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76
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non-electoral
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2017
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 115/2016
In the matter between:
KHETANI MBUISE NKABINDE FIRST APPELLANT
ORAPELENG LAWRENCE MOGOJE SECOND APPELLANT
AUBREY MMUSHI DIKOBE THIRD APPELLANT
JABULANE ELLIOT PAPI MAKHENE FOURTH APPELLANT
and
THE STATE RESPONDENT
Neutral citation: Nkabinde v The State (115/17) [2016] ZASCA 75 (01 June
2017)
Coram:
Navsa, Theron and Majiedt JJA and Fourie and Schippers AJJA
Heard:
18 May 2017
Delivered:
01 June 2017
Summary: Criminal Law and Procedure: acting in concert with common purpose:
murder and robbery with aggravating circumstances: purported special entries in
terms of s 317 of the Criminal Procedure Act 51 of 1977: to be strictly complied
with and resorted to only if the irregularity does not appear on the record: appeal
dismissed.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Free State Division of the High Court, Bloemfontein: (Cillié J,
sitting as court of first instance):
1.
The order of the court a quo granting leave to appeal to a full court is set aside
and replaced with the following:
‘The appellants are granted leave to appeal to the Supreme Court of Appeal
against their convictions and sentences.’
2.
The appeal is dismissed.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Schippers AJA (Navsa, Theron and Majiedt JJA and Fourie AJA
concurring):
[1] The appellants appeal against their convictions of murder, numerous counts
of attempted murder, robbery with aggravating circumstances, and unlawful
possession of explosives, firearms and ammunition, as a result of a cash-in-transit
heist in 2008 near Petrusburg in the Free State Province. They were each sentenced
to life imprisonment as well as lengthy terms of imprisonment.
A summary of the state evidence
[2] A substantial part of the evidence on behalf of the state is common cause.
The divergences will become apparent in due course. Fidelity Security Services
(Fidelity) is in the business of transporting cash with attendant security. On 8
August 2008 one of its armoured, cash-in-transit vehicles containing a built-in safe
(the armoured vehicle), transported R2.5 million from Bloemfontein to Kimberley.
The money was in four sealed bags, locked in the safe in the armoured vehicle and
manned by four security guards employed by Fidelity (the guards). They were
armed with three LM5 rifles and a Vector 9 mm pistol. The armoured vehicle was
accompanied by two guards in a Ford Bantam delivery vehicle (the Bantam). They
too, were armed with a LM5 rifle and a 9 mm pistol, respectively.
[3] As the convoy was proceeding along the N8 national road, also known as the
Bloemfontein-Petrusburg Road (the road), about 3 km outside Petrusburg they fell
victim to a brazen armed robbery carried out in broad daylight. The robbers
pursued the convoy in no less than five vehicles. Three of those vehicles travelling
at high speed, overtook the Bantam in pursuit of the armoured vehicle. A
Mercedes-Benz rammed twice into the Bantam from behind, causing the driver to
lose control. It left the road and came to a stop opposite to the direction in which it
had been travelling. Four robbers, armed to the teeth and wearing balaclavas, fired
shots at the Bantam, one of which struck its side window and went through the
windscreen. Fortunately the guards were not injured. The robbers then at gunpoint
ordered the guards out of the Bantam, forced them to lie face down on the ground,
and robbed them of their firearms and cellular telephones. With the guards
subdued, the robbers left the scene.
[4] In the meantime, their accomplices, in other vehicles, continued to pursue
the armoured vehicle: one slowed it down from the front and others pursued it
from behind. A third vehicle, another Mercedes-Benz, joined the pursuit and at
high speed slammed into the right side of the armoured vehicle, causing it to
overturn, slide on the roadway and come to a standstill on its passenger side. As
the guards emerged from the overturned vehicle, they were surrounded by some 20
robbers, also armed to the teeth, with automatic rifles, AK-47 assault rifles,
handguns and wearing balaclavas. They demanded the keys to the safe and
threatened to shoot the guards to show that they were serious about getting the
money. When it was clear that the guards did not have the safe-keys, they were
told to lie alongside to the road, face down. All of them were robbed of their
firearms, cellular telephones and some of their wallets.
[5] Next, the robbers tried to blow off the doors to the safe in the armoured
vehicle with dynamite. The guards, lying on the ground, described the sound of the
explosions like those of a bomb or grenade going off. The robbers however
succeeded only in blasting a hole into an internal door granting access to the safe.
But the robbers were determined to get to the money. Some robbers then pulled up
in a black Audi Q7 (the Audi) which stopped at the rear of the armoured vehicle.
They removed an orange-coloured angle-grinder and generator from the back of
the Audi. They placed the generator on the ground, held the angle-grinder and tried
to start it in order to open the safe of the armoured vehicle, but without success.
They also unsuccessfully tried to start the generator. In what follows, I shall refer
to the incidents near the Bantam and the armoured vehicle as ‘the first scene’.
[6] At the first scene, the armoured vehicle lying on the roadway caused a build-
up of traffic on both sides of the road. A number of innocent motorists and their
passengers caught in the traffic were robbed at gunpoint of their cellular
telephones, car keys and cash. In most of these cases, the cellular telephones were
thrown into nearby bushes, to prevent the motorists from contacting the police.
These victims also testified that they heard loud explosions (as the robbers tried to
blow open the safe); and that the robbers fired several shots at the first scene, in
some cases directly at their victims.
[7] In one of these cases, the robbers shot and killed an innocent motorist, Mr
De La Rey, who with his son was driving towards Bloemfontein. They were on
their way home to Potgietersrus, after they had bought sheep at a farm in
Petrusburg. As they approached the first scene, they heard shots being fired in the
veld and wanted to turn around. However, they could not do so quickly enough
because they were in a Ford F250 delivery vehicle (the F250), towing a trailer with
the sheep. Four robbers in a Ford Focus stopped next to them. They wore
balaclavas and three of them pointed their rifles at Mr De La Rey and his son. The
former turned the F250 towards the Focus and accelerated. The robbers then fired
directly at Mr De La Rey and his son. The son was forced to dive for cover and
saw his father’s head turn to one side as he was struck by a bullet. Mr De La Rey
lost control of the F250, which went into the direction of oncoming traffic and his
son turned the vehicle to the left, off the road. The robbers fired a few more shots
at them before fleeing in the direction of Bloemfontein. Later that day Mr De L a
Rey died in hospital of a gunshot wound to the chest.
[8] Another victim, Mrs de Meillon, was on her way to Bloemfontein from
Kimberley. She was accompanied by her mother and two children. As she was
driving on the road she saw the armoured vehicle overturning and come sliding
towards her. Next, she saw armed robbers run towards the armoured vehicle and
realised that it was a robbery. She tried to make a U-turn but some of the robbers in
a BMW, brandishing their firearms out of its windows, forced her to the other side
of the road. Two armed robbers banged on her side of the car and told them to get
out. Mrs de Meillon and her mother were manhandled and the barrel of a rifle was
shoved into her back when the robbers could not find her cellular telephone. She
and her family were forced to lie on the ground, face down. Shortly thereafter she
heard a loud explosion and numerous shots being fired. She said that for at least
half an hour, shots were being fired and the robbers sped up and down, pulling
innocent people off the road. At one point she thought that they were going to be
run over and she and her family crawled to the front of her car. They were robbed
of R2 100 and cellular telephones valued at about R10 000.
[9] After the mayhem at the first scene, and when the robbers could not open the
safe in the armoured vehicle, one of them shouted ‘time up’ and they fled the scene
in the Audi, an Opel Corsa delivery vehicle (the Corsa), a BMW and a Ford Focus
(the Focus). Unbeknown to them, at about 9:15 am on 8 August 2008, police
officers taking part in a mock exercise at an Air Force base outside Bloemfontein
in preparation for the 2010 soccer World Cup, received a report of the heist, that
shots had been fired and that there was an explosion. Colonel Joubert (Joubert),
who was part of the mock exercise and knew the area well, took command of a
task force and set off in an army helicopter in pursuit of the robbers. They were
told that the robbers had fled in an Audi, a Corsa, a BMW and a Focus.
[10] Joubert received a radio report that the robbers had left the road and taken a
secondary gravel road. On a gravel road near Soutpan, some 90 km away from the
first scene, the helicopter approached the Audi and the Corsa from behind. The
vehicles were travelling at high speed: estimated at about 160 km/h. The door of
the helicopter was open and members of the task force signalled the driver of the
Audi to stop numerous times, but to no avail. The helicopter then flew ahead and
hovered across the width of the road in an attempt to stop the Audi. The driver did
not slow down, the helicopter was forced to ascend and the Audi passed under it.
In the meantime the Corsa stopped following the Audi and disappeared in the dust.
The robbers in the Corsa and those in other vehicles got away.
[11] The helicopter continued the pursuit of the Audi on its passenger side, the
windows of which were open. The persons in the Audi fired gunshots at the
helicopter, which was forced to veer further to the left of the Audi to avoid being
hit. A member of the task force then fired a shot at the Audi which shattered its
right rear window. Joubert called for ground reinforcements on the radio. About 1
km past the entrance to Soetdoring Nature Reserve, the Audi suddenly pulled off
the road and stopped. Two of the occupants sitting at the back got out, opened the
tailgate, removed a white and orange object and threw it next to the road. They got
back into the Audi and it sped away.
[12] The chase continued. As the Audi passed over the Modderrivier bridge, its
occupants threw firearms out of the windows. Two shots were fired at the Audi
from the helicopter. One struck its left front wheel and the other, the radiator. Still,
the Audi did not stop, but eventually it was forced to do so near a stationary Toyota
Hilux delivery vehicle (the Hilux) where some people were standing. All four
doors of the Audi were opened and the occupants, later identified as the appellants,
made a run for it. The people standing at the Hilux also ran away. The helicopter
landed and members of the task team pursued the appellants. The second appellant
jumped into the Hilux in an attempt to get away. A shot was fired from the
helicopter, shattering the back window of that vehicle. The second appellant got
out of the Hilux and started running again. Members of the task team caught the
appellants and arrested them. I refer to the events at the place where the Audi was
stopped and the appellants arrested, as ‘the second scene’.
[13] At the second scene, a Vector 9 mm pistol was found in the boot of the
Audi. This firearm was issued by Fidelity to one of the guards in the Bantam, who
was robbed of it at the first scene. A SIM card and Nokia cellphone battery,
belonging to Fidelity and issued to a guard in the Bantam, were found in the Audi.
A packet containing dynamite, Durafuses and insulation tape was found in the boot
of the Audi. A Durafuse was used to ignite the blast at the first scene in the attempt
to blow open the safe of the armoured vehicle. A disassembled R5 rifle, a
magazine, 15 live rounds, balaclavas and gloves were also found in the boot of the
Audi. A Glock 9 mm pistol was found near its left front wheel. That firearm was
found to have been stolen during a robbery in Johannesburg in June 2008. A R5
rifle and an AK-47 assault rifle were found about 700 m from the Audi.
[14] After the appellants were arrested, Joubert drove to the Soetdoring gate,
where the appellants had thrown weapons out of the Audi, and cordoned off that
area. Two police officers who were not in the helicopter but travelling in different
police vehicles, saw these weapons in the road, which were about 500 m from
where the helicopter had landed at the second scene. Two LM 5 rifles which
Fidelity had issued to the guards the morning of the attack on the convoy were
found at the Soetdoring gate. The guards had been robbed of these rifles at the first
scene. Numerous firearms, magazines, parts of firearms and ammunition were also
found at the place where the appellants had thrown the weapons out of the Audi.
[15] At the Soetdoring gate, a civilian who had picked up the orange angle-
grinder which the appellants had thrown out of the Audi, handed it to Warrant
Officer Boukes (Boukes). He also took Boukes to the place where he had picked
up the angle-grinder, which was further from the second scene and from where the
Audi (which was stationary, after the appellants’ arrest) could not be seen. There in
the grass Boukes found the loading mechanism of a LM 5 rifle, an AK-47 assault
rifle, and a slot and slot cover of a LM 5 rifle.
[16] The state proved that a number of spent cartridges found at the first scene
were fired from five weapons found at the second scene. Although the defence
indicated that on this issue it would call an expert to contradict the evidence of
Captain Kekana, the state’s ballistics expert, no such evidence was presented.
The appellants’ version
[17] Initially only the first appellant testified in his defence, after which the
defence closed its case. Subsequently the defence was granted permission to
reopen its case and the second to fourth appellants testified. The appellants’
evidence may be summarised as follows. The first appellant drove the Audi on 8
August 2008. He said that it belonged to Mr Bennie Mohema (Mohema) who had
pledged it to him in 2007 for R100 000. They had agreed that the first appellant
could use the vehicle in the meantime. The appellants were going to Upington to
get spares for vehicles at metal scrap yards. En route, near Petrusburg, they were
stopped by a motorist who had flashed his lights and told them that there was an
incident up the road and that he heard shots being fired. They pulled off the road,
asked somebody for directions and were directed to Immigrant road, but they got
lost and drove down a gravel road, when they saw the helicopter. At that stage the
appellants turned into Bultfontein Road.
[18] The appellants denied that the persons in the helicopter signalled them to
stop, that it hovered across the road to get them to stop or that they had fired shots
at the helicopter. Thereafter the second appellant was shot from the helicopter and
bled. He told the first appellant to stop. The latter made a U-turn and stopped next
to a stationary vehicle (the Hilux). The first appellant said that he did not stop
when the second appellant had been shot because he thought that they were being
attacked. He also said that they, together with the persons at the Hilux, ran into the
veld. However, the second appellant testified that the fourth appellant helped him
out of the Audi and that they did not run away, but stood against the Hilux. The
fourth appellant however said that all of them ran away when they got out of the
Audi. They were arrested by the police who got out of the helicopter.
[19] Apart from the first appellant who said that he had some T-shirts and
toiletries, none of the appellants had any baggage and none was found in the Audi.
They denied that the angle-grinder, explosives, firearms, balaclavas, gloves, SIM
card or the Nokia charger were in the Audi and said that they did not know where
these items came from. When challenged as to whether it was their contention that
the police had planted these items, all of them replied that they did not know. The
first and third appellants said that they would be lying to the court if they tried to
explain where the items came from. They denied that they were involved at the
first scene where Mr De la Rey was shot and killed. They also denied that they had
thrown the angle-grinder or firearms out of the Audi.
[20] The court a quo held that it was clear from the evidence that the attack on
the convoy and the crimes at the first scene were committed by a group of robbers
acting in concert with the common purpose of armed robbery of the armoured
vehicle, and the persons who happened to be there. The appellants were part of that
group. The court rejected their version as ‘nonsense’. They were found guilty of
murder; four counts of attempted murder; five counts of robbery with aggravating
circumstances; numerous contraventions of the Firearms Control Act 60 of 2000
(the Firearms Control Act); and two contraventions of the Explosives Act 26 of
1956 (the Explosives Act). The first appellant was found guilty of theft of the
Audi.
The applications for leave to appeal
[21] The appellants applied to the court a quo for leave to appeal against their
convictions and sentences. In that application they simultaneously applied for the
recusal of the trial judge (Cillié J) on the ground that he was biased; and for special
entries to be made on the record in terms of s 317(1) of the Criminal Procedure Act
51 of 1977 (the Act), in accordance with their proposed special entries (the special
entries).
[22] The trial judge dismissed the application for his recusal. He granted the
application for the special entries; and granted the appellants leave to appeal to a
full court of the Free State High Court against their convictions and sentences.
[23] The full court (Musi, Naidoo JJ and Reinders AJ) did not decide the appeal
against the convictions and sentences. It held that the order by Cillié J was
incompetent since appeals based on special entries under the Act may not be
referred to a full court; and that it had no jurisdiction to hear the appeal. It struck
the appeal from the roll. The full court said that the appellants’ right of appeal
would not be taken away if it did not decide the appeal, and that if they were not
satisfied with the outcome, they would then have to approach this Court, which
would be another costly exercise.
[24] Thereafter the appellants applied to this Court for ‘leave to appeal’ against
the convictions handed down and sentences imposed by Cillié J on 9 July 2013.
The notice of motion states that ‘general leave to appeal and leave to appeal on
Special Entries’ were already granted to a full court; that the grant of the
application for the special entries ‘implied that the appeal had to be heard by the
Supreme Court of Appeal’; and that the court a quo had erred in granting leave to a
full court and ‘impliedly granted leave’ to this Court. The application for leave to
appeal was referred for oral argument in terms of s 17(2)(d) of the Superior Courts
Act 10 of 2013.
[25] Leave to appeal however had already been granted by the court a quo to a
full court. The special entries were properly before this Court and Mr Shapiro for
the appellants, and Ms Giorgi for the state, agreed that it was in the interests of
justice that this Court decide the appeal. They also agreed that the application for
leave to appeal to this Court be construed as an application in terms of s 315(2)(b)
of the Act, ie an application to set aside the direction by the court a quo that the
appeal be heard by a full court; and that it be substituted with an order that the
appeal be heard by this Court.1 This Court granted the application under
s 315(2)(b) of the Act.
The special entries
[26] Section 317(1) of the Act, in relevant part, reads:
‘If an accused is of the view that any of the proceedings in connection with or during his or her
trial before a High Court are irregular or not according to law, he or she may . . . apply for a
special entry to be made on the record (in this section referred to as an application for a special
entry) stating in what respect the proceedings are alleged to be irregular or not according to law,
1 Section 315(2) of the Act, in relevant part, reads:
‘(a) If an application for leave to appeal in a criminal case heard by a single judge of a provincial or local division
… is granted under section 316, the court or judge or judges granting the application shall, if it, he or she or, … they
… is or are satisfied that the questions of law and of fact and the other considerations involved in the appeal are of
such a nature that the appeal does not require the attention of the Supreme Court of Appeal, direct that the appeal be
heard by a full court.
(b) Any such direction by the court or a judge of a provincial or local division may be set aside by the Appellate
Division on application made to it by the accused or the attorney-general or other prosecutor … after the direction
was given.’
and such a special entry shall, upon such application for a special entry, be made unless the court
to which or the judge to whom the application for a special entry is made is of the opinion that
the application is not made bona fide or that it is frivolous or absurd or that the granting of the
application would be an abuse of the process of the court…’
[27] The purpose of a special entry is to raise an irregularity in connection with
or during the trial as a ground of appeal against conviction under s 318(1) of the
Act.2 The latter section provides, inter alia, that if a special entry is made on the
record, the person convicted may appeal to this Court against his conviction on the
basis of the irregularity stated in the special entry. Recently this Court has held that
the sole purpose of a special entry is to record an irregularity that does not appear
on the record.3 As is shown below, all of the so-called special entries are not proper
special entries but grounds of appeal under s 316 of the Act, because they appear
on the record. Some 60 years ago this Court held that the special entry procedure is
of vital importance and should be utilised where the irregularity does not appear on
the record of the proceedings.4 So, the statement in the application for leave to
appeal to this Court that a special entry is ‘simply a method of applying for an
appeal in regard to irregularities on or off the record’ is quite wrong.
[28] The proviso to s 322(1) of the Act makes it clear that a conviction or
sentence must not be set aside or altered by reason of any irregularity or defect in
the record or proceedings, unless it appears to the appellate court that a failure of
justice has in fact resulted from such irregularity or defect.56 In Naidoo,7 Holmes
2 A Kruger Hiemstra’s Criminal Procedure (Issue 8) at 31-29.
3 S v Staggie [2011] ZASCA 88; 2012 (2) SACR 311 (SCA) para 16.
4 R v Nzimande 1957 (3) SA 772 (A) at 774B.
5 Section 322(1) of the act reads inter alia as follows:
‘In the case of an appeal against a conviction . . . 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
JA identified two broad categories of irregularities: those of a serious and gross
nature that per se vitiate a trial; and those of a less serious nature, where the court
can separate the good from the bad and is able to consider the merits of the matter.
[29] The respects in which the appellants contend that their trial was irregular and
not according to law, may be summarised as follows:
(a)
Mr De La Rey was a white Afrikaans-speaking farmer like the trial
judge, which ‘strongly suggests bias in favour of the State … against
the Accused’.
(b)
The judge fell asleep during the presentation of the evidence.
(c)
The trial judge unfairly denied the appellants a postponement and
forced their counsel to continue with the trial without evidence
relating to police radio communications that was unlawfully withheld
from the defence, which manifested bias against the appellants.
(d)
In recounting the facts in the judgment, the trial judge ‘spoke as if the
State case had been proved even before he got to the evaluation of the
evidence’.
(e)
Counsel for the state misstated the position and misled the court
regarding the relevance of a video of the first appellant, made after his
arrest.
(f)
The court ‘misdirected itself by omission in that almost all its attention
is given to the State case and the Court ignored crucial and highly
material elements of the defence case.’
(c) make such 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.’
6 Hiemstra’s Criminal Procedure fn 2 (Issue 8) at 31-30 and 31-31 (Issue 5).
7 S v Naidoo 1962 (4) SA 348 (A) at 354D-F.
(g)
The court ‘misdirected itself by omission regarding the improbability
of Joubert … not going to all the scenes,’ and ‘it is clear he did not tell
the truth when he said he did not go to the first scene.’
(h)
The court ‘ignored and misdirected itself’ by failing to mention
Mbuli,8 regarding joint possession of the firearms, ammunition and
explosives, given that the appellants did not physically possess these
items.
(i)
The court permitted a police officer to make unfair attacks on the
character of the first appellant.
(j)
The appellants were pointed out by a witness ‘for blatantly racist
reasons.’
(k)
The court described the appellants’ defence as ‘snert’.
(l)
The court allowed the state advocate to put leading questions and the
fact that there was no objection in many instances, shows that the
defence counsel did not provide the appellants with competent and
effective representation.
(m) A dark coloured sack lying on the road with other exhibits was
deliberately excluded from the exhibits by the police.
(n)
Captain Kekana, the state’s ballistic expert, was not a member of the
Association of Firearm and Tool Mark Examiners, and his expertise
was poor.
(o)
The court overlooked the fact that the SIM card was planted by the
police in the Audi.
(p)
The court overlooked the fact that the state did not prove that the Audi
was stolen.
8 S v Mbuli 2003 (1) SACR 97 (SCA).
(q)
The record was at first incorrectly transcribed; at some stages the
interpretation was faulty; and the court ‘unfairly rejected an
application that the proceedings be conducted mainly in English’. This
was aggravated by the fact that the first appellant is hard of hearing.
(r)
When the third appellant testified, the interpreter said that Mr De la
Rey had been shot dead and somebody was going to be found guilty of
the murder.
(s)
Any other matter that counsel for the appellants or the state ‘may wish
to advance as being relevant to the consideration of the application.’
[30] It is convenient to deal firstly with special entry (s). On its own, it is
virtually meaningless and plainly impermissible. The court a quo should not have
made this a special entry on the record.
[31] None of the so-called special entries (a) to (r), are true special entries as
contemplated in s 317(1) of the Act. The court a quo should not have made them
special entries on the record. They are properly grounds of appeal.
[32] It must be stressed that an application for a special entry is not there for the
asking: the requirements of s 317(1) of the Act must be met, and the court must
satisfy itself that the application is bona fide and that it is not frivolous, absurd or
an abuse of the process. The court a quo failed to do so. All the so-called special
entries should not have been made. In some instances they are simply not bona
fide. In others, they are frivolous and consist of points that lack any substance and
cannot be seriously taken; or they are absurd in that they are inconsistent with
reason or common sense and unworthy of serious consideration.9
[33] Special entry (a) has no merit. The trial judge rightly posed the question to
Mr Shapiro whether the allegation of bias is not tantamount to saying that no white
male Afrikaans-speaking judge should preside over a trial where the accused are
black. Mr Shapiro’s answer effectively was ‘yes’ - there are other judges who can
hear such matters. The submission is untenable. But more fundamentally, the
allegation does not begin to meet the threshold test for bias, namely ‘whether a
reasonable, objective and informed person would, on the correct facts, reasonably
apprehend that the Judge had not or would not bring an impartial mind to bear on
the adjudication of the case.’10 Indeed, before us Mr Shapiro conceded that the
allegations in (a) would not justify an application for the recusal of the presiding
judge on the ground of bias. Moreover, he accepted that seen in isolation, special
entry (a) is offensive.
[34] Special entry (b) lacks merit and is an abuse of process. The trial judge,
unsurprisingly, found the allegation that he fell asleep during the trial unfair and
embarrassing, and did not know how to respond to such a vague and general
allegation, raised more than three years after the trial. The appellants were
represented by Mr Potgieter, who Mr Shapiro said was an experienced counsel.
The record shows that Mr Potgieter defended his clients and advanced their
interests without fear. He no doubt would have raised a concern if the judge had
nodded off. Further, a reading of the evidence does not demonstrate a presiding
officer who is not following the proceedings. On the contrary, the evidence of at
9 S v Halgryn 2002 (2) SACR 211 (SCA) para 3; S v Cooper & others 1977 (3) SA 475 (T) at 476C.
10 President of the Republic of South Africa & others v South African Rugby Football Union & others 1999 (4) SA
147 (CC) at 148G para 48; 1999 (10) BCLR 1059.
least 30 witnesses, shows that the judge was alert to and aware of the evidence
being tendered. At the appropriate time he would ask questions if the evidence was
unclear.
[35] There are numerous examples of this but three will suffice. One of the
guards testified that a firearm with serial number 106355 was issued to him.
Shortly thereafter he said that the serial number was 104355. The judge said that
the latter number differed from the one he had heard ie 106355. He was right and
the witness said that the correct number was 104355. Secondly, when Joubert was
asked about the position he had taken in the helicopter, the judge interrupted
counsel and asked Joubert to explain the seating arrangements. Joubert replied that
the helicopter had no seats, that it was a shell, as he put it, and that four officers
were sitting on the floor at each door. Thirdly, when the second appellant testified,
Mr Potgieter put it to him that he had met the other appellants in Bloemfontein on
8 November 2008. The judge pointed out that the date could not be right because
the appellants were in custody. Again, he was right. Aside from this, the appellants
can point to no prejudice, irregularity or failure of justice because the judge
allegedly fell asleep. As is demonstrated below, the appellants’ convictions are
entirely sustainable on the evidence.
[36] Special entry (c) is not bona fide and a distortion of the facts. On no less
than three occasions, the appellants applied for the postponement of the trial,
during which evidence was heard, causing a delay of some nine months in the
commencement of the trial. The record shows that in those applications, the judge
was extremely patient and tolerant, particularly in the light of the reasons for the
postponement: the appellants sought radio control records relating to police
communications and information as to when the helicopter had taken off and
landed; and the first, second and fourth appellants wanted to consult jointly in
prison (the third appellant was released on bail). In any event, the police were not
in possession of the records relating to radio communications, which were held by
an independent service provider. Mr Potgieter informed the trial court that he had
taken steps to obtain these records from the service provider, which he wanted to
use in cross-examination of the guards. Nothing further was heard from Mr
Potgieter in this regard.
[37] The police witnesses testified about the radio communications they received
concerning the incident and on this score, their evidence was not seriously
challenged. The defence sought the records of these radio communications in an
attempt to show what the security guards had told Joubert concerning the vehicles
used by the robbers. Mr Potgieter however had in his possession Joubert’s witness
statement with which he could confront the security guards on this issue.
Moreover, the trial judge informed Mr Potgieter that if necessary, any security
guard could be recalled for cross-examination should the records of the radio
communications reveal discrepancies in their version. The appellants plainly were
not prejudiced.
[38] Special entries (q) and (r) are not bona fide, and are frivolous and absurd.
The appellants have not stated how the initial incorrect transcription of the record
is alleged to be irregular and not according to law. The proceedings were
interpreted in the mother tongue of the appellants, and it was unnecessary to
conduct them in English. The parts of the record upon which Mr Shapiro relies are
a distortion and do not support the allegations in these special entries. When Mr
Potgieter informed the court that the appellant had complained that the
interpretation was incorrect in some respects, the interpreter was replaced. Once
during the proceedings, Mr Potgieter informed the court that the first appellant did
not have his hearing aid, but that he was willing to proceed with the trial and would
indicate to Mr Potgieter if anything needed to be explained. The Judge noted this
and said that if necessary, the first appellant could sit nearer (to aid his hearing).
Subsequently, there was no complaint during the trial about the first appellant’s
hearing.
[39] The remaining special entries are to a large extent interrelated and concern
the trial court’s judgment on the merits and will be dealt with in the analysis of the
merits of the appeal.
Analysis
[40] Regarding the merits, there can be no question that the robbers had agreed to
attack the convoy; that the attack was carefully planned; that all the robbers
participated in its execution; and that each robber associated himself with the acts
perpetrated by the others - the murder, attempted murder and armed robbery of
innocent civilians at the first scene. This alone is sufficient to establish common
purpose.11 The appellants foresaw and reconciled themselves with the possibility
that the execution of the armed robbery by their co-conspirators - who were
heavily armed with assault weapons - could result in the death of a person. They
were thus rightly convicted of murder.12
[41] But even in the absence of an agreement to attack the convoy, the evidence
conclusively shows that the appellants were present at the first scene where the
said acts of violence were being committed; that therefore, they knew or must have
11 C R Snyman Criminal Law 6th ed (2014) at 259.
12 S v Majosi & others 1991 (2) SACR 532 (A) at 536I-537E.
been aware of these attacks; that they intended to make common cause with the
robbers who committed those acts; and that they manifested this intention by
themselves performing acts of association with the conduct of the other robbers.13
[42] The ineluctable inference to be drawn from the facts is that the appellants
were part of the robbers wearing balaclavas and armed with rifles and AK-47
assault weapons at the first scene. The evidence of the police who pursued them in
conjunction with the retrieval of the items referred to earlier, lead to the
compelling conclusion that the persons who had been travelling in the Audi and
who had been arrested by the police, namely the appellants, were the individuals
involved in the murder and robberies at the first scene.
[43] Then there is the appellants’ evidence. Unsurprisingly, they could not
explain how the incriminating items came to be in the boot of the Audi. They did
not suggest that the police had planted them there. And it was never put to Joubert
that he, or any officer under his command, had ‘planted’ any evidence at the
second scene. So there is no room for that contention. In fact, the first and third
appellants were not willing to proffer any explanation for the presence of the
incriminating items, for fear of ‘lying’. The Corsa following them at high speed is
also unexplained. The appellants’ version that they were on their way to Upington
but got lost and ended up on a gravel road and that they did not try to dispose of
the angle-grinder and weapons, is highly improbable, let alone reasonably possibly
true. It may safely be rejected as false. And there is nothing wrong in
characterising their version as nonsense – in Afrikaans, ‘snert’.14
13 S v Mgedezi & others 1989 (1) SA 687 (A) at 705I-706B.
14 F F Odendal and R H Gouws Die HAT (Verklarende Handboek van die Afrikaanse Taal) 4ed (2000) defines
‘snert’ as ‘onsin’. In English, ‘nonsense’ or ‘rubbish’.
[44] Mr Shapiro’s theory that the police planted the SIM card in the Audi and
that Joubert was dishonest when he said that he never went to the first scene,
strains credulity. The helicopter and its occupants were nowhere near the first
scene: the unchallenged evidence is that Joubert saw the Audi for the first time
some 90 km away from the first scene. And the facts show that none of the police
officers who collected the evidence at the second scene, were present at the first
scene. The theory implies a conspiracy of epic proportions. It would mean the
following. The police somehow obtained the cellular telephone and Vector 9 mm
pistol issued to a guard (of which he had been robbed) from the robbers (who had
escaped) and placed the SIM card of that phone and the pistol in the Audi. In a
moving scene, the police then obtained the angle-grinder, and LM 5 rifles (of
which the guards at the first scene had been robbed) from the robbers (who had
also escaped) and planted these items at two separate places on the road where they
were found. They also planted explosives and fuses in the Audi, coincidentally of
the same type as those used at the first scene. The pursuit of the appellants in a
helicopter and their attempts to get rid of the angle-grinder and weapons are all a
figment of Joubert’s imagination. The theory is fanciful and absurd.
[45] The appellants’ possession of the firearms and explosives may be dealt with
briefly. This is not a case where a single possessor exercised possession of firearms
on behalf of a group. Instead, all the appellants at the relevant times had the
intention of jointly possessing the firearms and explosives, as a group.15 This was
established by the evidence. There were no competing claims to the firearms and
explosives. The appellants had the requisite intention: firstly, they all knew of the
existence of the firearms and explosives in their possession and secondly, that they
15 Mbuli fn 8 above para 71.
were exercising control over them.16 Their joint possession as a group and common
state of mind is buttressed by their attempts to get rid of the firearms. When they
were being pursued by the helicopter, the Audi stopped and two of them got out so
as to dispose of the angle-grinder and an AK-47 assault weapon. Later they threw
more firearms out of the windows of the Audi. All of them attempted to flee once
the Audi had been stopped. The only reasonable inference to be drawn from these
facts is that the appellants had the common intention to possess the firearms and
explosives.
[46] What remains is the charge of theft against the first appellant. The state
proved that the Audi was one of two Audi Q7’s stolen from Port Elizabeth harbour
on 28 June 2007. The first appellant’s initial explanation to the police was that he
had borrowed the vehicle from Mr Thabo Stimela (Stimela). The police followed
up that information, which revealed that Stimela had disappeared and that a
warrant for his arrest had been issued. However, during the trial the first
appellant’s explanation for his possession of the Audi changed. It was put to the
state witnesses, and the first appellant testified, that the Audi belonged to Mohema
who had pledged it to him in September 2007 for R100 000. As the court a quo
noted, according to the appellant, Mohema had coincidentally passed away.
[47] On his own version the first appellant had driven the Audi and was in
possession of it some three months after it was stolen in Port Elizabeth. The nature
of the stolen thing is an important element in determining what constitutes recent
possession. If it is of a kind which is usually, and can easily and quickly be
disposed of, anything beyond a relatively short period generally will not constitute
16 Snyman fn 11 at 261.
recent possession.17 The thing in this case - a brand-new, expensive sports utility
vehicle - is not one which can easily and rapidly pass from person to person. Aside
from this, the unchallenged evidence is that two number plates displaying different
registration numbers, not linked to any owner on the police registration system,
were found in the boot of the Audi. Now if the first appellant’s explanation is true
that Mohema, supposedly the owner of the Audi, pledged the vehicle to him, why
would these number plates be necessary at all? And why would they be in the
Audi, if not to be used illegally? All of this, coupled with the first appellant’s
different explanations for his possession of the Audi, in my view, is sufficient to
justify the conviction of theft.
[48] On a conspectus of all the evidence, what all of this shows, is that special
entries (d) to (p) are frivolous and absurd. Even considered as grounds of appeal,
they have no merit. They are unsustainable on the evidence. The state proved its
case beyond reasonable doubt and accordingly, the appellants were rightly
convicted.
Sentence
[49] The appellants were sentenced as follows:
Count 1 - theft: the first appellant: 15 years’ imprisonment;
Counts 11, 19, 22 and 25 - attempted murder: 7 years’ imprisonment on each
count;
Counts 13-15 and 17-18 - robbery with aggravating circumstances: 15 years’
imprisonment on each count;
Counts 16 and 20 - contravention of s 120(6)(a) of the Firearms Control Act: 3
years’ imprisonment on each count;
17 S v Skweyiya 1984 (4) SA 712 (A) at 715C-E.
Count 21 - murder: life imprisonment
Count 23 - contravention of s 27(1) of the Explosives Act 26 of 1956: 6 years’
imprisonment;
Count 24 - contravention of s 6(1) and (2) of the Explosives Act 26 of 1956: 1 year
imprisonment;
Count 26 - contravention of s 3 of the Firearms Control Act 60 of 2000: 15 years’
imprisonment;
Count 27 - contravention of s 90 of the Firearms Control Act 60 of 2000: 1 year
imprisonment; and
Count 28 - contravention of s 4 of the Firearms Control Act 60 of 2000: 15 years’
imprisonment.
[50] The court a quo noted that in terms of the provisions of the Correctional
Services Act 111 of 1998, the sentences imposed on all the charges run
concurrently with the life sentence imposed on the appellants, by the operation of
law.18 It ordered, in terms of s 280 of the Act, that all the sentences imposed in
respect of all the other charges should also run concurrently with the sentence of
life imprisonment,
[51] It is trite that sentencing lies in the discretion of the trial court. In the
absence of material misdirection by the trial court, an appellate court cannot
approach the question of sentence as if it were the trial court and then substitute the
trial court’s sentence simply because it prefers to.19
18 Section 39(2)(a)(i) of the Correctional Services Act.
19 S v Malgas 2001 (2) SA 1222 (SCA) para 12.
[52] The court a quo imposed the minimum sentences prescribed in the Criminal
Law Amendment Act 105 of 1997 in respect of the charges of murder, robbery
with aggravating circumstances, possession of semi-automatic and automatic
firearms, and possession of explosives. After considering the factors required to be
taken into account in the imposition of sentence, including the appellants’ personal
circumstances, the court a quo came to the conclusion that there were no
substantial and compelling circumstances to deviate from the prescribed minimum
sentences.
[53] In this regard, the court a quo said that the robbery was planned, and
brazenly executed on a public road by some 20 heavily armed robbers who did not
hesitate to indiscriminately shoot, and, I would add, kill an innocent civilian. They
terrorised defenceless motorists to overcome any resistance. Cash in transit heists
are becoming an epidemic in this country and communities expect the courts to
impose severe sentences for these crimes. All the appellants had completed high
school and earned an income. They committed the crimes out of greed. The
seriousness of the crimes outweighed their personal circumstances.
[54] The reasoning of the court a quo cannot be faulted. This Court has held that
the prescribed minimum sentences should not be departed from lightly and for
flimsy reasons. The legislature has ruled that these are the sentences that
ordinarily, and in the absence of weighty justification, should be imposed for the
specified crimes, unless there are truly convincing reasons for a different
response.20 This is not such a case. The sentences are appropriate.
20 Malgas fn 17 para 25.
[55] In the result, I make the following order:
1.
The order of the court a quo granting leave to appeal to a full court is
set aside and replaced with the following:
‘The appellants are granted leave to appeal to the Supreme Court of
Appeal against their convictions and sentences.’
2.
The appeal is dismissed.
_________________
A Schippers
Acting Judge of Appeal
Appearances
For Appellant:
S Shapiro
Instructed by:
Shapiro Attorneys, Johannesburg
c/o Tshangana Attorneys, Bloemfontein
For Respondent:
S Giorgi
Instructed by:
The Director of Public Prosecutions, Bloemfontein
|
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
NKABINDE MBUISE KHETANI & OTHERS V THE STATE
From: The Registrar, Supreme Court of Appeal
Date: 1 June 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) handed down judgment today in an appeal
from the Free State Division of the high court, Bloemfontein. The SCA dismissed the
appellants’ appeal against their convictions and sentences for murder and armed
robbery, arising from a cash-in-transit heist on the N8 National road near Petrusburg
in 2008.
The issues on appeal were whether the appellants’ had been properly convicted and
sentenced. They alleged that their trial was irregular, based on numerous special
entries on the record in terms of s 317(1) of the Criminal Procedure Act 51 of 1977
(CPA), which included allegations that the trial judge was biased and that the police
‘planted’ evidence to implicate the appellants in the crimes.
The SCA held that the special entry procedure must be used only if an irregularity in
the trial appears on the record. The so-called special entries appeared on the record
and were thus grounds of appeal. Special entries are not there for the asking; s 317
of the CPA must be strictly complied with. A court must satisfy itself that a special
entry is bona fide, and not frivolous or absurd. The special entries in this case were
held to be frivolous and absurd. The appellants’ convictions and sentences were
confirmed.
|
3726
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no. 1134/2020
Reportable
In the matter between:
POST OFFICE RETIREMENT FUND
Appellant
and
SOUTH AFRICAN POST OFFICE SOC LTD
First Respondent
MINISTER OF COMMUNICATIONS AND
DIGITAL TECHNOLOGIES
Second Respondent
SOUTH AFRICAN POSTAL WORKERS UNION
Third Respondent
COMMUNICATION WORKERS UNION
Fourth Respondent
DEMOCRATIC POSTAL AND
COMMUNICATIONS UNION
Fifth Respondent
Neutral citation:
Post Office Retirement Fund v South African Post Office SOC Ltd
and Others (Case no. 1134/2020) [2021] ZASCA 186 (30 December 2021)
Coram:
Petse AP, Makgoka and Plasket JJA and Molefe and Unterhalter AJJA
Heard:
11 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
30 December 2021.
Summary:
Posts and Telecommunications-Related Matters Act 44 of 1958 – rules
of Post Office Retirement Fund (the Fund) – rule 3 requires the South African Post
Office (SAPO) to pay to the Fund pension contributions, including employees’
contributions, on a monthly basis – SAPO stopped paying contributions – rule 3 places
an obligation on SAPO to pay contributions – the obligation to pay has not been
extinguished or deferred by intervening impossibility of performance – the obligation
to pay may not be avoided by SAPO deciding not to pay the Fund, but to pay other
creditors instead.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Kubushi J sitting as
court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and replaced with the following order:
‘1
It is declared that the South African Post Office:
1.1
is obliged and required, in terms of rule 3 of the Post Office Retirement
Fund’s rules, to pay contributions, as defined therein, to the Post Office
Retirement Fund on a monthly basis, in arrear, by not later than the first
working day of each month; and
1.2
is in breach of this obligation in that it has not made the required payments
since May 2020.
It is declared that the South African Post Office’s obligations in terms of rule 3
of the rules have not been extinguished or deferred by intervening impossibility
of performance.
The South African Post Office is directed to pay the costs of the Post Office
Retirement Fund, including the costs of two counsel.’
JUDGMENT
Plasket JA (Petse AP, Makgoka JA and Molefe and Unterhalter AJJA concurring)
[1] The South African Post Office SOC Ltd (SAPO) – the first respondent in this
appeal – is an organ of state that has provided postal services to the South African
public for many years. Its juristic form has varied over the years1 but it now takes the
form of a state-owned company, its continued existence in this form having been
provided for by s 3 of the South African Post Office SOC Ltd Act 22 of 2011 (the SAPO
Act). In terms of s 3(3), the ‘powers and duties of the State as a member and
shareholder of the Post Office must be exercised and performed’ by the Minister of
Communications and Digital Technologies, the second respondent in this appeal.
[2] Section 4(1) of the SAPO Act spells out SAPO’s duties. It provides:
‘Subject to the Postal Services Act and the licence issued to the Post Office in terms of the
said Act, the Post Office must take reasonable measures, within its available resources, to
achieve the progressive realisation of the following duties:
(a)
Ensure the universal and affordable provision of postal services;
(b)
ensure the provision of a wide range of affordable postal services in the interest
of the economic growth and development of the Republic;
(c)
be innovative in the provision of postal services;
(d)
develop postal services that are responsive to the needs of users and
consumers;
(e)
ensure the achievement of universal access to postal services by providing an
acceptable level of effective, reliable and regular postal services to all areas,
including rural areas and small towns where post offices are not sustainable;
(f)
ensure greater equity in respect of the distribution of services, particularly within
the areas of the historically disadvantaged communities, including rural areas;
(g)
ensure that the needs of disabled persons are taken into account in the
provision of postal services;
(h)
ensure the development of human resources and capacity-building within the
postal industry, especially amongst historically disadvantaged groups;
(i)
act in the best interest of postal users and other clients;
(j)
maintain an effective and efficient system of collecting, sorting and delivering
mail nationwide in a manner responsive to the needs of all categories of mail
users;
(k)
actively provide and develop a citizens' post office that contributes to
community and rural development and education, thereby serving as an
interface between government and the community; and
1 Lawrence Baxter Administrative Law (1984) at 115; E Van Eeden ‘Postal Services’ LAWSA (3 ed) Vol
33 para 72.
(l)
ensure compliance with international commitments relevant to the postal
industry.’
[3] In terms of s 5, SAPO may, without derogating from its powers in terms of the
Companies Act 71 of 2008 and subject to the Public Finance Management Act 1 of
1999, engage in a wide range of activities, such as purchasing immovable property,2
erecting buildings, installations and plants,3 acquiring and holding movable property4
and letting its services or otherwise making them available.5 One such service is the
paying of social grants. It is paid to do so by the South African Social Security Agency
(SASSA) and acts as its agent in so doing.
[4] The Post Office Retirement Fund (the Fund) – the appellant in this matter – was
established, along with the Telecommunications Pension Fund, by s 9 of the Posts
and Telecommunications-Related Matters Act 44 of 1958 (formerly known as the Post
Office Act). Section 10 makes provision for rules, which it calls statutes, for both funds.
Section 10(1) states that the control and management of these funds, the conditions
for admission to them and termination of membership, the amount and nature of
contributions and other payments to them by members and employers, the benefits
due to members and beneficiaries and the manner in which they may be amended are
governed by the statutes of each fund. Section 10(4) states that the statutes of the
funds ‘shall be binding on each fund as well as the postal employer and the
telecommunications employer, as the case may be, and on the members and
beneficiaries of each fund’.
[5] By notice of motion dated 31 July 2020, the Fund applied on an urgent basis to
the Gauteng Division of the High Court, Pretoria for the following substantive relief:
‘2.
That the South African Post Office SOC Ltd (“SAPO”) be declared to be in breach of
Rule 3.3 of the South African Post Office Retirement Fund Rules (the “Rules”).
3.
That SAPO be directed to remit to the Fund, within five (5) days of this order, all
outstanding arrear contributions (i.e. employer and employee contributions) in respect of the
periods May 2020 and June 2020, inclusive of interest at 9.75% per annum.
2 Section 5(a).
3 Section 5(b).
4 Section 5(d).
5 Section 5(e).
4.
That going forward, SAPO be directed to continue to timeously pay contributions to the
Fund as they fall due, in accordance with the Rules.’
None of the respondents other than SAPO took part in the proceedings in the high
court or on appeal. The application was dismissed with costs by Kubushi J. She
subsequently granted the Fund leave to appeal to this court.
[6] The material facts upon which the Fund’s case is founded are not complicated
and are largely common cause. Rule 3.3 of the rules of the Post Office Retirement
Fund (the rules) provides that contributions paid by SAPO, which include members’
contributions, are payable to the Fund monthly. SAPO failed to pay any contributions
to the Fund for the months of May and June 2020.
[7] SAPO raised three defences. The first was that the Fund’s rules did not oblige
it to pay contributions to the Fund. The second was that, if it was obliged by the rules
to pay contributions, it had a power to decide not to pay the Fund in the prioritization
of payments to creditors. The third was that its parlous financial state rendered it
impossible to pay the Fund with the effect that its obligation was either extinguished
or deferred.
The facts
[8] The contributions paid by SAPO to the Fund prior to May 2020 comprised of
members’ contributions of 7.5 percent of each employee’s pensionable monthly salary,
employer contributions of 13.55 percent of each employee’s pensionable monthly
salary and an additional voluntary contribution. It is not in dispute that SAPO did not
pay these contributions to the Fund at the end of May and June 2020. It ought to have
paid a total contribution of R40 million in respect of each month. It would appear that
SAPO has not paid any further contributions to the Fund since.
[9] When SAPO had not paid the May 2020 contribution by the due date of the first
working day of June 2020, Mr Michael Faasen, the Fund’s principal officer, wrote to
Mr Ivumile Nongogo, SAPO’s acting group chief executive officer. He pointed out that
the payment of contributions is a statutory obligation and that a failure on the part of
SAPO to pay placed the Fund in a difficult position. He understood that SAPO’s cash
flow would improve within a few days and said that ‘it will be much appreciated if this
payment will receive your favourable consideration’.
[10] Nongogo responded two days later. He said:
‘Indeed SAPO’s financial situation is dire and each month we are having to make a call on
payments. Last month we paid the pension fund but did not pay Medipos, this month we will
commence payments with Medipos and then the fund. We are cognizant that both parties
have statutory requirements in this regard but we are trying not to be unfair to any one party.’
(Medipos is SAPO’s in-house medical aid scheme.)
[11] Faasen wrote back to Nongogo to ask for clarity. He wanted to know whether
his understanding was correct that SAPO would pay contributions a month after the
due date for payment, with the effect that ‘SAPO’s arrears will grow exponentially until
the financial position of SAPO normalises’. In his response, Nongogo said:
‘Ideally this should not be the case, we are hopeful that as we open for business and start to
receive normal revenues we can cover all statutory payments and not create a backlog,
otherwise as you point out we will have an exponential growth in that backlog that will become
unmanageable. We are prioritizing these payments and as the cash comes in we will attempt
to bring any arrears to zero.’
[12] The Fund’s board of trustees decided that a formal letter, copied to the Minister,
should be sent to SAPO to spell out the Fund’s position. Prior to that letter being sent,
however, Faasen wrote to Nongogo to inform him of the board’s decision. He also
raised a further concern – that SAPO had also not paid premiums in respect of a
temporary disability policy for employees and that death and permanent disability
benefits of SAPO employees were at risk as well. Nongogo replied to say that he
appreciated the ‘serious impact that is [being] caused by SAPO’s non-payment’. He
assured Faasen that ‘everything is being done to resolve the financial issues’ but he
was unable to indicate when a solution to the problem would be found.
[13] The board’s formal letter followed. It is dated 11 June 2020 and was written by
Mr Ashwin Trikamjee, the chairperson of the Fund’s board. After stating that one of
the board’s responsibilities was to ensure that both employer and employee
contributions were paid timeously to the Fund and that SAPO’s contributions for May
2020 had not been paid, he said:
‘We are therefore concerned that members will suffer prejudice due to the non-payment and/or
delay by the Company in paying the required contributions. This specifically relates to death
and disability benefits not being funded as well as exit benefits being underfunded. Of special
concern is the deduction of member contributions from salaries but not being paid to the Fund,
which could have further legal implications for the Company.’
[14] Trikamjee requested that SAPO investigate the failure to pay the Fund and
furnish the board with ‘detailed feedback’. He demanded an undertaking from SAPO
that the outstanding contributions, plus interest, would be paid within 21 days of the
date of his letter. He asked for an ‘unequivocal commitment’ from SAPO that, in future,
contributions would be paid in accordance with the rules. He expressed the board’s
willingness to discuss ‘any challenges that the Company might be experiencing during
these times of upheaval caused by the Covid-19 outbreak that might negatively impact
the Company’s legal obligations towards the Fund as well as possible relief measures
within the ambit of the law’.
[15] Nongogo replied about two weeks later. He apologized for SAPO having been
‘unable to remit the pension contributions as required on a monthly basis’. He said that
SAPO’s financial position had deteriorated dramatically and that this had accelerated
as a result of ‘the Covid-19 induced lockdowns’, with a negative impact for all of its
creditors including the Fund.
[16] Nongogo informed the board that SAPO had approached the Department of
Communications and Digital Technologies for financial assistance but the earliest any
assistance could be expected was October 2020. In the meantime, he said, ‘the
situation remains extremely dire’. He expressed his appreciation that the board was
willing to discuss temporary relief measures. He identified two possible options for
discussion. They were a ‘contributions holiday’ of six months, and a ‘once-off capped
withdrawal by pension fund members who are still employees to cushion them from
decisions that SAPO will need to make that may impact on their earnings’. Finally, he
said that SAPO was ‘fully cognizant of the legal implications that arise from non-
remittance and the financial consequences that will impact on employees’, but it
looked forward to ‘an engagement with the Fund as to ways that could be pursued to
mitigate the situation’.
[17] Trikamjee responded on 6 July 2020, by which time SAPO’s June 2020
payment to the Fund was overdue. He informed Nongogo that the Fund’s board had
discussed the two proposals that he had made. Both were impractical for various
reasons and could not be pursued without a change to the rules, in the case of the first
proposal, and the amendment of an Act, in the case of the second. He said that the
board had resolved to request SAPO ‘to pay the contributions in respect of risk benefits
and fund expenses for May and June 2020 as a matter of extreme urgency to ensure
that members of the Fund are covered in respect of death and disability benefits’ and
that ‘Additional Voluntary Contributions which have already been deducted from
employees’ salaries at the end of May 2020 and June 2020 also need to be paid over
to the Fund’. The board, he said, would appreciate the opportunity to meet Nongogo
and his senior staff in order to discuss payment of the outstanding contributions after
the board had ‘considered all the legal options available to them to accommodate
SAPO in its present dire financial position’.
[18] On 21 July 2020, however, Faasen sent an email to Nongogo in which he
informed him that when the board had sought legal advice, it had been told that the
type of engagements it had thus far had with SAPO fell short of compliance with its
fiduciary duties to the Fund and its members. He informed Nongogo that the Fund
would shortly be launching an urgent application against SAPO ‘with a view to
receiving payment of outstanding contributions and ensuring that the Post Office pays
such future contributions as may arise’. He then said that the Fund would ‘at the same
time, consider a Rule Amendment in order to provide possible relief for all the parties,
and this would likely require further engagements with the employer’.
[19] On the following day, Nongogo replied as follows:
‘This is well noted and the stance is well understood. We remain cognizant of the outstanding
contributions to the fund and we are doing all things necessary to bring SAPO to a position
where it can honour these payments. In the meantime your consideration of possible actions
to offer relief [is] greatly appreciated.’
[20] The Fund’s attorneys then drafted the founding papers in the urgent application.
The notice of motion was dated 31 July 2020, as payment of the July contributions
was about to fall due. The papers were issued on the same day.
[21] In SAPO’s answering affidavit, deposed to by Ms Nondumiso Ngonyama, a
non-executive member of its board, the application was categorized as not being ‘a
simple claim by a creditor against a debtor’, but rather a matter that raises ‘a multitude
of contractual, statutory, constitutional and public policy issues’. She stated that it was
unclear what the Fund was trying to achieve:
‘It seeks payment of over R80 million and an order that SAPO must continue timeously to pay
R40 million a month. However, it does so while readily conceding that SAPO’s financial
position is dire and that each month SAPO has to prioritise its most critical financial obligations.
In fact, the Fund purports to found its claim for urgent payment on the basis that SAPO cannot
pay the amount in question. This is a non-sequitur.
[22] She explained that as a result of the ‘current economic environment and the
impact of COVID-19’, SAPO chose to pay medical aid contributions rather than
pension fund contributions. It had reasoned that it was ‘more important to pay its
employees’ salaries (rather than any fringe benefits) so that those employees may
continue to provide for themselves and their families whilst the COVID-19 pandemic
ravages South Africa’s health and wealth’.
[23] Ngonyama made the claim that the Fund had not made out a case as to why it
required payment of R40 million a month, as its operational expenses were only R1.4
million and it had reserves that would enable it to operate for four or five months
without SAPO’s contributions. She described the Fund’s insistence on being paid what
was owed to it as bewildering. Nonetheless, she claimed that SAPO was trying ‘to
make as many payments as it can, in order to ensure the fulfilment of its various duties
under section 4 of the South African Post Office SOC Act, 2011’. It would, she
undertook, pay the Fund as soon as it was able to, but said that it was not possible to
predict with certainty when that would be. At the time of deposing to her affidavit,
however, ‘paying R40 million a month to the Fund is not only financially impossible
and fiscally irresponsible, but payment of any material amount to the Fund would likely
cause SAPO’s demise’.
[24] Ngonyama claimed that the Covid-19 pandemic and the lockdowns put in place
to control it had a severe, adverse effect on SAPO’s business. Without any historical
context and without any detail, she stated that, as at 31 July 2020, only 55 of SAPO’s
1 416 post offices were operating profitably. In July 2020, SAPO incurred a net loss of
R97 million. This was nearly triple the net loss of R 34 million at the corresponding
time in 2019. It year to date loss at 31 July 2020 was R1.066 billion.
[25] As a result of SAPO’s dismal financial performance, it was only able to pay
some of its creditors but not others. It therefore decided to prioritise which would be
paid and which not. So, for instance, it prioritised the payment of transport costs,
national linehaul expenses, property costs including rental expenses, information
technology expenses and the cost of security. It chose to prioritise these expenses,
Ngonyama said, ‘in order to continue to meet its primary statutory duties’.
[26] Ngonyama stated that as a result of SAPO’s failure to pay creditors, critical
services, including the payment of social grants, had been interrupted and continued
‘negatively to impact on SAPO’s ability to recover lost revenue and to move to financial
sustainability’. She continued to say:
‘As a result of the economic downturn and constraints on its business, SAPO’s YTD loss as
at 31 July 2020, was R1.066 billion. YTD (as at 31 July 2020) staff costs are R1.2 billion . . .
Staff costs constitute 61% of total expenses . . . Despite the risks in not paying trade creditors,
SAPO has done everything it can to continue to pay employees’ basic salaries, even if it cannot
afford to cover all fringe benefits, especially medium to long term ones such as pension fund
contributions. Not all creditors are being paid, and once critical payments have been made,
SAPO has no cash left. For instance, once the August 2020 salaries have been paid, SAPO
will need to accumulate cash during the course of September to pay the September salaries.
The COVID-19 pandemic has had a fundamental impact on SAPO’s business.’
From this, it was clear that ‘at this stage SAPO does not have the R 40 million per
month, or any other amount, to pay the Fund’.
[27] Paying the Fund was described by Ngonyama as not being ‘one of SAPO’s
primary statutory duties’. She said that the Fund was ‘in no worse a position than any
of SAPO’s other statutory creditors’. As at 31 July 2020, SAPO owed its ‘statutory
creditors’ R 454 million. This included R 162 million to the medical aid scheme, R 125
million to the South African Revenue Service and R 18 million to the Unemployment
Insurance Fund.
[28] SAPO claimed that it was simply not possible for it to pay ‘tens of millions of
Rand to the Fund on a monthly basis simply because the Fund has brought this
application’. It averred that it would be ‘contrary to public policy and the Constitution,
and a forced breach of the Board’s fiduciary duties for the Court to compel SAPO to
make payment to the Fund to the detriment of the public and in unlawful preference
vis-a-vis all the other creditors of SAPO’.
[29] Finally, Ngonyama dealt with the fact that employees’ contributions, along with
employer’s contributions and voluntary contributions were not being paid. She said
that the Fund was confused when it alleged that SAPO was deducting employees’
contributions from their salaries and then failing to pay those amounts to the Fund.
Her explanation was this:
‘SAPO is intended to pay both the member and employer contributions, out of its own funds.
The member does not actually place SAPO in funds to pay any of the contributions. The
member portion of pension fund contributions would show up as a notional “deduction”, simply
as a matter of payroll accounting or book entry, on the employees’ payslips. No funds are
being diverted from the employees, because no such funds exist.’
[30] In the Fund’s replying affidavit, Faasen made the points that SAPO did not deny
its indebtedness to the Fund or that it failed to pay contributions to the Fund. Instead,
he said, it had redirected contributions meant for the Fund ‘to its operational
expenditure for an indeterminate period of time’. He accused the SAPO board of acting
with impunity, resorting to self-help and attempting to avoid judicial scrutiny.
[31] Faasen also made the point that SAPO’s financial difficulties pre-dated the
Covid-19 pandemic and that its governance failures were not temporary in nature.
SAPO’s version amounted to it simply being unable to pay its debts as they fell due
which, Faasen said, ‘begs the question whether SAPO’s Board is not continuing to
trade the company under reckless circumstances, bordering on delinquency’. Its
explanation for not paying what it owed, when all was said and done, was that it was
insolvent. He described SAPO’s utilization of employees’ pensions and risk cover for
the payment of operational expenses as being fiscally and morally irresponsible. What
is more, SAPO’s continued trading under these circumstances constituted, in Faasen’s
view, a potentially serious dereliction of duty in terms of the Companies Act 71 of 2008.
[32] In respect of the deduction of employees’ contributions that were not paid to the
Fund, Faasen categorised SAPO’s explanation, quoted above, as troubling
particularly because the recording of deductions of pensionable emoluments on
employee payslips was, on SAPO’s version, fraudulent. Furthermore, once the
deductions were made from employees’ gross salaries, the obligation to pay them to
the Fund was triggered.
The high court’s judgment
[33] The high court found that as a result of the lockdown induced by the Covid-19
pandemic, SAPO shut down completely and that the pandemic had a profound impact
on its business. The first statement of fact is nowhere to be found in the papers, and
the second, as I will show, is only partially correct. It then recorded information
concerning SAPO’s financial difficulties, some of which has been mentioned above,
and stated that it was against this background that the Fund had brought its
application.
[34] The approach of the high court to the issues that arise for decision were
encapsulated thus in the judgment:6
‘For the reasons that follow hereunder, I have to agree with SAPO that this application cannot
just be categorized as a simple monetary claim of a creditor against a debtor. It is a
constitutional matter which implicates constitutional and statutory duties of organs of state and
indeed the protection of fundamental rights. The claim takes place against the background
sketched in the opening passages of this judgment. Ordinarily, SAPO would be expected to
comply with the provisions of Rule 3.3 without much ado. These, however, are not ordinary
times. The imperatives of the time require a fresh look at the provisions and requirements of
the Rule.’
6 Para 40.
[35] This was so for two primary reasons. First, in terms of s 4 of the SAPO Act,
SAPO was placed under an obligation to provide services such a ensuring a universal
and affordable postal service. Secondly, SAPO is the agent that pays social grants on
behalf of SASSA. These functions, according to SAPO, were critical in fulfilling socio-
economic rights like the rights to social security and children’s rights, and also in
supporting and strengthening ‘almost every other right in the Bill of Rights’. The high
court found that to jeopardise SAPO’s ability to fulfil these functions would endanger
‘key constitutional rights and values’.7
[36] The high court accepted that SAPO had not paid its contributions to the Fund
and that it was unlikely to be able to do so in the immediate future. The crux of the
matter, it held, was whether SAPO should be ordered to pay the contributions that it
accepted were owing.8 It then turned to rule 3.3 of the rules. While disavowing the
need to interpret rule 3.3, as the parties had done, it accepted that the rule required
SAPO to make monthly payments to the Fund. It held, however, that ‘the Rules cannot
be read and/or interpreted to require payment where this is impossible, which is the
case here’.9
[37] An interpretation of rule 3.3 that meant that SAPO would be ordered to pay
what it owed would ‘fundamentally jeopardise the ability of SAPO to fulfil its core
functions and imperil key constitutional rights, if not the total collapse of SAPO’.10 Its
limited resources had to be applied ‘to achieving a government developmental
mandate and to maintain the infrastructure for the payment of social grants’. Reliance
was placed on the Constitutional Court judgment of Soobramoney v Minister of Health,
KwaZulu-Natal11 in support of the proposition that ‘there is a hierarchy of rights –
favouring the good of the many above the good of the few’; and that this ‘principle’
applied to the instant case in which the ‘rights of the many should trump the few’.12
7 Para 47.
8 Para 49.
9 Para 52.
10 Para 54.
11 Soobramoney v Minister of Health, KwaZulu-Natal [1997] ZACC 17; 1998 (1) SA 765 (CC); 1997 (12)
BCLR 1696 (CC).
12 Para 56.
[38] Having dealt thus with the meaning and effect of rule 3.3, the high court turned
to the second leg of SAPO’s defence, namely that of supervening impossibility of
performance. It observed that ‘any unqualified obligation to pay this court may make,
is at present not capable of being fulfilled’; that a court ‘cannot make an order the
implementation of which would not come to fruition’; and that SAPO had made it clear
that ‘even if it can be compelled to pay the amounts claimed by the Fund by a court
order, it will be impossible for it to pay’.13 Having concluded that it was impossible for
SAPO to pay what it owed to the Fund, the high court held that SAPO was ‘excused
from paying over its employees’ retirement contributions, at least for the duration of
the impossibility’.14 On this basis, the Fund’s application was dismissed.
[39] Finally, the high court ordered the Fund to pay SAPO’s costs on an attorney
and client scale. Its reasoning appears to have been that both parties had asked for a
punitive costs order against the other and that, as SAPO was the successful party,
these spoils too went in its favour.
The interpretation of rule 3.3
[40] The high court made a number of far-reaching findings as to the meaning of
rule 3.3 without attempting even the most perfunctory engagement with its terms or
the most basic of interpretive exercises. It is by now well-known that the interpretation
of written documents, including legislative instruments, involves a consideration of the
language used, the context in which it is used and the purpose of the document that
is the subject of interpretation. This was explained by Wallis JA in Natal Joint Municipal
Pension Fund v Endumeni Municipality15 as follows:
‘Interpretation is the process of attributing meaning to the words used in a document, be it
legislation, some other statutory instrument, or contract, having regard to the context provided
by reading the particular provision or provisions in the light of the document as a whole and
the circumstances attendant upon its coming into existence. Whatever the nature of the
document, consideration must be given to the language used in the light of the ordinary rules
of grammar and syntax; the context in which the provision appears; the apparent purpose to
13 Para 58.
14 Para 61.
15 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18. See too Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun (Edms) Bpk [2013]
ZASCA 176; 2014 (2) SA 494 (SCA) paras 10-12; Capitec Bank Holdings Limited and Another v Coral
Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA) para 25.
which it is directed and the material known to those responsible for its production. Where more
than one meaning is possible each possibility must be weighed in the light of all these factors.
The process is objective, not subjective. A sensible meaning is to be preferred to one that
leads to insensible or unbusinesslike results or undermines the apparent purpose of the
document. Judges must be alert to, and guard against, the temptation to substitute what they
regard as reasonable, sensible or businesslike for the words actually used. To do so in regard
to a statute or statutory instrument is to cross the divide between interpretation and legislation;
in a contractual context it is to make a contract for the parties other than the one they in fact
made. The “inevitable point of departure is the language of the provision itself”, read in context
and having regard to the purpose of the provision and the background to the preparation and
production of the document.’
[41] Section 9 of the Post and Telecommunication-Related Matters Act established
the Fund. Its principal purpose was to provide pensions for employees of SAPO in
order to ensure their security and dignified living in their latter, post-retirement lives.
Section 10(1) provided that the Fund’s control and management, the conditions for
admission to membership and the termination thereof, and the amount and nature of
contributions by members and the contributions by SAPO are governed by the Fund’s
rules. In terms of s 10(2), those rules, in common with subordinate legislation
generally, were required to be published in the Government Gazette. In terms of s
10(4), the rules ‘shall be binding on’ the Fund, SAPO and members and beneficiaries
of the Fund. Section 10 thus sets out the purpose of the rules and their context as the
mechanism for running and funding a vehicle for the eventual payment of benefits to
employees of SAPO who retire or leave its employ, and to the beneficiaries of those
who died while in SAPO’s service.
[42] In order to interpret rule 3.3, it is necessary to consider it in its broader context.
I shall first detail some of the more important provisions of the rules in order to sketch
that context and the purpose of the rules. I will then turn to rule 3.
[43] Rule 1.4 states that the object of the Fund is ‘to provide retirement and ancillary
benefits for the BENEFICIARIES as described in the RULES’. A beneficiary is rather
unhelpfully defined in rule 1.1 as ‘any person who is entitled to benefits in terms of
these RULES’. It becomes evident from the rules, however, that the beneficiaries of
the Fund are SAPO employees, both pre- and post-retirement, and their dependents.
[44] Rule 2 concerns the financial structure of the Fund. Rule 2.1 provides that the
Fund’s assets are to be held in three separate accounts. They are the share account,
the pensions account and the reserve account. For present purposes, the share
account is the most important of the three accounts. In terms of rule 2.1(1), it is
comprised of ‘all the MEMBERS’SHARES plus the additional voluntary contribution
account’. In respect of each member, it is made up of a member’s opening balance;
each member’s subsequent monthly contributions in terms of rule 3.1; SAPO’s
monthly contribution on behalf of each member in terms of rule 3.2(1)(a); transfers of
a member’s pension value from another Fund in terms of rule 9.8(1); investment
earnings; surplus bonuses; special transfers from the stabilization reserve in terms of
rule 3.2(4); and transfers from the data reserve. Additional contributions made by a
member in terms of rule 3.1(3) are also reflected in the share account, but separately
in an additional voluntary contribution account.
[45] Rule 4 defines who is eligible for membership of the Fund. Rule 4.1 provides
that ‘eligible employees’ shall become members of the Fund. An eligible employee is
defined in rule 1.1 as a permanent employee of SAPO, including a permanent part-
time employee, who has not attained the age of 65 years. Rule 4.1(5) stipulates that
membership of the Fund is a condition of service of every eligible employee.
[46] Rule 5 is headed ‘RETIREMENT’. It provides for the payment of pensions to
SAPO employees in the event of ‘normal retirement’, in rule 5.1, and ‘early retirement’,
in rule 5.2. It also makes provision, in rule 5.3, for lump sum benefits to be paid. To
illustrate the working of this rule, rule 5.1(1) provides that on retirement, a member
‘shall receive a PENSION vesting on the following day secured by the balance of the
MEMBER’S SHARE at that date after the amount of any lump sum benefit paid in
terms of RULE 5.3 has been deducted’. Rule 5.3(1) provides that a member, on
retirement, may choose to be paid a lump sum, but it may not be more than a third of
that member’s share.
[47] Rule 6 deals with the payment of benefits to the spouse of an employee who
has died while in the service of SAPO or after retirement. Rule 7 concerns itself with
benefits for employees who are disabled by accidents, diseases or illness to the extent
that they are no longer able to work.
[48] Rule 10 deals with the management of the Fund. In terms of rule 10.2(1), the
‘management, control and administration’ of the Fund is vested in the board. Rule 10.5
provides for the appointment of a principal officer and rule 10.6 requires the board to
appoint an auditor. Rule 10.8 requires the board to appoint an actuary for the Fund.
[49] From the above truncated and incomplete precis of the rules, it is apparent that
they create a sophisticated vehicle to provide for the social security of SAPO
employees when they retire, of dependents of SAPO employees who die either while
in service or after retirement and of SAPO employees who, prior to retirement, are
disabled. The funding model for this social security model is employee and employer
contributions, plus the fruits of the investment of these contributions. As SAPO
employs a large number of people, the Fund, of necessity, manages large sums of
money.
[50] With this context in mind, as well as the purpose of the rules to provide social
security for SAPO employees and their dependents, I now turn to rule 3. This rule is
headed ‘CONTRIBUTIONS’. It consists of three inter-locking parts.
[51] Rule 3.1 concerns itself with members’ contributions to the Fund. Rules 3.1(1),
3.1(2) and 3.1(3) provide:
‘(1)
Each MEMBER other than a DEFINED BENEFIT MEMBER shall contribute monthly
an amount equal to 7,5% of one-twelfth of his PENSIONABLE EMOLUMENTS to the FUND.
(2)
Contributions are deducted monthly by the EMPLOYER from the MEMBER’S
remuneration.
(3)
A MEMBER may make additional contributions to the FUND in order to secure greater
benefits or in respect of a period of past service. The conditions relating to the additional
contributions and the benefits payable shall be as provided for in RULES 5.4, 6.3 and 7.3(4).’
[52] Rule 3.2 deals with the employer’s contributions and the quantification of those
contributions. Rule 3.2(1) reads as follows:
‘The EMPLOYER shall contribute monthly the following amounts to the FUND:
(a)
9% of one-twelfth of each MEMBER’S PENSIONABLE EMOLUMENTS in respect of
MEMBERS other than DEFINED BENEFIT MEMBERS towards the provision of retirement
benefits only;
(b)
4.75% of one-twelfth of each MEMBER’S PENSIONABLE EMOLUMENTS in respect
of MEMBERS other than DEFINED BENEFIT MEMBERS to procure the death and disability
benefits described in Rules 6.1(1) and 7 and to cover the cost of expenses referred to in Rule
10.14 and rule 10.15; relating to members other than defined benefit members as decided by
the TRUSTEES in consultation with the ACTUARY;
(c)
such amounts as mutually agreed between the EMPLOYER and the TRUSTEES
acting on the advice of the ACTUARY, as may be necessary to eliminate a shortfall in the
Stabilisation Reserve;
(d)
such amounts as determined from time to time by the TRUSTEES after consultation
with the ACTUARY as may be necessary to eliminate any actuarial shortfall in the Pensions
Account or the Defined Benefit Reserve in the Reserve Account . . .
(e)
a percentage of the DEFINED BENEFIT MEMBERS’ PENSIONABLE EMOLUMENTS
as determined from time to time by the TRUSTEES after consultation with the ACTUARY to
fund the benefits of DEFINED BENEFIT MEMBERS in the defined benefit reserve in the
Reserve Account and to fund the cost of expenses referred to in Rules 10.14 and 10.15
relating to DEFINED BENEFIT MEMBERS.’
[53] Rule 3.2(2) allows for the increase or reduction of SAPO’s contributions in
defined circumstances. In terms of rule 3.2(3), SAPO may, in consultation with the
Fund’s actuary, ‘from time to time make additional contributions to the FUND in order
to increase the balance in the Reserve Account’. In terms of rule 3.2(4), the board may
on the request of SAPO , and after consultation with the Fund’s actuary, ‘make special
transfers of all or part of any balance in the stabilization reserve in the Reserve
Account as contemplated in RULE 2.2(3) to the MEMBERS’ SHARES or the defined
benefit reserve in the Reserve Account, pro rata to the contributions due by the
EMPLOYER in terms of [rule 3.2](1)(a) or (e) above, in which case the EMPLOYER’S
contributions will be reduced by the amount of such transfer’.
[54] Rule 3.3 is headed ‘PAYMENT OF CONTRIBUTIONS’. It states:
‘Contributions are payable to the FUND monthly, in arrears, not later than the first working day
after the end of the calendar month to which such contributions relate.’
[55] Rule 3 follows a series of logical steps. The first is that SAPO’s employees
contribute a defined proportion of their salaries to the Fund on a monthly basis. Their
contributions are deducted from their salaries by SAPO and are then paid to the Fund
by SAPO. The second step is that SAPO is required to contribute to the Fund, also on
a monthly basis, in respect of each of its permanent employees. The amounts that
SAPO is required to pay, and their purpose, are set out in rule 3.2(1)(a) to (e). The
third step determines when SAPO is required to pay the contributions contemplated
by rules 3.1 and 3.2. Rule 3.3 requires payment to be made monthly in arrears and
immediately after the end of a month to which they relate.
[56] Understood in this way, within the wider context of the rules as a whole and
their purpose of providing social security to SAPO’s employees, it is clear that SAPO
has no choice: it is placed under an obligation by the rules – a statutory obligation – to
pay the Fund the contributions provided for in rules 3.1 and 3.2 and, in terms of rule
3.3, to do so by ‘not later than the first working day after the end of the calendar month
to which such contributions relate’. SAPO, being a public body, may only do what it is
empowered by law to do. It is not free to do what it pleases.16 No provision is made in
the rules for an exemption from the obligation to pay contributions on a monthly basis
and SAPO is not authorized, in its discretion, to decide to withhold payment. In
unqualified terms, rule 3 requires SAPO to pay contributions to the Fund. It had no
power, in terms of the rules, to decide to withhold payments and to prioritise other
creditors over the Fund. The purpose of the Fund would be undermined if SAPO was
free to contribute if it wanted to, and to withhold contributions at will.
[57] It is necessary now to comment on the approach taken by the high court to the
interpretation of rule 3. First, the high court committed an irregularity by holding that
while ordinarily rule 3.3 imposed an obligation on SAPO to pay contributions monthly
to the Fund, the extraordinary times required a different result. In so doing it took the
16 Compcare Wellness Medical Scheme v Registrar of Medical Schemes and Others [2021] ZASCA 91;
2021 (1) SA 15 (SCA) paras 21-23 and 30-32. See too Cora Hoexter and Glenn Penfold Administrative
Law in South Africa (3 ed) (2021) at 357-358.
view that rule 3.3 could mean one thing on a particular day and another on the
following day – that circumstances dictated its meaning. That is not correct. The
interpretation of a written document is an objective exercise and the starting point is
the words of the document to be interpreted.17 Those words remain constant and
cannot be made to mean different things in order to suit the perceived needs of the
moment. As Lord Aitken said in Liversidge v Anderson,18 the laws ‘speak the same
language in war as in peace’.
[58] Secondly, the high court confused the interpretation of rule 3.3 with the
separate doctrine of impossibility of performance when it held that the rule should not
be interpreted to include an obligation on the part of SAPO to pay contributions when
this was impossible. In order to make such a finding as to the meaning of the rule, the
high court had to ignore the words of the rule, its context and purpose, and read other,
unspecified, words into it. A dictum of Kentridge AJ on constitutional interpretation, in
S v Zuma and Another,19 is apposite:
‘We must heed Lord Wilberforce’s reminder that even a constitution is a legal instrument, the
language of which must be respected. If the language used by the lawgiver is ignored in favour
of a general resort to “values” the result is not interpretation but divination.’
[59] Thirdly, in holding that an interpretation that rule 3.3 required SAPO to pay
contributions would not promote constitutional values, the high court simply ignored
both the plain meaning of the rule and the fundamental rights of SAPO’s employees
to social security and to fair labour practices. It also ignored the founding constitutional
value of the rule of law. The purpose of the obligation was to enable SAPO to fulfil its
employees’ fundamental rights to social security in terms of s 27(1)(c) of the
Constitution. By misappropriating a portion of its employees’ salaries required to be
paid on their behalf to the Fund, and using that money for other unauthorized
purposes, SAPO perpetrated an obvious unfair labour, in contravention of s 23(1) of
the Constitution, and did so on a grand and persistent scale. And the endorsement of
an arbitrary, open-ended and undefined power in the hands of SAPO to prefer its
17 Natal Joint Municipal Pension Fund v Endumeni Municipality (note 15) para 18.
18 Liversidge v Anderson 1942 AC 206 (HL) at 244. See too Esau and Others v Minister of Co-operative
Governance and Traditional Affairs and Others [2021] ZASCA 9; 2021 (3) SA 593 (SCA) para 4.
19 S v Zuma and Another [1995] ZACC 1; 1995 (2) SA 642 (CC); 1995 (6) BCLR 665 (CC) para 18.
creditors of choice over other creditors undermines the rule of law enshrined as a
founding value of the Constitution in s 1(c). It is far from clear to me how this promotes
constitutional values. At best, if it does, it does so while simultaneously undermining
other fundamental rights and constitutional values. This interpretation of the rule turns
a blind eye to SAPO routinely giving undue preferences to some creditors at the
expense of others.20
[60] Perhaps because the high court eschewed the need to interpret rule 3, it is not
at all clear how it arrived at its conclusion that the rule included a power in the hands
of SAPO to choose which of its creditors to pay and which to ignore. The high court’s
most profound misdirection, it seems to me, is its complete lack of any principled basis
for its decision: it has failed to explain how the power it recognized can, as a matter of
interpretation, to be said to be included in rule 3. I find, however, that rule 3’s meaning
is clear: it requires employees and SAPO to pay contributions to the Fund and those
contributions are required to be paid monthly, on the first working day of a month for
the preceding month. The argument that rule 3 does not impose an obligation on
SAPO to pay contributions to the Fund is consequently without merit.
Could SAPO decide not to pay the Fund despite the terms of rule 3?
[61] I turn now to two related arguments advanced by SAPO that are said to be
based on the Constitution and its values. They are to the effect that even if rule 3
imposes an obligation on SAPO to pay the Fund, it enjoys an unrestricted power to
decline to pay creditors of its choosing.
[62] As I understand the first of these arguments, it has the following contours:
SAPO’s contractual obligation to pay social grants implicates the fundamental rights
of access to social security, including social assistance21 and, in some cases, the
fundamental right of the paramountcy of a child’s best interests;22 the obligations
imposed on SAPO in terms of s 4 of the SAPO Act also impose constitutional
obligations because, by requiring SAPO to take reasonable measures within its
available resources to progressively realise, for instance, ‘the universal and affordable
20 Insolvency Act 24 of 1936, s 30.
21 Constitution, s 27(1)(c).
22 Constitution, s 28(2).
provision of postal serves’23 or the development of postal services that ‘are responsive
to the needs of users and consumers’,24 SAPO fulfils the fundamental rights of its
customers to dignity, equality and, it claims, virtually every other fundamental right; the
fact that it is fulfilling fundamental rights in this way vests in it a power, derived from
the Constitution or its values, to prioritise the payment of social grants and the
provision of the services it offers at the expense of some of its creditors.
[63] I have my doubts as to the correctness of the assertion that, by fulfilling its
mandate to provide a postal service, SAPO is fulfilling fundamental rights. That
assertion seems to me to be a bridge too far. Section 4 of the SAPO Act does no more
than place on SAPO an obligation to progressively realise, within its available
resources, a number of postal services. I shall, however, despite my doubts, accept
SAPO’s premise to be the case for purposes of the argument advanced by it.
[64] In my view, there is no merit in the argument for the reasons that follow. In
Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan
Council25 Chaskalson P, Goldstone J and O’Regan J held that it was ‘central to the
conception of our constitutional order that the Legislature and Executive in every
sphere are constrained by the principle that they may exercise no power and perform
no function beyond that conferred upon them by law’. As a public body, SAPO labours
under the same constraint, imposed by the rule of law and its principle of legality.
[65] We have not been directed to any provision in the Constitution that empowers
SAPO and, presumably every other organ of state, to decide which of its creditors it
wishes to pay, and which not, in order to prioritise its spending. If such an extraordinary
power existed, its effect would be to undermine the rule of law by placing organs of
state above the law in respect of the payment of their contractual and statutory
obligations. This attempt by SAPO to dress its failure to meet its obligations to the
Fund in the finery of the Constitution must therefore fail.
23 Section 4(a).
24 Section 4(d).
25 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council [1998] ZACC
17; 1999 (1) SA 374 (CC); 1998 (12) BCLR 1458 (CC) para 58.
[66] The second argument is a variation on the same theme. SAPO places reliance
on Soobramoney v Minister of Health, KwaZulu-Natal26 to justify its failure to pay its
debts. It was argued that Soobramoney recognizes that an organ of state may
prioritise its activities in the context of shortage of resources. It is necessary to consider
Soobramoney in detail in order to determine whether it assists SAPO in this case.
[67] Soobramoney was terminally ill and required kidney dialysis in order to prolong
his life, it being common cause that his illness could not be reversed. He sought kidney
dialysis from a state hospital but was refused treatment. Because of a shortage of
resources, the hospital was not able to provide the treatment to all who required it. It
had developed guidelines to determine who would receive treatment and who would
not. Soobramoney was not eligible for treatment because his renal failure was
irreversible and he was not, for various reasons, eligible for a kidney transplant. He
applied for an order directing the hospital to treat him. His application was dismissed
but he appealed to the Constitutional Court.
[68] Chaskalson P found that the fundamental right in issue in the case was the right
of access to health care in s 27(1)(a) of the Constitution. That right was subject to s
27(2) which provided that the state was required to take ‘reasonable legislative and
other measures, within its available resources, to achieve the progressive realisation’
of this and other socio-economic rights mentioned in s 27(1). Chaskalson P held that
the obligations imposed on the state by s 27 were dependent on the availability of
resources ‘for such purposes’ and that ‘the corresponding rights themselves are
limited by reason of the lack of resources’.27 Because the hospital could not treat
everyone who required treatment, the hospital administration had to develop
guidelines concerning access to dialysis treatment. Those guidelines were reasonable
and had been applied fairly and rationally in relation to Soobramoney.
[69] Soobramoney’s case is not authority for the proposition that an organ of state
may ignore its legal obligations in order to pursue what it considers to be more
important goals. It is, instead, authority for a different proposition, namely that when
26 Note 11.
27 Para 11.
access to a right such as health care is made dependent on the availability of
resources, an organ state may put in place a program in which it prioritises how that
right will be made available, as long as that program is reasonable.28 In this case, by
analogy, that means that when SAPO was faced with its financial crisis, it could and
should have formulated a plan of action to prioritise its s 4 duties, as they are
dependent on the availability of resources. It was not entitled to take the law into its
own hands and simply ignore its statutory obligation to pay contributions to the Fund.
The high court also misinterpreted Soobramoney. It is not authority for the proposition
that there is ‘a hierarchy of rights’ that favours ‘the good of the many over the good of
the few’ and that the ‘rights of the many should trump the few’.29
[70] Much was made in SAPO’s answering affidavit of its obligation to pay social
grants. It sought to create the impression that this was a cost that it bore. That is not
so for two reasons. In the first place, social grants are paid from the budget of SASSA
to SAPO, its agent, which pays beneficiaries. Secondly, SAPO is paid by SASSA for
providing this service. Its obligations in relation to beneficiaries cannot therefore have
a bearing on its failure to pay its contributions to the Fund.
Impossibility of performance
[71] The final defence raised by SAPO is that its obligation to pay the Fund was
extinguished by supervening impossibility of performance. The event that, according
to SAPO, rendered performance impossible was the onset of the Covid-19 pandemic
and its attendant lockdowns. In order to determine whether this defence may avail
SAPO, it is necessary first to consider the facts relevant to this defence and then to
consider the nature of the impossibility relied upon.
[72] In the communications between Faasen and Trikamjee, on the one hand, and
Nongogo, on the other, very little was said by the latter about the Covid-19 pandemic
being the cause of SAPO’s failure to pay contributions to the Fund. And this despite
Trikamjee asking for ‘detailed feedback’ on the causes of that failure. At one stage,
28 See too 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).
29 Para 56.
however, Nongogo said that SAPO’s financial position had deteriorated dramatically
and that this trend had accelerated as a result of the lockdown.
[73] The evidence as to the cause of SAPO’s failure to honour its obligations to the
Fund are, at best, ambiguous. For instance, Ngonyama spoke of SAPO’s parlous
financial position being the result of the ‘current economic environment and the impact
of COVID-19’. While she asserted that the Covid-19 pandemic had had a severe
impact on SAPO, she provided little historical evidence as to SAPO’s financial position
prior to the lockdown. Even so, on the limited evidence available, there is merit in the
Fund’s assertion that SAPO’s financial woes pre-dated the Covid-19 pandemic and
were caused by managerial failures.
[74] For instance, SAPO’s net loss in July 2020, a few months after the imposition
of the lockdown and at a time when the worst of it had been ameliorated, was R97
million. In July 2019, however, well before the start of the Covid-19 pandemic, SAPO’s
loss was R34 million. In other words, SAPO was a loss-making enterprise before the
lockdown, even though, as Nongogo said, the lockdown accelerated its decline. The
year-to-date loss, as at 31 July 2020, of R1.066 billion must be seen in that light.
Strangely, for a party seeking to establish a defence to its failure to meet its obligations,
SAPO has not taken the court into its confidence as to how many of the 1 361 loss-
making post offices were profitable before the lockdown started. The statement in the
answering affidavit that only 55 out of 1 416 post offices in the country were profitable
as at 31 July 2020 is a largely meaningless statistic.
[75] A second factual strand concerning impossibility of performance is apparent.
Nongogo, in his exchanges with Faasen, explained that SAPO was paying its creditors
in turns: one month it planned to pay medical aid contributions but not pension fund
contributions, and the following month it planned to do the reverse. This plan does not,
however, appear to have been put into effect.
[76] In the answering affidavit, Ngonyama explained that SAPO had decided to pay
medical aid contributions rather than pension fund contributions. She said that SAPO
was trying to pay as many of its creditors as it could, and she undertook to pay the
Fund as soon as it could. At the time she deposed to her affidavit, it was not possible,
she said, to pay the Fund what was due to it.
[77] Although the legal principles relating to impossibility of performance are most
closely associated with the law of contract,30 they have a wider application and are
based on the notion that the law does not require people to do the impossible – lex
non cogit ad impossibilia.31 These principles also apply in respect of the non-
performance of statutory obligations. For example, in Montsisi v Minister van Polisie,32
a special plea of prescription was dismissed on appeal because it had been impossible
for Montsisi to give the required statutory notice timeously of his intention to institute
proceedings against the Minister for damages arising from an assault on him by
policemen. It had been impossible for him to have complied while he was being
detained without trial, with no access to the outside world, in terms of s 6 of the
Terrorism Act 83 of 1967.
[78] The operation of the principles, in a contractual setting, was explained thus by
Scott JA in MV Snow Crystal:33
‘As a general rule impossibility of performance brought about by vis major or casus fortuitus
will excuse performance of a contract. But it will not always do so. In each case it is necessary
to “look to the nature of the contract, the relation of the parties, the circumstances of the case,
and the nature of the impossibility invoked by the defendant, to see whether the general rule
ought, in the particular circumstances of the case, to be applied”. The rule will not avail a
defendant if the impossibility is self-created; nor will it avail the defendant if the impossibility is
due to his or her fault.’
[79] It is evident from the dictum cited above that it is not every instance of
impossibility that would allow a defendant to escape the consequences of their
bargain. In Peters, Flamman and Co,34 Solomon ACJ held that it was only if ‘a person
30 See for example Peters, Flamman and Co v Kokstad Municipality 1919 AD 427 at 434-435; MacDuff
& Co Ltd (In Liquidation) v Johannesburg Consolidated Investment Co Ltd 1924 AD 573 at 600-601;
MV Snow Crystal: Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal [2008] ZASCA
27; 2008 (4) SA 111 (SCA) para 28.
31 R v Hargovan and Another 1948 (1) SA 764 (A) at 769-770; Montsisi v Minister van Polisie 1984 (1)
SA 619 (A) at 634H-636H; Gassner NO v Minister of Law and Order and Others 1995 (1) SA 322 (C)
at 325H-327H.
32 Note 31.
33 Note 30 para 28. See too Bischofberger v Vaneyk 1981 (2) SA 607 (W) at 611B.
34 Note 30 at 435.
is prevented from performing his contract by vis major or casus fortuitus’ that ‘he is
discharged from liability’. These terms, taken together, mean ‘any happening, whether
due to natural causes or human agency, that is unforeseeable with reasonable
foresight and unavoidable with reasonable care’.35
[80] In order to establish impossibility of performance, whether initial or
supervening,36 four requirements must be met by the party relying on this defence.
They have been set out by Bradfield as follows:37
‘First, the impossibility must be absolute as opposed to probable. The mere likelihood that
performance will prove impossible is not sufficient to destroy the contract. Second, the
impossibility must be absolute as opposed to relative. If I promise to do something which, in
general, can be done, but which I cannot do, I am liable on the contract. Third, the impossibility
must not be the fault of either party. A party who has caused the impossibility cannot take
advantage of it and so will be liable on the contract. Fourth, the principle must give way to the
contrary common intention of the parties. This intention may be expressed, as when, for
example, a seller expressly represents or guarantees that the goods sold exist.’
[81] There are three fundamental problems that arise in relation to SAPO’s
invocation of supervening impossibility of performance. The first is that the evidence,
such as it is, does not establish that the impossibility of performance that is alleged
arose as a result of vis major or casus fortuitus. At best for SAPO, its financial
misfortunes preceded the Covid-19 pandemic and were only made worse by it. In July
2019, for instance, more than six months before the onset of the Covid-19 pandemic,
it incurred a loss of R34 million. To this extent, its financial difficulties were foreseeable
and avoidable, with the fault lying squarely with the management of SAPO. As Meer J
said in Quinella Trading (Pty) Ltd v Minister of Rural Development and Land Reform,38
‘[s]elf-created impossibility does not discharge the obligations’ of a party to a contract.
35 G B Bradfield Christie’s Law of Contract in South Africa (7 ed) (2016) at 549.
36 In Peters, Flamman and Co v Kokstad Municipality (note 30) at 434, Solomon ACJ held that ‘a
contract is void if at the time of its inception its performance is impossible’ and that ‘where a contract
has become impossible of performance after it has been entered into the general rule was that the
position is then the same as if it had been impossible from the beginning’.
37 Bradfield (note 35) at 109-110.
38 Quinella Trading (Pty) Ltd v Minister of Rural Development and Land Reform 2010 (4) SA 308 (LC)
para 28.
[82] The second problem is that impossibility of performance was not established.
The evidence, boiled down to its basics, establishes that SAPO chose to pay certain
of its creditors and not others because it did not have sufficient funds to pay all of its
debts when they fell due. It decided that it would not pay the Fund. It could have
decided not to pay another creditor and, instead, to pay the Fund. Performance was
thus not objectively impossible.
[83] The third problem concerns whether the impossibility relied on by SAPO is
absolute or relative. In Unibank Savings and Loans Ltd (formerly Community Bank) v
ABSA Bank Ltd,39 the court held that ‘[i]mpossibility is furthermore not implicit in a
change of financial strength or in commercial circumstances which cause compliance
with the contractual obligations to be difficult, expensive or unaffordable’ because
‘[d]eteriorations of that nature are foreseeable in the business world at the time when
the contract is concluded’. Bradfield says of the requirement of absolute impossibility
that if a person promises to do something which, generally speaking, can be done, but
which the person concerned is unable to do, they are liable on the contract.40 In Scoin
Trading (Pty) Ltd v Bernstein NO41 it was held by this court that the law ‘does not
regard mere personal incapacity to perform as constituting impossibility’.
[84] The position, when a debtor is unable to pay a debt, was set out by Meyer J in
Unlocked Properties 4 (Pty) Ltd v A Commercial Properties CC.42 He held that when
the impossibility on which a seller relied was ‘peculiar to itself because of its personal
financial situation and incapability of securing payment of the full debt owed to the
bank’, it was not absolute and so the seller’s ‘incapability does not render the contract
void’ on account of impossibility of performance.
39 Unibank Savings and Loans Ltd (formerly Community Bank) v ABSA Bank Ltd 2000 (4) SA 191 (W)
para 9.3.1.
40 Note 35 at 110.
41 Scoin Trading (Pty) Ltd v Bernstein NO [2010] ZASCA 160; 2011 (4) SA 118 (SCA) para 22.
42 Unlocked Properties 4 (Pty) Ltd v A Commercial Properties CC [2016] ZAGPJHC 373 para 13. See
too Matshazi v Mezepoli Melrose Arch (Pty) Ltd and Another; Nyoni v Mezepoli Nicolway (Pty) Ltd and
Another; Moto v Plaka Eastgate Restaurant and Another; Mohsen and Another v Brand Kitchen
Hospitality (Pty) Ltd and Another [2020] ZAGPJHC 136 para 39; Pillay v Personify Investments (Pty)
Ltd and Others; Pillay and Another v Huntrex 302 (Pty) Ltd and Others; Pillay v Misty Blue Investments
(Pty) Ltd and Others; Investec Bank Ltd v Personify Investments (Pty) Ltd; Investec Bank Ltd v Misty
Blue Investments (Pty) Ltd; Investec Bank Ltd v Huntrex 302 (Pty) Ltd; Huntrex 302 (Pty) Ltd and Others
v Investec Bank Ltd and Others [2021] ZAKZDHC 41 paras 40-43; Nedbank Limited v Groenewald
Familie Trust and Others [2021] ZAFSHC 150 paras 16-17; Mahomed NO v VGZ and Others [2020]
ZAECPEHC 20 paras 28-29.
[85] The authorities I have cited apply foursquare to SAPO’s position. It chose not
to pay the Fund when it could have done so; its financial distress pre-dated the Covid-
19 pandemic, was foreseeable and avoidable, and so was not the result of vis major
or casus fortuitus; and the impossibility it relied upon was, in any event, relative as
opposed to absolute. The result is that SAPO’s defence of impossibility of performance
fails, and it is bound to perform its obligations in terms of rule 3 of the Fund’s rules.
Conclusion
[86] Each of the three defences raised by SAPO lacks merit. Its conduct in this case
is worthy of censure. Instead of facing up to its financial challenges, as it initially did,
and dealing with the Fund openly and honestly, it changed tack and sought to vilify the
Fund for seeking to protect the rights of its members, as its board was duty-bound to
do. Not only was SAPO’s approach to this matter opportunistic, but it was also cynical:
while claiming to be concerned about the fundamental rights of social grant
beneficiaries and its customers, it infringed the rights of its employees and sought,
through transparent legal sophistry, to place itself above the law. An organ of state
ought not to act in this way. SAPO, like any other debtor, cannot choose which debts
to pay. If it is trading in insolvent circumstances, its board’s obligation is to place it in
liquidation, not to pick and choose which of its debts to honour.
[87] SAPO’s approach was cynical in another respect as well. It attempted to use
the scare tactic of predicting its collapse if the relief sought by the Fund was granted.
And that it did without a tenable legal defence. Its apparent purpose was to divert the
court from applying the law – that when a statutory instrument places an obligation on
a party to pay contributions to another, it must do so. Courts of law exist to determine
disputes through the application of legal principles, not to attempt to find expedient,
non-legal, ad hoc solutions for one of the parties at the expense of the other. If the
consequence of the law taking its course is the demise of SAPO, that is a factor that
cannot influence us when the law is clear: SAPO is under a statutory obligation to pay
its employees’ contributions and its own contributions to the Fund every month, and it
is in breach of that obligation.
[88] On appeal, the Fund, perhaps influenced by its symbiotic relationship with
SAPO, informed us that it only sought declarators to the effect that SAPO was in
breach of its obligations in terms of rule 3 and that supervening impossibility of
performance has not extinguished or deferred its obligations. While it also sought a
remittal of the matter to the high court, with a view to seeking further remedial relief, I
do not believe that that is appropriate. If, despite the declaratory relief, SAPO
continues to breach its obligations the Fund can in that event take whatever steps it
considers to be appropriate.
[89] Before making the order, it is necessary to comment on the high court’s costs
order. It decided that costs should follow the result and that the Fund should pay
SAPO’s costs on an attorney and client scale because both parties asked for such a
costs order against the other. In this it misdirected itself. Even if the judgment was
otherwise correct, I can see no possible justifiable basis for an attorney and client costs
order being made against the Fund. As the appeal will succeed and the high court’s
order, including the costs order, will be set aside, the costs of the proceedings in the
high court and on appeal will have to be paid by SAPO. Given my comments on its
conduct in this matter, it can consider itself fortunate that those costs will only be on a
party and party scale.
[90] I make the following order.
1 The appeal is upheld with costs, including the costs of two counsel.
2 The order of the high court is set aside and replaced with the following order.
‘1
It is declared that the South African Post Office:
1.1 is obliged and required, in terms of rule 3 of the Post Office Retirement Fund’s
rules, to pay contributions, as defined therein, to the Post Office Retirement
Fund on a monthly basis, in arrear, by not later than the first working day of
each month; and
1.2 is in breach of this obligation in that it has not made the required payments
since May 2020.
2 It is declared that the South African Post Office’s obligations in terms of rule 3 of
the rules have not been extinguished or deferred by intervening impossibility of
performance.
3 The South African Post Office is directed to pay the costs of the Post Office
Retirement Fund, including the costs of two counsel.’
____________________
C Plasket
Judge of Appeal
APPEARANCES
For the appellant:
T Motau SC (with him R Tshetlo)
Instructed by:
Norton
Rose
Fulbright
SA
Inc,
Johannesburg
Webbers Attorneys, Bloemfontein
For the first respondent:
J P V McNally SC
Instructed by:
Webber Wentzel, Johannesburg
Symington & De Kok, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
30 December 2021
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Post Office Retirement Fund v South African Post Office SOC Ltd and Others
(1134/2020) [2021] ZASCA 186 (30 December 2021)
MEDIA STATEMENT
The Supreme Court of Appeal (SCA) today upheld the appeal of the Post Office
Retirement Fund (the Fund) against the South African Post Office SOC Ltd (SAPO).
All permanent employees of SAPO are members of the Fund. It administers
contributions paid monthly by SAPO, comprising primarily of an employee contribution
and an employer contribution. The purpose of the Fund is to pay retirement, death and
disability benefits to employees or their dependants. Rule 3 of the Fund’s rules
requires SAPO to deduct a certain percentage of each employee’s salary and to pay
it, together with its own contribution in respect of each employee to the Fund on a
monthly basis. In May 2020, SAPO failed for the first time to pay the contributions to
the Fund. When it failed to do so again at the end of the following month, the Fund
brought an urgent application to compel it to pay the contributions and to continue to
do so. The Fund’s application was dismissed with costs on a punitive scale by the high
court, but leave to appeal to the SCA was granted.
SAPO raised three defences. First, it argued that rule 3 of the Fund’s rules did
not impose an obligation on it to pay the Fund. This argument was found by the SCA
to be without merit. The language of the rule, interpreted contextually and purposively,
clearly placed an obligation on SAPO to pay the defined contributions on a monthly
basis.
Secondly, SAPO argued that it had the power to choose which of its debts to
pay and which not. As a result of its financial weakness, it was not able to pay all of its
creditors and had decided to prioritise the payment of those that related directly to its
core business of providing a postal service to the public, and the payment of social
grants. It claimed to have derived this power from the Constitution. This argument was
also found to be without merit. SAPO, as an organ of state, could only do what the law
authorised it to do. No provision of the Constitution authorised SAPO to decide which
of its creditors to pay and which not.
Thirdly, SAPO argued that payment of contributions to the Fund had become
impossible as a result of the Covid-19 pandemic, with the result that supervening
impossibility of performance extinguished its obligation to pay contributions to the
Fund. This argument also did not succeed. In the first place, the evidence did not
establish that the impossibility arose as a result of vis major or casus fortuitus, as
required by the law: SAPO’s financial woes preceded the Covid-19 pandemic, and
were only made worse by it. In the second place, the evidence did not establish that it
was impossible to pay the Fund. SAPO could have paid the Fund but chose not to,
and to pay other creditors instead. In the third place, the impossibility of performance
was relative and not absolute, as the law requires. This means that if a person
undertakes to do something which, generally speaking, can be done, but which that
particular person is unable to do, because for instance of a deterioration in their
financial position, they remain liable on their undertaking: impossibility of performance
does not excuse them from liability because the impossibility is relative to them, and
not absolute.
In the result, the SCA upheld the Fund’s appeal and set aside the high court’s
order dismissing the Fund’s application. In its place, the SCA made a declaratory order
to the effect that SAPO was obliged and required in terms of rule 3 of the Fund’s rules
to pay contributions to the Fund on a monthly basis; that it was in breach of this
obligation; and that its obligation in terms of rule 3 had not been extinguished by
supervening impossibility of performance.
|
1216
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Not Reportable
CASE NO: 137/07
In the matter between:
M ABRAHAMS
APPELLANT
versus
SPRINGBOK ATLAS COMPANY (PTY) LTD
RESPONDENT
____________________________________________________________________________________
CORAM:
NAVSA JA and HURT, KGOMO AJJA
Date of hearing:
21 FEBRUARY 2008
Date of delivery:
28 MARCH 2008
Summary:
Claim for personal injury – negligence – fittings in bus – absolution from
the instance.
Neutral citation:
M Abrahams v Springbok Atlas (137/2007) [2008] ZASCA 32
(28 March 2008)
____________________________________________________________________________________
HURT AJA
[1] On the morning of Friday 14 May 1999, a group of pupils from Wynberg School,
Cape Town, were being conveyed to Port Elizabeth in a bus owned by the respondent,
Springbok Atlas Co. (Pty) Ltd. While the bus was travelling along the N2 freeway in the
vicinity of Riversdale, one of the passengers, Riyadh van der Westhuizen, fell out of the
bus through the window of a toilet which was situated at the rear of the bus. The bus
was travelling at a speed of about 80 kph at the time of this incident and, not
surprisingly, Riyadh sustained a number of injuries as a result of his fall. He was 14
years old at the time. It is common cause that he suffered amnesia, presumably as a
result of injuries to the head and he was, and still is, unable to describe how he
happened to fall through the toilet window which was fitted into a seal and was not
designed to be opened.
[2] Almost 3 years after the event, Riyadh's mother, Mrs M Abrahams, instituted
action against the Road Accident Fund (which she cited as the first defendant) and the
respondent (as second defendant) for damages arising out of the injuries sustained by
Riyadh. The claim against the first defendant was settled and the trial proceeded in the
Cape Provincial Division before Allie J with the respondent as the only defendant. At
the outset of the trial, counsel agreed that the court would be asked to rule separately
on the issue of liability and an order to this effect was made in accordance with Rule 33
(4). After hearing the evidence, Allie J ruled that the plaintiff had failed to discharge the
onus of proving negligence on the part of the defendant and made an order absolving
the defendant from the instance. There was an application for leave to appeal which
was refused by Allie J. The present appeal is before us with the leave of this court. I
will refer to the parties by their designations in the court a quo.
[3] In her particulars of claim, the plaintiff had pleaded that Riyadh's fall and the
injuries consequently sustained by him were the result of negligent conduct on the part
of the servants of the defendant in one or more of the following respects: --
'(a)
the driver of the bus suddenly caused the bus to lurch forward, thereby causing Riyadh
to fall backwards against the window of the toilet;
(b)
the servants of the defendant failed to ensure that the window of the toilet was properly
secured and that the bus was generally in a roadworthy and safe condition;
(c)
the servants of the defendant, acting within the course and scope of their employment,
failed to ensure that the carpet of the toilet was properly fitted and did not cause the door of the
toilet to jam against it, thereby necessitating considerable force to be used by persons
attempting to open the door from the inside.'
[4] In the course of his opening address at the trial, counsel for the plaintiff was
granted an amendment to the allegation in (c) by the substitution of the word 'outside'
for the word 'of'. It appears from the evidence that the misconception relating to the
position of this carpet may have arisen because statements from the pupils who
observed the events were incorrectly recorded. I am prepared to assume that this was
so and that the reference in the statements made about a month after the event to a
carpet 'in the toilet' was the result of a misunderstanding between the witnesses and the
person taking their statements.
[5] During the course of the trial, the plaintiff’s counsel abandoned the contention
that Riyadh had fallen through the window because the bus had lurched. The result
was that only two grounds of negligence were relied upon by the plaintiff at the
conclusion of the evidence, namely the ground in the amended paragraph (b) and that
in (c).
[6] At the time when Riyadh fell out of the bus he was alone in the toilet and the door
was closed. Since he was unable to recollect what had happened, the precise
sequence of events which culminated in his fall must be a matter of conjecture.
Although it was the subject of (sometimes heated) debate in the course of the trial, it
was now conceded, in argument on appeal on behalf of the plaintiff, that the most
probable sequence of events was that Riyadh found himself unable to open the toilet
door in the ordinary manner and that he 'attempted to exert more force against the door
by bracing his feet against the door and his back against the . . . window. In so doing
he was able to exert sufficient force to cause the window and rubber surround to
dislodge from the frame'.1 I think this concession was wisely and justifiably made.
[7] Counsel for the plaintiff contended that if it is found on the evidence that the
window collapsed because it was badly fitted (or some other defect had rendered it
insecure) or that the toilet door jammed because of the nature of the carpet or the way
that the carpet was placed, then the plaintiff will have established the negligence
requisite to render the defendant liable for such damages as the plaintiff may be able to
prove. (I am ignoring, for the purposes of deciding this appeal, the Third Party Notice in
which the defendant seeks an apportionment of damages as a result of alleged
contributory negligence on the part of Riyadh.) While one is inclined to accept that use
of a vehicle such as the bus with an insecurely fitted window would probably amount to
negligence, there must be substantial doubt as to whether the mere presence of an ill-
fitted or loose carpet would give rise to an inference that the bus owner or operator
should have foreseen the possibility that it might cause injury.2 For the purposes of
this judgment, however, I am prepared to assume, in the plaintiff's favour, that proof of
either of these allegations would constitute a prima facie case of negligence. As already
indicated, Allie J absolved the defendant from the instance after hearing both parties'
evidence. She did so on the basis that the evidence of the plaintiff's witnesses to the
effect that the window was insecurely fitted and that the toilet door had become jammed
against the carpet was not sufficiently convincing to discharge the onus upon the
plaintiff. It is this finding, in particular, which is challenged on appeal.
[8] In the course of argument before us, counsel for the plaintiff narrowed the issues
still further by conceding that if the operation of the toilet door was hampered by one of
the pupils outside the toilet interfering with, or manipulating, the door handle so as to
make it difficult to open from inside the toilet, then the plaintiff's claim must fail.
1 I quote from plaintiff's counsel's Heads of Argument.
2 Kruger v Coetzee 1966 (2) SA 428 (A) at p 430 E to F
[9] Four of the witnesses called by the plaintiff were Riyadh's fellow pupils who were
in the bus at the time of the unfortunate occurrence. In keeping with other complicating
factors arising out of the delay in bringing this matter before court, this evidence
required to be viewed through a benign eye. They were testifying about a sudden and
horrifying sequence of events which had taken place over a very short period some six
years previously. They were all about 14 years old at the time of the occurrence and
the temptation to indulge in reconstructive analysis, at least during the remainder of
their journey to Port Elizabeth and on their return to school in the following week, must
plainly have been irresistible. They had made statements to the police about a month
after the event. They were not prepared to concede that those statements had been
taken down entirely accurately by the policemen concerned, although, by and large,
they were inclined to the view (a perfectly understandable one) that their memory of
events after the lapse of a month would be more reliable than it was at the time of
entering the witness-box. A further complication was that there had been no steps
taken, either at the time of the unfortunate occurrence or within a reasonable time
thereafter, to carry out an inspection of the bus as a whole or the toilet door and window
in particular. This occurred although it must have been apparent from very shortly after
the event that the question of responsibility for it would ultimately become important. As
a consequence of there having been no drawings, data or photographs depicting the
scene and the layout of the relevant items, the witnesses had no tangible points of
reference to which they could relate their descriptions of the scene, and the court was
left to try to estimate or imagine such crucial matters as the dimensions and location of
various items and features. Counsel for the plaintiff urged us to have regard to these
factors and view the various contradictions between the witness' respective versions
more as corroboration that there had been no collusion between them to put up a
falsified version, than as a source of doubt as to the reliability of their evidence.
Although there is substance in the suggestion, sight must not be lost of the fact that the
presiding judge made an explicit finding as to the credibility of these four witnesses and
this finding must be accorded its customary weight on appeal unless we can conclude,
on the contents of the record alone, that it was misguided.
[10] Because of its crucial nature, it will be convenient to deal with the evidence given
by each of these four eyewitnesses separately.
[11] Kyle Nash told the court that he had been sitting at the back of the bus, in the
last row of seats, with two companions. They were looking out of the rear window. He
suddenly saw 'something blue' rolling on the road surface and recognized it as a school
tracksuit. He then realised that one of the pupils had fallen out of the bus. It was only
when, a second or two later, someone opened the toilet door and saw that the toilet was
empty and the window was missing, that it was realised that it was Riyadh who had
fallen out. A number of pupils alighted from the bus to go and see whether they could
assist Riyadh but they were instructed to resume their seats. When he went back to his
seat, Kyle opened the toilet door. He found the door ajar but difficult to open because it
was catching on the carpet, or carpets, outside the toilet.3 He said he had inspected the
opening where the window had been and, around the rim of the frame, he had seen
what he took to be blue putty, with a slightly wet appearance as if it had been newly
installed. There were small fragments of glass stuck in it. He mentioned that earlier in
the day he had specially noticed that the window was vibrating violently and making a
'rattling noise'.
Kyle had not been looking in the direction of the toilet door at the time Riyadh must have
entered it, nor at the time when Riyadh fell out. But he had, a short time before this,
seen his friend, Chad Riffle approach the door and he noticed that Chad had had to
apply force, using two hands, to overcome the resistance by the carpet and open the
door sufficiently to enter the toilet.
He was asked in cross-examination to describe the carpet and his answers were
somewhat vague. It was put to him that the toilet floor was separated from the aisle by a
'lip' or 'ridge' which formed the bottom of the door frame. It was suggested that this was
about 5 cm high, so that the bottom of the door would have been 5 cm above the floor
level. On this basis it was suggested that the carpet could hardly have caused the door
to stick, but that, if this was happening, it could very simply be remedied by pulling the
3 He said: 'The door itself got jammed there was a carpet situated outside the door that had a rubber
lining around it and it had carpet on top of it in the middle and that when opening the door towards you, [it]
would get jammed and you had to have quite a big heave to open this door to be able to fit through it.'
carpet flat, away from the ridge. His answers to these suggestions were unsatisfactorily
vague, and the impression that was left was that he accepted them as valid. Be that as
it may, there seems to be no particular reason why Kyle's vagueness in relation to the
carpet should count against him as a credibility factor. I do have the impression from
his evidence about the window, however, that he was making an effort to link his
observations of the window frame to a suggestion that the window must have recently
been replaced (and might therefore be suspect from a safety point of view).
[12] Justin Smit was sitting on the left side of the aisle, one or two rows in front of
where the toilet was situated. He was kneeling on his seat, facing the rear of the bus
and talking to his companions who were seated toward the rear. He saw Riyadh enter
the toilet. A short while after Riyadh had entered and shut the door behind him, Justin
saw the door open and close briefly. He ascribed this to Riyadh 'battling to open the
door'. He indicated that the door had not opened more than about 5 to 10 cm. He
turned his gaze from the toilet door to talk to his companion in the rear seat and the next
thing he knew was that the alarm went up because Riyadh had fallen out of the bus. He
said he had gone into the toilet a short while before Riyadh and had had to use force to
pull the door open. He had to 'jerk' the door three times to get it open wide enough to
slide through the gap. The door was not as difficult to close as to open, but it
nevertheless had to be ' yanked' to close it properly. In order to get out of the toilet he
had found it necessary to ' shoulder barge' the door. He ascribed these difficulties to
the carpet which was outside the toilet door, placed loose on top of the ' runner carpet'
that ran the length of the aisle. He estimated that this carpet was between 5 and 8 cm
thick. From the moment he had entered the toilet he had noticed that the window was
rattling and 'looked dodgy'. He said the rattling noise was so loud 'you couldn't even
hear the engine of the bus' and he could see the glass moving in its frame as it rattled.
He said that no one had been holding the door closed while Riyadh was in the toilet and
that he hadn't seen anyone standing at the toilet door when Riyadh fell. After the
accident, when he and others were sent back into the bus, he had opened the toilet
door and entered the toilet ' to see what had happened'. He saw Riyadh's ' Walkman'
earphones hanging over the rim of the window frame.
I regret to have to say that this witness' evidence reads poorly on the record. His
versions about where he was facing while Riyadh was in the toilet and why he would not
have seen anyone standing at the toilet door4 were as numerous as they were
unconvincing. His description of the carpet being '5 to 8 cm thick' also seemed to be
contrived to deal with the point which had risen during the cross-examination of Kyle,
namely that there was a ridge approximately 5 cm high between the floor of the bus and
the bottom of the toilet door. Finally his explanation as to why, when he saw Riyadh
was struggling to open the door, he did not assist him by simply pulling the carpet away
from under the door, was unsatisfactory.
[13] Mark Raubenheimer said he could not remember where he had been sitting
before the accident occurred. He had been standing for some time, facing the rear of
the bus with the toilet door about 10 cm away on his left hand side. He saw Riyadh
enter the door and close it after him. While Riyadh was still in the toilet with the door
shut, he had opened it a short way and saw Riyadh washing his hands. He had then
immediately closed the door again. When he heard his companions screaming that
someone had fallen out of the bus, he opened the toilet door to find that Riyadh was no
longer there.
[14] Ashley Wells was sitting in the back row of seats, looking out through the rear
window. He had not observed anything specific before the accident but he was one of
the first to see Riyadh rolling along the road surface. He had seen Mark Raubenheimer
standing immediately outside the toilet door just before Riyadh fell out. He had also,
earlier, seen pupils struggling to open the toilet door and had noted that it appeared to
be sticking against the carpet beneath it.
[15] There appears to me to be a decisive feature in this evidence, which is not
dependent on issues of credibility. It relates to the operation of the toilet door on a
number of occasions both before and after the accident. It will be noted that the door
4 The evidence of Mark Raubenheimer, dealt with below, was that he was actually standing at the door,
waiting for Riyadh to come out when the accident happened.
was opened at least ten and possibly eleven times around the time when the accident
occurred.5 It is also accepted that the door was fully shut at the moment when Riyadh
fell out of the window. Two questions must be asked:
(a)
Why would the door have proved to be impossible to move, even to create a
small gap, on the one occasion when Riyadh found it necessary to brace himself
against the window to try to get it open?
(b)
Why did Riyadh not adopt the simple and obvious procedure of calling for
assistance?
If one accepts the pupils' denial that anyone was holding the door handle closed from
the outside, the picture which emerges is a confused and illogical one indeed. In my
view it is so confused that the inference must be drawn that this aspect of the evidence
was probably not accurate. On the one hand there is a version which is shrouded by
irrationality, on the other, the simple proposition that the pupils were playing pranks on
each other by trapping each other in the toilet, clears the mists of uncertainty and
affords one a rational explanation for everything that happened. I may say that this
rationality is not adversely affected by the circumstance that each of the witnesses was
probably lying when he denied that the door was being held. They had every reason to
lie about this. First, the person holding the door and probably his companions who were
enjoying the joke with him would obviously have been in serious trouble if this had been
disclosed to anyone. The person concerned would also have been liable in delict to
Riyadh. Those who observed but did not participate in the prank would, in all probability
have been sworn to secrecy or have voluntarily decided to protect their fellows. I do not
think that judicial nescience goes so far as to preclude me from observing that such
pacts are by no means uncommon amongst school pupils and perhaps a very common
feature of rugby teams travelling on tour together. Furthermore, it is common cause
that, at some stage earlier in the morning, when the bus had been stopped at a service
station, the driver had found it necessary to walk down the aisle to the back of the bus
and admonish the pupils seated there for their unruly behavior. I must reluctantly
5 Twice by Chad Riffle, twice by Justin Smit (once before and once shortly after the accident),once by
Riyadh to enter the toilet and (possibly) once just before he fell out, once by Mark Raubenheimer (before
the accident) and once immediately afterwards and once by Kyle Nash shortly afterwards.
conclude that the most reasonable and probable inference6 which must be drawn from
the various accounts given by the witnesses is that when Riyadh tried to leave the toilet
some one was holding the door closed from the outside. The defendant called a Mr Bell
as an expert witness, who testified that the toilet door catch was so constructed that if a
person held the handle from outside the toilet door it could not be opened from the
inside. This adds credence to my conclusion.
[16] As far as the allegations about the ill-fitting window were concerned, it will suffice
to say that the defendant's witnesses testified that the 'wet putty' material observed by
Kyle Nash was a waterproofing seal that was applied to the outside of all the windows
and that there was nothing sinister about its presence in the window frame. The vague
suspicions voiced by Kyle Nash and Ashley Wells about the rattling of the window were
also explained by the fact that the engine of the bus was situate at the rear of the bus
and immediately below the toilet. It was denied by the defendant's witnesses that the
window could possibly have been 'rattling' at all, given that it was housed in a rubber
lining. There was nothing in the allegations or denials in this connection to which the
court could refer for the purposes of deciding where the truth lay on this aspect, save its
views on the performance of the pupils as witnesses.
[17] In the result, the evidence tendered on the whole for the plaintiff fell far short of
proving any of the grounds of negligence on which the plaintiff relied. The order for
absolution from the instance made in the court a quo was accordingly correct.
6 Govan v Skidmore 1952 (1) SA 732 (N) at p 734, followed and approved e.g. in Kruger v Carlton Paper
of SA (Pty)Ltd 2002 (2) SA 335 SCA) at p 334.
[18] The appeal is dismissed with costs.
__________________
N V HURT
JUDGE OF APPEAL
CONCUR:
)
NAVSA JA
)
KGOMO AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 March 2008
Status:
Immediate
M ABRAHAMS v SPRINGBOK ATLAS
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 by
Mrs M Abrahams against a judgment of the Cape High Court in which
absolution from the instance had been granted in favour of the Springbok
Atlas Company (Pty) Ltd in regard to her claim for damages sustained by
her son Riyadh.
Riyadh had fallen out of a bus owned by Springbok Atlas Co. and driven
by one of its drivers, while en route from Cape Town to Port Elizabeth
where Riyadh and his rugby team were due to play against Grey College.
Riyadh had sustained serious injuries which caused amnesia.
The Appeal Court held that the decision by the Cape High Court to the
effect that Mrs Abrahams had failed to prove any negligence on the part
of the bus company was correct and the appeal was accordingly
dismissed.
|
2495
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 260/13
Reportable
In the matter between:
BAPEDI MAROTA MAMONE
Appellant
and
THE COMMISSION OF TRADITIONAL
LEADERSHIP DISPUTES AND CLAIMS
First Respondent
THE PRESIDENT OF THE REPUBLIC
OF SOUTH AFRICA
Second Respondent
THE MINISTER OF PROVINCIAL
AFFAIRS AND LOCAL GOVERNMENT
Third Respondent
MOHLALETSI TRADITIONAL AUTHORITY
Fourth Respondent
ACTING KGOSHIKGOLO
KGAGUDI KENNETH SEKHUKHUNE
Fifth Respondent
Neutral citation:
Bapedi Marota Mamone v The Commission of Traditional
Leadership Disputes and Claims & others (260/13) [2014] ZASCA
30 (28 March 2014)
Coram:
Maya, Leach, Theron and Willis JJA and Mocumie AJA
Heard:
17 February 2014
Delivered:
28 March 2014
Summary:
Review – s 6(2) of the Promotion of Administrative Justice Act 3 of
2000 – review threshold – whether the Commission of Traditional
Leadership Disputes and Claims ignored relevant material
information placed before it when deciding that the institution of the
Bapedi kingship resorts under the Sekhukhune lineage – whether
such decision rationally connected to that information or justifiable
on the reasons given for it.
_________________________________________________________
ORDER
On appeal from: North Gauteng High Court, Pretoria (Makgoba J sitting
as court of first instance).
The appeal is dismissed with costs that include the costs of two counsel.
___________________________________________________________
JUDGMENT
Maya JA: (Leach, Theron and Willis JJA and Mocumie AJA
concurring)
[1] This is an appeal against the judgment of the North Gauteng High
Court (Makgoba J) dismissing an application for the review, setting aside
and remittal for reconsideration of a decision taken by the first
respondent, the Commission of Traditional Leadership Disputes and
Claims (the commission), and ancillary relief. The commission and the
fourth and fifth respondents opposed the proceedings in the court below
and the second and third respondents abided the court’s decision. Only
the appellant and the commission are involved in this appeal, brought
with the leave of this court.
[2] The appellant is a traditional authority recognised as such in terms
of the Traditional Leadership and Governance Framework Act 41 of 2003
(the Act)1 and s 211 of the Constitution.2 It has a vested interest in the
1 Defined under the heading ‘traditional leadership’ in s 1 of the Act as a customary institution or
structure recognised by traditional communities.
2 Under s 211(1), read with s 212 of the Constitution Act 108 of 1996, the institution, status and role of
traditional leadership, according to customary law, are recognized, subject to the Constitution.
determination of the institution of the kingship of the Bapedi community
and the lineage under which it resorts. It is represented in these
proceedings by Kgoshi Mampuru Mampuru III, its traditional leader. The
fourth respondent is an opposing traditional authority, represented by its
traditional leader, Acting Paramount Kgoshi Kenneth Sekhukhune, in
whose royal house the commission found the Bapedi kingship to resort. It
was cited in the proceedings merely as an interested party and,
accordingly, no order was sought against it.
[3] The commission is an organ of state established in terms of s 22(1)
of the Act. It is one of the bodies created under the Act to counter the
erosion of the institution of traditional leadership by past colonisation, by
carrying out the Act’s objectives of (a) defining the place and role of the
institution within the new system of democratic governance; (b)
transforming it in line with constitutional imperatives and (c) restoring its
integrity and legitimacy in line with customary law and practices.3 One of
its functions is to investigate and make recommendations in cases where
there is doubt as to whether a kingship that was established and
recognised before the commencement of the Act, was established in
accordance with customary laws and customs of the relevant traditional
community as they applied at the time.4
[4] In the exercise of that function and of its own accord, the
commission initiated an investigation, which entailed public hearings
involving interested parties as well as research, for the Kgagudi
Sekhukhune Rhyne Thulare Sekhukhune and Mampuru Royal Houses, to
determine whether the paramountcy of the Bapedi was established in
3 As stated in the Act’s preamble.
4 In terms of s 25(2)(a)(i) of the Act.
accordance with customary laws and customs of the Bapedi traditional
community.5 In that exercise, the commission first established that (a) the
Bapedi currently have an officially recognised paramountcy; (b) Kgoshi
Kgagudi Kenneth Sekhukhune is the acting paramount chief; and (c)
there are 70 officially recognised senior traditional leaders6 within his
area
of
jurisdiction,
Sekhukhune
District,
Greater
Tubatse,
Makhuduthamaga, Fetakgomo and Marble Hall.
[5] The commission then traced the history of the Bapedi lineage and
kingship, which may be summarized as follows. The Bapedi traditional
community originated from a Batswana clan, Bakgatla ba Makau, which
lived near the Vaal River during the 16th century. It was led by Tabane
who had five sons, Diale his heir and successor, Kgwadi, Kgetsi,
Matsibolo and Mosia. Diale left the area with his wife and followers, who
would form the core of the Bapedi, and resettled at Fateng near Fort
Weeber.7 He was succeeded by his son, Thobela, who founded the Bapedi
traditional community and settled at the foot of the Leolo mountains, at
Mohlake, around 1650. The chieftaincy then passed down the generations
to Kabu, Thobejane, Moukwange and Mohube, respectively.
[6] Upon Mohube’s death, his younger brother, Mampuru I, became
regent for Mohube’s young heir and successor, Moramotshwe I.
Subsequently, a succession struggle ensued between Mampuru I and
Morwamotshe I. Mampuru I was defeated and fled the community with
his followers. Dikotope, Morwamotshe I’s son, then succeeded his father.
5 A traditional community is defined in s 1 of the Act as a community that is subject to a system of
traditional leadership in terms of that community’s customs and observes a system of customary.
6 Defined in s 1 of the Act as ‘a traditional leader of a specific traditional community who exercises
authority over a number of headmen or headwomen in accordance with customary law, or within
whose area of jurisdiction a number of headmen or headwomen exercise authority’.
7 Legend has it that he left to protect his wife and unborn child whom the community wanted to kill
because the child had cried whilst still in the womb, an incident perceived as a bad omen.
His younger brother, Thulare I, however, contested the chieftaincy.
Assisted by Mampuru I, Thulare I killed Dikotope and usurped the
chieftaincy. He then established the Bapedi kingship by conquering
several neighbouring tribal communities between 1790 and 1820. When
he died the kingship passed to his heir and successor, Malekutu I. The
latter was poisoned for the throne by one of his brothers, Matsebe who
was then killed by another brother, Phetedi. Phethedi and Thulare I’s
other sons were subsequently assassinated by the Matebele of Mzilikazi
in the Difaqane war.
[7] Only one of Thulare I’s sons, Sekwati I, survived the invasion. He
settled north-east of present day Nebo district with his followers and re-
established the Bapedi monarchy, which he expanded by conquering
surrounding tribal communities. As regent for Malekutu I, who died
without an heir, he was expected, in terms of custom, to raise seed for the
late king. Although Sekwati I had a wife and son, Sekhukhune I, he took
a candle wife or a timamollo8 to bear Malekutu I’s heir and successor in
accordance with Bapedi custom. The candle wife duly bore a son,
Mampuru II.
[8] After Sekwati I’s death in 1861, Sekhukhune I challenged his half-
brother for the kingship by throwing a spear at him. Mampuru II would
not fight. Instead, he fled the kingdom with the royal insignia and took
refuge among the Swazi tribes. Sekhukhune I then buried their father and
ascended the throne. He killed all Mampuru II’s followers and forcefully
consolidated several communities to further expand the Bapedi kingdom.
In 1879, the British colonial government, which was in power at the time,
incarcerated Sekhukhune I and installed Mampuru II in his place. But,
8 A wife married specifically to bear an heir and successor for a deceased king.
upon Sekhukhune I’s release in 1881, Mampuru II fled again and
Sekhukhune I successfully reclaimed the kingship. On 13 August 1882,
however, Mampuru II ambushed and killed Sekhukhune I. Surprisingly
though, he fled thereafter without ascending the throne. Subsequently, on
21 November 1883, he was convicted and hanged in Pretoria for the
murder.
[9] Successive regencies followed thereafter. Notably in the chain,
Kgoloko, Sekhukhune I’s half-brother, became regent for the latter’s
minor son, Sekhukhune II, until he came of age. The latter did ascend the
throne in due course and was predeceased by his heir, Thulare II. Thus,
after his death, his other son, Moramotshe III, became regent until he died
in 1965. Mampuru II, on the other hand, was succeeded (presumably
where he had settled) by Malekutu II who died in 1905. The latter’s son,
Malekutu III, succeeded him and ruled until death in 1958. Thereafter his
son and heir, the current Kgoshi Mampuru III, took reign over the
Mamone traditional community which falls under the appellant.
[10] A dispute arose in the commission’s investigation between the
opposing royal houses’ versions concerning the status of Sekhukhune I
and Mampuru II following the death of Malekutu and the rest of Thulare
I’s sons. According to the Sekhukhune royal house, Sekwati I refused to
marry a candle wife because he had a wife and had already identified
Sekhukhune I as his successor. Despite his refusal, the Bakgoma and
Bakgomana9 took a candle wife who bore a child that Sekwati I could not
have sired as he was too old, so they said. The Mampuru royal house, on
the other hand, contended that according to Bapedi custom the power to
marry a candle wife for a deceased king vests solely in the Bakgoma
9 The royal advisors.
Bakgomana and not in the regent. Who actually fathers the heir is
irrelevant and the deciding factor for succession is that the child is borne
by a candle wife. Sekwati I’s attitude towards marrying a candle wife
was, therefore, immaterial. In any event, he recognised Mampuru II as the
rightful heir and even gave him the royal insignia, they argued.
[11] Against this backdrop, the commission made the following
findings. It agreed with the version that according to Bapedi custom, in
the case of a king who dies without an heir, the Bakgoma and
Bakgomana take responsibility for identifying and marrying a candle wife
and appoint someone to raise seed for the deceased king. But it matters
not who sires the candle wife’s child as maternity is the overriding
consideration for succession. As Sekwati I was a mere regent, he had no
kingship to pass to his eldest son, Sekhukhune I. It was not unusual,
however, for kingship to be obtained through might and bloodshed. As
such, Sekhukhune I’s usurpation of the kingship accorded with common
practice at that time. Mampuru II’s possession of the royal insignia alone
did not give him kingship and he did not ascend the throne according to
custom at any stage. The commission then concluded, inter alia, that (a)
Sekhukhune I won the succession battle against Mampuru II; (b) the
Bapedi paramountcy is a kingship; and (c) the kingship resorts under the
lineage of Sekhukhune I.
[12] The Mampuru (Bapedi Marota Mamone) royal house accepted
these findings. It took issue only with the finding that Mampuru II never
ascended the throne and its decision that the kingship resorted under the
Sekhukhune lineage. Consequently, the appellant launched review
proceedings in the high court. Mainly, it wanted the commission to
reconsider the decision, alternatively declaratory relief vesting the
kingship in it and declaring Kgoshi Mampuru Mampuru to be the king of
Bapedi.10 The application was premised on the grounds that:
‘1 The Commission in deciding on the question where the lineage in which [the]
Kingship resorts ignored relevant facts and evidence placed before it or to which it
had access as contemplated in section 6(2)(e)(iii) of [the Promotion of Administrative
Justice Act 3 of 2000 (PAJA)].
2 The decision of the Commission regarding the choice of lineage of the kingship of
Bapedi is neither rationally connected to the information before it nor to the reasons
given by it as stated in section 6(2)(f)(ii)(cc) and (dd) of PAJA.’
[13] The appellant contended that the commission ignored Mampuru
II’s reign during Sekhukhune I’s incarceration and that he defeated and
killed him upon his release which, it argued, ended Sekhukhune I’s
lineage to the kingship. The court below rejected these contentions. It
took the view that the commission’s methodology met the constitutional
standard and was proper,11 that it considered all the evidence placed
before it and that its decision was rational. The court concluded that the
commission’s determination on the facts before it was unimpeachable and
dismissed the application.
[14] On appeal, the appellant identified the following issues for
determination:
(a) whether the high court’s finding that there was a succession battle
between Sekhukhune I and Mampuru II, which the former won, was
correct;
(b) whether the succession issue should have been determined solely on
the basis that it was not unusual for kingship to be obtained through
might and bloodshed and not by birth;
10 The alternative relief was sought in amendment proceedings brought in terms of Uniform rule 28
after the institution of the application.
11 The means employed by the commission in its investigation was, in any event, not placed in issue.
(c) whether the high court’s findings that the commission did not ignore
relevant material evidence in its determination and was rationally
connected to the information at its disposal was correct; and
(d) whether the high court’s approach to the review of the commission’s
administrative action was correct.
[15] The appellant’s key contentions in argument before us were that
the court below: (a) ignored the commission’s failure to consider the
evidence of Mampuru II’s reign, even if brief, which the commission
conceded in its answering affidavit and was in accordance with
established customary principle of male primogeniture; (b) disregarded
the appellant’s submission that there was no succession battle between
the two protagonists as Sekwati I had already passed the kingship to
Mampuru II, the only king to have ruled the whole Bapedi nation, and
that kingship was a birth right which cannot be lost whether exercised or
not; (c) failed to properly evaluate the customary principle of usurpation
of kingship by might and bloodshed, which the commission applied
inconsistently, by ignoring the evidence that Mampuru II killed
Sekhukhune I to defend his kingship of the Bapedi nation and was thus
the last king after Sekwati I; (d) failed to evaluate the facts within their
historical context as it ignored the evidence that Mampuru II, who was
favoured by the British authorities as the rightful heir to the throne by
birth, refused to submit to the jurisdiction of the Boer authorities, the
incumbent government upon Sekhukhune’s release from jail, which
favoured the latter for that reason. It was finally contended that the court
below blindly deferred to the commission and accepted its findings
without question as it should have found that there was no rational
connection between the information at the commission’s disposal and its
finding on lineage, which was not justifiable in relation to the reasons
given for it.
[16] It must be pointed out at the outset that the only allegations made
in the appellant’s founding papers in support of its review grounds, on
which the case was conducted in the court below, were that the
commission (a) ignored the fact of Mampuru II’s brief installation on the
throne by the British authorities during Sekhukhune I’s incarceration; (b)
correctly found that kingship could be usurped through might and
bloodshed but failed to apply this rule to Sekhukhune I’s murder by
Mampuru II, acting in defence of his throne; and (c) ignored historical,
official records which supported these facts. Therefore, most of the
contentions made in its heads of arguments and orally in court as set out
in paragraph [15] above, have no foundation in its affidavits. It is trite
that an applicant in motion proceedings must set out the allegations upon
which it relies and make out a proper case in its founding papers. It
cannot make a case on appeal that was not pleaded in its papers.12 The
appellant is thus precluded from relying on any newly raised allegations
that were not made in its affidavits.
[17] Turning to the review grounds in issue, the first consideration is the
standard of review of administrative action which must be applied in
adjudicating this appeal.13 The right to administrative action that is
lawful, reasonable and procedurally fair derives from s 33(1) of the
Constitution. Section 33(3) of the Constitution envisages the enactment of
12 Shakot Investments (Pty) Ltd v Town Council of the Borough of Stanger 1976 (2) SA 701 (D);
National Council of SPCA v Openshaw 2008 (5) SA 339 (SCA); Betlane v Shelley Court 2011 (1) SA
388 (CC) at 396C.
13 It was not in dispute that the commission’s decision constituted administrative action and that the
provisions of the Promotion of Administrative Justice Act 3 of 2000, which the appellant invoked,
apply.
national legislation to give effect to that right. The Promotion of
Administrative Justice Act 3 of 2000 (PAJA) is that legislation. Section
6(2) of PAJA provides, in relevant part, for the judicial review of
administrative action if
‘…
(e)
the action was taken –
…
(iii)
because irrelevant considerations were taken into account or
relevant considerations were not considered;
…
(f)
the action itself –
(ii)
is not rationally connected to –
…
(cc) the information before the administrator; or
(dd) the reasons given for it by the administrator;’
(It is relevant too that s 22(2) of the Act itself requires the commission to
carry out its functions in a manner that is fair, objective and impartial.)
[18] The review threshold is rationality.14 The test is an objective one15
and the reviewing court asks if there is a rational objective basis
justifying the connection made by the administrative decision-maker
between the material made available and the conclusion arrived at.16
14 Bel Porto School Governing Body & others v Premier, Western Cape & another 2002 (3) SA 265
(CC) para 89; Carephone (Pty) Ltd v Marcus NO & others 1999 (3) SA 304 (LAC) paras 31 and 32.
15 Pharmaceutical MNFRS of SA: In re Ex Parte President of the RSA & others 2000 (2) SA 674 (CC)
para 86.
16 Carephone above n14; Trinity Broadcasting (Ciskei) v ICASA 2004 (3) SA 346 (SCA) para 21.
Administrative action that fails to pass this threshold is inconsistent with
the requirements of the Constitution and is unlawful.17 It matters not that
the decision-maker acted in the belief, in good faith, that the
administrative action was rational.
[19] As indicated, the only contentions in support of the appellant’s case
that warrant determination (and with which the court below dealt
squarely) are those set out in paragraph [16] above. In regard to the
allegations in (a) and (b), the court below agreed with the commission,
correctly so in my opinion, (and the appellant properly accepted this
finding in its papers) that Sekhukhune I legitimately usurped the kingship
as it was not uncommon to do so through might and bloodshed. In the
court’s view, Mampuru II’s coronation by the British government was
inconsequential as it was a unilateral act, inconsistent with Bapedi
customary law, and intended merely to fulfil that government’s policy.
This must be so as no evidence whatsoever was given to the commission
that the Bakgoma and Bakgomana, upon which it was agreed the task of
identifying the king in accordance with Bapedi customary law and
custom rests, was involved in Mampuru II’s enthronement. The court
below further approved the commission’s finding that Mampuru II’s
conduct in clandestinely killing Sekhukhune I and thereafter fleeing was
entirely inconsistent with an intention to conquer and take over kingship
and was sheer murder for which he was accordingly convicted by a court
of law and executed. I can find no fault with this finding on the evidence
placed before the commission.
17 Democratic Alliance v President of the Republic of South Africa & others 2013 (1) SA 248 (CC)
para 27; Masetlha v President of the Republic of South Africa & another 2008 (1) SA 566 (CC) para
81; Pharmaceutical MNFRS of SA above, para 90.
[20] The contention set out in (c), which counsel rightly did not argue
with any vigour, is equally without merit. The commission dealt
comprehensively with the historical records which purportedly supported
the appellant’s case and showed that the appellant’s reliance on them was
totally misplaced as they were irrelevant to the issues under consideration
and were quoted out of context. The commission’s report, which forms
part of the record, succinctly described the methodology employed by the
commission in its investigations, which was properly not challenged, and
is replete with references to various historical texts and legislation.
[21] In short, the appellant failed to prove that the commission ignored
any relevant evidence. There simply is no basis on the record to conclude
that the commission’s decision was not rationally connected to the
information before it, or the reasons given by it. There is also no basis for
the bald contention that the court below blindly deferred to the
commission. It is well to keep in mind that unlike, in the case of appeals,
in review proceedings
‘[t]he setting of [the review] standard does not mean that the Courts can or should
substitute their opinions as to what is appropriate for the opinions of those in whom
the power [to make administrative action] has been vested. As long as the purpose
sought to be achieved by the exercise of public power is within the authority of the
functionary, and as long as the functionary’s decision, viewed objectively, is rational,
a Court cannot interfere with the decision simply because it disagrees with it …’18
[22] Lastly, it is necessary to deal briefly with an issue which, although
not raised in argument before us, was nonetheless not expressly
abandoned – the quest for a declarator concerning who should be the
rightful heir to the Bapedi throne. Suffice to say that it was ill-conceived
18 Pharmaceutical MNFRS of SA, above para 90.
as it had no basis at all. The task of the commission was merely to
determine the existence of the Bapedi kingship and its lineage. It made a
decision solely in that regard and it is only the rationality of that decision
that could be the subject of any review proceedings. And again, as was
common cause in the papers, the power to identify the king rests solely
with the Bakgoma and Bakgomana, in accordance with Bapedi customary
law and custom.
[23] In all the premises, I am satisfied that the commission did nothing
that constitutes a ground, recognised in our law, for review. The decision
it made is one which a reasonable decision-maker could reach.19 The high
court correctly dismissed the application and the appeal must, therefore,
fail.
[24] Accordingly, the following order is made:
The appeal is dismissed with costs that include the costs of two counsel.
__________________
MML MAYA
JUDGE OF APPEAL
19 Bel Porto above, para 90.
APPEARANCES:
For appellant:
DS Kumalo SC (KJ Selala)
Instructed by:
JP Moloto & Co, Johannesburg
Matsepes Inc, Bloemfontein
For 1st respondent:
G Bofilatos SC (LM Montsho)
Instructed by:
Bradrish Daya Attorneys, Pretoria
Webbers Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
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.
BAPEDI MAROTA MAMONE V THE COMMISSION OF TRADITIONAL
LEADERSHIP DISPUTES AND CLAIMS
The Supreme Court of Appeal (SCA) today unanimously dismissed an appeal against the
judgment of the North Gauteng High Court (Makgoba J) dismissing an application for the
review, setting aside and remittal for reconsideration of a decision taken by the first
respondent, the Commission of Traditional Leadership Disputes and Claims (the
commission).
The commission initiated an investigation for the Sekhukhune and Mampuru Royal Houses,
to trace the history of the Bapedi lineage and kingship and to determine whether the
paramountcy of the Bapedi had been established in accordance with the relevant customary
laws.. At the conclusion of its investigations, the commission concluded inter alia that the
Bapedi paramountcy is a kingship and that the kingship resorts under the lineage of the
Sekhukhune, The Mampuru royal house took issue with the latter finding.
Consequently, the appellant launched review proceedings under the Promotion of
Administrative Justice Act 3 of 2000 in the high court. It sought an order for the commission
to reconsider the decision, alternatively declaratory relief vesting the kingship in it and
declaring Kgoshi Mampuru Mampuru to be the king of Bapedi. The application was
premised on the grounds that the decision of the commission regarding the choice of lineage
of the kingship of Bapedi was taken without consideration of all the material evidence placed
before it and bore no rational connection to the information before it or to the reasons given
for it. The high court, having found no fault with the commission’s findings and decision,
dismissed the application.
On appeal, the SCA held that the appellant had failed to prove that the commission ignored
any relevant evidence; that there is no basis on the record to conclude that the commission’s
decision was not rationally connected to the information before it or the reasons given by it as
the court below found; and that the appellant’s contention that the court below blindly
deferred to the commission was equally without basis.
|
1410
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 284/2010
No Precedential Significance
MBUTINI ISAAC VILAKAZI Appellant
and
THE STATE Respondent
Neutral citation: Vilakazi v The State (284/10) [2010] ZASCA 125 (30
September 2010)
Coram:
NUGENT and HEHER JJA and K PILLAY AJA
Heard:
13 September 2010
Delivered:
30 September 2010
Summary:
Rape ─ whether conviction justified by the evidence –
whether sentence of ten years’ imprisonment
excessive.
___________________________________________________________
ORDER
On appeal from: North Gauteng High Court (Pretoria) (Basson J and
Makhafola AJ sitting as court of appeal):
The appeal against conviction and sentence is dismissed.
__________________________________________________________
JUDGMENT
K PILLAY AJA (Nugent and Heher JJA concurring)
[1] The appellant was charged, in the Regional Court of Mpumalanga,
with rape. The appellant, who was represented at the trial, pleaded not
guilty and elected not to disclose the basis of his defence. He was
convicted and sentenced to 10 years’ imprisonment. On appeal to the
North Gauteng High Court, the conviction and sentence were confirmed.
This appeal, which is with leave of the court below, is directed at both
conviction and sentence.
[2] The complainant is the appellant’s maternal aunt. At the time of the
incident she was 44 years old and he was 30. According to the
complainant on 1 January 2004, at 3:30 am, she was at the appellant’s
parental home. A quarrel ensued between the complainant and the
appellant’s mother, Ms Tomnina Ester Pakati, which caused the
complainant to leave. She met the appellant outside and asked him to
accompany her to her friend Elizabeth’s home. On the way, the appellant
decided to show the complainant his home at Extension 22.
[3] Upon arrival at Extension 22, the appellant grabbed the
complainant by her throat, led her to his room where he forcibly had
sexual intercourse with her. He instructed her not to scream and placed a
knife next to her on the pillow. The complainant eventually persuaded
him to leave so that she could go to her other sister Gogo’s home. This
was about 5:30 in the morning. The appellant accompanied her. On the
way there, they parted company and she proceeded to her friend Elizabeth
Ngwenya’s home.
[4] She reported the rape to Elizabeth, who observed that her neck was
swollen. Elizabeth gave her money and advised her to report the incident
to the appellant’s parents, which she did. They advised her to report the
incident to the police and took her to the police station, whereafter she
was taken to a medical doctor at a hospital.
[5] As disclosed in cross-examination the appellant’s version was an
alibi defence to the effect that he left his parental home at 2:00 am with
his girlfriend and spent the rest of the early hours of that morning with his
girlfriend at Extension 22. However, the complainant insisted that the
girlfriend was never present at the appellant’s parental home.
[6] It was not disputed that later that day the complainant came across
the appellant in hospital where, so he said, he had gone for treatment for a
foot injury. The appellant was arrested there.
[7] Elizabeth Ngwenya testified on the complainant’s behalf and
confirmed that the latter had reported the rape to her on the morning of 1
January 2004. She said that she saw ‘black marks’ on the complainant’s
neck.
[8] The doctor who examined the complainant on 1 January 2004
tabulated his findings on a J88 form, the contents of which were formally
admitted by consent. There were bruises on both sides of the
complainant’s upper chest. No other injuries were noted. The J88 form
was admitted together with a document, bearing the reference
02DIAF3447XX. The document was titled ‘Sexual Assault Kit’ and
recorded that swabs were taken from the complainant.
[9] Sergeant Makwena, a forensic analyst at the Forensic Science
Laboratory,
analysed
genital
swabs
A
and
B
of
specimen
02DIAF3447XX ‘L.A. Phalathi’ and found that the genital swabs tested
positive for semen.
[10] A DNA expert, Sergeant Mphepu, also testified. His evidence, was
that he did a comparative analysis of a control blood sample, marked with
reference number 02DIAE6202XX ‘I.M.V.’ with genital swabs A and B
with reference ‘02DIAF3447XX LA Phalati’, which revealed a 99.99
percent match.
[11] In the process of delivering judgment, the trial magistrate appears
to have realised that formal evidence was lacking that the blood sample
used for comparative analysis was that of the appellant. It seems that such
an admission might have been made but had not been formally recorded.
He accordingly posed the following question to counsel for the appellant:
‘However the Court does not have any notes for the formal admission that was made
that the blood sample that was used for comparison purposes was in fact the blood
sample of the accused, is that in contention or can the Court record that as a formal
admission?’
The record reflects the following exchange thereafter:
‘DEFENCE: (Inaudible)
COURT:
Can the court then record it as a formal admission?
DEFENCE:
(Inaudible).’
And further:
‘Sergeant Mogute testified that when he received the said samples at the laboratory
together with a blood sample, which is referred as to a control blood sample and
which was formally admitted to be that of the accused’s, he tested the vaginal swabs
that were taken from the complainant and found them to react positively, in other
words that there was DNA present.’
[12] In his testimony, the appellant denied that he had any sexual
intercourse with the complainant. He confirmed that he was at his
parental home until 2:00 am on 1 January 2004, when he left with his
girlfriend for his home at Extension 22.
[13] The appellant’s mother testified on behalf of the appellant. She said
that the appellant had left her house with his girlfriend at 2:00 am. The
complainant remained with her until 4:00 am and then returned at 11:00
am to report that the appellant had raped her. The appellant’s girlfriend
confirmed his version so far as it related to her.
[14] The trial court found that the cumulative weight of the DNA
evidence, which positively linked the appellant to the commission of the
crime, together with the credible evidence of the state witnesses
established the appellant’s guilt beyond reasonable doubt.
[15] I have pointed out that in the course of his judgment the magistrate
asked whether it was formally admitted that the blood sample that was
tested against the specimen of semen had emanated from the appellant.
Notwithstanding the inaudible replies from counsel it is clear from the
fact that the magistrate proceeded with this questioning, that such an
admission was formally made, and that was not disputed by counsel
before us. It was submitted on the appellant’s behalf that the extraction of
that admission was irregular and that it had not been made on the
instruction of the appellant. In those circumstances, so it was submitted,
the admission falls to be ignored, with the result that the prosecution had
not proved that the blood sample emanated from the appellant.
[16] I do not think the magistrate can be said to have acted irregularly in
asking whether a formal admission was being made. He was entitled to
admit evidence at any stage in the proceedings, which concluded only
when the verdict was delivered (provided, of course, that it did not cause
prejudice the appellant). In view of the fact that the admission was indeed
made it is clear that no prejudice was caused merely on account of the
fact that the admission was admitted only while he was delivering his
judgment. Moreover, it seems that, that was not the first time that the
admission was made. As I said earlier, it seems that the admission had
indeed been made before that, but had not been recorded by the
magistrate at the time.
[17] It is well established that an accused is bound by the admissions
made on his behalf by a legal representative unless such legal
representative has not been properly instructed or the admission was
made as a result of a bona fide mistake.1 Section 220 of the Criminal
Procedure Act 51 of 1977 permits a legal adviser to make any admission
on his or her client’s behalf. The aforesaid section provides:
‘An accused or his or her legal adviser or the prosecutor may in criminal proceedings
1 Dlamini v Minister of Law and Order & another 1986 (4) SA 342 (D); S v Mbelo 2003 (1) SACR 84
(NCD).
admit any fact placed in issue at such proceedings and any such admission shall be
sufficient proof of such fact.’
The contention that the admission was not made on the instructions of the
appellant was no more than an allegation made from the bar without any
evidence before us that that was so.
[18] But even without the admission the evidence was sufficient to
establish, by inference, that the blood sample that was tested had indeed
emanated from the appellant. It was not disputed that a blood sample had
indeed been taken from the appellant and sent to the laboratory for
analysis. The possibility that the laboratory then inadvertently tested the
semen sample against some other blood sample that happened to be there,
and that it coincidentally correlated with the semen sample, which is the
logical conclusion that follows from the submission, is so remote that it
can safely be rejected.
[19] It was also submitted that the evidence fell short of establishing
that the equipment used to perform the DNA analysis functioned
correctly for the performance of the task. In my view the submission has
no merit. The evidence established that the relevant technician calibrated
the equipment against standard samples, in accordance with ordinary
practices. In the absence of any evidentiary basis for suggesting the
equipment might have been defective for the task that it was to perform
there was no basis for finding that that might possibly have been so.
[20] The evidence of the complainant that she was raped was not placed
in issue in the course of the trial (nor in argument before us). The only
matter in dispute was whether the appellant was the perpetrator. The
complainant implicated the appellant shortly after the rape, both to her
friend and to the police. The trial court found her to be a credible witness.
This finding, on perusal of the record cannot be assailed. Her evidence,
which in itself might have justified a conviction, was corroborated by the
DNA evidence. I have no doubt that the appellant was properly convicted
and his appeal in that respect must be dismissed.
[21] The offence fell within the ambit of Part III of Schedule 2 of the
Criminal Law Amendment Act 105 of 1997, which carries a minimum
sentence of ten years’ imprisonment. Both the trial court and the court
below were unable to find that there were any substantial factors proved
that would compel a reduction in sentence.
[22] The appellant’s transgression must be viewed against the fact that
the complainant is his aunt who is much older than he is. In asking him to
accompany her in the early part of the morning to her friend’s residence,
she actually sought his protection. Instead he opportunistically subjected
her to the degradation of rape. She was also assaulted during the rape and
sustained bruises to her upper chest. There were no gynaecological
injuries noted which is not unusual in women of her age who have borne
children, as she had. Apart from the violence that is inherent in the act of
rape, this case was aggravated by the deliberate positioning of the knife
alongside the complaint before the assault was committed, which was
clearly intended to intimidate her.
[23] The only factors placed before the trial court in mitigation by the
appellant, at the time of sentencing, were that he was 32 years old, he had
two minor children, and had been employed as a truck attendant. He had
a previous conviction for theft and was serving a 30 month sentence for
assault. Both the trial court and the court below were unable to find that
these factors were sufficiently weighty to constitute substantial and
compelling factors, and I agree. I might add that in my view the sentence
that was imposed was in any event an appropriate sentence, even had
there been no minimum sentence.
[24] In the circumstances the appeal against conviction and sentence is
dismissed.
___________________
K Pillay
Acting Judge of Appeal
APPEARANCES:
APPELLANT:
(Ms) L Augustyn
Instructed by Legal Aid Board, Pretoria
Legal Aid Board, Bloemfontein
RESPONDENT: JJ Kotze
Instructed by The Director of Public Prosecutions,
Pretoria
The Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
30 September 2010
STATUS: Immediate
Vilakazi v The State (284/10) [2010] ZASCA 125 (30 September 2010)
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.
The SCA today dismissed an appeal against a conviction and sentence for rape. The
appellant was convicted on 19 June 2006, by the Bethal Regional Court,
Mpumalanga, and sentenced to 10 years’ imprisonment.
An appeal against convicted and sentence to the North Gauteng High Court was
dismissed on 7 August 2008.
The SCA found that the conviction was justified by the evidence and that the 10
years’ imprisonment imposed was an appropriate sentence.
|
1463
|
non-electoral
|
2016
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 772/2015
In the matter between:
JUDA JOSEPH PLEKENPOL APPELLANT
and
THE STATE RESPONDENT
Neutral citation: Plekenpol v The State (772/15) [2016] ZASCA 171 (24 November
2016).
Coram:
Bosielo, Pillay, and Petse JJA
Heard:
11 November 2016
Delivered:
24 November 2016
Summary:
Sentence: fatal assault with knobkierie: subsequent robbery: plea of guilty
to murder read with Criminal Law Amendment Act 105 of 1997 and robbery: appeal
against sentence of 24 years’ imprisonment for murder only: failure to consider the
Criminal Law Amendment Act 105 of 1997 misdirection: 24 years’ imprisonment found to
be too harsh, inappropriate and amounts to misdirection interference on appeal
warranted.
ORDER
On appeal from:
Gauteng Division of the High Court, Pretoria (Maumela J sitting as
court of first instance):
1 The appeal is upheld.
2 The sentence of 24 years’ imprisonment imposed by the court below in respect of
murder and the order antedating the operation of the sentences to 28 July 2014 are set
aside. The order of the court below is substituted with the following:
‘On count 1, the accused is sentenced to undergo 18 years’ imprisonment. On count 2,
the accused is sentenced to undergo 4 years’ imprisonment which is ordered to run
concurrently with the sentence imposed on count 1.’
3 The effective sentence of 18 years’ imprisonment is antedated to 4 June 2015.
JUDGMENT
Pillay JA (Bosielo and Petse JJA concurring)
[1] The appellant, a 31 year old man, was arraigned before the Gauteng Division,
Pretoria on charges of murder (count 1) and robbery with aggravating circumstances
(count 2) - as defined in s 1 of the Criminal Procedure Act 51 of 1977 (the CPA). Both
charges were subject to the provisions of s 51(1) of the Criminal Law Amendment Act
105 of 1997 (the Act). He stood accused of murdering one Louis Cornelius Eksteen (the
deceased) by repeatedly assaulting him and thereafter robbing him of a number of items,
including his motor vehicle, cash and credit cards.
[2] He pleaded guilty to murder and robbery as envisaged in s 51(2) of the Act. His
legal representative tendered a rather lengthy written statement in substantiation of his
plea in terms of s 112 of the CPA wherein the events during which these offences were
committed were fully described. The appellant signed this statement and indeed
confirmed it in court. The prosecution accepted the plea as tendered. A number of
documents such as the medico-legal examination (of the deceased), formal admissions,
a photograph album and a sketch, a report in terms of ss 77, 78 and 79 of the CPA were
handed into evidence by agreement. He was then convicted of the offences he pleaded
guilty to and on the 4 June 2016. The court found that the Act was not applicable in this
case and proceeded to impose on the appellant a sentence of 24 years’ imprisonment on
count 1 and 4 years’ imprisonment on count 2. The sentences were backdated to 24 July
2014, this being the date of conviction and were ordered to run concurrently.
[3] The appellant was granted leave to appeal against the sentence to this court.
Similarly the respondent (the State) was granted leave to appeal against the sentence. I
will refer to the parties as such hereunder in order to avoid any confusion.
[4] It is perhaps necessary at this stage to refer to important factors contained in the
appellant’s written plea explanation and relevant to the question of sentence. According
to this statement the appellant became friends with the deceased shortly prior to the
latter’s death. It seems that a group, including the deceased and the appellant, were
involved in homosexual activities though the deceased and appellant had not had a
sexual relationship by the time the former died.
[5] On or about 11 April 2013 the appellant visited the deceased at his abode, as he
had done twice before. They ate, consumed liquor and indulged in a drug referred to as
CAT, as they had done before. At some time during that evening, the deceased
suggested to the appellant that they engage in homosexual sex. The appellant ignored
the suggestion and carried on drinking. He had already had a dose of CAT. Later the
deceased grabbed hold of his arm. The appellant interpreted that as the deceased
wanting to lead him to the bedroom in order to fulfill his earlier suggestion. The appellant
felt offended and pulled loose from the grip but in doing so, tripped and fell to the floor.
As he tried to get up, he saw the deceased coming towards him. He lost his temper, felt
humiliated, provoked and lost his self-control. He got hold of what is commonly referred
to as a knobkierie1 and struck the deceased with it many times, randomly over his upper
body and head. This assault caused the deceased to fall to the floor. Though he realised
that the deceased was seriously injured the appellant kicked the deceased when he tried
to stand up.
[6] Notwithstanding the realisation that the injuries were severe and that the
1 A knobkierie is indeed depicted on the floor in a photograph taken during the immediate investigation at
the scene of the murder - part of Exhibit F of the record.
deceased might possibly die as a result, he nonetheless continued to assault the
deceased. Impulsively he decided to rob the deceased of some of his property in order to
sell these to buy drugs. He then tied the deceased’s hands behind his back so that the
latter would not stop the robbery. He also demanded the pin number of the deceased’s
bank card which was provided to him. He thereafter put a cloth around the deceased’s
mouth so as to prevent him from screaming. After incapacitating the deceased he loaded
a number of items into the deceased’s motor vehicle. He thereafter locked the house and
left with the vehicle. He sold some of the items and managed to withdraw R700 from the
deceased’s bank account. He was arrested on 17 April 2013.
[7] He admitted that at the time he knew that his actions were unlawful. It is clear from
his admissions that he intended to severely injure the deceased even if it led to death.
The appellant also admitted that the appropriation of the deceased’s property was
unlawful and that he had the intention of permanently depriving the deceased thereof.
Finally he accepted the severity of the injuries he inflicted on the deceased and
expressed sincere remorse for what he had done.
[8] In regard to sentence, the State called Doctor Janette Verster (Dr Verster) who
had been appointed as a specialist forensic pathologist at the University of Pretoria on 1
January 2013 to demonstrate the seriousness of the injuries sustained by the deceased.
She testified that she had performed the post-mortem examination on the deceased and
had recorded her findings in a report which gives a graphic and gruesome description of
the injuries sustained by the deceased. She recorded the following:
(a) A large 63 mm x 36 mm laceration across the right eyebrow containing bone
fragments with associated bruising, contusion of the eye and a haematoma surrounding
that eye; (b) a small 27 mm x 8 mm laceration on the right temple, (c) a v-shaped
laceration on the bridge of the nose associated with a comminuted fracture of the nasal
bones, the fragments of which could be seen in it; (d) small abrasions on the tip of the
nose, on the left cheek and on the right corner of the mouth; (e) a 11 mm x 2 mm
laceration perforated the right side of the lower lip; (f) the doctor observed that the head
was covered with blood as was the strips of linen found around the neck and; (g) there
were a number of lacerations, some superficial, found on the scalp of the deceased. She
estimated the number of blows to the head that caused these injuries to be at least 13.
She also found a tramline contusion across the superior aspect of the anterior chest wall
as well as a large contusion over the front chest. Further, she also found bruising to the
left shoulder, linear contusions on the upper back, bruising of the right elbow and
abrasion wounds on the wrists caused by a cord used to tie the deceased’s hands.
Smaller bruises were also noted on the lower area of the stomach, an irregular abrasion
on the anterior aspect of the left knee, superficial abrasions on the left lower leg. All of
these were the observations of the external appearance of the body of the deceased.
[9] The internal examination disclosed a comminuted fracture of the left side of the
skull. She also noted the comminuted fracture of the nasal bridge as well as one on the
right cheek bone together with a fracture of the right jaw. She also found that the neck
contained extreme contusions caused by pressure exerted on the neck. Dr Verster was
of the opinion that the cause of these fractures were multiple blows of sufficient blunt
velocity impact on the head and jaw so as to expel one of the deceased’s teeth and
shatter the bone structure where impact occurred. She also noted contusions to the brain
likely to have been caused by the blows which resulted in the skull fracture(s).
[10] She opined that a combination of the ligature pressure and a blow to the neck
could conceivably have lead to heart failure. She also discovered that the second, third
and fifth ribs on the right side of the thoracic cage were fractured, as was the fourth rib on
the left side. She also found that the sternum had been fractured. This could also have
led to cardiac arrest. As I understand the evidence, the examination of the internal
organs disclosed that they were generally pale and this indicates that the deceased lost a
large amount of blood.
[11] Dr Verster found that the cause of death of the deceased was ‘multiple blunt force
injuries to the head and chest, as well as injury to the neck, in the form of pressure to the
neck structures’. In evidence she qualified this by testifying that any one of four sets of
injuries, were sufficiently severe enough to cause the death on its own. Viz:
(a) the impact to the chest with contusions to the heart;
(b) multiple impacts to the head with brain injury(s);
(c) massive loss of blood arising from all the lacerations; and
(d) the impact to the neck which could have caused the death - not excluding asphyxia as
a result of obstruction to the airways.
None of her findings were challenged by the defence.
[12] The State also called Mr Theunis Jacobus Eksteen the brother of the deceased.
He testified that his mother was shocked at having discovered her mutilated dead son,
aged 45 and losing her son compounded her already fragile emotional state as she had
shortly before lost her own mother and her husband. He described his brother as a caring
gentleman who would give more to others than to himself. He was a musical artist and
generally knowledgeable. He was a father of a 13 year old daughter born of his marriage
which subsequently ended in divorce. His daughter lived with her mother but had a good
relationship with her father.
[13] He testified that he had an open relationship with his late brother and had his
brother had homosexual preferences, he would have been aware of it. In fact he did not
come across any signs indicative that he was so inclined when he cleared his brother’s
belongings from the house. Consequently he found it hard to believe that his brother
would indulge in such activities. This view is however insignificant given the plea which
the State accepted. He said that his mother had forgiven the appellant for what he has
done and they accepted his apology as set out in a letter dated 26 July 2014 which he
sent the deceased’s family.
[14] The appellant himself testified in mitigation of sentence. He said that at the time of
his testimony on 30 April 2015, he was in custody for a little more than two years, having
been arrested for these offences on 17 April 2013. He had passed standard six as it was
then referred to. He was married and has fathered a daughter who was 10 years old at
the time. He had an inconsistent primary school career. He was raised primarily by his
grandmother, since his father was absent in his life and his mother was working most of
the time. It emanates that the appellant worked as a male prostitute since the age of 12,
and at times as a security guard. During his adult life, he worked as a prostitute to
generate an income. During all this, he resorted to the use of alcohol and drugs.
[15] He referred to a report drafted by a Dr Henk J Swanepoel, a clinical psychologist,
which was handed in as an exhibit. Dr Swanepoel confirmed the finding that the appellant
is a man with a low self-esteem suffering with a borderline personality disorder. He
presents as a depressed person from a dysfunctional family background who had already
spent a substantial period in prison. He was found to have developed suicidal ideation.
He confirmed that he had also consulted with three psychologists as well as two
psychiatrists. He confirmed that he was diagnosed with a borderline personality disorder.
The appellant pointed out that the treatment for the disorder is not forthcoming in prison -
motivating a kind of reform therapy punishment. He exclaimed that he was extremely
remorseful about the incident and did not think that he would ever forgive himself - hence
he sent the family the aforementioned letter of apology.
[16] As stated above, the court below granted leave to appeal against sentence to this
court. It is, however, not clear against which sentence(s) such leave was granted.
However, the appellant’s notice of appeal is clearly directed at the sentence imposed in
respect of the murder only. There was no such notice filed by the respondent and hence
there is no ‘cross-appeal’ on its behalf. The appeal is therefore restricted to the question
of the appropriateness of the sentence of 24 years’ imprisonment in respect of murder in
terms of s 51(2) of the Act.
[17] Counsel for the appellant argued that the court below misdirected itself in that it
approached the sentence incorrectly as it did not deal with the question of imposing a
sentence in terms of s 51(2) of the Act read with sub-section (3) thereof. This was
conceded by the respondent. Furthermore, it failed to consider whether a period of 24
years’ imprisonment was shockingly inappropriate and consequently amounted to a
misdirection. This too was conceded by the respondent.
[18] On the other hand, counsel for the respondent argued that antedating the
sentence was not permissible in these circumstances and neither should the sentences
have been ordered to run concurrently. Consequently, these also constituted
misdirections. The approach by the court below towards the Act, is encapsulated by a
single paragraph in its judgment on sentence which reads as follows:
‘It is beyond dispute that the offences, of which the accused stands convicted, do not attract
minimum sentences in terms of the Criminal Law Amendment Act in the sense that he was
convicted of offences that do not entail the implementation of the minimum sentencing
legislation.’
This is clearly a material misdirection as the offence falls squarely within the ambit of
s 51(2) of the Act. This section prescribes a minimum sentence in respect, inter alia, of
murder. Deviation from prescribed sentences is only possible if substantial and
compelling circumstances as envisaged by s 51(3) of the Act are found to exist.
Consequently this court is at large to interfere and assess the sentence afresh.
[19] In S v Malgas 2001 (1) SACR 469 (SCA) para 20 it is stated that:
‘… acknowledge that one is obliged to keep in the forefront of one’s mind that the specified
sentence has been prescribed by law as the sentence which must be regarded as ordinarily
appropriate and that personal distaste for such legislative generalisation cannot justify an
indulgent approach to the characterisation of circumstances as substantial and compelling.’
And at para 25D -
‘The specified sentences are not to be departed from lightly and for flimsy reasons.’
[20] It was argued on behalf of the appellant that the following would globally constitute
substantial and compelling circumstances as envisaged by the Act:
(a) that at the time of the commission of the offence he was under the influence of
alcohol and drugs;
(b) that he was angered by the suggestion that he engage in sexual activities with the
deceased;
(c) he was a product of a dysfunctional family with an unsavoury background and did not
have the benefit of the influences of a mother and father during his upbringing; and
(d) that he was remorseful.
[21] It is clear that the brutality of the assault, evident from the photographs, was both
gratuitous and inhumane. Moreover, the deceased was unarmed and helpless soon after
the attack commenced. Any prospective sexual advances or attack by the deceased had
ceased soon after the initial assault. There was no need to continue therewith. The
appellant admitted that he realised that the continued assault could lead to the death of
the deceased. Further, he tied the deceased up when he was in such a state in order to
incapacitate him while he appropriated the deceased’s property. The greed clearly
blunted his sense of compassion. These factors constitute, in my view, extreme
aggravating circumstances.
[22] In balancing the two sets of factors as set out above, I am, in this case,
unpersuaded that there exists any substantial and compelling circumstances which would
allow a deviation from the prescribed sentence for this offence.
[23] The appellant was convicted of murder as envisaged in Part II of Schedule 2 of the
Act. Being a first offender to murder, the minimum sentence prescribed by s 51(2)(a)(i) of
the Act is imprisonment for a period not less than 15 years. Using this as a benchmark, it
is necessary also to examine whether this punishment is sufficiently appropriate in light of
the gravity of the crimes.
[24] It is worth mentioning that the record did not include a detailed list of the
appellant’s previous convictions. While there was an attempt to read this into the record,
it became blurred, because of the interruptions and unclear explanations that it cannot
serve any useful purpose. However, the appellant himself testified about one of them -
viz an assault with intent to do grievous bodily harm for which he was sentenced to seven
years’ imprisonment. In that incident, because the victim irritated him in some way, the
appellant clubbed him with a wooden lamp stand. As a result he broke the victim’s arm
and inflicted other serious injuries in the assault. This must certainly be taken into
account.
[25] All that could be said in favour of the appellant has been said and his personal
circumstances set out above do not lend themselves to an overly sympathetic
consideration of what sentence should be imposed on him. Violent crimes have become
endemic and prevalent in our country. These crimes pose a serious threat to the
wellbeing of society. The public seeks the courts to send out a stern message which
reflects the abhorrence of the public towards the scourge of crime. This public call is
legitimate. Chaskalson P appropriately stated in S v Makwanyane & another 1995 (2)
SACR 1 (CC) para 117 that:
‘The need for a strong deterrent to violent crime is an end the validity of which is not open to
question. The State is clearly entitled, indeed obliged, to take action to protect human life against
violation by others. In all societies there are laws which regulate the behaviour of people and
which authorise the imposition of civil or criminal sanctions on those who act unlawfully. This is
necessary for the preservation and protection of society. Without law, society cannot exist.
Without law, individuals in society have no rights. The level of violent crime in our country has
reached alarming proportions. It poses a threat to the transition to democracy, and the creation of
development opportunities for all, which are primary goals of the Constitution. The high level of
violent crime is a matter of common knowledge and is amply borne out by the statistics provided
by the Commissioner of Police in his amicus brief. The power of the State to impose sanctions on
those who break the law cannot be doubted. It is of fundamental importance to the future of our
country that respect for the law should be restored, and that dangerous criminals should be
apprehended and dealt with firmly. Nothing in this judgment should be understood as detracting
in any way from that proposition. But the question is not whether criminals should go free and be
allowed to escape the consequences of their anti-social behaviour. Clearly they should not; and
equally clearly those who engage in violent crime should be met with the full rigour of the law.’
[26] In S v Mhlakaza & another 1997 (1) SACR 515 (SCA) at 519c-e, the following was
said:
‘Given the current levels of violence and serious crimes in this country, it seems proper that, in
sentencing especially such crimes, the emphasis should be more on retribution and
deterrence….’
[27] In S v Swart 2004 (2) SACR 370 (SCA) at 378 para 12, it was said that:
‘Each of the elements [to be considered] of punishment is not required to be accorded equal
weight … and serious crimes will usually require that retribution and deterrence should come to
the fore and that the rehabilitation of the offender will consequently play a relatively smaller role.’
[28] As stated above, the appellant has been in trouble with the law before. The last
time he spent a long time in prison for an assault, the nature of which is not too dissimilar
to the assault which lead to the death of the deceased. What is more, he committed this
murder relatively soon after his release. It is evident that he has not benefitted nor learnt
from that punishment. It furthermore seems that he has a propensity to break the law and
certainly does not have the will power to resist resorting to violence when angered or
irritated. Thus, he is clearly a threat to society. There is no evidence that there is much
hope of him being rehabilitated any time soon. Consequently, a prison sentence of a
substantial period is what is called for.
[29] In my view, this murder is of such a nature that it requires more than the
prescribed minimum sentence. I have, however, taken into account that the appellant
was in custody for two years awaiting trial prior to his being sentenced. However, the
indignation which the general community would feel about a person like the appellant
with his history of quickly resorting to extreme violence must be reflected in an
appropriate sentence.
[30] In balancing all of the favourable factors as against the aggravating factors
pertaining to this murder, I have come to the conclusion that 24 years’ imprisonment is
indeed shockingly inappropriate. In my view, a sentence of 18 years’ imprisonment would
strike a delicate balance between the nature and gravity of the offences, the interests of
society and the personal circumstances of the appellant. I would regard such a sentence
as appropriate.
[31] While the respondent made much of the order to allow the sentence on count 2 to
run concurrently with that on count 1, there is no appeal in regard thereto. Neither is it
declared impermissible in the Act. To interfere therewith, absent an appeal directed at it,
would be unfair on the appellant. In brief, all that has been appealed against is the
inappropriateness of a 24 year period of imprisonment. Consequently the sentence on
count 2 must remain intact as also the condition of concurrency attached thereto. The
trial court’s order antedating the sentences is however incompetent and thus cannot be
allowed to stand. That power is in terms of sections 304 and 309 of the CPA reserved for
reviewing and appellate courts respectively. However, I think it would be wise to set out
in this order the full sentence so as to avoid any misunderstanding that could otherwise
occur.
[32] In the result, the following order is made:
1 The appeal is upheld.
2 The sentence of 24 years’ imprisonment imposed by the court below in respect of
murder and the order antedating the operation of the sentences to 28 July 2014 are set
aside. The order of the court below is substituted with the following:
‘On count 1, the accused is sentenced to undergo 18 years’ imprisonment. On count 2,
the accused is sentenced to undergo 4 years’ imprisonment which is ordered to run
concurrently with the sentence imposed on count 1.’
3 The effective sentence of 18 years’ imprisonment is antedated to 4 June 2015.
R Pillay
Judge of Appeal
Appearances:
For Appellant:
M G Ndalane (with J Mojuto)
Instructed by:
Legal Aid South Africa, Pretoria
Legal Aid South Africa, Bloemfontein
For Respondent:
P Vorster
Instructed by:
Director of Public Prosecution, Pretoria
Director of Public Prosecution, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
24 November 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Plekenpol v The State (722/15) [2016] ZASCA 171 (24 November 2016)
MEDIA STATEMENT
The Supreme Court of Appeal today upheld an appellant’s appeal against sentence. The appellant
was charged with murder and robbery with aggravating circumstances in the Pretoria High Court. He
pleaded guilty to murder and to ordinary robbery and was subsequently convicted as such. He was
sentenced to 24 years’ imprisonment on the murder and four years on the robbery. The sentences
were ordered to run concurrently.
The appellant and the deceased had become friends and one evening the appellant was offended by
an inappropriate suggestion by the deceased. The appellant then assaulted the deceased with a
knobkierie to such an extent that he sustained a number of wounds on the head and his upper body
which led to his death. The assault was continuous and found to have been brutal. Immediately
thereafter, the appellant tied up the deceased in order to facilitate the robbery. The appellant removed
a number of items from the deceased’s house, packed it in the latter’s vehicle and drove away after
locking the house. While the deceased was still alive and the appellant drove off, the latter was aware
that the assault was so severe that the deceased could die as a result.
The court below adopted the approach to sentence that these crimes were not subject to the
minimum sentence act. This the Supreme Court of Appeal found to be a misdirection and proceeded
to sentence the appellant afresh.
The appeal was directed at the sentence imposed for the murder. The Supreme Court of Appeal
found that a period of 24 years’ imprisonment was too harsh and reduced it to 18 years’
imprisonment. The sentence of four years in respect of the robbery was ordered to run concurrently
therewith.
---ends---
|
3776
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 952/2020
In the matter between:
WK CONSTRUCTION (PTY) LTD
APPELLANT
and
MOORES ROWLAND
FIRST RESPONDENT
MAZARS MOORES ROWLAND
SECOND RESPONDENT
MAZARS
THIRD RESPONDENT
Neutral citation: WK Construction (Pty) Ltd v Moores Rowland and Others
(Case no 952/2020) [2022] ZASCA 44 (6 April 2022)
Coram:
PETSE DP, NICHOLLS, GORVEN and HUGHES JJA and
TSOKA AJA
Heard:
15 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 have
been at 09h45 on 6 April 2022.
Summary: Civil procedure – extinctive prescription – special plea – debt deemed
due once creditor acquires, or could reasonably have acquired, knowledge of facts
from which debt arises – professional negligence – test whether creditor had
knowledge of facts which would give rise to a reasonable suspicion of possible
negligence – knowledge of large scale fraud over a number of years by financial
director reflected in company accounts – auditors failing to report any fraud – no
requirement of evidence on specific duties of auditors – knowledge of facts leading
to reasonable suspicion of possible negligence established – special plea correctly
upheld.
__________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: KwaZulu-Natal Division of the High Court, Durban (Phillips AJ,
sitting as court of first instance):
The appeal is dismissed with costs.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Petse DP, Nicholls and Hughes JJA and Tsoka AJA concurring)
[1] The appellant WK Construction (Pty) Ltd, which I shall refer to as
WK Construction, had employed a Mr Maartens as its financial director.
Mr Maartens defrauded WK Construction between 2006 and 2013. He did so by
including fraudulent transactions in its books of account. WK Construction was
defrauded of R80 132 548. It recovered R26 million from Mr Maartens. The net loss
sustained by WK Construction from the fraudulent activity was thus R54 132 548.
It is pleaded by the respondents that the auditor for WK Construction from 2007 was
a partnership known during various periods by the names of the three respondents.
From 31 August 2013, it is pleaded that the partnership was dissolved and the
erstwhile partners and others became directors of an incorporated entity, Mazars
Incorporated. This was the auditor of WK Construction from then until
28 February 2015. If any issues arise from the identity of these entities, they do not
concern us here. I shall collectively refer to them as Mazars. Mazars failed to report
on the fraudulent transactions during its term as auditor, rendering a clean audit
report each year. The claim relates to the audits for the financial year ending
28 February 2007 to that ending 28 February 2013.
[2] WK Construction sued Mazars in the KwaZulu-Natal Division of the High
Court, Durban (the high court). The summons was served on 23 August 2016. The
cause of action was an alleged breach of the auditing contract or contracts. Mazars
entered a special plea that the claim of WK Construction had been extinguished by
prescription. As an alternative, it contended that WK Construction was time barred
from claiming from Mazars on the basis of a clause in the contract governing their
relationship.
[3] These two issues were separated from the others in terms of rule 33(4) of the
Uniform Rules of Court. The evidence of one witness was led by Mazars, after which
Phillips AJ upheld the special plea of prescription. He also held that
WK Construction was time barred under the contract or contracts from claiming
against Mazars. The appeal is before us with his leave.
[4] It is not disputed that Mazars bore the onus on both issues. The special plea
of prescription invoked the provisions of the Prescription Act 68 of 1969 (the Act).
The salient provisions are:
Section 10(1) of the Act provides:
‘Subject to the provisions of this Chapter and of Chapter IV, a debt shall be extinguished by
prescription after the lapse of the period which in terms of the relevant law applies in respect of
the prescription of such debt.’
This introduced what is known as ‘strong’ prescription. Not only does the debt
become unenforceable after the lapse of the period in question, but, subject to certain
exceptions, it is extinguished such that a right of action based on it no longer exists.1
Section 11(d) of the Act fixes three years as the period for extinguishing a debt of
the kind in question. Section 12(1) of the Act provides:
‘Subject to the provisions of subsections (2), (3), and (4), prescription shall commence to run as
soon as the debt is due.’
And s 12(3) of the Act provides:
‘A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor
and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such
knowledge if he could have acquired it by exercising reasonable care.’
As is the case in the present matter, this provision has provided fertile soil for
litigation over the years.
[5] Boiled down to its essentials, the issue on prescription is when the alleged
debt was deemed to have become due. This required a finding on when
WK Construction had the relevant knowledge or could have acquired the relevant
knowledge by exercising reasonable care. This, in turn, required an assessment of
what comprised the relevant knowledge. If this was acquired prior to
23 August 2013, the debt had been extinguished by the time action was instituted.
[6] The sole witness called in the proceedings was one Ms De Coster. She had
been employed by WK Construction as its financial manager from May 2006 to
May 2018. She was a qualified chartered accountant. She reported directly to
Mr Maartens. She testified about the accounting systems employed by
WK Construction at the time. There was no dispute as to her testimony in this regard.
1 Standard General Insurance Co Ltd v Verdun Estates (Pty) Ltd and Another 1990 (2) SA 693 (A) at 698I–699C. In
contrast, s 3(1) of the Prescription Act 18 of 1943 provided that ‘[e]xtinctive prescription is the rendering
unenforceable of a right by the lapse of time’. This is known as ‘weak’ prescription.
In order to properly assess the matter, it is of some importance to delve into these
systems.
[7] Each project undertaken by WK Construction was allocated an account
number. An example pertinent to this matter was account number 69990, for a
project designated East Cape Small Contracts. An account was either open or closed.
Three digit general ledger codes were allocated for various types of expenditure.
This allowed ready identification of the nature of the expenses incurred which could
then be reconciled against the project in question. For example, general ledger code
423 related to materials. When these were procured for a project, that code and the
amount were entered under the account number for that project. All of the items
allocated to any one project could be extracted from the system so as to see at a
glance all of the entries, their codes, and the dates. This enabled WK Construction
to establish the profit or loss made on each project and identify the items on which
the expenses had been incurred. When a project had been completed, the account
relating to it was closed. A closed account was an historical account that was not in
use any longer. No transactions would take place on that account. At all times
material to this matter, the project with account number 69990 had been completed
and the account was a closed one.
[8] Ms De Coster testified that the directors had devised a system involving what
were termed bonus accounts. One of the bonus accounts was 67997 which was a live
account. The bonus accounts did not relate to projects, only to directors. Each
director was allocated a general ledger code number for use in those accounts. So,
directors whose expenses were being paid by WK Construction would have them
posted to account 67997 or one of the other bonus accounts and allocated to their
codes. These code numbers corresponded to general ledger codes used for legitimate
expense items in account numbers relating to projects. The code for Mr Maartens,
for example, was 423. Where his personal expenses of whatever nature had been
paid by WK Construction, they would be allocated to account 67997 against general
ledger code number 423. In an account relating to projects, general ledger code
number 423 would relate to materials for that project. This made it appear as if
account 67997 and the other directors’ bonus accounts were projects for which the
goods or services with that general ledger code number had been procured.
[9] The bonus account system was accordingly a mechanism by which some of
the directors’ personal expenses would be paid by WK Construction as if they had
been expended on projects of the company. These included items unrelated to
construction, one example being school fees. Directors’ meetings, to which Ms De
Coster was not privy, decided which of the directors’ expenses could be paid by
WK Construction and dealt with in this manner. The company accounts would not
reflect these payments as income to the directors concerned and, because they were
paid by the company, would correspondingly inaccurately inflate company expenses
in the books of WK Construction. Payments on behalf of directors were thus
portrayed as payments for expenses incurred by WK Construction in its projects.
[10] Ms De Coster testified that during February 2013 her attention was drawn to
a payment which had been posted to closed account 69990 in contravention of the
system. An amount of R543 022.76 had been paid by WK Construction to Leigh
Ebben Services CC. This did not relate to a project of the company. She sought
clarity from other employees of WK Construction, questioning it as a possible
‘gremlin’. It had been posted from one of the directors’ open accounts, 67997 to the
closed account 69990. As I have mentioned, nothing should have been posted to a
closed account. If expenses were moved from one open account to another, a journal
entry would be made debiting the one and crediting the other. The payment in
question had originally been posted to account 67997. No corresponding journal
entries had been made when it was moved from 67997 to 69990. This meant that
there was no proper audit trail for the posting. It would simply have disappeared
from account 67997 without any indication as to where it had gone. As Ms De Coster
put it, the amount appeared to have been ‘paid from the ledger’. She testified that
she thought at the time that it was as if the person posting it to account 69990 wanted
it to disappear.
[11] As a result, she reported this to Mr Maartens by email dated 12 February 2013,
saying:
‘Boss, I’ve noticed some funnies in the ledger to an account 69990. I have asked Vanessa to
investigate.
Do you know something about something in December?’
She testified that Mr Maartens replied by email that same day saying:
‘Hi there
We were doing a clean out of old bonus transactions so we could run 13th cheque costs in this code.
We merged 67997 and 69990 so that we could use a clean 67997. There should have been a 0
movement to date in the year to date on contract 69990. I will double check and advise. . . .’
[12] She was initially mollified by this because she ‘. . .sort of figured out that there
were transactions . . . that related to directors’, although she was not sure how these
worked. In about April 2013 however, while preparing the year end accounts, she
met with the Chief Executive Officer of WK Construction, Mr Karl Kusel. He
indicated to her that he was waiting on Mr Maartens to provide a reconciliation of
account 67997. She saw this as strange and thought that this directors’ account would
presumably not balance because this and any other such transactions had been
‘removed’ from it without trace. She went back to her office and printed out account
69990 and locked it in a box in her office. She was concerned that if something
which had been moved to that account was moved again, she might not be able to
find it. She did not know what to do because what she had found scared her. That
evening, she phoned her brother who advised her to speak to Mr Karl Kusel. She
described herself as being a bit hysterical and went outside to phone Mr Kusel,
telling him that she had found transactions that had been moved from account 67997
to a closed account. He said that they should await the reconciliation from
Mr Maartens.
[13] She continued to investigate. The closed account 69990 had had multiple
expenses posted to it which were clearly private and unrelated to projects. She
generated and analysed several detailed spreadsheets which showed up a number of
fraudulent transactions amounting to many millions of Rand. Many of the expenses
were allocated to code 423, the director’s code of Mr Maartens. These were not for
materials, but for private expenses despite this closed account number having been
that of a project. She enquired from one of the accounts staff whether anyone could
post expenses to closed accounts and was told that only systems administrators could
do so. There were three systems administrators: herself, one Thabo and
Mr Maartens. When she received this response on 19 July 2013, she forwarded it to
Mr Karl Kusel with the comment that ‘it is a problem’.
[14] On 8 August 2013, Mr Karl Kusel called her to his office and showed her the
reconciliation of account 67997 he had received from Mr Maartens. She indicated
that, because the values were lower than those she recalled for account 69990, she
did not think the reconciliation was correct. He gave her an excel spreadsheet of the
bonus reconciliation. He asked her to go through the data and requested that she meet
with him. The following day, the Friday of a long weekend, they met at the home of
Mr Karl Kusel. Mr Willie Kusel, the founder of WK Construction and father of
Mr Karl Kusel, was present. She was armed with printouts of all the relevant
accounts for a number of years. This made up a ‘big pack’ of documents.
[15] She was given the amounts that had been declared as bonuses. The postings
to the closed account 69990 showed amounts which were not in what Mr Maartens
had tendered as the reconciled bonus schedule. The additional amounts in account
69990 were thus not payments which had been approved by the directors to be paid
by WK Construction on behalf of a director and were well in excess of the approved
amounts. If they had been valid directors’ expenses, they should have been on the
schedule supplied by Mr Maartens. She was asked by Mr Willie Kusel whether she
believed that Mr Maartens ‘could have done something like this . . .’, that is, take
money from WK Construction. Her reply was that she did not know ‘. . . what else
it could be’ and could not conceive of another explanation if the directors were not
aware of them. Counsel during cross-examination attempted to question whether
that conversation had occurred but no evidence in rebuttal was led. The high court
accordingly held that the conversation was entirely consistent with the context of the
detailed spreadsheets having shown not only the nature and general extent of the
fraud but that Mr Maartens had been the perpetrator. There was no indication that
either Mr Willie Kusel or Mr Karl Kusel were unavailable to testify.
[16] Mr Maartens never returned to work after that weekend, indicating that he was
unwell. On 14 August 2013, Ms De Coster sent Mr Karl Kusel a PDF document
totalling 447 pages showing the transactions on the closed account 69990. This was
followed by a meeting with him. A total of many millions of Rand had gone from
account 67997, an active directors’ account, to 69990, a closed project one. She
found no reason ‘. . . why you would . . . move something from an active code into
a closed code other than for a purpose in hiding it and we had the details of all the
transactions’. Mr Maartens had clearly taken the money since he said that he had
moved the transactions into account 69990. Of that, code 423, the director’s code of
Mr Maartens, had just under R25 million allocated to it in account 69990 without
authorisation from the directors.
[17] This culminated in further investigations to attempt to establish the extent of
the fraud. On 18 August 2013, Mr Willie Kusel sent an email to Mr Maartens,
requesting a meeting on 22 August to discuss the reconciliation. He responded on
22 August saying that he had ‘. . . taken legal counsel . . . and they have advised me
that I have some issues that need to be addressed. . .’. He requested a later meeting
and it was agreed that they would meet on 24 August at the office of his legal
representative in Sandton.
[18] In the meantime, by 22 August 2013, further transactions in addition to those
involving the closed account 69990 had been unearthed. It was discovered that
payments had been made to conveyancers unrelated to the business of
WK Construction. This prompted a letter from the present attorneys of
WK Construction to a member of one of the firms of conveyancers to which such
payments had been made. It was written on the instructions of Mr Willie Kusel and
Mr Karl Kusel. It recorded that Mr Walden and the Kusels had met that day and went
on to say:
‘As discussed at our meeting I confirm that we are undertaking an investigation into the properties
that have been transferred into the name of Shaun Maartens from funds provided by
WK Construction without the knowledge and authority of Willie Kusel.’
It then requested that the conveyancing files be drawn in advance of the meeting to
take place on 24 August 2013. This elicited an emailed windeed printout from the
conveyancers dated 22 August showing six properties that had been transferred to
Mr Maartens.
[19] Also on 22 August 2013, Ms De Coster sent an email to Mr Karl Kusel with
documents attached. She said in it: ‘I must talk to you when you get this, please call
me.’ At 13h50 that day, she sent an email to him saying of Mr Maartens that she had
‘revoked his user certificate on the Nedbank system. It won’t work now’. At some
stage after the weekend of 9 August, Ms De Coster was instructed to, and did,
arrange for the locks on his office door to be changed.
[20] From all of this, it was quite clear to WK Construction by 22 August 2013
that Mr Maartens had defrauded it of a large sum of money. This was subsequently
confirmed at the meeting of 24 August 2013. WK Construction, in its heads of
argument, sought to submit that, on 22 August 2013, it did not know of the fraud,
but had only a suspicion. During argument, however, it was conceded that no other
construction could be put on the letter written by its own attorneys to the
conveyancers on that date than that it asserted that funds had been taken from
WK Construction by Mr Maartens without authorisation. The concession was
bolstered by the detailed information which had come to light from the books of
account as mentioned above. In my view, that concession was entirely appropriate.
[21] In summary, therefore, Ms De Coster was instructed sometime after the
9 August 2013 meeting with the Kusels to ensure that the locks on the office of
Mr Maartens were changed and this was done. Secondly, she testified that, on
22 August 2013, she informed Mr Karl Kusel that, in accordance with his
instructions, she had caused the ‘user certificate’ of Mr Maartens on the Nedbank
system of WK Construction to be revoked. Thirdly, the attorneys of
WK Construction wrote to conveyancing attorneys on 22 August 2013 indicating
that Mr Maartens had purchased properties ‘. . . from funds provided by WK
Construction without the knowledge and authority of Mr Willie Kusel’. The
properties in question had been provided by the conveyancers and reflected
Mr Maartens as the transferee. Fourthly, Mr Willie Kusel had called Mr Maartens to
a meeting which was to take place the following Saturday to account for the issues
which had arisen. These are not actions to be taken against a director of a company
on a mere suspicion. It is clear that WK Construction had concluded that
Mr Maartens had defrauded it over a number of years of many millions of Rand.
[22] However, WK Construction went on to contend that it did not, by
22 August 2013, have knowledge of the requisite facts giving rise to liability on the
part of Mazars. This is, of course, an entirely different matter from having
knowledge that Mr Maartens had perpetrated a fraud. The special plea is framed as
follows:
‘4.
On the assumption that the Plaintiff can establish the elements of its alleged claims, the
Defendants aver that prior to 23 August 2013:
4.1
The Plaintiff had knowledge:
4.1.1 that the Defendants had performed the audits of the Plaintiff company for the financial
years in question;
4.1.2 that the former financial director of the Plaintiff, Mr Maartens, had perpetrated fraud on
the Plaintiff, causing the Plaintiff to suffer losses (assum[ing] that the Plaintiff proves the
commission of the fraudulent transactions alleged); and
4.1.3 that the Defendants had not reported on any fraudulent activity of Mr Maartens identified
in the course of performing the audits;
4.2
the Plaintiff accordingly had knowledge of the identity of the Auditors (as the debtor in
respect of the claims) and of the facts from which the debts arose;
4.3
Alternatively, and if the Plaintiff did not have all of the knowledge referred to in
paragraph 4.2 above, the Plaintiff could have acquired such knowledge by exercising reasonable
care.’
[23] WK Construction had the knowledge asserted in paragraphs 4.1.1 and 4.1.3.
This was unchallenged and is incontrovertible. As mentioned above, it also correctly
conceded, after some debate, that it had the knowledge asserted in paragraph 4.1.2.
It did not, however, concede that Mazars had proved that it had knowledge of the
‘facts from which the debts arose’. In this regard, WK Construction founded its
submissions on two remaining pillars. The first was that the high court applied the
incorrect test, confining itself to a finding that, ‘because WK Construction had
knowledge of “the fraud” by 22 August 2013 . . . there was sufficient knowledge for
prescription to commence running . . . because as at that date there had been
unqualified audit reports’. The second was that it was not proved that WK
Construction knew that the money could not be recovered from Mr Maartens. The
third pillar of its argument, which I dealt with initially, was that WK Construction
did not have knowledge of the fraud perpetrated by Mr Maartens before
23 August 2013. As indicated, this requires no further mention. I shall deal with the
second pillar next and conclude with the first one.
[24] WK Construction submitted that prescription only begins to run when it is
established that the debtor who caused the primary loss cannot repay it. In other
words, Mazars had to prove that Mr Maartens was unable to satisfy the claim for
repayment before WK Construction had the requisite knowledge. Since this was not
proved, the running of prescription had not commenced prior to 23 August 2013.
For this proposition, it called in aid a number of cases.
[25] The first of these was ATB Chartered Accountants (SA) v Bonfiglio.2 In ATB,
the seller of a members’ interest and loan account in a close corporation was advised
by ATB that the purchaser had the financial ability to pay the purchase price. The
purchaser, who was to fund the payments from profits made by the close corporation,
defaulted on the first instalment due on 3 April 2003. The seller was advised at that
time that the close corporation, having been converted to a company, had been
liquidated. The seller sued ATB on 30 June 2006 on the basis that it had breached
its mandate to advise it. ATB entered a special plea of prescription claiming that the
cause of action arose at the time the seller had concluded the sale agreement,
alternatively when her attorney informed ATB that she intended to hold it
responsible for her losses and further alternatively by no later than the date on which
the purchaser defaulted and she was informed that the company had been liquidated.
[26] This Court held that it was unnecessary to determine the exact date on which
her cause of action arose, but that it had done so at the latest by the time she was
informed that the purchaser had defaulted and that the company had been liquidated.
The special plea of prescription was upheld on appeal as a result. WK Construction
submitted that different dates of the commencement of prescription were accepted
in ATB: as against the thief on 30 April 2002, but against the auditors on
3 April 2003. However, as shown above, that proposition is not supported by ATB
which found only that this was the latest date on which the knowledge had been
acquired and not that knowledge of the inability of the purchaser to pay was required.
2 ATB Chartered Accountants (SA) v Bonfiglio [2010] ZASCA 124; [2011] 2 All SA 132 (SCA) (ATB).
[27] The next matter relied upon was Thoroughbred Breeders’ Association of
South Africa v Price Waterhouse.3 This was a claim against an auditor but did not
deal directly with prescription. Theft by an employee had come to light. The theft
was believed to have started after October 1994, after the last audit undertaken by
Price Waterhouse (PW). PW was tasked to investigate and quantify TBA’s loss. The
thief was sued, summary judgment taken and R100 000 or so recovered. During the
investigation, it was found that, contrary to the earlier belief, the thefts had begun
prior to the last audit period. This gave rise to the claim against the auditor, PW, on
the basis that it had negligently failed to discover the thefts during the audit in
question.
[28] Prescription was invoked by Price Waterhouse. WK Construction submitted
that in Thoroughbred Breeders this Court held that the claim ‘arose only once it was
clear that the thief was unable to repay the amount in question.’ It relies upon the
following dictum:
‘. . . PW, it was common cause, was contractually bound to exercise reasonable care in the
execution of its audit and not to do the work negligently. The allegation is that it failed in that
respect; that had the work been done properly, Mitchell’s theft would have been uncovered in
January 1994; and that all the direct losses suffered by TBA due to Mitchell’s subsequent thefts
and his inability to repay were accordingly for the defendant’s account . . . .’4
This comes nowhere near to a finding by this Court that, until it was shown that the
thief was unable to pay, Thoroughbred Breeders Association lacked knowledge of
the requisite facts for prescription to commence running.
3 Thoroughbred Breeders’ Association of South Africa v Price Waterhouse 2001 (4) SA 551 (SCA) paras 32, 45 & 55
(Thoroughbred Breeders).
4 Ibid fn 3 para 9.
[29] The next two matters relied upon concerned claims for indemnification. The
first is Magic Eye Trading 77 CC v Santam Limited.5 That matter dealt with the
prescription of a claim for a declaratory order based on a contingent liability. It dealt
with claims for indemnification mostly under contracts of insurance and, in that
context, concluded that:
‘A claim to be indemnified against liability to a third party only arises once liability, in a fixed
amount, has been established. The corollary, which applies to the present matter, is found in the
third proposition set out in Pereira:
“That the disclaimer by the insurer, from which the period of three months allowed for the
institution of action commences to run, must follow on a claim by the insured of the character
described in (1) and (2) above. The condition does not admit of a general disclaimer of future
claims at a stage when a precise claim in a fixed amount has not, and cannot, be made by the
insured”.’6
[30] The second such matter is David Trust and Others v Aegis Insurance Co Ltd
and Others.7 One of the paragraphs relied upon, in this claim for indemnification,
read:
‘Katz Salber's inability to requisition payment from Investec was a direct consequence of its failure
to perform its mandate honestly and diligently. If Lombard had not stolen the money there would
have been no shortfall and Katz Salber would have been able to obtain the funds from Investec to
repay the plaintiffs; if the thefts had been discovered earlier, before the shortfall reached a point
where Katz Salber was no longer able to absorb it, the plaintiffs would also have been repaid. In
neither situation, in the absence of a claim from the plaintiffs against Katz Salber, could there have
been a claim by Katz Salber against the defendants under the policy. But once the stage was
reached where Katz Salber was faced by claims which, as a result of theft, it was no longer able to
meet, it is idle to suggest, as was done, that the plaintiffs' loss was due to Katz Salber's insolvency
and not to Lombard's dishonesty. . . .’
5 Magic Eye Trading 77 CC v Santam Limited [2019] ZASCA 188 para 15.
6 Ibid fn 5 para 15.
7 David Trust and Others v Aegis Insurance Co Ltd and Others 2000 (3) SA 289 (SCA) para 23.
[31] Once again, these matters are distinguishable from the present one. The
present claim is not one for indemnification. It is for damages arising from a breach
of contract. A claim for indemnification is triggered when the loss for which the
indemnity has been obtained has occurred and not before that. The two matters find
no application here. The second pillar relied upon by WK Construction is
accordingly not a compelling one.
[32] This leaves the first pillar. WK Construction contended that evidence was
required as to the applicable accounting standards and that Mazars had breached
these. This, in its nature, required expert evidence. Since none was adduced, it had
not been shown that WK Construction had all of the requisite facts giving rise to the
deemed knowledge. It was not sufficient to find that WK Construction was aware of
the fraud by Mr Maartens by 22 August 2013 and that there had been unqualified
audit reports which did not expose the fraud. In this regard, it relied on
Thoroughbred Breeders.8 This held that, in order to succeed in a claim against
auditors the standards set out in legislative enactments, the profession’s codification
of auditors’ duties and expert evidence should be presented to the court. This,
however, was a trial matter. In order to discharge the onus at the trial stage, that kind
of evidence would almost invariably be necessary. An auditor would have been in
breach of its duties ‘. . .if it had been careless in the execution of any aspect of its
mandate, measured against the general standards prevailing in the profession at the
time’.9 The present matter, however, concerns the facts required for prescription to
begin running in a claim based on professional negligence. This is different to the
facts which must be proved at a trial. The question is whether the evidence contended
for by WK Construction is necessary in these circumstances.
8 Ibid fn 3 paras 32, 45 & 55.
9 Ibid fn 3 para 20.
[33] This has been contested terrain for some time. It has been established that, in
order for prescription to run, the creditor need not be in a position to prove its case.
In Van Staden v Fourie,10 this Court held that running of prescription is not
postponed ‘until the creditor has established the full extent of his rights . . . .’ This
was elaborated on in Minister of Finance and Others v Gore NO,11 where it was
held:
‘This court has in a series of decisions emphasised that time begins to run against the creditor when
it has the minimum facts that are necessary to institute action. The running of prescription is not
postponed until a creditor becomes aware of the full extent of its legal rights, nor until the creditor
has evidence that would enable it to prove a case “comfortably”. . . .’
It is also ‘. . . clear that knowledge of legal conclusions is not required before
prescription begins to run . . .’.12
[34] In Truter and Another v Deysel,13 the position as regards professional
negligence was dealt with. Surgery had been performed on one of the eyes of
Mr Deysel. He went blind in that eye and sued the surgeon. In resisting a plea of
prescription, he submitted that the requisite knowledge:
‘. . . includes knowledge of facts showing that the defendant, in treating the plaintiff, failed to
adhere to the standards of skill and diligence expected of a practitioner in the former’s position.
Thus, it was submitted, until the plaintiff has sufficient detail – frequently if not invariably, in the
form of an expert medical opinion – showing that the defendant failed to exhibit the necessary
10 Van Staden v Fourie 1989 (3) SA 200 (A) 216B-F).
11 Minister of Finance and Others v Gore NO ZASCA 98; 2007 (1) SA 111 (SCA) para 17. References omitted.
12 Claasen v Bester 2012 (2) SA 404 (SCA) para 15. See also the dictum of Leach JA in Yellow Star Properties 1020
(Pty) Ltd v MEC, Department of Development Planning and Local Government, Gauteng 2009 (3) SA 577 (SCA)
para 37 where he held:
‘. . . It may be that the applicant had not appreciated the legal consequences which flowed from the facts, but its failure
to do so does not delay the date prescription commenced to run’.
13 Truter and Another v Deysel 2006 (4) SA 168 (SCA).
degree of diligence, skill and care and in what respects he or she failed to do so, the plaintiff does
not, in terms of s 12(3), have “knowledge of the facts from which the debt arises”.’14
This submission was roundly rejected by Van Heerden JA. She held:
‘. . . A debt is due in this sense when the creditor acquires a complete cause of action for the
recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to
succeed with his or her claim against the debtor is in place or, in other words, when everything has
happened which would entitle the creditor to institute action and to pursue his or her claim.’15
In that matter, she went on to cite with approval a dictum from McKenzie v Farmers'
Co-operative Meat Industries Ltd,16 to the effect that, in this sense, a complete cause
of action includes:
‘. . . every fact which it would be necessary for the plaintiff to prove, if traversed, in order to
support his right to the judgment of the Court. It doe[s] not comprise every piece of evidence which
is necessary to prove each fact, but every fact which is necessary to be proved. . . .’17
She accordingly found that:
‘ . . . an expert opinion that a conclusion of negligence can be drawn from a particular set of facts
is not itself a fact, but rather evidence . . . the presence or absence of negligence is not a fact; it is
a conclusion of law to be drawn by the court . . . .’18
This shows that expert opinion evidence concerning negligence is not required for
the running of prescription to commence.
[35] What, then, is the approach in a plea of prescription? In the context of a claim
of medical negligence, the Constitutional Court expressed itself on the appropriate
approach in Links v Department of Health, Northern Province.19 In that matter, the
plaintiff had received treatment to his thumb which had led to it being subsequently
14 Ibid fn 13 para 13.
15 Ibid fn 13 para 16.
16 McKenzie v Farmers' Co-operative Meat Industries Ltd 1922 AD 16 at 23.
17 See also Ibid fn 13 para 19.
18 Ibid fn 13 para 20. Emphasis in the original.
19 Links v Department of Health, Northern Province [2016] ZACC 10; 2016 (4) SA 414 (CC); 2016 (5) BCLR 656.
amputated. His claim was met with a special plea of prescription, bringing into focus
s 12(3) of the Act. A unanimous court held:
‘. . . To require knowledge of causative negligence for the test in s 12(3) to be satisfied would set
the bar too high. However, in cases of this type, involving professional negligence, the party
relying on prescription must at least show that the plaintiff was in possession of sufficient facts to
cause them on reasonable grounds to think that the injuries were due to the fault of the medical
staff. Until there are reasonable grounds for suspecting fault so as to cause the plaintiff to seek
further advice, the claimant cannot be said to have knowledge of the facts from which the debt
arises.’20
This was reiterated later in the judgment:
‘. . . Until the applicant had knowledge of facts that would have led him to think that possibly there
had been negligence and that this had caused his disability, he lacked knowledge of the necessary
facts contemplated in s 12(3).’21
[36] WK Construction invited us to apply the test recently articulated by the
Supreme Court of Canada in Grant Thornton LLP v New Brunswick.22 In that matter,
a report from an auditor on the soundness of a company had been sought, obtained,
and acted upon. It transpired that the company’s finances were not sound, as had
been reported, and it defaulted. Another accounting and auditing firm was
contracted. It opined that the financial statements had not been prepared to the
requisite standard. In particular, the company’s assets and net earnings had been
materially overstated. This had not been discovered by the auditor who had reported
on the company. Action was instituted alleging negligence. The auditor invoked a
statutory limitation providing that no claim could be brought after two years from
the day on which the claim was discovered. The court of first instance upheld this
20 Ibid fn 19 para 42.
21 Ibid fn 19 para 45.
22 Grant Thornton LLP v New Brunswick 2021 SCC 31.
defence but was reversed on appeal by the Court of Appeal of New Brunswick. The
Supreme Court of Canada set out the approach of the two courts below as follows:
‘. . . The motions judge held that a plaintiff needs to know only enough facts to have prima facie
grounds to infer the existence of a potential claim. The Court of Appeal, on the other hand, held
that discovery of a claim requires actual or constructive knowledge of facts that confer a legally
enforceable right to a judicial remedy, which includes knowledge of every constituent element of
the cause of action being pled. Thus, on the Court of Appeal’s interpretation, in addition to
knowledge of a loss and causation, a claim in negligence would include knowledge of a duty of
care as well as knowledge of a breach of the standard of care.’23
It rejected the approach of both the lower courts. It agreed with the court of first
instance that the claim was statute-barred by the relevant provision. In arriving at
that conclusion, it said:
‘. . . I propose the following approach instead: a claim is discovered when a plaintiff has
knowledge, actual or constructive, of the material facts upon which a plausible inference of liability
on the defendant’s part can be drawn . . . .’24
It is of more than passing significance that this new approach was developed against
the backdrop, peculiar to Canadian law, which had previously required ‘. . . prima
facie grounds for inferring . . . .’ liability. The Supreme Court of Canada held that
the new approach was necessary because ‘. . . there does not appear to be a universal
definition of what qualifies as prima facie grounds . . . .’25
[37] In the light of the clear position in our law, articulated in Truter and Links, it
would not be appropriate to introduce the posited approach. It is unnecessary to
consider a different test to that arrived at and applied in our law. This approach has
been continued in the matter of Loni v MEC for Health, Eastern Cape (Bhisho):26
23 Ibid fn 22 para 41.
24 Ibid fn 22 para 42.
25 Ibid fn 22 para 45.
26 Loni v MEC for Health, Eastern Cape (Bhisho) 2018 (3) SA 335 (CC) para 23.
‘In Links . . . this court opined that it would be setting the bar too high to require knowledge of
causative negligence. In answer to this issue, this Court held that in cases involving professional
negligence, the facts from which the debt arises are those facts which would cause a plaintiff, on
reasonable grounds, to suspect that there was fault on the part of the medical staff and that caused
him or her to “seek further advice”.’
This approach, then, is what governs the present matter. I must therefore decline the
invitation to introduce the approach of the Supreme Court of Canada.
[38] The question is, accordingly, whether, by 22 August 2013, it can be said that
the known facts would have caused WK Construction, on reasonable grounds, to
have suspected that there was fault on the part of Mazars so as to cause it to seek
further advice. Stated differently, whether WK Construction had ‘. . . knowledge of
facts that would have led [it] to think that possibly there had been negligence [on the
part of Mazars] and that this had caused . . .’ its loss from the fraud perpetrated by
Mr Maartens.
[39] The function of an auditor was described by Holmes JA in Lipschitz and
Another NNO v Wolpert and Abrahams:27
‘An auditor appointed under the Companies Act is a professionally qualified person. He is a
scrutineer with a critically enquiring mind. He maintains his independence at all times. He takes
no instructions from directors, shareholders or creditors. He carries out his statutory prescribed
duties with a reasonably high degree of skill and diligence in the circumstances and in the light of
modern conditions and standards. He acts in good faith; and he also has certain obligations under
his own statute . . . .’
27 Lipschitz and Another NNO v Wolpert and Abrahams 1977 (2) SA 732 (A) at 741F-H.
[40] WK Construction knew that the essential feature of the fraud was that it had
largely, although not exclusively, been reflected in postings to a closed account
whose project had ended. There was no justification for any entries to have been
made in account 69990. In addition, these were payments ‘made through the ledger’
unsupported by journal entries. Amounts had been moved from an open account
67997 to account 69990 without any corresponding journal entries or accounting
basis. The details were readily available. The fraud had been perpetrated over a
number of years. By 22 August 2013, as was put in Truter, ‘everything [had]
happened which would entitle the creditor to institute action and to pursue his or her
claim’.28 For the purpose of the commencement of the running of prescription,
whether it was suspected that the auditors had possibly negligently failed in their
duties must be distinguished from evidence which supports that suspicion. The latter
is not necessary for prescription to commence as was said in Gore and the other
cases referred to above.
[41] In the light of these facts, it can be concluded that WK Construction must have
had a reasonable suspicion of possible negligence on the part of Mazars. It did act
on that suspicion by contacting an accounting firm to give expert advice. In my view,
this amply satisfies the test in Link and the other cases for the requisite knowledge
causing prescription to commence running. The high court was thus correct in
upholding the special plea of prescription. This first pillar relied upon by
WK Construction does not provide a basis on which to uphold the appeal. Having
arrived at this conclusion, it is not necessary to consider the question of the time bar
clause in the contract or contracts. The appeal must fail.
28 Truter para 16.
[42] In the result the following order is made:
The appeal is dismissed with costs.
___________________
T R GORVEN
JUDGE OF APPEAL
Appearances:
For appellant:
A Subel SC (with him L Broster SC and S Pudifin-
Jones)
Instructed by:
Alexander Cox Attorneys, Kloof
Symington De Kok Attorneys, Bloemfontein
For respondents:
S Mullins SC
Instructed by:
Norton Rose Fulbright, Durban
Webbers Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
6 April 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.
WK Construction (Pty) Ltd v Moores Rowland and Others [2022] ZASCA 44
Today the Supreme Court of Appeal dismissed with costs an appeal against the
judgment of Phillips AJ in the KwaZulu-Natal Division of the High Court, Durban,
upholding a special plea of prescription. The respondents (Mazars) were auditors of
the appellant (WK Construction) at all material times. The financial director of
WK Construction perpetrated a fraud on it over a number of years for which audits
had been conducted by Mazars. Although the fraud was conducted by irregular
postings in various ledger accounts without corresponding journal entries, Mazars
did not detect these. In an action, WK Construction alleged that the failure of Mazars
to do so was as a result of a breach of the auditing contract and that, as a
consequence, WK Construction had suffered damages of some R54 million. The
action was met with a special plea of prescription. The crisp issue was whether WK
Construction had knowledge of the facts of the debt prior to 23 August 2013 since
action was instituted on 23 August 2016. Only the evidence of the person employed
as the financial manager at the time, and who reported to the financial director, was
led in support of the special plea.
On appeal, WK Construction submitted initially that it was unaware of the fraud of its
financial director at the relevant date since it had only a suspicion of the fraud. It was
conceded in argument that this point could not succeed. It was then contended that,
prescription only begins to run when it is established that the debtor who caused the
primary loss cannot repay it. This argument found no favour with the court. As its
main further point, WK Construction contended that because Mazars had not led
expert evidence of the duties of an auditor and that Mazars had fallen short of these
duties, the special plea should have been dismissed.
The Supreme Court of Appeal discussed the test to be applied at the stage of a
special plea of prescription. It applied the judgment in Truter and Another v Deysel
2006 (4) SA 168 (SCA) to the effect that ‘. . . time begins to run against the creditor
when it has the minimum facts that are necessary to institute action. The running of
prescription is not postponed until a creditor becomes aware of the full extent of its
legal rights, nor until the creditor has evidence that would enable it to prove a case
“comfortably”’. Truter further held that expert evidence was not necessary in order
to establish negligence as contended for by WK Construction since ‘an expert
opinion that a conclusion of negligence can be drawn from a particular set of facts is
not itself a fact, but rather evidence . . . the presence or absence of negligence is
not a fact; it is a conclusion of law to be drawn by the court’. The Supreme Court of
Appeal then went on to follow the approach of the Constitutional Court in the matter
of Links v Department of Health, Northern Province 2016 (4) SA 414 to the effect
that what was required was ‘knowledge of facts that would have led [it] to think that
possibly there had been negligence and that this had caused’ the loss sued for. It
was not necessary to have expert advice or evidence to that effect. This test was
satisfied in the present matter by 22 August 2013. Prescription accordingly
commenced to run prior to 23 August 2013. As a consequence, the appeal was
dismissed with costs.
|
1459
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 661/09
In the matter between:
J C DA SILVA V RIBEIRO First Appellant
L D BOSHOFF Second Appellant
v
SLIP KNOT INVESTMENTS 777 (PTY) LTD Respondent
Neutral citation:
Da Silva v Slip Knot Investments (661/2009) [2010] ZASCA
174 (2 December 2010).
Coram:
Mpati P, Cachalia, Tshiqi JJA, R Pillay and K Pillay AJJA
Heard:
18 November 2010
Delivered:
2 December 2010
Summary: Where an initial loan agreement is a ‘credit transaction’ to which the
National Credit Act 34 of 2005 (NCA) does not apply, and the parties enter into a
new agreement to guarantee the obligations under the initial loan agreement, the
new agreement is a credit guarantee to which the NCA does not apply.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Van der Walt AJ
sitting as court of first instance).
The following order is made:
The appeal is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Mpati P, Tshiqi JA, R Pillay and K Pillay AJJA concurring):
[1] The respondent sought and obtained an order in the South Gauteng High
Court on 18 September 2009 against the first and second appellants jointly and
severally for payment of the sum of R10 659 157.18 and certain ancillary relief.
The appellants now come before this court with leave of the high court. It will be
convenient to refer to the parties as they were referred to in the high court: the
respondent was the applicant, the first and second appellants were the first and
second respondents to whom I shall refer together as the respondents. It will,
however, be preferable to refer to the third respondent (R B Merit Investments
(Pty) Ltd), who has no interest in these proceedings, as R.B. Merit.
[2] The applicant’s claim is based on a written agreement, which was
concluded on 10 January 2008, but which had its genesis in two previous loan
agreements. Under the loan agreements, concluded in May 2007 and July 2007,
the respondents had bound themselves as sureties for two loans that R.B. Merit
had obtained from the applicant for a hotel development. After R.B. Merit and the
two sureties (the respondents) had failed to repay these loans when they
became due, and were thus in breach of their obligations under the loan
agreements, the parties negotiated a settlement of their dispute by concluding
the current agreement.
[3] In terms of this agreement it was recorded that:
(i)
the applicant had lent and advanced amounts of R22,5m and R1m to
R.B. Merit in terms of the loan agreements;
(ii)
the outstanding amount still owing under those agreements was an
amount of R35 641 117.69;
(iii)
R.B. Merit would, on 11 January 2008, pay R7,6m to the applicant and the
balance would be apportioned towards repayment of the outstanding
amounts under the two loan agreements;
(iv)
R.B. Merit would provide a bank guarantee to the applicant in an amount
of R20,4m before 18 January 2008;
(v)
the respondents would then be liable to pay the balance of the amount of
R28 196 336.48 as follows: by 15 May 2008 an amount of R800 000, and
by 1 December 2008, the balance together with any interest.
[4] R.B. Merit met its commitments under the agreement; the respondents
were unable to meet theirs. The applicant then demanded payment from them of
the total amount due under the agreement, but they paid only R158 754.88 on 24
September 2008. They were thus in breach of their contractual obligations. The
applicant sought to enforce the agreement by claiming the outstanding amount in
the high court. This comprised the amount of R800 000, which the respondents
had failed to pay on 15 May 2008, and the balance, after deducting the 24
September 2008 payment, which had become due and payable as of 25
September 2008.
[5] The respondents opposed the claim by seeking refuge in the National
Credit Act 34 of 2005 (the NCA). Their main ground of opposition was that the
agreement constituted a ‘credit agreement’ as contemplated by s 8 of the NCA.
The consequence of this, they contended, was that the agreement was void
because it was concluded contrary to s 89(2)(d), read with s 89(5),1 which
requires a credit provider to be registered as such before entering into an
agreement to which the NCA applies. It is common cause that the applicant is not
a registered credit provider.
[6] The applicant on the other hand asserted that the agreement was
concluded because of R.B. Merit’s failure to fulfil its undertakings under the initial
loan agreements, and the respondents’ failure to meet their obligations in terms
of their guarantees. So, it contended, the agreement was a ‘credit guarantee’ and
not a credit agreement. And further, that the NCA did not apply to it because, by
virtue of s 8(5), read with s 4(2)(c),2 the NCA is applicable to a credit guarantee
only to the extent that it also applies to a credit agreement in respect of which the
guarantee was granted. Accordingly, so it contended, because the agreement
was nothing more than a continuing guarantee to satisfy R.B. Merit’s original
obligation under the loan agreements – to which the NCA did not apply – the
1Section 89 ‘Unlawful credit agreements
(1)
. . .
(2)
. . . a credit agreement is unlawful if –
(a) . . .
(b) . . .
(c) . . .
(d) at the time the agreement was made, the credit provider was unregistered and this
Act requires that credit provider to be registered.
(5)
. . .
(a) the credit agreement is void as from the date the agreement was entered into.’
2 Section 8(5) provides: ‘An agreement, irrespective of its form . . . constitutes a credit guarantee
if, in terms of that agreement, a person undertakes or promises to satisfy upon demand any
obligation of another consumer in terms of a credit facility or a credit transaction to which this Act
applies.’
Section 4(2)(c) provides that the NCA: ‘. . . applies to a credit guarantee only to the extent that
this Act applies to a credit facility or credit transaction in respect of which the credit guarantee is
granted.’
agreement, properly construed, was a credit guarantee, which also fell beyond
the ambit of the NCA.
[7] The high court (Van Der Walt AJ) dismissed the respondents’ defence and
upheld the applicant’s contention that the NCA did not apply to the agreement
because it was a credit guarantee – not a credit agreement – to which the NCA
did not apply. The respondents appeal against this finding. The outcome of this
appeal therefore turns on whether the agreement is a credit agreement, as the
respondents contend, or a credit guarantee as the applicant asserts.
[8] The respondents do not dispute that the initial loan agreements were
credit transactions (credit agreements) as contemplated by s 8(4)(d)3 of the NCA
because they were mortgage agreements or secured loans, which entitled the
applicant to register mortgage bonds over the property on which R.B. Merit was
to build the hotel and, as further security, the respondents were to guarantee
R.B. Merit’s obligations. But because the loans were made to a juristic person, ie
R.B. Merit, the loan agreements were not subject to the NCA for two reasons:
first, by virtue of s 4(1)(b)4 the loans were large agreements because they were
mortgage agreements as contemplated in s 9(4), and secondly, because the
principal debts in both loans were above the higher threshold of R250 000
established in terms of s 7(1)(b) under General Notice 713, published in
Government Gazette 28893 of 1 June 2006.5 So, because the NCA did not apply
to the loan agreements, by virtue of s 4(2)(c) and s 8(5), it did not apply to the
respondents’ accessory obligations (guarantees) under those agreements either.
This much, as I have said, is common cause.
3 Section 8(4)(d): ‘. . . a mortgage agreement or secured loan.’ In terms of s 1 a ‘credit
transaction’ means ‘an agreement that meets the criteria set out in s 8(4)’.
4 Section 4(1)(b): ‘. . . a large agreement, as described in section 9(4), in terms of which the
consumer is a juristic person whose asset value or annual turnover is, at the time the agreement
is made, below the threshold value determined by the Minister in terms of section 7(1).’
5 Section 9(4): ‘A credit agreement is a large agreement if it is-
(a) a mortgage agreement; or
(b) any other credit transaction except a pawn transaction or a credit guarantee, and the principal
debt under that transaction or guarantee falls at or above the higher of the thresholds established
in terms of section 7(1)(b).’
[9] The respondents contended in the high court, as they did before us, that
once R.B. Merit fulfilled its obligations flowing from the agreement, and had no
further commitments towards the applicant, they became principal debtors under
the agreement. This meant that their obligations to the applicant were no longer
of an accessory nature. They were now the true borrowers or credit receivers
under the agreement. And the fact that they had guaranteed R.B. Merit’s loans
under the previous loan agreements had no bearing on the current agreement.
Accordingly, they contended, the agreement, properly construed, is a credit
transaction – not a credit guarantee – as contemplated by s 8(4)(f) of the NCA.6
This is because it involves the payment of an amount owed by the respondents
to the applicant, which has been deferred, and is payable together with interest
and an administration fee. We are thus required to consider whether the
agreement was merely an undertaking or a promise by the respondents to satisfy
R.B. Merit’s debts, as the applicant contends, or a new and separate obligation,
as the respondents would have it. The answer depends on what the parties
intended by the agreement.
[10] The applicant, the respondents and R.B. Merit were all parties to the
agreement. In terms of the agreement the following was recorded:
(i)
The initial loan agreements were concluded so that R.B. Merit could fund
a hotel development;
(ii)
in order to complete the development R.B. Merit required additional
funding, which has now been secured from certain third parties;
(iii)
the additional funding is, however, subject to the lender (the applicant)
releasing R.B. Merit and the sureties (the respondents) from their
obligations and undertakings in terms of the initial loan agreements;
6 Section 8(4)(f): ‘. . . any other agreement, other than a credit facility or credit guarantee, in terms
of which payment of an amount owed by one person to another is deferred, and any charge, fee
or interest is payable to the credit provider in respect of-
(i) the agreement; or
(ii) the amount that has been deferred.’
(iv)
at the request of R.B. Merit and the sureties, the lender has, subject to the
fulfilment of the terms and conditions of the agreement, agreed to the
cancellation of the pledges, cessions and suretyships concluded in terms
of the initial loan agreements. It was, however, specifically recorded that
the agreement does not constitute a novation of the initial loan
agreements. (Emphasis added.);
(v)
it is agreed that the obligations and undertakings as accepted by the
sureties in terms of the agreement have as their origin the initial
undertakings and obligations attributable to the sureties in the initial loan
agreements;
(vi)
the agreement shall be the sole record of the subject matter contained in
it;
(vii)
the outstanding amount owing as at 11 January 2008 under the initial loan
agreements would be R35 641 117.69.
[11] The outstanding amount was to be settled by R.B. Merit paying the sum of
R7,6m to the applicant on 11 January 2008 and providing a guarantee in the sum
of R20,4m before 18 January 2008. Once the sum was paid and the guarantee
furnished, R.B. Merit and the respondents would be released from their
obligations under the initial loan agreements and R.B. Merit would incur no
further obligations under the agreement. The respondents would then be
responsible for settling the outstanding balance, together with interest, as
provided for in the agreement. It is common cause that R.B. Merit met its
obligation to pay the applicant and also provided the guarantee in terms of the
agreement.
[12] The high court rejected the respondents’ contention that the initial loan
agreements were irrelevant to determining the issue in this case. The learned
judge pointed out that the agreement specifically referred to the respondents’
obligations under the loan agreements and also that at the time the agreement
was concluded the respondents still had the obligation to guarantee R.B. Merit’s
commitments to the applicant. It was therefore not, the judge held, a credit
transaction. And if it was not a credit transaction at the time the agreement was
concluded, it could not have become one subsequently, after R.B. Merit was
released from its obligations. For, if it could have, this would mean that the
agreement was not void at the time that it was concluded, but became so once
R.B. Merit had discharged its obligations under the very agreement. This result,
said the high court, would be absurd.
[13] I respectfully agree with the high court’s reasoning. To this I wish to add
that the parties ‘specifically recorded’ that the agreement ‘does not constitute a
novation of the initial loan agreements’ and that the ‘obligations and undertakings
as accepted by the sureties in terms of the agreement have as their origin the
initial undertakings and obligations attributable to the sureties in the initial loan
agreements’. The fact that the parties also recorded that ‘this agreement shall be
the sole record of the subject matter contained herein’ – a point the respondents
relied upon to avoid the consequences of the initial agreements – does not
detract from the fact that the parties explicitly intended not to extinguish, but
rather to confirm, the obligations arising from the initial agreements. The
obligations under the loan agreements and those under the new agreement were
thus interdependent.7 This can only mean that the agreement was, in substance,
an agreement to guarantee R.B. Merit’s obligations under the initial loan
agreements – and was therefore a credit guarantee to which the NCA did not
apply.
[14] The appeal must therefore fail. The following order is made:
The appeal is dismissed with costs.
______________
A CACHALIA
JUDGE OF APPEAL
7 Cf Adams v SA Motor Industry Employers Association 1981 (3) SA 1189 (A) 1199G-H.
APPEARANCES
APPELLANTS:
P L Carstensen
Instructed by Ross Munro Attorneys c/o A le Roux
Attorneys, Johannesburg
Honey Attorneys, Bloemfontein
RESPONDENT:
A C Botha
Instructed
by
Sim
&
Botsi
Attorneys
Inc,
Johannesburg
Symington & De Kok, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
2 December 2010
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
* * *
DA SILVA V SLIP KNOT INVESTMENTS
The Supreme Court of Appeal (SCA) today held that where the National Credit Act 34 of
2005 does not apply to an initial loan agreement, the Act also does not apply to a new
agreement (credit guarantee) subsequently entered into to guarantee the obligations under
the initial loan agreement.
Mr Joao da Silva and Mr Louis Dirk Boshoff argued that the new agreement entered into by
them with Slip Knot Investments, in terms of which they had guaranteed the repayment of
two loans advanced to R B Merit Investments (Pty) Ltd by Slip Knot, was void for failure
to comply with the National Credit Act, because Slip Knot was not a registered credit
provider. They argued that their obligations flowing from the new agreement were
independent of the initial loan agreements and replaced their obligations under them. The
new agreement was, so they argued, therefore a credit transaction and not a credit
guarantee.
The SCA held that if the agreement was not a credit transaction at the time it was
concluded, it could not have become one after R B Merit was released from its obligations.
It further held that the obligations under the loan agreements and those under the new
agreement were interdependent. This could only mean that the agreement was, in
substance, an agreement to guarantee R B Merit’s obligations under the initial loan
agreements – and was therefore a credit guarantee to which the Act did not apply. It
dismissed an appeal by Mr da Silva and Mr Boshoff against an order of the Johannesburg
High Court.
|
1870
|
non-electoral
|
2011
|
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case no.: 483/10
In the matter between:
PETRUS JACOBUS KRIEL Appellant
and
THE STATE
Respondent
Neutral citation: Kriel v The State (483/10) [2011] ZASCA 113 (01
June 2011)
Coram:
Cloete, Cachalia JJA and Meer AJA
Heard:
26 May 2011
Delivered:
01 June 2011
Summary:
Criminal Procedure − Leave to appeal − Appeal
against refusal of − Where an accused obtains leave to
appeal 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 is whether
leave to appeal should have been granted by the high
court and not the merits of the appeal itself − The test
is whether there is a reasonable prospect of success in
the envisaged appeal against sentence, rather than
whether the appeal ought to succeed or not.
ORDER
On appeal from: KwaZulu-Natal High Court (Durban) Nicholson and
Swain JJ sitting as court of first instance:
1 The appeal succeeds.
2 The order refusing appellant leave to appeal is set aside and is replaced
with an order granting the appellant leave to appeal to the KwaZulu-Natal
High Court against the sentence imposed on him in the regional court.
JUDGMENT
MEER AJA (Cloete and Cachalia JJA concurring)
[1] This matter comes before us on appeal with leave of the KwaZulu-
Natal High Court. It is an appeal against a sentence imposed in a regional
court. For the reasons set out in this judgment the issue before us is not
the appeal itself on the merits, but whether the petition for leave to appeal
to the KwaZulu-Natal High Court against the sentence imposed in the
Vryheid Regional Court, should have been granted by the KwaZulu-Natal
High Court.
[2] The relevant facts are as follows. On 11 December 2004 a collision
occurred on a public road between Vryheid and Dundee, KwaZulu-Natal
between a Toyota Landcruiser driven by the appellant in the direction of
Dundee and a Nissan double cab driving in the opposite direction towards
Vryheid. The impact caused the death of two of the occupants of the
Nissan. Other passengers were injured.
[3] On 18 January 2008 the appellant was convicted in the Vryheid
Regional Court following a plea of guilty on a charge of driving under the
influence of liquor in contravention of s 65 (1) (a) of the National Road
Traffic Act 93 of 1996 (count one), and two charges of culpable homicide
(counts 2 and 3). On the same day he was sentenced on count one to six
years’ imprisonment. On counts two and three, which were taken together
for the purpose of sentence, the appellant was sentenced to eight years’
imprisonment of which two years were suspended for five years on
condition that he was not again convicted of culpable homicide involving
a motor collision. The appellant’s drivers’ license was suspended for a
period of two years and he was declared unfit to possess a firearm licence
in terms of s 103(1) of the Firearms Control Act 60 of 2000. Leave to
appeal against sentence was refused by the regional magistrate.
[4] In his plea of guilty in terms of s 112 of the Criminal Procedure
Act 57 of 1977 and his statement setting out the facts upon which the plea
was based, the correctness of which was accepted by the State, the
appellant admitted that he had caused the collision and the deaths of two
deceased, women aged 70 and 57. He said he had consumed several beers
until about 01h00 during the night before the collision but said that he
had sobered up. At approximately 10h00 the next morning he had about
two brandies before setting out from Vryheid for Dundee. He felt fatigued
and believed that he could continue driving. But he nodded off to sleep
briefly, lost control of the vehicle, crossed the double barrier line in the
middle of the road and collided with the oncoming vehicle. He admitted
that alcohol had a part to play in causing the collision. His statement
concluded with his offering his deepest sympathy to the family of the
bereaved and praying that God might grant them patience and willingness
to forgive him. Equally, he expressed his sincere and utter remorse for his
actions.
[5] Anita Groenewald, the daughter of one of the deceased women,
testified for the State on sentence. The two deceased and the child who
was seriously injured were all members of the same family that was
preparing for a wedding to be held that very day. The witness was
summonsed to the scene of the accident where she discovered that the
two elder women were dead. The child, Germaine, who had sustained
brain injuries, had to be taken by helicopter to hospital in
Pietermaritzburg. In all some R200 000 was paid to cover the costs of
medical services. There were also burial costs of R15 000
[6] After the accident Germaine, who was six at the time, could not
maintain proper posture and fell over when trying to sit upright. She
crawled for some time before re-learning to walk, had to be potty trained,
fed and was helpless. Although nearly ten at the time of the trial, she had
a mental age of a six year old and had failed both Grade one and Grade
two. Germaine had lost all the sparkle in her life and showed little
emotion. The two deceased women had been energetic and healthy at the
time of the collision. Mrs Groenewald also described the considerable
trauma occasioned to the rest of the family as a result of the collision. She
was being treated for depression.
[7] The appellant did not testify in mitigation of sentence. His attorney,
addressing the court in mitigation, provided the following information,
which was not put in issue by the State. The appellant was a first
offender. At the time of the trial he was 46 years of age and had three
children aged 21, 19 and 12. His wife was unemployed. The appellant,
who has a diploma in agriculture, had been a wealthy farmer but had lost
everything early in 2000. As a consequence he had sought solace in
alcohol, becoming an alcoholic. Since the collision appellant had been
working with a priest towards his personal rehabilitation. At the time of
his trial he had not stopped drinking but his drinking habits were under
control. His only asset was his farm which was heavily bonded. The
appellant was working as a consultant on contract, teaching fire fighting
skills and earned between R10 000 and R12 000 per month.
[8] Three days after he had been sentenced, on 21 January 2008,
during an application for bail pending a petition for leave to appeal
against his sentence to the KwaZulu-Natal High Court, the magistrate
who had sentenced the appellant stated that due to an oversight he had
neglected to order that the sentences imposed on each count were to run
concurrently. The magistrate thereafter amended the sentence as follows:
‘(1)
It is also directed in terms of section 280 of Act 51 of 1977 THAT THE
SENTENCES ON COUNTS 1 AND 2 TO RUN CONCURRENTLY. In other
words you will serve an effective six (6) years’ imprisonment and not the
previous incorrect twelve (12) years.
(2)
In terms of section 276 (b) of Act 51 of 1977 it is directed that the accused
serves half of his sentence before he qualifies for parole.
(3)
In terms of section 35 THE DRIVER’S LICENCE IS SUSPENDED FOR
TWO (2) YEARS.
(4)
In terms of section 103 (1) of Act 60 of 2000 YOU ARE EX LEGE
DECLARED UNFIT TO OBTAIN A FIREARM LICENCE.’
[9] The magistrate expressed concern about his competency to rectify
the sentences as it could be argued that he was functus officio at the time
he corrected the sentences. He accordingly directed that the proceedings
be sent on urgent special review to the KwaZulu-Natal High Court. The
appellant was granted bail in the sum of R2 000 pending petition. On 19
February 2008 the conviction and sentences were confirmed on review by
the high court and it was ordered that the sentences should run
concurrently.
[10] A petition to the KwaZulu-Natal High Court, Pietermaritzburg for
leave to appeal against sentence was refused on 14 August 2009. The
appellant then applied to the high court for leave to appeal to this court
against the refusal by the high court of his petition for leave to appeal.
Nicholson and Swain JJ, sitting as a full bench in granting leave to
appeal, cited S v Khoasasa1 and then proceeded to grant leave to appeal
directly to this court against the sentence imposed by the regional court.
They were wrong in so doing, as, in S v Khoasasa2 it was held that a
sentence imposed in the regional court can only be appealed against in
1 S v Khoasasa 2003 (1) SACR 123 SCA
2 S vKhoasasa at para 12
this court when an appeal against such sentence has failed in the high
court.
[11] In Matshona v S3, a case similar to the present, this court was asked
to consider an appeal against a sentence imposed in the Pretoria Regional
Court. A petition for leave to appeal had been refused in the high court
and leave to appeal was granted to this court. Leach AJA at paragraphs 4
to 6 set out why the appeal on its merits could not be entertained. These
paragraphs are repeated:
‘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 section 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 Section 309C(2) and dealt with in
chambers. In the event of this petition 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 section 20(1) and section 21(1)
of the Supreme Court Act 59 of 1959, 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 court by way of petition.
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
3 S vMatshona [2008] 4 All SA 68 ( SCA) paras 4 - 6
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. 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:
“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 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.
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….’
[12] Like the Court in Matshoma we, too, cannot determine the merits
of the appeal. The issue before us is whether leave to appeal to the high
court should have been granted and not the appeal itself. The test in that
regard is simply whether there is a reasonable prospect of success on
appeal against sentence.
[13] The following factors have a bearing on the reasonable prospects of
success against the sentence of six years’ direct imprisonment imposed on
appellant for driving under the influence of liquor. The fact that two
people died must be ignored in considering the appropriate sentence for
this offence, to avoid duplication of punishment. First offenders who are
convicted for driving under the influence of liquor are generally not
sentenced to direct imprisonment but to a fine, alternatively imprisonment
of which a portion is suspended. This is apparent from a review of
sentences imposed for the offence in S v Mtshobane.4 The appellant’s
sentence of six years is the maximum period of imprisonment for reckless
and negligent driving under the Road Traffic Act 93 of 1996. Evidence
was not presented about appellant’s blood alcohol level or state of
intoxication. The State accepted that he had sobered up before drinking
the brandies. Yet the magistrate found that appellant was ‘heavily under
the influence of liquor’. Bearing these factors in mind, there exists a
reasonable prospect that a court of appeal might consider the sentence
imposed to be disproportionately harsh.
[14] In comparing the sentence of six years’ imprisonment on the counts
of culpable homicide with the lesser sentences generally imposed for
4S v Mtshobane1999 (1) SACR 25
culpable homicide involving motor vehicles, as appears from the
comparison done in S v Nyathi,5 a court of appeal might similarly
consider the sentence to be too severe, even should it take the view that
direct imprisonment (whether or not in terms of s 276 (1)(i) of the
Criminal Procedure Act) is warranted. In Nyathi a sentence of five years’
imprisonment of which two were suspended, was confirmed on appeal.
The appellant in Nyathi took a conscious decision to overtake on a double
barrier line and a blind rise, causing the death of six people. It was found
that the appellant’s culpability was seriously aggravated by his conscious
assumption of risk. The appellant before us assumed no such conscious
risk, (and for that reason does not fall into the most extreme category
mentioned in paragraph 12 of Nyathi), nor were the consequences as
serious as those in Nyathi as less people were killed, yet his period of
effective imprisonment is double that imposed in Nyathi.
[15] The Magistrate took the decision to suspend the appellant’s
driver’s licence for two years in terms of s 35 of the National Road
Traffic Act 93 of 1996 without affording the appellant an opportunity of
addressing him in this regard. A court of appeal might also decide that he
misdirected himself in doing so.
5 S v Nyathi 2005 (2) SACR 273 (SCA) paras 16 to 21
[16] In the result I am satisfied that leave to appeal should be granted
and the following order is made:
1 The appeal succeeds.
2 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
KwaZulu-Natal High Court against the sentence imposed on him in the
regional court.
_____________
Y S Meer
Acting Judge of Appeal
APPEARANCES:
For Appellant:
Adv P C Bezuidenhout SC (with him L Barnard)
Instructed by
Shaheed Abdulla & Co, Vryheid
Honey Attorneys, Bloemfontein;
For Respondent:
A A Watt
Instructed by
Director Public Prosecutions, Pietermaritzburg
Director Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
xx May 2011
STATUS: Immediate
KRIEL V THE STATE (483/10)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal (the SCA) today upheld the appeal and set aside the
order of the KwaZulu-Natal High Court refusing the appellant leave to appeal, to the
KwaZulu-Natal High Court against the sentence imposed on him by the Vryheid
Regional court. The latter order was replaced with an order granting the appellant
leave to appeal.
The appellant was convicted in the Vryheid Regional Court on a charge of driving
under the influence of liquor in contravention of s 65(1)(a) of the National Road
Traffic Act 93 of 1996 (the Act) (count one) and two charges of culpable homicide
(counts two and three). He was sentenced on count one to six years’ imprisonment.
On counts two and three he was sentenced to eight years’ imprisonment of which
two years were suspended for five years on condition that he was not convicted
thereafter of culpable homicide involving a motor collision. His driver’s licence was
suspended for a period of two years. Leave to appeal against sentence was refused
by the regional magistrate.
A petition to the KwaZulu-Natal High Court (Pietermaritzburg) for leave to appeal
against sentence was refused. The appellant then applied to the high court for leave
to appeal to the SCA against the refusal by the high court of his petition for leave to
appeal. The high court, per Nicholson J, granted him leave to appeal to the SCA
against the sentence imposed by the regional court.
The SCA held that the court a quo was wrong in doing so as an appeal from a
decision of a regional court lies to the high court. The SCA held that, on the authority
of Matshona v S [2008] 4 All SA 68 (SCA), it could not determine the merits of the
appeal. The SCA stated that the issue before it was whether leave to appeal to the
high court should have been granted. The test in that regard, it stated, was simply
whether there was a reasonable prospect of success on appeal against sentence.
The SCA stated that, if the culpable homicide is ignored, first offenders who are
convicted for driving under the influence of liquor are generally not sentenced to
direct imprisonment but to a fine, alternatively to imprisonment of which a portion is
suspended. The sentence of six years is the maximum period of imprisonment for
reckless and negligent driving under the Act. There was additionally no finding by
the magistrate that the appellant was heavily under the influence of liquor. The SCA
held that bearing these factors in mind there exists a reasonable prospect that a
court of appeal may consider the sentence imposed to be too severe. The SCA
stated that the appellant assumed no conscious risk, yet his period of direct
imprisonment is double that imposed in S v Nyathi 2005 (2) SACR 273 (SCA). The
SCA stated that the magistrate took the decision to cancel the appellant’s driver’s
licence for two years, without holding an enquiry, and a court of appeal might well
find this was a misdirection.
-- ends --
|
2740
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case : 314/11
Reportable
In the matter between
CITY OF JOHANNESBURG METROPOLITAN
Appellant
COUNCIL
and
PATRICK NGOBENI
Respondent
Neutral citation: City of Johannesburg Metropolitan Council v
Ngobeni (314/11) [2012] ZASCA 55 (30 March
2012)
Coram:
Navsa, Heher, Mhlantla, Tshiqi and Wallis JJA
Heard:
28 February 2012
Delivered: 30 March 2012
Summary: Wrongful shooting – conduct of trial judge – irregular –
approach to be followed and principles to be applied when dealing with
two mutually destructive versions – trial court misdirected itself.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Spilg J
sitting as court of first instance).
1 The appeal is upheld with costs including those attendant on the
employment of two counsel.
2 The order of the court below is set aside in its entirety and substituted
as follows:
'The plaintiff's claim is dismissed with costs.'
___________________________________________________________
JUDGMENT
__________________________________________________________
MHLANTLA JA (NAVSA, HEHER, TSHIQI and WALLIS JJA
concurring):
[1] This appeal is directed against a judgment of Spilg J sitting in the
South Gauteng High Court, Johannesburg, in terms of which the learned
judge upheld the claims for wrongful shooting, arrest and detention by the
respondent, Mr Patrick Ngobeni against the appellant, the City of
Johannesburg Metropolitan Council. It is convenient to refer to the parties
as they were cited in the court below.
The background
[2] On 15 September 2004, the plaintiff was shot by a metro police
officer Thabo Ledwaba during an incident which occurred at the
intersection of Queen Street and Buckingham Avenue, Kensington,
Johannesburg. Following the shooting, the plaintiff was admitted to
hospital having sustained two bullet wounds. He was arrested and
detained whilst in hospital. As a result of the incident the plaintiff was
rendered a paraplegic. He subsequently instituted an action against the
defendant and its two employees. The metro police officers who were
involved in the incident, were Mr Ledwaba, who died before the
commencement of the trial and Mr Mandlakayise Mabaso. The plaintiff
claimed damages from the defendant and the two police officers arising
from the shooting incident and for his subsequent arrest and detention.
[3] The plaintiff founded his claim on two alternative grounds. First,
he claimed that Mabaso and/or Ledwaba unlawfully assaulted him by
inter alia:
(a)
pointing a firearm at him;
(b)
shooting him multiple times and wounding him; and
(c)
jumping on his chest.
In the alternative, he claimed that Ledwaba negligently discharged the
firearm in his vicinity and this led to him being injured in his left shoulder
and hip.
[4] The defendant and its employees pleaded that on the night in
question Mabaso and Ledwaba, in their capacity as metro police officers,
had stopped the plaintiff for a traffic offence and enquired whether he
was in possession of a valid driver's licence. At a certain stage, and whilst
they were executing their duties as such, the plaintiff suddenly and
without reason, extracted an unlicensed firearm from his vehicle and
pointed it at Mabaso. The plaintiff further assaulted Mabaso by hitting
him with the firearm on his right eye. As a result of the plaintiff's actions,
Ledwaba who had been inspecting a licensed firearm found in the
plaintiff's possession, sought to defend Mabaso and in the course of such
defence fired three shots at the plaintiff with the licensed firearm.
[5] During the course of the trial in the court below, it became
apparent that the plaintiff was pursuing his claim solely on the basis that
Ledwaba had acted negligently when he fired the rounds which caused
his injuries. On the other hand, the defendant adduced evidence in
support of its defence of justification. At the end of the trial, the judge
was faced with two mutually destructive versions. He accepted the
plaintiff's version and held that the defendant and its employees were
liable for the damages suffered by the plaintiff. The defendant now
appeals against that judgment with the leave of this court.
The evidence
[6] Before identifying the issues on appeal I will proceed to set out a
brief exposition of the evidence adduced in the court below. The plaintiff
testified in support of his case. Inspector Raletsemo testified on behalf of
the plaintiff upon the insistence of the trial judge. Six witnesses were
called on behalf of the defendant. Mabaso was the defendant’s main
witness. The trial judge mero motu ordered an inspection in loco to be
held and thereafter called Mr Maseko, the owner of the vehicle driven by
the plaintiff during the incident.
[7] The plaintiff testified that on 14 September 2004 at 22h30, whilst
driving a Nissan LDV (Nissan) to Fontana Cafe, he had failed to stop at a
stop sign at the intersection of Queen Street and Buckingham Avenue,
Kensington. Two metro police officers noticed the infraction, stopped his
vehicle and parked their own vehicle immediately behind the Nissan.
Ledwaba exited the patrol vehicle and approached the plaintiff, who by
then had also alighted from the Nissan. They met towards the rear of the
Nissan where Ledwaba requested the plaintiff to produce his driver's
licence. The plaintiff disclosed that he did not have a licence, whereupon,
so he said, Ledwaba asked the plaintiff to 'make a plan'. The plaintiff
handed Ledwaba R40 which the latter accepted but had protested that it
was not enough.
[8] According to the plaintiff, Ledwaba approached the front of the
Nissan and noticed a loaded and cocked semi-automatic Norinco pistol
lying on the front seat of the vehicle. He took the weapon. The plaintiff
produced the Norinco’s licence upon Ledwaba's request. Ledwaba
proceeded to check the licence using the lights of the patrol vehicle. It
was at that stage that Mabaso alighted from the patrol vehicle and
approached the plaintiff who was standing outside the vehicle but within
the area of the open door of the Nissan. He had his back to the seat and
his left hand was resting on the open door.
[9] When Ledwaba finished checking the firearm licence, he
proceeded to the front of the Nissan. Using the torch in his left hand and
holding the Norinco in his right, he checked the licence disc. It was at
that stage that the plaintiff heard three shots being fired in quick
succession. According to him, once the trigger is depressed and held, the
Norinco would fire all the rounds in the weapon. The plaintiff believed
that the shots had been fired accidentally because immediately after
hearing the shots, he heard Ledwaba saying 'eish' as an exclamation of
surprise. The plaintiff could not feel anything from the waist down and
fell to the ground whilst holding onto Mabaso. He subsequently
discovered that he had been struck by two of the three rounds. He
explained that he was left to lie there for approximately four hours before
he was removed to hospital. Whilst lying there Mabaso jumped on his
chest. He did not lose consciousness and was aware of his surroundings
until his admission to the hospital where he was kept under police guard.
[10] The plaintiff confirmed that he had made two written statements to
the police. The first, to Inspector Nathane, who has since died, was made
in August 2005, whilst the second was taken by Inspector Molatelo
Raletsemo in October 2007. He also made a report to Dr Güldenpfennig,
who had been instructed by his attorney to compile a medico-legal report.
There were material contradictions between these statements and his
evidence. In certain instances the plaintiff denied some parts of the
statements stating that he had not conveyed to the police the information
contained therein. This was despite the fact that a similar report had been
given to Dr Güldenpfennig.
[11] The trial judge insisted that Inspector Molatelo Raletsemo be called
as a witness during the plaintiff’s case. He testified that he took over the
investigation of the case after the previous investigating officer Nathane
had died. Raletsemo testified that during October 2007, he consulted with
the plaintiff and recorded a second statement. He explained that the
plaintiff was offered an opportunity to make use of an interpreter but
declined. He communicated with the plaintiff in English, isiZulu and
Sepedi. According to him, the plaintiff appeared to be panicking and
uncomfortable when he made the second statement. After recording the
statement, the plaintiff read and signed the statement after confirming the
contents. That concluded the evidence adduced on behalf of the plaintiff.
[12] As stated earlier, Mabaso was the main witness on behalf of the
defendant. He testified that on 14 September 2004, he and Ledwaba
reported for duty and commenced their shift at 23h00. He was adamant
that the incident had occurred on 15 September 2004 at 01h15 and not at
the time alleged by the plaintiff. He and his colleague had observed the
plaintiff failing to heed the stop sign. They turned on their blue light,
stopped the Nissan and parked the patrol vehicle behind the plaintiff's. As
soon as the patrol vehicle came to a halt, a passenger stood up on the back
of the Nissan. They became suspicious and both alighted from the patrol
vehicle. They met the plaintiff and his passenger towards the rear of the
Nissan. The plaintiff was asked for his driver's licence which he could not
produce. Ledwaba approached the front of the Nissan and found a cocked
Norinco pistol lying on the front seat. He asked the plaintiff for a licence,
which was produced. Ledwaba returned to the patrol vehicle in order to
verify the licence, using the lights of the patrol vehicle.
[13] Mabaso, at that stage, was searching the passenger who had
identified himself as John. After searching the passenger, Mabaso
approached the plaintiff in order to conduct a body search. The plaintiff
unexpectedly moved away from Mabaso towards the driver's seat of the
Nissan. He reached into the vehicle and produced a firearm, which was
later identified as a Star PD pistol. The plaintiff cocked this pistol and
pulled Mabaso towards him. It was at this stage that the plaintiff hit
Mabaso in the right eye with the muzzle of the Star PD uttering the words
'woza la wena nja' (come here you dog). It was immediately after this
attack that Mabaso heard three shots being fired in quick succession.
Mabaso fell to the ground believing that it was the plaintiff who had fired
the shots. He later discovered that it was Ledwaba who had fired the
Norinco.
[14] Whilst Mabaso was on the ground, he heard footsteps and realised
that it was the passenger who was running away. He gave chase but
stopped when the passenger ran into a nearby erf. Mabaso returned to the
scene where Ledwaba explained that he had shot the plaintiff. He further
explained that he had a clear view of the plaintiff when he was holding
the firearm to Mabaso's face and that he shot the plaintiff in defence of
Mabaso. Immediately after the incident he and Ledwaba reported the
incident, calling for backup and an ambulance. Mabaso testified that the
ambulance arrived at the scene shortly after they had called for assistance.
Other police officers arrived, secured the scene and took photographs.
I must mention that the evidence of Mabaso was interrupted on numerous
occasions, namely, when the court on its own initiative ordered an
inspection in loco to be conducted and when Inspector Lurie and Mr
Maseko were called by the court. I shall deal with this aspect later in my
judgment.
[15] Leon Pelser, who is employed by Johannesburg Metro Police
Department as an armourer, testified that, on the morning in question, he
arrived at the scene at 01h55. He confirmed that Ledwaba and Mabaso
were on an all night shift from 23h00 to 07h00. Pelser found three spent
cartridges at the scene. He took photographs of the scene, made notes in
his investigation diary and requested Mabaso and Ledwaba to provide
him with their statements. He explained that Ledwaba reported that the
incident occurred at 01h15 and that he had fired three rounds. The
officers informed him that the plaintiff had already been taken to the
hospital; that immediately before the shooting incident the suspect had
been sitting in the door of the vehicle when he suddenly pulled out an
unlicensed firearm, cocked it and shoved it into the head and eye of
Mabaso. Ledwaba and Mabaso subsequently reported to his office. The
officers each wrote their statements independently, using separate desks
and thereafter handed these to him. He read the statements to each officer,
and thereafter Ledwaba and Mabaso signed their statements.
[16] During cross-examination, the material parts of Mabaso’s evidence
were put to Pelser. He testified that if a firearm were cocked, the cartridge
would be in the chamber. The round would remain in the chamber when
the magazine is removed. To eject it, one has to cock the weapon. He
explained that he had not discussed the case with members of the South
African Police Services (SAPS) at the scene nor had he examined the
firearms. He merely performed his functions without any hindrance or
interruption from SAPS members. Answering questions posed by the trial
court, Pelser testified that there had been no bullet in the chamber of the
Star PD. According to him if the firearm were cocked, the pin or hammer
would be lying backwards. In this case, it was not lying backwards but
was flat.
[17] Captain Sajad Singh, an official police photographer, testified that
he arrived at 02h50 whereafter Sgt Chuene showed him the crime scene.
He observed only three spent cartridges. He took photographs and
collected forensic evidence. He later compiled a photo album in which
various exhibits were identified and drew up a sketch plan. He
confiscated the Star PD and the 9mm Norinco firearms.
[18] Inspector Benjamin Lurie, a ballistics expert testified, in
circumstances to which I will revert, that he had received a firearm, a .45
ACB calibre Star the serial number of which had been erased (the Star
PD firearm), one magazine, and five .45 ACB calibre cartridges. He
testified that upon examination and testing of the Star PD firearm, he had
found that it functioned normally. Regarding the serial number, he
applied an electro-acid etching process and determined that the serial
number of the Star PD was possibly 16067. This serial number however
belonged to a different make and model of firearm. He was thus unable to
identify the origin or owner of the Star PD. After concluding the
examination, he handed the Star PD to the administration section. Lurie
explained that should the muzzle of a cocked Star PD pistol be pressed
against an object or body part with sufficient force, the slide and the
barrel of the pistol would move back and the trigger be disconnected. It is
a safety mechanism that is built into the firearm to prevent it from firing.
This results in the Star PD pistol not being capable of firing a round.
[19] Regarding the Norinco firearm, Lurie testified that it was not fully
automatic. It was necessary for the trigger to be depressed before any
round could be fired. Depressing and keeping the trigger depressed would
not result in more than one round being fired. His testimony in this
regard was contrary to the plaintiff’s. Lurie explained that when the
trigger is pulled and a shot is fired after extraction has taken place – the
cartridge cases are ejected to the right hand side of the firearm. According
to Lurie one can accidentally dislodge the safety catch without much
difficulty because the safety mechanism on the locking ball of the safety
selector does not function fully. The safety selector can fall forward and
backwards unassisted.
[20] Michael Venter, who is employed by Nicholas Yale CC, a local
agent of the manufacturing company of the Star PD firearm testified but
his evidence is of no real consequence.
[21] Mr Mandla Maseko, the owner of the Nissan driven by the
plaintiff, attended the inspection in loco upon the request of the trial
judge and he brought his vehicle. The judge thereafter called him as a
witness. Mabaso's evidence was interrupted by the judge to accommodate
this witness. Maseko testified that he and the plaintiff's brother had
swapped cars for the day as he had to travel to Piet Retief. On 15
September 2004 he received a call from the police, who enquired about
the whereabouts of his vehicle and thereafter notified him about the
incident. He later recovered his vehicle from the police in a damaged
condition. The driver’s door panel had been pierced by two bullets. The
window, as well as its mechanism that allows one to open and close the
window, was also damaged. The vehicle was repaired; the bullet holes
were closed; the window was replaced and the winding mechanism was
fixed.
[22] Dr Gordon Maritz Güldenpfennig was called by the defendant inter
alia, to explain the version of events conveyed to him by the plaintiff. He
testified that the trajectory of the bullet was downwards. He explained
that it was possible that the bullet had ricocheted and come into contact
with the shoulder bone which could have caused the bullet to deflect and
change its trajectory. According to him the plaintiff has partial sensory
loss from the level of T8 further down; thus the paralysis. There was a
possible deduction from the way the bullet travelled, as it could have
caught the edge of the scapula. The path of the bullet was consistently in
a downward direction and it moved to the right side. He testified that,
during consultation, there was no mention of the officers trying to get the
blood out, nor did the plaintiff mention that the officers tried to kill him.
He conceded that the plaintiff may have mentioned this, but because it
was not relevant for purposes of the report he did not write it in his notes.
[23] Inspector Rajendra Naidoo's evidence was tendered to disprove the
plaintiff's explanation that he voluntarily handed in his Norinco firearm to
the police for safekeeping, because he was not permitted to keep a
firearm at the place where he was residing. Naidoo’s testimony revealed
that on 9 September 2005, almost a year after the shooting incident,
Naidoo had arrested the plaintiff and confiscated his firearm after
receiving a report that the latter had been involved in the theft of a motor
vehicle.
The judgment in the High Court
[24] As indicated earlier in my judgment, Spilg J was faced with two
mutually destructive versions. Regarding the question of onus of proof,
the judge held that the issue of the onus was irrelevant as, either way, the
result would be the same. He preferred and accepted the evidence of the
plaintiff. He criticised Mabaso in regard to the time of the incident
despite the existence of objective facts which favoured the defendant’s
version of events. Both Mabaso and the plaintiff testified that they had
heard three shots being fired. The judge, however concluded that four or
five shots were fired. The judge ignored the evidence of Inspector Lurie
that the Norinco was not fully automatic, as well as that of Dr
Güldenpfennig in respect of the trajectory of the bullet. Spilg J criticized
the manner in which the police had conducted their investigation. In this
regard he was strongly influenced by the fact that the plaintiff had never
been charged with unlawful possession of a firearm. He suggested that
the metro police and Pelser may have conspired against the plaintiff and
may have planted the Star PD firearm at the scene to falsely implicate
him.
[25] In the result, Spilg J concluded that Ledwaba had not fired the
Norinco in order to defend Mabaso, but did so unintentionally and
negligently.(My emphasis.) He further found that Ledwaba was negligent
in that he held a dangerous weapon after having been warned of the
existence of a bullet in the breech whilst he was in close proximity to a
civilian and still holding the firearm with his finger on the trigger. Spilg J
accordingly found that the defendant was liable for the damages suffered
by the plaintiff and for the wrongful arrest and detention of the plaintiff.
It is against this conclusion that the defendant launched the appeal.
[26] The defendant raised the following issues for determination on
appeal:
(a) whether the trial judge had adopted the proper approach when faced
with mutually destructive versions;
(b) whether there was any merit in the appellant’s perception that the trial
judge was biased;
(c) whether the calling of a witness by a trial judge in civil proceedings
was irregular; and
(d) whether the calling by the trial judge for an inspection in loco was
irregular.
[27] In his written argument counsel for the defendant contended that
the judge descended into the arena and committed various irregularities
during the trial, namely, the judge mero motu called witnesses, called for
an inspection in loco to be held and unduly interfered when Mabaso
testified. He argued that the conduct of the judge evidenced bias in favour
of the plaintiff. On the other hand, counsel for the plaintiff denied the
allegation of bias against the judge. He contended that the judge had the
discretion to call witnesses and call for an inspection in loco at any stage
of the trial. He submitted that this had not prejudiced the defence case.
[28] In this court the parties agreed that the judge behaved in an
inappropriate manner during the trial. They accepted that the judge
deserved some censure with regard to the manner in which he conducted
the trial. It was submitted that, despite the behaviour of the judge, the
appeal could be determined on the merits. It is apposite at this stage to
deal with the aspect relating to the judge's conduct, as some of the issues
raised may have a bearing on the merits.
The conduct of the trial judge
[29] It is unfortunately necessary to make some adverse comments
about the conduct of Spilg J. The trial record runs to approximately
23 000 lines, of which 7200 lines were occupied by the judge, either
when questioning witnesses or making comments. His active
participation in the proceedings constitutes a third of the record. This, in
my view, is highly inappropriate. In a trial the judge has to act as an
impartial arbiter. The law requires that a judicial officer must conduct the
trial open-mindedly, impartially and fairly and such conduct must be
manifest to all those who are concerned in the trial and its outcome.1 In
Take and Save Trading CC v Standard Bank SA Ltd2 Harms JA held:
'A balancing act by the judicial officer is required because there is a thin dividing line
between managing a trial and getting involved in the fray.'
[30] In Jones v National Coal Board,3 Denning LJ said:
1 S v Roberts 1999 (4) SA 915 (SCA) at 923 A.
2 Take and Save Trading CC v Standard Bank of SA Ltd 2004 (4) SA 1 at para 4.
3 Jones v National Coal Board [1957] 2 All ER 155 (CA) at 159A-B. See also Yuill v Yuill [1945] 1 All
ER 183 at 189.
'In the system of trial which we have evolved in this country, the judge sits to hear
and determine the issues raised by the parties, not to conduct an investigation or
examination on behalf of society at large, as happens, we believe, in some foreign
countries. Even in England, however, a judge is not a mere umpire to answer the
question "How's that?" His object above all is to find out the truth,4 and to do justice
according to law; and in the daily pursuit of it the advocate plays an honourable and
necessary role. Was it not Lord Eldon, L.C., who said in a notable passage that "truth
is best discovered by powerful statements on both sides of the question" . . . and Lord
Greene, M.R., who explained that justice is best done by a judge who holds the
balance between the contending parties without himself taking part in their
disputations? If a judge, said Lord Greene, should himself conduct the examination of
witnesses,
"he, so to speak, descends into the arena and is liable to have his vision clouded by the
dust of the conflict."
. . .
So firmly is all this established in our law that the judge is not allowed in a civil
dispute to call a witness whom he thinks might throw some light on the facts. He must
rest content with the witnesses called by the parties . . . So also it is for the advocates,
each in his turn, to examine the witnesses, and not for the judge to take it on himself
lest by so doing he appears to favour one side or the other . . . And it is for the
advocate to state his case as fairly and strongly as he can, without undue interruption,
lest the sequence of his argument be lost . . . The judge's part in all this is to hearken
to the evidence, only himself asking questions of witnesses when it is necessary to
clear up any point that has been overlooked or left obscure; to see that the advocates
behave themselves seemly and keep to the rules laid down by law; to exclude
irrelevancies and discourage repetition; to make sure by wise intervention that he
follows the points that the advocates are making and can assess their worth; and at the
end to make up his mind where the truth lies. If he goes beyond this, he drops the
mantle of a judge and assumes the robe of an advocate; and the change does not
become him well.'
The procedure described by Denning LJ is clearly set out in rule 39 of the
Uniform Rules of Court and governs trials in this country.
4 As to the scope of this see Hon J J Spigelman AC "Truth and Law' [2011] 85 ALJR, 746.
[31] Trollip AJA in S v Rall5 laid down three principles of proper
judicial behaviour, namely:
'(1)
The Judge must ensure that "justice is done" . . . and should also ensure that
justice is seen to be done…. He should therefore so conduct the trial that his open-
mindedness, his impartiality and his fairness are manifest to all those who are
concerned in the trial and its outcome, especially the accused.
(2)
A Judge should also refrain from indulging in questioning witnesses or the
accused in such a way or to such an extent that it may preclude him from detachedly
or objectively appreciating and adjudicating upon the issues being fought out before
him by the litigants.
(3)
A Judge should also refrain from questioning a witness or the accused in a
way that may intimidate or disconcert him or unduly influence the quality or nature of
his replies and thus affect his demeanour or impair his credibility.'
[32] In S v Le Grange,6 Ponnan JA stated the following with regard to
judicial behaviour:
'It must never be forgotten that an impartial judge is a fundamental prerequisite for a
fair trial. The integrity of the justice system is anchored in the impartiality of the
judiciary. As a matter of policy it is important that the public should have confidence
in the courts. Upon this social order and security depend. Fairness and impartiality
must be both subjectively present and objectively demonstrated to the informed and
reasonable observer.'
[33] In this case Spilg J appears to have been on a personal fact-finding
mission. He descended into the arena, mero motu called witnesses and on
his own initiative decided that an inspection in loco be held. I turn now to
illustrate the instances where Spilg J entered the fray, contrary to the
5 S v Rall 1982 (1) SA 828 (A) at 831H-832G.
6 S v Le Grange 2009 (1) SACR 125 para 21.
principles outlined above. It will be necessary in certain instances to set
out the relevant extracts from the record.
(a)
An order that an inspection in loco be held
[34] It is trite that an inspection in loco is ordinarily conducted upon the
application of a party. If it is at the instance of the judge, he or she must
explain why they deem it necessary that an inspection in loco should be
held. In all cases it should be held at the earliest possible opportunity.
After an inspection, the judge must place his or her observations on the
record and allow the parties to comment thereon. The proper method of
recording the observations of the court at an inspection in loco was set
out in Kruger v Ludick7 as follows:
'It is important, when an inspection in loco is made, that the record should disclose the
nature of the observations of the Court. That may be done by means of a statement
framed by the Court and intimated to the parties who should be given an opportunity
of agreeing with it or challenging it and, if they wish, of leading evidence to correct
it. Another method, which is sometimes convenient, is for the Court to obtain the
necessary statement from a witness, who is called, or recalled after the inspection has
been made. In such a case, the parties should be allowed to examine the witness in the
usual way.'
[35] The record discloses the following exchange with regard to what
transpired before the judge decided that an inspection in loco be held:
'COURT: It is okay. While we are waiting then what is the view about an inspection
in loco, to see the scene, the view of the plaintiff Mr Swanepoel?
MR SWANEPOEL: M'Lord, I have no objection to such inspection ... [intervention].
COURT: Will it serve a purpose?
MR SWANEPOEL: It will serve a purpose with regard to a certain ... [indistinct]
pertaining ... [intervention].
7 Kruger v Ludick 1947 (3) SA 23 (A) at 31. See also Bayer South Africa (Pty) Ltd v Viljoen 1990 (2)
SA 647 (A) at 659H-660B and Goldstuck v Mappin & Webb Ltd 1927 TPD 723 at 734.
COURT: When should it be conducted though? Because if it is relevant to what you
may want to ask this witness, I believe you should not complete your cross-
examination, because then it means recalling and it also means that there will be a re-
examination.
MR SWANEPOEL: Yes.
COURT: That is the issue. What is your attitude, Ms Goedhart?
MS GOEDHART: M'Lord, my respectful submission to Your Lordship is that we do
not believe that it is going to make, elucidate anything. There are photographs in
EXHIBIT A which were taken on the night in question, which we submit to Your
Lordship would be far more beneficial, because in order to get the same feeling, then
you literally have to go there at night time to know how it looked like ...
[intervention].
COURT: Have you been to the scene?
MS GOEDHART: No, M'Lord, but the photographs do indicate, M'Lord, that it is a
built up area. The other difficulty, M'Lord, is the incident happened five years ago.
COURT: Yes.
MS GOEDHART: There is no guarantee that, if we take the time and spend the time,
that when we get there, M'Lord, it will still be the same scene, and, whatever,
evidence may or may not have been on the tar at that stage, M'Lord, is now no longer
going to be there.
. . .
COURT: So we have got that evidence already. We know it is three houses. That is, I
think we are going to have the inspection.'
Upon resumption of the proceedings, and after having conducted the
inspection in loco, the judge who appeared to have taken some
photographs himself during the inspection in loco, made the following
statement:
'COURT: Well I have got news for everybody I downloaded the photographs that
were taken yesterday. They are available. Unfortunately I am going to take it no one
has got a laptop with them, but there are a number of photographs depicting the door.
But possibly the witness can recall and just for assisting us I take it that this is alright.'
[36] There is no doubt that none of the parties applied for an inspection
in loco. It is clear that it was ordered by Spilg J to counter the evidence of
Mabaso. His evidence was interrupted to allow for the inspection to be
held. This was despite the protestations of the defendant's counsel. The
judge actively participated during the inspection, took photographs and
mero motu interviewed Maseko, the owner of the Nissan. After the
inspection, the guidelines set out in Kruger v Ludick were not followed,
in that, the observations of the judge were never placed on record.
Instead, the observations by the plaintiff's counsel during the inspection
were used as a basis to further cross-examine Mabaso. This procedure
was totally flawed. It is unbecoming of a judicial officer to behave in that
manner.
(b)
Calling of a witness
[37] As indicated earlier in my judgment, Spilg J mero motu called the
investigating officer to deal with the apparent contradictions relating to
the statement by the plaintiff. After the inspection in loco he called
Maseko to testify. As a general rule, in civil cases, the court has no power
to call a witness without the consent of the parties. The issue must be
thoroughly canvassed with the parties to enable them to express their
views or objections. In Rowe v Assistant Magistrate, Pretoria,8 the court
held:
‘In a civil action the parties lay before the court what evidence they think is necessary
to support their respective cases, and if, on determining the case, a magistrate or judge
is unable on the evidence before him to come to a decision, or finds it difficult to
decide where the truth lies, I do not think he ought to take upon himself the right of
calling a witness who had not been called by either of the parties in order to make his
task easier, or in his view, to do justice between the parties.’
8 Rowe v Assistant Magistrate, Pretoria 1925 TPD 361 at 369.
[38] The following statement was made by the trial judge when he
decided to call Maseko and in the process interrupted the evidence of
Mabaso for the defendant:
'COURT: That he will be called tomorrow, that because he would be predominantly
a witness for the plaintiff that despite where we have gone, your rights are rights of
examination and the examination whilst Ms Goedhart's rights are those of cross-
examination. And that I am not going to debate on. If you want I will give you the
authority which I have.
. . .
When the cross-examination commenced the judge sought to limit it:
COURT: Court called this witness to deal with the identification of his car.
MS GOEDHART: m'Lord, with respect once a witness is called and the defendant
has the opportunity and right, particularly, M'Lord, with respect at the stage at which
it has taken place, it was at the court's insistence ... [intervenes].
COURT: Yes.
MS GOEDHART: But we are already in the defendant's case, M'Lord, and the fact of
the matter is that there has been no explanation from the plaintiff as to why this
particular witness was not called before.
COURT: I must add I do not see the relevance, but I will allow the cross-
examination to go beyond the reason for the court calling him, the witness. I will then
reconsider the basis upon which re-examination takes place at a later stage, but at this
stage your rights of cross-examination are to deal with any matter that you believe
relevant, which will include most probably why you did not call the witness to deal
with where the bullets were in the vehicle on the night. So please carry on.'
. . .
No such restriction was placed on the plaintiff's counsel.
'COURT: That we do have. So I think just confirm that that did take place when he
was asked to indicate where he was immediately before.
MR SWANEPOEL: Sir you remember yesterday at the inspection in loco you were
asked where were you positioned immediately before the incident and you showed the
position basically in the door of the driver's side of the bakkie. ... Indeed.' (My
emphasis.)
[39] In my view, the manner in which the witness, Maseko, was called is
inappropriate. The judge did not explain the purpose of calling this
witness. He interrupted the cross-examination of Mabaso. This involved a
procedural disadvantage for the defendant. The judge was quick to
protect the witness when cross-examined as to his credibility and that of
the plaintiff. The trial judge erred when he rejected the objections of the
defendant’s counsel to his calling Maseko. In my view, the calling of this
witness was an irregularity. His evidence is accordingly inadmissible.
(c)
Refusal of the court to excuse a witness
[40] During the plaintiff's case, an admission was made on his behalf
that the contents of Inspector Lurie's report would be admitted. It was
therefore no longer necessary to call this witness as the parties were
agreed on the contents of his report. Spilg J, however disagreed and
refused to excuse the witness as emerges from the following excerpt:
'MS GOEDHART: M'Lord, in light of the admissions Inspector Lurie is present I
would like to excuse him in the light of the admissions.
COURT: No, I would actually like to ask him some questions he is not excused. I
am serious.
MS GOEDHART: Would Your Lordship ... [intervenes]
COURT: There are things that I would like to know, yes. So when the defendant, he
can be on the end of a phone call. I do not know when the plaintiff's evidence ...
[intervenes].
MS GOEDHART: As the court pleases.
COURT: But he is not going to be excused there are things that I need to understand
as well.
MS GOEDHART: As the court pleases, M'Lord.
COURT: Ultimately, everyone is giving evidence for my benefit.
MS GOEDHART: As the court pleases.
COURT: And I have gone through the papers and there are things and really, I see it
as a difficult case and I really would like assistance and from experts. I am not sure
Mr Lurie is the one who would know and that is why I cannot say yes or no, but I
think when the defendants starts its case if Mr Lurie could be present and then I could
release him. Say at 10:00 in the morning I am sure he has important things to do and
then we can just release him.'
[41] The parties agreed the contents of Insp Lurie's report. It was not
open to the judge to insist that he be called to give evidence on matters
extraneous to the report. The manner in which Spilg J dealt with the issue
is irregular as he had no regard to the submissions by the parties.
(d)
Interference and interventions by the judge
[42] The record is replete with instances where the judge intervened by
engaging the witnesses, especially Mabaso and Pelser, in unfairly lengthy
questioning, a task that ought to have been left to counsel. It is necessary
to set out a few of these passages in the judgment to illustrate the point:
(i) Mabaso, during his cross-examination, mentioned that he had
previously worked as a paramedic. The judge, not counsel for the
plaintiff, promptly challenged him stating that this was new evidence.
The following exchange between the judge and the witness ensued:
'COURT: You have not mentioned that in your evidence-in-chief. You hold yourself
out as having been able and capable and that is the impression you tried to lead,
certainly the court, to believe that you were competent in dealing with this situation.
Are you now saying you were not? --- I am trained, M'Lord, the only thing is I am not
licensed. The licensing should ... [intervention].
You were never asked about a license, were you Mr Mabaso? --- M'Lord?
Were you asked about a license, yes or no? --- Not at all.
Then answer the question as directed to you, please? --- Alright.'
(ii) As indicated earlier Mabaso’s testimony, in particular, during cross-
examination, was often interrupted by the judge. The record discloses the
following questions put to Mabaso by the judge and his answers to them:
'COURT: Is there anything else that you would like to mention, before Mr
Swanepoel carries on that you believe is of relevance? --- I believe it is of, thank you,
M'Lord, I think it is of relevance to know the fact that, I was not, I have never had any
incident like this in my life, especially that my life should be threatened the way it
was. I was not in the right state to do anything and I remember very well Officer
Ledwaba asked me to stay away and not have anything to do with him, because it was
like he was fearing that maybe I would do anything to injure Mr Ngobeni.
And why was your foot on Mr Ngobeni? --- Yes this happened later on.
Why was your foot on Mr Ngobeni? --- Mr Ngobeni as I was asking him the questions
he told me that he is fainting, and so that he says that he is fainting that came to me to
say that I would need to turn him on the side. So all I could have done was to hold
him with the hands for him to be on the side and maybe put something to make his
body tilt.
Why did you not use your hands? --- I could have done that.
Why did you not is the question? --- I would not have a good balance. I could not
actually kneel ... [intervention].
But why was Ledwaba not with you? --- He was with me, but he was checking,
M'Lord, to say if we have a good cover.
So you are lifting another human being with your foot, that is your evidence? --- I just
need to demonstrate what ... [intervention].
Did you or did you not lift another human being with your foot? --- That is what I did,
M'Lord.
And that person you know was injured, correct? --- On the side where he was injured
... [intervention].
Was he injured or not? --- He was injured, M'Lord.
Please carry on Mr Swanepoel.'
(iii)
A further example of the lengthy questioning by the judge is as
follows:
'COURT: So how could you do it with your foot, the right foot you said? --- The right
foot, I used the right foot, because my left foot was injured, so I could not really kneel
down.
So you stood on your left foot that was injured? --- Yes, M'Lord, but because I held
on the door I had balance enough so that I can tilt him on the side.
Sorry, so you stood on your injured foot? ---
The injured foot we are talking of just an abrasion.
No, but you did not say that it was just an abrasion? --- I did say that, M'Lord.
In your statement, you said there was an injury, not an abrasion in your statement. Let
us go to your statement --- On the statement it does not say but in the court I did.
What did you call it? --- I called it that I was injured.
You were injured? --- I was injured yes.
Any injury? --- Yes.
And in your evidence-in-chief you said it was an abrasion? --- I did say an abrasion,
M'Lord.
Okay. --- So I did clarify.'
(iv) The judge continued with his questions and became more aggressive
in his approach. Counsel for the plaintiff had to observe whilst the judge
proceeded with the lengthy questioning. The record reads:
'COURT: Sorry, who found the firearm? --- Mr Ledwaba.
So please how do you explain this? Mr Mabaso I am now saying it is not a game here.
We cannot, one cannot keep changing situations. Now you told us, you testified that
Mr Ledwaba had taken the firearm from the vehicle. How could he possibly then be
covering while you said at the same time as it sounded to me that you were searching
the passenger. Now please, how can you perform, how can Mr Ledwaba now be
assuming a position if both of you are searching? Please Mr Mabaso do not assume
that this court is a toy to be played with. Will you please tell me which version it is,
because unless you can reconcile the two? Can you reconcile the two? --- I can.
Now do so? --- At the time when I went into the vehicle approaching the bakkie, their
vehicle, Mr Ledwaba was ahead of me. He is the one who approached them and I also
approached them and at the time as we both approached them, I took the position of
having to search the passenger, because he went past the passenger and also went past
the driver, Mr Ngobeni. So him going to take that position, he just spotted that a
firearm is just lying on the seat. So he asked the question about the firearm, so him
having to see the firearm and asking the firearm, he thought he should just take it
immediately.
. . .
COURT: Did anything else occur, that you have not told the court at this stage?
Anything else? --- M'Lord, it happened very fast. I am quite sure that all I
remembered it was more the conversation, ... [indistinct] to the court, what he asked it
was about the drivers license that was Officer Ledwaba, he asked about ...
[intervention].
What I find very strange Mr Mabaso. --- Yes, M'Lord?
And maybe you can assist. Is that you start off by claiming that there is a suspicion,
because the passenger is lying on the back? --- That is correct.
Because you do not expect to see anyone at the back? --- Not really, M'Lord, can I
explain?
No, no I understand that. And you know that the greatest version is that there was
nobody in the vehicle? --- That is correct.
So now something that you do not expect which is denied, but let us just stay with it,
you were suspicious, because somebody is in the back? --- That is correct.
Mr Ledwaba sees a firearm lying and nothing is said, no further action is taken and no
other proportioning matters, measures are taken and you are happily being satisfied
that the passenger is okay. His hands can go down. Mr Mabaso I have great difficulty
in understanding this. --- I do understand, M'Lord, but I can just ... [indistinct].
Yes please, because I need assistance, if that is how it happened, that is how it
happened. --- M'Lord, there are a number of things that have been said which I do not
think I will be in a position I can say that, even if it was said it was not true. Example
the manner of us using the torch, I did not have a torch, and Officer Ledwaba did not
have a torch. So in a manner ... [intervention].
Did you have a torch in the vehicle? --- The torch was there in the vehicle.
So there is a vehicle that is issued with a torch? --- That is correct.
But you did not use it? --- We did not use the torch.
Alright. --- So, it actually makes sense to say that, at the way of the passengers
especially approaching us, we should not really allow that to happen. Now the
suspicion ... [intervention].
Why did you not say stop? --- Even in not doing that I do not understand.
When you got out of the vehicle, why did you not say stop to them? --- M'Lord, when
we put on the blue lights, it is common that obviously you are going to stop. So the
driver immediately alighted from the vehicle. We are not comfortable with that,
because if then if you happen to elect the passenger, I mean the driver, a suspect
having to come to you then you are not in the better position to defend yourself,
anything can happen.
So you got three, actually three causes of concern there? --- That the concern yes, for
the suspect to approach me.
Okay. --- That is a concern. The other concern is having to have a passenger at the
back of the bakkie lying down, unless one is sick, so the question was asked to Mr
Ngobeni to say why is the passenger lying at the back and he said he does not know
him, he does not trust him, so that is why he is sitting on the back. So that to me really
still put up a concern. That is the reason why I would ask you got to lift up your
hands. That is what we immediately asked them that they should lift up their hands.
But we used that discretion. We could also have followed by having to point them
with a firearm until the search was over, but we did not do that.
MR SWANEPOEL: I put to your ... [intervention].
COURT: Sorry I have a question, why not? --- We felt that they were complying,
because they lifted their hands up.
Thank you. --- So ... [intervention].'
(v) What follows herein is a further examination of Mabaso by the judge.
In certain instances, there is an indication that the judge was not satisfied
with the responses and would ask repetitive questions:
'COURT: Why is that, why do you not agree? --- Because at the time when the
shooting took place it was Officer Ledwaba who shot. It was three quick shots ...
[indistinct].
Are you definite about it? You are certain, you do no mistake that there might have
been four? --- This was three ... [intervenes].
Are you definite that there was not four? --- M'Lord, ... [intervenes].
Even though you were in whatever state you say you were? ---
M'Lord, it was three quick shots.
You are certain? --- Certain about it, M'Lord.
If someone said there were four would they be lying? --- I know that it was only three.
Would they be lying if they said there were four? --- They would, M'Lord.
Thank you. Please continue.'
'COURT: Sorry an incident of this nature, what do you mean by that?
MR SWANEPOEL: A serious incident.
COURT: Oh, sorry, I missed that. Sorry, a serious incident of this nature, you say,
you put to the witness a serious incident of this nature.
... [intervenes].
MR SWANEPOEL: I can re-ask the question, M'Lord.
COURT: No, no, I just need to know what the answer was. I mean the question and
the answer.
MR SWANEPOEL: A supervisor ... [intervenes].
COURT: Yes?
MR SWANEPOEL: I put the words a senior officer from Metro Police must attend
the scene.
COURT: Okay. A senior officer of Metro Police must attend the scene of an incident
of this nature.
MR SWANEPOEL: Indeed, M'Lord.
COURT: Of a serious incident of this nature.
MR SWANEPOEL: Do you agree? --- I do agree.'
[43] It is possible but not necessary to set out all the passages in which
the trial judge interfered. The record speaks for itself. As a general
principle, the judge may ask questions at the end of re-examination to
clarify issues. In S v Mafu,9 the court held that although a presiding
judicial officer is sometimes obliged to ask questions of witnesses, it is
important to guard against conduct which could create the impression that
the judge is descending into the arena of conflict or is partisan or has
already decided issues which should only be decided at the end of the
trial. Nor should a presiding officer put attacking propositions to an
accused person, as such conduct is capable of creating the impression that
the judge is acting as a cross-examiner, associating himself with the case
for the state. The court also emphasised the manner of questioning
because an irregularity will occur when questions are put to an accused in
a belligerent or intimidating manner, or so repetitively or confusingly, as
to amount to judicial harassment.
[44] As is apparent from the examples cited above, the judge improperly
interfered and took a very active role in the trial. He also interrupted the
cross-examination of Pelser and questioned him extensively. I do not
intend to set out the relevant extracts. The questions in most instances
were not meant to clarify issues but to show inconsistencies in the
witnesses’ evidence and discredit them, a task that should have been
reserved for counsel. This is evidenced by the judge’s remarks with
regard to the decision of the National Prosecuting Authority, an aspect
that will be addressed shortly in my judgment. In the result, the actions of
Spilg J had the effect of creating a perception that he was the plaintiff’s
second counsel.
9 S v Mafu 2008 (2) SACR 653 (W).
(e)
Concerns of the trial judge about the decision of the National
Prosecuting Authority
[45] Spilg J was alarmed to learn that the office of the National
Prosecuting Authority (NPA), was ready to make a decision on whether
or not to continue with the charges against Mabaso. He felt strongly that
such a decision by the NPA, albeit an independent institution, could not
be made prior to the delivery of his judgment. What follows herein are his
views in effect expressing that the NPA should wait for his judgment
before taking a decision.
'COURT: There is an issue that is of great concern to me in particular with regard to
the administration of justice. I am most concerned that on Monday a decision may be
made by the prosecuting authority as to whether to continue with the charges against
Mr Mabaso or not. I obviously have not formed a view on, but of concern to me
certainly is the lack of adequate investigation that to me was quite apparent from the
current investigating officer's answers. I do not know if anyone is going to be
attending court, the Criminal Court on Monday. Mr Swanepoel are you aware if the
attorney is going?
MR SWANEPOEL: We are not a part of those proceedings, M'Lord.
COURT: Well I am concerned that if a decision is taken and that decision is not to
continue with the prosecution that it is premature for that decision to be taken until
my judgment is delivered.
MR SWANEPOEL: I agree, M'Lord.
COURT: But the matter is to proceed, I have no difficulty with that, but if a decision
is taken and I need to know who the prosecutor is and that I need to be in contact with
that prosecutor so that there is no misunderstanding. But I believe an informed
decision with regard to the continuation of prosecution or not may depend on the
decision I make and as a High Court I would regard it as disrespectful if a decision is
taken now with full knowledge that a judgment is awaited in this very matter
concerning the same issues as the onus would be different, but that the same issues
and that it is a prima facie decision is going to be taken, sorry, a decision is going to
be taken by a prosecuting authority based on information that he is given, which I
believe will be inadequate until such time as my decision comes out and I am
planning to give this decision certainly I was hoping within a day or so of hearing
argument. It looks like argument may only be during court recess, but I would
appreciate it if I can be given the number of the prosecuting authority and that counsel
are in my presence when I speak to the prosecuting authority.'
[46] Section 179 of the Constitution deals with the NPA.10 Its
independence is guaranteed therein. The judge is not entitled to discuss
the prospects of the case with the prosecutor or request him or her to
make a decision to prosecute. There is no doubt that Spilg J wanted to
speak to the prosecuting authority. In my view, the quality of his views
on the issues appear to have been impaired. He seems to have made up
his mind that Mabaso was guilty of an offence; hence his desire that the
NPA should await the delivery of his judgment. In my view, what the
judge sought to achieve can be seen as an attempt to intrude upon the
prosecutorial independence of the prosecuting authority in contravention
of the Constitution and the National Prosecuting Authority Act 32 of
1998.
General remarks by Spilg J
[47] Spilg J made various comments during the trial. He referred to his
army training and involvement with the former South African Defence
Force and South African Police Services and his involvement with
insurance companies etc. I do not intend to burden this judgment with all
the comments which, in my view, were unwarranted.
10 Section 179(2) of the Constitution provides:
'The prosecuting authority has the power to institute criminal proceedings on behalf of the State, and to
carry out any necessary function incidental to instituting criminal proceedings.'
[48] In the result, Spilg J breached many of the canons of judicial
behaviour and was overzealous in his approach. Conduct of this nature
cannot be countenanced and has the potential of bringing the judiciary
into disrepute. His behaviour constitutes an irregularity which would have
vitiated the proceedings but for the parties’ request that we consider the
merits on appeal.
[49] It is to that issue that I now turn. The judgment of the court below
was assailed on the grounds that the judge had failed to apply recognised
principles when dealing with two mutually destructive versions and that
he had, as a result, failed to consider the inherent improbabilities in the
plaintiff's evidence. Counsel for the plaintiff on the other hand asserted
that the trial judge had given due consideration to the credibility of
witnesses and of the probabilities. Furthermore, he argued that the
defendant had to discharge the onus with regard to its defence of
justification and that the court had considered the defence. It was his
contention that the police had made too many mistakes and had conspired
against the plaintiff and falsely implicated him.
Conclusion
[50] It is trite that a party who asserts has a duty to discharge the onus
of proof. In African Eagle Life Assurance Co Ltd v Cainer,11 Coetzee J
applied the principle set out in National Employers' General Insurance
Association v Gany 1931 AD 187 as follows:
'Where there are two stories mutually destructive, before the onus is discharged the
Court must be satisfied that the story of the litigant upon whom the onus rests is true
and the other false. It is not enough to say that the story told by Clarke is not
11 African Eagle Life Assurance Co Ltd v Cainer 1980 (2) SA 234 (W) at 237D-H.
satisfactory in every respect, it must be clear to the Court of first instance that the
version of the litigant upon whom the onus rests is the true version . . . .'
[51] The approach to be adopted when dealing with the question of onus
and the probabilities was outlined by Eksteen JP in National Employers'
General v Jagers,12 as follows:
'It seems to me, with respect, that in any civil case, as in any criminal case, the onus
can ordinarily only be discharged by adducing credible evidence to support the case
of the party on whom the onus rests. In a civil case the onus is obviously not as heavy
as it is in a criminal case, but nevertheless where the onus rests on the plaintiff as in
the present case, and where there are two mutually destructive stories, he can only
succeed if he satisfied the Court on a preponderance of probabilities that his version is
true and accurate and therefore acceptable, and that the other version advanced by the
defendant is therefore false or mistaken and falls to be rejected. In deciding whether
that evidence is true or not the Court will weigh up and test the plaintiff's allegations
against the general probabilities. The estimate of the credibility of a witness will
therefore be inextricably bound up with a consideration of the probabilities of the case
and, if the balance of probabilities favours the plaintiff, then the Court will accept his
version as being probably true. If however the probabilities are evenly balanced in the
sense that they do not favour the plaintiff's case any more than they do the
defendant's, the plaintiff can only succeed if the Court nevertheless believes him and
is satisfied that his evidence is true and that the defendant's version is false.'
[52] In the present case the plaintiff, during the trial, abandoned his
main ground and pursued his claim on the basis that Ledwaba negligently
discharged the firearm. It follows that the plaintiff bore the onus of proof
and had to prove that Ledwaba had been negligent. Accordingly, the
defendant no longer had a duty to prove the defence of justification as it
could not raise such a defence against a claim of negligence. In the result,
12 National Employers' General Insurance v Jagers 1984 (4) SA 437 (E) at 440D. See also
Stellenbosch Farmers' Winery Group Ltd v Martell et cie 2003 (1) SA 1 (SCA) para 5 and Dreyer v
AXZS Industries (Pty) Ltd 2006 (5) SA 548 (SCA) at 558E-G.
the plaintiff had to prove the element of negligence on Ledwaba’s part in
order to succeed. Regarding the question of onus, Spilg J remarked:
'I am satisfied that after subjecting the evidence in this manner the truth is readily
discernible. Moreover I am satisfied that irrespective of who was required to
discharge the onus, the result will be the same.'
[53] I do not agree with the trial judge when regard is had to the facts. It
is difficult to comprehend how the judge could make this statement
unless he had pre-judged the issues. He adopted an approach that is
flawed and which cannot be applied when faced with two mutually
destructive versions. It was imperative for Spilg J to have been alive to
the issue relating to the onus and to make a determination in that regard.
Had the trial judge adopted a proper approach and applied the principles
set out in the Jagers case, the result would have been different. I will
hereafter show how the trial judge erred in his approach.
(a)
The issue relating to the time of the incident.
[54] It was submitted that the plaintiff’s version that the incident
occurred around 22h30 was more probable and that his evidence about
the time-lines were merely estimates. This argument cannot be sustained
against the objective facts. There is no dispute that Mabaso and
Ledwaba's shift commenced at 23h00. There is furthermore objective
evidence that the paramedics were despatched at 01h30 and arrived at the
scene at 01h35. They left from the scene at 02h00 and the plaintiff was
admitted at the hospital at 02h10. This evidence cannot be disputed. Spilg
J in his assessment of the evidence remarked as follows with regard to the
time of the incident:
'However the plaintiff's recollection of time is not relevant. If he is an hour out, it
makes no difference to the version he gave. It is the failure of Mabaso to account to
explain how all this could have happened within 15 minutes that puts into question
why they delayed in recording the time of the incident. It is a factor that I must
weigh.'
[55] There is no basis for this statement. The plaintiff had a duty to
discharge the onus. His recollection of the time of the incident was in my
view an important factor. It is incorrect for the judge to state that the
plaintiff’s recollection in this regard is irrelevant. The plaintiff’s version
is clearly wrong against the background of the objective facts; that
Mabaso and Ledwaba commenced duties at 23h00. They reported for
duty at their office and thereafter left to conduct patrol duties. It follows
that the incident could not have taken place before 23h00 but after
midnight. The plaintiff wants the court to believe that, after sustaining
such severe injuries, he was left unattended for more than four hours. His
version of the time when the incident occurred cannot be true and has to
be rejected. It also raises a further question of why he lied about the time
and what he was doing. The version given by Mabaso has a ring of truth.
The paramedics arrived shortly after the incident. There is nothing
peculiar in Mabaso’s explanation on the timeline and how the events
ensued after the shooting. In the result, the trial judge erred when he
accepted the plaintiff's version with regard to the time of the incident.
(b)
Number of shots fired
[56] Both Mabaso and the plaintiff testified that they had heard three
shots being fired. Pelser and Singh testified that they found three spent
cartridges. The trial judge despite the absence of objective facts relied on
the evidence of Maseko and that of the plaintiff that the Norinco carried
nine rounds prior to the shooting and concluded that at least four or five
shots had been fired. He held:
'Accordingly the mere fact that no bullet appeared to have been found by the repairer
does not militate against the fact that it had not been removed after the incident and
before it arrived at the repairer.
. . .
Moreover, the plaintiff's own testimony that he heard three shots fired yet confirms
that there were nine rounds in the Norinco give little reason to believe that this
evidence was manufactured. It is only the police photographs taken later at the scene
which indicated that only four bullets remained in the Norinco's magazine after the
incident.
. . .
Subject to any further contradictory evidence or anomaly I make the finding that four
shots were fired by Ledwaba which explains why only four bullets were found in the
magazine after the incident whereas the unchallenged evidence of the plaintiff is that
he had loaded the Norinco with nine bullets and I apologise, I think there were four
rounds of ammunition found and accordingly that five had in fact being fired of which
at least four are accounted: two in the driver’s door and two that struck the plaintiff.'
[57] Counsel for the plaintiff, in my view, correctly conceded that there
was no basis for this conclusion as the plaintiff had also stated that three
rounds were fired. Accordingly there was no factual basis for this finding.
It follows that the judge was obliged to accept the evidence presented by
the parties and not make his own assumptions or speculate.
(c)
Injury sustained by Mabaso
[58] It was submitted on behalf of the plaintiff that Mabaso could have
sustained the injury from contact with any object when he jumped away
and fell on the ground after the shots were fired. Counsel further argued
that the abrasion around the eye did not appear to have been caused by a
muzzle of a firearm. In this regard, reliance was placed on the conclusion
of the court below, in terms of which it held:
'I however accept that I cannot account for that without speculation. In other words
the fact that the firearm was pushed into his eye is not the only reasonable possible
explanation for his injury. It does not accord with what was visibly seen and alleged.
It required the person against whom the muzzle was placed to be moving towards the
plaintiff or being stationary for such an injury to be inflicted.'
[59] This submission has no merit. Mabaso explained how he sustained
the injury. It was never suggested by anybody that the injury could be
self-inflicted. Accordingly, Mabaso's version on how he sustained the
injury remained uncontroverted. There was some bruising around his eye.
This is evident from the photographs and is consistent with his version in
that regard. It follows that the judge erred when he rejected Mabaso’s
version of how he sustained the injury in the absence of evidence to the
contrary. He should have accepted the evidence and not relied on
conjecture and speculation.
(d)
Medical evidence
[60] The judge rejected the evidence of Dr Güldenpfennig about the
trajectory of the bullet. The doctor could not exclude the possibility that
the bullet upon entering the plaintiff's body came into contact with the
shoulder bone which would have caused the bullet to deflect and change
its trajectory. It has to be borne in mind that the plaintiff was leaning
forward behind the seat with his back turned at an angle to Ledwaba. The
exact position of Ledwaba when he fired the rounds is unknown. But on
Mabaso's version, the plaintiff was in the process of pulling Mabaso
towards him whilst hitting him with the Star PD pistol. Mabaso explained
that he resisted and moved backwards. It is clear therefore that this was
not a static scene and this could explain the trajectory of the bullet which
moved downwards. There was accordingly no basis for the judge to
ignore the evidence of Dr Güldenpfennig in this regard.
(e) Finding that Ledwaba negligently discharged the firearm
[61] As I had mentioned earlier in the judgment, the judge concluded
that Ledwaba unintentionally and negligently discharged the firearm.
This finding is however at odds with the evidence adduced before the
court. There is the objective evidence that the firearm was tested at a
firing range by Lurie. It was found to be incapable of firing automatically.
Lurie stated that it would require a conscious act to pull the trigger and
that at the very least one would have to depress the trigger every time
before a round could be fired. He further stated that it would require some
skill for one to fire the rounds in quick succession.
[62] In my view, it is improbable that the firearm, having regard to its
inherent inability to fire uninterruptedly, was negligently discharged three
times. It will be recalled that the acceptable expert evidence is that it
requires conscious and deliberate action to discharge the firearm
successively. The probabilities, therefore favour the defendant's version
that Ledwaba could only have discharged the firearm intentionally when
defending his colleague. The position of the spent cartridges as shown in
the photographs was also consistent with Ledwaba approaching the
Nissan and firing deliberately in defence of his colleague. The court
below accordingly erred when it concluded that Ledwaba had discharged
the firearm negligently as the evidence did not support such a conclusion.
(f)
Police cover-up
[63] Counsel for the plaintiff submitted that the police conspired against
the plaintiff and falsely implicated him to cover up their actions when
they shot him. It has to be borne in mind that the whole incident started as
a traffic offence. The metro officers happened to observe the plaintiff
committing the offence and decided to execute their duties. There was no
allegation that Pelser had manufactured the incident report to advance the
conspiracy against the plaintiff. Nor was it ever put to Pelser that
allowing Ledwaba and Mabaso to write their statements in the same
office constituted a conspiracy.
[64] For the plaintiff's version to be true, the court would have to accept
that there was a conspiracy between the police and the metro officers,
including Pelser, and that the whole story of the firearm had been
fabricated. Pelser would have had to manufacture the evidence contained
in the incident report and remove the extra rounds within an hour. The
plan would have to have involved the police officers from different units
and the metro officers to prepare for an uncertain event and implicate an
innocent person. Mabaso and Ledwaba would have foreseen that they
would encounter problems and that they would have to plant
incriminating evidence against the plaintiff to exonerate themselves. The
court would have to conclude that the Star PD firearm was deliberately
placed in the Nissan to falsely implicate him. That version is, in my view,
far-fetched and has to be rejected. The police indeed did not properly
secure the scene. That however, does not indicate a police cover-up. At
worst for the police, it reveals ineptitude. In the result there was no
factual basis for the conclusion of the trial judge. It was not appropriate
for him to speculate and find that there was a conspiracy. The
probabilities are that the Star PD pistol could only have been in the
plaintiff's possession and was used by him to attack Mabaso.
[65] In the result the judge misdirected himself when he failed to decide
the issue of onus of proof and in the process disregarded the
unsatisfactory aspects of the plaintiff’s evidence. He did not consider the
inherent contradictions in the plaintiff’s testimony vis a vis his written
statements to the police and Dr Güldenpfennig as well as against the
objective facts. The plaintiff’s version is, on the objective facts and
probabilities, false and not sustainable. The plaintiff accordingly failed to
discharge the onus of proof. In these circumstances, the court below erred
in its conclusion when it found that Ledwaba negligently discharged the
firearm. It follows that the plaintiff's claim should have been dismissed.
The appeal has to succeed.
[66] In the result the following order is made:
1 The appeal is upheld with costs including those attendant on the
employment of two counsel.
2. The order of the court below is set aside in its entirety and
substituted as follows:
'The plaintiff's claim is dismissed with costs.'
_______________
N Z MHLANTLA
JUDGE OF APPEAL
APPEARANCES
For Appellant:
R Stockwell SC
G M Goedhart
Instructed by:
Webber Wentzel, Johannesburg
Matsepes Inc, Bloemfontein
For Respondent:
A J Swanepoel
Instructed by:
H C Makhubele Attorneys, Johannesburg
McIntyre & van der Post, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
30 March 2012
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 Council v Ngobeni
(314/11) [2012] ZASCA 55 (30 March 2012)
Media Statement
Today the Supreme Court of Appeal (SCA) upheld an appeal against an order of the South
Gauteng High Court, Johannesburg (Spilg J). The judge in the court below found that The
City of Johannesburg Metropolitan Council (the appellant) was liable for the damages
suffered by Mr Patrick Ngobeni (the respondent) as a consequence of a wrongful shooting,
arrest and detention.
The background to the litigation is as follows:
On 15 September 2004, the respondent was shot by a metro police officer during an incident
which occurred when he failed to stop at a stop sign. Two metro police officers, Mr Mabaso
and Mr Ledwaba, who has since died, had noticed this infraction. They stopped their vehicle
behind the respondent's vehicle. During the exchange between the metro police officers and
the respondent, one of the officers caused a firearm to discharge, striking the respondent
who, as a result, sustained two bullet wounds. As a result of the incident, the respondent was
rendered a paraplegic. He instituted action in the South Gauteng High Court against the
appellant and the two metro police officers involved and claimed for damages arising from the
shooting incident and for his subsequent arrest and detention. He asserted that the officer
had discharged the firearm negligently. The appellant and its employees raised a plea of
justification for shooting the respondent.
The judge in the court below was faced with two mutually destructive versions. He upheld the
respondent’s claim and concluded that the officer had not fired the weapon in order to defend
the other officer, as claimed, but rather that he had done so unintentionally and negligently.
Accordingly, the court found the appellant liable for the damages.
In this court, both parties agreed that the trial judge behaved in an inappropriate manner
during the proceedings, in that he, on his own initiative, called certain witnesses, ordered that
an inspection in loco be held and in certain instances unduly interfered when some witnesses
testified. Counsel agreed that the judge deserved some censure with regard to the manner in
which he conducted the trial.
The SCA found upon a perusal of the record that almost a third thereof related to the judge's
participation in the trial when he either questioned the witnesses or made comments. This
court restated the principle relating to judicial conduct that a trial judge must act as an
impartial arbiter; conduct the trial open-mindedly, impartially and fairly and that such conduct
must be manifest to all. A judge may ask questions in order to clarify issues but it is important
for a judge to guard against conduct which could create the impression that he or she was
descending into the arena of conflict or was partisan or had already decided the issue.
After examining various passages from the record, the SCA concluded that the trial judge had
improperly interfered and took an active role in the trial. He inter alia, ordered an inspection in
loco when neither of the parties had applied for such; mero motu called witnesses; refused to
excuse a witness; made numerous interferences and interventions throughout the trial in
particular when the appellant’s witnesses testified; raised concerns about the National
Prosecuting Authority's decision; and made various inappropriate remarks during the course
of the trial. This court held that the conduct by the judge constituted an irregularity which
would have vitiated the proceedings had the parties not requested that the court consider the
matter on the merits.
The SCA then turned to the merits and dealt with the applicable principles when a court is
faced with two mutually destructive versions. The court reasoned that the onus of proof in civil
cases can only be discharged by adducing credible evidence to support the contentions by
the party who made the allegations. It held that it was imperative for the trial judge to have
remained alive to the issue relating to onus and make a determination in that regard.
Furthermore, that the judge had erred in his approach when he assessed the evidence. The
court concluded that it was improbable that a firearm, which was incapable of firing
automatically, could have been discharged negligently. It held that the probabilities favoured
the appellant’s version that the incident occurred after midnight; that the respondent had
pointed a firearm at Mr Mabaso and attacked him causing him to sustain an injury and that
Ledwaba had shot the respondent whilst defending his colleague. This court accordingly
concluded that the trial judge misdirected himself. It held that the respondent had failed to
discharge the onus of proof and that his claim should have been dismissed.
In the result the SCA issued an order upholding the appeal with costs.
--- ends ---
|
3473
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 238/2020
In the matter between:
SA AIRLINK (PTY) LTD
APPELLANT
and
SOUTH AFRICAN AIRWAYS
(SOC) LIMITED
(in Business Rescue)
FIRST RESPONDENT
LESLIE MATUSON N.O.
SECOND RESPONDENT
SIVIWE DONGWANA N.O.
THIRD RESPONDENT
Neutral citation: SA Airlink v SAA (SOC) Limited and Others (238/2020)
[2020] ZASCA 156 (30 November 2020)
Coram:
MAYA P, DAMBUZA, VAN DER MERWE,
MAKGOKA, and SCHIPPERS JJA
Heard:
4 September 2020
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives by email publication on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 10H00 on 30 November 2020.
Summary: Company Law – business rescue – revenue received by first
respondent shortly prior to being placed under business rescue – appellant
precluded from instituting legal proceedings against first respondent (in
business rescue) for recovery of such revenue without the consent of the
business rescue practitioners or leave of the court – revenue a debt owed by
first respondent to the appellant and not property of appellant – appeal
dismissed with costs.
ORDER
On appeal from: Gauteng High Court, Johannesburg (Kathree-Setiloane J
sitting as court of first instance):
The appeal is dismissed with costs, including the employment of two counsel.
JUDGMENT
Dambuza JA (Maya P, Van der Merwe, Makgoka, Schippers JJA
concurring)
Introduction
[1] The issue in this appeal is whether certain moneys paid to the
first respondent, South African Airways (SOC) Limited (SAA), prior to it
being placed under business rescue, should be released to the appellant,
South African Airlink (Pty) Limited (Airlink). Airlink appeals against an
order of the Gauteng High Court, Johannesburg, (Kathree-Setiloane J)
(high court), in terms of which its application for an order that the moneys in
question be paid to it was dismissed. The appeal is with the leave of the
high court.
Background
[2] For almost 20 years prior to 5 December 2019, Airlink and SAA
conducted their businesses as air transportation providers in alliance with each
other. Their relationship was founded on an Alliance Agreement which
formed the framework within which several other agreements, the
operational agreements, comprising two licence agreements1 and a
Commercial Agreement, regulated their operations.
[3] Of specific relevance to this appeal were the parties’ obligations under
the Commercial Agreement. This agreement regulated matters such as the
agreed spheres of operation, routes and flight scheduling, use by Airlink of
SAA’s computer software, marketing, communications, public relations and
sales obligations.
[4] Under the Licensing and Commercial Agreements Airlink was granted
a licence to use SAA’s ‘SA8 designator’2 and related intellectual property at
a basic fee and a continuing royalty of one percent of Airlink’s flown
revenue.3 In terms of the Commercial Agreement, Airlink’s passengers could
book and pay for their flights through SAA’s ticket booking and revenue
collection platforms. SAA would then remit to Airlink, periodically, the
moneys received for the Airlink ticket sales, less commissions and fees due to
SAA, as well as levies, charges and taxes collected by SAA, for which Airlink
was liable to the Civil Aviation Authorities.
[5] During each month passengers could book and pay for Airlink tickets
through SAA operated systems.4 SAA would only pay over to Airlink the
1 The Licence Agreement and the Licence Agreement Africa.
2 Defined in the licencing agreement as the ‘SA designator “SA”’.
3 Clause 1 of the Commercial Agreement.
4 Clause 6 in Appendix 3 to the Commercial Agreement provided as follows:
‘6
TICKETING
6.1
SAA will provide customers who wish to travel on Airlink scheduled flights, ticket services at all
airport and off-airport SAA worldwide ticketing locations. SAA will issue such tickets on SAA stock.
Similarly Airlink will provide customers wishing to travel on SAA scheduled flights, ticket services at all
airports where Airlink is not handled by SAA, all subject to the following conditions:
6.1.1
Airlink will update SAAFARI on a daily basis on all manually issued tickets, to provide a proper
electronic sales report to enable SAA to account for such transactions in its general ledger. Totals of sales,
revenue received for these ticket sales on the 7th working day of the following
month. Thereafter, on the 15th working day of the month, SAA would pay to
Airlink the balance between the revenue paid on the 7th day and other moneys
which would have been processed for the given month of operation.5 To
ameliorate the cash flow constraints that would be occasioned by Airlink
whilst waiting for SAA to account and pay over moneys received by it for
tickets sold in a specific month, SAA would make a prepayment to Airlink of
an amount computed on an advance sales formula.6
[6] On 5 December 2019, SAA was placed under business rescue in terms
of s 131(4)(a) of the Companies Act 71 of 2008 (the Act). The second and
third respondents, Mr Matuson and Mr Dongwana, were appointed on
5 November
2019
and
November
2019,
respectively,
as
joint business rescue practitioners for SAA as provided in s 129(3)(b) of the
Act.
cash, credit and debtor’s transactions will be faxed to the SAA Head Office on a daily basis, in a format
agreed from time to time.
. . . .’
5 This was regulated in clause 8 of the Commercial Agreement as follows:
‘8
REVENUE ACCOUNTING
8.1
SAA will provide Revenue Accounting and Ticket Audit functions for Airlink’s sales transactions.
In order to allow Airlink to reconcile its revenues, SAA will provide monthly electronic transfers to Airlink
on all Airlinks’ Revenue Accounting and Ticketing data, including, but not limited to, ticket data, sales data,
prorates data, BSP data, etc.
. . .
8.13
Payments by SAA to Airlink with respect to all Airlink tickets lifted and processed by SAA shall
be made on the basis that a prepayment shall be established and made by SAA to Airlink based on the
following principles:
8.13.1
. . .
8.13.2
Payment in respect of Airlink tickets flown will be paid on the 7th working day of the relevant month.
8.13.3
Payment in respect of the balance between the above and revenue that has been processed for the
given month of operation will be paid over on the 15th (fifteenth) working day of the following month by
direct bank deposit.
8.13.4
Earned revenues shall include Airlink’s lifted coupons, MCO’s and excess baggage. SAA has the
right to offset from amounts paid to Airlink any amounts due to SAA.
. . . .’
6 Clause 8.13.1 of the Commercial Agreement stipulated that: ‘SAA will provide Airlink with a loan equal
to advance sales as per the formula laid out in Appendix 11. It is agreed that the amount advanced to Airlink
will be revised at monthly intervals, with the first period starting on 01 September 1999’.
[7] It was not in dispute that prior to being placed under business rescue
SAA had received moneys for Airlink tickets sales conducted during
November 2019 up to 5 December 2019.7 On 6 December 2019, a day after
being placed under business rescue, SAA transmitted to Airlink a statement
of account in respect of a ‘prelim[inary] payment’ that was due to Airlink on
10 December 2019, that being the seventh working day in respect of the
revenue received during November 2019.
[8] It appears that prior to 5 December 2019 SAA’s impending
business rescue or its perilous financial state had been discussed between the
parties. In a letter dated 10 December 2019, headed ‘Proposal regarding
restructure
of
alliance
relationship’,
Airlink,
through
its
Chief Executive Officer and Managing Director, Mr Rodger Foster, referred
to
a
proposal
that
Airlink
had
made
to
SAA’s
Board Implementation Committee on 8 November (2019), to which SAA had
not responded. Having expressed concern about the risk to it as a result of
SAA being placed under business rescue, Airlink gave SAA six months’
notice of cancellation of the Alliance Agreements. The effective date of
cancellation would be 10 June 2020.
[9] In the letter Airlink proposed that:
‘. . . the franchise system be restructured as a code share agreement whereby Airlink -
operated flights can still be booked through the SAA – operated SA8 system as allocated
to Airlink but will also be available on the Airlink operated 4Z system.’
7 The amounts owing were in dispute. However that is not relevant to the issues before us.
At the same time Airlink reserved its right to claim moneys due by SAA to it
under the Alliance Agreement.
[10] On 11 December 2019, Airlink gave SAA seven days within which to
pay the moneys accounted for in the statement of account dated
6 December 2019, failing which it would terminate the Alliance Agreements
without further notice. However, on the same day Airlink revoked the
summary termination. An ‘Ad Hoc Agreement’ was reached that the Alliance
Agreements would remain in force ‘until terminated in accordance with their
own terms and [would] be complied with by the parties subject to the
provisions of the Ad Hoc Agreement and the provisions of Chapter 6 of the
Companies Act’. The main feature of the Ad Hoc Agreement was that SAA
would immediately make payment to Airlink in respect of flown revenue
received for the period 6 to 11 December 2019 and would, thereafter, make
daily payments in respect of flown revenue received on each day from 12
December 2019. On 13 December 2019, SAA generated a statement in respect
of moneys due to Airlink in respect of unflown revenue8 for May 2018.
[11] Throughout the negotiations and the ultimate re-arrangement of their
business relationship subsequent to the business rescue, SAA and Airlink
disagreed on whether Airlink was entitled to payment of the November-early
December 2019 ticket sales revenue (that is, the revenue received by SAA for
8 These are moneys held by SAA in respect of air tickets whose owners had failed to present themselves for
their respective flights. In this regard SAA’s policy was different from Airlink’s in that with SAA the
customer could still re-use his or her ticket for some time after the originally booked flight, depending on the
rules applicable to the ticket. If the customer failed to use the ticket within the stipulated period the money
attached to the ticket would be released to revenue. In practice SAA would raise a liability once a customer
failed to present him or herself but would only release the funds to Airlink after 18 months. This was so even
though Airlink’s rules provided that a customer had no right to re-use the ticket and the money became
forfeited immediately when a customer failed to present herself.
Airlink ticket sales during the accounting period immediately preceding the
commencement of business rescue). In a letter to SAA dated
17 December 2019, Airlink rejected the position adopted by the second
respondent, who was the only business rescue practitioner appointed for SAA
at the time, that the revenue constituted a pre-commencement debt owed by
SAA and could, therefore, not be paid to Airlink. Airlink maintained that this
revenue was not a ‘debt owed’ by SAA as envisaged in s 154(2) of the Act.
Consequently, Airlink considered itself entitled to immediate payment of the
moneys.
[12] On 18 December 2019, SAA provided Airlink with a reconciliation
statement in relation to the November-early December flown ticket sales
revenue, showing that R430 000 838.80 had been payable to Airlink for the
pre-commencement period. Airlink disputed the correctness of this amount.
On 17 January 2020, Airlink launched an urgent application against SAA in
the high court seeking to recover the November-early December revenue, the
amount set forth in the 18 December 2019 statement of account and the
unflown revenue.
The high court proceedings
[13] As forewarned in the correspondence that preceded the high court
application, the relief sought by Airlink was premised on SAA having held
the claimed revenue as an agent of Airlink. The argument was that in relation
to ticket sales and revenue collection, the business relationship between SAA
and Airlink was that of agency, because SAA had an obligation to pay the
funds to Airlink after deduction of commission, royalties and service charges.
[14] The high court rejected Airlink’s agency argument. It found no
evidence to support the contention that the funds belonged to Airlink and were
held by SAA on behalf of Airlink. That court also found that in terms of
Clause 12.2 of the Commercial Agreement, agency was expressly excluded
from the business relationship between SAA and Airlink, except where the
Alliance Agreement specifically provided for it. The court concluded that the
relationship between the parties was rather that of debtor and creditor. It
further held that Airlink had not made out any case for the lifting of the
moratorium imposed under s 133(1) of the Act on legal proceedings against
companies placed under business rescue.
Issues on appeal
[15] Airlink’s appeal was grounded on the same three issues that it had
raised with SAA in its pre-litigation correspondence. First, that SAA held the
revenue received for Airlink ticket sales as the latter’s agent and therefore it
was Airlink’s own money. Secondly, that even if the revenue was a debt owed
by SAA, such debt arose only after commencement of the business rescue and
thus could not be compromised in terms of s 154(2) of the Act. Thirdly, that
because (subsequent to commencement of business rescue) SAA had elected
to abide by the Alliance Agreement, it was not open to it to raise the s 133
moratorium as a defence to a claim for performance of its contractual
obligations.
Discussion
[16] The starting point is the position articulated in s 133(1) of the Act which
imposes a moratorium on legal proceedings against companies during
business rescue. The section also sets out the limited circumstances in which
that moratorium may be lifted and legal proceedings, may be brought or
persisted with against a company which is under business rescue. The section
provides:
‘133 General moratorium on legal proceedings against company-
(1) During business rescue proceedings no legal proceeding, including enforcement action,
against the company, or in relation to any property belonging to the company, or lawfully
in its possession, may be commenced or proceeded with in any forum except-
(a) with the written permission of the practitioner;
(b) with the leave of court and in accordance with any terms the court considers suitable;
(c) as a set-off against any claim made by the company in any legal proceedings,
irrespective of whether those legal proceedings commenced before or after the business
rescue proceedings
(d)
criminal proceedings against the company or its directors or officers;
(e)
proceedings concerning any property or right over which the company exercises
the powers of a trustee; or
(f)
proceedings by a regulatory authority in the execution of its duties after written
notification to the business rescue practitioner.’
[17] In its application before the high court Airlink accepted that once SAA
was placed under business rescue on 5 December 2019, no legal proceedings
could be initiated against it. To this extent, in prayer 2 of its notice of motion
it sought the leave of court, as provided in s 133(1)(b), to enforce its claim
against SAA. However, it went on to assert the reasons why the moratorium
did not apply in respect of the claimed revenue. It therefore did not lay any
basis for leave to institute the proceedings.
[18] Clearly, the general moratorium on legal proceedings imposed in terms
of s 133(1) becomes applicable immediately on commencement of business
rescue and endures until business rescue ceases. The intention of the provision
is to cast the net as wide as possible in order to include any conceivable type
of action against the company which is under business rescue.9 The
moratorium is necessary for the effectiveness of the business rescue
procedure. As this court held in Cloete Murray and Another:10
‘It is generally accepted that a moratorium on legal proceedings against a company under
business rescue, is of cardinal importance since it provides the crucial breathing space or a
period of respite to enable the company to restructure its affairs. This allows the
practitioner, in conjunction with the creditors and other affected parties to formulate a
business rescue plan designed to achieve the purpose of the process. . . .’
[19] Legal proceedings may therefore be brought against a company under
business rescue only in the circumstances set out in s 133(1)(a)-(f) of the Act.
The moratorium is applicable in respect of all legal proceedings against a
company in business rescue. A distinction between pre- and post-
commencement causes is irrelevant to the moratorium.11
[20] The factors relevant in determining whether it is appropriate to lift the
moratorium are case specific. However, as Boruchowitz J held in Arendse and
Others v Van der Merwe and Another NNO, regard will always be had to the
following:
‘(a) The effect that the grant or refusal of leave would have on the applicants’ rights as
opposed to other affected persons and relevant stakeholders; (b) the impact that the
proposed legal proceedings would have on the wellbeing of the company and its ability to
regain its financial health; and (c) whether the grant of leave would be inimical to the object
9 PM Meskin and JA Kunst Insolvency Law (1994) para 18.6.
10 Murray NO and Another v FirstRand Bank Ltd t/a Wesbank [2015] ZASCA 39; 2015 (3) SA 438 (SCA)
para 14.
11 To this extent, this court in Shamla Chetty t/a Nationwide Electrical v Hart NO and Another [2015] ZASCA
112; 2015 (6) SA 424 (SCA) para 35 has held that the term ‘legal proceedings’ applies even to proceedings
before arbitral tribunals and that such proceedings may only be brought with the consent of a business rescue
practitioner or with the leave of court.
and purpose of business rescue proceedings as set out in sections 7(k) and 128(b) of the
Act’.12
[21] Airlink’s stance in the court a quo and in this Court was that s 133(1) is
inapplicable in this case. Its application therefore fell to be dismissed on this
ground alone. Nevertheless, I shall proceed to consider briefly the grounds on
which Airlink relied in its attempt to evade the moratorium.
The agency argument
[22] Airlink contended that the revenue in question was not a debt as
provided in s 154(2) of the Act. That section provides:
‘154
Discharge of debts and claims:
(1)
. . .
(2)
If a business rescue plan has been approved and implemented in accordance with
this Chapter, a creditor is not entitled to enforce any debt owed by the company
immediately before the beginning of the business rescue process, except to the extent
provided in the business rescue plan.’
The essence of Airlink’s argument in this regard was that when SAA sold
Airlink tickets it did so as Airlink’s agent. Therefore, the proceeds of such
sales belonged to Airlink and SAA only held them on behalf of Airlink. It was
therefore not claiming a ‘debt’ as envisaged in s 154(2) of the Act. Instead,
the revenue claimed was Airlink’s property which SAA was holding
unlawfully.
12 Arendse and Others v Van der Merwe NO And Another [2016] ZAGPJHC 292 (GJ); 2016 (6) SA 490
(GJ) para 28 as cited in Meskin; supra note 9 at 18.6.
[23] This contention is unsustainable. As the high court highlighted,
clause 12.2 of the Commercial Agreement excluded agency in the relationship
between SAA and Airlink. The clause stated:
‘The relationship between the Parties shall be as independent contractors, and accordingly
no provision of this Agreement shall constitute any partnership or agency between the
Parties, and neither Party shall have any authority to bind the other Party to third persons,
save as may be expressly provided to the contrary herein or in the Alliance Agreement’.
[24] The question is whether there were any contractual provisions that
expressly provided that the relationship between the parties was one of
agency. The high watermark of Airlink’s contention in this regard was the
provision in the Commercial Agreement which provided that SAA would be
entitled to a sales commission similar to that earned by travel agents in respect
of Airlink ticket sales transacted on SAA platforms.13 It suffices to say that
this provision clearly did not expressly provide for agency. This is borne out
by the context of the agreements between the parties. Nothing in the
relationship between SAA and Airlink resembled agency. SAA never acted as
a ‘representative’ of Airlink. The high court was correct in describing the
nature of the business relationship between SAA and Airlink as that of mutual
support. Clause 7 of the Commercial Agreement provided that for the duration
of the agreements SAA and Airlink would provide each other with the support
13 Clause 6.1.4 of Appendix 3 provided that : ‘AIRLINK will be entitled to normal sales commission for the
sales made on SAA schedules services at any airport stations or office handled by AIRLINK, similar to a
travel agent. Similarly, SAA will be entitled to any sales commission for the sales made on the AIRLINK
scheduled services at any airport stations or office handled by SAA, similar to a travel agent.’ Further, clause
8 in the same appendix provided as follows, in part:
‘8.17 On all tickets flown on Airlink flights, Airlink will pay SAA the actual agents commission paid on the
tickets relative to the flown Revenue that accrues to Airlink.
8.18 SAA will pay Airlink any sales commission due on sales made on behalf of SAA in the offices of
Airlink. Similarly, Airlink will pay SAA any commission due on sales due made on behalf of Airlinkin SAA
offices.’
set out in the appendices to that contract on the terms and conditions set out
therein.
[25] The high court also correctly had regard to the fact that SAA had no
obligation to deposit the revenue received in respect of Airlink tickets sales in
a separate bank account and to hold it in trust, as Airlink’s property or on its
behalf. There was no evidence that SAA dealt with revenue received for
Airlink’s ticket sales differently from the manner in which it dealt with its
own moneys. On the contrary, the evidence showed that the revenue was held
by SAA’s bankers on behalf of SAA together with all its other revenue. For
these reasons the contention by Airlink that the ticket sales revenue was not a
debt owed to must fail.
Was the debt a pre or post business rescue debt?
[26] As I have said, Airlink argued in the alternative that the debt became
owing after the commencement of the business rescue proceedings. It
presumably intended to rely thereon that the debt could not be compromised
in the business rescue plan to be approved and that the provisions of s 154(2)
would not bar the claim during business rescue. However, when the
application was launched no business rescue plan had been published, let
alone voted on.
[27] This contention is untenable for the further reason that once SAA
received the funds for Airlink ticket sales an obligation immediately arose for
it to account in respect thereof to Airlink on the agreed date. In this way, on
receipt thereof the funds became a debt owed by SAA to Airlink which would
be due for payment as per agreement between the parties.
[28] Airlink’s argument that, because the accounting statement in relation to
the November revenue was only generated on 6 December 2019, a day after
the
commencement
of
business
rescue,
the
revenue
was
a
post-commencement debt, was misconceived. It was submitted on Airlink’s
behalf that SAA’s debt to Airlink only arose when the statement was rendered
and the debt became enforceable at the instance of the creditor. For this
contention, Airlink relied, among other authorities, on Eravin Construction
CC v Bekker NO and Others.14 This reliance was misplaced.
[29] In Eravin a business plan had been approved and implemented and this
court was concerned with whether certain payments made by a company in
liquidation to Eravin, which had since been placed under business rescue,
were void dispositions and therefore recoverable from Eravin in terms of
s 341(2) of the Companies Act 61 of 1973. The payment was made on
21 October 2010 and, being void, its repayment was immediately owed by
Eravin whose business rescue commenced on 26 September 2012. It was in
this context that this Court considered the meaning of ‘debt owed’ within the
context of s 154(2) of the Act and held that the payment (being the debt owed),
could not be recovered, as it was owed prior to 26 September 2012. This Court
then distinguished between moneys ‘payable’ and moneys ‘owed’, and held
that:
‘[Section 341(2)] states expressly that a disposition in the terms contemplated by it “shall
be void”. The recipient has no right, on this account, to retain it. Consequently, it owes a
debt to the body which made the prohibited disposition, and that debt is owed as soon as
the disposition was received.’
14 Eravin Construction CC v Bekker NO and Others [2016] ZASCA 30; 2016 (6) SA 589 (SCA) para 21.
Eravin is therefore no authority for Airlink’s contention that the revenue
received by SAA could only be owed when it became due for payment.
[30] Equally unsupportive of Airlink’s case are two other decisions on
which it relied, namely, Trinity Asset Management (Pty) Ltd v Grindstone
Investments15 and Standard Bank of South Africa Ltd v Miracle Mile
Investments 67 (Pty) Ltd and Another.16 There, the Constitutional Court and
this Court, respectively, were not concerned with the question of when a debt
became owed. The issue in both decisions was when a debt became due and
payable for determination of prescription.
SAA’s election to abide by the pre-business rescue agreements.
[31] Airlink contended that SAA was bound by its election to abide by the
Alliance Agreement and was therefore precluded from seeking refuge under
s 133(1). There is no merit in this contention. On Airlink’s case SAA was in
breach of the Alliance Agreements by refusing to pay the money in question.
Therefore an election to abide by the agreement was not open to it. 17 The
option would only be open to Airlink as the innocent party. It is, in any event,
not correct that SAA had opted to abide by the terms of the original Alliance
Agreements. As stated earlier, after the commencement of business rescue
SAA and Airlink concluded an ad hoc agreement in terms of which SAA
would remit to Airlink, on a daily basis, the moneys received in respect of
Airlink’s ticket sales after the start of business rescue. This was an interim
arrangement designed to limit the adverse impact of SAA’s business rescue
15 Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd [2017] ZACC 32; 2018 (1)
SA 94 (CC).
16 Standard Bank of South Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and Another [2016] ZASCA
91; 2017 (1) SA 185 (SCA).
17 G B Bradfield Christie’s Law of Contract in South Africa 7 ed (2016) at 639.
on Airlink. Its terms differed materially from the terms of the Alliance
Agreements and the Commercial Agreement.
[32] For all these reasons Airlink’s appeal must fail. Consequently:
The appeal is dismissed with costs, including the costs of two counsel.
________________________
N DAMBUZA
JUDGE OF APPEAL
Appearances:
For Appellant:
A R Bhana SC (with him J P V McNally SC and
L M Spiller)
Instructed by:
Webber Wentzel Attorneys, Johannesburg
Symington & De Kok, Bloemfontein
For the First Respondent: J M Suttner SC (with him J E Smit)
Instructed by:
Edward Nathan Sonnenbergs, Johannesburg
Matsepes Inc. Bloemfontein.
|
THE SUPREME COURT OF APPEAL OFSOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
30 November 2020
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
SA AIRLINK v SAA & OTHERS (238/2020) [2020] ZASCA 156 (30 November 2020).
MEDIA STATEMENT
On 02 March 2020 the Gauteng High Court, Johannesburg dismissed an application
by the SA Airlink in which it sought to have certain revenue held by South African
Airways (SAA) released to it. Today the Supreme Court of Appeal handed down a
judgment dismissing an appeal against the order of the high court.
On 5 December 2019 SAA was placed under business rescue. At the time
conducting business as air transportation provider in alliance with Airlink. This
arrangement was regulated by an Alliance Agreement together with several other
related agreements concluded between SAA and Airlink about twenty years ago. In
terms of these agreements, Airlink’s passengers could book and buy their flight
tickets through SAA operated platforms. SAA would pay over to Airlink revenue
received for these ticket sales on the 7th working day of the month following the
purchases.
When SAA was placed under business rescue on 5 December 2019 it had not yet
paid over to Airlink the funds received for ticket sales for the preceding month.
When Airlink demanded payment SAA’s business rescue practitioner, Mr Matuson
expressed the view that the funds could not be paid over to Airlink as they
constituted a pre-commencement debt (ie debt that preceded commencement of
business rescue).
Airlink instituted proceedings in the high court seeking an order that the amount of
R430 000 838.80 be released to it because SAA had merely been acting as its agent
in receiving the funds; therefore they always belonged to it. The high court dismissed
Airlink’s application, finding that Airlink had not made out any case for lifting of the
moratorium imposed under the Companies Act on legal proceedings against
businesses in business rescue. That court further found no evidence of an agency
relationship between Airlink and SAA.
In dismissing the appeal against the judgment of the high court, the Supreme Court
of Appeal held that the moratorium on legal proceedings against companies in
business rescue applies in respect of all legal proceedings except in instances set
out in s133(1) of the Companies Act 71 of 2008. Airlink was therefore precluded
from instituting legal proceedings without either consent of the business rescue
practitioner or leave of the court. Airlink had not made out any case for the lifting of
the moratorium in this case. The SCA confirmed the findings of by the high court that
there was no agency relationship between Airlink and SAA. It also confirmed the
finding of the high court that the two companies were in a mutually supportive
relationship. The SCA also found that the funds received by SAA were deposited in
SAA’s general bank accounts together with its other funds. They were never kept
into a special account as belonging to Airlink. The court rejected Airlink’s alternative
argument that SAA’s liability for the funds was a post-commencement debt and held
that on receipt of the funds by SAA a liability immediately arose for it to account to
Airlink in respect thereof at the agreed time. The fact that the agreed accounting day
fell on a date subsequent to commencement of business rescue did not alter the
date on which the liability arose.
--- ends ---
|
3777
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 1133/20
In the matter between:
SUSARA MAGRIETHA STROHMENGER
APPLICANT
and
SCHALK WILLEM VICTOR
FIRST RESPONDENT
THE REGISTRAR OF DEEDS
SECOND RESPONDENT
Neutral citation: Susara Magrietha Strohmenger v Schalk Willem Victor
and Another (Case no 1133/20) [2022] ZASCA 45 (08 April 2022)
Coram:
SALDULKER,
MAKGOKA
and
HUGHES
JJA
and
MATOJANE and MOLEFE AJJA
Heard:
23 FEBRUARY 2022
Delivered: This judgment was handed down electronically by circulation to
the parties' legal representatives by email, publication on the Supreme Court
of Appeal website and released to SAFLII. The date and time for hand-down
is deemed to be 10h00 on 8 April 2022.
Summary: Contract – restitution – prescription – whether special
circumstances existed for this Court to grant special leave to appeal – whether
the first respondent had proved his claim and was entitled to relief.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Northern Cape Division of the High Court, Kimberley
Lever AJ (Tlaletsi JP and Williams J concurring, sitting as court of appeal):
The applicant is granted special leave to appeal in terms of s 17(2)(d)
of the Superior Courts Act 10 of 2013.
The appeal is upheld with costs.
The order of the full court of the Northern Cape Division of the High
Court, Kimberley, is set aside and replaced with the following order:
‘The appeal is dismissed with costs.’
________________________________________________________________
JUDGMENT
________________________________________________________________
MATOJANE AJA (Saldulker, Makgoka and Hughes JJA and Molefe
AJA concurring):
[1] This is an application for special leave to appeal, and if granted, the
special leave itself. The applicant, Ms Susara Magrietha Strohmenger
(respondent in the court a quo), applies for special leave to appeal to this Court
against the judgment of the full court of the Northern Cape Division of the
High Court, Kimberley (Lever AJ, Tlaletsi JP and Williams J) in terms of
which the first respondent's appeal against the judgment of a single judge of
that division, was upheld. On 31 January 2019, the full court set aside the
order of the court a quo and granted judgment in favour of the first respondent
in accordance with the relevant prayers in the particulars of claim. The second
defendant did not defend the action.
[2] Aggrieved, the applicant applied to this Court for leave to appeal and
on 10 March 2021, the two Judges of this Court who considered the
application referred the application for oral argument in terms of s 17(2)(d) of
the Superior Courts Act and directed the parties to be prepared if called upon
to do so, to address the Court on the merits. The applicant contends that special
circumstances exist for this Court to grant special leave to appeal.
Facts
[3] The facts pertinent to the application are relatively brief as neither party
presented any oral evidence during the trial of the matter. From the pleadings,
the following appears: on 1 October 2015, the first respondent, as the plaintiff,
issued a summons against the applicant, claiming restitution of what he
alleged was performance pursuant to an invalid agreement concerning the
alienation of land.
[4] The restitution sought involved the re-transfer of the property described
as 5 Malan Street, Postmasburg, into the name of the first respondent;
alternatively, the value of the said property and compensation for the property
described as 26 Evkom Street, which had been on-sold by the applicant to an
innocent third party after it was transferred to the applicant in terms of the
alleged illegal agreement.
[5] The applicant raised a special plea of prescription, averring that the
summons had been served more than three years after the alleged debt fell
due. As to the substance of the claim, the applicant denied the oral agreement
as pleaded by the first respondent. She explained that the first respondent
bought the immovable property for her and had the same registered in her
name as a token of his love and affection towards her and to comply with a
maintenance obligation he had assumed and undertook to fulfil towards her.
The first respondent filed a reply and denied that the claim had prescribed.
[6] When the matter was called on the first day of the trial on 5 August
2019, the first respondent abandoned his alternative claim for the value of the
5 Malan Street property as well as a claim for compensation for the property
described as 26 Evkom Street. What remained was the relief pertaining to the
re-transfer of the 5 Malan Street property.
[7] The first respondent then closed his case without leading any evidence.
The applicant likewise closed her case, also without leading any evidence.
The trial court dismissed the first respondent's claim with costs. It also
dismissed the applicant’s special plea of prescription. The court held that
although the particulars of claim mentioned that the first respondent relied on
the assertion that the agreement was unlawful in respect of 9 Venter Street (as
referred to in the particulars of claim), no evidence was tendered that the first
respondent had performed in terms of an illegal agreement in relation to the 5
Malan Street property.
[8] Aggrieved by the order of the trial court, the first respondent appealed
to the full court. The full court upheld the appeal and set aside the trial court's
order. As to the applicant’s reliance on her special plea, the court found that
since there was no cross-appeal to challenge the trial court's finding on the
special plea on prescription, the applicant was precluded from relying on it.
[9] In its reasoning, the full court found that having pleaded donation, the
applicant was obliged to plead whether such a donation was oral or in writing
and that if there was a written donation, she could not have closed her case as
it would have been incumbent upon her to have led evidence to show how
s 28(2) of the Alienation of Land Act 68 of 1981 (the Act) applied.
[10] The importance and role of pleadings cannot be overstated. Generally,
a party must plead all facts material to the cause or causes of action alleged
against the opposite party. The purpose of pleadings is to define the issues for
the other party and the court. A party has a duty to allege in the pleadings the
material facts upon which it relies.1 A material fact is distinct from the
evidence by which a party hopes to prove the pleaded material fact. Evidence
cannot be pleaded.
[11] In construing a pleading, the presumption is always against the pleader
because he or she is taken to have stated his own case in the best possible light
and in the manner most favourable to himself. The court must assume the facts
to be true and then decide whether or not the pleaded material facts are
capable of supporting the cause of action, or defence, being advanced.
1 Minister of Safety and Security v Slabbert [2009] ZASCA 163; [2010] 2 All SA 474 (SCA) para 11; FPS
Ltd v Trident Construction (Pty) Ltd [1989] ZASCA 28; 1989 (3) SA 537 (A) at 541H; Fischer and Another
v Ramahlele and Others [2014] ZASCA 88; [2014] 3 All SA 395 (SCA); 2014 (4) SA 614 (SCA) para 13.
[12] With these general observations in mind, I turn to the pleadings in the
matter. As the matter was argued on pleadings only, it is necessary to set out
in some detail the cause of action as pleaded, as well as the applicant's plea in
relation thereto. The first respondent's oral agreement was pleaded as follows
in the particulars of claim:
‘4.
On or about June 2009, and at Postmasburg, the plaintiff and the first defendant
concluded an oral agreement. Both parties acted personally.
5.
The express, alternatively implied, in the further alternative tacit terms of the
agreement were:
5.1
The plaintiff will buy or -, (sic) alternatively, caused to be transferred into – the
name of the first defendant, three immovable properties in the Northern Cape Province and,
more specifically the town of Postmasburg.
5.2
The properties so transferred would be the value equal to the amount
of R 1 600 000,00.
5.3
In
lieu,
the
first
defendant
would
transfer
ownership
of
the
immovable property known as 9 Venter Street, Postmasburg, to the plaintiff.
[5.4]
The transfer of 9 Venter Street would coincide with the date of transfer of the third
and last of these properties into the name of the first defendant, alternatively shortly
thereafter.
6.
Plaintiff performed in part in terms of the agreement in that:
6.1
He purchased the property known as 26 Evkom Street, Postmasburg on or about
June 2009. The property was subsequently registered in the name of the first defendant.
This transaction was occasioned by a written deed of alienation between the plaintiff qua
purchaser and a third party.
6.2
The plaintiff purchased the property for an amount of R400 000,00 and incurred
costs
in
the
amount
of
R8 817.80
in
order
to
effect
the
transfer.
6.3
On or about 16 May 2012, he purchased the property known as 5 Malan Street,
Postmasburg. The property was subsequently registered in the name of the first defendant.
This transaction was occasioned by a written dead of alienation between the plaintiff qua
purchaser and a third party.
6.4
The plaintiff paid an amount of R 1 600 000.00 as a purchase price
and paid the amount of R 64 503.50 in respect of transfer costs.’
[13] In paragraph 8 of the particulars of claim, the first respondent pleaded
that the applicant repudiated the agreement on or about 28 May 2015 by
means of a letter written by the applicant's attorney, which repudiation the
first respondent accepted, alternatively the first respondent accepted the
repudiation by means of the particulars of claim.
[14] The first respondent specifically pleaded that the oral agreement
concluded was unlawful and illegal as the transfer of 9 Venter Street into the
name of the first respondent was not reduced to writing as prescribed in s 2(1)
of the Act. It is the first respondent’s case that he performed in part in terms
of an illegal agreement and as a result, he was entitled to claim restitution of
what he performed in terms of the agreement, namely the 5 Malan Street
property.
[15] In response to the aforegoing, the applicant, in her plea to paragraphs 4
and 5 of the particulars of claim denied that an oral agreement was concluded
between the parties as alleged by the first respondent and pleaded that:
‘5.1
The content of the paragraphs under reply are denied as if specifically traversed
individually, and plaintiff is put to the proof thereof.
5.2
In amplification of the denial, the first defendant denies the agreement as alleged
was concluded.
5.3
The first defendant, ex abundanti cautela pleads that:
5.3.1 The plaintiff and first defendant were in a life partnership at all relevant times for
purposes of the action, alternatively they lived together as a husband and wife would do;
5.3.2 The plaintiff bought immovable property for the first defendant and
caused the same to be registered in her name as token of his love
and
affection
towards
her
and
to
comply
with
the
maintenance
obligation
which
the
plaintiff
assumed
and
undertook
to
fulfil
towards
the
plaintiff.
The
immovable
properties,
after
transfer
in
the
first
defendant's
name,
were
hers
to
do
with
as
she
pleased
as
the
owner thereof.
5.3.3 During
the
subsistence
of
the
relationship
between
the
first
defendant
and
the
plaintiff,
plaintiff
and
first
defendant
both
had
the
benefit
of
the
income
from
the
properties
whilst
the
plaintiff
leased
the same to third parties;
5.3.4 The plaintiff at all time relevant and pertinent intended to transfer the immovable
properties in the first defendant's name and the first defendant intended to receive transfer
of the immovable properties in her name.'
[16] In response to paragraphs 6.3 and 6.4 of the particulars of claim, the
applicant pleaded:
‘Save to deny that the purchase and registration of the immovable property in the first
respondents name was pursuant to or as a result of the alleged agreement referred to in
paragraph 4 of the POC; the first defendant admits that the immovable property was
registered in her name. The plaintiff is put to the proof of the allegation in paragraph 6.4
of the POC.’
[17] Thus, in respect of 5 Malan Street, the first respondent pleaded that he
purchased 5 Malan Street for the applicant from a third party in terms of a
written Deed of Alienation and that the property was consequently transferred
to the applicant. In her plea, the applicant only admitted the fact that the
property was registered in her name. She denied the rest of the allegations
pleaded by the respondent.
[18] From an evidential burden point of view, what this meant for the
respondent was that he had to prove three crucial allegations denied by the
applicant, namely (a) that he concluded a written Deed of Alienation with a
third party in respect of 5 Malan Street; (b) that he purchased that property for
the applicant and (c) that he caused the property to be registered in the name
of the applicant. These are the aspects on which the first respondent bore the
burden of proof as they were squarely denied by the applicant in respect of 5
Malan Street. When he elected to close his case without adducing any
evidence on these issues, his claim in respect of 5 Malan Street was correctly
dismissed.
[19] In any event, on the pleadings, it seems that the first respondent’s
allegations do not bear scrutiny. It appears from the Windeed property report,
annexed to the particulars of claim, that instead of the first respondent, it was
the applicant who concluded a written deed of alienation with a third party in
respect of 5 Malan Street, pursuant to which the property was transferred from
the previous owner and registered in her name.
[20] It could well be that the first respondent paid the purchase price on
behalf of the applicant pursuant to an oral agreement. But that agreement, call
it a donation or sponsorship, is not one required to be in writing in terms of
s 28 of the Act. The agreement which the law requires to be in writing is the
underlying agreement in terms of which immovable property is transferred.
The agreement between the first respondent and the applicant, whatever its
terms are, does not fall within this purview.
[21] It is now settled that abstract theory applies to the passing of ownership
of property. The theory postulates two requirements for the passing of
ownership, namely delivery which in the case of immovable property is
effected by registration of transfer in the deeds office coupled with the so-
called real agreement. Brand JA in Legator McKenna Inc and Another v Shea
and Others2 explained that:
‘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. . . 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, e.g. sale, ownership will not pass - despite registration of transfer - if there is a
defect in the real agreement. . . .’
[22] There was no defect in the real agreement between the applicant and
the transferor. The latter was legally competent to transfer the property after
receiving payment from the first respondent. The applicant was legally
competent to acquire the property. The property was, accordingly, validly
transferred to the applicant.
[23] It was argued on behalf of the first respondent that the first respondent
had performed in terms of an illegal contract because the applicant's plea of
donation of the property is affected by the provisions of the Act and must be
in writing; otherwise it is unlawful and void. The first respondent’s reliance
2 Legator McKenna Inc and Another v Shea and Others [2008] ZASCA 144; 2010 (1) SA 35 (SCA) para 22.
on the so-called donation supposedly pleaded by the applicant is misplaced.
Properly construed, that relates to a different property which does not form
part of this appeal.
[24] In her plea, the applicant did not allege that two properties were donated
to her by the first respondent. Her plea reads:
‘5.3.2 The plaintiff bought immovable property for the first defendant and caused the
same to be registered in her name as token of his love and affection towards her and to
comply with the maintenance obligation which the plaintiff assumed and undertook to fulfil
towards the plaintiff. The immovable properties, after transfer in the first defendant's name,
were hers to do with as she pleased as the owner thereof.’ (My emphasis.)
[25] It is not disputed that the first respondent purchased the 26 Evkom
Street property and had it registered in the name of the applicant. The
applicant sold that property to a bona fide third party. There is no evidence
that the pleaded maintenance undertaking or alleged donation refers to 5
Malan Street and not 26 Evkom Street. The first respondent’s allegations of
purchasing 5 Malan Street for the applicant were expressly denied, and there
was no evidence to corroborate them.
[26] The pleaded facts do not establish a cause of action for restitution, as
the first respondent closed his case without tendering any evidence that there
was an overarching agreement as he contended, which was denied by the
applicant or that the transfer was occasioned by a written deed of alienation
between himself qua purchaser and a third party or the basis upon which he
would be entitled to restitution. It should be emphasised that the allegations
in the pleadings do not constitute evidence and remain allegations until
confirmed by admissible evidence.
[27] In view of all the aforegoing, the full court erred in ordering the transfer
of the property which, on the face of it, was validly transferred and registered
in the applicant's name pursuant to a valid deed of alienation between herself
and the seller, to which the first respondent was not a party. There is no
evidence as to what the first respondent’s role in it was.
[28] It follows that special circumstances exist for this Court to grant special
leave to appeal to this Court and that leave to appeal should be upheld.
[29] In the result, the following order is made:
The applicant is granted special leave to appeal in terms of s 17(2)(d)
of the Superior Courts Act 10 of 2013.
The appeal is upheld with costs.
The order of the full court of the Northern Cape Division of the High
Court, Kimberley, is set aside and replaced with the following order:
‘The appeal is dismissed with costs.’
________________________
K E MATOJANE
ACTING JUDGE OF APPEAL
APPEARANCES:
For applicant:
N Snellenburg SC
Instructed by:
Haarhoffs Inc, Kimberley
c/o Honey Attorneys, Bloemfontein
For the first respondent: S Grobler SC
Instructed by:
Engelsman and Magabane Inc, Kimberley
c/o Gous Vertue & Associates, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
8 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
Susara Magrietha Strohmenger v Schalk Willem Victor and Another (Case no 1133/20) [2022]
ZASCA 45
Today the Supreme Court of Appeal (SCA) upheld an appeal of the Northern Cape Division of the High
Court, Kimberley (high court) and replaced the order with one that dismissed the appeal.
The applicant applied for special leave to the SCA in terms of s 17(2)(d) of the Superior Courts Act 10
of 2013. This Court referred the application for oral argument and directed the parties to be prepared,
if called upon to do so, to address this Court on the merits. The applicant contended that special
circumstances existed which warranted this Court to grant the special leave to appeal.
The first respondent, the plaintiff in the high court, issued summons against the applicant, claiming
restitution of performance pursuant to an alleged invalid agreement concerning the alienation of land.
The restitution sought revolved around certain specified properties to be retransferred into the name of
the first respondent, or alternatively, the value of the property in question in addition to compensation
for another property, which had in the meantime been sold in terms of an alleged illegal oral agreement.
The applicant, in turn, raised a special plea of prescription and averred that summons had been issued
three years after the debt had fallen due. The substance of the plea was that the applicant denied the
oral agreement, as alleged by the first respondent and explained that the first respondent bought the
immovable property, and registered it in her name, as a token of his love and affection for her and to
comply with a maintenance obligation he had assumed and undertook to fulfil towards her.
The high court dismissed the first respondent’s claim as well as the applicant’s special plea. Aggrieved
by this, the first respondent appealed to the full court of the high court, which upheld the appeal and set
aside the high court’s order. The first respondent pleaded that the applicant repudiated their former
agreement. Furthermore, the full court precluded the applicant from relying on the special plea of
prescription and found that having pleaded donation, the applicant was obliged to plead whether such
a donation was oral or in writing. If it had been a written donation, she could not have closed her case
as it would have been incumbent on her to have led evidence to show how s 28(2) of the Alienation of
Land Act 68 of 1981 applied.
On appeal, the SCA found that the first respondent’s allegations did not bear scrutiny. The first
respondent could have paid the purchase price on behalf of the applicant pursuant to an oral agreement,
but such an agreement was not one legally required. If it had been a legal requirement, the underlying
agreement in terms of which the immovable property was transferred should have been in writing. The
agreement in question did not fall within this parameter.
The SCA held that the property was validly transferred to the applicant. The first respondent argued
that performance took place as a result of an illegal contract as the agreement must have been in
writing, otherwise it was unlawful and void, however the SCA concluded that reliance on such an
argument was misconstrued and was related to property unrelated to the matter at hand.
Accordingly, the SCA found that the full court erred when it ordered the transfer of property which had
been validly transferred and registered, pursuant to a valid deed of alienation to which the first
respondent was not a party. The SCA was satisfied that special circumstances existed warranting
special leave to appeal and accordingly upheld the appeal. The SCA set aside the order of the high
court, and dismissed the appeal.
--------oOo--------
|
2768
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 585/11
Reportable
In the matter between:
SHAUN GUNGUDOO FIRST APPELLANT
AYESHA GUNGUDOO SECOND APPELLANT
and
HANNOVER REINSURANCE GROUP FIRST RESPONDENT
AFRICA (PTY) LTD
HANNOVER REINSURANCE AFRICA LTD SECOND RESPONDENT
Neutral citation:
Gungudoo v Hannover Reinsurance Group Africa (585/11)
[2012] ZASCA 83 (30 May 2012)
Coram:
Mthiyane DP, Nugent, Cachalia, Mhlantla JJA and Ndita AJA
Heard:
8 May 2012
Delivered:
30 May 2012
Summary:
Sequestration – debtor failing to dispute claims on reasonable
and bona fide grounds – Sections 9(4A), 11(2A) and 11(4) requiring service
of sequestration application on employees of debtor – Service required
only on employees of business, not all employees.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Tsoka J sitting as
court of first instance):
The appeal is dismissed with costs of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (MTHIYANE DP, NUGENT, MHLANTLA JJA AND NDITA AJA
CONCURRING):
[1] This is an appeal against an order of the South Gauteng High Court
(Tsoka J) finally sequestrating the joint estate of the appellants who are married
in community of property. The appellants come before us with leave of the high
court.
[2] The appellants do not contest the finding that they are insolvent. They
confine their appeal to three grounds. First, that the respondents had failed to
make out a case for relief in their founding papers; second, that the respondents’
claims were disputed on bona fide and reasonable grounds; and finally, that the
respondents had not properly notified the appellants’ employees of the
sequestration proceedings in line with the relevant provisions of the Insolvency
Act 24 of 1936.
[3] It is important to understand the circumstances that led to the respondents
instituting sequestration proceedings against the appellants. The second
respondent is a wholly owned subsidiary of the first respondent and carries on
business as a re-insurer. The first appellant, Mr Gungudoo, commenced working
for the first respondent as an accounting clerk in 1986. In April 1995 he was
promoted to the position of Investment Manager, and in July 2002, to Senior
Investment Manager of the Investment Unit. Here, he was responsible for
managing the company’s investment assets valued at R3,4 billion, which
evidently required a high level of trust. A significant portion of these assets were
invested in listed equities and corporate bonds. Mr Gungudoo was, effectively,
the only person authorised to instruct stockbrokers on these investments.
[4] During July and August 2009 the first respondent’s audit committee
discovered that Mr Gungudoo had taken a number of allegedly unauthorised
‘short positions’ in the equity market, which resulted in a loss to the respondents
of R9,5 million. Such transactions, known as ‘short sales’, differ from the usual
‘long sale’ of stocks where an investor buys stock in the expectation that it will
increase in value. In a short sale the investor will sell short if he believes that a
stock is overpriced, and expects its price to decline.
[5] A short sale works this way: The investor identifies an overpriced stock,
which he does not own. He needs to sell it at a higher price before buying it back
at a lower price to take advantage of the expected decline in the price of the
stock. To enable the physical transfer of the stock to the buyer, he borrows the
share temporarily, through a broker, from the owner. Once he has physical
possession of the stock, he sells it in the market, and pays the proceeds of the
sale to the lender as collateral. After a period the investor will buy the stock back
at an expected lower price than the price for which it was sold. He will then return
the stock to the lender who in turn will repay the collateral. The difference
between the price paid for the stock by the investor and the amount of the repaid
collateral represents the investor’s profit. Of course if the share price does not
decline as expected, but instead improves, and the investor is compelled to sell it
at the increased price, he will incur a loss. These transactions are complex and
risky. In this case when the respondents became aware of the transactions they
decided to close the short positions immediately incurring losses in the process.
[6] When the respondents confronted Mr Gungudoo with this discovery, he
resigned suddenly on 4 August 2009, without explanation. At that stage he had
had twenty-three years of service. He was immediately placed on special leave
pending further investigation. The company’s auditors, Deloitte, prepared a report
identifying another potential loss to the second respondent of R23 million, flowing
from Mr Gungudoo’s alleged misrepresentations to Sanlam Private Investments
(Pty) Ltd. As this is not a liquidated claim, nothing further need be said about it.
[7] On 20 August 2009 the respondents launched proceedings, on a semi-
urgent basis, to sequestrate the appellants. The alleged loss of R9,5 million was
made up of five transactions and formed the basis of their cause of action. The
founding affidavit stated presciently that Mr Gungudoo’s affairs were still under
investigation and that further claims were likely to come to light.
[8] Mr Gungudoo filed his answering affidavit on 30 August 2009. He admitted
the transactions, and stated that he had had his employer’s authority to take
short positions. He asserted that the respondents’ Investment Committee and its
top management were aware of this practice since 1995, when he became the
investment manager, but he produced no proof to support this assertion. The
senior managers of the Investment Committee subsequently all made affidavits
denying that the practice of short trading was part of their investment strategy, or
that they were aware that Mr Gungudoo was trading in this manner.
[9] On 11 September 2009 the respondents filed their replying affidavit in
which they stated that Deloitte had been tasked with reconciling all the
transactions recorded in the second respondent’s data capturing system with
those recorded in the brokers’ notes for the period January 2007 to June 2009.
The purpose of this exercise was to ascertain whether Mr Gungudoo had
misappropriated any of the second respondent’s shares or cash.
[10] The respondents discovered, as they had predicted they would when
preparing their founding affidavit, that during the period under investigation
Mr Gungudoo had transferred shares and cash to the value of some R27 million
from its brokers Barnard Jacobs Mellet (BJM) and Sanlam Private Investments
(Pty) Ltd (SPI) broker accounts to a close corporation, Shaneil, of which
Mr Gungudoo is the sole member. It appeared that Mr Gungudoo had used the
assets of the respondents as collateral to conclude short sale transactions for the
benefit of his close corporation. These transactions involved shares of Anglo
American (Anglo), Sappi, Harmony, Goldfields, Dynamic Cables and certain cash
transfers. (The amount of R27 million was later reduced to R25 million after
Mr Gungudoo had provided an explanation for R2 million involving the Goldfields
transaction.)
[11] In addition to these transfers, the respondents ascertained that three other
share transfers from the respondents’ broker accounts into the accounts of third
parties had been made. The shares were of Goldfields, Absa and Cape
Empowerment, and resulted in a further loss of R16 million. The respondents
allege that as Mr Gungudoo had the sole mandate to trade on the first
respondent’s broker accounts, which is not disputed, only he could have brought
about these transactions. They say that he not only concealed the transactions
from the Investment Committee, but disguised them to look like inter-group
business deals by the careful use of encryption codes so that it appeared that
Shaneil was a public company and a subsidiary of the respondents.
[12] The respondents convincingly demonstrated this deception in their
replying affidavit by reference to a document – the ‘securities borrowing
agreement’ – which they obtained from BJM on 18 August 2009. The parties to
this agreement were the respondents, Shaneil Financial Management Limited,
Compass Insurance Company Ltd – all defined as part of the Hannover-Re
Group – and Finsettle (Pty) Ltd, an inter-broker house. Mr Gungudoo and Mr Bill
Skirving, the respondents’ compliance officer, signed the agreement on behalf of
respondents. Mr Skirving had no recollection of the agreement and says that
Mr Gungudoo had probably placed the document before him for signature; he
had signed it without reading it – as he had done with other documents. What is
clear is that the agreement unmistakeably and falsely misrepresented Shaneil as
being a member of the Hannover-Re Group.
[13] A perusal of the front page of the agreement reveals that Shaneil is falsely
described as a public company by the use of the word ‘Limited’, and is given a
registration number – 97/055477/06 – that has artfully been changed to
substitute the suffix ‘23’ to ‘06’. The suffix ‘06’ is used to designate a public
company, and the suffix ‘23’, a close corporation.
[14] Mr Gungudoo’s explanation – proffered in a further affidavit – of how his
close corporation came to be described as a public company and included in this
agreement was that BJM had made this error. But this account lacks credibility.
He signed the agreement knowing that Shaneil was not part of the Hannover–Re
Group. And he falsely suggested that the suffix which reflects ‘06’ instead of ‘23’
was a bona fide error on his part; it is obvious that the suffix was consciously
inserted to make Shaneil appear to be a public company that was associated
with the Group.
[15] The first respondent also revealed in a further affidavit that Mr Gungudoo
had signed a Financial Intelligence Centre Act 38 of 2001 (FICA) compliance
document soon after concluding the securities borrowing agreement, and had
submitted it to BJM. The document falsely misrepresents the respondents’ Group
Managing Director and its then Financial Officer as directors of Shaneil. Again,
Mr Gungudoo was not able to offer a plausible explanation for how he came to
sign a document that contained patently false information.
[16] So it is hardly surprising that both Willis J, who granted the provisional
sequestration order against the appellants, and Tsoka J, in granting the final
order, concluded that Mr Gungudoo had fraudulently woven a close corporation,
owned and controlled by him, into the fabric of the respondents’ relationship with
their stockbrokers to facilitate the movement of shares between the respondents
and Shaneil. This finding is relevant, though not conclusive, in the assessment of
whether the appellants are contesting the respondents’ claims on reasonable and
bona fide grounds.
[17] But I must begin with the first ground of appeal – the alleged failure of the
respondents to make out a case for the relief claimed in their founding affidavit.
The point can be disposed of quickly. In their founding affidavit the respondents
stated that the sequestration proceedings were brought in haste after the
discovery of some irregular transactions, and that further investigations were
likely to uncover more claims. In the face of Mr Gungudoo’s denial of any
wrongdoing in his answering affidavit the respondents set out details of the
additional claims in their replying affidavit. The dispute was then ventilated fully in
further affidavits filed with leave of the court. In addition to his answering affidavit,
Mr Gungudoo filed four further sets of affidavits and the respondents filed two
more after their replying affidavit. In granting the provisional and final orders the
high court considered all the material before it. In the absence of any attack by
the appellants on the exercise of the court’s discretion in permitting the filing of
further affidavits, and to consider all the evidence before it, this ground must fail.1
[18] I turn to consider whether Mr Gungudoo disputes the claims against him
on reasonable and bona fide grounds – the second ground of appeal. It was not
in issue that the claims against the appellants involving the misappropriation of
1 Ganes & another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA) para 21.
shares2 and cash were all liquidated claims. Mr Gungudoo was therefore
required, in good faith, to adduce facts which, if proved at trial, would constitute
good defences to each of the claims against him.3 For its part, all that the
respondents need establish before us is a single claim in excess of R100, as
s 9(1) of the Insolvency Act 24 of 1936 requires, which the appellants are unable
to contest on reasonable and bona fide grounds.
[19] Regarding the transactions that make up the claim for R25 million
mentioned earlier, it is convenient to deal with the Anglo, Sappi and Harmony
shares together. These shares were transferred on Mr Gungudoo’s instructions
from the second respondent to Shaneil. On the face of it, therefore, the shares
were misappropriated from the second respondent. Mr Gungudoo asserts that
Shaneil is the beneficial owner of those shares and had lent them to the second
respondent in a short sale transaction; and that the transfer of the shares to
Shaneil constituted a return of those shares. Cumulatively the transfer of these
shares amounted to R17 366 100. Mr Gungudoo, therefore, had to adduce facts
to show that Shaneil was the beneficial owner of the shares and that they were
transferred to Shaneil as a loan. In this regard I assume in his favour that he was
authorised to engage in transactions of this nature.
[20] The Anglo transaction involved the transfer of 20 000 shares from the
second respondent’s account at BJM to Shaneil’s BJM account on 22 May 2008.
To substantiate his assertion that this was a short sale transaction, and
constituted a return of the shares Shaneil had lent to the second respondent,
Mr Gungudoo relied on a statement purporting to be Shaneil’s BJM statement for
the period ending 28 December 2007, which bore the description ‘delivered to
you’. This demonstrated, he asserted, that Shaneil delivered these shares to the
second respondent as a loan.
2 Samsudin v De Villiers Berange NO [2006] SCA 79 (RSA) para 35.
3 Helderberg Laboratories CC v Sola Technologies 2008 (2) SA 627 (C) para 23.
[21] To verify this, the respondents’ attorneys obtained a copy of the original
BJM statement from BJM. Upon perusal, the copy of the original statement
appeared to be exactly the same as the copy on which Gungudoo relied, except
that in place of the entry bearing the ‘delivered to you’ description, the narrative
‘sold’ appeared in its place. Further investigations by the respondents showed
conclusively, from a contract note found on Mr Gungudoo’s laptop, that these
shares were in fact sold on 4 December 2007. The change in the narrative
invited the inference that Mr Gungudoo had tampered with the document on
which he relied in an attempt to demonstrate that it supported his version that
Shaneil had lent the shares to the second respondent.
[22] Faced with this inconsistency, Mr Gungudoo changed tack. In his
supplementary further affidavit he attributed the inconsistency to an error that
BJM had made when capturing the data – an assertion for which there was no
confirmation, and contradicted Mr Gungudoo’s earlier assertion under oath that
the shares were delivered to the second respondent as part of a short sale
transaction during December 2007.
[23] Mr Gungudoo then stated that Shaneil had transferred the shares to the
respondents during February 2006, and not in December 2007, as he had said
earlier. He supported this changed stance by reference to another BJM
statement recording Shaneil’s transactions for February 2006. One of the entries
on this statement recorded that 20 000 shares were ‘delivered to you’, which
Mr Gungudoo claimed was a delivery of the shares to Shaneil. However, the
respondents refuted this by pointing to a second recordal on the same statement
showing that the shares were ‘received from you’. This demonstrated, the
respondents contended persuasively, that there had been a broker error, which is
confirmed by a BJM Broker Dealer Account report showing a number of broker
errors on 6 February 2006.
[24] Mr Gungudoo’s version is in any event inherently improbable: there was
no need for the second respondent to have borrowed shares from Shaneil as the
very same BJM statement for February 2006 that he had relied upon to prove
that the transaction represented the closing of a short position also shows that
the second respondent bought 30 000 Anglo shares on 30 January 2006, a
month before the alleged borrowing of the 20 000 shares occurred. The papers
show that as at February 2006, the second respondent held 90 000 Anglo
shares.
[25] In yet another affidavit – the appellants’ second supplementary further
affidavit – Mr Gungudoo again attempted to show by reference to two further
BJM broker statements for May 2008 that the transaction demonstrated the
closing of a short position. He asserted that the narratives ‘collateral delivered’,
‘col due to you’, ‘col position closed’ and ‘collateral returned’ in the second
respondent’s statement from BJM were all consistent with the transaction having
been a short sale transaction.
[26] The assertion does not bear scrutiny. Mr Gungudoo’s transfer of 20 000
Anglo shares on 22 May 2008 from the second respondent’s accounts created a
negative position of 792 Anglo shares in its account. This appears to explain the
use of the narratives in the second respondent’s May statement. The transfer on
22 May 2008 reduced Shaneil’s negative opening balance of 50 468 shares to a
still negative balance of 30 368 shares. And this clarifies why the narratives
‘received from you’, ‘loan returned by you’ and ‘loan position closed’ appear on
the May 2008 statement of Shaneil. The narratives are, therefore, consistent with
the second respondent’s shareholding going into a negative shareholding
position after the share transfer to Shaneil on 22 May 2008, and negate
Mr Gungudoo’s suggestion that they demonstrate the closing of a short position.
[27] It thus becomes apparent that Mr Gungudoo transferred the 20 000
shares to Shaneil on 22 May 2008 to offset the negative balance in its accounts.
So even if we assume in his favour that he was authorised to engage in short
sale transactions, he produced no proof that Shaneil was the beneficial owner of
the Anglo shares. The transaction was, therefore, obviously an unlawful transfer
of shares to Shaneil.
[28] In any event I think that Mr Gungudoo’s assertion that he executed the
Anglo transaction and the other transactions in issue with the authority and
knowledge of the respondents is also inherently improbable. There is just no
evidence, other than his say so, that these transactions were authorised. I cannot
imagine the senior managers of the respondents approving transactions between
them and a close corporation in which their investment manager not only has a
direct interest, but is effectively acting on behalf of both sides.
[29] Moreover, the respondents have demonstrated by reference to the
securities borrowing agreement and the FICA document that Mr Gungudoo had
engaged in an elaborate subterfuge to make this transaction between his close
corporation and the second respondent – as he did with other transactions –
appear to be legitimate. Mr Gungudoo produced no evidence at all to show that
Shaneil had been the beneficial owner of these shares at any stage, and has
therefore not been able to reasonably and in good faith dispute the respondents’
claim that he misappropriated the shares to the value of R10 840 000. That being
so, it is unnecessary to examine any of the other transactions in issue.
[30] I turn to consider the appellants’ third and final ground of appeal – the
respondents’ alleged non-compliance with the provisions of the Act requiring
notice of the sequestration proceedings to be given to a debtor’s employees, and
where applicable, to their trade unions. First, the appellants contend that by
omitting to serve the sequestration application on the appellants’ employees
before obtaining the provisional order the respondents did not comply with
s 9(4A)(a)(ii) of the Act; second, they assert that by neglecting to notify the
employees of the extensions and the actual return day of the provisional order
the respondents did not act in accordance with s 11(2A); and third, they claim
that the respondents did not ensure that the sheriff of the high court complied
with his obligation to establish whether the employees were represented by any
trade unions or whether there was a notice board inside the appellants’ premises
so that service on the unions could be effected by affixing a copy of the petition
on the notice board in a manner contemplated by s 11(4) of the Insolvency Act.
The appellants submit that non-compliance with any and all of these peremptory
requirements of the Act vitiates the application.
[31] Before I consider this submission a brief factual background is necessary.
The respondents sought and obtained a provisional order on 31 August 2010. On
27 October 2010, shortly before the return day of the provisional order on
2 November 2010, the appellants filed a further affidavit alleging that the
respondents had not complied with s 9(4A)(a)(ii) of the Insolvency Act because
they had failed to serve a copy of the sequestration application on the appellants’
employees before the provisional order was granted – an assertion that the high
court was not asked to consider at the provisional sequestration hearing.
Mr Gungudoo identified seven such employees: one security guard, two other
security guards who are also drivers, three domestic workers and a bookkeeper-
administrator. They each filed affidavits confirming their employment with the
Gungudoos, but none asserted any interest in the sequestration proceedings,
and importantly for present purposes, none claimed to be employed in any
business of the appellants, nor did the Gungudoos make such a claim.
[32] On 2 November 2010, the return day, the provisional order was extended
until 16 November 2010 to allow the respondents to serve the papers on the
employees. On 14 November 2010, respondents’ legal representative served the
papers at the Gungudoo’s residence. On 16 November 2010, the matter was
postponed, and thereafter it was postponed once more. It was finally heard on
22 March 2011. The appellants also complain that the employees were not given
notice of the actual date of the hearing.
[33] As is apparent the respondents had not served the application on the
employees before obtaining the provisional order. The argument before us, and
before the court below, was concerned primarily with two aspects. First, whether
the relevant provisions of the Insolvency Act, 9(4A)(a), 11(2A) and 11(4), applied
to the seven employees even though they were not employees of any business
of the Gungudoos; and secondly if the provisions did apply to them, whether they
were peremptory or directory in nature. I turn to consider the first question.
[34] Section 9(4A)(a) provides as follows:
‘When a petition is presented to the court, the petitioner must furnish a copy of the
petition-
(i)
to every registered trade union that, as far as the petitioner can reasonably
ascertain, represents any of the debtor's employees; and
(ii)
to the employees themselves-
(aa)
by affixing a copy of the petition to any notice board to which the
petitioner and the employees have access inside the debtor's premises; or
(bb)
if there is no access to the premises by the petitioner and the employees,
by affixing a copy of the petition to the front gate of the premises, where
applicable, failing which to the front door of the premises from which the debtor
conducted any business at the time of the presentation of the petition;
. . .’
Sections 11(2A) and 11(4) provide as follows:
Section 11(2A): ‘A copy of the rule nisi must be served on-
(a)
any trade union referred to in subsection (4);
(b)
the debtor's employees by affixing a copy of the petition to any notice board to
which the employees have access inside the debtor's premises, or if there is no access
to the premises by the employees, by affixing a copy to the front gate, where applicable,
failing which to the front door of the premises from which the debtor conducted any
business at the time of the presentation of the petition;
. . .’
Section 11(4): ‘For the purposes of serving the rule nisi in terms of subsection (2A), the
sheriff must establish whether the employees are represented by a registered trade
union and determine whether there is a notice board inside the employer's premises to
which the employees have access.’
[35] Before considering the purpose and effect of these provisions, some
background to the adoption of the legislation is necessary. In 2002 the
Insolvency Act and the Companies Act 61 of 1973 were amended by Act 69 of
2002. Among the objects of these amendments was to ensure that employees of
debtors facing sequestration or winding-up were notified of the proceedings. The
amended s 9(4A) of the Insolvency Act4 was inserted to require that notice be
given to the debtor’s employees before a provisional order was granted and the
amended s 11(4)5 provided for service of a rule nisi on the employees. Likewise,
the amended s 346(4A)6 of the Companies Act called for notice to be given to the
company’s employees before the grant of a provisional order, and the amended
s 346A7, for service of the winding-up order on the company’s employees. The
Amendment Act came into effect on 1 January 2003.
[36] It is significant that these amendments were preceded by an amendment
to the Labour Relations Act 66 of 1995 (the LRA). The LRA amendment,
s 197B8, which came into operation on 1 August 2002, requires an employer
facing financial difficulties that may result in sequestration or winding-up to notify
a ‘consulting party’ contemplated in s 189(1) of the LRA of this fact. An employer
that applies to be wound up or sequestrated, or receives an application for its
4 Subsection (4A) inserted by s 2 of Act 69 of 2002.
5 Section 11 substituted by s 3 of Act 69 of 2002.
6 Subsection (4A) inserted by s 7 of Act 69 of 2002.
7 Section 346A inserted by s 8 of Act 69 of 2002.
8 Section 197B inserted by s 50 of Act 12 of 2002: ‘Disclosure of information concerning
insolvency
(1) An employer that is facing financial difficulties that may reasonably result in the winding-up or
sequestration of the employer, must advise a consulting party contemplated in section 189 (1).
(2) (a) An employer that applies to be wound up or sequestrated, whether in terms of the
Insolvency Act, 1936, or any other law, must at the time of making application, provide a
consulting party contemplated in section 189 (1) with a copy of the application.
(b) An employer that receives an application for its winding-up or sequestration must supply a
copy of the application to any consulting party contemplated in section 189 (1), within two days of
receipt, or if the proceedings are urgent, within 12 hours.’
winding-up or sequestration, must supply a copy of the application to the
‘consulting party’.9
[37] A ‘consulting party’ is not defined in the LRA, but s 189(1) of the LRA calls
for an employer that contemplates dismissing one or more workers for
operational requirements to consult employees in terms of a collective
agreement, or in the absence of a collective agreement, with a workplace forum,
trade union or other representative body of the employees. So, s 189 requires
the employer to consult only with employees that face dismissal for the
operational requirements of the employer – not all employees that fall within the
broad definition of an employee in s 213 of the LRA.10 It need hardly be stated
that ‘operational requirements’ of an employer can refer only to the employer’s
business requirements.11 The rationale for s 189(1) is to enable employees
engaged in the employer’s business operations, or their representatives, to
explore possible solutions with their employer to obviate the need for dismissal or
to limit the number of dismissals for operational reasons. It follows that s 197B of
the LRA requires an employer to disclose information concerning an insolvency
only to those employees that are employed in the employer’s business.
[38] In the instant case there is no suggestion that the seven employees of
appellants were employed for any business purpose or in any business of the
appellants. And the appellants, correctly, did not suggest that they had any duty
to disclose any information to these employees regarding the sequestration
proceedings against them – indeed it is common cause that they did not. It can
thus hardly be contended that the respondents had an obligation to inform the
9 Sections 197B(2)(a) and 197B(2)(b) of the LRA.
10 Section 213: ‘'employee' means-
(a) any person, excluding an independent contractor, who works for another person or for the
State and who receives, or is entitled to receive, any remuneration; and
(b) any other person who in any manner assists in carrying on or conducting the business of an
employer,
and 'employed' and 'employment' have meanings corresponding to that of 'employee’; Sibiya &
others v Amalgamated Beverages Ltd (2001) 22 ILJ 961 (LC).
11 Section 213 of the LRA says that operational requirements concern ‘requirements based on the
economic technological, structural or similar needs of an employer’.
debtor’s employees of the sequestration proceedings when the employer had no
such duty.
[39] A closer examination of the language used in the relevant provisions of
the Insolvency Act bears this out. It is significant that s 9 (4A)(a)(i) commences
with the requirement that the sequestration ‘petition’ be ‘furnished’ to ‘every trade
union that, as far as the petitioner can reasonably ascertain, represents any of
the debtor’s employees’. This suggests that the draftsman had employees of a
business in mind. This view is fortified by the petitioner’s obligation, in
s 9(4A)(a)(ii)(aa), to furnish a copy of the petition to the ‘employees themselves’
‘by affixing a copy of the petition to any notice board to which the petitioner and
the employees have access inside the debtor’s premises’. A notice board is
associated with a business – not a private residence – and the word ‘premises’ is
usually used to refer to a house or building occupied by a business or for an
official purpose.12 Any doubt that the object of the notice obligation is aimed at
the employees of a business must surely be dispelled by the language requiring
notice to be given to the employees, both in s 9(4A)(a)(ii)(bb) and s 11(2A)(b), at
‘the premises from which the debtor conducted business at the time of the
presentation of the petition’.
[40] Sections 346(4A) and 346A of the 1973 Companies Act13 are virtually the
mirror images of ss 9(4A) and 11(2A) of the Act. While s 346(4A) refers to notice
12 Concise Oxford English Dictionary 12 ed p 1132.
13 Section 346(4A): ‘Application for winding-up of company
(a)
When an application is presented to the court in terms of this section, the applicant must
furnish a copy of the application –
(i)
to every registered trade union that, as far as the applicant can reasonably ascertain,
represents any of the employees of the company; and
(ii)
to the employees themselves –
(aa)
by fixing a copy of the application to any notice board to which the applicant and the
employees have access inside the premises of the company; or
(bb)
if there is no access to the premises by the applicant and the employees, by affixing a
copy of the application to the front gate of the premises where applicable, failing which to the front
door of the premises from which the company conducted any business at the time of the
application;
(iii)
to the South African Revenue Service; and
of the winding-up application being served on the employees of the company at
its premises, s 346A says that the winding-up order is to be served on the
employees at the ‘debtor’s premises’. This obviously refers the company’s
business premises,14 which again strengthens my view that the reference to the
‘debtor’s premises’ in the ss 9(4A)(ii)(aa) and 11(2A)(b) of the Insolvency Act
also relates to business premises.
[41] What emerges from this analysis is that the purpose of the relevant
provisions of the LRA, Insolvency Act and 1973 Companies Act, which were
adopted as a package, was to ensure that where a debtor conducts a business,
notice of sequestration or winding-up proceedings must be given to employees of
the business. In the present case none of the Gungudoos’ employees were
employed in a business operation; so the respondents did not attract any
obligation to notify them of the sequestration proceedings. It follows that there is
no merit in the appellants’ submission that the respondents’ failure to comply with
ss 9(4A), 11(2A) and 11(4) of the Insolvency Act either invalidated the provisional
order or precluded the final order from being granted.
(iv)
to the company, unless the application is made by the company, or the court, at its
discretion, dispenses with the furnishing of a copy where the court is satisfied that it would be in
the interests of the company or of the creditors to dispense with it.
(b)
The applicant must, before or during the hearing, file an affidavit by the person who
furnished a copy of the application which sets out the manner in which paragraph (a) was
complied with.’
Section 346A: ‘Service of winding-up order
(1)
A copy of a winding-up order must be served on –
(a)
every trade union referred to in subsection (2);
(b)
the employees of the company by affixing a copy of the application to any notice board to
which the employees have access inside the debtor’s premises, or if there is no access to the
premises by the employees, by affixing a copy to the front gate, where applicable, failing which to
the front door of the premises from which the debtor conducted any business at the time of the
presentation of the application;
(c)
the South African Revenue Service; and
(d)
the company, unless the application was made by the company.
(2)
For the purposes of serving the winding-up order in terms of subsection (1), the sheriff
must establish whether the employees of the company are represented by a registered trade
union and determine whether there is a notice board inside the premises of the company to which
the employees have access.’
14Hendricks NO & others v Cape Kingdom (Pty) Ltd 2010 (5) SA 274 (WCC); Meskin
Henochsberg on the Companies Act Butterworths Vol 1 Issue 32 p 724 (3).
[42] The appellants’ contention, that these provisions are peremptory and not
directory therefore need not be considered. I expressly leave this question open.
[43] In these circumstances the appeal is dismissed with costs of two counsel.
_____________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
For Appellant:
A G South
Instructed by:
F Vally Attorneys, Pretoria
Honey Attorneys, Bloemfontein
For Respondent:
M R Hellens SC (with him C L Robertson)
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
30 May 2012
STATUS: Immediate
Gungudoo v Hannover Reinsurance Group Africa 585/11
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 dismissed an appeal from the South
Gauteng High Court, Johannesburg, against the final order of sequestration of the
joint estate of Shaun and Ayesha Gungudoo, who are married in community of
property.
The first appellant, Shaun Gungudoo, was employed by the respondent, Hannover
Reinsurance Group, as its Senior Investment Manager. He was responsible for
managing the company’s investment assets and was the only authorised person to
instruct stockbrokers. Mr Gungudoo had without authorisation used the assets of the
respondents to conclude short trading in the equity market for the benefit of his close
corporation, Shaneil, of which Mr Gungudoo was a sole member. This allegedly
resulted in a loss of R41million to the respondents and on discovery of this loss; a
semi-urgent application was successfully launched in the high court to sequestrate
the appellants.
On appeal the two main issues before the court were first, whether the respondents’
claims were disputed on bona fide and reasonable grounds and secondly, whether
the respondents had properly notified the appellants’ employees of the sequestration
proceedings in line with the Insolvency Act. On the first ground, the SCA examined
one of the claims of the respondents dealing with the misappropriation of shares by
Mr Gungudoo to the value of almost R11million and held that on consideration of the
evidence before it, Mr Gungudoo produced no evidence to support the allegation
that Shaneil owned the shares and the respondents had demonstrated that Mr
Gungudoo engaged in an elaborate subterfuge to create the impression that the
misappropriations were legitimate. The SCA found that the respondents established
a claim which the appellants cannot dispute on reasonable and bona fide grounds.
On the second ground, Mr Gungudoo alleged that failure by the respondents to
serve the sequestration application on his employees, to notify them of the return
day of the provisional order and to ensure the sheriff complied with his obligations to
his employees meant that non-compliance with these pre-emptory requirements
vitiates the application. These employees consisted of one security guard, two
drivers, three domestic workers and a bookkeeper. The SCA held that against the
background to the adoption of the relevant provisions of the Insolvency Act 24 of
1936 which was adopted alongside relevant provisions of the Labour Relations Act
66 of 1995 and the Companies Act 61 of 1973, the purpose of notice to employees
was to ensure that where a debtor conducts a business, notice of sequestration
must be given to employees of the business. The SCA held further that since none
of the Gungudoos’ employees were employed in a business operation, the
respondents did not attract any obligation to notify them of the sequestration
proceedings.
The appeal was consequently dismissed with costs.
-- ends --
|
3486
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 576/2019
In the matter between:
THE MEMBER OF THE EXECUTIVE COUNCIL
FOR HEALTH, EASTERN CAPE
APPELLANT
and
ZIMBINI MPETSHENI obo
LUYANDA MPETSHENI
RESPONDENT
Neutral citation: The Member of the Executive Council for Health, Eastern Cape v
Zimbini Mpetsheni obo Luyanda Mpetsheni (576/2019) [2020] ZASCA 169 (14
December 2020)
Bench:
PETSE DP, ZONDI and NICHOLLS JJA and EKSTEEN and
UNTERHLATER AJJA
Heard:
13 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
09h45 on 14 December 2020.
Summary: Action in delict – acute profound brain injury during labour causing the
child to suffer from cerebral palsy – whether the trial court could depart from the
expert opinion of the radiologist agreed to by the parties – no basis found to depart
from the causal factors implicated in an acute profound brain injury.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Bhisho (Hartle J sitting
as court of first instance): judgment reported sub nom Luyanda v Member of the
Executive Council for Health, Eastern Cape [2019] ZAECBHC 7
(a)
The appeal is upheld.
(b)
The order of the high court is set aside and replaced by the following order:
‘The plaintiff’s claim is dismissed.’
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Unterhalter AJA (Petse DP, Zondi and Nicholls JJA, and Eksteen AJA
concurring)
[1] On 3 December 2005, the respondent, Ms Mpetsheni, gave birth to a son,
Luyanda (the child), at the Madwaleni Hospital. Luyanda was born with severe brain
damage, as a result of which he suffers from cerebral palsy. Ms Mpetsheni instituted
an action against the appellant in which she alleged that the negligence of the staff
at the hospital failed to prevent the brain injury that occurred during her labour. That
injury was caused by a lack of oxygen and blood flow to Luyanda’s brain. The
technical description of reduced brain oxygen is hypoxic ischaemic encephalopathy.
[2] Ms Mpetsheni began to experience labour pains at 03h00 on 3 December
2005. Together with her mother, Ms Mpetsheni went to the hospital. They arrived at
about 07h00, and Ms Mpetsheni’s membranes ruptured. She was admitted to the
labour ward at about 08h00. There a nurse performed a vaginal examination,
checked the foetal heart rate and informed Ms Mpetsheni that the birth of her child
was still far from occurring, and that she should wait in a separate room. There are
different accounts as to what Mpetshini was told in the course of the day and what
further examinations took place. However, at 21h00 Ms Mpetsheni began to feel
great pain and started screaming. She was then examined by a nurse to check the
position of the foetus and the nurse informed her that she would give birth soon. A
drip was inserted. Ms Mpetsheni was attended upon by two nurses. One of the
important factual issues at trial was precisely what these nurses did during this final
stage of labour. But it is clear that this stage of her labour lasted some 60 minutes
before the child was delivered. During this time, and while Ms Mpetsheni was
pushing, so too did a nurse push on her abdomen. How often, and with what amount
of force, was disputed. In addition, one of the nurses performed an episiotomy.
Luyanda was born at 22h00. He did not cry. A doctor was called and, upon
investigation, it was determined that Luyanda had suffered a severe brain injury
during labour.
[3] At the trial, two issues were agreed by the parties. First, that the period in
contention was the second stage of labour, though the parties were at odds, as I shall
explain, as to how long that stage endured. Second, the parties stated that the report
of Dr Pretorius, an expert radiologist, and its addendum, was admitted into evidence
by agreement. Dr Pretorius considered an MRI scan of Luyanda’s brain. He
concluded that the image indicated an acute profound hypoxic ischemic event that
occurred intrapartum.
[4] The significance of this conclusion is an important matter. It was explained,
in the course of the trial, by the expert obstetrician and gynaecologist, Dr Buchmann,
who testified on behalf of the appellant. He testified that there is a distinction
between an intrapartum acute profound brain injury (‘an acute profound injury’) and
an intrapartum prolonged partial brain injury (‘a prolonged partial injury’). An acute
profound injury is severe, with total or near-total asphyxia (deficient supply of
oxygen); it is of short duration, and sudden onset, and generally occurs 30 minutes
before delivery. A prolonged partial injury is less severe, with partial asphyxia; it
develops slowly over several hours; it is often preceded by a deteriorating foetal
heart rate that gives a warning of developing hypoxia, that is, lack of oxygen.
Professor Buchmann stated that an acute profound injury is caused by a catastrophic
sentinel event, most likely, in the case of Luyanda, the event was the compression
of the umbilical cord. Dr Pretorius identified the injury suffered by Luyanda as an
acute profound injury.
[5] The expert called to testify on behalf of Ms Mpetsheni was Dr Ndjapa-
Ndamkou. He is also an obstetrician and gynaecologist. Dr Ndjapa-Ndamkou readily
recognised that he was not qualified to express an opinion as to the conclusion
reached by Dr Pretorius, since he is not a radiologist, and deference was thus
warranted. While there are passages of his testimony where Dr Ndjapa-Ndamkou
appeared to stray from his area of expertise to suggest that there were features of the
case consistent with a prolonged partial injury, ultimately, he accepted that Luyanda
suffered an acute profound injury.
[6] The court below was not convinced. Hartle J considered that there could be a
‘mixed injury pattern’,1 connoting an injury pattern that has some of the
characteristics of a prolonged partial injury and some of the characteristics of an
acute profound injury. This postulate was advanced for two reasons. First, Hartle J’s
‘own recourse to literature makes it plain that mixed patterns do exist and that when
energy substrates are depleted in partial prolonged asphyxia … there can be a further
assault in the form of near total collapse’.2 Second, Hartle J considered that the
absence of reasons offered by Dr Pretorius for his opinion was unhelpful and did not
exclude the possibility of a mixed injury pattern.
[7] Hartle J proceeded to consider the evidence led at the trial. Hartle J criticised
the evidence of Professor Buchmann. In particular, Hartle J considered Professor
Buchmann’s approach to be biased as to how fundal pressure (that is, applying
pressure by pushing downward on the mother’s uterus during delivery) was
conducive to cerebral palsy; that his denial of high risk factors that had occurred
during Ms Mpetsheni’s labour was unwarranted; and that his unwillingness to make
concessions that deviated from his view that this was an unforeseeable acute
profound injury lent support to an assessment of Professor Buchmann’s testimony
as lacking objectivity. Hartle J considered Dr Ndjapa-Ndamkou’s evidence to be
more probable and credible. The central finding is this:
‘Each of the risk factors highlighted by Dr Ndjapa-Ndamkou in a cascading manner point to a
causal connection between the inappropriate management of the plaintiff’s labour, including (
more especially) the injudicious and untimely application of the fundal pressure in a situation
1 Luyanda v Member of the Executive Council for Health, Eastern Cape [2018] ZAECBHC 7, especially para 121.
2 Ibid para 69.
where the child was already in a compromised position, and the superimposed acute profound
hypoxic result.’3
Consequently, the high court held that the appellant was liable in delict to the
respondent. Aggrieved by this result, the appellant appeals against that order with
the leave of the high court.
[8] The appellant submitted that the court below fell into error. There was no
basis to depart from the finding of Dr Pretorius that this was a case of an acute
profound injury. Such an injury was properly characterised as a catastrophic sentinel
event by Professor Buchmann. It was an unforeseeable injury, occurring in the final
stage of labour, in all likelihood less than 30 minutes before delivery; and, in this
case, it was mostly likely the complete occlusion of the umbilical cord for a period
of 15 to 20 minutes that caused the injury. Neither the length of the labour, nor the
recognised failure by the hospital staff properly to monitor and inspect the progress
of the labour, nor the rupture of Ms Mpetsheni’s membranes, nor the application of
fundal pressure, was causally implicated in the injury suffered by Luyanda. There
was also no warrant, so it was contended, for the court below to find that Professor
Buchman gave biased testimony.4 Indeed, it was submitted on behalf of the appellant
that the only bias that may be found was exhibited by the court below itself.
[9] Counsel for Ms Mpetsheni acknowledged the agreement made concerning
the evidence of Dr Pretorius and the concessions made by Dr Ndjapa-Ndamkou, in
particular, that Luyanda had sustained an acute profound injury. Nevertheless, it was
contended that upon a reasonable extrapolation as to the length of Ms Mpetsheni’s
3 Ibid para 122.
4 Ibid para 114.
labour, there may have been intermittent hypoxia (oxygen deprivation),
compromising the ability of the foetus to recover. Hypoxia of this kind could have
been detected had proper foetal monitoring been done, which it was not, and steps
could then have been taken to avoid serious injury, for example by performing a
timely caesarean section. This, together with the negligent manner in which fundal
pressure was administered, resulted in the acute profound injury.
[10] The first issue to be determined is whether the court below was justified in
departing from the opinion of Dr Pretorius, that Luyanda had suffered an acute
profound injury. It will be recalled that Hartle J did so on the basis of her own
recourse to the literature and the absence of reasons for the opinion expressed by Dr
Pretorius.
[11] This judicial assiduity strays beyond permissible bounds. The trial court will
ordinarily consider the assistance given by an expert’s evidence and come to its own
conclusions. But here the parties had agreed to accept the conclusion reached by Dr
Pretorius and ran the trial on this basis. In these circumstances, the trial court should
exercise very great caution. If Hartle J considered that Dr Pretorius’s conclusion was
questionable, it was essential to give notice of this to the parties, as soon as possible,
in the course of the trial, in turn securing the attendance of Dr Pretorius to explain
his position. Absent this, the trial court’s judgment is not the place to reject Dr
Pretorius’s opinion, nor to introduce a theory of injury at variance with the parties’
agreed position.
[12] Furthermore, a judge’s independent recourse to literature should also be
undertaken with circumspection. The admissibility of expert evidence is predicated
upon the special knowledge and skill of the expert to form an opinion that the judge,
unassisted, cannot. A judge with an interest in a field of expert knowledge should
not ordinarily undertake an independent search for relevant literature. And if it is
done for some special reason, the yield of such explorations must be put to the parties
and their experts. To do otherwise leaves the judge open to the very criticism made
in this case by the appellant: that the court below had recourse to undisclosed
literature to call into question an agreed conclusion that formed the basis upon which
the trial was run - that Luyanda suffered an acute profound injury.
[13] The high court was not willing to accept the opinion of Dr Pretorius and
characterised the injury as a ‘mixed injury pattern’. That was not a position available
to the trial court. Without notice to the parties, the literature reviewed by the learned
judge, not introduced into evidence, could not be used to justify a judicial
characterisation of the injury. Nor could the learned judge safely reach any such
characterisation, given the parties’ acceptance of the opinion of Dr Pretorius. Doubts
as to that opinion required of Hartle J that she take up the matter with the parties and
enjoy the benefit of testing her scepticism by securing the assistance of Dr Pretorius.
This is not simply a question of fairness. To make a finding on a matter that requires
an expert opinion, and to do so in contradiction of the opinion of an acknowledged
expert, agreed upon by the parties, without testing the matter with Dr Pretorius, was
to run a risk of error that cannot be allowed to stand.
[14] It follows that the matter must be considered from the agreed premise that the
parties adopted at the trial. That premise was that Luyanda suffered an acute
profound injury. The consequences of accepting this premise are far reaching. As I
have explained, the nature of an acute profound injury and a prolonged partial injury
are different. Those differences were set out by Dr Buchmann. Under
cross-examination, Dr Ndjapa-Ndamkou agreed that this was a case of an acute
profound injury and he concurred with the proposition that there was no indication
of a prolonged partial injury. Further, he agreed that an acute profound injury would
require a complete occlusion of the umbilical cord for a period between 15 and 20
minutes.
[15] What emerges from the differences between the two types of injury is that
their causes are also distinct. As their descriptions make plain, an acute profound
injury results from a catastrophic event, as Professor Buchmann explained. A
prolonged partial injury results from cumulative deprivations of oxygen over time.
The injury develops over hours and it may be observed by a deteriorating foetal heart
rate. Once this distinction is accepted, then very different time periods and causes
are implicated for the purposes of understanding what gave rise to the injury suffered
by Luyanda.
[16] Precisely because the court below appreciated that the distinctive nature of
an acute profound injury excluded from consideration aspects of the negligent
treatment given to Ms Mpetsheni, the court questioned the conceptual distinction
between the two types of injury and adopted the notion of a mixed injury pattern.
This permitted the court below to consider the cumulative risks borne by Ms
Mpetsheni of the rupture of her membranes, the length of her labour, the failure to
undertake proper monitoring, and the fundal pressure applied to her. But without the
premise of a mixed injury pattern, what of these cumulative risks has any bearing
upon the catastrophic event that caused the acute profound injury?
[17] Counsel for Ms Mpetsheni sought to resurrect the case on this score, even
accepting that this was a case of an acute profound injury. He did so in two ways.
First, he contended that the active phase of Ms Mpetsheni’s labour endured for
considerably longer than Professor Buchmann allowed. There may have been
intermittent hypoxia, over a considerable period of time, which would have
weakened the foetus. The nurses failed to do proper monitoring to determine whether
this risk was present. In addition, the rupture of the membranes may have led to the
reduction of amniotic fluid, and the added risk of cord compression. Taken together
with the fundal pressure that was applied, the acute profound injury was a probable
consequence. I shall refer to this as the cumulative risk argument.
[18] Second, counsel contended that the duration of the fundal pressure was in
itself a sufficient explanation of the acute profound injury. The nurses applied this
pressure in a manner that was both wrongful and negligent and hence the liability of
the appellant was proven. I shall refer to this as the excessive fundal pressure
argument.
[19] The cumulative risk argument rests on the factual premise that the active
phase of labour was lengthy which gave rise to risks, undetected by the nurses
responsible for Ms Mpetsheni, that cumulatively contributed to the acute profound
injury suffered by Luyanda.
[20] It was argued that this factual premise is supported by the evidence led at the
trial. Counsel relied upon the evidence of Dr Ndjapa-Ndamkou. He testified that,
during his consultation with Ms Mpetsheni, she had told him that a nurse had
informed her at 13h00 that she would give birth at 16h00. If this was what a nurse
believed at the time, it gives rise to the possibility that Ms Mpetsheni entered the
active phase of her labour in the afternoon of 3 December 2005. Given the time of
Luyanda’s birth at 22h00, Ms Mpetsheni would have been in the active phase of her
labour for a lengthy time, with attendant risks.
[21] The difficulty with this evidence is that Ms Mpetsheni, who testified both
before and after Dr Ndjapa-Ndamkou, made no mention of what the nurse had said
to her. This is an important omission. What Dr Ndjapa-Ndamkou recounted of his
consultation is hearsay. The difficulty is not simply technical. Absent some cogent
evidence that what was allegedly said by the nurse is supported by some other
evidence that Ms Mpetsheni had entered the active phase of her labour during the
afternoon, the hearsay evidence, even if considered, carries very little weight.
[22] The supporting evidence relied upon was this. Dr Ndjapa-Ndamkou placed
some reliance on the guidance that dilation in the latent phase of labour takes places
at 1-2 cm per hour. An extrapolation using this guidance might suggest that Ms
Mpetsheni would have given birth at 16h00, and this coincided with what she
reported to Dr Ndjapa-Ndamkou the nurse had indicated to her. This was also
consistent with the evidence of Ms Mpetsheni that at 13h00 she was feeling such
pain that it did not permit her to lie on the bed until the contractions abated. Given
when it was that the birth in fact occurred, Ms Mpetsheni endured a long active phase
of labour that could have contributed to the risk of foetal distress.
[23] The difficulty with this evidence is that it rests upon the assumption that the
progress of Ms Mpetsheni’s labour followed the course of the guidance. There are
no records as to the progress of her labour. There was some evidence of an
examination of Ms Mpetsheni at 13h00, though this was not confirmed in the
testimony of Ms Mpetsheni. There was no evidence given as to what the examination
revealed. Professor Buchmann testified that there are very great variations as to the
rate of dilation between women, and there is thus little to be learnt from the
extrapolation exercise relied upon by Dr Ndjapa-Ndamkou.
[24] Absent some direct evidence as to the course of Ms Mpetsheni’s labour, the
sparse details given by Ms Mpetsheni and the speculative generalisations offered by
Dr Ndjapa-Ndamkou do not provide evidence of sufficient weight to support the
nurse’s estimate of 16h00, even if made, as being a plausible time at which the birth
might have been expected to take place.
[25] What the evidence does establish is that Ms Mpetsheni cried out in pain at
21h00. She was then taken to the labour ward, a drip inserted, and she was attended
upon by two midwives. Fundal pressure was applied by one of the midwives. There
was some difficulty in the birth taking place. An episiotomy was performed, and
Luyanda was born at 22h00.
[26] Without clear evidence that there was a long period of active labour that
might have compromised the foetus and thereby contributed, in some way, to the
injury suffered by Luyanda, there is no factual basis for the cumulative risk
argument. Mere supposition will not suffice.
[27] The cumulative risk argument flounders for another reason. Professor
Buchmann was very clear as to the nature of an acute profound injury. It is of short
duration, and sudden onset, and generally occurs 30 minutes before delivery. In the
evocative language of Professor Buchmann, it is caused by a catastrophic sentinel
event. Dr Ndjapa-Ndamkou was constrained to accept this.
[28] The efforts by the court below to characterise the injury as being a mixed
injury pattern cannot be supported on the evidence before the court. Dr Ndjapa-
Ndamkou’s evidence was at odds with itself. He accepted that this was a case of an
acute profound injury, yet he sought to implicate features of the case that are
consistent with a prolonged partial injury. In particular, his efforts to suggest that
there was a prolonged labour was the basis for suggesting that asphyxia might have
developed slowly over several hours. But that is the very hallmark of a prolonged
partial injury. Precisely what Dr Pretorius said it was not.
[29] There is simply no adequate basis upon which the factual evidence and a
proper appreciation of the expert evidence supports the cumulative risk argument.
[30] I turn to the excessive fundal pressure argument. The issue here is well
defined: could the midwife have applied such excessive fundal pressure so as to
cause the catastrophic sentinel event that so grievously injured Luyanda?
[31] Professor Buchmann’s evidence was this. An acute profound event represents
a complete shut-off of blood flow to the brain. After 10 minutes, brain damage starts;
and after 25 minutes, most of the brain is damaged. Dr Ndjapa-Ndamkou was in
agreement that an acute profound event would mean a complete occlusion of the
cord for a period of between 15 and 20 minutes.
[32] When Ms Mpetsheni first gave her evidence, she explained that after 21h00
she was taken to the labour ward. There, in the course of her labour, one of the
midwives pressed on the top side of her abdomen to assist her, as Ms Mpetsheni was
pushing. Dr Ndjapa-Ndamkou referenced in his report that he had been told by Ms
Mpetsheni that excessive forceful pressure was applied. At trial, when this evidence
was sought to be led, counsel for the appellant objected on the basis that the evidence
was hearsay. This led to the recall of Ms Mpetsheni. Upon her recall, Ms
Mpetsheni’s evidence was that the midwife applied hard pressure to her abdomen
and slapped Ms Mpetsheni on her right flank. The duration of this pressure was 5
minutes on and 5 minutes off (the 5/5 regime). Under cross-examination, when asked
how Ms Mpetsheni could recall this timing so long after the event and given the pain
of childbirth, Ms Mpetsheni reported that she had heard that the 5/5 regime was
being applied from the midwives. Ms Mpetsheni also recalled that the 5/5 regime
was applied three times before the baby was delivered.
[33] The appellant submitted that the evidence of hard pressure and the 5/5 regime
should not be believed. It did not figure when first Ms Mpetsheni gave evidence, and
it was implausible that Ms Mpetsheni could remember what she claims the midwives
said, given that she was in the final stage of labour. Certainly, the trial court had
some difficulty in believing this evidence, which was described as ‘bizarre’.5
[34] It is unnecessary to express a firm view on this aspect of the matter. Here, too,
Professor Buchmann’s evidence is clear and not refuted by Dr Ndjapa-Ndamkou.
An acute profound injury requires a complete cut-off of blood flow in excess of 10
5 Luyanda (above fn 1) para 87.
minutes to start causing significant brain injury. The account given of the 5/5 regime
does not do this. Professor Buchmann considered that this fundal pressure could not
have caused the acute profound injury and he was sceptical that any midwife was
capable of applying significant pressure for 5 minutes. Dr Ndjapa-Ndamkou, while
accepting that complete occlusion was required, nevertheless maintained that the 5/5
regime might have compromised the recovery of the foetus. Here, too, the evidence
of Dr Ndjapa-Ndamkou appears to be internally inconsistent. If the type of injury
occurring in cases of acute profound injury requires a complete cut-off of blood flow
in excess of 10 minutes, then it is unclear how pressure that does less than this, on
three occasions, compromised recovery so as to bring about the same result.
[35] For these reasons, the excessive fundal pressure argument cannot be
sustained.
[36] Once this is so, the following conclusions follow. First, Dr Pretorius had
determined that the injury suffered by Luyanda was an acute profound injury.
Second, an acute profound injury, as Professor Buchmann explained, with the
ultimate concurrence of Dr Ndjapa-Ndamkou, was a catastrophic sentinel event of
short duration and sudden onset, occurring in all likelihood 30 minutes before the
birth. Third, what was done by the nursing staff in the last hour of Ms Mpetsheni’s
labour was not causally implicated in the acute profound injury suffered by Luyanda.
Fourth, there is neither sufficient evidence nor a defensible basis on the expert
evidence to find that the risks arising from a lengthy period of labour occurred in
this case. Even if they had, these risks were not causally operative in bringing about
the brain injury suffered by Luyanda.
[37] It follows that the appeal must succeed.
[38] A few final observations are warranted.
[39] First, Professor Buchmann’s opinions were clearly stated and firmly held. I
can discern no taint of bias in the manner in which Professor Buchmann defended
his position. The court below was not justified in attributing bias to Professor
Buchmann. Quite the contrary, his opinions have been of considerable assistance in
determining this appeal. A court may decide that an expert opinion is incorrect, but
a court should be slow to attribute bias to an expert of high standing because of the
conviction with which the expert defends his opinions.
[40] Second, counsel for the appellant submitted that the court below exhibited
bias. In the light of the conclusion to which I have come, there is no need to traverse
the detail of this submission. What is at stake in a trial of the kind before Hartle J
could not be of greater consequence. In these circumstances, it is of great importance
that counsel and the court place a premium upon the dignity and reciprocal respect
that allows courts to determine difficult cases.
[41] Third, counsel for the appellant made it plain that in the event that the
appellant prevailed in the appeal, no costs were sought, either in the appeal or in
respect of the trial. This was a proper stance to adopt.
[42] The following order is made:
(a)
The appeal is upheld.
(b)
The order of the high court is set aside and replaced by the following order:
‘The plaintiff’s claim is dismissed.’
________________
D N Unterhalter
Acting Judge of Appeal
APPEARANCES
For appellant:
P de Bruyn SC (with him N D Ngadlela)
Instructed by:
State Attorney, East London
State Attorney, Bloemfontein
For respondent:
D Brown (with him T Mduba)
Instructed by:
Dudula Yandis Attorneys, Johannesburg
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED
Member of the Executive Council for Health, Eastern Cape v Mpetsheni obo Mpetsheni
(Case no 576/2019) [2020] ZASCA 169 (14 December 2020)
From:
The Registrar, Supreme Court of Appeal
Date:
11 December 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 judgments of the Supreme Court of Appeal
Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against an
order of the Eastern Cape Division of the High Court, Bhisho (Hartle J), which turned mainly
on the high court’s treatment of the opinion of an expert witness. The appeal was upheld.
The matter concerned an action for damages, instituted by Ms Mpetsheni on behalf of her minor
son, Luyanda (the child). The child suffered a severe brain injury during labour, due to a lack
of oxygen and blood flow, and was consequently born with severe brain damage. As a result,
the child suffers from cerebral palsy. Ms Mpetsheni alleged that the child’s injuries were due
to the hospital staff’s negligence.
The appellant and Ms Mpetsheni were in agreement in respect of two issues at the trial: that
the period in contention was the second stage of labour; and that the report of Dr Pretorius, an
expert radiologist, along with its addendum, be admitted into evidence. In this report Dr
Pretorius concluded that the MRI scan indicated an acute profound hypoxic ischemic event that
occurred during labour (as opposed to a prolonged partial brain injury that occurred during
labour). The former is severe – a total or near-total lack of oxygen, occurring suddenly and
lasting only for a brief period, generally occurring 30 minutes prior to delivery. The latter is a
less severe injury that develops slowly, over several hours, and is often preceded by a
deteriorating foetal heart rate that gives a warning of developing hypoxia, ie a lack of oxygen.
The expert called to testify on behalf of the appellant stated that an acute profound injury is
caused by a catastrophic sentinel event which, in this case, was most likely the compression of
the child’s umbilical cord. The expert who testified on behalf of Ms Mpetsheni ultimately
agreed. Nevertheless, the high court took a different view, holding that the possibility of a so-
called ‘mixed injury pattern’ – an injury pattern that is partly characteristic of an acute profound
injury and partly characteristic of a prolonged partial injury – could not be ruled out on the
evidence. This view was based on the judge a quo’s own recourse to literature, coupled with
the absence of substantiating reasons proffered by Dr Pretorius in support of his conclusion.
The principal issue on appeal was thus whether the high court legitimately departed from the
opinion of Dr Pretorius, namely that the child had suffered an acute profound injury. On this
score the SCA found that the high court had erred. While in the normal course a court is to
consider the opinion of an expert and come to its own conclusions, this case was different
because the parties had agreed to accept the conclusion reached by Dr Pretorius and for the
trial to proceed on this basis. The SCA held that a judge was not, as a rule, permitted to perform
an independent analysis of the subject-matter by having recourse to literature not introduced
into evidence, and without notice to the parties, especially where the parties had already
accepted the opinion of an expert.
The SCA accordingly approached the matter from the premise that the parties had agreed to
adopt at the trial, ie that Luyanda suffered an acute profound injury. Such injury resulted from
a catastrophic event, which meant that the high court’s consideration of the cumulative risks
borne by Ms Mpetsheni – the rupture of her membranes, the length of her labour, the failure
by hospital staff to undertake proper monitoring, and the fundal pressure applied to her belly –
were altogether irrelevant. It added nothing to the enquiry into the catastrophic event that
caused the child’s acute profound injury.
The SCA concluded that what was done by the hospital staff in the last hour of Ms Mpetsheni’s
labour was not causally implicated in the acute profound injury suffered by the child.
In the result, the appeal was upheld. Counsel for the appellant made it plain that if the appeal
was good, no costs would be sought. The SCA agreed that this was the proper stance to adopt.
________________________________________
|
3744
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 377/2021
In the matter between:
CONDY MAWELA FIRST APPELLANT
PAULOS MATHIBELA SECOND APPELLANT
and
THE STATE RESPONDENT
Neutral Citation:
Condy Mawela & Another v The State (377/2021) [2022] ZASCA
18 (16 February 2022)
Coram:
MATHOPO, MBATHA and MOTHLE JJA and KGOELE and
PHATSHOANE AJJA
Heard:
11 November 2021
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 16 February 2022.
Summary: Criminal law and procedure – murder – common purpose – whether the
court correctly applied the legal principle of dolus eventualis – correct approach to
s 204 witnesses – whether the State had proven common purpose against
appellants – whether the State discharged onus of proving its case beyond reasonable
doubt – Appeal against both convictions and sentences upheld – State’s cross-appeal
dismissed.
____________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Kganyago J sitting
as court of first instance):
The appeal against the conviction of both Mr Mawela and Mr Mathibela on
counts 1 and 5 is upheld.
The appeal by Mr Mathibela on count 3 is upheld to the limited extent set out
below.
The appeal by Mr Mathibela against the sentence on count 3 succeeds.
The cross-appeal by the respondent is dismissed.
The order of the high court is set aside and is substituted with the following:
‘1
Accused no 2 and 3 are found not guilty on counts 1 and 5 and are discharged.
Accused no 3 is found guilty of common assault on count 3.
Accused no 3 is sentenced to 12 months’ imprisonment wholly suspended for
a period of three (3) years on condition that he is not convicted of any offence
involving violence during the period of suspension.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Mothle JA (Mathopo and Mbatha JJA and Kgoele and Phatshoane AJJA
concurring)
[1] What started off as an enraged mob hunting an alleged rapist by some
community members in Limpopo, ended tragically, with two brothers having lost their
lives in the Mashiyane family. One brother, Kleinbooi Mashiyane, was killed by the
community members and the other, Jackie Mashiyane (Jackie), who was the alleged
rapist, committed suicide. The rape allegation was not supported by the DNA evidence
of the suspect and any semblance of justice seems to have eluded the families.
[2] The narrative that emerge from the evidence in the high court trial is that on the
evening of 9 May 2017 at Magukubjane village, Hlogotlou, Limpopo, some community
members, a group of approximately 100 people, held a public meeting at a football
field. The purpose of the meeting was to discuss an incident of rape allegedly
committed by Jackie from Talane village nearby. The group then went to the
Mashiyanes’ homestead1 in Talane village to look for the suspect in order to bring him
back to their village and summon the police. It was on the group’s arrival at the
Mashiyanes’ homestead, that the events took a violent turn, which resulted in some
persons being assaulted, Jackie’s personal property burned, a BMW motor vehicle’s
windscreen damaged and one member of the family being killed.
[3] Mr Gijimani Andries Mgidi (Mr Mgidi),2 the father to both the deceased brothers,
testified that while at the police station with Jackie, he received a call from the group,
who summoned him back to the homestead. He left Jackie at the police station. On
his arrival at the homestead, accompanied by his other son, Mr Kleinbooi Mashiyane
(the deceased), and another relative, Mr Sergeant Masilela (Mr Masilela), he
encountered the group who had barricaded the road, and had lit a fire just outside the
homestead. The group surrounded the BMW vehicle and hit it with various objects,
damaging the windscreen. He got out of the vehicle and so did the deceased, who ran
away but was struck with a stone and fell. He later saw the deceased lying on the
ground bleeding. He took the deceased to a clinic, found it closed and went to the
police, where the deceased was later certified dead by the paramedics. Mr Masilela
testified that as he alighted from the vehicle, he was assaulted by the second appellant
with a knobkerrie which broke.
[4] At the end of the trial held at Limpopo Division of the High Court, Polokwane
(the high court) on 22 November 2018, the first and second appellants, Mr Mawela
1 The group had earlier in the day went to look for Jackie at his homestead, to no avail. At the evening
meeting preceded the second attempt to locate him.
2 Mr Mgidi is referred to in the high court judgment as ‘Mr Mogithe’. In the indictment, he is referred to
as ‘Gijimani Andries Mgidi’. The names of various witnesses are also incorrectly spelt in the trial court’s
judgment and the record, compared to the names set out in the list of witnesses filed in terms of s 144
(3)(a) of the Criminal Procedure Act 51 of 1977.
and Mr Mathibela,3 were convicted of various counts, including murder. Mr Mawela
was convicted of count 1, murder and count 5, malicious injury to property. He was
sentenced to 12 years’ imprisonment for murder and 5 years imprisonment for
malicious damage to property. The high court ordered that the 5-year sentence should
run concurrently with the 12 years’ sentence.
[5] Mr Mathibela was convicted on count 1, murder; count 3. Assault with intent to
cause grievous bodily harm; and count 5, malicious injury to property. He was
sentenced to 12 years’ imprisonment for murder; 5 years for malicious injury to
property and 3 years for assault with intent to cause grievous bodily harm. Also in his
case, the high court ordered that the two sentences of 3- and 5-years’ imprisonment
should run concurrently with the 12-year sentence.
[6] The appellants appeal to this Court is with leave of the high court. Mr Mawela
appeals against the conviction and sentences of imprisonment on both counts, while
Mr Mathibela was granted leave to appeal against conviction only on the count of
murder, and against both conviction and sentence on the counts of assault and
malicious injury to property. The high court also granted the State leave to appeal on
a question of the applicability of the Criminal Law Amendment Act 105 of 1997 (the
CLAA), concerning the sentence imposed on count 1, murder.
[7] Mr Mawela and Mr Mathibela contended before us that the high court erred in
its approach in dealing with three parts of the State’s evidence. First, the evidence of
State witnesses, mainly the accomplices, was contradictory in material respects.
Second, the trial was preceded by a conspiracy of the group to falsely implicate Mr
Mawela. Third, the failure by the accomplices as s 204 witnesses to answer all
questions, which implicated them, frankly and honestly as required by s 204 (1) of the
Criminal Procedure Act 51 of 1977 (the Act). I turn to deal briefly with these aspects
of the case in that order.
3 At the trial, Mr Mawela was accused no 2 and Mr Mathibela was accused no 3. Accused no 4 was
discharged at the end of the State’s case and accused no 1 was discharged at the end of the trial.
[8] The State’s case was essentially based on the evidence of three members of
the group, Ms Segopotso Mnguni (Ms Mnguni), Ms Patricia Mogoto (Ms Mogoto) and
Mr Paris Matladi (Mr Matladi), who were State witness in terms of s 204 of the Act in
return for immunity from prosecution. Ms Mnguni testified that on 9 May 2017 she was
part of the group that went to the Mashiyanes’ homestead at Talane village. In
response to no question at all, she significantly added in her evidence-in-chief that she
arrived at the homestead after the other members of the community, as she had
walked slowly. On arrival she saw Mr Mawela and Mr Mathibela questioning and
dragging an elderly woman, Ms Belinda Mahlangu (Ms Mahlangu), and later put her
in a wheelbarrow. Ms Mnguni further testified that she heard the two appellants speak
to Mr Mgidi on the phone and later noticed them coming out of the Mashiyanes’
residence carrying some clothing and other personal items which belonged to Jackie,
which they burned. Subsequently, she witnessed how some members of the group
attacked and damaged Mr Mgidi’s vehicle upon its arrival at the scene. Ms Mnguni
further saw a person running, after alighting from the vehicle and was struck by a stone
that came from the crowd. She saw Mr Mawela, in possession of a golf stick, chasing
the deceased and striking him with it. Ms Mnguni further added that she saw Mr
Mathibela also running towards the deceased armed with a knobkerrie. She could not
see if Mr Mathibela used the knobkerrie to hit anyone.
[9] The evidence of Ms Mnguni was materially contradicted by the other two s 204
witnesses. Ms Mogoto and Mr Matladi, who both testified that Ms Mnguni was not the
innocent bystander but was the leader of the group and actively participated in giving
instructions. Ms Mogoto further testified that, contrary to the allegation that it was the
appellants who spoke on the phone, she saw and heard how Ms Mnguni, speaking on
the phone, demanding Mr Mgidi to return to the homestead with Jackie and insulted
him. Ms Mogoto further testified that she saw Mr Mathibela burn some clothes contrary
to what Ms Mnguni had alleged. There were also some discrepancies on the evidence
of the questioning and assault of the old lady, Ms Mahlangu. Ms Masesi Raselomane
(Ms Raselomane), lived in the Mashiyanes’ homestead with her grandmother, Ms
Mahlangu. She testified that it was a lady with a panga, Ms Mnguni, who took her
phone to talk to Mr Mgidi.
[10] Ms Mnguni was the only witness who testified that she saw Mr Mawela chase
after the deceased and assault him with a golf stick. This evidence is at odds with the
evidence of Mr Matladi who testified that, when the deceased alighted from the vehicle,
Mr Mawela, who was near the door of the vehicle, hit the deceased once with an open
hand and the deceased ran into the darkness. Mr Matladi was nearer the vehicle but
his evidence does not corroborate that of Ms Mnguni. The third version of the State
came from Ms Mogoto who testified that she was standing next to the vehicle with Mr
Mgidi and Mr Mawela when an altercation ensued between Mr Mgidi and the Mr
Mawela. She intervened to avoid the confrontation. Other members of the group had
at that time gathered where the deceased had fallen.
[11] With regard to Mr Mathibela, there are further contradictions. Mr Matladi
testified that he was next to the vehicle when he witnessed Mr Mathibela strike Mr
Masilela with a knobkerrie on his arm as he alighted from the vehicle. The knobkerrie
broke. This version was confirmed by Mr Masilela that it took place by the vehicle as
he attempted to alight. However, this is a version that contradicts Ms Mnguni’s
evidence that she also saw Mr Mathibela chase after the deceased with a knobkerrie,
when the latter alighted from the vehicle, even though she could not see what Mr
Mathibela did with it. In essence, the evidence of the State through Ms Mnguni places
the two appellants away from the vehicle, chasing the deceased, while the other
evidence of the State, through Mr Matladi and Ms Mogoto locates both appellants by
the motor vehicle at the time the deceased was running away.
[12] Having regard to what is stated in the preceding paragraphs, I am of the view
that the material contradictions and various versions present in the State’s case cannot
sustain a conviction for murder. The finding of this Court in a similar matter in Jansen
v The State4 is apposite. The Court expressed the following view:
‘These are serious contradictions which go to the heart of her case. In my view, they have
rendered her evidence untrustworthy, less credible and unreliable. It cannot be said that her
evidence is satisfactory in all material respects.’
4 Jansen v The State [2016] ZASCA para 32.
[13] After the incident at the Mashiyanes’ homestead, it became known that some
of the group members, including Mr Mawela, who was the first to be arrested, had
made statements to the police. As a result, another community meeting was called,
where the group members forced him to tell them what he told the police. He told the
community that Mr Tumelo Chego5 threw the stone that fell the deceased and that Mr
Matladi hit the deceased with a knobkerrie. The community in turn conspired that
whoever is called as witness must implicate those who made statements to the police
for the commission of the offences.
[14] The high court downplayed the significance of the community’s conspiracy to
implicate those who had made statements to the police, including Mr Mawela. The
contradictory evidence was also tainted by the conspiracy. It is trite that the courts
must approach the evidence of the accomplices with caution, it even becomes more
so with the evidence of a conspiracy to falsely implicate others. This Court in Mojapelo
v S6 stated thus:
‘It is trite that a court should approach the evidence of an accomplice with caution, and courts
are repeatedly warned of the “special danger” of convicting on the evidence of an accomplice.
In R v Ncanana 1948 (4) SA 399, this court said:
“The cautious Court will often properly acquit in the absence of other evidence connecting the
accused with the crime, but no rule of law or practice requires it to do so.”.’
[15] At the commencement of their evidence, the high court warned the s 204
witnesses that as accomplices, each would be implicated in the commission of the
crimes. Consequently, they had to answer questions posed to them frankly and
honestly. Each of the s 204 witnesses, however, sought to exculpate themselves when
testifying. They sought to minimise their role to the point of distancing themselves from
the mob as bystanders and in doing so, attempted to cast the blame on the appellants.
Not one of them admitted the questions under cross-examination as to their roles in
the commission of the offences at the Mashiyanes’ homestead. The three witnesses
inexplicably appeared to have directed their focus on the conduct of the two appellants
out of more than 100 people present that evening.
5 Mr Tumelo Chego was accused no. 1 in the trial and was acquitted.
6 Mojapelo v S [2016] ZASCA 22 para 16.
[16] Thus, even in instances where it appears there was corroboration, the spectre
of the tainted evidence of conspiracy to falsely implicate others, detracts from its
credibility and reliability. It should not be left to the courts to sift through the evidence
of a witness to determine which part thereof might or might not be affected by the
conspiracy. That said the high court’s finding of murder on the basis of dolus eventualis
is not only tenuous but not borne out by the evidence.
[17] There is another matter which concerns the high court’s finding in the
penultimate paragraph of its judgment. The high court judgment concluded thus:
‘In this case when a stone was thrown to [Kleinbooi], it cannot be said that the intention was
to kill him. The intention was to stop him from fleeing, but by stopping him from fleeing with a
stone, they were gambling with his life, and they should have foreseen that it might struck a
fatal blow. In my view, the two accused are guilty of murder in [the form] of dolus eventualis.’
[18] Contrary to the high court’s finding, first, the State failed to prove that the said
stone struck a fatal blow or was actually the cause of the blunt force trauma. Second,
there was no evidence by the State that either Mr Mawela or Mr Mathibela threw the
stone at the deceased. Third, the high court’s finding that the fatal blow came from the
stone negates or excludes any evidence of the State, which sought to prove that the
fatal blow could have resulted from some other object such as a golf stick or
knobkerrie. The absence of that critical causal nexus between the appellants’ alleged
conduct and the eventual demise of the deceased, had not been proved.
[19] Another disconcerting feature of the judgment of the high court is that according
to the uncontested report on the Medical Legal Post Mortem Examination (the autopsy
report), conducted on the body of the deceased, the cause of death was ruled as ‘blunt
force trauma to the head’. The deceased was found to have sustained scalp injuries;
facial and neck surface injuries; fractured skull and associated brain tissue injuries and
intracranial haemorrhages. The high court erroneously found, contrary to the autopsy
report and without any evidence, that the deceased died, consequent to being hit by
a stone when running from the vehicle. The evidence, which the State failed to present,
was that there were about 50 people from the group who descended on the area where
the deceased fell and also stoned him. Ms Mogoto observed, at the spot where the
deceased had slumped, that he was bleeding and there were stones around him. Mr
Mawela also claimed that other members of the community threw stones towards
where the deceased was running. The question which arises is whether the deceased
sustained additional injuries from the group, apart from the stone that made him slump.
On this ground alone, the conviction for murder falls to be set aside.
[20] It has become prevalent practice to simply submit the autopsy report as an
admission in terms of section 220 of the Act, with no further attention paid to it. In this
matter, the autopsy report was admitted at the end of the State’s case as exhibit C.
None of the parties made an attempt to make reference to the autopsy report in their
submissions (address on the merits) to court. Further, except to state in the judgment
that the autopsy report was admitted as evidence and marked exhibit C, the high court
did not deal with it either. Failure to deal with the autopsy report as evidence suggests
that a critical piece of evidence that could prove or corroborate the cause of death,
was ignored.
[21] On count 5 it was contended by the State that Mr Mawela and Mr Mathibela
burnt Jackie’s clothes. The State’s evidence on this count is riddled with contradictions
of such a nature that the convictions cannot stand and must suffer the same fate as
their conviction on the count of murder. In respect of count 3, relating to the assault of
Mr Masilela by Mr Mathibela, Mr Masilela’s evidence was that Mr Mathibela accused
him of hiding the rape suspect at his house and smote him mightily with a knobkerrie
on his hand. He retreated into Mgidi’s vehicle; crawled from the rear passenger seat
to the driver’s seat and drove off from the scene to the police station. He was able to
identify Mr Mathibela. Nothing obstructed his view. The high court accepted the
evidence of the State’s witnesses as credible and reliable on this score. This was not
seriously disputed on appeal. That finding cannot be faulted.
[22] In this Court, counsel submitted that, at the very least, Mr Mathibela ought to
have been convicted of common assault because the State failed to prove that he
caused Mr Masilela grievous bodily harm. Save for the fact that Mr Masilela’s hand
was swollen the next day and he used warm water to reduce the inflammation, he did
not seek medical attention. It follows that the conviction of assault with intent to do
grievous bodily harm ought to be set aside and replaced with common assault. As to
sentence it ineluctably follows that the sentence of 3 years imprisonment must also be
set aside. In my view, a wholly suspended sentence would be suitable.
[23] The cross-appeal lodged by the State can be disposed of very briefly. It
collapsed when the State conceded that the high court had erred in convicting the
appellants. Count 1 was murder read with section 51(1) of the CLAA. It included
premeditation and the applicability of the common purpose doctrine. The high court
reasoned that it was ‘. . . satisfied that the State has proved common purpose against
[Mr Mawela] and [Mr Mathibela] and are therefore responsible for the death of
[Kleinbooi Mashiyane]’. As a result, the State contended that the high court was bound
to convict the appellants of premeditated murder. In addition, it ought to have found
that they acted with common purpose. This, it further argued, would attract life
imprisonment in terms of s 51(1) of the CLAA.
[24] As already said, the State’s case was that the group went to Mashiyane’s
homestead to apprehend Jackie, take him to their village, and to hand him over to the
police. There was no evidence presented that Mr Mawela and Mr Mathibela or the
group conspired to commit premeditated murder or had the mens rea to act with
common purpose to commit any offence, least of all, against the deceased. The
evidence in this case does not remotely meet the requirements that should be present
to sustain a conviction on common purpose, as determined in S v Mgedezi and
Others;7 and S v Thebus.8 The cross appeal should therefore fail.
[25] In the result, I make the following order:
The appeal against the conviction of both Mr Mawela and Mr Mathibela on
counts 1 and 5 is upheld.
The appeal by Mr Mathibela on count 3 is upheld to the limited extent set out
below.
The appeal by Mr Mathibela against the sentence on count 3 succeeds.
The cross-appeal by the respondent is dismissed.
7 S v Mgedezi and Others 1989 (1) SA 687 (A) at 705I-706B.
8 S v Thebus and Another 2003 (2) SACR 319 (CC) para 49.
The order of the high court is set aside and is substituted with the following:
‘1
Accused no 2 and 3 are found not guilty on counts 1 and 5 and are discharged.
Accused no 3 is found guilty of common assault on count 3.
Accused no 3 is sentenced to 12 months’ imprisonment wholly suspended for
a period of three (3) years on condition that he is not convicted of any offence
involving violence during the period of suspension.’
pp_______________________
SP MOTHLE
JUDGE OF APPEAL
APPEARANCES:
For first appellant:
D J Nonyane
Instructed by:
Polokwane Justice Centre, Polokwane
Bloemfontein Justice Centre, Bloemfontein
For second appellant:
L M Manzini
Instructed by:
Polokwane Justice Centre, Polokwane
Bloemfontein Justice Centre, Bloemfontein
For the respondent:
N G Munyai
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:
16 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
Condy Mawela & Another v The State (377/2021) [2022] ZASCA 18 (16 February 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal and
dismissing the cross-appeal against a decision of the Limpopo Division of the High Court,
Polokwane (the high court).
The issues before the SCA were whether the high court correctly applied the legal principle of
dolus eventualis; whether the high court’s approach to s 204 witnesses was correct; whether
the State had proven common purpose against the appellants; and whether the State had
discharged the onus of proving its case beyond a reasonable doubt.
On the evening of 9 May 2017 at Magukubjane village, Hlogotlou, Limpopo, some community
members, a group of approximately 100 people, held a public meeting at a football field. The
purpose of the meeting was to discuss an incident of rape allegedly committed by Jackie
Mashiyane from Talane village nearby. The group then went to the Mashiyanes’ homestead in
Talane village to look for the suspect in order to bring him back to their village and summon
the police.
Mr Gijimani Andries Mgidi (Mr Mgidi) testified that while at the police station with Jackie, he
received a call from the group, who summoned him back to the homestead. On his arrival at
the homestead, accompanied by his other son, Mr Kleinbooi Mashiyane (the deceased), and
another relative, Mr Sergeant Masilela (Mr Masilela), he encountered the group who had
barricaded the road, and had lit a fire just outside the homestead. The group surrounded the
BMW vehicle and hit it with various objects, damaging the windscreen. He got out of the
vehicle and so did the deceased, who ran away but was struck with a stone and fell. He later
saw the deceased lying on the ground bleeding. On 22 November 2018, the first and second
appellants, Mr Mawela and Mr Mathibela, were convicted of various counts, including murder.
The SCA found that that there were material contradictions and various versions present in the
State’s case which could not sustain a conviction for murder. Furthermore, the SCA found that
the community in turn conspired that whoever was called as witness must implicate those who
made statements to the police for the commission of the offences. Furthermore, each of the s
204 witnesses sought to exculpate themselves when testifying. They sought to minimise their
role to the point of distancing themselves from the mob as bystanders and in doing so,
attempted to cast the blame on the appellants.
In respect of the issue of dolus eventualis, the SCA held that first, the State failed to prove that
the said stone struck a fatal blow or was actually the cause of the blunt force trauma. Second,
there was no evidence by the State that either Mr Mawela or Mr Mathibela threw the stone at
the deceased. Third, the high court’s finding that the fatal blow came from the stone negates or
excludes any evidence of the State, which sought to prove that the fatal blow could have
resulted from some other object, such as a golf stick or knobkerrie. The absence of that critical
causal nexus between the appellants’ alleged conduct and the eventual demise of the deceased,
had not been proved. Lastly, the SCA held that the State’s cross-appeal collapsed when the
State conceded that the high court had erred in convicting the appellants.
~~~~ends~~~~
|
2624
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 421/2013
REPORTABLE
In the matter between:
ZHONGJI DEVELOPMENT CONSTRUCTION ENGINEERING COMPANY
LIMITED
Appellant
and
KAMOTO COPPER COMPANY SARL
Respondent
Neutral citation:
Zhongji Construction v Kamoto Copper Company (421/13) [2014]
ZASCA 160 (1 October 2014)
Coram:
Mpati P, Willis and Mbha JJA and Mathopo and Gorven AJJA
Heard:
5 September 2014
Delivered:
1 October 2014
Summary:
Appeal - jurisdiction – on appeal, held that the process of arbitration
should be respected – no basis for a declaratory order – appeal
dismissed.
ORDER
On appeal from: South Gauteng High Court, Johannesburg (Myburgh AJ sitting
as the court of first instance):
The appeal is dismissed.
JUDGMENT
Willis JA (Mpati P, Mbha JA and Mathopo AJA concurring):
[1] This appeal is concerned with whether the high court (Myburgh AJ) was
correct in dismissing an application for a declaratory order that a particular dispute
was „arbitrable‟ and whether an arbitration agreement applied in respect of certain
invoices that form the subject matter of the dispute between the parties. The appeal
to this court is with the leave of the high court.
[2] The appellant, which was the applicant in the high court, is a Chinese
company known as Zhongji Development Construction Engineering Company
Limited (Zhongji Construction). The respondent is a Congolese company, Kamoto
Copper Company SARL (Kamoto). The parties are therefore both peregrini of the
courts of South Africa.
[3] In April 2007 Zhongji Construction had been invited by a South African
company, Bateman Minerals & Metals (Pty) Limited (Bateman), acting on behalf of a
Congolese company known as DRC Copper and Cobalt Project SARL (the DCP), to
tender for the supply and construction of piling and civil works at the DCP‟s mining
site near Kolwezi in the Democratic Republic of Congo (the Congo). Arising from this
invitation, Zhongji Construction was awarded the tender. As a result of the award of
the tender Zhongji Construction and the DCP concluded a written agreement on 20
August 2008.
[4] The parties have referred throughout the proceedings in both the high court
and this court to this agreement as „the main agreement‟. For convenience, I shall do
so as well. In terms of this agreement, the „governing law‟ thereof is „English law‟.
The main agreement provides that, unless the parties otherwise agree, disputes
between them „shall be finally settled under the Rules for the Conduct of Arbitrations
as published by the Association of Arbitrators (Southern Africa)‟ (the Arbitration
Association). This main agreement also provides that three arbitrators would be
appointed in any arbitration between them, these arbitrators to be chosen either by
agreement between the parties or, failing such an agreement, by the chairperson of
the Arbitration Association. The arbitration clause in the main agreement moreover
provides that the arbitration shall be held in Gauteng.
[5] At all material times in its dealings with Zhongji Construction, Bateman had
been acting on behalf of the DCP. Prior to the formal conclusion of the main
agreement Bateman had advised Zhongji Construction in a series of letters,
stretching from 12 May 2007 to 21 September 2007, that it would be awarded the
tender and should proceed accordingly. In November 2007 Bateman, again acting
on behalf of the DCP, informed Zhongji Construction that, as a result of „merger
talks‟, Zhongji Construction should suspend its construction operations for about
„three to six months‟.
[6] In the meantime, shipments from China to the Congo were already on the
high seas and could not be stopped. In consequence of the suspension of
operations, representatives of Zhongji Construction and the DCP met in Beijing on
26 and 27 November 2007 to reach an agreement that would ensure that Zhongji
Construction would not be compromised in respect of work already done and
expenses actually incurred thus far.
[7] Arising from the discussions which took place at the meeting in Beijing in
November 2007, an interim agreement was reached between Zhongji Construction
and the DCP to tide things over until there was greater certainty about the future of
the piling and construction project. This interim agreement is reflected, at first, in an
exchange of correspondence at the end of November 2007 and the beginning of
December 2007. The interim agreement was formalised on 30 January 2008. The
parties have referred to this agreement as the „interim agreement‟. I shall do so as
well. Concluded under stressful conditions, the interim agreement had, quite
understandably, been short on detail other than what were, in the minds of the
parties, the essentialia. Counsel for Zhongji Construction has referred to the interim
agreement as being „skeletal‟. This is not an inaccurate description. It contains no
clause dealing with any dispute resolution mechanisms.
[8] On 8 May 2008, Bateman gave notice to Zhongji Construction that the piling
and civil work should proceed and that the drilling rigs should be re-mobilised. With a
view to this work being done, Bateman supplied Zhongji Construction with geological
data so that it could proceed with the piling, as well as the pile cape and the pile
layout. Bateman also gave Zhongji Construction drawings for the civil works,
instructing Zhongji Construction to purchase the necessary materials for construction
and to mobilise the necessary equipment and personnel accordingly. Zhongji
Construction began driving the first test piles at the site during September 2008,
completing all test piles by 24 October 2008.
[9] Similarly to its conduct on 8 May 2008, the DCP instructed Zhongji
Construction on 15 October 2008 not to proceed with the procurement or shipping of
any cement or reinforcing steel and also informed it that it should not mobilise any
additional personnel to site until further notice. On 29 October 2008, the DCP
instructed Zhongji Construction to suspend progress of all works.
[10] On 20 November 2008, Bateman on behalf of the DCP gave Zhongji
Construction a written instruction that all materials in transit between China and the
site near Kolwezi should be dealt with as follows:
(a)
Cargo that was, at that time, in transit in Zambia, Zimbabwe or the northern
parts of South Africa should be delivered to and held in storage at Bridgeport, No1
Bridge Close, City Deep, Johannesburg; and
(b)
All other cargo, in transit either in or to South Africa, should be delivered to
and held in storage at Bridgeport, 151 South Coast Road, Rossburgh, Durban.
[11] In this instruction of 20 November 2008, Bateman assured Zhongji
Construction that it would be reimbursed for all expenses in relation thereto, storage
charges in South Africa to be levied at US$2.75 per ton per week and US$210 per
container per week. Zhongji Construction implemented the instruction, incurring
transport and storage costs.
[12] On 5 December 2008, Zhongji Construction was given due notice that the
construction work by it was no longer to continue. As a result, Zhongji Construction
ceased operations and commenced with its demobilisation on 2 January 2009.
Zhongji Construction did no further construction work at the site near Kolwezi.
[13] Arising from the interim agreement, Zhongji Construction submitted payment
certificates to Bateman as follows:
(a)
On 21 May 2008 in an amount of US$ 1 733 294.39 (relating, inter alia, to the
construction costs of the construction camp itself as well as the batch plants and
approved lump sum costs). This was approved by Bateman on 19 June 2008.
(b)
On 13 July 2008 in an amount of US$1 049 386.30 (relating, inter alia, to the
cost of building the cement stores, as well as standing time from 1 May 2008 to the
end of June 2008). This was approved by Bateman on 2 October 2008.
(c)
On 25 August 2008 in an amount of US$623 994.30 (relating, inter alia, to
standing time for July 2008). This was also approved by Bateman on 2 October
2008.
(d)
On 23 September 2008 in an amount of US$823 994.30 (relating, inter alia, to
standing time for August 2008 as well as a once-off cost of remobilising and
servicing the drilling rigs). This was approved by Bateman on 19 November 2008.
[14] The DCP paid Zhongji Construction US$1 733 294.39 in respect of the first of
these invoices. Zhongji Construction has not been paid in respect of the remaining
three invoices, arising from the interim agreement, in respect of which there is a total
of US$2 497 374.90 outstanding. Zhongji Construction claims this amount, together
with interest and costs, from Kamoto.
[15] Moreover, Zhongji Construction also submitted an invoice in an amount of
US$7 938 780.98 for work performed in terms of the main agreement during
September 2008. Bateman rejected this claim, indicating a number of items that
should be removed therefrom. Zhongji Construction then submitted a revised interim
payment certificate for US$5 027 380.99, which Bateman approved on 1 December
2008. Zhongji Construction also submitted a claim for work performed in terms of
the main agreement for the period from 1 to 29 October 2008 in an amount of
US$3 324 995.68. This claim remains unpaid.
[16] In the meanwhile, the DCP and Kamoto concluded a written agreement of
merger in Kinshasa in the Congo on 25 July 2009. The language in which this
merger agreement was concluded is French. The merger was authorized by a
decree signed by the President of the Congo on 27 April 2010. Translations into
English of both the merger agreement and the decree were annexed to Zhongji
Construction‟s replying affidavit. The accuracy of these translations is not in dispute.
[17] The English translation from the French of the relevant portion of the merger
agreement reads:
„Under the terms hereof, DCP hereby contributes with the ordinary legal guarantees and
subject to the definitive fulfillment of the conditions precedent hereafter set out under Clause
9, to KCC, which accepts all of its goods, rights and obligations, assets and liabilities on 31
December 2008, without exception or reserve, in return for taking over its liabilities on the
same date under the terms and conditions provided in this agreement in consideration of
these contributions, the shareholders of DCP shall be allotted, in exchange, new shares in
KCC.
Therefore, as a result of the merger:
-
The property of DCP shall vest in KCC in the state which it exists at the time of
realization of the merger, it shall include all the goods, rights and assets belonging to the
Absorbed Company at that time, without exception;
-
KCC shall become debtor to the creditors of DCP in place of these, without this
substitution implicating novation with respect to them.‟
„KCC‟ in the agreement is Kamoto and the DCP is defined as the „Absorbed
Company‟.
[18] A turn of events then occurred. On 15 November 2010, Mr Williams of
Werksmans informed Zhongji Construction‟s attorneys that he acted for the DCP,
that the DCP had been dissolved and that, as a result of the merger agreement,
Zhongji Construction‟s claim lay against Kamoto. Thereafter, further turns occurred.
A pre-arbitration meeting was held and there were exchanges of correspondence
between the parties. Kamoto‟s attorneys were, all the while, careful to make it clear
that they neither consented nor submitted to arbitration. Ultimately, Kamoto‟s
position consolidated into one in which the following was its standpoint:
(a)
The interim agreement was silent on dispute resolution procedures and,
therefore, any claims arising out of that agreement were not susceptible to
arbitration;
(b)
Kamoto had not been a party to the dispute resolution procedures provided
for in the main agreement;
(c)
In any event, in the light of –
(i)
both parties being peregrini of South Africa;
(ii)
there having been no attachment to confirm or found jurisdiction;
(iii)
the contract having been concluded outside of South Africa; and
(iv)
the performance of the contract having been outside of South Africa
no court in South Africa had jurisdiction to make any order as to whether the dispute
was subject to the arbitration clause in the main agreement.
[19] On 24 November 2010 Kamoto‟s attorneys, Werksmans, referred Zhongji
Construction, once again, to the merger agreement, drawing attention to the fact that
it had the effect of dissolving DCP. Werksmans did so by sending a letter to Zhongji
Construction‟s then attorneys, Deneys Reitz. A copy of the Presidential decree
authorizing the merger was attached to the letter. In response thereto, Deneys Reitz
wrote to Werksmans advising that it would proceed against Kamoto with the
recovery of the debt allegedly owed to Zhongji Construction.
[20] In addition to the claims mentioned above, Zhongji Construction has asserted
that it was entitled to payment of US$27 724 677.02 arising from its being „out of
pocket‟ as a result of the suspension and, ultimately, the termination of the piling and
construction works in terms of the main agreement. Zhongji Construction‟s version of
events is that the suspension and termination of these works occurred in order to suit
the DCP‟s convenience.
[21] In July 2010 Zhongji Construction, acting through its erstwhile attorneys,
submitted a letter of demand to Kamoto in which it claimed payment of
US$25 661 345.36. This demand included claims that fell outside those that arose
from the interim agreement. In the letter Zhongji Construction threatened that if this
demand went unsatisfied, it would „institute proceedings‟. Following discussions
between the two respective sets of attorneys, it was agreed that the dispute would
be referred to arbitration and that an agreement to this effect would be prepared for
signature. Zhongji Construction‟s attorneys drew up an agreement which it sent to
the attorneys for the other side for consideration. It has not been signed.
[22] On 22 December 2011, more than a year later, Werksmans wrote to Bowman
Gilfillan, the attorneys that were then acting for Zhongji Construction, to advise that
Kamoto was prepared to agree to the submission of Zhongji Construction‟s claims
under the „main contract‟ (ie the main agreement) but that it would not agree to „the
submission to arbitration of any claims made against it, arising from the interim
agreement.‟
[23] Relying on the arbitration clause in the main agreement, Zhongji Construction
has sought redress by way of arbitration. Originally, when Zhongji Construction
made application to the high court, it sought relief in the following terms:
„1.
Declaring the dispute between the applicant and the respondent for the payment in
the sum of US$2 616 847.84 in respect of three invoices issued under the interim agreement
concluded between the applicant and the DRC Copper and Cobalt Project SARL on 30
January 2008 to be arbitrable;
2.
Declaring that the arbitration agreement contained in the main agreement concluded
between the applicant and the DRC Copper and Cobalt Project SARL on 20 August 2008
applies to the three invoices annexed hereto marked „A‟, „B‟ and „C‟, issued under the interim
agreement concluded between the applicant and DRC Copper and Cobalt Project SARL on
30 January 2008.
3.
Costs of suit.
4.
Alternative relief.‟
The three invoices „A‟, „B‟ and „C‟ to which reference was made in Zhongji
Construction‟s notice of motion are the three unpaid invoices referred to in paragraph
14 above.
[24] Kamoto‟s statement of its position in the answering affidavit has been
confusing. It appeared to Zhongji Construction, the high court and, until near the end
of the argument, to several members of this court that not only did Kamoto dispute
both its liability to submit to arbitration under the provisions of the main agreement
and any liability under the interim agreement, but also that Kamoto took the position
that even if the court found that it was bound by the arbitral provisions of the main
agreement, the arbitrator could not have jurisdiction even to consider the claims
arising from the interim agreement. The reason that was given was that the
arbitration tribunal could not decide its own jurisdiction and the interim agreement
contained no reference to dispute resolution procedures. Furthermore, Kamoto
appeared to contest its liability under the interim agreement not only because that
agreement contained no reference to dispute resolution procedures, but also
because Kamoto had not been a party to the interim agreement which, it contended,
stood entirely separate and apart from the main agreement.
[25] In its answering affidavit, Kamoto accepted that in terms of the merger
agreement, it „becomes the debtor to the creditors of DCP‟ and that it „acquired all of
DCP‟s goods, rights and obligations, assets and liabilities on 31 December 2008‟. It
then goes on to contend that:
„The dispute resolution regime agreed between those parties in the main agreement was not
agreed by the respondent and was not an obligation assumed by the respondent in terms of
the merger agreement‟.
Kamoto thereafter adds that:
„The respondent submits, therefore, that although it accepted all of DCP‟s “goods, rights and
obligations, assets and liabilities on 31 December 2008” in terms of the merger agreement, it
did not thereby agree to the submission to arbitration of disputes relating to “such goods,
rights and obligations, assets and liabilities” either under the main agreement or the interim
agreement.‟
[26] In its replying affidavit, Zhongji Construction says:
„[I]t was the applicant‟s understanding that the respondent had submitted to arbitration the
disputes under the main agreement, and that the only issue at the time of launching these
proceedings was whether the respondent had submitted to arbitration the disputes pertaining
to the interim agreement‟.
Zhongji Construction‟s confusion was understandable. This will have a bearing on
costs. After Kamoto had filed its answering affidavit, Zhongji Construction then
amended its notice of motion to seek an order as follows:
„1 Declaring that the respondent:
(a)
Has assumed the rights and obligations of DRC Copper and Cobalt Project SARL
under the main agreement concluded between the applicant and DRC Copper and Cobalt
Project SARL on 20 August 2008;
(b)
Is bound by the arbitral regime catered for in clause 20 of the main agreement in
relation to disputes in connection with or arising out of the main agreement or the execution
of the works thereunder as envisaged by clause 20.4 of the main agreement:
2 Declaring the following disputes between the applicant and the respondent to be
arbitrable:
(a)
Payment in the sum of US$5 263 896.79 in respect of an invoice issued under the
main agreement (annexed hereto marked “A”);
(b)
Payment in the sum of US$3 324 995.68 in respect of work performed in terms of the
main agreement for the period 1 October 2008 to 29 October 2008 and in relation to which
no interim payment certificate was issued (Annexed hereto marked “B”);
(a)
Payment in the sum of US$25 369 421.06 in respect of the suspension and
thereafter the rumination of the main agreement (Annexed hereto marked ”C”);
(b)
Payment in the sum of US$2 616 847.84 in respect of three invoices (Annexed
hereto marked “E”, “F” and ”G”) issued under the interim agreement concluded between the
applicant and the DRC Copper and Cobalt Project SARL on 30 January 2008.
3 Costs of suit.
4 Alternative relief.‟
[27] Kamoto‟s counsel, Mr Leech, submitted that the relief sought by Zhongji
Construction was without precedent – anywhere in the English-speaking world. That
may be so, but his Kamoto‟s stance with respect to the referral of the disputed issues
to arbitration has been singularly unforthcoming. It was only after Kamoto‟s counsel
was confronted in this court with the confusing and contradictory statement of
Kamoto‟s position in the answering affidavit, as well as the stance which appeared to
have been taken by its attorneys in correspondence when the arbitration was first
mooted by Zhongji Construction, that Mr Leech made concessions which made
Kamoto‟s position comprehensible. I now understand Kamoto‟s position to be this: If
this court were to find that there was a binding obligation, in terms of the main
agreement, read together with the merger agreement, for Kamoto to submit to
arbitration in respect of Zhongji Construction‟s claims arising from the main
agreement, the duly appointed arbitration tribunal would then have the power (some
might describe this as the „jurisdiction‟) to decide whether Kamoto was liable to
Zhongji Construction for its claims that arose from the interim agreement. In the
meantime, Kamoto persisted with its contentions referred to in paragraph 18 above.
In the light of the letter from Kamoto‟s attorneys to Zhongji Construction‟s attorneys
on 22 December 2011, to which reference has been made in paragraph 22 above,
this stance is not only baffling but extraordinarily unusual.
[28] The high court judge said:
„I am accordingly of the view that the respondent‟s objection with regard to jurisdiction is well
founded: disputes between it and the applicant concerning the effects of the merger are, at
best for the applicant, disputes which fall to be addressed by the arbitrator; they are not
matters in respect of which this Court has any jurisdiction absent an attachment.
I think it appropriate to add that I have, in coming to this conclusion, grappled with the fact
that there does not appear to be any genuine dispute with regard to the legal effect of the
merger. I was not however referred to any authority to support the proposition that a court is
entitled to have regard to the merits of a dispute in determining whether or not it has
jurisdiction; nor have I been able to find any.‟
It was on this basis that he found that the application had to be dismissed. The judge
also found that, in any event, there was a dispute as to whether or not the procedural
prerequisites for the arbitration had been waived and on this basis, too, he could not
find in favour of Zhongji Construction.
[29] The majority judgment in the Constitutional Court, delivered by O‟Regan
ADCJ in Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and another1 makes it
plain that our law of arbitration is not only consistent with, but also in full harmony
with, prevailing international best practice in the field. Since 1976, our country has
been a party to The New York Convention on the Recognition of Foreign Arbitral
Awards 10 June 1958, widely known simply as „The New York Convention‟. The duty
of our courts to support international arbitration and to give effect, where they can, to
1 Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and another 2009 (4) SA 529 (CC) esp in paras
195 to 236.
international arbitration agreements is bolstered by the Recognition and Enforcement
of Foreign Arbitral Awards Act 40 of 1977.
[30] In Bank Mellat v Helsinki Techniki S.A.2, decided in the English Court of
Appeal, Robert Goff LJ said:
„Many important states are now parties to the New York Convention; and in this country the
Arbitration Act 1975 was enacted to give effect to the convention, to which this country is a
party. Parties to international arbitrations must nowadays frequently rely upon the convention for the
purpose of enforcing awards; and when the award contains (as it will, for example, where the
arbitration is conducted in accordance with the I.C.C Rules) an order for costs, the enforcement of the
award will include an order for costs comprised in the award.
Parties to an arbitration may well choose London as a convenient neutral forum. There are
now excellent, and rapidly developing, services available in London for the conduct of such
arbitrations. The English language used is frequently a language familiar to both parties, and
often too the language of the contract: for that reason, too, London may be a suitable forum.
The services of very experienced solicitors, counsel, experts and arbitrators are readily
available here. So London may be chosen as a convenient neutral forum; or it may be
nominated by a body such as the I.C.C.
The holding of such an arbitration in London appears to me to be a far cry from litigation
where a foreign litigant comes to this country to sue an English resident in the English
courts.‟3
Mutatis mutandis, one could substitute for „London‟ in this passage, a number of
different centres in South Africa where the same observations would apply, with
equal effect. The South African courts not only have a legal but also a socio-
economic and political duty to encourage the selection of South Africa as a venue for
international arbitrations. International arbitration in South Africa will not only foster
our comity among the nations of the world, as well as international trade but also
bring about the influx of foreign spending to our country.
[31] In Fili Shipping Co Ltd v Premium Nafta Products and Others [On appeal from
Fiona Trust and Holding Corporation and others v Primalov and others]4, Lord
Hoffmann, delivering the speech with which all their lordships concurred, said:
2 Bank Mellat v Helsinki Techniki S.A [1984] Q.B. 291.
3 At 314G-315C.
4 Fili Shipping Co Ltd v Premium Nafta Products and Others [On appeal from Fiona Trust and Holding
Corpn and others v Primalov and others] [2007] UKHL 40; [2007] Bus LR.
„In my opinion the construction of an arbitration clause should start from the assumption that
the parties, as rational businessmen, are inclined to have intended any dispute arising out of
the relationship into which they have entered or purported to enter to be decided by the
same tribunal. The clause should be construed in accordance with this presumption unless
the language makes it clear that certain questions were intended to be excluded from the
arbitrator‟s jurisdiction.‟5 (My emphasis.)
[32] In Fiona Trust6 (which the House of Lords upheld in Fili Shipping), decided in
the English Court of Appeal, Longmore LJ, delivering the court‟s unanimous
judgment, said:
„As it seems to us any jurisdiction or arbitration clause in an international commercial
contract should be liberally construed. The words “arising out of” should cover “every dispute
except a dispute as to whether there was ever a contract at all”.‟7
And
„One of the reasons given in the cases for a liberal construction of an arbitration clause is the
presumption in favour of one-stop arbitration. It is not to be expected that any commercial
man would knowingly create a system which required that the court should first decide
whether the contract should be rectified or avoided or rescinded (as the case might be) and
then, if the contract is held to be valid, required the arbitrator to resolve the issues that have
arisen.‟8
And
„If there is a contest about whether an arbitration agreement had come into existence at all,
the court would have a discretion as to whether to determine that issue itself but that will not
be the case where there is an overall contract which is said for some reason to be invalid, eg
for illegality, misrepresentation or bribery, and the arbitration is merely part of that overall
contract. In these circumstances it is not necessary to explore further the various options
canvassed by Judge Humphrey Lloyd QC since we do not consider that the judge had the
discretion which he thought he had.‟ 9
[33] The respective definitions of „arbitration agreement‟ and „arbitration
proceedings‟ in the Arbitration Act confer wide powers on an arbitrator. These
definitions read as follows:
5 Para 13.
6 Fiona Trust Holding Corpn and others v Privalov and others [2007] EWCA Civ 20; [2007] Bus LR.
7 Para 18.
8 Para 19.
9 Para 39.
„“arbitration agreement” means a written agreement providing for a 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.‟10
And
„“arbitration proceedings” means proceedings conducted by an arbitration tribunal for the
settlement by arbitration of a dispute which has been referred to arbitration in terms of an
arbitration agreement.‟11
[34] In terms of rule 12.1 of the sixth edition of the Rules of the Arbitration
Association:
„The arbitrator may decide any dispute regarding the existence, validity, or interpretation of
the arbitration agreement and, unless otherwise provided therein, may rule on his own
jurisdiction to act‟.
[35] Accordingly, once the arbitration tribunal has been duly appointed in terms of
the main agreement, the rules of the Arbitration Association would give the tribunal
itself jurisdiction to decide the issues which may be raised before it, including those
which have been raised both in the high court and this court.
[36] In the light of an arbitrator‟s power to determine his or her jurisdiction in an
issue that arises from the referral to arbitration itself, there is, therefore, no reason
why the dispute about whether or not the claims arising from the appellant‟s
performance in terms of the interim agreement is indeed arbitrable should not be
decided by the arbitration tribunal prior to an application to the high court. In the
event that the arbitration tribunal decides in Zhongji Construction‟s favour, Zhongji
may then apply, in terms of s 31 of the Arbitration Act, for the award to be made an
order of court. Once that happens, the award would be internationally enforceable by
reason of the New York Convention and treaties, too numerous to mention, in terms
of which there is reciprocal recognition, within the comity of nations, of orders of
court made in foreign countries.12
10 Section 1 of the Arbitration Act.
11 Ibid.
12 See also the Enforcement of Foreign Civil Judgments Act 32 of 1988, esp s 2 thereof.
[37] In terms of s 19(1)(a) of the old Supreme Court Act 59 of 1959, which read the
same as s 21(1) of the now prevailing Superior Courts Act 10 of 2013, the high court
„has jurisdiction…in relation to all causes arising within, its area of jurisdiction and all
other matters of which it may according to law take cognisance.‟ Once the arbitration
has commenced, the high court in Gauteng would therefore have jurisdiction to
exercise its powers in terms of the Arbitration Act, by reason of the combination of
the following:
(a)
the arbitration will be held in Gauteng (and therefore a cause will have arisen
within its area of jurisdiction); and
(b)
the New York Convention; and
(c)
the Recognition and Enforcement of Foreign Arbitral Awards Act; and
(d)
the Arbitration Act, which, inter alia, provides for making an arbitration award
an order of court; and
(e)
international treaties, to which South Africa is a party, which enable the
international enforcement of orders of the South African courts.
The reason is that the coalescence of these factors not only permits the making of
an order by the court but also ensures its effectiveness. As this court made clear in
Bid Industrial Holdings (Pty) Ltd v Strang and another (Minister of Justice and
Constitutional Development, Third Party),13 the effectiveness of its orders remains an
important consideration when a court is making a decision as to whether jurisdiction
is present, even though, nowadays, a generally more relaxed approach is taken on
the issue.14
[38] The process of arbitration must therefore be respected. Zhongji Construction‟s
application to the high court was accordingly premature and perhaps unnecessary.
In Geldenhuys and Neethling v Beuthin15 Innes CJ said:
„Courts of Law exist for the settlement of concrete controversies and actual infringements of
rights, not to pronounce upon abstract questions, or to advise upon differing contentions,
however important. And I think we shall do well to adhere to the principle laid down by a long
line of South African decisions, namely that a declaratory order cannot be claimed merely
13 2008 (3) SA 355 (SCA).
14 Paras 38 to 59. See also Metlika Trading Ltd v Commissioner, South African Revenue Service
2005 (3) SA 1 (SCA) para 36.
15Geldenhuys and Neethling v Beuthin 1918 AD 426.
because the rights of the claimant have been disputed, but that such a claim must be
founded upon an actual infringement.‟16 (My emphasis.)
Kamoto came perilously close to infringing Zhongji Construction‟s right to arbitration
under the main agreement. Nevertheless, the relief which Zhongji Construction
sought in the high court related to an abstract or „academic‟ question of the kind to
which Innes CJ referred.17 The application ought to have been dismissed for this
reason alone. The arbitration must first be given the opportunity to have run its
course before the court considers any application relating thereto.
[39] In all the circumstances of the matter, it is inappropriate to mulct Zhongji in the
costs of this appeal.
[40] The following is the order of the court:
The appeal is dismissed.
_______________________
N P WILLIS
JUDGE OF APPEAL
Gorven AJA (Mpati P, Mbha JA and Mathopo AJA concurring):
[41] I have had the benefit of reading the judgment of my colleague Willis JA. I
arrive at the same outcome of the appeal but do so by a different route. The crisp
issue in this appeal was whether the court below was entitled or obliged to grant the
declaratory relief sought by the appellant (Zhongji). It held that it did not have
jurisdiction to grant the relief and, as a result, dismissed the application with costs.
This appeal is with its leave.
[42] The relief ultimately sought by Zhongji was an order:
„1 Declaring that the respondent:
16 At 441.
17 The term „academic‟, in this context, has been used in the following cases: Trustees J C Poynton
Property Trust v Secretary for Inland Revenue 1970 (2) SA 618 (T) at 620B-D; South African Mutual
Life Assurance Society v Anglo-Coal Collieries Ltd 1977 (3) SA 642 (A) at 658; Muller v The Master
and others 1992 (4) SA 277 (T) at 282A and was approved by the Constitutional Court in Zantsi v
Council of State, Ciskei, and others 1995 (4) SA 615 (CC) para 6.
(a) has assumed the rights and obligations of DRC Copper and Cobalt project SARL under
the main agreement concluded between the applicant and DRC per and Cobalt Project
SARL on 20 August 2008;
(b) is bound by the arbitral regime catered for in clause 20 of the main agreement in
relation to disputes in connection with or arising out of the main agreement or the execution
of the works thereunder as envisaged by clause 20.4 of the main agreement.
2 Declaring the following disputes between the applicant and the respondent to be
arbitrable:
(a)
Payment in the sum of US$5 263 896.79 in respect of an invoice issued under the
main agreement…
(b)
Payment in the sum of US$3 324 995.68 in respect of work performed in terms of the
main agreement for the period 1 October 2008 to 29 October 2008 and in relation to which
no interim payment certificate was issued…
(c)
Payment in the sum of US$25 369 421.06 in respect of the suspension and
thereafter the termination of the main agreement…; and
(d)
Payment in the sum of US$2 616 847.84 in respect of three invoices… issued under
the interim agreement concluded between the applicant and the DRC Copper and Cobalt
Project SARL on 30 January 2008.
3 Costs of suit.
4 Alternative relief.‟
[43] The following was common cause. Zhongji is a Chinese company and the
respondent (Kamoto) one based in the Democratic Republic of the Congo (the
DRC). Two agreements were concluded outside of South Africa between Zhongji
and another DRC based company, DRC Copper and Cobalt Project SARL (DCP).
The agreements were for the supply and construction of certain piling and civil works
at a mining site in the DRC. They were referred to throughout as the interim and
main agreements respectively. The interim agreement was concluded on 30 January
2008 and the main agreement on 20 August 2008. DCP terminated the main
agreement by letter dated 5 December 2008.
[44] The interim agreement contained no dispute resolution clause. The main
agreement contained an arbitration clause providing for disputes to be resolved by
arbitration in Sandton, Gauteng. It further provided that the arbitration would be
governed by the provisions of the Arbitration Act 42 of 1965 and would be subject to
the Rules for the Conduct of Arbitrations as published by the Association of
Arbitrators for Southern Africa (the Rules).
[45] Zhongji delivered four invoices to DCP arising from work done under the
interim agreement. One of these was paid and the other three were not. Zhongji also
delivered two invoices relating to work done under the main agreement. Neither was
paid. It invoiced DCP in respect of the suspension and termination of the main
agreement. This has not been paid. The unpaid invoices were disputed by DCP.
[46] Negotiations ensued for the disputes to be referred to arbitration. These
reached an advanced stage without actual agreement. On 15 November 2010,
attorneys who had been negotiating on behalf of DCP informed Zhongji‟s attorneys
that what was termed a merger agreement had been concluded in the DRC between
DCP and Kamoto (the merger agreement). They said that this had the effect of
dissolving DCP with effect from 31 December 2008 and, having annexed a copy in
the original French and an English translation, said that they assumed that Zhongji
would now pursue its claim against Kamoto, but that Kamoto did not admit liability.
When further correspondence did not result in an agreement on arbitration
proceedings, the application to the high court was launched. Its purpose, as appears
from the relief sought, was to establish that Kamoto was obliged to arbitrate disputes
between Zhongji and DCP in Sandton in terms of the arbitration clause in the main
agreement.
[47] The defences raised by Kamoto can be summarised as follows. First, the
court had no jurisdiction over it. Secondly, Kamoto was not bound by the arbitral
regime agreed between Zhongji and DCP in the main agreement. Thirdly, if it was so
bound, this arbitral regime did not apply to disputes under the interim agreement.
[48] Both parties were peregrini of South Africa. The interim, main and merger
agreements were concluded outside South Africa and all the work on the project took
place in the DRC. No attachment had been made to found jurisdiction. There had
been no submission to jurisdiction by Kamoto. These were the points advanced by
Kamoto in contending that the court below had no jurisdiction. Against that, it was
common cause that the lex arbitri comprised the Act, the New York Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (the New York
convention) and the Recognition and Enforcement of Foreign Arbitral Awards Act.18
Zhongji sought to persuade the high court that it had jurisdiction to grant the relief on
the basis that „the Court a quo should have identified itself as the Court having
jurisdiction within the meaning of the Arbitration Act; it was the only Court, or at least
the best placed Court, to pronounce on the arbitration agreement in terms of the lex
arbitri which constitutes the relevant jurisdictional causa.‟19
[49] It was further submitted on behalf of Zhongji that if the court declined to
exercise jurisdiction, „then an essential piece of the infrastructure of international
arbitration is missing‟. This would, in turn, lead to a decline in the number of entities
being willing to select this country as a neutral international venue for arbitrating
disputes arising from their agreements. A submission made on behalf of Kamoto was
that the invocation of this jurisdiction would lead to the opposite result. It was
submitted that „[a]pplication of the concepts of competence/competence, party
autonomy and the consensual underpinning of arbitrations, as well as the
international trend to minimise court interference in international arbitrations militate
against the court extending its jurisdiction in the manner sought to be encouraged by
[Zhongji]‟.20
[50] When a party raises a challenge to the jurisdiction of a court, this issue must
necessarily be resolved before any other issues in the proceedings. The reason is
simple. If the court has no jurisdiction, it is precluded from dealing with the merits of
the matter brought to it.21 Both of the parties‟ submissions focussed on the question
of jurisdiction and both treated this as the real issue in the application. But what
these submissions overlooked in my view is that an arbitration clause embodies an
agreement that is distinct from the terms of the agreement of which it forms a part.
Sometimes the fact that it is embodied in another agreement may affect its validity
because a challenge to the validity of the agreement in which it is incorporated is
18 Act 40 of 1977.
19 Emphases in the original.
20 Emphases in the original.
21 Metlika Trading Ltd & others v Commissioner, South African Revenue Service 2005 (3) SA 1 (SCA)
para 25.
also a challenge to the validity of the arbitration agreement.22 In the absence of such
a challenge, however, the arbitration agreement must be given effect in accordance
with its terms. The terms of this agreement require that the parties submit disputes to
arbitration in Sandton, Gauteng. In other words, the arbitration agreement fell to be
performed within the area of jurisdiction of the court below, because the seat of the
arbitration was within that area of jurisdiction.
[51] It was accepted by both Zhongji and Kamoto that, in an arbitration subject to
the lex arbitri, a court must have jurisdiction to deal with certain matters concerning
the arbitration at a certain stage. This is correct. The question then is to identify the
court that will exercise that jurisdiction. The obvious answer is that it is the court of
the seat of the arbitration, in this case, the high court in Johannesburg. The
jurisdiction of the court arises from the principle that the arbitration clause is to be
performed in Sandton, Gauteng by way of conducting an arbitration there. The court
has jurisdiction in relation to the arbitration clause in terms of s 19(1)(a) of the
Supreme Court Act.23 The real issue is whether it was entitled to grant the relief
sought.
[52] As mentioned, the Rules were imported as terms of the arbitration clause.
Rule 12 provides, in its relevant parts:
„12.1
The Arbitrator may decide any dispute regarding the existence, validity or
interpretation of the arbitration agreement and, unless otherwise provided therein, may rule
on his own jurisdiction to act.
12.2
A party to the reference wishing to challenge the jurisdiction of the arbitrator or who
avers that the arbitrator is exceeding his jurisdiction shall raise the jurisdictional issue at the
first available opportunity, failing which he shall be deemed to have consented to the
arbitrator‟s jurisdiction.
12.3
Where the Arbitrator has made a jurisdictional ruling pursuant to this rule otherwise
than in an award, a party who wishes to contest that ruling in court may only do so after the
award, in the absence of exceptional circumstances.
22 North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd 2013 (5) SA 1 (SCA).
23 Act 59 of 1959 (the old Act). The old Act governed the application but s 21(1) of the Superior Courts
Act 10 of 2013 is to the same effect as s 19(1)(a) of the old Act in this regard. The definition of court in
s 1 of the Arbitration Act 42 of 1965 refers us to the general grounds for South African courts to
exercise jurisdiction.
12.4
For the purposes of this Rule an arbitration clause which forms part of a contract
shall be regarded as an agreement independent of the other terms of the contract. A
decision by the Arbitrator that the contract is null and void shall not of itself result in invalidity
of the arbitration clause.‟24
[53] This means that, on Zhongji‟s own version, the very issues on which it sought
judicial pronouncement fell to be dealt with by the arbitration tribunal. This was
because the rules place the question of the scope of the arbitrator‟s jurisdiction and
whether any particular dispute falls within that jurisdiction in the hands of the
arbitrator. That is entirely permissible.25 If the arbitration tribunal in due course
makes an award concerning the disputed invoices, it must needs make findings on
the second and third defences raised by Kamoto in the application. In doing so, it
would give effect to the terms of the arbitration clause relied on by Zhongji.
[54] If the high court were to have pronounced on these issues, it would have
acted contrary to the provisions of the arbitration clause by determining issues that
are within the province of the arbitrator in terms of the arbitration agreement. A court
is not entitled to do that unless an order has been granted in terms of s 3(2)(b) of the
Act that those particular disputes shall not be referred to arbitration. No such order
has been sought or granted.
[55] This approach, and the underlying rationale for circumscribing the powers of a
court which has jurisdiction conferred by an arbitration agreement, shows
appropriate deference for the autonomy of the parties to decide on the forum which
should resolve their disputes. The supreme irony of the application is that Zhongji, in
ostensibly seeking to enforce the arbitration clause, in effect sought to have the court
act contrary to some of the terms of the agreement it invoked.
[56] This court has said that parties who refer matters to arbitration „implicitly, if not
explicitly, (and subject to the limited power of the Supreme Court under s 3(2) of the
Arbitration Act), abandon the right to litigate in courts of law and accept that they will
24 Rule 12 of the 6th edition of the Rules and Rule 11 of the 5th edition.
25 Amalgamated Clothing & Textile Workers Union of South Africa v Veldspun Ltd 1994 (1) SA 162 (A)
at 169E-G; North East Finance para 16.
be finally bound by the decision of the arbitrator.‟26 The Constitutional Court27 dealt
with the question whether s 34 of the Constitution applied directly to arbitrations. In
finding that it did not do so, O‟Regan ADCJ said:
„The decision to refer a dispute to private arbitration is a choice which, as long as it is
voluntarily made, should be respected by the courts. Parties are entitled to determine what
matters are to be arbitrated, the identity of the arbitrator, the process to be followed in the
arbitration, whether there will be an appeal to an arbitral appeal body and other similar
matters.‟28
O‟Regan ADCJ went on to state pertinently that:
„Given the approach not only in the United Kingdom (an open and democratic society within
the contemplation of s 39(2) of our Constitution), but also the international law approach as
evinced in the New York Convention (to which South Africa is a party) and the UNCITRAL
Model Law, it seems to me that the values of our Constitution will not necessarily best be
served by interpreting s 33(1) in a manner that enhances the power of courts to set aside
private arbitration awards. Indeed, the contrary seems to be the case. The international and
comparative law considered in this judgment suggests that courts should be careful not to
undermine the achievement of the goals of private arbitration by enlarging their powers of
scrutiny imprudently. Section 33(1) provides three grounds for setting aside an arbitration
award: misconduct by an arbitrator; gross irregularity in the conduct of the proceedings; and
the fact that an award has been improperly obtained. In my view, and in the light of the
reasoning in the previous paragraphs, the Constitution would require a court to construe
these grounds reasonably strictly in relation to private arbitration.‟29
It seems to me that the note of caution about enlarging the powers of courts in
matters concerning arbitrations, although made in relation to s 33(1) of the Act,
applies with equal force to powers of courts in dealing with arbitrations in general.
[57] The need to respect the provisions of arbitration agreements was
underscored by Harms JA in Telcordia Technologies Inc v Telkom SA Ltd30 when he
decried the approach of the high court in setting aside an arbitration award, saying
that, in doing so, the court had -
„disregarded the principle of party autonomy in arbitration proceedings and failed to give due
deference to an arbitral award, something our courts have consistently done since the early
26 Per Goldstone JA in Veldspun at 169F-G.
27 Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews & another 2009 (4) SA 529 (CC).
28 Paragraph 219.
29 Paragraph 235.
30 Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) para 4.
part of the 19th Century. This approach is not peculiar to us; it is indeed part of a worldwide
tradition. Canadian law, for instance, “dictates a high degree of deference for decisions . . .
for awards of consensual arbitration tribunals in particular.” And the “concerns of
international comity, respect for the capacities of foreign and transnational tribunals, and
sensitivity to the need of the international commercial system for predictability in the
resolution of disputes” have given rise in other jurisdictions to the adoption of “a standard
which seeks to preserve the autonomy of the forum selected by the parties and to minimise
judicial intervention when reviewing international commercial arbitral awards”.‟31
[58] In the present matter, the forum selected by Zhongji and DCP is that of a
private arbitration. Zhongji cannot be prejudiced if the arbitration tribunal gives effect
to the arbitration clause and rules on the issues which it sought to have resolved by
the high court. If the tribunal finds for Zhongji on the second and third defences
raised in the application and makes an award in its favour, it can apply to have the
award made an order of court.32 This order then becomes enforceable under the
New York convention. If the tribunal rules against it, it has chosen this forum.
Kamoto is entitled to raise a question of the jurisdiction of the tribunal to deal with the
matter as well as the second and third defences in resisting an award being made by
the Tribunal. Section 33 of the Act entitles a party to apply to set aside an award
where an arbitration tribunal has exceeded its powers. It has been held that if „an
arbitrator exceeds his powers by making a determination outside the terms of the
submission, that would be a case falling under s 33(1)(b)‟.33 Within the compass of
the Rules, a ruling on jurisdiction of an arbitration tribunal can be challenged in
court.34 Kamoto therefore has remedies to protect itself in the event that an
arbitration tribunal exceeds its powers. This is consistent with recognising that a high
court has jurisdiction but that its powers are circumscribed in deference to the
autonomy of the parties to the arbitration clause.
[59] With reference to the Rules and the international trend referred to and relied
on by both parties, it is clear that if courts arrogate to themselves the right to decide
matters which parties have agreed should be dealt with by arbitration, the likelihood
31 References omitted.
32 Section 31.
33 Veldspun at 169C-D.
34 Rule 12.3.
of this country being chosen as an international arbitration venue in future is remote
in the extreme. Persons wishing to have their disputes resolved by arbitration do not
wish the process to be retarded by constant recourse to courts. As was said by Lord
Hoffman:
„[6]
In approaching the question of construction, it is therefore necessary to inquire into
the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties
have entered into a relationship, an agreement or what is alleged to be an agreement or
what appears on its face to be an agreement, which may give rise to disputes. They want
those disputes decided by a tribunal which they have chosen, commonly on the grounds of
such matters as its neutrality, expertise and privacy, the availability of legal services at the
seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the
case of international contracts, they want a quick and efficient adjudication and do not want
to take the risks of delay and, in too many cases, partiality, in proceedings before a national
jurisdiction.
[7] If one accepts that this is the purpose of an arbitration clause, its construction must
be influenced by whether the parties, as rational businessmen, were likely to have intended
that only some of the questions arising out of their relationship were to be submitted to
arbitration and others were to be decided by national courts. Could they have intended that
the question of whether the contract was repudiated should be decided by arbitration but the
question of whether it was induced by misrepresentation should be decided by a court? If, as
appears to be generally accepted, there is no rational basis upon which businessmen would
be likely to wish to have questions of the validity or enforceability of the contract decided by
one tribunal and questions about its performance decided by another, one would need to
find very clear language before deciding that they must have had such an intention.‟35
Lord Hope of Craighead, in the same matter, said that the wording of an agreement
might provide that „arbitration may be chosen as a one-stop method of adjudication
for the determination of all disputes‟.36 In the present matter, the arbitration clause
also tends to the notion of a one-stop method for determining all disputes. To
recognise the limited powers of the court is in line with the international trends
referred to in Lufuno, Telcordia and Fiona Trust.
[60] In the result, I agree with my colleague Willis JA that the court a quo arrived at
the correct result in dismissing the application with costs. As to the costs on appeal,
35 Fiona Trust & Holding Corporation & others v Privalov & others [2007] UKHL 40; [2007] 4 All ER
951 (HL) paras 6 & 7.
36 Paragraph 27.
both parties dealt with the matter primarily as one involving jurisdiction. In fact,
Kamoto raised this as its primary point of defence to the application and on this point
it has failed. In the result, I also agree that there should be no order for costs on
appeal.
_______________________
T R GORVEN
ACTING JUDGE OF APPEAL
APPEARANCES:
For the Appellant:
M D Kuper SC (with him, W La Grange)
Instructed by:
Bowman Gilfillan, Johannesburg
c/o Matsepes Inc, Bloemfontein
For the Respondent:
B Leech SC
Instructed by:
Werksmans Attorneys, Johannesburg
c/o Lovius Block, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
September 2014
STATUS
Immediate
Zhongji Construction Engineering Company Limited v Kamoto Copper
Company SARL (421/2013)
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 an order
dismissing an application for a declaratory order relating to an arbitration which is to
take place in Gauteng between two foreign companies.
The SCA held that the process of arbitration must be respected.
|
1268
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case number : 340/07
In the matter between :
ELIZABETH GEORGINA ELZONA STEWART
FIRST APPELLANT
BRIAN STEWART
SECOND APPELLANT
and
DR M BOTHA
FIRST RESPONDENT
DR S SMAL
SECOND RESPONDENT
CORAM :
STREICHER, NUGENT, HEHER, CACHALIA JJA et
SNYDERS AJA
DATE :
21 MAY 2008
DELIVERED :
3 JUNE 2008
Summary:
Delict – liability of medical practitioner to a child born with
congenital defects – failure to inform mother who would have
terminated pregnancy – wrongfulness – legal policy.
Neutral citation:
Stewart v Botha (340/2007) [2008] ZASCA 84 (3 JUNE 2008)
SNYDERS AJA/
SNYDERS AJA:
[1] The appellant and his wife have a son, Brian, who was born on 4 August
1993 with severe congenital defects. These included a defect of the lower spine
which adversely affects the nerve supply to the bowel, bladder and lower limbs1 as
well as a defect of the brain2. The appellant’s wife, as first plaintiff, instituted an
action in the Cape High Court against the respondents, respectively the general
medical practitioner and specialist obstetrician and gynaecologist whom she
consulted during her pregnancy, for her special damages relating to the
maintenance, special schooling, past and future medical expenses consequent upon
her son’s condition. The appellant, as second plaintiff, on behalf of his minor son,
instituted a delictual claim in the alternative to that of the first plaintiff for the same
damages. It is acknowledged that the main claim would be good in law, if it is still
enforceable, and thus the same damages now claimed would be recoverable by the
child’s parents. The respondents excepted to the appellant’s claim, which was
upheld by Louw J, who dismissed the appellant’s claim with costs. With the leave of
that court the matter came on appeal to this court.
[2] In the particulars of claim it is alleged that the respondents, whilst treating the
first plaintiff during her pregnancy, were under a duty to detect any abnormalities in
the foetus, to advise the first plaintiff thereof, who would have undergone a
termination of pregnancy and consequently that Brian would not have been born and
would not have suffered from the severe physical handicaps that he does.
[3] The first respondent excepted to the appellant’s claim on the basis that it
does not disclose a cause of action, particularly as there is no duty on the first
respondent to ensure that Brian was not born and that a claim that recognises such
a duty would be contra bonos mores. The second respondent alleged in his
exception that the appellant’s claim is ‘bad in law, contra bonos mores and against
public policy’.
1 In medical terms known as lumbo-sacral myelomeningocele, commonly referred to as spina bifida.
2 In medical terms known as hydrocephalus.
[4] It is for the excipient to satisfy the court that the conclusion of law pleaded by
the appellant cannot be supported by any reasonable interpretation of the particulars
of claim.3 For this purpose the facts pleaded in the particulars of claim are accepted
as correct.4 There was no dispute between the parties that this approach was
correct or that exception was not the appropriate stage at which to decide this
matter.5
[5] The exceptions dispute the wrongfulness of the failure by the respondents to
have detected and informed the first plaintiff of congenital defects in the foetus she
was carrying. As there has been a considerable amount of recent debate6 on the
subject and to provide focus in the current enquiry, it is necessary to revert back to
the starting point in our law of delict when wrongfulness is to be decided. In
Telematrix (Pty) Ltd v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) at
468 the following is stated:
‘[12] The first principle of the law of delict, which is so easily forgotten and hardly appears in any local
text on the subject, is, as the Dutch author Asser points out, that everyone has to bear the loss he or
she suffers. The Afrikaans aphorism is that “skade rus waar dit val”. Aquilian liability provides for an
exception to the rule and, in order to be liable for the loss of someone else, the act or omission of the
defendant must have been wrongful and negligent and have caused the loss. But the fact that an act
is negligent does not make it wrongful although foreseeability of damage may be a factor in
establishing whether or not a particular act was wrongful. To elevate negligence to the determining
factor confuses wrongfulness with negligence and leads to the absorption of the English law tort of
negligence into our law, thereby distorting it.
‘[13] When dealing with the negligent causation of pure economic loss it is well to remember that the
act or omission is not prima facie wrongful (“unlawful” is the synonym and is less of a euphemism)
and that more is needed. Policy considerations must dictate that the plaintiff should be entitled to be
recompensed by the defendant for the loss suffered (and not the converse as Goldstone J once
implied unless it is a case of prima facie wrongfulness, such as where the loss was due to damage
caused to the person or property of the plaintiff.) In other words, conduct is wrongful if public policy
3 Minister of Law and Order v Kadir 1995 (1) SA 303 (A) at 318D-E; First National Bank of Southern
Africa Ltd v Perry NO 2001 (3) SA 960 (SCA) at 965 para 6.
4 Marney v Watson 1978 (4) SA 140 (C) at 144F-G; Trustees, Two Oceans Aquarium Trust v Kantey
& Templer (Pty) Ltd 2006 (3) SA 138 (SCA) at 143I-J.
5 See further Telematrix (Pty) Ltd v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) at
465G-466A on the suitability of this approach in certain circumstances.
6 Anton Fagan ‘Rethinking wrongfulness in the law of delict’ (2005) 122 SALJ 90; J Neethling ‘The
conflation of wrongfulness and negligence: Is it always such a bad thing for the law of delict?’ (2006)
123 SALJ 204; R W Nugent ‘Yes, it is always a bad thing for the law: A reply to Professor Neethling’
(2006) 123 SALJ 557.
considerations demand that in the circumstances the plaintiff has to be compensated for the loss
caused by the negligent act or omission of the defendant.’
[6] The enquiry as to negligence and wrongfulness is separate and distinct and
should not be confused as to terminology or substance.7
[7] Negligent conduct that causes physical damage to the person or property of
another is prima facie wrongful. However, ‘. . . the element of wrongfulness
becomes less straightforward . . . with reference to liability for negligent omissions
and for negligently caused pure economic loss. . . In these instances, it is said,
wrongfulness depends on the existence of a legal duty not to act negligently. The
imposition of such a legal duty is a matter for judicial determination involving criteria
of public or legal policy consistent with constitutional norms.’8
[8] The application of criteria of public and legal policy has created precedent for
the imposition of liability that caused pure economic loss.9 When there exists no
precedent, as in the present case, the process involves ‘. . . policy decisions and
value judgments which “shape and, at times, refashion the common law [and] must
reflect the wishes, often unspoken, and the perceptions, often dimly discerned, of
the people” (per M M Corbett in a lecture reported sub num “Aspects of the Role of
Policy in the Evolution of the Common Law” in (1987) SALJ 104 at 67). What is in
effect required is that, not merely the interests of the parties inter se, but also the
conflicting interest of the community, be carefully weighed and that a balance be
struck in accordance with what the Court conceives to be society’s notions of what
justice demands.’10 This approach, since the advent of the Constitution, is to be
supplemented and enriched by the imperatives embodied in the Constitution.11
[9] Claims arising from a similar context, although distinctly different, have
received legal recognition on accepted principles and norms in our courts and many
7 Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) at 144
para 11; Telematrix at 469B-E; R W Nugent at 558.
8 Trustees, Two Oceans Aquarium Trust at 144B-C.
9 Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A); Indac
Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (AD); Mukheiber v Raath 1999 (3) SA
1065 (SCA).
10 Minister of Law & Order v Kadir 1995 (1) SA 303 (A) at 318E-H.
11 Olitzki Property Holdings v State Tender Board 2001 (3) SA 1247 (SCA) at 1257D-F.
international jurisdictions. In Pinchin v Santam Insurance Co Ltd 1963 (2) SA 254
(W) the action of a child to recover damages for an injury done to it whilst in utero
was recognised. The claim by parents, against a hospital that agreed and failed to
perform a surgical tubal ligation in order to render the mother sterile, for the cost of
maintaining and supporting a child that was born afterwards,12 was granted in
Administrator, Natal v Edouard 1990 (3) SA 581 (A). The claim of a mother against a
medical practitioner for not having detected and informed her of the congenital
defects in her foetus which she would have aborted13 had she known was
recognised in Friedman v Glicksman 1996 (1) SA 1134 (W) and survived the
exception taken against it. In the same case a claim of the child, the same as is
presently under consideration, received the attention of a South African court for the
first time and was refused on public policy considerations.
[10] In these cases the claim that arose and was awarded was that of the parents
who sought to recover the additional financial burden they had to bear in
consequence of the negligence. There is no question in those cases of the essential
dilemma that arises in the case before us, as it is not questioned in those cases
whether the child would have been better off not to have been born. Those cases
commence with an acceptance of the fact that the birth has occurred and seeks to
address the consequences of the birth.
[11] At the core of cases of the kind that is now before us is a different and deeply
existential question: was it preferable – from the perspective of the child – not to
have been born at all? If the claim of the child is to succeed it will require a court to
evaluate the existence of the child against his or her non-existence and find that the
latter was preferable.
12 Claims of this nature have been referred to as ‘wrongful birth’, ‘wrongful pregnancy’ and ‘wrongful
conception’ claims in contrast to the ‘wrongful life’ claims which is the one involved in the present
case. Although the use of this terminology is unfortunate and has been widely criticised for that
reason, it is persistently used as a convenient reference. For the criticism of the use of these terms
see the minority judgment of Kirby J in Harriton v Stephens (2006) 226 CLR 52. I consciously refrain
from using it in this judgment.
13 This claim is also referred to in literature and judgments as ‘wrongful birth’ claims.
[12] There are courts that have embarked on this enquiry. By far the majority of
jurisdictions worldwide have refused claims of this nature.14 The leading case in
England, McKay v Essex Area Health Authority [1982] QB 1166 (CA) did so on an
analysis of the common law and also interpreted the Congenital Disabilities (Civil
Liability) Act 1976 (UK) to be prohibitive of such claims. Common law jurisdictions in
Canada, Australia15 and Singapore have refused claims of this nature, but in Israel,
in the matter Zeitsov v Katz (1986) 40 (2) PD 85 (Isr) the child’s claim was granted.
[13] In continental jurisdictions16 the trend is similar, but Holland in the matter
Leids Universitair Medisch Centrum v Molenaar no. C03/206, RvdW 2005, 42
provided the exception. Interestingly, during the period 1996 until 2001 French
courts allowed such claims. This resulted in political pressure from groups
representing disabled people, who advocated the view that the courts in these
decisions treated their lives as inferior to non-existence, and groups representing
gynaecologists, obstetricians and ultra-sonographers. The political pressure
ultimately resulted in legislative reaction when on 4 March 2002 an act was passed
that placed France in line with the majority of jurisdictions in the world.
[14] In the United States of America the refusal of the claim in the matter Gleitman
v Cosgrove 49 NJ 22 (1967) represented the conventional view for many years until
the Appellate Division of the New York Supreme Court, in Park v Chessin 400
N.Y.S. 2d 110 (1977) allowed a claim of this nature for special damages whilst at the
same time refusing a claim for general damages. Thereafter the Supreme Courts of
California,17 Washington18 and New Jersey19 followed suit.
14 For a very helpful summary of worldwide decisions in claims of this nature, see Ronen Perry ‘It’s a
Wonderful Life’ Cornell Law Review 93 (2008) 329.
See further Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) at 444 para
16 on the relevance and role of decisions in foreign jurisdictions on the consideration of public policy
in a case.
15 The most recent and much discussed decision in Australia being that of Harriton v Stephens (2006)
226 CLR 52 which was decided 6:1 in favour of refusing the claim.
16 A thorough discussion on the relevant issues involved pertaining to a decision by the
Bundesgerichtshof (sixth Civil Division) appears in B S Markesinis The German Law of Torts 3 ed
p142.
17 Turpin v Sortini 31 Cal 3d 220 (1982).
18 Harbeson v Parke Davis Inc 98 Wash 2d 460 (1983).
19 Procanik v Cillo 97 NJ 339 (1984).
[15] The nature and extent of the debate that has been raging is apparent from the
cases and articles referred to and many more.20 The debate illustrates that for every
argument there has been a counter argument and vice versa and there are hardly
novel contentions being raised. Like Omar Khayam I have heard ‘Great Argument
About it and about: but evermore Came out by the same Door as in I went.’ In view
of the conclusion that I have arrived at I do not think it necessary to evaluate all the
arguments. I intend to refer to the most significant issues in the debate only to
demonstrate the kind of difficult questions that arise.
[16] Whilst bearing in mind that the negligence of the medical practitioners did not
cause the congenital defects, the starting point of the enquiry was aptly stated in the
matter Speck v Finegold 408 A 2d 496 at 508 para 7 and 512:
‘Whether it is better to have never been born at all rather than to have been born with serious mental
defects is a mystery more properly left to the philosophers and theologians, a mystery which would
lead us into the field of metaphysics, beyond the realm of our understanding or ability to solve. The
law cannot assert a knowledge which can resolve this inscrutable and enigmatic issue.’ (per
Cercone J)
‘If it were possible to approach a being before its conception and ask it whether it would prefer to live
in an impaired state, or not to live at all, none of us can imagine what the answer would be. . . We
cannot give an answer susceptible to reasoned or objective valuation.’ (per Spaeth J)
[17] The critics of this argument refer to the function often performed by courts of
law to assess damages in difficult cases like pain, suffering and loss of amenities of
life. This counter argument does not address the real challenge, namely that it is
impossible to assess the harm caused, not merely difficult, because it is essential to
such a decision that the court finds that non-existence is preferable to life.
[18] As a further development to that argument it is often stated that delictual
damages seek not so much to punish the wrongdoer, but to compensate the plaintiff
by seeking to place him or her in the position he or she would have been in if the
negligence did not occur. If the negligence did not occur the child would not have
been born, which brings one back to the questionable assessment.
20 Evelyn Ellis and Brenda McGivern ‘The wrongfulness or rightfulness of actions for wrongful life’
(2007) 15 Tort L Rev 135 provides a recent collation of authorities; See also Ronan Perry supra.
[19] It has often been argued that allowing the claim would open the door to
claims by children against their mothers in circumstances where the mother has
been informed of the congenital defects but chose not to terminate the pregnancy.
The counter argument is that it is inconceivable that a mother’s choice not to avail
herself of her right under certain circumstances to terminate the pregnancy21 would
be regarded as unlawful. Furthermore, allowing a claim against one category of
defendants could not offer a principled basis on which to allow or refuse a claim
against another category of defendants.
[20] In opposition to the claim it has been argued that to allow it would cause
medical practitioners to be overly cautious and advise termination of pregnancy in
order to avoid the likelihood of liability. This argument has been said to lose sight of
the protection the law offers for behaviour that meets the standard of a reasonable
person and that if the recommendation of a termination of pregnancy is followed and
turns out to have been unreasonably advised, it could equally give rise to a claim by
the parents against the medical practitioner, hence the likelihood of liability is not
avoided.
[21] Caution has been expressed that allowing the claim could encourage claims
for minor defects. It has been recognised that this cause of action should only be
allowed in instances of grave defects.22 A measure of gravity can only ever be
subjectively applied and is so relative that it is completely uncertain and undesirable.
It could also be that the more serious the disability the less possible it may be to
appreciate the suffering or lack thereof.
[22] Counsel for the appellant submitted that an application of ss 11, 12(2)(a), 27,
28(1)(d) and 28(2) of the Constitution would lead to a conclusion that the claim
should be awarded. No suggestion was made which common law principle or
principles are to be developed or how the application of those sections would result
in an award of the claim. It was further broadly submitted that advances in medical
technology, the need for professionals not to act negligently, progressive
21 In our law in terms of The Choice of Termination of Pregnancy Act 92 of 1996.
22 In Zeitsov v Katz 40(2) P.D. 85 (S.Ct. 1986) this problem was stated but not resolved.
reproductive legislation and less than supportive social security services indicate
that the ‘time is right’ for claims of this nature.
[23] Section 11 of the Constitution gives ‘[e]veryone . . . the right to life’. If
anything, a consideration of the sanctity of life would lead to a conclusion to refuse
the claim as a decision to award it would entail, of necessity, an acceptance that
Brian’s life is worse than non-existence and therefore a violation of that very
principle.
[24] Section 12(2)(a) of the Constitution23 in the context of this case relates to the
first plaintiff’s rights and would be relevant to any duty owed to her, which is not
presently under consideration. It’s only other relevance is to causation as accepted
in this case, that the first plaintiff would have had the right to and would have
terminated her pregnancy if she was informed of the congenital defects of her
foetus.
[25] Sections 2724, 28(1)(d)25 and 28(2)26 of the Constitution is relevant to the
evaluation of considerations of public policy but in giving content to those rights the
question where liability in the present context should rest, is not answered. Nobody
would deny that Brian’s best interest would be served if he had access to all possible
medical provision for his condition, but the question remains who should be liable.
[26] It is clear that the debate is wide ranging, diverse and complex even before
religious, theological or philosophical arguments are considered.
[27] In those jurisdictions where these claims have been allowed the debate has
not been resolved, but an answer has simply been favoured on selected policy
23 Section 12(2)(a): ‘Everyone has the right to bodily and psychological integrity, which includes the
right to make decisions concerning reproduction.’
24 Section 27of the Constitution provides for the right of everyone to health care services, sufficient
food and water, social security, social assistance and emergency medical treatment and the
obligation of the state to take reasonable legislative measures, within its resources, to achieve the
realisation of these rights.
25 Section 28(1)(d): ‘Every child has the right to be protected from maltreatment, neglect, abuse or
degradation.’
26 Section 28(2): ‘A child’s best interests are of paramount importance in every matter concerning the
child.’
considerations without striking a balance that takes all the relevant norms and
demands of justice into account and without resolving the impossible comparison
between life with disabilities and non-existence. When one considers the content of
the duty owed to the child by the medical practitioners, the corresponding right,
wrongfulness, harm or damages, the choice between life with disabilities on the one
hand and non-existence on the other, is unavoidable. Making that choice in favour of
non-existence not only involves a disregard for the sanctity of life and the dignity of
the child,27 but involves an arbitrary, subjective preference for some policy
considerations and the denial of others.
[28] The essential question that is asked when enquiring into wrongfulness for
purposes of delictual liability is whether the law should recognise an action for
damages caused by negligent conduct28 and that is the question that falls to be
answered in this case. I have pointed out that from whatever perspective one views
the matter the essential question that a court will be called upon to answer if it is
called upon to adjudicate a claim of this kind is whether the particular child should
have been born at all. That is a question that goes so deeply to the heart of what it
is to be human that it should not even be asked of the law. For that reason in my
view this court should not recognise an action of this kind.
[29] For these reasons I conclude that the court below correctly refused the claim
on exception.
[30] The appeal is dismissed with costs.
…………………….
S SNYDERS
ACTING JUDGE OF APPEAL
Concur:
STREICHER
NUGENT
HEHER
CACHALIA JJA
27 Sections 10 and 11 of the Constitution 1996.
28 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 12 E-F.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case number : 340/07
In the matter between :
ELIZABETH GEORGINA ELZONA STEWART
FIRST APPELLANT
BRIAN STEWART
SECOND APPELLANT
and
DR M BOTHA
FIRST RESPONDENT
DR S SMAL
SECOND RESPONDENT
From: The Registrar, Supreme Court of Appeal
Date: 2008-06-03
Status: Immediate
The Supreme Court of Appeal this morning dismissed the claim of a child, born with severe
defects including spina bifida and hydrocephalus, against the doctors who treated his
mother during her pregnancy and negligently failed to advise her that her foetus suffered
from congenital defects. The judgment recognises the parents’ claim for the recovery of
medical expenses, maintenance, special schooling and past and future medical expenses
flowing from the child’s condition, and refused that of the child for the same damages. A
vital distinction is drawn between the parents’ claim and that of the child, namely that the
child’s claim necessarily involves a decision that the child’s life is worth less than non-
existence. Whether that is so, depends on fundamentally subjective answers which are
informed by individual theological, philosophical, emotional, moral and other values. The
court concluded that as the question goes so deeply to the heart of what it is to be human, it
should not be asked of the law.
|
2463
|
non-electoral
|
2013
|
REPORTABLE
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 796/2012
In the matter between:
SOUTH AFRICAN NATIONAL ROADS
AGENCY LIMITED
Appellant
and
THE TOLL COLLECT CONSORTIUM
First Respondent
TOLCON LEHUMO (PTY) LTD
Second Respondent
Neutral citation:
SANRAL
v
The
Toll
Collect
Consortium
(796/2012)[2013] ZASCA 102 (12 September 2013)
Coram:
NUGENT, BOSIELO, WALLIS and PETSE JJA and
SWAIN AJA.
Heard:
30 AUGUST 2013
Delivered: 12 SEPTEMBER 2013
Summary: Tender – review of decision to award – transparency and
objective standards – what constitutes – no need to disclose basis for
evaluating tenders.
ORDER
On appeal from: KwaZulu Natal High Court, Durban (Vahed J sitting as
court of first instance) it is ordered that:
1 The appeal is upheld with costs, such costs to include the costs
consequent upon the employment of two counsel.
2 The order of the court below is set aside and replaced with the
following order:
„The application is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
JUDGMENT
WALLIS JA (NUGENT, BOSIELO and PETSE JJA and SWAIN
AJA concurring)
[1] The appellant, SANRAL, which has responsibility for South
Africa‟s national roads, invited tenders for the operation of the N2 South
Coast Toll Plaza. Four tenderers submitted tenders, and the contract was
awarded to Tolcon Lehumo (Pty) Ltd, the second respondent. The first
respondent, a consortium of three companies operating under the name of
The Toll Collect Consortium (the Consortium), was dissatisfied at the
fact that its tender was unsuccessful and brought review proceedings in
the KwaZulu Natal High Court, Durban, challenging the award of the
tender. The review succeeded. Vahed J set aside the award and ordered
SANRAL to reconsider the tenders in the light of his judgment, subject to
the qualification that no-one involved in the original assessment of the
tenders should be involved in the fresh evaluation. This appeal is with his
leave.
[2] The tender documents provided that the assessment of tenders
would take place in two stages. First they would be assessed for quality
and given a score out of 100. Failure to receive 75 or more points would
result in the automatic disqualification of the tender irrespective of price
or other considerations such as Black Economic Empowerment (BEE).
Thereafter the remaining tenders would be assessed based on price,
contribution to BEE and other matters. The Consortium‟s tender was
disqualified at the first hurdle in that it received only 64.49 points on the
quality assessment. It accepted that unless it could successfully challenge
this assessment its tender was properly disqualified and the review could
not succeed. The primary issue in considering the appeal must
accordingly be the complaint in regard to the quality assessment.
However, it is first necessary to deal briefly with two preliminary points
raised by SANRAL
[3] The first point was that the Consortium lacked locus standi to
institute these proceedings under that name. There is no merit in this. If it
was permissible, as it undoubtedly was, for the Consortium to tender for
this contract under that name and title, as representing the three
companies making up the Consortium, it must likewise have been
permissible for the Consortium, under that name and title and still
representing the same three companies, to challenge by judicial review
the award of the tender. The second point related to the jurisdiction of the
court below. As the contract flowing from the tender fell to be performed
within its jurisdiction it clearly had jurisdiction to deal with a challenge to
the award of that contract by way of judicial review. That point was also
bad. I turn then to consider the issue in relation to the evaluation of
quality under the tender.
[4] The tender documents dealt with the quality assessment in the
following way. Item F3.11.3 in the tender data said:
'The score for quality will be based on the evaluation of the management proposals
submitted by the Tenderer in terms of returnable schedule Form D4.'
Item F3.11.3 went on to set out three broad quality criteria and the
maximum score in respect of each criterion, those being 45 points for toll
operations and maintenance; 50 points for toll systems and maintenance
and 5 points for electrical and mechanical maintenance. No further
breakdown was given of how the scores would be assessed by the
independent adjudicator appointed by SANRAL for that purpose.
[5] Form D4, attached to the tender, set out in some detail a number of
items that had to form part of a Management Proposal by prospective
tenderers. Tenderers were required to provide a clear statement in respect
of „at least the following information‟ using the headings and sub-
headings listed in a table forming part of the form. The table was divided
into three main parts headed „toll operations‟, „toll system‟ and „electrical
and mechanical system‟ respectively. Plainly those covered the three
heads under which the quality score was to be assessed. Each head was
then broken down into a number of sub-headings. Toll operations dealt
with organisational structure, financial management, traffic management,
risk management, quality assurance, environmental management, safety
and security and „other‟. Toll system covered organisational structure,
financial standing, risk management, quality assurance, environmental
management, past performance, a detailed toll system roll out programme
and „other‟. Electrical and mechanical systems repeated five of the items
appearing under the other heads together with „other‟. There was
accordingly a substantial overlap among the three heads. This does not
appear to have disconcerted the Consortium as its tender dealt with these
items exhaustively in 67 pages, together with several hundred pages of
annexures. There is no evidence to suggest that the Consortium queried
these items or sought any additional explanation as to the manner in
which they would be taken into account in adjudicating quality.
[6] The tender evaluation was first undertaken by an independent firm
called Tolplan Operations (Pty) Ltd and then a formal tender evaluation
was undertaken under the direction of SANRAL‟s regional manager in
Pietermaritzburg. Each of the three components that were to be scored
was further broken down and the available points distributed among the
various sub-headings. Thus „toll operations‟ was separated into
organisational structure, which was allocated 20 points, and proposed
operations management, to which the remaining 25 points were allocated.
Under organisational structure 5 points each were allocated for the
proposed route organogram and the quality of key personnel and the
remaining 10 points were given for staff salaries. The first four sub-items
under proposed operations management were each allocated 5 points and
the last two 2.5 points.
[7] A similar exercise was undertaken in respect of toll systems. Each
of the sub-items identified in D4 under this head was allocated marks
totalling 20 in all. The balance of 30 marks was reserved for „toll system
technical analysis‟. This latter item was treated as the „most critical
management and control tool‟ for the project. The Consortium did not
raise any objection to this item or to the score that it was allocated under
it. The complaints it makes in respect of its score for toll systems repeat
its complaints in respect of three corresponding items under „toll
operations‟ and they can conveniently be dealt with together with those
items. Under the last heading of maintenance of technical and mechanical
systems the Consortium lost points in relation to its technical manager,
technician and non-use of a specialist sub-contractor.
[8] In relation to this scoring exercise Mr Ibrahim, who deposed to the
affidavits on its behalf, said:
„… I shall not perform an analysis of the points scored by the successful tenderer (ie
the Second Respondent). The issue is not whether the Applicant ought to have scored
more points than the Second Respondent for quality but rather whether the Applicant
should have met the threshold of 75% for quality. It may, however, in some instances
be necessary to draw a comparison between the Applicant‟s points and the Second
Respondent‟s points to indicate that the points awarded to the Applicant were
erroneous.‟
Before dealing with that contention it is necessary to address what
became in argument the primary issue raised on behalf of the Consortium.
It is an issue that logically precedes any criticism of the scoring, because
it claims that the process was deficient from the outset in consequence of
a non-disclosure to tenderers.
[9] The foundation of the contention was the fact that the more
detailed breakdown in the scoring system for quality described above in
paras 6 and 7 was not disclosed to tenderers. The heads of argument on
behalf of the Consortium expressed the complaint in the following way.
The absence of the breakdown in scoring was said to result in the tender
adjudication process being neither transparent nor objective. It was
submitted that the obligation to disclose this information flowed from
SANRAL‟s Supply Chain Management Policy and Procedure Manual.
Item 1.9.3.3 of the Manual said, in regard to assessments of functionality
(quality) such as this one, that when inviting bids an institution must
indicate the evaluation criteria for measuring functionality; the weight of
each criterion and the applicable values. Some reliance was also placed
on the requirement of the Preferential Procurement Policy Framework
Act (the PPPFA).1 The submission in the heads of argument was that the
three broad headings did not comply with these requirements, as „none of
those headings would themselves be measured at all‟. On that footing it
was submitted that the tenderers should have been furnished with the
weights and values of each sub-item in advance of submitting their
tenders.
[10] SANRAL contended that the point was not open to the Consortium
because it was not foreshadowed or developed in the affidavits delivered
on its behalf. Furthermore there was no indication that any prejudice
flowed from the non-disclosure of this detail. It rejected the contention
put forward in the heads of argument on behalf of the Consortium that
this afforded an advantage to the existing operators who tendered because
they „would have a better understanding of what criteria were regarded as
important to SANRAL, and the relative importance of them.‟ Lastly it
contended that the invitation to tender indicated with sufficient clarity
how the overall scoring for quality would be undertaken and gave clear
instructions as to the areas of concern to SANRAL so that all tenderers
were aware of the information they needed to put forward in support of
their tenders.
1 Act 5 of 2000. SANRAL was at the time exempted from complying with that statute, but its
procurement policy indicated that it undertook procurement in accordance with the spirit of that Act.
Accepting this, it is unnecessary to consider the extent to which the Act was in law binding upon
SANRAL.
[11] In support of this final point SANRAL relied on the passage in
Minister of Environmental Affairs and Tourism & another v Scenematic
Fourteen (Pty) Ltd,2 where Scott JA said:
„A further point made by the respondent was that the applicants for fishing rights
ought to have been told in advance of the procedure to be adopted, involving as it did
the streaming of the applications into two groups and the use of a scoring system
applied to predetermined criteria. It was argued that the failure on the part of the DDG
properly to advise applicants rendered the allocation process procedurally unfair.
Section 3(2)(a) of PAJA expressly provides that what is procedurally fair depends on
the circumstances of each case. In the present case the applicants for fishing rights
were required to complete a detailed application form which indicated precisely what
information was required. It was accompanied by instructions on how to complete the
form and guidelines setting out in broad terms the considerations which the decision-
maker regarded as material for the purpose of making the allocations. An applicant
would therefore have been fully aware of the information that was required and on
which the allocations were to be made. In these circumstances, the decision-maker, in
my view, was not required to explain in advance exactly how the applications would
be processed. As Baxter Administrative Law at 548 puts it:
“The administration cannot be expected to share with the individual every phase of its final decision-
making process.”‟
[12] The Consortium‟s contentions found favour with the court below.
It held that it was incumbent on SANRAL to set out its benchmarks „up
front‟ so that a tenderer would know how to achieve the pre-determined
scoring. The learned judge summarised his conclusion as follows:
„It seems to me therefore, that if the first respondent wanted to assess and score
quality and functionality on that basis, and more especially if quality and functionality
was to serve a gatekeeper function, objectivity, rationality and functionality demanded
more clarity on how prospective tenderers could get through the gate.‟
2 Minister of Environmental Affairs and Tourism & another v Scenematic Fourteen (Pty) Ltd 2005 (6)
SA 182 (SCA) para 18.
For that reason the award of the tender was set aside and SANRAL was
ordered to reassess the tenders in the light of the judgment but without
using the same individuals to make the assessment.
[13] Two problems emerged with this order in the course of argument.
The lesser one was that there was no basis for disqualifying the persons
who had initially evaluated the tender from re-evaluating it. They were
not accused of bias or mala fides or any other conduct that would warrant
their disqualification. Accordingly that order should not have been made.
A court should not lightly disqualify officials and others who have the
responsibility for administrative tasks and acts, such as the evaluation of
tenders, from performing their duties. It emerged from counsel‟s
submissions that the order had been sought in the light of an alleged
failure by the relevant officials to co-operate in providing information,
but that problem had been resolved before the case was argued.
Continuing to seek their disqualification was accordingly an error.
[14] The major problem was that the order did not address the difficulty
the court identified in regard to the tender, namely the failure to inform
tenderers in advance of the detailed breakdown of the possible scores
under each of the headings used in the evaluation of the tenders. If there
was a problem with the failure to afford tenderers adequate insight into
the evaluation process it would not be resolved by remitting the tenders,
formulated without the benefit of that information, for re-evaluation. Only
setting aside the tender process and requiring SANRAL to undertake it
afresh on the basis of adequate information could resolve it. But that
relief was not asked for.
[15] This highlighted the fact that the point on which the review
succeeded was not raised in the application papers, notwithstanding the
fact that the applicant filed both a founding affidavit and a supplementary
founding affidavit after receiving the record. It is so, that here and there
complaints were made that the scoring process was subjective and that
SANRAL had not stipulated any objective criteria for the evaluation of
quality, but these complaints did not raise squarely the issue of the
adequacy of the information afforded to tenderers about the more detailed
scoring system to be used in the quality evaluation process. Had it been
raised then some attention might have been paid to the appropriateness of
the relief being sought.
[16] In addition had the point been raised it would have compelled the
Consortium to indicate in what way it was prejudiced by this failure.
Counsel candidly accepted that there was not a word in the affidavits
explaining how the disclosure of these details would have affected the
Consortium‟s tender. We were asked to infer prejudice from a
hypothetical example drawn from the allocation of points in respect of the
experience of some key personnel. However, in the absence of evidence
that the Consortium would have looked to employ different key people
had it been aware of this allocation, the point remained hypothetical. It
did not establish that the Consortium suffered prejudice or that the tender
process was flawed in a manner calculated to cause it prejudice. Absent
special circumstances, prejudice is necessary in order for the applicant to
demonstrate their interest in remedying by way of judicial review a fault
in a tender process. Otherwise the court is being asked to deal with an
academic issue. 3 As this court said in Allpay: 4 „It would be gravely
3 Rajah & Rajah (Pty) Ltd & others v Ventersdorp Municipality & others 1961 (4) SA 402 (A) at
407H-408B.
prejudicial to the public interest if the law was to invalidate public
contracts for inconsequential irregularities.‟
[17] Leaving these problems aside and turning to consider the merits of
the argument, the premise underpinning it is flawed. That premise
amounted to this. In order for the tender process to be fair to all tenderers,
SANRAL needed to disclose in advance, in the tender documents, full
details of every element of the tender evaluation process that would be
undertaken once tenders were submitted, including details of the
breakdown in the allocation of the points for quality under the three heads
set out in the tender documents. 5 The submission was that this was
necessary in order for the process to be transparent and for the evaluation
of the competing tenders to be objective. Neither contention can be
sustained.
[18] Transparency in a tender process requires that the tender take place
in an environment where it is subject to public scrutiny. In other words
the tender must be advertised publicly and its terms be available for
public inspection. Those terms must set out clearly what must be
submitted by those competing for the award of the contract. The
adjudication of the tender must take place in an impartial manner and the
results made publicly available. If there is a challenge to the outcome of
the tender there must be a record that discloses how the process of
adjudication was conducted. In that way the tender process is transparent
4 Allpay Consolidated Investment Holdings (Pty) Ltd & others v Chief Executive Officer, South African
Social Security Agency & others 2013 (4) SA 557 (SCA) para 21.
5 For the purposes of this judgment I accept that the detailed breakdown of points in respect of the
different sub-headings was known to SANRAL when the tender documents were issued, although it is
unclear from the evidence whether this was in fact the case.
and the public can see that it was conducted fairly. 6 When the
Constitution, in s 217, requires that the procurement of goods and
services by organs of state shall be transparent, its purpose is to ensure
that the tender process is not abused to favour those who have influence
within the institutions of the state or those whose interests the relevant
officials and office bearers in organs of state wish to advance. It requires
that public procurement take place in public view and not by way of back
door deals, the peddling of influence or other forms of corruption. But,
once a tender is issued and evaluated and a contract awarded in an open
and public fashion, that discharges the constitutional requirement of
transparency. It is not there to be used by a disappointed tenderer to find
some ground for reversing the outcome or commencing the process anew,
by claiming that there should have been greater disclosure of the
methodology to be adopted in evaluating the tenders.
[19] An attempt was made to draw a parallel between a student writing
an examination and needing to know how many marks are to be allocated
to each answer and the position of the tenderer needing to know where to
concentrate in furnishing the information required by the party issuing the
tender. But the two are not parallel situations. An examinee is subject to
the pressures of time and must complete a prescribed number of questions
within a limited period. Part of the skill in writing exams is therefore to
know what must be included and what can safely be omitted in answering
6 The UNCITRAL Model Law on the Procurement of Goods, Construction and Services (1994) was
adopted by the Commission (the United Nations Commission on International Trade Law) in 1994. It
has been influential in the establishment of public procurement regimes in many countries and it
requires transparency in public procurement. The principle of transparency is satisfied if the law
relating to public procurement is available; if tenders are publicly advertised; if the qualification
requirements for tenderers, the subject matter of the procurement and the criteria for evaluation are
specified; if information on any modifications of the tender is available; if details of the tender awards
are published; if there is a right to be present when tenders are opened; if there is a record of the tender
process and reasons are given for the acceptance and rejection of tenders. S P de la Harpe Public
Procurement Law: A Comparative Analysis (unpublished LLD thesis in the University of South Africa,
2009) at 96-114; 424-438 and 583.
a particular question. Tenders are not prepared under time constraints and
the tenderer is free to put every possible scrap of potentially useful
information into the tender. The tender can be as detailed as the tenderer
wishes to make it. If there is a parallel to the academic situation it is
rather with an essay or dissertation where the subject matter is identified
in advance and the broad parameters outlined, but the examinee is free to
respond as they see fit and in as much or as little detail as they choose.
[20] As to objectivity, which is an aspect of the constitutional
requirement that the public procurement process be fair, it requires that
the evaluation of the tender be undertaken by means that are explicable
and clear and by standards that do not permit individual bias and
preference to intrude. It does not, and cannot, mean that in every case the
process is purely mechanical. There will be tenders where the process is
relatively mechanical, for example, where the price tendered is the only
relevant factor and the competing prices are capable of ready comparison.
The application of the formula for adjudicating preferences under the
PPPFA may provide another example. However, the evaluation of many
tenders is a complex process involving the consideration and weighing of
a number of diverse factors. The assessment of the relative importance of
these requires skill, expertise and the exercise of judgment on the part of
the person or body undertaking the evaluation. That cannot be a
mechanical process. The evaluator must decide how to weigh each factor
and determine its significance in arriving at an appropriate decision. 7
Where that occurs it does not mean that the evaluation is not objective.
Provided the evaluator can identify the relevant criteria by which the
evaluation was undertaken and the judgment that was made on the
7 MEC for Environmental Affairs and Development Planning v Clairison’s CC [2013] ZASCA 82
paras 20-22.
relative importance and weight attached to each, the process is objective
and the procurement process is fair.
[21] Where the evaluation of a tender requires the weighing of disparate
factors it will frequently be convenient for the evaluator to allocate scores
or points to the different factors in accordance with the weight that the
evaluator attaches to those factors. But the adoption of such a system,
without its being disclosed to tenderers in advance, does not mean that
the tender process is not objective. If anything the adoption of the scoring
system enhances the objectivity of the process, because, in the event of a
challenge to the award of the tender, the basis upon which the evaluation
was undertaken emerges clearly.
[22] The prior disclosure of any such points system – assuming that it
was adopted in advance of the evaluation process and not in the course of
that process – is not ordinarily required, provided that the basic criteria
upon which tenders will be evaluated are disclosed.8 That is what this
court held in Scenematic in the passage quoted above in para 11. Provided
the tender documents make clear to participants what is required from
them their task is to submit that information for evaluation. If they do not
do so, or the information is inadequate when scrutinised, they run the risk
that on that aspect their tender will fare less well. This is what happened
in this case with two of the experienced tenderers. One of them gave no
details in respect of its toll plaza manager and was awarded no points
under this head. The other indicated that its operations manager was
relatively new to the role and received fewer points as a result. Disclosure
8 The criteria and procedures that must be disclosed to tenderers under the UNCITRAL Model Law
(Art 6(1)) relate to matters such as technical qualifications, legal capacity, solvency, good standing
with the revenue authorities, absence of criminal records and the like. De la Harpe, supra, 102 fn 36.
They do not extend to disclosure of a scoring system used in the assessment of these matters.
of any such refined process of scoring in relation to a tender evaluation
process will only be required if its non-disclosure would mislead
tenderers or leave them in the dark as to the information they should
provide in order to satisfy the requirements of the tender. There is no
evidence that this is the case here.
[23] The position in this case is that all potential tenderers knew that
they would have to achieve 75 points for quality if their tenders were not
to be excluded at the first stage of evaluation. They knew what matters
they had to address in their tenders. The Consortium experienced no
difficulties in that regard because it did not seek clarification from
SANRAL or the independent evaluator in regard to the information that
they needed to provide. It knew that a high priority would be placed on
experience because clause F2.1 of the tender documents said that only
tenders from parties experienced in toll operations and maintenance
would be considered. As it lacked such experience, at least in relation to
the operation of tolls for SANRAL, it needed to present the strongest
possible case in that regard. None of that would have been affected by
knowing in advance that the 45 points for toll operations would be
divided as to 20 for their organisational structure and 25 for their
proposed operations management. Nor would the disclosure of the
breakdown of points in other categories or within those categories have
affected matters or altered the terms of their tender in any way.
[24] It is no surprise therefore that the Consortium did not complain in
its affidavits about not knowing the detailed breakdown in the points
allocation, within the three categories identified in the tender documents.
This complaint, raised in argument and unsupported by any factual basis,
is without merit and should have been rejected.
[25] After the evaluation report had been made available the
Consortium
delivered
a
supplementary
founding
affidavit.
In
summarising its contentions the deponent said that the adjudication report
was incorrect in the manner in which it evaluated the Consortium‟s tender
for quality and that if its tender had been properly evaluated for quality it
would have achieved the 75 points threshold and should not have been
disqualified. The deponent proceeded to highlight various elements of the
quality evaluation and criticise the points allocated to the Consortium in
respect of these items. Although disclaiming an intention to engage in an
analysis of the points or to suggest that the Consortium should have
scored better than the ultimately successful tenderer the deponent said
that he would draw some comparisons „to indicate that the points
awarded to the [Consortium] were erroneous‟.
[26] Notwithstanding this disclaimer, this was in truth an invitation to
the court to examine the evaluation exercise and determine a revised
score for the Consortium that would enable it to cross the quality
threshold. Explanations contained in the report, to the effect that the
Consortium lacked relevant toll operation experience or had not provided
information to indicate that they were capable of managing and operating
this type of contract, were roundly criticised on two grounds. First it was
claimed that the project was a small one with limited risk and ideal for the
purpose of introducing a new operator, even though they lacked
experience in toll operations in comparison with their rivals. Second the
background and experience of the three key individuals were highlighted
and it was submitted that „it is clear that the quality of the [Consortium‟s]
personnel exceed that required for the management of the Contract‟ and
accordingly it should have been allocated a far greater number of points
under this head. Had that occurred the 75 points threshold would have
been surpassed.
[27] The invitation to re-score the Consortium‟s tender for quality must
be declined. Once again it must be stressed that this is not the function of
a court. The task of evaluating and awarding these tenders rested in the
hands of SANRAL, not the court, and its decision must be respected,
provided it was arrived at in accordance with the constitutional
requirements applicable to public procurement as set out in s 217 of the
Constitution, any applicable legislation and the terms of the tender. The
court could only interfere if the process was infected with illegality. The
court will not hesitate to interfere with the award of a tender where there
is impropriety or corruption. However, where the complaints merely go to
the result of the evaluation of the tender a court will be reluctant to
intervene and substitute its judgment for that of the evaluator. It may not
interfere merely because the tender could have been clearer or more
explicit. Nor will it interfere because it disagrees with the assessment of
the evaluator as to the relative importance of different factors and the
weight to be attached to them. The court is only concerned with the
legality of the tender process and not with its outcome.
[28] When one analyses the contentions on behalf of the Consortium
they amount to nothing more than a different view of the merits of its
tender to that taken by the independent evaluator and the evaluation
committee. In regard to the contention that this was a relatively small
project SANRAL‟s approach was that it could not afford to have a toll
road contractor that was unable to meet the standards of management and
operations that it required. It accordingly adopted the stance that the first
and foremost consideration in awarding the tender was its assessment of
the capability and capacity of the tenderer to carry out the tender
successfully. That was a different priority to the one identified by the
Consortium, but it cannot be said to be illegitimate. In regard to the skills
and experience of its key personnel one would expect the Consortium to
sing their praises. However, the evaluators took a less sanguine view of
them. That was a matter of judgment and it was one that was open to the
evaluators. The court cannot interfere with that decision. Overall
SANRAL may have adopted an overly cautious attitude, as the
Consortium contends, but that is not a ground for review of its decision.
[29] It follows that the application for review should not have
succeeded. Accordingly the following order is made:
The appeal succeeds with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the court below is set aside and replaced with the
following order:
„The application is dismissed with costs, such costs to include
those consequent upon the employment of two counsel.‟
M J D WALLIS
JUSTICE OF APPEAL
Appearances
For appellant:
B E LEECH SC (with him A J BOULLE)
Instructed by:
Werksmans Inc, Sandton
Symington & De Kok, Bloemfontein
For respondent:
P J OLSEN SC (with him V VOORMOLEN)
Instructed by:
Cox Yeats Attorneys, Durban
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: 12 September 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.
Sanral v The Toll Collect Consortium
The SCA today upheld an appeal by SANRAL against a judgment reviewing
and setting aside the award of a tender for the operation and maintenance of the N2
South Coast Toll Plaza. The court stressed that judicial review is not a means of
obtaining a fresh evalation by the court of the assessment of competing tenders and
the decision to award a tender. It is a mechanism for ensuring that in the award of
tenders the obligations imposed on public bodies by the Constitution and legislation
are obserrved. In this case the challenge to the evaluation of the tenders was
essentially an invitation to the court to re-assess the respondent’s tender and this
invitation should be declined.
|
5
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 332/2015
In the matter between:
REM
APPELLANT
and
VM
RESPONDENT
Neutral citation:
M v M (332/2015) [2016] ZASCA 5 (9 March 2017)
Coram:
Shongwe, Swain, Mathopo and Mocumie JJA and Dlodlo AJA
Heard:
10 November 2016
Delivered:
9 March 2017
Summary: Matrimonial Property Act 88 of 1984 – Marriage out of community of
property with accrual – Antenuptual contract – Exclusion of defined assets from
accrual – Proof of assets „acquired by such party by virtue of the possession or
former possession of such asset‟ – Particular asset, its proceeds and assets which
replace the excluded asset, or acquired with its proceeds excluded – Trust Property
Control Act 57 of 1988 – Unconscionable abuse of trust through fraud, dishonesty or
improper purpose with object of avoiding accrual claim – piercing of trust veneer -
spouse having standing to advance claim against husband as trustee – evidence not
establishing such conduct.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Kubushi J sitting as
court of first instance):
1 The appeal is upheld to the extent of the order contained in para 2 below.
2 Paragraph 2 of the order of the court a quo is set aside and substituted with the
following order:
„The first defendant is to pay to the plaintiff the sum of R2 669 822.78‟.
3 The respondent is ordered to pay the appellant‟s costs of the appeal.
JUDGMENT
Swain JA (Shongwe and Mathopo JJA and Dlodlo AJA concurring):
[1] It would be no exaggeration to describe the relationship between the
appellant, REM, and his former wife, the respondent, VM, as tumultuous. They have
been married and divorced three times. The proprietary consequences of the most
recent divorce were the subject of a trial that was conducted before the Gauteng
Division of the High Court, Pretoria (Kubushi J). The outcome of that trial is before
this court by way of leave granted by the court a quo on certain issues, and
thereafter leave having been granted by this court in respect of the whole judgment.
[2] The respondent as plaintiff in the court a quo advanced a number of
proprietary claims based upon the terms of an antenuptual contract (ANC) concluded
between the parties. This provided for a marriage out of community of property with
the accrual system in terms of the Matrimonial Property Act 88 of 1984 (the Act).
Central to a resolution of the issues between the parties is an interpretation of certain
provisions in the ANC, as well as a determination of whether certain trust assets
form part of the accrual of the appellant‟s estate.
[3] The claims advanced by the respondent were as follows:
(a)
Claim A was for the provision by the appellant of fixed property to the value
of R300 000 escalated at the rate of 10 per cent per annum. This was based upon a
provision in the ANC that in the event of an extramarital affair of the appellant being
the cause of a divorce, the appellant would be obliged to furnish this asset to the
respondent.
(b)
Claims B, E and F were for orders declaring that the assets held by the
Shajo Trust, the RMF Trust and Capmark Business Trust were the assets of the
appellant. It was alleged that these assets were to be taken into account when
determining the extent of the accrual of the appellant‟s estate for the purposes of the
respondent‟s accrual claim, because they were not excluded from the accrual in
terms of the ANC. In the alternative, it was alleged that the trusts were simply the
alter ego of the appellant and the assets of the trusts were in reality the assets of the
appellant.
(c)
Claim C was for an order setting aside the transfer of the appellant‟s 50 per
cent membership interest in Milcar Development CC (Milcar) to the Shajo Trust,
based upon the appellant‟s fraudulent intent to defeat the respondent‟s accrual
claim.
(d)
Claim D was for an order declaring that „contributions‟ made to the RMF
Trust formed part of the estate of the appellant in terms of the ANC, which had to be
taken into account when assessing the respondent‟s accrual claim.
[4] The defences raised by the appellant to these claims were as follows:
(a)
In respect of claim A the appellant alleged that the respondent had failed to
prove that the extramarital affair of the appellant was the „cause‟ of the divorce, as
required by the ANC.
(b)
In respect of claims B, E and F the appellant alleged that the assets held by
these trusts were excluded from the determination of the accrual of the appellant‟s
estate by virtue of the provisions of clause 6 of the ANC. In the alternative, it was
alleged that the respondent had not alleged that these trusts were a sham and
without any evidence that the appellant had acted fraudulently in controlling these
trusts, that these assets could not be regarded as forming part of the appellant‟s
estate for the purposes of an accrual.
(c)
In respect of claim C the appellant denied that the transfer of his interest in
Milcar to the Shajo Trust, was done with the fraudulent intent to defeat the
appellant‟s accrual claim.
(d)
In respect of claim D the appellant alleged that properly interpreted, the term
„contribution‟ in the ANC, implied a positive act which benefits the contributee without
there being a concomitant legal obligation to do so, and that these assets should not
be regarded as part of the accrual system.
[5] The court a quo dealt with the claims of the respondent as follows:
(a)
In respect of claim A, it held that the appellant‟s extramarital affair led to a
breakdown in trust, which eventually caused the breakdown of the marriage and the
ensuing divorce. The escalated amount awarded to the respondent, being the value
of the immovable property that the appellant was obliged to provide to the
respondent, was calculated as R1 144 004 as at 20 October 2011.
(b)
In respect of claims B and F, it held that the assets in these trusts were not
excluded from the accrual by the terms of the antenuptual contract. It had not been
proved by the appellant that there was any causal connection between the initial
assets excluded in terms of the ANC and these assets. As regards the alternative
defences to claims B and F, it was held that the Shajo and Capmark Trusts were the
alter egos of the appellant, because the appellant had managed these trusts in an
improper manner. The trust assets of these two trusts were accordingly to be taken
into account when determining the accrual of the appellant‟s estate. As regards claim
E in respect of the RMF Trust, the court a quo held that the appellant‟s beneficial
interest in this trust was excluded for accrual purposes in terms of the ANC. The
court a quo determined that the value of the assets in the Shajo Trust was
R16 967 866 and the value of the assets held in the Capmark Business Trust was
R517 054.
(c)
In respect of claim C, the court a quo made no finding because of the
conclusion it had reached in regard to claim B.
(d)
In respect of claim D, it held that the use of the word „contribution‟ in the
ANC meant any asset that accumulated in the RMF Trust after the marriage,
irrespective of how it was accumulated. It found that the total value of contributions
made to the RMF Trust was R4 087 335.40. The respondent was entitled to 75 per
cent of this amount being R3 065 501.58.
[6] I turn to deal with each of these claims. In respect of claim A the relevant
clause in the ANC provides that:
„Should it be proven that the principal, REM be the cause of a future divorce through an
extramarital relationship, he will effect that the principal VT obtains a fixed property to the
value of R300 000 (Three Hundred Thousand Rand). Such property shall be given to the
principal VT within 3 (three) months after dissolving of the marriage. REM shall pay the
transfer and bond registration costs of the said fixed property as well as the monthly
instalments on the said property, bonded by a financial institution. This figure of R300 000
(Three Hundred Thousand Rand), is to escalate at 10% (Ten Percent) per annum.‟
[7] The clause must be interpreted in context and against the background in
which it was concluded.1 The parties had been divorced on two previous occasions
which, according to the respondent, were caused by the appellant‟s involvement in
extramarital affairs. Although these allegations are disputed by the appellant, the
object of the clause must have been to deter the appellant from being involved in an
extramarital affair in the future. I do not agree with the appellant‟s argument that the
clause is contra bonos mores and unenforceable because it serves to encourage the
dissolution of the marriage, instead of attempting to reconcile the parties. 2 The
clause seeks to achieve the contrary objective, being the preservation of the
marriage by discouraging an extramarital affair by the appellant.
[8] The appellant also submits that the requirement that the conduct be „the
cause‟ of the divorce must be interpreted narrowly, in the legal sense. In other
words, the principles of legal causation must be applied. The appellant submits that
the marriage of the parties on the evidence as a whole, never had a realistic
prospect of continuing successfully and it is for this reason that the provisions must
be narrowly construed.
[9] It is not helpful to import the rules of legal causation when the meaning of the
phrase „the cause of a future divorce‟ has to be determined. The respondent clearly
believed that extramarital affairs of the appellant had caused the breakdown of their
marriage on two previous occasions and wished to preserve their third marriage, by
discouraging future infidelity on the part of the appellant. The appellant conceded
during cross-examination that his extramarital affair destroyed the trust in their
marriage. In my view, this concession viewed in the context of the purpose of the
clause, established that his conduct was the cause of the divorce.
1 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18.
2 See Cumming v Cumming 1984 (4) SA 588 (T) at 589F-I.
[10] I turn to consider claims B, E and F which relate to the Shajo Trust, RMF
Trust and the Capmark Business Trust. I agree with the court a quo‟s conclusion that
the appellant‟s beneficial interest in the RMF Trust was excluded for accrual
purposes in terms of the ANC.3 The enquiry is whether the court a quo was correct in
concluding that the assets held by the Shajo Trust and the Capmark Business Trust
were not excluded by the terms of the ANC. If these assets were not excluded, the
further issue is whether they legitimately form part of the assets of these trusts and
do not form part of the appellant‟s estate, for purposes of the accrual system.
[11] The relevant clause in the ANC provides as follows:
„That the assets of the parties herein contracting with each other, belonging to either of
them, which are listed hereunder and having the values shown herein above, together with
all liabilities presently associated with such assets, or any other asset acquired by such party
by virtue of the possession or former possession of such asset, shall not be taken into
account as part of the other party‟s estate and/or form part of the accrual system on the
dissolution of the marriage.
All assets as referred to in this paragraph herein above under 4 (four) and 5 (five) shall be
the assets of such party alone, and shall all loss and profit on such asset form the sole and
exclusive profit and/or loss of such party without the other party having any right to any part
and/or profit or loss on such asset, except for contributions made to the RMF Trust after date
of marriage, which contributions and growth on such contributions will be subject to the
accrual system.
The assets of
REM
so to be excluded are:
A beneficial interest in Vacation Investment Port Folio Trust and/or any other trust
conducting business in the vacation time share property market.
Members interest in RM Consultants CC
3 Whether „contributions‟ made to this trust after the parties‟ marriage form part of the accrual system
is the subject of Claim D.
Beneficial interest in the RMF Trust, fixed property within RMF Trust Portion 400 of erf 375
RIETFONTEIN . . .‟
[12] The excluded assets therefore comprise the listed assets, together with any
assets acquired by a party by virtue of the possession, or former possession of these
assets. The only excluded asset of relevance to the present enquiry is the Vacation
Investment Portfolio Trust (VIP Trust), because the appellant stated in evidence that
according to his recollection the only trust in which he held a „beneficial interest‟ at
the date of the marriage, was this trust.
[13] The appellant stated that at the time of the marriage, he was involved in the
time share industry and during 2001 there was a dispute between the appellant and
a certain Mr Ian Wilcox. The consequence of this was that a so-called asset swap
agreement was concluded between them, in terms of which the appellant acquired
the right to proceed with a business in Cape Town which was involved in the time
share industry. In return, he relinquished his interests in certain assets specified in
the agreement. The appellant‟s argument was that he was always involved in the
timeshare industry and had not been involved in any other form of business. It was
not disputed that the present interests of the appellant, whether in trusts or other
entities, were funded solely from the appellant‟s involvement in the timeshare
industry. The appellant accordingly contended that clause 6 of the ANC excluded
from the accrual of his estate, any asset acquired as a result of his activities in the
timeshare industry. I do not agree that the clause is capable of bearing such a wide
meaning. It only provides for the exclusion of the appellant‟s beneficial interest in the
VIP Trust, together with any asset acquired by virtue of his possession, or former
possession of this asset.
[14] No evidence was led by the appellant to show any nexus between the assets
held by the trusts in question and the assets held by the VIP Trust, at the time of the
marriage. No mention is made in the asset swap agreement of the VIP Trust, which
is not surprising as the appellant stated that it did not play a major role at that stage
in his activities in the timeshare industry. I agree with the view of Professor
Jacqueline Heaton, as to the meaning of the phrase „any other asset acquired by
such party by virtue of the possession or former possession of such asset‟. What is
envisaged is „the particular asset, its proceeds, and assets which replace the
excluded asset or are acquired with its proceeds‟.4 This phrase in the ANC owes its
origin to s 4(1)(b)(ii) of the Act which provides that:
„An asset which has been excluded from the accrual system in terms of the antenuptual
contract of the spouses, as well as any other asset which he acquired by virtue of his
possession of the first-mentioned asset, is not taken into account as part of that estate at the
commencement or the dissolution of his marriage.‟
The court a quo accordingly correctly concluded that the assets held by the Shajo
Trust and Capmark Business Trust, were not excluded from the accrual of the
appellant‟s estate in terms of the ANC.
[15] In support of the respondent‟s contention that the assets held by these trusts
formed part of the appellant‟s estate the respondent sought orders declaring that
these trusts were the alter ego of the appellant. The respondent alleged that the
appellant established these trusts to conceal his assets and with the purpose of
defeating the patrimonial claims of the respondent. It was also alleged that the
appellant transferred personal assets to these trusts and in registering these assets
in the trusts, did not intend to transfer ownership. He dealt with these assets as his
own and were it not for the trusts would have acquired and owned these assets in
his own name. It was also alleged that the appellant had failed properly to perform
his fiduciary duties as a trustee. In support of these claims the respondent relied on a
number of concessions made by the appellant when giving evidence. The appellant
conceded that he had used the funds of these trusts to pay personal maintenance
obligations. This was effected by crediting his loan accounts in these trusts, after he
had made these payments. He would also utilise funds in the account of a trust to
pay personal liabilities. He would then leave it to his accountant, a Mr Forssman, a
joint trustee in the Shajo Trust, to reconcile these payments and allocate them to
4 Jacqueline Heaton (ed) The Law of Divorce and Dissolution of Life Partnerships in South Africa
(2014) at 82-83.
various entities. He also conceded that he shifted money between various accounts
including his personal account and used the funds of the trusts to fund his business
enterprises.
[16] It is also apparent that the appellant disposed of his 50 per cent member‟s
interest in Milcar to the Shajo Trust without receiving value, as no payment was
made for the transfer, it being a transaction on paper. This transfer took place after
the respondent had instituted action for divorce. The respondent submits that the
purpose of the transfer was to fraudulently exclude this asset from the reach of the
respondent‟s accrual claim.
[17] The claim that the appellant used these trusts as his alter ego, necessarily
involves an acceptance of the valid existence of the trusts.5 The respondent did not
claim that the trusts were a sham and therefor did not exist, with the consequence
that the assets did not vest in them on this ground. The remedy of going behind a
validly established trust form, or „piercing its veneer‟ is correctly described as:
„an equitable remedy in the ordinary, rather than technical, sense of the term; one that lends
itself to a flexible approach to fairly and justly address the consequences of an
unconscionable abuse of the trust form in given circumstances. It is a remedy that will
generally be given when the trust form is used in a dishonest or unconscionable manner to
evade a liability, or avoid an obligation.‟6
[18] The appellant early on in the development of his businesses in the timeshare
industry on the advice of his accountant would create a new legal entity, whether in
the form of a trust, close corporation or company to pursue any venture. The object
was to isolate each business so that the financial demise of one, would not affect the
financial viability of any of the others. This was obviously a legitimate business
activity and the trusts in question must be viewed as part of the appellant‟s overall
5 Van Zyl & another NNO v Kaye NO & others 2014 (4) SA 452 (WCC) para 21.
6 Van Zyl (above) para 22.
business strategy. The evidence accordingly does not support the respondent‟s
contention that these trusts were established with the object of defeating any
patrimonial claims of the respondent.
[19] The conduct of the appellant in allegedly transferring personal assets to these
trusts, dealing with them as if they were assets of these trusts and not properly
performing his fiduciary duties, all with the object of concealing these assets and
thereby defeating the accrual claim of the respondent, are the central issues in
determining whether the trust veneer should be pierced. Although the trust form is
debased where it „is employed not to separate beneficial interest from control, but to
permit everything to remain “as before”, though now on terms that privilege those
who enjoy benefit as before while simultaneously continuing to exercise control,‟7 this
court has held that these dicta „pertaining to the importance of maintaining the
functional separation between control (by trustees) and enjoyment (by beneficiaries)
in family trusts, are premised upon the interests of third parties who transacted with
the trust‟.8 A fiduciary responsibility would be owed by the trustees to third parties
who transacted with the trust, as well as beneficiaries of the trust.9 If the trust form is
„debased‟ in this sense, justice dictates „that the veneer of the trust be pierced in the
interests of creditors‟ and „[b]y analogous reasoning, unconscionable abuse of the
trust form through fraud, dishonesty or an improper purpose will justify looking
behind the trust form‟.10 The ambit of a claim of this nature must be considered with
due regard for the provisions of the Trust Property Control Act 57 of 1988. Section 1
provides for the transfer of interest or ownership in property or assets to a
designated person or class of persons, as well as control of such property or assets
by a trustee or trustees in accordance with the provisions of the governing trust
instrument. Section 12 provides that trust property does not form part of the personal
7 Land and Agricultural Bank of South Africa v Parker & others 2005 (2) SA 77 (SCA) para 26.
8 WT & others v KT [2015] ZASCA 9; 2015 (3) SA 574 (SCA) para 33.
9 Ibid para 32
10 Ibid para 31 citing Parker (above).
property of a trustee, except to the extent that a trustee is entitled to such trust
property as a beneficiary in terms of the trust instrument.
[20] This Court has however held that a spouse, „has no standing to challenge the
management of the trust by her husband in the circumstances of the present case,
either as a beneficiary of the trust or as third party who transacted with the trust.‟ 11
The respondent who was neither a beneficiary of, nor a third party transacting with
these trusts would on this basis lack standing. I respectfully disagree with this
conclusion which confines standing to advance such a claim to those to whom a
fiduciary responsibility is owed by the trustee. There can be no basis in logic or
principle for a distinction to be drawn between legal standing to advance a claim to
pierce the veil of a trust, by a third party who transacts with the trust on the one
hand, and a spouse who seeks to advance a patrimonial claim, on the other. Breach
by the trustee of his or her fiduciary duties in the administration of the trust, is not the
determining factor. In either case, a claim lies against the trust, or the errant trustee,
on the basis that the unconscionable abuse of the trust form by the trustee, in his or
her administration of the trust, through fraud, dishonesty or an improper purpose
prejudices the enforcement of the obligation owed to the third party, or a spouse.12
The respondent had to prove that the appellant transferred personal assets to these
trusts and dealt with them as if they were assets of these trusts with the fraudulent or
dishonest purpose of avoiding his obligation to properly account to the responent for
the accrual of his estate and thereby evade payment of what was due to the
respondent, in accordance with her accrual claim. If established a declaration could
be made that the trust assets in question are to be used to calculate the accrual of
the appellants estate, as well as satisfy any personal liability of the appellant to make
payment to the respondent. Although the appellant administered the trusts with very
little regard for his fiduciary duties as a trustee and without proper regard for the
11 WT v KT supra para 33
12 See Iain M Shipley „Trust assets and the dissolution of a marriage: a practical look at invalid trusts,
sham trusts, and piercing the veneers of trusts/going behind the trust form‟ (2016) 28 SA Merc LJ 508.
essential dichotomy of control and enjoyment essential to the nature of a trust and
although such conduct may have justified his removal as a trustee, or the
appointment by the Master of an independent co-trustee in terms of s 7(2) of the
Trust Property Control Act, the evidence did not prove that he transferred personal
assets to these trusts and dealt with them as if they were assets of these trusts, with
the fraudulent or dishonest purpose of avoiding his obligation to properly account to
the respondent for the accrual of his estate. In addition it was not established that the
transfer of assets to these trusts by the appellant was simulated with the object of
cloaking them with the form and appearance of assets of the trusts, whilst in reality
retaining ownership. The assets of these trusts are accordingly not to be taken into
account in determining the accrual of the appellant‟s estate.
[21] In reaching this conclusion I do not overlook the conduct of the appellant in
transferring his interest in Milcar to the Shajo Trust. He stated that it was always his
intention that his shares in Milcar be registered in the name of the Shajo Trust,
because his usual practice was to conduct his business through trusts. The
respondent conceded that she could not dispute this but it was her belief that the
appellant had done this to defeat her accrual claim. Although the appellant agreed
that the ANC did not refer to any close corporations, except for RM Consultants CC
as being excluded from the accrual of his estate, this does not detract from his
general belief, albeit legally unfounded, that all of these assets were excluded in
terms of the ANC. There would therefor be no reason for him to place his interest in
Milcar in the Shajo Trust, to defeat the respondent‟s accrual claim. I am accordingly
satisfied on a consideration of the evidence as a whole, that it was not established
that the appellant fraudulently intended to deprive the respondent of a claim to any of
his interests in Milcar, by this transaction.
[22] This conclusion that the appellant did not fraudulently intend to deprive the
respondent of any interest in Milcar, disposes of claim C.
[23] I turn to consider claim D and whether the contributions to the RMF Trust fall
within the accrual system in terms of the ANC. The relevant clause provides that
„contributions made to the RMF Trust after date of marriage‟, including „growth on
such contributions will be subject to the accrual system‟.
[24] The appellant submits that the ANC does not specify whether the use of the
word „contribution‟ was intended to mean a contribution by the parties and/or
contributions by third parties. Because the parties did not use any other language
such as donation, loan, service, income or the like, the ordinary meaning of the word
applied. A positive act is required which benefits the contributee, without there being
a concomitant legal obligation to do so.
[25] In my view, this interpretation of the word „contribution‟ in the context of the
ANC as a whole is far too narrow. I agree with the conclusion by the court a quo that
the ANC does not state how, or by whom the contributions are to be made. What
was envisaged was the accumulation of assets by contributions for the benefit of
beneficiaries. By the use of the word „contribution‟ what was meant was any asset
that accumulated in the RMF Trust after the marriage, irrespective of how it was
accumulated. It was not argued by either of the parties that the conclusion by the
court a quo that the total contributions to the trust, including the growth of these
contributions amounting to R4 087 335.40, was wrong. Neither was it argued that the
finding that the respondent was entitled to 75 per cent of this amount, in the amount
of R3 065 501.55, was wrong.
[26] Likewise, no argument was advanced by either of the parties, as to the
correctness or otherwise of the manner in which the court a quo calculated the
accrual of the appellant‟s estate and the respondent‟s entitlement to one half of the
accrual. However, because the assets of the Shajo Trust and Capmark Trust do not
form part of the accrual of the appellant‟s estate, the amount due to the respondent
requires recalculation, in the following manner:
Revised net asset value of appellant‟s estate
R2 274 144.00
Contributions made to the RMF Trust
R3 065 501.55
R5 339 645.55
The appellant‟s estate has accordingly accrued by an amount of R5 339 645.55. The
respondent is entitled to one half of this amount in the sum of R2 669 822.78.
[27] The outcome of this appeal does not justify any variation in the costs order
made by the court a quo. The respondent remains successful in certain of the claims
advanced before that court. The appellant has, however, achieved substantial
success in this appeal and is entitled to the costs of the appeal.
[28] In the result, the following order is made:
1 The appeal is upheld to the extent of the order contained in para 2 below.
2 Paragraph 2 of the order of the court a quo is set aside and substituted with the
following order:
„The first defendant is to pay to the plaintiff the sum of R2 669 822.78‟.
3 The respondent is ordered to pay the appellant‟s costs of the appeal.
K G B Swain
Judge of Appeal
Mocumie JA
[29] I have had the benefit of reading the judgment of my colleague, Swain JA,
and agree with his reasoning and conclusion that the appeal should be upheld. I
unfortunately cannot agree with him on the question of costs. My reasons for the
disagreement are set out below.
[30] As much as the appellant has been substantially successful in this appeal,
that is not the only consideration.13 Other factors come into play including the nature
13 A C Cilliers Law of Costs 3 ed (2008) para 14.09.
of the proceedings and how the one party came to lose the case in the determination
of an appropriate costs order.
[31] Apart from the nature of the proceedings, further unique to this case, is the
issue of trust property provided for in the antenuptial contract. In circumstances
where, as in this case, the appellant is the only person in possession of all the facts
relating to the assets in the trusts, it can never be expected of the respondent to say
more than the little she knew. She could not be expected to be up to date with the
affairs of trusts that she did not herself run or administer. Although she failed to
discharge the onus which rested on her, such failure cannot be held against her at
appeal level. In any event, the issue brought before us for determination i.e exclusion
of trust property from the operation of an antenuptial contract has never been dealt
with by this court. Neither was there any argument to the effect that the opposition of
this appeal by the respondent was frivolously made. To the contrary, there was no
certainty in respect of the legal position in the context of an antenuptial contract vis-
à-vis trust property in the circumstances of this case. Both parties had to come to
this court as directed by the court a quo to seek clarity from this court. 14 I am
therefore of the view that, to order the respondent to pay the costs of the appeal
would not only be inequitable but would also be inappropriate.15 Thus each party
should be ordered to pay its own costs and that is the order I would have made.
B C Mocumie
Judge of Appeal
14 See Buttner v Buttner [2006] 1 All SA 429 (SCA) para 42.
15 See De Kock and Others v Van Rooyen 2005 (1) SA 1 (SCA) at 15. See also De Reuck v Director
of Public Prosecutions (Witwatersrand Local Division) and Others 2004 (1) SA 405 (CC) para 57;
Shilubana v Nwamitwa 2009 (2) SA 66 (CC) para 92; and Gcaba v Minister for Safety and Security
2010 (1) SA 238 (CC) para 62.
Appearances:
For the Appellant:
P A van Niekerk SC
Instructed by:
De Korte Du Plessis Inc, Pretoria
Honey Attorneys, Bloemfontein
For the Respondent:
C Woodrow
Instructed by:
Snyman De Jager Attorneys, Pretoria
Bezuidenhouts 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
9 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.
M v M (332/2015) [2016] ZASCA 5 (9 March 2017)
Media Statement
The SCA upheld an appeal against a finding by the High Court that the appellant had treated
two trusts as his alter ego, with the result that the property held by these trusts formed part of
his personal estate and were therefore subject to the accrual claim of the respondent, on their
divorce. It held, overruling a previous decision of the SCA, that a wife in the position of the
respondent who was neither a beneficiary of the trusts, nor a third party transacting with the
trusts and to whom her husband, in his capacity as the trustee of the trusts, did not owe a
fiduciary duty, had locus standi to advance a claim that the trust veneer be pierced. The claim
was an equitable remedy that lay against the trust, or the errant trustee on the basis that there
was an unconscionable abuse of the trust form by the trustee, in his or her administration of
the trust through fraud or dishonesty with the improper purpose of evading a liability, or
avoiding an obligation. The respondent had to prove that the appellant transferred personal
assets to the trusts and dealt with them as if they were assets of the trusts, with the fraudulent
or dishonest purpose of avoiding his obligation to properly account to the respondent for the
accrual of his estate and thereby evade payment of what was due to the respondent, in
accordance with her accrual claim. If established the trust assets in question could be used to
calculate the accrual of the appellant's estate and satisfy any personal liability of the appellant
to make payment of any amount owed to the respondent. It was held that although the
appellant administered the trusts with very little regard for his duties as a trustee, the
evidence did not prove that he transferred personal assets to these trusts and dealt with them
as if they were assets of these trusts, with the fraudulent or dishonest purpose of avoiding his
obligation to properly account to the respondent for the accrual of his estate. Accordingly, the
assets held by these trusts did not form part of the appellant’s personal estate and were not
subject to the accrual claim of the respondent.
--- Ends ---
|
3512
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 932/2019
In the matter between:
FUSION PROPERTIES 233 CC
APPLICANT
and
STELLENBOSCH MUNICIPALITY
RESPONDENT
Neutral citation: Fusion Properties 233 CC v Stellenbosch Municipality
(932/2019) [2021] ZASCA 10 (29 January 2021)
Coram:
PETSE DP, SALDULKER and SCHIPPERS JJA and
MATOJANE and SUTHERLAND AJJA
Heard:
20 November 2020
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives by email, publication on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 09H45 on 29 January 2021.
Summary: Practice and procedure – application for leave to appeal – referral
for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013
– leave sought against order of the high court directing applicant to provide
security for costs in terms of s 8 of the Close Corporations Act 69 of 1984 –
demand for security made under Uniform rules 47(1) and 47(3) – high court
exercising narrow discretion in making order – powers of appellate court to
interfere with exercise of such discretion circumscribed – no basis for
interference on appeal established.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town
(Allie J sitting as court of first instance):
The application for leave to appeal is dismissed with costs, including the costs
of two counsel.
JUDGMENT
Petse DP (Saldulker and Schippers JJA and Matojane and
Sutherland AJJA concurring):
Introduction
[1] This is an application for leave to appeal against a judgment of the
Western Cape Division of the High Court (the high court) brought by Fusion
Properties 233 CC (Fusion) which was referred for oral argument in terms of
s 17(2)(d)1 of the Superior Courts Act 10 of 2013 (the Superior Courts Act).
Fusion's adversary is the Stellenbosch Municipality (the municipality) which
is an organ of state within the local government sphere.
[2] The application falls within the narrowest compass. By its very nature
it requires, for its determination, full argument in relation to the merits of the
entire case as if the appeal itself were being considered. For this reason,
1 Section 17(2)(d) of the Superior Courts Act 10 of 2013 reads:
'The judges considering an application referred to in paragraph (b) may dispose of the application without
the hearing of oral argument, but may, if they are of the opinion that the circumstances so require, order that
it be argued before them at a time and place appointed, and may, whether or not they have so ordered, grant
or refuse the application or refer it to the court for consideration.'
Fusion was directed to file six copies of the application for leave, as well as
the full record in terms of rule 8 of this Court's rules. In addition, the parties
were forewarned that they must be prepared, if called upon to do so, to address
the court on the merits.2
Factual background
[3] The facts are fairly straightforward, and are briefly as follows. The legal
skirmish between Fusion and the municipality has had a somewhat long and
tortuous history. This is the third legal bout in which the parties have locked
horns. The dispute has its genesis in an invitation for proposals published by
the municipality during 2005 for the purchase and development of some eight
erven that it owned.
[4] Believing that the municipality's invitation presented it with a lucrative
opportunity for investment in property development, Fusion responded to the
invitation. In pursuit of its ultimate objective, it commenced negotiations with
the municipality with a view to concluding a written agreement of sale as a
precursor to the proposed development. For reasons that are not necessary to
canvass in this judgment, the intended sale fell through. The municipality
disputed the existence of any valid agreement between it and Fusion. On the
2 See order of this Court granted on 29 October 2019. It reads:
'1.
The application for leave to appeal is referred for oral argument in terms of s 17(2)(d) of the Superior
Courts Act 10 of 2013.
2.
The parties must be prepared, if called upon to do so, to address the court on the merits.
3.
For this purpose the applicant is to file five additional copies of the application for leave to appeal
within one month of the date of this order and to comply with the rules of this Court by filing the record in
terms of rule 8 within three months of this order and both parties are to comply with the remaining rules
relating to the prosecution of an appeal.
4.
If the applicant does not proceed with the application the applicant is to pay the costs relating to the
application for leave to appeal.'
other hand, Fusion sought to hold the municipality to its bargain, asserting
that the parties had concluded a valid agreement of sale.
[5] Determined not to yield to Fusion’s demands, the municipality then
resorted to litigation. It applied to the high court for a declarator that there was
no contractual nexus between it and Fusion. Fusion opposed the application.
Ultimately, the high court (Desai J) dismissed the application and directed the
parties ‘to negotiate in good faith’ in order to resolve their differences.
However, the parties’ negotiations failed to bear fruit. Instead, on 23 April
2014 and, after much toing and froing, the municipality finally resolved not
to proceed with the alienation of the erven to Fusion.
[6] On 5 November 2015 Fusion instituted legal proceedings against the
municipality in which it claimed damages for breach of contract for some R32
million and ancillary relief. The legal foundation for the claim asserted by
Fusion was that the municipality had, 'with the deliberate intention to prevent
the fulfilment of the conditions' of certain clauses of the alleged agreement
'delayed the process and failed to negotiate in good faith with [Fusion]'. The
municipality is resisting the claim which, as it appears from the record, is now
ripe for trial. It is common cause that Fusion is an empty shell with no assets
whatsoever. It is not engaged and has never engaged in any business activity.
The development of the municipality's erven that it had laid it sights on was
going to be its business venture of note in Stellenbosch.
[7] Realising that there was no realistic prospect of it recovering its
litigation costs against Fusion if it were successful in resisting the claim, on
account of Fusion's parlous financial state, the municipality invoked s 8 of the
Close Corporations Act 69 of 1984 (the Close Corporations Act) and, on 10
December 2018, delivered a notice in terms of rule 47(1) of the Uniform Rules
of Court. In this notice, the municipality demanded security for costs in the
sum of R2 626 431.06. This amount was alleged to represent 'estimated
reasonable costs in defending the action'.3 For its part, Fusion contested its
obligation to give security for costs in the amount required or any portion
thereof.
[8] Undaunted by Fusion's stance in contesting its liability to furnish
security for costs, the municipality brought an interlocutory application in
terms of rule 47(3) read with rule 6(11). It claimed an order directing Fusion
to provide security for costs in the sum of R2 626 431.06 and that the action
be stayed until the security was furnished.
[9] In pursuit of the application, the deponent to the municipality's
founding affidavit asserted, amongst others, the following. That Fusion had
not conducted business since 2007 and owned no immovable or movable
assets. And that in response to a notice in terms of rule 35(3) to make available
for inspection its audited financial statements and bank statements from 2005
to 2019, Fusion had stated that these documents were not in its possession and
their whereabouts were unknown. It was unclear whether these documents
even existed. Thus, the likelihood that Fusion was able to pay the
municipality’s costs was remote.
[10] Explaining the delay in demanding security for costs, the municipality's
deponent alleged firstly, that the documents discovered were voluminous,
3 Attached to the notice was a draft bill of costs detailing how the amount required was computed.
comprising approximately 250 lever arch files. Secondly, it decided not to
request security until it was certain that Fusion had the necessary authority to
institute the action: it could not challenge Fusion’s authority and request it to
provide security for costs simultaneously. Thirdly, in a pre-trial minute, the
municipality had stated that it would decide whether to request security for
costs upon inspection of the documents requested in its rule 35(3) notice.
Upon receipt of Fusion’s response to that notice, it was evident that Fusion
did not have financial statements and would not be able to pay costs.
[11] Fusion opposed the application for security for costs, essentially on the
following grounds. The application was not brought as soon as practicable
after the commencement of proceedings, as contemplated in rule 47(1) of the
Uniform Rules of Court. In terms of s 8 of the Close Corporations Act, a court
may at any time during proceedings require a close corporation to furnish
security for costs and may stay proceedings until the security is given, if there
is reason to believe that the corporation will be unable to pay the costs of the
opposing party if it is successful in its defence. Had Fusion not been a close
corporation but a company, it would not be obliged to put up security for costs.
This, so it was alleged, was because the Companies Act 71 of 2008 (the 2008
Companies Act) abolished s 13 of the former Companies Act 61 of 1973,
which provided for a company to put up security for costs; and ‘having
abolished large portions of the Close Corporations Act’, the 2008 Companies
Act ‘has effectively abolished the concept of future close corporations’.
Fusion also alleged that there was ‘no logical reason why a corporation should
be treated more onerously than a company with limited liability in respect of
security for costs’. This, it said, was inconsistent with the right of access to
court in s 34 of the Constitution, because it ‘impacts on the corporation's right
of pursuing legitimate claims’.
[12] Fusion also asserted that the municipality had delayed inordinately in
seeking security for costs. More specifically, there were delays from the date
on which the action was instituted; after the date on which the municipality’s
discovery affidavit had been signed ie 17 November 2017; after Fusion had
replied to the rule 35(3) notice; and after its refusal to provide security. Fusion
alleged that security was being sought in circumstances where the pleadings
had closed, discovery had been made, the case was ripe for hearing, and
significant expenses relating to printing and copying had been incurred.
[13] The application came before Allie J, who granted an order substantially
in the terms prayed for in the municipality's notice of motion. 4 After
evaluating the facts and having had regard to the relevant legal principles, the
high court said the following:
'A court would have regard to the common law and any applicable statute in deciding the
grounds upon which security for costs should be ordered.
Section 13 of the old 1973 Companies Act provided that in certain circumstances, namely
when there is reason to believe that the company will be unable to pay the costs, a company
4 The order reads thus:
'1.
Respondent shall pay security in an amount to be determined by the Registrar of this Court, for
Applicant's costs in the pending action, in the form of an interest bearing cash deposit with the Registrar,
alternatively by way of irrevocable guarantee issued by a South African commercial bank within 10
(ten) days of the amount being determined by the Registrar;
2.
All proceedings in the Respondent's pending action against Applicant are hereby stayed, pending
Respondent's compliance with paragraph 1 of this order;
3.
Applicant is hereby granted leave to re-enrol the application on the same papers, duly supplemented, if
necessary, for an order in terms of Rule 47(4) that Respondent's action be dismissed in the event that
Respondent fail to comply with paragraph 1 of this order;
4.
Respondent shall pay applicant's attorney and client costs in the application to strike out;
5.
Respondent shall pay the costs of this application for security for costs on a party and party basis.'
could be compelled to provide security for costs but that provision wasn't included in the
new Companies Act 71 of 2008.
Section 8 of the Close Corporations Act 69 of 1984 however contains a provision that Close
Corporations may be ordered to provide security for costs as follows:
"8. When a corporation in any legal proceedings is a plaintiff or applicant or brings a
counterclaim or counterapplication, the court concerned may at any time during the
proceedings if it appears that there is reason to believe that the corporation or, it if is being
wound up, the liquidator thereof, will be unable to pay the costs of the defendant or
respondent, or the defendant or respondent in reconvention; if he is successful in his
defence, require security to be given for those costs, and may stay all proceedings till the
security is given".'
[14] Cognisant of the fact that an application of the nature with which it was
seized entailed the exercise of a discretion, the high court continued:
'A court has a discretion to order security for costs. That discretion must be exercised after
taking into consideration all the relevant facts as well as justice, equity and fairness.
Effectively the court has to embark on a weighing up exercise which involves weighing
the need of an applicant to obtain certainty that a respondent would be capable of satisfying
an adverse costs order against a respondent's need to have its case adjudicated upon without
being prohibited from doing so as a consequence of its likely inability to pay costs in due
course, if so ordered.
Under the common law, the inability of a plaintiff to satisfy a potential costs order is
insufficient grounds to justify an order of security for costs. Something more is required,
such as proof that the action was instituted vexatiously, recklessly or as an abuse of the
court's process or that the respondent's prospects of success are not good.'
[15] Insofar as the delay point raised by Fusion is concerned, the high court
stated:
'I remain cognisant of the fact that the main action was instituted in 2015, although
applicant launched an application to cancel the agreement in 2008. The delay in bringing
this application is adequately explained by applicant with reference to: a period of
negotiations spanning the period 2009 to 2014 ; the pleadings; the Rule 37(8) minute dated
24 October 2018 where applicant reserved its right to bring this application after it had
sight of documents requested in the Rule 35(3) Notice; the negotiations that took place
between Mr Africa, the attorney of applicant and Mr Schoeman, the erstwhile attorney of
respondent in 2016 and again between their respective attorneys in 2018 as recorded in the
Rule 37(8) minute; as well as the Reply to the Rule 35 (3) Notice filed by respondent only
in November 2018.
It is therefore fallacious for respondent to allege that because applicant knew of its
impecuniosity since 2009. [I]t improperly waited from then until late 2018 to request
security for costs.'
[16] The high court then concluded:
'Respondent is a special purpose vehicle that was incorporated with the specific intent of
tendering and contracting with the applicant. Applicant was aware of the impecunious
nature of the respondent when it negotiated and purported to contract with respondent.
Applicant knew from the inception of its dealings with respondent and on its own version,
as early as 2009 and later in 2013, when it received the Price Waterhouse Cooper report
ostensibly submitted after a due diligence investigation, that respondent had no assets and
no income.
Applicant's knowledge at the inception of its dealings with respondent that at that stage it
had no realisable assets and funds, doesn't mean that the financial standing of the
respondent couldn't have improved subsequently.
. . .
The security for costs provision in section 8 exists to protect an opposing litigant against a
corporation with no realisable assets and which is unable to pay its costs.
There is no dispute that the respondent is currently impecunious and unable to satisfy an
adverse costs order against it.'
[17] Subsequently, on 31 July 2019, the high court dismissed Fusion's
application for leave to appeal with costs. Undeterred by this setback, Fusion
applied for leave to appeal to this Court in terms of s 17(2)(b) of the Superior
Courts Act. As already indicated, this application was referred for oral
argument, hence the present application now before us.
Discussion
[18] Since the coming into operation of the Superior Courts Act, there have
been a number of decisions of our courts which dealt with the requirements
that an applicant for leave to appeal in terms of ss 17(1)(a)(i) and 17(1)(a)(ii)
must satisfy in order for leave to be granted. The applicable principles have
over time crystallised and are now well established. Section 17(1) provides,
in material part, that leave to appeal may only be granted 'where the judge or
judges concerned are of the opinion that-
'(a)
(i)
the appeal would have a reasonable prospect of success; or
(ii)
there is some other compelling reason why the appeal should be heard. . . .'
It is manifest from the text of s 17(1)(a) that an applicant seeking leave to
appeal must demonstrate that the envisaged appeal would either have a
reasonable prospect of success, or, alternatively, that 'there is some
compelling reason why an appeal should be heard'. Accordingly, if neither of
these discrete requirements is met, there would be no basis to grant leave. I
shall revert to this aspect later.
[19] As already mentioned, that Fusion has no assets whatsoever and indeed
is impecunious, is uncontentious in these proceedings. And this is precisely
what prompted the municipality to demand security for costs from Fusion by
invoking s 8 of the Close Corporations Act. Section 8 has already been quoted
in paragraph 13 above.
[20] The procedure for security and the powers of the court are regulated by
Uniform rules 47(1) and 47(4), which provide:
'(1)
A party entitled and desiring to demand security for costs from another shall, as
soon as practicable after the commencement of proceedings, deliver a notice setting forth
the grounds upon which such security is claimed, and the amount demanded.
. . .
(4)
The court may, if security be not given within a reasonable time, dismiss any
proceedings instituted or strike out any pleadings filed by the party in default, or make such
other order as to it may seem meet.'
The high court rightly observed that rules 47(1) and 47(4) cater for the
procedure to be adopted whenever security for costs is required and do not
themselves deal with matters of substance.5
[21] Section 8 of the Close Corporations Act, in substance, mirrors s 13 of
the Companies Act 61 of 1973.6 Section 13 did not find its way into the 2008
Companies Act when the 1973 Companies Act was repealed and substituted
5 See, in this regard: D F Scott (EP) (Pty) Ltd v Golden Valley Supermarket 2002 (6) SA 297 (SCA); [2003]
3 All SA 1 (A) para 9.
6 Section 13 of the Companies Act 61 of 1973 provided:
'Where a company or other body corporate is plaintiff or applicant in any legal proceedings, the Court may
at any stage, if it appears by credible testimony that there is reason to believe that the company or body
corporate or, if it is being wound up, the liquidator thereof, will be unable to pay the costs of the defendant
or respondent if successful in his defence, require sufficient security to be given for those costs and may stay
all proceedings till the security is given.'
by the former. Nevertheless, counsel were agreed that the jurisprudence that
had developed over the years in regard to the interpretation of s 13 still offers
useful guidance and insights in ascertaining the object and purpose to which
s 8 of the Close Corporations Act is directed.
[22] In Giddey NO v J C Barnard and Others 2007 (5) SA 525 (CC) the
Constitutional Court noted that '. . . the main purpose of s 13 is to ensure that
companies, who are unlikely to be able to pay costs and therefore not
effectively at risk of an adverse costs order if unsuccessful, do not institute
litigation vexatiously or in circumstances where they have no prospects of
success thus causing their opponents unnecessary and irrecoverable legal
expenses'. 7 In the same decision the Court stated that 'section 13 of the
Companies Act confers a discretion upon courts to order the payment of
security for costs by a plaintiff company if there is a reason to believe that the
company will be unable to pay the costs of its opponent'.8
[23] It is by now well-established that a court considering an application for
security exercises a narrow and unfettered discretion. In the words of Hefer
JA in Shepstone & Wylie and Others v Geyser NO 1998 (3) SA 1036 (SCA)
([1998] 3 All SA 349), the court 'must decide each case upon a consideration
of all relevant features, without adopting a predisposition either in favour of
or against granting security'.9
7 Giddey NO v JC Barnard and Partners 2007 (5) SA 525 (CC) para 7.
8 Paragraph 6.
9 At 1045G-J. See too in this regard: MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd 2007 (6) 620
(SCA) para 16.
[24] Accordingly, there are at least three principles to be derived from the
excerpts from Giddey and Shepstone & Wylie quoted in paragraphs 8 and 9
above. First, a court seized with an application to compel a plaintiff or
applicant to furnish security for costs retains an unfettered discretion. Second,
the court needs to 'balance the potential injustice to a plaintiff if it is prevented
from pursuing a legitimate claim as a result of an order requiring it to pay
security for costs, on the one hand, against the potential injustice to a
defendant who successfully defends the claim, and yet may well have to pay
all its costs in the litigation'.10 Third, the salutary purpose of s 13 is 'to deter
would-be plaintiffs from instituting proceedings vexatiously or in
circumstances where their prospects are poor'.11
[25] In this application, Fusion in effect seeks leave to appeal against the
high court's exercise of its unfettered discretion. It is trite that the power of an
appellate court to interfere with the exercise of such discretion is
circumscribed. The ambit of this limited power was explained by the
Constitutional Court 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.
Where the discretion contemplates that the Court may choose from a range of options, it is
a discretion in the strict sense. The ordinary approach on appeal to the exercise of a
discretion in the strict sense is that the appellate court will not consider whether the decision
reached by the court at first instance was correct, but will only interfere in limited
circumstances; for example, if it is shown that the discretion has not been exercised
judicially or has been exercised based on a wrong appreciation of the facts or wrong
principles of law. Even where the discretion is not a discretion in the strict sense, there may
10 Giddey para 8.
11 Idem para 7.
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.'12
[26] In support of its reasoning in this regard, the Court went on to cite with
approval the decision in Bookworks (Pty) Ltd v Greater Johannesburg
Transitional Metropolitan Council and Another 1999 (4) SA 799 (W). There,
Cloete J, in analysing the nature of a discretion conferred on a court by s 13,13
emphasised four factors. These were:
'(1)
Section 13 is essentially concerned with costs – a matter invariably held to involve
the exercise of a discretion in a narrow sense.
(2)
When s 13 is combined with the provisions of Rule 47, as it must be to give it
practical effect, the court is regulating its own procedure by deciding not only whether a
litigant should be ordered to provide security for costs – a decision which may be made, in
terms of the section, “at any stage” of proceedings (and therefore in medias res) – but also,
where it grants such an order, whether the litigant should be allowed to proceed until such
security has been provided. The regulation by a court of its own procedure is also a matter
usually held to involve a discretion in the narrow sense.
(3)
The 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.
(4) Appeals against the exercise of the discretion conferred by s 13 should be discouraged
in the absence of some demonstrable blunder or unjustifiable conclusion on the part of the
trial court, otherwise the decision on the merits of a matter before the court would be
delayed by an appeal on an application which (to use the words of Innes CJ in [Warner
Reid and Others 1907 TS 306 at 310]) "marks no stage in the progress of the case, but is quite
outside and incidental to it".'14
12 Giddey para 19. See also in this regard: Benson v S A Mutual Life Assurance Society 1986 (1) SA 776 (A)
at 781I-782B and the cases therein cited.
13 Section 13 of the Companies Act 61 of 1973.
14 At 807H-808C.
[27] Most significantly, the Court emphasised that the court of first instance
is best placed to make the requisite assessment, noting that:
'. . . it would not be appropriate for an appellate court to interfere with [the decision of the
court of first instance] as long as it is judicially made, on the basis of the correct facts and
legal principles. If the court takes into account irrelevant considerations, or bases the
exercise of its discretion on wrong legal principles, its judgment may be overturned on
appeal. Beyond that, however, the decision of the court of first instance will be
unassailable.'15
[28] In view of the fact that s 8 of the Close Corporations Act is, for all
intents and purposes, the functional equivalent of the now repealed s 13 of the
Companies Act, there is no rational basis in fact or principle why the
principles discussed above in relation to s 13 should not apply with equal force
to s 8.
[29] I revert now to what lies at the heart of this application. It raises the
question whether, as already mentioned, it can justifiably be said that the high
court did not exercise its discretion judicially. Here, there is no dispute that
the nature of the discretion that the high court enjoyed 'contemplated that it
was open to the high court to choose from a range of options' in arriving at its
decision having regard to all the relevant facts before it. This is commonly
known as a discretion in the strict sense.16 I have already dealt above with the
proper approach that an appellate court is enjoined to adopt to an appeal
against the exercise of a discretion of that kind. In this regard, it bears
emphasis that we are not here called upon to decide as to whether ‘the decision
15 Giddey para 22. See also: Erf One Six Seven Orchards CC v Greater Johannesburg Metropolitan Council:
Johannesburg Administration and Another 1999 (1) SA 104 (SCA) at 109A-B.
16 It is sometimes referred to as a discretion in the narrow sense. See in this regard: Media Workers
Association of South Africa and Others v Press Corporation of South Africa Ltd ('Perskor') 1992 (4) SA 791
(A) at 800G-H.
reached by the court at first instance was correct’. Rather, our task is to
determine whether the high court exercised its discretion judicially or the
exercise was based on a wrong appreciation of the facts or wrong principles
of the law.
[30] Before us, Fusion's principal attack on the decision of the high court
was essentially four-pronged. First, it was contended that the municipality’s
application for security should have been refused because the municipality
failed to demand security for costs 'as soon as practicable after the
commencement of proceedings' as required by rule 47(1). Secondly, it was
submitted in Fusion's heads of argument that having regard to the fact that
s 13 of the Companies Act 1973, was repealed by the 2008 Companies Act
'self-evidently because the Legislature was mindful of the provisions of s 34
of the Constitution, 1996, under which access to courts is entrenched,' Close
Corporations too ought to be treated in the same way as all other corporate
plaintiffs in relation to applications for security for costs. Third, bearing in
mind that Fusion's impecuniosity was brought about by the municipality, it
would be a grave injustice to require Fusion to furnish security for costs. In
elaboration, it was submitted that as Fusion would not be able to provide
security at all, its claim would, in consequence, be dealt a death knell. Lastly,
that Fusion's underlying action is neither abusive nor vexatious, and to the
extent that the prospects of success are relevant, such prospects are not
unfavourable.
[31] I deal with these contentions in turn. Let it be said at the outset that, in
my view, none of them is sustainable. First, whilst it may be desirable that a
party entitled to demand security for costs must do so as soon as is reasonably
practicable, failure to do so is not necessarily fatal. Whether a delay should
constitute a bar to the demand entails a fact-based enquiry in the light of the
facts of a given case. Thus, a court faced with an application to compel will,
in exercising its discretion, undoubtedly have regard to this factor and weigh
it up together with other relevant factors. Therefore, delay in itself will rarely
be an overriding and decisive consideration. It is as well to remember that in
this case the municipality derived its right to demand security from s 8 of the
Close Corporations Act. Notably, s 8 provides in explicit terms that the court
seized with an application for security 'may at any time during the
proceedings' require security to be given. The words 'at any time during the
proceedings' could not be clearer. This must then mean that when the
municipality demanded security at discovery stage, it did so within the ambit
of s 8.
[32] Insofar as s 3417 of the Constitution is concerned, it is true that the right
of access to court 'is a bulwark against vigilantism, and the chaos and anarchy
which it causes'.18 However, it must not be lost from sight that in this case the
constitutional validity of s 8 was not challenged, be it frontally or otherwise
as required by the jurisprudence of our courts.19 Nevertheless, cognisant of
the fact that s 8 implicates the constitutional right of access to court, it must
be interpreted in the manner decreed by s 39(2)20 of the Constitution.
17 Section 34 of the Constitution which is headed: 'Access to courts' provides:
'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.'
18 See in this regard: Lesapo v North West Agricultural Bank and Another 2000 (1) SA 409 (CC); 1999 (12)
BCLR 1420 para 22.
19 See, for example, Member of the Executive Council for Development Planning and Local Government,
Gauteng v Democratic Party and Others1998 (4) SA 1157 (CC); 1998 (7) BCLR 855 (CC) paras 60-61. This
decision was most recently affirmed in Public Protector v Commissioner for the South African Revenue
Service and Others [2020] ZACC 28.
20 Section 39(2) provides in material part:
[33] In Boost Sports Africa (Pty) Ltd v South African Breweries (Pty) Ltd
[2015] ZASCA 93; 2015 (5) SA 38 (SCA)21 a similar argument was advanced
and rejected by this Court. In rejecting the argument, this Court stated that the
argument '[ignored] the fact that a court was vested with a discretion in terms
of s 13 and that in exercising its discretion a court performs a balancing act.
On the one hand it must weigh the injustice to the plaintiff if prevented from
pursuing a proper claim by an order for security, as against that it must weigh
the injustice to the defendant if no security is ordered and the plaintiff's claim
fails and the former finds himself or herself unable to recover costs'.22 Fusion's
contention that s 8 should in effect be treated as pro non scripto23 simply
because its former counterpart in s 13 of the Companies Act was repealed by
the 2008 Companies Act offends two fundamental principles of our law. First,
it pays no regard to an enduring principle of statutory interpretation that the
legislature is presumed to be aware of the existing law when it passes new
legislation. Thus, if the legislature was minded to bring about parity amongst
corporate plaintiffs, whether companies or close corporations, as contended
by Fusion, no doubt the legislature would have also repealed s 8. Yet, it
elected not to do so. That s 8 was not excised from the Close Corporations Act
but, instead, allowed to remain part of the Close Corporations Act to this very
day must therefore be taken to have been a deliberate decision by the
legislature. Secondly, and even most importantly, to uphold Fusion's
submission in this regard would, in effect, be encroaching on the exclusive
'When interpreting any legislation, . . ., every court, tribunal or forum must promote the spirit, purport and
objects of the Bill of Rights.'
21 Paragraph 13.
22 Idem para 13.
23 Loosely translated 'pro non scripto' means treating something 'as though it is not written' and therefore
does not exist or form part of the Close Corporations Act.
domain of the legislature against which the Constitutional Court has sternly
cautioned.24
[34] Furthermore, it must be stated that Fusion has failed to demonstrate that
the order directing it to furnish security dealt a death blow to its action. In any
event, that an order for security might or will put an end to the litigation is not
in itself an overriding consideration or even a sufficient reason to refuse an
application for security.25 Fusion's demonstrable lack of candour to enlighten
the high court as to why those who had hitherto been funding its litigation
were unwilling to continue doing so cannot redound to its benefit. Fusion
contented itself with a bald assertion that its previous funders were no longer
willing to undertake risks associated with the pursuit of its claim.
[35] There is, to my mind, much to be said for the counter argument of the
municipality that Fusion 'seeks to have a free pass to litigate luxuriously
without the risks of indemnifying the municipality' in the event that the latter
is ultimately successful and awarded costs. On this score, the pointed remarks
of Brand JA in MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd 2007 (6)
SA 620 (SCA) with reference to s 13 of the Companies Act that: 'One of the
very mischiefs s 13 is intended to curb, is that those who stand to benefit from
successful litigation by a plaintiff company will be prepared to finance the
company's own litigation, but will shield behind its corporate identity when it
is ordered to pay the successful defendant's costs. A plaintiff company that
24 See for example: Mwelase and Others v Director-General for the Department of Rural Development and
Land Reform and Another [2019] ZACC 30; 2019 (6) SA 597 (CC); 2019 (11) BCLR 1358 (CC) para 50-
53; Doctors for Life International v Speaker of the National Assembly and Others [2006 (6) SA 416 (CC);
2006 (12) BCLR 1399 (CC) paras 37-38; 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) paras 44 and 72.
25 Shepstone & Wylie paragraph 23 above at 1046 G-I.
seeks to rely on the probability that a security order will exclude it from the
court, must therefore adduce evidence that it will be unable to furnish security,
not only from its own resources, but also from outside sources such as
shareholders or creditors' 26 resonate with what obtains in this case.
Accordingly, failure to give due weight to this critical consideration is bound
to lead to a warped decision that unduly favours Fusion without regard for the
interests of the municipality.
[36] Insofar as the prospects of success of Fusion's action are concerned, it
must be said that in assessing the merits of the plaintiff's case, a court is not
required nor expected to undertake an in-depth analysis as a trial court would
at the end of a trial. It is sufficient that a court has a fair sense of the strength
and weakness of the antagonists' respective cases. For as Streicher JA
explained in Zietsman v Electronic Media Network Ltd and Others [2008]
ZASCA 4; 2008 (4) SA 1 (SCA) it is not expected that a court 'should in an
application for security attempt to resolve the dispute between the parties.
Such a requirement would frustrate the purpose for which security is sought.
The extent to which it is practicable to make an assessment of a party's
prospects of success would depend on the nature of the dispute in each case'.27
[37] After evaluating Fusion's pleaded case as against the municipality's plea
as well as the common cause facts, the high court concluded that Fusion's
allegations in its particulars of claim did 'not set out with sufficient
particularity, the respects in which the [municipality] is alleged to have
frustrated the fulfilment of the conditions precedent'. Consequently the high
26 Paragraph 20.
27 Paragraph 21.
court held that 'the prospects of success do not favour [Fusion]' on the
pleadings as they then stood.
[38] Accordingly, Fusion has not shown that the high court failed to exercise
its discretion judicially. That being so, the conclusion to which the high court
came is immune from interference by this Court. This Court, sitting as an
appellate court, is not at liberty to decide the matter according to its own views
of the merits of the case.28 This is because, as Cloete J aptly observed in
Bookworks (Pty) Ltd above, a discretion of the kind under consideration in
this case, ‘requires in essence the exercise of a value judgment and there may
well be a legitimate difference of opinion as to the appropriate conclusion’.
Thus, as the requirements of s 17(1)(a) have not been satisfied, leave to appeal
can not be granted.
[39] In the result the following order is made:
The application for leave to appeal is dismissed with costs, including the costs
of two counsel.
________________________
X M PETSE
DEPUTY PRESIDENT
SUPREME COURT OF APPEAL
28 Compare: HLX Networking Technologies v System Publishers (Pty) Ltd and Another 1997 (1) SA 391
(A) at 401G-402C.
Appearances
For Applicant:
M Osborne
Instructed by:
Smith & De Jongh Attorneys, Bellville
McIntyre van der Post, Bloemfontein
For Respondent:
I Jamie SC (with him P S Van Zyl and
A Nacerodien)
Instructed by:
Webber Wentzel, Cape Town
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: 29 January 2021
Status: Immediate
Fusion Properties 233 CC v Stellenbosch Municipality (932/2019) [2021]
ZASCA 10 (29 January 2021)
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
The Supreme Court of Appeal (the SCA) today dismissed an application for
leave to appeal against a judgment of the Western Cape Division of the High
Court,Cape Town (high court). The application was brought by Fusion
Properties 233 CC (Fusion) following the dismissal of its earlier application
for leave to appeal by the high court. Fusion's application was,on
29 October 2019, referred for oral argument in terms of s 17(2)(d) of the
Superior Courts Act 10 of 2013.
Fusion sought to appeal against an order of the high court granted on
15 July 2019 in terms of which it was directed to furnish security for costs in
the sum of R2 626 431. 06. In addition, the high court's order stayed Fusion's
pending action until Fusion complied with the order to furnish security.
The order of the high court was granted against the following backdrop.
During November 2015 Fusion instituted an action against the Stellenbosch
Municipality (municipality) for damages arising out of an alleged breach of
contract for some R32 million. It was common cause between the parties that
Fusion was an empty shell with no assets whatsoever. Because of Fusion's
impecuniosity, the municipality demanded security for costs as it believed that
there was no prospect of it recovering its litigation costs if it were successful
in resisting Fusion's claim.
Fusion disputed that it was liable to provide security on the principal grounds
that the municipality had not demanded security 'as soon as possible after the
commencement of the action'. Further, Fusion asserted that there was no
reason for the high court to give effect to s 8 of the Close Corporation Act 69
of 1984 which accorded a right to a defendant or respondent in legal
proceedings instituted by a close corporation to demand security if it appears
that there is reason to believe that the corporation will be unable to pay the
costs of the defendant or respondent if successful in their defense. Finally,
Fusion contended that requiring it to furnish security would result in it not
being able to pursue its claim against the municipality thereby effectively
denying it its right of access to a court in breach of s 34 of the Constitution.
The high court rejected all of the grounds upon which Fusion relied in
resisting the demand for security.
In pursuit of its application for leave before the SCA, Fusion persisted with
the grounds advanced in the high court. The SCA too rejected Fusion's
contentions. It held that the high court, in ordering Fusion to furnish security,
exercised a discretion in the narrow sense. This meant that the SCA's powers
to interfere with the exercise of such discretion on appeal were circumscribed.
And that for as long as the high court exercised its discretion judicially it was
unassailable.
The SCA also rejected the argument based on s 34 of the Constitution. It held
that it was not open to it to ignore the provisions of s 8 simply because s 13 of
the Companies Act 61 of 1973 which was the functional equivalent of s 8 was
not carried over to the current Companies Act 71 of 2008 when the 1973
Companies Act was repealed.
In the result Fusion's application for leave to appeal was dismissed with costs,
including the costs of two counsel.
|
3838
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 1040/2020
In the matter between:
PEERMONT GLOBAL (North West) (PTY) LIMITED
APPELLANT
and
CHAIRPERSON OF THE NORTH WEST
GAMBLING REVIEW TRIBUNAL
FIRST RESPONDENT
NORTH WEST GAMBLING REVIEW
TRIBUNAL
SECOND RESPONDENT
CHAIRPERSON OF THE NORTH WEST
GAMBLING BOARD
THIRD RESPONDENT
NORTH WEST GAMBLING BOARD
FOURTH RESPONDENT
JONOFORCE (PTY) LTD
FIFTH RESPONDENT
PIONEER BINGO (NORTH WEST)
(PTY) LTD
SIXTH RESPONDENT
LATIANO 560 (PTY) LTD
SEVENTH RESPONDENT
ELIOCUBE (PTY) LTD
EIGHTH RESPONDENT
METRO GAMING AND
ENTERTAINMENT (PTY) LTD
NINTH RESPONDENT
and
Case no: 1055/2020
In the matter between:
GALAXY BINGO MORULENG (PTY) LTD
(previously called Metro Gaming and
Entertainment (Pty) Ltd)
FIRST APPELLANT
GALAXY BINGO NORTH
WEST (RF) (PTY) LTD
SECOND APPELLANT
and
NORTH WEST GAMBLING BOARD
FIRST RESPONDENT
CHAIRPERSON OF THE NORTH WEST
GAMBLING BOARD SECOND RESPONDENT
CHAIRPERSON OF THE NORTH WEST
GAMBLING REVIEW TRIBUNAL
THIRD RESPONDENT
DENNIS MAKHARI NO
FOURTH RESPONDENT
AMOS VILAKAZI NO
FIFTH RESPONDENT
JONOFORCE (PTY) LTD
SIXTH RESPONDENT
MEC FOR FINANCE, ECONOMY
& ENTERPRISE DEVELOPMENT,
NORTH WEST
SEVENTH RESPONDENT
and
Case no: 1056/2020
In the matter between:
GALAXY BINGO MORULENG (PTY) LTD
(previously called Metro Gaming and
Entertainment (Pty) Ltd)
APPELLANT
and
NORTH WEST GAMBLING BOARD
FIRST RESPONDENT
CHAIRPERSON OF THE NORTH WEST
GAMBLING BOARD SECOND RESPONDENT
CHAIRPERSON OF THE NORTH WEST
GAMBLING REVIEW TRIBUNAL THIRD RESPONDENT
DENNIS MAKHARI NO
FOURTH RESPONDENT
AMOS VILAKAZI NO
FIFTH RESPONDENT
LATIANO 560 (PTY) LTD T/A GOLDRUSH
BINGO NORTH WEST-MAFIKENG
SIXTH RESPONDENT
MEC FOR FINANCE, ECONOMY
& ENTERPRISE DEVELOPMENT,
NORTH WEST
SEVENTH RESPONDENT
Neutral citation: Peermont Global (North West) (Pty) Ltd v Chairperson of the
North West Gambling Review Tribunal and Others and Two Other Cases (Case
numbers 1040/2020); 1055/2020 and 1056/2020 [2022] ZASCA 80 (2 June 2022)
Coram:
MAYA P, MAKGOKA, PLASKET and GORVEN JJA and MUSI
AJA
Heard:
16 and 17 FEBRUARY 2022
Delivered: 2 June 2022.
Summaries:
Peermont v Chairperson of the North West Gambling Review Tribunal and
Others
Administrative law – review – legality – the lawfulness and fairness of the licence
application process in terms of the North West Gambling Act 2 of 2001 (the North
West Act) – whether the licence application process was procedurally unfair,
given that (a) the applicable Request for Applications was not provided to the
appellant, and (b) allegedly incomplete copies of the bingo licence applications
were made available for public inspection – whether electronic bingo terminals
(EBTs) to be provided for play offered the game of ‘bingo’ as defined in the North
West Act – whether the North West Gambling Board failed to have regard to the
adverse impact that the licence of bingo operations was likely to have on the
appellant’s nearby casinos.
Galaxy Bingo Moruleng (Pty) Ltd and Another v North West Gambling Board
and Others (in re Jonoforce (Pty) Limited)
Administrative law – review – legality – whether the decision to grant the
application of the sixth respondent, Jonoforce (Pty) Ltd, for a bingo licence at
Klerksdorp was unlawful – whether fact that a portion of the sixth respondent’s
application for a bingo licence was marked confidential and not publicly
disclosed, violated ss 32(3)(a) and 24(5)(d) of the North West Act and rendered
the award pursuant thereto procedurally unfair – whether the impugned decisions
were inter alia irrational, unreasonable and based on a failure to consider relevant
considerations.
Galaxy Bingo Moruleng (Pty) Ltd v North West Gambling Board and Others
(in re Latiano 560 (Pty) Limited)
Administrative law – review – legality – whether the decision of the North West
Gambling Board, to grant the application of Latiano 560 (Pty) Ltd, for a bingo
licence in Mahikeng was unlawful – whether the decision was made on the basis
of an arithmetical error – whether the reasons given by the Board did not reflect
the decisions actually made, alternatively, show that the Board considered
irrelevant considerations and failed to consider relevant ones.
ORDER
On appeal from: North West Division of the High Court, Mahikeng (Djaje J
sitting as court of first instance):
In the Peermont appeal
The appeal is dismissed with costs, including the costs of two counsel.
In the Galaxy appeal (in re Jonoforce)
The appeal is dismissed with costs, including the costs of two counsel.
In the Galaxy appeal (in re Latiano)
The appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Makgoka JA (Maya P, Gorven, Plasket JJA and Musi AJA concurring):
Introduction
[1] This judgment concerns three appeals, namely: Peermont Global (North
West) Pty Ltd v Chairperson of the North West Gambling Review Tribunal and
Others (the Peermont appeal) under case number 1040/2020; Galaxy Bingo
Moruleng (Pty) Ltd and Another v North West Gambling Board and Others (in
re: Jonoforce (Pty) Limited) (the Galaxy appeal in re Jonoforce) under case
number 1055/2020; and Galaxy Bingo Moruleng (Pty) Ltd v North West
Gambling Board and Others (in re Latiano 560 (Pty) Limited) (the Galaxy appeal
in re Latiano) under case number 1056/2020.
[2] The three appeals concern the awarding of bingo licences by the North
West Gambling Board to Jonoforce (Pty) Limited and Latiano 560 (Pty) Limited.
Peermont Global (NW) (Pty) Limited (as an objector) and Galaxy Bingo
Moruleng (Pty) Limited (as a co-competitor), were unsuccessful in their review
applications in the North West Division of the High Court, Mahikeng (the high
court) to set aside the awarding of those licences. The review applications were
heard together in the high court and a composite judgment, dismissing the three
applications, was delivered.
[3] On appeal, this Court similarly heard the three appeals together. In the three
judgments, I consider the Peermont appeal, while Musi AJA considers both the
Galaxy appeal (in re Jonoforce) and the Galaxy appeal (in re Latiano). The issues
in the three appeals overlap, and for that reason, the three judgments should be
read together and collectively as a trilogy.
[4] I turn to the Peermont appeal. The appellant, Peermont Global (NW) (Pty)
Limited (Peermont) appeals against an order of the North West Division of the
High Court, Mafikeng (the high court), which dismissed its application to review
and set aside the decisions of the fourth respondent, the North West Gambling
Board (the Board), taken on 10 June 2016 to award bingo licenses to, among
others, the fifth respondent, Jonoforce (Pty) Ltd (Jonoforce) in Klerksdorp and to
the seventh respondent, Latiano 560 (Pty) Limited (Latiano), in Mmabatho,
respectively. Both areas are in the North West Province (the North West).
[5] Peermont was not an applicant for any of the awarded bingo licences. It
objected to the awarding of those licences on the basis of the likely negative
impact bingo operations would have on its casinos in the areas where the two
licences had been awarded for bingo operations. Prior to its review application in
the high court, Peermont had sought, unsuccessfully, to set aside the Board’s
decisions in an internal review before the North West Gambling Review Tribunal.
The legislative and regulatory framework
[6] It is necessary to first set out the legislative and regulatory framework
within which the Board considered the bingo licence applications and made the
impugned decisions. Gambling is an area of concurrent provincial and national
competence. Nationally, it is regulated by the National Gambling Act 7 of 2004
(the National Act), while the relevant provincial legislation is the North West
Gambling Act 2 of 2001 (the North West Act). In its preamble, the North West
Act notes, among other things, that gambling should stimulate the creation of
employment opportunities and provide a source of public revenue for the
province.
[7] Section 30 of the National Act provides that each provincial licensing
authority has exclusive jurisdiction to grant provincial licences in respect of
gambling. Pursuant thereto, s 3 of the North West Act provides for the
establishment of the Board as a juristic person. Section 4 of the North West Act
set outs the powers and functions of the Board, which, among others, include: (a)
overseeing gambling activities in the province; (b) exercising such powers and
performing such functions and duties as may be assigned to the Board in terms of
the Act or any other law; and (c) inviting applications for licences and considering
such applications. The Board also has the power to make and enforce rules for
the conduct of its proceedings and hearings, and to consult with any person or
employ consultants regarding any matter relevant to the performance of its
functions on such terms and conditions as it may determine.
[8] The composition of the Board is provided for in s 5, in terms of which the
Board shall consist of nine members from diverse fields. Four of them are
appointed by the relevant Member of the Executive Council (the MEC) for their
respective expertise in law, accounting and auditing, welfare or socio-economic
development and the tourism industry. Three of the members are designated by
each of the MECs for Economic Development and Tourism, Safety and Liaison,
Finance and Provincial Treasury. Two members shall be appointed on the basis
of having either proven business acumen, a knowledge of the gambling industry,
or who are otherwise suitable for appointment as members of the Board. In
addition, the Chief Executive Officer (the CEO) of the Board shall ex officio be a
member of the Board but shall not be entitled to vote.
[9] Any person wishing to apply for a gambling licence may only do so if the
Board has published a notice in a Provincial Gazette inviting applications for a
specific type of gambling licence. The Board would invite applications for a
specific gambling licence only after it had determined the need for a specific
gambling licence in the province. In this matter the Board resolved that there was
a need to issue bingo licences in the province.
[10] The procedure for applying for licences is set out in ss 24-28. In terms of
s 24(2), ‘[n]o person shall make an application for a licence … unless the
application is lodged pursuant to and in accordance with a notice inviting
applications which has been published by the Board in the Provincial Gazette’.
In terms of s 29, upon receipt of an application for a licence, the Board is required
to publish notice of the application in the Provincial Gazette as well as a local
newspaper, containing the material particulars of the application and inviting
‘interested persons’ to lodge written representations and to indicate whether they
wish to make oral representations in response to the application.
[11] In terms of s 24(3) all applications for licences shall be considered and
disposed of according to the procedures determined by the Board. And in terms
of s 24(4) the Board may conduct or cause to be conducted any hearing,
investigation or enquiry in relation to any application submitted under the Act.
Section 28 provides that any application for the grant of a licence shall be lodged
in the manner and form determined by the Board and be accompanied by the
documents and information determined by the Board and by payment of the
prescribed application fee. In the event of non-compliance with the above, the
application shall be invalid. After considering an application, the Board may grant
or refuse or postpone the consideration of an application, subject to any terms or
conditions it may deem fit. Section 29 requires the Board to give public notice of
licence applications that it has received, and to invite interested persons to make
representations on those applications. Section 32 requires the Board to make such
applications, as well as any representations and responses that it receives, open to
public inspection or to provide them on request. Sections 35 and 36 compel the
Board to hold public hearings in respect of every licence application it has
received.
[12] Section 90 provides for an internal remedy against decisions of the Board,
to the Tribunal, which consists of an advocate or retired judge; one member
designated by the National Gambling Board from the staff of the said Board; and
one member appointed on the basis of proven business acumen or other suitability
to serve on the Tribunal. The Tribunal has the power to: (a) confirm or set aside
the decision or proceedings of the Board; (b) remit the matter to the Board with
an order to take a decision in accordance with the correct procedure; or (c) take
such a decision as in its opinion ought to have been given by the Board and direct
the Board to do everything necessary to give effect to that decision.
Request for Applications
[13] These relevant provisions of the Act must be read with a document titled
‘Request for Applications’ (the RFA). This is a comprehensive document
prepared and authorised by the Board pursuant to s 28(1). It sets out, among other
things: the Board’s purpose in relation to bingo licences; the objectives of
licensing bingo operations; the principles applicable to bingo operations; the
processes for licence applications’; and the criteria applicable to the evaluation of
such applications. The initial RFA was dated March 2015. It was later replaced
by the amended RFA in October 2015. The amended RFA states its purpose as
being ‘to furnish interested parties and all prospective applicants for Bingo
Operator licences with a clear indication of the regulatory requirements, the
underlying principles applicable to the licensing of Bingo Operators, the process
and criteria applicable to the licensing of such applicants’.
[14] The amended RFA states that the Board wished to achieve certain
objectives such as: economic growth and development in the province; the
upliftment and economic empowerment of historically disadvantaged
communities; generation of additional revenue for the province; the promotion of
economic activities in the province; and the provision of entertainment, sport and
recreational facilities to members of the public.
[15] The amended RFA further states that bingo operations were seen as
supplementary to casinos in achieving the following objectives: (a) the
diversification and expansion of the existing gambling activities in the province;
(b) the provision of additional alternative forms of leisure and entertainment to
all areas in the province, in particular to the townships and rural communities; (c)
the opening of the gambling sector and the creation of opportunities for direct
participation of local previously disadvantaged individuals and small, medium
and micro-sized entrepreneurs; (d) the provision of job opportunities in the
previously disadvantaged areas; (e) the eradication of illegal gambling in the
province; and (f) the promotion of Broad-Based Black Economic Empowerment
(B-BBEE) to increase the participation of women and designated groups in the
gambling sector.
[16] As to the designated areas identified for bingo operations, the RFA states
that the Board had identified the need for bingo licences in those areas after
considering the ‘potential socio-economic impact on the community of the
proposed licensee’. The Board therefore preferred ‘… that Bingo Operations be
established in such areas where inadequate entertainment facilities presently exist
and would require strong motivation of any application where the intended Bingo
Operation will be situated within the same town or city with a casino.’
[17] With regard to the principles applicable to bingo operations, the RFA
mentions, among others, that an applicant must have at least 60% shareholding
by local previously disadvantaged individuals, of which 35% must be held by
black women, with full exercisable voting rights and economic interests. Also,
that the Board will consider the promotion of B-BBEE in the bingo market as
vital to any application.
Factual background
[18] On 2 October 2015, pursuant to s 24(2) of the North West Act, the Board
published a notice in which it invited ‘interested parties’ to apply for the grant of
bingo licences in the North West. The notice mentioned that the RFA had been
amended, and that a copy of the amended RFA would be available to ‘interested
parties’ at the offices of the Board between 2-9 October 2015 upon payment of a
non-refundable fee of R3 000. It is common cause that Peermont did not procure
the amended RFA.
[19] On 26 November 2015, the Board published a notice detailing a number of
applications it had received, which included those of Jonoforce and Latiano. The
applications lay open for public viewing for one month, from 1 December to 31
December 2015. In terms of s 29 of the North West Act, the Board invited written
objections (if any) to be submitted within the viewing period. Pursuant to that
notice, Peermont called for, and obtained, public-inspection copies of various
applications from the Board. On 24 December 2015, Peermont submitted written
objections to, among others, the Jonoforce and Latiano applications. On 2
February 2016, the Board informed Peermont that its objections were based on
the old version of the RFA dated March 2015 and not the amended RFA.
Peermont requested to be furnished with the amended RFA, which request the
Board declined on the basis that its availability had been time bound, as provided
for in the October notice.
[20] During May 2016, the Board held public hearings in respect of all of the
applications, which Peermont attended and made oral and written submissions
against the applications. On 10 June 2016, the Board made the decisions to award
bingo licences to Jonoforce and Latiano, among others. The Board announced its
decisions publicly by notice in the Provincial Gazette on 6 July 2016.
The internal review application and in the high court
[21] On 6 July 2016, Peermont launched an internal review application in terms
of s 90 of the North West Act before the Tribunal, seeking to review and set aside
the impugned decisions. Peermont raised five grounds of review before the
Tribunal, of which only three are relevant for present purposes. First, that the
licence application process was procedurally unfair. Second, that it was unlawful
for the Board to award bingo licences for use in conjunction with conventional
electronic bingo terminals (EBTs), as EBTs did not offer the game of ‘bingo’ as
defined in the North West Act. Third, that the Board was obliged, but failed, to
have regard to the adverse impact that the licensing of bingo operations was likely
to have on Peermont’s nearby casinos.
[22] In its written decision dated 29 August 2017, the Tribunal considered each
of these review grounds, and found no merit in any of them. It accordingly
dismissed Peermont’s internal review application with costs. Peermont applied to
the high court to overturn the Tribunal’s decision. The high court, too, dismissed
that application. In broad outline, the high court agreed with the reasoning of the
Tribunal, save to correct an error by the Tribunal of granting a costs order against
Peermont. The Tribunal does not have a power to make such an order in its
proceedings. In this Court, Peermont persisted in the three review grounds
referred to above. I consider those grounds, in turn.
Procedural unfairness of the licensing process
[23] Peermont relied on two subsets for this proposition. The first was that the
amended RFA, on which the licence applications and the impugned decisions
were based, was not disclosed to it. The second was that the public-inspection
versions of the applications unlawfully excluded significant portions of the
applications that were material to Peermont’s ability to object to the applications.
Each of these, so was the submission, inhibited Peermont’s ability to make
meaningful and informed representations on the applications, and consequently
infringed its right to procedural fairness.
Non-disclosure of the amended RFA
[24] With regard to the amended RFA, as mentioned already, on 2 December
2015 the Board published a notice in the provincial gazette which clearly
informed ‘interested parties’ that the RFA had been amended, and that a copy
thereof, was available upon request and against payment of a set fee. A time
period for such requests was set between 2 to 9 October 2015.
[25] It was submitted on Peermont’s behalf that the pre-conditions to access the
amended RFA applied to prospective licence applicants, and could not lawfully
be invoked against interested parties seeking to exercise their rights to object to
the applications after they had been lodged. For that reason, it was submitted,
Peermont had no reason to procure a copy of the RFA in October 2015 because
it did not intend to apply for a bingo licence. It also did not know at that point
which bingo-licence applications would be lodged and their intended locations.
It learned of the applications and the close proximity of the intended bingo
operations to its casinos only on 26 November 2015, when the Board published
the November notice. As with any other objector, it had reason to request the
amended RFA only at that time, rendering it impossible for Peermont to comply
with the Board’s deadline of 9 October 2015.
[26] I disagree. By reason of it being a major player in the gambling industry in
the North West, Peermont was, even by October 2015, very much an interested
party in the awarding of gambling licences in the province. The phrase ‘interested
parties’ is sufficiently wide to include both potential applicants and objectors.
Therefore, Peermont’s attempt to confine ‘interested parties’ to ‘applicants’ is
simply not sustainable. In any event, on a plain reading of the amended RFA,
nothing precluded Peermont from obtaining it. Thus, Peermont was entitled to
obtain a copy of the amended RFA, but elected not to do so. It has only itself to
blame for not having had sight of the amended RFA before it made its objections.
[27] It was also suggested on behalf of Peermont that the Board’s refusal to
furnish it with the amended RFA outside the set period was unlawful. I do not
agree. In terms of section 28 of the North West Act, the Board is empowered to
determine the manner and form of the applications. In this regard, the Board
determined that the amended RFA would be furnished upon request within the
set time period and upon payment of the requisite fee. It was perfectly entitled to
do so. It was thus in accordance with its own processes that the Board declined to
furnish the amended RFA to Peermont outside the allotted purchase window
period.
[28] Peermont asserted that that the Board’s decision was unlawful, but did not
challenge it. Until competently set aside, that decision has force.1 Peermont
contends that it was not obliged to challenge the decision, as such a challenge
would have been premature and incompetent ‘because the Board’s refusal to
provide the amended RFA was merely one exercise of the Board’s functions in a
larger administrative process’. It also cited a number of practical difficulties that
such an application would have occasioned, including unnecessary litigation and
possible delay in the determination of the bingo applications.
[29] Regarding the prematurity argument, it is important to note that the Board
is an organ of State. Its refusal to furnish Peermont with the amended RFA outside
the window period, constituted ‘an administrative action’, defined in s 1 of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) as a ‘decision’ taken
by an ‘organ of state’, ‘exercising a public power or performing a public function
in terms of any legislation’ ‘which adversely affects the rights of any person and
which has a direct, external effect…’2
[30] The Board’s October 2015 notice, which contained the pre-conditions for
obtaining the RFA, is sourced from the North West Act. When it made a decision
refusing to furnish Peermont with the amended RFA, it exercised a public power
in terms of that legislation. On Peermont’s own version, the Board’s decision
adversely affected its rights, and undoubtedly had a direct and external effect.
Thus, the Board’s decision was clearly final and susceptible to review under
PAJA. Therefore, it would not have been premature to challenge the Board’s
decision.
1 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA)
para 26; Member of the Executive Council for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd
t/a Eye and Lazer Institute [2014] ZACC 6; 2014 (3) SA 481 (CC); 2014 (5) BCLR 547 (CC) para 106.
2 Section 1 of the Promotion of Administrative Justice Act 3 of 2000.
[31] There was another string to Peermont’s prematurity bow: it was contended
that courts would not permit a review of a process that is underway if any potential
prejudice could be cured in the process itself. For this proposition, Peermont
relied on Rhino Oil and Gas Exploration SA (Pty) Ltd v Normandien Farms (Pty)
Ltd and Another [2019] ZASCA 88; 2019 (6) SA 400 (SCA) paras 30-34
(Normandien). That case concerned an attempt to review an administrative
decision which had not been taken, but was anticipated. The issue was whether
the failure by the South African Agency for Promotion of Petroleum Exportation
and Exploitation SOC Limited, a State-owned company, to comply with certain
statutory provisions, which regulate public participation, in an application for an
exploration right, was reviewable. This Court held that while failures to comply
with statutory duties are reviewable under the common law, the applicant for
review had to show that the failure gave rise to prejudice. Furthermore, it held
that the application to review was not ripe and the applicant ought to have waited
until after the exploration right was granted to launch its challenge. Thus, the
application could not succeed.
[32] In contrast, here Peermont’s express intention was to participate in, and
influence, the process of awarding bingo licences by meaningful and informed
representations on the licence applications. It alleged that its ability to do so was
prejudiced by the Board’s refusal to furnish it with a copy of the amended RFA.
That decision was final, and the Board made it very clear to Peermont that it was
not amenable to furnish the amended RFA outside the set period. There is nothing
in the Board’s correspondence with Peermont to suggest that the Board was
inclined to reverse its decision. And nothing in the bid adjudicating process could
alter it. Normandien therefore goes against Peermont’s proposition, and is thus
inapposite on this score.
[33] Peermont also relied on a passage in one of the related interim interdict
judgments, where Hendricks J said the following about this issue:
‘There is no doubt that two different RFA forms existed, namely the RFA form and the
amended RFA form, which was not provided to Peermont. This is fatal. It can never be correct
to contend that it was not necessary to make available to an objector the amended RFA form
on which the decision to award the licence was based, and then argue that the objector in any
event had sight of the previous RFA form and could base its objections thereon. This is unfair
towards the objector and an infringement of his/her right to object’.
[34] In my view, Peermont’s reliance on this passage is misplaced. First, the
learned judge was only making prima facie findings in the context of an interim
interdict, based on the facts then before the court. Those findings were certainly
not binding on the high court when it determined the main review application,
and less so, on this Court. But in any event, it seems Hendricks J was, with
respect, wrong to the extent he suggested that the Board was, without more,
obliged to provide Peermont with a copy of the amended RFA. It was Peermont’s
duty to request the copy and to comply with the conditions set by the Board,
namely to request the copy within the stipulated time and to pay the required fee.
[35] In the final analysis, the over-arching consideration about the Board’s
refusal to furnish Peermont with the amended RFA, is one of prejudice. As a
matter of fact, Peermont made substantive objections and fully participated in the
public hearings. It has not explained, with reference to any portions of the
amended RFA, how it was not able to comment meaningfully because of lack of
access to it. Peermont’s assertion of prejudice must also be tested by considering
its stance before and after it received the amended RFA. It first had sight of the
amended RFA when the Board produced the record of its decision in the internal
review process. It is telling that having received the amended RFA, Peermont’s
objections remained as they had been, when it did not have the amended RFA.
Peermont did not seek to amend or supplement any of its grounds of objection
after obtaining the amended RFA. This, in my view, diminishes Peermont’s
contention that by not having a copy of the amended RFA, it was hindered from
making meaningful, informed representations on the licence applications. It also
suggests strongly that Peermont did not suffer any material prejudice because of
that fact.
The incomplete public-inspection versions of the applications
[36] Peermont complained that only very limited portions of the licence
applications were made available to the public. It alleged that in respect of the
Jonoforce application, the public-inspection version comprised only annexures to
the applications; no portions of the actual licence applications were included. In
respect of Latiano’s application, Peermont contended that substantial portions
were omitted or redacted. The public-inspection version left out not only its
executive summary and its ‘strong motivation’ for being permitted to operate a
bingo hall in the same town as a casino, but also the amount and details of the
capital investment in the project, the number of bingo seats applied for; the split
between EBTs and traditional paper bingo, and the name of the gaming-machine
supplier that would provide EBTs to the premises.
[37] This is how the Board went about this aspect. It relied upon paragraph 4.6
of the amended RFA, which sets out the minimum information required for
purposes of lodging an application for a licence. It divided the information in two
parts. Part 1 relates to information about:
‘i) Consolidated and costed Business plan in response to this RFA
ii) Project models and plans (interior and exterior)
iii) Land and zoning rights
iv) Property ownership and/or lease agreements
v) Shareholding and Corporate structure
vi) Shareholders agreements
vii) Business Entity Disclosure Form
viii) Copies of prescribed notices
ix) Confirmation of payment of prescribed fees
x) Bingo Operation Location Plan
xi) Floor plan as per Rule 13.05
xii) Financial statements (latest audited)
xiii) Copies of liquor and other relevant Licenses (proof of application)
xiv) Original Tax Clearance Certificate
xv) Valid business registration (CIPRO)
xvi) Third party agreements (if applicable)
b) Personal History Disclosures.’
[38] In part 2, the Board determined which information from the above list,
needed to be available for public inspection. It excluded from public inspection,
information relating to (a) consolidated and costed business plan in response to
the RFA; (b) project models and plans; (c) shareholders agreements; (d)
confirmation of payment of prescribed fees; (e) financial statements; (f) valid
business registration (CIPRO); and (g) personal history disclosures. The Board
determined that that information was confidential, and did not need to form part
of the documents which must otherwise be available for public inspection.
[39] The result was that part 2 of paragraph 4.6 of the amended RFA provided
for public view inspection in respect of:
(a) Business entity disclosure form;
(b) Copies of prescribed notices;
(c) Bingo Operation Location Plan;
(d) Floor plan as per Rule 13.05;
(e) Copies of liquor and other relevant licenses;
(f) Land and zoning rights;
(g) Property ownership and/or lease agreements;
(h) Shareholding and corporate structure;
(i) Original Tax Clearance Certificate;
(j) Third party agreements (if applicable).
These are the documents that lay for public inspection at the offices of the Board
during the period 1 to 31 December 2015. It is common cause that Peermont did
not avail itself of the opportunity to view the documents.
[40] In its answer to Peermont’s complaint, the Board relied upon s 32 of the
North West Act, which requires licence applications to be made available for
inspection and consideration by interested parties. Section 32(1) requires the
Board to hold any licence application submitted to it open for public inspection
by interested persons. Section 32(2) obliges the Board to furnish a copy of such
application to an interested party, on request and payment of the requisite fee.
Section 32(3) creates limited and specific exceptions to these general disclosure
requirements. It empowers the Board to determine, either on its own accord or on
application by an applicant, that any information or document pertaining to the
financial capacity, names of prospective employees and business plans of an
applicant shall not be left open to the public inspection.
[41] The high court dealt summarily with Peermont’s argument on three bases.
First, it concluded that s 32 gives the Board the discretion to decide what
information in the application should be availed to the public, and it was not for
a party like Peermont to determine which information should not have been
omitted. Second, the high court stated that Peermont has not been able to state
why it failed to inspect the information that was availed, and lastly, that Peermont
had failed to state the prejudice it had suffered by not having the said information.
[42] I understand Peermont’s complaint slightly differently from the high court.
Peermont objected to the manner in which the Board had decided in paragraph
4.6 of the amended RFA, to exclude certain information from public inspection.
The gravamen of its complaint was that the substance had been stripped out of
the public-inspection versions of the applications. This, it contended, meant that
a mandatory and material condition of the North West Act was not complied with.
According to Peermont, it would have served little or no purpose for it to seek to
view what it considered woefully inadequate information.
[43] To my mind, the main obstacle for Peermont is the wide and discretionary
nature of the Board’s powers set out in the amended RFA, where the Board had
wide discretionary powers as to how it would assess applications for bingo
licences. The amended RFA also contains clear, policy-laden ideals and
objectives. Based on those powers, the Board determined, in terms of paragraph
4.6 of the amended RFA, which documents would be excluded from public
inspection.
[44] As mentioned already, s 32(3) only permits the Board to exclude specified
information that relates to the financial capacity of an applicant, the names of
prospective employees or the applicant’s business plan. Paragraph 4.6 of the
amended RFA seems to go much further and excluded information beyond that
mentioned envisaged in s 32(3). In its judgment, the high court seemed to endorse
the Board’s view that s 32(3) gave it a broad discretion to withhold information
from public inspection. To that extent, it was clearly wrong. But, as mentioned
already, the main obstacle in Peermont’s path is that, absent an attack on the RFA
on the basis of being ultra vires s 32, it stands and must be applied, even were it
may (notionally) ultra vires.3
Unlawfulness of awarding the licenses
[45] Traditionally, Bingo is a game of chance played with cards. Each player
matches numbers, pictures or symbols printed on the cards, with the numbers
3 See Merafong City Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) SA 211 (CC);
2017 (2) BCLR 182 (CC) para 41.
drawn at random by the game host. The winner is the one who first matches the
numbers. Over the years, the game has evolved and it is now played in whole or
in part by electronic means. According to Peermont, the defining characteristic of
bingo is the human element in matching the numbers, pictures or symbols on their
card or device to that called out by the operator or announcer, in order to win
against other human players.
[46] Peermont contended that the machines that the respondents intend using in
their bingo halls, which it calls conventional EBTs, lack this characteristic
because they entail automatic self-matching, and thus remove the human element
from the game. Thus, they are illegal to operate within North West because the
game they offer falls outside the definition of ‘bingo’ in the North West Act.
According to Peermont, there was no dispute that the respondents intended using
conventional EBTs, which ‘have the look-and- feel as slot machines’, whereas,
in terms of both the National Gambling Act and the North West Act, only casino
licensees can offer gambling slot machines. As mentioned already, Peermont
operates two casinos in the North West – one in Klerksdorp and another in
Mmabatho.
[47] According to Peermont, the Board was obliged, when granting the licences,
to satisfy itself that the licences would be used for lawful purposes. It could only
do so by considering the nature of the EBTs to be operated and whether or not
they could lawfully be operated under a bingo licence. Therefore, by granting the
bingo licences without considering the nature of the EBTs and the respondents’
intended use, the Board failed to ensure that those EBTs met the definition in the
North West Act. It thus failed to apply its mind to relevant considerations and
committed a material error of law and acted unlawfully.
[48] I first consider whether EBTs offer the game of bingo as defined in the
North West Act, after which I consider whether the Board was legally obliged to
consider the type of EBTs when it awarded the licences.
Do EBTs offer the game of bingo as defined in the North West Act?
[49] A considerable plank of Peermont’s argument in this regard was premised
on the decision in Akani Egoli (Pty) Ltd v Chairperson of the Gauteng Gambling
Board (Case number 17891/06, 29 January 2008) and the expert opinion of
Professor Barr used in that case. It is therefore necessary to consider that decision
more closely. The question in Akani was whether the Chief Executive Officer of
the Gauteng Gambling Board was entitled to approve a particular electronic
gaming machine, Real Touch Bingo (RTB), as a device that could be used in
bingo outlets in Gauteng. The casino owners who opposed the approval of those
machines, argued that RTB was nothing more than an ordinary slot machine,
which bore no resemblance to the game of bingo, and was therefore not lawful
for it to be approved for use in bingo halls. The court had to determine, on the
basis of the Gauteng Gambling Act 4 of 1995 (the Gauteng Gambling Act),
whether the game played on RTB was really the game of bingo. As the Gauteng
Gambling Act did not have a definition of the term ‘bingo’, the court held that the
Gauteng legislature had intended to conform to the definition of that term in the
National Act.
[50] After considering the definition of ‘bingo’ in the National Act, the court
analysed the manner in which the game was played on RTB, and had regard to
the technical report of Professor Barr. It found that the player took no part in the
actual game played on the RTB. He or she did no matching, either by electronic
means or otherwise. In that regard, the court found that the RTB did not provide
for an interactive game with player involvement in accordance with the definition
of bingo in the National Act.
[51] On these considerations, the court concluded that the game played on the
RTB was not bingo, and that the RTBs completely departed from traditional
bingo and were intended deliberately to mimic casino slots. Therefore, the court
reasoned, by approving those machines for use in licensed bingo premises, the
Gauteng Gambling Board sanctioned unlawful conduct. It accordingly reviewed
and set aside the decision of the Gauteng Gambling Board to approve the RTB
for use in licensed bingo premises. Peermont relied heavily on these findings, and
on the conclusions in related interdict judgments in the high court, in which the
same approach was adopted in interpreting the definition of ‘bingo’ in the North
West Act.
[52] In my view, Akani is distinguishable, and reliance on it in the interim
interdict judgments was misconceived. The definition of ‘bingo’ in the National
Act differs significantly from the definition in the North West Act. The National
Act provides that:
‘“bingo” means a game, including a game played in whole or in part by electronic means —
(a) that is played for consideration, using cards or other devices —
(i) that are divided into spaces each of which bears a different number, picture or
symbol; and
(ii) with numbers, pictures or symbols arranged randomly such that each card or similar
device contains a unique set of numbers, pictures or symbols;
(b) in which an operator or announcer calls or displays a series of numbers, pictures or symbols
in random order and the players match each such number, picture or symbol on the card or
device as it is called or displayed; and
(c) in which the player who is first to match all the spaces on the card or device, or who matches
a specified set of numbers, pictures or symbols on the card or device, wins a prize, or any other
substantially similar game declared to be bingo in terms of section 6(4).’
[53] Section 1 of the North West Act defines bingo as:
‘the gambling game known as bingo and any similar gambling game which is played with cards
(including electronic screens) on which appear a set of numbers or symbols and in the course
of which each player attempts to match for money, property, cheques or anything of value, all
or a specified set of numbers or symbols on his or her cards to calls made by the operator and
includes any similar gambling game operated in whole or in part by electronic means.’
[54] The difference between the National Act, and the North West Act, is that
the latter has two parts. The second part is constituted by the words, ‘and includes
any similar gambling game operated in whole or in part by electronic means’ at
the end of the definition. Peermont’s interpretation ignores this part, and caters
for one type of the game contemplated in the first part of the definition. The
requirement of ‘similarity’ envisages a second type of game to the one mentioned
in the first part of the definition. This second type of game does not have to have
all the attributes of the first type – only that it must be ‘similar’ to it.
[55] The second type of game is clearly broader than the traditional bingo game
played electronically on electric screens, as this is already catered for in the first
type of game. Furthermore, by providing that the game can be operated ‘in whole
or in part by electronic means’ it is clearly contemplated that ‘bingo’ can be a
wholly electronic game, with the player not doing anything other than to initiate
the game. The effect of the second part of the definition is therefore that the
legislature has broadened the definition ‘bingo’ to permit its playing by partially
or wholly electronic means. Thus, the game offered by EBTs that do not involve
player matching, fall within the second type of game. In light of the legislature’s
clear intention to broaden the definition of bingo, Peermont’s insistence that
‘bingo’ should be interpreted restrictively in terms of how the game of bingo has
traditionally been defined, is untenable.
[56] However, even what Peermont defines as conventional EBTs (without
player matching) fall within the definition of ‘bingo’ in the North West Act,
which is broad and was clearly intended to acknowledge technological
developments in the playing of the game of bingo. This conclusion is fortified by
the definitions of ‘gambling device’ and ‘gambling machine’ in the North West
Act. Gambling device means ‘any equipment or thing used remotely or directly
in connection with gambling or and including an electro-mechanical or electronic
device, component or machine or gambling machine’, while gambling machine
means:
‘any mechanical, electrical, video, electronic, electro-mechanical or other device, contrivance
or machine which upon insertion of a coin, bank note, electronic credit card, debit card, smart
card, token or similar object, or upon payment of any consideration is available to be played or
operated and the playing or operation of which, whether by reason of the skill of the player or
operator or the application of the element of chance or both, may deliver or entitle the person
playing or operating the machine to receive cash, property, cheques, merchandise, credit,
electronic credits, debits, tokens, tickets or anything of value but does not include an
amusement machine.’
EBTs which fit into these definitions enable operation by electronic means in
whole or in part in playing the game of bingo.
[57] In addition, Peermont’s classification of certain equipment as
‘conventional EBTs’ is overbroad. Whether or not a particular EBT has been
programmed in such a way that it functions in a manner that complies with the
definition of bingo in the North West Act in every instance, will depend on an
evaluation of the particular machine. This was the case in Akani, where there was
evidence of how the RTB worked, something absent in the present case. It seems
that these electronic terminals come in many configurations, shapes and sizes.
One model of EBT could look different to another, run different hardware and
software, and could offer a different type of electronic bingo, with a different look
and feel. All these are technical and factual issues which are not capable of pre-
judging without examination, as Peermont would have it.
[58] It follows that Akani offers no assistance on the question as to whether the
EBTs likely to be used in conjunction with the licences offer bingo as defined in
the North West Act, and are, therefore, lawful to use in the province. Equally, the
pronouncements in the two related interdict judgments do not advance
Peermont’s case. They were made in the context of interim interdicts and the
courts there could not make definitive findings on this issue. To the extent they
purported to do so, their pronouncements should be regarded as obiter. In
National Treasury and Others v Opposition to Urban Tolling Alliance (OUTA)
and Others [2012] ZACC 18; 2012 (6) SA 223 (CC) para 31, it was held that
where an interim interdict was sought pending the institution and finalisation of
a review application the court hearing the application for an interim ‘need not
determine the cogency of the review grounds.’ It would not be appropriate to
usurp the pending function of the review court and thereby anticipate its function.
Was it unlawful for the Board to award licences without considering the types of
EBTs?
[59] It is common cause that when awarding the bingo licences, the Board did
not consider the nature of the applicable EBTs that the respondents intended to
use on the proposed licensed premises under the authority of the licences. The
Board stated that that process is distinct from the licensing one, and would be
undertaken at a later stage when the respondents submit the type of EBTs to be
used in conjunction with their licences. For this, the Board relied upon regulation
145(1) of the North West Gambling Regulations of 2002 (the General
Regulations),4 which reads:
‘Equipment to be of approved type and registered
(1) A licensee shall not keep or expose for play any equipment which may be used in the
operation of a bingo game other than equipment which –
(a) has been supplied by a licensed manufacturer or supplier;
4 North West Gambling Regulations, GN 353 of 2002, PG 5823, 5 November 2002.
(b) is identical in all material respects to equipment approved by the Board for distribution by
the manufacturer or supplier; and
(c) in the case of such equipment as the Board may determine, has on application in the manner
and form determined by the Board, been separately registered by the Board.’
[60] Peermont joined issue with the Board’s reliance upon regulation 145, and
made the following submissions. The regulation does not require the Board to
assess whether bingo is played on the relevant machines. Its purpose is not to
require the Board to assess whether the equipment in question complies with the
Act’s definition of ‘bingo’. The regulation simply requires these machines to be
supplied by licensed manufacturers or suppliers and to be identical to machines
approved by the Board for distribution by the manufacturer or supplier. Such
approval of manufacturer or supplier machines relates to the machines (the
equipment) and not to the licensed activity for which the machines will be
employed. Thus, the processes provided for under regulation 145 do not assess
whether the machines in question offer the game of bingo. Instead, they are
concerned with equipment standards.
[61] I do not agree with these submissions. The regulation expressly enjoins the
Board to ensure that the bingo licensees use only the equipment which: (a) has
been supplied by a licensed manufacturer or supplier; or (b) is similar to the
equipment approved by the Board; or (c) has been separately registered by the
Board. It is difficult to see how the Board can discharge this responsibility without
enquiring, and determining, whether the equipment fits into the definition of
‘bingo’ in the North West Act. Viewed in this light, the regulation does require
the Board to assess whether bingo is played on the relevant equipment. It is also
significant that regulation 145 uses the word ‘licensee’, instead of ‘applicant’.
This fortifies the conclusion that the equipment-approval process is envisaged
only after a licence has been granted, and not at the time the grant of a licence is
considered.
[62] This is also consistent with the amended RFA, which makes no reference
to the type of EBT or bingo to be offered when licences are considered. This can
only mean that it was envisaged that the approval of equipment was to be
considered at a later stage. There is no suggestion that the Board intends to discard
the process of equipment approval, and to simply allow the licensees to use
unapproved equipment. Regulation 145 must be read together with s 65 of the
North West Act, which enjoins the Board to ensure that all gaming machines must
be separately approved and registered by it.
[63] Accordingly, when an applicant applies for a bingo licence, he or she is not
required in the application to specify the type of EBT he or she intends to use, but
to merely specify the number of EBTs or table games. The type of equipment to
be used, and whether it offers ‘bingo’ as defined in the North West Act, is not
relevant at this stage. It only becomes relevant when a licensee seeks the Board’s
approval for a specific equipment he or she intends to use, which application must
be made under regulation 145(1). In that application, the licensee must motivate,
and satisfy the Board, that the relevant equipment offers ‘bingo’ as defined in the
North West Act. The Board may or may not be satisfied with the motivation. If
not, the application would be rejected and the licensee will not be permitted to
use the equipment in question for bingo.
[64] Viewed in this light, Peermont’s challenge is premature as regards
approvals yet to be made by the Board for the use of specific EBTs that any of
the respondents might wish to use. It would have to wait for the Board’s decision
to approve specific equipment for use. It is not open for Peermont to anticipate
the Board’s decision in this regard with a pre-emptive strike. What is more,
Peermont has not suffered any prejudice as a result of the Board’s adoption of the
two-stage process. On this score, Peermont is in the same position as the applicant
in Normandien, about which this Court appositely said (at para 34):
‘Normandien has approached the court before any decision, according to it, has even been
taken, and before it had suffered any prejudice on account of the actions complained of. It
launched a pre-emptive strike against Rhino. It may perhaps have been best advised to
“husband its powder” in anticipation of the battle that may (or may not) lie ahead.’
[65] In any event, it is common cause that most of the EBTs that Peermont
objects to, have been approved by the Board for use in the North West since at
least 2013. The Board approved the registration of two entities, International
Game Technology-Africa (Pty) Limited (IGT) and SG Gaming Africa (Pty)
Limited (SG) as manufacturers of the specific EBTs and approved their
equipment for distribution to licensed bingo operators in the North West. To the
extent Peermont is aggrieved by this decision, it seems common cause that
Peermont has been aware of this fact, but did nothing to challenge the Board’s
decision to approve and authorise those EBTs. It cannot do so in these
proceedings, where the two entities are not even cited.
Failure to consider impact on Peermont’s casinos
[66] This complaint is predicated on Peermont’s assertion that EBTs have the
same look-and-feel as slot machines and provide a materially similar gaming
experience, and therefore, would adversely affect its revenues and undermine its
continued viability. In the amended RFA the licence applicants were required to
provide strong motivation for establishing bingo operations in the same town as
an existing casino. As mentioned already, Peermont operates casinos in
Klerksdorp and Mmabatho, where Jonoforce and Latiano, respectively, had been
granted bingo licences.
[67] To motivate its objection, Peermont relied, among others, on a report
prepared by a firm of economists, RBB Economics (RBB). Peermont had
commissioned that report to analyse the likely impact of a bingo operation with
the relocation of the Galaxy bingo licence to Klerksdorp. The report concluded
that there was a significant risk that a substantial portion of the revenues of
Peermont’s casino would be diverted to the bingo establishment, and there was a
very significant risk that a material portion of its customers would no longer
gamble at that casino to ‘any appreciable extent’.
[68] In order to assist the Board in the evaluation of the licence applications, the
Board commissioned Bohica Business Consulting CC (Bohica) to conduct
probity reviews of the various applications and advise it accordingly. During May
2016, Bohica prepared a comprehensive report in respect of all the applications.
The report dealt with various objections raised and the responses thereto, and
provided recommendations to the Board. With specific regard to Peermont’s
objection based on the RBB report, Bohica found that the report provided no
evidence of likely consumer trends and customer intentions. Bohica also found
that Peermont’s objection was anti-competitive. The Bohica report noted that the
Board had given careful consideration to the socio-economic environment in
determining how many Bingo licences were to be issued in different districts,
including the impact that additional forms of gaming may have on communities.
[69] It is clear that the Board and Peermont approached this issue from different
vantage points. Whereas Peermont viewed it from a purely narrow commercial
interest, the Board considered broad objectives set out in the amended RFA, such
as the need to empower historically disadvantaged businesses, diversification, the
socio-economic environment and the impact that additional forms of gaming may
have on communities. Thus, from Peermont’s point of view, it seems that nothing
short of the rejection of the licences would have satisfied its objection. This being
a review application, the question is whether the Board performed the function
with which it was entrusted, and not whether its decision was correct. From a
perusal of the minutes of its meeting of 10 June 2016, it seems that the Board
considered Peermont’s objection against the Bohica report, and other factors
referred to earlier, and found it to be without merit.
[70] It is trite that when a functionary is entrusted with a discretion, the weight
to be attached to particular factors, or how far a particular factor affects the
eventual determination of the issue, is a matter for the functionary to decide. If he
or she acts in good faith (and reasonably and rationally) a court of law cannot
interfere.5 The fact that the Board did not adopt Peermont’s objections does not
mean it did not consider the impact of the bingo operations on Peermont’s
casinos. It did, and balanced this against other relevant factors, which it was
enjoined to consider. There is, therefore, similarly no merit in this ground of
review.
Conclusion
[71] In all the circumstances, there is no merit in any of the three review grounds
advanced by Peermont. They were correctly dismissed by both the Tribunal and
the high court. The appeal must therefore fail and costs must follow the result.
[72] In the result, the appeal is dismissed with costs, including the costs of two
counsel.
____________________
T MAKGOKA
JUDGE OF APPEAL
5 MEC for Environmental Affairs and Development Planning v Clairison’s CC [2013] ZASCA 82; [2013] 3 All
SA 491 (SCA); 2013 (6) SA 235 (SCA) paras 18 and 23.
Musi AJA (Maya P, Makgoka, Gorven, Plasket JJA concurring)
[73] As explained above, the high court dismissed with costs, the review
applications of the appellants, Galaxy Bingo Moruleng (Pty) Ltd (previously
called Metro Gaming & Entertainment (Pty) Ltd) (Metro) and Galaxy North West
(RF) (Pty) Ltd (collectively the Galaxy entities), to review and set aside the
decisions of the North West Gambling Board (the Board), taken on 10 June 2016.
The Board refused their respective applications for a bingo licence but granted it
to the sixth respondent, (Jonoforce (Pty) Ltd (Jonoforce). They also
unsuccessfully sought to review and set aside the decision of the North West
Review Tribunal (the Tribunal), which had also dismissed their applications to
review and set aside the Board’s decisions.
[74] On 2 October 2015, the Board published a notice in the Provincial Gazette
inviting interested parties to apply for bingo licences in the North West Province.6
Two licences were to be awarded in the Kenneth Kaunda District Municipality.
6 The invitation was published in terms of s 24 read with s 28 and s 52 of the North West Gambling Act 2 of 2001
(the Act). Section 24 reads:
‘(1) The licences under this Act shall be –
(a) Casino licences
(b) Bingo licences
. . .
(2) No person shall make an application for a licence, and no such application shall be entertained, unless the
application is lodged pursuant to and in accordance with a notice inviting applications which has been published
by the Board in the Provincial Gazette, and which notice may state: -
(a) the type and number of licences to be issued and any conditions that may apply,
(b) the area to which the licence will relate,
(c) any requirements that may be necessary or desirable, and
(d) the evaluation criteria to be applied.
(3) All applications for licences shall be considered and disposed of according to the procedures determined by
the Board.
(4) The Board may conduct or cause to be conducted any hearing, investigation or enquiry in relation to any
application submitted under this Act.
(5) The Board shall not approve an application for any licence unless it is satisfied that –
(a) the funding of the business for which a licence is required is provided by a reputable person, body or institution,
(b) the premises in question are or will on completion be suitable for the purpose for which they will be used
under the licence,
(c) the development is not undesirable within the specific geographic environment, with reference to social,
religious, educational, cultural, economical, environmental and land-use aspects,
[75] The appellants showed interest and obtained a copy of the Request for
Application (the RFA) from the Board. Upon receipt thereof, they noticed
discrepancies and omissions in the RFA. They pointed these out to the Board as
a result of which it issued several notices to all applicants, addressing some of the
discrepancies and omissions.
[76] On 20 November 2015, the Galaxy entities submitted separate applications
for the two bingo licences. They were both unsuccessful. The licences were
awarded to Pioneer Bingo (NW) (Pty) Limited (Pioneer) and Jonoforce (Pty)
Limited. Aggrieved by these decisions, the Galaxy entities launched internal
review proceedings with the Tribunal.7 Their applications were dismissed.
(d) the applicant has made full and frank disclosure of all matters prescribed or determined by the Board and the
relevant information in respect of the application was made available for public scrutiny in terms of the provisions
of this Act,
(e) the grant of the licence is in the public interest,
(f) the applicant qualifies in terms of section 25 and is not disqualified in terms of section 26.
(6) After consideration of an application the Board may grant or refuse or postpone the consideration of an
application subject to any terms and conditions it may see fit.’
Section 28 provides:
‘(1) Any application for the grant or renewal of a licence shall –
(a) be lodged in the manner and form determined by the Board,
(b) be accompanied by the documents and information determined by the Board and by the prescribed application
fee or annual fee as the case may be, which shall not be refundable, and
(c) be invalid in the event of non-compliance with the foregoing in any respect.
(2) The applicant shall be liable for and pay the Board any reasonable costs incurred in connection with the
publication and transmission of any notice contemplated in section 29(1).’
Section 52 reads:
‘(1) No person shall maintain premises where the game of bingo is played, without a casino licence or a bingo
licence, whether or not any such game is linked as contemplated in subsection (2).
(2) No person shall, by any electronic or similar method of linking, link licensed premises to any other premises
so as to provide for the game of bingo to be played at such other premises without a bingo licence in respect of
such premises.’
7 The tribunal has power to review a decision or proceedings of the Board. Section 90 of the Act reads as follows:
‘(1) Any person aggrieved by the decision or proceedings of the Board may by way of review proceedings to be
prescribed, submit him or herself before a review tribunal in the manner prescribed by the Board in concurrence
with the Responsible Member.
(2) The aggrieved person shall as soon as is reasonably possible and not later than thirty days after the Board has
given its decision, inform the Board in writing of his or her intention to institute review proceedings as
contemplated in subsection (1).
(3) The review tribunal referred to in subsection (1) shall be consist of three members appointed by the
Responsible Member as follows:
(a) an advocate or retired judge who shall for the purposes of the review proceedings in terms of this section be
appointed as the presiding officer,
[77] Dissatisfied with the decision of the Tribunal, the Galaxy entities took the
decisions of the Board and the Tribunal on review in the high court, which also
dismissed their applications with costs. That order is the subject of this appeal,
with the leave of this Court. It must be mentioned that in the high court, the
Galaxy entities abandoned the challenge to the decision in respect of Pioneer, and
only sought to review the awarding of the licence to Jonoforce.
[78] The powers and functions of the Board are set out in s 4 of the North West
Act. Section 4(1) reads as follows:
‘(1) The powers and functions of the Board shall be –
(a) to oversee gambling activities in the Province;
(b) to advise the Responsible Member or furnish a report or recommendation to the Responsible
Member on any matter referred to the Board by the Responsible Member for consideration and
arising from the application of this Act relating to the control of gambling in the Province;
(c) to exercise such powers and perform such functions and duties as may be assigned to the
Board in terms of this Act or any other law; and in particular to –
(i) invite applications for licences in terms of this Act;
(ii) consider and dispose of applications for licences in such manner and at such time
and place as it may from time to time determine;
(iii) grant, renew, amend, refuse, suspend or revoke licences under this Act;
(iv) impose conditions in respect of any licence at any time;
. . .
(b) one member designated by the National Gambling Board from the staff of the said Board, and
(c) one member appointed on the basis of having either proven business acumen, or who is otherwise suitable for
appointment as a member of the tribunal.
(4) The procedure to be followed in connection with the hearing of the review lodged in terms of this section,
shall be as prescribed.
(5) The aggrieved person may in person or through a legal representative appear before the review tribunal.
(6) The tribunal hearing the review under this section may:
(a) confirm or set aside the decision or proceedings of the Board, or
(b) remit the matter to the Board with an order to take a decision in accordance with the correct procedure, or
(d) such a decision as in its opinion ought to have been given by the Board and direct the Board to do everything
necessary to give effect to that decision.
(7) Members of the tribunal who are not in the full-time employment of the State, shall be paid such remuneration
and allowances as the Responsible Member may from time to time determine with the concurrence of the Member
of the Executive Council responsible for Finance.’
(xxviii) consult with any person or employ consultants regarding any matter relevant to
the performance of its functions on such terms and conditions as the Board may
determine.’
[79] The Board issued a Request for Applications (the RFA) in accordance with
the prescripts of the Act. It is not disputed that the Board did so legally. The RFA
has not been challenged by the appellants. The North West Act, the regulations
published pursuant thereto, and the RFA therefore constitute the framework or
system within which applications for bingo licences had to be submitted,
evaluated and awarded.8
[80] In the amended RFA the board set out the objectives of licensing
operations, the principles applicable to bingo operations, the criteria for
evaluation of bingo licence applications, and the minimum requirements for
purposes of lodging an application for a bingo operator licence. All the parties
acted pursuant to the prescripts of the RFA.
[81] The review was launched in terms of s 6 of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA) which, inter alia, provides as
follows:
‘(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;
8 Allpay Consolidated Investment Holdings (Pty) Ltd Others v Chief Executive Officer of the South African Social
Security Agency [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC) para 38.
(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;
(iv) because of the unauthorised or unwarranted dictates of another person or body;
(v) in bad faith; or
(vi) arbitrarily or capriciously;
(f) the action itself –
(i) contravenes a law or is not authorised by the empowering provision; or
(ii) is not rationally connected to –
(aa) the purpose for which it was taken;
(bb) the purpose of the empowering provision;
(cc) the information before the administrator; or
(dd) the reasons given for it by the administrator;
(g) the action concerned consists of a failure to take a decision;
(h) the exercise of the power or the performance of the function authorised by the empowering
provision, in pursuance of which the administrative action was purportedly taken, is so
unreasonable that no reasonable person could have so exercised the power or performed the
function; or
(i) the action is otherwise unconstitutional or unlawful.’
[82] The Galaxy entities raised four grounds of review. First, they contended
that the Board withheld important parts of Jonoforce’s application from public
inspection, in a procedurally unfair manner in contravention of s 32(3)(a) and
24(5)(d) of the North West Act. Second, they alleged that their applications were
in almost every relevant metric, objectively superior, or similar to Jonoforce’s
application and that the scoring which resulted in Jonoforce receiving higher
points than them, was irrational and unreasonable, alternatively arbitrary and
capricious. They also pointed out that the Board miscalculated Metro’s score,
which means that the Board’s decision was influenced by a mistake of fact. Third,
they asserted that the Board’s reasons do not accord with the transcript and
minutes of the Board’s meeting and therefore, appear contrived. Fourth, they
alleged that the Board was biased against them. I now consider the grounds of
review.
Jonoforce’s public inspection documents
[83] The appellants stated that Jonoforce’s public inspection version contained
only annexures to its application and that it did not contain the substance of the
application or an executive summary. The appellants asserted that the public
inspection version rendered the Jonoforce application insufficient and that the
Board should not have considered it because it was unlawful and irregular to do
so. They argued that the nature of the public inspection version of Jonoforce’s
application rendered the Board’s decision reviewable because:
(a) it was contrary to s 32(3)(a) of the North West Act and paragraph 6.3 of the
RFA;
(b) it was contrary to paragraph 5.2.5(b) of the RFA; and
(c) it rendered the Board’s decision procedurally unfair, as they were not given
reasonable opportunity to make informed and meaningful representations on the
application.
[84] Section 32(3)(a) of the North West Act states that:
‘(3) The Board may determine that –
(a) any document or information relating to the financial capacity of any person participating
in an application, to the names of prospective employees or to the business plans of an
applicant, shall not be open to public inspection, provided such information can be separated
from the remainder of the application and is marked confidential.’
[85] Paragraph 6.3 of the RFA reads as follows:
‘Confidentiality
In terms of the provisions of section 32(3) of the Act, an applicant may in the application
concerned, identify any document or information included in the application, which in the
opinion of the applicant is confidential or should for any reason not be disclosed to the public
and show cause why the Board may determine why such document or information should not
be open to public inspection.
Applicants are therefore, required to submit a list containing all information deemed
confidential, as well as the reasons why such information should not be disclosed, in terms of
clause 3.3 herein.
In terms of the Act, the Board may, further, determine that any document or information
relating to the financial capacity of any person participating in an application, to the names of
prospective employees or the business plans of an applicant, shall not be open to public
inspection, provided such document or information can be separated from the remainder of the
application and is marked confidential.’
[86] In terms of s 32(3) of the North West Act, an applicant may identify any
document or information included in the application, which in the applicant’s
opinion, is confidential or should, for any reason, not be disclosed to the public
and show cause why the Board may determine why such document or information
should not be open to public inspection. All applicants were required to submit a
list containing all information deemed confidential, as well as the reasons why
such information should not be disclosed in terms of s 32(3). In terms of s 32(3)
of the Act, the Board may, further, determine that any document or information
relating to the financial capacity of any person participating in the application,
the names of prospective employees or the business plans of an applicant, shall
not be open to public inspection, provided such document or information can be
separated from the remainder of the application and is marked confidential.
[87] The appellants contended that the Board sealed more than the categories of
information than was permitted by the Act. Additionally, so went the argument,
what was sealed could not be separated from what remained because what
remained gave almost no useful information as to the nature of Jonoforce’s
application.
[88] The Board contended that it decided which portions of the applications
ought to be made available for public inspection. It asserted that s 28(1) gives it
the power to decide the manner and form in which an application for a licence
should be made. It pointed out that it made such determination in paragraph 4.6
of the RFA. Paragraph 4.6 divides the required information into two parts. Part
one deals with the detailed application and part two with the portion that will be
made available for public inspection. The Board further contended that the
appellants were given the opportunity to object to the information made available
for public inspection but they did not do so.
[89] Jonoforce contended that its public inspection copy contained all the
information required in paragraph 4.6 of the RFA. However, Jonoforce admitted
that it did not include its executive summary in its public inspection version, and
that on this score, it did not comply with paragraph 5.2.5(b) of the RFA.
[90] The Tribunal was persuaded that the Galaxy entities failed to establish that
Jonoforce’s application failed to meet the criteria set out in the RFA read together
with the applicable provisions of the North West Act. Although the Galaxy
entities pressed this ground of review in the high court, that court neither
discussed nor analysed it.
[91] Section 24(5)(d) of the North West Act provides that the Board shall not
approve an application for any licence unless the applicant has made full and
frank disclosure of all matters prescribed or determined by the Board and the
relevant information of the application was made available for public scrutiny in
terms of the provisions of the North West Act. In terms of s 32(1) any application,
representations, responses and further information lodged shall be open for public
inspection by interested persons during the normal office hours of the Board.
[92] Paragraph 5.2.5(b) of the RFA required the content of the public viewing
documents to be the same as in paragraph 5.2.2 of the RFA. Paragraph 5.2.2 reads
as follows:
‘5.2.2 Executive Summary
The Executive Summary in the proposal should provide a synopsis of the key aspects and
benefits of the applicant’s proposed business operation.
The Key aspects of the proposed project should be clearly described, taking into account
amongst others the evaluation criteria, including the following information where applicable:
(a)
details of the project team;
(b)
related managerial experience;
(c)
summary of business plan;
(d)
financial and funding model or strategy, including a summary of the sourcing, level and
nature of financing and the ability to meet financial obligations;
(e)
details of any contract entered into between the applicant and an agency/site, if any;
(f)
a summary of the estimated financial returns to the applicant from the operation;
(g)
a summary of the key socio-economic benefits of the project to citizens of the North
West Province;
(h)
a summary of the estimated revenue to the provincial government in respect of
gambling taxes.’
[93] Paragraph 4.6 of the RFA sets out the minimum information required for
purposes of lodging an application for a bingo operator licence. It is common
cause that Jonoforce complied with paragraph 4.6 and submitted all the
information required in terms thereof.
[94] It is clear from s 24(5) that the Board must be satisfied that the requirements
stated therein were met before it can approve any licence. The Board set out the
minimum requirements for purposes of lodging an application for a bingo
operator licence in the RFA. The Board was satisfied that Jonoforce complied
with the prescripts of the RFA. The Board did not regard the failure to include the
executive summary in the public inspection version as material. It was satisfied
that the relevant information in respect of the application was made available for
public scrutiny.
[95] The Galaxy entities admit that they did not object to Jonoforce’s
application during the public hearings. They left the public hearing session after
making their presentation but before Jonoforce had done so. They state that they
did not see the need to robustly challenge the Jonoforce application prior to the
decision to grant the licence to Jonoforce, as, according to them, Jonoforce’s
public inspection version was hopelessly non-compliant and they expected the
Board to reject it outright. They state that had a proper public inspection copy
been made available they would have been apprised of what Jonoforce’s
application actually contained and would have made submissions with regard to
its deficiencies.
[96] I am of the view that the Galaxy entities had sufficient and reasonable
opportunity to make representations and challenge Jonoforce’s application. They
deliberately decided not to. A party should not be allowed to eschew a process
that is geared at achieving transparency, accountability and equity only to demand
its benefits after an unfavourable decision is taken. The Galaxy entities made an
election and they must be held to it. In Equity Aviation Services (Pty) Ltd v
Commission for Conciliation, Mediation and Arbitration and Others,9 the
principle was stated thus:
9 Equity Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others [2008]
ZACC 16; 2009 (1) SA 390 (CC); [2008] 12 BLLR 1129 (CC); (2008) 29 ILJ 2507 (CC); 2009 (2) BCLR 111
(CC).
‘The principle of the right of election is a fundamental one in our law . . . When exercising an
election, the law does not allow a party to blow hot and cold. A right of election, once exercised,
is irrevocable particularly when the volte face is prejudicial or is unfair to another.’10
[97] The Galaxy entities did not contend that they were prejudiced by the
exclusion of the executive summary from Jonoforce’s public inspection version.
Their volte face will be unfair towards Jonoforce, for they had enough opportunity
to raise their objections at the public hearing.
[98] In any event, the Board’s failure to textually and legalistically comply with
s 32(2) is not fatal if one has regard to the purpose of the section. The test as
formulated in African Christian Democratic Party v Electoral Commission11 is
whether what the Board did constituted compliance with s 32(2) viewed in the
light of its purpose. The purpose of the section is to ensure fairness and
transparency in the allocation of Bingo licences by giving interested parties an
opportunity to object to an application, whilst protecting the applicant against
disclosure of confidential information. Any person, including the Galaxy entities,
could request further information about Jonoforce’s application before or during
the public hearings. None of them availed themselves of the opportunity to do so.
In my view the purpose of the section was achieved.
[99] The Galaxy entities contended that Jonoforce was not candid in its
application because it stated that its directors had ‘no criminal history or prior
convictions’, whereas two of its directors had previous convictions. They asserted
that the Board could not have been satisfied that Jonoforce made full and frank
disclosure. I am of the view that Galaxy entities are clutching at straws with this
assertion. That fact was disclosed in Jonoforce’s application in the company
10 Fn 9 above para 54.
11 African Christian Democratic Party v The Electoral Commission and Others [2006] ZACC 1; 2006 (3) SA 305
(CC); 2006 (5) BCLR 579 (CC) at para 25.
declaration. The Board was therefore aware of this fact, and clearly did not
consider it a hindrance when it made its decision to award Jonoforce the licence.
[100] I am of the view that the Board complied with the Act and the RFA. It
adopted a fair procedure and complied with all the terms and conditions in the
RFA. Its decision was therefore rational and reasonable. This review ground
ought to fail.
Objective superiority
[101] The appellants contended that their applications were objectively superior
in each critical area indicated in the RFA. The seven critical areas and the scores
allocated to each are depicted below.
NO
EVALUATION CONSIDERATION
RATING/SCORE
Management competence
Viability and financing of the operation
Broad Based Black Economic Empowerment
commitments
Measures to create sustainable employment
opportunities
Socio-Economic Development
Employment Practices and Human Resources
Development Plans
Security Measures
TOTAL SCORE
[102] According to the Galaxy entities, the points allocated to Jonoforce, given
their accepted superiority were unreasonable and irrational alternatively arbitrary
or capricious. Jonoforce obtained 546, Metro 445 and Galaxy Bingo 459.
[103] The Board denied the Galaxy entities’ assertions and pointed out that it
applied its mind to all the applications and exercised a discretion as to who should
be awarded a licence. It stated that the Act and the RFA gave it a very wide
discretion to evaluate the information submitted by an applicant and that it
procured the services of Bohica Business Consultants CC (Bohica) in order to
assist and advise it on the evaluation of the applications.
[104] Jonoforce conceded that the Galaxy entities’ bid was superior, in certain
areas. It attributed this to the fact that the Galaxy entities are well established
gambling industry players, with access to financial muscle, human resources and
technical support. Jonoforce, on the other hand, is a new entrant in the bingo field
and it understandably does not have access to similar resources.
[105] The Tribunal found that the transformation of the gambling industry was a
legitimate goal that should be pursued to broaden access to opportunities for all,
especially previously disadvantaged people. Additionally, but allied to this, it
found that diversifying and expanding the existing gambling sector is a
compelling legitimate statutory purpose. On these considerations, it concluded
that the Board’s decision was rational.
[106] The high court found that the Board’s reasoning for allowing new entrants
in the gambling sector was sensible and could prevent monopolies. It further
found that the Board possesses the necessary expertise ‘in determining the award
of licences in the province’. It too, held that the granting of a licence to Jonoforce
was reasonable.
[107] The Galaxy entities argued that the high court erred in finding that the
Board’s decision was consonant with the need to allow new entrants. They
submitted that the high court erred in finding that the Board acted reasonably and
by deferring to the Board.
[108] The essence of this ground of review is that the Board did not assess the
facts properly. The Galaxy entities required the high court to evaluate and
compare their applications with Jonoforce’s. According to them, this exercise
would have shown that their applications were superior to that of Jonoforce. The
appellants set out, at length, all the facts that make their applications objectively
superior.
[109] It should be remembered that the high court had to adjudicate a review and
not an appeal. In Pepcor Retirement Fund and Another v Financial Services
Board and Another,12 this Court stated:
‘Recognition of material mistake of fact as a potential ground of review obviously has its
dangers. It should not be permitted to be misused in such a way as to blur, far less eliminate,
the fundamental distinction in our law between two distinct forms of relief: appeal and review.
For example, where both the power to determine what facts are relevant to the making of a
decision, and the power to determine whether or not they exist, has been entrusted to a
particular functionary (be it a person or a body of persons), it would not be possible to review
and set aside its decision merely because the reviewing court considers that the functionary
was mistaken either in its assessment of what facts were relevant, or in concluding that the facts
exist. If it were, there would be no point in preserving the time-honoured and socially necessary
separate and distinct forms of relief which the remedies of appeal and review provide.’13
[110] A reviewing court should always guard against usurping the functions and
decision-making powers of administrative agencies.14 In South Durban
Community Environmental Alliance v MEC for Economic Development, Tourism
12 Pepcor Retirement Fund and Another v Financial Services Board and Another 2003 (6) SA 38 (SCA); [2003]
3 All SA 21 (SCA).
13 Ibid para 48.
14 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 45.
and Environmental affairs: KwaZulu-Natal Provincial Government and
Another,15 this Court, with reference to mistake of fact, said the following:
‘I consider that the present state of the law in this regard, is correctly set out in the following
dictum, in the case of Airports Company South Africa v Tswelokgotso Trading Enterprises CC
2019 (1) SA 204 (GJ) para 12…:
“In sum, a court may interfere where functionary exercises a competence to decide facts but in
doing so fails to get the facts right in rendering a decision, provided the facts are material, were
established, and met a threshold of objective verifiability. That is to say, an error as to material
facts that are not objectively contestable is a reviewable error. The exercise of judgement by
the functionary in considering the facts, such as the assessment of contested evidence or the
weighing of evidence, is not reviewable, even if the court would have reached a different view
on these matters were it vested with original competence to find the facts.”’16
[111] The facts on which the Galaxy entities rely to show their objective
superiority are not uncontested. With regard to management competence,
Jonoforce points out that the Galaxy entities do not assert that its management
competence and experience was deficient or rendered it unqualified to be awarded
a bingo licence. Jonoforce explains that the Galaxy entities used the same
management team at all its bingo operations. This team, according to Jonoforce,
is not directly involved in the day-to-day individual bingo sub-operations. The
team also charges 5% of gross gaming revenue management from each bingo
operator. Jonoforce stated that, although the appellants have greater access to
funding and resources, its management team consists of successful entrepreneurs
and it is self-funded through loans from its non-Previously Disadvantaged
Individuals (PDI) shareholders.
15 South Durban Community Environmental Alliance v MEC for Economic Development, Tourism and
Environmental Affairs: KwaZulu-Natal Provincial Government and Another [2020] ZASCA 39; [2020] 2 All SA
713 (SCA); 2020 (4) SA 453 (SCA); 2020 (7) BCLR 789 (SCA).
16 Ibid para 23.
[112] The Galaxy entities also asserted that the 300m² site secured by Jonoforce
is hopelessly inadequate for bingo operations. Jonoforce explains that the size of
its site was a deliberate choice to balance a number of competing priorities,
including securing the best location. The Board accepted this, and there is nothing
reviewable about its decision.
[113] The Galaxy entities proffered the same gross gaming revenue projections
for two different applications at two different municipalities. Bohica analysed all
the applications and found Jonoforce’s to be adequate. Jonoforce also advanced
the Board’s objective of opening and diversifying the gambling sector in the
North-West Province.
[114] It is clear that the factual basis for the alleged objective superiority is
heavily contested. Were this Court to delve into each and every aspect which the
appellants alleged show their superiority with a view of upsetting the decision of
the Board, the distinction between appeal and review would be impermissibly
blurred.
[115] The Galaxy entities also challenged the Board’s scoring. They argued that
the scores of some Board members were not rationally connected to the
information before the Board. In this regard, the Galaxy entities singled out one
of the Board members, Mr Kunene, who gave Jonoforce a perfect score of 100.
[116] The Board consists of a group of people with diverse backgrounds and
experiences.17 Their judgment and allocation of points would inevitably be
17 In terms of section 5 of the Act the Board shall consist of nine members whom –
‘(a) one member shall be qualified to be admitted to practice as a legal practitioner and after having so qualified,
practiced as a legal practitioner or performed services related to the application or administration of the law,
(b) one member shall be an accountant or auditor registered in terms of the Public Accountants’ and Auditors’
Act, 1991 (Act No. 80 of 1991), with experience in public practice as defined in section 1 of that Act,
(c) one member shall be appointed by virtue of his or her knowledge and experience in the field of welfare or
socio-economic development,
influenced by their backgrounds. One factor may weigh heavy for one but not for
the other. The Galaxy entities failed to mention that Mr Kunene gave Galaxy
North West 98 out of 100. It is clear that he gave very high scores relative to the
other Board members. The Galaxy entities contended that the scores should be
predictable and within a particular range.
[117] The Tribunal found that the difference in scoring is indicative of the fact
that the Board members applied their minds to the subject matter and ‘[t]o expect
similar and/or equivalent scoring from persons of diverse professional and social
backgrounds would undermine the requirements for diversity’. Unsurprisingly,
the Galaxy entities do not offer any support for their submission of predictability.
However, the fact that the Board members allocated different scores or that their
respective scores differ greatly does not necessarily make the decision irrational.
The scoring of the individual members was not the sole criterion.
[118] The Board miscalculated Metro’s score by reflecting its score as 433
instead of 445. The Galaxy entities contend that as a result, the Board’s decision
was influenced by a mistake of fact. The correct score would not have made a
difference with regard to the decision as Jonoforce’s score would still be higher
(d) one member shall be appointed by virtue of his or her knowledge and active involvement in the tourism
industry,
(e) one member shall be designated by the Member of the Executive Council responsible for Economic
Development and Tourism,
(f) one member shall be designated by the Member of the Executive Council responsible for Safety and Liaison;
(g) one member shall be designated by the Member of the Executive Council responsible for Finance and
Provincial Treasury,
(h) two members shall be appointed on the basis of having either proven business acumen, a knowledge of the
gambling industry, or who are otherwise suitable for appointment as members of the Board.
(2) In addition, the Chief Executive Officer of the Board shall ex officio be a member of the Board but shall not
be entitled to vote.
(3) A member of the Board other than a member referred to in paragraphs (e), (f) or (g) of subsection (1) shall not
be appointed until the Responsible Member has invited interested parties by notice in the Provincial Gazette and
an advertisement in the media to nominate within 21 days of the publication of such notice candidates for
consideration.
. . .
(11) A member of the Board shall before assuming office, make and subscribe an oath or solemn affirmation in
the form determined by the Responsible Member.’
than Metro’s score. Although this was a mistake of fact, it was not a material
mistake as the scores were not the only criterion used to award licences. The
Board’s decision was not materially influenced by this mistake.
[119] Metro also bemoaned the fact that it received different scores for different
applications. In my view, there is nothing untoward about this. The different
applications were for different sites (Klerksdorp and Mahikeng) and Metro was
competing with a different entity (Latiano) at Mahikeng. It is, therefore,
understandable that it was evaluated and scored relative to the other competitor.
[120] Therefore, the high court’s conclusion that the Board’s decision on this
score was reasonable, is unassailable. Likewise, the high court’s conclusion that
the Board properly considered the review grounds discussed above is correct.
Reasons
[121] As stated above, the Board gave the reasons for its decisions to the Galaxy
entities. Most of the reasons overlap. With regard to both Galaxy entities, the
Board stated that in evaluating the applications it considered the objectives of the
RFA which sought to:
(a) diversify and expand existing gambling activities and provide additional and
alternative forms of leisure and entertainment to all areas in the province, in
particular, townships and rural communities; and
(b) open the sector and create opportunities for direct participation by local
previously disadvantaged individuals and Small Medium and Micro size
entrepreneurs, in the gambling industry.
[122] The Board indicated that in granting the applications to the successful
applicants it considered that this would diversify, open and create opportunities
for direct participation by local previously disadvantaged individuals.
Furthermore, so the Board stated, in determining the best application, it took into
consideration all factors that would make an application exceptional in
comparison to all others; and it could not find any factors that made the Galaxy
entities’ bids exceptional.
[123] With regard to Metro, the Board pointed out that during the evaluation of
its applications in respect of Klerksdorp (Dr Kenneth Kaunda District
Municipality) and Mmabatho (Ngaka Modiri Molema District Municipality), the
Board established that it stated the same gross gaming revenue projections for
both applications, whereas the demographics and the economies of scale were
different. It stated that because the two municipalities are vastly different and thus
require different financial projections for operating a bingo hall, Metro had failed
to account and justify the similarity in the financial projections, during the public
hearing.
[124] The Galaxy entities contended that the reasons proffered by the Board are
inconsistent with the transcript of the Board’s meeting and the minutes thereof. It
contended that the Board used the scores allocated for each critical area as the
basis for granting the respective licences. They submitted that the Board, in
considering new entrants, failed to apply its mind and took an irrelevant
consideration into account. It argued that the phrase ‘new entrant’ does not appear
in the RFA at all.
[125] The Tribunal found that the appellant’s attack of the Board’s policy
decisions should be rejected. It found that the policy objective of the RFA also
seeks to achieve the ideals of Broad Based Black Economic Empowerment (B-
BBEE) as set out in the Broad Based Black Economic Empowerment Act 53 of
2003.
[126] The high court, with reference to clause 1.2 of the RFA, stated that it was
important for the Board to exercise its discretion in such a way as to ensure that
the main objectives of the RFA were met. It found that it would serve no purpose
to allow monopoly in the industry and not allow new entrants. It concluded that
the Galaxy entities did not establish sufficient grounds to have the Board’s
decision reviewed and set aside.
[127] While it is correct that the RFA does not make specific reference to ‘new
entrants’, paragraph 1.2 of the RFA states, inter alia, that the Board realises that
introducing additional bingo licences in the province will, amongst others, assist
in achieving the objectives of diversification, expansion and opening the sector
to create opportunities for direct participation of local previously disadvantaged
individuals and small businesses. Furthermore, it stated that it endeavoured to
achieve and promote the ideals of B-BBEE, with the view to increasing the
participation of women and designated groups in the sector.
[128] In my view, properly construed, paragraph 1.2 of the RFA sought to allow
new entrants into the gambling business. It is inconceivable that the objectives of
diversification, expansion and opening the sector can be achieved without a
concerted effort to allow new players into the industry. It is also rational and
reasonable that the Board would look at the number of women in the B-BBEE
structure of an applicant, because the stated objective was to increase the
participation of women.
[129] The Galaxy entities contended that the second reason for the rejection of
their applications is unsustainable and lawfully unjustifiable. They argued, first,
that it was not necessary for an application to be exceptional and secondly, if it
was a requirement then their applications were exceptional.
[130] Clause 4.7 of the RFA states:
‘The Board shall in evaluating the applications for a Bingo Operator licence not be limited to
the above criteria and shall take into consideration all factors that may make the bid exceptional
in comparison to all other applications in determining the best bid.’
[131] The Board explained that the arithmetic scoring was not the sole evaluation
criterion. It pointed out that it evaluated the appellants’ applications in accordance
with the permissible criteria set out in the RFA. As indicated above, one such
criterion, on which Metro was found wanting, was its gross gaming revenue
projections for different sites.
[132] The RFA, which stands unchallenged, clearly stated that the critical areas
were additional considerations for evaluation and all the applicants were aware
of this. The site of the bingo operations is an obvious important consideration but
no score was allocated therefor. This is so, according to the Board, because it was
part of the total evaluation process. This cannot be gainsaid.
[133] The minutes and the transcript of the Board meeting of 10 June 2016 both
reflect that the issue relating to Metro’s gross gaming revenue was highlighted
and seen as an obstacle. The minutes reads:
‘The meeting further highlighted that Metro Gaming and Entertainment (Pty) Ltd [Galaxy
Bingo Moruleng] stated the same gross gaming revenue projections in respect of Klerksdorp,
(Dr. Kenneth Kaunda Municipality) and Mmabatho (Ngaka Modiri Molema) whereas the
demographics and the economies of scale are distinct.’
The minutes reflected that:
‘The meeting agreed that the successful applicants met the minimum requirements of the
evaluation criteria, and further highlighted that the bids by Jonoforce (Pty) Ltd . . . satisfied the
objectives of the RFA and further met the requirement of exceptional bid as per the RFA and
further agreed that granting applications to Jonoforce (Pty) Ltd and Pioneer Bingo (NW) (Pty)
Ltd will diversify, open the sector and create opportunities for direct participation by Local
Previously Disadvantaged Individuals.’
[134] The Board was clearly not convinced by the explanation given by Metro.
The Board regarded it as an important factor militating against granting the
licence to Metro. Although the Board did not mention the scores in its reasons,
one can reasonably accept that the scores were but one of the considerations it
took into account.
Bias
[135] The Galaxy entities contended that the Board was biased or reasonably
appeared to be biased against them. They submitted that the evidence showed a
concerted, though ham-fisted, attempt to award the licence to Jonoforce at all
costs, regardless of its inferior application. In support of this contention, the
Galaxy entities alleged that:
(a) Jonoforce obtained significantly higher scores for metrics where it was
objectively and numerically inferior to them;
(b) the Board unfairly took issue with their financial projections;
(c) the report showed procedural bias against them when it failed to respond to
their letters; and
(d) the Board was biased against them during the public hearings.
[136] The Tribunal considered the complaints of the Galaxy entities and
concluded that objectively speaking there is no merit in any of them. The high
court also found that there were no facts to support the allegations of bias.
[137] It is trite that the test for bias is objective and the onus of establishing it is
on the Galaxy entities. The test, as formulated in President of the Republic of
South Africa and Others v South African Rugby Football Union and Others
(SARFU),18 is whether a reasonable, objective and informed person would on the
18 President of the Republic of South Africa and Others v South African Rugby Football Union and Others –
Judgment on recusal application 1999 (4) SA 147 (CC); 1999 (7) BCLR 725 (CC).
correct facts reasonably apprehend that the adjudicator did not bring an impartial
mind to bear on the adjudication of the matter.19
Jonoforce’s higher scores
[138] I have dealt with this issue above. The Galaxy entities did not put forward
any evidence or reason why any individual Board member or the Board as a
collective would be biased against them. The scores were allocated by individual
members of the Board for each critical area. The allocation of significantly higher
scores is not necessarily indicative of bias and the Galaxy entities did not show
why the scores are indicative of bias in this matter.
Financial projections
[139] The Galaxy entities alleged that the Board unreasonably took issue with
Metro’s financial projections while ignoring the fact that Jonoforce’s projections
showed a business barely turning a profit after five years. This submission is not
entirely correct. Jonoforce’s projections show that it would be profitable in the
third year. The fact that the Board took issue with Metro’s gross gambling
revenue projections is reasonable. The Board was dealing with two applications
by the same entity for bingo licences at two different areas. It was only reasonable
to ask why the gross gambling revenue projections for the different areas were
the same.
Failure to respond to letters
[140] The Galaxy entities wrote several letters to the Board seeking clarification
on certain aspects in the RFA. Instead of replying directly to them, the Board
decided to issue general notices to all applicants clarifying some of the issues
raised by the appellants. This was a practical way to deal with concerns raised as
19 Fn 18 above para 48.
a general notice would draw the attention of all applicants to the concerns raised
and addressed. The Galaxy entities were seemingly satisfied with the manner in
which their queries were addressed. This is so because they did not correspond
with the Board further on the issues raised in the letters.
Bias at public hearings
[141] This complaint relates to public hearings held on 23 and 24 May 2016. The
purpose of the hearings was clearly for all the applicants to present their
respective applications and for the Board members to ask questions, if any. The
Galaxy entities were asked about the fact that different entities use the Galaxy
Bingo name and branding. The Galaxy entities alleged that the Board was biased
against them because other applicants were not asked about the difference
between their company name and their trading name. Mr Sekgaphane, the former
CEO of the Board, explained that the questions were asked in order to get
clarification from the Galaxy entities regarding the use of the name Galaxy.
[142] The CEO stated that in corresponding with the Galaxy entities or members
of their corporate structure the corporate entities’ names were used
interchangeably and this caused confusion. He also pointed out that the Galaxy
entities submitted multiple applications for bingo licences and that the Board
endeavoured to get clarification on the identity of the ‘true faces behind the
various corporate structures’. When the Galaxy entities answered that other
companies also used trade names the Board pointed out to them that only one
trading name ‘Goldrush’ was used by another applicant, whereas in the case of
the Galaxy entities different trading names were used.
[143] I am of the view that this was in the circumstances a fair question and it
does not exhibit any bias against the Galaxy entities. Their corporate structure is
indeed complicated. In fact, the Tribunal also misunderstood their intricate
corporate structure, which is one of the issues taken by them against the
Tribunal’s decision. The questions regarding their intricate corporate structure
and names used by the different entities were fair. Mr Mogapi, a Board member,
specifically asked the Galaxy entities’ representative whether the fact that Metro
uses the Galaxy Gaming brand would not cause confusion. The insistence that the
Metro Gaming Entertainment changed its name to Galaxy Bingo Moruleng (Pty)
Ltd or display Metro Gaming and Entertainment signage is probably because of
the confusing corporate structure rather than bias. The name change occurred
after a licence was awarded to Metro and could not have influenced the decision
not to grant the Galaxy entities licences.
[144] The Galaxy entities also complained that the CEO of the Board asked them
a question about whether they agreed that the Board could impose conditions
when granting a licence. This question was asked because there was, at the time,
a live dispute between the Board and one of the Galaxy entities about the question
whether the Board could impose conditions when granting a licence. This
question was also reasonable under the circumstances.
[145] The Galaxy entities also complained that the Board asked them a question
about the fact that they would be funded by way of an interest-free loan. The
funding model was one of the critical areas of the evaluation. Granting a corporate
entity an interest-free loan is indeed strange and questions to clarify that is not an
indication of bias. It is inconceivable that a biased Board would grant Metro a
bingo licence during the same sitting. The fact that it obtained a higher score than
Latiano also shows a lack of bias. A reasonable person with knowledge of the
facts would not apprehend bias or make such an allegation. The Galaxy entities’
apprehension of bias was therefore unreasonable and the Tribunal and the high
court correctly dismissed this review ground.
Review against the Tribunal
[146] The appellants requested the high court to review and set aside the decision
of the Tribunal on several bases. They contended that the Tribunal:
(a) misconceived its powers;
(b) applied the incorrect review standards;
(c) did not properly consider its arguments on bias; applied the wrong standard in
determining whether to grant an order of substitution; and
(d) failed to apply its mind.
[147] The high court found that the issue relating to the Tribunal misconceiving
its powers had ‘nothing to do with the decision of the tribunal to uphold the
decision of the board and as such takes the matter nowhere’. It also found that
there was no reason to review the Tribunal’s decision on the ground of it applying
the incorrect review standard. On the issue of bias, it found that the Galaxy
entities did not establish any facts to establish bias. Thus, it dismissed the review
application against the decisions of the Tribunal.
Tribunal misconceived its powers
[148] The Tribunal found that s 90(1) of the North West Act gave it the power of
a ‘classical wider review’. The Galaxy entities agree with this finding. I will
therefore accept the proposition for present purposes.
[149] The Galaxy entities contended that the Tribunal wrongly refused to
interrogate the Board’s decision by holding in various ways that it was required
to defer to the Board. It submitted that the Tribunal therefore committed a
material error of law. This submission is incorrect. The Tribunal did interrogate
the Board’s decision. There are instances in its decision where it found that the
Board’s decisions on different aspects were rational. It found that: (a) the RFA
was a rational and legitimate policy of the Board; (b) the Board’s decision to grant
the bingo licences to Jonoforce and Latiano was rational; and (c) the Tribunal
should not substitute its opinion for that of the Board as the Board’s decision was
rational. The Tribunal made these findings after interrogating the Board’s
decisions. Besides, its power to decide the matter afresh would only arise if it
found during the review process that any of the Board’s decisions is one that a
reasonable decision-maker could not reach.20
[150] It is correct, as the appellants contended, that the Tribunal relied on pre-
constitutional cases when it adjudicated this matter. It found an administrative
decision cannot be reviewed unless it is arbitrary, capricious, mala fide or so
grossly unreasonable that it shows that the functionary did not apply its mind. It
did not apply the ‘reasonable decision-maker standard’ or the standards set out in
s 6 of PAJA. These permit both a reasonableness and rationality challenge, which
can be taken cumulatively or in the alternative. The appropriate standard is
dependent on the cause of action or the review ground utilised to challenge a
decision or process.
[151] The Tribunal also used the rationality standard, which is lower than the
reasonableness standard. It subjected both the procedure and the decisions of the
Board to a rationality standard. In National Energy Regulator of South Africa and
Another v PG Group (Pty) Limited21 Khampepe J, writing for the majority, held:
‘I do not believe that we can separate process rationality and substantive rationality in the way
the second judgment purports to. The relevant question for rationality is whether the means
(including the process of making a decision) are linked to the purpose or ends. To my mind,
rationality necessarily, whether found in PAJA or anywhere else, must include some evaluation
of process. If not, then we are simply asking whether a decision is right or wrong based on post
hoc reasoning.
20 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others 2004 (4) SA 490 (CC); 2004 (7)
BCLR 687 (CC) para 44.
21 National Energy Regulator of South Africa and Another v PG Group (Pty) Limited and Others [2019] ZACC
28; 2019 (10) BCLR 1185 (CC); 2020 (1) SA 450 (CC).
It is a natural and inescapable denouement that the process leading to the decision “must also
be rational in that it must be rationally related to the achievement of the purpose for which the
power is conferred”.
There is no reason why rationality under PAJA should be given a different (more restrictive)
meaning. It follows that rationality under PAJA includes an assessment of whether the means
(including everything done in the process of taking the decision) links to the end.’22
[152] A proper reading of the Tribunal’s decision clearly shows that it objectively
apprised the process and the decisions of the Board. It used the pre-Bato Star test
by asking whether the decision was ‘so grossly unreasonable’. This is a higher
standard. As stated above the correct question is whether the decision is one
which a reasonable decision-maker could not reach. The Tribunal’s analysis and
findings are consonant with a conclusion that the Board’s decisions fall within a
range of reasonable decisions that the Board could make.
[153] In Bato Star a reasonable decision is described thus:
‘What will constitute a reasonable decision will depend on the circumstances of each case,
much as what will constitute a fair procedure will depend on the circumstances of each case.
Factors relevant to determining whether a decision is reasonable or not will include the nature
of the decision, the identity and expertise of the decision-maker, the range of factors relevant
to the decision, the reasons given for the decision, the nature of the competing interests
involved and the impact of the decision on the lives and well-being of those affected. Although
the review functions of the court now have a substantive as well as procedural ingredient, the
distinction between appeals and reviews continues to be significant.’23
[154] The Tribunal applied the wrong standard but it subjected the process and
decision to a review. Its decision with regard to the Board’s decision is one that a
22 Fn 21 above para 48-50.
23 Fn 21 above para 45.
reasonable decision-maker could reach. The Board’s decision is also within the
band of reasonable decisions that a reasonable decision-maker could reach.
[155] The Tribunal cannot be faulted for finding that it should be slow to interfere
with the Board’s decisions. The Tribunal was correct in showing deference to the
Board. It is clear from its reasons that it did not rubberstamp unreasonable
decisions and neither did it timidly accept them. It said:
‘Given the fact and circumstances of [the appellants’] review applications the review Tribunal
should not intervene with the decisions of the [the Board], more so, as there is no evidence
before the Review Tribunal that the [Board] did not apply its mind to the licence applications
that were before it.’
[156] The Tribunal indeed made a mistake by accepting that the applicant before
it was only Metro. It constantly referred to ‘the applicant’ instead of ‘the
applicants’, since it had two different entities before it as applicants. Furthermore,
the Tribunal, in dismissing the review applications, described each as having been
brought by ‘the applicant’. The Galaxy entities submitted that these mistakes are
indicative of the Tribunal’s failure to apply its mind. The Tribunal was aware that
it was dealing with two review applications brought by Metro and only one
brought by Galaxy Bingo North West. It stated, in its decision, that ‘the
Applicant, Metro Gaming and Entertainment (Pty) Ltd “Metro” brings [these]
review applications’. It referred to the sites. With regard to the Galaxy Bingo
North West, the Tribunal properly referred to it and the fact that it brought a
review application with regard to one application. This indicates that the Tribunal
made genuine mistakes which are not necessarily indicative of it not applying its
mind.
[157] For all of the above reasons, I am of the view that the appeal should be
dismissed. There is no reason why the costs should not follow the result.
[158] As a result, the appeal is dismissed with costs, including the costs of two
counsel.
_________________
C MUSI
ACTING JUDGE OF APPEAL
The Galaxy appeal (in re Latiano)
Musi AJA (Maya P, Makgoka, Gorven, Plasket JJA concurring)
[159] In this appeal, the appellant, Galaxy Bingo Moruleng (Pty) Ltd (previously
called Metro Gaming & Entertainment (Pty) Ltd) (Metro)) is aggrieved by the
decision of the Board declining its application for a bingo license and awarding
such license to the sixth respondent, Latiano 560 (Pty) Ltd t/a Goldrush Bingo,
North West (Latiano) in the Ngaka Modiri Molema District Municipality. After
it received a formal letter of rejection from the Board and, later, reasons for the
rejection, Metro launched an unsuccessful internal review to the North West
Gambling Review Tribunal (the Tribunal), which dismissed its review
application. It approached the court a quo seeking to review and set aside the
decisions of the board and the tribunal. The application was dismissed.
[160] Metro raised three grounds of review against the Board’s decision. First,
that the Board incorrectly calculated Latiano’s score and thereby committed a
material mistake of fact as well as a failure to apply its mind properly to all the
relevant considerations. Second, that the Board’s reasons do not accord with the
transcript and the minutes of the relevant Board meeting and appear contrived.
Allied to this ground, that the Board took irrelevant considerations into account
and failed to take into account relevant considerations and that it acted
unreasonably and irrationally. Third, that the Board was biased against Metro.
[161] The bias review ground, which was similar to the one raised in the
Jonoforce appeal, was comprehensively discussed and definitively dealt with, and
rejected, in that judgment and therefore, nothing more needs to be said about it in
this judgment. It suffices to say that the reasons proffered on this aspect in the
Jonoforce appeal apply with equal force to this appeal. I now turn to consider the
remaining grounds of review, seriatim.
Board miscalculated Latiano’s score
[162] The decision to award the license to Latiano was taken at the Board’s
meeting held on 10 June 2016. Six Board members allocated scores. Metro and
Latiano’s consolidated scores were incorrectly calculated as follows: Latiano 471
average 79 (471/6 = 78.5 rounded off to 79). Metro 470 average 78 (470/6 = 78.3
rounded off to 78). It is common cause that the correct consolidated scores were:
Latiano 467 average 77.83 (467/6 = 77.83) and Metro 470 average 78.3 (470/6 =
78.3).
[163] Metro therefore achieved a higher score. The difference being, on the
average score, 0.5. Metro contended that based on its superior score the licence
ought to have been awarded to it because the scores were the sole criterion used
in the allocation of licences. It stated that the minutes and the transcript of the
meeting make it clear that the licenses were awarded based on the scores. It
pointed out that the minutes reflected that:
‘The meeting after considering the applications resolved that the following applications should
be granted as per the allocated scores.’
[164] Metro further sought to rely on the remarks by Mr Sekgaphane, the Board’s
Chief Executive Officer (the CEO), when he explained the process to the Board
members as follows:
‘The elements [listed on the scorecards] that you find under these headings are elements that
you find in the full reading of the RFA.
. . .
The last score sheet is the result, it’s basically now going to tell us according to District
Municipality, which applicant came top, second, third and fourth and in the RFA we said the
evaluation of bids and the granting and the granting of licences will be on the best (indistinct)
consideration, which basically means that the highest scored applicant will be given preference
to be licensed …’ (Appellant’s emphasis.).
[165] The appellant also relied on the following extract from the transcript:
‘CHAIRPERSON: … Can we then move to the next region, which is Ngaka Modiri Molema.
Latiano 79
Metro Gaming 78
Board members are you satisfied with that reflection?
BOARD MEMBERS AGREE.
CHAIRPERSON: Alright, thank you. Can we then move to the final region?’
[166] The Tribunal found that the scoring was used as a computation aid by the
Board in the exercise of its discretion. Additionally, it found that scoring did not
remove and/or exclude the Board’s discretion, because the Board could still grant
the licence to an entity that did not achieve the highest score. The high court
mentioned this ground of review but, unfortunately, did not discuss or analyze it.
[167] As already mentioned, the Board enjoyed wide discretionary powers
conferred in the RFA. Metro has not challenged the lawfulness of the RFA. It is
this unchallenged policy that the Board utilized in the exercise of its function to,
inter alia, consider and dispose of applications for licences in such manner as it
may determine.24 The RFA mentions the critical areas that the Board would use
for the evaluation and it retained the right to look at other factors during the
evaluation process. It is clear from the RFA that the Board did not fetter its
discretion with the allocation of scores for the critical areas.
[168] For example, paragraph 4.7 of the RFA, headed ‘Considerations for
Evaluations’, the Board stated that:
‘a) In addition to the above criteria the Board will in selecting the preferred bidder consider
any other additional information and commitments made by the applicant in support of the
application in determining the best bid.
(b) The Board shall in evaluating the applications for a Bingo Operator licence not be limited
to the above criteria and shall take into consideration all factors that may make the bid
exceptional in comparison to all other applications in determining the best bids.’
[169] This is consonant with the principles stated in Kemp and Others v Van Wyk
and Others25 that:
‘[G]enerally there can be no objection to an official exercising a discretion in accordance with
an existing policy if he or she is independently satisfied that the policy is appropriate to the
circumstances of the particular case. What is required is only that he or she does not elevate
principles or policies into rules that are considered to be binding with the result that no
discretion is exercised all.’26
[170] The transcript and the minutes of the meeting, contrary to what Metro
asserts, show that the scoring was not the only or determinant factor which the
Board was to consider. When briefing the Board, the CEO emphasized this point.
He explained:
‘If you have four applications in Bojanala and you have positioned one, two, three for lack of
a better word, then – and there are two licenses in Bojanala, the working of the RFA is such
24 See s 4(c)(ii) of the North West Act.
25 Kemp and Others v Van Wyk and Others [2008] 1 All SA 17 (SCA).
26 Ibid para 1.
that number 1 and number 2 will then be licensed for Bojanala, because that would be
influenced by the scoring and the principle of the best bid evaluation.’ (My emphasis.)
[171] He later gave a full explanation when addressing a concern raised by Mr
Kunene, a Board member. He said:
‘So basically, we wouldn’t even have to sit here, basically we’ll just have to look at that scoring
and then tick off, but there is an element that I’m raising and Mr. Kunene, that (indistinct) your
question, and I said when the Board finished with the evaluation, there will be the total score
according to districts that is going to be displayed. You have, as the Board – finished with the
evaluation, there will be the total score according to districts that is going to be displayed. You
have, as the Board – I’m answering the last part of your question, are these scores reflective of
what we see? If you see that there is a candidate there who is being scored high and according
to the evaluation that has been led by a consultant, that applicant does not deserve to score that
high, you have to apply your mind to say are we right to proceed with this (indistinct) because
definitely, if this matter can go to Court, that question is (inaudible) to say but did you see this
applicant was non-compliant (indistinct).
Now you have (indistinct) to manage the scoring . . . That is why that engagement is important.
It’s not for you to deliberate at length, but you must have confidence that the scoring reflects
generally what we have seen from the report. So here the scoring is a guide which you must
use, as I said, to determine 1 and 2, but most importantly this Board must be satisfied with the
decision that it makes, which will be when you now to decide to (indistinct), because this
[score] is not the right the score (inaudible) outcome of the evaluation. A decision must still
say grant, denied, and is going to help the Board in making – (indistinct) to your question Mr.
Kunene through you Chair.’
[172] It is clear from the above that a two-step process was going to be, and was
indeed, followed by the Board. The individual Board members had to allocate
scores in accordance with the critical areas. Those scores would then be
consolidated, thereafter, the Board members – as a collective, would have to
evaluate the scores to determine whether those scores are reflective of all the
evaluation areas stated, inter alia, in paragraph 4.7 of the RFA, including the
critical areas and the additional considerations. It is because of this two-stage
approach that the consolidated scores were given to the Board members and they
were asked whether the scores reflect a fair and transparent evaluation of the
application. It is only after the Board agreed that the scores reflect a fair and
transparent evaluation, in accordance with the report of the consultants and the
RFA that they moved on to the next district.
[173] Moreover, when the scores reflected that a licence ought to be granted to
Pioneer Bingo, for another district, the CEO pointed out that although the scoring
showed that it ought to be successful, the Board still had to consider whether the
misrepresentations made by its main funder were material. Pioneer Bingo’s main
funder did not disclose his previous convictions. The Board deliberated on the
issue and found that he apologized for the misrepresentations and gave an
acceptable explanation.
[174] With regard to Metro and Latiano, the Board members were under the
impression that the latter obtained a higher score. They were of the view that the
score was a proper reflection of their evaluation and that it was in line with
consultant’s report. They were clearly of the view that Latiano was the better
candidate, considering the overall evaluation criteria, including the scoring.
[175] On these considerations, it is evident that even if the correct scores were
reflected, the Board would still have preferred Latiano during the second stage of
the evaluation, based on its reasons. It is clear from the minutes of the meeting
that the issue of Metro’s gross gaming revenue projections weighed heavily
against it. The Board was not satisfied with its explanation. It would have failed
the second stage of the evaluation.
[176] Metro contended that a further factor that justified the awarding of the
license to it was that it complied with the requirement of the RFA, which stated
that copies of liquor and other relevant licences or proof of application therefor
was required for purposes of lodging an application for a bingo operator licence.
Latiano did not comply with this requirement. According to Metro, this was a
brazen non-compliance with a mandatory requirement because Latiano indicated
that it intends to procure liquor and associated items from local suppliers.
[177] This requirement must be seen in context. It is only when an applicant had
applied for a liquor licence or indicated that it applied for a liquor licence that
proof thereof would be required. Metro does not allege that a liquor licence is an
indispensable requirement to obtain a bingo operator licence. There is no
indication that a bingo licence ought not to be granted if an applicant does not
intend to sell liquor. In any event, the Board has the power to grant a licence
conditional upon the licence holder getting a liquor licence before operating. I am
of the view that this non-compliance is not material.
[178] In Allpay Consolidated Investment Holding (Pty) Ltd and Others v Chief
Executive Officer, South African Social Security Agency and Others27 the
Constitutional Court said the following:
‘Assessing the materiality of compliance with legal requirements in our administrative law is,
fortunately, an exercise unencumbered by excessive formality. It was not always so. Formal
distinctions were drawn between “mandatory” or “peremptory” provisions on the one hand and
“directory” ones on the other, the former needing strict compliance on pain of non-validity, and
the latter only substantial compliance or even non-compliance. That strict mechanical approach
has been discarded. Although a number of factors need to be considered in this kind of enquiry,
the central element is to link the question of compliance to the purpose of the provision. In this
Court O’Regan J succinctly put the question in ACDP v Electoral Commission as being
“whether what the applicant did constituted compliance with the statutory provisions viewed
27 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African
Social Security Agency (Corruption Watch and Centre for Child Law as Amici Curiae) [2013] ZACC 42; 2014
(1) SA 604 (CC); 2014 (1) BCLR 1 (CC).
in the light of their purpose”. This is not the same as asking whether compliance with the
provisions will lead to a different result.’28
[179] Metro contended that the Board’s reasons do not accord with the transcript
and the minutes of the meeting of 10 June 2016. I have already indicated that the
transcript indicates that the Board considered other aspects. Metro contended that
the Board took into account irrelevant considerations when it considered new
entrants and previously disadvantaged women. It also contended that the Board
misconstrued the enquiry under the RFA and as a result it was materially
influenced by an error of law.
[180] These contentions were made because of the following reasons that the
Board gave for its decision to grant the licence to Latiano:
‘[T]he Board in evaluating your application . . . took into consideration the objectives of the
Request for Applications (RFA), which seek to achieve the following:
(i)
diversification and expansion of existing gambling activities and provision of additional
and alternative forms of leisure and entertainment to all areas in the Province, in particular,
townships and rural communities; and
(ii)
open the sector and create opportunities for direct participation by Local Previously
Disadvantaged Individuals and Small Medium and Micro size entrepreneurs, in the gambling
industry.
The Board taking the above objectives of the RFA into consideration, deemed it necessary to
grant the application for a Bingo License in Mmabatho to Latiano … after it was established
that [Latiano] satisfied the above objectives of the RFA in that 60% of its shareholders are four
black females who are new entrants in the market, and Local Previously Disadvantaged
Individuals.
It is worth mentioning that the Board in granting the applications to the above-mentioned
applicant, considered that this will diversify, open the sector and create opportunities for direct
participation by Local Previously Disadvantaged Individuals.’
28 Fn 28 above para 30.
[181] Metro contended that its B-BBEE commitments, including to PDI women,
were superior to Latiano’s. However, Metro’s PDI’s for this application were a
young male who owns 25% shares in Metro and a female who owns 35% shares.
The female already had shares in another business that was allocated a bingo
licence in Brits. Metro alleged that Latiano’s award does not support broad-based
empowerment because it only allocated shares to four black women. It also
disputed the women are new entrants. Finally, it contended that the award to
Latiano did not further diversification in the market and therefore, was not
rationally connected to the reasons given.
[182] The high court and the Tribunal found that the reasons given by the Board
were rational and reasonable. The Tribunal found that the fact that Latiano had
four females owning 60% shares who were new entrants and local PDIs made
Latiano’s application exceptional. It further found that the Board applied its mind
when considering the B-BBEE credentials of both applicants.
[183] The high court found that the supposed superiority relied on by Metro was
only because of the fact that it already has licences in the North-West and in other
provinces. It reasoned that Metro’s argument ‘on its own completely defeats the
intention of having new entrants in the gambling industry’.
[184] The fact that the RFA does not contain the phrase ‘new entrants’ does not
mean that the Board was barred from considering such entrants into the gambling
industry as part of its evaluation. The RFA makes plain that the Board aimed to
diversify and expand existing gambling activities and it wished to open the sector
to create opportunities for direct participation of local PDIs and small medium
and micro-size and entrepreneurs, in the gambling industry. The RFA further
states that the Board considers B-BBEE in the bingo market as vital to any
application. Applicants were requested to clearly and precisely articulate in the
application ‘the promotion of economic transformation in order to contribute to
meaningful participation of local black people in the provincial economy’. The
Board could achieve these objectives by, inter alia, looking at new PDI entrants
into the gambling market.
[185] It is clear that the Board could only achieve those objectives by scrutinizing
applications to determine whether they met those objectives. Metro’s argument
that because a score was already allocated for B-BBEE it meant that the Board
could not consider that issue outside of the scores allocated, is wrong. Since this
was a vital issue to consider in the evaluation, it was not unreasonable for the
Board to look closely at the B-BBEE structure and persons who participate as
previously disadvantaged individuals. In any event, as already mentioned, the
Board was not satisfied with Metro’s gross gaming revenue projections.
[186] The decision to give more weight to the four female PDI entrants is
rationally connected to the objectives set out in the RFA. The means employed
justifies the end. It is also a decision which a reasonable decision-maker would
reach, considering the objectives stated in the RFA. In my opinion the appeal is
without merit.
[187] As a result, the appeal is dismissed with costs, including the costs of two
counsel.
________________________
C MUSI
ACTING JUDGE OF APPEAL
Appearances:
In the Peermont appeal
For appellant
F Snyckers SC (with him I Goodman)
Instructed by:
Webber Wentzel, Sandton
Symington de Kok Attorneys,
Bloemfontein.
For third and fourth respondents:
M P van der Merwe SC (with him K M
Mahlase)
Instructed by:
Bokwa Inc., Pretoria
Bokwa Inc., Bloemfontein.
For fifth and eighth respondents:
H Maenetje SC (with him S Pudifin-
Jones)
Instructed by:
Ian Levitt Attorneys, Sandton
Pieter Skein Attorneys, Bloemfontein.
For sixth respondent:
R G Buchanan SC (with him O H
Ronaasen)
Instructed by:
Le Roux Inc. Attorneys, Mahikeng
Honey Attorneys, Bloemfontein.
For seventh respondent:
B Roux SC (with him M Smit)
Instructed by:
Cliffe Dekker Hofmeyr Inc, Sandton
Noordmans Attorneys, Bloemfontein.
For ninth respondent:
P Farlam SC (with him P Olivier)
Instructed by:
Edward Nathan Sonnenbergs, Sandton
Lovius Block Inc, Bloemfontein.
In the Jonoforce appeal
For appellants
P Farlam SC (with him P Olivier)
Instructed by:
Edward Nathan Sonnenbergs Inc, Sandton
Lovius Block Inc, Bloemfontein.
For first and second respondents:
M P van der Merwe SC (with him M
Mathaphuna)
Instructed by:
Bokwa Inc., Pretoria
Bokwa Inc., Bloemfontein.
For sixth respondent:
H Maenetje SC (with him S Pudifin-
Jones)
Instructed by:
Ian Levitt Attorneys, Sandton
Pieter Skein Attorneys, Bloemfontein.
In the Latiano appeal
For appellants
P Farlam SC (with him P Olivier)
Instructed by:
Edward Nathan Sonnenbergs Inc, Sandton
Lovius Block Inc, Bloemfontein.
For first and second respondents:
MP van der Merwe SC (with him
M Mathaphuna)
Instructed by:
Bokwa Inc., Pretoria
Bokwa Inc., Bloemfontein.
For sixth respondent:
B Roux SC (with him M Smit)
Instructed by:
Cliffe Dekker Hofmeyr Inc., Sandton
Noordmans Attorneys, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY: JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
2 June 2022
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Peermont Global (North West) (Pty) Ltd v Chairperson of the North West Gambling Review Tribunal
and Others and Two Other Cases (Case numbers 1040/2020); 1055/2020 and 1056/2020 [2022]
ZASCA 80 (2 June 2022).
Today, the Supreme Court of Appeal (the Court) handed down a trilogy of judgments, dismissing
appeals against orders of the North West Division of the High Court, Mahikeng (the high court). The
high court had dismissed the review applications against the North West Gambling Board (the Board)
in respect of the awarding of bingo licences in the North West Province. The appeals against the
dismissal of the review applications were by Peermont Global (North West) Pty Ltd (Peermont) and
Galaxy Bingo Moruleng (Pty) Ltd (Galaxy). Peermont was not an applicant for any of the awarded
bingo licences. It objected to the awarding of those licences on the basis of the likely negative impact
bingo operations would have on its casinos in the areas where the two licences had been awarded for
bingo operations. Galaxy was an unsuccessful bidder for a bingo licence. Separately, it sought to review
the awarding of bingo licences to Jonoforce and Latiano, respectively.
Peermont appeal
Peermont’s appeal concerned the Board’s decision to award bingo licenses to, among others, the fifth
respondent, Jonoforce (Pty) Ltd (Jonoforce) and to the seventh respondent, Latiano 560 (Pty) Limited
(Latiano), respectively. Peermont advanced three review grounds against the awarding of the licences,
namely: the licence application process was procedurally unfair; it was unlawful for the Board to award
bingo licences for use in conjunction with conventional electronic bingo terminals (EBTs), as EBTs did
not offer the game of ‘bingo’ as defined in the North West Act; the Board was obliged, but failed, to
have regard to the adverse impact that the licensing of bingo operations was likely to have on
Peermont’s nearby casinos. The Court considered each of the review grounds and found none of them
to have merit. Accordingly, the Court dismissed Peermont’s appeal with costs of two counsel.
Galaxy appeal (in re Jonoforce)
The Court found that although the Jonoforce application did not strictly comply with sections 32 (3)(a)
and 24(5)(d) of the North West Act, its application complied with the Board’s Request for Applications
(RFA) and the purpose of the aforementioned sections. The Court further found that the Galaxy entities’
objective superior applications were beyond the scope of a review and properly suited for appeal
proceedings, because it was contested. It further found that the reasons for not granting the licences to
the Galaxy entities were reasonable and rational.
Galaxy appeal (in re Latiano)
In the Latiano appeal, the Court found that the Board miscalculated Metro’s score. It, however found
that the scoring was not the sole criterion. It held that the scores were a guide and that the Board was
correct in considering other criteria such as new entrants, especially women, to the gambling industry.
The Court held that neither the Board nor the Tribunal was biased against the Galaxy entities. The Court
therefore dismissed the Galaxy appeals.
END
|
1431
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 342/10
ANDRÉ VAN DE VENTER
Appellant
and
THE STATE
Respondent
____________________________________________________________
Neutral citation:
Van de Venter v The State
(342/10) [2010] ZASCA 146 (29 November 2010)
BENCH:
PONNAN, CACHALIA and LEACH JJA
HEARD:
12 NOVEMBER 2010
DELIVERED:
29 NOVEMBER 2010
SUMMARY: Sentence – misdirection by trial court – court on appeal substituting an effective
term of imprisonment of 18 years for that of 33 years imposed by the trial court.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from:
North Gauteng High Court (Pretoria) (Moabi AJ sitting as court of
first instance).
The appeal is allowed to the extent set out below:
The sentence of 28 years’ imprisonment imposed by the court below pursuant to
the appellant’s conviction on count 1, the murder, is set aside and in its stead is
substituted a term of 18 years’ imprisonment.
The sentence of 5 years’ imprisonment imposed by the court below pursuant to
the appellant’s conviction on count 2, the theft, is ordered to run concurrently with
the sentence imposed on count 1.
The appellant is thus sentenced to an effective term of imprisonment of 18 years.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
PONNAN JA (CACHALIA and LEACH JJA concurring):
[1] During February 2000 the appellant, André van de Venter, was convicted in the
North Gauteng High Court (Pretoria) (per Moabi AJ) on one charge each of murder and
theft and sentenced to an effective term of imprisonment of 33 years - being 28 years
for the murder and five years for the theft.
[2] Leave to appeal was granted to this court by the trial judge solely in respect of
sentence on 3 March 2000. A petition to this court to expand the scope of the appeal to
include the convictions as well, was dismissed on 9 July 2001.
[3] For reasons that do not emerge on the record and in any event are unnecessary
to fully traverse no further steps were taken to prosecute the appeal for close on nine
years. When the record was eventually filed with this court on 2 June 2010, it was
accompanied by affidavits from the registrar and two clerks of the high court to the
effect that the complete record of the proceedings could not be located. The record that
now serves before us on appeal has accordingly been reconstructed by those officials.
Before us counsel were agreed that the reconstructed record was adequate for a full
and proper ventilation of the appeal. I agree.
[4] The facts giving rise to the appellant’s conviction were: On 27 March 1998 and
in consequence of a report that he had received, Peter Thomas called on the home of
his friend Eric Nezar (the deceased). As the door was locked he had to gain forcible
entry into the flat. On entering the premises he came upon the body of the deceased on
his bed with his face and the upper side of his head bloody. The deceased's hand
clutched an electrical cord and there were visible blood spots on one of the walls. He
summoned the police. Later that day the deceased's brother, Willem, was contacted by
Captain van Aswegen of the Pretoria Murder and Robbery Unit of the SAPS and
informed of the deceased's death. Two days later, whilst sifting through the deceased’s
belongings, Willem chanced upon certain ornamental stones that appeared to have
blood on them. Those he handed to the police.
[5] It would seem that whilst the investigating officer, Sergeant van Rensburg, was
interviewing people who knew the deceased, the appellant came to be mentioned.
Sergeant van Rensburg interviewed the appellant and secured a statement from him.
When Captain van Aswegen perused that statement his curiosity was piqued and he
resolved to question the appellant. On 6 April 1998 Sergeant van Rensburg and Captain
van Aswegen proceeded to the appellant's home. During the course of their questioning
of the appellant they enquired about the clothes that he (the appellant) had worn on the
night when the deceased had met his death. His shoes in particular appeared to them to
link the appellant to certain footprints at the deceased's home. The appellant was
arrested.
[6] The next day the appellant intimated his willingness to participate in a pointing
out. Arrangements were then made by the investigating officer for an independent
commissioned officer, Captain van der Spuy, to oversee the pointing out. That evidence
and its import is summarised in the judgment of the court below as follows:
'Van der Spuy . . . produced the photos which showed the accused at the scene and where he was
pointed out where different aspects relating to the crime were found in the room. He brought in photos . . .
all these show the accused at the premises of the deceased and indicating various points where the
deceased was, where he got the stone which he used to hit the deceased, where the blood spots were
and where they were removed. In brief, these photographs and voluntarily pointing out squarely put the
accused at the scene and he knew what happened on that particular night when the deceased was killed.'
[7] There was as well the evidence of Elmarie Horak linking the appellant to the
commission of the offences. Miss Horak testified that the appellant had come to her
shop, Cash Converters, to sell 63 CDs and a cell phone. She asked him to go to the
Sunnyside Police Station to depose to an affidavit confirming his ownership of those
items and his entitlement to dispose of them. The appellant did indeed do so. He
returned with a sworn statement. He also signed an in-store declaration that he had
lawful title to sell and 'transfer full ownership thereof to Cash Converters'. He was paid
R300 in total for those items.
[8] Marno Boshoff, who knew both the deceased and the appellant, testified that at
some stage he had asked the appellant why he had killed the deceased. His response
is summarised by the trial court as follows:
'And he said the accused said he did not know why he did it. He was asked if he, the accused, was angry,
if the deceased did anything wrong to him; but he replied and said no, the deceased did nothing wrong to
me. He says he, the accused, did not understand what happened, in essence. He said on that particular
morning he, the accused, woke up – maybe I should here indicate that there is evidence to the effect that
the night before the accused went to the deceased's room and he slept over there. Now when he woke up
in the morning he was in the flat of the deceased. He went to the bathroom and when he came back he
saw a stone or a rock lying down. He says he does not know what happened next. He said afterwards he
realised what he had done and that there was a problem and he ran away, he left the flat.'
The appellant did not testify in his defence. That was his right. But it is not without its
consequences. For, approaching the evidence holistically, as one must, the irresistible
inference to be drawn from the facts that I have briefly outlined, is that the appellant
killed the deceased and thereafter stole the deceased’s possessions the subject of the
theft charge. It follows that the conclusion of the trial court on the convictions cannot be
faulted.
[9] As to sentence: The judgment of the court below on sentence is singularly
unhelpful. It spans a total of three pages in the record. It alludes to the objective gravity
of the offence, the brutality of the deed and the lack of remorse displayed by the
appellant as reflected in his failure to take the court into his confidence and his
disposing of the deceased's possessions the morning after the murder.
[10] The judgment then proceeds:
'. . . because maybe the most serious issue that must be addressed is that of if the satanism influence, if
any, is on you. The state argues that there is no evidence that you were in any way afflicted by this issue
of satanism and if you were then you did it knowing what would be the consequences. Where the court
would not take that view, it will take a very lenient view, it will give you the benefit of the doubt even if you
did not testify that you were to an extent maybe affected by these satanism tendencies. We were told that
satanism preaches death, destruction, contempt of religion, of God, and maybe as we do not really have
a good motive of why you did what you did, one can maybe say yes, satanism had the better of you
because how can a person act so cruelly? When somebody is sleeping on the bed, you bash him with a
stone and proceed to kill him; what is the motive? We do not have a clear motive her, that is why I will
give you the benefit that you had this influence on you of satanism. But this expert on satanism also turns
and says people who get involved in that type of practice do it with their eyes right open and they know
what probably will be the consequences of their activities.'
The judgment then concludes:
'The court is conversant with the authorities which have been referred to in address in mitigation. The
court is of the opinion that you must get a direct jail sentence and that, if really you are under the
influence of satanism or it is still affecting you, which the court does not know, you may get help inside
prison, but the court is of the opinion that maybe you were and it gives you the benefit and strongly will
direct that facilities be made available for your rehabilitation in prison.'
[11] What the judgment ignored though was the evidence contained in the reports of
Prof Roos and Dr Plomp, psychiatrists in the employ of Weskoppies Hospital. Both had
concluded that whilst the appellant appreciated what he was doing at the time of the
commission of the offences, his moral responsibility was diminished because he was a
schizoid personality, who was emotionally depressed. Both described people who are
diagnosed as such as lonely and not able to develop intimate relationships with others.
[12] The report of the social worker, Ms du Preez, paints a picture of a sad, lonely
youngster - the product of a broken home. Although he matriculated, the appellant
acknowledges that he struggled academically. As the product of a broken home, he
appears to have moved between his mother and father. That resulted in his schooling
being disrupted. After he failed standard 9 he was moved to his father and stepmother
and had to adjust to a new school environment. At that stage he started abusing alcohol
and dabbling in satanism. The appellant seems to have formed the impression since the
age of about 10 years that life was senseless and that he did not want to continue living.
Whilst in standard 10 he attempted on three different occasions to take his own life.
[13] Since leaving school the appellant has been unable to hold down permanent
employment and his employment history has been quite sporadic. Although on the cusp
of adulthood at 23 years, the appellant has not been involved in any meaningful
relationships. Nor for that matter has he had any real friends. According to his mother
he spent all of his time at home writing letters to his pen friends and viewing television.
His mother informed the social worker that the appellant manifested very low self-
esteem and that if he did go out it was usually late at night when he was less likely to be
seen by others. In an endeavour to assist him to address those various issues, the
appellant's mother suggested that he contact the deceased who was very active in
counselling, Bible study groups and a cell leader at his church. That is how the
appellant first came to have contact with the deceased. According to the appellant, he
was contemplating joining a Buddhist retreat which he was then discussing with the
deceased at the time of the latter's death. In his warning statement to the police the
appellant stated that despite the fact that he was heterosexual that the deceased had
massaged him but as he put it 'Ek nie daarvan hou nie, ek hou nie daarvan dat 'n
manspersoon so aan my vat nie'.
[14] The circumstances entitling a court of appeal to interfere in a sentence imposed
by a trial court were recapitulated in S v Malgas 2001 (1) SACR 469 (SCA) para 12,
where Marais JA held:
‘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. . .
. However, even in the absence of material misdirection, an appellate court may yet be justified in
interfering with the sentence imposed by the trial court. It may do so when the disparity between the
sentence of the trial court and the sentence which the appellate Court would have imposed had it been
the trial court is so marked that it can properly be described as “shocking”, “startling” or “disturbingly
inappropriate”.’
[15] In my view the test for intervention on the first leg is satisfied. None of the
mitigating factors that I have alluded to merited even a mention in the judgment of the
trial court. They ought to have. Nor were they balanced against what were perceived to
be the aggravating features in the commission of the offences. In failing to afford any
recognition to those factors in the determination of an appropriate sentence, the trial
court disregarded the traditional triad of the crime, the offender and the interests of
society. Instead the learned judge appears to have emphasised the public interest and
general deterrence in arriving at what he considered to be a just sentence, whilst
ignoring the other traditional aims of sentencing such as personal deterrence,
rehabilitation and reformation. It follows that the sentence imposed by the learned
judge falls to be set aside and this court is accordingly free to impose the sentence it
considers appropriate.
[16] It remains to consider what sentence should be substituted for that of the trial
court. How and why the learned trial judge arrived at a sentence of 28 years for the
murder and why the sentence of 5 years imposed for the theft, which was part and
parcel of the same criminal transaction was not ordered to run concurrently, is not
explained. Despite the fact that the appellant was represented before the learned judge
there nonetheless remained a duty on him to call for such evidence as was necessary
to enable him to exercise a proper judicial sentencing discretion. For, as S v Siebert
1998 (1) SACR 554 (SCA) at 558i–559a made plain:
'Sentencing is a judicial function sui generis. It should not be governed by considerations based on
notions akin to onus of proof. In this field of law, public interest requires the court to play a more active,
inquisitorial role. The accused should not be sentenced unless and until all the facts and circumstances
necessary for the responsible exercise of such discretion have been placed before the court.’
The judgment added: ‘[A]n accused should not be sentenced on the basis of his or her
legal representative’s diligence or ignorance’.
[17] The natural indignation that the community must feel at the appellant’s conduct
warrants appropriate recognition in the sentence. Nevertheless that can hardly invite a
sentence that is out of proportion to the nature and gravity of the offence. As it was put
in S v Scott-Crossley 2008 (1) SACR 223 (SCA) para 35:
'Plainly any sentence imposed must have deterrent and retributive force. But of course one must not
sacrifice an accused person on the altar of deterrence. Whilst deterrence and retribution are legitimate
elements of punishments, they are not the only ones, or for that matter, even the over-riding ones.’
The judgment continues ‘[i]t is true that it is in the interests of justice that crime should
be punished. However, punishment that is excessive serves neither the interests of
justice nor those of society.'
[18] The conclusion to which I have come bearing in mind all the above factors, as
also the fact that the appellant spent a period of approximately one year in custody prior
to the finalisation of the matter, is that a proper sentence on the murder conviction
would be one of 18 years’ imprisonment. I would, moreover, order the sentence of five
years’ imprisonment imposed on the appellant for the theft conviction to run
concurrently with the 18 years.
[19] One final aspect requires comment. It is unclear why the learned judge saw fit to
grant leave to the appellant to appeal to this court. In S v Monyane & others 2008 (1)
SACR 543 (SCA) para 28 this court stated:
‘It does not appear from the record that the trial judge considered whether leave to appeal should have
been granted to the full court. In terms of s 315(2)(a) of the Criminal Procedure Act 51 of 1977 when an
application for leave to appeal in a criminal case heard by a single judge is granted under s 316, the trial
judge shall, if satisfied that the questions of law and of fact and the other considerations involved in the
appeal are of such a nature that the appeal does not require the attention of the Supreme Court of
Appeal, direct that the appeal be heard by a full court. The present appeal is a case in which the trial
judge should have been so satisfied. There were no questions of law involved; the case raised no
question of principle; and there were no considerations which called for the attention of this court (S v
Myaka 1993 (2) SACR 660 (A) at 661i-662b). It frequently happens that simple appeals have to be heard
by this court. In order to avoid the unnecessary clogging of the roll of this court with matter that does not
require its attention, it is important that trial judges should not overlook the provisions of s 315(2)(a) (S v
Sinama 1998 (1) SACR 225 (SCA)). The inappropriate granting of leave to appeal to this court results in
cases of greater complexity and which are truly deserving of the attention of this court having to compete
for a place on the court roll with a case which is not (Shoprite Checkers (Pty) Ltd v Bumpers Schwarmas
CC and Others 2003 (5) SA 354 (SCA) para 23).’
[20] In the result the appeal is allowed to the extent set out below.
The sentence of 28 years’ imprisonment imposed by the court below pursuant to
the appellant’s conviction on count 1, the murder, is set aside and in its stead is
substituted a term of 18 years’ imprisonment.
The sentence of 5 years’ imprisonment imposed by the court below pursuant to
the appellant’s conviction on count 2, the theft, is ordered to run concurrently with
the sentence imposed on count 1.
The appellant is thus sentenced to an effective term of imprisonment of 18 years.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
L A van Wyk (Ms)
Instructed by:
Pretoria Justice Centre
Pretoria
Bloemfontein Justice Centre
Bloemfontein
For Respondent:
P W Coetzer
Instructed by:
Director of Public Prosecutions
Pretoria
Director of Public Prosecutions
Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 November 2010
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Van de Venter v The State
(342/10) [2010] ZASCA 146 (29 November 2010)
Media Statement
Today the Supreme Court of Appeal (SCA) upheld an appeal by André van de Venter against
the sentence imposed on him by the High Court for his conviction on one count each of
murder and theft. He was sentenced by the High Court to 28 years imprisonment for the
murder and 5 years for the theft. As those sentences were to run consecutively he was thus
sentenced to an effective term of 33 years’ imprisonment.
The appellant was convicted murdering Eric Nezar who was killed in his flat in Pretoria on 27
March 1998. The SCA held that the judgment of the court below on sentence was singularly
unhelpful. The judgment of the trial court alluded to the gravity of the offence, the brutality of
the deed and the lack of remorse displayed by the appellant as reflected in his failure to take
the court into his confidence and his disposing of the deceased's possessions the next
morning. What the judgment ignored though was the evidence contained in the reports of two
psychiatrists in the employ of Weskoppies Hospital. Both had concluded that the appellant's
moral responsibility was diminished because he had a schizoid personality and was
emotionally depressed. The judgment of the high court also ignored the report of the social
worker, which painted a picture of the appellant as a sad lonely youngster, the product of a
broken home.
The SCA held that the High Court had misdirected itself in that it had failed to even mention
the various mitigating factors that were present or to balance them against the aggravating
features in the commission of the offences. The trial court in failing to afford appropriate
recognition to those factors had disregarded the traditional triad of the crime, the offender and
the interests of society. It followed that the sentence imposed by the trial court could not
stand. It accordingly had to be set aside. The sentence of 28 years' imprisonment imposed by
the court below pursuant the appellant's conviction on the murder charge, was set aside and
in its stead was substituted a term of 18 years' imprisonment. The sentence of 5 years
imprisonment imposed by the trial court pursuant to the appellant's conviction on the charge
of theft was ordered to run concurrently with the 18 years imposed for the murder conviction.
In the result the appellant was sentenced to an effective term of 18 years’ imprisonment.
-- ends ---
|
3821
|
non-electoral
|
2022
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 933/20
In the matter between:
ALFRED MSEBENZI NHLAPO
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Nhlapo v The State (933/2020) [2022] ZASCA 72 (25 May 2022)
Coram:
Ponnan, Makgoka and Carelse JJA and Makaula and Savage AJJA
Heard:
03 May 2022
Delivered: 25 May 2022
Summary: Criminal appeal against sentence – special leave to appeal granted only
against the sentence of ten years’ imprisonment for attempted murder – cumulative
effect of sentences relevant – sentence on one count cannot be viewed in isolation
from the others – no warrant for interference – appeal dismissed.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Louw J and Manamela
AJ sitting as court of appeal):
The appeal is dismissed.
JUDGMENT
Savage AJA (Ponnan, Makgoka, Carelse JJA and Makaula AJA concurring):
Introduction
[1] The appellant was convicted in the regional court, Ermelo (Mpumalanga) of
theft of a firearm (count 1), possession of a firearm and ammunition in contravention
of ss 3 and 90 of the Firearms Control Act 60 of 2000 (counts 2 and 3) and attempted
murder (count 4). He had pleaded guilty to the first three counts and not guilty to the
fourth. On 19 January 2010, he was sentenced to terms of imprisonment for three
years, five years and one year on counts 1 to 3, respectively, and 10 years’
imprisonment on count 4. The sentences on counts 1 to 3 were ordered to run
concurrently with the sentence imposed on count 4. The effective sentence was thus
10 years’ imprisonment. In addition, the appellant was declared unfit to possess a
firearm.
[2] The appellant’s application for leave to appeal was dismissed by the trial court.
With the leave of the high court, obtained on petition to it, the appellant appealed to
the Gauteng Division of the High Court, Pretoria (the high court). The appeal was
against his conviction on count 4, being the attempted murder, and the sentence of
ten years’ imprisonment imposed pursuant thereto. The appeal was dismissed.
Subsequently, the appellant was granted special leave by this Court to appeal only
against the sentence imposed in respect of count 4.
Background facts
[3] The matter emanates from events which took place on 1 January 2008 at
Morgenzon, Mpumalanga. The appellant was drinking alcohol when he had an
altercation with another man about a girlfriend. The appellant held a beer bottle in his
hand, while the other man had a grass cutter. The appellant left the scene and went
to his parents’ home, where he stole a firearm belonging to his father, which had been
locked in a safe.
[4] The appellant returned to the scene of the earlier altercation. He was
aggressive and, on meeting the complainant, asked him if he wanted to die. Although
the complainant remained silent, the appellant fired one shot at him. Following this, he
warned the complainant that he would not miss again. The appellant then attempted
to fire a further shot while pointing the firearm at the complainant and his cousin, but
the firearm jammed.
[5] In considering an appropriate sentence, the magistrate had regard to the
relevant mitigating and aggravating circumstances. The appellant’s personal
circumstances were considered, including that he was 26 years old, unmarried with a
six-month-old child, lived with his parents, had passed grade 9 and was employed,
earning R3 500 fortnightly. Although alcohol was found to have played a role in the
commission of the offences, the seriousness of the offences and the appellant’s failure
to desist from his criminal conduct, despite an opportunity for reflection to do so, were
weighed against him. In addition, regard was had to his previous convictions, for
housebreaking, escaping from custody and obstruction of justice, and his failure to
comply with a sentence of correctional supervision. The court found that a sentence
of direct imprisonment was appropriate, with the terms of imprisonment imposed in
respect of the first three counts ordered to run concurrently with the 10 years’
imprisonment imposed on count 4.
[6] On appeal, the high court confirmed the conviction and found that there was no
misdirection in the sentencing of the appellant. It recognised that sentencing was the
prerogative of the trial court and found that the sentence imposed was not shockingly
inappropriate or vitiated by misdirection. The appeal was therefore dismissed.
[7] The appellant thereafter applied to this Court for special leave to appeal. The
two judges who considered the petition granted special leave to the appellant to appeal
to this Court solely against the sentence of 10 year’s imprisonment imposed on count
4. Counsel for the appellant conceded in argument before this Court that the sentence
of 10 years’ imprisonment imposed on count 4 could not be viewed in isolation
particularly where, as here, the sentences imposed in respect of the first 3 counts had
been ordered to run concurrently with that imposed in respect of count 4. However,
the sentence imposed for the attempted murder was said to be unduly harsh and, as
a result, to induce a sense of shock given the appellant’s relative youthfulness and his
capacity for rehabilitation. In support of this contention reliance was placed on various
authorities in which sentences of three and five years had been imposed for attempted
murder;1 where alcohol played a role in the commission of the offence; where there
had been evidence of provocation; and where no injury had been sustained.2 It goes
without saying that whilst previous judgments on sentencing do indeed serve a useful
purpose, each case falls to be decided on its own unique facts.3
Discussion
[8] The sentence imposed in respect of count 4 concerned a crime which, with the
remaining three offences committed, formed part of one criminal transaction. The trial
court correctly took account of the cumulative effect of the sentences imposed in
ordering that the sentence of nine years’ imprisonment in respect of the first three
counts be served concurrently with the sentence imposed in respect of count 4. All
relevant factors, including the mitigating and aggravating circumstances which
existed, the appellant’s prior criminal record, the seriousness of the crime committed,
and society's interest were appropriately considered.
[9] Sentencing is pre-eminently a matter for the discretion of the trial court. An
appeal court should be careful not to erode such discretion unless it has not been
judicially exercised, or the trial court misdirected itself to such an extent that its
decision on sentence is vitiated, or the sentence is so disproportionate or shocking
1 S v Skhosana [2018] ZAGPJHC 13. See the case of Mokela v S [2011] ZASCA 166; 2012 (1) SACR
431 (SCA) in which a sentence of five years was also imposed for the same crime.
2 S v Ntsime [2005] ZANWHC 30 paras 38 and 39.
3 See for example S v Sinden 1995 (2) SACR 704 (A) at 708A; S v D 1995 (1) SACR 259 (A) at 260e.
that no reasonable court could have imposed it.4 In this matter, the sentence of 10
years’ imprisonment arose consequent upon the trial court’s proper exercise of its
discretion, with which no interference by this Court is warranted. It follows for these
reasons that the appeal must fail.
Order
[10] The following order is made:
The appeal is dismissed.
___________________
K M SAVAGE
ACTING JUDGE OF APPEAL
4 S v Rabie 1975 (4) SA 855 (A) at 857E-F. See also Bogaards v S [2012] ZACC 23; 2012 (12) BCLR
1261 (CC); 2013 (1) SACR 1 (CC) para 41 and S v Anderson 1964 (3) SA 494 (AD) at 495D.
APPEARANCES
For appellant:
N J du Plessis
Instructed by:
Gerrie Groenewald Attorneys Inc, Mbombela
Kruger Venter Inc, Bloemfontein.
For respondent:
J Jacobs
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:
25 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 judgment of the Supreme Court of Appeal
Nhlapo v The State (933/2020) [2022] ZASCA 72 (25 May 2022)
Today the Supreme Court of Appeal (SCA) handed down a 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 the sentence of 10 years’ imprisonment imposed against the
appellant for attempted murder (count 4) could be viewed in isolation from sentences ordered to run
concurrently with that sentence.
The appellant was convicted in the regional court, Ermelo (Mpumalanga) of theft of a firearm (count 1),
possession of a firearm and ammunition in contravention of ss 3 and 90 of the Firearms Control Act 60
of 2000 (counts 2 and 3) and attempted murder (count 4). He pleaded guilty to the first three counts
and not guilty to the fourth. On 19 January 2010, he was sentenced to terms of imprisonment of three
years, five years and one year respectively in respect of counts 1 to 3; and 10 years’ imprisonment in
respect of count 4. The sentences imposed on counts 1 to 3 were ordered to run concurrently with the
sentence imposed on count 4, with the result that the effective sentence imposed was 10 years’
imprisonment.
When the trial court dismissed the appellant’s leave to appeal, the appellant appealed to the high court.
The high court upheld the conviction and found that there was no misdirection in the sentencing of the
appellant. In the SCA, this Court found that the sentence imposed in respect of count 4 concerned a
crime which, with the remaining three offences committed, formed part of one criminal transaction.
Accordingly, the SCA held that the trial court correctly took account of the cumulative effect of the
sentences imposed in ordering that the sentence of nine years’ imprisonment in respect of the first three
counts be served concurrently with the sentence imposed in respect of count 4. In doing so, the SCA
found that all relevant factors, including the mitigating and aggravating circumstances which existed,
the appellant’s prior criminal record, the seriousness of the crime committed, and society's interest were
appropriately considered.
The SCA reiterated that sentencing is pre-eminently a matter for the discretion of the trial court. Since
the sentence of 10 years’ imprisonment arose consequent upon the trial court’s proper exercise of its
discretion, no interference with such sentence by this Court was warranted. It followed for these reasons
that the appeal failed.
~~~~ends~~~~
|
2311
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 301/08
In the matter between:
SELSLEY FARM TRUST APPELLANT
v
SIMON MHLONGO RESPONDENT
Neutral citation:
Selsley Farm Trust v Mhlongo (301/2008) [2009] ZASCA
124 (28 September 2009).
Coram:
Harms DP, Navsa, Van Heerden, Mhlantla JJA, Leach AJA
Heard:
7 September 2009
Delivered:
28 September 2009
Summary:
Labour tenant under Act 3 of 1996 – whether requirements of the
definition of ‘labour tenant’ satisfied.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Land Claims Court (Ncube AJ sitting as court of first instance).
The following order is made:
The appeal succeeds.
The orders of the court a quo in respect of both the main application and
the counter application are set aside and are replaced with the following:
‘(a) The application is dismissed.
(b) There will be no order made on the counter application.
(c) There will be no order as to costs.’
________________________________________________________________
JUDGMENT
________________________________________________________________
LEACH AJA (Harms DP, Navsa, Van Heerden, Mhlantla JJA concurring)
[1] The appellant is the current owner of the farm commonly known as
‘Selsley’ situated in the district of Lions River in KwaZulu-Natal. The respondent,
who resides on the farm and has done so since about 1953, instituted
proceedings against the appellant in the Land Claims Court seeking certain relief,
including an order under s 33(2A) of the Land Reform (Labour Tenants) Act 3 of
1996 (‘the Act’) declaring him to be a labour tenant under the Act .
[2] The proceedings went to trial and culminated in a finding that the
respondent was indeed a labour tenant on Selsley. The respondent was
therefore granted the declarator he sought. The court also issued a further
interim order regulating the respondent’s use of land on Selsley pending the
determination of an application for the acquisition of land which the respondent,
as a labour tenant, had lodged with the Director-General under s 16(1) and 17 of
the Act. The appellant now appeals to this court against the finding that the
respondent was a labour tenant.
[3] Much of the factual background is not in dispute. In 1934 the respondent
was born on the farm Maritzdal where his parents resided and were employed by
the farmer, Mr Guy Kimber. Although the respondent’s father died when he was a
child, he and his mother remained living on Maritzdal where his mother, Mrs
Violet Mhlongo, was employed as a domestic worker. Eventually the respondent
was also taken into Guy Kimber’s employ as a labourer and driver.
[4] In about 1953, on the marriage of their son David, Guy Kimber and his
wife moved from Maritzdal, leaving it to be farmed by the newlyweds, and
relocated a few kilometers to Selsley, a farm which some 30 years previously
had been acquired by his father, Mr Percy Kimber, for purposes of winter
grazing. The respondent and his mother moved with them and continued working
in their employ on Selsley, he as a general labourer and driver and she as a
domestic worker. At all times since then the respondent has been resident on
Selsley, despite the farm having changed hands from time to time as I shall
mention in due course. On the other hand, in about 1958 or 1959 when Guy
Kimber’s wife left Selsley and moved to Tongaat, the respondent’s mother moved
with her to continue in her service.
[5] It is not clear whether Guy Kimber moved to Tongaat together with his
wife. However, he continued to farm Selsley until his death. Quite when that
occurred is not clear. While it appears to have been in about 1986, another of his
sons, Michael Kimber, who testified on behalf of the appellant and who had also
moved to live on Selsley when his brother had married, stated at one stage that
his father had died in about 1960. In the light of the view I have of the matter,
nothing turns on this.
[6] Michael Kimber, who had also moved to live on Selsley when his brother
had married and continued to live on the farm until 1998, only took over the
farming operations on the death of his father (whenever that occurred). On doing
so, he also took the respondent into his service and employed him in the same
capacity as his late father had done.
[7] Michael Kimber continued farming on Selsley until November 1998 when
he sold the farm to either a Mr David Watson or a company the latter represented
known as Meander-Selsley Farm (Pty) Ltd.1 Fortunately the precise identity of the
purchaser is not relevant to the determination of this appeal. Of greater
importance is the fact that the new owner, either Watson or his company,
1 Watson stated in evidence that he purchased the farm but there is documentation in the form of
a letter addressed to the Department of Land Affairs signed by Watson on behalf of the Meander-
Selsley Farm (Pty) Ltd which appears to be to the effect that the company was the owner.
continued to employ the respondent who remained resident on the farm. Several
months later the respondent became ill. In mid-1999 he stopped working and has
since received a state pension. Despite ceasing to work, he remained living on
Selsley, even after the farm was sold to the present appellant in 2004.
[8] According to the respondent, after his mother left Selsley he looked after
the few head of cattle she had accumulated but which remained behind on the
farm. When his mother died in about 1982, he inherited these cattle and their
progeny from her. This was disputed by the appellant but, once more, nothing
really turns on this. It is common cause that the respondent had a simple home
on the farm, and that he was permitted to both grow crops on a small piece of
land and to graze a number of cattle. The precise number of cattle he grazed,
although a matter of great dispute at the trial, is not relevant for purposes of this
appeal as the appellant concedes that the respondent had the right to both grow
some crops and to graze a few cattle on the farm.
[9] In the light of this background, I turn to the respondent’s contention that he
was a labour tenant under the Act. In s 1 of the Act a ‘labour tenant’ is defined as
being a person:
‘(a)
who is residing or has the right to reside on a farm;
(b)
who has or has had the right to use cropping or grazing land on the farm,
referred to in paragraph (a), or another farm of the owner, and in consideration of
such right provides or has provided labour to the owner or lessee; and
(c)
whose parent or grandparent resided or resides on a farm and had the use of
cropping or grazing land on such farm or another farm of the owner, and in
consideration of such right provided or provides labour to the owner or lessee of
such or such other farm,
including a person who has been appointed a successor to a labour tenant in
accordance with the provisions of section 3(4) and (5), but excluding a farmworker. . ..’
In contradistinction, the Act defines a ‘farmworker’ as being:
‘. . . a person who is employed on a farm in terms of a contract of employment which
provides that–
(a)
in return for the labour which he or she provides to the owner or lessee of the
farm, he or she shall be paid predominantly in cash or in some other form of
remuneration, and not predominantly in the right to occupy and use land; and
(b)
he or she is obliged to perform his or her services personally.’
It is clear from this that a labour tenant by definition cannot be a farmworker. It
should also be mentioned that s 2(5) of the Act provides that:
‘If in any proceedings it is proved that a person falls within paragraphs (a), (b) and (c) of
the definition of “labour tenant”, that person shall be presumed not to be a farmworker,
unless the contrary is proved.’
[10] Importantly, sub-paragraphs (a), (b) and (c) of the definition of labour
tenant are to be interpreted conjunctively or cumulatively.2 Thus, although the
respondent clearly satisfied the criteria set out in (a) of the definition, he can only
be regarded as a labour tenant under the Act if he also satisfies the criteria set
out in both (b) and (c).
[11] In arguing that he had satisfied requirements of both (b) and (c), the
respondent relied on his and his mother’s admitted entitlement to grow crops and
graze cattle on Selsley which, he submitted, had been extended to them in
consideration for their labour on the farm. The appellant, on the other hand,
denied this, contending that the respondent and his mother had been allowed to
graze cattle and grow crops due to their employer’s goodwill. In regard to this
issue, the trial court concluded that the evidence fell short of proving that ‘. . . the
right to use cropping and grazing land on the farm was exercised in consideration
for the labour which he and his mother provided to the owner of the farm’.
2 Ngcobo & others v Salimba CC; Ngcobo v Van Rensburg 1999 (2) SA 1057 (SCA).
[12] Despite having reached that conclusion, which meant in effect that the
respondent had not proved that he was a labour tenant, the trial court still found
for the respondent. It did so by reasoning that the test was not whether the
respondent had proved a link between the provision of labour and the right to
grow crops and graze cattle but whether or not the respondent was a
‘farmworker’ as defined in the Act; that the appellant bore the onus under s 2(5)
to prove that the respondent was a ‘farmworker’; that it had not discharged that
onus; and that the respondent was therefore presumed to be a ‘labour tenant’.
[13] By reasoning in this way the trial court misdirected itself by putting the cart
before the horse. While a farmworker is excluded from being a labour tenant, the
presumption in s 2(5) that a person is not a farmworker only arises where the
person concerned is shown to fall within the definition of labour tenant.
Accordingly, if it is not shown that the person in question satisfies the
requirements of all three sub-paragraphs of the definition of labour tenant, the
presumption cannot arise.
[14] The respondent therefore bore the onus of proving that he was a labour
tenant as defined. To do so, he had to lead evidence to satisfy the requirements
of the definition and, only on having done so, would the presumption in s 2(5)
have become operative. The trial court found that the respondent had not
established an essential requirement of the definition (viz that in consideration of
their labour he and his mother had received their right to crop and graze). It
ought therefore to have found that, as the requirements of the definition had not
been satisfied, the presumption in s 2(5) did not arise, and that the respondent’s
claim should be dismissed.
[15] On appeal, the respondent argued that he and his mother had received
their cropping and grazing rights in consideration of their labour and that the trial
court had erred in not finding that to have been the case. The appellant argued to
the contrary. In my view it is unnecessary to decide this issue as, for another
reason, the respondent’s claim must clearly fail.
[16] In respect of (c) of the definition, it was incumbent upon the respondent to
establish that he had a parent who (i) resided or resides on a farm (ii) had the
use of cropping or grazing land on such farm or another farm of the owner, and
(iii) in consideration of such right provided or provides labour to the owner or
lessee of such farm or other farm.
[17] The respondent’s case as pleaded was that this requirement had been
fulfilled by his mother having been employed by Guy Kimber on Selsley from
about 1953, when the Kimber family moved to the farm, until she left and moved
to Tongaat with Mrs Kimber, during which period, in consideration for providing
her labour, she had enjoyed the right to grow crops and to graze cattle. While
much of the evidence and a great deal of the argument centred on whether Mrs
Mhlongo had indeed grazed cattle on Selsley and, if she did, whether she had
done so and had enjoyed her rights to grow crops in consideration of providing
her labour, sight appears to have been lost of the further requirement for (c) of
the definition to be satisfied, viz that her labour had to be provided to the owner
or lessee of the farm.
[18] It is on this aspect of the matter that the respondent’s claim flounders. The
‘owner’ of the farm as contemplated by the definition of ‘labour tenant’ is defined
in s 1 of the Act as meaning:
‘. . . the owner, as defined in section 102 of the Deeds Registries Act, 1937 (Act 47 of
1937), of a farm, and where it occurs in the definition of “labour tenant”, includes his or
her successors and predecessors in title.’
Had Guy Kimber been the owner, as so defined, or the lessee of Selsley, the
statutory requirement in question would have been met. But the respondent
neither attempted to prove that Guy Kimber was the owner of Selsley at any time
nor who the owner was at the material time that Mrs Mhlongo exercised her
rights to grow crops and graze cattle on the farm. He appears to have overlooked
that Michael Kimber, in an affidavit filed before the hearing and confirmed by him
at the outset of his testimony, said the following:
‘5
Selsley farm was purchased by my grandfather during or about 1919 to 1923. My
grandfather, whose names were PERCY DICKSON KIMBER, had a farm in the
Impendle area and purchased Selsley Farm for the purpose of moving cattle and horses
to the Dargle area during the winter months.
When my grandfather died, Selsley Farm was inherited by my father, GUY
McKENZIE KIMBER. I then inherited Selsley Farm from my father when he died during
or about 1986.
In fact, ownership of the farm did not follow what I have referred to above as
ownership. During my grandfather’s lifetime he transferred the farm to me. I recall this
being during or about 1950. My father thereafter farmed the farm until his death when I
took it over.’
[19] As appears from this, during the material time that the respondent’s
mother resided on Selsley Farm and worked for Guy Kimber and his wife, the
farm was in fact owned by Michael Kimber to whom she did not render her
labour. How it came about that Guy Kimber farmed the farm owned by his son
was neither canvassed in evidence nor explained in any way. He may well have
leased it, in which event the requirement in sub-para (c) that the labour be
provided to the owner or lessee would have been satisfied: but one cannot
speculate on whether that was the case. It takes little imagination to think of
circumstances under which Guy Kimber came to farm Selsley without being its
owner or lessee.
[20] Faced with this difficulty, counsel for the respondent fell back on an
argument that Mrs Mhlongo had worked for Guy Kimber at a time when he
owned Maritzdal. Not only had this never formed part of the respondent’s claim
as pleaded but, probably as a result, the issue of who had been the owner of
Maritzdal was not investigated during the trial and there is nothing to show that
Guy Kimber was its owner at that time.
[21] The respondent therefore failed to satisfy an essential element of his case,
viz that his mother had provided labour to the owner or lessee of a farm as
required by sub-clause (c) of the definition of labour tenant. The court a quo thus
erred in finding that the respondent was a labour tenant and its finding and
declarator in that regard cannot stand. The appeal must therefore succeed.
[22] In its counter application the appellant sought an order evicting the
respondent from Selsley. However, while counsel for the appellant asked for the
order of the court a quo dismissing the counter application to be set aside, he
informed us that the appellant sought neither an eviction order nor a costs order
against the respondent. In the light of the appellant’s attitude on these aspects,
this court need order no more than as is set out below.
[23] The following order is made:
The appeal succeeds.
The orders of the court a quo in respect of both the main application and
the counter application are set aside and are replaced with the following:
‘(a)
The application is dismissed.
(b)
There will be no order made on the counter application.
(c)
There will be no order as to costs.’
_____________________
L E LEACH
ACTING JUDGE OF APPEAL
APPEARANCES:
COUNSEL FOR APPELLANTS: A de Wet
INSTRUCTED BY:
Hay & Scott Attorneys; Pietermaritzburg
CORRESPONDENT:
Honey Attorneys; Bloemfontein
COUNSEL FOR RESPONDENT: T C Mbhense
INSTRUCTED BY:
Legal Aid Board; Pietermaritzburg
CORRESPONDENT:
Bloemfontein Justice Centre; Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 September 2009
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court
of Appeal.
SELSLEY FARM TRUST v SIMON MHLONGO
The appellant, the owner of the farm Selsley in the district of Louis River,
KwaZulu-Natal, appealed to the Supreme Court of Appeal against a decision in
the Land Claims Court which had declared the respondent to be a ‘labour tenant’
under Act 3 of 1996.
The Supreme Court of Appeal today upheld the appeal, finding that the
respondent had failed to prove an essential element of his case, namely, that his
mother had provided labour to the owner or lessee of the farm. While the court
accepted that the respondent’s mother had worked for a Mr Guy Kimber on the
farm, the evidence established that he was not the owner and there was no
evidence that he leased the farm. The respondent had thus failed to prove an
essential element of his claim which had to fail.
|
1857
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 611/2010
In the matter between:
NTOMBIZODWA YVONNE MAPHANGO
(NOW MGIDLANA) AND 17 OTHERS
APPELLANTS
v
AENGUS LIFESTYLE PROPERTIES
(PTY) LTD
RESPONDENT
Neutral citation:
Maphango v Aengus Lifestyle Properties (611/2010) [2011]
ZASCA 100 (1 June 2011)
Coram:
Brand, Lewis, Cachalia, Shongwe JJA and Plasket AJA
Heard:
17 May 2011
Delivered:
01 JUNE 2011
Summary:
Termination of lease agreements ─ tacit term contended for that
landlord will not employ termination clause in order to renegotiate new leases at
higher rental ─ found not to have been established ─ reliance on s 26(1) of the
Constitution and other considerations of public policy ─ unsuccessful
________________________________________________________________
ORDER
________________________________________________________________
On appeal from:
South Gauteng High Court (Johannesburg) (Van der Riet AJ
sitting as court of first instance).
The appeal is dismissed.
________________________________________________________________
JUDGMENT
________________________________________________________________
BRAND JA (LEWIS, CACHALIA, SHONGWE JJA and PLASKET AJA):
[1] The 18 appellants are lessees of flats in a ten storey building known as
Lowliebenhof, in Braamfontein, Johannesburg. The respondent is the owner of
the building. Proceedings started when the respondent brought an application in
the South Gauteng High Court, Johannesburg, for the eviction of the appellants
and their families from the flats on the basis that their leases had been duly
terminated by notice on its behalf. The appellants opposed the application,
essentially on two grounds. First, that the respondent’s purported termination of
the leases was invalid. Second, that, even if the leases were validly terminated, it
would not be just and equitable to evict them from the flats. For the second
ground they relied on the provisions of s 4(6) of the Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998, that generally became
known as PIE.
[2] When the application came before Van der Riet AJ in the court a quo, the
respondent conceded that the leases of two of the appellants, Ms Siguca and Ms
Masemola had not been validly terminated. With regard to the sixteen other
leases involved, Van der Riet AJ upheld the respondent’s contention that the
termination was valid. He further held, in respect of nine of the appellants, that
there were no grounds of justice and equity, as contemplated in s 4(6) of PIE,
that would justify the refusal of their eviction. These nine appellants were
therefore evicted. As to the other seven appellants, he concluded that an eviction
order would render them homeless and would thus not be just and equitable as
contemplated by s 4(6) of PIE. At the behest of these appellants, he therefore
postponed the application for their eviction for three months so as to afford them
the opportunity to join the City of Johannesburg as a party to the proceedings
and to obtain a report from the latter, setting out what steps it could take to
provide them with alternative accommodation. As to the costs of the application,
Van der Riet AJ decided that since the matter involved constitutional issues, the
parties should pay their own costs.
[3] The appeal against the judgment of Van der Riet AJ is with his leave. In
essence it is aimed at two findings in the judgment. First, that the leases were
validly terminated. Second, that Ms Siguca and Ms Masemola should pay their
own costs.
Termination of the lease agreement
[4] I start with the issues surrounding the termination of the leases. The
respondent purchased the property in 2007, but only became the owner in May
2009, shortly before the eviction applications were launched. It was not a party to
any of the leases. They were concluded over the years between the different
appellants, as lessees, and whoever happened to be the respondent’s
predecessor as owner of the building at the time, as lessor. However, by
operation of the common law principle of huur gaat voor koop, the respondent
became the successor to all rights and obligations deriving from these lease
agreements, when it became the owner of the building.
[5] The appellants entered into four different pro forma lease agreements that
were identified with reference to the name of the lessor at the time, as the
Ithemba agreement, the Union agreement, the Artisan agreement and the Eagle
Creek agreement. For reasons that will soon become apparent, the appellants
emphasised those terms of the four agreements that deal with increases in the
stipulated rental while the respondent’s focus was directed at the period of the
lease for which the different agreements provide.
[6] As to increases in the stipulated rental, three of the agreements expressly
limit the increment at which the stipulated rent can be increased annually. The
Ithemba agreement permits an increase of 10 per cent, together with an amount
equal to any increase in rates, taxes and other stipulated expenses payable by
the lessor in respect of the building, distributed pro rata between the tenants
occupying the property. In the Union agreement, the annual escalation is 15 per
cent, while the Artisan agreement limits the increment to the lessee’s pro rata
share of any increase in rates and taxes payable by the lessor. The Eagle Creek
agreement is the exception. It does not specifically impose a limitation on the
increase of rental, but it is common cause that in this case any increase must be
reasonable (see s 5(6)(c) of the Rental Housing Act 50 of 1999). Finally, the
Ithemba agreements provide that in the event of some legislative provisions
affecting the rental, the respondent cannot increase the rent without first
approaching the competent authority for leave to do so.
[7] As to termination of the leases, each of the agreements provides for an
initial fixed period. In the Ithemba agreement, for example, it is 12 months. After
the initial period, each agreement is automatically renewed indefinitely. Three of
the agreements contain an express provision entitling both parties to terminate
the agreement on written notice to the other, though the periods of notice
required are of different duration. The Artisan agreement does not have an
express term providing for termination by notice. But it is not in issue that in
terms of the residual rules of the common law, this agreement is also terminable
by either party after the initial period, on reasonable notice to the other (see eg A
J Kerr The Law of Sale and Lease 3 ed (2004) at 488; Francois du Bois (ed)
Wille’s Principles of South African Law 9 ed (2007) at 918 para 9(1) and the
authorities there cited.) With regard to termination, the Ithemba agreement again
contains a provision which is not to be found in the other agreements. It is to the
effect that, if the lease is supported by a Department of Housing subsidy,
termination shall be at the discretion of the lessee. As it turned out, the only two
leases that were supported by a Departmental subsidy were those of Ms Siguca
and Ms Masemola. That is why the respondent conceded that their leases could
not be terminated on notice by the respondent.
[8] It is common cause that in respect of all the leases the initial fixed period
had lapsed prior to the notices of termination, to which I now turn. From about
September 2008, the respondent gave written notice of termination of the leases
to each of the appellants. The notices called upon them to vacate their flats on
different dates during the period from November 2008 to March 2009. The
notices also informed the appellants that if they wished to stay on in their flats
beyond the stipulated dates, they would have to enter into new lease agreements
at rentals which were between 100 per cent and 150 per cent more than what
they were paying at the time. The appellants refused to accept the termination of
their agreements. They also said that they could not afford to pay the increased
rent. They accordingly remained in occupation and continued to pay the rental
amounts that they were paying at the time.
[9] The respondent’s explanation as to why it gave these notices remained
mainly undisputed. According to this explanation, the respondent’s business
model is to acquire buildings in the Johannesburg CBD that are often derelict,
which it then renovates and rents out to tenants. This business model requires it
to be able to generate sufficient income from rental in order to service the
acquisition and renovation costs of the building. It acquired Lowliebenhof for
R11 628 000, which it obtained through bond finance.
[10] After acquisition of the building, the respondent spent an amount of over
R1 million on renovation and maintenance. It also employed fulltime guards and
cleaners. These expenses appear to have been advantageous to the tenants of
the building. In motivating why the appellants would not be able to afford
comparable accommodation in the same area, their attorney, inter alia, said
about other flats in the area that:
‘The buildings are not well maintained and major renovations would have to be done for
them to be a viable alternative to Lowliebenhof.’
[11] But the result of these expenses was that the rent paid by the appellants
(and presumably the occupants of other flats in the building) was insufficient to
cover the costs of bond finance, renovation and maintenance. As a result, the
respondent found that the project was running at a loss. At the same time, so the
respondent said, there were a number of potential tenants who were willing and
able to pay the increased rental it was constrained to impose in order to render
the project financially viable.
[12] The arguments advanced by the appellants against this background as to
why the leases were not validly terminated, were twofold:
(a)
First, they contended that each of the lease agreements contained a tacit
term which forbids the use of the termination clause to effect an increase in rental
beyond the increment provided for in the respective agreements;
(b)
Second, that to allow the respondent to terminate the agreements for the
sole purpose of allowing it to implement a rent increase would be contrary to
public policy. For their argument based on public policy, the appellants relied on
three grounds: (a) that the termination would be unreasonable and unfair; (b)
that it would constitute an infringement of their constitutional right to have access
to adequate housing in terms of s 26(1) of the Constitution; (c) that it constituted
an ‘unfair practice’ as contemplated in the Rental Housing Act 50 of 1999 read
with the Gauteng Unfair Practice Regulations 2001, promulgated under that Act.
Tacit term
[13] I propose to deal first with the argument based on a tacit term. As
explained by Corbett AJA in Alfred McAlpine & Son (Pty) Ltd v Transvaal
Provincial Administration 1974 (3) SA 506 (A) at 531-532, a tacit term is an
unexpressed provision of a contract, inferred by the court from the express terms
of the contract and the surrounding circumstances. Because a tacit term is
derived from an inference as to what both parties must have intended, if they had
applied their minds, the inference will be drawn only if the court is satisfied that it
is a necessary one. Once there is difficulty and doubt as to how the term should
be formulated or how far it should go, it can hardly be said that the parties clearly
intended the proposed term to be part of their agreement (see eg South African
Mutual Aid Society v Cape Town Chamber of Commerce 1962 (1) SA 598 (A) at
606B; Desai v Greyridge Investments (Pty) Ltd 1974 (1) SA 509 (A) at 522H-
523A).
[14] Over the years our courts have formulated the test to be applied in order
to decide whether the importation of a tacit term would be appropriate in various
ways. Another variation would hardly contribute to clarity. Suffice it therefore to
refer to the following summary by Nienaber JA in Wilkens NO v Voges 1994 (3)
SA 130 (A) at 137A-C:
‘The practical test for determining what the parties would necessarily have agreed on the
issue in dispute is the celebrated bystander test. Since one may assume that the parties
to a commercial contract are intent on concluding a contract which functions efficiently, a
term will readily be imported into a contract if it is necessary to ensure its business
efficacy; conversely, it is unlikely that the parties would have been unanimous on both
the need for and the content of a term, not expressed, when such a term is not
necessary to render the contract fully functional.’
[15] Relying on the test thus formulated, the appellants contended that a tacit
term, which prohibits the exercise of the right to terminate for the sole purpose of
effecting a rental increase which exceeds the increment agreed upon, is
necessary to ensure the efficacy of the agreements. Without this term, so the
argument went, the landlord could demand an increase in excess of that agreed
upon by simply threatening to terminate the contract. Moreover, so the argument
continued, absent the proposed tacit term, there would be no consensus on an
essential term of the contract. A definite or ascertainable rental is one of the
essentialia of a lease. Were the landlord permitted to use the termination clause
to effect a rental increase, the rent would not be definite or ascertainable.
[16] I find these arguments logically unsound. None of them pertain to the
position while the lease agreements are in place. During the currency of the
lease, the lessees are not at the landlord’s mercy insofar as rental increases are
concerned. Nor can there be any uncertainty about the permitted increases. Both
parties are bound by the terms controlling rental increases. However, once the
agreements are validly terminated, the landlord is no longer bound by the
express or implied provisions of the erstwhile lease. Whether or not a lease
agreement was validly terminated depends on the termination provisions. Thus,
for example, any purported termination during the initial fixed period would not be
valid. During that period the lessee therefore enjoys the benefits of the rental
increase provisions. The same goes for the required period of notice. In short,
during the currency of the lease, business efficacy does not require an
incorporation of the proposed tacit term. After termination of the lease, the
proposed tacit term would be of no consequence.
[17] For their further arguments in support of the tacit term they propose, the
appellants relied on what Nienaber JA referred to in the quotation from Wilkens
NO as the celebrated bystander test. It will be remembered that according to this
test the enquiry is what the response of both parties would have been if, at the
time the contract was being negotiated, the officious bystander were to ask them
‘what would happen in such and such a case?’. Incorporation of the proposed
term requires the unanimous confirmation of the proposed term with the
comment ‘we did not trouble to say that; it is too clear’. (Per Scrutton LJ in
Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 (CA) at
605).
[18] With reference to this test, the appellants argued that if the officious
bystander were to ask the parties whether they intended the owner to be able to
circumvent the rental increase provisions by making use of the termination
clause, the answer would have been no. They found support for their argument in
the provisions of the Ithemba agreement to the effect that if the lease is
supported by Departmental subsidy, termination would be at the discretion of the
lessee. This shows, so the argument went, that these leases were entered into
with security of tenure in mind.
[19] As I see it, the last-mentioned part of the argument goes against the
appellants. What it indicates is that, where the parties intended to qualify the
termination provisions so as to provide the lessees with additional security of
tenure ─ beyond the initial fixed period and the notice period ─ they knew exactly
how to do so. Of greater significance, however, is that in my view the question
put forward by the appellants as the one that the officious bystander would ask,
is wrongly formulated. In consequence, the answer to the officious bystander is
likely to be wrong. The question is not whether the landlord may circumvent the
rental escalation provisions by means of the termination clause. What the
officious bystander would ask is whether either party would be entitled to
terminate the agreement, after the initial fixed period and in accordance with the
termination clause, in order to negotiate a new lease with different contractual
terms. As I see it the answer would then be ─ why not?
[20] As formulated by the appellants, the question posed by the officious
bystander would introduce the consideration of motive in the exercise of a
contractual right, while that consideration is generally irrelevant (see eg
Bredenkamp v Standard Bank of South Africa Ltd 2010 (4) SA 468 (SCA) para
7). Introduction of motive through incorporation of a tacit term would in my view
elicit the question ─ what motive for termination by notice would be acceptable?
Would the landlord have to justify its motive for termination in every case? Is the
lessee also required to have a valid motive for terminating the agreement on
notice? If so, would the fact that the lessee can no longer afford the rental
constitute a valid reason? As I see it, all these difficulties stand in the way of the
incorporation of the tacit term for which the appellants contend.
[21] In addition, acceptance of the appellants’ argument would mean that the
landlord had entered into a lease of infinite duration without being entitled to
terminate the agreement, even when the enterprise seeks to be commercially
viable. Why this notion is inherently untenable is illustrated by the situation that
arose in this case. In my view, it stands to reason that this unlikely
intention on the part of the landlord can hardly be incorporated into the lease
agreements on the basis that it is self-evident.
Reasonableness and fairness
[22] I now turn to the appellants’ case based on public policy. Their first
contention in this regard was that termination of the leases was, in the
circumstances, unreasonable and unfair and should therefore not be enforced on
grounds of public policy. In support of this contention the appellants argued that it
had been decided by the Constitutional Court in Barkhuizen v Napier 2007 (5) SA
323 (CC) that, as a matter of public policy, our courts will not give effect to the
implementation of a contractual provision which is unreasonable and unfair.
[23] I believe that the argument is fundamentally flawed because the
proposition on which it relies is not supported by the decision of the
Constitutional Court in Barkhuizen, nor does it reflect the principles of our law of
contract as they stand. Reasonableness and fairness are not freestanding
requirements for the exercise of a contractual right. That much was pertinently
decided in Bredenkamp (para 53). As to the role of these abstract values in the
law of contract, this court expressed itself as follows in South African Forestry Co
Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) para 27:
‘. . . . [A]lthough abstract values such as good faith, reasonableness and fairness are
fundamental to our law of contract, they do not constitute independent substantive rules
that courts can employ to intervene in contractual relations. These abstract values
perform creative, informative and controlling functions through established rules of the
law of contract. They cannot be acted upon by the courts directly. Acceptance of the
notion that judges can refuse to enforce a contractual provision merely because it
offends their personal sense of fairness and equity will give rise to legal and commercial
uncertainty.’
(See also eg Brisley v Drotsky 2002 (4) SA 1 (SCA) paras 21-25 and 93-95)
[24] In Barkhuizen, Ngcobo J, writing for the majority, first explained (para 80)
what he meant by the notion of ‘good faith’, namely that it encompasses the
concepts of justice, reasonableness and fairness. He then proceeded to express
the principles of our law, as formulated by this court, inter alia in Brisley, in the
following terms (para 82):
‘As the law currently stands good faith is not a self-standing rule, but an underlying value
that is given expression through existing rules of law. In this instance good faith is given
effect to by the existing common-law rule that contractual clauses that are impossible to
comply with should not be enforced . . . . Whether, under the Constitution, this limited
role of good faith is appropriate and whether the maxim lex non cogit ad impossibilia
alone is sufficient to give effect to the value of good faith are, fortunately, not questions
that need be answered on the facts of this case and I refrain from doing so.’
[25] Unless and until the Constitutional Court holds otherwise, the law is
therefore as stated by this court, for example, in South African Forestry Co,
Brisley and Bredenkamp. Accordingly, a court cannot refuse to give effect to the
implementation of a contract simply because that implementation is regarded by
the individual judge to be unreasonable and unfair. Strictly speaking the enquiry
into the reasonableness and fairness of the respondent’s termination of the
contract of the leases is therefore unnecessary. But in any event, I am not
persuaded that in the circumstance the termination of the leases can be
denounced as unreasonable and unfair. The respondent’s business venture, to
acquire and upgrade residential buildings in the inner city of Johannesburg, is
commendable. Amongst other things, it appears to be in line with the initiatives of
the Johannesburg City Council. However, since the respondent is not a
charitable organisation, it cannot be blamed for its unwillingness to pursue this
commendable business venture at a loss as would be the result if the current
leases were to be maintained at the agreed rentals. The respondent therefore
decided to terminate the leases, as it was contractually entitled to do, to save its
business from commercial demise. In doing so, it behaved transparently by
disclosing its motive, which it was not obliged to do. Had it not done so, the
present litigation would probably not have ensued. Objectively, I can find nothing
in the respondent’s conduct that can justifiably be described as unreasonable
and unfair.
The impact of s 26(1) of the Constitution
[26] The appellants’ further argument relied on the proposition that the
termination of the leases was contrary to public policy, because it constituted an
infringement of their right of access to adequate housing in terms of s 26(1) of
the Constitution. The logical progression of their argument proceeded as follows:
(a)
According to well-settled principles of our common law, a term of a
contract will not be enforced if either the term itself or its enforcement will be
contrary to public policy (see eg Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at
7I-J).
(b)
Public policy represents the legal convictions of the community. Since the
advent of our constitutional democracy, public policy is informed by our
Constitution and the values which underlie it (see eg Afrox Healthcare Bpk v
Strydom 2002 (6) SA 21 (SCA) para 18; Barkhuizen v Napier 2007 (5) SA 323
(CC) para 28).
(c)
Consequently, a term in a contract that is inimical to the values enshrined
in the Constitution is contrary to public policy and therefore, unenforceable (see
eg Barkhuizen para 29; Bredenkamp v Standard Bank of South Africa Ltd 2010
(4) SA 468 (SCA) para 43).
(d)
Even if a contractual provision is not in itself in conflict with any
constitutional value, its enforcement may be. In that event, the first question is
whether the rights so infringed ─ such as the right to practise a trade, occupation
or profession, or the right to freedom of expression ─ can in principle be limited in
terms of s 36 of the Constitution. If so, the second question is whether the
limitation brought about by the enforcement of the contractual provision is fair
and reasonable in the circumstances (see eg Bredenkamp paras 47-48).
(e)
Security of tenure is a constitutional element of the right of access to
housing in terms of s 26(1) of the Constitution (see Jaftha v Schoeman; Van
Rooyen v Stoltz 2005 (2) SA 140 (CC) para 29; Gundwana v Steko Development
CC (CCT 44/10) [2011] ZACC 14 (11 April 2011) para 40).
(f)
The rights enshrined by s 26(1), including the right to security of tenure to
one’s home, embodies both a positive and a negative element. Positively, it does
not bind private persons, but its provisions oblige the state to take reasonable
measures to achieve the realisation of the right. In its negative aspect it also
binds private persons. Apart from the obligations of the state, it thus forbids
private persons from interfering with the rights of any other person in terms of the
section (see eg Standard Bank of South Africa Ltd v Saunderson 2006 (2) SA
264 (SCA) para 12).
[27] In furtherance of their case, the appellants then sought to apply these
principles in the following way. The termination provisions, so they conceded, are
not in themselves inimical to the rights enshrined in s 26(1), since there is
nothing wrong with providing for the termination of a lease on notice. Yet the
implementation of these provision resulted in an infringement of their right to
security of tenure to the flats that are their homes. In consequence, the
respondent was bound to exercise its right under the termination provisions in a
manner that was reasonable and fair. Since the termination of their leases was in
the circumstance unreasonable and unfair, it was contrary to public policy.
[28] Though I agree with the general principles relied on by the appellants, my
difficulty lies with the way in which they sought to apply these principles in
furtherance of their case. What their argument appears to lose sight of is that a
lessee of property has no security of tenure in perpetuity. The duration of the
lessee’s tenure is governed by the terms of the lease.Generally speaking a lease
can be for a fixed period, say 10 years or six months or for an uncertain period,
eg until X dies. If the period of the lease is left undetermined, it can be terminated
on notice. If the period of notice is not specifically agreed upon, the residual rules
require that the notice must be reasonable. One thing a lease cannot be is ‘for
ever’. A purported lease in perpetuity is not a lease: it constitutes another
contract, namely emphyteusis or ‘erfpag’ (see eg A J Kerr The Law of Sale and
Lease 3 ed (2004) p 273-274; 14 Lawsa 2 ed para 4 sv ‘Lease’; De Wet & Van
Wyk SA Kontrakte en Handelsreg 5 ed (1992) p 356).
[29] Beyond the period of the lease, the lessee has no security of tenure. If the
lease is for say 10 years, it goes without saying that the lessee’s security of
tenure is for 10 years only. If after 10 years the lessor insists that the lease has
been terminated through effluxtion of time, no one will suggest that such
insistence amounts to an infringement of the lessee’s security of tenure under s
26(1) of the Constitution. Perhaps less obvious is the situation where the lease is
terminated on notice. But the principle remains the same. The parties agreed at
the outset that the lessee’s tenure can be terminated on notice. What this
amounts to, is an agreement that the lessee’s security of tenure will never endure
beyond the end of the notice period.
[30] The position of owners, on the other hand, is quite different. The right of
an owner to possession is of indefinite duration. That, I believe, is the main
distinction between cases like Jafta, Saunderson and Gundwana, on the one
hand and the present case on the other. Those cases dealt with interference with
the right of security of tenure of an owner to his or her home. The combined
effect of those cases is that a termination of that right may only follow upon
judgment in a court of law. In this case, as I have said, the appellants had no
security of tenure beyond the duration of the leases. Put in another way, this
security of tenure was circumscribed by the leases themselves. It therefore
cannot be said that termination in accordance with the leases, constituted an
infringement of their right to security of tenure.
Provisions of the Housing Act 50 of 1999 and the Gauteng Unfair Practice
Regulations, GN 4004 of 2001
[31] Finally, the appellants contended that the termination of the leases was
contrary to public policy because it constituted an unfair practice in contravention
of the Rental Housing Act 50 of 1999 and the relevant regulations promulgated
under that Act. From the appellants’ argument it never became clear why they
chose this circuitous route instead of simply relying on a contravention of the Act.
But be that as it may.
[32] With regard to the provisions of the Act, the appellants’ particular focus
was on s 4(5)(c). In terms of this section the landlord may ‘terminate the lease in
respect of rental housing property on grounds that do not constitute an unfair
practice and are specified in the lease’. ‘Unfair practice’ is defined in s 1 of the
Act to mean ‘(a) any act or omission by a landlord or tenant in contravention of
this Act; or (b) a practice prescribed as a practice unreasonably prejudicing the
rights or interests of a tenant or a landlord’.
[33] Since the appellants do not contend for any contravention of the Act by
the respondent, we are not concerned with part (a) of the definition. As to part
(b), ‘prescribed’, is defined in s 1 to mean ‘prescribed by regulation by the
Member of the Executive Council of a province responsible for housing matters,
by notice in the Gazette’. With reference to the regulations thus prescribed by
the MEC for Housing in the Province of Gauteng (GN 4004 of 2 July 2001), the
appellants relied on two provisions, namely: (a) Regulation 41(d) which prohibits
a landlord from engaging in ‘oppressive or unreasonable conduct’, and (b)
Regulation 14(1)(f) which provides that ‘a landlord must not conduct any activity
which unreasonably interferes with or limits the rights of the tenant . . .’.
[34] I do not agree with the appellants’ contention that the termination of their
leases constituted a contravention of these statutory provisions. First, the
provisions of the Act and the regulations relied upon are directed against a
‘practice’. That does not contemplate, as I see it, unacceptable conduct by the
landlord on an isolated occasion (see eg The Concise Oxford English Dictionary
which defines ‘practice’ (in this context) as ‘the customary or expected procedure
or way of doing something’). It envisages incessant and systemic conduct by the
landlord which is oppressive or unfair. Termination of a lease would therefore not
qualify as a practice. Secondly, for reasons I have already stated, I do not believe
that the respondent’s terminations of the leases could in the circumstances be
denounced as unreasonable or unfair, let alone oppressive.
Costs of two appellants in the court a quo
[35] This brings me to the second part of the appeal which is directed at the
court a quo’s order to the effect that Ms Siguca and Ms Masemola, who were
successful on the merits, should pay their own costs. It will be remembered that
the respondent conceded in the court a quo that its eviction application against
these two appellants could not succeed. The reason for the concession was that
these two appellants had entered into the Ithemba agreement and that, because
their leases were supported by a Department of Housing subsidy, these leases
could, in terms of the specific provisions of the agreement, only be terminated at
the discretion of the lessee.
[36] Since the impugned costs orders were made in the exercise of its
discretion by the court a quo, this court can only interfere on the basis that the
discretion had not been properly exercised. I do not believe that the appellants
have made out that case. On the contrary, I think these costs orders were justly
made. All the appellants, including those who were successful and those who
were not, were represented by the same counsel. They all filed affidavits which
were identical in all material respects. Where the appellants were unsuccessful,
no costs orders were made in favour of the respondent and I can see no reason
why the position of the successful appellants should be any different. Moreover,
the defence on which the two appellants ultimately succeeded was only raised at
a late stage of the proceedings, when virtually all the papers had been filed.
Costs on appeal
[37] Following the guidance of the Constitutional Court in Barkhuizen (para
90) and in Biowatch Trust v Registrar, Genetic Resources 2009 (6) SA 232
(CC), the court a quo held that, since the appellants raised important
constitutional issues, they should not be burdened with costs. It therefore made
no order as to costs. I believe this court should adopt the same approach with
regard to the costs of appeal.
Order
[38] In the result the appeal is dismissed.
____________________
F D J Brand
Judge of Appeal
APPEARANCES:
APPELLANTS:
D I Berger SC (with him S Wilson & I de Vos)
Instructed by Mdladlamba Attorneys, Johannesburg
Lovius Block Attorneys, Bloemfontein
RESPONDENTS:
G C Wright (with him N Mbelle)
Instructed by Knowles Husain Lindsay Inc
c/o John Broido, Johannesburg
McIntyre & Van der Post, 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
1 June 2011
STATUS: Immediate
MAPHANGO V AENGUS LIFESTYLE PROPERTIES (611/2010)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal (the SCA) today dismissed the appeal.
The 18 appellants are lessees of flats in a ten storey building. The respondent is the
owner of the building. The respondent brought an application in the South Gauteng
High Court (the court a quo) for the eviction of the appellants and their families from
the flats on the basis that their leases had been duly terminated by notice on its
behalf. The appellants opposed the application, essentially on two grounds. First,
that the respondent’s purported termination of the leases was invalid. Second, that,
even if the leases were validly terminated, it would not be just and equitable to evict
them from the flats, for this ground they relied on the provisions of s 4(6) of the
Prevention of Illegal Eviction from Unlawful Occupation of Land Act 19 of 1998 (PIE).
When the application came before Van der Riet AJ in the court a quo, the
respondent conceded that the leases of two of the appellants, Ms Siguca and Ms
Masemola, had not been validly terminated. With regard to the sixteen other leases
involved, Van der Riet AJ upheld the respondent’s contention that the termination
was valid. He further held that, in respect of nine of the appellants, that there were
no grounds of justice and equity, as contemplated in s 4(6) of PIE, that would justify
the refusal of their eviction. These nine appellants were therefore evicted. As to the
other seven appellants, he concluded that an eviction order would render them
homeless and would thus not be just and equitable as contemplated in s 4(6). He
postponed the application for three months so as to afford them the opportunity to
join the City of Johannesburg as a party to the proceedings and to obtain a report
from the latter, setting out what steps it could take to provide them with alternative
accommodation. As to costs Van der Riet AJ decided that since the matter involved
constitutional issues, the parties should pay their own costs.
The issues before the SCA were whether the leases were validly terminated; and
whether Ms Siguca and Ms Masemola should pay their own costs. From about
September 2008, the respondent gave written notice of termination of the leases to
each of the appellants. The notices called upon them to vacate their flats on different
dates during the period from November 2008 to March 2009. The notices also
informed the appellants that if they wished to remain in their flats beyond the
stipulated dates, they would have to enter into new lease agreements at rentals
which were between 100 per cent and 150 per cent more than what they were
paying at the time. The appellants refused to accept the termination of their
agreements, could not afford to pay the increased rent, and accordingly remained in
occupation and continued to pay the rental amounts they were paying at the time.
The respondent’s explanation as to why it gave these notices was that its business
model is to acquire buildings in the Johannesburg CBD that are often derelict, which
it then renovates and rents out to tenants. This business model requires it to be able
to generate sufficient income from rental in order to service the acquisition and
renovation costs of the building. After acquisition of the building, the respondent
spent an amount of R1 million on renovation and maintenance, these expenses
were advantageous to the tenants. But the result of these expenses was that rent
paid by the appellants was insufficient to cover the costs of bond finance, renovation
and maintenance and the project was consequently running at a loss.
Against this background the appellants advanced the following reasons as to why
the leases were not validly terminated: first, they contended that each lease
agreement contained a tacit term which forbid the use of the termination clause to
effect an increase in rental beyond the increment provided for in the respective
agreements; second, they contended that to allow the respondent to terminate the
agreements for the sole purpose of allowing it to implement a rent increase would be
contrary to public policy. For the latter argument they relied on three grounds,
namely: that the termination would be unreasonable and unfair; that it would
constitute an infringement of their constitutional right to have access to adequate
housing in terms of s 26(1) of the Constitution; and that it constituted an ‘unfair
practice’ as contemplated in the Rental Housing Act 50 of 1999 read with the
Gauteng Unfair Practice Regulations 2001, promulgated under that Act (the Act and
its promulgations). Relying on the officious bystander test the appellants contended
that a tacit term is necessary to ensure the efficacy of the agreements, without which
the landlord could demand an increase in excess of that agreed upon by simply
threatening to terminate the contract. Moreover, they argued, there would be no
consensus on an essential term of the contract. The SCA found these arguments
logically unsound as during the currency of the lease, business efficacy does not
require an incorporation of the proposed tacit term and after termination of the lease,
the proposed tacit term would be of no consequence. The SCA stated that as
formulated by the appellants, the question posed by the officious bystander would
introduce the consideration of motive in the exercise of a contractual right, while that
consideration is generally irrelevant. In addition, the SCA stated, acceptance of the
appellants’ argument would mean that the landlord had entered into a lease of
infinite duration without being entitled to terminate the agreement, even when the
enterprise cease to be commercially viable. In support of the appellants contention
that the termination was unreasonable and unfair and should therefore not be
enforced on grounds of public policy, they argued that it had been decided by the
Constitutional Court in Barkhuizen v Napier 2007 (5) SA 323 (CC) that, as a matter
of public policy, our courts will not give effect to the implementation of a contractual
provision that is unreasonable and unfair. However, the SCA held this statement to
be fundamentally flawed since reasonableness and fairness are not freestanding
requirements for the exercise of a contractual right. Accordingly, a court cannot
refuse to give effect to the implementation of a contract simply because that
implementation is regarded by the individual judge to be unreasonable and unfair,
and strictly speaking the enquiry into the reasonableness and fairness of the
respondent’s termination of the contract of the leases is therefore unnecessary. As
to the impact of s 26(1) of the Constitution, the appellants contended that the
termination provisions are not in themselves inimical to the rights enshrined in s
26(1), but their implementation resulted in an infringement of their right to security of
tenure to the flats that are their homes, and in consequence the respondent was
bound to exercise its right under the termination provisions in a reasonable and fair
manner. The SCA stated that their argument lost sight of the fact that a lessee of
property has no security of tenure in perpetuity. The parties agreed at the outset that
the lessee’s tenure could be terminated on notice, which in effect amounted to an
agreement that the lessee’s security of tenure would never endure beyond the end
of the notice period. It therefore could not be said that termination in accordance with
the leases, constituted an infringement of their right to security of tenure. As to the
appellants’ contention that termination of the leases was contrary to public policy
because it constituted an unfair practice in contravention of the Act and its
promulgations, the SCA stated that the provisions of the Act and the regulations are
directed against a ‘practice’, which did not contemplate unacceptable conduct by the
landlord on an isolated occasion. It envisages incessant and systematic conduct by
the landlord that is oppressive or unfair and termination of the lease would therefore
not qualify as a practice, and the respondent’s terminations of the leases could not in
the circumstances be denounced as unreasonable and unfair, let alone oppressive.
As to the costs of Ms Siguca and Ms Masemola in the court below, the SCA stated
that since the impugned costs orders were made in the exercise of its discretion by
the court a quo, the SCA could only interfere on the basis that the discretion had not
been properly exercised. The SCA did not believe the appellants had made out that
case. The court a quo held that, since the appellants raised important constitutional
issues, they should not be burdened with costs and made no order as to costs. The
SCA believed it should adopt the same approach with regard to the costs of appeal.
-- ends --
|
3849
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 356/2021
In the matter between:
PIETER HENDRIK STRYDOM N.O.
FIRST APPELLANT
AMELIA STRECKER N.O.
SECOND APPELLANT
and
SNOWBALL WEALTH (PTY) LTD
FIRST RESPONDENT
LEO CHIH HAO CHOU
SECOND RESPONDENT
W ZHANG
THIRD RESPONDENT
JULIAN DAVID RABINOWITZ
FOURTH RESPONDENT
Neutral citation:
Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and
Others (356/2021) [2022] ZASCA 91 (15 June 2022)
Coram:
PONNAN, VAN DER MERWE and HUGHES JJA and MUSI and SMITH
AJJA
Heard: 4 May 2022
Delivered:
15 June 2022
Summary:
Insolvency – s 26(1) of Insolvency Act 24 of 1936 – disposition not made
for value – means for no value at all.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Erasmus J,
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
JUDGMENT
Van der Merwe JA (Ponnan and Hughes JJA and Musi and Smith AJJA
concurring)
[1] The appellants are the joint liquidators of DexGroup (Pty) Ltd (in liquidation)
(DexGroup). The first respondent is Snowball Wealth (Pty) Ltd (Snowball). The second,
third and fourth respondents are Mr LCH Chou, Ms W Zhang and Mr JD Rabinowitz
respectively. I refer to the three of them collectively as the other respondents. Prior to
its liquidation, DexGroup sold shares in Trustco Group Holdings Limited (the Trustco
shares) to each of the respondents. The appellants sued the respondents in the
Western Cape Division of the High Court, Cape Town (the high court) for the return of
the Trustco shares, alternatively payment of the value of the shares, on the ground that
each sale constituted a disposition without value in terms of s 26(1) of the Insolvency
Act 24 of 1936. Snowball and the other respondents separately excepted to the
appellants’ particulars of claim. The high court (Erasmus J) upheld both exceptions.
The appeal is with the leave of this court.
[2] By virtue of Item 9 of Schedule 5 to the Companies Act 71 of 2008, Chapter 14
of the repealed Companies Act 61 of 1973 continues to apply to insolvent companies,
until a date to be determined. Sections 339 and 340 form part of Chapter 14. Section
339 makes the provisions of the law relating to insolvency mutatis mutandis applicable
to the winding-up of a company unable to pay its debts. Section 340(1) provides:
‘(1)
Every disposition by a company of its property which, if made by an individual, could,
for any reason, be set aside in the event of his insolvency, may, if made by a company, be set
aside in the event of the company being wound up and unable to pay all its debts, and the
provisions of the law relating to insolvency shall mutatis mutandis be applied to any such
disposition.’
[3] Section 26(1) of the Insolvency Act (s 26(1)), in turn, reads:
‘(1)
Every disposition of property not made for value may be set aside by the court if such
disposition was made by an insolvent –
(a) more than two years before the sequestration of his estate, and it is proved that,
immediately after the disposition was made, the liabilities of the insolvent exceeded his
assets;
(b) within two years of the sequestration of his estate, and the person claiming under or
benefited by the disposition is unable to prove that, immediately after the disposition
was made, the assets of the insolvent exceeded his liabilities:
Provided that if it is proved that the liabilities of the insolvent at any time after the making of the
disposition exceeded his assets by less than the value of the property disposed of, it may be
set aside only to the extent of such excess.’
The issue in the appeal is the meaning of the phrase ‘not made for value’ in s 26(1)
(the phrase).
Background
[4] The background to the claims against the respondents, as sketched in the
particulars of claim, was the following. DexGroup was placed in final liquidation on 26
October 2016, whereafter the appellants were appointed as joint liquidators. Since at
least 2007 and at all times thereafter, however, DexGroup was unable to pay its debts
and its liabilities exceeded its assets. The particulars of the dispositions of the Trustco
shares by DexGroup to the respondents were as follows. On 23 September 2010, it
sold 21 million shares to Snowball at 27 cent per share and on 22 November 2010, it
sold a further 6 million shares to Snowball at 48 cent per share. On 22 November 2010,
it also sold 4 136 755 shares to Mr Chou, at the same price. On the same date, it sold
300 000 shares to Ms Zhang and 1 million shares to Mr Rabinowitz, all at the same
price.
[5] The particulars of claim proceeded to state that the ‘reasonable market value’
of the shares at the time of each sale was 67 cent per share. Because the respondents
paid 27 cent (40 per cent of the market value) and 48 cent (72 per cent of the market
value), the value given for the shares was ‘illusory or merely nominal’. The dispositions
took place more than two years prior to 25 February 2014, being the deemed date of
sequestration in terms of s 340(2)(a) of Act 61 of 1973.1 On the strength of these
allegations, the appellants sought orders setting aside each sale under s 26(1)(a).
[6] Snowball’s exception departed from the premise that ‘illusory or merely nominal’
value means no value. It emphasised that the according to the particulars of claim,
DexGroup had received payment of R5 670 000 for the 21 million shares and
R2 880 000 for the 6 million shares. Therefore, so Snowball said, the value given by it
was not illusory or merely nominal. On this basis it contended that the appellants’
allegations were not capable of sustaining claims based on dispositions not made for
value as contemplated in s 26(1).
[7] The nub of the exception of the other respondents was the following:
‘A disposition of property is “not made for value” within the meaning of s 26 where (i) no benefit
at all is received for the property, or (ii) some benefit is received for the property, but it is merely
illusory or nominal, so that the benefit amounts to no value at all.
A disposition of property for an inadequate value (as opposed to for an illusory or nominal
value) is not a disposition “not made for value” within the meaning of s 26.’
1 Section 340(2)(a) reads:
‘(2) For the purpose of this section the event which shall be deemed to correspond with the sequestration
order in the case of an individual shall be–
(a) in the case of a winding-up by the Court, the presentation of the application, unless that winding-up
has superseded a voluntary winding-up when it shall be the registration in terms of section 200 of the
special resolution to wind up the company.’
The exception proceeded to state that since the particulars of claim revealed that the
other respondents had paid more than 70 per cent of the alleged reasonable market
value of the shares, the sales in question were not dispositions not made for value.
[8] As I have said, the high court upheld both exceptions. The crux of its reasoning
appeared from the following:
‘I now turn to the facts of this matter tested against the legal position set out above. It is clear
that the disposition was clearly not for “no value” and was also not “illusionary” nor “nominal”.
The plaintiffs’ own factual allegations are destructive of any claims in terms of section 26 of the
Insolvency Act. The proper interpretation, in the context of the act, as set out above does simply
not apply to the facts as pleaded. The pleadings excepted must be taken as it stands, the
truthfulness thereof is accepted for these purposes. Even if accepted that the value paid was
less than the reasonable market value, no basis is laid nor suggested that there was anything
remiss therewith. It would be an absurdity to equate the position that, when paying a discounted
price, it can be said you gave no value.’
[9] Whilst this passage cannot be faulted, the high court did not directly address
the exception of the other respondents. Thus, it refrained from deciding whether the
phrase means for no value at all. I have demonstrated that Snowball’s exception was
founded on a narrower ground. However, if the exception of the other respondents is
good, then it must follow that Snowball’s exception had to succeed on that ground as
well.
Case law
[10] I therefore proceed to consider the meaning of the phrase. Although it has been
considered in a number of decisions of this court, as I shall show, it has not definitively
been decided whether s 26(1) contemplates a claim based on a disposition for
inadequate or insufficient value as opposed to no value at all.
[11] Estate Wege v Strauss 1932 AD 76 (Estate Wege) dealt with the provisions of
s 24 of the Insolvency Act 32 of 1916. For present purposes they did not differ from
those of s 26(1) in any material respect. The essential issue in that matter was whether
the payment of bets on horse races were dispositions not made for value. The appellant
contended that in law betting agreements were null and void. For that reason, so it was
submitted, the payments that Mr Wege had made to a bookmaker whilst the former
was factually insolvent, were dispositions without value. Wessels ACJ rejected the first
part of the contention in these terms at 81:
‘A bet, therefore, is not illegal by our law, though it is not enforceable in our Courts between
the parties to it, and when we speak of a wagering contract being null and void we mean no
more than that our Courts will not lend their aid to its enforcement.’
[12] The court proceeded to adopt the finding of the court below that there was no
good reason for making value dependent on the existence of a legal sanction. After
saying that the word ‘value’ in the provision in question carried no technical meaning
and could therefore only mean value in the ordinary sense of the word, it stated at 84:
‘The object of sec. 24 is not to prevent a person in insolvent circumstances from engaging in
the ordinary transactions of life, but to prevent a person from impoverishing his estate by giving
his assets away without receiving any present or contingent advantage in return.’
It is apparent that the question whether the phrase meant no value or inadequate value,
did not arise in Estate Wege and this dictum must be read in that light.
[13] In Estate Jager v Whittaker & Another 1944 AD 246 (Estate Jager), a trustee,
acting under s 26(1), sought to reclaim interest that the insolvent had paid to a creditor
in contravention of the Usury Act 27 of 1926. Relying on Estate Wege, the creditor
contended that the benefit that the insolvent had derived from the money lent to him
was a quid pro quo for his promise to pay (and the payment of) interest in excess of
the rate allowed by law. Watermeyer CJ, writing for the court, disagreed. He said at
251-252:
‘But, in my opinion, the Legislature, by making it a criminal offence for a lender to stipulate for,
demand, or receive interest at a rate higher than that allowed by the Usury Act, has in effect
said that the use by the borrower of the money lent shall not be regarded as value for the
promise or for payment of anything more than the rate of interest permitted by the Usury Act.
No obligation of any sort to pay a higher rate of interest than that permitted by the Act can arise
from a promise to pay a higher rate, and therefore it follows that such a promise is a mere
nullity, and any payment of such a higher rate in pursuance of such promise is in effect a
donation, or disposition not made for value, and is consequently liable to be set aside under
sec. 26 of the Insolvency Act. This view is not in conflict with the decision of this Court in the
case of Estate Wege v Strauss because there are passages in the judgment in that case which
indicate clearly that when the question arises whether payments made in pursuance of such
contracts can be set aside under sec. 26 of the Insolvency Act, a distinction must be drawn
between a contract which, though lawful, gives rise only to moral obligations unenforceable in
a court of law and an illegal contract which gives rise to no obligations at all.’
[14] Importantly, this court stated at 250-251:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo. The most
obvious example of such a disposition is a donation and . . . it would appear prima facie that
any payment, purporting to be made solely in discharge of an existing obligation, is in effect a
donation if no obligation to make such payment in fact exists. If a lawful obligation to pay the
money in fact exists, then the obvious benefit which the payer receives in return for such
payment is a discharge from his liability to pay. Such a payment decreases his assets, but at
the same time it diminishes his liabilities, and in transactions which are entered into in the
ordinary course of business such a discharge from a liability would be value for the payment
made. For the purposes of this case, it is unnecessary to consider what the legal position would
be if the obligation which is discharged arises from a promise to donate or a promise made in
return for an inadequate consideration.’
Therefore, the question whether s 26(1) could apply to dispositions for inadequate
value not only did not arise on the facts of Estate Jager, but was expressly left open.
[15] The question also did not arise in Langeberg Koöperasie Bpk v Inverdoorn
Farming and Trading Company Ltd 1965 (2) SA 597 (A) (Langeberg Koöperasie).
There a creditor appealed against an order setting aside a suretyship and mortgage
bond as dispositions not made for value under s 26(1). Two points arose for decision.
The first was whether the suretyship agreement in question constituted a disposition of
property within the meaning of the Insolvency Act. If so, the second point was whether
there was a disposition not made for value under s 26(1).
[16] The suretyship agreement was entered into by a farming company to secure
an overdue debt owed by its insolvent parent company to the creditor. The suretyship
agreement entailed an obligation to pay (as surety and co-principal debtor), as well as
an obligation to pass a mortgage bond over the unencumbered property of the farming
company. The mortgage bond was registered accordingly. This court endorsed the
finding of the court below that in the circumstances the suretyship agreement clearly
constituted a transaction falling within the definition of ‘disposition’ in the Insolvency
Act.
[17] The argument on the second point was that the disposition was for value as
the farming company derived a benefit from a moratorium that had been granted by the
creditor to the parent company as a result of the execution of the suretyship agreement.
Whilst acknowledging that such a benefit could in principle constitute value under
s 26(1), Beyers JA, for the majority,2 held that on the facts the farming company had
derived no direct or indirect benefit from the moratorium.
[18] Swanee’s Boerdery (Edms) Bpk (In Liquidation) v Trust Bank of Africa Ltd 1986
(2) SA 850 (A) (Swanee’s Boerdery) concerned a similar case to Langeberg
Koöperasie. There a company that formed part of a group of companies undertook a
suretyship obligation to guarantee the debt of another company in the group. The
former company was liquidated and the question arose whether the suretyship was a
disposition not made for value. Galgut AJA referred extensively to Langeberg
Koöperasie in considering an argument that the suretyship gave financial stability to
the whole group of companies and therefore amounted to a disposition for value. He
held, however, that this had not been established on the facts.
2 Williamson JA dissenting, only on the question whether a contract of suretyship could be a disposition.
[19] In the course of the judgment, the following was stated at 860E-F:
‘We were referred to Bloom’s Trustee v Fourie 1921 TPD 599 at 601 where DE WAAL J when
discussing s 24 of Act 32 of 1916 says:
“It seems to me that the word “value” means adequate value or “just and valuable
consideration”.”
It is clear from what is said in that judgment that the learned Judge came to that conclusion
because he adopted the words “just and valuable consideration” which appeared in s 83 of Ord
6 of 1843 (C) and also the dictionary meaning of value. Be that as it may, the dictum is no
longer applicable since this Court has now defined value in the Estate Wege case and the
Estate Jager case, both cited above.’
In my view this dictum also did not decide the question raised in the present matter. I
say so for two reasons. The first is that the facts in Swanee’s Boerdery did not require
the consideration of a distinction between the concepts of inadequate value and no
value. Secondly, on the issue of value under s 26(1) this dictum went no further than
Estate Wege and Estate Jager discussed above.
[20] In each of the mentioned authorities the focus of this Court was on the nature
of the transaction, whether it be the: (i) wager in Estate Wege, which was likened to an
insurance and thus not a disposition of property without value; (ii) usurious interest rate
in Estate Jager, where it was held that no obligation arose from a promise to pay a
higher interest rate than that permitted by the Act and that such a promise was a mere
nullity; (iii) suretyship in Langeberg Koöperasie, where the court held that it was difficult
to see what possible value there could be for a company that was forced to pledge its
assets for a substantially overdue debt for its hopelessly insolvent parent company; (iv)
suretyship in Swanee’s Boerdery where, whilst emphasising that a company had a
personality of its own, it was held that the facts were distinguishable from Langeberg
Koöperasie, inasmuch as the company would for all practical purposes have ceased to
exist. Thus, in each of those matters, the court was not strictly speaking required to
consider the issue that confronts us in this matter. The importance of this is twofold.
First, there is no authority of this court directly on point as seems to have been
suggested, by which we are bound. Second, unlike the other matters, here it is not the
nature of the transaction that occupies our attention. It is a sale at arm’s length. There
is no suggestion that it lacks validity, is unenforceable or otherwise susceptible to
impeachment. The argument is that although a price was fixed in terms of an arm’s
length transaction, the disposition of the shares at that price was a disposition ‘not
made for value’.
[21] Before turning to the interpretation of the phrase, it is also necessary to refer
to the decision in Terblanche NO v Baxtrans CC and Another 1998 (3) SA 912 (C). The
facts of that case were similar to the facts of this matter. The liquidator of a company
sought, inter alia, to have a disposition set aside under s 26(1) on the ground that
ownership of assets worth R1 276 000 had been transferred for a consideration of only
R383 539. The payment of the latter amount to two banks enabled the transfer of
ownership of the assets to the transferee. The latter excepted to this claim on the
grounds that according to the authorities any value would suffice to render s 26(1)
inapplicable and that the plaintiff had not pleaded any basis upon which the payment
of the amount of R383 539 could be regarded as not constituting value.
[22] In his judgment Selikowitz J employed the expressions ‘illusory value’ and
‘nominal value’. The learned judge stated at 917B-C:
‘Illusory or nominal value is what those words suggest – no value at all. “Illusory value” is merely
an illusion and “nominal value” is value in name only.’
Why this was done is not apparent from the judgment. According to the judgment these
expressions were not mentioned in the particulars of claim, the argument or the case
law referred to. Before us, lead counsel for the appellants confirmed that this judgment
was relied upon for the use of these expressions in the appellants’ particulars of claim.
I may mention that in his minority judgment in Langeberg Koöperasie, Williamson JA
(at 612), after having concluded that ‘the circumstances actually precluded any benefit
accruing to . . . or ever being likely to accrue in the future’, added ‘the possible benefit
to be gained . . . was really, in the event, illusory’. In my view, the importation of the
expressions ‘illusory value’ and ‘nominal value’ does conduce to confusion. However,
in the light of the conclusion to which I arrive, the issue need not detain me.
[23] Selikowitz J said that neither the argument that s 26(1) could only apply where
there is a total absence of value nor the argument that inadequate value would always
be prima facie evidence of no value, could prevail. It proceeded to determine the
exception raised in that case on the basis that there was no allegation that the value
conceded (R383 539) ‘should be treated as equivalent to no value having been
received’. It is thus apparent that this judgment also does not provide a clear answer to
the question in the present matter.
Interpretation
[24] It follows that the meaning of the phrase has to be determined on ordinary
principles of interpretation. There is no need to cite authority for the proposition that
this exercise entails giving meaning to the phrase by a holistic consideration of its text,
context and purpose. As I have shown, the other respondents contended that the
phrase meant for no value at all. The appellants pleaded that it meant for less than
‘reasonable market value’ and submitted that it referred to a counter performance that
did not represent a ‘fair return or equivalent’.
[25] It follows that the appellants’ interpretation requires significant reading-in into
s 26(1). Not so with the interpretation of the other respondents. It will be recalled that
in Estate Wege this court said that the word ‘value’ in the predecessor of s 26(1) meant
value in the ordinary sense of the word. This was taken further in Estate Jager when
Watermeyer CJ said:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo’.3
According to its text, therefore, the phrase means for no value at all. The next question
is whether the context and purpose of the phrase indicate that it should nevertheless
carry a different meaning.
3 See para 14 above.
[26] The most important contextual consideration is that s 26 forms part of a set of
remedies available to a trustee or liquidator under the Insolvency Act. The other
remedies are contained in s 29 (‘Voidable preferences’), s 30 (‘Undue preference to
creditors’) and s 31 (‘Collusive dealings before sequestration’).
[27] Under s 26(1),4 a disposition not made for value may be set aside when the
debtor was factually insolvent at the time or when it caused the debtor to become
factually insolvent. Subsections 26(1)(a) and (b) only deal with the incidence of the
onus in respect of factual insolvency. It follows that the availability of the remedy under
s 26(1) is not limited in time. It does not require proof of an intention to prefer one
creditor over another or of collusion, nor can a claim under s 26(1) be defeated by
showing that the disposition occurred in the ordinary course of business and without
the intention to prefer.
[28] Section 29(1)5 permits the setting aside of a disposition that had the effect of
preferring one creditor over another, where the debtor was factually insolvent when the
disposition was made or where it caused the debtor’s factual insolvency. The remedy
is only available in respect of dispositions made within six months prior to the
sequestration or the commencement of winding-up. A claim under s 29 may be
defeated by establishing that the disposition was made in the ordinary course of
business and that it was not intended to prefer one creditor above another.
[29] Section 30(1)6 provides for the setting aside of a disposition by a debtor, who
was factually insolvent at the time and whose estate was subsequently sequestrated
4 Quoted in para 3 above.
5 Section 29(1) reads:
‘Every disposition of his property made by a debtor not more than six months before the sequestration
of his estate or, if he is deceased and his estate is insolvent, before his death, which has had the effect
of preferring one of his creditors above another, may be set aside by the Court if immediately after the
making of such disposition the liabilities of the debtor exceeded the value of his assets, unless the person
in whose favour the disposition was made proves that the disposition was made in the ordinary course
of business and that it was not intended thereby to prefer one creditor above another.
6 Section 30(1) reads:
or placed in liquidation, if the disposition was made with the intention of preferring one
creditor above another. In principle this remedy may be employed irrespective of how
much time elapsed between the disposition and the sequestration or winding-up.
Section 30 also does not provide for any defences to, or exclusions from, the scope of
a claim thereunder.
[30] Finally, s 317 permits the setting aside of a transaction entered into by a debtor
prior to sequestration or liquidation, whereby the debtor, in collusion with another,
disposed of property in a manner which had the effect of prejudicing the debtor’s
creditors or by preferring one above another. The remedy is also in principle available
no matter how much time elapsed since the transaction had been entered into. A
person, who was party to the collusion is liable to make good the loss caused to the
estate, as well as for payment of a penalty. If the person is a creditor, the claim against
the estate is forfeited.
[31] In my view, this contextual setting materially informs the interpretation of the
phrase. Whilst the purpose of these provisions clearly is to protect the interests of the
general body of creditors, they do not evince an intention to advance the interests of
creditors above all other interests. This is, inter alia, illustrated by s 29: a disposition
that in fact had the effect of preferring one creditor over another, is immune from a
challenge under s 29 if the disposition was made more than six months before the
‘If a debtor made a disposition of his property at a time when his liabilities exceeded his assets, with the
intention of preferring one of his creditors above another, and his estate is thereafter sequestrated, the
court may set aside the disposition.’
7 Section 31 reads:
‘(1) After the sequestration of a debtor’s estate the court may set aside any transaction entered into by
the debtor before the sequestration, whereby he, in collusion with another person, disposed of property
belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his
creditors above another.
(2) Any person who was a party to such collusive disposition shall be liable to make good any loss
thereby caused to the insolvent estate in question and shall pay for the benefit of the estate, by way of
penalty, such sum as the court may adjudge, not exceeding the amount by which he would have
benefited by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim
against the estate.
(3) Such compensation and penalty may be recovered in any action to set aside the transaction in
question.’
sequestration or winding-up and, when made within the period of six months, if the
recipient shows that it was made in the ordinary course of business and without the
intention to prefer. This is also indicated by the provisos to s 26(1)8 and 26(2).9
[32] In my view, these provisions were intended to constitute a comprehensive set
of remedies to reverse objectionable transactions that occurred prior to sequestration
or winding-up. A comparison of these remedies demonstrates that the more
objectionable the transaction, the more extensive the remedy afforded. As I have said,
the remedies under s 26, s 30 and s 31 allow retrospective redress that is unlimited in
time. But both s 30 and s 31 deal with conduct intended to prejudice the general body
of creditors. Section 30 requires proof of the intention to prefer and s 31 requires proof
of collusion. However, there is nothing inherently, commercially or morally
objectionable to a sale at a discounted price. The same cannot be said of a factually
insolvent person squandering or giving away assets for no return. That, I think, is what
Wessels ACJ meant when he said ‘the object of sec. 24 is not to prevent a person in
insolvent circumstances from engaging in the ordinary transactions of life, but to
prevent a person from impoverishing his estate by giving his assets away without
receiving any present or contingent advantage in return’.10 This indicates that s 26(1)
was intended to apply only to gratuitous dispositions.
[33] Importantly, in terms of s 26(2),11 the recipient has no claim in competition with
the creditors of the insolvent estate. Section 32(3)12 provides that should the property
8 See para 3 above.
9 Section 26(2) provides:
‘A disposition of property not made for value, which was set aside under subsection (1) or which was
uncompleted by the insolvent, shall not give rise to any claim in competition with the creditors of the
insolvent’s estate: Provided that in the case of a disposition of property not made for value, which was
uncompleted by the insolvent, and which-
(a) was made by way of suretyship, guarantee or indemnity; and
(b) has not been set aside under subsection (1),
the beneficiary concerned may complete with the creditors of the insolvent’s estate for an amount
not exceeding the amount by which the value of the insolvent’s assets exceeded his liabilities
immediately before the making of that disposition.’
10 See para 12 above.
11 See footnote 9 above.
12 Section 32(3) reads:
have been alienated or consumed in the period between the disposition and the setting
aside, the recipient would be liable for the value of the property at the date of the
disposition or at the date on which it is set aside, whichever is the higher. On the
appellants’ construction therefore, should a purchaser, with no knowledge of the
seller’s financial situation, in the ordinary course of business purchase property at a
discounted price (something less than ‘reasonable market value’ or a ‘fair return or
equivalent’) from a person that is sequestrated years later, the purchaser would have
to return the property without the right to reclaim the purchase price. Moreover, should
the purchaser bona fide have alienated or consumed the property, he or she would be
liable for payment of the higher of the value of the property at the time of the sale or at
the time of the setting aside of the disposition and forfeit the purchase price. Many
examples could be given of the absurd results that the appellants’ interpretation would
lead to. It suffices to say that they could not have been intended.
[34] As I have said, the appellants’ case is that dispositions for less than the
‘reasonable market value’ or a ‘fair return or equivalent’ are not made for value. In
Goode, Durrant and Murray Ltd v Hewitt and Cornell, NNO 1961 (4) SA 286 (N) at
291E-F Fannin J said:
‘The word “value” is not, however, confined to a monetary or tangible material consideration,
nor must it necessarily proceed from the person to whom the disposition is made. Whether an
insolvent has received “value” for a disposition must be decided by reference to all the
circumstances under which the transaction was made.’
In Langeberg Koöperasie at 604B-C this court quoted this passage with approval. Thus,
it is an established principle that ‘value’ under s 26(1) includes benefits that do not have
a reasonable market value and in respect of which a fair return or equivalent could not
be evaluated or expressed in monetary terms. This consideration, too, points away
from the construction favoured by the appellants.
‘When the Court sets aside any disposition of property under any of the said sections, 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.’
[35] Finally, there is s 25(4)(c) of the Insolvency Act. In relevant part it provides:
‘(4)
If a person who is or was insolvent unlawfully disposes of immovable property or a
right to immovable property which forms part of his insolvent estate, the trustee may,
notwithstanding the provisions of subsection (3), recover the value of the property or right so
disposed of-
(a) . . .
(b) . . .
(c) from any person who acquired such property or right from the insolvent or former
insolvent without giving sufficient value in return, in which case the amount so recovered
shall be the difference between the value of the property or right and any value given in
return.’
Subsection 4(c) was introduced by an amendment that took effect on 1 September
1993.13 The legislature is presumed to be acquainted with the existing law14 and a
deliberate change of expression indicates a change of intention.15 In the result, the
phrase could not bear the meaning of not for ‘sufficient value’.
[36] All the contextual and purposive indicators reinforce the ordinary meaning of
the phrase. For these reasons, I conclude that the phrase ‘not made for value’ in s 26(1)
of the Insolvency Act 24 of 1936 means for no value at all.16 It follows that the appeal
must fail.
[37] The appeal is dismissed with costs, including the costs of two counsel where
so employed.
_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
13 In terms of the Insolvency Amendment Act 122 of 1993.
14 See Fundstrust (Pty) Ltd (In liquidation) v Van Deventer 1997 (1) SA 710 (A) at 732B.
15 See Shalom Investments (Pty) Ltd & Others v Dan River Mills Incorporated 1971 (1) SA 689 (A) at
701B-C.
16 Therefore the decision in De Jongh Ontwikkelings (Pty) Ltd & Another v Kilotech Investments (Pty) Ltd
& Others 2021 (4) SA 492 (GP) para 6.3.7 and 6.3.8 should not be followed.
Appearances:
For appellant:
F H Terblanche SC (with P W T Lourens)
Instructed by:
Susan Strydom Inc., Pretoria
Symington & De Kok Attorneys, Bloemfontein
For first respondent:
C M Eloff SC
Instructed by:
Bowman Gilfillan Attorneys, Sandton
McIntyre Van der Post Attorneys, Bloemfontein
For second, third and
fourth respondents:
J Muller SC (with K Reynolds)
Instructed by:
Edward Nathan Sonnenbergs, Cape Town
Matsepes Inc., Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 356/2021
In the matter between:
PIETER HENDRIK STRYDOM N.O.
FIRST APPELLANT
AMELIA STRECKER N.O.
SECOND APPELLANT
and
SNOWBALL WEALTH (PTY) LTD
FIRST RESPONDENT
LEO CHIH HAO CHOU
SECOND RESPONDENT
W ZHANG
THIRD RESPONDENT
JULIAN DAVID RABINOWITZ
FOURTH RESPONDENT
Neutral citation:
Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and
Others (356/2021) [2022] ZASCA 91 (15 June 2022)
Coram:
PONNAN, VAN DER MERWE and HUGHES JJA and MUSI and SMITH
AJJA
Heard: 4 May 2022
Delivered:
15 June 2022
Summary:
Insolvency – s 26(1) of Insolvency Act 24 of 1936 – disposition not made
for value – means for no value at all.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Erasmus J,
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
JUDGMENT
Van der Merwe JA (Ponnan and Hughes JJA and Musi and Smith AJJA
concurring)
[1] The appellants are the joint liquidators of DexGroup (Pty) Ltd (in liquidation)
(DexGroup). The first respondent is Snowball Wealth (Pty) Ltd (Snowball). The second,
third and fourth respondents are Mr LCH Chou, Ms W Zhang and Mr JD Rabinowitz
respectively. I refer to the three of them collectively as the other respondents. Prior to
its liquidation, DexGroup sold shares in Trustco Group Holdings Limited (the Trustco
shares) to each of the respondents. The appellants sued the respondents in the
Western Cape Division of the High Court, Cape Town (the high court) for the return of
the Trustco shares, alternatively payment of the value of the shares, on the ground that
each sale constituted a disposition without value in terms of s 26(1) of the Insolvency
Act 24 of 1936. Snowball and the other respondents separately excepted to the
appellants’ particulars of claim. The high court (Erasmus J) upheld both exceptions.
The appeal is with the leave of this court.
[2] By virtue of Item 9 of Schedule 5 to the Companies Act 71 of 2008, Chapter 14
of the repealed Companies Act 61 of 1973 continues to apply to insolvent companies,
until a date to be determined. Sections 339 and 340 form part of Chapter 14. Section
339 makes the provisions of the law relating to insolvency mutatis mutandis applicable
to the winding-up of a company unable to pay its debts. Section 340(1) provides:
‘(1)
Every disposition by a company of its property which, if made by an individual, could,
for any reason, be set aside in the event of his insolvency, may, if made by a company, be set
aside in the event of the company being wound up and unable to pay all its debts, and the
provisions of the law relating to insolvency shall mutatis mutandis be applied to any such
disposition.’
[3] Section 26(1) of the Insolvency Act (s 26(1)), in turn, reads:
‘(1)
Every disposition of property not made for value may be set aside by the court if such
disposition was made by an insolvent –
(a) more than two years before the sequestration of his estate, and it is proved that,
immediately after the disposition was made, the liabilities of the insolvent exceeded his
assets;
(b) within two years of the sequestration of his estate, and the person claiming under or
benefited by the disposition is unable to prove that, immediately after the disposition
was made, the assets of the insolvent exceeded his liabilities:
Provided that if it is proved that the liabilities of the insolvent at any time after the making of the
disposition exceeded his assets by less than the value of the property disposed of, it may be
set aside only to the extent of such excess.’
The issue in the appeal is the meaning of the phrase ‘not made for value’ in s 26(1)
(the phrase).
Background
[4] The background to the claims against the respondents, as sketched in the
particulars of claim, was the following. DexGroup was placed in final liquidation on 26
October 2016, whereafter the appellants were appointed as joint liquidators. Since at
least 2007 and at all times thereafter, however, DexGroup was unable to pay its debts
and its liabilities exceeded its assets. The particulars of the dispositions of the Trustco
shares by DexGroup to the respondents were as follows. On 23 September 2010, it
sold 21 million shares to Snowball at 27 cent per share and on 22 November 2010, it
sold a further 6 million shares to Snowball at 48 cent per share. On 22 November 2010,
it also sold 4 136 755 shares to Mr Chou, at the same price. On the same date, it sold
300 000 shares to Ms Zhang and 1 million shares to Mr Rabinowitz, all at the same
price.
[5] The particulars of claim proceeded to state that the ‘reasonable market value’
of the shares at the time of each sale was 67 cent per share. Because the respondents
paid 27 cent (40 per cent of the market value) and 48 cent (72 per cent of the market
value), the value given for the shares was ‘illusory or merely nominal’. The dispositions
took place more than two years prior to 25 February 2014, being the deemed date of
sequestration in terms of s 340(2)(a) of Act 61 of 1973.1 On the strength of these
allegations, the appellants sought orders setting aside each sale under s 26(1)(a).
[6] Snowball’s exception departed from the premise that ‘illusory or merely nominal’
value means no value. It emphasised that the according to the particulars of claim,
DexGroup had received payment of R5 670 000 for the 21 million shares and
R2 880 000 for the 6 million shares. Therefore, so Snowball said, the value given by it
was not illusory or merely nominal. On this basis it contended that the appellants’
allegations were not capable of sustaining claims based on dispositions not made for
value as contemplated in s 26(1).
[7] The nub of the exception of the other respondents was the following:
‘A disposition of property is “not made for value” within the meaning of s 26 where (i) no benefit
at all is received for the property, or (ii) some benefit is received for the property, but it is merely
illusory or nominal, so that the benefit amounts to no value at all.
A disposition of property for an inadequate value (as opposed to for an illusory or nominal
value) is not a disposition “not made for value” within the meaning of s 26.’
1 Section 340(2)(a) reads:
‘(2) For the purpose of this section the event which shall be deemed to correspond with the sequestration
order in the case of an individual shall be–
(a) in the case of a winding-up by the Court, the presentation of the application, unless that winding-up
has superseded a voluntary winding-up when it shall be the registration in terms of section 200 of the
special resolution to wind up the company.’
The exception proceeded to state that since the particulars of claim revealed that the
other respondents had paid more than 70 per cent of the alleged reasonable market
value of the shares, the sales in question were not dispositions not made for value.
[8] As I have said, the high court upheld both exceptions. The crux of its reasoning
appeared from the following:
‘I now turn to the facts of this matter tested against the legal position set out above. It is clear
that the disposition was clearly not for “no value” and was also not “illusionary” nor “nominal”.
The plaintiffs’ own factual allegations are destructive of any claims in terms of section 26 of the
Insolvency Act. The proper interpretation, in the context of the act, as set out above does simply
not apply to the facts as pleaded. The pleadings excepted must be taken as it stands, the
truthfulness thereof is accepted for these purposes. Even if accepted that the value paid was
less than the reasonable market value, no basis is laid nor suggested that there was anything
remiss therewith. It would be an absurdity to equate the position that, when paying a discounted
price, it can be said you gave no value.’
[9] Whilst this passage cannot be faulted, the high court did not directly address
the exception of the other respondents. Thus, it refrained from deciding whether the
phrase means for no value at all. I have demonstrated that Snowball’s exception was
founded on a narrower ground. However, if the exception of the other respondents is
good, then it must follow that Snowball’s exception had to succeed on that ground as
well.
Case law
[10] I therefore proceed to consider the meaning of the phrase. Although it has been
considered in a number of decisions of this court, as I shall show, it has not definitively
been decided whether s 26(1) contemplates a claim based on a disposition for
inadequate or insufficient value as opposed to no value at all.
[11] Estate Wege v Strauss 1932 AD 76 (Estate Wege) dealt with the provisions of
s 24 of the Insolvency Act 32 of 1916. For present purposes they did not differ from
those of s 26(1) in any material respect. The essential issue in that matter was whether
the payment of bets on horse races were dispositions not made for value. The appellant
contended that in law betting agreements were null and void. For that reason, so it was
submitted, the payments that Mr Wege had made to a bookmaker whilst the former
was factually insolvent, were dispositions without value. Wessels ACJ rejected the first
part of the contention in these terms at 81:
‘A bet, therefore, is not illegal by our law, though it is not enforceable in our Courts between
the parties to it, and when we speak of a wagering contract being null and void we mean no
more than that our Courts will not lend their aid to its enforcement.’
[12] The court proceeded to adopt the finding of the court below that there was no
good reason for making value dependent on the existence of a legal sanction. After
saying that the word ‘value’ in the provision in question carried no technical meaning
and could therefore only mean value in the ordinary sense of the word, it stated at 84:
‘The object of sec. 24 is not to prevent a person in insolvent circumstances from engaging in
the ordinary transactions of life, but to prevent a person from impoverishing his estate by giving
his assets away without receiving any present or contingent advantage in return.’
It is apparent that the question whether the phrase meant no value or inadequate value,
did not arise in Estate Wege and this dictum must be read in that light.
[13] In Estate Jager v Whittaker & Another 1944 AD 246 (Estate Jager), a trustee,
acting under s 26(1), sought to reclaim interest that the insolvent had paid to a creditor
in contravention of the Usury Act 27 of 1926. Relying on Estate Wege, the creditor
contended that the benefit that the insolvent had derived from the money lent to him
was a quid pro quo for his promise to pay (and the payment of) interest in excess of
the rate allowed by law. Watermeyer CJ, writing for the court, disagreed. He said at
251-252:
‘But, in my opinion, the Legislature, by making it a criminal offence for a lender to stipulate for,
demand, or receive interest at a rate higher than that allowed by the Usury Act, has in effect
said that the use by the borrower of the money lent shall not be regarded as value for the
promise or for payment of anything more than the rate of interest permitted by the Usury Act.
No obligation of any sort to pay a higher rate of interest than that permitted by the Act can arise
from a promise to pay a higher rate, and therefore it follows that such a promise is a mere
nullity, and any payment of such a higher rate in pursuance of such promise is in effect a
donation, or disposition not made for value, and is consequently liable to be set aside under
sec. 26 of the Insolvency Act. This view is not in conflict with the decision of this Court in the
case of Estate Wege v Strauss because there are passages in the judgment in that case which
indicate clearly that when the question arises whether payments made in pursuance of such
contracts can be set aside under sec. 26 of the Insolvency Act, a distinction must be drawn
between a contract which, though lawful, gives rise only to moral obligations unenforceable in
a court of law and an illegal contract which gives rise to no obligations at all.’
[14] Importantly, this court stated at 250-251:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo. The most
obvious example of such a disposition is a donation and . . . it would appear prima facie that
any payment, purporting to be made solely in discharge of an existing obligation, is in effect a
donation if no obligation to make such payment in fact exists. If a lawful obligation to pay the
money in fact exists, then the obvious benefit which the payer receives in return for such
payment is a discharge from his liability to pay. Such a payment decreases his assets, but at
the same time it diminishes his liabilities, and in transactions which are entered into in the
ordinary course of business such a discharge from a liability would be value for the payment
made. For the purposes of this case, it is unnecessary to consider what the legal position would
be if the obligation which is discharged arises from a promise to donate or a promise made in
return for an inadequate consideration.’
Therefore, the question whether s 26(1) could apply to dispositions for inadequate
value not only did not arise on the facts of Estate Jager, but was expressly left open.
[15] The question also did not arise in Langeberg Koöperasie Bpk v Inverdoorn
Farming and Trading Company Ltd 1965 (2) SA 597 (A) (Langeberg Koöperasie).
There a creditor appealed against an order setting aside a suretyship and mortgage
bond as dispositions not made for value under s 26(1). Two points arose for decision.
The first was whether the suretyship agreement in question constituted a disposition of
property within the meaning of the Insolvency Act. If so, the second point was whether
there was a disposition not made for value under s 26(1).
[16] The suretyship agreement was entered into by a farming company to secure
an overdue debt owed by its insolvent parent company to the creditor. The suretyship
agreement entailed an obligation to pay (as surety and co-principal debtor), as well as
an obligation to pass a mortgage bond over the unencumbered property of the farming
company. The mortgage bond was registered accordingly. This court endorsed the
finding of the court below that in the circumstances the suretyship agreement clearly
constituted a transaction falling within the definition of ‘disposition’ in the Insolvency
Act.
[17] The argument on the second point was that the disposition was for value as
the farming company derived a benefit from a moratorium that had been granted by the
creditor to the parent company as a result of the execution of the suretyship agreement.
Whilst acknowledging that such a benefit could in principle constitute value under
s 26(1), Beyers JA, for the majority,2 held that on the facts the farming company had
derived no direct or indirect benefit from the moratorium.
[18] Swanee’s Boerdery (Edms) Bpk (In Liquidation) v Trust Bank of Africa Ltd 1986
(2) SA 850 (A) (Swanee’s Boerdery) concerned a similar case to Langeberg
Koöperasie. There a company that formed part of a group of companies undertook a
suretyship obligation to guarantee the debt of another company in the group. The
former company was liquidated and the question arose whether the suretyship was a
disposition not made for value. Galgut AJA referred extensively to Langeberg
Koöperasie in considering an argument that the suretyship gave financial stability to
the whole group of companies and therefore amounted to a disposition for value. He
held, however, that this had not been established on the facts.
2 Williamson JA dissenting, only on the question whether a contract of suretyship could be a disposition.
[19] In the course of the judgment, the following was stated at 860E-F:
‘We were referred to Bloom’s Trustee v Fourie 1921 TPD 599 at 601 where DE WAAL J when
discussing s 24 of Act 32 of 1916 says:
“It seems to me that the word “value” means adequate value or “just and valuable
consideration”.”
It is clear from what is said in that judgment that the learned Judge came to that conclusion
because he adopted the words “just and valuable consideration” which appeared in s 83 of Ord
6 of 1843 (C) and also the dictionary meaning of value. Be that as it may, the dictum is no
longer applicable since this Court has now defined value in the Estate Wege case and the
Estate Jager case, both cited above.’
In my view this dictum also did not decide the question raised in the present matter. I
say so for two reasons. The first is that the facts in Swanee’s Boerdery did not require
the consideration of a distinction between the concepts of inadequate value and no
value. Secondly, on the issue of value under s 26(1) this dictum went no further than
Estate Wege and Estate Jager discussed above.
[20] In each of the mentioned authorities the focus of this Court was on the nature
of the transaction, whether it be the: (i) wager in Estate Wege, which was likened to an
insurance and thus not a disposition of property without value; (ii) usurious interest rate
in Estate Jager, where it was held that no obligation arose from a promise to pay a
higher interest rate than that permitted by the Act and that such a promise was a mere
nullity; (iii) suretyship in Langeberg Koöperasie, where the court held that it was difficult
to see what possible value there could be for a company that was forced to pledge its
assets for a substantially overdue debt for its hopelessly insolvent parent company; (iv)
suretyship in Swanee’s Boerdery where, whilst emphasising that a company had a
personality of its own, it was held that the facts were distinguishable from Langeberg
Koöperasie, inasmuch as the company would for all practical purposes have ceased to
exist. Thus, in each of those matters, the court was not strictly speaking required to
consider the issue that confronts us in this matter. The importance of this is twofold.
First, there is no authority of this court directly on point as seems to have been
suggested, by which we are bound. Second, unlike the other matters, here it is not the
nature of the transaction that occupies our attention. It is a sale at arm’s length. There
is no suggestion that it lacks validity, is unenforceable or otherwise susceptible to
impeachment. The argument is that although a price was fixed in terms of an arm’s
length transaction, the disposition of the shares at that price was a disposition ‘not
made for value’.
[21] Before turning to the interpretation of the phrase, it is also necessary to refer
to the decision in Terblanche NO v Baxtrans CC and Another 1998 (3) SA 912 (C). The
facts of that case were similar to the facts of this matter. The liquidator of a company
sought, inter alia, to have a disposition set aside under s 26(1) on the ground that
ownership of assets worth R1 276 000 had been transferred for a consideration of only
R383 539. The payment of the latter amount to two banks enabled the transfer of
ownership of the assets to the transferee. The latter excepted to this claim on the
grounds that according to the authorities any value would suffice to render s 26(1)
inapplicable and that the plaintiff had not pleaded any basis upon which the payment
of the amount of R383 539 could be regarded as not constituting value.
[22] In his judgment Selikowitz J employed the expressions ‘illusory value’ and
‘nominal value’. The learned judge stated at 917B-C:
‘Illusory or nominal value is what those words suggest – no value at all. “Illusory value” is merely
an illusion and “nominal value” is value in name only.’
Why this was done is not apparent from the judgment. According to the judgment these
expressions were not mentioned in the particulars of claim, the argument or the case
law referred to. Before us, lead counsel for the appellants confirmed that this judgment
was relied upon for the use of these expressions in the appellants’ particulars of claim.
I may mention that in his minority judgment in Langeberg Koöperasie, Williamson JA
(at 612), after having concluded that ‘the circumstances actually precluded any benefit
accruing to . . . or ever being likely to accrue in the future’, added ‘the possible benefit
to be gained . . . was really, in the event, illusory’. In my view, the importation of the
expressions ‘illusory value’ and ‘nominal value’ does conduce to confusion. However,
in the light of the conclusion to which I arrive, the issue need not detain me.
[23] Selikowitz J said that neither the argument that s 26(1) could only apply where
there is a total absence of value nor the argument that inadequate value would always
be prima facie evidence of no value, could prevail. It proceeded to determine the
exception raised in that case on the basis that there was no allegation that the value
conceded (R383 539) ‘should be treated as equivalent to no value having been
received’. It is thus apparent that this judgment also does not provide a clear answer to
the question in the present matter.
Interpretation
[24] It follows that the meaning of the phrase has to be determined on ordinary
principles of interpretation. There is no need to cite authority for the proposition that
this exercise entails giving meaning to the phrase by a holistic consideration of its text,
context and purpose. As I have shown, the other respondents contended that the
phrase meant for no value at all. The appellants pleaded that it meant for less than
‘reasonable market value’ and submitted that it referred to a counter performance that
did not represent a ‘fair return or equivalent’.
[25] It follows that the appellants’ interpretation requires significant reading-in into
s 26(1). Not so with the interpretation of the other respondents. It will be recalled that
in Estate Wege this court said that the word ‘value’ in the predecessor of s 26(1) meant
value in the ordinary sense of the word. This was taken further in Estate Jager when
Watermeyer CJ said:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo’.3
According to its text, therefore, the phrase means for no value at all. The next question
is whether the context and purpose of the phrase indicate that it should nevertheless
carry a different meaning.
3 See para 14 above.
[26] The most important contextual consideration is that s 26 forms part of a set of
remedies available to a trustee or liquidator under the Insolvency Act. The other
remedies are contained in s 29 (‘Voidable preferences’), s 30 (‘Undue preference to
creditors’) and s 31 (‘Collusive dealings before sequestration’).
[27] Under s 26(1),4 a disposition not made for value may be set aside when the
debtor was factually insolvent at the time or when it caused the debtor to become
factually insolvent. Subsections 26(1)(a) and (b) only deal with the incidence of the
onus in respect of factual insolvency. It follows that the availability of the remedy under
s 26(1) is not limited in time. It does not require proof of an intention to prefer one
creditor over another or of collusion, nor can a claim under s 26(1) be defeated by
showing that the disposition occurred in the ordinary course of business and without
the intention to prefer.
[28] Section 29(1)5 permits the setting aside of a disposition that had the effect of
preferring one creditor over another, where the debtor was factually insolvent when the
disposition was made or where it caused the debtor’s factual insolvency. The remedy
is only available in respect of dispositions made within six months prior to the
sequestration or the commencement of winding-up. A claim under s 29 may be
defeated by establishing that the disposition was made in the ordinary course of
business and that it was not intended to prefer one creditor above another.
[29] Section 30(1)6 provides for the setting aside of a disposition by a debtor, who
was factually insolvent at the time and whose estate was subsequently sequestrated
4 Quoted in para 3 above.
5 Section 29(1) reads:
‘Every disposition of his property made by a debtor not more than six months before the sequestration
of his estate or, if he is deceased and his estate is insolvent, before his death, which has had the effect
of preferring one of his creditors above another, may be set aside by the Court if immediately after the
making of such disposition the liabilities of the debtor exceeded the value of his assets, unless the person
in whose favour the disposition was made proves that the disposition was made in the ordinary course
of business and that it was not intended thereby to prefer one creditor above another.
6 Section 30(1) reads:
or placed in liquidation, if the disposition was made with the intention of preferring one
creditor above another. In principle this remedy may be employed irrespective of how
much time elapsed between the disposition and the sequestration or winding-up.
Section 30 also does not provide for any defences to, or exclusions from, the scope of
a claim thereunder.
[30] Finally, s 317 permits the setting aside of a transaction entered into by a debtor
prior to sequestration or liquidation, whereby the debtor, in collusion with another,
disposed of property in a manner which had the effect of prejudicing the debtor’s
creditors or by preferring one above another. The remedy is also in principle available
no matter how much time elapsed since the transaction had been entered into. A
person, who was party to the collusion is liable to make good the loss caused to the
estate, as well as for payment of a penalty. If the person is a creditor, the claim against
the estate is forfeited.
[31] In my view, this contextual setting materially informs the interpretation of the
phrase. Whilst the purpose of these provisions clearly is to protect the interests of the
general body of creditors, they do not evince an intention to advance the interests of
creditors above all other interests. This is, inter alia, illustrated by s 29: a disposition
that in fact had the effect of preferring one creditor over another, is immune from a
challenge under s 29 if the disposition was made more than six months before the
‘If a debtor made a disposition of his property at a time when his liabilities exceeded his assets, with the
intention of preferring one of his creditors above another, and his estate is thereafter sequestrated, the
court may set aside the disposition.’
7 Section 31 reads:
‘(1) After the sequestration of a debtor’s estate the court may set aside any transaction entered into by
the debtor before the sequestration, whereby he, in collusion with another person, disposed of property
belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his
creditors above another.
(2) Any person who was a party to such collusive disposition shall be liable to make good any loss
thereby caused to the insolvent estate in question and shall pay for the benefit of the estate, by way of
penalty, such sum as the court may adjudge, not exceeding the amount by which he would have
benefited by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim
against the estate.
(3) Such compensation and penalty may be recovered in any action to set aside the transaction in
question.’
sequestration or winding-up and, when made within the period of six months, if the
recipient shows that it was made in the ordinary course of business and without the
intention to prefer. This is also indicated by the provisos to s 26(1)8 and 26(2).9
[32] In my view, these provisions were intended to constitute a comprehensive set
of remedies to reverse objectionable transactions that occurred prior to sequestration
or winding-up. A comparison of these remedies demonstrates that the more
objectionable the transaction, the more extensive the remedy afforded. As I have said,
the remedies under s 26, s 30 and s 31 allow retrospective redress that is unlimited in
time. But both s 30 and s 31 deal with conduct intended to prejudice the general body
of creditors. Section 30 requires proof of the intention to prefer and s 31 requires proof
of collusion. However, there is nothing inherently, commercially or morally
objectionable to a sale at a discounted price. The same cannot be said of a factually
insolvent person squandering or giving away assets for no return. That, I think, is what
Wessels ACJ meant when he said ‘the object of sec. 24 is not to prevent a person in
insolvent circumstances from engaging in the ordinary transactions of life, but to
prevent a person from impoverishing his estate by giving his assets away without
receiving any present or contingent advantage in return’.10 This indicates that s 26(1)
was intended to apply only to gratuitous dispositions.
[33] Importantly, in terms of s 26(2),11 the recipient has no claim in competition with
the creditors of the insolvent estate. Section 32(3)12 provides that should the property
8 See para 3 above.
9 Section 26(2) provides:
‘A disposition of property not made for value, which was set aside under subsection (1) or which was
uncompleted by the insolvent, shall not give rise to any claim in competition with the creditors of the
insolvent’s estate: Provided that in the case of a disposition of property not made for value, which was
uncompleted by the insolvent, and which-
(a) was made by way of suretyship, guarantee or indemnity; and
(b) has not been set aside under subsection (1),
the beneficiary concerned may complete with the creditors of the insolvent’s estate for an amount
not exceeding the amount by which the value of the insolvent’s assets exceeded his liabilities
immediately before the making of that disposition.’
10 See para 12 above.
11 See footnote 9 above.
12 Section 32(3) reads:
have been alienated or consumed in the period between the disposition and the setting
aside, the recipient would be liable for the value of the property at the date of the
disposition or at the date on which it is set aside, whichever is the higher. On the
appellants’ construction therefore, should a purchaser, with no knowledge of the
seller’s financial situation, in the ordinary course of business purchase property at a
discounted price (something less than ‘reasonable market value’ or a ‘fair return or
equivalent’) from a person that is sequestrated years later, the purchaser would have
to return the property without the right to reclaim the purchase price. Moreover, should
the purchaser bona fide have alienated or consumed the property, he or she would be
liable for payment of the higher of the value of the property at the time of the sale or at
the time of the setting aside of the disposition and forfeit the purchase price. Many
examples could be given of the absurd results that the appellants’ interpretation would
lead to. It suffices to say that they could not have been intended.
[34] As I have said, the appellants’ case is that dispositions for less than the
‘reasonable market value’ or a ‘fair return or equivalent’ are not made for value. In
Goode, Durrant and Murray Ltd v Hewitt and Cornell, NNO 1961 (4) SA 286 (N) at
291E-F Fannin J said:
‘The word “value” is not, however, confined to a monetary or tangible material consideration,
nor must it necessarily proceed from the person to whom the disposition is made. Whether an
insolvent has received “value” for a disposition must be decided by reference to all the
circumstances under which the transaction was made.’
In Langeberg Koöperasie at 604B-C this court quoted this passage with approval. Thus,
it is an established principle that ‘value’ under s 26(1) includes benefits that do not have
a reasonable market value and in respect of which a fair return or equivalent could not
be evaluated or expressed in monetary terms. This consideration, too, points away
from the construction favoured by the appellants.
‘When the Court sets aside any disposition of property under any of the said sections, 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.’
[35] Finally, there is s 25(4)(c) of the Insolvency Act. In relevant part it provides:
‘(4)
If a person who is or was insolvent unlawfully disposes of immovable property or a
right to immovable property which forms part of his insolvent estate, the trustee may,
notwithstanding the provisions of subsection (3), recover the value of the property or right so
disposed of-
(a) . . .
(b) . . .
(c) from any person who acquired such property or right from the insolvent or former
insolvent without giving sufficient value in return, in which case the amount so recovered
shall be the difference between the value of the property or right and any value given in
return.’
Subsection 4(c) was introduced by an amendment that took effect on 1 September
1993.13 The legislature is presumed to be acquainted with the existing law14 and a
deliberate change of expression indicates a change of intention.15 In the result, the
phrase could not bear the meaning of not for ‘sufficient value’.
[36] All the contextual and purposive indicators reinforce the ordinary meaning of
the phrase. For these reasons, I conclude that the phrase ‘not made for value’ in s 26(1)
of the Insolvency Act 24 of 1936 means for no value at all.16 It follows that the appeal
must fail.
[37] The appeal is dismissed with costs, including the costs of two counsel where
so employed.
_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
13 In terms of the Insolvency Amendment Act 122 of 1993.
14 See Fundstrust (Pty) Ltd (In liquidation) v Van Deventer 1997 (1) SA 710 (A) at 732B.
15 See Shalom Investments (Pty) Ltd & Others v Dan River Mills Incorporated 1971 (1) SA 689 (A) at
701B-C.
16 Therefore the decision in De Jongh Ontwikkelings (Pty) Ltd & Another v Kilotech Investments (Pty) Ltd
& Others 2021 (4) SA 492 (GP) para 6.3.7 and 6.3.8 should not be followed.
Appearances:
For appellant:
F H Terblanche SC (with P W T Lourens)
Instructed by:
Susan Strydom Inc., Pretoria
Symington & De Kok Attorneys, Bloemfontein
For first respondent:
C M Eloff SC
Instructed by:
Bowman Gilfillan Attorneys, Sandton
McIntyre Van der Post Attorneys, Bloemfontein
For second, third and
fourth respondents:
J Muller SC (with K Reynolds)
Instructed by:
Edward Nathan Sonnenbergs, Cape Town
Matsepes Inc., Bloemfontein
|
4067
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 706/2022
In the matter between:
DIRECTOR OF PUBLIC
PROSECUTIONS, KWAZULU-NATAL APPELLANT
and
BRIAN MUNSAMY PILLAY RESPONDENT
Neutral citation: Director of Public Prosecutions, KwaZulu-Natal v Pillay
(706/2022) [2023] ZASCA 105 (23 June 2023)
Coram:
DAMBUZA ADP and SCHIPPERS, MOTHLE, MATOJANE and
GOOSEN JJA
Heard:
5 May 2023
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives via email, publication on the Supreme Court of Appeal
website and released to SAFLII. The date and time for hand-down is deemed to
be 11h00 on 23 June 2023.
Summary: Criminal procedure – appeal in terms of s 311 of Criminal Procedure
Act 51 of 1977 – constitution of trial court in terms of s 93ter(1) of Magistrates’
Courts Act 32 of 1944 –– whether peremptory requirements of s 93ter(1) satisfied
– duties of magistrate when accused represented– appeal upheld – conviction and
sentence reinstated.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg
(Mathenjwa AJ and Ploos van Amstel J, sitting as court of appeal):
The appeal is upheld.
The high court's order is set aside.
The respondent’s conviction and sentence imposed by the Regional Court
Durban, are reinstated.
The respondent’s appeal against his conviction is remitted to the high court.
________________________________________________________________
JUDGMENT
________________________________________________________________
Goosen JA (Dambuza ADP and Mothle and Matojane JJA concurring):
[1] This is an appeal by the Director of Public Prosecutions, KwaZulu-Natal
(the DPP), in terms of s 311 of the Criminal Procedure Act 51 of 1977 (the CPA).
It lies against an order of the High Court, KwaZulu-Natal Division,
Pietermaritzburg (the high court), which set aside the conviction and sentence of
the respondent on a charge of murder.
[2] The appeal was prosecuted on the basis that it raises a question of law,
namely the proper interpretation and application of s 93ter(1) of the Magistrates’
Courts Act 32 of 1944 (the MCA).1 The respondent rightly conceded that the
issue in this matter, raises a question of law.
1 Director of Public Prosecutions, Gauteng Division, Pretoria v Moabi [2017] ZASCA 85; 2017 (2) SACR 384
(SCA) para 46.
[3] The facts are common cause. The respondent and a co-accused were
charged with murder. The trial proceeded before the Regional Court for the
Regional Division of KwaZulu-Natal at Durban (the trial court). It commenced
on 18 May 2018. The respondent was legally represented throughout the
proceedings before the trial court. The record reflects several court appearances
before the commencement of the trial. The entries consist of handwritten notes
recorded by the presiding officer. On 26 February 2018, the accused appeared in
court. They were represented by Mr Luckychand. The case was remanded to 7
March 2018 ‘for PTC’, which was accepted to be shorthand for ‘pre-trial
conference’.
[4] On 7 March 2018, the pre-trial conference occurred in open court. Both the
respondent and his co-accused were present and were represented by Mr
Luckychand. The re-typed entry on the record reads as follows:
‘Both accused before Court.
Both accused are advised of the use of lay assessors – duly understood.
Mr Luckychand confirm that no assessors will be required.
Both accd confirm the same
PTC held – See annexure.
1 day available for trial [illegible] evidence admitted.’
[5] The trial commenced on 18 May 2018. The record reads as follows:
‘COURT:
Okay, just before we proceed, Mr Luckychand, you confirm for the record that
no assessors are required in this matter?
MR LUCKYCHAND:
That’s correct, Your Worship.’
[6] On 18 August 2018, the respondent was convicted of murder. His co-
accused was acquitted. He was sentenced to 10 years’ imprisonment on 21 August
2018. The respondent was granted leave to appeal against his conviction. On 25
May 2022, shortly before the hearing of the appeal, the high court issued a
directive requiring the parties to file supplementary heads of argument dealing
with whether there had been compliance with s 93ter(1) of the MCA. That issue
had not been raised as a ground of appeal. The appeal was heard on 2 June 2022.
On 10 June 2022, the high court delivered judgment, which dealt only with the
constitution of the trial court. It held that the peremptory requirements of s
93ter(1) had not been satisfied and it set aside the respondent’s conviction.
[7] The appeal squarely raises the proper interpretation of s 93ter(1) of the
MCA and its application. The section provides that:
‘The judicial officer presiding at any trial may, if he deems it expedient for the administration
of justice─
(a)
before any evidence has been led; or
(b)
in considering a community-based punishment in respect of any person who has been
convicted of any offence,
summon to his assistance any one or two persons who, in his opinion, may be of assistance at
the trial of the case or in the determination of a proper sentence, as the case may be, to sit with
him as assessor or assessors: Provided that if an accused is standing trial in the court of a
regional division on a charge of murder, whether together with other charges or accused or not,
the judicial officer shall at the trial be assisted by two assessors unless such an accused requests
that the trial be proceeded with without assessors, whereupon the judicial officer may in his
discretion summon one or two assessors to assist him.’
[8] In S v Gayiya2 this Court held that s 93ter(1) prescribes the proper
constitution of the court before which an accused stands trial.3 It was held that in
the event that the court is not properly constituted, the proceedings are a nullity.
[9] In relation to the effect of the section, this Court held:
‘The section is peremptory. It ordains that the judicial officer presiding in a regional court
before which an accused is charged with murder (as in this case) shall be assisted by two
2 S v Gayiya [2016] ZASCA 65; 2016 (2) SACR 165 (SCA).
3 Gayiya fn 2 above para 8 read with para 11.
assessors at the trial unless the accused requests that the trial proceed without assessors. It is
only where the accused makes such a request that the judicial officer becomes clothed with a
discretion either to summon one or two assessors to assist him or to sit without an assessor.
The starting point, therefore, is for the regional magistrate to inform the accused, before the
commencement of the trial, that it is a requirement of the law that he or she must be assisted
by two assessors, unless he (the accused) requests that the trial proceed without assessors.’
[10] The passage is clear and unequivocal. This statement of law has been
reiterated by this Court in Shange v S 4 and in Mtambo v The State.5 Since the
Gayiya judgment in numerous high court judgments have addressed s 93ter(1) of
the MCA and sought to apply Gayiya. Some conflict in the interpretation and
application of Gayiya has emerged. In the light of this, it is necessary to resolve
the conflict.
[11] In S v Langalitshoni,6 a full bench of the Eastern Cape Division set aside
the conviction of the accused by a regional court on the basis that s 93ter(1) was
not complied with. In that matter, the accused was legally represented. After
referring to the quoted passage from Gayiya, the court said:
‘The statement of the legal principle quoted in the preceding paragraph has the effect of
creating an obligation on the part of a regional magistrate presiding over a trial involving a
charge of murder. There are two essential elements to the obligation. The first is to inform the
accused person before the commencement of the proceedings what the peremptory provisions
of the law require to ensure the proper constitution of the regional court. The second is to
inform the accused person that he or she may elect to proceed with the trial without assessors.’7
[12] The court then set out what a trial magistrate is required to do to discharge
the obligation, both when the accused is unrepresented and represented. In
relation to the latter scenario, the court said,
4 Shange v S [2017] ZASCA 51 para 5.
5 Mtambo v State [2021] ZASCA 17 para 9.
6 S v Langalitshoni [2018] ZAECMHC 75; 2020 (2) SACR 65 (ECM).
7 Langalitshoni para 8.
‘What is required is a repetition of the legal principle quoted elsewhere in this judgment.
Ideally, communication of the legal principle should be made in a direct manner by the
magistrate addressing the accused person, who should be asked at that stage to indicate whether
he or she has been made aware of the peremptory provisions. The legal representative of the
accused person may then be asked by the magistrate to confirm the correctness of the answer
given by the accused person. It is then necessary for the magistrate to ask specifically whether
the accused person wishes to permit the trial to proceed without assessors. At this point a
magistrate would not be criticised for giving a brief outline of the role played by assessors in a
criminal trial. The magistrate ought to be satisfied that the answer given by the accused person
demonstrates an appreciation of the nature of the question and reflects a reliable response in
the circumstances. The accused person has the right to be tried in a fully constituted court. An
election to proceed without assessors amounts to a waiver of such right. A waiver of a right
cannot be achieved without knowledge thereof. That this is so should be checked with the
accused person and the legal representative.’8
[13] The court concluded that in asking the legal representative ‘are you going
to use the services of the assessors?’, the magistrate did not convey that the
‘proper constitution of the court requires that the magistrate ordinarily sit with
two assessors.9 It concluded that the question was misleading since it suggested
that the use of assessors involved an ‘additional right’. The questions and answers
did not, it found, indicate that the accused with full knowledge, waived his right
to a trial before ‘a properly constituted court’.
[14] In S v Ngomane and Another,10 the accused was also legally represented
and, on two separate occasions before the commencement of the trial, the
question of the composition of the court in terms of s 93ter(1) was addressed. The
record of these exchanges was cryptic. The court took the view that the fact that
8 Langalitshoni fn 6 above para 9.
9 Langalitshoni fn 6 above para 11.
10 S v Ngomane and Another [2021] ZAGPPHC 172; 2021 (2) SACR 654 (GP).
the notes were cryptic, was of no consequence. The magistrate was, it held,
clearly alert to the issue of assessors by addressing it on two occasions.11
[15] Dealing with Langalitshoni, the court in Ngomane, reasoned that:
‘Accordingly, when the accused is legally represented, there is no overriding duty on the
presiding magistrate to explain to the accused in any detail each and every single one of his
numerous constitutional rights.’12
…
‘It is obvious in this case that the legal representative of the appellants was also fully alert to
the issue of assessors, which was attended to and disposed of when the appointment of
assessors was addressed by the magistrate and waived on behalf of the appellants. The section
provides that only the accused, obviously as advised by his legal representative and through
his legal representative, may waive the appointment of assessors.’13
[16] These passages indicate a sharp difference in judicial opinion. It is two-
fold. On the one hand, it relates to the ambit of a magistrate’s duties in relation to
s 93ter(1) of the MCA where the accused is represented. On the other, it concerns
the sufficiency of ‘evidence’ required to establish that an accused person has
elected to proceed with a trial in the absence of assessors. There are several
judgments in the KwaZulu-Natal Division, of which the judgment under appeal
is one, where the issue has arisen.
[17] Before dealing with these judgments, reference should be made to Chala
and Others v Director of Public Prosecutions, KwaZulu-Natal, and Another,14
which predates Gayiya. In that matter, Vahed J concluded that a failure to
properly invoke the provisions of the section would always constitute a fatal
11 Ngomane para 17.
12 Ngomane para 19.
13 Ngomane para 20.
14 Chala and Others v Director of Public Prosecutions, KwaZulu-Natal, and Another [2014] ZAKZPHC 62; 2015
(2) SACR 283 (KZP).
irregularity resulting in the proceedings being set aside.15 The learned judge then
went on to state:
‘I am of the view also that to overcome the problems as highlighted by these cases it should
always appear from the record of proceedings in cases where s 93ter is required to be invoked,
that a proper explanation is given by the magistrate to the accused persons of the choice they
have in the appointment of assessors, together with a brief exposition of the import of that
choice and as to what is required of them. The record should also reflect, after having given
such explanation and requesting such response from accused persons, in cases where they elect
not to have assessors, that the magistrate nevertheless still considered whether such course was
advisable in the particular case before him or her. All of this should appear on the record.’16
[18] In Nxumalo v S,17 the court raised the issue of the constitution of the court
in terms of s 93ter(1), in an appeal against the sentence. The accused were legally
represented at the trial. The record indicated that, on 26 September 2013, their
legal representative informed the court that ‘the defence does not require
assessors’. At a pre-trial conference held on 9 December 2013, this was reiterated.
When the trial commenced on 31 March 2014, the magistrate asked the legal
representative whether what was recorded at the pre-trial conference was still the
case, and it was confirmed.
[19] The court held that Gayiya had endorsed the approach set out in Chala.18
It held that Langalitshoni had expanded on the approach previously adopted. It
found that the proviso to s 93ter(1) was never explained to the accused and that
he had not made a request not to sit with assessors. It set aside the conviction and
sentence.
15 Chala para 27.
16 Chala para 28.
17 Nxumalo v S [2022] ZAKZDHC 23 (10 February 2022) (Lopes and Ploos Van Amstel JJ).
18 Nxumalo para 7.
[20] On 28 March 2022, judgment was delivered in Hlatshwayo and Another v
S.19 It followed Nxumalo. It held that the record did not disclose that the proviso
was explained and found that the trial court was not properly constituted. It set
aside convictions and sentences. Zulu v State20 was delivered on 13 May 2022. In
that case, the question relating to the constitution of the trial court in terms of s
93ter(1) was not dealt with in pre-trial proceedings. Zulu also followed Nxumalo.
The court set aside the convictions and remitted the matter to the regional court
for the trial to commence de novo.
[21] On 29 July 2022, the judgment in Green v State21 (Green) was delivered.22
Green marked a departure from the approach adopted in the earlier judgments. In
that matter, the minute of a pre-trial conference recorded that ‘no lay assessors
[are] required.’ Dumisa AJ, who wrote the main judgment, accepted that the
requirements of s 93ter(1) were met. He held that there was no reason to doubt
the competence of the legal representative and that the court was entitled to
assume that the accused had made his election with the benefit of advice.
[22] In a concurring judgment, Olsen J addressed the conflict between Ngomane
and Langalitshoni. In relation to the judgments of Nxumalo, Hlatshwayo and
Zulu, Olsen J stated:23
‘I have not found a report of any case in this division in which it was held, before the judgment
in Langalitshoni was handed down, that a simple record of a request by an accused (conveyed
by his legal representative) that the magistrate sits alone is inadequate to establish the proper
constitution of a court presided over by a magistrate alone. That accords with my understanding
of the attitude of this Court at the time, that a record of the choice alone is sufficient. I have
19 Hlatshwayo and Another v State [2022] ZAKPHC 8 (28 March 2022) (Bezuidenhout AJ and Ploos van Amstel
J).
20 Zulu v State [2022] ZAKPHC 20 (13 May 2022) (Khallil AJ and Chili J).
21 Green v State [2022] ZAKPHC (29 July 2022) (Dumisa AJ and Olsen J).
22 Judgment in the matter presently under appeal was delivered on 10 June 2022, after Green was argued, but
before judgment was delivered.
23 Green fn 21 above para 21.
found three judgments which post-date Langalitshoni in which that case was followed in this
division without comment. [References to Nxumalo, Hlatshwayo and Zulu omitted.]
Despite the fact that Ngomane was published in 2021, the judgment was not drawn to the
attention of the judges who presided in the three cases, just mentioned. Being unaware of this
conflict, they did not deal with it. In the circumstances, I do not believe that in this appeal we
are bound to follow the three decisions.’
[23] The court was critical of the use of phrases like ‘properly constituted court’,
or ‘fully constituted court’ as used in Langalitshoni. It was critical of its
characterisation of the accused’s election as being an incidence of waiver. It
declined to follow the Langalitshoni reasoning.
[24] This brings me to the judgment in the matter under appeal. In this instance
the high court was aware of the judgment in Ngomane. It did not, however,
engage with the conflict in approach between Ngomane and Langalitshoni.
Instead, it asserted that:
‘In Ngomane the court appears to have entirely overlooked that in Gayiya the accused was also
legally represented, and Mpati P clearly stated that the accused must be informed by the
presiding officer at the trial that by law he or she is required to be tried in the presence of
assessors. Accordingly, the issue of assessors is canvassed with the accused and that
communication should appear in the record.’
[25] The high court then considered Nxumalo, accepting that it endorsed
Langalitshoni. It found on the facts that the respondents were not informed of the
right to be tried in the presence of assessors. It concluded that, on the facts, the
case was on all fours with Nxumalo and that it was bound by that judgment.
[26] The high court’s perfunctory treatment of Ngomane on the basis that the
court had overlooked the fact that, in Gayiya, the accused was represented, is
unfortunate. It is also wrong. In Gayiya, the accused was not represented at the
stage that the trial court dealt with s 93ter. There are several passages in the
judgment of Mpati P which indicate this fact. For instance, the judgment indicates
that the court questioned the accused on his plea of guilty to satisfy itself that he
admitted all of the elements of the offences. The judgment records that the
accused addressed the court after he had closed his case. He also addressed the
court in relation to the sentence. This would not have occurred had the accused
been represented.
[27] The high court’s error caused it to construe Gayiya as laying down a
principle that the presiding officer is obliged to address an accused person
directly, and to explain the ambit and effect of s 93ter(1) to an accused person
without reference to their legal representative. Gayiya did not lay down such
principle. The judgment, it must also be stated, did not endorse the approach
advocated in Chala.24 It merely referred to the exposition of the case law set out
in Chala.25 The judgment in Gayiya requires only that the magistrate presiding at
the trial brings to the attention of an accused person the provisions of s 93ter(1)
and establishes whether the accused has made a request to proceed without
assessors. In the event that the accused makes such request, the magistrate may
exercise a discretion regarding the appointment of assessors.
[28] It is necessary to say something about the request which may be made by
an accused. The court in Langalitshoni construed s 93ter(1) as conferring upon
an accused person a right to be tried by a ‘fully’ or ‘properly’ constituted court,
namely a court including assessors. It held that the election not to do so amounts
to a waiver of the right, which can only occur if the accused is fully cognisant of
their rights. Other courts, as indicated, have also used the words ‘election’ and
waiver’ to characterise the request.
24 As erroneously stated in Nxumalo and Hlatshwayo. See para 19 above.
25 Gayiya fn 2 above para 7.
[29] Section 93ter(1) deals, as this Court has held, with the constitution of the
court. It regulates the criminal jurisdiction of a regional court.26 The section
permits the involvement of persons, in addition to appointed judicial officers, in
the adjudication of criminal matters within the jurisdiction of a magistrate’s court.
It does so on a discretionary basis by way of an election made by the presiding
judicial officer, except in the case of a murder charge. In the latter case, the
section provides for the peremptory involvement of assessors to assist the
presiding judicial officer. In both instances, the participation of the assessors is
delineated, and provision is made for disqualification, recusal, and the
continuation of the trial without an assessor.27
[30] Section 93ter (1) does not confer upon an accused person a right to be tried
by a ‘properly constituted’ court. The language employed in s 93ter(1) confers
only a right to request that the trial proceed without assessors. The request is not
dispositive. Once the request is made, the magistrate has a discretion to summon
one or two assessors to assist them, notwithstanding the request. The fact that the
court has a discretion to summon assessors despite the request, effectively negates
the notion of any kind of ‘election’ by the accused.
26 The section appears in Chapter XII of the MC Act, which relates to the criminal jurisdiction of the magistrate’s
court.
27 MC Act s 93ter(11) provides:
‘(a) If an assessor—
(i) dies;
(ii) in the opinion of the presiding officer becomes unable to act as an assessor;
(iii) is for any reason absent; or
(iv) has been ordered to recuse himself or herself or has recused himself or herself in terms of subsection (10),
at any stage before the completion of the proceedings concerned, the presiding judicial officer may, in the interests
of justice and after due consideration of the arguments put forward by the accused person and the prosecutor—
(aa) direct that the proceedings continue before the remaining member or members of the court;
(bb) direct that the proceedings start afresh; or
(cc) in the circumstances contemplated in subparagraph (iii), postpone the proceedings in order to obtain the
assessor’s presence:
Provided that if the accused person has legal representation and the prosecutor and the accused person consent
thereto, the proceedings shall, in the circumstances contemplated in subparagraphs (i), (ii) or (iv), continue before
the remaining member or members of the court.’
[31] What s 93ter(1) requires is that an accused person must be informed of the
section’s mandatory provisions and that he may request that the trial proceed
without assessors. Gayiya does not hold that the magistrate is obliged to only
address the accused directly, or to explain the nature of the rights conferred by
the section. It is not necessary, for present purposes, to traverse the obligations
imposed upon a judicial officer in circumstances where an accused person is
unrepresented. They are well understood.
[32] Where an accused person is legally represented, the obligation which rests
upon a presiding officer is of a different character. The presiding officer remains
under an obligation to ensure that the trial is fair and that an accused person’s
constitutional rights are protected. But that general obligation is to be carried out
in the light of the accused having exercised the right to legal representation.
Section 25(3)(f) of the Constitution confers upon an accused person the right to
choose and be represented by a legal practitioner. In S v Mpongoshe 28 this Court
held that section 73(2) of the CPA confers upon an accused the wider right to be
represented. In that case it was held that the right to legal representation
encompassed the right to have a plea tendered vicariously by the legal
representative.
[33] In Beyers v Director of Public Prosecutions, Western Cape,29 it was held
that:
‘The idea of being represented by a legal adviser cannot simply mean having somebody next
to you to speak on your behalf. Representation entails that the legal adviser will act in your
best interests, will represent you, will say everything that need be said in your favour, and will
28 S v Mpongoshe 1980 (4) SA 593 (A) at 603B-C.
29 Beyers v Director of Public Prosecutions, Western Cape 2003 (1) SACR 164 (C) at 166j-167a.
call such evidence as is justified by the circumstances in order to put the best case possible
before the court in your defence.’
[34] ‘Representation’ in this sense is not confined to the conduct of the trial. A
legal representative, who is engaged to represent an accused, is obliged to act in
the best interests of their client. That means, inter alia, to act according to the
highest standards of professional ethics; to advise the client of their rights fully
and properly; and to guide and advise the client in exercising of those rights. The
legal representative must prepare thoroughly and properly on all aspects of the
case. This includes advising the client about s 93ter(1), where it applies,
informing the magistrate of the process and whether a request is made to proceed
without assessors.
[35] A presiding officer must, in the first instance, respect an accused person's
choice of legal representative and must defer to the legal representative’s conduct
of the matter. These are general principles which are well established. They
inform our adversarial system of trial adjudication.30 It is against this backdrop
that the duties of a trial magistrate must be viewed. Where an accused is
represented, it must be established that the representative and the accused were
aware of the provisions of the section, and whether the accused, as represented,
has made a request as envisaged. It is incumbent upon the presiding officer to
ensure that the court is constituted in accordance with s 93ter(1). As indicated in
Gayiya, the presiding officer must take the lead in doing so at a stage before any
evidence is led.
30 See R v Matonsi 1958 (2) SA 450 (A) at 456; R v Baartman and Others 1960 (3) SA 535 at 538; S v Mkhise; S
v Mosia; S v Jones; S v Le Roux 1988 (2) SA 868 (A) at 874E; S v Louw 1990 (3) SA 116 (A) at 124B-125E.
[36] The approach regarding the intended reliance upon prescribed minimum
sentences as provided by s 51 of Act 105 of 1997, is instructive. In S v Legoa,31
it was held that the concept of substantive fairness under the Constitution requires
that an accused be informed of facts, which the State intends to prove to bring
him within the increased sentencing jurisdiction provided by that Act. The court
declined to lay down a general rule regarding the form of notice. It held that:
‘Whether the accused’s substantive fair trial right, including his ability to answer the charge,
has been impaired will therefore depend upon a vigilant examination of the relevant
circumstances.32
[37] In S v Kolea,33 this Court reaffirmed the principle in Legoa. It also endorsed
the approach set out by Ponnan JA in a minority judgment in S v Mashinini and
Another,34 where the learned judge stated that the fair trial enquiry is first and
foremost a fact-based enquiry. The court in Kolea held that the conclusion to
which the majority had come was wrong.35
[38] Although we are not here dealing with a fair trial enquiry, compliance with
s 93ter(1) of the MCA is no less a fact-based enquiry. In light of this, it is equally
undesirable to lay down a general rule regarding what must be done to establish
compliance with the section. The set of guidelines proffered in Langalitshoni,
strays into this terrain. The requirements are at odds with the notion of a right to
legal representation. They are also premised upon a misconception of the nature
of the right conferred by s 93ter(1) and the application of principles of waiver.
[39] The high court concluded that the respondent’s right was not explained to
him. Before this Court, counsel for the respondent contended that whatever had
31 S v Legoa [2002] ZASCA 122; 2003 (1) SACR 13 (SCA).
32 Legoa para 21.
33 S v Kolea [2012] ZASCA 199; 2013 (1) SACR 409 (SCA) para 8.
34 S v Mashinini and Another [2012] ZASCA 1; 2012 (1) SACR 604 (SCA) para 51.
35 Kolea fn 33 above para 37.
occurred at the pre-trial remand proceedings was irrelevant since it was the trial
magistrate who was obliged to explain and act in accordance with the section.
The argument is without substance. The purpose of the pre-trial conference is to
ensure that the enrolled case is ready to proceed to trial. Such pre-trial
proceedings are not to be ignored.
[40] The notes made by the magistrate presiding at the pre-trial remand hearing,
state that the provisions of the section were explained to the accused. They were
understood. The legal representative said that the two accused did not require
assessors. This was plainly a request that the trial proceeds without assessors. The
accused confirmed this to be so. Thus, when the trial magistrate asked the legal
representative whether that was still the case, he sought to confirm the request.
[41] On the facts, s 93ter(1) was complied with. The high court ignored the facts
as disclosed on the record. In the circumstances, the high court erred both in
respect of the law relating to the section and in its application to the facts. It
follows that the appeal must succeed.
[42] The respondent was granted leave to appeal against his conviction. The
high court did not deal with the merits of the appeal against conviction. The
consequence of this Court’s finding on appeal, must be that the respondent’s
conviction and sentence are reinstated. Once that is so he is entitled to prosecute
his appeal in the high court.
[43] In the result, the following order will issue.
The appeal is upheld.
The high court's order is set aside.
The respondent’s conviction and sentence imposed by the Regional Court
Durban, are reinstated.
The respondent’s appeal against his conviction is remitted to the high court.
_________________
G G GOOSEN
JUDGE OF APPEAL
Schippers JA
[44] I have had the benefit of reading the first judgment by my colleague
Goosen JA. I agree that the appeal should be upheld, but I come to that conclusion
by a shorter route. In what follows, I utilise the same abbreviations used in the
first judgment.
[45] The issue raised in this appeal is one of statutory interpretation: whether
there has been compliance with s 93ter(1) of the MCA. It provides:
‘The judicial officer presiding at any trial may, if he deems it expedient for the administration
of justice─
(a)
before any evidence has been led; or
(b)
in considering a community-based punishment in respect of any person who has been
convicted of any offence,
summon to his assistance any one or two persons who, in his opinion, may be of assistance at
the trial of the case or in the determination of a proper sentence, as the case may be, to sit with
him as assessor or assessors: Provided that if an accused is standing trial in the court of a
regional division on a charge of murder, whether together with other charges or accused or not,
the judicial officer shall at the trial be assisted by two assessors unless such an accused requests
that the trial be proceeded with without assessors, whereupon the judicial officer may in his
discretion summon one or two assessors to assist him.’
[46] The issue arose in the following circumstances. The respondent and his co-
accused were charged with murder in the Regional Court, Durban, KwaZulu-
Natal. They were legally represented. The record shows that that at a pre-trial
conference they were advised of the use of lay assessors, which they understood;
that their attorney confirmed that no assessors would be required; and that the
same was confirmed by the accused.
[47] A different magistrate presided over the trial. The accused were
represented by the same attorney. Before the trial commenced, the magistrate
asked the attorney to confirm that no assessors were required, which he did. The
trial proceeded without assessors. The respondent was convicted of murder and
sentenced to ten years’ imprisonment. His co-accused was acquitted.
[48] The respondent was granted leave to appeal to the KwaZulu-Natal Division
of the High Court, Pietermaritzburg (the high court). Prior to the hearing of the
appeal, the high court (Mathenjwa AJ and Ploos van Amstel J) issued a directive
that the parties file supplementary heads of argument on the question whether
there had been compliance with the proviso to s 93ter(1) of the MCA (the
proviso).
[49] The high court did not deal with the merits of the appeal. It held that there
was no compliance with the proviso and set aside the respondent’s conviction and
sentence. The court referred to Langalitshoni,36 in which the magistrate enquired
of the accused’s legal representative whether he was going to use the services of
36 S v Langalitshoni [2018] ZAECMHC 75; 2020 (2) SACR 65 (ECM).
assessors. The representative replied that assessors were not required. The court
in Langalitshoni held that ideally, the magistrate should ask the accused directly
whether he or she has been made aware of the proviso; the legal representative
‘may then be asked by the magistrate to confirm the correctness of the answer
given by the accused person’; and it is then necessary for the magistrate to
specifically ask whether the accused wishes that trial proceed without assessors.37
It set aside the accused’s conviction and sentence for want of compliance with
the proviso.
[50] The high court also referred to the contrary approach in Ngomane.38 There,
the court (Bam J and Munzhelele AJ) declined to follow Langalitshoni and held
that the legal representative of the appellants was alert to the issue of assessors;
that it had been addressed by the magistrate on two separate occasions; and that
the appointment of assessors had been waived on behalf of the appellants. It
concluded that when the accused is legally represented, there is no need for the
magistrate to explain to the accused in minute detail what the MCA provides, and
what their rights are in relation to assessors.
[51] In this case, the high court reasoned that the trial court was not properly
constituted at the pre-trial conference; and that before commencement of the trial,
the respondent had not been informed that ‘as a matter of law he had a right to be
tried in the presence of assessors and with full knowledge thereof he elected not
to be tried in the presence of assessors’. The court said that the appeal ‘is on all
fours with the facts in Nxumalo’,39 and that it was bound by that decision. In
Nxumalo the record reflected that the accused’s legal representative had informed
37 Ibid para 9.
38 S v Ngomane and Another [2021] ZAGPPHC 172; 2021 (1) SACR 654 (GP) (Ngomane).
39 S v Nxumalo [2022] ZAKZDHC 23.
the court that ‘the defence does not require assessors’, which the representative
confirmed at a pre-trial conference and prior to the commencement of the trial.
[52] The high court relied on the following paragraphs in Nxumalo:
‘. . . Mr Nxumalo himself [the accused], was not involved in these discussions, save for being
present when the learned magistrate spoke to Mr Zulu [the legal representative].
The proviso was never explained to Mr Nxumalo, and he never made a request not to sit with
assessors. Whether his legal representative explained the proviso to him, is also not reflected
on the record. Had that been the case, the learned magistrate could have engaged Mr Nxumalo
so that he could have confirmed his understanding of the section, and his request not to have
assessors’.40
[53] It is trite that statutory interpretation is a unitary exercise which requires a
court to determine the meaning of a provision, having regard to the language used,
the context in which it is used and the purpose of the provision.41 As was held in
Endumeni,42 ‘[t]he inevitable point of departure is the language of the provision
itself’.43 These are the words which the lawgiver has chosen to enact to express
the purpose of the legislation and are thus the primary source by which meaning
is ascertained.
[54] The proviso, on its plain language, states that a regional court magistrate
must be assisted by two assessors where an accused is charged with murder,
unless the accused requests that the trial proceed without assessors. These
requirements are peremptory.44 Prior to the commencement of the trial, the
40 Ibid paras 9 and 10.
41 Capitec Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA
99; 2022 (1) SA 100 (SCA) para 25.
42 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA)
(Endumeni).
43 Ibid para 18.
44 S v Gayiya [2016] ZASCA 65; 2016 (2) SACR 165 (SCA) paras 8 and 11.
regional magistrate must inform the accused of the proviso – an uncomplicated
obligation as appears from Gayiya.45
[55] The proviso says nothing about the ‘waiver’ of a right that the judicial
officer be assisted by two assessors. Instead, it refers to a ‘request’ by an accused
that the trial proceed with or without assessors. A ‘request’ is defined in the
Oxford English Dictionary46 as ‘[t]he action or an instance of asking . . . for
something’. Similarly, it is defined as ‘the act of politely or officially asking for
something’,47 or asking for something formally.48
[56] Thus, on its plain wording, the proviso prescribes the constitution of a
regional court in which an accused is charged with murder, unless the accused
formally asks that the trial proceed without assessors. Put differently, the request
is a statement of the accused’s desire that no assessors are required. And it makes
no difference whether that request is conveyed to the magistrate by the accused
himself, or by his legal representative. This construction is consistent with the
purpose of the proviso: to promote lay participation in the adjudication of
criminal cases in order to achieve a measure of community involvement in the
criminal justice system,49 unless the accused requests otherwise.
[57] The proviso is silent on the manner in which an accused must be informed
of the court’s composition; or whether a statement or confirmation by an
accused’s legal representative that the trial may proceed without assessors,
constitutes compliance with the proviso. Sensibly interpreted however, 50 as long
as it appears from the record of the proceedings that an accused has been informed
45 Ibid para 8.
46 L Brown The New Shorter Oxford English Dictionary on Historical Principles 3 ed (1993) Vol 2 p 2556.
47 https://dictionary.cambridge.org/dictionary/english/request.
48 https://www.collinsdictionary.com/dictionary/english/request.
49 A Kruger Hiemstra’s Criminal Procedure 21-9 Issue 12 (May 2019).
50 Endumeni para 18.
of the proviso – by the magistrate or the accused’s legal representative – and that
there is a formal request that the trial proceed without assessors, there will be
compliance with the proviso. Whether there has been such compliance is a
question of fact to be determined in light of the circumstances of the particular
case.
[58] In the case of an accused who is legally represented, it is implicit in a
statement or request to the magistrate that no assessors are required, that the
accused has been informed of the proviso. This is because judicial officers ‘act
on the assumption that a duly admitted lawyer is competent’, as stated by this
Court in Halgryn.51 Legal competence necessarily entails knowledge of the law
and in this case, the proviso. It can therefore be accepted that a legal
representative would inform the accused of the proviso, explain its requirements,
and that when the representative informs the court that assessors are or are not
required, that the accused has understood what has been explained to him or her,
unless, in the exceptional case, something emerges which suggests otherwise.52
[59] It is self-evident that an attorney or advocate must demonstrate legal
expertise, honesty and faithfulness in the conduct of his or her client’s case.53 It
is the duty of the legal representative ‘to ensure that the accused’s constitutional
rights are not violated and that the accused has a fair trial in accordance with all
procedural aspects and relevant legislation’.54 For these reasons, the manner in
which the client’s case is to be conducted, vests in the legal representative. In the
words of Schreiner JA:
‘. . . Once the client has placed his case in the hands of counsel the latter has complete control
and it is he who must decide whether a particular witness, including the client is to be called or
51 S v Halgryn [2002] ZASCA 59; 2002 (2) SACR 211 (SCA); [2002] 4 All SA 157 (SCA) para 12.
52 S v Green [2022] ZAKZPHC 31 para 23.
53 R v Matonsi 1958 (2) SA 450 (A) at 458A per Van Blerk AJA.
54 Ngomane para 22; Ibid para 21.
not. So in Swinfen v Lord Chelmsford, 157 E.R. 1436 at p. 1449, POLLOCK, C.B., states the
Court’s view that,
“a counsel has complete authority over the suit, the mode of conducting it, and all that is incident to it
– such as withdrawing the record, withdrawing a juror, calling no witnesses, or selecting such as, in his
discretion, the things ought to be called, and other matters which properly belong to the suit and the
management and conduct of the trial”.’55
[60] Counsel’s authority over the suit however, does not detract from the
mandatory requirements of the proviso. But the proviso does not preclude a
situation, for example, where the legal representative advises the accused that in
his or her view, and in the interests of the accused, the trial should proceed
without assessors. A court should not look behind a decision in a trial made by
counsel in good faith and in the best interests of the client, save only to prevent a
miscarriage of justice.56 If the accused accepts that advice, the legal representative
would advise the court that assessors are not required, and there would be
compliance with the proviso. And in such a case, it cannot be suggested that ‘the
accused never made a request [that the court] not sit with assessors’. Neither is it
necessary for the record to reflect that the ‘legal representative explained the
proviso to him’57 – that is a given.
[61] The wording of the proviso is clear and unambiguous concerning the
composition of the court, and the accused’s entitlement to formally ask that the
trial proceed with or without assessors. However, the interpretation of the proviso
in Langalitshoni and Nxumalo produces a manifest absurdity. It is a settled
principle that statutes should be construed to avoid absurdities or anomalous
results.58 Had the legal representative in both those cases informed the court that
55 Matonsi fn 19 at 456C-D.
56 GDB v Her Majesty The Queen 2000 SCC 2002; [2000] 1 SCR 520 para 34.
57 Nxumalo paras 9 and 10.
58 Venter v R 1907 TS 910 at 915, affirmed in Smit v Minister of Justice and Correctional Services and Others
[2020] ZACC 29; 2021 (3) BCLR 219 (CC) para 121, where Madlanga J, citing Innes CJ, said: ‘[W]hen to give
the plain words of the statute their ordinary meaning would lead to absurdity so glaring that it could never have
assessors were required, it would have been accepted that the proviso had been
explained to the accused and that there was compliance with the requirements of
the proviso. And in that scenario, it cannot be suggested, as the court in
Langalitshoni found, that the question, ‘Are you going to use the services of
assessors’, was ‘misleading’, because it did not convey to the accused the proper
constitution of the court.59 As stated, the legal representative would be aware of
the proviso, would have advised the accused of its requirements, and neither the
representative nor the accused could conceivably be ‘misled’. Why should the
position be any different in the case where the legal representative informs the
court that assessors are not required? In both scenarios the proviso requires no
more than a formal request by the defence lawyer that the trial proceed with or
without assessors.
[62] The decision in Hlatshwayo illustrates the point.60 It does not appear from
the judgment whether the accused were legally represented; it is assumed that
they were. On 27 March 2018, during the pre-trial stage, the magistrate completed
a pro-forma document forming part of the record and next to paragraph 1.14
thereof, it was indicated that both accused required assessors. That is the clearest
indication that they understood the proviso; and there was no question about
compliance with it. On 22 May 2018 the accused appeared before a different
magistrate (who ultimately presided over the trial) and the case was remanded for
trial. The following note was made on the record: ‘Both accused now indicate
that they do not require assessors in this case’.61 At the commencement of the trial
the magistrate did not deal with the proviso at all. The accused were convicted of
been contemplated by the Legislature, or where it would lead to a result contrary to the intention of the Legislature,
as shown by the context or by such other considerations as the Court is justified in taking into account, the Court
may depart from the ordinary effect of the words to the extent necessary to remove the absurdity and to give effect
to the true intention of the Legislature.’
59 Langalitshoni para 11.
60 S v Hlatshwayo and Another [2022] ZAKPHC 8 (28 March 2022).
61 Ibid para 4.
murder and sentenced to 15 years’ imprisonment. On appeal, the convictions and
sentences were set aside because there was no compliance with the proviso.62
[63] It appears from Hlatshwayo that the request by the legal representative, on
behalf of the accused, that the trial proceed with assessors was accepted by the
trial court. So too, a similar request was subsequently made that assessors were
no longer required. That explains why it was unnecessary for the magistrate to
again deal with the proviso prior to the commencement of the trial. The appeal
court however followed Langalitshoni and Nxumalo in setting aside the
convictions and sentences.
[64] I return to the facts of this case. The record shows that at the pre-trial
conference, the respondent and his co-accused were legally represented. They
were advised of the use of lay assessors, obviously sourced in the proviso, which
requires the magistrate to be assisted by two assessors. The magistrate could not,
and would not, have recorded that they understood that advice, unless it was
explained to them. So, contrary to the high court’s finding, the accused were
directly involved in the explanation concerning the proviso. The magistrate went
further. He asked the respondent’s attorney to confirm that no assessors were
required – essentially a confirmation of the accused’s request – which the attorney
provided. Thereafter, the record states, ‘both accd confirm the same’, meaning
that they, in turn, confirmed the request to their attorney that the trial proceed
without assessors.
[65] Subsequently, and prior to the commencement of the trial, the presiding
magistrate’s request to the respondent’s attorney to again confirm that no
assessors were required, was a belt-and-braces approach to the proviso. The
62 Ibid paras 14-16.
attorney provided the requisite confirmation. On these facts, nothing can be
clearer than that the magistrate (and it may be accepted, the attorney) explained
the proviso to the respondent; that he understood it; and that he requested that the
trial proceed without assessors.
[66] It follows that the high court erred in holding that the trial court was not
properly constituted. And its attempt to distinguish Ngomane on the basis that
Bam J ‘appears to have entirely overlooked that in Gayiya the accused was also
legally represented’, and that regardless of legal representation, the accused
should still be informed of the proviso, must fail. The accused in Gayiya was
unrepresented, and that is not what Gayiya holds.
[67] For the above reasons, the decisions in Langalitshoni, Nxumalo and
Hlatshwayo are incorrect and should not be followed. The decision in Zulu63
however, stands on a different footing. There, the trial court informed the accused
of the proviso, after he had already pleaded. The appeal court correctly held that
the magistrate was required to inform the accused of the proviso before the trial
commenced. That was sufficient to set aside the conviction and sentence.
However, the court’s endorsement of the approach in Langalitshoni, Nxumalo
and Hlatshwayo, was incorrect.
[68] The appeal must therefore be upheld. I agree with the order issued.
__________________
A SCHIPPERS
JUDGE OF APPEAL
63 Busani Richard Zulu v The State [2022] ZAKPHC 20 (13 May 2022).
Appearances
For the appellant:
K L Singh and B Mbokazi
Instructed by:
Director of Public Prosecutions, Durban
Director of Public Prosecutions, Bloemfontein
For the respondent:
L Barnard
Instructed by:
Jay Pundit & Co, KwaDukuza
Blair 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:
23 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
Director of Public Prosecutions, Kwazulu-Natal v Pillay (Case no 706/2022) [2023] ZASCA 105 (23
June 2023)
The Supreme Court of Appeal (SCA) today upheld an appeal against an order of the KwaZulu Natal
Division of the High Court, Pietermaritzburg (the high court), which set aside the conviction of the
respondent, Pillay, on a charge of murder. The Director of Public Prosecutions (the DPP) appealed on
question of law in terms of s 311 of the Criminal Procedure Act, 51 of 1977.
Pillay had been charged with murder before the Regional Court for the Regional Division of the KwaZulu
Natal Division in Durban. He was legally represented at the trial. He was convicted on 18 August 2018.
On 21 August 2018, he was sentenced to 10 years’ imprisonment.
Pillay appealed to the high court against his conviction. Shortly before the appeal hearing, the high court
requested the parties to submit further argument on whether the provisions of s 93ter(1) of the
Magistrates’ Court Act, 32 of 1944 (the MCA) had been complied with. Section 93ter(1) provides that in
a trial involving a charge of murder, the magistrate shall be assisted by assessors unless the accused
requests that the trial proceed without assessors.
The high court accepted that s 93ter(1) is peremptory, as had been authoritatively stated in judgments
of the SCA. It held that the trial magistrate was obliged to explain the provisions of the section to an
accused directly and to explain the effect of electing to proceed without assessors. It based its finding
upon several judgments of the KwaZulu Natal Division of the High Court, to which it considered itself
bound. It found that the section had not been explained to Pillay. It therefore found that the trial was not
conducted before a properly constituted court and set aside the conviction and sentence.
On appeal to the SCA, the DPP contended that the High Court's interpretation and application of s
93ter(1) was wrong in law, since it was not a requirement of the section that a magistrate should explain
the nature and effect of the section to a represented accused directly and without reference to the legal
representative.
The SCA noted that since its judgment in S v Gayiya, which set out the meaning and effect of s 93ter(1)
of the MCA, a sharp difference had emerged between judgments in various Divisions of the High Court.
That difference also manifested itself in judgments of the KwaZulu Natal Division, including the
judgment under appeal. The difference of judicial opinion related to the extent of the duties of a
magistrate when an accused person is represented; the nature of the right conferred by the section;
and what requirements need to be met to establish compliance.
The SCA held that s 93ter(1) confers only a right to request that the trial proceed without assessors.
The section does not confer a right to choose or elect the constitution of a court. It held that when an
accused person is represented by a legal representative, a magistrate’s duties are carried out with due
deference to the fact that the right to legal representation has been exercised. In the context of s 93ter(1)
of the MCA, a magistrate is obliged to ensure that the court is constituted as ordained by the section.
This requires that the magistrate establish that the legal representative and the accused is aware of the
section and has advised the accused. The magistrate must establish whether the accused wishes to
exercise the right to request that the trial proceed without assessors. The SCA held that compliance
with the section involves a fact-based enquiry and that it was undesirable to lay down a set of guidelines
and requirements by which that enquiry may be satisfied.
With reference to the facts, the SCA held that at an earlier remand hearing, the presiding magistrate
had indeed explained s 93ter(1) of the MCA, in the presence of the legal representative and that the
accused had understood it. The legal representative stated that they did not require the appointment of
assessors. The accused confirmed this in person. These facts had not been considered by the high
court. The SCA found that when the trial magistrate asked the legal representatives, at the
commencement of the trial, whether the views previously expressed were still the views of the accused,
the magistrate was confirming the request that the trial proceed without assessors. The provisions of s
93ter(1) of the MCA had therefore been met and the trial court was properly constituted.
The SCA upheld the appeal and reinstated the conviction and sentence imposed by the regional court.
Since the high court had not dealt with the appeal on the merits, the SCA remitted the appeal to the
high court for consideration on its merits.
--------ends--------
|
2314
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 472/08
MR VIDEO (PTY) LTD
First Appellant
MR VIDEO, CORNER OF DURBAN & RAGLAN STREETS (BELLVILLE) Second Appellant
MR VIDEO, CLAREMON
Third Appellant
MR VIDEO, DELMAR CENTRE (PAROW)
Fourth Appellant
MR VIDEO, SABLE SQUARE (MILNERTON)
Fifth Appellant
MR VIDEO, VRIJZEE (GOODWOOD)
Sixth Appellant
MR VIDEO, AROMA VILLAGE (BRACKENFELL)
Seventh Appellant
MR VIDEO, 244 VOORTREKKER ROAD (PAROW)
Eighth Appellant
MR VIDEO, CAPE GATE LIFESTYLE CENTRE (BRACKENFELL)
Ninth Appellant
MR VIDEO, 187 VOORTREKKER STREET (BELLVILLE)
Tenth Appellant
MR VIDEO, 94D VOORTREKKER ROAD (GOODWOOD)
Eleventh Appellant
MR VIDEO, VAN RIEBEECK ROAD (KUILSRIVER)
Twelfth Appellant
MR VIDEO, 7/11 CENTRE (KUILSRIVER)
Thirteenth Appellant
MR VIDEO, PARKLANDS
Fourteenth Appellant
MR VIDEO, DURBANVILLE
Fifteenth Appellant
MR VIDEO, MOWBRAY
Sixteenth Appellant
MR VIDEO, GARDENS
Seventeenth Appellant
MR VIDEO, SEA POINT
Eighteenth Appellant
MR VIDEO, LAKESIDE MALL (BENONI)
Nineteenth Appellant
MR VIDEO, CEDAR SQUARE (FOURWAYS)
Twentieth Appellant
MR VIDEO, NORTHCLIFF
Twenty First Appellant
MR VIDEO, THE BUZZ SHOPPING CENTRE (FOURWAYS)
Twenty Second Appellant
MR VIDEO, ALBERMARLE CENTRE (GERMISTON)
Twenty Third Appellant
and
NU METRO FILMED ENTERTAINMENT (PTY) LTD
First Respondent
TWENTIETH CENTURY FOX FILM CORPORATION
Second Respondent
DISNEY ENTERPRISES INC
Third Respondent
WARNER BROS ENTERTAINMENT INC
Fourth Respondent
VIDEOVISION ENTERTAINMENT (PTY) LTD
Fifth Respondent
Neutral citation: Mr Video (Pty) Ltd v Nu Metro Filmed Entertainment (Pty) Ltd (472/08)
[2009] ZASCA 127 (29 September 2009).
Coram:
Harms DP, Lewis, Snyders JJA, Hurt et Tshiqi AJJA
Heard:
27 August 2009
Delivered:
29 September 2009
Summary: Copyright infringement – locus standi of parties to participate in
proceedings to restrain infringement – relief by way of order for delivery up of
infringing articles- special order for costs marking court's disapproval of conduct of
infringing parties.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: High Court, Cape Town (Fourie J sitting as court of first
instance).
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
HURT AJA (HARMS DP, LEWIS, SNYDERS JJA et TSHIQI AJA concurring):
[1] This is an appeal against certain orders granted by Fourie J in the
Cape High Court. The appeal is with his leave. For the sake of clarity and
because there are a number of parties involved, I intend to refer to them as
follows:
(a)
to Nu Metro Filmed Entertainment (Pty) Ltd (the first respondent) as
'Nu Metro';
(b)
to the second, third, fourth and fifth respondents collectively as 'the
Owners' (a reference to the fact that they are the owners of the copyright in
the films with which their application in the court below dealt);
(c)
where I refer individually to any of the Owners, I will use an
abbreviation of its name, ie 'Fox', 'Disney', 'Warner' or 'Videovision';
(d)
to all 23 appellants collectively as 'the Video Group';
(e)
where I refer to the first appellant individually, I shall call it 'the
Franchisor'.
[2] Nu Metro trades in films in the theatrical (cinema) sector of the film
market in South Africa and also in the rental and retail sales sector of that
market. The Owners are well-known producers and distributors of films in the
entertainment field, save that Videovision is not involved in the production of
films, but, as a substantial part of its business, acquires by assignment the
South African copyright in respect of various films which it distributes in this
country. The Franchisor carries on business as a franchisor of businesses,
conducted under the name 'Mr Video', for the hiring of recorded films to
members of the public for home viewing. The Video Group includes 22 of the
Franchisor's franchisees. The application in the high court related to various
films in which the Owners claimed to own the copyright. These will be referred
to collectively as 'the films'.
[3] Nu Metro discovered that the Video Group were offering DVD
recordings of the films, which they had imported from America, for hire in their
businesses. They therefore brought an application for relief by way of
interdicts, delivery up of infringing articles and costs, based on the contention
that the Video Group's conduct in offering these imported DVDs for hire
constituted an infringement of the Owners' copyright and an infringement of
the exclusive licence rights which Nu Metro claimed to hold as a result of
agreements concluded with the Owners. The Video Group opposed the
application, disputing the Owners' claim to be the copyright owners and Nu
Metro's claim to be an exclusive licensee. They admitted that they had
imported numbers of DVD recordings of the films from the USA, but disputed
the contention that their conduct amounted to copyright infringement. Shortly
before the date on which the opposed application was set down for hearing,
however, the Video Group conceded that the Owners were, indeed, the
owners of the copyright in the films and tendered to submit to the interdicts
sought against them and to an order directing them to pay the Owners' costs.
[4] This tender disposed of some of the issues in the opposed application,
and the issues with which Fourie J was required to deal were the following:
(a)
Nu Metro's locus standi to participate in the application, it being
contended that Nu Metro had not proved that it held valid licences from the
copyright proprietors which entitled it to proceed against The Video Group;
(b)
the Owners' entitlement to an order for delivery up in terms of section
24(1)1 of the Copyright Act No 98 of 1978 ('the Act');
(c)
three separate issues as to costs.
Fourie J found against the Video Group on all of these issues. It is these
adverse findings that the Video Group have sought to challenge on appeal.
The Locus Standi Issue.
[5] The Video Group contended, both in the court below and before us,
that Nu Metro had failed to prove that it was the exclusive licensee of the
Owners. They also submitted that, on a proper interpretation of the licence
agreements which Nu Metro had annexed to the replying affidavit, its rights
were not such as would entitle it to restrain the dealing by the Video Group in
the imported DVDs to which reference has been made. The argument
presented in support of these contentions was complicated but, in my view,
futile. I do not think that it is necessary to decide whether the licence
agreements are valid or what their scope is. At the lowest level, Nu Metro and
1 '(1) Subject to the provisions of this Act, infringements of copyright shall be actionable at the
suit of the owner of the copyright, and in any action for such an infringement or such relief by
way of damages, interdict, delivery of infringing copies or plates used or intended to be used
for infringing copies or otherwise shall be available to the plaintiff as is available in any
corresponding proceedings in respect of infringements of other proprietary rights.'
the Owners have established that Nu Metro is appointed as the only local
distributor of the films. The Video Group have acknowledged that their
conduct infringes the copyright of the the Owners and is accordingly unlawful.
In the premises, Nu Metro was entitled, quite apart from any rights it may
have as a licensee, to join in the proceedings to interdict. The challenge to its
locus standi must accordingly fail.
The Order for Delivery of Infringing Items.
[6] The evidence establishes that copyright proprietors in the film industry
have, for the purpose of controlling the distribution of their films territorially,
divided the world market into six 'zones' of which zone 1 comprises the USA
and Canada, Zone 2 comprises Japan, Europe, South Africa, the Middle East
and Greenland and the remaining four zones are situated in other territories in
the world and need not be further defined for present purposes. The DVD
recordings of films in each zone are electronically encoded. The playback
equipment marketed in each zone is also encoded so as to preclude it from
playing DVDs which are not encoded for that particular zone. Thus a DVD
player sold in South Africa will have a code that enables it to play only DVDs
encoded for zone 2. DVD recordings sold or hired out for home viewing in
each zone have explicit warnings and reservations of rights on their
packaging, advising the user of the copyright limitations to the proposed use
and the penalties that may result from misuse.
[7] According to Fox, Disney and Warner, the DVD recordings of the films
produced for sale in the USA are all sold and supplied with these 'copyright
warnings', inter alia drawing users' attention to the fact that the DVDs are sold
for home viewing in the zone 1 territories only. It is common cause, however,
that the Video Group, having purchased the American products, offered them
for hire from the various outlets operated by the franchisees in the Video
Group, and also supplied their customers with a pamphlet describing how
local DVD players can be 'decoded' to enable them to play zone 1 films.
[8] The provisions of s 24(1) are quoted earlier in this judgment. The
section gives the court a discretion to order that the infringer should deliver up
all 'infringing copies'. An 'infringing copy' in relation to a cinematograph film is
defined in s 1 of the Act as
'a copy of the film or a still photograph made therefrom; . . .being in any such case
an article the making of which constituted an infringement of the copyright in the . . .
cinematograph film . . . or, in the case of an imported article, would have constituted
an infringement of that copyright if the article had been made in the Republic.'
The Video Group contend that Fourie J erred in ordering The Video Group to
deliver up the zone 1 DVDs in their possession or under their control. The
argument is that the zone 1 encoded DVDs were acquired lawfully from the
USA and that they are, accordingly, not 'infringing copies' as defined. The
submission is that, to establish that the zone 1 DVDs are infringing copies, 'it
would have been necessary for [Nu Metro and the Owners] to allege and
prove that the making of the article in South Africa by the person who as a
fact made the article in the USA would have constituted an infringement of the
copyright in South Africa'. The Video Group contend that no allegation to that
effect has been made in the papers. It is difficult to understand this contention.
The very basis upon which the application is brought by the proprietors of the
copyright in the films is that zone 1 DVDs are not available for lawful
distribution in South Africa. There is no evidence to show that the person who
manufactured the zone 1 DVDs in the USA had the right to do so in South
Africa. In fact the probabilities are overwhelmingly against such a suggestion.
Accordingly, if the DVDs had been made locally by that person, the inference
must be that the making would have constituted an infringement. The attitude
adopted by the Owners in these proceedings is fully in keeping with that
inference. There is accordingly no substance in this contention.
[9] The further submission concerning the order for delivery up is that the
court should have had regard to the fact that the zone 1 DVDs were the
property of the Video Group and the court should have been reluctant to
deprive them of their property rights. Fourie J rejected this submission. He
held that the order was necessary in the circumstances to enable Nu Metro
and the Owners to monitor and enforce the interdicts. He pointed out that at
least 22 respondents were involved and he surmised that the very opposition
to the order for delivery indicated a probable intention to deal in the zone 1
DVDs. There is a further consideration which warrants an order under s 24(1)
in this case. It is that the infringing DVDs were acquired for an unlawful
purpose and there is no lawful use to which they could be put in this country:
at any rate, no such use could be suggested by counsel for the Video Group.
The history of the Video Group's conduct with regard to its use of the zone 1
DVDs also militates against any suggestion that Nu Metro and the Owners
would be properly protected if an order for delivery up was not made. As
indicated, this was a matter involving the exercise of a discretion by the lower
court. I consider that the learned judge correctly exercised his discretion in
favour of the grant of the order for delivery.
Costs
[10] The three orders as to costs made in the court below and challenged
on appeal are the following:
(a)
the order that the costs of the application should include the costs of
various affidavits aimed at establishing infringing conduct on the part of a
number of the Video Group in their respective franchise businesses;
(b)
the order that the Video Group pay Nu Metro's costs in the application;
(c)
the order that the costs of the Owners be taxed and paid on the
attorney and client scale.
[11] The Video Group's submission in relation to the costs of the affidavits is
that they (the Video Group) had made no secret of the fact that the
franchisees were dealing in zone 1 encoded DVDs which they had imported
from the USA. Accordingly, so the submission runs, it was unnecessary for Nu
Metro and the Owners to produce evidence of individual acts of infringement
by individual franchisees. The short answer to this submission is that, until the
answering affidavit was delivered, Nu Metro and the Owners had no way of
knowing what the Video Group would put in issue. It is significant that the
Video Group challenged Nu Metro and the Owners' evidence of the existence
of the licensing agreements on the ground that the relevant contract
documents were not put up with the founding papers. In those circumstances,
it hardly lies in the Video Group' mouths to object to the delivery of affidavits
proving individual acts of infringement. The decision to allow Nu Metro and
the Owners these costs was correct.
[12] The order for attorney and client costs was also fully justified. The
deponent for the Franchisor is a man with considerable experience in the
home entertainment market. There had been a debate (I put in no higher for
the purposes of this issue) amongst the Video Group as early as 2006, as to
the legality of importing DVDs from the USA for use in the Video Group's
businesses. The conclusion then was that such conduct was probably
unlawful and the Franchisor had circulated a warning to its franchisees that
this was the case. However it seems that the Video Group decided to
continue with their conduct and bide their time until faced with an application
for an interdict. The flagrant way in which the Video Group arranged to bypass
the coding restrictions used by the copyright owners for the obvious purpose
of controlling the exploitation of their rights, also has considerable significance
in this context. After the application had been brought, and before the
answering affidavit was filed, the Franchisor was advised by its attorney that
the Video Group had no defence to the application. Nevertheless the Video
Group delivered an answering affidavit opposing the relief sought. It was only
at the eleventh hour, when the heads of argument were being prepared, that
the Video Group capitulated in respect of the copyright owners. The decision
by Fourie J to mark his disapproval of this conduct by a special costs award
was fully justified.
[13] The award of costs in favour of Nu Metro was warranted on the basis
that the opposition to Nu Metro's participation in the application was
unsuccessful.
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
_______________________
N V HURT
ACTING JUDGE OF APPEAL
Appearances:
Counsel for Appellant:
A R Sholto-Douglas SC
R D E Gordon
Instructed by
De Klerk & Van Gend, Tyger Valley
E G Cooper Majiedt Inc, Bloemfontein
Counsel for Respondent: P Ginsburg SC
G Marriott
Instructed by
Nortons Incorporated, Johannesburg
McIntyre Van der Post, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 29 September 2009
Status: Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal
MR VIDEO (PTY) LTD & OTHERS v NU METRO FILMED ENTERTAINEMENT (PTY)
LTD & OTHERS
The Supreme Court of Appeal today gave judgment in the dispute between the Mr Video
franchises as appellants, and Nu Metro, 20th Century Fox, Disney Enterprises, Warner Bros.
and Videovision Entertainment (Pty) Ltd as respondents. The Cape High Court had granted
Nu Metro and its fellow respondents an interdict against the infringement of their copyright
in DVD copies of various films. The High Court had also ordered the Mr Video group to
deliver to the Nu Metro group all the infringing DVD copies of the films in their possession
or under their control. The High Court had expressed the view that the defence raised by the
Mr Video group to the claims for infringement and delivery of infringing articles had not
been bona fide and that at least part of their purpose was to delay the enforcement of the Nu
Metro group's rights to protect the copyright. It had accordingly ordered the Mr Video group
to pay the costs of the Nu Metro group on the attorney and client scale as a mark of its
disapproval of their conduct.
The Supreme Court of Appeal dismissed the appeal of the Mr Video group against the High
Court's judgment. It noted, in addition to the factors mentioned by the High Court as
warranting an attorney and client costs order, that the Mr Video group had furnished its home
video rental customers with instructions on how to modify their DVD players to enable them
to view films recorded on the infringing DVDs which were specially coded to prevent them
being played on ordinary equipment purchased in South Africa. It accordingly confirmed all
the orders made in the High Court and ordered the Mr Video group to pay the Nu Metro
groups costs of appeal.
--ends--
|
1791
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 176/2010
In the matter between:
SLIP KNOT INVESTMENTS 777 (PTY) LTD
Appellant
and
WILLEM MALAN DU TOIT
Respondent
(Fifth Respondent in the court a quo)
Neutral citation:
Slip
Knot
v
Du
Toit
(176/2010)
[2011] ZASCA
(28 March 2011)
Coram:
NAVSA, NUGENT, HEHER, CACHALIA and MALAN JJA
Heard:
7 March 2011
Delivered:
28 March 2011
Summary:
Suretyship – fraud or misrepresentation by third party –
whether surety bound
_____________________________________________________________________
ORDER
On appeal from: Free State High Court (Bloemfontein) (A Kruger J sitting as court of
first instance):
(1)
The appeal is upheld with costs.
(2)
The judgment of the court a quo is set aside and replaced with the following:
‘Judgment is granted in favour of the applicant against the fifth respondent
jointly and severally with the first to third respondents in their capacities as
trustees of the Smitskop Trust (IT Number 207/96) and the fourth and sixth
respondents, for –
(a) payment of the sum of R 7 950 000,00;
(b) interest on the aforesaid sum at the rate of 1,5 per cent per week,
calculated daily, from 8 May 2008 to date of payment;
(c) costs of suit on the attorney and own client scale.’
_____________________________________________________________________
JUDGMENT
MALAN JA (NAVSA, NUGENT, HEHER, CACHALIA JJA concurring)
[1] This appeal concerns the defence of iustus error to a claim seeking to enforce an
agreement of suretyship. The respondent (the fifth respondent in the court below),
although admitting that he signed the deed of suretyship, denied that he was liable and
averred that he signed by mistake and without the intention to incur contractual liability.
In determining whether a mistake is iustus the courts have posed the following question:
‘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.’1
[2] This case is not concerned with a misrepresentation, whether innocent or not, by
the appellant inducing the respondent to sign a suretyship. The appellant, Slip Knot
Investments 777 (Pty) Ltd, did not negotiate with the respondent, nor did it have any
contact with him prior to him signing the suretyship. On the contrary, the respondent
relied, if not on fraud, on the omission of a third party to inform him of the nature of the
document he was called upon to sign.2
[3] At the time of the hearing of the application the respondent was a sixty-year old
farmer in the district of Luckhoff. He was also a trustee of the Smitskop Trust (the ‘trust’)
along with his brother and the latter’s son. The appellant, Slip Knot, advanced a sum of
R6 million to the trust. The respondent, his brother and nephew signed a deed of
suretyship in favour of Slip Knot. Judgment was obtained against the trust and the
sureties after the trust had failed to adhere to the terms of a settlement agreement. The
sequestration of the trust and the estate of the respondent’s brother followed. The
respondent was unaware of the proceedings against the trust and the sureties. He
brought an application for rescission of the judgment against him, which was granted.
The main application subsequently came before Kruger J in the Free State High Court.
He dismissed Slip Knot’s application for judgment against the respondent but gave
leave to appeal to this court.
[4] The trust was created in 1996 by the respondent’s brother who was a beneficiary
of the income of the trust. Although decisions of the trustees had to be taken by a
majority vote the brother had to be part of the majority. He had the power to determine
by will the date of vesting of the trust funds and to determine the way in which its assets
were to be divided at the termination of the trust. The brother also administered the trust
in his own interests and those of his heirs. The respondent had no interest in the trust
assets or its income. He was, however, one of the three trustees albeit, as he said, only
in name. The business of the trust was managed by the respondent’s brother and
1 George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A) at 471A-D.
2 The position where the misapprehension has been caused by a third party was left open in Brink v
Humphries & Jewell (Pty) Ltd [2005] 2 All SA 343 (SCA) para 2 n 6.
nephew. The trust had farming interests in Fauresmith but those interests were
unrelated to the farming activities of the respondent. The respondent controlled trusts of
his own, of which his brother was a trustee, but they were managed by the respondent
alone. The respondent knew before he signed the suretyship that his brother was
involved in major business transactions elsewhere in Africa. He regarded them as risky.
[5] The suretyship was signed on 6 November 2007. It appears that on that day the
respondent’s nephew had telephoned the respondent’s friend, Altro Potgieter, and told
her that he had certain documents that required the respondent’s signature. They
concerned the business transactions that his father was conducting in Africa and had to
be signed urgently and returned by fax on the same day. The respondent and his own
son were at that time busy on his farm outside Luckhoff. Potgieter told him of the
conversation and informed him of the need to sign the documents before a
commissioner of oaths. He was, however, busy and asked her to wait. After two further
calls to her from his nephew, Potgieter again spoke to the respondent and emphasised
the urgency of the matter. Potgieter gave him a bundle of documents comprising some
75 pages that had already been signed by his brother and nephew. The respondent
remarked that it would have taken him a day to read through them. He was prepared to
sign the documents without reading them because he thought that he was not
personally affected and because the two other trustees had already signed. The
respondent assumed that his brother and nephew had agreed to the terms on which
Slip Knot would advance monies to the trust and that his signature was required as a
trustee only.
[6] The respondent and his son went to the manager of the First National Bank in
Luckhoff, a commissioner of oaths, to sign the documents. Although the manager had
occupied that position for a week, he used to be manager at the Fauresmith branch of
the same bank and knew of the transaction. This reassured the respondent that the
documents concerned his brother’s trust. He signed on each of the pages at the places
where his brother and nephew had signed. He also initialled every page where their
initials appeared. Potgieter and the respondent’s son witnessed his signature and also
initialled where his initials appeared. Neither the respondent nor the bank manager or
any of the two witnesses read the documents or paid any attention to their contents.
They were thereafter faxed to the respondent’s brother. The respondent could not
afterwards, when requested by his attorney, find his copies and assumed that they were
destroyed after faxing; he had, he stated, no reason to keep them because they did not
affect him financially. He had never negotiated with the appellant and had never
discussed the transactions with his brother or nephew, and he would not have signed as
surety in respect of such a large amount borrowed at a very high rate of interest and
concerning a business venture he regarded as risky.
[7] The documents comprised the memorandum of agreement providing for the R6
million loan to the trust. Annexure A to it is a resolution by the trustees of the trust
authorising it to enter into the loan agreement. Annexure B is an extract of a resolution
of the directors of Slip Knot. Also included was the deed of amendment of the Smitskop
Trust signed by all the trustees; the amended letter of authority of the Master; the
suretyship agreement; Annexure A thereto, an extract of a resolution by Slip Knot
authorising a director to enter into the deed of suretyship; a letter of undertaking
authorising a firm of attorneys to pay Slip Knot the sale proceeds of certain properties
belonging to the trust; a letter by the attorneys to Slip Knot undertaking to pay these
proceeds; a power of attorney to pay a bond in favour of Slip Knot over certain trust
properties; a covering mortgage bond; and a cession of loan accounts in the trust by the
trustees to Slip Knot. All these documents were signed and initialled by the respondent
and the other trustees. The individual documents were headed differently but the
headings of the memorandum of agreement, its Annexures A and B, and the suretyship
are all in bold capital letters similar to the recitation of the parties to the agreements.
They are in larger print than the remainder of the document. Although he did not read
the documents the respondent stated that he never expected a suretyship to be
amongst them. No one drew his attention to the suretyship.
[8] It was submitted on behalf of Slip Knot that, although the respondent’s mistake
may have been induced by fraud, ie the omission of his brother or his nephew to draw
the suretyship to his attention, the binding force of the suretyship was not affected
thereby. It is correct that, as was said in Karabus’ case,3 where ‘the fraud which induces
a contract does not proceed from one of the parties, but from an independent third
person, it will have no effect on the contract.’ But the mistake relied upon in Karabus
was an error in motive: the intention of the defendant in that case was directed at the
conclusion of the contract on the cheque and his mistake concerned only the reason for
entering into it.4
[9] The respondent’s defence is that he lacked the intention to be bound and
therefore that no agreement of suretyship was concluded. Contractual liability, however,
arises not only in cases where there is consensus or a real meeting of the minds but
also by virtue of the doctrine of quasi mutual assent. Even where there is no consensus
contractual liability may nevertheless ensue.5 The respondent’s mistake is a unilateral
one. Referring to the mistake of the kind the respondent laboured under it was said in
National and Overseas Distributors Corporation (Pty) Ltd v Potato Board:6
‘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.’
The ‘decisive question’ to be asked in cases such as this has been formulated as
follows:7
‘[D]id the party whose actual intention did not conform to the common intention expressed, lead the other
party, as a reasonable man, to believe that his declared intention represented his actual intention? … To
answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a
3 Karabus Motors (1959) Ltd v Van Eck 1962 (1) SA 451 (C) at 453C-D.
4 Saambou-Nasionale Bouvereniging v Friedman 1979 (3) SA 978 (A) at 999H-1000C.
5 See eg Sonap Petroleum (SA) Pty Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis
1992 (3) SA 234 (A) at 238I-240B; Be Bop a Lula Manufacturing & Printing CC v Klingtex Marketing (Pty)
Ltd [2008] 1 All SA 529 (SCA) paras 10, 11 and 14.
6 1958 (2) SA 473 (A) at 479G-H. For a discussion of Musgrove & Watson (Rhod) (Pvt) Ltd v Rotta 1978
(2) SA 918 (R) (on appeal reported as Musgrove & Watson (Rhodesia) Ltd v Rotta (1978 (4) SA 656
(RA)) and Standard Credit Corporation Ltd v Naicker 1987 (2) SA 49 (N) see Carole Lewis ‘Caveat
subscriptor and the doctrine of justus error’ (1987) 104 SALJ 371.
7 Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (3)
SA 234 (A) at 239I-240B. See Davids & andere v ABSA Bank Bpk 2005 (3) SA 361 (C) paras 13-15 and
cf the discussion by Dale Hutchison ‘“Traps for the Unwary”: when careless errors are excusable’ in
Graham Glover (ed) Essays in Honour of AJ Kerr (2006) p 39.
misrepresentation as to one party’s intention; secondly, who made that misrepresentation; and thirdly,
was the other party misled thereby? … The last question postulates two possibilities: Was he actually
misled and would a reasonable man have been misled?’
[10] In the court below Kruger J found that the respondent’s mistake was reasonable.
In coming to this conclusion he emphasised that the respondent was a farmer who had
nothing to do with the business of the trust and the loan to it. He was not a
businessman. He knew that the documents related to his brother’s venture into Africa
and, although he considered it risky, thought that they did not concern him. It was
because he was put under considerable pressure to sign them forthwith that led him to
believe that they did not affect him. Slip Knot did not negotiate with the respondent at all
and the latter became aware of their existence only afterwards. The bank manager, in
addition, informed the respondent that he was aware of the transaction and that had set
his mind at rest. The suretyship was also not prominent among them. In a sense,
Kruger J opined, his brother and nephew, in forwarding the documents to him, had
acted as the appellant’s agents who should have warned him of the suretyship in the
bundle. The heading of the suretyship was in the same type as the other words on the
first page. The respondent, the court below found, had no reason to expect a
suretyship, in terms of which he would personally undertake liability as a surety to be
among them.
[11] In argument before us counsel for the respondent expressly disavowed that the
respondent was misled by Slip Knot – whether by reason of the form in which the
documents were couched or in any other way. To the extent that the respondent was
misled he placed the blame squarely and solely at the doors of his brother and nephew.
Nor is there any suggestion that the fraud or misrepresentation of the respondent’s
relatives could or should be attributed to Slip Knot. There is every reason to infer that
Slip Knot, as a reasonable person, believed that the respondent’s declared intention to
be bound as surety as evidenced by his signature to the suretyship also represented his
real intention. The respondent entered into the suretyship relying, not on any
representation by Slip Knot, but on representations made to him by his nephew and
conveyed to him by Altro Potgieter.
[12] A contracting party is generally not bound to inform the other party of the terms of
the proposed agreement.8 He must do so, however, where there are terms that could
not reasonably have been expected in the contract.9 The court below came to the
conclusion that the suretyship was ‘hidden’ in the bundle and held that the respondent
was in the circumstances entitled to assume that he was not personally implicated. I can
find nothing objectionable in the set of documents sent to the respondent. Even a
cursory glance at them would have alerted the respondent that he was signing a deed
of suretyship. As I have said, counsel for the respondent conceded that there was
nothing misleading in the bundle and that a suretyship among the documents was not
unexpected. The court below emphasised the fact that the respondent was a farmer and
not a businessman and that he had nothing to do with the trust and the loan advanced
to the trust. This is incorrect. The respondent was a trustee of the trust. He may have
been a farmer but this is of no consequence. The respondent had his own trusts and
managed them. He must have known what a trust was and what the duties and
responsibilities of a trustee were.10 Slip Knot was entitled to rely on the respondent’s
signature as a surety just as it was entitled to rely on his signature as a trustee.11 The
respondent relied entirely on what was conveyed to him by his nephew through Altro
Potgieter. Slip Knot made no misrepresentation to him and there is no suggestion on
the respondent’s papers that Slip Knot knew or ought, as a reasonable person, to have
known of his mistake. The rate at which interest was charged was not placed in issue in
the court below or in this appeal.
[13] The following order is made:
(1)
The appeal is upheld with costs.
(2)
The judgment of the court a quo is set aside and replaced with the following:
8 Constantia Insurance Co Ltd v Compusource (Pty) Ltd 2005 (4) SA 345 (SCA) para 19.
9 Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) para 36 and cf Fourie v Hansen & another
[2001] 1 All SA 510 (W) at 516.
10 See Edwin Cameron with Marius de Waal, Basil Wunsh, Peter Solomon and Ellison Kahn Honoré’s
South African Law of Trusts 5 ed (2002) p 262ff.
11 See Glen Comeragh (Pty) Ltd v Colibri (Pty) Ltd & another 1979 (3) SA 210 (T) at 214D-F.
‘Judgment is granted in favour of the applicant against the fifth respondent jointly
and severally with the first to third respondents in their capacities as trustees of
the Smitskop Trust (IT Number 207/96) and the fourth and sixth respondents, for
–
(a)
payment of the sum of R 7 950 000;
(b)
interest on the aforesaid sum at the rate of 1,5 per cent week, calculated
daily, from 8 May 2008 to date of payment;
(c)
costs of suit on the attorney and own client scale.’
_________________
F R MALAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
A C Botha
Instructed by:
Sim & Botsi Attorneys Inc
Johannesburg
Lovius Block
Bloemfontein
For Respondent:
J P de Bruin SC
Instructed by:
Symington & De Kok
Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 March 2011
Status:
Immediate
Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal.
SLIP KNOT v DU TOIT
The Supreme Court of Appeal today upheld an appeal by a money
lender who had made a loan to a trust which was secured by the
three separate deeds of suretyship by the three trustees. The
defence raised by the respondent, one of the trustees, was that he
had signed the suretyship by mistake and that at the time he
signed it he was unaware of its nature. The mistake he relied upon
was that he was misled by the other trustees who had failed to
inform him that one of the documents he was asked to sign was a
personal suretyship. The Bloemfontein high court upheld the
defence of justifiable mistake but the Supreme Court of Appeal
found that, because the money lender had not made any
misrepresentation to the respondent and was unaware of his
mistake, it was entitled to rely on the appearance of contractual
liability created by his signature.
|
3766
|
non-electoral
|
2022
|
`
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 739/2021
In the matter between:
RASIMATE SAMUEL BALOYI
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation:
Rasimate Samuel Baloyi v The State (739/2021) [2022] ZASCA
35 (01 April 2022)
Coram: MOCUMIE, HUGHES JJA AND MAKAULA, SMITH AND WEINER
AJJA
Heard:
18 February 2022
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 handed down on
01 April 2022.
Summary:
Criminal Law and Procedure – whether the murder was
premeditated – life sentence – appropriateness of sentence.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo Division of the High Court of South Africa, (Ledwaba AJ
and Phatudi J, sitting as court of appeal):
The appeal is dismissed.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Makaula AJA (Mocumie and Hughes JJA and Makaula, Smith and Weiner AJJA
concurring):
[1] This is an appeal against the judgment and order of the Limpopo Division of the
High Court, Polokwane (Ledwaba AJ and Phatudi J sitting as full bench), with leave of
this Court granted on the following limited ground:
‘The sentence imposed and whether the state established that the murder was premeditated.
The appeal was dealt with in terms of s 19(a) of the Superior Courts Act 10 of 2013 as
(amended). The parties agreed to the adjudication of the appeal by this Court without hearing
oral argument as provided for under the practice rules of this Court during the National State
of Disaster Regulations of 2020 which are still in operation’.
[2] The appellant and his erstwhile accused (accused 2) were charged and
convicted of murder by the Regional Court (the trial court). The trial court found no
substantial and compelling circumstances and sentenced both to life imprisonment.
The appellant appealed against the conviction and sentence to the full bench of the
high court, which dismissed his appeal. Leave to appeal was granted to this Court on
petition.
[3] The appellant's charge before the trial court was murder, read with the
provisions of s 51(1) of the Criminal Law Amendment Act 105 of 1997 (CLAA), which
prescribed the imposition of life imprisonment. The appellant was appraised of the
applicability of the CLAA as the murder was planned and premeditated or committed
in the execution of a common purpose. The trial court warned the appellant
accordingly.
[4] I briefly set out the following material facts. On 4 March 2012, at about 20h30,
Mr Thabo Letsoalo (Mr Letsoalo) and Mr Nicholas Molepo (Mr Molepo) were with the
deceased at a tavern sitting under a tree drinking liquor. The appellant arrived in the
company of accused 2. The appellant approached the deceased from behind and
hacked him with a panga on his head. He hit him more than once, and the deceased
fell to the ground. Accused 2 joined the assault by hitting the deceased with a weapon
that looked like a steel bar (or a pick-handle) while the deceased was lying on the
ground. They also kicked him. After assaulting the deceased, the appellant and
accused 2 left the scene. An ambulance and the police were called in vain. Mr Thabo
Alfred Sithole (Mr Sithole), the tavern owner, was called to the scene. He found the
deceased lying in a pool of blood. He conveyed the deceased to Mankweng hospital,
where the latter died a few minutes after arrival.
[5] The appellant’s evidence is different from that of both eyewitnesses. The
Appellant denied that he assaulted the deceased, let alone with a panga. He stated
that in the late afternoon he was involved in a scuffle with the deceased when the latter
fell against a fence, injuring his forearm. He testified that he never saw accused 2 on
that day. He only learnt the following day that the deceased had died.
[6] The appellant said that he was at the tavern on the same date, at about 16h00
to 17h00. He sat there for about 35 minutes before other local young men joined him,
and later the deceased. The deceased took an empty crate of beers and went to join
other patrons. The appellant stood up and purchased a ‘long tom of Hansa’ and a
cigarette. When he returned, the chair he was sitting on was not there. He was told
that it was taken by the deceased. He saw the chair, fetched it, and took it to where
he had been sitting. After a while, he again went to buy a cigarette. When he returned,
he found the deceased standing next to where he had sat. The deceased confronted
him about the chair. He told the deceased that he (the appellant) was the first to use
it. They then quarrelled over the use of the chair. The appellant said they were both
drunk at that stage. He said that the deceased pushed him, and they ended up pushing
each other. He testified thus:
‘We put our arms around each other grabbing each other and I tripped him he fell onto the
fence.’
People who were present separated them. He thereafter bought a cigarette and
snacks and left the tavern. He did not return to the tavern that day.
[7] During cross-examination regarding whether the deceased was injured during
this alleged scuffle, he said:
‘The injuries I saw on him I think they would have been caused by the fence and the witness
is indicating to his left forearm’.
[8] The appellant and accused number 2’s evidence was rejected by the trial court
because their ‘evidence was unconvincing and simply did not have the ring of truth
about it. Their version can safely be rejected as false’. The trial court further found that
‘accused’s untruthfulness is a guarantee of the truthfulness of the state witness’. In my
view, the trial court correctly analysed the evidence and cannot be faulted for finding
the appellant guilty of murder. However, it did not say whether the murder was planned
or premeditated in its judgment on conviction. It is only in sentencing the appellant that
the trial court mentioned premeditation for the first time. It said:
‘This is (sic) a premeditated murder. You came to this tavern armed with a panga and an iron
rod or bar. Your purpose was to kill the deceased and that is just what you have done. You
had ample opportunity to restrain yourself. This poor deceased had no chance whatsoever.’
[9] The full court dismissed the appeal. It agreed with the finding by the trial court
in its judgment on sentence that the murder was premeditated. The full court reasoned
that because the appellant went to the tavern armed with a panga, with which he killed
the deceased, he had formed the intention to kill the deceased before going to the
tavern.
[10] The evidence of Mr Letsoalo and Mr Molepo was found to be acceptable and
credible by the trial court. From that, it is ineluctable that the trial court was correct in
convicting the appellant and accused 2 as charged. Although this Court has not had
the benefit of a post-mortem report, the judgment of the full court reflected on the
injuries as follows:
‘The injuries sustained included (sic) 6 x lacerations, a fracture to the coronal suture, fractures
of the left mandibular bone over the front of the middle aspect.’
These are serious injuries which were inflicted on the head and are indicative of the
force used. The cause of death was recorded as ‘blunt force head injuries’.
[11] The issue before this Court is whether the state established that the murder
was premeditated. It is clear that nowhere in the trial court's judgment prior to the
imposition of the sentence was any reference made to planning or premeditation of
the murder by the appellant. The full court did not make any pronouncement on the
issue as well, save to use the trial court's words that the murder was premeditated.
Therefore, it behoves this Court to reflect on the issue and determine whether the
murder was indeed planned or premeditated, as well as the legal significance of the
fact that the issue was not decided by the trial court prior to sentencing. These issues
must be considered by looking at the evidence presented by the two eyewitnesses in
conjunction with the appellant's version.
[12] On the accepted evidence of the two reliable eyewitnesses, the appellant
hacked the deceased from behind with a panga and continued to assault the deceased
while he was lying on the ground. This to me, was a sequel to their prior fight three or
so hours earlier. There is no evidence that he was armed with a panga earlier during
the fight. He left for a few hours and came back armed with a panga and attacked the
deceased with it. The appellant thus had time to think about the attack. The attack did
not occur on the spur of the moment.
[13] It is necessary to point out that not in every instance, that an accused is armed
with a weapon, will it be an indication of premeditation. The Appellant relied on S v
Makatu1 in its submission that there was no premeditation on the part of the Appellant.
In Makatu, the appellant went to the deceased’s office armed with a firearm for which
he had no licence. Paragraph 12 of the judgment captures precisely what occurred
and reads:
‘When the appellant went into the deceased’s office she immediately told him that she was
not interested in him and that he should move out of the house that he was busy renovating
for them. This triggered bad memories of what she had done and said in the past. “It was then
at that spur of the moment that I felt hurt and started shooting at her.” After firing shots at her
the appellant had turned the gun on himself, apparently shooting himself through the chin, the
bullet exiting through his forehead.’
[14] In accepting the appellant’s version in Makatu, the court reasoned as follows:
‘. . . the evidence does not support a finding that the appellant had taken the firearm with the
intention of shooting his wife, nor that he was motivated by the fear of losing her share in the
joint estate. It cannot be said that the State established that his version was not reasonably
true.’2
[15] The appellant's evidence must be evaluated together with the acceptable
evidence of the two eyewitnesses, who undoubtedly knew both him and accused 2.
His evidence that he fought with the deceased earlier that day speaks to the reason
why he came back in the evening and assaulted the deceased without saying a word.
The appellants attack was thus a continuation of the fight that had occurred earlier.
[16] It is trite that a court can accept certain portions of the evidence of a witness as
the truth and reject others. This Court in Rex v Gumede held that:3
‘There may be motives inducing a witness at one stage to tell falsehoods and subsequently to
confess the truth, and it would be arbitrary rashness to hold that the later evidence must
necessarily be rejected.’
[17] Having outlined the above, it is essential to state that a finding of premeditation
requires inferential reasoning. The trier of facts (a presiding officer) has to interrogate
1 S v Makatu 2006 (2) SALR 582 (SCA).
2 Ibid at 588.
3 Rex v Gumede 1949 (3) SA 749 (A) at 755.
the facts of each case and then deduce from them whether the commission of the
offence was premeditated or not. That is partly due to the legislature not having defined
‘planned’ or ‘premeditated’ in the CLAA.
[18] Intrinsic in the question this Court posed, when it granted leave to appeal, is the
issue that seems to continue to perplex presiding officers in criminal trials where
planning or premeditation is alleged by the State. The question arises: must a trial
court determine whether the murder was planned or premeditated at conviction? The
answer lies in what this Court said in Michael Legoa v State4 when it determined
whether at the trial of an accused charged with dealing in dagga, ‘the State is entitled
to prove the value in question after conviction but before sentencing, so as to invoke
the minimum sentences’. Cameron JA said that the court acquires the jurisdiction in
respect of the minimum sentences legislation ‘only if the evidence regarding all the
elements of the form of the scheduled offence is led before verdict on guilt or
innocence, and the trial court finds that all the elements specified in the Schedule are
present’. Our courts have consistently followed this approach. However, the ultimate
question remains ‘whether the accused had a fair trial under the substantive fairness
protections afforded by the Constitution’.5
[19] A similar question arose in S v Taunyane.6 As in this case, the trial court failed
to mention at the conviction stage that the accused was guilty of planned or pre-
mediated murder. It was only at the sentencing stage that mention was made. The full
court found that such omission constituted a misdirection.
[20] Similarly, I find that the trial court in this matter, misdirected itself in pronouncing
that the murder was premeditated only at the sentencing stage. What remains to be
determined is whether the appellant was prejudiced by such misdirection. In Legoa
this Court found that the Appellant received an unfair trial as a result of the misdirection
by the trial court.
4 Michael Legoa v State [2002] 4 All SA 373; 2003 (1) SACR 13 (SCA) para 1.
5 Ibid para 18.
6 S v Taunyane 2018 (1) SACR 163 (GJ).
[21] The question of whether an accused is prejudiced by the failure of a trial court
to refer to an offence in Part 1 of Schedule 2 varies from case to case. This Court held
in Legoa that such failure would not, in every case, result in an accused being
prejudiced. Whether an accused has been denied a fair trial, as a result, depends on
the facts of each case, as I shall demonstrate below.
[22] Failure to make a pronouncement at the verdict stage as to which of the
provisions of Part 1 of Schedule 2 of Act 51(1) of the CLAA are applicable to the
accused’s conviction constitutes a misdirection in every case it occurs. However, such
failure will not always prejudicially affect the accused to an extent that the accused will
avoid being sentenced to the minimum sentence of life imprisonment. If that were to
be the case, it would result in a miscarriage of justice.
[23] There will undoubtedly be cases where the proved facts compellingly and
ineluctably point to premeditation. In such a case there cannot be any conceivable
prejudice to an accused person if the minimum sentence is imposed despite the fact
that a finding regarding premeditation had not been made prior to conviction. In my
view, this is such a case. The accused was duly warned of the applicability of the
minimum sentencing legislation on the basis of premeditation and, as I have said
previously, the proved facts incontrovertibly established that the murder was
premediated. Accordingly, there can be no conceivable basis on which he can
complain about the fairness of the trial.
[24] To conclude on this aspect, a court of appeal cannot overlook that, despite the
misdirection of a trial court, in failing to make a finding at the verdict stage, that the
murder was planned or premeditated. Justice should not only be done or seen to be
done to the accused, it has to be meted out to the victims and those affected by the
actions of an accused, as well. The court of appeal should rather focus on the
appropriateness of the sentenced imposed. It cannot be that an inappropriate
sentence should be imposed simply because of a misdirection on the part of the
sentencing court, particularly when the accused is not prejudiced
[25] A minimum sentence imposed will stand only if the accused had been properly
apprised in the charge sheet and informed by the court of the relevant provisions of
the CLAA before the trial begins. Furthermore, the state will not be relieved of the duty
to prove planning or premeditation before the verdict. In that event, the accused will
be made aware of which evidence will be led and the kind of sentence likely to be
imposed. That will allow the accused to prepare his defence and cross-examination of
the state witnesses accordingly. This is exactly what happened in this case. It is
accordingly not unjust for the appellant to be sentenced in terms of s 51(1) of the
CLAA.
[26] I have accepted that the appellant returned to the deceased with a clear
intention to kill him. Unlike in Makatu, I have found that the motive behind the
appellant's action was to continue with the fight that had occurred in the late afternoon.
Clearly, under those circumstances, the appellant had premeditated the attack on the
deceased.
[27] Though superfluous in the light of the finding regarding premeditation, I am
satisfied that on the proved evidence, the appellant had also acted in execution of a
common purpose with accused 2.
[28] Having established that the murder was premeditated, I have to determine
whether the trial court erred in respect of the sentence it imposed. The trial court
correctly took into account and balanced the appellant’s personal circumstances, the
seriousness of the offence and the interest of society. The full court found that the trial
court did not err. I agree with that finding.
[29] It is trite that the issue of sentence is predominantly in the discretion of the trial
court. The powers of the appeal court are circumscribed to this extent, and the crux of
the appeal against a sentence is not whether the sentence was right or wrong.7 An
appeal court will thus not interfere with that discretion unless there is a clear
misdirection or the sentence is manifestly disproportionate to the extent that no
7 See S v Pillay [1977] 4 All SA 713 (A); 1977 (4) SA 531 (A) at 535 (E).
reasonable court would have imposed it. In my view, the aggravating circumstances
far outweigh the appellant's personal circumstances, which are not out of the ordinary.
In the circumstances of this matter, the sentence of life imprisonment is appropriate.
[30] Consequently, I make the following order.
The appeal is dismissed.
________________________
M MAKAULA
ACTING JUDGE OF APPEAL
APPEARANCES:
For appellant:
L M Manzini
Instructed by:
Polokwane Local Office Legal Aid SA
Bloemfontein Local Office Legal Aid SA
For respondent:
J J Jacobs
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:
01 April 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this
case and does not form part of the judgments of the Supreme Court of Appeal
Rasimate Samuel Baloyi v The State (739/2021) [2022] ZASCA 35 (01 April 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment dismissing an appeal against the
Limpopo Division of the High Court, Polokwane (the high court).
The issue before the SCA concerned failure by the trial court to mention whether the murder was
planned or premeditated on conviction, but only during sentencing, which constituted a misdirection.
The appellant and his erstwhile accused (accused 2) were charged and convicted of murder by the
Regional Court (the trial court). The trial court found no substantial and compelling circumstances and
sentenced both to life imprisonment. The appellant appealed against the conviction and sentence to
the full bench of the high court, which dismissed his appeal; hence leave to appeal was granted by the
SCA. This court granted leave on a limited ground whether ‘the sentence imposed and whether the
state established that the matter was premediated.’
The SCA held that the trial court correctly analysed the evidence and cannot be faulted for finding the
appellant guilty of murder. However, the SCA held that the trial court did not say whether the murder
was planned or premeditated in its judgment on conviction. It was only in sentencing the appellant that
the trial court mentioned premeditation for the first time.
In addition, the SCA held that it was clear that there was nowhere in the trial court's judgment prior to
the imposition of the sentence where any reference was made to planning or premeditation of the
murder by the appellant. Consequently, the full court did not make any pronouncement on the issue as
well, suffice to use the trial court's words that the murder was premeditated. As a result, the SCA had
to reflect on the issue and determine whether the murder was indeed planned or premeditated.
The SCA held that the appellant had time to think about the attack. Hence, the attack did not occur on
the spur of the moment. Furthermore, the SCA held that the motive behind the appellant's action was
to continue with the fight he alleged had occurred in the late afternoon. As a result, the SCA found that
under those circumstances, the appellant had premeditated the attack on the deceased. However, the
SCA found that the trial court misdirected itself in pronouncing that the murder was premeditated only
at the sentencing stage. Accordingly, the SCA had to determine whether the appellant was prejudiced
by such misdirection.
The SCA held that failure to make a pronouncement at the verdict stage as to which of the provisions
of Part 1 of Schedule 2 of Act 51(1) was the accused convicted of would certainly constitute a
misdirection in every case it occurs. However, the SCA held that such failure may not in each case
prejudicially affect the accused to an extent where the accused ought to be sentenced to the minimum
sentence of life imprisonment; he/she would escape such a sentence by virtue of such a misdirection.
In addition, the SCA had to also determine whether the trial court erred in respect of the sentence it
imposed on the basis of its finding that there were no substantial and compelling circumstances. The
full court found that the trial court did not err, and the SCA agreed with that finding.
Furthermore, the SCA held that the issue of sentence was predominantly in the discretion of the trial
court. An appeal court would not interfere with that discretion unless there was a clear misdirection
amongst other factors. The SCA found that there was no misdirection. As a consequence, the
aggravating circumstances far outweighed the appellant's personal circumstances, which are not out of
the ordinary. As a result, the SCA found that the sentence of life imprisonment was appropriate.
~~~~ends~~~~
|
3938
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 1049/2021
In the matter between:
BLUCHER HAUMAN MELLET N O
FIRST APPELLANT
HENDRIK FRANCOIS MELLET N O
SECOND APPELLANT
CAROLINA JOHANNA PRINSLOO N O
THIRD APPELLANT
and
MARAIS ROCCO VERMEULEN
FIRST RESPONDENT
EVAN ERNEST CORBETT
SECOND RESPONDENT
Neutral citation:
Mellet N O and Others v Vermeulen and Another (1049/2021)
[2022] ZASCA 176 (07 December 2022)
Coram:
PETSE AP, MAKGOKA AND PLASKET JJA AND MAKAULA AND
MASIPA AJJA
Heard:
07 September 2022
Delivered:
07 December 2022
Summary: Close Corporation Act 69 of 1984 – whether a Trust inter vivos can own
member’s interest in a Close Corporation – ss 29(1) and 29(1A) of the Close
Corporation Act – party alleging compliance with s 29(1A)(a) – (d) must prove it – onus
not discharged – appeal dismissed with costs.
ORDER
On appeal from: Free State Division of the High Court, Bloemfontein (Musi JP,
Loubser J concurring, Daffue J dissenting, sitting as court of appeal):
The appeal is dismissed with costs.
JUDGMENT
Makaula AJA (Petse AP, Makgoka and Plasket JJA and Masipa AJA concurring):
Introduction
[1] This appeal relates to the application of s 29(1) and s 29(1A) of the Close
Corporation Act 69 of 1984 (the CCA), in the instance where the Blucher Mellet Family
Trust (the Trust) acquired a 60 percent member’s interest in a close corporation,
Findaload CC (the close corporation), and sold it to the respondents. The core issue
for determination is whether the Trust was legally able to acquire the member’s interest
and it arose in the following circumstances. The respondents failed to perform their
obligations in terms of the agreement of sale. The appellants brought an application in
the Free State Division of the High Court, Bloemfontein (the high court) to compel them
to do so. The respondents brought a counter-application in which they attacked the
validity of the agreement of sale on the basis that s 29(1) of the CCA prohibited the
Trust from holding a member’s interest in the close corporation.
[2] The contention by the appellants before the high court was that the Trust did
not, in fact, hold the member’s interest, but merely served as a conduit to channel the
sale from the first appellant, in his personal capacity, to the first and second
respondents. The high court, per Mbhele J, sitting as the court of first instance, upheld
the application and ordered, amongst others, that: (a) a bond be registered over the
properties owned or registered in the names of the respondents (as security for
payment of the purchase price); and (b) for the respondents to pay 50 percent of the
‘transfer’ costs to the attorneys seized with the task of registering the bond. (The word
‘transfer’ in the order is a patent error. The parties agree that the word should be
‘registration’.)
[3] Following this, the respondents appealed to the full court of the Free State
Division of the High Court, Bloemfontein (the full court). Musi JP and Loubser J upheld
the appeal with costs, with Daffue J dissenting. The further appeal is before us with
the speval leave of this Court.
Background facts
[4] The appellants are members of the Trust. The first and the third appellants are
also members of the close corporation. The first appellant held a 60 percent member’s
interest, and the third appellant a 40 percent member’s interest, in the close
corporation. The first appellant wanted to sell his member’s interest to the
respondents. He did not want the purchase price to be paid directly to him, so he asked
the respondents to pay him via the Trust. To fulfil this arrangement, the Trust entered
into an agreement titled a Deed of Sale of Membership Interest (the agreement) with
the respondents.
[5] I turn now to the salient provisions of the agreement. The seller is defined as
the Trust and the purchaser is defined as both respondents. The subject of the sale,
the ‘membership interest’ is defined as the 60 percent member’s interest ‘currently
held by B H Mellet and to be transferred to the Seller as well as the Claims consisting
of the assets and liabilities listed in Annexure A, B, C and D hereto’.
[6] Clause 4 provides that the ‘Seller sells to the Purchaser, who purchases the
Membership Interest and the claims consisting of the assets listed in Annexures A, B,
C and D hereto with effect from the effective date, subject to the terms and conditions
set out in this agreement’.
[7] Clause 7 contains a warranty. The Trust warranted that Mellet would transfer
his member’s interest to the Trust, and that he would be bound by the agreement ‘in
the same manner as if he personally sold the interest to the Purchaser’.
[8] Clause 14 is headed ‘MISCELLANEOUS’. It inter alia provides that, when
possible, every provision of the agreement should be interpreted ‘in a manner which
makes it effective and valid under applicable Law’ but if a provision is ‘held to be illegal,
invalid or unenforceable under applicable Law, that illeglity, invalidity or
unenforceability shall not affect the other provisions of this Agreement, all of which
shall remain in full force’.
[9] Finally, in clause 26, the respondents undertook to furnish security ‘for the due
and proper payment of the purchase price’. They were required to do so by registering
a bond over two properties. Clause 26.3 provides that the registration of the bond ‘shall
be handled by Blair Attorneys and the registration costs and fees shall be paid by the
seller and the purchaser on a 50/50 basis’.
The issue
[10] As indicated above, s 29(1) and s 29(1A) of the CCA are central to a
determination of the issue before us. Together, they create a prohibition and an
exception to the prohibition.
[11] Section 29(1) creates the prohibition. It provides:
‘Subject to subsection (1A) or (2)(b) and (c), only natural persons may be members of a
corporation and no juristic person or trustee of a trust inter vivos in that capacity shall directly
or indirectly (whether through the instrumentality of a nominee or otherwise) hold a member’s
interest in a corporation.’
[12] Section 29(1A) creates the exception. It provides:
‘A natural or juristic person in the capacity of a trustee of a trust inter vivos may be a member
of a corporation: Provided that-
(a)
no juristic person shall directly or indirectly be a beneficiary of that trust;
(b)
the member concerned shall, as between himself or herself and the
corporation, personally have all the obligations and rights of a member;
(c)
the corporation shall not be obliged to observe or have any obligation in respect
of any provision of or affecting the trust or any agreement between the trust
and the member concerned of the corporation; and
(d)
if at any time the number of natural persons at that time entitled to receive any
benefit from the trust shall, when added to the number of members of the
corporation at that time, exceed 10, the provisions of, and exemption under,
this subsection shall cease to apply and shall not again become applicable
notwithstanding any diminution in the number of members or beneficiaries.’
The appellants’ argument
[13] Before the court of first instance, the appellants sought an order enforcing the
provisions of clause 26 of the agreement. They averred that the Trust had already
complied with the provisions of clause 26.3 by paying its 50 percent contribution
towards the costs of registering the bond.
[14] The appellants contended that it was common cause between the parties that
the Trust would take transfer of the member’s interest solely as a conduit between
Mellet and the respondents. It was never the intention of the parties that the Trust
should hold the member’s interest. They contended, however, that s 29(1A) makes it
clear that an inter vivos Trust can hold or own an interest in a close corporation.
[15] In addition, the appellants argued that it was not incumbent upon them to attach
the Trust Deed, the relevant resolutions, and other documents to show that the Trust
met the requirements of s 29(1A). A bald statement that the Trust met the
requirements, without any evidence to support it, was made in the appellants’ replying
affidavit. The appellants also stated that a certificate issued by the Companies and
Intellectual Property Commission proved that the requirements of s 29(1A) had been
met.
The respondents’ argument
[16] The respondents pleaded that the agreement is in direct conflict with s 29(1) of
the CCA in that the seller was not a natural person and could not have been a holder
of a member’s interest in a close corporation. Their counter–application sought
declaratory orders that the agreement was, as a result, unlawful, void ab initio and
consequently unenforceable.
[17] The respondents submitted that the legality of the agreement was pertinently
raised in the papers and the appellants did not place any evidence before the court
that brought them within the terms of s 29(1A) of the CCA. They submitted that the
agreement is unambiguous and means that the Trust and not the appellants in their
personal capacities would own 60 percent of the member’s interest, and then sell it to
the respondents.
Analysis
[18] The agreement makes it clear that the seller of the member’s interest is the
Trust. It is common cause that the Trust held a member’s interest in a close corporation
and purported to sell it to the respondents. If there had been any doubt, it was dispelled
by the first appellant himself when he stated that as he was ‘desirous to transfer the
benefits of the sale to the Trust’ provision was made in the agreement ‘that the
member’s interest held by myself, was to be transferred to the Trust and directly be
sold to the Respondents’. Section 29(1) of the CCA is thus implicated. It was raised
squarely by the respondents to assail the validity of the sale.
[19] A member of a close corporation is defined in s 1 of the CCA to mean ‘a person
qualified for membership of a corporation in terms of section 29 . . .’. Section 29(1) is
clear and unambiguous. It provides that only natural persons can become members
of a close corporation. The word ‘only’ is prescriptive and disqualifies juristic persons
and Trustees of trusts inter vivos from either directly or indirectly holding a member’s
interest in a close corporation unless there is compliance with s 29(1A).
[20] Section 29(1) is qualified by s 29(1A). It specifies the circumstances in which
natural or juristic persons who are trustees of inter vivos trusts may hold member’s
interests in close corporations. Two of the four requirements are that no juristic person
may be a beneficiary of the trust whether directly or indirectly; and the total of natural
persons who are beneficiaries plus the members of the close corporation do not
exceed ten. Furthermore, s 29(2) specifies in positive terms who may hold member’s
interests. Three categories of person qualify. They are: a natural person and two
categories of natural or juristic persons who are trustees.
[21] It stands out starkly that s 29 contemplates, as a default position, that only
natural persons are capable of holding member’s interests. The exception created by
s 29(1A) is qualified: natural as well as juristic persons may hold member’s interests
but only in the capacity of a trustee in certain circumstances. This point was made by
Boruchowitz J in Southern African Bank of Athens Ltd v Salvadora Properties Ninety
Nine CC1 when, with reference to the definition of a member of a close corporation in
terms of s 1, he held that the definition ‘envisages membership of the person
representing the trust and not the trust itself’.
[22] It seems to me that because the Trust purported to hold the member’s interest,
rather than a trustee, the appellants do not get out of the starting blocks to bring
themselves within the terms of s 29(1A). In any event, they have adduced no evidence
whatsoever to do so. It was suggested by counsel for the appellants that a certificate
issued by the Companies and Intellectual Property Commission (CIPC) that reflects
the first appellant and third appellant, Ms Carolina Prinsloo, as members of the close
corporation in their capacity as trustees, proves compliance with s 29(1A). There is no
merit in this argument. Speculation that some unknown functionary must have satisfied
himself that Mellet and Prinsloo were authorised and met the requirements of s 29(1A)
is not evidence of these facts.
[23] It is as well to remember that it is incumbent on parties to set out their cause of
action or defence, as the case may be, in clear and concise terms to enable to
opposing party to know the nature of the case or defence advanced.2 It was
accordingly crucial that the appellants place relevant facts to prove compliance with
s 29(1) and s 29(1A) and not merely rely on a copy of the CK document which was an
annexure to the replying affidavit. In view of the appellants’ failure to adequately prove
compliance with the provisions of s 29, there was insufficient evidence upon which the
court of first instance could find in their favour.
[24] The respondents have established that the agreement is in conflict with s 29(1)
and was accordingly invalid. The appeal must therefore fail. There is nothing to
suggest that costs should not follow the result. Counsel for the respondents requested
that costs of two counsel be allowed. The matter is not at all complex. The costs of
two counsel are not warranted.
1 Southern African Bank of Athens Ltd v Salvadora Properties Ninety Nine CC [2010] ZAGPJHC 37
para 15.
2 Rule 18 of the Uniform Rules of Court.
[25] In the result, the following order is made:
The appeal is dismissed with costs.
__________________
M Makaula
Acting Judge of Appeal
APPEARANCES
For appellants:
SJ Reinders
Instructed by:
Eugene Attorneys, Bloemfontein
For respondents:
N Snellenburg SC (with R van der Merwe)
Instructed by:
Lovius Block Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OFSOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED
FROM
The Registrar, Supreme Court of Appeal
DATE
07 December 2022
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part
of the judgment.
Mellet N O and Others v Vermeulen and Another Blucher Hauman Mellet N O & Others v
Marais Rocco Vermeulen & Another (1049/2021) [2022] ZASCA 176 (2022) (07 December
2022)
MEDIA STATEMENT
Today the Supreme Court of Appeal dismissed an appeal against an order of the Full Court of
the Free State Division of the High Court, Bloemfontein. The appeal related to the application
and interpretation of sections 29(1) and 29(1A) of the Close Corporation Act 69 of 1984 (the
Act) in the event where a family trust, the Blucher Mellet Family Trust (the Trust), had acquired
a 60 percent member’s interest in a close corporation from one of its trustees and which it
immediately sold to the respondents. The core issue for determination was whether the Trust
was legally able to acquire the member’s interest or not. The respondents brought a counter-
application in which they attacked the validity of the agreement of sale on the basis that s 29(1)
of the Act prohibited the Trust from holding a member’s interest in the close corporation except
under certain narrowly circumscribed circumstances.
The appellants instituted legal proceedings against the respondents in the Free State Division
of the High Court, Bloemfontein seeking an order for specific performance against the
respondents. They contended that it was common cause between the parties that the Trust
would take transfer of the membership interest from the first appellant solely as a conduit to
receive the purchase price that would ordinarily have been payable to the first appellant. It had
never been the intention of the parties that the Trust itself should hold the membership interest.
Thus, the Trust would merely have acted as a conduit to channel the funds. They contended
that ss 29(1) and 29(1A) made it apparent that an inter vivos trust, which was a juristic person,
could have held or owned an interest in a close corporation. The respondents, in turn, pleaded
that the agreement is in direct conflict with the aforementioned sections in that the Trust was
not a natural person and could not have been a holder of a member’s interest in a close
corporation.
The SCA considered the sections and found that the Act specified the circumstances in which
natural or juristic persons who are trustees of inter vivos Trusts may hold member’s interests
in a close corporation. Section 29 contemplates that only natural persons are capable of holding
member’s interests. However, s 29(1A) allowed an exception which provided that natural as
well as juristic persons may hold member’s interests as a trustee, but only in certain narrowly
defined circumstances. Since the Trust here purported to hold the member’s interest, rather
than a trustee, the appellants did not get out of the starting blocks to bring themselves within
the terms of the exception provided for in s 29(1A) of the Act. On the contrary, the respondents
succeeded in establishing that the agreement of sale was in conflict with s 29(1), and therefore
invalid.
In the result, the appeal was dismissed with costs.
--- ends --
|
3094
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 222/2015
In the matter between:
REGISTRAR OF PENSION FUNDS
Appellant
and
C T HOWIE NO
First Respondent
D L BROOKING NO
Second Respondent
G O MADLANGA NO
Third Respondent
ROY ALAN HUNTER
Fourth Respondent
TELLUMAT PENSION FUND
Fifth Respondent
Neutral citation: Registrar of Pension Funds v Financial Services
Appeal Board (222/2015) [2015] ZASCA 203 (2
December 2015)
Coram:
MPATI P, LEACH, WALLIS and MATHOPO JJA and
BAARTMAN AJA
Heard:
24 November 2015
Delivered: 2 December 2015
Summary: Locus standi – Board of Appeal established by section 26A of
the Financial Services Board Act 97 of 1990 overturning decision by the
Registrar of Pension Funds –– Registrar does not have locus standi to
review the decision of the Appeal Board.
ORDER
On appeal from: Gauteng Division, Pretoria (Mavundla J, sitting as
court of first instance):
The appeal is dismissed.
JUDGMENT
Wallis JA (Mpati P, Leach and Mathopo JJA and Baartman AJA
concurring)
[1] This appeal is joined with that in Tellumat,1 judgment in which is
to be handed down simultaneously with this judgment. The two appeals
arise out of the same decision by the Board of Appeal (the Appeal Board)
established in terms of s 26A of the Financial Services Board Act (the
FSB Act).2 The Appeal Board overturned a decision made under s 14 of
the Pension Fund Act (the Act) 3 by the appellant, the Registrar of
Pension Funds (the Registrar), to permit a transfer of business by the
Tellumat Pension Fund (the Fund). Both the Registrar and Tellumat (Pty)
1 Tellumat (Pty) Ltd v Appeal Board of the Financial Services Board and Others [2015] ZASCA 202.
2 Financial Services Board Act 97 of 1990.
3 Pension Funds Act 24 of 1956.
Ltd (Tellumat), the employer in relation to the Fund, challenged the
decision of the Appeal Board by way of review in the high court. Those
challenges were dismissed by the high court but it gave leave in both
cases to appeal to this court.
[2] Ordinarily it would not be necessary to write separate judgments in
these two cases as they raise the same issues on the merits of the review.
But there is a separate issue, arising in this case and not common to
Tellumat, that necessitates a separate judgment. The issue is whether the
Registrar has the necessary locus standi to challenge on review a decision
of the Appeal Board with which the Registrar does not agree. That issue
warrants a separate judgment, which will be confined to that question
alone. As regards the basis for and merits of the review they are dealt
with in the judgment in Tellumat.
[3] This court raised the question of the Registrar’s locus standi prior
to the appeal and we have received full argument from counsel on the
point. Before considering that argument it is helpful to set out the
statutory background against which the question must be decided.
[4] The Registrar’s functions are set out in the Act. The function with
which we are concerned is that of approving amalgamations of pension
funds and the transfer of any business from a pension fund to any other
person in terms of s 14 of the Act. In this case the Registrar approved a
transfer of part of the business of the Fund. The transfer involved the
cession to pensioners of annuities taken out at their election with an
insurer in order to provide them with the benefits that they would
otherwise have had to look to the Fund to provide. The mechanism by
which this was done is described in the Tellumat judgment.
[5] If anyone is aggrieved by any decision by the Registrar, including
any decision pursuant to s 14 of the Act, they are entitled to lodge an
appeal against that decision with the Appeal Board in terms of s 26(1) of
the FSB Act. The composition of the Appeal Board is set out in s 26A of
the FSB Act. It must be chaired by a retired judge or an advocate or
attorney with a minimum of ten years experience. Its proceedings must be
heard in public (s 26B(9)) and parties are entitled to representation by a
legal representative (s 26B(8)). An appeal is decided on the written
evidence, factual information and documentation submitted to the
Registrar before the decision that is the subject of the appeal was taken
(s 26B(10)).
[6] The powers of the Appeal Board are set out in s 26B(15) of the
Act. These read as follows:
‘The appeal board may—
(a)
confirm, set aside or vary the decision under appeal, and order that any
such decision of the appeal board be given effect to; or
(b)
remit the matter for reconsideration by the decision-maker concerned
in accordance with such directions, if any, as the appeal board may determine.’
The appeal is accordingly of the second type referred to in Tikly.4 The
Appeal Board decides whether the Registrar’s decision was right or
wrong. Its decision either affirms or replaces that of the Registrar.
[7] If the Appeal Board did not exist the only way to challenge a
decision by the Registrar would be by way of judicial review. In such a
review the Registrar would be cited and would be able to enter the lists to
defend the challenged decision.5 Where the Appeal Board endorses the
decision by the Registrar and an aggrieved party wishes to challenge it,
they may do so by way of judicial review in terms of PAJA6 for the
reasons explained in Tellumat. In such a case, as the decision under
challenge is effectively that of the Registrar, endorsed by the Appeal
Board, both the Registrar and the Appeal Board are cited as parties to the
review and it is customary for the Registrar to appear and defend the
4 Tikly and Others v Johannes NO and Others 1963 (2) SA 588 (T) at 590F-H.
5 S A Medical & Dental Council v McLoughlin 1948 (2) SA 355 (A) (McLoughlin) at 370-1.
6 The Promotion of Administrative Justice Act 3 of 2000.
decision.7 That is not a problem. Where the decision by a functionary or
body is challenged by judicial review, and that functionary or body is
cited in the review proceedings, it is clearly open to them to participate in
the review and defend the challenged decision. There are many cases that
illustrate this principle.
[8] But the present case is different. Here the Registrar is adopting an
adversarial position towards the Appeal Board. The dispute is not
between the Registrar and an outside party aggrieved by the decisions. It
is an internal quarrel between the Registrar and the Appeal Board over
the correctness of the Registrar’s decision. It is immaterial to this review
whether other interested parties also wish to challenge the decision of the
Board. The Registrar is challenging it in her own right.8 In the
submissions on her behalf it was contended that in an appeal the Registrar
is a party to the proceedings and as such enjoys the same right as any
other party to challenge the outcome by way of judicial review. The issue
dealt with in this judgment is whether that proposition is correct.
7 Edcon Pension Fund v Financial Services Board of Appeal and Another [2008] ZASCA 65; 2008 (5)
SA 511 (SCA); National Tertiary Retirement Fund v Registrar of Pension Funds [2009] ZASCA 41;
2009 (5) SA 366 (SCA); Registrar of Pension Funds v ICS Pension Fund [2010] ZASCA 63; 2010 (4)
SA 488 (SCA) are all cases of this type,
8 The decision in question was taken by the previous registrar, Mr Jurgen Boyd, but the current
registrar, Ms Rosemary Hunter, is pursuing the review.
[9] The point made in the previous paragraph, that the Registrar’s
challenge is independent of the attitude of other interested parties, is
indicative of the problem that lies in accepting that the Registrar has l
locus standi to challenge the decision of the Appeal Board on appeal from
one of her decisions. The problem does not arise in this case because
Tellumat brought review proceedings in its own right. But, had it not
done so, the position would have been that all the parties concerned in
practical terms with the Appeal Board’s decision would have accepted it,
but it would be susceptible to being overturned at the instance of the
Registrar. That would be a most unusual situation. There are any number
of reasons why parties will be prepared to accept the decision of the
Board of Appeal after it is made. Indeed they might have had an
agreement prior to the appeal hearing that they would do so. Why should
their acceptance be subject to the Registrar wishing to establish that the
original decision was correct and that the Appeal Board has erred?
[10] It was submitted that the Registrar was a party to the proceedings
before the Board of Appeal, using ‘party’ in its litigious sense of one of
the adversaries in a dispute. Our attention was drawn in this regard to the
provisions of s 26B(12) of the FSB Act. Under s 26B(11) the Appeal
Board is confined to the material that was before the Registrar in
considering the appeal. But s 26B(12) authorises a departure from this
principle. It reads:
(a) Despite the provisions of subsection (11) the chairperson of a panel designated to
hear an appeal may on application by—
(i)
the appellant concerned, and on good cause shown, allow further oral and
written evidence or factual information and documentation not made available to the
decision-maker prior to the making of the decision against which the appeal is lodged;
or
(ii)
the decision-maker concerned, and on good cause shown, allow further oral
and written evidence or factual information and documentation to be submitted and
introduced into the record on appeal.
(b) If further oral and written evidence or factual information and documentation is
allowed into the record on appeal under paragraph (a) (i), the matter must revert to the
decision-maker concerned for reconsideration, and the appeal is deferred pending the
final decision of the decision-maker.
(c) If, after the decision-maker concerned has made a final decision as contemplated
in paragraph (b), the appellant continues with the appeal by giving written notice to
the secretary, the record on appeal must include the further oral evidence, properly
transcribed, written evidence or factual information and documentation allowed, and
further reasons or documentation submitted by the decision-maker concerned.’
[11] I do not think that this section bears the construction suggested by
the Registrar. The reference to an application is merely a convenient way
of describing the mechanism whereby the appellant or the Registrar may
escape the constraints of s 26B(11). It does not necessarily bear any
connotation of a form of legal procedure. It means nothing more than that
the appellant may ask the Appeal Board for permission to submit
additional material that was not before the Registrar when the decision
was made. If there is a good reason for permitting it to do so the Appeal
Board may permit it to be admitted, but must then remit the matter to the
Registrar for a reconsideration of the original decision. In the same way
the Registrar may ask to submit additional material, either on the basis
that it is necessary to elucidate an issue that the Appeal Board must
consider, or because it is relevant and has only recently become
available.9 The Board of Appeal has a discretion to permit the
introduction of additional material taking into account its relevance and
questions of prejudice that may be caused by permitting it to be
introduced.
[12] In my view none of that means that the Registrar becomes a party
to the appeal proceedings in the sense that would permit it now to adopt
an adversarial position vis-à-vis the Appeal Board. Such a status would
be inconsistent with the role of the Registrar as an impartial regulator
acting in the interests of the industry generally and, when dealing with an
9 This is not intended to be an exhaustive statement of the circumstances in which additional material
may be introduced.
application such as this, acting as a neutral decision maker, bearing in
mind the interests of all parties to the fund in question. That the Registrar
is obliged to adopt an impartial stance when considering an application
under s 14 of the Act goes without saying. Indeed if the Registrar did not
do so that would be a ground of review under s 6(2)(a)(iii) of PAJA.10 As
that is undoubtedly the case, I find it difficult to see on what basis the
Registrar can become a party to the merits of the decision in an
adversarial sense when that decision is taken on appeal. The position is
wholly different from that which pertains in a review, where the
lawfulness of the procedure adopted by the Registrar would be attacked.
Recognising that a decision maker has locus standi to defend the
lawfulness of their conduct is different from recognising them as having
locus standi to defend the correctness of their decision. But in an appeal
to the Board of Appeal the latter is the issue.
[13] There is a further problem that arises if the Registrar has locus
standi to challenge the decision of the Appeal Board on review. It is well
illustrated by this case. In the Registrar’s founding affidavit she charged
the Appeal Board with misdirections of fact and law; of taking into
account irrelevant considerations and ignoring relevant considerations;
10 The Promotion of Administrative Justice Act 3 of 2000.
and finally of taking a decision that was so unreasonable that no
reasonable person could have so exercised their powers. These allegations
were addressed to an Appeal Board chaired by a former President of this
court. While that does not render the Appeal Board immune from
criticism, if the Registrar is free to challenge in the courts the decisions of
the Appeal Board established by Parliament to hear appeals against her
decisions, that will serve to undermine public confidence in the Appeal
Board. After all, if the Registrar regards the decisions of the Appeal
Board as grossly unreasonable, why should the public have any faith in
them?
[14] But the Registrar’s claim lies under PAJA and the question of locus
standi is therefore to be answered in terms of s 38 of the Constitution.11
Two possible grounds for locus standi arise there. The first would be that
the Registrar is acting in her own interest.12 In Giant Concerts13 the
Constitutional Court held that whilst this might not require the same
sufficient, personal and direct interest as the common law, it still required
that the litigant must show that the contested legal decision directly
affects their rights or interests, or potential rights or interests. But the
11 See Giant Concerts CC v Rinaldo Investments (Pty) Ltd [2012] ZACC 28; 2013 (3) BCLR 251 (CC)
paras 41 and 43; Tulip Diamonds FZE v Minister of Justice and Constitutional Development and
Others [2013] ZACC 19; 2013 (10) BCLR 1180 (CC) para 31.
12 Section 38(a) of the Constitution.
13 Para 41.
Registrar’s rights and interests, actual or potential, are not affected by the
Appeal Board’s decision. She has no interest in the Fund other than as
regulator and this case raises no regulatory concerns. The parties
interested in the decision are the Fund, the pensioners and Tellumat, as
the employer.
[15] It was suggested that the Registrar would be bound by any
underlying principle articulated by the Appeal Board in its decision. But
the principle of stare decisis is not applicable in relation to the decisions
of the Appeal Board.
[16] The other possibility recognised in the Constitution is that the
Registrar is acting in the public interest.14 Counsel urged upon us that the
Registrar performs important functions and has an interest, shared by the
public, in the correctness of her decisions. My difficulty with this is that
the existence of the Appeal Board presupposes that the legislature was of
the view that some of the decisions by the Registrar might be incorrect,
and that there needed to be a mechanism to challenge and correct those
decisions. The view of the legislature was that when an appeal against a
decision of the Registrar succeeds, the Registrar is wrong and the Appeal
14 Section 38(d) of the Constitution.
Board right, or expressed more charitably, as between the Appeal Board
and the Registrar the Appeal Board’s decision is to be taken as correct.15
[17] Counsel referred us to a number of cases dealing with locus standi
while accepting that none of them were on all fours with this case. He
cited McLoughlin,16 but the question in issue there was whether a
statutory council that had conducted disciplinary proceedings against a
medical practitioner and imposed sanctions, could appeal to the then
Appellate Division against a judgment setting aside its decisions on
review. Not surprisingly the court held that, as a party to the review
proceedings it had a right to do so.
[18] Of rather more relevance to the situation in the present case is the
earlier decision in Minister of Labour.17 The Industrial Registrar, under
the old Industrial Conciliation Act,18 refused to register certain
amendments to a trade union’s constitution. An appeal to the Minister of
Labour was dismissed and the union pursued a statutory appeal to the
Supreme Court. Under the terms of the statute the decision of the court
was deemed to be that of the Minister, and the decision of the Minister
15 This is reminiscent of Justice Jackson’s aphorism about the United States Supreme Court that ‘We
are not final because we are infallible, but we are infallible only because we are final’. Brown v Allen
344 US 443 at 540.
16 At 370-1. See also Maske v The Aberdeen Licencing Court 1930 AD 30.
17 The Minister of Labour v Building Workers’ Industrial Union 1939 AD 328.
18 Industrial Conciliation Act 36 of 1937.
was deemed to be the decision of the Registrar. This court held that this
necessarily excluded a further appeal by the Minister. The parallel with
this case lies in the fact that under s 26B(15) the decision of the Appeal
Board either confirms or replaces the decision of the Registrar. Although
there is no equivalent deeming provision, permitting the Registrar to
challenge that decision in effect means that the Registrar is challenging
her own decision.
[19] The other case on which counsel placed considerable reliance was
Brits Town Council v Pienaar NO.19 He particularly stressed a sentence in
the judgment of Roper J,20 where the judge said that a town council, as
the body having jurisdiction over the issue of trading licences, had an
interest in the grant or refusal of a certificate by the Administrator of the
province compelling it to issue such a licence. But the context was
different and did not involve an appeal against the council’s refusal of a
licence. Three times the council refused an application for the issue of a
motor garage and general dealer’s licence. Under the Ordinance the
Administrator could issue a certificate compelling the council to issue a
licence if its grounds for refusal had been that there were sufficient such
licences in the municipality. Purporting to act in terms of this provision,
19 Brits Town Council v Pienaar NO and Another 1949 (1) SA 1004 (T).
20 At 1024-5.
but without asking the council why it had refused the licences, the
Administrator issued a certificate. The council challenged that decision as
unlawful and beyond the powers of the Administrator. It was in that
context and in relation to a challenge to the council’s locus standi that
Roper J said that it had an interest in the grant or refusal of a certificate
because it was the authority responsible for licencing in the town. The
case is entirely distinguishable.
[20] There is a brief statement in Rajah & Rajah,21 that indicates that a
local authority with a licencing function may have locus standi to review
and set aside the grant of a licence on the basis that it is in the public
interest for it to oversee the issue of such licences. But the context is
again different and the case was decided on the basis that the council had
suffered no prejudice as a result of the issue of the licence. As it was not
prejudiced, and on the face of it could not be prejudiced, by the issue of
the licence it is not clear why its licencing function should have given it
locus standi to bring review proceedings.
21 Rajah & Rajah (Pty) Ltd v Ventersdorp Municipality and Others 1961 (4) SA 402 (A) at 407E.
[21] Lastly, it is necessary to have regard to the decision in this court in
Pepcor.22 The case also arose from an application to the Registrar under
s 14 of the Act. Some years after the Registrar issued a certificate under
that section it appeared that the certificate had been issued on the basis of
information that was inaccurate and misleading. The Registrar
accordingly applied to set the certificate aside. His locus standi to do so
was challenged. The court held that he had locus standi on the basis that
he had committed an irregular act in issuing the approval in the first
instance and therefore had locus standi in the public interest to remedy
the situation by seeking to set the approval aside by way of review
proceedings. This constitutes an exception to the principle that once a
public body or functionary has exercised their powers they are functus
officio and their decision may only be set aside by a court at the instance
of a third party having a legal interest in that decision.23
[22] Once again that case is distinguishable from this situation. The
Registrar was seeking to set aside his own decision that had been made
irregularly. Here the Registrar seeks to set aside a decision of the Appeal
Board in order to vindicate a decision that the Appeal Board decided was
22 Pepcor Retirement Fund and Another v Financial Services Board and Another [2002] ZASCA 198;
2003 (6) SA 38 (SCA) [2003] 3 All SA 21 (SCA) at para 13.
23 See also Transair (Pty) Ltd v National Transport Commission and another 1977 (3) SA 784 (A) at
792H–793G; Municipal Manager: Qaukeni Local Municipality v F V Guard Trading CC [2009]
ZASCA 66; 2010 (1) SA 356 (SCA); [2010] 4 All SA 213 (SCA) at paras 23-24.
incorrect. Counsel argued that because there was locus standi in the
former situation and also when the Appeal Board was taken on review
after upholding the Registrar’s decision, it necessarily followed that the
Registrar had locus standi in this case. I do not agree. The answer to the
question whether a party has locus standi will vary depending on the
nature of the interest that the party seeks to vindicate.
[23] In order to determine the nature of that interest one must go back to
the purpose behind the establishment of the Appeal Board and its powers
under s 26B(15) of the FSB Act. The purpose is clear. It is to enable
persons affected by decisions of the Registrar24 to challenge those
decisions before a specially constituted body. The Appeal Board is to
decide, on the information before the Registrar, what decision the
Registrar should have made. And, once the Appeal Board has spoken,
either the Registrar’s decision stands, because it has been confirmed, or it
is substituted by the Appeal Board’s decision. In the latter event the
Appeal Board’s decision stands in the place of the decision of the
Registrar. In effect it becomes the Registrar’s decision. That much is
24 The definition of ‘decision maker’ in section 1 means that the right of appeal in s 26 is far wider than
a right of appeal against decisions of the Registrar and extends to the registrars of other financial
institutions.
clear from the fact that it does not direct the Registrar to act differently,
but directs that its own order be given effect.25
[24] Recognising that the Registrar has locus standi to challenge the
decision by the Appeal Board would upset the statutory relationship
between the two as set out in the FSB Act. It would be inconsistent with
the purpose of creating the Appeal Board and has the potential to
undermine it in performing its function. If one of the parties affected by it
is unhappy with a decision by the Appeal Board they are free to review it.
Recognising an independent right in the Registrar would permit of
challenges to a decision accepted by the parties affected thereby. The
Registrar does not point to any aspect of her regulatory functions that
would be detrimentally affected if she cannot challenge decisions by the
Appeal Board. Whilst the absence of authority to support the Registrar’s
position is not of itself fatal it provides a further pointer to the conclusion
that the Registrar does not have locus standi in this situation.
[25] This conclusion should not be a hindrance to the performance by
the Registrar of her functions. It relates only to a narrow area where the
Registrar disagrees with a decision of the Appeal Board overturning one
25 Section 26B(15)(a) of the FSB Act.
of her decisions. It will not affect the Registrar’s ability when she and the
Appeal Board see eye to eye to defend that position in review
proceedings. Nor will it prevent the Registrar from bringing proceedings
in other instances relating to her performance of her statutory functions.
[26] In the result I hold that the Registrar lacked locus standi to institute
the review proceedings in this case. The appeal is dismissed.
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
F C SNYCKERS SC (with him S KHUMALO
Instructed by:
Rooth & Wessels Attorneys, Pretoria;
McIntyre & Van der Post, Bloemfontein
For respondents: No appearance.
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
2 December 2015
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.
Tellumat (Pty) Ltd v Appeal Board of the Financial Services Board
[2015] ZASCA 202 and Registrar of Pension Funds v Financial
Services Appeal Board [2015] ZASCA 203 .
The SCA today delivered judgment in these two appeals. Both arose out
of a decision by the Registrar of Pension Funds to approve the transfer to
pensioners of the Tellumat Pension Fund of annuity insurance policies
selected by the pensioners for the purpose of providing them with the
benefits they would otherwise have had to obtain from the Fund. The
decision was taken on review to the Appeal Board and set aside. Both the
employer, Tellumat (Pty) Ltd and the Registrar challenged the Appeal
Board’s decision by way of judicial review. Their applications were
dismissed and they appealed to the SCA.
The SCA dismissed the Registrar’s appeal on the grounds that she lacked
locus standi to challenge the decision of the Appeal Board. It held that to
permit a review would be contrary to the purpose of the legislature in
establishing the Appeal Board with the power to hear appeals against the
Registrar’s decisions and either to confirm those decisions or to vary or
set them aside and replace them with its own.
The SCA upheld Tellumat’s appeal. It said that the Appeal Board had
failed to pay sufficient regard to the fact that the application for the
Registrar’s approval was part of a larger distribution scheme properly
agreed upon by the Fund’s trustees. The effect of its order would have
been to disturb that scheme and require the actions taken pursuant to it
from 2007, with the support of the majority of pensioners, to be
overturned and revisited. Instead of considering the scheme as a whole
and the part the transfer would play in that scheme it treated the issues
before it as discrete and separate from the scheme. This failed to
recognise that the arrangements between the parties, which included
substantial improvements in existing pensions would not have been the
same were the issue to be approached on the basis it had done. Its
decision was accordingly set aside.
|
1866
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 491/10
In the matter between:
S A SOUTWERKE (PTY) LTD Appellant
v
SAAMWERK SOUTWERKE (PTY) LTD First Respondent
MINISTER OF MINERALS AND ENERGY Second Respondent
DIRECTOR-GENERAL: MINERALS AND ENERGY Third Respondent
REGIONAL MANAGER: MINERALS AND ENERGY Fourth Respondent
NORTHERN CAPE
Neutral citation: SA Soutwerke v Saamwerk Soutwerke (491/2010) [2011]
ZASCA 109 (1 June 2011).
Coram:
Brand, Heher, Ponnan, Cachalia and Theron JJA
Heard:
13 May 2011
Delivered:
1 June 2011
Summary: A person who relies on an illegally issued permit to occupy land
has no right to be consulted by an applicant for a mining right as
contemplated by s 22(4) of the Mineral and Petroleum Resources
Development Act 28 of 2002.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Northern Cape High Court, Kimberley (Lacock J sitting as court
of first instance).
The following order is made:
The appeal is dismissed with costs;
The registrar of this court is directed to deliver copies of this judgment to
The National Commissioner of the South African Police Service, the
National Director of Public Prosecutions and the Minister responsible for
the Department of Minerals and Energy.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Brand, Heher, Ponnan and Theron JJA concurring):
[1] This appeal concerns a dispute between two companies over the right to
mine salt in the Northern Cape. It is appropriate to set out the facts in some detail
so that the legal issues that arose both in the high court and in this court are
properly understood.
[2] On 13 July 2005 Saamwerk Soutwerke (Pty) Ltd applied to the
Department of Minerals and Energy (the DME) for a right to mine salt on a
property known as Vrysoutpan in the Gordonia District of the Northern Cape.1
1 The property is fully described as Portion 146 of Portion 58 (Vrysoutpan) and Portion 59
(Vrysoutpan) van die plaas Kalahari-Wes No 251, District of Gordonia, Northern Cape Province.
The property is state-owned. The application was made in terms of s 22 of the
Mineral and Petroleum Resources Development Act 28 of 2002 (the Act) and
delivered to the Regional Manager, Mr Mdaweni in line with s 22(1)(a).2 On
5 September 2005 Mdaweni by letter accepted the application, as he was obliged
to do, because no other person was on record as holding a right or permit to
mine salt on the property.3 Mdaweni’s letter stated that in terms of s 22(4)4,
Saamwerk had to submit a scoping report by 4 October 2005, conduct an
environmental impact assessment and submit an environmental management
plan by 3 November 2005, notify in writing and consult with the landowner or
lawful occupier and any other affected party, and submit the result of such
consultation to him by 4 October 2005. One of the issues in this appeal relates to
whether Saamwerk had complied with its obligation to consult.
[3] On 7 December 2005 Saamwerk lodged its environmental management
programme, as s 39(1) requires.5 This was after Mdaweni’s deadline, but well
within the 180 days that the section specifies. Section 39(4) says that the
Minister must approve the plan within 120 days of its lodgement if it meets
certain requirements.6 The date of approval is important because s 25(3)
declares that it is only then that the mining right becomes effective.
2 Section 22: ‘(1) Any person who wishes to apply to the Minister for a mining right must lodge
the application-
(a) at the office of the Regional Manager in whose region the land is situated.’
3 Section 22: ‘(2) The Regional Manager must accept an application for a mining right if-
(a) the requirements contemplated in subsection (1) are met; and
(b) no other person holds a prospecting right, mining right, mining permit or retention permit for
the same mineral and land.’
4 Section 22: ‘(4) 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 conduct an environmental impact assessment and submit an environmental management
programme for approval in terms of section 39, and
(b) to notify and consult with interested and affected parties within 180 days from the date of the
notice.’
5 Section 39: ‘(1) Every person who has applied for a mining right in terms of section 22 must
conduct an environmental impact assessment and submit an environmental management
programme within 180 days of the date on which he or she is notified by the Regional Manager to
do so.’
6 These are set out in s 39(3). It provides as follows:
‘(3) An applicant who prepares an environmental management programme or an environmental
management plan must-
(a) establish baseline information concerning the affected environment to determine protection,
remedial measures and environmental management objectives;
[4] On 27 September 2006 the DME informed Saamwerk by letter that its
application had been approved provisionally in terms of s 23(1) and that the
Regional Manager would approve the environmental plan by 22 November 2006.
The ‘proposed mining right’ was made conditional on Saamwerk’s submission of
a revised social and labour plan, which took place on 5 December 2006.
[5] Saamwerk thus believed that it had fulfilled all its obligations and all that
remained was the Minister’s approval of the environmental plan before it could
commence mining. At the same time another company, SA Soutwerke (Pty) Ltd
(SA Salt) – the appellant – also asserted a right to mine on the property. Because
of these conflicting claims the DME prevaricated over the approval of
Saamwerk’s environmental plan. Saamwerk thus became embroiled in a dispute
with the DME over its failure to approve the plan and with SA Salt over its
competing claim.
[6] SA Salt had been mining salt on the property since 1981. The history of
how it began its mining operations there is not relevant to the current dispute.
What is germane is that it applied for a mining right under the subsequently
repealed Minerals Act 50 of 1991 (the Minerals Act) on 13 November 2000. On
21 May 2001 the DME consented to the application and on 19 August 2001 the
Director-General authorised the Regional Manager to conclude a written
(b) investigate, assess and evaluate the impact of his or her proposed prospecting or mining
operations on-
(i) the environment;
(ii) the socio-economic conditions of any person who might be directly affected by the prospecting
or mining operation; and
(iii) any national estate referred to in section 3(2) of the National Heritage Resources Act, 1999
(Act 25 of 1999 ), with the exception of the national estate contemplated in section 3(2)(i)(vi) and
(vii) of that Act;
(c) develop an environmental awareness plan describing the manner in which the applicant
intends to inform his or her employees of any environmental risks which may result from their
work and the manner in which the risks must be dealt with in order to avoid pollution or the
degradation of the environment; and
(d) describe the manner in which he or she intends to-
(i) modify, remedy, control or stop any action, activity or process which causes pollution or
environmental degradation;
(ii) contain or remedy the cause of pollution or degradation and migration of pollutants; and
(iii) comply with any prescribed waste standard or management standards or practices.’
agreement with SA Salt. That was done on 17 December 2001 when SA Salt’s
managing director, Mr André Blaauw, signed the agreement on its behalf. After
some delay the permit was ultimately issued on 28 April 2004.
[7] The DME sent the permit to SA Salt’s attorneys under a covering letter by
registered post on the same day. They received it on 25 May 2004. SA Salt thus
conducted its mining operations under this permit, which had the number MP
169/2003 and an expiry date of 27 April 2005. So, when Saamwerk applied for a
mining permit on 13 July 2005 and Mdaweni accepted it on the DME’s behalf on
5 September 2005, SA Salt’s permit number MP 169/2003 had expired. This
permit was therefore not a barrier to Saamwerk’s obtaining a mining right.
[8] However, on 16 August 2006, SA Salt wrote to Mdaweni asserting that it
was the holder of another permit – permit number MP 169/2004 – which gave it
an ‘old order mining right’. This meant, if the assertion was correct, that SA Salt
was entitled exclusively to continue mining on the property for a period of five
years after the Act had commenced its operation on 1 May 2004 – as s 7(1) of
the Act’s transitional arrangements in Schedule II envisages. On this basis
SA Salt objected to the DME’s acceptance of Saamwerk’s application for a
mining right.
[9] The DME had supposedly issued this permit to SA Salt under the Minerals
Act on 28 April 2004 – on the very same day it had issued MP 169/2003.
However, unlike MP 169/2003, which had an expiry date, MP 169/2004 did not
have one. This was irregular because s 9(1), read with s 9(3) of the Minerals Act,
required mining authorisations to be issued for a determined period. Be that as it
may, MP 169/2004 not only duplicated MP 169/2003 – except for its omission of
an expiry date – but purported to authorise SA Salt to mine on the very same
property (and for the same period) over which Saamwerk’s application had been
accepted.
[10] On 30 August 2006 Saamwerk asked SA Salt to terminate its mining
operations and vacate the property as it intended to commence its mining
operations there on 1 September. SA Salt did not budge. Instead, on
1 September 2006 its attorneys wrote to the Regional Manager again asserting
that ‘it is the lawful holder of a valid mining permit number MP 169/2004’ and
threatened to approach the high court should the DME not suspend Saamwerk’s
mining right. SA Salt also ignored a demand from the Department of Public
Works on 4 September 2006 to vacate the property in favour of Saamwerk.
[11] After Saamwerk became aware of SA Salt’s competing claim to mine on
the property, it took up the matter with the DME. The DME informed it that
SA Salt’s permit MP 169/2004 had lapsed a year after its issue – on 27 April
2005 – because SA Salt had not applied to convert it as an old order right.
Saamwerk’s attorneys then wrote to SA Salt on 20 October 2006 demanding that
it vacate the property within a week. Again, it would not and continued to assert
its right to mine on the property. On 28 November 2006 Saamwerk addressed a
letter to the DME to complain about the delay in resolving the dispute.
[12] On 6 December 2006 Mdaweni convened a meeting with SA Salt to
discuss the conflicting authorisation to Saamwerk. He informed SA Salt that the
DME had no record of having issued MP 169/2004. This contradicted the DME’s
earlier statement to Saamwerk that this permit had expired. Of greater concern,
Mdaweni now made the startling claim that there were serious question marks
over the permit’s validity because it appeared to have been forged. The only
permit that the DME had on record, he told SA Salt’s representatives, was
MP 169/2003, which had an expiry date of 27 April 2005. However, he thought,
and told SA Salt’s representatives, that it was valid for a period of five years as
an old order right. It is difficult to understand how he came to this erroneous view
because that permit was valid for one year only and was therefore not capable of
being converted under s 7(1) of the Act. Even if it was, SA Salt had not applied
for the right to be converted. Nevertheless, Mdaweni adopted the stance that
DME had approved Saamwerk’s application in error as MP 169/2003 to mine on
the property already existed.
[13] Thereafter Saamwerk continued to pressurize the DME to bring finality to
the matter. On 26 January 2007 the DME gave Saamwerk an undertaking that it
would investigate the validity of MP 169/2004. It said it would do so by sending
an inspector to the property, and also take immediate steps to evict SA Salt from
the property if it transpired that the permit was invalid. Strangely, the DME said
nothing about Mdaweni’s view concerning the validity of MP 169/2003, which
would obviate the need to investigate the validity of MP 169/2004. On 7 February
2007 Saamwerk’s attorneys again wrote to the DME for confirmation that an
inspector had been sent to the property, but received no response. The Minister
had also not approved the environmental plan as promised.
[14] In the meantime the DME arranged a meeting with SA Salt on 13 March
2007 and requested it to produce the original MP 169/2004. Mr John Block, one
of SA Salt’s directors, produced the permit at the meeting. Mdaweni and
Mr Byron Guthrie from DME’s head office in Pretoria inspected the permit and
concluded that it was valid, which was contrary to the view Mdaweni had earlier
held. In the absence of an expiry date on the permit, Block and Mdaweni agreed
that it permitted SA Salt to mine for five years; but that SA Salt would have to
apply for the permit to be converted as an old order right within five years of the
Act’s commencement. This effectively meant that once SA Salt lodged its
conversion application, Saamwerk would not be able to mine on the property.
[15] Against this background Saamwerk commenced proceedings in the
Northern Cape High Court on 22 March 2007 to compel the Minister to approve
the environmental plan and also to have MP 169/2004 declared invalid. The very
next day Block and Mr Bester, SA Salt’s financial manager, lodged an application
with the DME to convert what SA Salt now regarded as an old order right under
MP 169/2004 to a right to continue mining under the Act. On 7 April 2007 the
DME granted the conversion application, which confirmed SA Salt’s belief that it
could continue mining until 30 April 2009; that is for five years after the Act had
commenced.
[16] A month later SA Salt filed its answering affidavits. And it relied mainly on
the permit that Mdaweni and Guthrie had authenticated, that is MP 169/2004, to
resist the relief Saamwerk sought. Mdaweni filed an affidavit on behalf of the
DME supporting SA Salt’s stance. He stated that the DME had approved
Saamwerk’s application through a bona fide error, the error being that SA Salt’s
permit MP 169/2004 had not been recorded on its computer system. The DME
was thus not aware of this permit when it accepted Saamwerk’s application on 5
September 2005. SA Salt also opposed Saamwerk’s relief on another ground;
that it had not met all its obligations under the Act, including having failed to
consult with SA Salt as an ‘occupier’ of the property.
[17] However, the only dispute that was ventilated in the high court was
whether any valid permit had been issued to SA Salt to mine on the property and,
if so, what the duration of the permit was, and also whether it was valid at the
time that the DME had accepted Saamwerk’s application. As there were disputes
on the papers over these issues the court, at the request of the parties, referred
them to oral evidence.
[18] The hearing lasted five days in October 2009. Several DME officials
testified. They were not only unable to provide a satisfactory explanation
concerning the origin of MP 169/2004, but they also gave contradictory evidence
on this aspect. In addition, Saamwerk called a handwriting expert who testified
that the impugned permit had been falsified. His evidence was not disputed.
[19] Because of the nature of the oral testimony and the documentary
evidence that was placed before the court, the DME and SA Salt were driven to
concede that MP 169/2004 was invalid; that the only valid permit issued to
SA Salt was MP 169/2003, which had expired on 27 April 2005; and that SA Salt
had no valid authorisation to mine on the property on 5 September 2005, when
the DME accepted Saamwerk’s application. It is particularly curious – and
troubling – that SA Salt adduced no evidence by any of its officials to explain how
it came to possess MP 169/2004. At the very least, one would have expected
Block, who, on SA Salt’s behalf, had produced the permit at the meeting with the
DME on 13 March 2007, to have explained from where he had got it. So it is
hardly surprising that the high court later found the permit to be a forgery, and
that someone in SA Salt’s service was aware of this.
[20] At the conclusion of oral evidence the matter was postponed to
10 December 2009 for argument. However on 29 October 2009, SA Salt
launched a counter-application. This time it sought to review and set aside the
Minister’s approval of Saamwerk’s application on 27 September 2006. Its cause
of action was based on a single ground – that the then acting Regional Manager
of the DME, Mr Mfetoane, did not have the authority, in terms of s 9(2) of the
Minerals Act to issue MP 169/2003, which was valid only for a year because the
Minister had authorised the issue of a permit for a five-year period; or a two-year
period at least. The permit Mfetoane issued to SA Salt was therefore null and
void. The consequence of the nullity, so it was submitted, was that its application
for a mining permit in November 2000 remained pending. This meant that the
DME had no authority to grant a right to Saamwerk without first properly
processing SA Salt’s pending application in terms of s 9(1)(b) of the Act.7 SA Salt
thus sought a declaratory order to this effect. Saamwerk opposed the application
and the DME elected to abide by the decision of the court.
[21] In a closely reasoned judgment, Lacock J dismissed the counter-
application with costs. First, he found that as SA Salt had not instituted review
proceedings to set aside MP 169/2003, it remained valid, whether or not its issue
was ultra vires.8 And further, he rejected SA Salt’s contention that the relief it
7 Section 9: ‘(1) If a Regional Manager receives more than one application for a prospecting
right, a mining right or a mining permit, as the case may be, in respect of the same mineral and
land, applications received on-
(a) . . .
(b) different dates must be dealt with in order of receipt.’
8 Oudekraal Estates (Pty) (Ltd) v City of Cape Town 2004 (6) SA 222 SCA at para 26.
sought arose from a collateral challenge to the Regional Manager’s purported
unlawful administrative act on the ground that it was not being coerced to comply
with any act.9 Second, the learned judge found that even if he were to exercise a
discretion regarding SA Salt’s claim to declaratory relief, he would have found
against it. In this regard, the factors that weighed with him were that the SA Salt
already had the benefit of having mined illegally for more than five years; that it
took no steps itself to investigate the source of the impugned permit and that it is
improbable that no one at SA Salt was aware that it had been falsified. In my
view the judge’s reasoning cannot be faulted. He was therefore correct to have
dismissed the counter-application.
[22] In the main application the court declared Saamwerk the holder of the
mining right over the property and also that the Minister was deemed to have
approved Saamwerk’s environmental plan. It also declared MP 169/2004 invalid.
The DME and SA Salt were ordered jointly and severally to pay Saamwerk’s
costs.
[23] SA Salt was dissatisfied with this outcome and applied to the high court for
leave to appeal against the orders granted in the main application and in the
counter-application, but it did not challenge the declaration that MP 169/2004
was invalid or the costs order that was granted against it in the main application.
[24] In its application for leave to appeal SA Salt advanced a new ground of
review to attack the decision to approve Saamwerk’s application for a mining
authorisation – one that the high court was not asked to consider either in the
main application or the counter-application. This was that the mining right could
not have been granted to Saamwerk since it had failed to consult with SA Salt as
an ‘occupier’ of the property. Although, as I mentioned earlier, SA Salt had raised
this defence in the main application, counsel for SA Salt chose not to pursue it at
the time. The high court dismissed the new ground and refused leave to appeal,
9 Ibid para 32.
but this court granted the necessary leave. The DME has no interest in this
appeal.
[25] In refusing SA Salt’s application for leave to appeal, the high court
considered that there was a factual dispute on the papers (in the main
application) as to whether Saamwerk had consulted with SA Salt. But, said the
judge, SA Salt chose not to make an issue of it through a referral for oral
evidence with the other issues that were referred. This meant, so the court
reasoned, that Saamwerk was denied the opportunity to adduce further evidence
to support its case on this point. It would therefore be unfair, so it said, to allow
SA Salt to resuscitate this issue.
[26] I do not share the learned judge’s view that there was a dispute of fact on
this issue. SA Salt raised the defence that it had not been consulted in its
answering affidavit. In reply Saamwerk did not adduce facts to gainsay SA Salt’s
assertion. The reason it did not do so, it stated pertinently, was because this
issue was immaterial (‘ontersaaklik’) to the relief it was seeking, which was a
mandamus10 to compel the DME to execute the decision it had already taken to
award a mining right to it; it also had no bearing on the dispute regarding the
validity of MP 169/2004, which constituted the basis of SA Salt’s defence in the
main application.
[27] So the question remains; was the high court entitled to have refused to
review and set aside the Minister’s approval of Saamwerk’s application without
considering whether it had complied with the consultation requirement in the Act?
The answer to this question, in my view, depends upon the legal basis relied on
by SA Salt for its occupation of the property. As SA Salt’s occupation was
premised on the validity of MP 169/2004, which the high court correctly found
10 Now incorporated under s 6(2)(g) of the Promotion of Administrative Justice Act 3 of 2000. It
provides:
‘A court or tribunal has the power to judicially review an administrative action if –
(a) . . .
. . .
(g) the action concerned consists of a failure to take a decision.’
was not valid, the further question that arises is whether SA Salt had a right to be
consulted even though the permit was invalid. To answer this question it is
necessary to examine the relevant provisions of the Act briefly.
[28] Section 22 sets out the procedure for the application for a mining right.
Any person who wishes to apply for a mining right must lodge the application with
the Regional Manager concerned.11 The Regional Manager must accept it if no
other person holds a mining right or mining permit for the same mineral and
land.12 If the application is accepted, the Regional Manager must, within 14 days
of that date by written notice, inform the applicant to conduct an environmental
impact assessment and submit an environmental management programme for
approval in terms of s 39,13 and to notify and consult with ‘interested and affected
parties’ within 180 days from the date of the notice.14
[29] The purpose of the notification and subsequent consultation is to enable
the applicant to assess the impact that its mining operations may have on such
parties. This will place the applicant in a position to prepare an environmental
management programme that takes their concerns into account. The Regional
Manager must also, within 14 days of accepting the application, call upon these
parties to submit their comments regarding the application within 30 days of the
date of the notice. The rationale for soliciting comments is to allow the Regional
Mining and Development Committee to consider objections and to advise the
Minister thereon.15
[30] The Act does not define who an interested or affected party is. But it
seems clear that an ‘interested’ party is one with a lawful interest in land on
which a mining right is sought, such as the landowner or lawful occupier. From
the notification that the DME sent to Saamwerk on 5 September 2005, which I
11 Section 22(1).
12 Section 22(2)(b).
13 Section 22(4)(a).
14 Section 22(4)(b).
15 Section 10(2).
referred to earlier, this is how the DME understood the reference to interested
parties.16
[31] ‘Affected parties’ appears to refer to persons whose socio-economic
conditions might be directly affected by the mining operation. These would, for
example, include persons who earn a livelihood in the immediate environment
where mining operations are to be conducted. This is why the applicant for a
mining permit must prepare an environmental management programme referred
to above that deals with, among other things, this issue.17 SA Salt is clearly not
an ‘affected party’ as contemplated in the section and had no right to be
consulted on this basis; although there is a suggestion in its written argument
that its eight employees, and their families, who reside on the property, are.
Whether that is so would necessarily depend on the facts attaching to the
circumstances of each employee, which was not canvassed in the papers. In any
event, to the extent that the employees derive their interest purely through their
employer, SA Salt, they can certainly have no stronger interest than SA Salt itself
possesses.
[32] I have mentioned that in its answering affidavit in the main application
SA Salt asserted that Saamwerk had a duty to consult with it as an ‘occupier’. Its
right to occupy the property was firmly anchored in its belief that MP 169/2004
was valid. On a proper reading of its answering affidavit, this was the basis upon
which it claimed a right to occupy the property. It thus asserted that it was a
lawful occupier of the property.18
[33] But this claim contains the seeds of its own destruction; because if the
permit was valid Saamwerk’s application to mine would have been rejected. And
no question of Saamwerk’s obligation to consult could arise. The permit, as we
now know, was declared invalid; and with that declaration, any suggestion that
16 See para 2 above.
17 Section 39(3)(b)(ii).
18 Cf Bengwenyama Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd & others 2011 (3)
BCLR (CC) paras 62-67.
SA Salt remained a lawful occupier, and thus had a right to be consulted,
disappeared.
[34] To demonstrate how disingenuous SA Salt’s claimed right to be consulted
is, one only has to ask what would have happened if Saamwerk had attempted to
consult SA Salt? The answer is obvious. SA Salt would have firmly rebuffed the
attempt on the ground that it had a valid permit, and therefore, a prior right to
mine on the property, just as it did in resisting Saamwerk’s attempts to evict it
from the property. So the reason that Saamwerk did not take issue with SA Salt
over this question in its replying affidavit in the main application was because
SA Salt’s very claim to have a valid permit was inconsistent with its assertion that
it also had a right to be consulted by Saamwerk – and that Saamwerk had a
corresponding duty to do so. SA Salt’s belated attempt to raise this issue, which
had no proper basis in the main application and was not pursued in those
proceedings, or in the counter-application, was therefore doomed to fail.
[35] Counsel for SA Salt contended that even if the counter-application was
dismissed there were a number of other reasons why the high court, in the main
application, was not entitled to grant any declaratory order other than that
MP 169/ 2004 be declared invalid. I need not deal with this contention; because
once the counter-application was dismissed, correctly in my view, SA Salt had no
standing to impugn the order that the high court granted in the main application.
In the result the appeal must fail.
[36] I have dealt with the consultation issue in some detail because SA Salt
made it its principal ground of appeal, and argued the matter on this basis. The
counter-application could, however, have been dismissed on a much simpler
basis – SA Salt’s failure to exhaust internal remedies before launching review
proceedings. The high court does not appear to have considered this, perhaps
because it too had a firm view on the merits of the case against SA Salt.
[37] The facts show that the decision to grant Saamwerk a mining right, which
SA Salt sought to have set aside, was communicated to Saamwerk by letter on
27 September 2005. The Deputy Director-General, Mr J F Rocha, signed the
letter; but the Director-General probably made the decision under the Minister’s
delegated authority. However, it is immaterial whether Rocha or the Director-
General made the decision. It is beyond dispute that the Minister did not. This
means that SA Salt was obliged to appeal to the Minister, as s 96(3) of the Act
envisages, before launching review proceedings.19 It did not do so and it was
therefore was not competent to have approached the high court for any relief.
[38] One matter remains. This dispute commenced in 2005 with the DME’s
decision to accept Saamwerk’s application for a mining right. Saamwerk
apparently complied with whatever obligations the law and the DME expected of
it. In the meantime, SA Salt, which had been mining on the property since 1981,
produced a mining permit authorising it to mine on the property. The DME had no
record of this permit. Then, SA Salt and the DME suspiciously came to an
agreement that the permit was valid, when it obviously was not. So Saamwerk
was compelled to litigate against both SA Salt and the DME to vindicate its right.
[39] In the court proceedings that followed, the high court found, as I have
mentioned, that the permit had been forged, and that SA Salt must have been
aware of this. It beggars belief that the officials of the DME, who dealt with this
matter, purported to validate the permit even though it visibly was not valid, and
the DME had no record of it. The result was that Saamwerk, despite continuing
throughout to pay its rental to the Department of Public Works, was denied its
right to mine on the property. Instead SA Salt continued to mine for at least five
years without a valid permit.
[40] During the hearing before us, we were informed by Saamwerk’s legal
representatives that they had lodged a complaint with the South African Police
19 Bengwenyama Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd & others 2011 (3)
BCLR (CC) paras 43-52.
Service approximately two years ago to investigate the forgery, but had since
heard nothing. Equally disturbing is that there is more than a hint of ineptitude – if
not venality – among one or more of the officials of the DME who dealt with this
matter. Yet no one has been held accountable. I shall accordingly request the
registrar of this court to deliver a copy of this judgment, as well as the judgments
of the high court, to the National Commissioner of the South African Police
Service, the National Director of Public Prosecutions, and the Minister who is
responsible for Department of Minerals and Energy.
[41] I make the following order:
The appeal is dismissed with costs;
The registrar of this court is directed to deliver copies of this judgment to
The National Commissioner of the South African Police Service, the
National Director of Public Prosecutions and the Minister responsible for
the Department of Minerals and Energy.
_________________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
For Appellant:
W H G van der Linde SC (with him E F van
Huyssteen)
Instructed by:
Wessels & Smith Inc, Upington
McIntyre & Van Der Post, Bloemfontein
For 1st Respondent:
J J Gauntlett SC (with him J C Tredoux)
Instructed by:
Haarhoffs Inc, Kimberley
Peyper Sesele Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
1 June 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
SA Soutwerke v Saamwerk Soutwerke
(491/10) [2011] ZASCA 109 (1 June 2011)
Media Statement
In an appeal concerning a dispute between two companies who mine salt in the Northern
Cape, the Supreme Court of Appeal (SCA) today delivered judgment dismissing the appeal
by SA Soutwerke (Pty) Ltd against the judgment of Lacock J in the Northern Cape High Court.
The high court had dismissed its counter-application in which it sought to review and set aside
the Minster's approval of Saamerk's application for a mining permit and declared Saamwerk
Soutwerke (Pty) Ltd the holder of a mining permit over the disputed property.
The question on appeal was whether the high court was entitled to refuse to review and set
aside the Minister's approval of Saamwerk's application without considering whether
Saamwerk had consulted with Soutwerke as an 'interested and affected party' as
contemplated in the Mineral and Petroleum Resources Development Act 28 of 2002. The
answer to this question would depend, the SCA held, upon the legal basis relied on by SA
Soutwerk for its occupancy of the property. As SA Soutwerke's occupation of the property
was premised on the validity of a permit, which the high court had correctly held to be invalid
as it was found to be a forgery, the question arose as to whether SA Soutwerke had a right to
be consulted even though the permit was invalid.
The SCA, after careful considering of the requirements set out in the Act, held that a person
or entity that relies on an illegally issued permit to occupy land has no right to be consulted by
an applicant for a mining right as contemplated in the Act. SA Soutwerke clearly was not an
'interested and affected party' as required by the Act and thus had no right to be consulted on
this basis.
The SCA expressed its dismay at the fact that even though a complaint had been lodged with
the South African Police Services by Saamwerk to investigate the forgery of the mining
permit, nothing had occurred for two years. This was despite a finding by the high court,
which was approved on appeal, that SA Soutwerke must have been aware of the the forgery.
The court also found that there appeared to have been ineptitude, if not venality, on the part
of the officials of the Department of Minerals and Energy and requested the registrar of this
court to deliver a copy of the this judgments, as well as the judgments of the high court, to the
National Commissioner of the South African Police Services, the National Director of Public
Prosecutions and the Minister who is responsible for Department of Minerals and Energy.
The SCA consequently dismissed the appeal with costs.
--- ends ---
|
1454
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 457/09
MANONG AND ASSOCIATES (PTY) LTD
Appellant
and
CITY OF CAPE TOWN
First Respondent
FUTUREGROWTH PROPERTY DEVELOPMENT
Second Respondent
COMPANY (PTY) LTD
______________________________________________________________
Neutral citation:
Manong v City of Cape Town (457/09) [2010] ZASCA 169
1 December 2010)
CORAM:
Navsa, Cloete, Van Heerden and Mhlantla JJA and
Ebrahim AJA
HEARD:
15 November 2010
DELIVERED:
1 December 2010
SUMMARY: Unfounded complaints in Equality Court ─ formulation of
complaints not in accordance with the manner envisaged by the
Promotion of Equality and Prevention of Unfair Discrimination Act 4 of
2000 ─ costs in matters concerning the assertion of constitutional rights
─ manner in which litigation conducted justifying costs order against
complainant ─ concerns expressed about irrelevant and outrageous
statements by complainant during course of enquiry.
______________________________________________________________
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
Western Cape Equality Court (Cape Town) (Moosa J
sitting as court of first instance).
1.
The appellant’s appeals in respect of its exclusion from the CBD
project and the upholding by the court below of the second respondent’s plea
of misjoinder in relation to the Setsing project are dismissed with costs,
including the costs of two counsel.
2.
The cross-appeal by the first respondent in respect of the broader
Khayelitsha enquiry is upheld with costs, including the costs of two counsel.
3.
The cross-appeals by the first and second respondents, in relation to
the costs order in both cases, are upheld with costs, including the costs of two
counsel.
4.
The finding of the court below set out in para 36 and the costs order
contained in para 64 of the judgment dated 12 November 2008 are set aside
and substituted as follows:
‘1.
The applicant’s complaint that it was discriminated against in general by the first
respondent and its predecessor in the allocation of contracts in Khayelitsha is dismissed with
costs, including the costs of two counsel and such costs are to include the costs reserved on
18 August 2007.
2.
The applicant is ordered to pay the first and second respondents’ costs in relation to
the complaint concerning its exclusion from the CBD project, including the costs of two
counsel and such costs are to include the costs reserved on 18 August 2007, which also
encompass the second respondent’s costs in relation to the Setsing project.’
5.
The appellant is ordered to pay the respondents’ wasted costs
occasioned by the postponement of the appeal on 20 August 2010.
______________________________________________________________
JUDGMENT
______________________________________________________________
NAVSA and MHLANTLA JJA (CLOETE, VAN HEERDEN JJA and EBRAHIM
AJA concurring)
[1] This case implicates the right to equality in the procurement of State
related (municipal) contracts. The Constitution guarantees equality before the
law and prohibits unfair discrimination by the State and/or individuals directly
or indirectly on one or more grounds, including race, gender, sex, pregnancy,
marital status, ethnic or social origin, colour, sexual orientation, age, disability,
religion, conscience, belief, culture, language and birth. Section 9(3) of the
Constitution obliges the State to enact national legislation to prevent or
prohibit unfair discrimination. The Promotion of Equality and Prevention of
Unfair Discrimination Act 4 of 2000 (the Act), which came into operation on 16
June 2003, is an important statute to that effect. Its purpose is to prevent or
prohibit unfair discrimination and to promote equality.
[2] The promotion of equality is a noble goal and as we transform our
society and meet the myriad challenges associated with change we should
always act on a principled basis. Where there are legitimate grievances based
on racial exclusion, we should deal with them promptly and firmly. Racism
was the scourge of our nation and we should, where it is shown to exist, resist
it strenuously and take all the necessary steps to eliminate it from our midst.
Courts, when faced with legitimate complaints of racial exclusion should not
hesitate to show their disapproval by means of appropriate orders. On the
other hand, given South Africa’s peculiar history, racism is such a serious
charge that care should be taken to ensure that such a complaint is well-
founded. A contrived charge is equally deserving of censure. In this case we
have to decide on which side of the dividing line the appellant’s complaint in
the Equality Court falls. The evidence and issues in this case demonstrate the
complex challenges facing the State in its management and promotion of
fundamental change in society.
[3] The procurement of State-related contracts for the acquisition of
professional or other services, whether by way of tender or otherwise, has
become a hotly contested field with courts frequently being the battleground.
Litigation has included a range of legal issues, including but not limited to
charges by unsuccessful service-providers of being victims of racial
discrimination or bias. The question in the present appeal is whether the
complaint of racism brought by the appellant in the Equality Court (Cape
Town) in relation to the procurement of municipal contracts was warranted.
The appeal is before us with the leave of that court. The two judgments of the
court below which are the subject of the present appeal and cross-appeal are
reported as Manong and Associates (Pty) Ltd v City of Cape Town & others
2008 (2) SA 601 (C) and Manong and Associates (Pty) Ltd v City Manager,
City of Cape Town, & others 2009 (1) SA 644 (EqC). The first judgment deals
with practice directions and preliminary points.
[4] The appellant, Manong and Associates (Pty) Ltd, describes itself as a
national
company
specialising
in
civil,
structural
and
development
engineering. The engineering practice progressed from initially operating only
in Cape Town as a one person practice, to operating as a close corporation,
and ultimately expanding its presence as a national company to Port
Elizabeth, Johannesburg, East London and Mthatha. Notwithstanding its
national footprint the company has a fairly limited professional staff
complement comprising four full time directors who are qualified engineers,
four professional associates and eleven professional technical staff.
[5] The driving force behind the appellant is Mr Mongezi Stanley Manong
(Manong), who is its managing director and a professional engineer. The
complaint in the court below leading up to the present appeals is the
culmination of a deep sense of injustice on the part of Manong, which appears
to have developed over many years based on his perception of treatment
meted out to him by officialdom. Unless the context otherwise requires, we
shall refer to the engineering practice headed by Manong in its various forms
over the years as ‘the company’.
[6] The company’s complaint as initially formulated in its founding affidavit
was that it was discriminated against by the first respondent, the City of Cape
Town (CCT), and its predecessor, the City of Tygerberg (COT), by being
generally excluded from municipal contracts in relation to Khayelitsha and
specifically in relation to a proposed retail development in the Central
Business District (CBD) in that township. The company alleged that the CCT
and the COT implemented policies and practices designed to exclude and
limit its access to municipal projects. Interestingly, even though the COT and
the CCT were implicated in relation to the CBD complaint no relief was
claimed against the CCT. As regards the CBD, the company alleged that the
second respondent, Futuregrowth Property Development Company (Pty) Ltd
(FG) discriminated against it by excluding it from that development. The
company also complained that FG had excluded it from the ‘Setsing project’ in
the Free State and had again discriminated against it by doing so. Manong’s
founding affidavit comprised 92 paragraphs extending to 30 pages. The
characterisation of the complaint, outlined earlier in this paragraph, is our best
attempt at encapsulating what is set out by Manong in rather convoluted form.
Manong’s method of formulating a complaint is criticised later in this
judgment.
[7] In the replying affidavit, after being invited by the respondents to state
the basis of the company’s complaint more precisely, Manong relied on the
provisions of ss 7(c) and (e) of the Act, which read as follows:
‘Prohibition of unfair discrimination on ground of race
Subject to section 6, no person may unfairly discriminate against any person on the ground of
race, including-
(a)
. . .
(b)
. . .
(c)
the exclusion of persons of a particular race group under any rule or practice that
appears to be legitimate but which is actually aimed at maintaining exclusive control by a
particular race group;
(d)
. . .
(e)
the denial of access to opportunities, including access to services or contractual
opportunities for rendering services for consideration, or failing to take steps to reasonably
accommodate the needs of such persons.’
[8] The factual basis for the complaint was set out by Manong.1 He blamed
the company’s exclusion from opportunities in Khayelitsha on Mr Hendrik
Barnard, employed by CCT as a civil engineering technologist. For the greater
part of his career with the COT and CCT, Barnard was involved with the
allocation and administration of municipal contracts in Khayelitsha. According
to Manong, the antagonism between Barnard and the company arose as a
result of Barnard’s contrived complaint concerning the quality of services
provided by the company to COT in relation to a contract involving the
installation of a boardwalk leading to a platform with a sea view at a site on
Lookout Hill in Khayelitsha. Barnard was accused of being racist and of
conspiring with others to ensure that only white-controlled institutions received
municipal work.
[9] As the enquiry progressed in the court below, the company’s case
crystallised as follows: Barnard, driven by racism, fabricated and/or
exaggerated the complaint referred to in the preceding paragraph, and then,
using it as a reason, vowed never again to allocate any municipal work in
Khayelitsha to the company. Barnard conspired with other like-minded
officials of the COT and CCT to achieve that end. Accordingly, in respect of
the CBD project, Barnard conspired with other CCT officials and with
employees of FG to exclude the company. This was achieved through
privatising the CBD project so as to have it developed on a turnkey ‘design,
develop and deliver’ basis.2 This enabled the CCT to shift the blame for the
1In his replying affidavit under the heading ‘CAUSE OF ACTION’, inter alia, the following
appears:
’40.
Advocate Jamie SC representing the first and third respondents during the directions
hearing of 06 March 2007 issued a practice note directing the complainant to explain some
issues that would clarify its cause of action against the first respondent. The complainant sets
out its reply to the queries raised by the first respondent.
40.1
The complainant in its complaint of unfair discrimination against the first respondent
relies on its exclusion from the procurement process in Khayelitsha on direct discrimination
against the complainant as witnessed by the behaviour of Barnard in the Lookout Hill project;
40.2
On the Khayelitsha CBD project the complainant relies on both on an act and
omission on the part of the first respondent as fully described under the preliminary issues of
this affidavit;
40.3
The policy of the first respondent of appointing consultants “HCB1” found on page
166 of the record is deemed to be imposing conditions which are unfairly discriminating to the
complainant.’
2 A turnkey development is one where for an agreed sum the contractor appointed undertakes
to provide a fully operational facility on an agreed date. The contractor is accordingly at risk
should the deadline not be met or should there be any defects in the design or construction.
company’s exclusion to FG. In short, the company’s case was that the CCT,
in order to exclude him from the CBD contract, decided to develop the CBD
project on a turnkey basis enabling the principal contractor to appoint the
consulting engineers and others without having to comply with State
procurement requirements and that this was done solely to exclude the
company.
[10] In the court below the company sought an order against the CCT in
terms of which the latter would be prohibited from excluding the company
from procurement opportunities in Khayelitsha and would be obliged to make
such opportunities available to it. The company also sought an order in terms
of which the CCT would be required to compensate it for financial losses
sustained as a result of being ‘deliberately marginalised . . . in Khayelitsha’.
Against FG, the company sought compensation in the sum of R1.74 m which
it alleged was the financial loss it suffered as a result of being unfairly
excluded from the CBD project. Additionally, it sought compensation from FG
in the sum of R240 000 which it claimed represented the loss it suffered as a
result of cancellation by FG of a contract to be a consultant on the ‘Setsing
Project’ in the Free State. It is difficult to discern the basis on which this latter
claim falls within the jurisdiction of the Equality Court. Later, when we set out
the background in greater detail and evaluate the evidence, its lack of
relevance will become clear.
[11] Although stating early on in the judgment that a complainant bears the
onus to establish discrimination on the basis of race, the court below
(Moosa J sitting with two assessors), in evaluating the evidence presented
during the enquiry, at the outset, adopted the wrong approach. It held that the
CCT was ‘burdened with the onus of showing on a balance of probabilities
that the discrimination did not take place or that the impugned conduct was
not based on race or that the discrimination was fair’. The court below
considered that the thrust of the CCT’s case was that the discrimination did
not take place. It was on that basis that the evidence was evaluated. As we
will show later, this inverts the approach that should be followed when a case
of discrimination is adjudicated.
[12] In assessing the evidence the court below took the view that the CCT’s
complaint in relation to the quality of work on the first phase of the Lookout Hill
project had never been formally communicated to the company and that it had
in any event been shown that such issues that had arisen had been resolved
at a meeting in February 2002. The court below stated that Barnard gave no
reason for not appointing the company to the second phase of the Lookout
Hill project. Compounding the erroneous approach referred to in the
preceding paragraph the court below held it against the CCT that it had failed
to conduct a formal performance evaluation on the work done by the company
on the first phase of the Lookout Hill project. A formal performance evaluation
is required by the procurement policy adopted by the CCT pursuant to the
Preferential Procurement Policy Framework Act 5 of 2000 ─ but that only
applied from September 2003, which was after the first phase of the Lookout
Hill project had been completed.3 The court below took into account that the
company received no further work in Khayelitsha and concluded as follows:
‘From the objective facts the only reasonable inference we can draw is that the complainant
was excluded from the second phase of the Lookout Hill project on the basis of race and such
exclusion continued on subsequent appointments.’
[13] Having arrived at the conclusion referred to in the preceding
paragraph, the court below nevertheless proceeded to consider affirmative
action measures adopted by the CCT and its predecessor, the COT, in
relation to Cape Town in general and to Khayelitsha in particular. It had
regard to targets that were set and the database of consultants which it is
common cause had shortcomings. The court below took into account the
reappointments of consultants other than the company on Khayelitsha
projects within particular timeframes and the CCT justification, namely, that
they had been reappointed because they had the exposure to the first phase
of particular developments or that they had special expertise and skills that
3 The Preferential Procurement Policy Framework Act 5 of 2000 is legislation contemplated by
s 217(3) of the Constitution which provides that national legislation must prescribe a
procurement policy that allows for categories of preference in the allocation of contracts and
the protection or advancement of persons previously disadvantaged.
were required on the second phase. This, according to the CCT, was done to
retain expertise and to ensure continuity.
[14] The court below concluded that such policies and practices as were
resorted to by the CCT in the allocation of municipal contracts, although
appearing to be legitimate on the face of it, perpetuated unfair discrimination
on the basis of race and had the effect of maintaining exclusive control of
such professional work in the hands of white professional consultants (see
para 30 of the judgment of the court below). In effect, the court below held
that the company’s complaint of being racially discriminated against generally,
in respect of the allocation of work in Khayelitsha, was justified in respect of
ss 7(c) and (e) of the Act.
[15] In respect of the company’s exclusion in relation to the CBD
development, the court below had regard to its progression from inception to
completion. It concluded that although the processes followed by the CCT in
initiating and promoting the development were suspect, from an administrative
law point of view, the conspiracy relied on by Manong referred to in paras 8
and 9 above was not proved and consequently held that the complaint in
terms of either of the sections of the Act referred to above could not be
upheld.
[16] The effect of the court’s findings was that the quantum of the
compensation the company sought against the CCT in relation to its exclusion
generally from municipal projects in Khayelitsha based on the CCT’s racism
stood over for later adjudication.
[17] In the first judgment referred to in para 3 above, the court below held
that FG had no connection to or involvement in the Setsing project and that
there had been a misjoinder. The court had found that the company had made
no attempt to join the entities to which the Setsing project was related, namely
Futuregrowth Asset Management (Pty) Ltd and Community Property
Company (Pty) Ltd. The costs relating to that dispute was held over for ‘later
determination’.
[18] After disposing of the issues set out above, the court below dealt with
the question of costs. It took the view that an equality court should be careful
to avoid deterring bona fide litigants from asserting constitutional rights to
equality by making costs orders against unsuccessful parties and
consequently made no order as to costs. That costs order appears to have
encompassed the costs referred to at the end of the preceding paragraph.
[19] The company appeals against the finding of the court below in respect
of its exclusion from the CBD project. It also appeals against the finding of
misjoinder as set out in para 17 above. The CCT cross-appeals against the
conclusion by the court below that it had discriminated against the company
on the basis of race in the allocation of civil engineering contracts for the area
of Khayelitsha generally. Furthermore, it appeals against the finding that its
practices and policies had been designed to maintain exclusive control by
white professional consultants. The CCT and FG appeal against the costs
order in the court below, submitting that although courts should be careful not
to mulct parties who bona fide seek to assert constitutional rights, this case
was an abuse and was brought solely to promote the company’s commercial
interests. A further issue that we will deal with in due course is the costs of the
postponement of the appeal on 20 August 2010, when senior counsel
representing the company suddenly took ill and had to be hospitalised.
[20] Thankfully, the following questions are no longer in issue:
(a)
whether entities such as the company can be discriminated against on
the ground of race;
(b)
whether a Trust established by the CCT and the company which it
controlled are municipal entities and as such are organs of state;
(c)
whether the Act has retrospective effect.
In relation to the last question the parties were agreed that the historical
enquiry into racism was relevant only to the extent that it could be shown to
have existed in the first place and to have continued to periods after the
commencement of the Act.
[21] The assessment by the court below of the evidence adduced was terse
and it made no credibility findings. The proceedings in the court below
endured over a period of more than three years. The record extended over 34
volumes comprising more than 3000 pages. A considerable part of the record
contained irrelevant material, an aspect to which we will revert later in this
judgment. The court below ought to have conducted a more thorough,
comprehensive and accurate evaluation of the evidence. That exercise is one
we now embark on. We will also determine whether the reasoning and the
conclusions reached by the court below are correct.
[22] At the outset it is necessary to record that when Manong testified, a
persistent theme was that both the CCT and the COT were reluctant to
appoint him over a period spanning almost ten years. Throughout his
testimony he sought to emphasise that officials partial to the apartheid regime
and presently in the employ of the CCT were intent on preserving the privilege
of white persons and institutions, consequently denying him the opportunity of
procuring municipal contracts. We interpose to state that Manong produced
irrelevant documentation and often made speeches about the injustices of the
past and on occasion made outrageous statements, thereby detracting from a
proper enquiry and protracting the proceedings. When it was put to Manong
under cross-examination that his allegations about racial discrimination were
unsustainable because the parties who were appointed to a particular project
instead of the company were black persons or entities controlled by black
persons, he invariably responded by stating that he was principally concerned
to promote the company’s interests.
[23] Another feature of Manong’s testimony is that he often relied on
allegations made by himself in letters sent to various individuals including the
Presidency and commercial and other entities as ‘proof’ of his complaint. He
also made references to newspaper articles. Furthermore, he repeatedly
resorted to other hearsay evidence which was never substantiated and was
plainly shown to be unreliable.
[24] Manong initially operated an engineering practice under the style of a
close corporation. It started business operations in 1995. The appellant was
formed in 2002 and took over the business formerly run by the close
corporation. When the close corporation started its operations, Manong was
the only professional employed by it. Almost immediately after the close
corporation started conducting business, it was appointed to a municipal
project by the CCT. The close corporation added to its staff as it procured
more projects. It is undisputed that from 1996 to 2002 the close corporation
and thereafter the company procured municipal work from the CCT in at least
15 projects, the total value of which is approximately R137 m. From 2003 until
the complaint in the court below the company procured ten more contracts to
do municipal work for the CCT. The total fees paid to it in respect of the latter
contracts amounted to R1 523 221.27. To sum up, between 1996 until the
beginning of 2005 the CCT awarded the company a total of 25 projects
outside of Khayelitsha. That equates to approximately 2.8 projects per annum.
[25] Before the COT was incorporated as part of the CCT in 2000 it alone
was responsible for awarding municipal contracts in Khayelitsha, which at that
time fell under its jurisdiction. It is common cause that Manong formally
introduced himself and the company to the COT for the first time in 1997, by
way of a letter in which he extolled the company’s skills, experience and
virtues. Between 1998 and 2000 the company was awarded two municipal
contracts to do work in Khayelitsha. Those projects are all relevant to
Manong’s perception of being unfairly discriminated against and they deserve
closer attention. They are as follows:
(a)
The Mew Way Sports project ─ the fee was R25 000.
(b)
The Lookout Hill project phase 1 ─ the total value of the project was
R1.5 m.
[26] In 1998, shortly after Manong had introduced himself to the COT,
Barnard himself thought it might be worthwhile to award a small project in
Khayelitsha to the company to see what it was capable of. That was how the
company became involved in the Mew Way project, which is described
hereafter. The COT appointed the company to this project jointly with Wouter
Engelbrecht, an established white-controlled engineering firm, which had vast
experience in sport facility development. Their brief was to prepare a master-
plan for the development of sport facilities in Khayelitsha. When he was cross-
examined about being given this opportunity Manong was dismissive,
suggesting that the Mew Way project was awarded to set him up for failure,
since the company had no prior experience in the development of sporting
facilities. He was especially disparaging concerning the total amount of fees
which had to be shared equally with Wouter Engelbrecht, namely R50 000.
He was adamant that there was no empowerment potential of any kind in this
project. We pause to state that counsel for the company rightly found
themselves unable to contend that the awarding of the project was designed
to ensure the company’s failure.
[27] Manong himself was contradictory when he contended that on other
projects where the company did not have the necessary experience, the CCT
or its predecessor ought to have considered pairing it with established entities
which had specialised skills and experience.
[28] From 2000 to 2005 only 12 new projects were awarded to consultants
in Khayelitsha by Barnard, acting with a colleague, Mr Tertius de Jager.
Barnard’s evidence that the clamour for work in Khayelitsha by a host of
consultants is far in excess of available projects was not contradicted. Of the
12 new projects, one was awarded in 2000 to the company, namely, the first
phase of the Lookout Hill project.
[29] As stated above, the first phase of the Lookout Hill project
contemplated a boardwalk leading to a platform with a sea view. According to
Manong, a key black employee of the COT, acting on his behalf, to his
knowledge falsely represented to Barnard that the company had done work
on the project on risk. Impressed by this, Barnard appointed the company as
an engineering consultant on the first phase of the Lookout Hill project.
Barnard was thus instrumental in awarding the Mew Way Project and the first
phase of Lookout Hill to the company.
[30] It is now necessary to look at the problems that arose in relation to the
first phase of the Lookout Hill project. It is common cause that the company
was responsible for the technical information to be provided to prospective
tenderers on the project. It had to ensure that the information was such that a
person or entity wishing to tender for the construction of the boardwalk could
draw up a bill of quantities so as to put a price to a tender. It is common cause
that the thickness of the slurry on which the boardwalk had to rest had not
been provided in the documents on which tenders had to be based.
Furthermore, it is common cause that no provision had been made for
handrail specifications which also would have caused a difficulty in drawing up
a bill of quantities. It is uncontested that the timber for the boardwalk that was
delivered to the site and accepted was not in accordance with specification.
What is instructive in this regard is the initial testimony of an important figure
in the company, namely, Mr Lyndon Davids, who at the outset accepted that
the company bore the overall and ultimate responsibility for ensuring that the
documents that went out to tender were complete. He initially accepted
responsibility on behalf of the company for the failures referred to above.
Later he retracted that evidence and both he and Manong attempted to shift
the blame to the landscape architect who had been employed on the project,
namely, Mr Eamonn O’Rourke. That exercise proved unconvincing,
particularly if one has regard to the written recommendation made by Barnard
to the COT, which reads as follows:
‘7.1
That Manong and Associates be appointed for the design-,tender- and construction
supervision stages of the first phase of the civil engineering works associated with the Look-
out Hill Tourism Facility in Khayelitsha.’
[31] It is clear from the relevant documentation, including the fees charged
by the company and the manner of calculating those fees, the testimony of
Barnard and the initial concessions by Davids that, as the consulting
engineers, the company bore the responsibility to ensure that the document
that went out to prospective tenderers was accurate and complete. It also
bore responsibility for ensuring that the timber and other materials received on
site were as specified in the relevant plans. It is difficult to make sense of
Manong’s grievance that he had not received a letter of appointment from
Barnard in respect of the first phase of Lookout Hill. It appears that he was
suggesting that this failure is somehow connected to the conspiracy to
undermine the company and to exclude it from further work in Khayelitsha.
Barnard testified that he could not recall whether a letter of appointment was
sent to the company but stated that if that had not been done it was purely an
oversight and that there was no sinister motive behind it. There is no other
evidence from which it can be inferred or concluded that Barnard was
untruthful on this aspect.
[32] From the minutes of site meetings and the evidence referred to in
paras 30 and 31 it is palpably clear that the concerns expressed by Barnard,
about the quality of the work done by the company in respect of the first
phase, were genuine and justified. They certainly were not contrived. The
conclusion of the court below that these concerns were never communicated
to the company is therefore incorrect.
[33] Manong complained that the company was excluded from the second
phase of the Lookout Hill project because of Barnard’s racism. It is necessary
to consider the facts. The boardwalk referred to above was to form part of a
tourist centre with a parking area. The work beyond the boardwalk comprised
the second phase of the project. Before decisions were finally made by the
architect, Dr Mlamli Magqwaka, about the composition of his project team on
the second phase of the Lookout Hill project, including the consulting
engineer, he happened to have an informal discussion with Barnard. The
latter mentioned the problems he had encountered with the company on the
first phase. Magqwaka said that he knew Manong, had worked with him in the
past and was comfortable with him. Barnard replied that it was up to
Magqwaka to make the final decision about whether to persevere with
Manong. Magqwaka’s recollection of that conversation was hazy. He did not
contradict Barnard, save that he stated that the nature of the opposition was
such that he thought it best not to endanger his own reputation and appointed
in the company’s stead an entity called Iliso Consulting, which was 67 per
cent black-owned. Barnard was not responsible for appointing the consulting
engineer on the second phase of the project.
[34] Given that the engineering consultant appointed to the second phase
of the Lookout Hill project was black-controlled, the suggestion that the motive
for excluding Manong was racist is ill-conceived. In any event, the final
decision to exclude the company appears to have been made by Magqwaka.
That the first phase was completed within budget was fortuitous and occurred
despite the company’s shortcomings. In a project with a greater value and
with greater dimensions the failures referred to above could have had
disastrous financial consequences.
[35] A further complaint by the company was that a number of consultants
had been reappointed to projects in Khayelitsha, thus denying other
consultants an opportunity of doing work in Khayelitsha. It will be recalled that
the court below thought that this was a significant factor indicating racial bias.
[36] In dealing with the multifarious and rambling nature of the company’s
complaint of discrimination extending over a number of years, including a time
when the COT was still in existence and later after it had been absorbed into
the CCT, Barnard was compelled to reconstruct records of allocations of
contracts in Khayelitsha because many officials had left the department and
relevant documents could no longer be located. When Barnard was cross-
examined on the reasons for the reappointment of certain consultants he
stated that generally the reasons were to ensure continuity, to capitalise and
build on the consultant’s exposure to first phases of particular projects and to
use the specialised skills of particular consultants. He could not provide
specific motivations for each project on which there had been a reappointment
of contractors because contemporaneous notes were not always available. It
is clear that a number of firms with a majority black shareholding were also
reappointed during particular cycles.
[37] We turn to deal with the affirmative action policies and practices of the
COT and the CCT over the relevant period. It is common cause that one of
the measures adopted by the COT and CCT to promote transformation, was
that a minimum quota of 30 per cent of municipal work was reserved for
allocation to historically disadvantaged individuals or entities. Another
measure was that the companies to whom such work had to be allocated
were required to have a minimum 30 per cent shareholding by previously
disadvantaged individuals. These measures were resorted to in order to
promote transformation. Section 217(1) and (2) of the Constitution provide:
‘(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.’
[38] The Broad Based Black Economic Empowerment Act 53 of 2003,
which came into operation on 21 April 2004, established a legislative
framework for the promotion of Black Economic Empowerment. It uses the
expression ‘Black people’ as ‘a generic term which means Africans,
Coloureds and Indians’.4 Manong laid great store by the fact that the company
is a hundred per cent African-owned. He repeatedly emphasised that the
company was the only engineering practice in the Western Cape which was a
hundred per cent African-owned. Manong and Magqwaka testified about the
difficulties faced by black Africans to overcome obstacles and prejudices in
the Western Cape which historically was ‘a Coloured preference area’. In this
latter contention they cannot be faulted.
[39] Some government departments have in the recent past adopted
measures to prefer black Africans to other segments of the black population of
South Africa in the allocation of contracts. The parties were agreed that during
the timeframe relevant to the present appeal that preference did not apply.
[40] Following the issue by the CCT of a Procurement Policy Initiative dated
September 2003, a database was used in an attempt to ensure a fair spread
4 See s 1 of the Act.
of contractual opportunities. It is unchallenged that the database was
ineffective. This was due to it being technically deficient. There is no
sustainable evidence that it was designed to favour anyone or discriminate
against any person or entity. It is abundantly clear that whilst the targets
initially set by the COT and CCT might be susceptible to the criticism that they
were not sufficiently ambitious, the transformation thrust nevertheless gained
momentum over the years leading up to the time when the complaint was
lodged. A greater percentage of the total value of the municipal work was
allocated to previously disadvantaged individuals. The graph was decidedly
moving upwards and at an accelerated pace.
[41] Barnard testified with reference to a schedule compiled in conjunction
with counsel representing the CCT that in 2002/2003 seventy-one per cent of
projects in Khayelitsha was awarded to firms comprising a black shareholding
of more than 50 per cent. For the year 2003/2004 eighty-nine per cent went to
black-controlled firms. In 2004/2005 seventy per cent was allocated in this
way. In 2005/2006 seventy-five per cent was awarded to black-controlled
firms. Significantly, most of these appointments were made by Barnard.
[42] More importantly, the evidence of Barnard, which did not enjoy
sufficient attention in the court below, was that the CCT did not deal with
Khayelitsha in isolation. In attempting to ensure the fairest spread of work and
employing the measures referred to earlier, the frequency and value of work
allocated to consultants were measured across the entire metropole. As can
be seen from the allocation of work to the company from 1996 to the
beginning of 2005 a total of 27 projects, including Khayelitsha, was awarded
to the company. This approximates to 3 contracts per annum. The total value
is considerably more than R140 m. Not only is this a hugely significant
number of valuable contracts but it also reflects that the company must have
been reappointed in any given annual cycle.
[43] We now turn to deal with the background to the CBD project. In 1999
the COT called for expressions of interest in the development of a CBD in
Khayelitsha. A series of consultations and interaction with interested parties
and community organisations followed. This culminated in the conclusion of a
framework agreement, to which attendees subscribed. A provision in this
framework agreement, whilst committing to fair and transparent procurement
procedures, nevertheless purported to grant the signatories preference in the
procurement process. The company was one such signatory.
[44] Having absorbed the COT in 2000, the CCT accepted the broad
principles contained in the framework agreement but not all the details. The
land owned by the CCT and earmarked for the CBD was sold to a Trust which
the CCT had established and controlled. The Trust held 100 per cent of the
shares in KBD Management (Pty) Ltd which was the vehicle that would
receive the financing for the project by way of a loan from a bank. KBD
Management (Pty) Ltd established KBD Retail (Pty) Ltd for the sole purpose
of developing and constructing the CBD. KBD Retail in turn appointed FG as
project managers for the development and construction of the CBD.
[45] Manong repeatedly stated, without substantiation, that there had been
keen interest shown by a number of banks to finance the project. The truth is
that only one bank was prepared to do so, namely Rand Merchant Bank
(RMB). That bank insisted that the building contractor commissioned to
construct the CBD be one of the big four building contractors in South Africa
and that the project be completed on a turnkey basis. This led to WBHO (Pty)
Ltd (WBHO) being appointed as the contractor. WBHO, because it bore the
risk and the cost of development up until delivery of the project, insisted, as is
usual in turnkey projects, that it have a free hand in appointing consultants,
including the engineers. This was of course subject to transformation targets
being met, namely, that at least 30 per cent of consultants be made up of
previously disadvantaged persons.
[46] Because of the conditions set by RMB and WBHO, referred to in the
preceding paragraph, FG and the CCT effectively played no further part in the
development of the CBD. However, the Trust that the CCT initially controlled5
5 City councillors, because of later regulatory legislation, were forced to resign as trustees.
would ensure, after construction and after the loan was repaid, that the
community of Khayelitsha would reap the financial benefits of the project.
[47] The engineering entity that was appointed by WBHO to the CBD
project, namely, Axis Consulting, was black-owned, albeit by a person who is
coloured. It is preposterous to suggest, as Manong does, that the
arrangement involving RMB and WBHO was designed specifically to exclude
him. It is a proposition that merely has to be stated to be rejected.
Regrettably, it took almost five years for this proposition to be finally rejected.
[48] Manong contended further that the company had been appointed to the
CBD project as the engineering consultant by Mr Van Der Vent, a director of
FG, and that it had subsequently been excluded by some form of racist
conspiracy between Barnard and Van der Vent. According to Manong he had
a legitimate expectation that he would be part of the CBD project team. This,
however, was not borne out by the evidence. When Van der Vent and
Barnard testified, they both denied that Van der Vent had in fact appointed the
company to the CBD project and also that Van der Vent had made a public
announcement to that effect. The overwhelming weight of evidence is that
RMB insisted on the turnkey arrangement and that Van der Vent had no
authority to appoint consultants. Furthermore, the main consultants that were
appointed to the CBD project were black. Magqwaka was the architect, Axis
Consulting, which was black-owned, was the engineering consultant and the
electrical consultants were Johaardien and Associates, also a black-controlled
entity. There is not a tittle of evidence to support Manong’s allegations of a
conspiracy of any sort to exclude the company.
[49] The legal advice received by the COT and CCT on how to deal with the
disposal of the land on which the CBD was to be developed, and the
privatisation of the project without tender or other prescribed procedures
being followed, does appear to be suspect from an administrative law point of
view. However, it does not follow that there was a racist motive for the
development proceeding as it did. Put differently, the charge of racism
appears unfounded in relation to the manner in which the development
proceeded. In order for the company to succeed in the court below that
charge had to be proved.
[50] Without condoning the CCT’s apparent failure to follow proper tender
or other prescribed procedures for the disposal of the land on which the CBD
was to be developed, the reality is that the development would probably never
have seen the light of day had the measures referred to above not been
employed. The principle of legality in relation to the establishment of the Trust
and the company that it controlled and the manner in which the COT and the
CCT were involved in the CBD project prior to the final agreement for its
construction is not what the court below was constrained to adjudicate upon. It
was called upon to decide whether a charge of racial discrimination was
properly brought.
[51] We now turn our attention briefly to the Setsing project. In the first
judgment of the court below dealing with practice directions and preliminary
points, it held that FG’s plea of misjoinder was well-founded. It accepted FG’s
assertion that it had no connection to the Setsing project and pointed out that
the entities responsible for that project were Futuregrowth Asset Management
(Pty) Ltd and Community Property Company (Pty) Ltd. Before us the company
adopted the view that, since Van der Vent was a director of all three
companies, the court below ought to have held that at material times he was
representing FG. That submission is somewhat confusingly tied to a further
contention on behalf of the company, namely, that the court below ought to
have directed that the two companies responsible for the Setsing project be
joined in the proceedings.
[52] A careful examination of the complaint and the evidence adduced by
Manong reveal that his baseless perception was that Van der Vent had
offered him an opportunity to be a consultant on the Setsing project in the
Free State as a trade-off for ending his crusade in relation to the CBD project.
The total value of the Setsing project was R12 m, two per cent of which would
have accrued to the company as fees. According to Manong, this offer was
made to the company when he confronted Van der Vent, after he had been
informed by Magqwaka that the company was not going to be part of the CBD
project team. After an acrimonious exchange of correspondence concerning
the Setsing project, the relationship between Manong and Van der Vent broke
down and that put paid to any further involvement by the company in the
Setsing project.
[53] In his testimony Van der Vent was adamant that the Setsing project
was unconnected to the CBD venture. He was emphatic that he had offered
the project to the company in line with his commitment to transformation and
to making opportunities available to black consultants. He referred to his track
record in this regard. Even Manong conceded that Van der Vent had an
admirable transformation record, but stated that he had become disillusioned
with Van der Vent after the company was excluded from the CBD project.
Manong was unable to substantiate his allegations in relation to the Setsing
project. They amounted to nothing more than (at best for him) unfounded
supposition.
[54] As stated early in this judgment, the court below approached the
evidence on the basis that it was for the CCT to prove that it had not
discriminated against the company. The burden of proof in cases of
discrimination brought in the Equality Court is dealt with in s 13 of the Act. The
relevant part of s 13(1) provides:
‘(1)
If the complainant makes out a prima facie case of discrimination─
(a)
the respondent must prove, on the facts before the court, that the discrimination did
not take place as alleged; . . .’
‘Discrimination’ is defined in s 1 of the Act as follows:
‘[It] means any act or omission, including a policy, law, rule, practice, condition or situation
which directly or indirectly─
(a)
imposes burdens, obligations or disadvantage on; or
(b)
withholds benefits, opportunities or advantages from, any person on one or more of
the prohibited grounds.’
The prohibited ground of unfair discrimination relied on by the company is
race and as pointed out above it relied specifically on ss 7(c) and (e).
[55] In Prinsloo v Van der Linde & another 1997 (3) SA 1012 (CC) para 23,
the Constitutional Court, in dealing with the equality clause in the interim
Constitution (s 8), said the following:
‘The idea of differentiation (to employ a neutral descriptive term) seems to lie at the heart of
equality jurisprudence in general and of the s 8 right or rights in particular.’
In Harksen v Lane NO & others 1998 (1) SA 300 (CC) para 42 the following
appears:
‘Where s 8 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.’
[56] Thus, to even begin to get off the ground the company must at the very
least show that it was treated differently to other engineering consultants in
relation to COT or CCT projects. The company had to show that in the totality
of City projects, it received disproportionately fewer contracts so in relation to
other consultants. Since the very premise of the company’s case was race it
had to establish a prima facie case that the differentiation was race-based.
[57] The litigation in the court below was preceded by litigation in the Cape
High Court in terms of which the company sought an interdict against CCT
and FG in terms of which they would be prohibited from continuing to
construct the CBD in Khayelitsha pending the furnishing of information by
them. Although that litigation was withdrawn with the company tendering costs
it is clear that Manong considered it a worthwhile exercise. According to him
he received ‘crucial information’ to assist him in lodging the complaint in the
court below. It is clear from that statement by Manong and the manner in
which the enquiry was conducted by him, including the paucity of
substantiating evidence, that he and the company were on a fishing
expedition, hoping somehow that the complaint would ultimately be proved.
The following part of his evidence shows that the complaint was contrived:
‘I just went in there with eyes closed, literally. But the papers that came from the interdict gave
me more hope that I’ve got a case here, that’s why I did not even continue to argue the case,
I said okay, let us pay the costs and start a new fresh ─ a fresh case, based on the answering
affidavit of the interdict. In fact, in the beginning of my founding papers I said based on the
information that we received from the interdict papers, then we are doing this, instituting this
litigation.
Okay, so let’s just take it one step at a time then. On your own evidence you took a shot in the
dark with the interdict application? --- Absolutely.’
[58] As stated earlier, the court below made no credibility findings. In our
view, Barnard and Van der Vent were credible and reliable witnesses as were
other material witnesses who testified on behalf of the respondents. Manong
was an unsatisfactory witness. He clearly made up his case as he went along.
He made scandalous allegations that he could not justify, he drew conclusions
that were unwarranted and he was unable to provide any concrete evidence
supporting the company’s case. Insofar as Davids’ evidence was in conflict
with Barnard’s, particularly in relation to the latter’s concerns about the quality
of the company’s work on the first phase of Lookout Hill, Barnard’s evidence
is to be preferred. The detailed analysis of the evidence set out above shows
that the company’s case did not get out of the starting stalls.
[59] It is clear that at the end of the company’s case on the merits in the
court below, it had failed to establish a prima facie case, either in respect of its
complaint of being discriminated against in general in relation to work in
Khayelitsha, or in regard to its exclusion from the CBD project. Its case
consisted mostly of self-serving and unsubstantiated statements by Manong.
The evidence he had indicated that would be forthcoming in substantiation of
his case did not materialise. For example, he had indicated that Magqwaka
would testify that Barnard had excluded him from the second phase of the
Lookout Hill project on the basis of race. According to Manong, Magqwaka
had telephoned him and told him that Barnard had said that for as long as he
(Barnard) was responsible for awarding work in Khayelitsha the company ‘will
never be appointed for any project full stop’. Magqwaka did not testify to that
effect.
[60] Furthermore, in respect of its complaint that it was discriminated
against in general by the CCT in respect of Khayelitsha, the company failed to
bring into account all the projects that had been awarded to it across the
metropole. Manong was dismissive, without justification, of the CCT’s claims
that projects in Khayelitsha were not considered in isolation and that the fair
distribution of work to consultants was weighed citywide. In deciding that the
company suffered racial discrimination in respect of the allocation of work in
Khayelitsha generally, the court below was clearly wrong.
[61] At the end of the company’s case of general discrimination in respect
of projects in Khayelitsha, the CCT unsuccessfully applied for absolution from
the instance. It ought to have succeeded.
[62] In our view, the court below was correct in its conclusion on the
company’s exclusion from the CBD project. As demonstrated above the
exigencies of a successfully funded development in Khayelitsha drove the
turnkey arrangement. The main consultants appointed by WBHO in
accordance with set Black Economic Empowerment targets were all black. It
is preposterous to suggest, as Manong did, that the final agreement which
gave WBHO the right to appoint consultants was a ploy to exclude him and
was racially motivated.
[63] Section 7(c) of the Act provides that the impugned rule or practice,
although appearing legitimate, must be ‘aimed’ at maintaining exclusive
control by a particular race group. The targets set by the COT and the CCT
were intended to have the opposite effect. They were not proved to have been
applied in a manner calculated to maintain exclusive control by a particular
race group. Section 7(e) of the Act prohibits the denial of access to
opportunities to particular categories of persons. Under this section unfair
discrimination may include the failure to take steps to reasonably
accommodate the needs of particular categories of persons. The company’s
case, based on this section, was also not established.
[64] In our view the court below was undoubtedly correct in upholding the
plea of misjoinder of FG in relation to the Setsing project. The court below
made that decision after being informed that FG had no connection to the
Setsing project. Counsel on behalf of FG disclosed the identities of the entities
responsible for that project. It was contended before us that because the
litigation occurred in the Equality Court there was a duty on the court below to
have had those entities joined in the proceedings. We have difficulty in
understanding this proposition. First, Manong made no complaint of racist
conduct on the part of those entities. Second, his misconception that the
Setsing project was a trade-off, which was central to his complaint ─ such as
it is ─ against FG, can hardly hold sway against these other entities. Third,
Manong is no ordinary lay litigant. He is correctly described by counsel for the
respondents as a serial litigant.6 He has been quick to resort to litigation when
the company has a grievance against any person or entity. When he was
informed of the identities of the entities connected to the Setsing project, he
had to choose whether he could make a sustainable case against them in the
Equality Court. It does not behove the company to lay the blame at the door of
the court below for not joining them. Fourth, the relevant evidence in relation
to Setsing shows that it has no bearing on his complaint of racism. This
means that the joinder he contends should have occurred would have been
pointless.
[65] Before turning our attention finally to the question of costs, we briefly
address related issues of concern. As this court observed in Manong &
Associates (Pty) Ltd v Department of Roads and Transport, Eastern Cape, &
others (No 2) 2009 (6) SA 589 (SCA) paras 53 and 57, the Equality Court was
established in order to provide easy access to justice to enable even the most
6 In Manong & Associates v Minister of Public Works 2010 (2) SA 167 (SCA) this court
dismissed an appeal against a judgment of the Equality Court (TPD) in terms of which an
application by the company for an interim interdict preventing the Director-General and the
Minister of Public Works from implementing a Professional Services Supplier Register was
rejected. The company had submitted in the Equality Court that the abandonment by the
Department of Public Works of a roster in favour of the register referred to above would
prejudice particularly African professional consultants. The Department justified the departure
on the basis that its policy to promote transformation had to be in line with the Public Finance
Management Act 1 of 1999 and the Preferential Procurement Policy Framework Act 5 of
2000. The Department sought by way of the register to expand the categories of formerly
disadvantaged persons who would benefit from its transformation policy. In dismissing the
appeal this court stated (at para 1) that the application in the Equality Court was ‘somewhat
ambitious’.
In the two other judgments of this court involving the company referred to elsewhere in this
judgment the company succeeded on procedural aspects and the matter was referred back to
the Equality Court for adjudication. In one of the judgments, this court commented
unfavourably on the extent of the record filed on behalf of the company.
disadvantaged individuals or communities to walk off the street, as it were into
the portals of the Equality Court to seek speedy redress against unfair
discrimination through less formal procedures.7
[66] Section 20(2) of the Act provides that a person wishing to institute
proceedings in terms of or under the Act must, in the prescribed manner,
notify the clerk of the Equality Court of their intention to do so. Regulation 6 of
the Regulations governing proceedings in the Equality Court provides for a
prescribed form to be completed in which the complaint is to be formulated. It
is clear that a succinct statement of complaint is required. In response, the
person or entity against whom or which the complaint is lodged similarly has
to complete a prescribed form in which information in limited form is required.
It also requires any documentation on which reliance is to be placed to be
attached. This is clearly intended to focus the minds of the parties and the
court leading to expedition.
[67] As stated earlier, Manong, instead of using the prescribed form,
resorted to a rambling 30 page exposition. If his annexures are included his
complaint took up a total of almost 100 pages. It is therefore unsurprising that
the enquiry in the court below extended over more than three years.
[68] Included in the documentation presented to the court below was
documentation relating to alleged racism in the judiciary and the church.
Allegations implicating the media and copies of court judgments were
included. Before the hearing of this appeal, this court directed the parties to
consider more carefully which parts of the record it was necessary to read. A
note by the respondents indicated that approximately 750 pages of record that
7 In that case the company’s complaint was that it was unsuccessful in a tender process on
the basis of experience requirements which Manong contended discriminated against black
engineers who historically did not have an opportunity to develop experience. In the absence
of directions by the court below, the enquiry did not sufficiently explore whether a scoring and
roster system provided sufficient opportunity for developing the required experience. In that
case this court referred the matter back to the Equality Court for further exploration. This court
was sympathetic to the company in that case on the basis that Manong who drove the
litigation was a lay litigant and on the information before it took the view that the Equality
Court ought to have been of greater assistance.
had been filed were unnecessary to read. These parts of the record were filed
despite an agreement between the parties that they were unnecessary.
Before us counsel representing the company apologised for this and
disavowed any involvement in how this had occurred. By the time the record
was filed the company was represented by attorneys. In Manong &
Associates (Pty) Ltd v Department of Roads and Transport, Eastern Cape &
another (No 1) 2009 (6) SA 574 (SCA) para 44, this court commented
unfavourably on the unnecessary parts of the record filed by the company in
that case. It is unacceptable that the same litigant conducts litigation in this
court repeatedly in this unsatisfactory manner.
[69] If litigation is to be conducted in the Equality Court on this basis rather
than in the intended manner, the envisaged expedition and easy access to
justice will be undone. A factor that may require legislative attention is
whether entities that are financially able to litigate on a grand scale should be
able to use the machinery of the Equality Court to clog up a system intended
to benefit particularly lay litigants and the public at large.
[70] Of course, government must be held to account and where the
principle of legality or other fundamental constitutional principles have been
breached by the State, appropriate relief should be afforded to a complainant.
However, it does not follow that procedures intended to benefit lay litigants
and to have legitimate complaints speedily adjudicated should be allowed to
be abused to the extent that government is unnecessarily tied up in extended
litigation.
[71] During his testimony in the court below and whilst he was conducting
the company’s case, Manong made a number of outrageous and irrelevant
statements deserving of censure. At one stage, whilst being cross-examined
by counsel for FG, Manong testified that black Africans will not deal with other
Africans ‘unless they get kickbacks’. He went on to say ‘they’ll prefer Whites’.
He stated that that was a reason he had ‘cases’ in the Eastern Cape.
[72] At one stage in his cross-examination of Barnard, Manong stated that
in all the problems he encountered concerning procurement, the common
denominator was Afrikaans speakers. When Barnard testified about
interacting with certain individuals and offered up names including those
against whom no charge of racism was levelled by Manong, the latter asked
whether that person was an Afrikaner, suggesting collusion in the racist
conspiracy. This, not surprisingly, resulted in an objection by counsel for the
CCT that Manong was resorting to racial stereotypes.
[73] Manong was not short on threats either. When he was cross-examined
by counsel for FG and was reminded that the company had received work
from the COT on Lookout Hill and was asked to confirm that fact, Manong’s
response was:
‘Don’t involve yourself, otherwise I will join you and ask damages. . . ’
[74] Manong accused Van der Vent of deliberately defacing an FG
letterhead in a telefacsimile in which Van der Vent informed him that his
services were no longer required on the Setsing project. Manong surmised
that this was calculated to prevent the company from ascertaining
Futuregrowth Asset Management (Pty) Ltd’s particulars and designed to
enable FG to raise the plea of non-joinder. Manong labelled the ‘deliberate’
distortion a criminal offence in terms of the Companies Act. This accusation is
ridiculous. That company appears to be well-known and is registered in
accordance with company legislation. Van der Vent testified that the distortion
that obfuscates the names of directors at the bottom of the letterhead was
probably due to a problem encountered in the transmission of the
telefacsimile. Since it had no such distortions on the dispatching end it might
even be due to problems at the receiving end. This unwarranted allegation of
criminal conduct against Van der Vent is not atypical.
[75] At one stage of his evidence, Manong, consistent with his stance of
making up his case as he went along and in line with being a conspiracy
theorist, said, without any prior warning, that he had information from State
agencies, including the office of the Presidency, the National Intelligence
Agency and the Scorpions, a police investigative unit, that the company was
being specifically targeted by government officials, including those within the
CCT and the Western Cape Provincial Government. When counsel for the
CCT asked about the basis for this general conspiracy, Manong’s response
was that it was based on correspondence that he had written to these
agencies. Questioned further he stated that he had reports from the National
Intelligence Agency. The following is a part of his evidence in this regard:
‘These reports, we got them from the National Intelligence Agency. Somebody from the
National Intelligence Agency said: “Look, be careful. Your company is specifically targeted by
these individuals and State organisations.” ‘
[76] On top of all of this is a bizarre moment when Manong, interrupting his
cross-examination of Barnard, asked for a minute to pay tribute to Dr Piet
Koornhof, a former Minister in the apartheid government. He had just heard of
Dr Koornhof’s death. The following are extracts from the record on this
aspect:
‘[L]ast night I heard the sad news that Dr Piet Koornhof passed away I want just for one
minute to pay tribute to him how it also affected my life, just one minute I won’t take much of
the Court’s time. In 1971 Dr Piet Koornhof was the Minister of Bantu Affairs and
Development. Now his Department was in charge of forced removals and so on, now why I
am mentioning this because at that stage in fact Africans were staying in the Karoo because
I’m from Victoria West, they started with Beaufort West and Middelburg in the Cape, they
moved them to Thembaza. Now the Daily Despatch that was under the editorship of Donald
Woods at that time . . .’
At that stage the court below questioned the relevance of these statements.
Unflustered, Manong went on to say the following:
‘No it’s not relevant but about him, the good part of him, only to say the good heart of Dr
Koornhof in that process but if the Court feels I’m going to clutter the record . . .’
The court then put it to Manong that he was saying that Dr Koornhof was a
good man to which he replied:
‘Yes because when he was sent there to Thembaza and saw the situation he literally cried
and said this policy is inhuman.
. . .
After a week when he went to Pretoria he was removed from the position. I am just saying
that was the type of person he was, although he was serving that Government but he had the
human heart in him.’
[77] These statements and this kind of conduct should not be tolerated in
any court, least of all the Equality Court. Even accepting that the Act
envisages a less formal manner of conducting enquiries, this manner of
leading evidence and conducting a case is beyond the pale.
[78] It is not lost on us that Manong himself was not averse to being
expedient. As pointed out above, whilst ostensibly championing fair and
transparent procurement procedures, Manong nevertheless sought to assert a
dubious claim by the company to preferential treatment in terms of the
framework agreement relating to the CBD project. The same applies to
Manong’s assertion that he was awarded the Elsies River depot project by
virtue of the ‘intervention’ of a black COT councillor. In the same vein he saw
nothing wrong with engaging a key employee of the COT fraudulently to
misrepresent that he had done work on risk on the first phase of Lookout Hill
in order to facilitate an appointment to that project. Despite his assertion that
he was championing social justice he was dismissive of socially meritorious
projects such as Mew Way because the financial rewards were small. Whilst
asserting emphatically that the company is the only wholly-African owned
engineering practice in the Western Cape, Manong conveniently chose to
ignore or downplay the prominent role in the company played by Davids, a
coloured person. It is common cause that on one of the biggest projects that
the company undertook, namely, the Stanhope Bridge Project in Claremont,
Davids was the principal actor on behalf of the company. From Davids’ own
evidence he was so busy seeing to the company’s affairs that it took him
several more years than usual to obtain his professional accreditation. This is
yet another example of double standards by Manong.
[79] Manong, having had the experience of that case and the others listed
earlier in this judgment, continues unabatedly to litigate in shotgun fashion. He
can no longer elicit any sympathy or goodwill on the basis of being a lay
litigant.
[80] Our comments in respect of the merits in this case are not intended to
minimise the problems facing government in the Western Cape. Deeply
embedded prejudice is difficult to overcome. It is clear that black Africans
suffered severe prejudice in the Western Cape in the past. Much effort, time
and resources are required to overcome that disadvantage. We express the
hope that all role players will do their utmost to undo the ravages of the past
and that everyone concerned will understand that it is in the national interest
to be inclusive.
[81] It is now necessary to deal with costs. Section 21(2)(o) of the Act
provides:
‘After holding an inquiry, the court may make an appropriate order in the circumstances,
including an appropriate order of costs against any party to the proceedings.’
Thus, it is clear that in respect of costs an equality court exercises its
discretion in the light of all the circumstances.
[82] It was submitted on behalf of the company that an order by this court
reversing the costs order by Moosa J in respect of both appeals would have a
chilling effect on future complaints that could legitimately be brought in the
Equality Court. It was submitted that particularly where constitutional rights
were being asserted a court should be slow to order a litigant to pay costs.
[83] In Biowatch Trust v Registrar, Genetic Resources 2009 (6) SA 232
(CC), the Constitutional Court said the following (para 16):
‘Equal protection under the law requires that costs awards not be dependent on whether the
parties are acting in their own interests or in the public interest. Nor should they be
determined by whether the parties are financially well-endowed or, as in the case of many
NGO’s, reliant on external funding. The primary consideration in constitutional litigation must
be the way in which a costs order would hinder or promote the advancement of constitutional
justice.’
[84] At para 22 of Biowatch the Constitutional Court referred to its earlier
judgment in Affordable Medicines Trust & others v Minister of Health & others
2006 (3) SA 247 (CC) which established the principle that ordinarily, if the
State loses, it should pay the costs of the other side and if the government
wins, each party should bear its own costs.
[85] At para 23 of Biowatch the court stated:
‘If there should be a genuine, non-frivolous challenge to the constitutionality of a law or of
State conduct, it is appropriate that the State should bear the costs if the challenge is good,
but if it is not, then the losing non-State litigant should be shielded from the costs
consequences of failure. In this way responsibility for ensuring that the law and State conduct
are constitutional is placed at the correct door.’
[86] However, in the paragraph that follows the Constitutional Court
qualified that statement and said the following:
‘If an application is frivolous or vexatious, or in any other way manifestly inappropriate, the
applicant should not expect that the worthiness of its cause will immunise it against an
adverse costs award. Nevertheless, for the reasons given above, courts should not lightly turn
their backs on the general approach of not awarding costs against an unsuccessful litigant in
proceedings against the State, where matters of genuine constitutional import arise. Similarly,
particularly powerful reasons must exist for a court not to award costs against the State in
favour of a private litigant who achieves substantial success in proceedings brought against
it.’ (Footnotes omitted.)
[87] In Biowatch, the Constitutional Court warned that the mere labelling of
litigation as constitutional and the dragging in of specious references to
sections of the Constitution would of course not be enough, in itself, to invoke
the general principle that ordinarily, if government wins in a constitutional
case, each party should bear its own costs. It stated that the issues must be
genuine and substantive and truly raise constitutional considerations relevant
to the adjudication.8
[88] In Affordable Medicines the Constitutional Court said the following at
para 138:
‘There may be circumstances that justify departure from this rule such as where the litigation
is frivolous or vexatious. There may be conduct on the part of the litigant that deserves
censure by the Court which may influence the Court to order an unsuccessful litigant to pay
costs. The ultimate goal is to do that which is just having regard to the facts and
circumstances of the case.’
8 See para 25.
[89] In Weare v Ndebele NO 2009 (1) SA 600 (CC) para 78, the
Constitutional Court stated the following:
‘The ordinary rule in the court is that where litigants unsuccessfully raise important
constitutional issues against the State, costs will not be awarded against them. There is an
exception to this rule; this is when the litigation is pursued for private commercial gain.’
(Footnote omitted.)
There appears to be a tension between that conclusion and what is set out in
the first sentence of the dictum referred to in para 83 above. In Weare,
notwithstanding the exception referred to in the dictum set out above, the
Constitutional Court did not order costs against the losing litigant, a business-
man who had embarked on a commercial venture and where, no doubt, the
litigation was pursued for commercial gain. In Weare, the Premier of KwaZulu-
Natal had no objection to each party paying its own costs.
[90] Moosa J, in making the costs order in the court below, considered the
general principle referred to in the judgments of the Constitutional Court, cited
in the preceding paragraphs. The learned judge stated that the principle could
only be departed from in ‘exceptional circumstances’. He took into account in
the company’s favour that it had done some work on the CBD project on risk
and thought that it had a legitimate expectation to be appointed. Against that,
he reasoned that because of matters beyond the control of the CCT, the
company had lost out on that opportunity. In conclusion the court below said
the following:
‘In the light of these circumstances, the court is of the opinion that equity and fairness
demand that the court applies the spirit and ethos of the Equality legislation by making no
order as to costs.’
[91] In the case dealing with practice directives and preliminary points
where FG’s plea of misjoinder was upheld, the question of costs was held
over for ‘later determination’. As we have said, it appears that the order
referred to at the end of the preceding paragraph encompassed those costs.
We shall assume in the company’s favour that it did. If it did not, this court is
entitled to make an appropriate costs order itself.
[92] The discretion exercised by a court in making a costs order is not a
‘broad’ discretion or a ‘discretion in the wide sense’ or a ‘discretion loosely so
called’, where a court of appeal is at liberty to substitute its decision for the
decision of the court below simply because it considers its conclusion more
appropriate. The discretion in relation to costs is a discretion in the strict or
narrow sense, which is also described as a ‘strong’ or a ‘true’ discretion. In
such a case, the power to interfere is limited to cases in which it is found that
the court vested with the discretion did not exercise the discretion judicially,
which can be done by showing that the court of first instance exercised the
power conferred on it capriciously or upon a wrong principle, or did not bring
its unbiased judgment to bear on the question or did not act for substantial
reasons. See Naylor & another v Jansen 2007 (1) SA 16 (SCA) para 14.
[93] In National Coalition for Gay and Lesbian Equality & others v Minister
of Home Affairs & others 2000 (2) SA 1 (CC) para 11, the Constitutional
Court, in dealing with a similar kind of discretion in relation to a postponement,
said the following about the powers of a court of appeal:
‘[I]t 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.’ (Footnote omitted.)
[94] In the present case the court below did not, as stated above, conduct
an exhaustive analysis of the evidence. It did not take into account, as it was
obliged to, that the complaint was contrived and that Manong representing the
company made up its case as he went along. The court below did not
consider the reprehensible manner in which the litigation was conducted.
Despite the pretention that the complaint in the court below was
constitutionally founded, it was in fact purely mercenary. The sympathy of the
court below expressed in respect of the CBD project is in our view misplaced.
It is thus clear that the court misdirected itself in this regard. Notwithstanding
that the court found in the company’s favour in respect of the complaint of
general discrimination in respect of the allocation of work in Khayelitsha, the
court below did not follow the general rule that the State should pay the
winning litigant’s costs. It is clear that the court misdirected itself in all the
respects listed above and that this court is entitled to interfere with the order it
made in respect of costs. In our view, it would indeed be appropriate to set
aside the costs order made by the court below and to hold the company liable
for the respondents’ costs, including the costs of two counsel. The same
result should ensue in respect of the costs in this court.
[95] We now address the costs of the postponement occasioned by the ill-
health of the company’s senior counsel hours before the scheduled hearing of
the appeal on 20 August 2010. The heads of argument had been drawn by
junior counsel. It is necessary to record that on that day junior counsel
representing the company informed the court that the company insisted that it
be represented by the senior counsel it had retained and his instructions were
that he should not present the company’s case on his own. In Cape Law
Society v Feldman 1979 (1) SA 930 (E), the respondent was confined to
hospital and too ill to attend the hearing necessitating a postponement. In that
case, there was a dispute concerning liability for the wasted costs. The court,
in dealing with the contention that the award of costs should depend on the
outcome of the case on the merits, stated the following (at 934A-C):
‘Because of the enforced absence of the respondent this case has had to be postponed sine
die. To that substantial extent the respondent’s rights have been safeguarded and to that
extent he has benefited but to that same extent the applicant has been prejudiced. It would be
manifestly inequitable to prejudice the applicant further by placing it in a potentially vulnerable
position of having to pay the costs of postponement if it should lose the main case.’
[96] That approach should be followed. The present is an a fortiori case,
because a postponement of the appeal was not inevitable. The company
sought an indulgence, which was granted. Its rights were thereby
safeguarded. In light of the view we take in regard to costs generally in this
matter, as set out above, the company should also pay the costs occasioned
by the postponement.
[97] The following order is made:
1.
The appellant’s appeals in respect of its exclusion from the CBD
project and the upholding by the court below of the second respondent’s plea
of misjoinder in relation to the Setsing project are dismissed with costs,
including the costs of two counsel.
2.
The cross-appeal by the first respondent in respect of the broader
Khayelitsha enquiry is upheld with costs, including the costs of two counsel.
3.
The cross-appeals by the first and second respondents, in relation to
the costs order in both cases, are upheld with costs, including the costs of two
counsel.
4.
The finding of the court below set out in para 36 and the costs order
contained in para 64 of the judgment dated 12 November 2008 are set aside
and substituted as follows:
‘1.
The applicant’s complaint that it was discriminated against in general by the first
respondent and its predecessor in the allocation of contracts in Khayelitsha is dismissed with
costs, including the costs of two counsel and such costs are to include the costs reserved on
18 August 2007.
2.
The applicant is ordered to pay the first and second respondents’ costs in relation to
the complaint concerning its exclusion from the CBD project, including the costs of two
counsel and such costs are to include the costs reserved on 18 August 2007, which also
encompass the second respondent’s costs in relation to the Setsing project.’
5.
The appellant is ordered to pay the respondents’ wasted costs
occasioned by the postponement of the appeal on 20 August 2010.
_________________
M S NAVSA
JUDGE OF APPEAL
_________________
N Z MHLANTLA
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
M Madlanga SC
T Masuku
Instructed by
Nongogo Nuku Inc, Cape Town
E G Cooper Majiedt Inc, Bloemfontein
For 1st Respondent:
I Jamie SC
R Paschke
Instructed by
Webber Wentzel, Cape Town
Webbers, Bloemfontein
For 2nd Respondent:
N Arendse SC
M Janisch
Instructed by
Cliffe Dekker Hofmeyr Inc, Cape Town
Honey Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
1 December 2010
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal
On 1 December 2010 the Supreme Court of Appeal dismissed an
appeal by Manong & Associates (Pty) Ltd, a company specialising in
civil, structural and development engineering, against a decision of the
Western Cape Equality Court in terms of which it was held that the City
Council of Cape Town (the CCT) and Futuregrowth Property
Development Company (Pty) Ltd (FG) had not discriminated against it
on the basis of race by excluding it from the development of a central
business district in Khayelitsha. Furthermore, it dismissed the
company’s appeal against a decision of the Equality Court upholding
FG’s plea of misjoinder in respect of a complaint concerning the Setsing
project in the Free State.
The SCA also upheld a cross-appeal by the CCT against a decision of
the Equality Court in terms of which it held that the CCT had
discriminated against the company on the basis of race by excluding it
from municipal contract opportunities in Khayelitsha. The Equality Court
held that the CCT had employed measures, which although they
appeared legitimate, were aimed at maintaining exclusive control by
white professional firms.
In respect of municipal opportunities in Khayelitsha allegedly being
denied to the company on the basis of racial discrimination, the SCA
held that the Equality Court had not conducted a proper factual analysis
of the evidence and had adopted the wrong approach concerning the
onus of proof. The SCA found that the allegations of race discrimination
were wholly unfounded and that the individuals complained of had in fact
provided the company with opportunities. This court held that the CCT
was justified in its view that the allocation of work in Khayelitsha should
not be viewed in isolation but should be considered across the
metropole. In nine years the CCT had awarded 27 municipal projects to
the company with a total value of more than R140 m.
The SCA expressed concern about the manner in which the company
had conducted the litigation in the Equality Court. Its complaint spanned
almost 100 pages. The Promotion of Equality and Prevention of Unfair
Discrimination Act 4 of 2000 envisaged that complaints should be
succinctly stated. This would focus the minds of the parties and the court
and would contribute to expedition. The litigation in the Equality Court
extended beyond three years and was the antithesis of what was
intended.
This court was dismayed at some of the comments made by the
company’s managing director during the course of the enquiry in the
Equality Court. A number of outrageous statements were made
deserving of censure.
The SCA considered the submission on behalf of the CCT and FG that
the Equality Court should, instead of making no order as to costs, have
ordered the company to pay their costs, including the costs of two
counsel. It took into account that in general, parties genuinely asserting
their constitutional rights should not have to pay the State’s costs even
where they lost the case. Having regard to the manner in which the
litigation was conducted by the company and the wholly unfounded
charges of racism, the SCA reversed the order of the Equality Court and
ordered the company to pay the respondents’ costs, including the costs
of two counsel. The SCA ordered the company to pay the CCT and FG’s
costs of appeal, including the costs of two counsel, and the costs of a
postponement of the appeal occasioned by the sudden illness of the
company’s senior counsel.
|
1359
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No 411/09
In the matter between:
ETHEKWINI MUNCIPALITY
Appellant
and
R E BROOKS
First Respondent
L A MINDRY and 14 OTHERS
Second to Fifteenth Respondents
Neutral citation:
Ethekwini Municipality v Brooks (411/09) [2010]
ZASCA 74 (27 May 2010)
Coram:
MPATI P, NAVSA, VAN HEERDEN and
MHLANTLA JJA and GRIESEL AJA
Heard:
14 May 2010
Delivered:
27 May 2010
Summary:
Servitude of right of way – whether such a ‘public
street’, as contemplated in s 1 of Ordinance 25 of 1974
(Natal).
ORDER
On appeal from: KwaZulu-Natal High Court (Durban) (Choudree AJ
sitting as court of first instance):
The appeal is dismissed with costs.
JUDGMENT
GRIESEL AJA (MPATI P, NAVSA, VAN HEERDEN and
MHLANTLA JJA concurring):
[1] The issue for determination in this appeal is whether a servitude
of right of way over the first respondent’s land is to be classified as a
‘public street’ as defined in s 1 of the Local Authorities (Natal)
Ordinance 25 of 1974 (‘the Ordinance’). (For convenience I refer to the
appellant as ‘the municipality’ and to the first respondent as ‘Mrs
Brooks’.)1
[2] Mrs Brooks launched an application in the KZN High Court,
Durban against the municipality (as first respondent in the court below),
seeking, inter alia, an order declaring that the servitude of right of way
over her property does not create a public street as defined in the Ordi-
nance. In addition, she also sought certain interdictory relief, prohibiting
the municipality from treating, in any manner or form, that portion of her
1 The second to fifteenth respondents, who are the owners of neighbouring properties, abided the
decision of the high court and took no part in the appeal to this court.
property which is subject to the servitude as a public road; and pro-
hibiting and interdicting the municipality from undertaking or continuing
any road works on that portion of her property which is subject to the
servitude, ‘without first complying with the provisions relating to private
streets in the Local Authorities Ordinance, No. 25 of 1974 and/or the
Durban Extended Powers Consolidated Ordinance, No. 18 of 1976 or
taking steps in terms of those laws to declare Nyala Drive a public road’.
[3] The municipality opposed the application and, in its answering
affidavit, adopted the attitude that Nyala Drive is a public street as
defined in the Ordinance. In the result, so it contended, the municipality
is ‘obliged to fulfil the obligations contemplated by s 209 of the
Ordinance for the public benefit and, in particular, to ensure that the road
is kept in good order and repair’.
[4] The high court rejected the municipality’s contentions and
granted an order in favour of Mrs Brooks, hence this appeal, which is
before us with leave granted by the court below.
A public street
[5] The answer to the dispute between the parties must be sought in
the definition of ‘public street’ as defined in s 1 of the Ordinance,
namely, as ‘any street which –
(a)
has been established by a local authority or other competent authority as a
public street;
(b)
has been taken over by or vested in a local authority as a public street in
terms of any law;
(c)
the public has acquired the right to use; or
(d)
which is shown on a general plan or diagram of any private township situate
in the area of a local authority filed in the Deeds Registry or the Surveyor-
General’s Office and to which the owners of erven or lots in such township
have a common right of use.’
[6] A ‘private street’, on the other hand, is defined, in the same
section, as ‘any street which is not a public street’.
[7] In support of its contention that Nyala Drive is a public street, the
municipality relied mainly on para (c); alternatively paras (b) and (d) of
the definition. These requirements will accordingly be considered con-
secutively in the sequence adopted by the municipality, after a brief
examination of the relevant factual background.
Factual background
[8] In 1993 Mrs Brooks took transfer of the property described as:
‘Remainder of Lot 183 Drummond, situate in the Drummond Health Committee
Area and in the Port Natal-Ebhodwe Joint Services Board Area, Administrative
District of Natal; in extent 3,7497 (Three Comma Seven Four Nine Seven) Hectares.’
[9] The property originally formed part of subdivision B of what was
then infelicitously called ‘Farm Kafirdrift No 906’ (later renamed as
‘Farm Drift No 906’). It is situated in a rural area, near the Valley of a
Thousand Hills. Certain further subdivisions, numbered 2 to 10 (subse-
quently renumbered as erven 175 to 183), were surveyed over sub-
division B in 1947. At the same time, a servitude of right of way 30 feet
(9,14 metres) wide was surveyed over the farm. The servitude was
created in order to provide access by means of a road to the newly
created land-locked subdivisions, which would otherwise have no road
access. Suitable endorsements reflecting the servitude were entered upon
the title deeds of the relevant subdivisions. A similar endorsement also
appears in Mrs Brooks’ title deed, recording that her property is subject
to a servitude of right of way as indicated on a Surveyor-General’s
diagram ‘in favour of the Remainder of B of the Farm Kafirdrift’; in
other words, in favour of the other subdivisions lying to the north and the
west of her property, which subdivisions later came to be described as
erven 175 to 182.2
[10] The first subdivision to be registered (in 1960) was subdivision
10, later described as Lot 183, of which Mrs Brooks’ property forms the
remainder. Later, a road known as Nyala Drive was created within the
area of the servitude. The road is untarred and extends over a distance of
just over one kilometre, allowing access to the various subdivisions. A
sign indicating that the road is a cul-de-sac has been placed at the
entrance of Nyala Drive and was still there when these proceedings
commenced, as appears from one of the photographs on record. The road
commences off Thousand Hills Drive, runs in a northerly direction
across Mrs Brooks’ property for a short distance, before turning in a
westerly direction at a ninety degree bend on the north-eastern corner of
her property and continuing from there in a straight line to the end of the
cul-de-sac.
2 Mrs Brooks’ property is, in addition, also subject to a road servitude in favour of the Drummond
Health Committee which cuts across the south-eastern corner of the property. This servitude, however,
is unrelated to the present dispute and does not concern us in this appeal.
[11] A dispute arose between the municipality, on the one hand, and
the owners of several of the properties abutting upon Nyala Drive, on the
other hand, as to the party or parties liable to maintain that road. Main-
tenance was originally undertaken by the Drummond Health Committee,
the predecessor in title of the municipality. Thus, on 24 July 2003 Mr
Hobson, Executive Director: Engineering Services of the Outer West
area of the municipality told a meeting of owners of certain properties
serviced by Nyala Drive that he considered the road to be a right of way
servitude and not a public road. He informed the meeting that the
municipality proposed to undertake certain modifications to the recently
installed drains and that it would thereafter arrange for the road to be
graded. The maintenance of the road would thereafter be the obligation
of the various landowners.
[12] In a similar vein, Mr D B Thomas, Deputy Head: Roads
Provision, wrote to one of the other owners in Nyala Drive on 27
September 2004:
‘Nyala Road, as it stands, is a right-of-way servitude in favour of the property
owners and not a public road. In view of the afore-mentioned the maintenance of the
road will remain the responsibility of residents.’
[13] On 5 October 2004, in a letter addressed to Mrs Brooks, Mr S
Chetty, Manager: Engineering Services in the Roads Provision Depart-
ment of the municipality, reiterated that Nyala Drive was ‘a right-of-way
servitude in favour of the property owners and not a public road’. In the
result, so it was stated, ‘the maintenance of the road will remain the
responsibility of the residents’.
[14] However, after receiving a petition, dated 18 October 2004,
signed by 14 of the 16 owners of properties abutting Nyala Drive,
however, the municipality reconsidered the matter and appears to have
changed its stance. During April 2005 it accordingly informed Mrs
Brooks that, on the advice of the Surveyor-General and its own legal
department, it would henceforth be treating Nyala Drive as a public road
and would assume responsibility for its maintenance.
[15] Matters came to a head a few months later, during November
2005, when the municipality commenced extensive road and
construction works on Nyala Drive on a portion of the property of Mrs
Brooks. This conduct precipitated the urgent application that forms the
basis of the present appeal.
[16] Against this background, I now to turn to deal with the individual
requirements on which the municipality relied in support of its
contention that Nyala Drive is a public street.
The right of the public to use the road
[17] In considering whether or not the public had acquired a right to
use Nyala Drive, it may be noted that, at common law, there were two
kinds of roads which members of the public were entitled to use: the one
was the via publica, coming into existence by proclamation as a public
road by the competent authority. This category, which coincides with
para (a) of the definition of ‘public street’, does not concern us as it is
common cause that there has been no proclamation in respect of Nyala
Drive. The other category of public road is a so-called via vicinalis or
‘neighbours’ road’ (Afrikaans: buurweg). In Malherbe v Van Rensburg
& ’n ander3 the court (Van Winsen J, Corbett J concurring) dealt with
the nature and origin of a ‘buurweg’ and held as follows:
‘’n Saaklike reg van weg kan, onder andere, deur verjaring bekom word mits die
aanspraakmaker op so ’n reg bewyse kan lewer dat hy en sy voorgangers-in-titel ten
opsigte van praedium in wie se guns die reg opgeëis word, gebruik gemaak het vir ’n
tydperk van 30 jaar van ’n bepaalde weg, en dat die gebruik openlik, vreedsaam en
sonder instemming van die eienaar van die grond waaroor die weg loop, geskied het.
In teenstelling hiermee kan die publiek geen regte tot ’n weg by wyse van verjaring
verwerf nie. Sodanige verwerwing kan slegs uit hoofde van gebruik sedert ’n
onheuglike tyd geskied. Deur sodanige gebruik word ’n buurweg geskep. Daar rus op
die persoon wat beweer dat so ’n buurweg bestaan die bewyslas om aan te toon dat
die publiek in die algemeen, sonder beletsel van die eienaar van die grond waaroor
die weg loop, vir so ’n geruime tydperk van die weg gebruik gemaak het dat die
oorsprong van die gebruik nie bepaal kan word nie. Die reg deur so ’n gebruik
geskep het sy oorsprong in “ancient custom” of vetustas. Weens die verswarende
aard van regte op hierdie wyse deur die publiek oor ’n ander se grond verkry word
duidelike bewyse van sodanige gebruik geverg.’4
(My emphasis).
[18] When it comes to a servitude of right of way, it is important to
bear in mind that it enures not only to the servitude holder but, as it was
put by Voet,5 also to ‘the members of his household, his guests, his table
companions, hirelings and medical attendants along with him.’ This
passage in Voet does not purport to create a watertight numerus clausus
3 1970 (4) SA 78 (C).
4 At 80A–F (other case references omitted).
5 Commentarius 8 3 1.
of parties entitled to make use of a servitude road. Thus, Maasdorp6
paraphrased the above passage as follows:
‘(S)ervitudes . . . may be made use of, not only by the owner of the dominant tene-
ment, but by anyone who has a legal right to be upon the dominant tenement, such as
servants, guests, visitors, labourers, etc.’
(My emphasis.)
[19] This brings me to the evidence adduced on behalf of the
municipality in support of its contention that the public has acquired the
right to use Nyala Drive:
(a)
Mr Alan Neil Mitchell, a practising land surveyor, has been
employed by the municipality (and its predecessor) since 1985 and he is
presently Manager: Land Surveying in the Surveying and Land
Information Department of the Engineering Unit of the municipality. He
said inter alia the following with regard to Nyala Road:
‘Access to members of the public was not at any stage, as far as I am aware and as
far as the records of the respondent reveal, ever barred.
Members of the public were always allowed to use the road which was created in the
area of the servitude which ultimately acquired the status of a public street.’
(b)
Ms Dorothy Grace Canny, who was a secretary at the Drummond
Health Committee between the years 1971 and 1979, stated:
6 A F S Maasdorp Institutes of Cape Law Vol II (1918) p 202.
‘Nyala Drive was already in existence when I joined the Drummond Health
Committee. As far as I am aware, it was always regarded as a road to which
members of the public had access and which the public utilised.’
(c)
Ms Frith Myers joined the Drummond Health Committee as
Town Secretary on 3 February 1993 and remained in that position until
the Drummond Health Committee was eventually incorporated into the
Outer West area of the municipality, where she is presently still
employed. She said:
‘As far as I am aware, Nyala Drive was always regarded as a public road to which
the public had access and which they utilised.’
(d)
Mr Richard William Birkett, the Deputy Surveyor General,
Pietermaritzburg, stated that ‘. . . our offices share the views expressed in
the affidavit of Mitchell to the effect that Nyala Drive has acquired the
status of a public street’. He added:
‘Nyala Drive was accessible to the public ever since the creation of the first
subdivisions serviced by it; members of the public were never barred access to it; . . .
certain of the owners of such subdivisions appear to be engaging in commercial
enterprises such as nurseries which will attract members of the public.’
In the circumstances, according to Mr Birkett, it is ‘inconceivable that
Nyala Drive could still be classified as a private road’.
[20] Mrs Brooks, in her replying affidavit, denied that Nyala Drive
had been regarded by the municipality and its predecessor as a public
street. Her attitude is summarised as follows:
‘I remain the owner of my property and the only people who may legitimately use it
are those in whose favour the right of way servitude was created and this is a finite
and limited class of people.’
She added that, when she purchased her property (in 1992), there was a
sign at the entrance from Thousand Hills Drive to the following effect:
‘Residents’ Access Only’. Her evidence in this regard is supported by
affidavits from two current owners and one former owner in the area,
who similarly recall that members of the public did not enjoy un-
restricted access to Nyala Drive, nor did they routinely use it as a public
road. Indeed, as pointed out by one of these witnesses, ‘. . . members of
the public, unless they were visiting property owners in the area, had no
need and could not access any public place if they travelled down the
road’.
[21] It is significant to note that, although Mr Mitchell filed a supple-
mentary affidavit in response to some of the allegations contained in the
replying affidavit of Mrs Brooks, he did not deal with these aspects of
her evidence, which are thus uncontradicted.
[22] Apart from the above views expressed in vague and general
terms on behalf of the municipality regarding the public nature of Nyala
Drive, there had, of course, also been the contrary views expressed by
senior employees of the municipality, as mentioned earlier.7 Those views
only changed after the petition of 18 October 2004, in which the various
owners urged the municipality to regard Nyala Drive as a public street.
(This seems to confirm that all owners of properties in Nyala Drive at
7 Paras 11–13 above.
that stage still regarded it as a private street.) Thus, far from being
generally regarded as a public street, exactly the opposite seems to have
been the position – at least until 2005, when the municipality had a
change of heart.
[23] Having regard to the legal test as outlined above and bearing in
mind the requirement for clear proof (‘duidelike bewyse’) in support of
the right relied on, I am of the view that the evidence adduced on behalf
of the municipality falls far short of establishing a right on the part of the
general public to use the road in question. At best for the municipality,
the evidence establishes that some members of the public, or persons
other than the owners of subdivisions, may, over the years, have used the
road from time to time without let or hindrance. However, the evidence
fails to establish whether or not those members of the public who used
Nyala Drive over the years fell into the extended category of lawful
users of the servitude of right of way described by Voet in the passage
referred to above. It follows, therefore, that the municipality has failed to
prove that the public has acquired a right to use the portion of Nyala
Drive that forms part of the property of Mrs Brooks.
Has the road been taken over by or vested in the municipality?
[24] The first alternative argument advanced by the municipality
relies on para (b) of the definition, based on an allegation that Nyala
Drive has been taken over by or vests in the municipality. Section 220 of
the Ordinance deals with this situation and reads as follows:
‘(1)
Whenever any private street referred to in section 218 or section 219 has
been formed, hardened, paved, kerbed and guttered to the satisfaction of the council,
then on the application in writing of the owner of the land, or, as the case may be, of
the owners representing more than one-half of the value of houses and land abutting
upon such street, the council shall take over such street as a public street.
(2)
Notwithstanding anything hereinbefore contained, the council may also with
the consent in writing of the owners representing more than one-half of the value of
houses and land abutting upon any private street, take over such street as a public
street.’
[25] In support of this leg of the argument, the municipality relied on
the petition referred to above,8 which set out the history of the road and
proposed that Nyala Drive be recognised as a ‘public road’ for purposes
of maintenance. (Mrs Brooks refused to sign the letter, while another
owner could not be located.) The municipality regarded the petition as an
application by owners representing more than one-half of the value of
houses and land abutting the private street in question to take over such
street as a public street. It therefore claims to have acceded to the
application and to have ‘taken over’ Nyala Drive as a public street.
[26] Leaving aside the question whether or not Nyala Drive is the
kind of private street referred to in sections 218 and 219 (which is open
to considerable doubt), there is simply no evidence of any decision
having been taken by the council to take over that street. Had such a
decision legitimately been taken, one would have expected a clear
recordal thereof. Thereafter, the next step would have been to regularise
the position in the offices where transactions of this nature are recorded,
8 Para 14 above.
namely the Registrar of Deeds and the Surveyor-General. In this regard,
s 221 of the Ordinance provides as follows:
‘Whenever the council shall take over any private street as a public street as
hereinbefore provided, such street shall vest in the council, but it shall not be
necessary for such street to be transferred to the council, the Registrar of Deeds and
the Surveyor-General being hereby authorised to make such entries in the records of
their respective offices as may be necessary to give effect to the provisions of this
section; provided that they or either of them may require the production of such
proof or other information as they or he may deem necessary, including any plan or
plans; and provided further that the title deeds of any property concerned shall be
produced to the Registrar of Deeds whenever they are available, for endorsement in
terms of such vesting aforesaid.’
No evidence has been adduced of any entries made in the records of
either of those offices to give effect to the purported taking over, nor
have the title deeds of the properties concerned been produced to the
Registrar of Deeds for endorsement.
[27] Bearing in mind that ownership in public streets vests in the
municipality in terms of s 208 of the Ordinance, the municipality’s
argument that it had ‘taken over’ Nyala Drive as a public street implies
that it had somehow, informally and unilaterally, acquired ownership of
a portion of Mrs Brooks’ property – in the process depriving her of
ownership of that portion – without any formal decision or recordal to
that effect and without any steps having been taken in respect of
expropriation as contemplated by s 190 of the Ordinance. This
proposition only has to be stated for it to be rejected.
[28] Faced with these formidable obstacles, counsel for the munici-
pality – without expressly abandoning the point – rightly did not press it
with much vigour. In my view the municipality’s contentions regarding a
‘takeover’ of Nyala Drive as a public street are simply untenable.
The Surveyor-General’s diagrams
[29] The final leg of the municipality’s argument received scant
attention in the papers filed on its behalf. It is based on para (d) of the
definition which, to repeat, refers to a street ‘which is shown on a
general plan or diagram of any private township situate in the area of a
local authority filed in the Deeds Registry or the Surveyor-General’s
Office and to which the owners of erven or lots in such township have a
common right of use’.
[30] In support of this point, Mr Mitchell attached an extract from a
drawing (No FT8A–4B) compiled and drawn in the office of the
Surveyor-General, which was completed on 8 May 1963 and kept up to
date with information relating to subdivisions and servitudes. It shows
the individual properties and roads in the general area of Drummond.
Where Nyala Drive is situated, the diagram clearly indicates ‘right of
way servitude SG 200/48’.
[31] Mr Birkett, in his supporting affidavit, briefly deals with this
aspect as follows:
‘I confirm also that as far as our offices are concerned, Nyala Drive is reflected on
diagrams of the private townships created in the area serviced by the road, filed in
our offices, as being one to which the owners of erven in such townships have a
common right of use.’
[32] I shall accept for present purposes, without deciding the point,
that the properties and their subdivisions shown on the general plan or
diagram relied on fall in ‘a private township situate in the area of a local
authority’. The further requirement is more problematic: the diagram
must depict a street ‘to which the owners of erven or lots in such
township have a common right of use’. This is the aspect in the
definition on which the municipality strongly relies. In my view, the
reliance is misplaced. It is clear beyond doubt, and confirmed by the
general diagram, that the owners of properties in Nyala Drive enjoy their
common right of use of the street by virtue of the servitude of right of
way. (The rights derived from the servitude are, of course, also enjoyed
by the owners of new subdivisions, the general principle being that ‘[i]f
the dominant land is physically subdivided between different co-owners,
the servitude continues to be attached to each subdivided portion of the
land in so far as it can benefit from the servitude, provided that it does
not increase the burden on the servient land.’)9 Can the mere fact that the
street is shown on the Surveyor-General’s diagram now convert what
manifestly is a private street into a public street? This would clearly be
an absurd result, which could not have been intended by the legislature.
For para (d) of the definition to make any sense, one would therefore
have to interpret it so as to exclude from its ambit of application streets
in respect of which owners enjoy their common right of use by virtue of
a servitude of right of way.
9 24 Lawsa (2 ed) para 399 and the authorities referred to therein.
[33] I am accordingly of the view that para (d) of the definition
likewise does not assist the municipality in establishing that Nyala Drive
is a public street.
Costs
[34] It follows from the foregoing analysis that the appeal falls to be
dismissed with costs. It remains to deal briefly with one aspect relating
to costs. The court below, when granting leave to appeal to this court,
ordered the municipality to bear the costs of Mrs Brooks, not only with
regard to the application for leave to appeal (which included an
application by the municipality for condonation for late noting of its
appeal), but also ‘the costs of the appeal incurred by [Mrs Brooks] in
prosecuting her defence to the appeal’. The municipality subsequently
obtained the leave of the court below to appeal against that portion of the
order as well.
[35] The learned judge, in granting leave to appeal, did not refer to
any authority to justify his order regarding the costs of appeal. He
reasoned as follows:
‘I am of the view that we all function in a new constitutional environment where
citizens ought not to be deprived of their rights to go forward and ventilate them
simply because of lack of funds. We are in a constitutional environment where every
citizen now has a right to challenge any act of authority on reasonable grounds and in
a case of this kind I am satisfied that an appropriate order for costs should be that the
municipality bear the costs of appeal and if I am proved to be wrong certainly those
costs will be reflected in an appropriate order made in due course by the Supreme
Court of Appeal. The judgment in favour of the applicant would be otherwise
nugatory if her lack of funds prevented her from defending the judgment.’
[36] Counsel for the municipality urged us, as a matter of principle, to
disapprove of the precedent set by the court below, submitting that such
order was ‘grossly irregular and without precedent and that the grant
thereof constitutes a gross misdirection’.
[37] In view of the conclusion to which I have come with regard to
the merits of the appeal, the order of the court below regarding the costs
of appeal makes no difference in this instance; the municipality will in
any event have to pay those costs. Any comments that we may make in
that regard will therefore be nothing more than obiter dicta. Suffice to
say that, by ordering an appellant in anticipando to pay the costs of the
appeal, a lower court in effect fetters the discretion of a court of appeal,
which is undesirable.
Order
[38] The appeal is dismissed with costs.
B M GRIESEL
Acting Judge of Appeal
APPEARANCES
FOR APPELLANT:
V I Gajoo SC
Instructed by:
Ngidi & Company Inc, Durban
Symington & De Kok, Bloemfontein
FOR RESPONDENT:
A A Gabriel
Instructed by:
Calitz Crockart & Associates, Durban
Matsepes Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
27 May 2010
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
* * *
ETHEKWINI MUNICIPALITY v R BROOKS
– Case No 411/09
The Supreme Court of Appeal today dismissed an appeal by the Ethekwini
Municipality against a judgment of the KwaZulu-Natal High Court, Durban, relating
to the status of a road in the Drummond area, known as Nyala Drive.
The respondent, Mrs Rosalind Brooks, applied to the high court for an order
declaring that the road is not a public road, as defined in s 1 of the Local Authorities
(Natal) Ordinance 25 of 1974. It appeared from the evidence that the road was
created during the 1960s within the area of a servitude of right of way that runs over
the property of Mrs Brooks. The road, which is a cul-de-sac, links her property as
well as certain adjoining subdivisions in the area to Thousand Hills Drive.
The municipality argued that the public had acquired a right to use the road;
alternatively, that the municipality had taken over the road in question, as
contemplated by the Ordinance. In the further alternative, the municipality relied on
the provision in the definition to the effect that it is a street ‘which is shown on a
general plan or diagram of any private township situate in the area of a local
authority filed in the Deeds Registry or the Surveyor-General’s Office and to which
the owners of erven or lots in such township have a common right of use’. The high
court rejected the municipality’s arguments. It accordingly granted a declaratory
order in favour of Mrs Brooks, holding that Nyala Drive is a private road.
On appeal, the SCA confirmed the judgment of the high court and dismissed the
appeal with costs.
--ends--
|
3238
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 639/06
Reportable
In the matter between:
THE NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS
FIRST APPELLANT
INVESTIGATION DIRECTOR: DIRECTORATE
OF SPECIAL OPERATIONS
SECOND APPELLANT
INVESTIGATION DIRECTOR: INVESTIGATING
DIRECTORATE (SERIOUS ECONOMIC OFFENCES)
THIRD APPELLANT
INVESTIGATING DIRECTOR: INVESTIGATING
DIRECTORATE (CORRUPTION)
FOURTH APPELLANT
DIRECTOR OF PUBLIC PROSECUTIONS
(DURBAN AND COAST LOCAL DIVISION)
FIFTH APPELLANT
and
JACOB GEDLEYIHLEKISA ZUMA
FIRST RESPONDENT
MICHAEL HULLEY
SECOND RESPONDENT
CORAM:
FARLAM, NUGENT, CLOETE, PONNAN et MLAMBO JJA
HEARD:
28 AUGUST 2007
DELIVERED:
8 NOVEMBER 2007
SUMMARY:
Search and seizure – search warrant – validity of – warrants issued in
terms of s 29 of National Prosecuting Authority Act 32 of 1989 –
whether references to suspected offences inappropriately vague.
ORDER OF COURT SET OUT IN PARA 109 IN JUDGMENT OF NUGENT JA.
Neutral citation:
This judgment may be referred to as The National Director of
Public Prosecutions v Zuma [2007] SCA 137 (RSA).
___________________________________________________________
FARLAM JA
INTRODUCTION
[1] This is an appeal against a judgment of Hurt J, sitting in the Durban
High Court, in which he declared five search warrants invalid and the
searches pursuant to them unlawful and ordered the appellants to return to
the respondents all items seized under them together with all copies that had
been made and to pay the costs of the application.
[2] Hurt J’s judgment has been reported: see Zuma v National Director of
Public Prosecutions 2006 (1) SACR 468 (D).
PARTIES
[3] The appellants, who were the respondents in the court below, are the
National Director of Public Prosecutions (first appellant), the Investigating
Director of the Directorate of Special Operations (second appellant), the
Investigating Director of the Investigating Directorate: Serious Economic
Offences (third appellant), the Investigating Director of the Investigating
Directorate: Corruption (fourth appellant) and the Director of Public
Prosecutions for the Durban and Coast Local Division of the High Court (fifth
appellant).
[4] The respondents, who were the applicants in the court below, are Mr
Jacob Zuma (first respondent) and Mr Michael Hulley, who has been acting as
Mr Zuma’s attorney in regard to criminal charges which were brought against
him in June 2005 (second respondent).
RELEVANT STATUTORY PROVISIONS
[5] It is appropriate before the facts in this matter are considered to set out
the relevant statutory provisions. They are contained in ss 28 and 29 of the
National Prosecuting Authority Act 32 of 1998, as amended, which, as far as
is material, provide as follows:
‘28 (1) (a)
If the Investigating Director has reason to suspect that a special offence has
been or is being committed or that an attempt has been or is being made to commit such an
offence, he or she may conduct an investigation on the matter in question, whether or not it
has been reported to him or her in terms of section 27.
(b)
If the National Director refers a matter in relation to the alleged commission or
attempted commission of a specified offence to the Investigating Director, the Investigating
Director shall conduct an investigation, or a preparatory investigation as referred to in
subsection (13), on that matter.
(c)
If the Investigating Director, at any time during the conducting of an investigation on a
matter referred to in paragraph (a) or (b), considers it desirable to do so in the interest of the
administration of justice or in the public interest, he or she may extend the investigation so as
to include any offence, whether or not it is a specified offence, which he or she suspects to be
connected with the subject of the investigation.
. . .
29 (1) The Investigating Director or any person authorised thereto by him or her in writing
may, subject to this section, for the purposes of an investigation at any reasonable time and
without prior notice or with such notice as he or she may deem appropriate, enter any
premises on or in which anything connected with that investigation is or is suspected to be,
and may-
(a)
inspect and search those premises, and there make such enquiries as he or she may
deem necessary;
(b)
examine any object found on or in the premises which has a bearing or might have a
bearing on the investigation in question, and request from the owner or person in charge of
the premises or from any person in whose possession or charge that object is, information
regarding that object;
(c)
make copies of or take extracts from any book or document found on or in the
premises which has a bearing or might have a bearing on the investigation in question, and
request from any person suspected of having the necessary information, an explanation of
any entry therein;
(d)
seize, against the issue of a receipt, anything on or in the premises which has a
bearing or might have a bearing on the investigation in question, or if he or she wishes to
retain it for further examination or for safe custody: Provided that any person from whom a
book or document has been taken under this section may, as long as it is in the possession of
the Investigating Director, at his or her request be allowed, at his or her own expense and
under the supervision of the Investigating Director, to make copies thereof or to take extracts
therefrom at any reasonable time.
(2)
Any entry upon or search of any premises in terms of this section shall be conducted
with strict regard to decency and order, including-
(a)
a person's right to, respect for and the protection of his or her dignity;
(b)
the right of a person to freedom and security; and
(c)
the right of a person to his or her personal privacy.
. . .
(4)
Subject to subsection (10), the premises referred to in subsection (1) may only be
entered, and the acts referred to in subsection (1) may only be performed, by virtue of a
warrant issued in chambers by a magistrate, regional magistrate or judge of the area of
jurisdiction within which the premises is situated: Provided that such a warrant may be issued
by a judge in respect of premises situated in another area of jurisdiction, if he or she deems it
justified.
(5)
A warrant contemplated in subsection (4) may only be issued if it appears to the
magistrate, regional magistrate or judge from information on oath or affirmation, stating-
(a)
the nature of the investigation in terms of section 28;
(b)
that there exists a reasonable suspicion that an offence, which might be a specified
offence, has been or is being committed, or that an attempt was or had been made to commit
such an offence; and
(c)
the need, in regard to the investigation, for a search and seizure in terms of this
section,
that there are reasonable grounds for believing that anything referred to in subsection (1) is
on or in such premises or suspected to be on or in such premises.
. . .
(9)
Any person executing a warrant in terms of this section shall immediately before
commencing with the execution-
(a)
identify himself or herself to the person in control of the premises, if such person is
present, and hand to such person a copy of the warrant or, if such person is not present, affix
such copy to a prominent place on the premises;
(b)
supply such person at his or her request with particulars regarding his or her authority
to execute such a warrant.
(10) (a) The Investigating Director or any person referred to in section 7 (4) (a) may without a
warrant enter upon any premises and perform the acts referred to in subsection (1)-
(i) if the person who is competent to do so consents to such entry, search, seizure and
removal; or
(ii)
if he or she upon reasonable grounds believes that-
(aa)
the required warrant will be issued to him or her in terms of subsection (4) if he or she
were to apply for such warrant; and
(bb)
the delay caused by the obtaining of any such warrant would defeat the object of the
entry, search, seizure and removal.
(b)
Any entry and search in terms of paragraph (a) shall be executed by day, unless the
execution thereof by night is justifiable and necessary, and the person exercising the powers
referred to in the said paragraph shall identify himself or herself at the request of the owner or
the person in control of the premises.
(11)
If during the execution of a warrant or the conducting of a search in terms of this
section, a person claims that any item found on or in the premises concerned contains
privileged information and for that reason refuses the inspection or removal of such item, the
person executing the warrant or conducting the search shall, if he or she is of the opinion that
the item contains information which is relevant to the investigation and that such information
is necessary for the investigation, request the registrar of the High Court which has
jurisdiction or his or her delegate, to seize and remove that item for safe custody until a court
of law has made a ruling on the question whether the information concerned is privileged or
not.’
[6] In Investigating Directorate: Serious Economic Offences v Hyundai
Motor Distributors (Pty) Ltd: in re Hyundai Motor Distributors (Pty) Ltd v Smit
NO, 2001 (1) SA 545 (CC) the Constitutional Court held, inter alia, that s 29
(5) of the National Prosecuting Authority Act (which I shall call in what follows
‘the Act’) is not inconsistent with the Constitution.
FACTS
[7] On 11 August 2005 Mr Johan du Plooy, a senior special investigator
employed at the Directorate of Special Operations, established by s 7 of the
Act, made an affidavit in support of an application for 21 search warrants to be
issued in terms of s 29(5) and 29(6) of the Act. On 12 August 2005 an
application was made in chambers in terms of s 29(4) of the Act to Ngoepe JP
in the Pretoria High Court, for the issue of the warrants sought in Mr du
Plooy’s affidavit and on the same day the learned judge president authorised
the issue of the majority of warrants sought after requiring a modification to
the wording of the drafts submitted to him so that the offences which were the
subject of the investigation were stated.
[8] On the morning of 18 August 2005 the warrants authorised by Ngoepe
JP were executed simultaneously at premises throughout the country by
some 250 members of the Directorate of Special Operations of the National
Prosecuting Authority and approximately 93 000 documents were seized. The
purpose of the searches was to obtain further evidence for use by the
prosecution in the criminal proceedings on charges of corruption then pending
against Mr Zuma and for use in possible criminal proceedings against two
companies, Thint (Pty) Ltd and Thint Holdings (Southern Africa) (Pty) Ltd.
[9] A short time after the searches took place these two companies were
indicted to stand trial as co-accused with Mr Zuma in the Pietermaritzburg
High Court.
[10] Proceedings were instituted in the Johannesburg High Court on 26
August 2005 by Ms J Mahomed, an attorney practising in Gauteng, who had
acted as the legal advisor and representative of Mr Zuma, for an order setting
aside two of the warrants authorised by Ngoepe JP, declaring the searches
and seizures carried out in execution of the warrants to be unlawful and
directing inter alia that all her property seized under the warrants be returned.
On 9 September 2005 Hussain J granted Ms Mohamed the relief she sought.
His judgment, which has been reported as Mahomed v National Director of
Public Prosecutions and Others 2006 (1) SACR 495(W), has also been the
subject of an appeal before us, in which the judgment is being delivered
simultaneously with this one.
[11] On 6 October 2005 Mr Zuma and Mr Hulley brought this application
seeking relief in respect of seven of the warrants authorised by Ngoepe JP.
The attacks on two of the warrants became moot and no order was made in
respect of them.
[12] On 5 January 2006 Thint (Pty) Ltd and its director Mr Pierre Moynot
brought an application in the Pretoria High Court for relief similar to that
sought in the present case in respect of warrants issued by Ngoepe JP
authorising searches and seizures at the company’s office and at the
residence of Mr and Mrs Moynot, both in Pretoria. The respondents were the
first and second appellants in the present matter and Mr du Plooy, who had
deposed to the affidavit on which the application for the warrants was
founded. The respondents conceded the relief sought in respect of the
warrant issued authorising the searches and seizures at the residence of Mr
and Mrs Moynot but opposed the application in respect of the searches and
seizures effected at the office of Thint (Pty) Ltd. The application so limited
failed. Du Plessis J, who heard it, held that the warrant was valid and the
searches and seizures effected under it were valid. Thint (Pty) Ltd and Mr
Moynot have appealed against his judgment and the judgment on their appeal
is also being delivered simultaneously with this one.
[13] The five warrants in regard to which the application succeeded related
to searches of the following premises:
(a)
Mr Zuma’s flat in Killarney, Johannesburg, which was occupied when
the warrant was executed by two of his sons, his daughter and the wife of one
of his sons;
(b)
Mr Zuma’s residence at the Nkandla Traditional Village in the district of
Nkandla in KwaZulu-Natal;
(c)
Mr Zuma’s former office at the Union Buildings, Pretoria;
(d)
Mr Zuma’s former offices at Momentum House, Ordinance Road,
Durban; and
(e)
Mr Hulley’s offices in Durban.
[14] The five warrants authorised by Ngoepe JP which are relevant in the
present case were, except for the particulars relating to the premises to be
searched, in identical terms. They read as follows:
SEARCH WARRANT
(Section 29(5) of the National Prosecuting Authority Act, No. 32 of 1998)
TO:
The Investigating Director: Directorate of Special Operations or any person
Authorised by him/her in writing
WHEREAS it appears to me from information on oath setting out the nature of the
investigation, that there exists a reasonable suspicion that an offence/offences has/have been
or is/are being committed, to wit, Corruption in contravention of Act 94 of 1992, Fraud, Money
Laundering in contravention of Act 121 of 1998 and/or the commission of tax offences in
contravention of Act 58 of 1962, or that an attempt was or had been made to commit such an
offence/offences, and the need, in regard to the investigation, being an investigation into
allegations of corruption, fraud, money laundering and/or the commission of tax offences, for
a search and seizure in terms of the above-mentioned section, of any object as per Annexure
A, which has a bearing or might have a bearing, on the investigation in question.
AND WHEREAS it appears to me from the said information on oath that there are reasonable
grounds for believing that an object(s) having a bearing or which might have a bearing on, or
is/are connected with the investigation, is (are) on or in the premises or suspected to be on or
in the premises of
. . .
YOU ARE HEREBY AUTHORISED to enter the said premises during the daytime and there
to inspect and search and make such enquiries that you may deem necessary, examine any
object found on or in the premises which has a bearing or might have a bearing on the
investigation in question and, against the issue of a receipt, to seize anything on or in the
premises which has a bearing or might have a bearing on the investigation, or if you wish, to
retain it for further investigation or for safe custody, (including inspection, searching and
seizing computer-related objects in the manner authorized in Annexure B) and to remain on
the said premises and to complete the abovementioned inspection, search, enquiries,
examination and seizure during the nighttime if necessary.’
[15] Annexure A, to which reference is made in the first paragraph of the
preamble of all the warrants, was also in identical terms in the case of each
warrant except in the case of the warrant authorised in respect of the offices
of the second respondent, Mr Hulley, which I shall deal with presently. It
contained twenty-three numbered paragraphs which followed the wording of
paragraphs 2 to 24 of Annexure A to the warrants authorised for the search at
the residence and offices of Ms Mahomed which formed the subject matter of
the application heard by Hussain J in the Johannesburg High Court and which
are printed in full at pages 514 to 517 and 519 to 522 of the report of his
judgment.
[16] The copy of Annexure A annexed to the warrant authorising the search
of the offices of the second respondent had only two paragraphs. The first
paragraph read as follows:
‘Any records of whatever nature that Hulley and Associates received from Schabir Shaik and
any of the Nkobi entities or any other source in approximately July 2005 concerning the affairs
of Jacob Zuma, and specifically records kept or compiled by Schabir Shaik in his capacity as
financial adviser to Jacob Zuma.’
[17] The wording of the second paragraph followed the wording of the
twenty third paragraph of Annexure A in the other warrants under
consideration in this case and the twenty fourth paragraph of that Annexure in
the two warrants printed at the end of Hussain J’s judgment to which I have
referred. Hurt J described it as a ‘catch-all paragraph’. It read as follows:
‘In general any record or financial records of whatever nature, including ledgers, cash books,
company registers, share registers, share certificates, bank documents, notes, minutes of
meetings, diary entries, records of telephone conversations and any other correspondence, e
mails, faxes, documentation, or electronic computer data which have a bearing or might have
a bearing on the investigation. Electronic computer data includes computers, laptops, stiffies,
hard drives, compact discs, data cartridges, backups, electronic devices and any other form in
which electronic information can be stored or saved. Records of telephone conversations
include cell phone data stored in any cell phones.’
[18] Annexure B, to which reference was made in the authorising paragraph
of all the warrants, was identically worded in each case. It read as follows:
‘1.
Making two mirror images (complete disc copies) of computers, laptops notebooks or
hard drives, or any other electronic device on which information can be stored or saved, such
as stiffies, compact discs and floppies.
2.
Making digital images of any of the above for identification purposes.
3.
Seizing computer hardware and software components and computer manuals
necessary to facilitate forensic analysis.
4.
Thereafter, and at a location removed from the premises, conducting searches by
way of forensic analysis to identify and retrieve all information which has a bearing, or might
have a bearing, on the investigation in question.’
[19] There was a dispute on the affidavits as to what happened when the
warrant authorised in respect of the second respondent’s offices was
executed. Hurt J (at 489 b) relied only on the evidence given by the
deponents for the appellants. (In doing so he was in my view correct, as the
rule in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA
623 (A) clearly applies, at least as far as disputes of fact relating to the
execution of the warrants is concerned: whether it also applies in respect of
disputes relevant to the authorisation of the warrants need not now be
considered.)
[20] According to the version relied on by the learned judge Mr Johannes
van Loggerenberg, a senior special investigator employed at the Directorate
of Special Operations, who was the leader of the team which executed the
search warrant at the second respondent’s offices, arrived at the offices with a
team of seven searchers before the second respondent did. When the second
respondent arrived, Mr van Loggerenberg gave him a copy of the warrant
which he read. He then informed Mr van Loggerenberg and his team that he
could assist them by pointing out the documents he had received relating to
the first respondent. (The reference was clearly to the documents referred to
in the first paragraph of Annexure A to the warrant which he had read.) Mr van
Loggerenberg followed the second respondent to his filing office where he
pointed out two file boxes (which were still unopened), on the side of each of
which was a foolscap page reflecting the contents of each box. With the
agreement of Mr van Loggerenberg the second respondent made copies of
the inventories of each box. The boxes were seized and the second
respondent was given a receipt for them. Some time thereafter the second
respondent, who had been telephoned by the first respondent and told of the
searches in Johannesburg and Nkandla, left for the airport en route to
Johannesburg. On his way to the airport he telephoned Mr Anton Steynberg,
a Deputy Director of Public Prosecutions, stationed at the regional office of
the Directorate of Special Operations, KwaZulu-Natal, and told him that he
wanted to challenge the lawfulness of the searches and that for that purpose
he needed a copy of Mr du Plooy’s affidavit pursuant to which the warrants
had been obtained. After contacting his leader, Mr WJ Downer SC, who was
in charge of the investigation, Mr Steynberg reverted to the second
respondent and told him that he could obtain a copy of the affidavit from the
registrar of the Pretoria High Court. The second respondent then asked
whether all the documents seized could be sealed and lodged with the
registrar of the High Court until the lawfulness of the search had been
determined. Mr Steynberg’s response was that he would check with Mr
Downer but that the law did not make provision for documents to be lodged
with the registrar in such circumstances. He then spoke to Mr Downer, who
agreed with his approach. When he next spoke to the second respondent,
who by this time had arrived in Johannesburg, Mr Steynberg told him what Mr
Downer had said and suggested that he contact him. Thereafter the second
respondent telephoned Mr Downer and requested him to stop the search until
he had a copy of Mr du Plooy’s affidavit and had had an opportunity to apply
for a court order declaring the search of his offices unlawful. Mr Downer
declined this request. He stated in his affidavit that the second respondent
made no other request of him and did not claim privilege in respect of any of
the documentation which had been in his possession. ‘All he did’, said Mr
Downer, ‘was to ask me what would happen if any documents were privileged
and I said to him that he must decide which documents he considered to be
privileged.’ Mr Downer also said to the second respondent that it did not seem
to him that any of them could be privileged because they emanated from Mr
Shaik’s attorney, Mr Parsee, according to whom they consisted of financial
records.
[21] Later that day the second respondent spoke to Mr George Baloyi, a
Deputy Director of Public Prosecutions attached to the office of the Director of
Public Prosecutions, Pretoria. He asked Mr Baloyi to agree to his proposal
that the papers seized at his offices be deposited with the registrar. He stated
that he needed time to peruse the papers, consult with counsel and then
make a decision whether to challenge the legality of the search warrants. ‘His
request was’, said Mr Baloyi, ‘that pending such a decision, the documents be
deposited with the registrar.’ Mr Baloyi told the second respondent that he
would discuss the matter with Mr Downer.
[22] The next morning the second respondent received a copy of Mr du
Plooy’s affidavit from Mr Baloyi, who told him that his request could not be
acceded to. That afternoon the second respondent sent a telefax to Mr
Steynberg in which he stated his view:
(1)
that ‘a certain privilege attaches to the entire body of documents
seized’ from his offices; and
(2)
that in terms of the Act the ‘documents ought to be lodged with the
Registrar in these circumstances’.
[23] Mr Steynberg replied as follows on 22 August 2005:
‘The search and seizure operation conducted at your offices on 18 August and our
subsequent telephone conversations refer.
I am informed by the DSO [Directorate of Special Operations] members who conducted the
search that you pointed out to them the documents described in the search warrant, namely
the financial documents relating to Mr Zuma that were forwarded to you by his former
financial manager, Mr Schabir Shaik, via his attorney Mr Reeves Parsee. No other documents
were read or seized by the DSO members, nor were your offices physically searched.
I am informed further that at no stage did you or any of your staff indicate to the members
present that the documents seized were, or might be, privileged.
In the abovementioned circumstances, we are of the view that such documents constitute
evidentiary material that is highly relevant to the current investigation and that no legal
privilege attaches to such documents.
We are therefore of the view that there is no reason in law why these documents should be
handed to the registrar for safekeeping and accordingly we decline to do so.’
DECISION OF COURT A QUO
[24] Hurt J’s decision in favour of the respondents was based on three
separate grounds. The first ground was that the appellants had not shown, as
s 29(5)(c) required, that there was a need for a search and seizure in terms of
the section. This was because the material put before Ngoepe JP did not
contain a persuasive explanation of the necessity to invoke the provisions of
the section.
[25] He expressed the view that it was ‘open to considerable doubt’ whether
the additional evidence sought was needed by the authorities for the purposes
of their investigation. In any event, he held, even if the evidence was
necessary, it had not been established that it could not be obtained by
invoking the provisions of s 28.
[26] The second ground on which Hurt J’s judgment was based was that
the warrants were unduly vague in two respects.
[27] The first was that they did not describe the suspected offences under
investigation with sufficient particularity. He referred in this regard to the
dictum of this court in Powell NO v Van der Merwe NO 2005 (5) SA 62 (SCA)
in para 59 (d) and (e) that ‘a warrant must convey intelligibly to both searcher
and searched the ambit of the search it authorises’ and that ‘(i)t is no cure for
an overbroad warrant to say that the subject of the search knew or ought to
have known what was being looked for: the warrant must itself specify its
object, and must do so intelligibly and narrowly within the bounds of the
empowering statute.’
He continued (at 487b-f):
‘I consider that the precept in Powell’s case, requiring the warrant to convey the ambit of the
search “intelligibly”, includes a requirement that the person to be searched must be given
information as to approximately when the suspected offences have been committed and who
is suspected of having committed them. It should be noted, as I have indicated earlier, that
the warrants in this case are in the form of a notification by the authorising, judicial officer that
it “appears to (him/her) from information on oath” that the reasonable suspicion exists. The
information on oath which was submitted to obtain authorisation for these warrants was that
the suspected corruption arose from conduct, up to 2002, between the first applicant and Mr
Shaik, that the suspected money laundering occurred over a similar period and that the fraud
and tax offences related to non-disclosure in declarations required by statute. There was also,
of course, the vague suggestion of a suspicion that corrupt activities may have continued
beyond 2002. Without including those limits in the warrants, it would be impossible for the
person on the receiving end of their execution to know what the searchers might reasonably
be entitled to look for. I accordingly hold the view that the references to the suspected
offences in the warrants are inappropriately vague and that the warrants are all invalid on that
ground.’
[28] The second respect in which it was held that the warrants were unduly
vague was based on the ‘catch-all paragraph’, which, in effect, so he held,
constituted ‘authority to search an accused person’s premises “to find
anything that [would] help [the appellants] in the prosecution”.’ He held further
that the ‘catch-all paragraph’ in each of the warrants was not severable from
the rest of the warrants because the authorities relied on in support of the
severance argument (Cine Films (Pty) Ltd v Commissioner of Police 1972 (2)
SA 254 (A) at 268 and Divisional Commissioner of SA Police, Witwatersrand
Area, v SA Associated Newspapers Ltd 1966 (2) SA 503 (A) at 513 A-B)
predated the Constitution and constitutional considerations now prevent the
warrants in this case being pruned down to acceptable limits ex post facto.
[29] The third ground on which the judgment was based involved a finding
that the second appellant should have been aware that attorney-client
privilege might be jeopardised in the course of the search of the second
respondent’s offices, which could have resulted not only in prejudice to the
respondents but also in a violation of the first respondent’s fair trial rights. This
could have been prevented either by referring in the warrant to the provisions
of s 29(11) or by bringing these provisions to the attention of the second
respondent when the warrant was served on him.
[30] In the course of his judgment Hurt J also considered and rejected a
submission advanced before him by counsel for the respondents, which was
repeated in argument in this court, to the effect that the powers conferred by s
29 can only be used against a person suspected of having committed a crime
or crimes before he or she becomes an accused.
[31] Hurt J assumed in his judgment that the formal steps required to be
followed by the appellants to obtain and thereafter execute the warrants
complied with the statutory requirements. He accordingly made no finding on
a number of issues raised in this regard on the papers by the respondents.
[32] In this court counsel for the respondents once again raised the
contentions which Hurt J had assumed, without deciding, were not correct.
DISCUSSION:
THE VALIDITY OF THE WARRANTS
[33] As appears from the summary of Hurt J’s judgment I have given, his
finding that the warrants under consideration in this case were invalid
because they were, as he put it, ‘inappropriately vague’ was based upon the
application of the summary of the law on the point appearing in para 59(d) of
the judgment of this court in Powell NO v Van der Merwe NO, supra. In this
regard Hurt J found that the failure to include in the warrants the information
relating to the nature of the investigation for the purpose of which the warrants
were sought resulted in their not conveying to the persons on the receiving
end of the warrants the ambit of the searches authorised by the warrants.
That the warrants read on their own, without reference to Mr du Plooy’s
founding affidavit, were so defective cannot be gainsaid. It is clear from the
operative part of the warrants that the power to examine and thereafter seize
objects conferred was confined to things which had or might have a bearing
‘on the investigation in question’ but the terms of the investigation were stated
in such general terms that it was not possible to ascertain what it covered.
[34] Mr Trengove, who appeared with Mr Salmon and Mr Breitenbach for
the appellants, endeavoured to meet this point by submitting that para 59(d)
of this court’s judgment in Powell does not require that the warrant be
intelligible ‘then and there’, as it was put, ie, at the time of the search, and that
it is enough that the ambit of the search should be intelligible when and if
challenged in court after the person whose premises have been searched has
had sight of the founding affidavit on the strength of which the warrant was
issued. He pointed out that although para 59 in Powell purports to be a
summary of the legal position as set out in the cases discussed in this part of
the judgment the requirement of intelligibility to the searched did not feature at
all in that discussion and that, as he put it, its pedigree was not clear. He did
not, however, submit that this requirement in the judgment was incorrect but
merely that it had to be qualified in the way I have indicated. He stated that he
was unable to point to any authority in our law either for or against his
submission in this regard and Mr Kemp, who appeared with Mr Smithers on
behalf of the respondents, and argued for the contrary proposition, indicated
that he was also unable to refer to authority on the point.
[35] In my view Mr Trengrove’s attempt to introduce this qualification into
what was said on the point in Powell cannot succeed. The suggested
qualification is not only against the trend of the South African authorities to
which I shall refer presently as well as that of decisions in Australia and New
Zealand but there are also compelling reasons why that should be so, as I
shall endeavour to indicate.
[36] I begin with the South African authorities to which reference was made
in Powell. In Pullen NO v Waja 1929 TPD 838 at 849 Tindall J in a passage
quoted in Powell at para 54 said:
It is desirable that the person whose premises are being invaded should know the reason
why: the arguments in favour of the desirability of such a practice are obvious.’
[37] In Minister of Justice v Desai NO 1948 (3) SA 395 (A) the same judge,
by this time Tindall ACJ, said (at 405), when discussing the desirability of
including a recital in a warrant:
‘a recital is a helpful part of a search warrant if it is properly drafted, for it apprises the
occupier whose premises are searched of the reason for the encroachment on his rights and
thus may tend to allay resentment and prevent obstruction of the police.’
[38] The topic is considered in a number of judgments delivered elsewhere
in the Commonwealth, many of which are collected in the comprehensive
judgment of Burchett J delivered in the Federal Court of Australia in Beneficial
Finance Corporation Ltd v Commissioner of Australian Federal Police (1991)
103 ALR 167 (Fed C of A). The statutory provisions considered in those cases
were not materially different from those under consideration here. One of the
cases to which he referred was Auckland Medical Aid Trust v Taylor [1975] 1
NZR 728 (CA) in which McCarthy P said (at 736 line 50 to 737 line 2):
‘As, according to my view, s 198 required a warrant to be issued in respect of a particular
offence, it seems to me to be a necessary requirement still that there be sufficient particularity
to enable, as I have said, the officer executing it to know to what offence the articles he is
searching for must relate, and to enable the owner of the premises to understand, and if
necessary to obtain legal advice about, the permissible limits of the search.’ (The emphasis is
mine.)
In the same case McMullin J said (at 749 lines 12 to 22 and 37 to 42):
‘It is important . . . that the executing officer should know just what is the offence in respect of
which the warrant is issued for without that knowledge the search may be unbounded. It is
important, too, to the householder who may be concerned to know the scope of the warrant.
He is entitled to have the warrant produced to him by the officer executing it (s 198 (8)).[As he
is in our law (s 29(9)(a)).] The production of a warrant may have a twofold purpose, (i) to
satisfy a householder that the person presenting the warrant is a person having judicial
authority to enter the premises, and (ii) to enable the householder to ascertain to what things
the search is to be directed. . . . I am of the opinion that there should be a sufficient measure
of particularisation of the offence in the warrant to enable both the officer executing the
warrant and the person on whose premises it is to be executed (who may not be the suspect)
to know just what are the metes and bounds of the search and seizure contemplated.’ (Again,
my emphasis.)
(See also Rosenberg v Jaine [1983] NZLR 1 at 5 and Tranz Rail Ltd v
Wellington District Court [2002] 3 NZLR 780 (CA) at 793 line 48 to 794 line 3.)
[39] Another decision to which Burdett J referred (at 183) was an
unreported judgment of Toohey J in Quartermaine v Netto, delivered on 14
December 1984, in which the following was said:
‘The requirement of particularity is not merely formal; it is aimed at ensuring that the person
whose premises are being searched knows the object of the search and can therefore make
some assessment of the material likely to prove relevant. It is unacceptable that such a
person be left in the dark as to the object of the search.’
[40] In the case before him Toohey J held that there was ‘sufficient
precision to enable the officer executing the warrant to know what he is
required to look for and for those in whose premises documents are found to
make some assessment of what is required of them.’
[41] The matter was also considered by the English Court of Appeal in
Regina v Inland Revenue Commissioners, Ex parte Rossminster Ltd 1980 AC
952. That case concerned a warrant issued by the Common Serjeant of the
City of London under s 20C of the Taxes Management Act 1970, as
amended. The warrant was addressed to various officers of the Board of
Revenue and it authorised them to enter certain premises, to search them and
to ‘seize and remove any things whatsoever found there which you have
reasonable cause to believe may be required as evidence for the purpose of
proceedings in respect of such an offence.’ The expression ‘such an offence’
was a reference to ‘an offence involving fraud in connection with or in relation
to tax’. The warrant was challenged on the ground that it did not specify any
particular offence involving fraud in connection with or in relation to tax. It was
suggested that there might be twenty different kinds of such fraud.
[42] The application failed in the Queen’s Bench Divisional Court but
succeeded in the Court of Appeal. An appeal by the revenue commissioners
to the House of Lords succeeded, mainly, as I see it, as far as the point
presently under consideration is concerned, on what was held to be the
correct construction of the section under which the warrant was issued. The
Court of Appeal’s construction of the section was held to be erroneous.
[43] In my view, however, the reasoning contained in Lord Denning MR’s
judgment on the point presently under discussion does apply to our section
construed against the background of the Constitution and the rights set forth
in our Bill of Rights, particularly s 14, which entrenches the right to privacy.
Moreover our section, unlike s 20c of the Taxes Management Act, requires
that a person who seizes anything should be authorized to do so by the
warrant.
[44] The passage in Lord Denning MR’s judgment which is in my view
relevant in this case runs from 973H to 974F. It reads as follows:
‘(T)he vice of a general warrant of this kind – which does not specify any particular offence –
is two-fold. It gives no help to the officers when they have to exercise it. It means also that
they can roam wide and large, seizing and taking pretty well all a man’s documents and
papers.
There is some assistance to be found in the cases. I refer to the law about arrest – when a
man is arrested under a warrant for an offence. It is then established by a decision of the
House of Lords that the warrant has to specify the particular offence with which the man is
charged: see Christie v Leachinsky [1947] A.C. 573. I will read what Viscount Simon said, at p
585:
“if the arrest was authorised by magisterial warrant, or if proceedings were instituted by the
issue of a summons, it is clear law that the warrant or summons must specify the offence . . .
it is a principle involved in our ancient jurisprudence. Moreover, the warrant must be founded
on information in writing and on oath and, except where a particular statute provides
otherwise, the information and the warrant must particularise the offence charged.”
Lord Simonds put it more graphically when he said, at p. 592:
“Arrested with or without a warrant the subject is entitled to know why he is deprived of his
freedom, if only in order that he may, without a moment’s delay, take such steps as will
enable him to regain it.”
So here. When the officers of the Inland Revenue come armed with a warrant to search a
man’s home or his office, it seems to me that he is entitled to say: “Of what offence do you
suspect me? You are claiming to enter my house and to seize my papers.” And when they
look at the papers and seize them, he should be able to say: “Why are you seizing these
papers? Of what offence do you suspect me? What have these to do with your case?” Unless
he knows the particular offence charged, he cannot take steps to secure himself or his
property. So it seems to me, as a matter of construction of the statute and therefore of the
warrant – in pursuance of our traditional role to protect the liberty of the individual – it is our
duty to say that the warrant must particularise the specific offence which is charged as being
fraud on the revenue.
If this be right, it follows necessarily that this warrant is bad. It should have specified the
particular offence of which the man is suspected. On this ground I would hold that certiorari
should go to quash the warrant.’
[45] The passages quoted from Christie v Leachinsky, supra, by Lord
Denning MR were in accordance with our law even before the Interim
Constitution came into force: see, eg, Minister of Law and Order v Kader 1991
(1) SA 41 (A) at 46D-E.
[46] In the circumstances I am satisfied that para 59 of Cameron JA’s
judgment in Powell correctly states the legal position to be applied in this case
and that the ‘not then and there’ qualification argued for by Mr Trengove
would not be correct.
[47] Mr Trengove also submitted that in deciding whether the warrants were
intelligible ‘to the searched’ one had to take into account the knowledge
already possessed by Mr Zuma, not by the persons to whom the warrants in
question were presented when the searches began. I think that there are two
answers to this submission.
[48] First, regard being had to the need for the warrant, standing on its own,
then and there to indicate with the required specificity ‘the metes and bounds’
of the authorised search and seizure, so that steps could be taken without a
moment’s delay for unauthorised search and seizure to be stopped, it must
follow, as Mr Kemp in my view correctly submitted, that the warrant must be
reasonably intelligible to the person to whom it has to be presented in terms of
s 29(9)(a) of the Act. Secondly, even if Mr Zuma can be regarded as having
had the requisite knowledge so as to understand the full ambit of the warrants
(a matter on which I make no finding), I think that the answer to the
submission is contained in subparagraph (f) of para 59 in Powell, which, it will
be recalled, reads:
‘It is no cure for an overbroad warrant to say that the subject of the search knew or ought to
have known what was being looked for: The warrant must itself specify its object, and must do
so intelligibly and narrowly within the bounds of the empowering statute.’
[49] I do not think that the appellants’ case is taken any further by a
consideration of the provisions of s 29 (10)(b). First, it is not clear whether the
paragraph can pass constitutional muster unless a provision requiring
disclosure to the ‘searched’ person of sufficient information to enable him or
her to know ‘the metes and bounds of the search and seizure contemplated’ is
to be read in. Secondly, the need for an urgent search and seizure operation
as envisaged under ss (10) did not exist in this case. It may be that if such a
need had existed ‘the metes and bounds’ requirement may have been
capable of being dispensed with on the application of the principles set forth in
s 36 of the Constitution.
[50] What is important in this case is that s 29 (9)(a) requires a copy of the
warrant to be handed to the person in control of the premises or affixed to a
prominent place on the premises if such person is not present. As McCarthy P
said in the Medical Aid Trust case, supra (at 736 line 39), the corresponding
requirement in the New Zealand statute was put there for some purpose.
What that purpose is appears clearly from the authorities to which I have
referred. A construction of our section which would defeat that purpose can
clearly not be upheld and could lead in certain cases to invasions of privacy
which are totally unacceptable and contrary to the spirit, purport and objects
of our Bill of Rights.
[51] In view of the fact that I am satisfied that Hurt J was correct in holding
that all the warrants were invalid because they did not intelligibly convey the
ambit of the search, it is unnecessary for me to consider Mr Trengove’s
submission that Hurt J erred in holding that the ‘catch-all paragraph’ could not
be severed from the rest of the warrants. It is appropriate, however, to record
that Mr Kemp, in my view correctly, did not support Hurt J’s view that
‘constitutional considerations have superseded the considerations which led
the Appellate Division to hold that offending portions of a warrant could be
severed from the acceptable potions’ in the Cine Films and SA Associated
Newspapers cases. In the Ferucci case, which Hurt J purported to follow, the
court found (at 234 F) that severance was not possible because the difficulties
flowing from the terms and contents of the warrant permeated the warrant as
a whole, not because of new constitutional considerations which rendered the
two Appellate Division cases no longer applicable.
[52] In the circumstances I am satisfied that Hurt J correctly held that the
five warrants with which he was concerned were invalid.
SHOULD A PRESERVATION ORDER BE GRANTED?
[53] In view of the fact that I have come to the conclusion that Hurt J
correctly held that the warrants under consideration in this matter were invalid
it is necessary to consider Mr Trengove’s further submission that the order of
the court a quo should be varied by inserting therein paragraphs which are
designed to ensure the preservation of the evidential material gathered under
the warrants or copies thereof.
[54] Mr Trengove contended that a decision to the effect that the warrants
were invalid amounts to a finding that the appellants unlawfully infringed the
respondents’ rights to privacy which are constitutionally entrenched in the Bill
of Rights. The court has, so it was submitted, a wide discretion to determine
the appropriate remedy in cases involving the infringement of constitutional
rights. In this regard reliance was placed on s 38 and s 172 (1) of the
Constitution.
[55] These provisions read, as far as is material, as follows:
’38
Anyone listed in this section [which includes “anyone acting in their own interest”] 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 . . .’
‘172 (1)
When deciding a constitutional matter within its power, a court
(a)
must declare that any law or conduct that is inconsistent with the Constitution is
invalid to the extent of its inconsistency; and
(b)
may make any order that is just and equitable, including –
(i)
an order limiting the retrospective effect of the declaration of invalidity; and
(ii)
an order suspending the declaration of invalidity for any period and on any conditions,
to allow the competent authority to correct the defect.’
[56] Mr Trengove submitted that in fashioning appropriate remedies so as
to deal with constitutional violations the courts have to have regard to the
interests of third parties where these are or would be involved. Examples of
cases where this was done are Modderklip Boerdery (Pty) Ltd 2004 (6) SA 40
(SCA), MEC Department of Welfare, Eastern Cape v Kate 2006 (4) SA 478
(SCA) and MEC for Local Government and Development Planning, Western
Cape v Paarl Poultry Enterprises CC trading as Rosendal Poultry Farm 2002
(3) SA 1 CC. He pointed out that the public have an interest in the prosecution
of criminals: indeed, as was said in S v Basson 2005 (1) SA 171 (CC) at para
33 the effective prosecution of crime is an important constitutional objective.
In the same case at para 32 it was said that ‘[t]he constitutional obligation
upon the State to prosecute those offences which threaten or infringe the
rights of citizens is of central importance in our constitutional framework.’ (See
also Key v Attorney-General, Cape Provincial Division 1996 (4) SA 187 (CC)
at para 13.)
[57] It was further submitted that a declaration that the warrants are invalid
coupled with a preservation order would, in the language of s 172 (1)(b) of the
Constitution, be ‘just and equitable’ because it would recognise and balance
all the constitutional interests involved.
[58] Mr Trengove contended further that there was ample reason for the
exercise in the way suggested of the court’s remedial discretion. He listed four
factors, viz:
(1)
It is clear that the State at all times acted in good faith and there is no
suggestion, nor can there be, that it acted in bad faith or with ulterior purpose.
(2)
This is not a case of crass or gross violations of human rights;
(3)
The search and seizure was undertaken in the course of an
investigation of serious crimes of high public interest. All persons concerned,
State, police and potential accused, have a material interest in the search for
the truth and the materials seized can only contribute to that end. It follows
that an order should be fashioned which preserves the evidence and does not
expose it to the risk that it might be lost.
(4)
In view of the suggestion made in the respondent’s papers that Mr
Zuma’s professional privilege may have been breached as a result of the
execution of the warrants, it may become an issue at a possible future trial of
Mr Zuma whether he has suffered irreparable prejudice in this regard. The
interests of justice require that that issue should be capable of the easy and
definitive resolution which only the preservation of copies of the materials
seized can ensure.
[59] In support of his contention that this court should in the exercise of its
wide powers under s 38 and s 172(1) of the Constitution Mr Trengove referred
to the position in Canada where the applicable constitutional provisions
resemble ours in certain respects. In particular s 24(1) of the Canadian
Charter of Rights and Freedoms, which provides that ‘[a]nyone whose rights
and freedoms, as guaranteed by this Charter, have been infringed or denied
may apply to a court of competent jurisdiction to obtain such remedy as the
court considers appropriate and just in the circumstances’, uses language
which appears to have influenced the framers of our Constitution in the
drafting of s 38 and s 172 (1). In addition our s 35(5) (which provides that
‘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’) is clearly
influenced by s 24(2) of the Charter, which reads as follows:
‘(2)
Where, in proceedings under subsection (1), a court concludes that evidence was
obtained in a manner that infringed or denied any rights or freedoms guaranteed by this
Charter, the evidence shall be excluded if it is established that, having regard to all the
circumstances, the admission of it in the proceedings would bring the administration of justice
into disrepute.’
[60] Mr Trengove referred to the fact that some courts in Canada have
adopted the view that unconstitutionally obtained evidence should always be
returned unless ‘the initial possession by the person from whom the things
were seized was itself illicit, eg, in the case of prohibited drugs or weapons’:
see Lagiorgio v the Queen (1987) 42 DLR (4th) 764 (Federal Court of Appeal)
at 767. In that case Hugessen J said (ibid): ‘Anything less negates the right
and denies the remedy.’ Another case where a similar stance was adopted
was Re Weigel and The Queen (1983) 1 DLR (4th) 374 (Sask QB), in which
Noble J said (at 380): ‘The rights of an accused must not be given away just
to make it easier for the Crown to prosecute an accused person.’ Earlier in his
judgment (at 379) he had said that it was necessary that illegally obtained
evidence be returned to provide incentives for proper investigative conduct.
‘What justification’, he asked, ‘is there for ruling on the one hand that the issue
of a search warrant was illegally made and in the next breath saying to the
authorities – that is alright – you can use the seized articles as evidence
against the accused anyway. Can it be said this clearly contradictory position
will encourage police officers and persons in authority to abide by the laws
designed to protect the rights of the ordinary citizen? I think not.’
[61] Mr Trengove also drew our attention to another line of cases in Canada
where a more flexible approach was adopted. In one of them, Re Dobney
Foundry Ltd and The Queen (No.2) (1985) 19 CCC (3d) 465, a judgment of
the British Columbia Court of Appeal, Esson JA criticised the line of cases
which included Re Weigel and The Queen, supra, saying (at para 19) that
they rested ‘upon the premise that the purpose and effect of the Charter is to
elevate individual rights and freedoms to an absolute value which excludes
any consideration of competing values such as the desirability that the
criminal law be enforced. The rationale for that approach is that only “the
police” are concerned with the enforcement of the criminal law. That
approach, I suggest, ignores the reality of the matter, viz., the interests of the
community as a whole require that a reasonable balance be struck between
individual rights and community interest.’
[62] The order made in that case was that the justice of the peace in whose
possession the documents were being kept under seal pursuant to an early
interim order of the court should return the documents seized to the
appellants within seven days from the date of service of his order provided
that if a new warrant or warrants had been obtained before the expiration of
seven days the justice of the peace was to deliver to the Crown all documents
covered by the warrant or warrants and to return all other documents to the
appellants.
[63] In the course of his judgment Esson JA referred to Re Chapman and R
(1984) 12 CCC (3d) 1 (Ontario Court of Appeal), a decision in which the court
had ordered the return of documents seized under an invalid warrant, despite
an assertion by the Crown that the items were needed for the purpose of a
criminal prosecution. It had done so not by applying a rigid rule but in the
exercise of a discretion.
[64] Another decision of the Ontario Court of Appeal on the point is
Commodore Business Machines Ltd v Canada (Director of Investigation and
Research) (1986) 50 DLR (4th) 559 (Ont C.A.), where stating (at 562) that ‘[i]t
may be that in many, if not most, of the situations where a search has been
conducted in violation of Charter rights the goods seized should be returned’,
Cory JA made an order permitting the Crown to retain copies of the
documents seized.
[65] Mr Trengove submitted that the flexible approach adopted by the
Ontario Court of Appeal should be followed. He cited with approval views of
Professor Kent Roach of the University of Toronto which are set out in his
book Constitutional Remedies in Canada (para 9.770) as follows:
‘ In my view, the Ontario Court of Appeal’s approach is to be preferred to those taken by other
courts. It allows courts to return evidence when necessary either to correct a s. 8 violation by
restoring illegally seized property or to avoid condoning and participating in a serious
violation. If courts refuse to return evidence obtained through flagrant breaches of the
Charter, they will not only condone the unacceptable conduct, but actually assist it by
retaining the fruits of illegal searches. At the same time, it is difficult to argue that crime
control considerations should never be considered, especially in cases where the evidence, if
returned, is likely to be destroyed or otherwise not be available in subsequent trials. Courts
should recognize that the return of evidence is in a practical sense related to its possible
exclusion at a criminal trial and should be hesitant to return evidence, if its exclusion could be
not justified under s. 24(2).’
[66] It was accordingly contended that the court has the power, which in the
circumstances of this case it should exercise, to fashion an order which
preserves the evidence seized under the warrants (or copies thereof) so that
the trial court can ultimately determine whether it should nonetheless be
admissible in evidence. He submitted that the order should be sufficiently
widely framed to ensure that if following the final determination of this appeal
and the related appeals Mr Zuma is not charged at all or if he is not charged
within a reasonable time he and Mr Hulley may apply on the same papers
duly amplified for an order directing the registrar to release the materials to
them.
[67] Mr Kemp submitted that if this court were to hold that the warrants
were invalid, the court should simply order the return of the documents. He
submitted that the rights protected by s 14 of the Constitution include the right
to control one’s information and submitted that the violation of the
respondents’ rights would only end when the documents were handed back.
[68] In my view Mr Trengove was correct in submitting that this court has
the power to order that the documents or copies should be retained under
seal by the Registrar of the Durban High Court. It is true that such an order
would involve a continuation to some extent (although a relatively minor one)
of the violation of the respondent’s constitutional rights to the documents but it
is clear that the court’s power under s 38 and s 172 (1) of the Constitution is
wide enough to cover this.
[69] For the reasons given by Mr Trengove I think it would be appropriate in
this case for an order to be made for the preservation under seal by the
Registrar of the Durban High Court of copies of the documents seized under
the warrants declared invalid in this case, with the originals being handed
back to Mr Zuma and Mr Hulley.
SUGGESTED ORDER
[70] The following order should in my view be made.
1.
Subject to what is set out below, the appeal is dismissed with costs
including those occasioned by the employment of two counsel.
2.
The order of the High Court is varied by the substitution of the following
paragraph for the existing paragraph 2:
‘2 (a) The respondents are ordered to hand over to the registrar forthwith all
items seized and removed from the respective premises in terms of the
aforesaid warrants together with all copies of such items which the
respondents or their agents may have made while the items have been in
their possession, irrespective of the means by which such copies have been
made or taken.
(b)
The registrar is ordered to make copies (either in person or through a
delegate) in the presence of the attorneys for the applicants and the
respondents of all the documents seized pursuant to the warrants referred to
in paragraph 1 and to cause images of all computer materials seized pursuant
to such warrants to be made by an expert appointed by the registrar and must
hand over to the applicants’ attorneys the originals of the documents and the
computer materials seized and all copies of such items which the respondents
or their agents may have made while the items have been in their possession
(irrespective of the means by which such copies have been made or taken)
after the copying process is complete.
(c)
The registrar is directed to retain the copies and computer images
made in terms of subparagraph (b) and to keep them accessible, safe and
intact under seal until:
(i)
notified by the respondents that the retained items or any of them may
be returned to the applicants; or
(ii)
if proceedings are instituted pursuant to the investigation referred to in
the founding affidavit placed before Ngoepe JP when the said warrants
were authorised, the conclusion of such proceedings; or
(iii)
the date upon which the first respondent decides not to institute or to
abandon such proceedings;
whereupon the items so retained must be returned to the applicants.
(d)
The provisions of subparagraphs (b) and (c) are subject to:
(i)
any order of any competent court (whether obtained at the instance of
the applicants or the respondents);
(ii)
the lawful execution of any search warrant obtained in the future; or
(iii)
the duty of either of the applicants or the registrar to comply with any
lawful subpoena issued in the future
(e)
the respondents must not take any step to obtain access to any of the
retained or returned items unless they give the applicants reasonable prior
notice before any such step is taken: in particular, but without derogating from
the generality of this provision the respondents may not take any such step
without giving the applicants:
(i)
reasonable prior notice of any application for a search warrant or an
order directing either or both of the applicants or the registrar to deliver
or release any retained or returned item; and
(ii)
a reasonable opportunity to challenge in court any subpoena before
either of the applicants or the registrar is obliged to comply with it.
(f)
The respondents must pay all costs of implementing the provisions of
this paragraph.’
________________
IG FARLAM
JUDGE OF APPEAL
CONCURRING
CLOETE JA
NUGENT JA:
[71] I have read the judgment of my colleague Farlam. I cannot agree with
the order that he proposes and I regret that I must indeed gainsay his view
that the warrants were defective.
[72] In the course of his judgment the learned judge in the court below
made certain observations that reflect an approach that I think is
fundamentally unsound. The learned judge observed that with time the courts
will develop a body of practice as to the circumstances in which it is
appropriate for a warrant to be issued and, so it seems from what he said, as
to the form that such a warrant must take, in much the way that courts have
developed by gradual modification what is commonly known as the Anton
Piller order. He added that considerable assistance is to be had in that regard
by looking at the manner in which courts have dealt with statutory provisions
of the kind that are now in issue in other legislation, and that such a ‘body of
rules’ has already started to develop. In my view that approaches the matter
the wrong way round.
[73] The example that the learned judge used of an Anton Piller order
highlights the defect of that approach. The Anton Piller order is a remedy that
the courts have created in the exercise of their inherent powers. It is to be
expected in those circumstances that the courts have fashioned a ‘body of
rules’ determining when and in what form such an order may be issued. But
that is not what we are concerned with in this case. We are concerned with
warrants that are issued under statutory powers. It is the statute that must
dictate what is required for a warrant to be valid and not the warrant that must
dictate to the statute.
[74] Whether or not a warrant is defective depends upon whether or not it
meets the requirements of the statute and that is in turn a matter for
construction of the statute. It would be quite wrong for courts to devise what
they consider to be a satisfactory form of warrant and then to test the validity
of a particular warrant against that self-devised template. And while decisions
in other cases will sometimes be helpful in deciding whether a warrant meets
the criteria demanded by a particular statute at other times they will not be.
Statutes that allow for search and seizure are not all the same. Nor do I think
that decisions from foreign jurisdictions need to be slavishly adopted least of
all without careful consideration of the context within which they were decided.
[75] The proper starting point, in my view, is not with pre-conceived ideas of
what a warrant must contain, whether drawn from other cases or otherwise,
but rather with construing the particular authorising statute to see what its
criteria are. And where the legislature, in a constitutionally valid law, has
authorised the performance of an act if certain conditions are met, others
cannot simply be added.
[76] But there are two criteria for validity that will indeed apply to all
warrants for search and seizure on account of their nature alone. A warrant is
no more than a written authority to perform an act that would otherwise be
unlawful. Like any other written authority it must obviously be intelligible
(‘capable of being understood’)1 for it must be possible to determine with
certainty the scope of its authority. A warrant must also authorise no more
than is permitted by its authorising statute. If it purports to authorise what it is
not permitted to authorise the warrant will be invalid at least to the extent of
the excess. (It might be wholly invalid if the good cannot properly be severed
from the bad.)
[77] Those criteria for the validity of a warrant were recently restated by this
court in Powell.2 The form in which it was expressed (a warrant must be
intelligible to ‘searcher and searched’) was taken by counsel for the
respondents to mean that a warrant must necessarily contain all the
information that is required to identify what may and what may not be
searched for and seized without travelling outside the warrant. That is not
what was said in Powell and the language that was used does not purport to
do so. Whether that is required for a warrant to be valid is a question that
goes to its necessary content rather than to its ‘intelligibility’ and was not
considered or even discussed in Powell. But it has taken up most of the
argument in this matter and I will return to it later in this judgment.
[78] Apart from those two generally applicable criteria for the validity of a
1 Shorter Oxford English Dictionary.
2 Powell NO v Van der Merwe NO 2005 (5) SA 62 (SCA) para 59.
warrant I do not think there are others that are material to this case. If there
are other requirements for the validity of the warrants that are now in issue
they must be found in the statute itself, whether expressly or by necessary
implication, if they are to be found at all.
[79] A statute must generally be construed in accordance with the ordinary
meaning of its language viewed within its context (which includes the purpose
that the statute sets out to achieve). In this case there has been no
suggestion that the powers that are conferred by the authorising statute are
unconstitutional and thus invalid. Nor was that suggested when the
Constitutional Court scrutinised the section in Hyundai Motor Corporation.3
Some of the submissions that were made before us drew freely on what were
said to be constitutional imperatives that justify the ordinary language being
rewritten to a greater or lesser degree but none of those submissions paid any
attention to the permissive provisions of s 36 of the Bill of Rights. That section
permits the legislature to make inroads upon protected rights (which the
present statutory provision does) if certain requirements are met. There has
been no suggestion that the inroads that are made by the present statute
when construed in its ordinary meaning are not consistent with the provisions
of s 36 and there is no reason then to give it another meaning.
[80] The clear purpose of the search and seizure section that is now in
issue is to afford a tool to the Directorate of Special Operations (the
Directorate) to perform its statutory functions. The Directorate was established
in the office of the National Director of Public Prosecutions (NDPP) by s 7(1)
of the National Prosecuting Authority Act of 1998. One of its functions is to
investigate and prosecute the commission of ‘specified offences’, which
include certain offences ‘of a serious and complicated nature.’4 (Nothing turns
on what offences that term encompasses and for convenience I will call them
simply ‘offences’.)
[81] The general scheme of the Directorate’s investigating powers was
3 Investigating Directorate: Serious Economic Offences v Hyundai Motor Distributors (Pty) Ltd: in re Hyundai Motor
Distributorsv (Pty) Ltd v Smit N.O. 2001 (1) SA 545 (CC) para 40.
4 Powell, above, para 6.
analysed by the Constitutional Court in Hyundai Motor Corporation, and again
by this court in Powell, and I need only summarise it. The Act envisages that
an investigation might be conducted in either of two forms. The Investigating
Director may conduct a full investigation (in Powell it was called a plenary
investigation and I will use that term) if he or she has reason to suspect that
an offence has been or is being committed.5 (A delegate may be appointed to
do so on his or her behalf and where appropriate I will call the Investigating
Director and his or her delegate interchangeably the ‘investigator’). If the
Investigating Director considers it necessary to hear evidence in order to
establish whether there are reasonable grounds to conduct a plenary
investigation he or she may also hold a preparatory investigation.6
[82] The statute gives extensive investigatory powers to an investigator
(whether in a preparatory or a plenary investigation). He or she may summon
any person who is believed to be able to furnish any information on the
subject of the investigation, or to have in his or her possession or under his or
her control any book, document or other object relating to that subject, to be
questioned and to produce the item, to question the person concerned, and to
retain for further examination or safe custody any such item.7 An investigator
also has wide powers of search and seizure. Subject in each case to a caveat
that I will come to ss 29(1) and 29(9) authorise an investigator to enter any
premises on or in which anything connected with that investigation is or is
suspected to be and then to –
‘(a)
inspect and search those premises, and there make such enquiries as he or she may
deem necessary;
(b)
examine any object found on or in the premises which has a bearing or might have a
bearing on the investigation in question, and request from the owner or person in
charge of the premises or from any person in whose possession or charge that object
is, information regarding that object;
(c)
make copies of or take extracts from any book or document found on or in the
premises which has a bearing or might have a bearing on the investigation in
question, and request from any person suspected of having the necessary
information, an explanation of any entry therein;
5 Section 28(1).
6 Section 28(13).
7 Section 28(6) read with s 28(14).
(d)
seize, against the issue of a receipt, anything on or in the premises which has a
bearing or might have a bearing on the investigation in question, or if he or she
wishes to retain it for further examination or for safe custody…’
[83] Extensive as those powers of search and seizure are I do not find it
surprising that they are given. It can be expected that at the time an
investigation commences (whether it be preparatory or plenary) an
investigator will have little or no knowledge of when or where or how or by
whom the suspected offence was committed. For an investigation may be
initiated on no more than suspicion, and suspicion that an offence has been or
is being committed is quite capable of existing without details of that kind
being known. It is also unlikely that an investigator will know, without further
enquiry, what documents or books or objects exist that might have a bearing
on the investigation. How else is an investigator then to discover whether an
offence has been or is being committed, and if so when, and where, and by
whom, and in what manner it was or is being committed, and how else is he
or she to discover what evidence there is to substantiate those conclusions,
other than to search for and examine objects and documents that might reveal
those facts? I do not think that complex criminal conduct, which is the kind of
conduct that the directorate was established to investigate, can be expected
to be uncovered by relying only on information and material that is
volunteered.
[84] In some circumstances an investigator may enter premises and
perform all the acts listed in s 29(1) without a warrant.8 Where those
circumstances exist an investigator may thus search the premises and
examine any object found on or in the premises, make copies of or take
extracts from any book or document found on or in the premises, and seize
anything on or in the premises, if the item concerned has or might have a
bearing on the investigation that he or she is conducting. Before entering the
8 (10)(a) The Investigating Director or any person referred to in section 7(4)(a) may without a warrant enter upon any
premises and perform the acts referred to in subsection (1) –
(i)
…
(ii)
if he or she upon reasonable grounds believes that –
(aa)
the required warrant will be issued to him or her in terms of subsection (4) if he or she were to apply
for such warrant; and
(bb)
the delay caused by the obtaining of any such warrant would defeat the object of the entry, search,
seizure and removal.
premises and performing those acts the investigator need only identify himself
or herself to the owner or the person in control of the premises. The
investigator need not inform the person concerned of the nature of the
investigation, nor provide any information relating to the investigation, nor
identify in any way to the person in charge of the premises the material that is
being sought.9
[85] Where the circumstances referred to in s 29(10) do not prevail those
powers may be exercised if that is permitted by a judicial warrant (and only if it
is so permitted). Section 29(4) provides that in those circumstances the
premises referred to in subsection (1) may only be entered, and the acts
referred to in that subsection may only be performed, ‘by virtue of a warrant’10
issued in chambers by a magistrate or a regional magistrate or a judge.
[86] The function of a warrant, as it is expressed in the language of the
section, is to permit an investigator to perform the acts that are authorised by
s 29(1). It functions as what the Divisional Court in England (approved by the
House of Lords)11 described as ‘the key to the opening of the door to a power
that is granted by [the authorising statute)’.12 While it may permit an
investigator to perform all the acts that are authorised by s 29(1) that must
necessarily include the power to permit an investigator to perform only one or
more of those acts or to perform one or more of them only to a limited extent.
[87] Such a warrant may be issued (s 29(5))
‘if it appears to the magistrate, regional magistrate or judge from information on oath or
affirmation, stating -
(a)
the nature of the investigation in terms of section 28;
(b)
that there exists a reasonable suspicion that an offence, which might be a specified
offence, has been or is being committed, or that an attempt was or had been made to
commit such an offence; and
(c)
the need, in regard to the investigation, for a search and seizure in terms of this
9 As in the case of a search and seizure under warrant, it must be conducted only with ‘strict regard to decency and
order, including a person’s right to, respect for and the protection of his or her dignity, the right of a person to freedom
and security, and the right of a person to his or her personal privacy’ (s 29(2)).
10 The ordinary meaning of ‘by virtue of’, according to the Shorter Oxford Dictionary, is ‘by the authority of, in reliance
upon, in consequence of, because’
11 Inland Revenue Commissioners v Rossminster Ltd (On appeal from Regina v Inland Revenue Commissioners, Ex
parte Rossminster Ltd) [1980] AC 952 (HL).
12 At p. 961G.
section,
that there are reasonable grounds for believing that anything referred to in subsection (1) is
on or in such premises or suspected to be on or in such premises.’
[88] The warrants that are now in issue (I exclude for the moment the
warrant to search the premises of Mr Hulley) are all in the same terms (but for
the premises that they describe). Attached to the body of each warrant are
two annexures. Annexure A lists, in 23 paragraphs, various species of
documentation that is to be searched for and seized. Annexure B relates to
electronic forms in which that material might be stored. The scope of the
annexures is circumscribed by a clause in the body of each warrant that limits
the material to that which ‘has a bearing or might have a bearing on the
investigation in question’. The offences that are being investigated, according
to the body of each warrant, are ‘corruption in contravention of Act 94 of 1992,
fraud, money-laundering in contravention of Act 121 of 1998, the commission
of tax offences in contravention of Act 58 of 1962’ and any attempt to commit
such an offence or offences.
[89] A search and seizure on the terms that are described in the warrants
would have been permitted without a warrant in the circumstances that are
referred to in s 29(10). The various species of documentation and material
that are described in the warrants, which are all capable of identification, are
limited to documents and material that has or might have a bearing on the
investigation that is in progress, and they all fall within the terms of s 29(1).
That search and seizure would have been permitted by s 29(10)
notwithstanding that the person in charge of the premises (‘the searched’)
was unable to identify for himself or herself the material that was capable of
being seized. Indeed, it would have been permitted without information of any
kind relating to the investigation being provided to the person concerned.
[90] Yet it is contended in this case that a search and seizure on those
terms is not permitted under a warrant unless the ‘searched’ is provided with
information of that kind in the warrant (precisely what information was said to
be required has never been made altogether clear). I would find it remarkable
if an investigator was capable of doing without a warrant what he or she is not
capable of doing under the judicial control of a warrant. I find nothing in the
statute to support that conclusion. Whether or not s 29(10) is constitutionally
invalid, as my colleague has suggested it might be, does not seem to me to
be relevant to construing the ordinary meaning of the statute. It might be that
that section, and consequently the section that is now in issue, on their
ordinary meaning, are indeed invalid (I do not suggest that they are) but that
is not a matter that we have been called upon to decide.
[91] The learned judge in the court below said (relying on the decision in
Powell) that it is ‘now authoritatively established’ that in order to be valid a
warrant must, amongst other things, ‘set out the “specified offences”
suspected of having been committed or being committed’. He went on to say
that that required that ‘the person to be searched must be given information
as to approximately when the suspected offences have been committed and
who is suspected of having committed them.’ In that respect, so the court
held, the warrants were ‘inappropriately vague’ and they were defective on
that ground alone.
[92] I do not understand the learned judge to have meant that as a matter of
law a warrant must ‘set out the offences’ that are suspected. Certainly that
was not established by Powell and the statute also does not require it. I
understand the learned judge to have meant only that where a warrant allows
for the seizure of material that has or might have a bearing on ‘the
investigation’ (as the warrant did in Powell and as they do in this case) the
failure to ‘set out the offences’ that are under investigation will necessarily
mean that the scope of the authority is vague.
[93] I do not think that that, either, was established by Powell. In Powell the
warrant, construed in its particular context, allowed for the seizure of material
that exceeded what was permitted by s 29(1) (which confines itself to material
that has or might have a bearing on an investigation, by which is meant an
investigation into the suspected commission of offences) and it was for that
reason that the warrant was defective. There is no dispute that the
investigation in the present case (and accordingly the warrants) is confined to
the investigation of suspected offences. The point that is made in this case is
one that was not dealt with in Powell (in view of the construction that was
placed on the warrant it was not necessary to do so) and I do not think that
case is of assistance.
[94] I think that the finding of the court below needs to be clarified. The
learned judge said that the failure to specify what was under investigation
meant that the terms of the warrant were vague. I do not think that is correct.
Merely because one needs to look outside a written instrument to establish
what it relates to in concrete terms does not mean that the instrument is
vague. As pointed out by Watermeyer CJ in Rottcher’s Saw Mills13 (in relation
to a written contract but it applies as much to a warrant) it is always
necessary, in one way or another, to look outside a written instrument to
translate the ‘abstraction’ that it expresses to the ‘concrete thing in the
material world’. If the outside source that must be looked to for its
interpretation establishes with certainty what the instrument means then the
instrument is not vague at all.
[95] In this case the subject of the investigation is indeed capable of being
established with certainty. The investigator, with intimate knowledge of what
the investigation entails, is quite capable of establishing with certainty what
may or may not be seized. A court that might be called upon to decide
whether the authority of the warrant has been exceeded will also be capable
of doing so with certainty upon evidence of what the investigation entails. It is
not that the warrant is vague. I think that what the court below had in mind
was rather that they contain insufficient information to enable the ‘searched’ to
identify from the terms of the warrant alone what may and what may not be
seized (to relate the ‘abstract’ to the ‘concrete thing’). The question is whether
a warrant must indeed place the ‘searched’ in that position in order to be valid.
[96] My colleague bases his support for the finding of the court below on
what was said by Lord Denning in Rossminster (albeit that he was overruled
13 1948 (1) SA 983 (A) 990-991.
by the House of Lords)14 and in certain cases decided in New Zealand. I am
sure that statements to the same effect are to be found in other cases as well
because there might indeed be statutes that require that of a warrant. But as I
observed at the outset of this judgment I think that is the wrong way to
approach the enquiry. The enquiry is whether the statute in this case requires
that of a warrant. Certainly it does not do so expressly and my colleague has
pointed to nothing in the statute that requires it by necessary implication.
[97] If the necessity for embodying information of that kind in the warrant is
to place the ‘searched’ in a position to identify what may and what may not be
seized (no other purpose has been suggested) then I fail to see how that is
achieved by informing him or her ‘approximately when and by whom’ the
offence is suspected to have been committed. That, by itself, will be
altogether insufficient for that purpose. Why the ‘searched’ need be told only
‘approximately’ when the offences are suspected to have been committed,
and why he or she need not also be told where and in what manner it is
suspected that they were committed (though even that additional information
will not be enough to identify all material that has or might have a bearing on
the investigation) is unexplained. In endorsing its finding my colleague says
only that the investigation was ‘stated in such general terms that it was not
possible to ascertain what it covered’ without saying what would have
sufficed. Assertions by the respondents’ counsel as to what was required are
equally unhelpful. For in each case one is left asking why some features are
selected for disclosure in preference to others, and why any of those features
are required at all when none by themselves (or even in combination) will
suffice for the intended purpose. It seems to me to be all rather random and
arbitrary.
[98] In truth it will not be possible, in any practical terms, to embody in a
warrant everything that is required to identify all material that has or might
have a bearing on an investigation that is of any complexity. And if it is not
possible to do so then I see no reason why a statute should require a warrant
to make what is no more than an empty gesture in that direction and none has
14 Citation above, fn. 11.
been suggested.
[99] Section 29(4) allows for all (or any) of the acts set out in s 29(1) to be
performed (including the seizure of ‘anything that has or might have a bearing
on the investigation’) if that is permitted by a warrant and I think it follows that
a warrant may permit that in terms (which is what the warrants in the present
case effectively do). There is nothing in the express language of s 29 to
suggest that those acts may be permitted by a warrant only if a person who
might be in charge of the premises (there may be no such person at all) is first
placed in a position to identify then and there what may and what may not be
seized. Indeed, nothing in the express language of the section suggests that a
person who is in charge of the premises must be provided with any
information relating to the investigation at all. The court below and my
colleague have also not pointed to anything in the statute that suggests by
necessary implication that that is required. On the contrary, in my view the
section, construed in its context, necessarily implies the contrary, for at least
five reasons.
[100] First, if that is indeed a requirement of the statute, then the information
that must be conveyed must surely be capable of being circumscribed with
some certainty, rather than by mere random assertion. Secondly, as I alluded
to earlier, I do not think it would be possible, in an investigation of any
complexity, to express in a warrant all the information that would be
necessary for that purpose. One or more features of the conduct that
constitutes the suspected offence will not serve that purpose, nor, indeed, any
rational purpose at all, and I do not think that the section requires a gesture.
Thirdly, to require the disclosure of the full nature of an investigation, such
that all material that has a bearing is capable of being identified by those who
might be implicated, seems to me to have the real potential to undermine the
investigation. Fourthly, the person to whom the warrant is presented is not
called upon to assist in identifying the material or to perform any other act. It is
difficult to see in the circumstances why it should be essential that he or she is
able to identify then and there the material that is subject to seizure. Any
contest as to what may be seized under the warrant must necessarily be
resolved by a court, which is capable of determining that issue upon evidence
of what the investigation entails. And finally, to return to a point that I made
earlier, if a search and seizure in such terms is permitted without disclosure
when it occurs without a warrant, I see no reason why the legislature should
have required it when it occurs under the control of a warrant. Indeed, I think
that would be an absurd result, which the section must be construed to avoid.
[101] The warrants in the present case express intelligibly and with certainty
the scope of the authority that they confer. They permit a search for and
seizure of all the species of material referred to in the annexures (all of which
is capable of being identified) if the material has or might have a bearing on
the investigation in respect of which they were issued. What that investigation
entails, and whether the material has or might have a bearing upon it, are all
objective facts that are capable of being ascertained. A search and seizure in
those terms also does not extend beyond what is permitted by s 29(1). I see
nothing more that is required of the warrants by the statute.
[102] I should add that the learned judge in the court below also held that
para 23 of annexure A to each of the warrants (he referred to it as the ‘catch-
all’ clause) was so wide in its terms that its presence alone was sufficient to
invalidate the warrants but I do not think that finding takes the matter further.
In my view that clause does not differ materially from the other clauses of the
annexure. The material that it encompasses is similarly confined to material
that has or might have a bearing on the investigation and it all falls within the
provisions of s 29(1).
[103] The court below also held that Ngoepe JP ought not to have issued the
warrants because the information placed before him did not demonstrate the
need for the search and seizure as required by s 29(5)(c). That was principally
because, said the learned judge, the information placed before Ngoepe JP
‘[did] not make out a case that the [material] cannot be obtained by invoking
the provisions of section 28’.15 (That section authorises an investigator to
summon a person to produce documents.) The learned judge seems also to
15 That is the section that allows an investigator to summon persons to answer questions and to produce documents.
have been of the view that the investigation could make do without all the
material that was sought but I do not think that a judicial officer is entitled to
refuse a warrant for that reason. How an investigation is to be conducted falls
within the prerogative of the investigator. If material has or might have a
bearing on an investigation the investigator is entitled to have access to the
material and I do not think that it is open to a court to say that he or she may
have access to only some of it but not more. The section permits a judicial
officer to refuse a warrant only if the need is not shown to resort to search and
seizure for that purpose.
[104] In my view the court below set the bar far too high in requiring it to be
shown that the material could not be obtained by invoking the provisions of
section 28. I do not see how an investigator could ever show that other than
by first asking for the material to be produced and having the request refused.
If that were to be required before a warrant may be issued it would altogether
undermine an investigation. I think that subsection (c) requires it to be shown
only that the material cannot be expected in the ordinary course to be
produced voluntarily. That will almost always be the case when it is being
sought from a person who it might incriminate, as in the present case. I do not
think that finding of the court below was correct.
[105] The warrants relating to the premises of Mr Hulley (who was Mr
Zuma’s attorney) were framed in the same general terms as the other
warrants but the annexures were different. Annexure A had two paragraphs.
The first paragraph described a collection of specific documentation that had
been delivered to Mr Hulley by the attorney for Mr Zuma’s former financial
adviser. There is no difficulty identifying that material. When the warrant was
executed at Mr Hulley’s office he immediately pointed to two sealed boxes
that contained the material. There is also no suggestion that that material falls
outside the ambit of s 29(1). The second paragraph described various species
of documentation, much as the annexures to the other warrants did, but again
confined to material that has or might have a bearing on the investigation. No
attempt was made to execute that portion of the warrant but in any event I do
not think it was defective, for the reasons I have already given. Clearly it could
not be said that Mr Hulley, if he were free to act by his own accord, might not
have been willing to produce the material voluntarily, but it must be borne in
mind that he would not have been entitled to do so other than on the
instructions of his client. In the circumstances the need for search and seizure
in relation to that material was similarly established.
[106] Lastly to the question of privilege. Section 29(11) creates a mechanism
for protecting the privilege that might be claimed for information contained in
any material found on premises. It was submitted on behalf of the
respondents that a warrant that does not contain at least a reference to that
section is defective. Apart from asserting that proposition counsel provided no
convincing explanation why that is a necessary implication of the statute and
in my view the submission has no merit.
[107] The learned judge in the court below expressed himself on the
importance of protecting legal privilege when executing a warrant and with
much of what he said I agree but I do not understand the learned judge to
have held that the execution of the warrant at the premises of Mr Hulley (or
the execution of the warrants at other premises) was unlawful for any failure in
that regard nor do I think it was. The warrant was presented to Mr Hulley who
immediately identified two boxes containing the material covered by the first
paragraph of the annexure and they were removed. No search took place at
his premises and no further material was seized. There was no reason for the
appellants to have thought that the boxes might contain privileged information.
The boxes were expected to contain documents that emanated from Mr
Zuma’s former financial adviser and not from an attorney. The day after the
material was seized Mr Hulley wrote to the appellants asserting that ‘a certain
privilege’ might attach to some of the documents, but he has never elaborated
upon what that ‘certain privilege’ might be. There can be no doubt that that
was not a claim that information contained in the documents was protected
from disclosure by legal professional privilege for otherwise Mr Hulley would
have said so. Even now there is no claim that any of the information was
privileged. In the circumstances I do not think it has been shown that any
special precautions to avoid the disclosure of privileged information were
called for when the warrants were executed.
[108] Other matters raised by the respondents in the papers were not
seriously pressed before us and in any event I do not think they have any
merit. I do not think that any of the warrants that are in issue in this appeal
were legally deficient, nor that they were unlawfully executed. In those
circumstances the directorate is entitled to have such access to the material
as is ordinarily permitted by law and the application ought to have been
dismissed.
[109] The appeal is upheld with costs. The order of the court below is set
aside and an order is substituted dismissing the application with costs. In both
cases the costs are to include the costs of two counsel.
________________
R.W. NUGENT
JUDGE OF APPEAL
PONNAN JA ) CONCUR
MLAMBO 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:
8 NOVEMBER 2007
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
The Supreme Court of Appeal today upheld the appeal brought by the National
Director of Public Prosecutions, the Investigating Directors of three of the directorates
established under the National Prosecuting Authority Act and the Durban Director of
Public Prosecutions against an order made by Mr Justice Hurt in the Durban High
Court setting aside five search warrants issued by the Judge President of the Transvaal
Provincial Division Mr Justice Ngoepe, authorising the search of premises occupied
or formerly occupied by Mr Jacob Zuma and his attorney Mr Michael Hulley.
In his judgment which was concurred in by Appeal Judges Ponnan and Mlambo,
Appeal Judge Nugent held that the warrants under consideration expressed
‘intelligibly and with certainty the scope of the authority that they confer’ and that the
statute under which they were issued required no more.
In a minority judgment concurred in by Appeal Judge Cloete, Appeal Judge Farlam
stated he agreed with Mr Justice Hurt in the Durban High Court that the warrants
were invalid because they did not intelligibly convey the ambit of the search.
|
3132
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 89/06
In the matter between:
BRUCE E McGREGOR
FIRST
APPELLANT
CORPCOM OUTDOOR (PTY) LTD
SECOND
APPELLANT
and
CITY OF JOHANNESBURG
RESPONDENT
CORAM: HOWIE P, CLOETE, LEWIS JJA et SNYDERS,
THERON AJJA
DATE OF HEARING: 9 MARCH 2007
DATE OF DELIVERY: 28 MARCH 2007
Summary:
Local government – Interpretation of Municipal by-laws. Approval granted to
display an advertising sign for a fixed period. Promulgation of new by-laws preserves the
approval granted in terms of repealed by-laws but does not extend the scope of the right
previously granted.
Neutral citation: This judgment may be referred to as McGregor v City of
Johannesburg [2007] SCA 31 RSA
____________________________________________________________________________
THERON AJA:
[1] The respondent, a metropolitan municipality, sought and obtained an order
before Cachalia J in the Johannesburg High Court, interdicting the appellants
from displaying an advertising sign and advertising hoarding on the basis that its
by-laws were being contravened. An appeal to the full court was dismissed, per
Satchwell and Tsoka JJ (Goldstein J dissenting). The further appeal to this court
is with its special leave.
[2] The first appellant is the registered owner of certain residential property on
which an advertising sign and hoarding (‘the sign’) belonging to the second
appellant is erected. In terms of a letter dated 1 July 1999, the respondent’s
predecessor, the Eastern Metropolitan Local Council (EMLC), approved an
application by the second appellant to erect the sign on the property. The
approval, which it is important to emphasise, was to operate for the period 1 July
1999 to 30 June 2002, was granted in terms of the Signs and Advertising
Hoardings: By-laws (the ‘1995 by-laws’).1 The 1995 by-laws were repealed by
Notice 6271 of 1999 (the ‘1999 by-laws’).2 The 1999 by-laws were in turn
repealed, with effect from 1 December 2001, by Notice 7170 of 2001 (the ‘2001
by-laws’).3
[3] Both the 1999 and 2001 by-laws contained a provision (clause 38(2) in the
former and 43(2) in the latter) which reads:
1 The 1995 By-laws were contained in Local Authority Notice 37 of the Municipality of Sandton, published in the
Gauteng Provincial Gazette No 1 of 4 January 1995.
2 Notice 6271 contained the Eastern Metropolitan Local Council Advertising Signs and Hoardings By-laws and
was published in the Gauteng Provincial Gazette No 80 of 29 September 1999.
3 Notice 7170 was published in the Gauteng Provincial Gazette Extraordinary No 234 of 28 November 2001 and
contained the Advertising Signs and Hoarding By-laws for the City of Johannesburg.
‘Anything done under or in terms of any provision [of the by-laws repealed] … shall be
deemed to have been done under the corresponding provisions of these by-laws and such repeal
shall not affect the validity of anything done under the by-laws so repealed.’
[4] By virtue of clause 5(26) of the 2001 by-laws,4 the display of advertising
signage on property zoned ‘residential’ was declared to be unlawful. No similar
provision is to be found in the 1995 or the 1999 by-laws. It is common cause that
the sign was erected on property which is zoned ‘residential’.
[5] Clause 4(3) of the 2001 by-laws, which is at the heart of the present
dispute, provides:
‘Any sign which does not comply with the provisions of these by-laws and which was lawfully
displayed on the day immediately preceding the date of commencement of these by-laws shall
be exempt from the requirements of these by-laws if the sign in the opinion of the Council is
properly maintained and is not altered, moved or re-erected as contemplated in Clause 2(2).’5
The appellants contend that in terms of the approval granted by the EMLC the
sign was lawfully displayed on 30 November 2001, which was the day
immediately preceding the date of commencement of the 2001 by-laws. On that
basis, so it was argued, the sign falls within the ambit of the exemption created in
terms of clause 4(3), which exempts the sign from the operation of the 2001 by-
4 Clause 5(26) renders it unlawful to, inter alia, erect or maintain:
‘Any third party advertising sign on any property zoned “Residential” in terms of the relevant Town Planning
Scheme whether secondary rights or not have been granted by Council and which are exercised on the erf.’
5 The relevant portions of clause 2 read:
‘(1) No person shall display or erect any advertising sign or hoarding or use any advertising sign or hoarding or
use any structure or device as an advertising sign or hoarding without first having obtained the written approval of
the Council; provided that the provisions of this Clause shall not apply to signs contemplated in Clause 4,
(2) No sign erected displayed (sic) with the approval of the Council shall in any way be altered, moved, re-erected
nor shall any alteration be made to the electrical wiring system of such sign except for the purposes of renovating
or maintenance, without the further approval of the Council in terms of sub-clause (1).’
laws, provided that the sign is properly maintained and not altered, moved or re-
erected.
[6] The approval granted by the EMLC was for a fixed period (1 July 1999 to
30 June 2002) and it is common cause that the promulgation of the 2001 by-laws
did not in any way limit such approval. What is in dispute is whether the 2001
by-laws extended the scope of the appellants’ right to display the sign beyond the
limit of the original approval.
[7] Clause 4(3) has to be interpreted in context, having regard to the purpose
of the by-laws and the mischief sought to be regulated. The purpose of the by-
laws is clearly to regulate the display of signage within the respondent’s area of
jurisdiction.6 This includes regulating the maintenance of the signage,
restrictions, offences, sanctions and the granting of exemptions. In my view, and
for the reasons that follow, the construction contended for by the appellants
undermines and detracts from this general purpose.
6 The Preamble to the 2001By-laws reads:
‘WHEREAS the community of the City of Johannesburg has legitimate interests in ensuring:-
1. that signs or advertisements do not constitute a danger or nuisance to members of the general public whether
by way of obstruction, interference with traffic signals or with the visibility of such signals, light nuisance or
otherwise;
2. that signage or advertising displayed in its living environment is aesthetically pleasing, appropriate and placed
at appropriate sites with an uncluttered effect;
3. that its environment for tourism is characterised by a high standard of user friendly signage and advertising
satisfactorily integrated into the environment;
AND WHEREAS individual businesses have legitimate interests in the proper advertising of their businesses,
wares and products;
AND WHEREAS it is the duty of the Council of the City of Johannesburg to balance the competing interests in a
fair, equitable, flexible and responsible way;’
[8] The purpose of clause 4(3) is to preserve that which had lawfully come
into existence prior to the promulgation of the 2001 by-laws.7 The effect of
clause 4(3) is to preserve existing rights even though such rights may be
inconsistent with the 2001 by-laws. Clause 4(3) further exempts a sign that was
lawfully displayed immediately before the 2001 by-laws came into operation
from the requirements of such by-laws to the extent necessary to preserve the
right already granted. By exempting the sign from the requirements of the 2001
by-laws, clause 4(3) does no more than preserve the validity of any approval that
may have been granted in terms of repealed by-laws; the exemption does not in
any way serve to extend the original approval, by, for example, deleting any
limitations to which such approval had been subject. In this matter, the appellants
were exempted from the requirement of obtaining the approval of the respondent
to erect and display the sign (clause 2(1)), which approval the respondent was
precluded from granting after 30 November 2001 by reason of the enactment of
clause 5(26). It follows that the sign was lawfully displayed until the period for
which approval was granted for its display expired. After 30 June 2002, the
continued display of the sign was unlawful.
[9] To interpret clause 4(3) in the manner contended for by the appellants
would mean that a particular class of signage would be unregulated (subject only
to the requirements properly to maintain and not to move or alter the sign) and
7 Clauses in other legislation similar to clause 4(3) have been interpreted by our courts as having the purpose of
preserving existing rights. R v Shoolman 1937 CPD 183; British Chemicals and Biologicals (SA) (Pty) Ltd v
South African Pharmacy Board 1955 (1) SA 184 (A); SA Warehousing Services (Pty) Ltd v National Transport
Commission 1982 (3) SA 840 (A) at 845D-E.
completely excluded from the provisions of the respondent’s by-laws. According
to the appellants, approval to display the sign for a fixed period would, by virtue
of the exemption in clause 4(3), and subject only to the requirements in that
clause, be converted to approval in perpetuity. That cannot be so. I respectfully
agree with Satchwell J that it would be absurd permanently to exempt from the
provisions of the 2001 by-laws a sign which is specifically proscribed in terms of
such by-laws (clause 5(26)). A further consequence of accepting the appellants’
interpretation is that signs which do not comply with the provisions of the 2001
by-laws, may, by reason of such non-compliance, be favoured with extended
rights. This interpretation leads to a glaringly absurd result which could never
have been intended by the legislature.8
[10] I turn to deal with the argument, which found favour with Goldstein J, that
to adopt the respondent’s interpretation of clause 4(3) would render the latter
‘superfluous since it would be duplicating the effect of section 43(2)’. Both
clauses 4(3) and 43(2) have the effect of preserving existing rights. This does not
mean that either clause is rendered superfluous. Clause 43(2) preserves the
validity of legal acts performed in terms of previous by-laws, provided such acts
are permitted in terms of the new by-laws. The erection of a sign in a residential
area is not permitted in terms of the new by-laws (clause 5(26)). Clause 4(3)
preserves what was lawfully done in terms of the repealed legislation and which
has, in terms of the new legislation, become unlawful.
8 Poswa v MEC for Economic Affairs, Environment and Tourism, Eastern Cape 2001 (3) SA 582 (SCA) para 11.
[11] For these reasons, the appeal is dismissed with costs, including the costs of
two counsel.
L V Theron
Acting Judge of Appeal
CONCUR:
HOWIE P
CLOETE JA
LEWIS 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:
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
McGregor v City of Johannesburg
In a judgment today the Supreme Court of Appeal has dismissed an appeal
relating to the interpretation of municipal by-laws applicable to the display of
advertising signage and hoarding.
The first appellant is the registered owner of certain residential property on
which an advertising sign and hoarding (‘the sign’) belonging to the second
appellant is erected. In terms of a letter dated 1 July 1999, the respondent’s
predecessor, the Eastern Metropolitan Local Council (EMLC), approved an
application by the second appellant to erect the sign on the property. The
approval, which it is important to emphasise, was to operate for the period 1
July 1999 to 30 June 2002, was granted in terms of the Signs and Advertising
Hoardings: By-laws (the ‘1995 by-laws’). The 1995 by-laws were repealed by
Notice 6271 of 1999 (the ‘1999 by-laws’). The 1999 by-laws were in turn
repealed, with effect from 1 December 2001, by Notice 7170 of 2001 (the
‘2001 by-laws’).
The appellants contend that in terms of the approval granted by the EMLC
the sign was lawfully displayed on 30 November 2001, which was the day
immediately preceding the date of commencement of the 2001 by-laws. On
that basis, so it was argued, the sign falls within the ambit of the exemption
created in terms of clause 4(3) of the 2001 by-laws, which exempts the sign
from the operation of the 2001 by-laws, provided that the sign is properly
maintained and not altered, moved or re-erected.
The SCA, in a judgment by Theron AJA in which Howie P, Cloete JA, Lewis
JA and Snyders AJA concurred, held that the purpose of clause 4(3) is to
preserve that which had lawfully come into existence prior to the promulgation
of the 2001 by-laws. The effect of clause 4(3) is to preserve existing rights
even though such rights may be inconsistent with the 2001 by-laws. Clause
4(3) further exempts a sign that was lawfully displayed immediately before the
2001 by-laws came into operation from the requirements of such by-laws to
the extent necessary to preserve the right already granted. By exempting the
sign from the requirements of the 2001 by-laws, clause 4(3) does no more
than preserve the validity of any approval that may have been granted in
terms of repealed by-laws; the exemption does not in any way serve to
extend the original approval, by, for example, deleting any limitations to which
such approval had been subject.
The court held that the sign was lawfully displayed until the period for which
approval was granted for its display expired. After 30 June 2002, the
continued display of the sign was unlawful.
--ends--
|
1783
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 64/10
In the matter between:
ELEFTERIOS POLONYFIS Appellant
v
THE MINISTER OF POLICE First Respondent
INSPECTOR P I VAN RENSBURG NO Second Respondent
CONSTABLE J STRYDOM NO Third Respondent
INSPECTOR BOOYSEN NO Fourth Respondent
CONSTABLE MOLELEKOA NO Fifth Respondent
CONSTABLE MARKGRAAFF NO Sixth Respondent
THE MAGISTRATE, COLESBERG NO Seventh Respondent
INSPECTOR MOUTON NO Eight Respondent
CONSTABLE PETERS NO Ninth Respondent
CONSTABLE MPHULANYAE NO Tenth Respondent
INSPECTOR MATSHEBE NO Eleventh Respondent
CONSTABLE BARNS NO Twelfth Respondent
THE MAGISTRATE, DE AAR NO Thirteenth Respondent
Neutral citation: Polonyfis v The Minister of Police (64/2010) [2011] ZASCA 26
(18 March 2011)
Coram:
Brand, Maya, Cachalia, Shongwe JJA and Petse AJA
Heard:
24 February 2011
Delivered:
18 March 2011
Summary: Search and seizure under ss 20 and 21 of the Criminal Procedure
Act 51 of 1977 discussed – The execution of a warrant will only be set aside if
there is an abuse of power or a ‘gross violation’ of a person’s rights.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Northern Cape High Court, Kimberley (Lacock J sitting as court
of first instance).
The following order is made:
The appeal is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Brand, Maya, Shongwe JJA, Petse AJA concurring):
[1] This is an appeal against a judgment of Northern Cape High Court
(Lacock J) dismissing an application by the appellant for an order to set aside a
search warrant issued by a Colesberg magistrate.
[2] These are the facts. The appellant was the owner of a business that
operated under the name ‘The Entertainment Centre’ at premises in the sleepy
little Karoo town of Colesberg. It was the only business of its kind in the town. On
1 December 2006, at the request of members of the SAPS, the magistrate, who
is the seventh respondent, issued the search warrant – with which we are
concerned in this appeal – under s 21 of the Criminal Procedure Act 51 of 1977
(the Act). The warrant reads as follows:
‘SUID-AFRIKAANSE POLISIEDIENS
VISENTERINGSLASBRIEF
Artikel 20, 21 en 25 van Strafproseswet, 1977 (Wet No 51 van 1977)
Aan:
Kst Strydom Kst Janse van Rensburg
Insp Booysen Kst Molelekoa
Kst Markgraaff
(Rang, naam en werksadres van lede wat deursoeking gaan uitvoer)
en enige ander lid van die Suid-Afrikaanse Polisiediens wat behulpsaam kan wees met
die visentering en beslaglegging.
Dit blyk aan my uit inligting onder eed, dat redelike gronde bestaan om te glo dat daar
binne
Die Landdrosdistrik van Colesberg voorwerpe is, soos wat in Aanhangsel “A” hierby
aangeheg, beskryf is, en wat –
*(a)
op redelike gronde vermoed word betrokke te wees by die vermeende pleging
van;
*(b)
tot bewus kan strek van die vermelde pleging van; of
*(c)
op redelike gronde vermoed word bestem te wees om gebruik te word by die
pleging van;
die misdryf(we), synde onwettige dobbelary onder Artikel 81(1)(a) van die Noord Kaap
dobbel en Wedren Wet 1996 (nr 5/1996) en dat ek redelike gronde het om te vermoed
dat hierdie voorwerpe
in besit, of onder die beheer van .............................................................................
……………………………………………………….(vermeld naam en persoon(e) is;
op of by ‘n perseel, te wete Kerkstraat Hall Entertainment Centre (beskryf
perseel)
U word hierby gemagtig om gedurende die dag/nag die geïdentifiseerde –
persoon(e) te visenteer
perseel te betree en te deursoek en om enige persoon(e) op of by daardie
perseel te visenteer,
en op die voorwerp(e) wat in Aanhangsel “A” beskryf is, beslag te lê, wat gedurende die
deursoeking gebind word en om daaroor te beskik ooreenkomstig artikel 30 van die
Strafproseswet.
Gegee onder my hand te Colesberg op hierdie dag van 1 Desember 2006 (jaar).
Volle name: EDWARD WILLIAM SCHON
Ampstitel: Magistrate/Landdros
Landdrosdistrik: COLESBERG’
[3] The application for the warrant was supported by an affidavit, referred to in
the warrant as ‘Aanhangsel “A”’, which the investigating officer had deposed to.
The relevant portions of the affidavit read:
‘2.
Ek het gedurende 2006 op ‘n navraag gewerk ten opsigte van onwettige dobbel persele.
Inligting is ingesamel ten opsigte van die bedrywighede van die persele in die Bo-Karoo.
4.
Te Colesberg is Entertainment Centre geleë in die winkel sentrum Hall wat in Kerkstraat
is by die perseel is die modus operandi presies soos op De Aar. Die geld word by die
toonbank betaal en weer word speel munte wat die masjiene werk aan jou gegee indien
u enige wennings maak word die lesing neergeskryf en uitbetaal by die toonbank. Beskik
oor geen lisensie nie 38 masjiene.
5.
In (die) geval is aansoek gedoen vir 252A en sal van lokvinke gebruik gemaak word op
06/12/02 om dobbel te kan bewys op alle gelde en masjiene sal beslag gelê word.’
[4] The following day, on 2 December, the SAPS mounted an undercover
operation to gather evidence of suspected gambling. A SAPS member entered
the premises described in the warrant and exchanged a R10 and a R20 note at
the counter in return for which he was given 60 tokens. He used the tokens to
play on a machine known as a ‘one arm bandit’. The particular machine does not
pay out cash amounts but registers winnings as ‘credits’ that are redeemable for
cash. The member’s endeavours yielded 35 credits for which he was paid an
amount of R17.50 in cash. He then left the premises and reported to his
superiors.
[5] Armed with this information and the warrant, Inspector Booysen, who is
the fourth respondent and one of the officers mentioned in the warrant, entered
the premises later that day. He was accompanied by four other police officers,
the second, third, fifth and sixth respondents. He read the content of the warrant
to the manager and handed a copy of it – without the affidavit – to him. He then
proceeded to execute the warrant by seizing cash in an amount of R15 162.30,
gambling machines, a coin counting machine, a scale used for weighing tokens,
tokens each worth fifty cents, documents, receipt books, keys, ashtrays, chairs
and some other smaller items.
[6] While conducting the search, Booysen asked the manager for his
identification document. He answered that it was in his hotel room, which was
some distance from the premises. Booysen then escorted him there to find the
document. When they entered the room, Booysen noticed a black book. He
enquired from the manager what information it contained. The manager replied
that it contained telephone numbers. Booysen asked him who his employer was.
The manager was uncooperative and replied that he did not know. Booysen then
took possession of the book in the hope that he may be able to obtain the
employer’s contact details there. They then returned to the business premises
and found the appellant’s attorney standing outside with the other police officers.
[7] They entered the premises and Booysen exhibited the warrant to the
attorney – again without the affidavit. It bears mentioning that Booysen had the
affidavit in his possession throughout the search and seizure operation. The
police officers then left with the items that they had seized. The appellant initially
sought the return of all these items. The high court, by consent, granted an order
for the return of all the articles, except the money, tokens and gambling
machines. The appellant complains that the high court ought also to have
ordered that the remaining articles be returned.
[8] The appellant attacks the lawfulness of the search and seizure operation
on four grounds: first, because the warrant did not indicate which sub-section of s
20 of the Act was applicable to the search; secondly, for the reason that the
address of the premises to be searched was vaguely described in the warrant;
thirdly, that Booysen’s failure to exhibit the affidavit, when the warrant was
executed rendered the search unlawful, and finally, that the execution of the
warrant was unlawful because the SAPS seized some things that were not
mentioned in the warrant.
[9] Before I deal with each of these contentions it is worth referring to some of
the broad principles applicable to search and seizure warrants that Nugent JA
recently restated in Minister of Safety and Security v Van Der Merwe:1
1 [2010] ZASCA 101 (7 September 2010); 2011 (1) SACR 211 (SCA) paras 8-15.
‘From the earliest criminal codes – both in this country and abroad – statutory powers of
search and seizure have existed for the detection and prosecution of crime. Such
powers, to search and seize in relation to crime, are generally authorised in the following
way.
A court or judicial officer is empowered by the statute to authorise, first, a search
of premises, and secondly, the seizure of articles found in the course of that search, by
issuing a warrant to that effect. Most often, the power to issue such a warrant is
dependent upon it being shown, by information on oath, that it is suspected on,
reasonable grounds, that an article (or articles) connected with a suspected offence is to
be found on premises.
For a warrant to be justified, in such circumstances, the information that is placed
before the court or judicial officer will necessarily need to demonstrate, firstly, that there
are reasonable grounds to believe that a crime has been committed; and secondly, that
there are reasonable grounds to believe that an article connected with the suspected
crime is to be found upon particular premises. In order to demonstrate the existence of
those jurisdictional facts, the “information on oath” will necessarily need to disclose the
nature of the offence that is suspected.
In some cases it will be known that a particular article exists that is connected
with the suspected crime. In those cases the purpose of the search will be to discover
the particular article, and the article will thus be capable of being described in specific
terms. In other cases it will not be known whether any particular article exists, but it can
be expected that an article or articles of a particular kind will exist if the offence was
committed. In such cases the purpose of the search will be to discover whether such
article or articles exist/s, and thus they or it will be capable of being described only by
reference to their genus. It is in relation to warrants of that kind that problems of validity
most often arise. It will be inherent in the nature of the authority to search that the
searcher might, in appropriate circumstances, be entitled to examine property that is not
itself connected with the crime – for example, the contents of a cupboard or a drawer, or
a collection of documents – to ascertain whether it contains or is the article that is being
sought.
The authority that is conferred by a warrant to conduct a search, and then to
seize what is found, makes material inroads upon rights that have always been
protected at common law – amongst which are rights to privacy and property and
personal integrity. In those circumstances – as demonstrated by the review of decided
cases by Cameron JA in Powell NO & others v Van der Merwe NO & others – the courts
in this country have always construed statutes that authorise the issue of warrants
strictly in favour of the minimum invasion of such rights – which is in accordance with a
general principle of our law to that effect. As the learned judge said in that case:
“Our law has a long history of scrutinising search warrants with rigour and exactitude –
indeed, with sometimes technical rigour and exactitude. The common-law rights so
protected are now enshrined, subject to reasonable limitation, in s 14 of the Constitution:
‘Everyone has the right to privacy, which includes the right not to have –
(a) their person or their home searched;
(b) their property searched;
(c) their possessions seized; or
(d) the privacy of their communications infringed.’ ”
A challenge to the validity of a warrant will thus call for scrutiny of the information
that was before the issuing officer, to determine, firstly, whether it sufficiently disclosed a
reasonable suspicion that an offence had been committed; and secondly, whether it
authorises no more than is strictly permitted by the statute.
Questions that arise in relation to the second issue will generally fall into either of
two different categories. The first is whether the warrant is sufficiently clear as to the acts
that it permits. For, where the warrant is vague, it follows that it will not be possible to
demonstrate that it goes no further than is permitted by the statute. If a warrant is clear
in its terms, a second, and different, question might arise, which is whether the acts that
it permits go beyond what is permitted by the statute. If it does, then the warrant is often
said to be “overbroad” and will be invalid so far as it purports to authorise acts in excess
of what the statute permits. A warrant that is overbroad might, depending upon the
extent of its invalidity, be set aside in whole, or the bad might be severed from the good.
Needless to say, a warrant may be executed only in its terms. But it is important
to bear in mind that it is not open to a person affected by a search to resort to self-help
to prevent the execution of a warrant, even if he or she believes that its terms are being
exceeded – which is in accordance with ordinary principles of law. As Langa CJ pointed
out in Thint:
“While a searched person may in certain cases collaborate and aid the investigator . . .
the legislation envisages a unilateral exercise of power that is not dependent on such
collaboration.”
Thus it is ultimately the searcher who must decide whether an article or articles fall
within the terms of the warrant, though he or she does so at the risk that, if not, his or her
conduct might be found to have been unlawful.’ (Footnotes omitted.)
[10] Bearing these principles in mind I turn to consider the first of the
appellant’s complaints – that the warrant is invalid because the learned
magistrate failed to specify which sub-section of s 20 is applicable to the articles
that may be seized.2 I did not understand the appellant to contend that a warrant
would in and of itself be invalid if it purported to authorise the seizure of articles
under all three sub-sections. This must be so because the jurisdictional facts
necessary for the issue of a single warrant may be found in all three sub-
sections.3 In other words an article may be ‘concerned in the commission of an
offence’, ‘may afford evidence of the commission of an offence’ and also may ‘on
reasonable grounds believed to be intended to be used in the commission of an
offence’. Indeed this would frequently be the case – particularly because the
sections are couched in general terms and are almost impossible to delineate.
[11] The appellant’s real objection to the warrant is that the information that
was placed before the magistrate did not justify his using all three sub-sections.
Mr Jagga, who appeared for the appellant, contended that from the magistrate’s
reasons it is apparent that he only extended the warrant to cover all the sub-
2Section 20: ‘State may seize certain articles
The State may, in accordance with the provisions of this Chapter, seize anything (in this Chapter
referred to as an article)-
(a) which is concerned in or is on reasonable grounds believed to be concerned in the
commission or suspected commission of an offence, whether within the Republic or elsewhere;
(b) which may afford evidence of the commission or suspected commission of an offence,
whether within the Republic or elsewhere; or
(c) which is intended to be used or is on reasonable grounds believed to be intended to be
used in the commission of an offence.
3 To the extent that it may be suggested that two provincial divisions have held that it is not
permissible for a search warrant to be issued to cover the circumstances in all three sub-sections,
I respectfully disagree. See Fiona Henning v The Minister of Public Safety and Security Case No
22157/2003 paras 23 and 24; Sarel Blaauw v The Chairperson of the North West Gambling
Board & others Case No 940/04 paras 13 and 14.
sections so as to couch the warrant in terms that are as wide as possible. The
warrant was therefore over-broad, and for that reason invalid.
[12] The contention does not bear scrutiny. The magistrate stated his reasons
for issuing the warrant in the terms he did as follows:
‘7.1
Ek ontken dat ek nie my aandag aan die aangeleentheid spandeer het alvorens
ek die lasbrief onderteken en uitgereik het nie. Ek het juis nie enige van (a), (b) of
(c) deurgehaal nie, aangesien ek dit nodig gevind het om die bevoegdhede soos
in aldrie vervat, intakt te hou en nie die Polisie se magte onnodig te beperk nie.
7.2
Nadat ek die verklaring deurgelees het, was ek oortuig dat daar redelike gronde
bestaan om te glo dat daar ‘n misdryf op die perseel gepleeg word.
7.3
Dit was vir my duidelik dat die geld, masjiene en speelmunte kwalifiseer in terme
van (a), (b) en (c) en derhalwe het ek nie een van die drie deurgehaal nie.’
[13] It is clear that the authorisation was sought to search the premises and
seize articles that bear some relationship to illegal gambling on the premises. A
gambling machine, for example, which is one of the articles we are concerned
with in this case, may be concerned in the commission of the offence of illegal
gambling, afford evidence of the commission of that offence and reasonably be
used in the commission of further such offences. In other words the three sub-
sections would all apply. Similarly, as the magistrate said, money and tokens
could notionally also fall into all three categories. The magistrate, therefore,
correctly did not limit the warrant to only one of the sub-sections.
[14] I turn to the appellant’s second ground of attack; that the inaccurate
description of the address in the warrant rendered it invalid. The warrant
describes the premises as ‘Kerkstraat, Hall Entertainment Centre’. The correct
description of the premises and its address is, however, ‘The Entertainment
Center, shop 10, The Mall, 72 Church Street, Colesberg’. The affidavit prepared
for the purpose of obtaining the warrant contains the following description: ‘Te
Colesberg is Entertainment Centre geleë in die winkel sentrum Hall wat in
Kerkstraat is’. It appears that the word ‘Hall’ was erroneously used instead of ‘the
Mall’.
[15] Mr Jagga, submitted that the description of the property must be
ascertained only by reference to the warrant and not the affidavit, which, as I
have mentioned, was not attached to the warrant when it was executed. On this
basis it is contended that the description of the address on the face of the
warrant does not meet the strict requirements of the test that was adopted by
Gura AJ in Sarel Blaauw v The Chairperson of the North West Gambling Board &
others.4 There the court was persuaded, on the basis of Canadian authority,5 that
South African law requires a warrant:
‘(To) identify a physical location for the search to take place . . . The description of the
place to be searched should be precise enough to allow someone unfamiliar with the
investigation to identify the location to be searched from the warrant alone . . . the
address or described place must be particular and accurate. For example, if the warrant
outlines the wrong address, the search and seizure are viewed as warrantless.’
(Ellipses added.)
[16] For present purposes it is not necessary to consider this authority, except
to the limited extent that it is relevant in this case. The starting point must always
be to ask what the South African law is. For this we must look to s 21(2) of the
Act, which says that a warrant shall authorise a police official ‘to enter and search
any premises identified in the warrant’. The section means no more than that the
warrant should intelligibly describe the premises to be searched so that the
official who is authorised to conduct the search is able to identify it. Absolute
perfection in description is not required – not even in the United States where the
Constitution’s Fourth Amendment provides in terms that no warrant shall issue
except those ‘particularly describing the place to be searched’.6 US courts have
4 Case no 949/04 (BPD) para 16.
5 Scott C Hutchison et al Search and Seizure Law in Canada vol 2 at 16-30 and 16-31.
6 Wayne R LaFave & Jerold H Israel Criminal Procedure 1985 p 135.
thus held that ‘it is enough if the description is such that the officer with the
search warrant can, with reasonable effort ascertain and identify the place
intended’.7 In a similar vein, Canadian courts have emphasised that the
substance of the warrant must be looked at to give effect to it.8 Thus a technically
wrong address does not invalidate a warrant if it otherwise describes the
premises with sufficient particularity so that the police can ascertain and identify
the place to be searched.9
[17] Viewed in this light the warrant with which we are concerned – even
without the affidavit – met the requirements of s 21 of the Act. The ‘Entertainment
Centre’ was the only one of its kind on ‘Kerkstraat’ and in Colesberg. The police
officers executing the warrant knew the premises and were able to locate it
without any difficulty. I should add that, Sarel Blaauw, the case on which the
appellant relies, does not support him. There the learned judge correctly said that
if the description of the premises is not accurate, he would nevertheless uphold a
warrant if the search was conducted at the correct address.10 There is therefore
no substance in this contention.
[18] I turn to the appellant’s third complaint; that the absence of the affidavit
when the SAPS executed the warrant invalidated the search. As I understand the
complaint it is that because Booysen did not hand over the affidavit to the
manager when he gave him the warrant, the warrant was incomplete and for this
reason its execution was unlawful.
[19] Section 21(4) of the Act requires a police officer executing a warrant to
‘after such execution, upon demand of any person whose rights in respect of any
search or article seized under the warrant have been affected, hand him a copy
of the warrant’. The reason that the officer must, on demand hand a copy of the
7 Steele v United States No 1 267 US 498, 45 SCt 414, 69 LEd 757 (1925).
8 R v Silverstone 66 CCC (3 rd) 125 paras 61-64.
9 R c Charles 2010 QCCQ 9178 (Can LII) para 37.
10 n 4 para 17.
warrant, only after execution is, as Nugent JA points out in the passage quoted
above, because the search and seizure process is a unilateral exercise that is
not dependent upon the cooperation of the person who is in charge of the
property that is being searched. And it is for the officer conducting the search to
decide whether or not an item to be seized falls within the terms of the warrant.
After the search a copy of the warrant and any document referred to in it must –
on demand – be handed to the person in charge who may then decide whether
or not to challenge the validity of the warrant, either because it was unlawfully
issued or unlawfully executed.
[20] Inspector Booysen read the contents of the warrant to the manager and
handed a copy of it to him, albeit without the affidavit. The manager did not
‘demand’ a copy of the affidavit, even though the warrant referred to it. Neither
did the appellant’s attorney. They could have done so at any stage after the
execution of the search when they must have realised that they had not received
a copy of the affidavit. They elected not to do so for reasons only they are aware
of. Booysen says pertinently that it was an oversight on his part not to have
handed a copy of the document to the manager and that he would have handed
a copy to him if he had asked for it because he had the document in his
possession at the time of the search. There is therefore no merit in this complaint
either.
[21] I turn to the appellant’s fourth and final contention – that the manner of
execution of the warrant was unlawful because the executing officers seized not
only money, tokens, and machines, but they also took chairs, ashtrays and
documents of whatever nature, including documents from the manager’s hotel
room. The validity of the whole search was therefore tainted. For this rather novel
proposition Mr Jagga relied on this court’s judgment in Pretoria Portland Cement
Company Limited & another v The Competition Commission & others11 where the
court held that where the executing authority abuses its power in a manner that
11 2003 (2) SA 385 (SCA).
involves a gross violation of a person’s right to privacy the entire search and
seizure process may be set aside.12 The court qualified this by saying that an
unlawful execution will not by itself inevitably taint a warrant that is itself regular.13
[22] The search warrant authorised only the seizure of machines, money and
tokens. The SAPS, however, seized articles that the warrant did not mention.
And it was not able to justify the seizure of the other articles on any other ground.
The high court, therefore, correctly ordered the return of all those items not
mentioned in the warrant.
[23] But it does not mean that because the execution of the warrant went
beyond its strict terms that the entire search was tainted. I do not think that the
behaviour or conduct of the police amounted to, in Pretoria Portland’s
formulation, either an ‘abuse of power’ or ‘gross violation’ of the appellant’s
rights. The seizure simply went beyond the ambit of the warrant and the
appropriate remedy for this was, as the high court ordered, the return of those
articles that were seized but not authorised by the warrant.
[24] In my view, the court below correctly dismissed all the appellant’s
contentions. In the result the appeal is dismissed with costs.
___________
A CACHALIA
JUDGE OF APPEAL
12 Ibid para 71 and 73.
13 Ibid para 73I-J.
APPEARANCES
APPELLANTS:
N Jagga
Instructed by Vardakos Attorneys, Vereeniging
Honey & Partners, Bloemfontein
RESPONDENT:
W Coetzee
(1st – 6th and 8th) Instructed by The State Attorney,
Kimberley
(7th) The Magistrate, Colesberg NO, Colesberg
(13th) The Magistrate, De Aar NO, De Aar
The State Attorney, Bloemfontein
|
REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
18 March 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Polonyfis v The Minister of Police
(64/2010) [2011] ZASCA 26 (18 March 2011)
The Supreme Court of Appeal (SCA) dismissed an appeal against an order of
the Northern Cape High Court, Kimberley. The appellant, Mr Elefterios
Polonyfis, who owns ‘The Entertainment Centre’ in Colesberg, appealed
against the judgment of the high court in which its application to set aside a
search warrant was dismissed with costs. The warrant was issued by a
Colesberg magistrate since the police believed that illegal gambling was being
conducted on the premises.
The appellant attacked the lawfulness of the search and seizure operation on
four grounds, namely (1) the warrant did not indicate which sub-section of s
20 of the Criminal Procedure Act 51 of 1977 was applicable; (2) the address
of the premises to be searched was vaguely described in the warrant; (3) that
the fourth respondent failed to exhibit an affidavit in support of the warrant;
and (4) that the execution of the warrant was unlawful because the South
African Police Service seized items that were not mentioned in the warrant.
It was held that all three sub-sections of s 20 of the act were applicable in this
case and that the magistrate correctly did not limit the warrant only to one
section.
The SCA held further that a technically wrong address does not invalidate a
warrant if it otherwise describes the premises with sufficient particularity so
that the police can ascertain and identify the place to be searched.
With regard to the appellant’s third argument the court found that the
appellant did not request a copy of the affidavit from the police. Had he done
so they would have indeed provided him with a copy.
The appellant further argued that the seizure of the ashtrays, chairs,
documents and other smaller items were not permitted by the warrant and
that this deemed the entire seizure invalid. The court found that although the
warrant only permitted the seizure of gambling machines, money and tokens
the execution of the warrant was not invalid because the search did not result
in a abuse of power or a ‘gross violation’ of the appellant’s rights. In any case,
the high court already ordered the return of the other items which were taken.
Therefore the SCA dismissed the appeal with costs.
|
2366
|
non-electoral
|
2013
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 619/12
In the matter between:
DENGETENGE HOLDINGS (PTY) LTD
Appellant
and
SOUTHERN SPHERE MINING AND
DEVELOPMENT COMPANY LIMITED
First Respondent
RHODIUM REEFS LIMITED
Second Respondent
MINISTER OF MINERALS AND ENERGY
Third Respondent
DEPUTY DIRECTOR-GENERAL: MINERAL REGULATION
DEPARTMENT OF MINERALS AND ENERGY
Fourth Respondent
REGIONAL MANAGER: MPUMALANGA REGION,
DEPARTMENT OF MINERALS AND ENERGY
Fifth Respondent
REGIONAL MANAGER: LIMPOPO REGION,
DEPARTMENT OF MINERALS AND ENERGY
Sixth Respondent
ABRINA 1998 (PTY) LTD
Seventh Respondent
Neutral citation:
Dengetenge Holdings (Pty) Ltd v Southern Sphere
Mining and Development Company Ltd & others
(619/12) [2013] ZASCA 5 (11 March 2013)
Bench:
NUGENT, PONNAN, SHONGWE and THERON JJA and
ERASMUS AJA
Heard:
21 FEBRUARY 2013
Delivered:
11 MARCH 2013
Corrected:
Summary:
Failure to comply with rules of court – appeal lapsing –
application for condonation – factors to be considered –
cumulative effect of such factors – condonation refused.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from:
North Gauteng High Court (Pretoria) (Tuchten J sitting as court of
first instance):
(a)
The application for condonation is dismissed with costs.
(b)
The applicant for condonation is ordered to pay the costs incurred by the
respondents in opposing the lapsed appeal.
(c)
In both instances (a) and (b) the costs shall include the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN JA (NUGENT, SHONGWE and THERON JJA and ERASMUS AJA
concurring):
[1] After the record had been filed in this matter the appeal lapsed for failure on the
part of the appellant (now the applicant) – Dengetenge Holdings (Pty) Ltd (Dengetenge)
– to prosecute it by timeously filing its heads of argument. The initial question that is
before us is whether the default by Dengetenge should be condoned and the appeal
revived. Before turning to that question it is convenient to describe how the appeal
arose and the circumstances in which it came to lapse.
[2] The dispute in the matter pertains to prospecting rights for the platinum group
metals in respect of two properties situated in the Limpopo Province, namely Portion 1
and the remaining extent of Boschkloof 331 KT (Boschkloof) and Portion 1 and the
remaining extent of Mooimeisjesfontein 363 KT (Mooimeisjesfontein) (the properties).
After sub-division of those properties they came to be transferred, in accordance with
the then spatial development policies of the State, to the South African Bantu Trust and
thereafter vested in the self-governing territory of Lebowa. In terms of s 12(1) of the
Lebowa Mineral Trust Act 9 of 1987 the mineral rights in respect of the properties
vested in the Lebowa Mineral Trust (LMT). With the adoption of our interim Constitution
the ownership of the properties minus the mineral rights in respect thereof, which had
been severed from the land and vested in the LMT, reverted to the Republic of South
Africa. And thereafter by virtue of s 3(1)(b) of the Abolition of Lebowa Mineral Trust Act
67 of 2000 the mineral rights which had previously vested in the LMT vested in the
Republic of South Africa. Whilst the LMT was the holder of the mineral rights it had
entered into a notarial mineral lease agreement and a prospecting agreement in respect
of the properties with Southern Sphere Mining and Development Company Ltd
(Southern Sphere) and Rhodium Reefs Ltd (Rhodium), the first and second
respondents respectively.
[3] On 7 April 2003 Rhodium applied in terms of the Mineral and Petroleum
Resources Development Act 28 of 2002 (the MPRDA), to the Minister of Minerals and
Energy (the Minister) for a renewal of its prospecting agreement with the LMT. Its
application was refused. Rhodium immediately launched an urgent application in the
then Transvaal Provincial Division of the High Court. Neither the Minister, who was cited
as the first respondent or the Deputy Director-General: Mineral Regulation, Department
of Minerals and Energy (Deputy DG), who was cited as the second, opposed the
application. The order which issued was:
'2.
THAT, subject to 3 below:
2.1
the first respondent is hereby interdicted and restrained from granting any rights in terms
of sections 17 and/or 23 of the Mineral and Petroleum Resources Development Act no. 28/2002
("the Act") in respect of the portions of the remaining extent and portions 1 and 2 of the farm
Boschkloof 331 K.T., Mpumalanga Province which are the subject of the applicant's application
dated 27 October 2004 for a prospecting right ("the properties"); and
2.2
the second respondent is hereby interdicted and restrained from granting any rights in
terms of section 17 and/or 23 of the Act in respect of the properties arising from any delegation
effected in his favour by the first respondent.
2.3
the third respondent is interdicted and restrained from accepting any application in
respect of the properties in terms of section 16 and 22 of the Act.
3.
THAT the interdict set out in 2 above shall serve as a temporary interdict pending the
final determination of review proceedings to be launched by the applicant against the
respondents, seeking the review and setting aside of the decision in terms of section 17 of the
Act by the first and/or second respondents to refuse the applicants application dated 27 October
2004 for a prospecting right in respect of the properties, on condition that such review
proceedings shall be initiated within 30 days from the date hereof.'
[4] On 2 December 2005 Rhodium instituted the envisaged review application. That
application was also unopposed. On 6 December 2006, the following order issued:
'1.
The refusal decision by the First Respondent and/or the Second Respondent on the 14th
of September 2005 taken in terms of section 17(2) of the Mineral and Petroleum Resources
Development Act, No. 28 of 2002, not to grant the prospecting right applied for by the Applicant
in terms of an application for a prospecting right relating to platinum group metals and all
minerals associated therewith ("the prospecting right") in respect of Portions 1, 2 and the
remaining extent of the farm Boschkloof 331K in the Magisterial District of Lydenburg ("the
property"), is hereby reviewed and set aside;
2.
The First Respondent and/or the Second Respondent are directed to grant and issue to
the Applicant the prospecting right applied for in respect of the property;
3.
The First Respondent is directed to pay the costs of this application.'
[5] On 15 April 2005 Southern Sphere lodged with the Regional Manager of the
Department of Minerals and Energy, Limpopo (RM Limpopo) an application for a
prospecting right in terms of s 16 of the MPRDA in respect of properties that it described
as Boschkloof 331 KT and Mooimeisjesfontein. On 4 October 2006 the RM Limpopo
informed Southern Sphere that it had been granted a prospecting right in terms of s 17
of the MPRDA over Portion 1 and the remaining extent of Boschkloof 331 KT and
Portion 1 and the remaining extent of Mooimeisjesfontein.
[6] On 7 February 2006 Dengetenge applied to the Regional Manager of the
Department of Minerals and Energy, Mpumalanga (RM Mpumalanga) for a prospecting
right in respect of Portion 1 of Boschkloof and Portion 1 and the remaining extent of
Mooimeisjesfontein. The application was granted on 23 August 2006 and registered
with the Mineral and Petroleum Titles Registration office on 28 November 2006. On 20
December 2005, Abrina 1998 (Pty) Ltd (Abrina), lodged an application with the RM
Mpumalanga for a prospecting right in respect of the remaining extent and Portion 2 of
Boschkloof. That application was accepted on 9 February 2006 and subsequently
granted on 26 July 2006.
[7] On 17 August 2007 the Director-General: Department of Minerals and Energy
wrote to Southern Sphere:
‘1.
I refer to the abovementioned matter and wish to advise that the Minister of Minerals and
Energy has, after careful deliberation, decided to withdraw the decision of the Deputy Director-
General: Mineral Regulation to grant a prospecting right to Southern Sphere in as far as it
overlaps with the right granted to Rhodium Reefs in respect of the properties in question.
2.
The reasons for this decision are as follows:
2.1
On or about 26 October 2005, the Court granted an interdict by way of a court order,
whereby the Department was interdicted from granting any rights in respect of the properties
forming the subject of an application for prospecting rights by Rhodium Reefs Limited, pending
the finalization of review proceedings to be instituted by Rhodium Reefs Limited.
2.2
In terms of a court order dated 6 December 2006, the refusal decision was set aside and
the Department was directed to grant and issue to the Applicant the prospecting right applied for
in respect of the property.
2.3
Subsequent to the above Court Order, the Minister was made aware by the attorneys of
the Applicant "Rhodium Reefs" that your client has been granted a right which extends to the
properties granted to Rhodium Reefs Limited in terms of the Court Order.
2.4
It is evident that the granting of the prospecting right in respect of the "Rhodium
properties" to your client was an unfortunate error, and is in contravention of both Orders of
Court and as such may result in Contempt of Court proceedings being instituted against the
Minister.
2.5
After careful deliberation, the Minister has therefore now decided that the only legal
manner to rectify the situation, would be to invoke the provisions of section 103(4) of the Act,
and to withdraw the granting of the right to Southern Sphere in as far as it overlaps with the right
granted to Rhodium Reefs in respect of the properties in question.
3.
The effect of this decision is therefore that your prospecting right is hereby amended to
include the area applied for by your client, but excluding the properties awarded to Rhodium
Reefs in terms of the Court Order of 6 December 2006.'
[8] Against that backdrop, Southern Sphere launched a review application in the
North Gauteng High Court. It cited the Minister, the Deputy DG, the RM Mpumalanga,
the RM Limpopo, Rhodium, Abrina and Dengetenge as the first to seventh respondents
respectively. Southern Sphere sought various orders, not all of which are relevant for
present purposes. After initially opposing the application, Abrina withdrew its opposition.
Affidavits were filed on behalf of the Minster, the Deputy DG and the Regional
Managers, not with a view to opposing the relief sought, but, as it was put, to assist the
court below. The matter came before Tuchten J who made inter alia the following
orders:
‘3.
THAT the decision of the third respondent as delegate of the first respondent to award to
the seventh respondent ("Dengetenge") prospecting rights for the platinum metals group as
contemplated in Section 17 of the MPRDA over one or more properties is reviewed and set
aside ….
4.
It is declared and directed that:
4.1
The first respondent validly took the decision in terms of Section 103(4) of the MPRDA
which was communicated to the applicant's attorneys of record on 3 September 2007;
4.2
The applicant ("Southern Sphere") has been validly awarded prospecting rights over the
northern parts of Portion 1, Portion 2 and the Remaining Extent of Boschkloof 331 KT and
Mooimeisjesfontein 363 KT;
4.3
The fifth respondent ("Rhodium") has been validly awarded prospecting rights over the
southern parts of Portion 1, Portion 2 and the Remaining Extent Boschkloof 331 KT;
4.4
The common boundary between the northern and southern parts of Boschkloof 331 KT
is as depicted on the map, which forms an annexure to this relation to the properties or any of
them;
4.5
Save as set out in this order, no prospecting rights has validly been granted in relation to
the properties or any of them;
4.6
Any mineral titles, such as there may be, registered under the provisions of the Mining
Titles Registration Act, 16 of 1967, in favour of the Abrina or Dengetenge over any of the
properties must forthwith be cancelled;
4.7
The first, second, third and fourth respondents (collectively "the DME respondents")
must, without delay, do all things and take all such steps as may be necessary to give effect to
the grant of prospecting rights to Southern Sphere over the northern parts and to Rhodium over
the southern parts of Boschkloof 331 KT as set out in this order.’
[9] On 17 June 2011 Dengetenge obtained leave from the high court to appeal to
this court. After obtaining two extensions of time Dengetenge filed the record of appeal
with the registrar of this court on 15 December 2011. That meant that its heads of
argument had to have been filed by 23 February 2012 (SCA Rule 10). Appreciating, it
would seem, that it would be unable to meet that deadline Dengetenge sought the
consent of the other parties to the matter for the late filing of its heads by 13 April 2012.
Although the Minister and the State functionaries (who had been cited as respondents
in the high court) took no part in the appeal, the State Attorney consented to the late
filing of the heads of argument. Southern Sphere and Rhodium did not. Dengetenge
was thus forced to file a substantive application for condonation with the registrar of this
court. That application only reached the registrar on 24 February 2012 by which stage
the appeal had already lapsed. By way of a letter dated 2 March 2012 the registrar
notified Dengetenge that its appeal had lapsed due to non-compliance with the rules of
this court. An application for condonation was thus required to revive it (Court v
Standard Bank of SA Ltd; Court v Bester NO & others 1995 (3) SA 123 (A) at 139 F-H).
[10] On 8 March 2012 Southern Sphere’s attorney wrote to Dengetenge’s attorney
‘there is no need for our clients to respond to your client’s application dated 23 February
2012 as your client’s appeal has lapsed’. That letter, as also the earlier one from the
registrar, failed to elicit a response. After a silence of some four months, on 12 July
2012 Dengetenge served on Southern Sphere a copy of an application for condonation
and reinstatement of the appeal. When it was pointed out to Dengetenge that its heads
of argument had still not been filed, it re-served those documents on 27 August 2012
accompanied by its heads of argument. The heads of argument were thus some six
months late.
[11] Factors which usually weigh with this court in considering an application for
condonation include the degree of non-compliance, the explanation therefor, the
importance of the case, a respondent’s interest in the finality of the judgment of the
court below, the convenience of this court and the avoidance of unnecessary delay in
the administration of justice (per Holmes JA in Federated Employers Fire & General
Insurance Co Ltd & another v McKenzie 1969 (3) SA 360 (A) at 362F-G). I shall
assume in Dentenge’s favour that the matter is of substantial importance to it. I also
accept that there has been no or minimal inconvenience to the court. I, however, cannot
be as charitable to the appellant in respect of the remaining factors.
[12] In Uitenhage Transitional Local Council v South African Revenue Service 2004
(1) SA 292 (SCA) para 6 this court stated:
'One would have hoped that the many admonitions concerning what is required of an applicant
in a condonation application would be trite knowledge among practitioners who are entrusted
with the preparation of appeals to this Court: condonation is not to be had merely for the asking;
a full, detailed and accurate account of the causes of the delay and their effects must be
furnished so as to enable the Court to understand clearly the reasons and to assess the
responsibility. It must be obvious that, if the non-compliance is time-related then the date,
duration and extent of any obstacle on which reliance is placed must be spelled out.'
[13] What calls for some acceptable explanation is not only the delay in the filing of
the heads argument, but also the delay in seeking condonation. An appellant should,
whenever it realises that it has not complied with a rule of court, apply for condonation
without delay (Commissioner for Inland Revenue v Burger 1956 (4) SA 446 (A) at 449
G-H). There are huge gaps in the chronological sequence advanced by Dengetenge.
But what is evident is that from 2 March 2012 it knew that its appeal had lapsed on
account of its failure to file its heads with the registrar of this court by 23 February of
that year. From then onwards it must have been quite clear to it that an application for
condonation was necessary. And yet aside from an abortive attempt on 12 July it did
nothing until 27 August 2012. The closest that one gets to anything amounting to an
explanation for the delay is the following from the affidavit of Dengetenge’s attorney filed
in support of the application for condonation:
'22.
... Subsequent thereto, and whilst Counsel were busy with preparation for the Heads of
Argument, it was discovered during the second week of April 2012 that there were important
documents, including the final judgment and order of the Court a quo appealed against, which
were missing from the record of the appeal lodged on 15 December 2011. The other documents
included the processes filed by the parties in April 2011, pursuant to an invitation of the Court a
quo in terms of paragraph 5 of its judgment and order of 24 February 2011 and 1 March 2011.
23.
It was also important for the Heads of Argument and chronology table that the said
documents be part of the record of the appeal, inasmuch as they were critical, in our humble
submission, for purposes of the proper ventilation and adjudication of the appeal. It was thus
advised by Counsel that for purposes of finalisation of the Heads of Argument, Practice Note,
chronology table and certificate, a request should be made to the transcribers to prepare a
supplementary volume of the record of the appeal. That was outright attended to by my office
and included a request to the Court a quo to provide us with the final written judgment and order
pursuant to the hearing of 29 April 2011 which involved a reconsideration of paragraph 4 of the
order of 24 February 2011 and/or 1 March 2011 above.'
Those averments raise more questions than they answer. There is no attempt to relate
them to a coherent time-frame or to fully enlighten the court as to the relevance and
materiality of those documents or why the heads of argument could not have been filed
in their absence. Moreover, as Rhodium, in its opposition to the application for
condonation, makes plain:
'13.9. The absence of the submissions and, in addition, the "final written judgment and order
pursuant to the hearing of 29 April 2011" from the appeal has no bearing on the outcome of this
appeal in terms of the Appellant's notice of appeal. The final order granted by the court a quo
dealt exclusively with an issue as between the first and second respondents about the north-
south divide of the properties. The grounds of appeal raised by the Appellant in terms of its
notice of appeal all pertain to the judgment of the court a quo dated 24 February 2011.'
I should perhaps add that none of those documents were referred to in argument before
us. The suspicion thus remains that the explanation advanced by Dengetenge is
disingenuous and contrived. But even were it to be accepted, the explanation proffered
is woefully inadequate. It falls far short of explaining the deathly silence by Dengetenge
upon its learning that the appeal had lapsed or why it took some six months to launch
the application for condonation. I would thus find it impossible to hold that the delay in
bringing this application has been explained in a manner which is even remotely
satisfactory.
[14] I now turn to the respondents’ interest in the finality of the judgment of the court
below. Both Southern Sphere and Rhodium state that once the appeal had lapsed the
prospecting rights granted by the Minister to each of them became effective. Southern
Sphere commenced prospecting operations on the properties during March 2012,
which, so it contends, it was obliged to do in terms of section 19(2)(b) of the MPRDA.
And as at July 2012 had incurred direct prospecting costs on the project of
approximately R6 million. Rhodium states that it has already expended in the region of
R1, 2 million and its forecasted cost for the compilation of its environmental impact
assessment is R1,928 million. As it puts it: ‘While not all of this cost has actually been
incurred yet, the process has been commissioned and a portion thereof has been
incurred and the balance thereof will have to be settled soon so as to comply with the
requirements set out in the above mentioned letter of acceptance of Rhodium's mining
right application.’ Those amounts, according to the respondents, would be placed at risk
if Dengetenge is given the opportunity to re-instate the lapsed appeal. Most of those
costs according to both respondents had been incurred by them when they believed
that they had legal certainty in consequence of the appeal having lapsed and there was
no indication by Dengetenge that it intended seeking its re-instatement. Furthermore,
according to Southern Sphere, it has
‘sold shares to investors in order to fund the prospecting operations. These shares were sold to
both local and international investors on the premise that the Appeal had lapsed. Shares were
also sold to the local communities residing on the properties representing some 32 000 people
who have very high expectations of being involved in the project's success. It has taken the First
Respondent many years to establish a strong working relationship with the local communities,
and the damage that would be caused to community relations if the project was now placed on
hold or otherwise delayed could well be irreversible’.
None of those allegations are disputed by Dengetenge. Nor, it seems to me, could they
be. It must accordingly be accepted that both respondents have been severely
prejudiced by Dengetenge's delay in prosecuting the appeal.
[15] Given the flagrant breach that one encounters here coupled with the failure to
advance an acceptable explanation therefor, as also the very evident prejudice to the
respondents, we may well have been entitled to refuse the indulgence of condonation
irrespective of the merits of the appeal (Blumenthal & another v Thomson NO & another
1994 (2) SA 118 (A) at 121I). But, faced with some explanation, albeit one that
appeared inadequate and perhaps even lacking in candour, counsel was directed to
address the merits of the appeal so as to enable us to assess the Dengetenge's
prospects of success and to weigh that together with the other factors.
[16] At the commencement of the argument before the high court counsel who then
represented Dengetenge, placed the following on record:
'[COUNSEL] ADDRESSES COURT:
As the court pleases, My Lord. My Lord, the
seventh respondent concedes that in so far as the relief is sought by the applicant in its notice of
motion and by the fifth respondent in its counter application to review and set aside the decision
to grant it a prospecting right … [intervened]
COURT:
Grant whom a prospecting right?
[COUNSEL]: The seventh respondent My Lord.
COURT:
Yes?
[COUNSEL]: It concedes that the grant of that right was unlawful.
COURT:
That is quite an important concession.
[COUNSEL]: It is indeed My Lord.
COURT:
So I had better make a careful note of it. Concedes that the grant … [indistinct].
You concede … [intervened
[COUNSEL]: My Lord, in the … [intervened]
COURT:
Excuse me. I want to just make sure that I have got it right. You concede that the
grant of a prospecting right to the seventh respondent was unlawful?
[COUNSEL]: That is correct.
COURT:
Seventh respondent is Dengetenge. Can we call it Dengetenge?
[COUNSEL]: As the court pleases, My Lord.
COURT:
To make it easier for me. Yes?
[COUNSEL]: My Lord, as obviously will appear from my argument when I address Your
Lordship, the basis of that concession is that the grant was in the face of an interdict.
. . .
[COUNSEL]: My Lord, where that leaves the seventh respondent, where that leaves
Dengetenge, is that what we will be addressing Your Lordship on, is purely what the appropriate
relief should be following, on consequent upon concession. In other words, what is a just and
equitable remedy following the setting aside of the right to it. And that is my submissions to Your
Lordship will be based on that. Obviously My Lord, I will make submissions on the rights that
Southern Sphere the applicant has and the rights that Rhodium has as well. But in so far as
Dengetenge goes My Lord, my submissions will be limited to what is the just and equitable
remedy in the circumstances.
COURT:
Thank you.'
[17] In the light of what occurred before the high court there can be no doubt that
Dengetenge’s counsel abandoned its opposition to the application (Kannenberg v Gird
1966 (4) SA 173 (C) at 181-183). That being so, Dengetenge cannot, on appeal, seek to
advance a case that was specifically abandoned before the court below (Wolfowitz &
Wolfowitz v Fresh Meat Supply Co Ltd 1908 TS 506 at 512; Gcayiya v Minister of Police
1973 (1) SA 130 at 135F-G). But, says counsel who argued the matter for Dengetenge
in this court, notwithstanding its having eschewed in clear and unequivocal terms its
opposition to the application in the court below, the high court was obliged to mero motu
go behind counsel’s submission to determine whether it was correctly made. In my
view, such a proposition, for which one finds no support in our law, merely has to be
stated to be rejected. But even if there was such an obligation on the high court, I can
hardly see how it could have come to any other conclusion but that the grant of a
prospecting right to Dengetenge in the face of an interdict which specifically prohibited
that was unlawful. A further string to counsel’s bow was that even though the Minister
and State functionaries (who had been cited as respondents in that case) had chosen,
in their wisdom, not to oppose the grant of the interdict, they were free to simply
disregard that order of court. Once again I cannot agree. For, as Froneman J observed
in Bezuidenhout v Patensie Sitrus Beherend BPK 2001 (2) SA 224 (E) at 229 B-C:
'An order of a court of law stands until set aside by a court of competent jurisdiction. Until that is
done the court order must be obeyed even if it may be wrong (Culverwell v Beira 1992 (4) SA
490 (W) at 494A-C). A person may even be barred from approaching the court until he or she
has obeyed an order of court that has not been properly set aside (Hadkinson v Hadkinson
[1952] 2 All ER 567 (CA); Bylieveldt v Redpath 1982 (1) SA 702 (A) at 714).'
Moreover, it bears re-iterating that respect for the authority of the courts, which is
foundational to the rule of law, often serves as the bulwark against anarchy and chaos.
[18] Individually weighed - on each of the three factors the scales are tipped against
condoning the default and reviving the appeal. Cumulatively - they are decisive against
it. The superficial manner in which the application was prepared and the lack of
attention to matters which obviously called for an explanation, taken together with the
undoubted prejudice that the respondents have shown and the non-existent prospects
of success on appeal renders it impossible to justify the grant of condonation.
[19] In the result:
(a)
The application for condonation is dismissed with costs.
(b)
The applicant for condonation is ordered to pay the costs incurred by the
respondents in opposing the lapsed appeal.
(c)
In both instances (a) and (b) the costs shall include the costs of two counsel.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
D B Ntsebeza SC (with him G Shakoane and L Mashapa)
Instructed by:
Denga Incorporated, Johannesburg
Phatshoane Henney Attorneys, Bloemfontein
For First Respondent:
G Kairinos
Instructed by:
Badal Attorneys, Rosebank
Honey Attorneys, Bloemfontein
For Second Respondent:
G L Grobler SC (with him J L Gildenhuys (Ms))
Instructed by:
Edward Nathan Sonnenbergs, Johannesburg
McIntyre & Van der Post, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
11 MARCH 2013
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Dengetenge Holdings (Pty) Ltd
v
Southern Sphere Mining and Development Company Ltd & others
(619/12) [2013] ZASCA 5 11 March 2013)
Media Statement
Today the Supreme Court of Appeal (SCA) dismissed an application by Dengetenge
Holdings (Pty) Ltd for condonation and the reinstatement of its appeal. The appeal
had lapsed as a result of Dengetenge’s failure to file its heads of argument as
required by the Rules of the SCA.
Despite having being informed by the Registrar of the SCA that its appeal had
lapsed and appreciating that an application for condonation and the reinstatement of
its appeal was, as a consequence, necessary Dengetenge failed to take any steps to
remedy the situation for approximately six months. In dismissing the application for
condonation, the SCA held that: (a) Dengetenge had failed to advance an
acceptable explanation for the delay; (b) the two respondents, Southern Sphere
Mining and Development Company Limited and Rhodium Reefs Limited, who had
been granted prospecting rights over the properties and had already expended large
sums of money in exercising those rights, had been severely prejudiced by
Dengetenge’s delay in prosecuting the appeal; and (c) there were no prospects of
success on appeal. With regard to the last mentioned, the SCA held that
Dengetenge had abandoned its opposition to the application in the high court and
that it could not, on appeal, seek to advance a case that it had specifically
abandoned before that court. The SCA accordingly dismissed the application for
condonation, refused to reinstate the appeal and ordered Dengetenge to pay the
necessary costs.
--- ends ---
|
3799
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 1007/2020
In the matter between:
IMOBRITE (PTY) LTD
APPELLANT
and
DTL BOERDERY CC
RESPONDENT
Neutral Citation:
Imobrite (Pty) Ltd v DTL Boerdery CC (1007/20) [2022] ZASCA
67 (May 2022)
Coram:
VAN DER MERWE, MOLEMELA, MAKGOKA and CARELSE JJA and
MUSI AJA
Heard:
04 March 2022
Delivered: 13 May 2022.
Summary:
Close corporation - winding-up – proper interpretation of s 69 of Close
Corporation Act 69 of 1984 - whether application for winding-up brought by secured
creditor constituted abuse of court’s processes – unpaid creditor generally entitled to
winding-up ex debito justitiae against corporation unable to pay its debts – discretion
to nevertheless refuse winding-up order – whether discretion not to grant the winding-
up order was properly exercised – appeal upheld.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: The North West Division of the High Court, Mahikeng (Nobanda AJ
sitting as court of first instance):
The following order is therefore granted:
1. The appeal is upheld.
2. The order of the high court is set aside and replaced with the following:
‘(a) The respondent close corporation, DTL Boerdery CC, is placed under a
provisional order of winding-up in the hands of the Master of the North West
Division of the High Court, Mahikeng (high court).
(b) A rule nisi is issued calling upon the respondent and all interested parties
to show cause, if any, to the high court within six weeks of the date of
issuance of this order, as to why:
(i) the respondent should not be placed under a final order of winding-up; and
(ii) the costs of this application should not be costs in the winding-up of the
respondent.
(c) Service of this order shall be effected:
(i) by the sheriff of the high court or his lawful deputy on the registered office
of the respondent;
(ii) on the South African Revenue Services;
(iii) by publication in one edition each of the Sunday Times and a newspaper
circulating in the area where the respondent carries on business and in the
Government Gazette;
(iv) by registered post on all known creditors of the respondent with claims in
excess of R25 000;
(v) on the employees of the respondent in terms of s 346A(1)(b) of the
Companies Act 61 of 1973; and
(vi) on any registered trade union that the employees of the respondent may
belong to.
(c) Costs to be costs in the winding-up.’
______________________________________________________________
JUDGMENT
______________________________________________________________
Molemela JA (Van der Merwe, Makgoka, Carelse JJA and Musi AJA concurring):
Introduction
[1] Central in this appeal is the question of whether the North West Division of the
High Court, Mahikeng, correctly refused the appellant’s application for the winding-up
of the respondent close corporation.
Background
[2] The appellant, a private company, agreed to lend an amount of R2 750 000 to
the respondent, a close corporation, and the respondent’s sole member, Mr Tielman
Kotze (Mr Kotze). This agreement was recorded in an acknowledgement of debt
(AOD) signed on 15 May 2018. The AOD inter alia acknowledged that the respondent
and Mr Kotze had procured a loan from the appellant for the capital amount of
R2 750 000 and that they would repay the capital plus interest thereon in ten yearly
instalments of R791 495.95. In addition to interest, the respondent and Mr Kotze also
agreed to pay a ‘facilitation fee’ to the appellant. It was agreed that the first instalment
would be payable on or before 7 May 2019 and thereafter on or before 7 May of each
consecutive year. The AOD also stipulated that in the event that the debtor remained
in default 10 days after receiving notice to repair the breach, then the appellant, as the
creditor, would be entitled to exercise any remedy at its disposal in terms of the law,
including to cancel the agreement and retain all payments already made.
[3] It is common cause that the appellant was a secured creditor of the respondent
and held a special and general notarial bond over the respondent’s movable assets
for an amount of R2 750 000, together with an additional amount of R540 000 in
respect of costs. In addition, a first ranking covering mortgage bond had been
registered in favour of the appellant over the respondent’s farm.
[4] It is also common cause that the respondent failed to pay the first instalment by
the due date, namely 7 May 2019. As a result, the appellant delivered a letter of
demand to the respondent. On 20 May 2019, the appellant sent a letter to the
respondent, drawing its attention to its failure to pay the first instalment in accordance
with the AOD. In its response dated 3 June 2019, the respondent called for a statement
of account and intimated that upon receipt thereof, the respondent and Mr Kotze would
proceed to apply for alternative funding from a third party in order to liquidate their
indebtedness. In the same response, the respondent disputed the date from which
interest was payable and queried the facility fee computation.
[5] On 21 June 2019, the appellant issued a statutory demand as contemplated in
s 69 of the Close Corporations Act, 69 of 1984. The Sheriff properly served the
demand. On 5 August 2019, the attorneys for the respondent sent a letter to the
appellant’s attorney, referring to previous correspondence and recording that it was
disputing any indebtedness to the appellant. It was also contended that the provisions
of the National Credit Act 34 of 2005 (the NCA) were applicable, but that the appellant
had failed to comply with its requirements. Lastly, the letter stated that any application
seeking the winding-up of the respondent would be opposed.
[6] It is against the aforesaid background facts that the appellant, on 13 September
2019, launched an application for the winding-up of the respondent in the North West
Division of the High Court, Mahikeng (the high court) on the basis that DTL was unable
to pay its debts. In the answering affidavit, the respondent raised a number of
defences. However, not all of the defences raised persisted when the application came
before the high court. Two points in limine were raised. The first point in limine was
that the respondent disputed that it alone was a debtor of the appellant and, on that
basis, contended that the appellant had no locus standi to bring the winding-up
proceedings against it individually. The argument was raised that the debtor, as
described in the acknowledgement of debt, referred not only to the respondent but to
both the respondent and Mr Kotze. On this basis, it was contended that the
acknowledgement of debt had created a special sui generis kind of debtor which can
only be held jointly liable and as the appellant had not joined Mr Kotze, the appellant
was not entitled to pursue the proceedings against the respondent. The second point
in limine was to the effect that the acknowledgement of debt was a written record of a
loan agreement where the appellant had granted credit recklessly and in violation of
the relevant provisions of the NCA).
[7] Substantively, the respondent persisted with the defence that the appellant was
abusing the winding-up proceedings in order to enforce a debt for which the appellant
enjoyed adequate security. The high court rejected the points in limine. Relying on its
interpretation of the provisions of s 69(1)(a) of the Close Corporations Act, it found that
the appellant’s application for the respondent’s winding-up constituted an abuse of the
court’s processes. Therefore, the high court dismissed the application with costs,
notwithstanding that all the requirements for a winding-up order had been complied
with.
[8] Aggrieved by that decision, the appellant sought the high court’s leave to appeal
its order and was granted leave to appeal to this Court. Before this Court, the
respondent applied for the late filing of its heads of argument to be condoned. The
appellant did not oppose that application. At the commencement of the appeal hearing,
the application for condonation was granted on the basis that the respondent had
made out a proper case, warranting that the delay in filing the heads of argument be
condoned. The issues raised as points in limine which the high court dismissed need
not detain us, as they were no longer pursued before us. I turn now to the legal
principles applicable to the merits of this appeal.
Applicable Legal Position
[9] The winding-up of a Close Corporation is regulated by s 66 of the Close
Corporations Act 69 of 1984 (Close Corporations Act) as amended. The applicability
of the Companies Act 61 of 1973 to the winding up of close corporations is set out as
follows in s 66 of the Close Corporations Act:
‘(1) The laws mentioned or contemplated in item 9 of Schedule 5 of the Companies Act, read
with the changes required by the context, apply to the liquidation of a corporation in respect
of any matter not specifically provided for in this Part or in any other provision of this Act.’1
1 The Companies Act referred to in this part is the Companies Act 71 of 2008 (the 2008 Companies
Act). Schedule 5 of the 2008 Companies Act deals with ‘transitional arrangements’. The relevant
subitems of item 9 of schedule 5 provide that:
‘(1) Despite the repeal of the previous Act, until the date determined in terms of subitem (4), Chapter
14 of that Act continues to apply with respect to the winding-up and liquidation of companies under this
Act, as if that Act had not been repealed subject to subitems (2) and (3).
(2) Despite subitem (1), sections 343, 344, 346 and 348 to 353 do not apply to the winding-up of a
solvent company, except to the extent necessary to give full effect to the provisions of Part G of Chapter
2.
(3) If there is a conflict between a provision of the previous Act that continues to apply in terms of
subitem (1), and a provision of Part G of Chapter 2 of this Act with respect to a solvent company, the
Notably, s 66 (2) of the Close Corporations Act provides that for the purposes of
subsection (1), any reference in a relevant provision of the Companies Act, and in any
provision of the Insolvency Act 24 of 1936, made applicable by any such provision to
a company, shall be construed as a reference to a corporation.
[10] Section 69(1) of the Close Corporations Act provides that for the purposes of s
68(c), a corporation shall be deemed to be unable to pay its debts, if-
‘(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of not
less than two hundred rand then due has served on the corporation, by delivering it at its
registered office, a demand requiring the corporation to pay the sum so due, and the
corporation has for 21 days thereafter neglected to pay the sum or to secure or compound for
it to the reasonable satisfaction of the creditor; or
(b) any process issued on a judgment, decree or order of any court in favour of a creditor of
the corporation is returned by a sheriff, or a messenger of a magistrate's court, with an
endorsement that he or she has not found sufficient disposable property to satisfy the
judgment, decree or order, or that any disposable property found did not upon sale satisfy
such process; or
(c) it is proved to the satisfaction of the Court that the corporation is unable to pay its debts.
(2) In determining for the purposes of subsection (1) whether a corporation is unable to pay
its debts, the Court shall also take into account the contingent and prospective liabilities of the
corporation.’
[11] The requirements set out in s 69 need not be met cumulatively, as the
conjunction ‘or’ is used after paragraphs (a), (b), and (c) of subsection (1). In this
matter, it is common cause that in order to establish the requirement that the
respondent is unable to pay its debts, the appellant relied upon the respondent’s
inability to pay an undisputed debt within the statutorily allowed period of 21 days after
receiving the statutory demand. For this, the appellant relied upon the deeming
provision of this Act prevails.’ (Emphasis added.) No date has been determined to affect the interim or
transitional operation of item 9 of schedule 5. Chapter 14 of the old Act therefore continues to apply.
Section 345 of the old Act falls within chapter 14 of the old Act and, accordingly, in terms of subitem
9(1) of schedule 5 in new Act. Section 345 continues to apply with respect to the winding-up and
liquidation of companies as if the old Act had not been repealed. Subitem 9(1) is nevertheless subject
to subitems 9(2) and (3). Subitem 9(2) excludes, however, s 344 of the old Act from the winding-up of
solvent companies.’
provision contained in s 69(1)(a) of the Close Corporations Act. The appellant’s
application was also premised on s 69(1)(c) of the Close Corporation.
[12] Section 344 of the Companies Act 61 of 1973 (the 1973 Companies Act) is the
source of authority that vests a court with the power to liquidate a company.2 The
relevant part of s 344 provides as follows:
‘The court may grant or dismiss any application under section 346, or adjourn the hearing
thereof, conditionally or unconditionally, or make any interim order or any other order it may
deem just . . .’.
Interpretation of s 69 of Close Corporation Act
[13] The language in s 69(1)(a) of the Close Corporations Act is clear and
unequivocal. On a plain reading of that provision and noting the usage of the word
‘thereafter’, it is evident that a creditor will be entitled to rely upon the deeming
provision if, the close corporation has for 21 days after the demand has been made
as contemplated in the section, neglected to either pay the sum due to the creditor, or
to secure or compound for it to the reasonable satisfaction of the creditor. ‘Secure’
within the context of that section means that the close corporation must provide
security or additional security which is to the creditor’s satisfaction within 21 days after
the statutory demand. To interpret the section as meaning that the deeming provision
will not apply if, prior to the demand, the creditor already had sufficient security to
cover the debt would be to strain the clear language of the section. It would mean that
many creditors, such as financial institutions that regularly procure security to secure
debts, would hardly be able to rely upon the deeming provision, and thus, the winding-
up process would never be available to them. That meaning would simply lead to
insensible or unbusinesslike results.3 The high court’s interpretation of s 69 (1) was
plainly wrong, and the concession by the respondent’s counsel on that aspect was
therefore rightly made. It is now convenient to consider whether the appellant’s
application for winding-up constituted an abuse of the court process.
2 See Ex Parte Muller NO: In Re P L Myburgh (EDMS) Bpk [1979] 3 All SA 721 (N);1979 (2) SA 339(N)
at 340.
3 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] 2 All SA 262 (SCA); [2012] ZASCA
13 (SCA); 2012 (4) SA 593 (SCA) para 18-23.
Was there an abuse of court processes?
[14] It is trite that, by their very nature, winding-up proceedings are not designed to
resolve disputes pertaining to the existence or non-existence of a debts. Thus,
winding-up proceedings ought not to be resorted to enforce a debt that is bona fide
(genuinely) disputed on reasonable grounds. That approach is part of the broader
principle that the court’s processes should not be abused.
[15] A winding-up order will not be granted where the sole or predominant motive or
purpose of seeking the winding-up order is something other than the bona fide bringing
about of the company’s liquidation.4 It would also constitute an abuse of process if
there is an attempt to enforce payment of a debt which is bona fide disputed, or where
the motive is to oppress or defraud the company or frustrate its rights.5
[16] In this matter, it can hardly be disputed that the respondent had no valid defence
against the appellant’s claim. First, not a single instalment had been paid in repayment
of the debt. Second, the indebtedness in respect of the capital amount was not
disputed at any stage; instead, the respondent’s claim that the debt was incorrectly
calculated was based on the alleged miscalculation of interest and the facility fee.
Notably, despite remaining in default beyond the 21-day period stipulated in the
statutory demand, the respondent failed to tender to pay what is considered to be the
correct amount, nor did it make any suggestions regarding how to discharge its
indebtedness, save to mention that it and Mr Kotze would obtain alternative financing
once the amount of the debt had been corrected. Under these circumstances, there
can be no merit in the suggestion that the appellant was attempting to enforce payment
of a debt which was bona fide disputed. That being the case, it cannot be accepted
that the appellant’s application was predicated on any reason other than the bona fide
bringing of winding-up proceedings. Therefore, the respondent has not shown that the
winding-up proceedings constituted an abuse of the court’s process. Counsel for the
respondent’s concession on this aspect was therefore correctly made.
4 See Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T). That principle has
been so entrenched in our law that it has become known as ‘the Badenhorst rule’.
5 Henochsberg on the Companies Act Issue 23 at 694.
[17] In the written heads of argument, it was contended on behalf of the respondent
contended that a creditor cannot utilise the liquidation process to claim a debt due by
the debtor to one single creditor. Before us, counsel for the respondent seemed to
suggest that the reason why a winding-up order cannot be granted where there was a
single creditor was because a concursus creditorum could not established. However,
he conceded, correctly in my view, that the authorities to which we were referred in
the written heads of argument do not support that proposition.6 Therefore, there is no
need for this aspect to detain us. It suffices merely to reaffirm that the concept of
concursus creditorum (which refers to the establishment of a ‘body of creditors’ for
purposes of distributing the estate among creditors) is not a prerequisite for the
granting of a winding-up order but rather a consequence of the winding-up order by
operation of law.7
The exercise of the discretion to grant a winding-up order
[18] Having conceded before us that the high court’s interpretation of s 69 was
wrong and that the appellant’s application did not constitute an abuse of the court’s
processes, counsel for the respondent had another string to the respondent’s bow; he
urged this Court to accept that the discretion to refuse the winding-up order
(notwithstanding the appellant’s compliance with all the formalities prescribed in s
69(1) of the Close Corporations Act) was properly exercised. This was because the
appellant had a mortgage over the respondent’s fixed property, and the special notarial
bond secured over movable property. It was therefore contended that the properties
in question may, upon execution, yield more than the value of the claim.
[19] It is well-established that the two types of discretion exercised by courts are
often referred to as a discretion in the strict/narrow/true sense and a discretion in the
6 In the written heads of argument, we were referred to two judgments of this Court, namely, Collett v
Priest 1931 AD 290 at 299 and Body Corporate of Empire Gardens v Sithole and Another [2017] ZASCA
28; 2017 (4) SA 161 (SCA), as authorities for the proposition that ‘the liquidation process cannot be
fittingly described as a mechanism to be utilised by a creditor to claim a debt due by the debtor to one
single creditor’.
7 Walker v Syfret NO 1911 AD 141 at 160. See also s 347 (14) of the Companies Act 61 of 1973.
broad/wide/loose sense.8 In the context of an application for business rescue, this
Court in Oakdene Square Properties v Farm Bothasfontein (Oakdene),9 observed that
the term ‘discretion’ is sometimes used in the loose sense to indicate no more than
the application of a value judgment. Furthermore, this Court in Oakdene explained that
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. Moreover, it pointed out that ‘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.’
[20] In Afgri Operations Limited v Hamba Fleet (Pty) Ltd,10 this Court reaffirmed that
an unpaid creditor has a right, ex debito justitiae, to a winding-up order against a
company that has not discharged its debt.11 Notably, it also reaffirmed the trite principle
that the refusal of a winding-up order under such circumstances entails the exercise
of a narrow discretion.12 The following observations in Boschpoort Ondernemings
(Pty) Ltd v Absa Bank Limited13 appositely illustrate that the mere fact that there may
be more value than the claim is not, without more, sufficient to sway a court towards
exercising the discretion in favour of a debtor:
‘[17] That a company’s commercial insolvency is a ground that will justify an order for its
liquidation has been a reality of law which has served us well through the passage of time.
The reasons are not hard to find: the valuation of assets, other than cash, is a notoriously
elastic and often highly subjective one; the liquidity of assets is often more viscous than
recalcitrant debtors would have a court believe; more often than not, creditors do not have
knowledge of the assets of a company that owes them money - and cannot be expected to
8 Trencon Construction Pty Ltd v Independent Development Corporation and Others [2015] ZACC 22;
2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) para 82 footnote 65.
9 Oakdene Square Properties v Farm Bothasfontein (Kyalami) [2013] ZASCA 68; 2013 (4) SA 539;
[2013] 3 All SA 303 (SCA) para 18.
10 Afgri Operations Limited v Hamba Fleet (Pty) Ltd [2017] ZASCA 24; 2022 (1) SA 91 (SCA) para 12.
See also De Waard v Andrew and Thienhaus Ltd 1907 TS 727 at 733 and Service Trade Supplies ltd
v Dasco and Sons Ltd 1962 (3) SA 424 (T) at 428B-D to which reference was made, with approval, by
this court in Sammel and others v President Brand Gold Mining Company Ltd 1969 (3) SA 629 (A) at
662F.
11 See Dippenaar NO and Others v Business Venture Investments NO 134 (Pty) Ltd and Another [2014]
ZAWCHC 7; [2014] 2 All SA 162 (WCC), where it was held that the ex debito justitiae maxim conveys
no more than that, once a creditor has satisfied the requirements for a liquidation order, the court may
not on a whim decline the order.
12 Afgri Operations Limited v Hamba Fleet (Pty) Ltd [2017] ZASCA 24; 2022 (1) SA 91 (SCA) para 12-
13.
13 Boschpoort Ondernemings (Pty) Ltd v Absa Bank Limited [2013] ZASCA 173; [2014] 1 All SA 507
(SCA); 2014 (2) SA 518 (SCA).
have; and courts are more comfortable with readily determinable and objective tests such as
whether a company is able to meet its current liabilities than with abstruse economic exercises
as to the valuation of a company’s assets. 14 (Footnote omitted).
[21] In summing up, it bears emphasising that the exercise of discretion in favour of
not granting a liquidation order must be based on a solid factual foundation. As
mentioned in the foregoing paragraphs, that factual foundation is missing from the
facts presented by the respondent in the answering affidavit. In the face of a
compelling case made by the appellant for granting a winding-up order, the respondent
did not raise a bona fide defence to the claim. Instead, it relied on untenable technical
defences. These were rightly rejected by the high court.
[22] It is well-established that an appellate court may interfere with the exercise of
a discretion in the true sense by a court of the first instance only if it can be
demonstrated that the latter court exercised its discretion capriciously or on a wrong
principle, or has not brought an unbiased judgment to bear on the question under
consideration, ‘or has not acted for substantial reasons’.15
[23] The impression that I get from the whole tenor of the high court’s judgment is
that it accepted that there was no dispute regarding the respondent’s indebtedness
but made much of the fact that the appellant held securities in the full amount of the
principal debt, which prompted it to exercise the residual discretion not to grant the
winding up order.16 I am also of the view that the high court’s wrong interpretation of
the concept ‘secured debt’ in s 69(1)(a) fettered its exercise of the residual discretion
whether or not to grant a winding-up order; the result is that it exercised its discretion
on the basis of wrong principles. In the absence of facts supporting the exercise of a
discretion in favour of the respondent, there was no justification for the high court
refusing to grant the winding-up order. Therefore, this Court is, at large to interfere
with the discretion exercised by the high court. For the reasons canvassed in
14 Ibid para 17-18.
15 Trencon Construction Pty (Ltd) v Industrial Development Corporation of South Africa Limited and
Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) para 88-89; Hotz and
Others v University of Cape Town [2017] ZACC 10; 2017 (7) BCLR 815 (CC); 2018 (1) SA 369 (CC)
para 28.
16 This is evident from paras 20-24 of the high court’s judgment.
paragraphs 20 and 21 above, the proper exercise of discretion ought to be in favour
of granting the winding-up order sought by the appellant. It follows that the appeal
ought to succeed.
[24] The affidavits show that the appellant has established an incontestable prima
facie case for granting a winding-up order,17 and therefore a right to a provisional
order. Given the trite principle that it is well within the powers of the court to grant a
final order of liquidation instead of a provisional order,18 the next question for
consideration is whether the winding-up order substituting the order of the high court
should be provisional or final. Generally, it is a well-established practice that a
provisional order of liquidation should issue. The purpose of the practice is to afford
interested parties, especially creditors, an opportunity to support or oppose a final
liquidation. There is no reason to depart from the general practice in this case. The
respondent’s business is a farming enterprise. It may very well have other creditors
than the appellant. Some new developments might have occurred since the refusal of
the winding-up application. New employees oblivious of this litigation may have been
employed in the intervening time between the handing down of the judgment of the
high court and the finalisation of this appeal. It is therefore not inconceivable that
further relevant facts might be forthcoming if a rule nisi is issued. Thus, a provisional
order will best serve the interests of justice in this matter.
[25] The following order is therefore granted:
1. The appeal is upheld.
2. The order of the high court is set aside and replaced with the following:
‘(a) The respondent close corporation, DTL Boerdery CC, is placed under a
provisional order of winding-up in the hands of the Master of the North West
Division of the High Court, Mahikeng (high court).
(b) A rule nisi is issued calling upon the respondent and all interested parties
to show cause, if any, to the high court within six weeks of the date of
issuance of this order, as to why:
(i) the respondent should not be placed under a final order of winding-up; and
17 Afgri Operations Limited v Hamba Fleet (Pty) Ltd [2017] ZASCA 24 para 9.
18 Johnson v Hirotec (Pty) Ltd 2000 (4) SA 930 (SCA) para 9; Afgri Operations Limited v Hamba Fleet
(Pty) Ltd [2017] ZASCA 24; 2022 (1) SA 91 (SCA) para 19.
(ii) the costs of this application should not be costs in the winding-up of the
respondent.
(c) Service of this order shall be effected:
(i) by the sheriff of the high court or his lawful deputy on the registered office
of the respondent;
(ii) on the South African Revenue Services;
(iii) by publication in one edition each of the Sunday Times and a newspaper
circulating in the area where the respondent carries on business and in the
Government Gazette;
(iv) by registered post on all known creditors of the respondent with claims in
excess of R25 000;
(v) on the employees of the respondent in terms of s 346A(1)(b) of the
Companies Act 61 of 1973; and
(vi) on any registered trade union that the employees of the respondent may
belong to.
(c) Costs to be costs in the winding-up.’
________________________
M B Molemela
Judge of Appeal
Appearances:
For appellant:
Adv MP van der Merwe SC
Instructed by:
Leahy Attorneys, Pretoria
McIntyre van der Post, Bloemfontein
For respondent:
Adv S Grobler SC
Instructed by:
Kotze Low & Swanepoel, Vryburgh
Dippenaar & Crous Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
13 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
Imobrite (Pty) Ltd v DTL Boerdery CC (1007/20) [2022] ZASCA 67 (May 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment upholding, with costs, an appeal
against the North West Division of the High Court, Mahikeng (the high court).
The issue before the SCA was whether the North West Division of the High Court, Mahikeng, correctly
refused the appellant’s application for the winding-up of the respondent close corporation.
The appellant, a private company, agreed to lend an amount of R2 750 000 to the respondent, a close
corporation, and the respondent’s sole member, Mr Tielman Kotze (Mr Kotze). This agreement was
recorded in an acknowledgement of debt (AOD) signed on 15 May 2018. The AOD inter alia
acknowledged that the respondent and Mr Kotze had procured a loan from the appellant for the capital
amount of R2 750 000 and that they would repay the capital plus interest thereon in ten yearly
instalments of R791 495.95. In addition to interest, the respondent and Mr Kotze also agreed to pay a
‘facilitation fee’ to the appellant. It was agreed that the first instalment would be payable on or before 7
May 2019 and thereafter on or before 7 May of each consecutive year. The AOD also stipulated that in
the event that the debtor remained in default 10 days after receiving notice to repair the breach, then
the appellant, as the creditor, would be entitled to exercise any remedy at its disposal in terms of the
law, including to cancel the agreement and retain all payments already made.
The appellant was a secured creditor of the respondent and held a special and general notarial bond
over the respondent’s movable assets for an amount of R2 750 000, together with an additional amount
of R540 000 in respect of costs. In addition, a first ranking covering mortgage bond had been registered
in favour of the appellant over the respondent’s farm.
The respondent failed to pay the first instalment by the due date, namely 7 May 2019. As a result, and
following various communications between the parties, the appellant launched an application for the
winding-up of the respondent. Relying on its interpretation of the provisions of s 69(1)(a) of the Close
Corporations Act, the high court found that the appellant’s application for the respondent’s winding-up
constituted an abuse of the court’s processes. Therefore, the high court dismissed the application with
costs, notwithstanding that all the requirements for a winding-up order had been complied with.
The SCA held that, in this matter, it could hardly be disputed that the respondent had no valid defence
against the appellant’s claim. First, not a single instalment had been paid in repayment of the debt.
Second, the indebtedness in respect of the capital amount was not disputed at any stage; instead, the
respondent’s claim that the debt was incorrectly calculated was based on the alleged miscalculation of
interest and the facility fee. Notably, despite remaining in default beyond the 21-day period stipulated
in the statutory demand, the respondent failed to tender to pay what it considered to be the correct
amount, nor did it make any suggestions regarding how to discharge its indebtedness, save to mention
that it and Mr Kotze would obtain alternative financing once the amount of the debt had been corrected.
The SCA held that under these circumstances, there could be no merit in the suggestion that the
appellant was attempting to enforce payment of a debt which was bona fide disputed. That being the
case, it cannot be accepted that the appellant’s application was predicated on any reason other than
the bona fide bringing of winding-up proceedings. Therefore, the respondent had not shown that the
winding-up proceedings constituted an abuse of the court’s process.
In addition, the SCA held that having conceded that the high court’s interpretation of s 69 was wrong
and that the appellant’s application did not constitute an abuse of the court’s processes, counsel for the
respondent had another string to the respondent’s bow; he urged this Court to accept that the discretion
to refuse the winding-up order (notwithstanding the appellant’s compliance with all the formalities
prescribed in s 69(1) of the Close Corporations Act) was properly exercised.
Furthermore, the SCA held that in summing up, it bears emphasising that the exercise of discretion in
favour of not granting a liquidation order must be based on a solid factual foundation. Moreover, the
SCA held that the factual foundation was missing from the facts presented by the respondent in the
answering affidavit. In the face of a compelling case made by the appellant for granting a winding-up
order, the respondent did not raise a bona fide defence to the claim. Instead, it relied on untenable
technical defences. According to the SCA, these were rightly rejected by the high court.
Furthermore, the SCA held that the impression it got from the whole tenor of the high court’s judgment
was that relying on wrong principles, it accepted that there was no dispute regarding the respondent’s
indebtedness and exercised the residual discretion not to grant the winding-up order. Hence, the SCA
held that it was of the view that the high court’s wrong interpretation of the concept ‘secured debt’ in s
69(1)(a) fettered its ultimate exercise of the residual discretion whether or not to grant a winding-up
order and resulted in it exercising its discretion in favour of the respondent. The SCA held that the high
court exercised its discretion on the basis of a wrong principle. Following this, the SCA held that in the
absence of facts supporting the exercise of a discretion in favour of the respondent, there was no
justification for the high court refusing to grant the winding-up order. Therefore, the SCA held that this
Court was at large to interfere with the discretion exercised by the high court. Finally, the SCA held that
the proper exercise of discretion ought to be in favour of granting the winding-up order sought by the
appellant. As a result, the SCA held that the appeal ought to succeed.
~~~~ends~~~~
|
3571
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 934/2019
In the matter between:
INGOSSTRAKH
APPELLANT
and
GLOBAL AVIATION INVESTMENTS (PTY) LTD
FIRST RESPONDENT
GLOBAL AVIATION INVESTMENTS
GROUP (BVI) LTD
SECOND RESPONDENT
GLOBAL AVIATION OPERATIONS (PTY) LTD
THIRD RESPONDENT
Neutral citation: Ingosstrakh v Global Aviation Investments (Pty) Ltd and Others
(934/2019) [2021] ZASCA 69 (4 June 2021)
Coram:
MBHA, DAMBUZA and MAKGOKA JJA and MABINDLA-BOQWANA and
UNTERHALTER AJJA
Heard:
22 February 2021
Delivered:
This judgment was handed down electronically by circulation to the parties’
representatives by email, and by publication on the Supreme Court of Appeal website
and release to SAFLII. The time and date for hand down is deemed to be 10h00 on the
4th day of June 2021.
Summary: Civil Procedure – default judgment – appellant under bar – whether good
cause shown for upliftment thereof.
Contract – jurisdiction – where a foreign peregrinus defendant submits to jurisdiction of a
South African court at the suit of a foreign peregrinus plaintiff, such submission and a
ground of jurisdiction that links the court to the subject matter of the litigation, sufficient
for a South African court to assume jurisdiction.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Moshidi J sitting as
court of first instance):
1 The appeal is dismissed with costs, including costs of two counsel where so employed.
2 The cross-appeal is upheld with costs, including costs of two counsel where so
employed.
3 The order of the high court is set aside and replaced with the following:
a) Default judgment is granted against the respondent in favour of the applicants
in the sum of US$ 2 500 000;
b) Interest on the above amount at the prescribed rate from 13 November 2012 to
date of payment;
c) Costs of the suit.
______________________________________________________________________
JUDGMENT
Makgoka JA (Mbha, Dambuza JJA and Mabindla-Boqwana and Unterhalter AJJA
concurring):
[1] This appeal concerns a decision of the court a quo, the Gauteng Division of the
High Court, dismissing, respectively, the respondents’ application for default judgment
and the appellant’s (Ingosstrakh) application for condonation of the late filing of its plea.
In the court a quo, the respondents, Global Aviation Investments (Pty) Ltd; Global Aviation
Investments Group (Pty) Ltd; and Global Aviation Operations (Pty) Ltd, were the
applicants and Ingosstrakh the respondent. For the sake of convenience, I refer to the
respondents collectively as ‘Global’, except where it is necessary to identify one of them
specifically.
[2] The dispute arises from a written insurance policy (the policy) concluded in
October 2012 between Global and associated companies, on the one hand, and
Ingosstrakh, on the other. Ingosstrakh is a Russian company, with its registered address
in Moscow. In terms of the policy, Ingosstrakh undertook to indemnify Global against all
risks of loss or damage occasioned to certain specified aircraft, whilst in flight, taxiing or
on the ground.
[3] Among the insured aircraft, was Global’s MD82 aircraft with registration marks ZS-
TOG (the aircraft), which was insured for the agreed sum of US $2 500 000. The policy
provided, among other things, that in the event the cost of repair to damage caused to
the aircraft exceed 75% of the insured value of the aircraft, Global would be entitled to
regard the aircraft as a constructive total loss (CTL), and Ingosstrakh would be obliged to
pay Global the full insured value of US$2 500 000. I shall return to the relevant clause of
the policy.
[4] On 13 November 2012, whilst the policy was of full effect, the aircraft could not
take-off from OR Tambo International Airport in Johannesburg, as the pilot received a
cockpit warning of a landing gear anomaly. Both engines of the aircraft had ingested non-
organic foreign matter while under full power, causing severe damage to the aircraft. The
damage caused by the incident to the aircraft constituted a risk insured against in terms
of the policy. Global declared the aircraft to be a CTL in terms of the policy. It notified
Ingosstrakh of the incident and demanded payment of US $2 500 000. Ingosstrakh
refused to pay on the basis that the aircraft was not a total loss.
[5] Consequently, on 15 August 2014 Global launched an application against
Ingosstrakh seeking an order declaring Ingosstrakh to be liable to indemnify it in terms of
the policy following the incident on 13 November 2012, and for payment of US
$2 500 000. Ingosstrakh opposed the application. The application was eventually
dismissed on 25 May 2015 on the basis that there were material disputes of fact on the
papers. Although Global applied for leave to appeal that order, there is no clarity as to the
status of that application.
[6] In terms of the policy, notices on Ingosstrakh were to be served on Steve Slatter
Insurance Brokers (Pty) Ltd (Slatter) in Durban, South Africa. Thus, before Global issued
summons against Ingosstrakh, it sought, and obtained, an order on 8 September 2015 in
the court a quo authorising service of the summons on Ingosstrakh, care of Slatter.
[7] On 9 September 2015 Global issued summons against Ingosstrakh, which was
served on Slatter by the sheriff on 10 September 2015.1 On 30 September 2015,
Ingosstrakh served its notice of intention to defend the action. However, Ingosstrakh failed
to deliver its plea, and on 4 November 2015 Global served a notice of bar in terms of rule
26 of the Uniform Rules of Court, in terms of which Ingosstrakh was afforded five days to
deliver its plea. That period would have expired on 11 November 2015. On 10 November
2015, Ingosstrakh, without delivering its plea, served an application in which it sought an
order:
(a) Setting aside the order of 8 September 2015 authorising summons to be served on
Slatter, as well as the subsequent service of the summons on Slatter on 9 September
2015; and
(b) Uplifting the notice of bar served on 4 November 2015.
[8] Global opposed the application, which was eventually dismissed on 2 September
2016. Ingosstrakh was ordered to pay Global’s costs, including costs of two counsel, on
the scale as between attorney and client. In the wake of that judgment, on 5 September
2016 Global’s attorneys, via email, drew the attention of Ingosstrakh’s attorneys to the
fact that Ingosstrakh was ipso facto barred from delivering its plea, as the period for doing
1 In addition to the US $2 500 000 referred to already, Global also claimed consequential damages (in
respect only of the third respondent, Global Aviation Operations), for US $170 245.24. Global alleged that
as a result of Ingosstrakh failing to make payment in respect of the total loss of the aircraft, the third
respondent was unable to replace the aircraft with a substitute aircraft, and also lost income which would
have been earned by the third respondent from such substitute aircraft. This claim was abandoned in the
court a quo and accordingly is not in issue in this appeal.
so had expired on 11 November 2015 in terms of the notice of bar. It was enquired as to
Ingosstrakh’s intentions. There was no response to the email.
[9] On 27 September 2016 Global launched an application for default judgment
against Ingosstrakh, which opposed the application. Ingosstrakh also delivered a counter-
application, in terms of which it sought, in prayer 1, that the judgment of 2 September
2016 be ‘considered in relation to whether there was an obvious omission in failing to deal
with [its prayer for the uplifting the notice of bar].’ In the alternative, Ingosstrakh sought
an order that ‘the court supplement the judgment to deal with the oversight in relation to
the alternative relief sought by [Ingosstrakh] in its application.’ Alternatively, Ingosstrakh
sought an order uplifting the notice of bar served on 4 November 2015, and condoning
the late delivery of its plea.2 Global opposed Ingosstrakh’s counter-application.
[10] The applications were heard on 26 April 2018. In a judgment delivered on 31 July
2018, the court a quo considered it an ‘unfair procedure’ for Global to seek default
judgment, ‘in the midst of protracted litigation’ between the parties, and long after the
entry of appearance to defend. The court also said that there were disputed issues, both
of a factual and technical nature, which could only be resolved by expert evidence in a
trial. Furthermore, the court mentioned that Global’s decision not to proceed with the
default judgment in respect of claim B was a further reason to refuse the application, as
the court considered the two claims interlinked.
[11] With regard to Ingosstrakh’s counter-application for the ‘clarification’ and
‘supplementation’ of the order of 2 September 2016, and for condonation of the late filing
of its plea, the court summarily dismissed it, stating that it ‘lacked any basis’ and was
‘misplaced’ as, so the court reasoned, it did not ‘have the requisite appellate/review
jurisdiction to interfere therewith.’ Accordingly, the court dismissed both applications. The
parties are each aggrieved by the orders, and with the leave of the court a quo, they both
appeal to this Court against the dismissal of their respective applications.
2 An unsigned and undated version of Ingosstrakh’s plea was served on 26 October 2016.
[12] There is a preliminary issue to consider. It is whether the order refusing Global’s
application for default judgment is appealable. Appealability of an order is determined by,
amongst other considerations, whether it is final in effect. In Zweni v Minister of Law and
Order3 it was held that such an order has three attributes: first, it must be final in effect
and not susceptible to alteration by the court that made it; second, it must be definitive of
the rights of the parties; and third, it must have the effect of disposing of at least a
substantial portion of the relief claimed in the main proceedings.
[13] In the present case, the practical effect of the court a quo’s order is that the parties’
respective applications are in limbo. In refusing to grant default judgment, the court a quo
alluded to the fact that the issues between the parties needed to be ventilated in a trial.
However, in the same breath, it dismissed Ingosstrakh’s application for the upliftment of
the bar, thus effectively closing any avenue for a trial. The result is that Ingosstrakh is
unable to enter the main case, because it is under bar, while Global is unable to obtain
default judgment against Ingosstrakh.
[14] If the court a quo’s order that Ingosstrakh was not entitled to the upliftment of the
bar is correct, logic dictates that Global’s application for default judgment should have
been considered. Conversely, if the court a quo was of the view that the issues warranted
a trial, it should have granted Ingosstrakh’s counter-application to uplift the bar. Viewed
in this light, the court a quo’s order suffers from an internal contradiction, resulting in an
untenable position for both parties. The first duty of a court is to resolve the dispute before
it. That was not done by the court a quo. The interests of justice require this court’s
intervention to resolve the impasse. On this basis, the matter is appealable. Furthermore,
3 Zweni v Minister of Law and Order [1993] 1 All SA 365 (A); 1993 (1) SA 523 (A) at 536B. Zweni has
undergone some modification over the years. See for example Moch v Nedtravel (Pty) Ltd t/a American
Express Travel Service 1996 (3) SA 1 (A); Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA
115; [2010] 1 All SA 459 (SCA); 2010 (2) SA 573 (SCA); Nova Property Group Holdings Limited v Cobbett
and Others [2016] ZASCA 63; [2016] 3 All SA 32 (SCA); 2016 (4) SA 317 (SCA). However, none of these
find application in this case.
given the circuitous and the considerable length of time the case has taken, it is in the
interest of justice that the litigation between the parties be brought to finality.
[15] Before Ingosstrakh’s contentions are considered, it has to contend with the fact
that it is under bar from delivering its plea. As stated already, Global’s notice of bar was
served on 4 November 2015, affording Ingosstrakh five days in which to file its plea. The
last day for it to do so was 11 November 2015. It did not do so. Instead, it launched the
application to set aside the service of summons. As a result, as from 11 November 2015,
Ingosstrakh has been under bar. The effect thereof is that unless and until the bar is
uplifted, Ingosstrakh has no right to deliver its plea. Its application for the upliftment of the
bar was dismissed on 2 September 2016. There is no appeal against that order.
[16] It was submitted before us on behalf of Ingosstrakh that the court a quo in its
judgment of 2 September 2016 did not consider its prayer to uplift the bar. It is so that the
court did not expressly address the prayer for upliftment of the bar. But it is clear from a
proper reading of the judgment as a whole that the court considered the totality of the
application to be unmeritorious. What is clear, however, is that Ingosstrakh’s prayer for
the upliftment of the bar was dismissed. If Ingosstrakh was aggrieved with the order, the
proper course was to appeal against it. It elected not to do so. The effect thereof is that
Ingosstrakh remains barred from pleading.
[17] Global submitted that the question whether Ingosstrakh may competently file its
plea has been finally disposed in the judgment of 2 September 2016, and is thus res
judicata. A matter is res judicata if in the previous proceedings, the issue adjudicated
upon was for the same cause, between the same parties and the same thing was
demanded. See Smith v Porritt and Others 2008 (6) SA 303 (SCA) para 10 in which a
flexible approach was adopted to the doctrine of res judicata. That approach was
approved by the Constitutional Court in S v Molaudzi [2015] ZACC 20; 2015 (2) SACR
341 (CC) paras 22 and 23.
[18] To consider whether this threshold has been met in the present case, it is
necessary to examine Ingosstrakh’s applications of 10 November 2015 in respect of
which this appeal pertains. Part of the relief in the November 2015 application (in prayer
3 of the notice of motion) was that ‘[T]he notice of bar served by [Global] on [Ingosstrakh]
on 3 November 2015 be uplifted.’ In its counter-application to Global’s application for
default judgment, Ingosstrakh sought (in prayer 2.1 of the notice of motion) an order
‘[u]plifting the notice of bar served by [Global] on [Ingosstrakh] on 3 November 2015’.
[19] It becomes immediately evident that the relief common in both the November 2015
application and the counter-application was for the same thing, namely, the upliftment of
the notice of bar. It is irrelevant that in the counter-application, such relief was paired with
a prayer for condonation of the late delivery of Ingosstrakh’s plea. The true nature of the
relief sought was not altered by pinning a new label on the counter-application. In both
applications, the same reasons were advanced in support of the relief sought. During
argument before us, counsel for Ingosstrakh fairly conceded that conceptually, the latter
appellation would make no difference as the desired outcome is the same, ie to remove
the impediment which prevents Ingosstrakh from delivering its plea.
[20] To sum up on this point, the issue whether Ingosstrakh is entitled to the upliftment
of the notice of bar has been determined in the judgment of 2 September 2016, in terms
of which its prayer to that effect was dismissed. It follows that Ingosstrakh was not entitled
to seek the same relief under the rubric of ‘condonation for the late delivery of its plea.’
The court a quo was undoubtedly correct in dismissing the relief sought by Ingosstrakh
for it to reconsider or supplement the judgment of 2 September 2016. The application
was ill-advised and the relief sought was incompetent. In all circumstances, the order
made by the court on 2 September 2016 stands. The issue is res judicata and Ingosstrakh
is barred from filing its plea. That should ordinarily be the end of the matter, and would
entitle Global to have their application for default judgment adjudicated upon. However,
to put the matter beyond doubt I will consider, in Ingosstrakh’s favour, whether it would
be entitled to condonation for its failure to file a plea,4 to which I now turn.
[21] Rule 27 of the uniform rules deals with the extension of time, removal of bar and
condonation. In terms of rule 27(3) the court may, on good cause shown, condone any
non-compliance with the rules. Thus, in order to succeed in this regard, Ingosstrakh would
be expected to show good cause why condonation should be granted for its failure to
deliver its plea. Generally, the concept of ‘good cause’ entails a consideration of the
following factors: a reasonable and acceptable explanation for the default; a
demonstration that a party is acting bona fide; and that such party has a bona fide defence
which prima facie has some prospect of success.5 Good cause requires a full explanation
of the default so that the court may assess the explanation.6 I consider each of the above
requisites, in turn.
[22] With regard to the explanation for the default, there are two periods of default which
Ingosstrakh must explain for its failure to deliver a plea. The first is before the notice of
bar was served on it, and the second relates to the period after the bar was served. This
is because the notice of bar was served as a consequence of Ingosstrakh’s failure to file
its plea. With regard to the former, Ingosstrakh served its notice of intention to defend the
action on 30 September 2015. It therefore had up to 28 October 2015 to file its plea. There
is simply no explanation whatsoever why a plea was not filed during that period.
[23] As to the period after the notice of bar, it was submitted on behalf of Ingosstrakh
that the delay in delivering the plea must not be calculated from 10 November 20157, but
4 This is in line with S v Jordaan & Others (Sex Workers Education and Advocacy Task Force & Others as
amici curiae, 2002 (6) SA 642; 2002 (11) BCLR 1117 (CC) para 21 where it was held that where a provision
or decision is attacked on one ground that is considered decisive of the matter, the other grounds raised in
the matter should nevertheless be ventilated and decided upon for the benefit of a court that may later have
to hear an appeal arising from that matter.
5 Colyn v Tiger Food Industries Limited t/a Meadow Feed Mills (Cape) [2003] 2 All SA 113 (SCA); 2003 (6)
SA 1 (SCA) para 11; Chetty v Law Society Transvaal 1985 (2) SA 756 (A) at 764J-765E.
6 Silber v Ozen Wholesalers (Pty) Ltd 1954 (2) SA 354A at 353A.
7 Expiry of the period set in the notice of bar.
from a ‘reasonable period’ following the judgment of 2 September 2016, to allow it time
to consider that judgment. This, it was contended, was because Ingosstrakh seriously
pursued that application and had legitimate grounds for doing so. This is an untenable
proposition. Ingosstrakh does not enjoy the latitude to decide when a properly filed notice
of bar takes effect. The fact is, when Ingosstrakh took a conscious decision to ignore the
notice of bar, and instead launched the application to set aside the service of summons,
it did so at its peril. It should have known that if that application did not succeed, it would
remain under bar. It took the risk of its procedural gamesmanship and must now live with
the consequences of its decision.
[24] But even if one accepts its proposition, Ingosstrakh still falls short. There were only
two options open to it post the judgment, namely to appeal against the order or to file its
plea. It had 14 days from 2 September 2016 to seek leave to appeal. That period expired
on 22 September 2016. Ingosstrakh did nothing in that regard. On expiry of that period,
the only remaining option was to deliver a plea. The five-day period in the notice of bar
would have commenced on 23 September, and expired on 29 September 2016. Similarly,
Ingosstrakh did nothing in this regard, and there is no explanation for its inactivity. This is
significant, considering that as early as 5 September 2016 Global, had enquired from
Ingosstrakh what it intended to do, without any response.
[25] Ingosstrakh sought to rely on ‘without prejudice’ discussions between the
respective legal representatives for its supine attitude. Such discussions and
negotiations, however cannot, substitute the obligation to comply with set time frames for
the exchange of pleadings, unless the parties have agreed to suspend the relevant time
periods. There was no such agreement in the present case. It is also significant that until
Global applied for default judgment, Ingosstrakh was content to sit back and do nothing
about filing its plea, for which there is no explanation. In sum, Ingosstrakh’s conduct in
this matter shows inexcusable default and a failure to give a proper explanation therefor.
I have demonstrated this in relation to its conduct both before and after the notice of bar
was served. This calls into question its bona fides, an aspect to which I next turn.
[26] In the course of its judgment of 2 September 2016, the court made adverse findings
against Ingosstrakh for its motive in bringing that application. Its true motive, the court
found, was a disguised and contrived attempt to introduce prescription as a defence to
the action, a fact expressly conceded by Ingosstrakh’s counsel. The court said:
‘The application was misconceived from the onset. The papers filed extend into almost 200 pages.
Unsustainable arguments on behalf of Ingosstrakh were advanced. The proceedings undoubtedly
are vexatious and constitute an abuse of process of court. The reprehensible conduct of
Ingosstrakh to obtain an ulterior tactical advantage warrants this court’s censure in ordering
punitive costs [. . .]’
This put paid to any suggestion by Ingosstrakh that the application was pursued bona
fide. Nothing more needs to be said about this.
[27] Lastly, under the rubric of ‘good cause’, I consider whether Ingosstrakh has
disclosed a bona fide defence to Global’s claim. I commence with what would be a special
plea of jurisdiction, contained in its draft plea. Its premise is this. Both Global Aviation
Operations (the second respondent) and Ingosstrakh are foreign peregrini, of the British
Virgin Islands and Russia, respectively. Clause 8 of the policy provides that it is governed
by the laws of the insured (Global Aviation Operation’s) country of domicile (the British
Virgin Islands) and each party agrees to submit to the exclusive jurisdiction of the courts
of the insured’s country of domicile in any dispute arising from the policy.
[28] It was thus submitted on behalf of Ingosstrakh that the court a quo did not have
jurisdiction to determine the dispute as between the second respondent and Ingosstrakh.
Global argued that Ingosstrakh had submitted to the court a quo’s jurisdiction. Both
parties being foreign peregrini, the leading authority is Veneta Mineraria SPA v Carolina
Collieries (Pty) Ltd (in liquidation) 1987 (4) SA 883 (A). The case concerned a dispute
between an Italian company (a foreign peregrinus plaintiff) and a Transvaal company, a
peregrinus of Natal, but an incola of the Transvaal (a local peregrinus). The defendant
company had submitted to the jurisdiction of the Durban and Coast Local Division. This
Court held that such submission did not suffice to clothe the Natal court with jurisdiction,
as one or more of the traditional grounds of jurisdiction must also be present. As there
was no traditional ground of jurisdiction present, the submission of the defendant did not
confer jurisdiction on the court. It was explained (at 894A-B):
‘This dictum [in The Owners, Master and Crew of the SS Humber v The Owners and Master of
the SS Answald 1912 AD 546 at 554] again emphasises the principle that in addition to the
machinery of arrest (which, in the case of a local peregrinus, is dispensed with by law) something
more is required before a Court can take cognizance of a matter in its area of jurisdiction. By
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.’
[29] Following Veneta, the position is as follows: the submission of a local peregrinus
defendant does not suffice, without more, to establish jurisdiction at the suit of a foreign
peregrinus plaintiff. Since it is not competent to attach the property of a local peregrinus
defendant, in addition to submission, what is required is a ground of jurisdiction that
establishes a link between the court and the subject matter of the litigation. In a
contractual claim sounding in money that link will be provided by the fact that the contract
was concluded or performance is to be rendered within the area of jurisdiction of the court.
In Hay Management Consultants Ltd v P3 Management Consultants (Pty) Ltd [2005] 3
All SA 119 (SCA) it was held, with reference to American Flag,8 that submission to the
jurisdiction of the court by a foreign peregrinus defendant in an action for money brought
by an incola plaintiff was of itself sufficient for the court to assume jurisdiction. There was
8 American Flag plc v Great African T-Shirt Corporation CC; American Flag plc v Great African T-Shirt
Corporation CC: In re Ex parte Great African T-Shirt Corporation CC 2000 (1) SA 356 (W). There,
a peregrine of the Republic instituted an action in a local division against a South African close corporation
based on an acknowledgment of debt. The defendant defended the action and signalled its intention to
institute a counterclaim against the plaintiff. It also applied for the attachment of the plaintiff’s claim ad
fundandam jurisdictionem. One of the issues was whether, despite the plaintiff’s submission to the court’s
jurisdiction, in the absence of a ratio jurisdictionis, such submission was effective to confer jurisdiction on
the Court. A specially constituted Full Bench embarked on a comprehensive survey of the authorities, and
held that it had always been our law that actions by incolae against peregrine defendants could be
entertained solely on the ground of the defendant's submission to the jurisdiction of the court (at 449). The
court distinguished Veneta on the basis that case there was no link at all between the Court and the matter,
since both parties were peregrini and the cause of action did not arise within the court's area of jurisdiction.
The court concluded that since American Flag had consented to the jurisdiction of the court, attachment
was neither necessary nor permissible.
no need for the incola plaintiff to attach the property of the foreign peregrinus defendant
to found jurisdiction.
[30] In the present matter, a foreign peregrinus plaintiff (the second respondent)
brought proceedings against a foreign peregrinus defendant (Ingosstrakh). Here, unlike
the position in Veneta, it would have been competent to attach the property of
Ingosstrakh, but is such attachment necessary for the court to enjoy jurisdiction? In my
view, if a foreign peregrinus defendant submits to the jurisdiction of the court, and a
ground of jurisdiction is established that links the court to the subject matter of the
litigation, that will suffice for the court to assume jurisdiction. This is so because once a
foreign peregrinus defendant has submitted to jurisdiction, an effective basis is
established to enforce a judgment that might issue against such a defendant. This follows
because submission is universally recognised as the basis upon which the courts of one
country recognise the judgments of another. Attachment in these circumstances is
unnecessary.
[31] There are forceful arguments reflected in the academic literature that would
recognise submission alone by the defendant in a suit between a foreign peregrinus
plaintiff and a foreign peregrinus defendant as sufficient for the court to assume
jurisdiction.9 However, it is not necessary for us to express a firm view on this matter. In
the present case, unlike the position in Veneta, apart from the issue of submission, there
is a ground of jurisdiction that links the subject matter of the litigation to the court a quo –
the insurance policy was concluded in Johannesburg.
[32] It follows that, if Ingosstrakh submitted to the jurisdiction of the court a quo, that
court enjoyed jurisdiction because, in addition to submission, the contract of insurance
9 See for example Forsyth, Private International Law, 4 ed 215-6, cited with approval in Hay Management
para 17, and an article by the same author in (2006) 18 SA Merc LJ. See also John Peter ‘Consent
Confusion but no Effect’ in (1993) 110 SALJ 15 at 20.
was concluded within its area of jurisdiction. On this basis, Ingosstrakh’s defence, at least
as between Ingosstrakh and the second respondent, must fail as a matter of law.
[33] What remains to be determined is whether Ingosstrakh submitted to the court a
quo’s jurisdiction. This is a factual question in which the court considers whether the
cumulative effect of the proved facts established submission on a balance of probabilities.
See Hay Management para 13. In the present case, I consider that Ingosstrakh had
selected a domicilium for service of process in this country. In Beverley Building Society
v De Courcy and Another 1964 (4) SA 264 (SR) at 270 C-E and Standard Bank v Butlin
1981 (4) SA 158 (D (at 164D-F) this was recognised as a significant factor leaning
towards submission, although in the latter case, it was held on the specific facts of that
case that the defendant had not submitted to the jurisdiction.
[34] In addition, Ingosstrakh has been involved in at least three substantive applications
in the court a quo in respect of the policy in issue. In two of those it was the respondent,
and filed a counter-application in one of them. Not once did Ingosstrakh object to the
jurisdiction of the court a quo. The third application, the one to set aside the order
authorising service on Slatter, was at Ingosstrakh’s instance. On these facts, I consider
Ingosstrakh to have submitted to the jurisdiction of the court a quo.
[35] It is also important to consider the business relationship between the parties, as
well as the convenience of a South African court hearing and determining this matter. The
second respondent’s associated companies, ie the first and third respondents, are
incolae. In Estate Agent Board v Lek 1979 (3) SA 1048 (A) it was held that ‘convenience
and common sense’ are, are among others, valid considerations in determining whether
a particular division has jurisdiction to hear and determine a particular case.
[36] In the leading English case of The Eleftheria [1969] 2 All ER 641 the court listed
number of factors as relevant when considering whether an English court should hear a
matter, among which is whether a defendant genuinely desires a trial in the foreign
country, or is only seeking procedural advantages. In this case, it must be borne in mind
that Ingosstrakh has already been found in the court a quo to have sought improperly to
gain a tactical advantage, as fully explained in para 26 above. It is definitely not raising
the question of jurisdiction to have the matter decided in the British Virgin Islands. For all
these considerations, Ingosstrakh’s jurisdiction point has no merit.
[37] Ingosstrakh set much store by the judgment of 26 May 2015, referred to more
fully earlier in para 5. It was contended that the judgment rendered certain issues res
judicata between the parties. To consider this issue, it is helpful to delineate the issues
which occupied the court’s mind in that case. The court was concerned with the proper
interpretation of clause 3(b) and in particular, Global’s assertion that it, as the insured,
was exclusively entitled to declare the aircraft a total loss once the aircraft was damaged
(paras 11, 12 and 17). The court found that the clause did not preclude Ingosstrakh from
also providing estimates of what the cost of repair would be. The court also dealt with
Global’s contention that only Global Maintenance was entitled to provide a quote for the
cost of repair to the aircraft, as it had the necessary accreditation at the time when the
aircraft was damaged. The court rejected this argument and accepted that Ingosstrakh
was entitled to obtain a quote from an AMO which had only obtained accreditation after
the event (at para 13).
[38] The court thereafter dealt with the issue of compromise. Global had contended
that its claim had been compromised. It had relied on a paragraph in the affidavit of Mr
Van der Merwe, an aviation surveyor appointed by Ingosstrakh to assist in the evaluation
of the damage and to investigate further. In the final paragraph of his report dated 28
December 2012, he stated the following:
‘Subject to the underwriter’s agreement we recommend a loss reserve be established on the basis
of a constructive total loss. We additionally recommend a fee reserve of £8 000. We trust the
above and aforementioned is found to be in order and look forward to receiving underwriter’s
return comments accordingly. In the mean-time our investigations continue with further reports to
follow.’
Suffice it to say that Global’s contention was rejected, it is not necessary to delve into the
court’s reasons for that conclusion.
[39] Lastly, the court considered whether there was a dispute of fact. It concluded (at
para 25) that given Global’s assertion that Ingosstrakh’s AMO or expert had not actually
inspected the aircraft meant ‘that it would be impossible on these papers as they stand to
make a finding that the aircraft was in fact a CTL and therefore exceeded the seventy five
percent of the agreed value between the parties.’ (emphasis added.)
[40] It must be clear from this overview of the court’s judgment that it considered totally
different issues to those in the present application. The only issue which Global asserted
in both applications is one of compromise. I am prepared to assume, without deciding,
that that issue is indeed res judicata. But that does not assist Ingosstrakh. We do not
decide the appeal on the basis of that issue.
[41] The ruling by a court that there is a material dispute of fact is a procedural issue.
It does not finally resolve any substantive issues between the parties. It can therefore not
form the basis of a res judicata defence. In any event, as I pointed out earlier, the main
reason for that ruling was Global’s assertion that Ingosstrakh’s expert had not inspected
the aircraft. The court understandably, and correctly took a view that it could not resolve
that issue on the papers. Global makes no such assertion in the present application.
[42] Viewed in the light of the above considerations, the court’s judgment of 26 May
2015 poses no hurdle for this Court to decide the substantive issues between the parties.
None of the substantive issues in this judgment were considered in that judgment.
Ingosstrakh’s reliance on that judgment is misplaced.
[43] I turn now to the basis of Ingosstrakh’s refusal to pay the full insured amount. The
starting point in this enquiry is clause 3(b) of the policy, which provides:
‘A total loss may be declared under this insurance, at the option of the insured, in the event that
the cost of repair of the damage together with the cost of salvage and/or transport from the place
of accident to the place of repair and return to the service be estimated at 75% or more of the
agreed value. This provision shall not, however, preclude the declaration of a total loss following
the agreement between the insurers and the insured in the event that such costs be estimated at
less than 75% of the agreed value. In such event the insurers will pay the agreed value of the
aircraft. However, any increase in the agreed value of the aircraft concerned, as provided in clause
11 of this section, shall not be taken into account in the application of this provision.’
[44] The issue in dispute is whether on a proper consideration of the various repair
costs relied on by the parties, such costs do or do not exceed the 75% threshold referred
to above. Global contends they do, while Ingosstrakh submits the contrary. This issue, in
turn, depends on the extent of damage to the aircraft. The aircraft had two engines and
according to Global, both engines were damaged. It was common cause between the
parties that the incident had resulted in damage to the structure of the engines.
[45] Global relies on a quotation by Global Aviation Maintenance Limited (Global
Maintenance), its associated company, of which it is common cause, that it is a duly
accredited Aircraft Maintenance Organisation (AMO). Global Maintenance reflects the fair
and reasonable costs of repair as being US$2 891 028.14, well in excess of the
US$1 875 000, ie 75% threshold. This includes the cost of repairs of both engines in the
amount of US$1 133 863. This amount is based on a report dated 1 July 2013 by Bonus
Aerospace,10 which deals with the work scope and quotations to repair the engines, and
shows that the cost to repair the two engines are US$516 301.04 and US$617 562.84,
respectively.
[46] Ingosstrakh’s stance, on the other hand, is that only one engine (the left one) was
damaged. It relies on a quotation by Phoebus Apollo (Phoebus). Although there is a
dispute whether Phoebus was an accredited category ‘B’ AMO, I assume, for present
purposes, that it had the necessary accreditation. In terms of Phoebus’ quotation, the
necessary repair work to the structural damage on the aircraft could be done for a cost
below the 75% threshold. Its estimation of the repair cost is US$1 139 000, which does
not include the engine repair cost. It also does not include the cost for non-routine repair
work should such be necessary with additional findings, nor for any engineering. The
10 The Bonus Aerospace referred to in the letter is a USA facility certified by South African Airways with
the capabilities and reputation in the industry for its high-quality work.
quotation which Ingosstrakh furnished in respect of the engines was prepared by FJ
Turbine for US$ 119 600. However, it does not include costs for: parts and components;
additional work resulting from exposure to areas not quoted; exposure resulting from
rejection of flow checks, bench checks, missing components, etc.
[47] This dispute as to whether both engines or one were damaged, need not unduly
detain us. Deference should be given to a neutral and authoritative view of the South
African Civil Aviation Association (SACAA). In terms of the Civil Aviation Act 13 of 2009,
this is the supreme authority in the country over all aircraft and related matters, including
the regulation of how repairs to aircraft are done. The aircraft in issue was registered with
SACAA. According to SACAA’s regulations, repairs can only be carried out by an
approved AMO holding a category B accreditation from SACAA. This is for quality
assurance purposes. In other words, SACAA would issue the necessary certificate
airworthiness only if the repairs were carried out by an approved AMO. It follows that any
quotation for repairs provided by an organisation which is not an approved AMO would
be of little value.
[48] Moreover, SACAA’s view in respect of the necessary repairs to the aircraft in issue,
is set out in its letter to Global dated 5 August 2013. It said, among other things, the
following:
‘As per previous correspondence for Airworthiness department, we confirm that the minimum
work scope acceptable to return JT8D-217A engines bearing serial numbers P726370 AND
P708515 to service is the ESV-2 work scope detailed in the reports from Bonus Aerospace dated
1 July 2013 and FJ Turbine Power dated 28 June 2013 that were submitted to this department.’
[49] From the above, it is clear that SACAA requires that for the aircraft to return to
airworthiness, both engines need to be repaired. The scope of works decreed by SACAA
is ESV-2. According to an extract from Pratt & Whitney’s Maintenance Planning Guide11
this involves heavy maintenance, which requires a full overhaul of the engines. As stated
11 Pratt & Whitney is an American aerospace manufacturer with global service operation. It is said to be a
world leader in the design, manufacture and service of aircraft engines and auxiliary power units.
already, there is also a report from Bonus Aerospace in which it is estimated that the cost
of repairing the two engines were US$617 562.84 and US$516 301.04, respectively.
Thus, from all the available evidence, including SACAA’s letter dated 5 August 2013, it
must be accepted that both engines were damaged in the incident and that SACAA
directed that both engines must be overhauled. It is therefore not open to Ingosstrakh,
without more, to assert that only one engine was damaged.
[50] In Ingosstrakh’s replying affidavit in the counter application, the deponent, Mr van
der Merwe, an aviation surveyor and assessor of insurance claims in the aviation industry,
contended that all of SACAA’s correspondence relied upon by Global referenced but one
engine. But that is plainly not so, given the contents of SACAA’s letter of 5 August 2013.
Although, Mr van der Merwe references this letter, he does not explain how it can be read
to refer to but one engine. His critique of the letter is that it relies upon quotes that were
premised on instructions from Global, and hence were inflated. This, contends Mr van der
Merwe, gives rise to a triable issue.
[51] In my view that is not the case. SACAA had determined that both engines had to
be repaired and the scope of works required to do so. SACAA is an independent authority.
It had made a decision as to what was required to return the aircraft to service. Mr van
der Merwe’s skepticism as to the basis upon which SACAA made its decision does not
displace that decision or cause it to be set aside. In the face of SACAA’s decision, it is
hard to imagine a trial court reaching a different outcome. There is not a genuinely triable
issue on this score.
[52] Once this is accepted, the CTL threshold is exceeded, when one takes into
account that the only quotation which deals with SACAA’s requirement, and the scope of
repairs regarding the engines, is by Bonus Aerospace dated 1 July 2013. As stated
already, according to that quotation the cost to repair both engines amounted to
US$1 133 863.88. Phoebus’ quotation for the airframe, it should be recalled, is US$
1 139 000. If one were to add this amount to the Bonus Aerospace quotation, the CTL
threshold has clearly been exceeded. Seen in this light, Ingosstrakh simply does not have
a bona fide defence to Globals’ claim.
[53] To sum up, Ingosstrakh is under bar from delivering its plea. Even if one were to
be generous and consider it to be in the interests of justice to ignore this procedural
impediment, Ingosstrakh has failed to show good cause for its failure to file its plea. There
is no acceptable explanation therefor, and it has not demonstrated a bona fide defence
to Global’s claim. It follows that the court a quo erred in dismissing Global’s application
for default judgment. It should have been granted and Ingosstrakh’s counter-application
dismissed.
[54] In the result the following order is made:
1 The appeal is dismissed with costs, including costs of two counsel where so
employed.
2 The cross-appeal is upheld with costs, including costs of two counsel where so
employed.
3 The order of the high court is set aside and replaced with the following:
a) Default judgment is granted against the respondent in favour of the
applicants in the sum of US$ 2 500 000;
b) Interest on the above amount at the prescribed rate from 13 November
2012 to date of payment;
c) Costs of the suit.
____________________
T Makgoka
Judge of Appeal
APPEARANCES:
For Appellant:
B Berridge SC (with him A Govender)
Instructed by:
Clyde & Co., Johannesburg
Webbers, Bloemfontein.
For Respondents:
N Segal (with him A Ramlaal-Narash)
Instructed by:
Cranko Karp, Johannesburg
McIntyre Van der Post, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY: JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM The Registrar, Supreme Court of Appeal
DATE 4 June 2021
STATUS Immediate
Please note that the media summary is for the benefit of the media and does not form part of the
judgment of the Supreme Court of Appeal.
Ingosstrakh v Global Aviation Investments (Pty) Ltd and Others (934/2019) [2021] ZASCA 69 (4 June
2021)
Today the Supreme Court of Appeal (the SCA) dismissed with costs, the appellant's (Ingosstrakh)
appeal against an order of the Gauteng Division of the High Court, Johannesburg (the high court) which
dismissed Ingosstrakh’s application for condonation of the late filing of its plea. The SCA also upheld
with costs, the respondent’s (Global) appeal against the order of the high court dismissing their
application for default judgment against Ingosstrakh. The SCA set aside the order of the high court and
replaced it with an order granting default judgment against Ingosstrakh in favour of Global.
The dispute arose from an insurance policy concluded between Global and companies associated to it,
on the one hand, and Ingosstrakh, a Russian company, on the other. In terms of the policy, Ingosstrakh
undertook to indemnify Global against all risks associated with a specified aircraft. The risk insured
against occurred and a dispute arose as to Ingosstrakh’s liability to pay in terms of the policy. Global
issued summons against Ingosstrakh, which failed to plead and was placed under bar. Upon expiry of
the bar, Global applied to the high court for default judgment. Ingosstrakh opposed the application and
counter-applied for the lifting of the bar. The high court dismissed both applications but subsequently
granted leave to the SCA.
The SCA concluded that the order of the high court was untenable to the extent it failed to resolve the
disputes between the parties. With regard to Ingosstrakh’s application for the lifting of the bar, the SCA
concluded that since there was no appeal against an earlier high court order dismissing a similar
application, its appeal had to fail on the basis that the issue was res judicata. The SCA further concluded
that in any event, Ingosstrakh had failed to show good cause for the lifting of the bar.
The SCA also considered Ingosstrakh’s submission that the high court did not have jurisdiction to
determine the dispute as it, Ingosstrakh, and the second respondent, were both foreign peregrini in
South Africa, and that in terms of the policy, jurisdiction was governed by the laws of the Virgin British
Islands, the second respondent’s country of domicile. The SCA considered the leading authority on this
issue, namely Veneta Mineraria SPA v Carolina Collieries (Pty) Ltd (in liquidation) 1987 (4) SA 883 (A),
as well as Hay Management Consultants Ltd v P3 Management Consultants (Pty) Ltd [2005] 3 All SA
119 (SCA). The court distinguished Veneta on the following basis: in Veneta, the plaintiff was a foreign
peregrinus and the defendant a local peregrinus of Natal, but an incola of the Transvaal. Although the
defendant had submitted to the jurisdiction of the Durban and Coast Local Division, there was no other
jurisdictional connecting factor linking the defendant to the Natal Court. Consequently, such submission
to jurisdiction did not suffice to clothe the Natal court with jurisdiction. In the present case, the SCA
found, on a consideration of a number of factors, that Ingosstrakh had submitted to the jurisdiction of
the high court, and in addition, there was a ground of jurisdiction that linked the subject matter of the
litigation to the high court, ie that the insurance policy was concluded in Johannesburg. Accordingly,
the SCA concluded that the high court had jurisdiction in the matter.
The Court considered Ingosstrakh’s various other defences and found no merit in any of them.
In the circumstances, the Court (per Makgoka JA) with Mbha and Dambuza JJA and Mabindla-Boqwana
and Unterhalter AJJA concurring, dismissed with costs, Ingosstrakh’s appeal against an order of the
high court dismissing its application for condonation of the late filing of its plea. It upheld with costs,
Global’s appeal against the order of the high court dismissing Global’s application for default judgment.
The SCA set aside the order of the high court and replaced it with an order granting default judgment
against Ingosstrakh in favour of Global.
END
|
2938
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
CASE NO: 20001/2014
Reportable
In the matter between:
THE TRUSTEES OF THE SIMCHA TRUST (IT 1342/93)
APPELLANT
and
MADELEINE DE JONG
FIRST RESPONDENT
GREGORY NIGEL JOSEPH WHITE
SECOND RESPONDENT
MARTHINUS JOHANNES ELS
THIRD RESPONDENT
MARGARET JEAN WOUTERS
FOURTH RESPONDENT
JOSHUA SAMUEL JOHNSON SOUTH
FIFTH RESPONDENT
NICOLE GENEVIEVE KYTE
SIXTH RESPONDENT
JACQUES SCHMIDT
SEVENTH RESPONDENT
SUZANNE WEHMEYER (SCHMIDT)
EIGHT RESPONDENT
EXCLUSIVE ACCESS TRADING 585 (PTY) LTD
NINTH RESPONDENT
EMANUEL FEGUERA DE ABREU
TENTH RESPONDENT
SHIRAAZ JOOSUB
ELEVENTH RESPONDENT
BARRISTER INVESTMENTS (PTY) LTD
TWELFTH RESPONDENT
AMBER VAN DER WALT
THIRTEENTH RESPONDENT
SARAH ELIZBETH HALLAS
FOURTEENTH RESPONDENT
JOAO OSE RIBEIRO DA CRUZ
FIFTEENTH RESPONDENT
SKYE MIDDLETON
SIXTEENTH RESPONDENT
RICHARD DANIEL KYTE
SEVENTEENTH RESPONDENT
THE CITY OF CAPE TOWN
EIGHTEENTH RESPONDENT
Neutral Citation:
Simcha Trust v Madeleine de Jong (20001/2014) [2015] ZASCA 45
(26 March 2015).
Coram:
Navsa ADP, Brand, Mhlantla & Zondi JJA and Schoeman AJA
Heard:
26 February 2015
Delivered:
26 March 2015
Summary:
Claim against City of Cape Town for compensation in terms of s
8(1)(c)(ii)(bb) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) based on
improper approval of building plans that caused neighbouring property owners to seek
redress – high court unjustifiably allowing litigation in terms of which aggrieved land
owners had sought a review into litigation in terms of which the offending land owner
was permitted to alter its position from co-respondent into an applicant seeking redress
in terms of s 8(1)(c)(ii) of PAJA – interpretation and application of that sub-section –
compensation not available when administrative decision set aside and where remittal
should follow – courts slow to impose liability on administrators who do their work
negligently but honestly – „exceptional cases‟ as the expression appears in s 8(1)(c)(ii)
is concerned with appropriateness of remedy rather than quality of decision sought to
be impugned – even if sub-section could be employed in favour of the offending land
owner the circumstances were such that any decision would be premature in that it was
not possible to say now what the ultimate outcome of either the old or new plans would
be.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape Division, Cape Town (Rogers J sitting as court of first
instance): judgment reported sub nom De Jong & others v The Trustees of the Simcha
Trust & Another 2014 (4) SA 73 (WCC).
The following order is made:
The appeal is dismissed with costs including the costs attendant upon the employment
of two counsel.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Navsa ADP (Brand, Mhlantla & Zondi JJA and Schoeman AJA concurring):
[1] This appeal is directed against the dismissal by the Western Cape Division, Cape
Town (Rogers J), of a claim by the appellant, the Trustees of the Simcha Trust
(Simcha), for compensation in terms of s 8(1)(c)(ii)(bb) of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA). The case turns on the interpretation and
application of that section.
[2] Simcha‟s claim for compensation was based on the wrongful approval by the
eighteenth respondent, the City of Cape Town (the City), of building plans submitted by
the former to the latter. The plans had been set aside because of a challenge in the
Western Cape Division by owners of an adjoining building, the first to seventeenth
respondents (the Seventeen), under the provisions of PAJA. The setting aside of the
plans was by agreement between Simcha, the City and the Seventeen. Desai ADP
issued an order to that effect. It is necessary to note that when he did so, the matter
was not expressly remitted to the City for reconsideration. It is now necessary to deal in
some detail with the background leading up to the order of Desai ADP and to the
adjudication of the claim for compensation by Rogers J.
[3] The Seventeen are registered owners of sectional title units at Four Seasons
Sectional Title Scheme, situated at 43 to 47 Buitenkant Street Cape Town. The
sectional title units immediately abut the property owned by Simcha, in respect of which
the plans were submitted to the City for approval. It appears that Simcha‟s adjoining
property had been derelict for years and that the plans in question contemplated an
exponential increase in the height and size of the building. Subsequent to the approval
of the plans, construction work began in earnest on 14 May 2012. It was contemplated
that a hotel and a block of flats would be erected. The Seventeen, realising what was
taking place, conducted investigations and were advised that the approval of the plans
could be impugned on a number of grounds. That prompted a successful application for
an interdict, pending the outcome of an application to have the approval of the plans
reviewed and set aside. The Western Cape Division, Cape Town (Dolamo AJ) issued
the following order:
„The first respondent is hereby interdicted from carrying out or allowing any further construction
work on Erf 5284 Cape Town situated at 41 Buitenkant Street, Cape Town pending a final
determination of an application to be commenced by the applicant within 14 days from date
hereof for the review of the decision of the second respondent of 20 September 2008 to
approve building plans submitted to it by the first respondent in terms of the National Building
Regulation Standard Act 103 of 1977.‟
The court directed that the costs of the interdict stand over, pending determination of
the review application.
[4] The Seventeen applied in the Western Cape Division, Cape Town for an order
reviewing and setting aside the approval by the City, on 20 October 2008, of building
plans submitted by Simcha in terms of the National Building Regulations and Building
Standards Act 103 of 1977 (the NBRBSA) in respect of a building to be constructed on
erf 5284 situated at 41 Buitenkant Street Cape Town. It specifically sought an order that
Simcha pay the costs of the application and the related interdict. In their founding
papers in the review application, the Seventeen attacked the City‟s approval of
Simcha‟s plans. First, because of the extent – mainly the height – of the building to be
constructed on behalf of Simcha, it was submitted that there would be derogation in
value of their neighbouring properties. It was contended that the regulatory statutory
framework precluded approval of plans that derogated from the value of adjoining and
neighbouring properties. The principal statutory tools for regulating land use in the City
is the Land Use Planning Ordinance 15 of 1985 (LUPO) and the zoning scheme
regulations. The property in construction was described as being „too intrusive‟ and
„overwhelming‟.
[5] The Seventeen complained that the approval by the City of Simcha‟s high-rise
building would ensure that they were deprived of natural light, privacy and ventilation,
affecting their rights of full enjoyment of their properties. The evidence of a professional
property-valuer was relied upon by the Seventeen to the effect that, if Simcha‟s property
were to proceed to completion, it would occasion loss of value of the properties of the
Seventeen of up to 30 per cent.
[6] In addition, the Seventeen contended that a building control officer appointed in
terms of the NBRBSA had an obligation to investigate property value derogations and to
make a recommendation to persons to whom the City had delegated the power to
approve or refuse applications for building plan approvals. Such a recommendation, so
it was contended, required a motivated report in respect of a conclusion reached by him
in relation to the derogation of property values. It is common cause that in the present
case, no such report was completed by the building control officer.
[7] The review application was not opposed by the City. After the interim order had
been granted, Simcha filed an affidavit in the review application styled „first respondent‟s
further affidavit‟, which described events after the grant of the interim order. The
interdict did not have an immediate impact on continued building operations because it
had been granted towards the end of the year when the builders‟ holiday was imminent.
Simcha insisted that the only basis for the interdict was the decision of the
Constitutional Court Walele v City of Cape Town 2008 (6) SA 129 (CC). At this stage, it
is necessary to interrupt this narrative to consider ss 6 and 7 of the NBRBSA and the
decision in Walele. The relevant parts of s 6 provide:
„(1) A building control officer shall –
(a)
make recommendations to the local authority in question, regarding any plans,
specifications, documents and information submitted to such local authority in accordance with
section 4(3);
(b)
ensure that any instruction given in terms of this Act by the local authority in question be
carried out;
(c)
inspect the erection of a building, and any activities or matters connected therewith, in
respect of which approval referred to in section 4(1) was granted;
(d)
report to the local authority in question, regarding non-compliance with any condition on
which approval referred to in section 4(1) was granted.
[8] The relevant parts of s 7 provide as follows:
„(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;
(b) (i) is not so satisfied; or
(ii) is satisfied that the building to which the application in question relates –
(aa)
is to be erected in such a manner or will of such nature or appearance that –
(aaa) the area in which it is to be erected will probably or in fact be disfigured thereby;
(bbb) it will probably or in fact be unsightly or objectionable;
(ccc)
it will probably or in fact derogate from the value of adjoining or neighbouring
properties;
(bb)
will probably or in fact be dangerous to life or property, such local authority shall
refuse to grant its approval in respect thereof and give written reasons for such
refusal.‟
[9] The Constitutional Court, in Walele held that the purpose of the recommendation
by the building control officer, contemplated in s 6, must be to furnish the decision-
maker with a basis for his or her opinion, one way or the other, and that the decision-
maker must assess and himself or herself be satisfied about these issues. In the
present case, as in Walele, there was no motivation for a decision reached by the
building control officer that the plans were in accordance with statutory prescripts and
more particularly that there would be no derogation in the value of neighbouring
property. As in Walele, he only ticked an appropriate box in a standard form.
[10] In its further affidavit, Simcha stated that after appreciating the effect of the
decision in Walele, it decided to concede the review application. From its perspective,
that decision was solely based on the failure of the building control officer and the City
to comply with the prescripts of ss 6 and 7 of the NBRBSA.
[11] Continuing its narrative of what happened after the grant of the interim interdict,
Simcha described how it attempted to reach an agreement with the City concerning the
continuation of building operations. Predictably, the City was not receptive. Ultimately
Simcha decided to submit new plans. There were subsequent legal skirmishes between
the Seventeen and Simcha about whether steps taken to protect the building under
construction, in the interim, amounted to further building activity in violation of the
interdict, but those disputes were resolved.
[12] The City‟s approval process for Simcha‟s new plans dragged on without an end
in sight, in the short term. Despite the relief sought by the Seventeen being conceded
by both the City and Simcha and despite the former not seeking costs in relation to the
review application, Simcha, nonetheless, filed its further affidavit, its declared object for
doing so was to require the court below to order the City, (a) to pay the costs of the
interim interdict and the review application, and (b) to order it to refund the scrutiny fees
of R82 327.60, paid in respect of the first set of plans. In addition, Simcha sought an
order that the City should compensate it for out-of-pocket losses resulting from the grant
of the interim interdict. I pause to state that the costs related to the interdict, in the main,
comprised the costs occasioned by Simcha‟s opposition. Simcha contended that it was
entitled in terms of s 8(1)(c)(ii)(bb) of PAJA to the compensation, set out above, which
appeared to include the scrutiny fees. It insisted that it was entitled to an order in terms
of that subsection on the basis that the plans were approved, notwithstanding that the
approval was preceded by the Constitutional Court decision in Walele.1 In support of
this claim, Simcha argued that the City‟s conduct in not implementing the Walele
decision and causing affected persons to suffer loss, was unconscionable and
incomprehensible. In paragraph 21 of its further affidavit, it contended:
„The City “abides” the review. Having been grossly negligent in failing to implement Walele; and
having thus far made no attempt to assist the Trust (whether it be by way of the urgent
consideration of fresh building plans or otherwise) the City has now taken the ultimate step of
betrayal, which was to wash its hands in innocence and leave the Trust to its own devices in the
review.‟
1 The Walele judgment was delivered on 13 June 2008 and Simcha‟s plans approved on 20 October 2008
– more than four months later.
The costs orders sought and the claim to compensation were adjudicated by Rogers J.
[13] The lis concerning the validity of the approval of the plans had been settled. The
only outstanding issue was costs, which ought to have been decided with reference to
the facts of the review application. Ordinarily, the successful party – the Seventeen –
would have been entitled to an order for costs of the application, to be paid by Simcha,
the only initially opposing party. The Seventeen, in any event, did not seek the costs of
the review application. All that was left was consideration of the costs related to the
interim interdict for which Simcha, ordinarily, would have been liable. I do not
understand how the dispute, concerning the correctness of the City‟s approval of the
plans, transformed from litigation in respect of which Simcha, was a co-respondent with
the City, to litigation in terms of which Simcha was now seeking redress against the City
on the basis of the latter‟s asserted reckless or negligent conduct in approving the
plans. And that transformation occurred purely on the strength of a „further affidavit‟.
What was required was some new process to be instituted by Simcha against the City,
which would then have been adjudicated on the merits. By permitting this unjustifiable
metamorphosis, Rogers J allowed an extension of the litigation. That being said, it is
now necessary to deal with the Western Cape Division‟s adjudication of Simcha‟s claim
to compensation, purportedly in terms of s 8(1)(c)(ii)(bb) of PAJA.
[14] In deciding Simcha‟s claim to compensation, the high court‟s starting point was
the provisions of s 8(1) of PAJA which read as follows:
„(1) The court or tribunal, in proceedings for judicial review in terms of section 6(1), may grant
any order that is just and equitable, including orders –
(a) directing the administrator –
(i) To give reasons; or
(ii) To act in the manner the court or tribunal requires;
(b) prohibiting the administrator from acting in a particular manner;
(c) setting aside the administrative action and –
(i) remitting the matter for reconsideration by the administrator, with or without directions;
or
(ii) in exceptional cases –
(aa)
substituting or varying the administrative action or correcting a defect
resulting from the administrative action; or
(bb)
directing the administrator or any other party to the proceedings to pay
compensation;
(d) declaring the rights of the parties in respect of any matter to which the administrative action
relates;
(e) granting a temporary interdict or other temporary relief; or
(f) as to costs.‟
[15] Rogers J considered the three submissions on behalf of the City. First, that
compensation in terms of s 8(1)(c)(ii) could not be granted where the court had set
aside the administrative action and remitted the matter for reconsideration by the
decision-maker. That being so, it was contended that the alternative remedy, of
compensation, set out in s 8(1)(c)(ii) was not available. Second, that the circumstances
which render a case „exceptional‟ within the meaning of s 8(1)(c)(ii) are not concerned
with the egregiousness of the impugned conduct but with the appropriateness of
departing from the usual remedy of remittal. Third, that the sub-section can only be
invoked by an aggrieved applicant seeking a review of a decision rather than by a
respondent.
[16] The court a quo agreed with the first two submissions referred to in the preceding
paragraph. Rogers J considered them to accord with the structure of s 8(1)(c). He took
the view: Firstly, that the use of the word „and‟ at the end of the introductory part of
paragraph (c) followed by the separation of sub-paragraphs (i) and (ii) with the word „or‟
is a strong „syntactical pointer‟ in favour of the view that the remedies in those two sub-
paragraphs are alternatives that are mutually exclusive. And secondly, that sub-
paragraph (ii) was qualified by the phrase „in exceptional circumstances‟, indicating that
the remedies in sub-paragraph (ii) apply in circumstances different from those in sub-
paragraph (i). In consequence, he concluded that at least in the case of item (aa) of
sub-paragraph (ii), the remedy can only ever be a true alternative to the remedy in sub-
paragraph (i). He reasoned that a court could not remit a matter for reconsideration by
the decision-maker and also substitute or vary the action complained of.
[17] With reference to the decision of this court in Gauteng Gambling Board v Silver
Star Development Ltd & others 2005 (4) SA 67 (SCA) para 28, Rogers J agreed with
the contention that the phrase „in exceptional cases‟ was not concerned with whether
the administrative decision „was a conspicuously bad one but with whether there are
unusual circumstances which make it appropriate to grant the exceptional remedy in
item (aa) or (bb) rather than the usual remedy of remittal.‟ He concluded that
exceptionality was concerned with the choice of remedy, not the quality of the
administrator‟s decision in the abstract.
[18] Rogers J also agreed with the submission on behalf of the City that the remedy
of compensation must have been intended by the legislature as a remedy for the benefit
of an aggrieved party in the review proceedings because such party will enjoy, neither a
reconsideration of his administrative application by the original administrator, nor obtain
the benefit of a substituted administrative decision by the court. At the end of paragraph
22 he said the following:
„I do not say that an aggrieved party in review proceedings is entitled to compensation merely
because there has been neither a remittal nor a substitute decision by the court but I do hold
that compensation is not available as a remedy if the usual remedy of remittal has been granted
or if exceptionally the court has substituted its own decision for that of the administrator.‟
[19] As part of his reasoning, Rogers J was rightly concerned that affected parties
could, on his interpretation of the relevant section of PAJA, be precluded from obtaining
compensation under PAJA in respect of loss suffered as a result of really egregious
administrative decisions, because in such cases the remedy of remittal will often remain
appropriate, or there may be scope for a substituted administrative decision by the
court. However, he did not see this as justification for departing from what appeared to
him to be the clear meaning of s 8(1)(c) of PAJA. He stated that it should be borne in
mind that the law of delict remained at the disposal of an affected party. The court below
was rightly aware that our courts have been conscious of the dangers of imposing
liability on public bodies for the negligent but honest exercise of powers. In this regard
he relied on the decision of the Constitutional Court in Steenkamp NO v Provincial
Tender Board, Eastern Cape 2007 (3) SA 121 (CC) paras 38-56.
[20] As part of his reasoning, Rogers J also had regard to Darson Construction (Pty)
Ltd v City of Cape Town & Another 2007 (4) SA 488 (C). What that case held was that,
having regard to the facts, (a) it was impractical to remit the decision for
reconsideration; (b) there had been no basis for the court to substitute its own decision
for that of the decision-maker; and (c) that an applicant was entitled to some
compensation for the manner in which the City had breached the applicant‟s right to
administrative justice. Rogers J noted that in Darson there had been no analysis of the
structure of s 8(1)(c) of PAJA and considered it significant that compensation was only
awarded because neither the remedy of remittal nor a substituted order was feasible.
[21] Returning to the facts before him, Rogers J held that Simcha‟s claim for
compensation could not succeed. He took into account that, even though the order of
Desai ADP did not expressly provide for remittal to the City for reconsideration, it could
readily be concluded that it had that effect. The following part of the judgment reflects
his reasoning:
„[I]t is perfectly clear from the history of the matter that nobody understood the order as finally
determining that the building plans submitted by Simcha in 2008 were not able to be approved.
All that was set aside was the approval of the application. The review court did not substitute for
that approval a refusal of the building plan application. The legal position, upon the granting of
the review order, was that the 2008 application for building plan approval remained before the
City and Simcha was entitled to a decision on that application. That being the obvious purport of
the order, it is not open to the review court to grant either of the exceptional alternative remedies
in para (ii) of sub-section 8(c).‟
[22] Although the court below also held that the City‟s approval of Simcha‟s plans,
along with thousands of others, in violation of Walele, was a serious dereliction of duty
and stated that, in its view, the decision to approve Simcha‟s plans was a conspicuously
bad one, it did not consider it to be „exceptional‟ within the meaning of that expression in
s 8(1)(c)(ii). It is necessary to record that although the City‟s explanation for its tardiness
in implementing Walele is not particularly persuasive, the picture that emerges from its
explanation for the delay is one of a lumbering bureaucracy trying to come to terms with
the implications of Walele, taking advice on it and not being very effective in finding a
solution in dealing with plans that had already been approved and with plans still to be
considered.
[23] The court below considered causation to be a further problem confronting
Simcha. In that regard Rogers J rightly asked whether a properly motivated report by
the building control officer might, in any event, have led to the plans being rejected or, if
approved, be overturned on review. It brings into sharp focus the manner in which
Simcha required the issue to be determined, namely, by way of its further affidavit and
unacceptably transforming the litigation in the manner described above.
[24] It was rightly accepted on behalf of Simcha that, if the compensation claim failed,
Simcha ought to pay the City‟s costs in the review application. Ironically, Rogers J
restricted those to costs arising out of the affidavits filed in connection with
compensation as well as to the appearance related to the claim for compensation. This
once again illustrates the distortion caused by extending the litigation. In respect of the
costs of the interdict, Rogers J considered that Simcha‟s persistent opposition was such
that Simcha probably knew, prior to the institution of legal proceedings, that no building
control inspector‟s report existed. In the view of the court below the costs of the interdict
should follow the result, namely, that Simcha should pay the applicant‟s interdict costs
and that the City should not be ordered to pay the costs of either the applicant or of
Simcha. In the result the following order was made:
„[a]
The first respondent‟s claim against the second respondent for compensation in terms of
s 8(1)(c)(ii)(bb) of the Promotion of Administrative Justice Act 3 of 2000 is dismissed.
[b]
The first respondent is directed to pay the second respondent‟s costs in relation to the
said claim for compensation, including the costs of two counsel.
[c]
In regard to the costs in case 22197/12 reserved by this court‟s judgment of 12
December 2012, the first respondent is directed to pay the applicant‟s costs, including the costs
of two counsel.‟
[25] I agree with the conclusion of the court below that, although Desai ADP did not
expressly remit the matter to the City for reconsideration, the legal effect of the setting
aside of the City‟s approval would have been a remittal. This is particularly so where a
party has not requested it, and a court has not seen fit to substitute a decision-maker‟s
decision with one of its own. In any event, having regard to the structure of s 8(1) of
PAJA, that could only occur in an exceptional case. Courts are not overly enthusiastic to
substitute their decisions for those of decision-makers where technical proficiency is
required, particularly where the decision-maker‟s experience and skills are beyond
those of a court.2 This does not however mean that a court will shirk its responsibility in
ensuring that the principle of legality is met, even where the issues are intricate and
complex and in respect of which a decision-maker has institutional experience and
expertise.
[26] The legal effect of remittal referred to in the preceding paragraph remains
unaffected by Simcha‟s decision, in pursuance of its own interests, to submit new plans
in an attempt to expedite a planning approval process to enable the building it
contemplates on its property to be completed as soon as possible.
2 See Minister of Environmental Affairs and Tourism and others v Phambili Fisheries (Pty) Ltd; Minister of
Environmental Affairs and Tourism and others v Bato Star Fishing (Pty) Ltd 2003 (6) SA 407 (SCA) para
50 and Associated Institutions Pension Fund v Van Zyl 2005 (2) SA 302 (SCA) and the discussion in C
Hoexter Administrative Law in South Africa 2ed (2012) at 151-153.
[27] A careful reading of s 8 of PAJA leads one to the conclusion that in respect of
some of the sub-provisions of s 8(1) one could have a combination of remedies.
However, when an administrative action is set aside in terms of s 8(1)(c) a court can
follow only one of the two alternatives provided for in s 8(1)(c)(i) or (ii). I therefore agree
with the conclusion reached by the court below, set out in paragraph 16 above, that the
remedy of compensation is not available when an administrative act has been set aside
and the matter remitted for reconsideration. I find the reasoning of the court a quo set
out in paragraph 16 above to be compelling.
[28] In Gauteng Gambling Board this court said the following at para 28:
„The power of a court on review to substitute or vary administrative action or correct a defect
arising from such action depends upon a determination that a case is “exceptional”: s
8(1)(c)(ii)(aa) of the Promotion of Administrative Justice Act 3 of 2000. Since the normal rule of
common law is that an administrative organ on which a power is conferred is the appropriate
entity to exercise that power, a case is exceptional when, upon a proper consideration of all the
relevant facts, a court is persuaded that a decision to exercise a power should not be left to the
designated functionary. How that conclusion is to be reached is not statutorily ordained and will
depend on established principles informed by the constitutional imperative that administrative
action must be lawful, reasonable and procedurally fair.‟
The court below was correct in relying on that decision in reaching its conclusion that
the phrase „in exceptional cases‟, as it appears in s 8(1)(c)(ii), was not concerned with
whether the administrative decision „was a conspicuously bad one but with whether
there are unusual circumstances which make it appropriate to grant the exceptional
remedy in item (aa) or (bb) rather than the usual remedy of remittal.‟ Hence I agree with
its conclusion that exceptionality was concerned with the choice of remedy, not the
quality of the administrator‟s decision in the abstract.
[29] In Steenkamp the Constitutional Court was concerned with the question whether
financial loss caused by improper performance of a statutory or administrative function
should attract liability for damages in delict. Moseneke DCJ said the following at para
29:
„It is nonetheless appropriate to note that ordinarily a breach of administrative justice attracts
public-law remedies and not private-law remedies. The purpose of a public-law remedy is to
pre-empt or correct or reverse an improper administrative function. In some instances the
remedy takes the form of an order to make or not to make a particular decision or an order
declaring rights or an injunction to furnish reasons for an adverse decision. Ultimately the
purpose of a public remedy is to afford the prejudiced party administrative justice, to advance
efficient and effective public administration compelled by constitutional precepts and at a
broader level, to entrench the rule of law.‟
In Steenkamp s 38 of the Constitution was implicated.3 In the present case, reliance
was placed solely on the provisions of s 8(1)(c) of PAJA. In para 30 of Steenkamp the
following appears:
„Examples of public remedies suited to vindicate breaches of administrative justice are to be
found in s 8 of the PAJA. It is indeed so that s 8 confers on a court in proceedings for judicial
review a generous jurisdiction to make orders that are “just and equitable”. Yet it is clear that the
power of a court to order a decision-maker to pay compensation is allowed only in “exceptional
cases”. It is unnecessary to speculate on when cases are exceptional. That question will have to
be left to the specific context of each case. Suffice it for this purpose to observe that the
remedies envisaged by s 8 are in the main of a public law and not private law character.‟
[30] Steenkamp was rightly relied on by Rogers J for his statement that our courts
have been slow to impose liability on public bodies for negligent but honest decisions.
As noted in Steenkamp, if administrative or statutory decisions are made in bad faith or
under corrupt circumstances or completely outside the legitimate scope of the
empowering provision, different public policy considerations may well apply.4 There is
no suggestion that those circumstances obtain in the present case.
3 Section 38 read as follows:
„Anyone listed in this section has the right to approach a competent court, alleging that 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;
(b) anyone acting on behalf of another person who cannot act in their own name;
(c) anyone acting as a member of, or in the interest of, a group or class of persons;
(d) anyone acting in the public interest; and
(e) an association acting in the interest of its members.‟
4 Para 55.
[31] I also agree that in the ordinary course the remedies provided for in s 8(1) of
PAJA are envisaged to be at the disposal of a party aggrieved and negatively affected
by administrative action and seeking to have the decision reviewed. In the present case
the Seventeen were the parties seeking the review. The Seventeen might have been
entitled to compensation in the event that none of the other remedies envisaged in s 8
of PAJA were available to them. That, however, is not a factual permutation we need
concern ourselves with. Rogers J‟s reasoning in this regard, set out in paragraph 18
above, appears to me to be correct.
[32] When counsel on behalf of Simcha was asked why it did not pursue a delictual
remedy, he surprisingly, but without much conviction, submitted that it could be deduced
that s 8(1)(c)(ii) had the effect of displacing that remedy. I do not intend to engage with
that contention, save to say that it is entirely without merit.
[33] In any event, in the circumstances of the present case, a claim for compensation
on any basis, whether in terms of s 8 of PAJA or by way of a delictual action appears
premature. We do not know the ultimate fate of the new plans that have been submitted
for approval. And in any event, the impugned plans have been abandoned. There is no
basis on which to determine finally whether they would ultimately have passed muster.
The causation problems foreseen by the court below are real.
[34] Whilst it might, with hindsight, be argued that the exercise engaged in by the
court below in adjudicating the claim for compensation was useful and will provide
future guidance, a court must guard against embarking on exercises it considers
jurisprudentially useful, when the effect is an unjustifiable extension of litigation which
must be prejudicial to a contesting party.
[35] For all the reasons set out above the appeal must fail. The following order is
made.
The appeal is dismissed with costs including the costs attendant upon the employment
of two counsel.
________________________
MS NAVSA
ACTING DEPUTY PRESIDENT
APPEARANCES:
FOR APPELLANT:
Adv. H J de Waal
Instructed by:
Brink De Beer & Potgieter Inc., Tygervalley
Honey Attorneys, Bloemfontein
FOR RESPONDENTS:
Adv. S P Rosenberg SC (With him E F van
Huyssteen)
Instructed by
Webber Wentzel, 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
26 March 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Simcha Trust v Madeleine de Jong (20001/2014) [2015] ZASCA 45 (26 March 2015)
The Supreme Court of Appeal (SCA) today dismissed an appeal against a
decision of the Western Cape Division, Cape Town in terms of which it
dismissed an application by the appellant, the Trustees of the Simcha Trust
(IT 1342/93) for compensation, purportedly in terms of s 8(1)(c)(ii)(bb) of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) against the City of
Cape Town, for approving building plans that were later set aside when the
owners of an adjacent property applied to court for an order in those terms.
The SCA was critical of the high court for allowing the review application in
which the trustees were co-respondents with the City to be transformed into
litigation in terms of which they sought redress against the City on the basis of
the latter’s asserted reckless or negligent conduct in approving the plans. And
that purely on the strength of a ‘further affidavit’.
The SCA nevertheless considered that the high court had rightly dismissed
the claim for compensation. It held that the provisions of PAJA, on which the
trustees relied, did not permit for a setting aside of an administrative decision,
the effect of which was a remittal to the decision maker in addition to
compensation. It agreed with the high court’s reasoning in this regard.
The SCA also agreed that the phrase ‘in exceptional circumstances’ in the
legislation in question was not concerned with whether the administrative
decision was a conspicuously bad one but with whether there are unusual
circumstances which make it appropriate to grant the remedy of
compensation. The SCA reiterated that courts were rightly aware of the
dangers of imposing liability on public bodies for the negligent but honest
exercise of powers.
The appeal was dismissed with costs including the costs attendant upon the
employment of two counsel.
|
2812
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 650/11
In the matter between:
HANO TRADING CC
Appellant
and
J R 209 INVESTMENTS (PTY) LTD
First Respondent
NEDBANK LIMITED
Second Respondent
Neutral citation Hano Trading CC v J R 209 Investments (Pty) Ltd (650/11)
[2012] ZASCA 127 (21 September 2012)
Coram:
MTHIYANE DP, VAN HEERDEN, MHLANTLA, BOSIELO JJA
AND ERASMUS AJA
Heard:
30 August 2012
Delivered: 21 September 2012
Summary: Rules of court – rule 6 – non-compliance – filing of further affidavits
– test to be applied – Indulgence – factors to be presented in application for court
to exercise discretion to allow further affidavits. Contract – breach – notice of –
requirements in terms of contract.
_________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Tlhapi J sitting as court of
first instance):
The appeal is dismissed with costs.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
ERASMUS AJA (MTHIYANE DP, VAN HEERDEN, MHLANTLA, BOSIELO
JJA concurring):
[1] The issues in this appeal are whether the court a quo should have allowed
the filing of further affidavits, as envisaged in rule 6(5)(e) of the Uniform Rules of
Court, and to whether the first respondent (applicant a quo) was entitled to a
declarator and ancillary relief, to be discussed later in the judgment. For
convenience I shall refer to the first respondent as the respondent in view of the
fact that the second respondent was cited nominally and played no role, either in
the proceedings in the court below or in this appeal.
[2] The respondent brought an application in the court below for a declaratory
order that an agreement entered into between itself and the appellant on 2 June
2009 is valid and binding on the parties thereto. The ancillary relief prayed for
was in relation to the registration of the property in terms of the agreement.
[3] The appellant opposed the matter by filing an answering affidavit together
with supporting documents. The defence raised therein contained a denial that the
agreement between the parties was enforceable, as it had been legally cancelled in
terms of clause 14 of the agreement which reads:
‘14.
Default/Breach
In the event that (sic: of) the Purchaser committing a breach of any of the terms of this
Agreement and failing to remedy such breach within a period of 14 (fourteen) days after receipt
of a written notice from the Seller calling upon the Purchaser to remedy the breach complained
of, then the Seller shall without further notice cancel the Agreement and the Purchaser shall
forfeit all monies paid as a deposit to the Seller, and the Seller shall claim and recover all
damages from the Purchaser.’(My emphasis.)
This clause must be read with clause 12.2:
‘12.2 Any notice given by prepaid registered post in terms of this clause shall be deemed to
have been received by the addressee within 7 (seven) days after the date of posting.’
[4] The appellant attached a letter dated 3 December 2009 addressed to an
entity whose name was not the same as the respondent and to an address that did
not conform with the respondent’s chosen domicilium citandi et executandi in
terms of the agreement. It further denied that the respondent had previously
tendered or had the ability to make payment of the deposit in the manner
prescribed by the agreement, the details of which will be discussed below.
[5] The respondent replied to the answering affidavit and laid a basis, by
referring to common cause facts between the parties, to infer that the averments
made by the appellant were unsustainable. In particular, that there was no proper
compliance with clause 14 of the agreement upon which the appellant could rely
for its insistence that it had cancelled the agreement.
[6] No new issues were raised in the replying affidavit of the respondent, but
the appellant deemed it necessary to obtain various affidavits and documentation,
most of which were generated after the filing of the respondent’s replying
affidavit.
[7] The appellant filed these documents seemingly with the registrar and placed
them on the court file without leave of the court as envisaged in rule 6(5)(e) of the
rules of court.
[8] The court a quo, per Tlhapi J, ruled these further affidavits inadmissible.
Relying on the evidence contained in the three sets of affidavits, referred to above,
the agreement was ruled to be valid and binding upon the parties.
[9] Rule 6 of the rules of court reads:
‘6
Applications (rules of the court)
(1) Save where proceedings by way of petition are prescribed by law, every application shall be
brought on notice of motion supported by an affidavit as to the facts upon which the applicant
relies for relief.
(2)….
6(5)(d) Any person opposing the grant of an order sought in the notice of motion shall-
(i) ….
(ii) within fifteen days of notifying the applicant of his intention to oppose the application,
deliver his answering affidavit, if any, together with any relevant documents; and
(iii) ….
(e) Within 10 days of the service upon him of the affidavit and documents referred to in sub-
paragraph (ii) of paragraph (d) of subrule (5) the applicant may deliver a replying affidavit. The
court may in its discretion permit the filing of further affidavits.’
[10] A litigant in civil proceedings has the option of approaching a court for
relief on application as opposed to an action. Should a litigant decide to proceed
by way of application, rule 6 of the Uniform Rules of Court applies. This rule sets
out the sequence and timing for the filing of the affidavits by the respective
parties. An advantage inherent to application proceedings, even if opposed, is that
it can lead to a speedy and efficient adjudication and resolution of the disputes
between parties. Unlike actions, in application proceedings the affidavits take the
place not only of the pleadings, but also of the essential evidence which would be
led at a trial. It is accepted that the affidavits are limited to three sets.1 It follows
thus that great care must be taken to fully set out the case of a party on whose
behalf an affidavit is filed. It is therefore not surprising that the rule 6(5)(e)
provides that further affidavits may only be allowed at the discretion of the court.
[11] Rule 6(5)(e) establishes clearly that the filing of further affidavits is only
permitted with the indulgence of the court. A court, as arbiter, has the sole
discretion whether to allow the affidavits or not. A court will only exercise its
discretion in this regard where there is good reason for doing so.
[12] This court stated in James Brown & Hamer (Pty) Ltd (previously named
Gilbert Hamer & Co Ltd) v Simmons NO 1963 (4) SA 656 (A) at 660D-H, that:
‘It is in the interests of the administration of justice that the well-known and well established
general rules regarding the number of sets and the proper sequence of affidavits in motion
proceedings should ordinarily be observed. That is not to say that those general rules must
always be rigidly applied: some flexibility, controlled by the presiding Judge exercising his
discretion in relation to the facts of the case before him, must necessarily also be permitted.
Where, as in the present case, an affidavit is tendered in motion proceedings both late and out of
its ordinary sequence, the party tendering it is seeking, not a right, but an indulgence from the
Court: he must both advance his explanation of why the affidavit is out of time and satisfy the
Court that, although the affidavit is late, it should, having regard to all the circumstances of the
case, nevertheless be received. Attempted definition of the ambit of a discretion is neither easy
nor desirable. In any event, I do not find it necessary to enter upon any recital or evaluation of
the various considerations which have guided Provincial Courts in exercising a discretion to
admit or reject a late tendered affidavit (see e.g. authorities collated in Zarug v Parvathie, 1962
1 Transnet Ltd v Rubenstein 2006 (1) SA 591 (SCA) para 28; Minister of Land Affairs and Agriculture v D & F Wevell Trust & others 2008 (2) SA 184 (A) para 43; MEC for
Health, Gauteng v 3P Consulting (Pty) Ltd 2012 (2) SA 542 (SCA) para 28.
(3) SA 872 (N)). It is sufficient for the purposes of this appeal to say that, on any approach to
the problem, the adequacy or otherwise of the explanation for the late tendering of the affidavit
will always be an important factor in the enquiry.’
[13] It was then later stated by Dlodlo J in Standard Bank of SA Ltd v
Sewpersadh & another 2005 (4) SA 148 (C) at paras 12-13:
‘The applicant is simply not allowed in law to take it upon himself and (to) file an additional
affidavit and put same on record without even serving the other party with the said affidavit. . .
Clearly a litigant who wished to file a further affidavit must make formal application for leave
to do so. It cannot simply slip the affidavit into the Court file (as it appears to have been the case
in the instant matter). I am of the firm view that this affidavit falls to be regarded as pro non
scripto.’
[14] To permit the filing of further affidavits severely prejudices the party who
has to meet a case based on those submissions. Furthermore no reason was placed
before the court a quo for requesting it to exercise a discretion in favour of
allowing the further affidavits. Consequently the court a quo was correct in ruling
that the affidavits were inadmissible.
[15] Having ruled that the court a quo was correct in its finding to disallow the
filing of further affidavits, and the potential evidence contained therein, I now turn
to the relevant facts.
[16] On 2 June 2009, the parties entered into a written agreement whereby the
appellant sold land to the respondent for the amount of R7,5 million. A non-
refundable deposit of R2 million was payable, of which it was recorded that an
amount of R1,25 million had already been paid and utilised by the appellant. This
amount was paid by a third party, Centurus Pty Ltd, on behalf of the respondent.
[17] In respect of the outstanding R750 000 the agreement read:
‘The balance of the deposit being R750 000,00 (SEVEN HUNDRED AND FIFTY
THOUSAND RAND) payable in cash or bank cheque or bank transfer directly to the Seller or
the Seller’s nominated beneficiary by the Purchaser on 12th June 2009.’ (My emphasis.)
[18] The balance of the purchase price would only become payable on
registration or on 12 June 2014 which was also the agreed date upon which that
the respondent would take full occupation and possession of the property. The
respondent failed to pay the balance (R750 000) of the deposit by the stipulated
date of 12 June 2009. The respondent claimed that this was due to an
administrative oversight.
[19] On 23 October 2009, without any prompting or enquiries from the
appellant, M & T Development (Pty) Ltd drew a cheque for R750 000, payable to
the appellant on behalf of the respondent. The respondent instructed its agent to
facilitate the delivery thereof to the appellant. The agent in turn contacted the
appellant’s attorney, who is the current attorney of record, as well as the firm of
attorneys mandated in the agreement to attend to the transfer of the property.
[20] The response received from the attorney by electronic mail on 29 October
2009 reads:
‘I had the opportunity of meeting Mr James Semoka and Simon Sebyenane in this regard. I
confirm that their instruction are that they are not selling the farm anymore and as such the deed
of sale is null and void.’ (My emphasis.)
It is noteworthy that the two persons mentioned by the attorney are the same
persons mentioned in the agreement as the representatives of the appellant.
[21] The respondent then, on 25 November 2009, tendered payment in the form
of the same cheque directly to the appellant’s attorney. The covering letter from
the respondent’s attorney included a paragraph in the following terms:
‘We understand from our client you refused to accept the above payment by reason of the
AGREEMENT having been cancelled, for want of our client having paid the deposit by
12/06/2009.
Clause 2.3 of the AGREEMENT is not a suspensive clause. You have also failed to invoke the
provisions of clause 14 of the AGREEMENT. As a result, the AGREEMENT remains binding
and our client keeps you bound to the provisions of the AGREEMENT. We require your written
confirmation, within three (3) days from receipt hereof that you keep yourself bound to the
AGREEMENT, in the absence of which we shall approach the High Court for an interdict
against you.’
[22] This letter was met with a prompt response, dated 27 November 2009, from
the same attorney that wrote the e-mail, referred to in para 20 above, to the agent
of the respondent a month before. It reads:
‘We refer to the above matter and confirm receipt of your letter dated 25th instant. Kindly advise
as to whether your client by tendering the cheque, a copy of which you attached to your letter,
was rectifying the breach it has committed.’
[23] As the response from the appellant’s attorney did not address the
cancellation of the agreement it was followed by another letter, dated 3 December
2009, in which the respondent’s attorney again drew the attention of the
appellant’s attorney to clause 14. No response was received to this letter until 1
February 2010, to which I shall revert later. Instead, the appellant’s attorney wrote
a letter dated 3 December 2009 and sent it to JR 29 Investment (Pty) Ltd, which is
not the name of the respondent. This registered item was also despatched to an
address which was incomplete in a material manner as regards the domicilium
citandi et executandi chosen by the respondent in the agreement.
[24] This letter posted on 7 December 2009 reads:
‘We refer to the above matter and advise that you are in breach of your obligations in terms of
the offer to purchase signed by yourself and our client Hano Trading cc.
This letter serves as a notice to you to rectify the breach within 14 days of receipt of this letter
failing which the agreement shall be cancelled without further notice to yourself.’
It is instructive to note that the attorney did not alert his colleague, representing
the respondent, of this correspondence and the respondent did not receive this
letter.
[25] On 1 February 2010 the respondent’s attorney requested the appellant’s
attorney to provide a response to his letter of 3 December 2009. The appellant’s
attorney responded as follows:
‘We refer to the above matter and in particular your even dated letter, wherein you are referring
to your letter dated 3rd December 2009.
In as far as we are [sic: concerned] the letter dated 3rd December 2009 did not require us to
respond as you have indicated certain steps that you were in the process of taking.
We further refer you to our letter which we wrote to you in response to your letter dated 25th
November 2009 in which we requested you to state whether by tendering the cheque your client
was attempting to rectify the breach to which we did not get a response.
Kindly let us hear from you what your client intends doing since it had failed to comply with its
obligations in terms of the offer to purchase that it has signed with our client.
Our client’s instructions is that your client has failed to comply with its obligation in terms of
the agreement and therefore the contract or agreement has been cancelled.’
I pause to note that nothing is said in this letter, which was posted by registered
post on 7 December 2009, about the notice in terms of clause 14, nor is any other
issue raised more particularly the manner and form of the payment.
[26] The respondent then launched the proceedings in the court a quo on 21 May
2010. The appellant replied and in its affidavit it primarily raised three defences,
namely that: (a) the respondent was unable to pay the deposit, (b) the appellant
had served a notice in terms of clause 14 read with clause 12.2 and that the
respondent had failed to remedy the breach; and (c) the tender made by the
respondent was not a valid tender in terms of clause 2.3 of the agreement. Before
this court, the appellant claimed further that the continued repudiation by the
respondent entitled the former’s non-compliance with clause 14 before
cancellation. Not only was the last defence never raised on the papers, but it is
also in direct contradiction to the appellant’s defence that, in sending the letter of
3 December 2009, it provided the respondent with a notice to remedy its breach.
[27] It is common cause that the respondent never tendered the portion of the
deposit in the amount of R750 000 strictly in accordance with the agreement. The
cheque tendered is not one of the three forms of payment described in clause 2.3.
However, and with regard to the conduct of the appellant herein, it is disingenuous
to raise this as a defence at this stage.2
[28] The appellant relies on the fact that an entity other than the respondent drew
the cheque that was tendered; and then infers that the respondent does not have the
ability to perform in terms of the agreement insofar as it relates to the balance of
the deposit. This inference, in my view, is misplaced as the initial amount of
R1,25 million was also not paid by the respondent company but by an entity that
was not necessarily related to the respondent. The identity of the source of the
money was never a term of the agreement and the appellant’s reliance thereon is
clearly misplaced.
[29] Clause 2.3 of the agreement requires the payment to be in one of three
forms, being ‘cash or bank cheque or bank transfer’. The cheque drawn on the
2 Taggart v Green 1991 (4) SA 121 (W); Edengeorge (Pty) Ltd v Chamomu Property Investments (Pty) Ltd 1981 (3) SA 460 (T).
account of M & T Development (Pty) Ltd does not qualify as one of the above.
The question that arises is whether the respondent’s failure to strictly comply with
the mode of payment was a relevant factor warranting the purported cancellation
of the agreement by the appellant.
[30] It is my view that the appellant cannot rely solely on this fact to validly
cancel the agreement for the following reasons:
First, if this amounted to a breach, the provisions of clause 14 had to be followed.
Second, at the time when the appellant’s attorney wrote the e-mail message dated
29 October 2009 to the agent, he could not have been aware that the cheque was
not a’ valid tender’ in terms of the agreement. In fact at that stage he was not even
aware that the balance of the deposit would be paid by a cheque, his view was that
the agreement was ‘null and void’.
[31] I now turn to the appellant’s reliance on compliance with clause 14 of the
agreement. In order for the appellant to succeed in this regard it had to show that it
complied strictly with the peremptory provisions of clause 14. The appellant was
obliged in terms of the said clause to notify the respondent in writing, of the
breach complained of. The appellant further had to prove that the respondent
received such notice. If the notice was despatched by registered post, the appellant
could rely on clause 12.2 as it would deem the respondent to have received the
notice within 7 days of the date of posting.
[32] This presupposes that the notice was sent to the correct address and to the
correct entity. For the purpose of the correct identity and address of the
respondent, clause 12.1 provides that;
‘All notices to be given by either of the parties to the other in terms of this Agreement, shall be
given by prepaid registered post or by telegram or facsimile, or be delivered by hand to:
12.1.1 . . .
12.1.2 The Purchaser:
JR 209 INVESTMENTS (PTY) LTD
GROUND FLOOR, BLOCK 5, PHASE 4
BOARDWALK OFFICE PARK
HAYMEADOW STREET
FAERIE GLEN.’
[33] The notice that the appellant relies on in the instant matter, dated 3
December 2009, was despatched by registered post. Although the proof of
registration does not indicate that it was prepaid, as required in terms of clause 12,
it will be accepted as such for present purposes. As indicated above, the appellant
addressed the notice to JR 29 Investment (Pty) Ltd instead of JR 209 Investments
(Pty) Ltd. The address also did not indicate that it was in ‘Boardwalk Office Park’.
It would appear that the failure to identify Boardwalk Office Park would have
rendered delivery of the notice impossible, as Haymarket Street in Faerie Glen
consists of numerous businesses and office premises. The provision contained in
12.1 of the agreement is peremptory as is evident from its wording, ie if the
information is not in compliance with that stipulated in the agreement, the
deeming provision of 12.2 does not apply.
[34] Moreover on a closer analysis of the notice itself, it is evident that it entirely
fails to indicate, and call on the respondent to remedy, any particular breach
complained of. It thus fails to comply with the requirements of clause 14.
[35] In my view the non-compliance with clause 14 prevents the appellant from
relying on any of the three breaches on which it purported to rely to cancel the
agreement.
[36] The court a quo was therefore correct in declaring the said agreement valid
and binding upon the appellant and the respondent and ordering the appellant to
pay the costs.
[37] Consequently the appeal is dismissed with costs.
_____________________
NC Erasmus
Acting Judge of Appeal
APPEARANCES
For Appellant:
G M Young
Instructed by: Botha Massyn, Thobejane
c/o Malebye Attorneys, Pretoria
Rossouws Attorneys, Bloemfontein
For Respondent:
M C Erasmus SC
Instructed by: A B Lowe
A B Lowe Attorneys, Pretoria
Honey Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
21 September 2012
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
HANO TRADING CC v J R 209 INVESTMENTS (PTY) LTD
The Supreme Court of Appeal (SCA) today held that failure by Hano Trading CC (the
appellant) to give J R 209 Investments (Pty) Ltd (the respondent) written notice of its
breach of the sale agreement between them as required by clause 14 thereof, prevented the
appellant from relying on the breaches on which it had purported to rely to cancel the
agreement. It dismissed an appeal against an order of the North Gauteng High Court,
Pretoria declaring the agreement valid and binding upon the parties.
The parties had entered into an agreement in terms of which the appellant sold land to the
respondent for the amount of R7.5 million. In terms of the agreement, the respondent was
required to pay a non-refundable deposit of R2 million. The respondent had already paid
R1.25 million which the appellant had already used. In terms of the agreement, the
remaining balance of the deposit, namely R750 000, was payable in cash or bank cheque or
bank transfer on 12 June 2009. The respondent failed to pay the balance on the stipulated
date. The appellant then purported to give written notice to the respondent as required by
clause 14. However, this notice was despatched to a wrong party and a wrong address. The
appellant then purportedly cancelled the agreement, which prompted the respondent to seek
an order in the high court declaring the agreement valid and binding between the parties.
After the three sets of affidavits had been filed, the appellant filed further affidavits without
seeking leave of the court to do so. The high court disallowed the further affidavits and
granted the order sought. The SCA further held that the high court had correctly disallowed
the further affidavits and that deviation from the Court Rule 6(5)(e) can only occur in the
discretion of the court on application.
In dismissing the appeal, the SCA held that the high court was correct in making the order
that it had made. In any event, the SCA held, the purported notice entirely failed to indicate,
and call on the respondent to remedy, any particular breach complained of. It therefore
failed to comply with the requirements of clause 14.
|
1326
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 44/2009
HENDRIK PIETER LE ROUX
First Appellant
BURGERT CHRISTIAAN GILDENHUYS
Second Appellant
REINARDT JANSE VAN RENSBURG
Third Appellant
and
LOUIS DEY
Respondent
Neutral citation:
Le Roux v Dey (44/2009) [2010] ZASCA 41 (30 March 2010)
Coram:
Harms DP, Mlambo and Malan JJA and Griesel and Majiedt AJJA
Heard:
8 March 2010
Delivered:
30 March 2010
Summary: Actio iniuriarum – defamation – humiliation – jest – wrongfulness –
animus iniuriandi – consciousness of wrongfulness not required - damages
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: North Gauteng High Court (Pretoria) (Du Plessis J sitting as court
of first instance):
The following order is made:
1 The appeal is dismissed with costs, such costs to include the costs of two counsel.
2 The cross-appeal is upheld with costs, such costs to include the costs of two
counsel.
3 The order of the court below is amended by substituting para 3 with „Koste,
insluitend die koste van twee advokate‟.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
HARMS DP (MLAMBO and MALAN JJA and MAJIEDT AJA)
[1] This appeal relates to a claim for sentimental damages for the infringement of
the dignity (dignitas) and reputation (fama) of the plaintiff, the present respondent,
who was a vice principal at a well-known secondary school in Pretoria. The
perpetrators were three scholars, the defendants. The high court upheld both claims
and awarded a composite amount of R45 000 with costs on the magistrates‟ courts‟
scale. With the leave of the trial court the defendants appeal the judgment while the
plaintiff cross-appeals the quantum of the award and the costs order.
[2] The claims arose from these facts: the first defendant, who then was fifteen
and a half and in grade 9, one evening searched the internet for pictures of gay
bodybuilders. He found one. It showed two of them, both naked and their legs
astride, sitting next to each other in a rather compromising position – a leg of the one
was over a leg of the other – and the position of their hands was indicative of sexual
activity or stimulation. He manipulated the photograph by pasting a photo of the
plaintiff‟s face on the face of the one bodybuilder and the face of the principal of the
school onto the other. He also covered the genitals of each with pictures of the
school‟s badge.
[3] He sent the manipulated photo to a friend who, in turn, sent it by cell phone to
the second defendant, who was in grade 11 and 17 years old. The picture spread
like fire amongst the scholars. A few days later the second defendant showed the
picture to a female teacher during class and later decided to print the photo in colour
and showed it around on the playground. At his behest and because he did not have
the necessary „guts‟ the third defendant, who was in the same grade and of the
same age, placed the photograph prominently on the school‟s notice board. A
teacher saw it quite soon and removed it.
[4] As a result, the plaintiff instituted an action against them based on the actio
iniuriarum, claiming damages for defamation as well as for his humiliation. The facts
are fairly uncontentious and the main issues raised by the appeal and cross-appeal
concerned (a) wrongfulness; (b) the presence of fault in the form of animus
iniuriandi; (c) the quantum of damages; and (d) the appropriate costs order. There is,
however, another fundamental question relating to splitting of causes of action that
will be dealt with in the course of the judgment. It may be pointed out at this early
stage that the first two issues are essentially related to the evidence of the
defendants that the publication of the picture was intended as a joke and was
perceived as such and that, accordingly, they could not be liable under the actio
iniuriarum because their actions were not wrongful and because they did not have
the intent to injure the plaintiff (a lack of animus iniuriandi).
DEFAMATION: WRONGFULNESS
[5] I begin with the defamation claim. The first matter to consider is the
wrongfulness of the publication of the manipulated photo. It is well established that
the determination of whether a publication is defamatory and therefore prima facie
wrongful involves a two-stage inquiry. (I use the word „publication‟ to include a
pictorial representation such as a photograph.) The first is to determine the meaning
of the publication as a matter of interpretation and the second whether that meaning
is defamatory.1
[6] To answer the first question a court has to determine the natural and ordinary
meaning of the publication:2 how would3 a reasonable person of ordinary intelligence
have understood it? The test is objective. In determining its meaning the court must
take account not only of what the publication expressly conveys, but also of what it
implies, ie, what a reasonable person may infer from it. The implied meaning is not
the same as innuendo, which relates to a secondary or unusual defamatory meaning
that flows from knowledge of special circumstances. Meaning is usually conveyed by
words but a picture may also convey a message, sometimes even stronger than
words.
[7] It may be accepted that the reasonable person must be contextualised and
that one is not concerned with a purely abstract exercise.4 One must have regard to
the nature of the audience. In this case the main target was the school children at
the particular school but it also included at least teachers.5
[8] A publication is defamatory if it has the „tendency‟ or is calculated to
undermine the status, good name or reputation of the plaintiff.6 It is necessary to
emphasise this because it is an aspect that is neglected in text-book definitions of
defamation because it is usually said that something can only be defamatory if it
causes the plaintiff‟s reputation to be impaired.7 That is not the case, as Neethling
explains with reference to authority:8
„It is notable that the question of a factual injury to personality, that is, whether the
good name of the person concerned was actually injured, is almost completely ignored in
1 F D J Brand „Defamation‟ in 7 Lawsa 2 ed para 237.
2 Argus Printing & Publishing Co Ltd v Esselen’s Estate [1993] ZASCA 205; [1994] 2 All SA 160
(SCA); 1994 (2) SA 1 (A) at 20E-21B.
3 Corbett CJ used the word „might‟ because he was dealing with an exception. At the trial stage the
test is different. To the extent that Mthembi-Mahanyele v Mail & Guardian Ltd [2004] ZASCA 64;
[2004] 3 All SA 511; 2004 (6) SA 329 (SCA) para 25 might have applied the „might‟ test at the trial
stage it erred. The perceived error had no effect on the outcome of the case.
4 Mthembi-Mahanyele v Mail & Guardian Ltd para 26.
5 Mohamed v Jassiem [1995] ZASCA 115; 1996 (1) SA 673 (A).
6 J Neethling et al Neethling’s Law of Personality 2 ed (2005) p 131, Sindani v Van der Merwe 2002
(2) SA 32 (SCA); [2002] 1 All SA 311 (A).
7 J Burchell The Law of Defamation in SA (1985) p 34-35 contains a collection. I shall refer to this
work as „Burchell I‟.
8 Supra p 136.
the evaluation of wrongfulness of defamation. In fact, generally9 a witness may not even be
asked how he understood the words or behaviour. In addition, it is required only that the
words or behaviour was calculated or had the tendency or propensity to defame, and not
that the defamation actually occurred. In short, probability of injury rather than actual injury
is at issue. It can be concluded, therefore, that the courts are not at all interested in whether
others‟ esteem for the person concerned was in fact lowered, but only, seen objectively, in
whether, in the opinion of the reasonable person, the esteem which the person enjoyed was
adversely affected. If so, it is simply accepted “that those to whom it is addressed, being
persons of ordinary intelligence and experience, will have understood the statement in its
proper sense”.‟
[9] It is often said that jest may exclude animus iniuriandi, something to which I
shall return.10 Masch v Leask,11 however, held that jest could be a defence only if it
was something that would have been understood by the reasonable person as jest –
„if a man says that the words were used in jest, he must prove that it could be taken
up in no other light by a reasonable person.‟ Melius de Villiers, like so many before
(such as Voet 47.10.8)12 and after him (including this court), did not distinguish
clearly between wrongfulness and animus iniuriandi in his classical work on
iniuriae.13 Ignoring this failure, his views on jest in the present context are
illuminating. He drew a distinction between legitimate jest and jest that is not
legitimate. Jest is not legitimate, he said, when in order to amuse yourself or to show
off your wit, you say or do things which, considering the occasion or personal
circumstances of another, would be insulting, offensive or degrading.
[10] It appears to me that if a publication is objectively and in the circumstances in
jest it may not be defamatory.14 But there is a clear line. A joke at the expense of
someone – making someone the butt of a degrading joke – is likely to be interpreted
as defamatory. A joke at which the subject can laugh will usually be inoffensive.
9 The author explains that the exception applies to an alleged innuendo only, something not relevant
to this case.
10 Eg Herselman NO v Botha [1993] ZASCA 144; [1994] 1 All SA 420 (A); 1994 (1) SA 28 (A) at 35E.
11 1916 TPD 114 at 116.
12 Johannes Voet is an institutional writer on Roman-Dutch law. The reference is to his Commentarius
ad Pandectas, a commentary on the Digesta of Justinian. The standard English translation of Voet is
that of Percival Gane.
13 The Roman and Roman-Dutch Law of Injuries (1899) p 195.
14 Compare Jansen Van Vuuren & another NNO v Kruger [1993] ZASCA 145, [1993] 2 All SA 619 (A);
1993 (4) SA 842 (A) at 855B-856G.
[11] In determining whether a publication is defamatory regard must be had to the
person who was allegedly defamed. What may be defamatory of a private individual
may not necessarily be defamatory of a politician or a judge. By virtue of their public
office they are expected to endure robust comment but that does not imply that they
cannot be defamed or should not be entitled to turn to courts to vindicate
unjustifiable attacks on their character.15 This is to a lesser extent also true of
teachers. They must expect to be the subject of robust comment and the butt of
jokes by scholars but, once again, there is a line that may not be crossed because
they, too, have the right to reputation and dignity, which must be protected.
[12] The plaintiff alleged that the publication was per se defamatory and in the
alternative alleged in effect that the photo implied that he masturbated in the
presence of another, was guilty of immoral exposure, had a low moral character, had
a homosexual relationship with the principal, or was homosexual. He did not rely on
an innuendo.
[13] The learned judge, in determining the objective „message‟ conveyed by the
publication, held that although it was obvious that the faces did not belong to the
bodies, the transposition of the faces onto the bodies associated the two teachers
with the bodybuilders and their behaviour. They were busy with some sexual activity
(even though one could not see what the two men did because of the positioning of
the school badges) and that the photo created the impression that the two figures
have low moral values and immodest sexuality.
[14] As to the question whether the publication was defamatory, the learned judge
said that the reasonable person would have viewed the photo through the lens of the
Constitution, more particularly s 10, which provides that everyone has the right to
have their dignity respected and protected; s 14, which guarantees the right to
privacy; and s 9(2) and (3), which demand that everyone‟s sexual orientation should
be respected. The publication raises questions about the plaintiff‟s sexuality and
sexual orientation, he said. It ridicules the plaintiff‟s moral values and disrespects his
person. However, the sexual orientation itself, he said, is of little moment because
15 Argus Printing & Publishing Co Ltd v Esselen’s Estate 1994 (2) SA 1 (A) at 23C-29A; Mthembi-
Mahanyele v Mail & Guardian Ltd [2004] 3 All SA 511, 2004 (6) SA 329 (SCA) paras 33-43.
the ridicule would not have been different if the other person had been a female
member of staff.
[15] The defendants‟ counsel attacked these findings on a number of grounds. His
main argument was that the implicit meaning, especially the association between the
plaintiff and the bodybuilders, had not been pleaded. The answer is that
interpretation is for the court and need not be pleaded. Meaning, express or implied,
is a matter for argument and not evidence. It is also not understood where this
technical argument was supposed to lead. Counsel sought to rely on evidence that
this is not how the picture was perceived and also on evidence that one or two
persons who had seen the picture did not believe that it reflected the true
relationship between the two teachers or that they did not think less of the plaintiff as
a result of the publication. As mentioned above, all this is beside the point.
Interpretation is an objective issue. Actual loss of reputation is not required, nor is
belief in the defamation.
[16] Something was also made of the fact that the defendants were school
children and that the reasonable person would have taken that into account in
assessing the meaning of the photo. I have some difficulty in appreciating how the
identity of the alleged defamer can determine the objective meaning of a publication.
The picture was created and distributed anonymously. Its origin down the line would
not have been known since it was in the nature of a chain letter. An addressee may
or may not have suspected that children were behind it all but there was no reason
for them to have accepted that as a fact.
[17] The picture was not published in isolation. There was a background to it. The
plaintiff‟s name rhymes with „gay‟, and a ditty based on this association and a
pamphlet with the same tenor was in circulation amongst the children. This
background, which probably led to the creation of the photo and its publication, is
relevant in determining its meaning.16 Counsel also argued that although the
publication would have been defamatory if, say, a parent or minister of religion had
been portrayed in this manner it cannot be defamatory of a teacher because he is a
16 Geyser & ‘n ander v Pont [1968] 1 All SA 43 (W); 1968 (4) SA 67 (W) at 69E-H.
person in authority. I mention this submission only because it was repeatedly made
and not because it deserves judicial consideration.
[18] There is nothing that, objectively speaking, indicates that the photo was
perceived as a joke, let alone a legitimate one. Counsel could not explain the joke.
People may have laughed, just as they laughed at someone being pilloried – not
because it was funny but because of the humiliation of the victim. Schadenfreude,
the Germans would have called it. Laughter remains a curious psychological
phenomenon. Sigmund Freud divided jokes into two broad categories: „innocent‟
jokes and „tendentious jokes. Innocent jokes are jokes without an underlying
hostility and do not evoke laughter at the expense of anyone in particular.
„Tendentious‟ jokes are jokes made with aggressive or sexual provocations, to elicit
strong emotional response. The philosopher Alfred M Stern, for instance, argues that
we laugh at degraded values, or in order to degrade values. He said:17
„In my theory, laughter is interpreted as a value judgment, an instinctive, negative
value judgment concerning a degradation of values. This judgment is not expressed in
words, but in the inarticulate sounds we call laughter. Laughter, however, is not only our
reaction towards a degradation of values. Sometimes it is also an action provoking a
degradation of values or, at least, trying to provoke it. When we laugh at a person, or a
thing done by a person, although no value degradation can be found in them, we try to
degrade their value. And often we succeed.
There is a French saying, Ie ridicule tue, the ludicrous kills. Of course, it does not kill
physically, but it may kill morally, axiologically; it may kill values, and then laughter may have
tragic consequences.
If we laugh at a serious person or his work, this person is offended. And he is right to
be offended, for instinctively he recognizes in this laughter an attempt to degrade his value
or that of his work in the eyes of other people.‟
This accords with the views expressed by the anonymous author of the title „Humour
and Wit‟ in 9 Encyclopaedia Britannica p11:
„Humour today seems to be dominated by two main factors: the influence of the
mass media and the crisis of values affecting a culture in rapid and violent transition. The
17 „Why do we laugh and cry?‟ calteches.library.caltech.edu/154/01/stern.pdf. (Accessed on 15 March
2010.) For a detailed discussion see the article „Comedy‟ in 4 Encyclopaedia Britannica 15 ed.
former tends toward the commercialized manufacture of laughter by popular comedians and
gags produced by conveyor-belt methods; the latter toward a sophisticated form of black
humour larded with sick jokes, sadism, and sex.‟
In fairness to counsel, his ultimate submission was that although the photo was not
objectively funny, it would have been for scholars who would have enjoyed the photo
because it held the plaintiff up to ridicule, something I would have thought means
that they would have interpreted the photo as being defamatory. As the learned
judge said, even adolescents know where to draw the line between jest and ridicule.
[19] I therefore conclude that the photo was defamatory of the plaintiff and that its
publication was wrongful. It matters not for this conclusion what his sexual
orientation was or what the sex of the other person on the photo was because it
deals with his sexual orientation in a derogatory manner.18 It ridicules him, his moral
values and disrespects his person.
A DIVERSION: SPLITTING OF ACTIONS.
[20] The plaintiff‟s second cause of action was for the impairment of his dignity
flowing from the publication. The term „dignity‟ covers a number of concepts in s 10
of the Constitution but in the present context we are concerned with the plaintiff‟s
sense of self-worth. Melius de Villiers19 spoke of the inborn right to the tranquil
enjoyment of one‟s peace of mind; and the valued and serene condition in one‟s
social or individual life which is violated when one is subjected to offensive and
degrading treatment, or exposed to ill-will, ridicule, disesteem or contempt.
[21] The plaintiff gave extensive evidence of how the publication of the photo had
affected and humiliated him. It placed him in an invidious position as deputy principal
who was responsible for religious events and educating and upholding morals at the
school. The court below upheld this claim but, as mentioned, did not make a
separate award of damages in respect thereof. This led to a major attack on the
award by the plaintiff in the course of the cross-appeal. The defendants, on the other
18 J Burchell Personality Rights and Freedom of Eexpression: the Mmodern Actio Iniuriarum (1998) p
184 n 4 (hereinafter „Burchell II‟).
19 Op cit p 24-25.
hand, attacked the judgment on the grounds that it should have held that plaintiff‟s
dignity was not impaired or because they lacked animus iniuriandi.
[22] There is, however, an anterior question that has to be considered: can the
same act give rise to two actiones iniuriarum in the hands of the same plaintiff? To
illustrate, an assault gives rise to an actio iniuriarum. Does a humiliating assault give
rise to an additional action for the impairment of dignity? Or does the nature of the
assault simply impact on the quantum of damages? I believe that the answer to this
example is on consideration evident: there is only one cause of action.
[23] I am unaware of any instance in the history of the actio iniuriarum where a
particular defamatory act gave rise to two causes of action. (I exclude the cases
where patrimonial damages are also claimed.) The reason is in my view that any
defamation is in the first instance an affront to a person‟s dignity which is aggravated
by publication. Someone who is not affronted by a publication and who does not feel
humiliated will not sue for defamation.20 That is why the award of damages
compensates „the plaintiff for injured feelings and for the hurt to his or her dignity and
reputation.‟21 As F P van den Heever J once said, „an action on defamation has
several purposes: to kill libel, to recover a solatium for injured feelings and to recover
a penalty from the slanderer‟.22 In other words, in assessing compensation in a
defamation case a court must have regard to the effect the publication had on the
plaintiff.23 In Gelb v Hawkins24 this court‟s determination of compensation in a
defamation case was said to relate „in the main to contumelia,25 but does not
overlook the elements of loss of reputation, and penalty‟, which means that on the
facts of the case the plaintiff‟s humiliation and not loss of reputation was the major
factor in deciding quantum.26
20 Compare Voet 47.10.19 in a somewhat different context.
21 7 Lawsa 2 ed para 260. See also SA Associated Newspapers Ltd & ‘n ander v Samuels [1980] 3 All
SA 227 (A); 1980 (1) SA 24 (A) at 39F-G read with 40B.
22 Kriek v Gunter 1940 OPD 136 at 144.
23 Muller v SA Associated Press 1972 (2) SA 589 (C) at 595A.
24 [1960] 3 All SA 371 (A); 1960 (3) SA 687 (A) at 693H.
25 Which means contempt or insult.
26 Also Van der Berg v Coopers & Lybrand Trust (Pty) Ltd & others [2001] 1 All SA 425 (A); 2001 (2)
SA 242 (SCA) at 260H.
[24] Risking the wrath of those who believe that our law of defamation has not
been contaminated by the common law, I believe that the following statement by
Windeyer J encapsulates what I wish to say:27
„It seems to me that, properly speaking, a man defamed does not get compensation for his
damaged reputation. He gets damages because he was injured in his reputation, that is[,]
simply because he was publicly defamed. For this reason, compensation by damages
operates in two ways as a vindication of the plaintiff to the public and as consolation to him
for a wrong done. Compensation is here a solatium rather that a monetary recompense for
harm measurable in money. The variety of the matters which, it has been held, may be
considered in assessing damages for defamation must in many cases mean that the amount
of a verdict is the product of a mixture of inextricable considerations.‟
[25] I therefore conclude that the plaintiff‟s additional claim based on the affront to
his dignity was ill-founded and does not require further consideration and I proceed
to consider the second leg of the defamation claim, namely animus iniuriandi.
DEFAMATION: ANIMUS INIURIANDI
[26] It is trite that delictual liability depends in general terms on fault which, in the
case of defamation and all other iniuriae, is fault of a particular nature, namely
animus iniuriandi. As mentioned, the defendants say that they did not have the
intention to defame the plaintiff because their intention was to make a joke and, in
any event, they did not know that there was such a thing as defamation. It was not
always clear from the evidence whether the defence was one of legal incapacity due
to the inability to distinguish between right and wrong but it was not argued that the
presumption of legal capacity was rebutted.28
[27] To assess the defence of lack of animus iniuriandi it is necessary once again
to visit the issue as to its meaning and application in the context of the actio
iniuriarum in its different forms. Much has been said in judgments and academic
works on the issue and my failure to refer to many of them is not due to a lack of
respect but only because I do not wish to clutter this judgment unduly.
27 Uren v John Fairfax & Sons Pty Ltd 117 CLR 118 (HC of A) 150. A part of the quotation appears in
Burchell I p 292.
28 Melius de Villiers op cit p 29-30.
[28] Our Roman-Dutch writers did not distinguish clearly or consistently between
wrongfulness and animus iniuriandi (or dolus malus). This gave rise to much
confusion. In any event, animus iniuriandi means the intention to injure. That is how
this court has understood the concept since at least Whittaker v Roos and
Bateman.29 This is also the meaning attached to the term by early proponents of
animus iniuriandi as an essential element of defamation, Melius de Villiers,30 Prof D
Pont31 and Prof T W Price.32
[29] The Continental Pandectists of the 19th Century analysed the concept of
dolus and added another element to the intention to injure, namely consciousness of
the wrongfulness of the act (coloured intent or „wederregtelikheidsbewussyn‟).33 In
spite of my high regard for them it has to be conceded that by systemising the
Roman law concepts they did not necessarily state the Roman-Dutch law. This
means that an adherence to the roots of our law does not necessarily require an
adoption of Pandectist theories.
[30] Legal theory is important but law is not a natural science and, as Oliver
Wendell Holmes Jnr had said, „the life of the law has not been logic; it has been
experience‟34 and that „general propositions do not decide concrete cases.‟35 Prof J
C van der Walt once referred to the poet and philosopher N P van Wyk Louw who
spoke of the „spookagtige dans van logiese kategorieë‟ and indicated that although
general rules are on the one hand necessary for legal certainty they may on the
other hand impede justice:36
„Daar bestaan dus „n ewige, inherente spanningsverhouding tussen die eise van
regverdigheid en regsekerheid. . . . Die reg kan dus vanweë sy inherente
kompromiekarakter nooit volkome seker of regverdig wees nie.‟
The bon mot of Holmes must, nevertheless, be seen in context. It was not a call for
irrational judging or an abandonment of general principles or consistency. As Max
29 1912 AD 92 at 124-125. I do not intend to list the annotations on this statement.
30„Animus iniuriandi: An essential element in defamation‟ 48 (1931) SALJ 308.
31 Case note in 1940 THRHR 270 at 278-279.
32 „Animus iniuriandi in defamation‟ 66 (1949) SALJ 4 at 6 and 26.
33 J R Midgley and J C van der Walt „Delict‟ in 8(1) Lawsa 2 ed para 105 n 3.
34 The Common Law (1881) p 1.
35 Lochner v New York (1905) 198 US 45 at 76.
36 „N P van Wyk Louw: Enkele konsekwensies vir die regsdenke‟ 1986 TSAR 257 at 268.
Rheinstein explained in his introduction to Max Weber‟s Law in Economy and
Society:37
„Not only the context in which this famous passage appears but Holmes‟s entire life and
work should have made it clear that he would have been the last to disparage logical
thinking, that is, thinking which tries to avoid intrinsic contradiction and to maintain
consistency within a given line of argumentation. Clearly, Holmes was also far from
disparaging the use of concepts. Thinking without concepts is as unthinkable as painting
without paints or making music without sounds. The only problem is what sort of concepts
we use or, from what premises we start when we begin to think. This is what Holmes means:
that we derive our premises from the experience of life rather than formulating them as
artificial and purely formal concepts.‟
[31] Probably the first reference to coloured intent in our legal literature is to be
found in the first edition of Strafreg by J C de Wet and H L Swanepoel (p 91). The
authors, significantly, did not pretend to find the concept in our law but relied
exclusively on Dutch and German textbooks that were current at the time (1949). In
the delictual context the first reference to the requirement (at least to my knowledge)
appeared in N J van der Merwe and P J J Olivier‟s 1966 edition of Die Onregmatige
Daad in die Suid-Afrikaanse Reg (p 72 and 75). The authors must have thought that
the matter was self-evident because they did not rely on any authority for their
statement.
[32] This court in O’Malley38 accepted that coloured intent formed an essential part
of animus iniuriandi for purposes of defamation. The statement was in context obiter
and it will be recalled that this case created an exception to the general requirement
of animus iniuriandi by holding that the public media could not escape liability by
relying on its absence. The ratio was later overruled in Bogoshi.39 As far as iniuria in
general is concerned, Jansen JA sought to hold in Ramsay40 that coloured intent
was a general requirement but the majority (per A S Botha AJA) held otherwise.41 It
held, significantly, that whether or not coloured intent should be required for any
37 Simon & Schuster 1954 at p xlvi in the 1967 paperback edition.
38 Suid-Afrikaanse Uitsaaikorporasie v O’Malley [1977] All SA 631 (A); 1977 (3) SA 394 (A) at 403C-
D.
39 National Media Ltd v Bogoshi [1998] 4 All SA 347 (SCA); 1998 (4) SA 1196 (SCA).
40 Ramsay v Minister van Polisie & andere [1981] 4 All SA 692 (A); 1981 (4) SA 802 (A).
41 Supra at 817F-819C.
particular iniuria is a matter of legal policy and, by implication, not a matter of legal
philosophy.
[33] To test the correctness of the assumption that colourless intent is a valid
defence in the case of iniuria it is useful to consider the case law in this regard. One
seeks rather in vain for an instance where the defence was accepted.42 The opposite
is true. It is not a defence in the case of invasion of privacy,43 unlawful arrest or
detention,44 assault,45 defamation by the press,46 or wrongful attachment.47
[34] Malicious prosecution appears to be an exception because it has been held
firmly that coloured intent is a requirement for liability.48 The interesting aspect of this
cause of action is that it is probably the only iniuria where the plaintiff must prove
animus iniuriandi instead of the defendant having to prove its absence. This, and the
common name of the action, indicates that there is something special about this
cause of action. It appears to me that this is an instance where coloured intent forms
part of the wrongfulness element: public policy considerations demand that a plaintiff
should only be compensated for a prosecution that was instigated without
reasonable or probable cause if, in addition, it was „malicious‟ (in the sense of
coloured intent). The practical effect of this might be that a further inquiry into the
fault element may become unnecessary because it has already been established by
the plaintiff and there is accordingly nothing for the defendant to disprove.
[35] Aquilian causes such as intentional interference with contractual relationships
and injurious falsehoods have been explained on the same basis. The theoretical
problem with these is that the general requirement of fault under the lex Aquilia is
negligence while they require dolus or animus iniuriandi. This court held in Gore49
that animus iniuriandi is in these instances a requirement for wrongfulness because
42 The authorities relied on by Neethling op cit p 197 n 75 do not bear out the statement that
colourless intent is a defence in cases of an invasion of dignity.
43 C v Minister of Correctional Services 1996 (4) SA 292 (T) at 306A-F.
44 Minister of Justice v Hofmeyr [1993] 2 All SA 232 (A); 1993 (3) SA 131 (A) at 154–157; Ramsay v
Minister van Polisie [1981] 4 All SA 692 (A); 1981 (4) SA 802 (A) at 818.
45 Bennett v Minister of Police [1980] 3 All SA 817 (C); 1980 (3) SA 24 (C).
46 National Media Ltd v Bogoshi [1998] 4 All SA 347 (SCA); 1998 (4) SA 1196 (SCA).
47 Coetzee (Sheriff, Pretoria East) v Meevis [2001] 1 All SA 10 (SCA), 2001 (3) SA 454 (SCA).
48 Rudolph & others v Minister of Safety and Security & another [2009] ZASCA 133; [2009] 3 All SA
323; 2009 (5) SA 94 (SCA) para 18.
49 Minister of Finance & others v Gore NO [2007] 1 All SA 309 (SCA); 2007 (1) SA 111 (SCA). For
criticism of the terminology used: J Neethling and J M Potgieter „Middellike aanspreeklikheid vir „n
opsetlike delik‟ 2007 TSAR 616.
public policy considerations demand that a plaintiff should be compensated for an
interference with contractual relationships only where the interference was
accompanied by coloured intent.50
[36] Reverting to defamation, the defence of privileged occasion provides another
illustration.51 The plaintiff may prove that, although the defendant had published the
statement on a privileged occasion, he had overstepped the mark by having spoken
animo iniuriandi in the sense of coloured intent. Although this is usually said to be
part of the fault investigation it is indeed part of the investigation into wrongfulness
and a close reading of the cases dealing with privileged occasions, beginning with
Jordaan v van Biljon52 and Craig v Voortrekkerpers Bpk,53 confirms this conclusion.
[37] A purely Pandectist approach does get one into a bind. This was even
recognised by De Villiers AJ in the commendable judgment in Maisel v van
Naeren,54 which gave rise to the whole debate.55 It appears to me to be incongruous
that a defendant who, for example, cannot establish truth and public benefit to justify
defamation, can nevertheless escape liability by relying on a belief in either the truth
or public benefit. Not only that, the approach also inhibits the development of this
part of the law under the Constitution. Van Dijkhorst J, not surprisingly, sought to
develop the common law in this regard by holding that a lack of coloured intent could
not be a defence if it was due to negligence,56 a view similar to that of F P van den
Heever J,57 Colman J,58 P Q R Boberg59 and Burchell.60
[38] It might be opportune to revisit with the wisdom of hindsight the judgment in
Bogoshi.61 The judgment was primarily concerned with the correctness of O’Malley,
50 Dantex Investment Holdings Pty Ltd v Brenner & others NNO [1988] ZASCA 122; [1989] 1 All SA
411 (A); 1989 (1) SA 390 (A) at 396G-I.
51 Anton Fagan „Rethinking wrongfulness in the law of delict‟ 122 (2005) SALJ 90 at p 99 deals with
this issue.
52 [1962] 1 All SA 350 (A); 1962 (1) SA 286 (A).
53 1963 (1) SA 149 (A). The same applies to Nydoo & andere v Vengtas 1965 (1) SA 1 (A)
54 1960 (4) SA 836 (C) at 850E-H.
55 Burchell II p 308.
56 Marais v Groenewald [2000] 2 All SA 578 (T); 2001 (1) SA 634 (T) at 646F-G.
57 Kriek v Gunter 1940 OPD 136.
58 Hassen v Post Newspapers (Pty) Ltd & others [1965] 3 All SA 528 (W); 1965 (3) SA 562 (W) at
570G-H.
59 „Animus iniuriandi and mistake‟ 88 (1971) SALJ 57.
60 Burchell I p 166-174.
61 National Media Ltd v Bogoshi [1998] 4 All SA 347 (SCA); 1998 (4) SA 1196 (SCA). For those
learned authors who have criticized this court for having failed to decide the case under the interim
which had held that the press could not rely on a lack of animus iniuriandi as a
defence in a defamation case. The judgment also dealt with the anterior question of
justification: the publication of a defamatory statement will be lawful if it was
reasonable in the circumstances of the case. In other words the general criterion of
reasonableness determines whether a defamatory publication was wrongful or not.62
„Reasonableness‟ in this context must not be conflated with negligence.63 If
justifiable, the question of fault cannot arise. I agree in this regard with Lewis JA64:
„However, fault need not be in issue at all if in the particular circumstances anterior
inquiry shows that the publication is lawful because it is justifiable. Bogoshi indicates that the
reasonableness of the publication might also justify it. In appropriate cases, a defendant
should not be held liable where publication is justifiable in the circumstances – where the
publisher reasonably believes that the information published is true. The publication in such
circumstances is not unlawful. Political speech might, depending upon the context, be lawful
even when false provided that its publication is reasonable. . . . This is not a test for
negligence: It determines whether, on grounds of policy, a defamatory statement should not
be actionable because it is justifiably made in the circumstances.‟
It appears that on this analysis the discussion of negligence in Bogoshi might have
complicated matters unnecessarily. Once it is found that the publication was
unreasonable the next question should simply be whether it was published with the
intent to injure.65
[39] The effect of this is that mistake or bona fides might in appropriate
circumstances justify a defamatory statement (ie, if it was reasonable to have been
made) and that it is accordingly not necessary to require coloured intent. I therefore
conclude, especially in view of precedent and the constitutional emphasis on the
Constitution of 1994, it could be mentioned that the defamatory articles complained of, as the
judgment indicates, mostly pre-dated its adoption.
62 Burchell II p 207-208.
63 See the discussion by J Neethling and J M Potgieter „Wrongfulness and negligence in the law of
delict: a Babylonian confusion?‟ 2007 (70) THRHR 120 and the cases referred to. See also the
debate between J Neethling „The conflation of wrongfulness and negligence: is it always such a bad
thing for the law of delict?‟ 123 (2006) SALJ 204 and R W Nugent „Yes, it is always a bad thing for the
law: a reply to Professor Neethling‟ 123 (2006) SALJ 557. Further Anton Fagan „Blind faith: a
response to Professors Neethling and Potgieter‟ 124 (2007) SALJ 285.
64 Mthembi-Mahanyele v Mail & Guardian Ltd [2004] 3 All SA 511; 2004 (6) SA 329 (SCA) para 47
discussed by J Neethling „Die locus standi van „n kabinetsminister om vir laster te eis, en die verweer
van redelike publikasie van onwaarheid op politieke terrein‟ 2005 (68) THRHR 321.
65 J Neethling „Aanspreeklikheid van die massamedia weens laster: die nalatigheidsvraag‟ 2004
TSAR 406.
protection of personality rights, that the animus iniuriandi requirement generally does
not require consciousness of wrongfulness (wederregtelikheidsbewussyn).66
[40] In addition, and pace the obiter in Herselman NO v Botha (mentioned earlier
to which I was a party) and authors such as Neethling,67 I do not believe that jest
excludes the intention to injure. It goes to motive and, as Melius de Villiers said,68 if a
joke is degrading the defendant‟s motive does not matter.
[41] The court below found that since the defendants knew that what they did was
wrong in the general sense, they indeed did have the required coloured intent in the
sense of consciousness of wrongfulness. Although the factual finding was fully
justified I have some difficulty with the conclusion because it could confuse moral
and legal blameworthiness. It is sufficient to rely on counsel‟s concession, correctly
made, that the defendants‟ intention was to ridicule the plaintiff. This means that the
defendants are liable. The remaining issues are quantum and costs.
QUANTUM
[42] As mentioned, the court below awarded R45 000 to the plaintiff. Assessment
of compensation is a matter for the trial court and a court of appeal may interfere
under limited circumstances only. One is where the court had misdirected itself on a
material issue. The parties were agreed that the court indeed misdirected itself. It
dealt with the matter as if the assessment of quantum was similar to the
determination of sentence in a criminal case.69 Factors taken into account were that
the perpetrators should not at this young age be burdened with a debt that might
affect their future; and that their interests should be considered. This misdirection
may require a re-assessment of quantum. The defendants argue that the amount
should be reduced while the plaintiff, who had claimed R300 000 in relation to each
of the two „delicts‟, argued for a substantial increase.
[43] The defamation and consequent humiliation was in my view serious. The
publication was, on the probabilities, widespread under the scholars. The photo may
still be available on many a cell phone or computer and there is no reason to believe
66 It should be clearly understood that this judgment does not deal with crimen iniuria or with dolus in
criminal law where other policy considerations may apply.
67 Op cit p 165-166.
68 Op cit p 195.
69 Mogale & others v Seima [2005] ZASCA 101; 2008 (5) SA 637 (SCA) para 11.
that the dissemination has stopped. The plaintiff was known to the audience; and his
position of authority was materially undermined. He had reason to suspect that he
became the laughing stock of the school.
[44] The plaintiff submitted that because the right to dignity is now a protected
right in terms of the Constitution, this justifies a new approach to quantum because,
as counsel said, the values underlying the Constitution are not otherwise
appropriately protected. The problem with the argument is that it assumes that the
common law on defamation is deficient and that one is entitled, albeit indirectly, to
constitutional damages. It also ignores the fact that there are many rights
guaranteed in the Constitution and if one were to re-assess the „monetary‟ value of
one the others, such as free speech, might be implicated.70
[45] An apology impacts on quantum and the defendants submit that they sought
to apologise to the plaintiff but that he refused to speak to them on the advice of his
lawyers. The evidence of the defendants on their attempted apology appears to me
to be somewhat suspect.71 However, the attempt was made long after the event on
the advice of a third party. The manner in which they conducted their defence during
the trial and the manner in which they gave evidence indicate clearly that they were
disrespectful towards the plaintiff, had no remorse, and did not wish to apologise.
They justified their arrogance on the basis that the plaintiff should not have taken
offence at what they did, and that he should have been content with the disciplinary
steps that had been taken by the school and the community service to which they
had been subjected. I agree with plaintiff‟s counsel that all this was aggravating.
[46] The court below had regard to the impact of the publication on the plaintiff‟s
dignity but, said his counsel, insufficiently so. As mentioned, the plaintiff gave
extensive evidence on this. It was one of the considerations he took into account in
moving to another school. I do not wish to elaborate. It is clear that the plaintiff is a
sensitive person but he may have taken this matter too much to heart. In my view
one cannot assess quantum subjectively. One must have regard to the probable
consequences for someone in the position of the plaintiff. In other words, the
70 Compare Mogale & others v Seima 2008 (6) SA 637 (SCA) para 9.
71 Compare Tsedu & others v Lekota & another [2009] ZASCA 11; [2009] 3 All SA 46 (SCA); 2009 (4)
SA 372 (SCA) para 21-24.
determination must be objectively justifiable.72 I am not convinced that the court
below erred in this regard.
[47] The last aspect that I wish to address in this context is whether the fact that
the defamers were school children and the defamed their teacher has an impact on
quantum. In other words, should the plaintiff not have taken the publication from
whence it came? To illustrate: is an allegation by a dissatisfied litigant that a judicial
officer was dishonest less serious than a similar allegation by the minister of justice?
I think that the question has to be answered in the affirmative because it is less likely
that the allegation by the litigant would be taken seriously by an objective person. In
other words, although the source cannot affect the defamatory nature of the
statement it might affect the award.
[48] After anxious consideration I have come to the conclusion that in spite of the
misdirection the award of the court below was fair in all the circumstances. I may
have awarded more but since my award would not have been substantially more an
interference cannot be justified. It should be remembered that there was a
countervailing misdirection because the court had upheld the loss of dignity claim as
a separate claim, which might have affected his assessment. I do recognise that the
plaintiff may eventually be out of pocket due to the cost of litigation but defects in the
costs structure cannot be rectified through awards of damages.
COSTS
[49] As mentioned, the court below ordered costs on the magistrates‟ courts‟
scale. This means, if regard is to be had to the amount awarded, that the plaintiff has
to bear a substantial percentage of his own costs. The parties on both sides
employed two counsel for the trial and each submitted that, if successful, the
success should carry the costs of two counsel, which is only possible if costs were to
be awarded on the high court scale. On appeal they also employed two counsel and
agreed, correctly in my view, that the costs of two counsel were justified. It appears
to me to be somewhat incongruous in those circumstances to hold that the trial costs
should have been on the lower scale.
72 Compare Delange v Costa [1989] 2 All SA 267 (A); 1989 (2) SA 857 (A) at 861-862.
[50] Costs are within the discretion of the trial court and unless there is a
demonstrable error this court cannot intervene. The high court correctly held that the
mere fact that the case concerned defamation did not justify without more a costs
order on the higher scale.73 However, the court misdirected itself in my view by
regarding the case as an ordinary run of the mill defamation case. The matters of
principle involved justified in my view a costs order on the higher scale and also
costs of two counsel.74
ORDER
[51] The following order is made:
1 The appeal is dismissed with costs, such costs to include the costs of two counsel.
2 The cross-appeal is upheld with costs, such costs to include the costs of two
counsel.
3 The order of the court below is amended by substituting para 3 with „Koste,
insluitend die koste van twee advokate‟.
________________________
L T C Harms
Deputy President
73 Graham v Odendaal 1972 (2) SA 611 (A); Mogale & others v Seima [2005] ZASCA 101; 2008 (6)
SA 637 (SCA).
74 McKay v Editor City Press and another [2002] 1 All SA 538 (SE).
GRIESEL AJA:
[52] Laughter can be a serious business with serious consequences, as the
defendants in this case discovered to their detriment. They testified that their
intention was not to injure the reputation of the plaintiff, but to make a joke. They
also testified that the overwhelming reaction of the recipients of the manipulated
picture was one of hilarity. Thus, to put their defence in a nutshell, the defendants
maintained that the manipulated picture was not intended seriously and was not
taken seriously.
[53] Trying to explain to others why we find certain jokes or situations humorous
can be problematic. As it was graphically put by E B White:75 „Humor can be
dissected as a frog can, but the thing dies in the process and the innards are
discouraging to any but the pure scientific mind.‟ Nonetheless, attempts have been
made from time to time to dissect humour. One of these attempts was by the British
comedian, Rowan Atkinson (better known as Mr Bean), who explained that an object
or a person can become funny in three different ways: by behaving in an unusual
way; by being in an unusual place; or by being the wrong size.76
[54] It seems to me that this was what the defendants were trying to convey
when pressed to explain the joke to the court below: they referred to the incongruity
(„teenstelling‟) created by the manipulated picture. The defendants said what made
the picture so funny – in their eyes and in the eyes of their fellow learners who saw it
– was not the fact that it was so close to the truth, but that it was so very far removed
from reality. The following extract from the second defendant‟s evidence in response
to questions by the court illustrates the point:
‘HOF: Wat is eintlik dan snaaks? U moet my verskoon, mnr Gildenhuys, maar as u nie eintlik ’n
negatiewe konnotasie geheg het nie, dan wat was snaaks? --- Omdat dit sovêr van die werklikheid af
is. Dr Dey is iemand wat hoë morele waardes voorgestaan het by die skool en . . . dit wat hy voor die
75 US humourist and author (1899–1985) in Some Remarks on Humor, Introduction, accessed at
http://www.quotationspage.com/quotes/E. B. White on 24 March 2010.
76 http://en.wikipedia.org/wiki/Humour accessed on 24 March 2010.
skool gesê het is al wat ek van hom geken het, en dit was altyd goeie goed. Dit was hoë morele
waardes.’
[55] The first defendant explained that what he found funny about the picture was
the fact that it was so „far fetched‟, namely to see the principal and the vice principal
in such a compromising position. The third defendant said much the same. When
asked, „So dit is die teenstelling wat snaaks is?‟, he replied: „Dit is definitief die
kontras en die ironie.‟ (Rowan Atkinson would explain that the figures in the picture
are depicted as behaving in an unusual way or being in an unusual situation.)77
[56] Prof Kriegler, an educational psychologist who was called as an expert on
behalf of the defendants, lent theoretical support to their defence by explaining that
often it is the element of incongruity that makes something funny:
„Teenstelling is soos in inkongruensie, twee goed wat eintlik glad nie bymekaar pas nie,
soos sê nou maar ons sit Margaret Thatcher se gesig op ‟n Penthouse Pet se lyf, dit sou
snaaks wees omdat dit rym nie, dit hoort glad nie bymekaar nie. Maar dit is ‟n komplekse
onderwerp.‟
[57] Further light is thrown on this „complex subject‟ in the article by Prof Stern,
quoted by my colleague,78 where the author makes the following perceptive and
apposite remarks:
„There exist as many classes of jokes as classes of values. There are jokes degrading
intellectual values, others degrading moral values, esthetic values, religious values, vital
values, instrumental values, economic values, etc.
. . . .
The number of anecdotes drawing their comic effects from a degradation of those moral
values which characterize the erotic life is especially noticeable. On the one hand, we have
the vigorous sexual passions; on the other hand, the rigorous restrictions of these passions
77 Para 53 above.
78 Para 18 above.
by ethics, religion, social conventions, and penal prohibitions. The individual can not escape
the social pressure exerted by these conventions and taboos. He can violate them only at
the risk of social and sometimes even of penal sanctions. The individual takes his revenge
in trying, by means of jokes and anecdotes, to degrade those moral values of erotic life
which the social and moral conventions and legal prohibitions try to protect. The laughter
resulting from those degradations is for the individual a kind of symbolic liberation from a
social pressure from which he suffers. When the individual ceases to suffer from the effect of
those conventions and prohibitions, he is no longer so eager to degrade their value.
Therefore, it is neither the old ladies nor the old gentlemen who tell us the most piquant
stories.‟
[58] The fact that the court – and the plaintiff – may find the defendants‟ attempt
at humour banal or in bad taste or unamusing is neither here nor there. This does
not transform a bad joke into a defamatory statement. In this regard I respectfully
endorse what was said by Sachs J in the Laugh it Off matter79 in a slightly different
context:
„We are not called upon to be arbiters of the taste displayed or judges of the humour offered.
Nor are we required to say how successful Laugh It Off has been in hitting its parodic mark.
Whatever our individual sensibilities or personal opinions about the T-shirts might be, we are
obliged to interpret the law in a manner which protects the right of bodies such as Laugh It
Off to advance subversive humour. The protection must be there whether the humour is
expressed by mimicry in drag, or cartooning in the press, or the production of lampoons on
T-shirts. . . . They chose parody as a means, and invited young acolytes to join their gadfly
laughter.‟
[59] With that prelude I turn to the first inquiry, namely to establish the natural or
ordinary meaning of the picture in question. As rightly observed by the trial judge,
any person who looks at the picture would immediately observe that it is not in fact a
photograph of the plaintiff and the principal, but rather the product of amateurish
manipulation. One is also struck by the fact that the principal (who, incidentally,
79 Laugh it Off Promotions CC v SAB International (Finance) BV t/a Sabmark International (Freedom
of Expression Institute as amicus curiae) 2006 (1) SA 144 (CC) para 108.
accepted the apologies of the defendants and did not take legal action against them)
is depicted in the picture with a broad smile on his face, as if recognising the humour
in the situation.
[60] If one were to apply the traditional test by postulating the reaction of hypo-
thetical ordinary right-thinking persons generally, such persons who are outsiders to
the particular school would not know or understand the context in which it was
created or published: thus, they would not know the two men whose faces have
been superimposed onto the naked bodies; they would not know their true character
and disposition; they would therefore not see the incongruity in the situation; they
would not recognise the strategically placed school emblems and would not
understand the significance of those emblems in relation to the two figures depicted
in the picture. They would not know that the picture was created and circulated by
adolescent schoolboys in an attempt to poke fun at their principal and vice-principal.
In short, such outsiders would not understand the „natural and ordinary meaning‟
conveyed by the picture – as little as if a picture were shown to them bearing a
subtitle in Mandarin. The subtitle in Mandarin would first have to be translated before
the reasonable person of ordinary intelligence would be able to determine whether
or not it carries a defamatory meaning. Here, the reasonable outsider would require
a „translation‟ of a different kind before being able to interpret the picture in question.
[61] The audience for which the picture was intended, namely the defendants
and their fellow learners at the school, saw it quite differently. Some of them
received it on their cell phones, others saw the printout that was made by the second
defendant. Their reactions, while not decisive, were certainly significant. Being
familiar with the context, they immediately recognised the attempt at humour and
laughed at the incongruity conveyed by the picture.
[62] I pause here to deal briefly with Masch v Leask, referred to in my colleague‟s
judgment.80 There, the words used by the defendant – „Dit lieg jij‟ („You are telling a
80 Para 9 above.
lie‟) – were defamatory per se. It was in that context that Wessels J said the
following:
„It is perfectly clear that the animus injuriandi lies with the person who uses the words, but if
a person utters words that are per se libellous, he is responsible for what he does, and he is
responsible if he injures the business of another. If, therefore, he was to excuse himself that
he merely spoke in jest, he must prove to the Court that it was in jest, and that the words
must have been accepted as such by the by-standers.‟81
The present situation is different: here, it cannot be held that the picture is
defamatory per se and the court has to grapple with the natural and ordinary
meaning thereof. It would be wrong, in these circumstances, to require the
defendants to prove that it could be taken up in no other light by a reasonable
person. The onus rests on the plaintiff to prove the defamation on which he relies
and if it were to be found that the publication in issue is ambiguous or that doubt
exists as to the meaning thereof, then the presumption of law is in favour of an non-
injurious meaning.82
[63] The present situation is analogous to the defamation relied upon in
Mohamed v Jassiem,83 where the court held that it was defamatory to call someone
„an Ahmadi sympathiser‟, even though it was only understood in a defamatory sense
by „a tiny fraction of our national population‟ in the Western Cape Muslim
community.84 Likewise it would be inappropriate in this case to postulate the
reactions of „ordinary right-thinking persons generally‟, instead of restricting the
inquiry to the microcosm comprising the particular school community and examining
the way in which they understood the picture. Applying that test, the plaintiff has
failed to prove, in my view, that the meaning conveyed by the picture is the one
relied on in the particulars of claim. It follows that the claim based on defamation
81 At 116.
82 Melius de Villiers op cit p 91.
83 Note 5 above.
84 At 703B–H.
fails at the first stage, with the result that it is not necessary for me to consider the
other aspects raised in the erudite judgment of my colleague.
[64] Having said that, I accept, as does my colleague, that there is only one
cause of action arising from the defendants‟ conduct herein. It is self-evident that
whereas defamation invariably involves „in the first instance an affront to a person‟s
dignity which is aggravated by publication‟,85 the converse is not always true; in
other words, an affront to a person‟s dignity does not necessarily amount to
defamation.86 On the facts of this case, I am firmly of the view that the defendants‟
conduct amounts to an impairment of the plaintiff‟s dignity, not his reputation.
[65] Turning to the claim based on the impairment of the plaintiff‟s dignity, the
requisites for this cause of action are „firmly entrenched in our law‟ and do not
require repetition.87 Essentially, the concept of dignitas is a subjective one.88 In the
present matter, the plaintiff testified as to how he, subjectively, experienced the
picture and its aftermath and how it negatively affected his own feelings of self-
respect and dignity.89 That evidence was accepted by the trial court and its findings
in that regard have not been assailed on appeal. For the reasons given by my
colleague,90 I agree that it is not open to the defendants to rely on jest as a defence
against the claim based on iniuria. It does not protect them in these circumstances
where they foresaw the possibility that their attempts at humour might be perceived
as insulting, offensive or degrading by the plaintiff.
[66] For these reasons and for the reasons furnished by Harms DP in relation to
quantum and costs, I agree with the order proposed by him.
85 Para 23 above.
86 Melius de Villiers op cit p 90.
87 Delange v Costa 1989 (2) SA 857 (A) at 860I–861B.
88 Ibid.
89 Cf para 21 above.
90 Para 9 above.
B M GRIESEL
Acting Judge of Appeal
APPEARANCES:
APPELLANTS:
T Strydom
H van Tonder
Instructed by Zietsman-Horn
Attorneys, c/o Beyers & Day
Incorporated, Pretoria
Claude Reid Attorneys, Bloemfontein
RESPONDENTS:
M C Maritz SC
J du Plessis
Gerhard Wagenaar Attorneys,
Pretoria
Symington & De Kok Attorneys,
Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 March 2010
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
* * *
LE ROUX V DEY
Today the Supreme Court of Appeal (SCA) dismissed an appeal against an order of
the North Gauteng High Court (Pretoria) finding in favour of the respondent in an
action for defamation and awarding him damages, and upheld a cross-appeal by the
respondent against a costs order of the high court.
The appellants published a manipulated photo of two naked gay bodybuilders sitting
next to each other in a compromising position. The photo of the respondent (the vice
principal of their school) was pasted on the face of the one bodybuilder and the face
of the principal of the school onto the other.
The high court, in determining the objective ‘message’ conveyed by the publication,
held that although it was obvious that the faces did not belong to the bodies, the
transposition of the faces onto the bodies associated the two teachers with the
bodybuilders and their behaviour and that the photo created the impression that the
two figures had low moral values and immodest sexuality. As to the question
whether the publication was defamatory, it held that it ridiculed the respondent’s
moral values and disrespected his person. The high court also found that the
respondent’s dignity had been impaired but did not award him damages for
impairment of dignity. It awarded the respondent costs on the magistrates’ courts’
scale.
The SCA held that the photo was defamatory of the respondent and that its
publication was wrongful. It held in respect of the respondent’s additional claim
based on impairment of dignity that it was ill-founded as a particular defamatory act
cannot give rise to two causes of action. It held in respect of the respondent’s cross-
appeal against the quantum of damages that the award of the high court was fair in
the circumstances. In upholding the cross-appeal against the costs order of the high
court, the SCA held that the matters of principle involved in the matter justified a
costs order on the higher scale and also costs of two counsel.
|
37
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 576/2016
In the matter between:
NELSON MANDELA BAY MUNICIPALITY
APPELLANT
and
AMBER MOUNTAIN INVESTMENTS 3 (PTY) LTD
RESPONDENT
Neutral citation: Nelson Mandela Bay Municipality v Amber Mountain
Investments (576/2016) [2017] ZASCA 36 (29 March 2017)
Coram:
Cachalia, Theron, Dambuza and Mocumie JJA and Molemela AJA
Heard:
7 March 2017
Delivered: 29 March 2017
Summary: Local authority : Rates : Property rates levied for a financial year :
levying of rates an integral part of budget process.
Interpretation : Acts to be read together as they form part of current system of local
government : Local Government: Municipal Property Rates Act 32 of 2000 : s
13(1) : words and phrases : ‗as from‘ : interpreted to mean that the rate is payable
within the period of the financial year : s 13(1) read with ss 12, 26, 27 and 28 :
obligation to pay property rates arises at the start of the financial year : obligation
to make payment arises once the municipality has determined the date of payment
and amount due : Local Government: Municipal Finance Management Act 56 of
2003 : ss 15 to 19 : municipality‘s duties to approve annual budget for each
financial year, budget including projected revenue for current year based on
collection levels to date : budget to be finalised before start of financial year :
Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) :
certificate is issued in terms of s 118(1) in respect of municipal debts which have
become due, not future debts : municipality‘s rates policy to the contrary is ultra
vires the Act and invalid.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Eastern Cape Local Division of the High Court, Port Elizabeth
(Tshiki J sitting as court of first instance):
1 The appeal is dismissed with costs.
_____________________________________________________________________________
JUDGMENT
______________________________________________________________________________
Theron JA (Cachalia, Dambuza and Mocumie JJA and Molemela
concurring):
[1] This court is called upon to determine whether, following upon the sale of
immovable property, the property owner is liable to pay the total rates on the
property determined for the financial year or only the rates calculated until the
property is transferred. The outcome of this appeal turns on the interpretation of
various provisions of the Local Government: Municipal Property Rates Act 6 of
2004 (the Rates Act), the Local Government: Municipal Systems Act 32 of 2000
(the Systems Act) and the Local Government: Municipal Finance Management Act
56 of 2003 (the Finance Act). These Acts must be read together as they form the
basis for the current system of local government.1
[2] The facts giving rise to the dispute between the parties are largely common
cause. The respondent, Amber Mountain Investments 3 (Pty) Ltd, was the previous
owner of immovable property described as remainder of Erf 8757, Walmer, Port
Elizabeth (the property). The respondent sold the property to Joburg Skyscraper
(Pty) Limited. Before transfer of the property, the respondent required a rates
clearance certificate, in terms of s 118 of the Systems Act, from the appellant, the
Nelson Mandela Bay Municipality, (the municipality). The municipality‘s financial
year commences on 1 July in a year and ends on 30 June the following year. The
municipality required payment of rates until the end of its financial year, being 30
June 2010, as a condition for furnishing the certificate. The municipality presented
the respondent with an account for the sum of R2 281 014,68. The respondent paid
the amount, under protest, in order to obtain the certificate. At the time of payment,
the respondent‘s actual indebtedness to the municipality was for the sum of
R1 214 482,68. The respondent says that this constituted an overpayment of its
obligations to the municipality of R1 066 532, for which it was entitled to be
reimbursed.
1 The preamble of the Systems Act reads: ‗Whereas this Act is an integral part of a suite of legislation that gives
effect to the new system of local government‘. South African Property Owners Association v Johannesburg
Metropolitan Municipality & others [2012] ZASCA 157; 2013 (1) SA 420 (SCA) para 8.
[3] The respondent instituted action against the municipality in the Eastern Cape
Division of the High Court, Port Elizabeth. The matter proceeded on the basis of
the agreed facts set out in para [2] above. At the request of the parties, the court
directed that the issues be separated and that the sole issue for determination was:
‗whether the [appellant] is obliged to refund a portion of the rates in respect of the remainder erf
8757, Walmer, for the period from the date of transfer of the property to Joburg Skyscraper (Pty)
Ltd on 25 February 2010 until the end of the [appellant‘s] financial year terminating on 30 June
2010. . . due regard being had to the manner in which this issue has been pleaded by the parties,
and in particular the validity of the second sentence in Clause 31 of the [appellant‘s] Property
Rates Policy for the 2009/2010 financial year‘.
[4] In the court a quo, as in this court, the municipality contended that in light of
the relevant provisions in Chapters 2 and 3 of the Rates Act, the respondent was
obliged, when it sought a rates clearance certificate, to pay the full property rate on
the property for the financial year commencing 1 July 2009. The court a quo found
that the respondent was only obliged to pay rates on the property until the date of
transfer of the property to Joburg Skyscraper, ie 25 February 2010. It found that ‗it
would be unjust for the [appellant] to claim rates from the [respondent] when it
was no longer the owner of the property. The [respondent] can only be obliged to
pay rates for property that is registered in its own name‘. The court ordered that the
municipality repay the amount of R1 066 532, including interest, to the respondent.
It is against this judgment that the appellant appeals, with the leave of the court a
quo.
[5] Municipalities are vested with original constitutional power to levy rates on
property.2 In terms of s 229(1)(a) of the Constitution a municipality has authority
to impose ‗rates on property and surcharges on fees for services provided by or on
behalf of the municipality‘. The original power to levy rates is regulated by
national legislation in the form of the Rates Act.3
[6] Section 2(1) of the Rates Act empowers a metropolitan or local municipality
to ‗levy a rate on property in its area‘. Section 24(1) of the Rates Act provides that
a ‗rate levied by a municipality on a property must be paid by the owner of the
property‘. Section 2(1) of the Rates Act, read with s 24(1) expressly empowers a
municipality to levy and determine rates on property.
[7] Of particular relevance to this dispute are ss 12 and 13(1) of the Rates Act.
Section 12 reads:
‗12(1) When levying rates, a municipality must levy the rate for a financial year. A rate lapses at
the end of the financial year for which it was levied.
(2) The levying of rates must form part of a municipality's annual budget process as set out in
Chapter 4 of the Municipal Finance Management Act. 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.
Section 13(1) reads:
‗(1) A rate becomes payable-
(a) as from the start of a financial year; or
(b) 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 resolution levying rates, is
2 Fedsure Life Assurance & others v Greater Johannesburg Transitional Metropolitan Council & others 1999 (1)
SA 374 (CC) paras 44 and 45; Gerber & others v Member of the Executive Council for Development Planning and
Local Government, Gauteng & another 2003 (2) SA 344 (SCA) para 23.
3 Body Corporate Croftdene Mall v Ethekwini Municipality [2011] ZASCA 188; [2012] 1 All SA 1 (SCA) para 14.
approved by the provincial executive in terms of s 26 of the Municipal Finance Management
Act‘.
[8] It was argued on behalf of the municipality that ss 12 and 13 make plain that
an owner‘s obligation was to pay one annual property rate and that such liability
arose, and was fixed, on the first day of the municipality‘s financial year, namely 1
July. The use of the singular noun, ‗a rate‘, so the argument went, in these sections
and other sections of the Rates Act, is indicative that a single rate, for the entire
financial year, is payable at the start of such financial year. Accordingly, when the
respondent sought a rates clearance certificate on 25 February 2010, its liability to
pay a single rate for the entire financial year had already, by operation of law, been
fixed as at 1 June 2009 and the municipality was entitled to require payment of the
property rate for the entire financial year, before issuing a rates clearance
certificate.
[9] The nub of the municipality‘s case is this. Once its financial year
commenced, the respondent became liable to pay the rates fixed for that financial
year and it was entitled to withhold the rates clearance certificate until it had
received payment of rates for that financial year. There are pertinent questions
which arise in the determination of the municipality‘s contentions. Why does the
legislation stipulate that a municipality must levy the property rate for a financial
year (s 12(1))? Why does the levying of rates form part of a municipality‘s annual
budget process (s12(2))? The answer to these questions will assist in determining
whether the municipality‘s contentions should be upheld.
[10] As mentioned, the outcome of this appeal turns on the interpretation of
various provisions of the Rates Act, the Systems Act and the Finance Act. In
relation to the Finance Act, ss 15 to 19 are relevant. In terms of s 15, a
municipality may incur expenditure only in terms of an approved budget. The
council of a municipality must approve an annual budget for the municipality for
each financial year, before the start of that financial year (s16(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 (s16(2)). The annual budget must realistically set
out the anticipated revenue for the budget year from each revenue source
(s17(1)(a)). Section 17(3) of the Finance Act details various documents that are to
be tabled with the annual budget, including draft resolutions approving the budget
and imposing any municipal tax, and a projection of cash flow for the budget year
by revenue source. An annual budget may only be funded from realistically
anticipated revenues to be collected, cash-backed accumulated funds from previous
years‘ surpluses not committed for other purposes and borrowed funds (s18(1)).
Revenue projections in the budget must be realistic, taking into account projected
revenue for the current year, based on collection levels to date and actual revenue
collected in previous financial years (s18(2)). A municipality may only spend
money on a capital project if the money for the project has been appropriated in the
capital budget (s19(1)(a)).
It is clear from these provisions, that the collection of rates forms part of a
municipality‘s budget – which must be determined before the financial year
commences.
[11] In regard to the Rates Act, its main objective is to regulate the power of a
municipality to impose rates on property. The preamble of the Rates Act
recognises that ‗there is a need to provide local government with access to a
sufficient and buoyant source of revenue necessary to fulfil its developmental
responsibilities‘. It also recognises that income derived from property rates is a
critical source of revenue for municipalities to achieve their constitutional
objectives.4 This was confirmed in Kalil NO & others v Mangaung Metropolitan
Municipality & others,5 where Leach JA explained:
‗Sections 152(1)(b) and (2) of the Constitution oblige municipalities to provide services to their
communities in a sustainable manner. In order to do so, a municipality is empowered by s 229 of
the Constitution to raise funds by imposing rates on property in a process regulated by national
legislation — the applicable legislation being the Systems Act, the Finance Act and the Rates
Act‘.6
[12] Two conclusions follow: First, it is clear from the relevant provisions of the
Rates Act and the Finance Act that the levying of rates is an integral part of a
municipality‘s annual budgetary process.7 Second, the approval of the budget must
go hand in hand with the determination of rates, as the revenue from rates is
essential to fund the budgeted expenditure.8 It is for this reason that the property
rate is determined for each financial year. It is only once the rate is determined that
a municipality can estimate its income for the financial year and prepare its budget
in accordance with that projected income.
[13] To return to the main issue in this case, when is the property rate payable? In
terms of s 13(1)(a) of the Rates Act, a rate becomes payable ‗as from the start of a
financial year‘. (Emphasis added.) In my view, the use of the phrase ‗as from‘ as
opposed to the word ‗on‘ is significant. The phrase ‗as from‘ denotes the
4 A report issued by STATS SA (last updated September 2016) entitled, the ‗Quarterly financial statistics of
municipalities September 2016‘, sets out the income of municipalities. The total income of South Africa‘s
municipalities for the quarter ending September 2016 was about R54 million, of which the income from property
rates was over R15 million. See http://www.statssa.gov.za/publications/P9110/P9110September2016.pdf accessed
on 15 March 2017.
5 Kalil NO & others v Mangaung Metropolitan Municipality & others [2014] ZASCA 90; 2014 (5) SA 123 (SCA).
6 Ibid, para 6.
7 South African Property Owners Association fn 6 above, para 32.
8 Ibid.
commencement of a period while the word ‗on‘ specifies a particular date. If the
word ‗on‘ had been used by the legislature, the rate would have been payable on 1
July, the start of the municipality‘s financial year. Support for this view can be
found in Kleynhans v Yorkshire Insurance Co Ltd9 where Schreiner ACJ said:
‗It seems to me that the important words are those that fix the commencement of the period,
which here are ‗as from‘ (‗vanaf‘) the date on which the claim arose. Those words are the typical
words of commencement that bring the ordinary civil method of computation into operation‘.10
[14] In attributing a meaning to the phrase ‗as from‘, regard must be had to the
ordinary meaning of the words, which must be determined in the context of the
statute, read as a whole, with reference to the scope and purpose of the statute.11
The Rates Act defines a ‗financial year‘ as the period starting from 1 July in a year
to 30 June the next year. Section 13 falls under Chapter 2 of the Act which is titled
‗rating‘ and is preceded by s 12(1), which provides that a municipality must levy
the rate for a financial year and that a rate lapses at the end of the financial year for
which it was levied.
[15] There are other provisions in this chapter of the Rates Act that provide
assistance in the enquiry as to when a property rate is payable. Sections 26, 27 and
28 deal with the method and time of payment of rates, the furnishing of accounts
and the recovery of arrear rates from tenants and occupiers. These sections read, in
relevant part:
‗26(1) A municipality may recover a rate-
9 Kleynhans v Yorkshire Insurance Co Ltd 1957 (3) SA 544 (A).
10 Ibid, at 550F-H.
11 Consolidated Mines of South West Africa Ltd v Administrator, SWA & another 1958 (4) SA 572 (A) at 599A-C;
South African Property Owners Association v Johannesburg Metropolitan Municipality & others [2012] ZASCA
157; 2013 (1) SA 420 (SCA) para 55; Liebenberg NO & others v Bergrivier Municipality [2013] ZACC 16; 2013 (5)
SA 246 (CC); 2013 (8) BCLR 863 (CC) para 39.
(a) on a monthly basis or less often as may be prescribed in terms of the Municipal Finance
Management Act; or
(b) annually, as may be agreed to with the owner of the property.
(2)(a) If a rate is payable in a single amount annually it must be paid on or before a date
determined by the municipality.
(b) If a rate is payable in instalments it must be paid on or before a date in each period
determined by the municipality
. . . .
27(1) A municipality must furnish each person liable for the payment of a rate with a written
account specifying-
(a) the amount due for rates payable;
(b) the date on or before which the amount is payable;
. . . .
28(1) If an amount due for rates levied in respect of a property is unpaid by the owner of the
property after the date determined in terms of section 26 (2), the municipality may recover the
amount in whole or in part from a tenant or occupier of the property‘.
[16] The import of these sections is that the rate may be recovered on a monthly
basis or annually, subject to an election by the owner. In respect of both payment
options, it is the municipality that determines the date by which payment must be
made. It is the responsibility of the municipality to produce a statement reflecting
the amount due in respect of rates and the date on which the amount is payable.
Section 28(1) is of particular significance. Once the municipality has determined
the amount due and the date on which such amount is payable, and the owner fails
to make payment on the due date, the municipality may recover the ‗amount due‘
from the tenant or occupier of the property. Section 28(1) does not entitle a
municipality to recover the rate levied for the financial year from the tenant or
occupier.
[17] Importantly the Act distinguishes between what is ‗due‘ and what is ‗due
and payable‘. In terms of s 13, the rate becomes payable (in the sense of the
obligation to pay arising at that stage) ‗as from the start of a financial year‘.
Section 26 empowers a municipality to determine when the rate is due. If a rate is
payable in instalments then the municipality is required, by way of written
accounts, to advise the payee of the date on which the rate is due.
[18] In the context of prescription and the distinction between what may be
claimed and what is payable this Court said the following in Union Share Agency
& Investment Ltd v Spain:12
‗The distinction between the indebtedness being subject to the happening of an event and the
payment being so subject is a vital one, and should not be overlooked.‘
This passage was quoted with approval in Trinity Asset Management (Pty) Ltd v
Grindstone Investments (Pty) Ltd13 by Willis JA who went on to say:
‗The very phrase ―due and payable‖, ie both ―claimable‖ and ―payable‖ as at a point in time,
indicates that ―due‖ and ―payable‖ are not coextensive with one another‘.14
This court has held that the phrase ‗prescription shall commence to run as soon as
the debt is due‘ as used in s 12(1) of the Prescription Act 68 of 1969, means that:
‗[T]here has to be a debt immediately claimable by the creditor or, stated in another way, that
there has to be a debt in respect of which the debtor is under an obligation to perform
immediately.15
[19] In terms of s 27 of the Rates Act, payment of the rate is subject to the
happening of an event, namely, the municipality‘s determination of the amount to
12 Union Share Agency & Investment Ltd v Spain 1928 AD 74 at 80-81.
13 Trinity Asset Management (Pty) Ltd v Grindstone Investments (Pty) Ltd (1040/15) [2016] ZASCA 135 (29
September 2016).
14 Ibid, para 14.
15 Deloitte Haskins & Sells Consultants (Pty) Ltd. v Bowthorpe Hellerman Deutsch (Pty) Ltd 1991 (1) SA 525 (A) at
532H-I.
be paid and the date by which payment must be made. A property owner‘s
obligation in respect of property rates arises at the start of the financial year when
the municipality determines the rate. If the rate is payable in instalments, an
owner‘s obligation to make payment arises once the municipality has determined
the date of payment and amount due. Put differently, a portion of the debt in
respect of rates becomes due from time to time. For these reasons, the argument
advanced on behalf of the municipality, that the determination of an annual
property rate is indicative of an intention that a single rate for the entire year is
payable at the start of each financial year cannot be sustained.
[20] Adopting the tools of interpretation already referred to, and having regard to
the definition of ‗financial year‘ and the provisions of ss 12(1), 26, 27 and 28, the
words ‗payable as from‘ in s 13(1)(a)‘, must be interpreted to mean that the rate is
payable within the period of the financial year and not on 1 July as contended by
the municipality. Counsel for the municipality conceded that the legislature could
have inserted the words ‗due and‘ payable in s 13(1)(a), without offending the
scheme of the Act if it was the intention that the rates should be due and payable
on 1 July of each year.
[21] It is rule of statutory construction that provisions which interfere with
protected rights should be narrowly interpreted. It is clear that the municipality‘s
requirement for rates to be paid for a full year, as a condition for the issue of a
clearance certificate in terms of s 118 of the Systems Act, adversely affects the
rights of property holders to alienate their property. In my view s 13 (1)(a) of the
Rates Act should therefore be interpreted narrowly to mean that the word ‗payable‘
only fixes the rate for the financial year, but does not mean that rate is also due at
the same time.16
[22] The final question to determine is whether a municipality can, prior to
issuing a rates clearance certificate, insist on payment of all rates, fees and charges
in respect of the property for the current financial year, even if this period extends
beyond the date of the certificate.
Section 118 of the Systems Act reads:
‗(1) A registrar of deeds may not register the transfer of property except on production to that
registrar of deeds of a prescribed certificate-
(a) issued by the municipality or municipalities in which that property is situated; and
(b) which certifies that all amounts that became 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.‘ (Emphasis added.)
[23] In my view the section is clear and unambiguous. The certificate is issued in
respect of municipal debts which have become due in the two years preceding the
date of application for the certificate and does not apply to future municipal debts.
In City of Johannesburg v Kaplan NO & another,17 this court said:
‗No property may be transferred unless a clearance certificate is produced to the registrar of
deeds that certifies full payment of all municipal debts as described in s 118(1) which have
become due during a period of two years before the date of application for the certificate‘.18
(Emphasis added.)
[24] Clause 31 of the municipality‘s rates policy provides:
16 City of Cape Town v Real People Housing (Pty) Ltd 2010 (5) SA 196 (SCA) para 9.
17 City of Johannesburg v Kaplan NO & another 2006 (5) SA 10 (SCA).
18 Ibid, para 26.
‗In the case of an application for a certificate in terms of s 118 of [the Systems Act], the full
amount which remains unpaid, inclusive of all instalments, for the remaining financial year shall
be payable‘.
This could include debts incurred after the date of application for a clearance
certificate. Section 3 of the Rates Act empowers a municipality to make policy not
inconsistent with the Act. In any event, policy cannot override, amend or be in
conflict with laws and legislative instruments, otherwise the separation between
legislature and executive will disappear.19
[25] This court in City of Cape Town v Real People Housing (Pty) Ltd20 was
faced with a policy in terms of which the municipality sought to ensure payment of
debts for more than two years preceding the date of application for clearance
certificate. Nugent JA said that:21
‗… any proviso that would have the effect of entitling the City to withhold a certificate until all
debts were paid – would nullify the express language of the section and it might just as well not
be there. I do not think it is necessary to cite authority for the trite proposition that a term cannot
be implied in a statute if it would contradict its express terms. Had it been intended not to limit
the period to two years then the words would not have appeared at all.
The dilemma in which the City finds itself is that it has left debts outstanding for more than two
years albeit that the statute contemplates prompt collection. No doubt there are understandable
reasons why that is so but the City cannot resolve its dilemma by subjugating the statute to a
policy that would frustrate its terms‘.
[26] The clear intention of the legislature was to limit the period in s 118(1) to
two years preceding the date of application for the certificate. The municipality‘s
policy contradicts the express terms of the statute and ‗would frustrate its terms‘.
19 Akani Garden Route (Pty) Ltd v Pinnacle Point Casino (Pty) Ltd 2001 (4) SA 501 (SCA) para 7. See also Clinch v
Lieb 1939 TPD 118 at 125.
20 City of Cape Town v Real People Housing (Pty) Ltd [2009] ZASCA 159; 2010 (5) SA 196 (SCA).
21 Paras 14 and 15.
To the extent that the municipality‘s policy is inconsistent with s 118(1), it is ultra
vires and void.
[27] To sum up: the relevant provisions of the Rates Act, the Finance Act and the
Systems Act read together, buttress the contention of the respondent that the
municipality was not entitled to withhold the property rates clearance certificate
until it had received payment of the property rates for the entire financial year.
Such property rates became payable (but not due) from the start of the financial
year. Further, s 118(1) clearly applies to municipal debts which have become due
in the two years preceding the date of application for the certificate and does not
apply to future municipal debts. The question posed in para [3] above must
therefore be answered in favour of the respondent.
[28] The appeal is dismissed with costs.
_________________
LV Theron
Judge of Appeal
APPEARANCES:
For the Appellant:
SC Rorke SC
Instructed by:
Doreen Mgoduka Attorneys, Port Elizabeth
Webbers, Bloemfontein
For the Respondent:
LA Schubart SC
Instructed by:
Greyvensteins Incorporated, Port Elizabeth
Kramer
Weihmann
&
Joubert
Attorneys,
Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 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.
Nelson Mandela Bay Municipality v Amber Mountain Investments (576/2016) [2017]
ZASCA 36 (29 March 2017)
MEDIA STATEMENT
The Supreme Court of Appeal today dismissed an appeal by the Nelson Mandela Bay Municipality,
against a judgment of the Eastern Cape Local Division of the High Court, Port Elizabeth. The issue
was whether a property owner who sells property is liable for the payment of rates in respect of that
property up to the end of a municipality’s financial year or only for payment of rates up to the date of
transfer of the property.
The respondent, Amber Mountain Investments 3 (Pty) Ltd was the previous owner of immovable
property. It sold the property to a different company. Before the property was transferred, on 25
February 2010, the respondent required a rates clearance certificate, in terms of s 118 of the Local
Government: Municipal Systems Act 32 of 2000 (the Systems Act). The municipality’s financial year
commences on 1 July in a year and ends on 30 June the following year. The municipality required
payment of rates until the end of its financial year, being 30 June 2010, prior to it furnishing the rates
clearing certificate. It presented the respondent with an account for the sum of R2 281 014,68 in
respect of property rates and electricity. The respondent paid the amount, under protest, in order to
obtain the certificate. At the time of payment, the respondent’s actual indebtedness to the municipality
was for the sum of R1 214 482,68.
Aggrieved by this, the respondent, alleging that it had overpaid the municipality the sum of R1
066 532, instituted action against the municipality in the court a quo, claiming repayment of these
moneys. The respondent’s claim for repayment was based on unjust enrichment.
The court a quo agreed with the respondent, and found that it was only obliged to pay rates on the
property until the date of transfer of the property, ie 25 February 2010. It held that as the respondent
was no longer the owner of the property, it would be unjust for the municipality to claim rates from the
respondent.
In coming to its decision, the SCA was of the view that the answer to the issue raised, lay in the
interpretation of various provisions of the Local Government: Municipal Property Rates Act 6 of 2004
(the Rates Act), the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) and the
Local Government: Municipal Finance Management Act 56 of 2003 (the Finance Act). And that these
Acts had to be read together – as they formed the basis for the current system of local government.
The SCA held that the relevant provisions of the Rates Act, the Finance Act and the Systems Act
read together, reinforced the respondent’s view that the municipality was not entitled to withhold the
property rates clearance certificate until it had received payment of the property rates for the entire
financial year. Such property rates became due from the start of the financial year, and not on the
start of the financial year. It further held that s 118(1) of the Systems Act plainly applied to municipal
debts which had become due in the two years preceding the date of application for the certificate and
did not apply to future municipal debts. The court accordingly dismissed the appeal, in favour of the
respondent.
--- ends ---
|
222
|
non-electoral
|
2018
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 399/2017
In the matter between:
THE COMMISSIONER FOR THE SOUTH AFRICAN
APPELLANT
REVENUE SERVICE
and
DANWET 202 (PTY) LTD
RESPONDENT
Neutral citation: CSARS v Danwet (399/2017) [2018] ZASCA 38 (28 March 2018)
Coram: Lewis, Majiedt and Mbha JJA, Davis and Mothle AJJA
Heard:
15 March 2018
Delivered: 28 March 2018
Summary: Condonation for late filing of an appeal against an assessment – section
104(3) of the Tax Administration Act 28 of 2011 mandates a taxpayer to object to a
refusal by SARS to extend the period for lodgment – failure by taxpayer to file an
objection.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Tax Court, Johannesburg (Masipa J 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 Tax Court is set aside and replaced with the following:
‘The matter is struck from the roll.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Davis AJA (Lewis, Majiedt and Mbha JJA and Mothle AJA concurring):
[1] This case concerns three related issues: (1) whether a Tax Court has the
necessary jurisdiction to entertain and thereafter grant an application for condonation
of the late filing of an appeal against an assessment; (2) if so whether the appellant
has a discretion to extend the period within which an appeal against an assessment
may be lodged beyond the prescribed period of 30 days as set out in s 107 of the
Tax Administration Act 28 of 2011 and (3) if the answer to the second issue is in the
affirmative, whether good cause was shown by the respondent to justify the order in
its favour.
The Facts
[2] In 2013 the appellant conducted an audit of the respondent’s business. On 19
August 2013 it issued an additional assessment for the 2012 tax year in the amount
of R1 208 919, which represented a significant increase from the initial assessment
of R19 915.
[3] On 7 October 2013 the respondent objected to this additional assessment. On
7 November 2013 the appellant responded to the objections by partially reducing the
amount of the additional assessment. On 9 December 2013 Mr Jan Coetzee, a tax
consultant representing the respondent, filed a notice of appeal against the partial
disallowance of the objection on the e-filing platform of the appellant. Attached to this
notice of appeal was a document which set out the reasons for the respondent’s
appeal in some detail.
[4] More than six months passed without any attempt by the respondent to
enquire into the status of its appeal until 30 June 2014, when Mr Coetzee telephoned
the appellant’s call centre to enquire about the status of the appeal. He was advised
that there was no record of the appeal on the appellant’s e-filing platform.
[5] According to Mr Coetzee, he telephoned Ms Ray-Anne van Schalkwyk at the
appellant’s office in Alberton, who advised him to re-submit the appeal. On 2 July
2014 he did so, together with a request for condonation, explaining that he believed
the notice of appeal had been correctly uploaded. In his explanation, he recorded
that Telkom ADSL lines had been water logged in the area where his office was
situated, particularly during the first two weeks of December 2013. He suggested
that, in the process of submitting the notice of appeal, the Telkom ADSL line had
stopped working, thereby preventing the full transmission of the relevant documents
on appellant’s e-filing platform. He justified his failure to initiate an earlier enquiry into
the status of the appeal on the basis that, in his experience, it could take appellant
‘up to 9 months to respond to the lodging of an appeal’.
[6] The appellant refused to grant condonation, on the basis of its interpretation of
s 107(2)(a) and 2(b) of the Act. In a letter of 12 February 2015, representatives of the
appellant, wrote:
‘Section 107(2) (a) or (b) of the TA Act provides that a senior SARS official may extend the
period within which an appeal must be lodged up to 21 days if reasonable grounds exist for
the delay or up to 45 days if exceptional grounds exist for the delay. No discretion is provided
to SARS to extend the period beyond 75 days. As the nature of appeal was delivered on 2
July 2014 it was more than 75 days late and accordingly Appellant has no discretion to
condone.’
[7] The respondent applied for condonation for the late filing of the appeal before
the Tax Court, Johannesburg (Masipa J), which granted an order on 1 February 2017
in terms of which leave was granted to the respondent to file its notice of appeal
against the disallowance of the objection of the assessment for the 2012 tax year
within ten days of the granting of the order.
[8] The appellant contends that the first issue is dispositive of the appeal in that
the Tax Court did not have the necessary jurisdiction to entertain the respondent’s
application for condonation.
Jurisdiction
[9] The jurisdiction of the Tax Court is set out in s 117 of the Act which, to the
extent relevant to this case, provides that the tax court has jurisdiction over tax
appeals lodged under s 107. Section 107 reads as follows:
‘Appeal against assessment or decision – (1) After delivery of the notice of the decision
referred to in section 106 (4), taxpayer objecting to an assessment or “decision” may appeal
against the assessment or “decision” to the tax board or tax court in the manner, under the
terms and within the period prescribed in this Act and the “rules”,
(2) A senior SARS official may extend the period within which an appeal must be lodged for
21 business days, if satisfied that reasonable grounds exist for the delay; or up to 45
business days, if exceptional circumstances exist that justify an extension beyond 21
business days.’
[10] The word ‘decision’ as contained in s 107 is defined in s 101 as meaning a
decision referred to in s 104(2) of the Act which provides that:
‘The following decisions may be objected to and appealed against in the same manner as an
assessment:
(a) a decision under subsection (4) not to extend the period for lodging an objection;
(b) a decision under section 107 (2) not to extend the period for lodging an appeal; and
(c) any other decision that may be objected to or appealed against under a tax Act.’
Section 129(2) of the Act sets out the powers of the tax court as follows:
‘In the case of an assessment or “decision” under appeal or an application in a procedural
matter referred to in section 117 (3), the tax court may –
(a) confirm the assessment or ‘decision’;
(b) order the assessment or “decision” to be altered; or
(c) refer the assessment back to SARS for further examination and assessment.’
[11] In the present case, the Tax Court granted condonation for the late filing of an
appeal against the revised assessment. The appellant interpreted s 107(2) to justify
its refusal of an extension for the lodging of an appeal; that is beyond the periods
prescribed in the section, the appellant had no power to grant an extension.
[12] A decision in terms of s 107(2) of the Act is ‘a decision’ for the purposes of
s 104(2) and s 129(2). It follows that, irrespective of the merits of the interpretation of
s 107(2) as contended for by appellant, a decision not to extend the prescribed
period falls within the definition of ‘decision’ for the purposes of s 129(2). Thus, the
Tax Court, subject to compliance with the procedures set out in s 104(3), had the
jurisdiction to determine an application for condonation for the failure by a taxpayer to
lodge an appeal timeously.
[13] Had the respondent objected to the decision to refuse an extension of time, as
it was obliged to do by s 104(3), the Tax Court would have had the power to order
that an extension should be granted in terms of s 117(3) of the Act read with Rule 53.
Rule 53 confers on the Tax Court the power to grant condonation and allow an
extension of time in which to lodge a notice of appeal.
[14] It follows that a decision to condone the late lodgement of an appeal is
appealable to this court in terms of s 129 read with s 133(1) of the Act. However,
counsel for the appellant based his argument on the qualification to which I have
made mention, namely he contended that the respondent had failed to comply with
the requirements set out in s 104(3) and accordingly the tax court did not have
jurisdiction to hear the condonation application
The procedure to be adopted by a taxpayer in terms of s 104(3)
[15] Section 104(3) provides as follows: ‘a taxpayer entitled to object to an
assessment or “decision” must lodge an objection in the manner, under the terms,
and within the period prescribed in the ‘rules’. It is common cause that no objection
was lodged against the decision taken by the appellants’ representatives to invalidate
the appeal by refusing to extend the period within which the appeal could be brought.
Rule 7 of the Tax Court Rules1 provides that a taxpayer who may object to an
assessment under s104 of the Act may deliver a notice of objection within 30 days.
There is however no mention of an objection to a decision as provided for in s 104.
Rule 10(1)(b) provides that a taxpayer who wishes to appeal against an assessment
to the tax court must deliver a notice of appeal within 30 days after the delivery of the
disallowance or such extended period granted under s 107(2) of the Act.
[16] The Rules are therefore hardly a model of clarity when dealing with the
prescribed period within which a taxpayer must object to a decision such as a refusal
to extend the prescribed period. What is clear however, is that, in the event that a
taxpayer seeks to have such a refusal reversed, s 104(3) provides expressly that the
taxpayer is obliged to lodge an objection against the decision taken by a senior
SARS official acting in terms of s 107(2).
[17] In the context of the present case, an objection by the respondent to a refusal
to extend the period within which an appeal may be lodged may appear on the face
of it to be a pointless exercise, in that s 107(2) circumscribes the power of the
appellant to extend the period within which the appeal is to be lodged. The appellant
would not have the legal power to uphold an objection to a refusal to extend the time
for the lodging of an appeal beyond the period expressly provided for in s 107(2).
[18] The question then arises as to whether s 104(3) is absurd or pointless in this
instance. There is a common law presumption that a statute does not contain
1 Tax Court Rules as published in the Government Gazette No37819 on 11 July 2014
purposeless provisions. If, however, the legislative provision cannot be given a
meaningful construction, the presumption is taken to be rebutted.2
[19] Notwithstanding the present case dealing with a refusal to extend the period
for the lodgment of an appeal, there are cases where the obligation to object to a
decision made in terms of s 107(2) serves a clear purpose. For example, the
appellant may refuse to extend the period for lodgment on the basis that it is not
satisfied that reasonable grounds exist for the delay. An objection by a taxpayer
would seek to rebut the reasons given for this decision. There would be no legal
impediment to the appellant’s reconsideration of its decision in the light of the
objection by the taxpayer. There is therefore no basis on which to conclude that
s 104(3) is pointless or leads inevitably to absurdity.
[20] In summary, s 104(3) obliged the respondent to object to the decision taken by
the appellant on 15 February 2015 to invalidate its appeal. It failed to do so. It follows
that there was no valid application before the tax court which, accordingly, did not
have jurisdiction to hear the application.
[21] For these reasons, the following order is made:
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the Tax Court is set aside and replaced with the following:
‘The matter is struck from the roll.’
___________________
D Davis
Acting Judge of Appeal
2 LC Steyn Die Uitleg van Wette (5ed) at 119-124; LAWSA Vol 25 para 330 and cases cited in footnote
8 thereof.
APPEARANCES
For the Appellant:
N Snellenburg SC with D R Thompson
Instructed by:
State Attorney, Bloemfontein
For the respondent:
C Dreyer with A Saldulker
Instructed by
Pierre Retief Inc., Bedfordview
Maree & Partners, Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
28 March 2018
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media and does not form
part of the judgment of the Supreme Court of Appeal.
The Commissioner of South African Revenue Service v Danwet 202 (Pty) Ltd (399/2017) [2018]
ZASCA 38 (28 March 2018)
Today the Supreme Court of Appeal (SCA) upheld an appeal against the judgment of the Gauteng
Tax Court, Johannesburg. The issues on appeal were (1) whether a Tax Court had the necessary
jurisdiction to entertain and thereafter grant an application for condonation of the late filing of an
appeal against an assessment; (2) if so whether the appellant had a discretion to extend the period
within which an appeal against an assessment may be lodged beyond the prescribed period of 30
days as set out in s 107 of the Tax Administration Act 28 of 2011(the Act) and (3) if the answer to the
second issue was in the affirmative, whether good cause was shown by the respondent to justify the
order in its favour. The tax court answered these questions in favour of the respondents.
The issues on appeal arose within the context of the following facts: The appellant conducted an audit
on the respondents business. The appellant later did a further assessment that represented a
significant increase from the initial assessment. The respondent then rejected the further assessment
however filed for the condonation late. The appellant refused to grant condonation on the basis of its
interpretation of s 107(2) (a) and 2(b) of the Act. The respondent applied for condonation for the late
filing of the appeal before the Tax Court, Johannesburg where leave was granted to the respondent to
file its notice of appeal.
The appellants argued before the SCA that the Tax Court did not have jurisdiction to entertain the
respondent’s application for condonation. The SCA held that had the respondent objected to the
decision to refuse an extension of time, as it was obliged to do by s 104(3) of the Act, the Tax Court
would have had the power to order that an extension should be granted in terms of s 117(3) of the
Act.
The SCA held that the Tax Court, subject to compliance with the procedures set out in s 104(3), had
the jurisdiction to determine an application for condonation for the failure by a taxpayer to lodge an
appeal timeously. It follows that had the respondent objected to the decision to refuse an extension of
time, as it was obliged to do by s 104(3), the Tax Court would have had the power to order that an
extension should be granted in terms of s 117(3) of the Act read with Rule 53.
The SCA thus concluded that s 104(3) obliged the respondent to object to the decision taken by the
appellant to invalidate its appeal. It failed to do so. It follows that there was no valid application before
the tax court which, accordingly, did not have jurisdiction to hear the application.
|
2246
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 278/08
In the matter between:
KIMBERLEY JUNIOR SCHOOL
FIRST APPELLANT
THE GOVERNING BODY OF THE
KIMBERLEY JUNIOR SCHOOL
SECOND APPELLANT
and
THE HEAD OF THE NORTHERN
CAPE EDUCATION DEPARTMENT
FIRST RESPONDENT
PAUL MELVILLE THEUNISSEN
SECOND RESPONDENT
SEATILE SARAH RANTHO
THIRD RESPONDENT
DONNA-LEE MARCELÉ BRAND
FOURTH RESPONDENT
Neutral citation:
Kimberley Junior School v The Head of the Northern
Cape Education Department (278/08) [2009] ZASCA 58
(28 May 2009)
CORAM:
STREICHER ADP, BRAND, MAYA, SNYDERS et
MHLANTLA JJA
HEARD:
21 MAY 2009
DELIVERED:
28 MAY 2009
SUMMARY:
Employment of Educators Act 76 of 1998 – appointment
of principal of public school by first respondent in terms of
s 6(3) of the Act – recommendation by school governing
body found to be essential prerequisite for such
appointment
–
held
on
the
facts
that
such
recommendation had never been made – appointment
consequently set aside.
______________________________________________________________
ORDER
_____________________________________________________
On appeal from:
Kimberley High Court (Bosielo AJP et Majiedt J
sitting as court of first instance.)
1.
The appeal is upheld with costs.
2.
The order of the court a quo is set aside and replaced with an order in
the following terms:
'(a)
The decision taken by the first respondent to appoint the third
respondent as principal of the first applicant, is hereby reviewed
and set aside.
(b)
The first respondent is ordered to pay the applicants' costs.'
_____________________________________________________
JUDGMENT
______________________________________________
BRAND JA (Streicher ADP, Maya, Snyders and Mhlantla JJA concurring)
[1] The appellants in this matter are the Kimberley Junior School ('the
School') and the Governing Body of the School ('the SGB'). The first
respondent is the Head of the Northern Cape Education Department ('the
HoD') while the second, third and fourth respondents are Mr Paul Theunissen
('Mr Theunissen'), Mrs Seatile Rantho ('Mrs Rantho') and Mrs Donna-Lee
Brand ('Mrs Brand') respectively. Only the HoD actively involved himself in
these proceedings. The matter has its origin in the decision of the HoD to
appoint Mrs Rantho – a black female person – instead of Mr Theunissen – a
white male person – as principal of the School. The application by the School
and the SGB to the Kimberley High Court for that decision to be reviewed and
set aside was dismissed by Majiedt J, with Bosielo AJP concurring. The
appeal against that judgment is with the leave of the court a quo.
[2] The issues between the parties will best be understood in the light of
the factual background that follows. At the beginning of May 2006 the
Northern Cape Education Department ('the Department') advertised for
applications to fill various vacant teaching posts in its area. Included amongst
these was the vacancy for the position of principal at the School. Seven
applicants applied. Two of those, who did not comply with the requirements
stated in the advertisement, were sifted out by the district office of the
Department. Of the remaining five, four were short-listed for interviews by an
interview committee of the SGB specially constituted for that purpose in
accordance with directives from the Department. The interviewing and
assessment procedure to be followed by the interview committee was likewise
prescribed in detail by the Department. Inter alia the committee was required
to put a series of questions to each candidate that were aimed at determining
the candidate's ability in twelve prescribed categories. Every committee
member was then called upon to score the candidate's performance in each
category. In the end, these scores were added up and the average mark
calculated. Following upon its assessment of the four candidates involved in
the manner prescribed, the interview committee made its proposals to the
SGB. These were adopted by the latter and conveyed to the HoD in a letter of
12 June 2006.
[3] That letter and the ensuing correspondence between the SGB and the
HoD are directly relevant to the dispute that eventually arose for
determination. This explains the somewhat extensive extracts that are to
follow.
•
In its letter of 12 June 2006 the SGB informed the HoD:
'Re: Appointment of Principal
In the nomination of the above post, equity, redress and representivity were carefully
considered at both the shortlisting and the interviewing process.
The demographics of the school are attached.
Having calculated the scores of the four candidates the following is relevant:
1.
Mr P Theunissen, who obtained a score of 98.8, has been a deputy principal
for 9 years and acting principal for 6 months. He has excellent experience,
sound knowledge of the administration and financial management of a
primary school. He has taught for 17 years in a primary school and has
insight into current education issues relevant to primary school education. He
has had leadership experience in a multi-cultural school.
2.
Mrs S Rantho, the second candidate, obtained a score of 58.1. She is
currently HOD at a Secondary School in Bloemfontein and does not have
teaching experience in a primary school. Nor does she have adequate
administration and management skills to be a principal of a Primary School.
3.
Mrs D-L Brand, the third candidate, obtained a score of 55.8. She is a
Foundation Phase educator and has some experience in an acting HOD
position. As such she lacks the necessary administration and management
skills required to be principal of a suburban school with more than 700
learners.
It is very evident that Mr P Theunissen is the only suitable applicant to take up the
post of principal at Kimberley Junior School.'
•
The demographics of the school attached to the letter showed that the
learner population was made up of 60 per cent African; 25 per cent Coloured;
8 per cent Indian and 7 per cent white learners. It also showed that the top
management at the School consisted of one white male and three white
female persons. The letter also accompanied several forms prescribed by the
Department, including form NCK2 which described all three candidates as
being 'recommended for appointment'.
•
On 12 October 2006 the HoD decided to appoint Mrs Rantho as
principal and conveyed that decision to the SGB in a letter of the same date. It
reads:
'I refer to the above-mentioned matter and your recommendation for the appointment
of a principal at your school.
Having considered the recommendation and ensured that you have complied with
the requirements in section 6(3) of the Employment of Educators Act, 76 of 1998, in
that at least three candidates have been recommended for appointment as
contemplated in section 6(3)(c) and having satisfied myself that there has been
compliance with the provisions of section 6(3)(b). I am satisfied with your
recommendation and shall proceed with the appointment of Ms S S Rantho as per
your recommendation.'
•
The SGB's response to this letter was dated 25 October 2006. The
relevant part reads as follows:
'This letter serves to confirm our telephone discussion held on Monday 23 October
2006 and has reference to your letter signed 12 October 2006, but only received 19
October 2006, . . . It is obvious that there is a patent error in your letter in that you
state that you accept the Governing Body's recommendation that Ms S S Rantho be
appointed as the Principal of Kimberley Junior School. . . . This is not what was
recommended by the Governing Body and I again attach the recommendation that
Mr. P Theunissen is the only suitable candidate.
You also state very clearly that the Governing Body had followed the required
procedure correctly in terms of the relevant sections of the Act.
If it is not a patent error on your part then I respectfully request that you supply the
Governing Body with:
(1)
reasons for your deviation from our recommendation . . .
(2)
. . . '
•
It is not clear from the papers what was said during the telephone
conversation of 23 October 2006, but, as I see it, not much turns on that.
What is clear is that Mrs Rantho was informed of her appointment on 25
October 2006.
[4] On 31 October 2006 representatives of the Governing Body met with
the HoD. In a letter of that date to the HoD, the chairperson of the Governing
Body recorded what he regarded to be the gist of the meeting as follows:
'Our meeting this morning scheduled for 09h00 and held at the Department of
Education has reference. . . .
I would like to place on record my understanding of our meeting and my request for
you to reconsider your decision forwarded to myself on 12 October 2006.
You made it clear that due to a technical misinterpretation, by the Governing Body, of
Section 6(3)(c) of the Employment of Educators Act, 76 of 1998 you chose one of the
three candidates put forward by the Governing Body, notwithstanding the fact that
only one clear candidate was indicated as suitable in the letter dated 12 June 2006.
You further indicated that as the Governing Body and the Department of Education
have differing interpretations as to the intention of the abovementioned Act that the
Governing Body now only has the courts to turn to, to make a final interpretation of
the law, as your decision is final and there is no further appeal process.
. . . '
•
The HoD concluded the exchange of correspondence by his letter of 10
November 2006, which reads:
'With reference to your letter dated the 25th October 2006, I wish to respond as
follows:
1.
There is no error in the position that I have taken in my letter dated the 12th
October 2006. I believe this position was fully explained to you at our
meeting.
2.
To the extent that you are not aware of the reasons for my decision which I
believe were given to you at our meeting I wish to re-iterate them:
2.1
While I accept that the recommendation complies with Section 6(3) [of the
Employment of Educators Act 76 of 1998] an obligation is placed on me by
Section 7(1) to always have regard to the democratic values and principles
set out in Section 195 of the Constitution. This I have to do while taking into
account the ability of the candidate and the need to address the imbalances
of the past. Given the context of the school I have striven to meet this
obligation in appointing Ms Rantho.
2.2.
I am satisfied that with the necessary support Ms Rantho will be able to
discharge her duties as principal of your school.
. . . '
[5] The correspondence shows an appreciation by both parties that the
roles of both the HoD and the Governing Body in the present context are
governed by s 6(3) of the Employment of Educators Act 76 of 1998. In terms
of s 6(1) the authority to appoint, promote or transfer any educator employed
by a provincial department of education vests in the head of that department.
That authority is, however, subject to s 6(3) of which the relevant part
provides:
'(3)(a) . . . (A)ny appointment, promotion or transfer to any post on the educator
establishment of a public school may only be made on the recommendation of the
governing body of the public school . . .
(b)
In considering the applications, the governing body . . . must ensure that the
principles of equity, redress and representivity are complied with and the governing
body . . . must adhere to-
(i)
the democratic values and principles referred to in section 7 (1);
(ii)
any procedure collectively agreed upon or determined by the Minister
for the appointment, promotion or transfer of educators;
(iii)
any requirement collectively agreed upon or determined by the
Minister for the appointment, promotion or transfer of educators which the candidate
must meet;
(iv)
a procedure whereby it is established that the candidate is registered
or qualifies for registration as an educator with the South African Council for
Educators; and
(v)
procedures that would ensure that the recommendation is not
obtained through undue influence on the members of the governing body.
(c)
The governing body must submit, in order of preference to the Head of
Department, a list of-
(i)
at least three names of recommended candidates; or
(ii)
fewer than three candidates in consultation with the Head of
Department.
(d)
When the Head of Department considers the recommendation contemplated
in paragraph (c), he or she must, before making an appointment, ensure that the
governing body has met the requirements in paragraph (b).
(e)
If the governing body has not met the requirements in paragraph (b), the
Head of Department must decline the recommendation.
(f)
Despite the order of preference in paragraph (c) and subject to paragraph (d),
the Head of Department may appoint any suitable candidate on the list.
(g)
If the Head of Department declines a recommendation, he or she must-
(i)
consider all the applications submitted for that post;
(ii)
apply the requirements in paragraph (b) (i) to (iv); and
(iii)
despite paragraph (a), appoint a suitable candidate temporarily or re-
advertise the post.
(h)
The governing body may appeal to the Member of the Executive Council
against the decision of the Head of Department regarding the temporary appointment
contemplated in paragraph (g).
(i)
The appeal contemplated in paragraph (h) must be lodged within 14 days of
receiving the notice of appointment.
(j)
The appeal must be finalised by the Member of the Executive Council within
30 days.
(k)
If no appeal is lodged within 14 days, the Head of Department may convert
the temporary appointment into a permanent appointment . . ..'
[6] To complete the legislative picture; s 7(1) of the Act – to which
reference is made in s 6(3)(b)(i) – provides:
'(1) In the making of any appointment or the filling of any post on any educator
establishment under this Act due regard shall be had to equality, equity and the other
democratic values and principles which are contemplated in section 195 (1) of the
Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), and which
include the following factors, namely-
(a)
the ability of the candidate; and
(b)
the need to redress the imbalances of the past in order to achieve
broad representation.'
[7] In formulating its case for the review of the HoD's decision to appoint
Mrs Rantho instead of Mr Theunissen, the SGB accepted, quite correctly, so it
seems, that that decision had been taken in terms of s 6(3)(f). Departing from
that premise its contentions, broadly stated, were twofold. First, that Mrs
Rantho was not a 'suitable candidate' for the position of principal as required
by the subsection. Secondly, that although the subsection allows the HoD to
deviate from any order of preference proposed by the SGB, Mr Theunissen is
so markedly better qualified for the position and so markedly outscored Mrs
Rantho during the interview procedure, that her appointment could not be
justified on any reasonable grounds.
[8] The response to the first proposition elicited from the HoD was in
essence that, since the SGB recommended Mrs Rantho as one of three
candidates for the position, albeit as a distinct second option, it is not open to
it to argue that she is not suitable. In this regard the HoD referred to the
definition of 'recommendation' in the Concise Oxford English Dictionary,
namely, 'to put forward with approval as being suitable for a purpose or role'.
The proposition by the SGB that it recommended someone who it regarded as
not suitable, so the HoD contended, therefore amounts to a contradiction in
terms. As to the markedly superior score attained by Mr Theunissen during
the interview and assessment procedure, the HoD's response appears to be
encapsulated by the following statement in his answering affidavit:
'The constitutional imperative of the need to redress imbalances of the past in order
to achieve broad representation as echoed in Section 7(1) of the EEA and
Section 195(1)(h) and (i) of the Constitution could only be given effect to by
appointing as principal of [the School] someone other than [Mr Theunissen]. These
constitutional imperatives could, in my respectful submission, only be achieved by
appointing [Mrs Rantho] as principal of [the School].'
[9] The way in which the battle lines were thus drawn led the court a quo
to believe that the dispute presented for determination turned on whether the
HoD had properly exercised the discretion bestowed on him in terms of
s 6(3)(f) when he decided to appoint Mrs Rantho instead of Mr Theunissen.
Having thus understood the dispute, the court proceeded to decide it in favour
of the HoD. Its ratio decidendi appears from the following statement (in para
23):
'I unreservedly endorse this approach by the HOD. Once he had taken the position,
correctly so in my view, that the three candidates proffered for recommendation had
been regarded as suitable for appointment after having undergone a rigorous and
extensive process of sifting and evaluation, he was not only at liberty, but in fact
enjoined by legislation, particularly by the Constitution, to exercise his discretion in
favour of a candidate who would promote equity, redress and representivity. The top
management demographics is clearly out of proportion to the learner demographics
at the school. This required redress as envisaged by the applicable legislation. In my
view therefore, it cannot be said that his decision was not rationally connected to the
purpose of the empowering legislation.'
[10] But as I see it, a proper analysis of the facts directs the spotlight to an
issue which is entirely different from the one identified by the court a quo. As
the court a quo saw it, the question was essentially the same as the one that
arose in Head, Western Cape Education Department v Governing Body, Point
High School 2008 (5) SA 18 (SCA), namely, whether the HoD had properly
exercised his discretion under s 6(3)(f). In my view, the real enquiry in this
case, however, relates to the antecedent question, namely, whether the HoD
had any discretion to make an appointment under s 6(3)(f) at all. That, in turn,
depends on the answer to the more pertinent question, whether the SGB had
recommended Mrs Rantho to be appointed as principal of the School. The
question arises from the pre-condition in s 6(3)(a) – which could hardly be
stated in any clearer terms – that 'any appointment, promotion or transfer . . .
[of an educator by the head of the department to a post at a public school]
may only be made on the recommendation of the governing body of the public
school . . .' (See also Head, Western Cape Education Department v
Governing Body, Point High School (supra) para 10.) The same theme is
maintained in s 6(3)(f). Though the head of department is not bound by the
order or preference proposed by the governing body, he or she can only
appoint from the list of candidates recommended by the latter.
[11] Under common law, necessary preconditions that must exist before an
administrative power can be exercised, are referred to as 'jurisdictional facts'.
In the absence of such preconditions or jurisdictional facts, so it is said, the
administrative authority effectively has no power to act at all (see eg Paola v
Jeeva NO 2004 (1) SA 396 (SCA) paras 11, 14 and 16). The same principle
finds application under the provisions of the Promotion of Administrative
Justice Act 3 of 2000 – PAJA – albeit that the formulation is in somewhat
different terms (see President of the Republic of South Africa v South African
Football Union 2000 (1) SA 1 (CC) para 168). This is borne out, for example,
by the following statement by Cora Hoexter, Administrative Law in South
Africa 227:
'Section 6(2)(a)(i) of the PAJA gives effect to s 33(1) of the Constitution [which
guarantees the right to administrative action that is lawful] by allowing judicial review
of administrative action where the administrator who took it "was not authorised to do
so by the empowering provision". Section 6(2)(f)(i) of the PAJA similarly provides that
an administrative action may be reviewed where it "is not authorised by the
empowering provision". These two provisions reflect the position at common law.'
[12] In administrative law parlance the head of department's power to
appoint under s 6(3)(f) is therefore dependent on the jurisdictional fact of a
recommendation by the governing body. As was pointed out by the
Constitutional Court in President of the Republic of South Africa v South
African Football Union (supra) para 168 note 132, the judgment of Corbett J in
South African Defence and Aid Fund v Minister of Justice 1967 (1) SA 31 (C)
remains the leading authority on jurisdictional facts in our law. In that
judgment Corbett J (at 34 in fine – 35C) identified two categories of
jurisdictional facts that can be encountered in empowering legislation. The
first category, described as 'objective jurisdictional facts', includes the type of
fact or state of affairs that must exist in an objective sense before the power
can validly be exercised. Here the objective existence of the fact or state of
affairs is justiciable in a court of law. If the court finds that objectively the fact
or state of affairs did not exist, it will declare invalid the purported exercise of
the power.
[13] In the second category, that of subjective jurisdictional facts, the
empowering statute has entrusted the repository of the power itself with the
function to determine whether in its subjective view the prerequisite fact or
state of affairs existed or not. Expressions often used by the legislature to
express this intent are, eg, 'in his or her opinion' or 'if he or she is satisfied
that' the particular fact or state of affairs exists. In this event the question is
not whether the prescribed fact or state of affairs existed in an objective
sense. The court can only interfere where it is shown that the repository of the
power, in forming the opinion that the fact or state of affairs existed, had failed
to apply its mind to the matter. Whether a particular jurisdictional fact can be
said to fall within the one category or the other, will depend on the
interpretation of the empowering statute.
[14] On my interpretation of s 6(3)(a) and s 6(3)(f) the prerequisite of a
recommendation by the governing body falls in the first category, ie of
objective jurisdictional facts. For the existence of this fact, the HoD in this
case relied on the form NCK2 which specifically described all three names
submitted as 'recommended candidates'. Self-evidently, however, the form
must be read together with the SGB's letter of 12 June 2006. The pertinent
question is therefore whether form NCK2, read with that letter, can objectively
be construed as a recommendation of three candidates, including Mrs
Rantho, for the position of principal of the School. The HoD concluded that it
did. From his answering affidavit it appears that that conclusion evolved from
the following process of reasoning: s 6(3)(c)(i) requires in peremptory
language that the governing body 'must submit a list of at least three names of
recommended candidates'. Moreover, s 6(3)(c)(ii) provides for the eventuality
that a governing body finds itself unable to recommend three candidates. In
that event it can submit a list of fewer than three candidates, but in
consultation with the head of department. In this case, so the HoD's reasoning
went, the SGB made no attempt to invoke the s 6(3)(c)(ii) procedure. It must
therefore be understood to have recommended three candidates as required
by s 6(3)(c)(i).
[15] The replying affidavit on behalf of the SGB presented the explanation
that its members were unaware of the s 6(3)(c)(ii) option because the
directives of the Department and the form NCK2 itself provided for no
alternative but to submit the names of three candidates. Consequently the
SGB decided that, although they found only one candidate suitable, they
would submit three names but recommend only one. However, as I have said,
the question is not what the SGB intended nor what the HoD thought. The
question is whether form NCK2 read with the letter by the SGB of 12 June
2006 can objectively be construed as a recommendation of Mrs Rantho as
principal of the school.
[16] The term 'recommendation' is so commonly used that dictionary
definitions can hardly contribute to greater clarity. But the definition of the term
in the Concise Oxford English Dictionary which both the HoD and the court a
quo found helpful, namely 'to put forward with approval as being suitable for a
purpose or role', accords with my understanding of the term. Simply stated the
question is thus: can form NCK2 read with the letter of 12 June 2006 be
understood to put three candidates, including Mrs Rantho, forward as suitable
candidates for the post of principal? I believe the answer to the question is:
clearly not. In fact, the letter conveys the exact opposite. By saying in the last
sentence that only one of the three candidates referred to is suitable, the
author clearly intended to convey that the other two are not. Logic allows for
no other inference. Moreover, what I regard as the only sensible inference is
accentuated by two comments in paragraph 2 of the letter with specific
reference to Mrs Rantho, namely, first that she has no experience in teaching
at a primary school and, secondly, that she does not have adequate
administration and management skills to be a principal of a primary school.
[17] The HoD's response to the first comment is that teaching experience at
a primary school is not required by the advertisement for the post. But that is
neither here nor there. The author of the letter obviously thought, rightly or
wrongly, that it was and therefore concluded that Mrs Rantho's lack of such
experience rendered her unfit for recommendation. The second comment in
paragraph 2 of the letter the HoD regarded, so he said (in para 36.3) as 'an
acceptance by the [SGB] that [Mrs Rantho] does have administration and
management skills to be a principal of a primary school, albeit inadequate'. I
find the answer untenable. How can Mrs Rantho be understood to be
recommended as suitable to be a principal if her administration and
management skills were assessed to be inadequate to perform that function?
What is more, what goes for Mrs Rantho must also go for Mrs Brand who can
plainly not be understood to be recommended. It is true that form NCK2 on its
own describes all three nominees as 'recommended candidates', but the
message conveyed by the letter is so clear that it can hardly be obscured by
the contents of the form.
[18] As to the HoD's process of reasoning based on his interpretation of
s 6(3)(c), my conclusion is this: though I agree with his interpretation of the
section, his reasoning cannot be sustained. Section 6(3)(c)(i) plainly requires
a governing body to recommend at least three candidates. For the
recommendation of a lesser number it must consult the head of the
department with a view to invoke the procedure under s 6(3)(c)(ii). What the
SGB tried to do in this instance, namely to nominate or put up the names of
three candidates, but to recommend only one, is simply not permitted by
s 6(3)(c). The SGB was supposed to recommend three candidates. But the
HoD's inference that the Governing Body did in fact do something just
because it was required to do so, simply does not follow. Experience of life
dictates otherwise. Things are often not what they are supposed to be. The
question remains whether, on a proper interpretation of its letter of 12 June
2006, the SGB did in fact recommend three candidates. For the reasons I
have given, I believe the answer to that question is 'self-evidently not'.
[19] In the absence of the jurisdictional fact of a recommendation by the
SGB the HoD had no authority to make an appointment. Or – in the language
of s 6(2)(a)(i) and s 6(2)(f)(i) of PAJA – absent any recommendation by the
SGB, the HoD was not authorised by the empowering provision to make an
appointment. It follows that his appointment of Mrs Rantho as principal of the
School falls to be set aside. In the event, the SGB requested that we should
appoint Mr Theunissen as principal of the School. I do not believe that would
be appropriate. Apart from the principle of separation of powers, which
dictates that a court should be hesitant to usurp executive functions, there
was in this case not even a proper recommendation by the SGB as
contemplated by s 6(3)(c). In the circumstances, both the SGB and the HoD
should, in my view, be afforded the opportunity to perform their respective
functions in terms of s 6(3) in a proper manner.
[20] In the result it is ordered that:
1.
The appeal is upheld with costs.
2.
The order of the court a quo is set aside and replaced with an order in
the following terms:
'(a)
The decision taken by the first respondent to appoint the third
respondent as principal of the first applicant is hereby reviewed and set aside.
(b)
The first respondent is ordered to pay the applicants' costs.'
…………………
F D J BRAND
JUDGE OF APPEAL
COUNSEL FOR APPELLANT:
J G VAN NIEKERK SC
Instructed by:
ENGELSMAN, MAGABANE INC
KIMBERLEY
Correspondents:
LOVIUS BLOCK ATTORNEYS
BLOEMFONTEIN
For Respondent:
L T SIBEKO SC
Instructed By:
THE STATE ATTORNEY
KIMBERLEY
Correspondents:
THE STATE ATTORNEY
BLOEMFONTEIN
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 MAY 2005
Status:
Immediate
KIMBERLEY JUNIOR SCHOOL
FIRST APPELLANT
THE GOVERNING BODY OF THE
KIMBERLEY JUNIOR SCHOOL
SECOND APPELLANT
and
THE HEAD OF THE NORTHERN
CAPE EDUCATION DEPARTMENT
FIRST RESPONDENT
PAUL MELVILLE THEUNISSEN
SECOND RESPONDENT
SEATILE SARAH RANTHO
THIRD RESPONDENT
DONNA-LEE MARCELÉ BRAND
FOURTH 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
On 28 May 2009 the SCA upheld an appeal by the Kimberley Junior School and the
Governing Body of that school against a judgment of the Kimberley High Court in
favour of the Head of the Northern Cape Education Department (HoD).
The matter arose from a decision by the HoD to appoint Mrs Rantho – a black
female person – instead of Mr Theunissen – a white male person – as principal of
the School. The application by the School and the Governing Body to the High Court
for that decision to be reviewed and set aside, was dismissed with costs.
The basis for the High Court's decision was essentially that, in terms of the
Employment of Educators Act 76 of 1998 the discretion to make the appointment
was bestowed upon the head of the department and that he could not be faulted in
the exercise of that discretion.
The SCA found, however, that in terms of s 6(3) of the Act, the HoD's discretion to
make an appointment is dependent on the prerequisite of a recommendation by the
Governing Body of at least three candidates. On a proper analysis of the facts, so
the SCA found, there was no proper recommendation by the Governing Body.
Consequently the HoD had no discretion to make any appointment at all. In the
result the HoD's appointment of Mrs Rantho was set aside. The request by the
school and the Governing Body that the court should appoint Mr Theunissen was,
however, refused, essentially on the basis that that will be for the HoD to consider in
the light of a proper recommendation by the Governing Body.
|
2737
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 330/2011
Reportable
In the matter between:
MOHAMMED AZEEM GAFFOOR NO
First Appellant
AYESHA-BI PARKER NO
(In their capacities as Executors of the Deceased
Estate late Cassiem Ebrahim Gaffoor)
Second Appellant
and
VANGATES INVESTMENTS (PTY) LTD
First Respondent
ABDUL AZIZ BANDERKER
Second Respondent
GOOLAM MUSTAPHA BREY
Third Respondent
MOHAMMED ALLIE DHANSAY
Fourth Respondent
ABDULLAH ESHACK GANGRAKER
Fifth Respondent
ABDUL WAHAB BARDAY NO (in his capacity
as Executor together with Eighteenth and
Nineteenth Respondents in the same capacity)
Sixth Respondent
MOHAMED YOUSIF MOHAMED
Seventh Respondent
NISHAAD MURUDKER
Eighth Respondent
LAIKAT ALI SONDAY
Ninth Respondent
MAHMOOD KHATIB NO
Tenth Respondent
UTHMAN BREY NO
Eleventh Respondent
MOHAMED ALLIE DHANSAY NO
Twelfth Respondent
AMINA DHANSAY NO
Thirteenth Respondent
AZGARI BEGUM HOOSAIN NO
Fourteenth Respondent
ABDULLAH ESHACK GANGRAKER NO
Fifteenth Respondent
FATIMA GANGRAKER NO
Sixteenth Respondent
RAUF KHAN NO
Seventeenth Respondent
HASEENA BEGUM KHAN NO
Eighteenth Respondent
AKBAR ALLIE LOGDAY NO (Eighteenth
and Nineteenth Respondents also NO in
their capacities as Trustees of the Deceased
Estate late Rauf Khan)
Nineteenth Respondent
MOHAMED YOUSIF MOHAMED NO
Twentieth Respondent
ZOHRA MOHAMED NO
Twenty First Respondent
MOOSA MOHAMED NO
Twenty Second Respondent
NAZEEM MOHAMED NO
Twenty Third Respondent
EBRAHIM ALLIE ENOS MURUDKER
NO
Twenty Fourth Respondent
GOOLAM MUSTAPHA BREY NO
Twenty Fifth Respondent
UTHMAN BREY NO
Twenty Sixth Respondent
MAHMOOD KHATIB NO
Twenty Seventh Respondent
VANGATE PROPERTY (PTY) LTD
Twenty Eighth Respondent
ONE VISION INVESTMENTS 52 (PTY)
LTD
Twenty Ninth Respondent
MAHMOOD KHATIB
Thirtieth Respondent
Neutral Citation:
Gaffoor NO v Vangates Investments (Pty) Ltd (330/2011)
[2012] ZASCA 52 (30 March 2012)
Coram:
Mthiyane DP, Van Heerden, Leach and Tshiqi JJA and
Ndita AJA
Heard:
9 March 2012
Delivered:
30 March 2012
Summary:
Section 115 of Companies Act 61 of 1973 – rectification of
register of members – purported transfers of shares
unlawful and invalid – court’s discretion in terms of s 115 a
discretion in the broad sense – exercise of discretion to
order rectification.
ORDER
On appeal from: Western Cape High Court, Cape Town (Koen AJ sitting as
court of first instance):
1.
The appeal succeeds with costs, including the costs of two
counsel.
2.
The order of the high court is set aside and substituted with the
following:
‘(a) The first respondent is directed to rectify its register of members –
(i) by deleting the transfers of shares registered on 16 August 2004 from
Cassiem Ebrahim Gaffoor to the second to fifth respondents, the seventh to
ninth respondents and Mr Rauf Khan, and all subsequent transfers of those
shares to other persons or entities; and
(ii) by registering the deceased estate of the late Cassiem Ebrahim
Gaffoor, as represented by the applicants in their capacity as executors, as
shareholder in respect of 444 and one-ninth of four shares in the first
respondent with effect from 16 August 2004.
(b)
The first to fifth respondents, the seventh to ninth respondents, the sixth,
eighteenth and nineteenth respondents in their capacity as executors of the
estate late Rauf Khan and the thirtieth respondent are ordered to pay the costs
of the application, including the costs of two counsel, jointly and severally, the
one paying the other to be absolved.’
JUDGMENT
VAN HEERDEN JA (MTHIYANE DP, LEACH & TSHIQI JJA & NDITA AJA
concurring):
Introduction
[1] The question in this appeal is whether, in the circumstances of this
case, an alteration to the register of members 1 by the shareholders of a
company, appropriating the shares of a deceased co-shareholder, without
notice to his deceased estate and without an approach to court, should be
allowed to stand in the company’s register of members. The Western Cape
High Court (Koen AJ) refused an application by the executors of the deceased
estate for rectification of the register of members so as to record the
shareholding of the deceased estate. The present appeal by the executors
against that decision comes before us with the leave of the high court.
Background
[2] It is necessary to set out the facts, which are largely common cause, in
some detail. During the 1990s a group of persons, consisting of the second to
fifth, the seventh to ninth respondents, Mr Rauf Khan 2 and the deceased,
identified the potential for the development of a shopping mall on what was then
the Athlone Golf Course. This group came to be known as the Athlone Business
Syndicate (the ABS). Some while after this idea was conceived by the ABS, the
City of Cape Town invited proposals for the development of the land. The
closing date for submissions was 25 February 2000. The successful bidder
would have to purchase the land and then develop it according to its
development scheme.
[3] The ABS decided to submit a proposal and to form a company for this
purpose. The nine members of the ABS were the founding members of the
company which was initially incorporated as a public company under the name
Vangates Investments Limited. However, as the City of Cape Town made it
clear that it wished to deal with a private company, the public company was
converted to a private company, Vangates Investments (Pty) Ltd (the company),
1 Followed by a shareholders’ and then by a directors’ resolution.
2 Mr Khan is now deceased and his estate is represented in these proceedings by the sixth, eighteenth and
nineteenth respondents.
the first respondent in this appeal. The total share capital of the company was
R4000, divided into 4000 ordinary par value shares of R1 each. Each of the
nine founding members held 444 shares and one-ninth of four shares, the latter
four shares being held by the ninth respondent as nominee.
[4] The preparation of the bid by the ABS involved the expenditure of fairly
large sums of money. The process leading to the acquisition of the land was a
long and expensive one. Members of the company invested R1,4 million in the
preparation of the bid. For some reason, unexplained on the papers and by
counsel, the deceased’s financial contribution at that time appears to have been
a smallish one, which was after his death calculated by the company’s auditors
to be only R18 990.
[5] The bid was successful. In terms of the bid proposal, the company was
required to purchase the land from the City of Cape Town for a purchase price
of R6,7 million. The company had to pay an initial deposit of R670 000 and the
members of the company had to finance that amount which was paid on 21 May
2002. The respondents allege that, together with the technical team (later
becoming a shareholder and represented by the twenty-ninth respondent), a
contribution of R67 000 was required from each member towards the payment
of the deposit. Despite being called upon to do so, the deceased did not make
any contribution.
[6] From the outset, problems beset the proposed development. The
technical team had put together a defective scheme which had to be discarded
and, by the second half of 2002, the company was technically insolvent. By the
time the deceased passed away on 21 October 2002, the project appeared to
be ‘dead in the water’.
[7] The first set of executors of the deceased estate (the wife and brother
of the deceased) was appointed on 14 February 2003. The winding-up of the
estate did not progress smoothly. There were problems between the executors
and the other family members of the deceased, eventually giving rise to what
the attorneys for the executors described as ‘warfare’. The scale of these
difficulties is evident from various letters addressed by the attorneys to the
executors and to the Master of the High Court in late 2003 and early 2004, the
relevant attorney describing himself as being ‘completely at [his] wits end in
connection with this estate’.
[8] In the meantime, the company had not abandoned its plans to pursue
the development and soldiered on. It employed new people to devise a new
scheme and a new technical team was put together to execute it. The new
scheme finally came to fruition at the end of July 2004, when the company
found a financier in the Zenprop group which had expertise in property
development and management.
[9] On 7 April 2004, a meeting was held between Mr Mustapha Murudker
(the father of the eighth respondent) and the ninth respondent (Mr Sonday), on
the one hand, and one of the executors of the deceased estate and the second
appellant (Ms Parker), on the other. The respondents knew that the second
appellant was at that time not an executor of the estate, although she allegedly
held herself out as representing the estate.3 The purpose of the meeting was to
discuss the involvement of the estate in the new project and to invite further
contributions from the estate relating to the development, particularly towards
payment of the purchase price of the land.
[10] On 6 May 2004, before the financier became involved, Ms Parker
received a letter from ABS requesting urgent payment of an amount of
R760 000 for the purchase of the land, as well as ‘the loan account deficit of
R216 000 . . . due by your late father’. How the amount of R760 000 was made
up, or why a deficit of R216 000 existed, is not explained. In fact, the letter went
on to say that, if these amounts were not paid by 11 May 2004, ABS would
‘immediately refund the loan account of R19 000 . . . due to the estate by
Vangates Investments (Pty) Ltd’. As Koen AJ in the high court pointed out, why
there should be a loan account credit balance of R19 000, and at the same time
a deficit of R216 000, was not explained and is difficult to understand.
3 The appellants in fact alleged in their replying affidavit that Ms Parker had been specifically authorised
by the executors to represent them in meeting with Messrs Murudker and Sonday.
[11] On 2 June 2004, the Master removed the first set of executors of the
deceased estate from office. Later that month, on 23 June 2004, the attorneys
acting for the company4 addressed a further letter to Ms Parker who at this point
– to the knowledge of the respondents – definitely had no authority to make any
decisions on behalf of the deceased estate. In terms of this letter, Ms Parker
was given until 29 June 2004 to indicate whether the estate would retain its
shareholding in the company, in which event it was expected to contribute ‘its
portion of the purchase price and other amounts due and owing’, or whether it
wished to be ‘paid out its share’ in the company. The clear implication of this
letter was that, in the latter event, the deceased estate would forgo any claim to
the shares. By means of a further letter dated 25 June 2004, the deadline by
which a decision was to be taken by Ms Parker was extended to 2 July 2004.
There was no response from Ms Parker to either of the two letters.
[12] As stated earlier, at the end of July 2004, Zenprop became involved in
providing bridging finance for the development. However, the final financing of
the entire development project, including the payment of the purchase price of
the land, was done by Barclays Bank at the end of 2004. All the members of the
company were then required to bind themselves in favour of Barclays Bank as
sureties, each for an amount of R2 million. It would therefore appear that the
other members of the company did not in fact make monetary contributions
towards the payment of the balance of the purchase price of the land, as had
earlier been envisaged. Unlike the other members of the company, the
deceased estate was never called upon to stand surety in favour of Barclays
Bank, the ultimate financier of the development.
[13] According to the respondents, however, Zenprop had insisted that
every member of the company be involved in the payment of the purchase price
– ‘we had to sign suretyships in favour of Barclays Bank for the ultimate loan
and Zenprop was unwilling to carry a deceased estate as a member, especially
with the family members at war with one another’. Meanwhile, the Master had
4 MK Attorneys, the sole proprietor of which is the thirtieth respondent.
not yet appointed a second set of executors. The company received legal
advice to the effect that the impasse created by the non-participation of the
deceased estate could be resolved by recourse to a draft (unsigned)
shareholders’ agreement which had earlier been agreed to by the members of
the company, including the deceased, and which (according to the respondents)
allowed members to ‘take up’ the shares of a deceased member. It appears
from the register of members that, on 16 August 2004, the deceased’s shares
were transferred out of his name and into the names of the second to fifth
respondents, the seventh to ninth respondents, and Mr Rauf Khan. 5 The
thirtieth respondent, in his capacity as company secretary, signed the share
transfer forms on behalf of the deceased estate. It was this purported transfer of
shares which the appellants contend was invalid and in respect of which they
seek rectification of the register of members. On the same day, there were
further transfers of these shares to the family trusts of the second to fifth, the
seventh to ninth respondents and Mr Khan and to the thirtieth respondent ‘in
trust’. Finally, the thirtieth respondent transferred the shares held by him in trust
to two family trusts.6
[14] On 16 September 2004, ostensibly after the register of members had
already been altered, the shareholders of the company passed a resolution
purporting to ‘take up’ the deceased’s shares in terms of clause 18.4 of the
abovementioned shareholders’ agreement at a total valuation of R19 434,7 as
determined by the auditors of the company with reference to the date of death
of the deceased. This was followed by a directors’ resolution on 20 September
2004, ‘approving’ and confirming’ the transfers of shares set out in the
preceding paragraph and authorising the thirtieth respondent to sign all the
share transfer forms on behalf of the deceased estate.
5 According to the respondents, the date of the transfers was incorrectly reflected in the register of
members and that the transfers actually took place only on 20 September 2004. As will be seen below, the
relevant directors’ resolution was only taken on 20 September.
6 There is some uncertainty as to the date on which the last-mentioned transfers took place, but this is not
relevant for the purposes of this appeal.
7 R18 990 in respect of the deceased’s loan account and R444 in respect of his shares.
[15] Also on 20 September 2004, the company’s attorneys wrote to the
attorneys representing Ms Parker who, as stated earlier, had no authority to
represent the estate. The attorneys confirmed that they ‘held in trust’ the sum of
R19 434 in respect of the loan account owing to the deceased and the value of
his shares. They asked whether an executor had been appointed and for details
of the estate banking account so that this amount could be paid to the estate.
[16] About a week later, on 28 September 2004, a second set of executors
was appointed by the Master. The new executors were Messrs Holt and Kajee.
On the same day, Mr Holt wrote to the attorneys acting for the company,
advising them of this appointment and requesting that a meeting be held.
Sometime before 20 October 2004, a meeting was held between Mr Holt and
members of the company, at which Mr Holt was advised of the content of the
shareholders’ resolution taken on 16 September and of the directors’ resolution
taken on 20 September. Mr Holt was informed that the deceased estate had
been divested of its shareholding in the company and that those shares had
been transferred to the other shareholders. According to the respondents, it was
explained to him that the reasons for the resolutions were the failure of the
deceased estate to make a contribution to the purchase price of the land and to
‘up its loan account above the meagre outlay of just more than R19 000’. Holt’s
reaction was that the executors would convey this to the heirs and take
instructions from them.
[17] On 20 October 2004, Mr Holt wrote to the attorneys acting for the
company, stating that ‘the heirs want to retain the shares in’ the company and
asking to be provided with copies of the deceased’s share certificates. The
response to Mr Holt’s letter, dated 25 October 2004, was that the deceased was
not a shareholder of the company.
[18] Despite this initial flurry of activity on the part of Mr Holt, the second set
of executors did little more to pursue the issue of the deceased’s shareholding,
despite the fact that the heirs, including Ms Parker, had apparently instructed
them to take steps in this regard. A bank guaranteed cheque in respect of the
deceased’s loan account and the value of his shares, with interest, was sent to
the second set of executors on 4 March 2005. It was returned on 22 April 2005
under cover of a letter stating that the executors had received ‘instructions to
pursue this matter’.
[19] In the meantime, the property development was completed and the
Vangate Mall shopping centre was opened on 29 September 2005. According
to the respondents, Vangate Mall operated at a loss for the years 2005 to 2008.
[20] Messrs Holt and Kajee submitted a liquidation and distribution account
in the deceased estate in July 2007. This account did not reflect the deceased’s
shares in the company. On 22 January 2008, the deceased’s heirs, including
the present appellants in their personal capacities, wrote to the Master objecting
to the account, inter alia, because of the lack of progress made by the
executors in recovering the shares. The letter records that the heirs had ‘been
advised that the estate’s claim for the shares in [the company] may have
prescribed’ and that ‘[t]his may represent a loss of millions of rands to the
estate’. According to the heirs, the executors had failed in their duty to
administer the estate properly.
[21] Mr Holt and Mr Kajee then resigned as executors in June 2008 and
November 2008, respectively. On 12 December 2008, the appellants were
appointed as executors. On 18 December 2008, they addressed a letter to the
company’s auditors relying on s 113 of the Act and requesting inspection and
copying of the register of members of the company and the transfer register. A
similar letter dated 22 January 2009 was addressed by the appellants to the
thirtieth respondent in his capacity as company secretary. There was no reply to
these letters and, on 28 January, yet another letter was addressed to the
thirtieth respondent by the appellants’ attorneys, referring to the previous
requests and reiterating that the appellants wanted to inspect and copy the
company’s register of members and transfer register as a matter of urgency.
This letter evoked a response from the thirtieth respondent to the effect that he
did not have the share register and was trying to locate it.
[22] In the meantime, on 22 January 2009, the appellants wrote to the
attorneys acting for the company and the remaining shareholders, stating that –
‘It has become apparent that the deceased was a shareholder in Vangate Investments
(Pty) Ltd (“Vangate”) and that such shareholding is listed as a claim in favour of the
Estate. Our instructions from the heirs of the Estate are to pursue this matter of the
Late Mr Gaffoor’s shareholding so that we may finalise the Estate accordingly. We
have further become aware that Vangate was in the process of selling its investments
to a third party and have been advised that your goodselves are acting on behalf of the
seller herein. Should this sale have already been finalised we remind your goodselves
of the Estate’s shareholding in Vangate and trust that the Estate, as shareholder of the
company, will also benefit accordingly from this sale.’
The sale referred to by the appellants was a sale concluded by the company in
February 2009, in terms of which the company sold Vangate Mall to the Public
Investment Corporation. Transfer took place in June 2009 and 50 per cent of
the profit was shared among the members of the company. In the words of the
respondents, ‘[t]his sale saw the fruition of the investment which the members
of the ABS [had] made over a decade and a half’.
[23] In July 2009, the appellants’ present attorneys were instructed in this
matter and, on 6 October 2009, they addressed a letter to the company and its
shareholders, demanding that the shares previously registered in the
deceased’s name be forthwith registered in the name of the deceased estate;
that all dividends and amounts paid in terms of resolutions taken by the
company through its board or its members in general meeting be accounted for,
and that the company and its members pay to the deceased estate all sums to
which the deceased became entitled ‘during the period from when the shares
were invalidly transferred (on the 18th [sic: 16th] August 2004) to date hereof’.
The respondents’ attorneys replied on 29 October 2009, ‘confirming receipt . . .
and . . . that our client’s instructions are that it notes the contents thereof’.
[24] On 11 November 2009, the appellants launched an application in which
they claimed, inter alia, the following relief –
‘2. That the Applicants are declared to be entitled to be registered as the shareholders
of 444 shares in the First Respondent [the company] and one-ninth of 4 shares in the
First Respondent and are the shareholders of the First Respondent in respect of one-
ninth of the issued share capital of the First Respondent . . . .
3. That the First to Ninth and Thirtieth Respondents are directed to rectify the First
Respondent’s register of shares by deleting the transfer of shares previously registered
in the name of Cassiem Ebrahim Gaffoor [the deceased] to the Second to Ninth
Respondents reflected in the Register of Members’ Share Transfers to have been
transferred on the 16th of August 2004 and reinstating the deceased estate as
represented by the Applicants, as members in their capacity as Executors of the estate
late C E Gaffoor, in respect of 444 and one-ninth of 4 shares with effect from 16 August
2004.
4. That the First to Ninth and Thirtieth Respondents are ordered to account to the
Applicants herein and to furnish the Applicants herein with all documentation and
source documents relating to the transactions so accounted in respect of:
4.1 The loan accounts of all members and directors during the period February
2004 until date of furnishing such account herein and payments and repayments
made in respect of such loan accounts.
4.2 The declaration of all and any dividends made between February 2004 and
date hereof and the payment of any such dividends effected whether in species
or in cash or otherwise and the identity of each payee in each instance or
recipients of such dividend.
4.3 All payments including, but not limited to any distribution in kind made by or
on behalf of the First Respondent to each shareholder and each director during
the period February 2004 to date whether made by First Respondent or on its
behalf and whether out of any bank account or the trust account of attorneys or
otherwise.
5. That the First to Fifth, Seventh to Ninth and Thirtieth Respondents are ordered and
directed to furnish the documentation referred to above and account as aforesaid within
30 days of the order of the above Honourable Court in terms of paragraphs 1 to 3
above, whereupon the Respondents who have received dividends, payments or
distribution of whatever nature are ordered to effect payment or restoration of one-ninth
of dividends, payments or distribution of whatever nature paid to Respondents (be it
the value of all dividends paid in specie to members or cash) to the Applicants herein
forthwith.
6. First Respondent is ordered to pay the proceeds of 5 above to the Applicants.
Applicants are given leave to apply for further relief consequent upon the accounting
referred to in 5 above.
7. That the First Respondent be ordered to pay the costs of the application, including
the costs of two counsel and that any other Respondents opposing the application be
ordered to pay the cost of the application jointly and severally with First Respondent.’
[25] No relief was sought against the various family trusts, cited through
their trustees as the tenth to the twenty-seventh respondents, nor against the
twenty-eighth and the twenty-ninth respondents. All these respondents abided
the decision of the high court.
The judgment in the high court
[26] The respondents opposed the application on two grounds: first, they
contended that the applicant’s right to claim rectification of the register in terms
of s 115 of the Act had prescribed, and second (and in any event) that the delay
in bringing the application was such that, in the exercise of the discretion vested
in it by s 115, the court would be justified in refusing the relief sought.
[27] The relevant part of s 115 of the Act provides as follows –
‘Rectification of register of members – (1) If –
(a) the name of any person is, without sufficient cause, entered into or omitted
from the register of members of a company . . .
the person concerned or the company or any member of the company, may apply to
the Court for rectification of the register.
(2) The application may be made in accordance with the rules of Court or in such other
manner as the Court may direct, and the Court may either refuse it or may order
rectification of the register and payment by the company, or by any director or officer of
the company, of any damages sustained by any person concerned.
(3) On any application under this section the Court may decide any question relating to
the title of any person who is a party to the application to have his name entered in or
omitted from the register, whether the question arises between members or alleged
members or between members or alleged members on the one hand and the company
on the other hand, and generally may decide any question necessary or expedient to
be decided for the rectification of the register.’
[28] In response to the prescription point, the high court expressed the view
that s 115 of the Act creates a statutory right which is not a ‘debt’ within the
meaning of that expression in Chapter III of the Prescription Act 68 of 1969 and
that there can be no extinction of such right by prescription.8 As regards s 115,
the high court held that this section vested in the court a wide discretion which
is to be exercised according to the circumstances of each case. It followed that
8 J A Kunst, P Delport & Q Vorster (eds) Henochsberg on the Companies Act 5ed (1994, with loose-leaf
updates) Volume 1 Service Issue 25 at 222-222(1). As the high court did not regard this issue as being
decisive of the matter, it did not deal with it any further.
the illegality of the share transfers in this case did not automatically lead to an
order in terms of s 115 in the appellants’ favour. Undue delay is one of the
factors which a court will take into account in the exercise of its discretion under
s 115. In this case, before the removal of the first set of executors, there had
been discussions with other members of the company about the role the estate
would play in the development. While it was so that the papers do not make it
clear why they were requested to make the financial contribution required of
them at that stage, there is no evidence that any active steps were taken to
obtain clarity in this regard.
[29] The high court pointed out that the second set of executors knew, by 20
October 2004 at the latest, that the deceased’s shares in the company had
been transferred to the remaining shareholders and how this had come to pass.
However, after an initial flurry of activity in October 2004, the second set of
executors did nothing until April 2005 when, in response to the tender of a
cheque in respect of the deceased’s loan account and shares, they indicated
that they intended to ‘pursue the matter’. This was not done: no effective steps
were taken by the executors to seek rectification of the register of members, nor
to obtain advice about this for approximately four years. In fact, it was only after
the appointment of the third set of executors in December 2008 that requests
were made to inspect and copy the company’s register of members and transfer
register. These requests coincided with the sale (at a profit) of the property to
the Public Investment Corporation in early 2009. Even then, it took a further
nine months for the application to be launched in November 2009.
[30] In dismissing the application with costs, including the costs of two
counsel, the high court stated that –
‘During this time the remaining members conceived a new development, obtained a
financier, incurred liabilities on behalf of the company, entered into suretyships and
brought the development to fruition. They did so without any contribution, financial or
otherwise, from the deceased’s estate. They had invited the estate to participate
without receiving any answer; they had disclosed to the executors what they had done
with the deceased’s shares; and had been threatened that matters would be pursued.
More than five years passed without any steps being taken to alter the membership of
the company by the deceased estate. The development was initially not a financial
success, and only after the sale to the Public Interest Corporation, when a return on
their investment had been obtained, were the members of the company faced with this
claim.
. . . In exercising the discretion vested in the Court I do not think that fairness and
justice demand that I should grant the order sought by the applicants.’
Conclusions
[31] During the course of the hearing before this court, counsel for the
appellants informed us that he was moving for only para 3 of the relief claimed
in the notice of motion. 9 In other words, the only relief claimed was the
rectification of the company’s register in terms of s 115 of the Act.10 Counsel for
the respondents, on the other hand, contended that the appellants’ ‘right to
recover the shares’ is a ‘debt’ as envisaged in Chapter III of the Prescription
Act; that the three year period of prescription in respect of this right11 had
commenced running before or on 20 October 2004,12 and that the right had
been extinguished by prescription long before the application was launched in
the court below. This being so, it was contended that, as the appellants cannot
establish that they are ‘entitled’ to the shares, there is no basis on which they
can claim rectification of the register of members.
[32] In argument before the high court, the respondents conceded that the
transfer of shares from the deceased estate to the remaining shareholders of
the company was unlawful and invalid, despite their earlier position in their
answering affidavit, where they had relied on the provisions of the draft
shareholders’ agreement to defend the validity of the share transfers. The court
below recorded that it was common cause that the disputed shares were
invalidly transferred from the name of the deceased into the names of the other
9 See para 24 above.
10 The full text of which is set out in para 27 above.
11 Section 11(d) of the Prescription Act.
12 By which date, at the latest, the appellants had knowledge of the identity of the debtor and the facts
from which the debt arose, or could have acquired such knowledge by the exercise of reasonable care, as
required by s 12(3) of the Prescription Act.
shareholders ‘at least on the basis that the share transfer documents were not
signed in the manner prescribed in the articles of the company’.
[33] In my view, the reason for the invalidity of the purported share transfers
goes much further than this. A share is a collection of personal rights which is
transferred by cession. In the words of Howie JA in Botha v Fick in respect of
the transfer of shares: 13
‘1. Blote consensus is voldoende om sessie daar te stel.
2. Sessie geskied deur middel van ’n oordragsooreenskoms wat sal saamval met, of
voorafgegaan word deur, ’n justa causa. Die justa causa kan ’n verbintenisskeppende
ooreenkoms wees.’14
In this case, the purported transfer of the shares did not comply with either of
these requirements. There was no contractual or other basis (justa causa) for
the purported transfer. Neither was there any intention on the part of the
executors of the deceased estate to relinquish or pass title to the disputed
shares to the remaining shareholders or to anyone else.
[34] In terms of the Articles of Association of the company, ‘[t]he executor of
the estate of a deceased sole holder of a share shall be the only person
recognised by the company as having any title to the share’. As justification for
the purported share transfers, the respondents initially relied on the
shareholders’ resolution dated 16 September 2004 and the subsequent
resolution adopted by the company’s board of directors on 20 October 2004.
However, at the time of both resolutions, and to the knowledge of the remaining
shareholders, the deceased estate was unrepresented as the position of
executor was temporarily vacant.15 In fact and in law, no notice was given to the
deceased estate. The only other basis on which a transfer of shares could have
been compelled by the respondents would have been by an approach to court
13 Botha v Fick 1995 (2) SA 750 (A) at 778G-779B.
14 ‘1. Mere consensus is sufficient to constitute cession. 2. Cession takes place by mean of a transfer
agreement which will coincide with, or be preceded by, a justa causa. The justa causa can be an
obligationary agreement.’ (My translation.) See also Jeffrey v Pollak and Freemantle 1938 AD 1 at 22.
15 As indicated above, the first set of executors was removed from office on 2 June 2004 and the second
set of executors only appointed on 28 September 2004.
on a basis recognised in law. This is a further reason why the two resolutions
were invalid. Thus, although the purported share transfers had been registered
in the company’s register of members, the court is ‘entitled to go behind the
register to ascertain the identity of the true owner’.16
[35] This puts paid to the respondents’ submission to the effect that the
appellants’ ‘right to recover the shares’ had prescribed. The deceased estate
(or, rather, its executors) had never ceased to be the owner of the disputed
shares. As dominium remained vested in them, there was no need for them to
claim ‘recovery’ of these shares. All that they needed was to have that
ownership reflected in the company’s register of members.
[36] This brings me to the appellants’ claim, under s 115 of the Act, for the
rectification of the company’s register of members so as to reflect the executors
of the deceased estate as the holders of 444 shares and one-ninth of four
shares in the company. I agree with the view of the high court17 that s 115
creates a statutory right to apply to the court for the exercise by it of a statutory
power; such right is not a ‘debt’ within the meaning of that expression in
Chapter III of the Prescription Act and there can be no extinction of such right
by prescription.
[37] Section 115 is set out in para 27 above. It has been said that ‘the
Court’s jurisdiction under this section is unlimited; it has a discretion in the
circumstances of each case’.18 The court is not, however, obliged to rectify the
register whenever it is shown that the name of a person has, without sufficient
cause, been omitted from the register or entered therein:
‘The power given to the Court under the section is a discretionary one: Section 115
provides that the Court may either refuse the application or may order rectification of
the register . . . .
16 See Kalil v Decotex (Pty) Ltd & another 1988 (1) SA 943 (A) at 970H-971A.
17 Based on the views expressed in Henochsberg on the Companies Act above fn 8 at 222-222(1).
18 Henochsberg on the Companies Act above fn 8 Service Issue 33 at 220(1).
“When the Court entertains the application it is bound to go into all the circumstances
of the case, and to consider what equity the applicant has to call for its interposition.’’
Halsbury [Laws of England 4 ed vol 7 art 308].’19
[38] On behalf of the respondents, it was contended that the discretion
vested in the court by s 115 is a ‘discretion in the narrow or strict sense’ and
that an appellate court can only interfere in the exercise of such discretion in
limited circumstances; for example, if it is shown that the court a quo has
misdirected itself by taking irrelevant considerations into account; that it has
exercised its discretion for no substantial reason; that the discretion was not
exercised judicially or was exercised based on a wrong appreciation of the facts
or wrong principles of law.20 Counsel for the appellants disagreed, submitting
that the discretion is one in ‘the broad sense’ and that this court’s powers of
interference are not limited in this way.
[39] The distinction between the two categories of discretionary power was
drawn by EM Grosskopf JA in Media Workers Association of South Africa &
others v Press Corporation of South Africa (‘Perskor’)21 and Knox D’Arcy Ltd &
others v Jamieson & others.22 The essence of ‘a discretion in the narrow or
strict sense’ involves a choice between two or more different, but equally
permissible alternatives, while ‘a discretion in the broad sense’ means no more
than a power to have regard to a number of disparate and incommensurable
features in arriving at a conclusion. It is only when the court exercises a
discretion in the narrow or strict sense that an appeal court’s powers of
interference are said to be limited. With regard to the exercise of a discretion in
the broad sense, there is no reason why the powers of an appeal court should
be so restricted. Since these matters can be determined equally appropriately
19 Bauermeister v CC Bauermeister (Pty) Ltd 1981 (1) SA 274 (W) at 277F-H.
20 Giddey NO v JC Barnard and Partners 2007 (5) SA 525 (CC) para 19; MTN Service Provider (Pty) Ltd
v Afro Call (Pty) Ltd 2007 (6) SA 620 (SCA) paras 9-10. See also Ex Parte Neethling & others 1951 (4)
SA 331 (A) at 335D-E.
21 Media Workers Association of South Africa & others v Press Corporation of South Africa (‘Perskor’)
1992 (4) SA 791 (A) at 796H-I and 800C-J.
22 Knox D’Arcy Ltd & others v Jamieson & others 1996 (4) SA 348 (A) at 361G-I.
by an appeal court, the latter may substitute its own discretion for that of the trial
court if it differs from such court on the merits and may make the order which it
deems just.23
[40] As indicated above,24 the court’s jurisdiction under s 115 of the Act has
been described as unlimited and the exercise of its discretion based on what
equity requires. So too, in Botha v Fick,25 Howie JA stated that –
‘Die Hof het ’n wye diskresie by ’n aansoek ingevolge hierdie artikel [s 115] om toe te
sien dat billikheid en geregtigheid geskied. 26 En dit is “to make it reflect the state of
affairs which the appellant is entitled to claim that it ought to reflect” (Orr NO and
Others v Hill 1929 TPD 885 te 892) en, soos dit in die saak van In re The
Contributories of the Rosemount Gold Mining Syndicate in Liquidation 1905 TH 169 te
188 gestel is,
“to fix with the obligations of membership those persons and those persons only upon
whom such obligations should justly and equitably rest”.’
[41] In determining whether to grant or refuse an application for rectification,
the court makes a judgment in the light of all the relevant considerations. As
with s 344(h) of the Act, which provides that ‘[a] company may be wound up by
the Court if – (h) it appears to the Court that it is just and equitable that the
company should be wound up’, there is nothing about the power conferred by
s 115 of the Act which results in the court of first instance having any special
advantage that would enable it to exercise the power any more appropriately
than a court of appeal. The power is one that the court of appeal is in as good a
position as the court of first instance to exercise.27 That being so, and bearing in
mind the equitable nature of the court’s discretion in terms of s 115, this
discretion can rightfully be described as a discretion in the broad sense. This
23 See also Bezuidenhout v Bezuidenhout 2005 (2) SA 187 (SCA) paras 16-17.
24 Para 37.
25 Footnote 13, at 780C-D.
26 ‘The Court has a wide discretion in an application in terms of this section to ensure that fairness and
justice prevail.’ (My translation.)
27 Mahomed v Kazi’s Agencies (Pty) Ltd & others 1949 (1) SA 1162 (N) at 1167-1169; Tjospomie
Boerdery (Pty) Ltd v Drakensberg Botteliers (Pty) Ltd 1989 (4) SA 31 (T) at 40A-41B and 44D-45B. See
also mv Achilleus v Thai United Insurance Co Ltd & others 1992 (1) SA 324 (N) at 335C-D.
court is therefore empowered to re-examine all the relevant material and, if
satisfied that the discretion has not been appropriately exercised, to substitute
its own opinion for that of the court of first instance. It is not necessary to show
that the exercise of its discretion by the court below was flawed in one of the
respects mentioned in para 38 above.
[42] In declining to rectify the company’s register of members, Koen AJ
relied almost exclusively on what he perceived to be the undue delay by the
appellants in bringing the application in terms of s 115.28 He relied in this regard
on Verrin Trust & Finance Corporation (Pty) Ltd v Zeeland House (Pty) Ltd &
others,29 in which Corbett J stated the following –
‘The jurisdiction which the court exercises under sec 36 [the equivalent of s 115] is a
discretionary one and an applicant under the section is not entitled to an order ex
debito justitiae . . . [T]he English Courts have held that an application for rectification
must be made promptly and that undue delay may deprive an applicant of his remedy
. . . This rule was adopted by Vieyra, J in Pretorius and Another v Natal South Sea
Investment Trust Ltd (under judicial management), 1965 (3) SA 410 (W) at pp. 420-2).’
[43] While delay is of course one of the factors to be taken into
consideration, there are other aspects of this case that bear emphasis. The
respondents’ complaint was that the remaining shareholders had carried the
risk of total failure of the Vangate Mall project whilst neither the deceased nor
the executors of his estate carried any risk by making a contribution towards the
deposit which was payable by the company to the Cape Town City Council for
the acquisition of the development land, or to the later amounts required to be
raised from the shareholders. It is clear from the ‘auditor’s valuation’ that the
deposit was indeed funded by shareholders’ loans. Although it is common
cause that the deceased did not contribute towards this deposit, there was
nothing in the papers to indicate what had been done to call for this deposit (eg
a shareholders’ resolution or the like). Nor was there any clarity about the basis
28 See paras 28-29 above.
29 Verrin Trust & Finance Corporation (Pty) Ltd v Zeeland House (Pty) Ltd & others 1973 (4) SA 1 (C)
at 10C-H.
of calculation of each shareholder’s initial monetary contribution, more
particularly why the deceased’s asserted contribution appeared to be
significantly smaller than that of the other shareholders.
[44] As regards the later amounts called for from the deceased estate, it has
already been stated 30 that, because of the intervention of Zenprop and
thereafter Barclays Bank, it would appear that the other shareholders did not in
fact make monetary contributions towards the payment of the balance of the
purchase price of the land. And, while the other shareholders apparently stood
surety in favour of Barclays Bank to the tune of R2 million each, there is nothing
to show that the deceased estate (even if it was represented by executors at the
relevant time) was ever called upon to furnish a suretyship. This
notwithstanding, in an attempt to justify the ‘taking up’ of the deceased’s shares
by the remaining shareholders (and the two resolutions passed in this regard),31
the respondents alleged that –
‘It was necessary to take these steps to give effect to the terms of the deed of sale
which the first respondent had with the City of Cape Town. The estate could not co-
operate because there was at that time no executor . . . at any rate the estate was not
in a position to make any contribution at all; and the beneficiaries in terms of the will of
the deceased could not make the required contribution to the purchase price of the
land which had to be paid to the City of Cape Town at that time. As shown previously,
they were in a state of war with one another. The fact that the deceased estate could
not co-operate to keep the project on track, surely also meant that it would and could
not stand surety in favour of Barclays Bank which financed the development. It was
therefore crucial that the remaining members had to take up the shares of the
deceased in terms of the shareholders’ agreement.’
[45] It was never the respondents’ case that some form of sanction existed
whereby a shareholder could be forced to forfeit his shares or involuntarily
transfer them if he or she failed to contribute loan account capital or was unable
30 See para 12 above.
31 See para 14 above.
to stand surety for the company. In any event, self-help is not countenanced in
our law. As pointed out above, the reliance on the draft shareholders’
agreement as a valid and binding document was later abandoned by the
respondents. In view hereof, both the shareholders’ resolution of 16 September
2004, which relied on the shareholders’ agreement, and the directors’ resolution
of 20 September 2004, which purportedly gave effect to the shareholders’
resolution, were invalid and ineffective.
[46] Another important point is that the ‘valuation’ at which the remaining
shareholders purported to acquire the disputed shares was (even on the basis
of the unsigned shareholders’ agreement) not a proper valuation. Although
dated 10 September 2004, it valued the shares at the date of death of the
deceased (21 October 2002), viz at a time when the company was technically
insolvent and the development project ‘was to all intents and purposes dead in
the water’. Because the cheque in respect of the deceased’s loan account and
the value of his shares, with interest, was returned to the company’s attorneys,
the ‘expropriation’ of the deceased shares took place without any
compensation.
[47] The deceased was one of the founding members of the company and
was described as the ‘pioneer’ of the development at the ‘turning of the soil’
ceremony in 2004. Apart from the letters to Ms Parker dated 6 May 2004 and 23
June 2004, 32 the deceased estate was not given any prior notice of the
purported transfer of shares from the deceased estate to the remaining
shareholders. In fact, at the time of passing of the two resolutions in September
2004, the deceased estate was unrepresented as the position of executor was
vacant, and hence no notice of the relevant meetings could have been given to
the deceased estate.
[48] The remaining shareholders thereafter received various indications that
the executors of the deceased estate wished to retain the estate’s shareholding
32 See paras 10-11 above.
in the company. When Messrs Holt and Kajee were appointed as executors on
28 September 2004, they were confronted with a fait accompli, namely the
deprivation of the shareholding of the estate. However, on 20 October 2004, Mr
Holt wrote to the attorneys acting for the company, stating that ‘the heirs want to
retain their shares in’ the company. Instead of this alerting the remaining
shareholders to potential problems with the purported share transfer, their
attorney responded by stating simply that the deceased was not a shareholder
in the company. The same applies to the return of the abovementioned cheque
by the executors to the company’s attorneys.33 If the remaining members had
taken the trouble to properly investigate the position of the second set of
executors, they would have had ample opportunity to reverse the 2004
decisions, taken in the absence of representation on the part of the estate,
before the end of 2004. This was when the balance of the purchase price was
apparently due, some three months after the appointment of the second set of
executors.
[49] It is true that the executors of the deceased estate took no further action
in respect of the share transfers until the appointment of the third set of
executors on 12 December 2008. This delay was the main reason why the high
court refused the application for rectification. However, when weighed up
against the manner in which the remaining shareholders purported to transfer
the deceased’s shares to themselves and the other considerations set out
above, I am of the view that justice and equity demand that the register of
members be rectified in the manner required by the appellants. What the
deceased’s true entitlement is in respect of his restored shareholding is not a
matter which we have to decide. So too, we do not have to deal with questions
such as whether there were other company liabilities that had been borne by
shareholders and the effect of accumulated losses over a sustained period vis-
à-vis final profits.
33 See paras 18 and 46 above.
[50] The relief claimed in para 3 of the notice of motion seeks to direct the
‘First to Ninth and Thirtieth Respondents’ to rectify the company’s register of
members with effect from 16 August 2004. Even though the respondents
indicated that this date was a mistake as the relevant directors’ resolution was
taken only on 20 September 2004, the date of the transfers as reflected in the
register of members is 16 August 2004 and it is these and subsequent entries
which need to be rectified. It is therefore the latter date which should appear in
the order made by this court. Moreover, it should be the company (the first
respondent) that is directed to rectify the register, not also the second to ninth
and thirtieth respondents who, it would seem, are themselves no longer
registered as members.
[51] As regards costs, counsel for the respondents contended that, as the
appellants had limited the relief sought by them only during the hearing before
this court, this should, were the appellants to succeed, have an effect on the
costs order. Counsel pointed out that the relief originally sought was very far-
reaching and also involved the question of title to the disputed shares as well as
comprehensive consequential relief. This may well be so, but the respondents’
arguments were based on the premise that ‘ownership’ of the shares passed
when the deceased’s shares were ‘taken up’ by the remaining shareholders and
that the appellants’ right to recover the shares had prescribed. Counsel for the
respondents submitted in their heads of argument that the question of title to the
shares is interlinked with the question of whether the register should be rectified
and that this court should find that the claim for rectification had fallen away as
the claim for the shares had clearly prescribed. Both these aspects have been
dealt with in this judgment. This being so, I see no virtue in making only a partial
costs order in favour of the appellants.
[52] The following order is therefore made:
1.
The appeal succeeds with costs, including the costs of two
counsel.
2.
The order of the high court is set aside and substituted with the
following:
‘(a) The first respondent is directed to rectify its register of members –
(i) by deleting the transfers of shares registered on 16 August 2004 from
Cassiem Ebrahim Gaffoor to the second to fifth respondents, the seventh to
ninth respondents and Mr Rauf Khan, and all subsequent transfers of those
shares to other persons or entities; and
(ii) by registering the deceased estate of the late Cassiem Ebrahim
Gaffoor, as represented by the applicants in their capacity as executors, as
shareholder in respect of 444 and one-ninth of four shares in the first
respondent with effect from 16 August 2004.
(b)
The first to fifth respondents, the seventh to ninth respondents, the sixth,
eighteenth and nineteenth respondents in their capacity as executors of the
estate late Rauf Khan and the thirtieth respondent are ordered to pay the costs
of the application, including the costs of two counsel, jointly and severally, the
one paying the other to be absolved.’
______________________
B J VAN HEERDEN
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
L KUSCHKE SC
Instructed by Shepstone & Wylie Attorneys,
Cape Town
Honey and Partners Inc, Bloemfontein
RESPONDENTS:
Z F JOUBERT SC (with him M VERSTER)
Instructed by M Z Barday & Associates,
Athlone
Hill McHardy & Herbst Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
30 March 2012
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Gaffoor NO v Vangates Investments (Pty) Ltd
(330/2011) [2012] ZASCA 52 (30 March 2012)
Media Statement
Today the Supreme Court of Appeal (SCA) delivered judgment upholding the appeal against
an order of the Western Cape High Court, Cape Town, refusing an application by the
executors of a deceased estate (the appellants) for rectification of the register of members so
as to reinstate the shareholding of the deceased estate.
The question on appeal was whether, in the given circumstances, an alteration to the register
of members by the shareholders of a company appropriating the shares of a deceased co-
shareholder, without notice to his deceased estate and without an approach to court, is
effective.
The facts and history of this matter can be summarised as follows:
During the 1990s a group of nine people, including the deceased, identified the potential for
the development of what was then the Athlone Golf Course. They became known as the
Athlone Business Syndicate (ABS). They decided to submit a proposal and formed a
company, Vangates Investments (Pty) Ltd (the first respondent), in order to bid for a tender
from the City of Cape Town for the development of the land. Each of the nine founding
members held 444 shares and one-ninth of four shares held by the ninth respondent as
nominee. Their bid was successful but, despite having been called upon to do so, the
deceased did not contribute his share of the deposit due on the purchase of the land from the
City of Cape Town. From the outset, the proposed development was beset with problems
and, by the time the deceased passed away, the project appeared to be dead in the water.
The company however decided not to abandon its plans to pursue the development and
ultimately found a financier, Zenprop, which had expertise in property development and
management.
The first set of executors of the deceased estate was appointed but the winding up did not
progress smoothly. Numerous problems arose between the family members of the deceased
and the executors. The Master ultimately removed the first set of executors. Despite
discussions, the deceased estate did not contribute its share of the balance of the purchase
price of the land.
The Master had in the meanwhile not appointed a new set of executors. The company
received legal advice to the effect that the impasse created by the non-participation of the
deceased estate could be resolved by recourse to a draft (unsigned) shareholders’ agreement
which had earlier been agreed to by the members of the company, including the deceased,
and which (according to the respondents) allowed members to ‘take up’ the shares of a
deceased member. As a result it would appear that the deceased’s shares were transferred
out of his name and into the names of the eight other shareholders of the company. It was
this purported transfer of shares which the appellants contend was invalid and in respect of
which they seek rectification of the register of members. This was followed by a shareholders’
resolution and a director’s resolution to the same effect.
A second set of executors then was appointed by the Master. At a meeting with members of
the company, the executors were informed that the deceased estate had been divested of its
shareholding in the company and that those shares had been transferred to the other
shareholders. The executors wrote to the attorneys acting for the company, stating that the
heirs wished to retain the shares in the company and asking to be provided with copies of the
deceased’s share certificates. The response to the letter was that the deceased was not a
shareholder of the company.
The second set of executors then resigned as executors and the appellants were appointed
as executors. They addressed a letter to the company’s auditors requesting inspection and
copying of the register of members of the company and the transfer register. They also wrote
to the attorneys acting for the company and the remaining shareholders, stating that the
deceased was a shareholder in the company and that they were going to pursue this matter
of the deceased estate's shareholding.
The SCA held that as, at the time of both resolutions, and to the knowledge of the remaining
shareholders, the deceased estate was unrepresented as the position of executor was
temporarily vacant. In fact and in law, no notice was given to the deceased estate of the
transfer of shares. The only other basis on which a transfer of shares could have been
compelled by the respondents would have been by an approach to court on a basis
recognised in law. The decisions to transfer the shares were thus invalid. Thus, although the
purported share transfers had been registered in the company’s register of members, the
court was entitled to go behind the register to ascertain the identity of the true owner.
The SCA found that the deceased estate had never ceased to be the owner of the disputed
shares. As dominium remained vested in them, there was no need for them to claim recovery
of these shares. All that they needed was to have that ownership reflected in the company’s
register of members. The court held that its jurisdiction under s 115 of the Companies Act 61
of 1973 to grant an application for rectification of the shareholders' register was unlimited and
the exercise of its discretion based on what equity required.
In determining whether to grant or refuse an application for rectification, the court has to make
a judgment in the light of all the relevant considerations. That being so, and bearing in mind
the equitable nature of the court’s discretion in terms of s 115, this discretion can rightfully be
described as a discretion in the broad sense. This court was therefore empowered to re-
examine all the relevant material and, if satisfied that the discretion has not been
appropriately exercised, to substitute its own opinion for that of the court of first instance.
The SCA was of the view that it had never been the respondents’ case that some form of
sanction existed whereby a shareholder could be forced to forfeit his shares or involuntarily
transfer them if he or she failed to contribute loan account capital or was unable to stand
surety for the company. Reliance on the draft shareholders’ agreement as a valid and binding
document was abandoned by the respondents. In view thereof, the SCA held that the
decisions to transfer the shares were invalid and ineffective.
The appeal was subsequently upheld, the order of the court below set aside and replaced
with an order directing that the register of members be rectified by deleting the transfers of
shares and by registering the deceased estate as shareholder in respect of 444 and one-ninth
of four shares in the Company.
--- ends ---
|
78
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 225/2016
In the matter between:
HOME TALK DEVELOPMENTS (PTY) LTD
FIRST APPELLANT
AFROPULSE 132 (PTY) LTD
SECOND APPELLANT
KINGTRADE INVEST 100010 (PTY) LTD
THIRD APPELLANT
and
EKURHULENI METROPOLITAN MUNICIPALITY
RESPONDENT
Neutral citation:
Home Talk Developments (Pty) Ltd v Ekurhuleni Metropolitan
Municipality (225/2016) [2017] ZASCA 77 (2 June 2017)
Bench:
Ponnan, Cachalia, Majiedt and Willis JJA and Schippers AJA
Heard:
14 March 2017
Delivered:
2 June 2017
Summary:
Law of Delict: pure economic loss: whether Municipality liable in
delict for pure economic loss arising out of the alleged failure by the Municipal
Manager to issue a s 82 certificate in terms of the Town-Planning and Township
Ordinance 15 of 1986.
_____________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Gauteng Local Division, Johannesburg (Nicholls J sitting as court of
first instance):
The appeal is dismissed with costs, such costs to include those consequent upon the
employment of two counsel.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Ponnan JA (Majiedt and Willis JJA and Schippers AJA concurring):
[1] The first principle of the law of delict, as Harms JA pointed out in Telematrix,1 is
that everyone has to bear the loss that he or she suffers. And, in contrast to instances of
physical harm, conduct causing pure economic loss is not prima facie wrongful.2
Accordingly, a plaintiff suing for the recovery of pure economic loss, is in no position to
rely on an inference of wrongfulness flowing from an allegation of physical damage to
property (or injury to person),3 because ‗the negligent causation of pure economic loss
is prima facie not wrongful in the delictual sense and does not give rise to liability for
damages unless policy considerations require that the plaintiff should be recompensed
1 Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA [2005] ZASCA 73;
SA 2006 (1) SA 461 (SCA); [2006] 1 All SA 6 (SCA) para 12.
2 Itzikowitz v Absa Bank Ltd [2016] ZASCA 43; 2016 (4) SA 432 (SCA) para 8.
3 Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 26G-H.
by the defendant for the loss suffered.‘4 This case - within an administrative law setting
– represents yet a further example in which these limits are being tested.5
[2] This appeal, with the leave of the court below (Nicholls J), is against a judgment
dismissing the appellants‘ claims with costs. The basis of each claim is to be found in
the allegations that officials (in particular the City Manager) in the employ of the
respondent Municipality, owed certain duties to each of the appellants in connection
with the exercise of the Municipality‘s statutory powers and that such officials failed to
properly discharge those duties, thereby occasioning the appellants‘ loss.
[3] The first appellant is Hometalk Developments (Pty) Ltd (Hometalk), the owner of
Portion 280 (a portion of Portion 153) of the farm Klipriviersberg 106, which property it
proposed developing as Meyersdal Nature Estate, Extension 7 (Ext 7). The second
appellant is Afropulse 132 (Pty) Ltd (Afropulse), the owner of portions 282, 286 and 287
(all of them portions of Portion 153) of the farm Klipriviersberg 106, which properties it
proposed developing as Meyersdal Nature Estate, Extensions 9, 11 and 12 (Ext 9,11 &
12). The third appellant is Kingtrade Invest 100010 (Pty) Ltd (Kingtrade), the owner of
Portions 281 and 283 (both portions of Portion 153) of the farm Klipriviersberg 106,
which properties it proposed developing as Meyersdal Nature Estate, Extensions 8 and
10 (Ext 8 & 10). The respondent is the Ekurhuleni Metropolitan Municipality (the
Municipality), a Municipality as contemplated by s 151 of the Constitution of the
Republic of South Africa, Act 108 of 1996, read with s 12 of the Local Government –
Municipal Structures Act of 1998 (Act 117 of 1998).
[4] The disputes between the parties have their genesis in a so-called land swap
transaction, pursuant to which a land developer, Sydney Rean Booysen, the controlling
mind of the three appellants, and the Municipality, each transferred land respectively
owned by them to the other. The Municipality and various interested stakeholders had
endeavoured for some time to determine a management framework to conserve, yet
4 Steenkamp NO v Provincial Tender Board, Eastern Cape [2005] ZASCA 120; 2006 (3) SA 151 (SCA);
[2006] 1 All SA 478 para 1.
5 Ibid.
allow, the controlled development of what has come to be described as the Meyersdal
Nature area. During July 2000, the Municipality approved in principle, the establishment
of the Meyersdal Nature area consisting of certain portions of land, inclusive of land
involved in the land swap transaction, which had been acquired by Kingtrade from the
Meyer Trust.
[5] On 13 September 2004, Mr. Booysen wrote to the Municipality requesting ‗that a
certain portion [the Meyer Trust land] . . . which has been appropriated for development,
be hereby conserved and exchanged for certain Ekurhuleni land which is developable
and which . . . has been regarded as more appropriate for the development from a
conservation point of view.‘ Ext 7, which was not part of the land swap, was purchased
from the Municipality on 16 February 2005. On 4 April 2005 the Corporate Affairs
Committee (CAC) of the Municipality resolved to approve the land swap. On 23 January
2006 a written agreement of exchange was concluded between Kingtrade and the
Municipality and at that stage the Municipality‘s land was valued at R9 401 000 and the
Meyer Trust land at R7 742 000. On 27 June 2006 the City Development Portfolio
Committee of the Municipality resolved:
‗1.
That the application in terms of s 96 of the Town Planning and Townships
Ordinance, 1986 . . . for proposed MEYERSDAL NATURE ESTATE EXTENSIONS 7, 8, 9, 10,
11 and 12 be approved . . .‘
On 1 October 2007 the Municipality caused Extensions 7, 9, 11 and 12 to be proclaimed
as townships by publishing a notice of proclamation in the Provincial Gazette in terms of
s 103 of the Town-Planning and Township Ordinance 15 of 1986 (Ordinance), however,
for reasons that remain unexplained, Ext 8 & 10 was omitted from the notice. After
approval of the townships, Kingtrade sold and transferred Ext 9, 11 & 12 to Afropulse.
Mr. Booysen then set up a professional team consisting of an attorney, estate agent,
engineers and financiers, with a view to developing the land. Mr. Neil Diamond, a
councillor in the Municipality, who is also an estate agent in the area, was approached
to assist in marketing Ext 9, 11 & 12. He also took up an offer from Mr. Booysen to
acquire a 20% interest in Afropulse and to that end contributed start-up capital of R4,5
million.
[6] On 1 May 2006, Mr. Patrick Flusk was appointed the City Manager of the
Municipality. During September of that year the Government Anti-Corruption hotline
received an anonymous complaint in the form of an e-mail, which read:
‗A land swop transaction by the Alberton council which is part of Ekurhuleni took place
which is attracting attention.
A councillor being Mr. Neil Diamond is involved and he is a successful estate agent in Alberton.
The details reported in the press are that the Alberton council approved a land swop of 55
hectares they owned in Meyersdal, for 55 hectares of farmland also in the area. The values
used for the transaction were based on Agricultural values and appear to be between R8 million
and R9 million. The land the council swopped was turned into the Meyersdal Nature Estate by
the relevant developer and yielded 330 stands sold for a minimum R800 000 each.
It appears the retail value of the stands are R250 million. Services for such a number of stands
would be in the order of R40 million, resulting in a profit of R200 million. Mr. Neil Diamond and
the other parties involved may well be completely innocent, but it just appears too co-incidental.
Apparently the Alberton council wanted to retain some ―green-belt‖ land and by apparent co-
incidence the developer already owned the land the council identified that they would want to
swop for. Mr. Diamond was appointed the estate agent for the sale of the stands in the
Meyersdal Nature Estate and I would imagine his commissions would approximate R12.5
million. He apparently recused himself from this decision but it appears that the land the council
valued at R140,000 per hectare was adjacent to land sold for almost R1.3 million per hectare 2
years before. In my humble opinion a town council should not be able to preside over swopping
land worth a net R200 million when the figures in the relevant reports are R8 million. Additionally
Mr. Diamond seemed to have such huge vested interests and was the sole agent in the
previous sales in the area which call these valuations into doubt? It may well be that he had an
obligation to inform the council they weren‘t doing a clever deal? In any event my parents are
poor people living in Alberton and paying exorbitant rates, so it does concern me if council
assets were not dealt with properly.‘
[7] According to Mr. Flusk, after his appointment as the City Manager, he was
informed by the Mayor that Pasco Risk Management (Pty) Ltd (Pasco) had been
appointed by the Municipality to undertake certain forensic investigations. When Pasco
informed Mr. Flusk that they had come across the hotline complaint in one of the files
during the course of their investigation, he took the view that the complaint could not be
ignored and accordingly extended Pasco‘s mandate to investigate those allegations as
well. In the meanwhile, Mr. Tom Peeters, the head of the Municipality‘s legal
department, had secured a legal opinion from Advocates Wim Trengove SC and Kate
Hofmeyr appertaining to some 526 land transactions that also included the
aforementioned land swap. That opinion concluded – as three earlier legal opinions had
done - that the Municipality did not have the power to delegate its function under s 14(2)
of the Local Government, Municipal Finance Management Act 56 of 2003 (the MFMA)
to its CAC. Accordingly, so stated the opinion, such delegation was unauthorised and
thus invalid and consequently, subsequent approvals by the CAC to transfer the
Municipality‘s properties to third parties were also unauthorised and invalid. The opinion
recommended that the Municipality ought to take the following steps to rectify the
problem:
‗39.1
The municipal council must reconsider the transfers in a meeting open to the
public in accordance with the provisions of s 14(2). It is a fresh consideration and decision and
the municipal council must take care not merely to rubberstamp the earlier invalid decisions of
its Committee. If it decides to approve the transfers, then it should proceed as suggested below.
If it decides not to approve of any of the transfers, then the circumstances of each of them will
have to be reconsidered.
39.2
Once the municipal council has approved the transfers, the municipality must apply to
court to validate them or at least to direct that they be allowed to stand. It has to cite the parties
to whom the transfers were made and, if the latter have subsequently passed further transfer of
the properties, the subsequent registered owners should also be cited.
39.3
The municipality should in the first place ask for an order validating the transfers already
made or at least directing that they be allowed to stand. There is in our view a cogent argument
to be made that those transfers should not be undone only to be redone for the sake of
formality.
39.4
The municipality should however in the alternative ask for an order rectifying the deeds
register by declaring the old transfers to be invalid and authorising the municipality to transfer
the properties again.‘
[8] The Trengove/Hofmeyr opinion served before the first ordinary council meeting of
the Municipality on 31 January 2008. The minutes of that meeting, to the extent here
relevant, reads:
‗Clr PWA Pretorius, seconded by Clr MJ Mason, proposed the addition of the following
recommendation 10:
―10.
That a quarterly report be submitted to the Corporate Services Portfolio Committee and
Council indicating to whom Council land was alienated and at what purchase price.‖
Clr N Diamond, seconded by Clr NA Mabena, proposed the addition of the following
recommendations 11 & 12:
―11.
That a further report be submitted to Council after verification of the 526 land
transactions approved by the Corporate Affairs Committee from 1st July 2004, and that a legal
process be undertaken by approaching the courts to ratify the 526 land transactions and
associated decisions taken by the various organs and committees of Council.
12.
That it be noted that recommendations may not contradict any policy of Council or any
part of the Municipal Finance Management Act, Act 56 of 2003, or any other legislation outlining
the responsibilities of Local Government.‖
Council accepted the above proposals.‘
Resolutions:
‗5.
That Council notes the review of the disposal processes and policies of all capital
assets, including land, post 01st July 2004, to ensure compliance with the provisions of the
MFMA.
6. That the City Manager or nominee be authorised to take the necessary steps to ensure
compliance with the provisions of the MFMA, including any necessary legal steps to protect the
interests of Council, and that periodic progress reports be submitted to Council on such steps
taken.‘
[9] Mr. Booysen took the view that by the end of 2007 he had completed all of the
required services and was entitled to a certificate in terms of s 82 of the Ordinance (the
s 82 certificate).6
6 Section 82 headed ‗Prohibition of registration of certain deeds of transfer‘, reads:
‗(1) Subject to the provisions of subsection (2), the Registrar shall not register a deed of transfer by which
the ownership of an erf in a township –
(a) is transferred before the township has been declared an approved township in terms of section 79;
(b) which has been declared an approved township in terms of section 79, is transferred by the township
owner –
(i) if the Director has notified the Registrar in writing that any condition set out in the schedule
contemplated in section 79, other than a condition requiring the transfer of land or the payment of an
endowment in cash to the State or a local authority, has not been complied with;
(ii) until such time as –
(aa) the provisions of section 81 in respect of the transfer of land to the State or a local authority have
[10] When by March 2008 the s 82 certificate had still not issued, Home Talk and
Afropulse applied to the High Court, Pretoria for an order:
‗That the Ekurhuleni Metropolitan Municipality, and the Municipal Manager, Ekurhuleni
Metropolitan Municipality, Mr. Patrick Flusk, (hereinafter ―the first and second respondents‖) be
and are hereby ordered and compelled to certify within 5 days of the date of issue of this order –
2.1
that the first respondent will within a period of 3 (three) months from the date of such
certificate as contemplated in s 82 . . . be able to provide the erven in the townships of
Meyersdal Nature Estate, Extensions 7, 9, 11 and 12 . . . (hereinafter ―the townships‖) with the
necessary engineering services; and
2.2
that the first respondent is prepared to consider applications for the approval of building
plans in respect of erven in the townships.
3.
In the event that the first and second respondents fails to issue the certificates in terms
of s 82 . . . certificate as referred to in paragraph 2.1 above, the third respondent be authorised
to register deeds of transfer in terms of his normal duties under the Deeds Registries Act, 47 of
1937 in respect of erven in the townships, notwithstanding the absence of such certificates.
been complied with, where any conditions set out in the schedule contemplated in section 79 requires
such transfer;
(bb) the Director or the local authority has notified the Registrar in writing that the provisions of section 81
in respect of the payment of an endowment in cash to the State or a local authority have been complied
with, where any condition set out in the schedule contemplated in section 79 requires such payment;
(cc) the local authority within whose area of jurisdiction the township is situated has certified that it will,
within a period of 3 months from the date of the certificate, be able to provide the erf with such services
as it may deem necessary and that it is prepared to consider an application for the approval of a building
plan in respect of the erf.
(2) The provisions of –
(a) subsection (1)(b)(i) shall not apply to the transfer of an erf, if the Director has authorised the Registrar
in writing to register the deed of transfer concerned;
(b) subsection 1(b)(ii)(bb) shall not apply to the transfer of an erf to the State or a local authority by virtue
of a condition set out in the schedule contemplated in section 79;
(c) subsection 1(b)(ii)(cc) shall not apply to –
(i) the transfer of an erf in a township for the establishment of which application has been made in terms
of a repealed law and the registration of the deed of transfer would not have been in conflict with the
provisions of that law;
(ii) the transfer of an erf contemplated in paragraph (b).
‗Subject to the provisions of subsection (2), the registrar shall not register a deed of transfer by which the
ownership of an erf in a township –
(a) is transferred before the township has been declared an approved township in terms of s 79;
(b) which has been declared an approved township in terms of s 79, is transferred by the township owner;
(ii) until such time as –
(cc) the local authority within whose area of jurisdiction the township is situated has certified that it will,
within a period of three months from the date of the certificate, be able to provide the erf with such
services as it may deem necessary and that it is prepared to consider an application for the approval of a
building plan in respect of the erf.‘
4.
Directing the first and second respondents jointly and severally, to pay the applicants‘
cost of this application on an attorney and own client scale.‘
[11] Not only did Mr. Flusk purport to oppose the application on behalf of the
Municipality, he also launched a counter application seeking:
‗1.1
That the decision of the first applicant Corporate Affairs Committee of 4 April
2005 to approve the land exchange . . . be set aside.
1.2
That the agreement concluded between first applicant and third respondent dated 23
January 2006 and which intended to give effect to the decision referred to in prayer 1.1 be set
aside.
1.3
That the 3 land sale agreements concluded between the second respondent and the
third respondent dated 2 July 2007 . . . be set aside.
1.4
That the first applicant‘s resolution dated 26 June 2006 . . . to approve the township
applications in respect of . . . Extensions 7 to 12 be set aside.
1.5
That the second and third respondents be directed to transfer to the first applicant the
properties identified as . . . Extensions 8 to 12, and that they further be directed to do all such
things and sign all such documents, including powers of attorney, within 7 days of date of order,
to give effect to the aforegoing transfers.
1.6
That the Sheriff of the above Honourable Court be and is hereby empowered to sign all
and any documents identified in paragraph 1.5 above, should the second and third respondents
fail or refuse to sign same.
1.7
That the record of decision by the Gauteng Provincial Government: Department of
Agriculture, Conservation and Environment No GAUT002/05-06/0125, the proposed change of
land use of . . . be set aside.
1.8
That the following proclamations with regard to the aforesaid townships be set aside,
being Local Authority Notices 2495 to 2502 as set out in the Provincial Gazette Extraordinary for
the province of Gauteng No 273 of 1 October 2007.
1.9
That Mr Rean Booysen be ordered to subject himself to viva voce evidence (including
cross examination) with regard to the issues raised in the founding and answering affidavits on
a date to be determined by this court.
1.10
That first and second respondents be ordered to pay the costs of this application jointly
and severally the one paying the other to be absolved.‘
[12] The matter came before Legodi J who, on 20 June 2008, ordered that:
‗9.1.1 The main application is hereby struck from the roll due to failure to exhaust
internal remedies.
9.1.2 The applicants in the main application are hereby directed to exhaust internal remedies
in terms of s 124 of the Ordinance read together with the provisions of s 7 of PAJA.
9.1.3 The second respondent and the Municipality‘s counter-application is hereby struck off
from the roll due to the second respondent‘s lack of authority to depose to the founding affidavit
in the counter-application.
9.1.4 Each party to pay its costs.‘
[13] On 17 March 2009 the Executive Mayor wrote to Mr. Flusk informing him that the
council of the Municipality had resolved to terminate his employment as the City
Manager with effect from that date. Mr. Johan Leibbrand was thereafter appointed the
acting City Manager in Mr. Flusk‘s stead. On 30 October 2008, and in accordance with
the order of Legodi J, Home Talk and Afropulse filed a notice of appeal with the
Services Appeal Board. On 22 January 2009 the parties concluded a deed of settlement
before the Services Appeal Board. That agreement recorded that the only ‗contentious
matter remaining in issue for determination by the Board is the question of costs‘. On 19
February 2009 Home Talk and Afropulse filed a supplementary affidavit with the High
Court. They contended that as they had now exhausted their internal remedies, they
were entitled to re-enrol the matter for the hearing of the relief originally claimed in their
notice of motion.
[14] On 20 March 2009 the parties settled the High Court application. Mr. Leibbrand,
who served as the acting City Manager after Mr. Flusk‘s dismissal, represented the
Municipality. In terms of the agreement, the Municipality undertook ‗immediately upon
signature of this agreement to issue the certificates in terms of s 82 (Ordinance 15 of
1986) in respect of Meyersdal Extensions 7, 9, 11 and 12 not later than 20 March 2009.‘
The agreement also recorded that:
‗Kingtrade has paid a total amount of R3 881 757.81 in respect of rates and taxes
pertaining to Meyersdal Extensions 7, 9, 11 and 12 to EMM for a period of seven months. This
amount is made up by a payment of R2 756 683.42 paid on or about 27 November 2007,
R562 537.18 paid on or about 21 February 2008 and R562 537.18 paid on or about 28 March
2008. It is agreed that an item will be tabled at the next meeting of the full Council of the EMM,
to be held on 26 March 2009, recommending that a clearance certificate (which requires no
further payment from Kingtrade) in respect of Meyersdal Extension 7, 9, 11 and 12 be issued,
valid for a period of seven months from the date that the certificates in terms of s 82 are issued.
The parties record their understanding that this paragraph does not bind the Council in any
way.‘
[15] On 17 March 2010, Home Talk, Afropulse and Kingtrade as the first, second and
third plaintiffs respectively caused summons to be issued out of the South Gauteng
High Court against the Municipality. The issues of liability and quantum having been
separated in terms of Uniform rule 33(4), the matter proceeded to trial in respect of the
former before Nicholls J who, on 30 October 2015, dismissed the action with costs
including those consequent upon the employment of two counsel. The appeal is with the
leave of the learned judge.
[16] In the summons, the claim was originally founded on the allegations that:
‗9.
The defendant despite its approval of the third plaintiff‘s township establishment
and the instruction by the Registrar of Deeds to do so, wilfully alternatively negligently failed to
proclaim Extension 8 and 10 of the Meyersdal Nature Estate (the third plaintiff‘s development).
10.
By December 2007:
. . .
10.3
The plaintiffs had met all the requirements for the issue of s 82 Certificates by the
Defendant in respect of Extensions 7, 9, 11 and 12 respectively and were entitled to demand
from the Defendant to issue same;
. . .
12.
Despite demand and the first and second plaintiffs having met the requirements for the
issue thereof, the defendant represented by its duly appointed employees, acting in the course
and scope of their employment, over the period November 2007 to 20 March 2009 unlawfully
and wilfully, refused to issue the s 82 Certificates in respect of Extensions 7, 9, 11 and 12.
Alternatively the defendant represented as aforesaid, despite demand and the first and second
plaintiffs having met the requirements for the issue thereof, over the period November 2007 to
20 March 2009 unlawfully and negligently failed to issue the s 82 Certificates in respect of
Extensions 7, 9, 11 and 12, the defendant having been negligent in one or more of the following
respects.‘
[17] The particulars of claim underwent a series of further amendments, the most
significant of which being some three years later on 23 May 2013 when, for the first
time, Mr. Flusk was mentioned by name. It was then contended that he had acted mala
fide in withholding the issuance of the s 82 certificate. Common to the claims on behalf
of all three appellants were these allegations:
‗18.
The required s 82 certificate was eventually only issued on 20 March 2009 after
first plaintiff had initiated court proceedings in this regard and Flusk‘s employment terminated on
or about 18 March 2009.
19.
The failure or refusal aforesaid resulted from a decision to refuse the issue of the said
certificate by the defendant‘s then Municipal Manager, one Flusk, who had earlier managed to
procure a resolution by the Council that he alone was to have the power to issue s 82
certificates.
20.
In acting as he did, the said Flusk acted as defendant‘s designated functionary and
representative, alternatively as an employee of defendant and within the course and scope of
his employment as such.
21.
The decision aforesaid and his resultant failure or refusal aforesaid, constituted unlawful
and wrongful conduct.
22.
The aforesaid conduct was:
22.1
Intentional; and
22.2
Mala fide and/or motivated by a mala fide ulterior purpose.
22A.
As a direct result of the mala fide conduct aforesaid, the s 82 certificate was delayed
from approximately 15 December 2007 until 20 March 2009.‘
[18] The plea of the Municipality to those allegations was:
‗11.1
The claims . . . are aquilian claims for pure economic loss arising from the
alleged delay occasioned by the failure of the defendant to issue certificates in terms of 82 of
the Townships and Town Planning Ordinance 15 of 1986 (―the Ordinance‖).
11.2
The operative legislation does not anticipate, either directly or by inference, either
compensation or damages to any person aggrieved by the failure of, or delay by, the local
authority in the issue of any such certificate.
11.3
Section 119 of the Ordinance requires the installation and provision of engineering
services to the satisfaction of the local authority concerned; and the provisions of Section 124
provide for an appeal to a Statutory Services Appeal Board by any person aggrieved by the
decision of a local authority in terms of Section 119 or the refusal or unreasonable delay of a
local authority to give such a decision.
11.4
In addition, alternatively subject to such appeal provision, persons . . . aggrieved by a
failure or unreasonable delay in the certification in terms of Section 82, have the remedies of a
mandatory interdict and judicial review.
11.5
The object of Section 82 is not to provide any right or benefit to persons such as the
plaintiff[s], but rather to protect members of the public who are purchasers of erven . . . in order
to advance the public good.
11.6
The provisions of Section 82(1)(b)(ii)(cc) and Section 119 confer upon the local authority
an administrative discretion in decision making.
11.7
The imposition of liability for damages as claimed is likely to have a chilling effect on
performance of the local authorities‘ administrative and statutory function and the achievement
of the objects of the statutory provision.
. . .
11.9
The defendant pleads that as a result of the aforegoing:
11.9.1 the statutory duty does not provide a basis for inferring that a duty exists to the first
plaintiff at common law; and
11.9.2 neither public policy nor public interest favour the holding of the alleged conduct on the
part of the defendant unlawful in the aquilian sense and thus susceptible to a remedy in
damages.‘
[19] Undoubtedly, the appellants were entitled to proper administrative legal
proceedings. But, that did not mean that the breach of the administrative duties as set
out in the particulars of claim necessarily translated into private law duties giving rise to
delictual claims.7 It must be accepted that an incorrect administrative decision is not per
se wrongful.8 It is thus unhelpful to call every administrative error ‗unlawful‘, thereby
implying that it is wrongful in the delictual sense, unless one is clear about its nature
7 Steenkamp para 30.
8 Telematrix (Pty) Ltd v Advertising Standards Authority SA 2006 (1) SA 461 (SCA); [2006] 1 All SA 6
(SCA) para 23.
and the motive behind it.9 Administrative law is a system that over centuries has
developed its own remedies and, in general, delictual liability will not be imposed for a
breach of its rules unless convincing policy considerations point in another direction.10
The breach of every legal duty, especially one imposed by administrative law, does not
necessarily translate into the breach of a delictual duty.11 If the legal duty invoked is
imposed by a statutory provision the focal question is one of statutory interpretation.12
Whether the existence of an action for damages can be inferred from the controlling
legislation depends on its interpretation and it is especially necessary to have regard to
the object or purpose of the legislation. This involves a consideration of policy factors
which, in the ordinary course, will not differ from those that apply when one determines
whether or not a common-law duty existed.13
[20] Conduct is wrongful in the delictual sense if public policy considerations demand
that in the circumstances the plaintiff has to be compensated for the loss caused by the
negligent act or omission of the defendant.14 It is then that it can be said that the legal
convictions of society regard the conduct as wrongful.15 ‗Wrongfulness‘, the
Constitutional Court held, ‗typically acts as a brake on liability, particularly in areas of
the law of delict where it is undesirable or overly burdensome to impose liability‘. It
9 Steenkamp para 24.
10 Steenkamp para 27.
11 Steenkamp para 19.
12 Steenkamp para 20.
13 Steenkamp para 21.
14 Minister van Polisie v Ewels 1975 (3) SA 590 (A) 597A-B: ‗dat die gelede skade vergoed behoort te
word‘. In Olitzki Property Holdings v State Tender Board & another 2001 (3) SA 1247 (SCA) para 12,
Cameron JA observed: ‗Where the legal duty the plaintiff invokes derives from breach of a statutory
provision, the jurisprudence of this Court has developed a supple test. The focal question remains one of
statutory interpretation, since the statute may on a proper construction by implication itself confer a right
of action, or alternatively provide the basis for inferring that a legal duty exists at common law. The
process in either case requires a consideration of the statute as a whole, its objects and provisions, the
circumstances in which it was enacted, and the kind of mischief it was designed to prevent. But where a
common law duty is at issue, the answer now depends less on the application of formulaic approaches to
statutory construction than on a broad assessment by the court whether it is ―just and reasonable‖ that a
civil claim for damages should be accorded. ―The conduct is wrongful, not because of the breach of the
statutory duty per se, but because it is reasonable in the circumstances to compensate the plaintiff for the
infringement of his legal right‖. The determination of reasonableness here in turn depends on whether
affording the plaintiff a remedy is congruent with the court‘s appreciation of the sense of justice of the
community. This appreciation must unavoidably include the application of broad considerations of public
policy determined also in the light of the Constitution and the impact upon them that the grant or refusal of
the remedy the plaintiff seeks will entail.‘
15 Minister van Polisie v Ewels 1975 (3) SA 590 (A) 597A-B.
elaborated: ‗[wrongfulness] functions to determine whether the infliction of culpably
caused harm demands the imposition of liability or, conversely, whether ―the social,
economic and other costs are just too high to justify the use of the law of delict for the
resolution of the particular issue‖.‘16 What is called for is ‗not an intuitive reaction to a
collection of arbitrary factors but rather a balancing against one another of identifiable
norms.‘17
[21] In Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 33C-D, Botha JA dealt
at length with the general principles underlying delictual liability. He found that
considerations of convenience militate strongly against allowing an action for damages
because the threat of litigation would unduly hamper the expeditious consideration and
disposal of applications by a local authority. With that in mind he set out to interpret the
statute in question in order to determine whether the legislature intended another result.
He concluded it did not (at 31D-E), an answer fortified by the fact that the legislation in
question provided for an appeal procedure (at 31E-F). The importance of an internal
appeal procedure is that it may be indicative of an intention that this is the only available
remedy for an incorrect decision. For an incorrect decision on appeal there is then no
remedy except a judicial review.
[22] In considering the issue of wrongfulness in the delictual sense, the nature of the
Municipality‘s functions certainly require close scrutiny. But it must be appreciated that
the nature of its functions is but one of the circumstances calling for consideration in the
case. As always, to determine the issue of wrongfulness, all the circumstances of the
case fall to be considered. One of the questions in this case is whether the legislature
intended a claim for damages in respect of loss caused in addition to the other
administrative law remedies available to the appellants. In Steenkamp (para 22), Harms
JA observed:
16 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC
28; 2015 (1) SA 1 (CC); 2014 (12) BCLR 1397 (CC) para 20.
17 Minister of Safety and Security v Van Duivenboden [2002] ZASCA 79; 2002 (6) SA 431 (SCA); [2002] 3
All SA 741 (SCA) para 21.
‗It appears to me that if the breach of a statutory duty, on a conspectus of the statute,
can give rise to a damages claim, a common-law legal duty cannot arise. If the statute points in
the other direction, namely that there is no liability, the common law cannot provide relief to the
plaintiff because that would be contrary to the statutory scheme. If no conclusion can be drawn
from the statute, it seems unlikely that policy considerations could weigh in favour of granting a
common-law remedy.‘
[23] As in Knop’s case, here too the legislature has made provision for an internal
appeal. That is the surest indicator that it was not within the contemplation of the
legislature that the refusal of a s 82 certificate would, without more, be regarded as a
wrong entitling an action for damages against the Municipality. It must be added that the
Ordinance is there for the public good. Provisions such as s 82, exist principally for the
protection of housing consumers and not property developers in the position of the
appellants. In Knop (at 31H), Botha JA concluded: ‗[i]n my judgment it could not have
been in the contemplation of the legislature that, apart from the appeal procedure, the
refusal of the application was to be regarded as a wrong to the applicant entitling him to
bring an action for damages against the local authority.‘ In arriving at his conclusion, the
learned Judge did point out:18
‗That is not to say that the local authority need not exercise due care in dealing with
applications; of course it must, but the point is that it would be contrary to the objective criterion
of reasonableness to hold the local authority liable for damages if it should turn out that it acted
negligently in refusing an application, when the applicant has a convenient remedy at hand to
obtain the approval he is seeking. To allow an action for damages in these circumstances
would, I am convinced, offend the legal convictions of the community.‘
[24] In comparable circumstances, other Commonwealth jurisdictions appear to have
adopted a similar approach. In England, Jones v Department of Employment19
expressed the position thus:
‗The question thus is whether, taking all these circumstances into account, it is just and
reasonable that the adjudication officer should be under a duty of care at common law to the
claimant to benefit. Having regard to the non-judicial nature of the adjudication officer's
18 Knop v Johannesburg City Council 1995 (2) SA 1 (A) 33D-E.
19 Jones v Department of Employment [1989] Q B 1 (CA) at 22 B-D; [1988] 1 All ER 725 at 736.
responsibilities, and in particular to the fact that the statutory framework provides a right of
appeal which, if a point of law arises, can eventually bring the matter to this court, it is my view
that the adjudication officer is not under any common law duty of care. In other words, I agree
with Mr. Laws that his decision is not susceptible of challenge at common law unless it be
shown that he is guilty of misfeasance. Indeed, in my view, it is a general principle that, if a
government department or officer, charged with the making of decisions whether certain
payments should be made, is subject to a statutory right of appeal against his decisions, he
owes no duty of care in private law. Misfeasance apart, he is only susceptible in public law to
judicial review or to the right of appeal provided by the statute under which he makes his
decision.‘
In Australia, Kitano v The Commonwealth of Australia,20 held:
‗It was conceded . . . that no civil cause of action lies on the statute for breach of s 122. It
seems to me that for the plaintiff to succeed in his special action on the case he must show
something more than a mere breach of the statute and consequential damage; he must show
something over and above what would ground liability for breach of statutory duty if the action
were available.‘
And, in Canada, it was stated in Comeau's Sea Foods Ltd v Canada (Minister of
Fisheries and Oceans) that:21
‗Decisions taken in the exercise of statutory power will be subject to judicial review, and
sometimes a statutory right of appeal. Unlawful decisions can be nullified and the individual
relieved of the consequences of such a decision. The existence of these remedies is regarded
by the courts as an indicator that no additional remedy in negligence need be provided,
particularly where the judicial review or appeal is adequate to rectify matters, and the only real
damage suffered by the individual is the delay and possibly the expense involved in establishing
that a decision is invalid. This seems in part an axiomatic decision on the part of the court, that
there should be a division between public law remedies and private law remedies. Where an
ultra vires decision can be set aside on appeal or review, there should not normally be any
additional liability in damages, unless the individual can establish misfeasance. Simple
negligence is insufficient. The fact that the decision may be set aside may also mean that the
only damage suffered is the expense involved in challenging the decision.‘
20 Kitano v The Commonwealth of Australia (1973) 129 CLR 151 at 174-175.
21 Comeau's Sea Foods Ltd v Canada (Minister of Fisheries and Oceans) [1995] 2 FC 467, 1995 CanLII
3576 (FCA).
[25] Before leaving the foreign authorities, it needs to be mentioned that in English
law ‗duty of care‘ is used to denote both what in South African law would be the second
leg of the inquiry into negligence and legal duty in the context of wrongfulness. As
Brand JA observed in Trustees, Two Oceans Aquarium Trus22t at 144F, ‗duty of care‘ in
English law ‗straddles both elements of wrongfulness and negligence‘.23 Accordingly,
the phrase ‗duty of care‘ in our legal setting is inherently misleading.
[26] On appeal it was submitted that ‗misfeasance in public office‘ is a convenient
label for what we are here concerned with. The following are the essential elements of
the tort:
‗First, there must be an unlawful act or omission done or made in the exercise of power
by the public officer. Second, as the essence of the tort is an abuse of power, the act or
omission must have been done or made with the required mental element. Third, for the same
reason, the act or omission must have been done or made in bad faith. Fourth, as to standing,
the claimants must demonstrate that they have a sufficient interest to sue the defendant. Fifth,
as causation is an essential element of the cause of action, the act or omission must have
caused the claimants' loss.‘24
That submission hardly need detain us, for, not having been raised by the appellants on
the pleadings, those requirements were neither fully ventilated in the evidence, nor dealt
with in the judgment of the trial court. Moreover, it must be remembered that the English
law of torts, ‗though it is freely quoted and often followed in our courts, is not often a
safe guide for solving a problem which arises under Roman Dutch Law‘.25
[27] At home, Telematrix (par 26) summed up the legal position thus: ‗In different
situations courts have found that public policy considerations require that adjudicators of
22 Trustees for the Time Being of Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd (545/2004)
[2005] ZASCA 109; [2007] 1 All SA 240 (SCA) (25 November 2005)
23 McIntosh v Premier, KwaZulu-Natal & Another [2008] ZASCA 62; 2008 (6) SA 1 (SCA); [2008] 4 All SA
72 (SCA) para 12, where Scott JA stated: ‗As is apparent from the much-quoted dictum of Holmes JA in
Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-F, the issue of negligence itself involves a twofold inquiry.
The first is: was the harm reasonably foreseeable? The Second is: would the diligens paterfamilias take
reasonable steps to guard against such occurrence and did the defendant fail to take those steps? The
answer to the second inquiry is frequently expressed in terms of a duty.‘
24 Three Rivers District Council and others v Bank of England (No 3) [2001] UKHL 16; [2001] 2 All ER 513
para 41.
25 Perlman v Zoutendyk 1934 CPD 151 at 155.
disputes are immune to damages claims in respect of their incorrect and negligent
decisions.‘ That, seems to me to be fatal to the appellants‘ cause of action in negligence
as formulated in the original particulars of claim. Appreciating, it would seem, that
‗something more‘ than a mere negligent statutory breach and consequent economic
loss is required to hold [a functionary] delictually liable for the improper performance of
an administrative function,26 prompted, I daresay, the series of further amendments to
the particulars of claim. But, what that ‗something more‘ is appears to have occasioned
the appellants all manner of difficulty in this case. The formulation ultimately settled on
was ‘mala fide and/or motivated by a mala fide ulterior purpose‘ However, precisely
what ‘mala fide and/or motivated by a mala fide ulterior purpose‘ was intended to
signify, was not disclosed in the pleading. Before us, respondent‘s counsel complained
that the ‗greatest difficulty that the [Municipality] had in defending the claim, was the
failure by the appellants to commit themselves to a factual theory of their case‘. By this I
understood counsel to suggest that insufficient particularity was given of the material
facts sought to be relied upon by the appellants to support the contention that Mr. Flusk
acted mala fide and/or with a mala fide ulterior purpose.
[28] In a 67 page opening address appellants‘ counsel, exercising a right under the
provisions of Uniform rule 39(5) to ‗briefly outline the facts intended to be proved‘, made
no mention of the facts intended to be adduced to establish the alleged mala fides or
ulterior purpose. One knows that such address can never be a substitute for pleadings.
In any event, it did not serve to forewarn the respondent of the evidence that would
eventually be relied upon. What is important is that the pleadings should make clear the
general nature of the case of the pleader. They are meant to mark out the parameters of
the case sought to be advanced and define the issues between the litigants.27 In that
regard, it is a basic principle that a pleading should be so framed as to enable the other
party to fairly and reasonably know the case he or she is called upon to meet. These
26 Steenkamp para 30 citing the judgment of Mason J in Kitano v The Commonwealth of Australia (1973)
129 CLR 151 at 174-175, which was referred to with approval in Dunlop v Woollahra Municipal Council
[1981] 1 All ER 1202 (PC) at 1208F-G. The case concerned the liability of a local authority in tort for
passing of an ultra vires resolution.
27 Robinson v Randfontein Estates GM Co Ltd 1925 AD 173 at 198.
requirements in respect of pleadings are the very essence of the adversarial system.28
The prime function of a judge is to hear evidence in terms of the pleadings, to hear
argument and to give his decision accordingly.29 In Imprefed (Pty) Ltd v National
Transport Co 1993 (3) SA 94 (A) at 107G-H it was stated:
‗At the outset it need hardly be stressed that: ―The whole purpose of pleadings is to bring
clearly to the notice of the Court and the parties to an action the issues upon which reliance is to
be placed.‖‘ (Durbach v Fairway Hotel Ltd 1949(3) SA 1081 (SR) at 1082.‘
[29] The degree of precision required obviously depends on the circumstances of
each case. As a general rule, the more serious the allegation of misconduct, the greater
is the need for particulars to be given which explain the basis for the allegation. This is
especially so where the allegation that is being made is of bad faith or dishonesty. The
point is well established by authority in the case of fraud.‘30 With regard to fraud, a
general allegation of fraud is not sufficient to infer liability on the part of those who are
said to have committed it. It is important to record, as the following excerpt shows. that
during the course of the trial counsel for the appellants specifically disavowed a case
based on fraud:
‗Mr Peter:
I think my learned friend knows better, that when one pleads fraud one
has to plead it very carefully, and very expressly. To just say male fide ulterior purpose, the
word fraud is not even mentioned here. But now we hear from Mr Diamond‘s evidence and this
witness for the very first time, fraudulent and corrupt activities.
Mr Maritz:
I never heard mention, I never heard anyone or anybody mention fraud, and it is
not pleaded by us, it is not relied upon.
Court: Well, it is certainly corrupt to be saying . . . [intervene].
28 Yannakou v Apollo Club 1974 (1) SA 614 (A) at 623-4.
29 Above.
30 Three Rivers District Council and others v Bank of England (No 3) [2001] UKHL 16; [2001] 2 All ER 513
par 51. As long ago as Wallingford v Mutual Society (1880) 5 App Cas 685 at 697 Lord Selborne LC said:
‗. . . general allegations, however strong may be the words in which they are stated, are insufficient even
to amount to an averment of fraud of which any Court ought to take notice.‘
In a similar vein in Nedperm Bank Ltd v Verbi Projects CC 1993 (3) SA 214 (W) at 220B, Zulman J stated:
‗At the outset one has to observe that it is trite that fraud is a most serious matter and the type of
allegation which is not lightly made and which is not easily established. What is important is that a factual
basis must be laid for an allegation of fraud, and it is not sufficient . . . merely to put up speculative
propositions or to raise submissions or to advance arguments on probabilities which might indicate a
fraud. What is essential is that there should be hard facts, as it were, upon which the court can exercise
the discretion.‘
Mr Maritz:
Corrupt, yes. Corrupt and extortion as to an attempt to extract an extortion is
bribe from my client, and that is what the evidence so far had been. That is fully covered by the
allegations. The defendant disclosed not to seek further particulars.‘
[30] Thus, during the course of the evidence it came to be clarified that the appellants‘
case rested on extortion. In Notaris v R 1903 TS 484, Innes CJ described extortion as
‗the taking under colour of office or authority from any person, by means of illegitimate
pressure, any money or valuable thing which is not due from him at the time it is
taken.‘31 It seems to me though that for the purposes of properly pleading a case in the
context of a civil claim the distinction sought to be drawn by counsel for the appellant
between fraud, on the one hand, and extortion, on the other, may be a distinction
without a difference. For, as Three Rivers (par 55) pointed out:32
‗A party is not entitled to a finding of fraud if the pleader does not allege fraud directly
and the facts on which he relies are equivocal. So too with dishonesty. If there is no specific
allegation of dishonesty, it is not open to the court to make a finding to that effect if the facts
pleaded are consistent with conduct which is not dishonest such as negligence.‘
[31] Of course, allegations of fraud, dishonesty or bad faith must be supported by
particulars and the other party is entitled to notice of the particulars on which the
allegations are based.33 ‗The proposition that a plaintiff claiming pure economic loss
must allege wrongfulness, and plead the facts relied upon to support that essential
allegation, is in principle well founded. Whilst it is not necessary, nor indeed appropriate,
to plead policy considerations or the boni mores, it is incumbent on a plaintiff to plead all
the facts on which he wishes to rely to enable the court to decide whether policy
considerations and the boni mores warrant that liability should extend to the case in
question.‘34 In fact, the absence of such allegations may render the particulars of claim
31 Cited with approval in R v Mahomed 1929 AD 58 at 67. Gardiner and Lansdown Criminal Law and
Procedure (1970) vol 2 at 1709 describes it thus: ‗A person is guilty of the crime of extortion who from
improper motives, and by inspiring fear in the mind of another, demands from, and compels the latter to
render some advantage which is not due.‘
32 Three Rivers District Council and others v Bank of England (No 3) [2001] UKHL 16; [2001] 2 All ER
513.
33 Three Rivers para 55.
34 Trope v South African Reserve Bank & Another 1992 (3) SA 208 (T) at 214D.
excipiable on the basis that no cause of action had been disclosed.35 But, here the
respondent did not file an exception. It would thus be futile to investigate whether an
exception, if properly and timeously taken, would have been successful. The question is
rather whether, despite the inadequacy of the appellants‘ pleadings, sufficient facts
were adduced to enable a proper determination of the policy considerations pertaining
to wrongfulness. Conversely stated, the question is whether the respondent has shown
prejudice in the sense that it would have conducted its case in a materially different
way, had the appellants‘ case been properly pleaded.36 Although by no means
persuaded that the respondent‘s assertion of prejudice is entirely without merit, I prefer
to pass over the issue, for it seems to me that this court can, on the facts, such as they
are, decide whether as a matter of policy the respondent should be liable for the loss
claimed by the appellants.
[32] The evidence of the attempt at extortion rests solely on the say so of Mr.
Diamond. According to Mr. Diamond, he was involved since July 2006 in a marketing
campaign for the sale of stands in Ext 9,11 &12. During one of their last marketing
events in November of that year, Mr. Flusk visited the marketing tent at the proposed
development site and signed an offer to purchase a stand. Mr. Diamond testified:
‗Mr Maritz:
This offer in particular, did it ever come up thereafter in your interaction
with Mr Flusk? --- M‘Lady, from my position in the Corporate Affairs Committee and the Finance
Committee there were interactions with the city manager from time to time and the city manager
would enquire as to the progress on the development and the city manager would also request
whether we could not do something better as far as the price is concerned, and more
specifically ask for a discount. Obviously this was not something I entertained. Initially I just
ignored it and brushed it off and later it progressed to be a more firm push from his side that he
wanted a reduced price or a discount on his stand.
And how did you react to those increased attempts to obtain such a discount? --- M‘Lady
I, as indicated, I originally ignored him, I later brushed them off, but the city manager was quite
firm in his persistence in obtaining a better price.
35 Fourway Haulage SA (Pty) Ltd v South African National Roads Agency Ltd [2008] ZASCA 134; 2009
(2) SA 150 (SCA); [2009] 1 All SA 525 (SCA) para 14.
36 Shill v Milner 1937 AD 101 at 105; Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168 at
198.
And what were the further developments in this regard, regarding you and Mr Flusk? ---
M‘Lady, in and about January 2008 I had a meeting with the city manager, where the city
manager indicated that he does not just want a discount, he would in actual fact like the stand
for free. I, at that stage, indicated to the city manager that I cannot entertain such a request, as
there were nobody else that received any discounts and that there were definitely no free stands
that could be handed out. I think that such an action from my part, or the part of Afro Pulse,
would have constituted a bribe and that was definitely not necessary for anything with regards to
this development. Everything was on track, the development was progressing well. At that stage
the city manager then informed me that he had certain concerns arising from an investigation
where there was an alleged whistle blower and that he would institute or has instituted an
investigation into the land exchange, M‘Lady. The city manager then indicated to me that if I do
not concede to his request he can make things as easy or as difficult as he wants with regards
to this development, M‘Lady.
Was there anything specifically mentioned by him in this regard as to what he was
referring to? --- M‘Lady, the only outstanding matter at that stage was the issue of a Section 82
certificate. To my knowledge the Section 82 certificates are issued by junior officials once a
developer complies with all the service aspects and engineering aspects of a development. So I
did not take much notice to the, and I would like to call it a threat from the city manager at that
stage as I knew that it was not delegated to him but it was a sub-delegation, the issue of Section
82 certificates to the HOD Corporate and Legal, and in actual fact it was even further down the
line where those Section 82 certificates were issued. So I did not really regard it as a credible
threat at that stage, M‘Lady.
Did he mention anything about Section 82 at all? --- Yes, he did, M‘Lady.
What did he say? --- He indicated that he could draw out the issue of a Section 82
indefinitely.
If you say ―draw out‖, do you mean delay? --- Delay, yes, M‘Lady.
How did you react to that? --- M‘Lady, I did not engage Patrick Flusk any further on that.
I did, however, share that with Mr Riaan Booysen and indicated that those were the comments
from the city manager or the threats from the city manager. Mr. Booysen assured me that we
met with all the engineering requirements for the issue of an 82 certificate and that he could not
possibly foresee how council could refuse the issue of the 82 certificate to allow an individual to
benefit to the extent to which Patrick Flusk wanted to obtain a benefit, M‘Lady.‘
[33] Given the pertinence of this evidence to the enquiry, the fact that the appellants
did not respond to it by amending their particulars of claim conduced to all sorts of
confusion. The parties generated a record of 24 volumes consisting of approximately
3600 pages of evidence and exhibits. As observed in KPMG Chartered Accountants: ‗It
is difficult to understand why the trial judge permitted all of the evidence or overruled the
objection to the leading of some of the evidence. Obviously, courts are fully justified in
ignoring provisionally objections to evidence if those objections interfere with the flow of
the case. It is different if a substantive objection is raised which could affect the scope of
the evidence that will follow. In such a case a court should decide the issue and not
postpone it.‘37 In allowing the evidence, the trial judge intimated that she would consider
what evidential weight to attach to such evidence later. But that, with respect, was to put
the cart before the horse because, evidential weight only falls to be considered in
respect of evidence that is admissible.
[34] Needless to say, the onus rested upon the appellants to establish, as a matter of
probability, the conduct complained of on the part of Mr. Flusk. Foundational to the
appellants‘ claim is the assertion that Mr. Flusk made an offer to purchase one of the
stands in the property development on 17 November 2006. The evidence in this regard
is a disputed document purporting to be a signed offer to purchase by Mr. Flusk, which
was only discovered some two weeks before the commencement of the trial, which itself
had previously been postponed almost a year and a half earlier. There appear to me to
be several disquieting features about the document. First, the document contained a
home telephone number that was several years out of date and related to Mr. Flusk‘s
previous residence. Second, the telephone number contained the prefix 011 at a time
prior to the compulsory ten digit dialling coming into effect. Third, despite the fact that
Mr. Flusk is married in community of property, none of his spouse‘s details were
included on the information sheet accompanying the alleged offer. Fourth, unlike other
such offers, Mr. Flusk‘s offer was never accepted and although some speculation was
advanced, no evidence was proffered as to why it was never accepted. Fifth, the
37 KPMG Chartered Accountants (SA) v Securefin Limited & another [2009] ZASCA 7; 2009 (4) SA 399
(SCA); [2009] 2 All SA 523 (SCA) para 38.
original agreement has never been produced, nor its absence adequately explained.
Sixth, Mr. Diamond produced two lists of purchasers – the first list did not reflect Mr.
Flusk as a purchaser, the second, provided to the mayor later, did. Seventh, Mr.
Diamond initially alleged that Mr. Flusk had made an offer in respect of Erf 38, later he
corrected that to Erf 4 and produced a copy of an offer to purchase in respect of that
latter stand. Eighth, Erf 4 had in any event already been sold to another buyer in 2007,
prior to the alleged extortion attempt.
[35] Obviously, if it is accepted – as I think it must be – that the offer to purchase is
not genuine, then it must follow that the alleged extortion cannot be sustained. It bears
noting that Mr. Flusk had called for the list of purchasers in the development in order to
prove that there was an unhealthy relationship between the developer, on the one hand,
and councillors and officials of the Municipality, on the other. That being so, it is
incomprehensible that he would have made such a demand in circumstances where he
knew that he himself had made an offer to purchase and that his name would feature on
the list. There are, in addition, several probabilities that point away from the extortion
demand having been made. Prior to the evidence given by Mr. Diamond, there was
simply no suggestion anywhere on the record as to the alleged extortion attempt made
by Mr. Flusk. This attempt was also never pleaded in any of the iterations of the
particulars of claim from 2010 to the date of the trial. In this regard the first time that Mr.
Flusk and the term mala fides were ever mentioned was in the amendment to the
particulars of claim in May 2013. Significantly, no mention of this was made in the High
Court application that came before Legodi J. In fact, the allegation first saw the light of
day some seven years after the fact during the course of the trial.
[36] The explanation of Mr. Diamond and Mr. Booysen that they did not want to
complicate the matter with ‗side issues‘ or antagonise Mr. Flusk ring hollow. By the time
the review application was launched, their relationship with Mr. Flusk was already
antagonistic. Furthermore, when challenged in this regard, they stated that they had no
proof other than Mr. Diamond‘s say-so. That had not changed by the time of the trial. By
then, as Mr. Booysen conceded under cross examination, the alleged extortion had
gone from being a side issue to the central issue in the case. By Mr. Diamond‘s own
admission, he ought to have lodged a complaint with the mayor and speaker. Had it
been raised with them, given the extent of the impropriety, it may have had the effect of
disqualifying Mr. Flusk from further participation in the matter. Mr. Diamond suggested
that he could not have reported the matter because he did not have ‗adequate proof‘.
Implicit in this is that his mere say-so did not constitute ‗adequate proof‘. Why he
thought that the proof that was inadequate then had suddenly become adequate by the
time of the trial, is not explained.
[37] At the time that the alleged attempt was made, the land transaction had been the
subject matter of a forensic investigation for at least six months. A legal opinion had
been sought and obtained from counsel, which was to the effect that the land swap
transaction was null and void for want of compliance with s 14(2) of the MFMA, which
everyone, including the members of the Municipal Council, accepted as correct. In fact it
was then accepted by everyone concerned that the land transaction process had to
commence de novo and follow all the procedures set out in s 14(2) of the MFMA. There
was a serious question mark over the manner in which the land was alienated – by
swap – which was unique, as opposed to a sale by public tender.
[38] There was, as well, continuing controversy relating to the value of the
Municipality‘s land. The minutes of the Corporate and Legal Committee of the
Municipality reflect that a further property valuation was secured, that valued the
Municipality‘s land much higher than the earlier valuation secured at the time of the
swap. Mr. Flusk persisted in demanding lists of purchasers to demonstrate the
irregularity of the transaction and the ‗closeness‘ of councillors and officials to the
developer. Mr. Diamond‘s own evidence was that his reaction to a complaint of
misconduct before the regional office of the ANC, which he believed Mr. Flusk had
initiated, was that he was disappointed because until then (being October 2008) he had
regarded Mr. Flusk as a man of integrity. This evidence is completely at odds with his
assertion that some nine months earlier, Mr. Flusk had been attempting to extort a free
stand from him under the threat of the misuse of his administrative authority.
[39] It is important that the alleged extortion not be allowed to add further colour to the
matter. An alternative case was advanced before us founded upon inference. As best
as I could discern the argument, the inference that we were asked to draw is that in
purporting to withhold the s 82 certificate, Mr. Flusk was motivated by an ulterior
purpose. From the bar in this court, we were pointed to the following evidence of Mr.
Diamond and other similar passages as proof that Mr. Flusk was actuated by an ulterior
purpose:
‗What took place there? --- The city manager indicated to me that his main concern was,
or amongst his concerns, but his main concern was my involvement in the development and
that the city manager felt that I would be benefiting from this development. The city manager
then indicated to me that should I transfer my shares in the company [Afropulse] to an NGO of
his choice he would immediately release the s 82 certificate.‘
Mr. Flusk‘s responded to this allegation thus:
‗What was Mr. Diamond‘s attitude when you confronted him about his shareholding in
Afropulse? --- Well, in fact, the discussion started from the unlawfulness of the alienation, and
he was saying that it is water under the bridge and there is nothing that we can do about it,
other than to implement Council‘s resolution in line with his recommendation to Council. I said
―Well, you are mistaken. There are a number of things that Council can do to rectify these
issues, particularly based on the opinion of Wim Trengrove, including the fact that it is an
unlawful alienation and for us to rectify it.‖ Mr. Diamond‘s involvement, or benefit through
Afropulse? --- Well, I am aware of what he said, My Lady, so.
Well, let me put it to you. He said that you wanted him to transfer his shares to an NGO. --- That
is a blatant lie, My Lady, because he was saying to me it is water under the bridge. I said to him
one of the things Council can do is to recover, the MFMA allows the Council to recover undue
profit that has emanated through Council‘s assets, that people unduly benefitted from, in this
case a land alienation. The MFMA allows us to recover those costs, My Lady.‘
Elsewhere, Mr. Flusk added:
‗I am saying to you therefore it is totally irrelevant, it would have been totally irrelevant
whether Mr. Booysens and the township developers had complied with the services agreement
requirements or anything else, because even if they had fully you would still not have issued
that certificate. --- I just cannot see My Lady, how they could have fully complied with the
ordinance, because there cannot be a delink between the MFMA and the ordinance, for
example. So I cannot see how they could have had full compliance with the ordinance.‘
[40] The process of inferential reasoning calls for an evaluation of all the evidence
and not merely selected parts. In this context it is important to emphasise:
notwithstanding Mr. Booysen‘s say-so that by 15 December 2007 all requirements had
been met and the s 82 certificate should have been issued thereafter, as at March 2008,
when the high court application was launched, the external sewer connection was yet to
be finalised. Mr. Groenewald, the chief engineer for water and sanitation in the
Municipality testified:
‗And the date of his signature, can you identify that date? --- That one was the 19th of
August 2008.
Can you tell us why Mr Pierson appears to have signed it only on the 19th of August 2008 and
not in May 2008? --- My Lady, during an inspection held on the internal network constructed,
they found that a sewer line on the . . . just north of the southern boundary of Extension 10, had
a back fall on and it was not correct and Craig did not sign it, because we asked them to rectify
that back fall on the sewer, before he can sign this.‘
Mr. Flusk‘s evidence (irrespective of whether it might be objectively determined that he
was right or wrong in his belief) was that he was acting in the best interests of the
municipality. One gains the impression that having received a complaint from national
government arising from a tipoff in relation to a land transaction, as the accounting
officer, he felt obliged to investigate those allegations. He appointed investigators who,
again whether rightly or wrongly, questioned the propriety of the transaction and its
value. A legal opinion was obtained, and accepted as correct, that the land transaction
was tainted by invalidity and was a nullity and that the council had to reconsider the
matter. The Municipal Council accepted the legal opinion as correct and required a
process of ratification, which, according to the legal opinion, could not amount to a mere
rubberstamping of the transaction.
[41] The issuing of a s 82 certificate in those circumstances, even if it were to be
accepted that all the other requirements had been met, may have resulted in the land
being transferred to third parties despite invalidity for non-compliance with the
provisions of s 14(2) of the MFMA. Even Mr Leibbrand accepted:
‗I just want to you to comment on this, is it not correct that the moment you give a s 82
Certificate, that is the last bar that stops transfer happening in the Deeds Registry, that is why
Mr. Booysen wanted them? Are you aware of that? --- Ja, that is my understanding.
On the one hand Mr. Flusk is now launching . . . he also has in his mind to launch a mission
against setting aside this land transaction, but he also knows that if he issues a s 82 Certificate,
setting aside the land swop is going to be very difficult because now you have got hundreds of
other people who just bought the land, and taken transfer from Mr. Booysen‘s company. From a
managerial practical perspective do you see that difficulty? --- That My Lady, is a . . . if you look
at what comes first and what follows in terms of that, I think that is a valid argument. That he
would like to first deal with the actual transaction. My only concern was it took very long to get
that point and then who was consulted, and whether we should have actually cancelled the
transaction based on what? That was my only concern, but dealing with that point first, I agree.‘
[42] Any inference sought to be drawn must be 'consistent with all the proved facts: If
it is not, then the inference cannot be drawn‘, moreover, ‗it must be the ―more natural, or
plausible, conclusion from amongst several conceivable ones' when measured against
the probabilities.38 In this respect, it is important to distinguish inference from conjecture
or speculation.39 Here, Mr. Diamond, a councillor in the Municipality, stood to make a
substantial profit. He was entitled to a fixed percentage of three per cent (of an
estimated R 181 million) described in the agreements as an ‗agent‘s commission‘.
Those agreements were prohibited by the Ordinance. In these circumstances, the city
manager, as the accounting officer of the Municipality, had good cause for concern. I
am accordingly not persuaded that when the evidence is viewed in its proper context, it
can be concluded by a process of inferential reasoning that Mr. Flusk was actuated by
an ulterior purpose. In any event, having found that the extortion does not survive
scrutiny, precisely what that purpose is, remains unclear.
38 South African Post Office v De Lacy & another [2009] ZASCA 45; 2009 (5) SA 255 (SCA); [2009] 3 ALL
SA 437 (SCA) para 35.
39 S v Essack 1974 (1) SA 1 (A) at 16D.
[43] The principal complaint of the appellants is that they have suffered pure
economic loss, for the most part, in being deprived of investment opportunities by
reason of the delay in the issuance of the s 82 certificate. For this, they seek to hold the
respondent vicariously liable. Throughout the period of the delay, the appellants were,
on their own version, fully aware of the alleged extortion attempt and true motivation for
Mr. Flusk‘s actions but kept this to themselves. They permitted Mr. Flusk to continue to
broadcast his ostensible honesty to his employers. In the light of these facts, to hold the
respondent liable on the basis of vicarious liability when the appellants could have but
failed, to afford the respondent the opportunity of remedying the wrong complained of,
may well be to impose an additional unwarranted burden on the respondent.40 Basic
notions of fairness would have required the appellants to raise their voices in complaint
against the alleged conduct of Mr. Flusk and to afford the Municipality an opportunity of
dealing with it. To shroud his alleged dishonesty in secrecy for as long as they did, and
to thereafter seek to hold his employer liable in damages, may well be antithetical to
notions of decency and fairness.
[44] The considerations of legal and public policy alluded to above compel me to the
conclusion that the Municipality did not act wrongfully in the delictual sense and was not
in breach of any legal duty owed by it to the appellants. That means that the
Municipality enjoys immunity against liability for damages resulting from the conduct
complained of. This conclusion makes it strictly unnecessary to consider the further
contentions debated before us in argument. However, for the sake of completeness and
particularly because causation also poses certain difficulties for the appellants, I shall
briefly touch on that issue.
[45] Causation involves two distinct enquiries.41 The first is a factual one and relates
to the question as to whether the defendant's wrongful act was the cause of the
40 Fourway Haulage par 26.
41 In International Shipping Company (Pty) Ltd v Bentley [1989] ZASCA 138; 1990 (1) SA 680 (A); [1990]
1 All SA 498 (A) para 64-66, Corbett CJ expressed the position thus: ‗. . . in the law of delict causation
involves two distinct enquiries. The first is a factual one and relates to the question as to whether the
defendant's wrongful act was a cause of the plaintiff's loss. This has been referred to as "factual
causation". The enquiry as to factual causation is generally conducted by applying the so-called "but-for"
plaintiff's loss. The enquiry as to factual causation is generally conducted by applying
the so-called ‗but-for‘ test. The second enquiry then arises, namely whether the
wrongful act is linked sufficiently closely or directly to the loss for legal liability to ensue
or whether, as it is said, the loss is too remote. In this regard it is important to recognise
that broadly speaking wrongfulness and remoteness perform the same function. They
are both measures of control.42
[46] The summons particularised each of the appellants‘ claims as follows:
‗First plaintiffs claim:
7.
During approximately January 2006, first plaintiff applied for the approval of township
development on first plaintiff‘s property aforesaid.
8.
The development was called Extension 7 of Meyersdal Nature Estate and comprised a
mix of residential and office development on three erven and was to comprise a townhouse
development on two erven and an office block on the third erf.
9.
Defendant duly approved the establishment of the aforesaid township.
. . .
11.
By December 2007, first plaintiff had either fully installed all of the required engineering
services or had furnished proper guarantees for the completion of outstanding items.
. . .
13.
By December 2007, first plaintiff had accordingly satisfied all the requirements for the
issue by Defendant of a certificate under s 82 of the Ordinance.
. . .
16.
In the reasonable and legitimate expectation that a s 82 certificate aforesaid would be
issued and that the building plans would subsequently be formally approved:
test, which is designed to determine whether a postulated cause can be identified as a causa sine qua
non of the loss in g[q]uestion. In order to apply this test one must make a hypothetical enquiry as to what
probably would have happened but for the wrongful conduct of the defendant. This enquiry may involve
the mental elimination of the wrongful conduct and the substitution of a hypothetical course of lawful
conduct and the posing of the question as to whether upon such an hypothesis plaintiff's loss would have
ensued or not. If it would in any event have ensued, then the wrongful conduct was not a cause of the
plaintiff's loss; aliter, if it would not so have ensued. If the wrongful act is shown in this way not to be a
causa sine qua non of the loss suffered, then no legal liability can arise. On the other hand,
demonstration that the wrongful act was a causa sine qua non of the loss does not necessarily result in
legal liability. The second enquiry then arises, viz whether the wrongful act is linked sufficiently closely or
directly to the loss for legal liability to ensue or whether, as it is said, the loss is too remote. This is
basically a juridical problem in the solution of which considerations of policy may play a part. This is
sometimes called "legal causation".‘
42 Fourway Haulage para 231.
16.1
First plaintiff, in January 2008, commenced with the erection of the office block on Erf
392, which was completed during or about the end of September 2008.
16.2
First plaintiff, in January 2008, commenced with the erection of 47 townhouses on Erf
390, which was completed during or about the end of June 2008.
17.
Notwithstanding repeated demands by first plaintiff, which demands were both oral and
in writing, defendant failed or refused to issue the required s 82 certificate with the consequence
that the building plans were also not formally approved.
23.
If it had not been for the mala fide conduct aforesaid:
23.1
The building plans in respect of the office block erected on Erf 392 would have been
approved;
23.1A Construction of the office block would have commenced by approximately mid-February
2008 and would have been completed by approximately the end of September 2008.
23.2
The building plans in respect of the 47 townhouses erected on Erf 390 would have been
approved;
23.2A Construction of the 47 townhouses would have commenced by approximately mid-
February 2008 and would have been completed by approximately the end of June 2008;
23.3
An occupation certificate would have been issued in respect of both the office block and
the 47 townhouses aforesaid on the completion dates aforesaid;
23.4
First plaintiff would have transferred the land (i.e. Erf 392), by then already sold, and
would have invested the proceeds in an interest-bearing investment by no later than 1 March
2008;
23.5
First plaintiff would have transferred the land (i.e. Erf 390), by then already sold, and
would have invested the proceeds in an interest-bearing investment by no later than 1 March
2008;
23.6
First plaintiff would have been able to sell Erf 391 and to invest the proceeds in an
interest-bearing investment by no later than 1 March 2008;
23.7
First plaintiff, on completion of the office block, would have been refunded the
construction costs of the office block aforesaid in terms of an oral agreement with the purchaser
of the land (Erf 392) and would have invested such refunded amount in an interest-bearing
investment by no later than end September 2008;
23.8
First plaintiff, on completion of the 47 townhouses, would have been paid the aggregate
of the selling prices of the 47 townhouses by then already sold, less the price of the land in
terms of an oral agreement with the purchaser of the land (Erf 390) aforesaid and would have
invested such amount in an interest-bearing investment by no later than end June 2008.
24.
As a direct result of Defendant‘s conduct aforesaid:
24.1
The required s 82 certificate was delayed from December 2007 until 20 March 2009 and
the formal approval of the building plans was similarly delayed.
24.2
First plaintiff was precluded from transferring Erf 392, from receiving the proceeds of the
sale and from investing such proceeds as aforesaid until 13 July 2009.
24.3
First plaintiff was precluded from transferring Erf 390, from receiving the proceeds of the
sale and investing it as aforesaid until July 2009.
24.4
First plaintiff was, for the period 1 March 2098 to 30 June 2009, precluded from selling
Erf 391 and from investing the proceeds in an interest-bearing investment.
24.5
First plaintiff was in law obliged to pay the rates and taxes in respect of all three erven
for the period from when transfer would ordinarily and otherwise have been effected of the three
erven into the names of the purchasers (new owners) until the dates when after the eventual
issue of the s 82 certificate, transfer could reasonably be effected into the names of the
purchasers.
24.6
First plaintiff was precluded from receiving the refund of the construction costs relating to
the office block aforesaid and from investing it as aforesaid until 13 July 2009.
24.7
First plaintiff was precluded from receiving the aggregate of the selling prices of the 47
townhouses until July 2009.
25.
As a result of the defendant‘s mala fide conduct aforesaid and the consequences
thereof as set out above, first plaintiff suffered damages in an amount of R10 406 058
calculated as set out in annexure ―A‖ hereto.
Second plaintiff‘s claim:
‗28.
During approximately January 2006, second plaintiff applied for the approval of a
township development on second plaintiff‘s property aforesaid.
29.
The development was called Extensions 9, 11 and 12 of the Meyersdal Nature Estate
and comprised a residential township development consisting of 289 erven.
30.
Defendant duly approved the establishment of the township.
. . .
41.
If it had not been for the mala fide conduct and resultant delay aforesaid, second plaintiff
would have been able:
41.1
To effect transfer of all 289 erven to the purchasers, alternatively, and to the extent that
the existing concluded deeds of sale were void and the purchasers were not prepared to
proceed with the transactions, to sell all the erven and to effect transfer thereof into the names
of the purchasers;
41.2
To receive payment of the purchase price of each erf at the then total market value for
all the erven of R181 475 000; and
41.3
To invest the proceeds in an interest-bearing investment by no later than 1 March 2008.
42.
As a direct result of the defendant‘s mala fide conduct aforesaid:
42.1
Second plaintiff was, for the period 1 March 2008 to 30 June 2009, precluded from
effecting transfer of 289 erven into the names of the purchasers and from receiving the
proceeds from the sales.
42.2
As a result of the delay aforesaid, second plaintiff suffered a loss of interest on the sum
of R181 475 000 for the period 1 March 2008 to 30 June 2009.
42.3
Second plaintiff was only able to effect transfer and so to realise the proceeds of the
development substantially later, by which time the market value was at least 10% lower than
what it was and what plaintiff would have received had it not been for the delay aforesaid.
42.4
Second plaintiff accordingly suffered a loss, the equivalent of the 10% drop in market
value, in the amount of R18 147 500.
42.5
Second plaintiff, in addition, suffered a loss in that second plaintiff was obliged to
continue paying rates and taxes in respect of the 289 erven over the period of delay until
transfer was in each case given to the new purchaser, which rates and taxes would otherwise
have been payable by the new owners had there not been a delay as aforesaid.
43.
As a result of the defendant‘s mala fide conduct aforesaid and the consequence thereof
as set out above, second plaintiff suffered damages in the amount of R47 667 975 calculated as
set out in annexure ―C‖ hereto.
Third plaintiff‘s claim:
44.
At all times relevant hereto and during the period 1 October 2007 to 21 March 2009,
third plaintiff was the owner of Portions 281 and 283 (portions of Portion 153) of the farm
Klipriviersberg 106 (―third plaintiff‘s property‖).
45.
Third plaintiff‘s property aforesaid fell within the municipal area of defendant.
46.
During approximately January 2006, third plaintiff applied for the approval of a township
development on third plaintiff‘s property aforesaid.
47.
The development was called Extension 8 and 10 of Meyersdal Nature Estate and
comprised a high density residential township development.
48.
Defendant duly approved the establishment of the township.
49.
The township register was thereafter duly opened by the Registrar of Deeds.
50.
Notwithstanding notification by the Registrar of Deeds that the township register had
been duly opened, defendant failed to cause the aforesaid townships to be proclaimed as such
in terms of Section 103 of the Ordinance.
51.
Defendant‘s Chief Engineer had, during the course of 2007, taken a decision that
Extensions 7 to 12 be regarded as one for purposes of the installation of services.
52.
As a result of the mala fide conduct set out in paragraphs 19 to 22 . . . above, it was
clear that even if Extensions 8 and 10 were duly proclaimed, the said Flusk would similarly
refuse to issue the s 82 certificates in regard to Extensions 8 and 10.
53.
In order to mitigate its damages, third plaintiff did not take any steps to compel
proclamation by defendant of Extensions 8 and 10 as such proclamation would have resulted in
third plaintiff becoming liable for the payment of rates and taxes on all of the erven in the
proclaimed townships from date of proclamation onwards, under circumstances where the third
plaintiff would, as in the case of Extensions 7, 9, 11 and 12, not have been able to obtain the
necessary Section 82 certificates so as to enable it to effect transfer to any purchaser.
54.
If it had not been for the mala fide conduct aforesaid:
54.1
The township would have been proclaimed by 1 October 2007, alternatively by 15
December 2007.
54.2
All requirements for the issue of a s 82 certificate would have been complied with by
third plaintiff by 15 December 2007.
54.3
The s 82 certificate would have been issued by 31 December 2007.
54.4
Third plaintiff would have been able to sell the land at the then market value to effect
transfer and to invest the proceeds in an interest-bearing investment, all of which would have
happened by no later than 1 March 2008.
55.
As a direct result of the defendant‘s mala fide conduct aforesaid:
55.1
There was such a delay with the proclamation of the township that by the time that
defendant indicated that it was not prepared to proclaim the township the property market
experienced such a collapse that the development was no longer economically viable.
55.2
The third plaintiff was precluded from selling and effecting transfer of land sold and from
receiving and investing the proceeds of sales as otherwise would have happened.
55.3
The third plaintiff was for the period 1 March 2008 to at earliest 30 June 2009 precluded
from investing such proceeds of sales which otherwise would have happened.
55.4
The third plaintiff consequently suffered a loss equivalent the loss of interest which third
plaintiff would have received from such investment.
55.5
The third plaintiff in addition suffered a loss as a result of at least a 10% drop in market
value of land in the development aforesaid.
56.
As a result of the Defendant‘s mala fide conduct aforesaid, and the consequence thereof
as set out above, third plaintiff suffered damages in the sum of R10 625 330 calculated as set
out in annexure ―D‖ hereto.‘
[47] The appellants‘ pleaded case rests on several assumptions. As I see it, at core,
many of the wounds for which the appellants seek to hold the Municipality liable are
self-inflicted. The first appellant‘s claim was predicated on the fact that it was kept out of
its money as a result of the delay in selling the 47 townhouses and letting the office
block. According to Mr. Booysen, in the expectation of the grant of the s 82 certificate,
he went out to tender for the construction of the 47 residential townhouses and the
office block of approximately 5000 square meters. When the s 82 certificate did not
issue as he had anticipated, he simply decided to proceed with the construction. At that
stage the building plans had been submitted but had not yet – and could not – have
been approved, until the s 82 certificate had issued.
[48] But, it gets worse for the first appellant. Under cross examination, Mr. Booysen
admitted that in terms of an internal company arrangement it was not the first appellant,
but rather two sister companies, that would be entitled to the rental for the office block
and the purchase price flowing from the sale of the 47 townhouses. In re-examination it
emerged that: (a) the first related company, Chestnut Hill Investment 213 (Pty) Ltd
(Chestnut Hill) had purchased Erf 390, on which the 47 townhouses were to be built,
from the first appellant on 8 November 2006 for the sum of R 7 million; and (b) the
second related company, Armadillo Developments 505 (Pty) Ltd (Armadillo), had
purchased the stand on which the office block was to be built from the first appellant on
21 August 2007 for the sum of R 10 million. The first appellant‘s claim thus changed
from its amended form to belatedly allege that it suffered loss in two forms: first, as a
result of the delay in the implementation of the land sale agreements to Chestnut Hill
and Armadillo; and, second, the delay in recovering remuneration in respect of
construction contracts with those two companies to erect the townhouses and office
block. Both sale agreements were concluded after the application for the establishment
of the township but prior to its proclamation as such in terms of s 103 of the
Ordinance.43 Accordingly, both sale agreements fall foul of and are contrary to the
provisions of s 67 of the Ordinance.44 The claim of the first appellant is to be put in the
same position that it would have been in had the illegal and void agreements been
timeously and properly performed.45 The mere expression of the proposition
demonstrates its absurdity.
[49] Insofar as the second appellant is concerned, Mr. Diamond testified:
‗And those cancellations as far as those properties are concerned, where they, to what
extend were they successfully resold to other purchasers? --- My Lady, all properties were
resold. The reality, however was, that the total marketing environment change from 2006 to
2009. There was a global crash of the property market in late 2008 in the US and in Europe, it
resulted in South Africa with the credit crunch in 2009, so where credit was easily available and
people could very comfortably afford properties and buy property and invest in real estate. This
43 103. Notice declaring township an approved township
(1) After the provisions of sections 72, 75, 99 and 101 have been complied with and the authorised local
authority to which application has been made in terms of section 96(1) is satisfied that the township is
situated within its area of jurisdiction, such local authority shall, by notice in the Provincial Gazette,
declare the township an approved township and it shall, in a schedule to such notice, set out the
conditions on which the township is declared an approved township.
(2) After an authorised local authority has published a notice as contemplated in subsection (1), it shall
forward a copy of –
(a) the notice;
(b) the schedule to the notice; and
(c) the general plan of the township, as approved, forthwith to the Director.
44 67.
Prohibition of certain contracts and options
(1) After an owner of land has taken steps to establish a township on his land, no person shall, subject to
the provisions of section 70 –
(a) enter into any contract for the sale, exchange or alienation or disposal in any other manner of an erf
in the township;
(b) grant an option to purchase or otherwise acquire an erf in the township,
Until such time as the township is declared an approved township: Provided that the provisions of this
subsection shall not be construed as prohibiting any person from purchasing land on which he wishes to
establish a township subject to a condition that upon the declaration of the township as an approved
township, one or more of the erven therein will be transferred to the seller.
(2) Any contract entered into in conflict with the provisions of subsection (1) shall be of no force and
effect.
(3) Any person who contravenes or fails to comply with subsection (1) shall be guilty of an offence.
(4) For the purposes of subsection (1) –
(a) ―steps‖ includes steps preceding an application in terms of section 69(1) or 96(1);
(b) ―any contract‖ includes a contract which is subject to any condition, including a suspensive condition.
45 In Schierhout v Minister of Justice Innes CJ said:
‗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 . . . (Code 1.14.5). 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 lawgiver has
expressly so decreed or not; the mere prohibition operates to nullify the act.‘
resulted in 2009 that we sat with 110 properties approximately that was very difficult to sell. I
think our marketing exercise took us more than a year to conclude sale agreements on those
110 properties. My Lady, it was so difficult for our company to actually sell these properties that
we solicited the services of other agents within our area and in surrounds to participate and join
us in our marketing effort and we threw the net as far as wide as possible to ensure that we
could sell these properties. Notwithstanding, My Lady, there were many purchasers that could
not conclude transactions due to credit that was not available to them anymore and it was a
very tough market environment in 2009, My Lady.‘
However, both Mr. Booysen and Mr. Diamond conceded that the sales of the stands
foundational to the second appellant‘s claim occurred in contravention of s 67(1) of the
Ordinance. Both were aware of the prohibition. In that regard Mr. Booysen testified:
‗It is your right to decline any question which may intend to incriminate you. Mr.
Booysen, I am sure as an attorney you are aware of that. The other aspect, while we are on
your agreement, you referred to as a pretty harsh deposit clause, where the standard term is
that a deposit must be paid, and it is a non-refundable deposit. --- That is correct, My Lady.
Not only is the deposit payable, but it is to be kept in an attorney‘s trust account, and into
an interest bearing one in terms of s 78(2)(A) of the Attorney‘s Act, and the interest is to
accrued for the developer, the seller, not for the purchaser who pays the deposit. --- That is
correct, My Lady. My Lady, if I can just mention while we are on the clause, I do not think that
that clause is in any way ambiguous or that any purchaser who buys from us is confused on
what the provisions of that clause is. So, I do not think any purchaser is being misled by that
clause. They know exactly what is meant. So, I am not sure what Mr Peter‘s inference is by
confirming the provisions of that clause. There is no misunderstanding if I read it, and
apparently so when Mr. Peter reads it, there is no misleading statement in that, My Lady.
I am just pointing out what your agreement provides, Mr. Booysen. --- Thank you, Mr
Peter.
But, nowhere in s 19 is there any suggestion that consent was obtained. You agree with
that. --- My Lady . . . [intervene].
Clause 19 agreement. --- My Lady, I am advised that Clause 19 complies with s 70, and
I do not want to further be asked.‘
Like Mr. Booysen, when being cross examined about these agreements, Mr. Diamond
also chose not to answer questions that might incriminate him.
[50] Clause 2.1 of the agreement signed by prospective purchasers reads:
‗On date of signature hereof by the Purchaser, the Purchaser shall pay in full a non-
refundable deposit of R40,000 (Forty Thousand) which shall be paid to the Seller‘s
conveyancers and will be invested in an interest bearing trust account, interest to accrue to the
Seller, in terms of Sec 78(2A) of the Attorneys Act.‘
And, clause 19.1.1 of the agreement provided:
‗It is recorded that the erfs are not registerable at present as the township has not been
proclaimed and the purchaser undertakes not to cancel the agreement at any stage, despite the
provisions of s 67 of the Township and Town Planning Ordinance 15 of 1985.‘
Those clauses appear to me to be inimical to the interests of the community and may
well be contrary to public policy.46 But, it is not necessary to dwell on this because, as
with the first appellant, these agreements are also contra legem.
[51] The third appellant‘s claim stands on a slightly different footing – it is founded on
a depreciation of the value of the stands in an unproclaimed township. The wrongful act
complained of appears to be what can only be described as the inadvertent failure by
the Municipality to proclaim the townships in respect of Ext 8 & 10 at the same time that
the other townships were proclaimed. It is difficult to see the causal nexus between the
failure to proclaim the township, the s 82 certificate and the asserted loss. Absent
proclamation, the third appellant was not entitled to a s 82 certificate. No doubt that is
the reason why the failed review application that came before Legodi J did not relate at
all to Hometalk or Ext 8 & 10. What is more is that Mr. Booysen chose not to insist on
the township being proclaimed because, he then considered it financially advantageous
not to do so. In that regard he testified:
‗Okay. But, your evidence was different. Your evidence was they did not proclaim the
township, nobody knows why it was not proclaimed at this same time as the other townships.
But, you did not push the issue because you did not want to incur rates and taxes while you
were fighting with Mr Flusk. --- That was my evidence, My Lady.‘
[52] Applying the test formulated by Corbett CJ in International Shipping v Bentley, I
am by no means persuaded that the conduct complained of was indeed the cause of
46 Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A); [1989] 1 All SA 347 (A).
the appellants‘ asserted loss. For this reason as well, no legal liability can arise. But,
even assuming factual causation in the appellants‘ favour, serious difficulties with
remoteness remain. Mr. Diamond testified:
‗And you will also agree with me that nobody saw the global financial crises coming? ---
Definitely not me, My Lady. You an expert in the [indistinct]. Okay, any other estate agents you
know of, or property experts that could see this crash coming, is going to wack the South
African property market so badly? --- My Lady, if the US financial gurus on Wallstreet did not
see it coming there was no ways that the best of the best that we have locally would have
envisaged that, My Lady.‘
It goes without saying that the vicissitudes of markets are notoriously difficult to foresee.
[53] In the result, I would accordingly dismiss the appeal with costs, such costs to
include those consequent upon the employment of two counsel.
______________
V M Ponnan
Judge of Appeal
Schippers AJA (Majiedt JA concur):
[54] I have had the advantage of reading the judgment of my colleague Ponnan JA. I
agree with it for the reasons he has given. I wish however, to add the following
observations. First, the appellants have not established causation: that the withholding
of the relevant certificates in the circumstances, caused them to suffer loss. Second,
they have not proved damage: a basic element of a delictual action.
[55] The appellants‘ case, in summary, is this. By December 2007, they had satisfied
all the requirements for the issue of certificates under s 82 of the Town Planning and
Townships Ordinance No 15 of 1986 (the Ordinance). The respondent, acting through
its City Manager, Mr Patrick Flusk, wrongfully, intentionally and mala fide, or motivated
by a mala fide or ulterior purpose, delayed the issue of the s 82 certificates from 15
December 2007 until 20 March 2009, which caused the appellants to suffer economic
loss.
Causation
[56] In Skosana,47 Corbett JA said:
‗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.‘
[57] This court has held that the test for legal causation, ‗is a flexible one in which
factors such as reasonable foreseeability, directness, the absence or presence of a
novus actus interveniens, legal policy, reasonability, fairness and justice all play their
47 Minister of Police v Skosana 1977 (1) SA 31 (A) at 34E-G. See also International Shipping Company
(Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700E-I; Mashongwa v Passenger Rail Agency of South Africa
[2015] ZACC 36; 2016 (3) SA 528 (CC) para 65.
part‘.48 In Fourway Haulage,49 Brand JA cautioned that these factors, ‗should not be
applied dogmatically, but in a flexible manner so as to avoid a result which is so unfair
or unjust that it is regarded as untenable‘.
[58] It is settled that a plaintiff needs ‗only to establish that the wrongful conduct was
probably a cause of the loss, which calls for a sensible retrospective analysis of what
would probably have occurred, based upon the evidence and what can be expected to
occur in the ordinary course of human affairs rather than an exercise in metaphysics‘.50
[59] The first appellant claims that it has suffered economic loss of some R10 million,
comprising largely interest it would have earned on investments. The particulars of
claim state that but for the mala fide conduct of Mr Flusk, the first appellant would have
transferred Erf 390 and Erf 392; and it would have received a refund of the construction
costs of an office block erected on Erf 392 and the aggregate of the selling prices of 47
townhouses erected on Erf 390. It would have invested the proceeds from the sales of
these erven, the aggregate of the selling prices of the townhouses, the refund of the
construction costs and the proceeds from the sale of Erf 391, in an interest-bearing
investment. As a result of the mala fide conduct on the part of the respondent, the first
appellant was precluded from doing so and was obliged to pay rates and taxes on Erf
390, Erf 391 and Erf 392, between the date on which transfer would ordinarily have
taken place and the date on which transfer could reasonably be effected into the names
of the purchasers, after the s 82 certificates were issued.
[60] The respondent denied these allegations and pleaded that the first appellant
entered into the relevant agreements of sale prior to publication of a notice under s 103
of the Ordinance, in terms of which a township is declared an approved township,51 in
contravention of s 67 thereof.
48 Standard Chartered Bank of Canada v Nedperm Bank Ltd 1994 (4) SA 747 (A) at 764I-765A.
49 Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd [2008] ZASCA 2009 (2) SA 150 (SCA)
para 34.
50 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 25.
51 Section 103(1) of the Ordinance reads:
‗After the provisions of sections 72, 75, 99 and 101 have been complied with and the authorised local
[61] Mr Sydney Rean Booysen, an attorney and a director of the first and second
appellants, testified that in January 2006 he submitted an application, in terms of s 96 of
the Ordinance, for the establishment of a township known as ‗Meyersdal Nature Estate
Extension 7‘. One application, called ‗Extension 7‘, was submitted, which encompassed
Extensions 7, 8, 9, 10, 11 and 12; and it stated that the township would be phased in,
as shown on the layout plan. The township comprised, inter alia, a total of 296
residential 1 stands in respect of Extensions 7, 8, 9, 11 and 12; and one office stand,
and high density sites (on which townhouses could be built) on Extension 7. Extensions
7, 9, 11, and 12 were proclaimed as approved townships. Mr Booysen said that he did
not know why Extensions 8 and 10 had not been declared approved townships
simultaneously with the other Extensions, but he did not insist on those declarations,
because then the third appellant would have been liable for rates and taxes, which it
wanted to avoid. I revert to these aspects below.
[62] It is common ground that prior to proclamation of the township on 1 October 2007
in terms of s 103 of the Ordinance, the first appellant sold Erf 390, on which the 47
townhouses were built, and Erf 392. Mr Booysen testified that Erf 390 had been sold to
Chestnut Hill Investments 213 (Pty) Ltd (Chestnut Hill) in November 2006; and Erf 392,
to Armidillo Developments 505 (Pty) Ltd (Armidillo) in August 2007. Mr Neil Diamond, a
director of the second appellant, said that there were some 300 stands in the whole
development; that by November 2006, 90 per cent of these stands had been sold; that
by January 2007, all had been sold; and that all these sales were done in contravention
of the Ordinance. The first appellant‘s claims for economic loss arise from these
contracts: it would have invested the proceeds and earned interest on those amounts.
[63] Section 67 of the Ordinance reads:
authority to which application has been made in terms of section 96(1) is satisfied that the township is
situated within its area of jurisdiction, such local authority shall, by notice in the Provincial Gazette,
declare the township an approved township and it shall, in a schedule to such notice, set out the
conditions in which the township is declared an approved township.‘
‗Prohibition of certain contracts and options:- (1) After an owner of land has taken steps to
establish a township on his land, no person shall, subject to the provisions of section 70-
(a)
enter into any contract for the sale, exchange or alienation or disposal in any other
manner of an erf in the township;
(b)
grant an option to purchase or otherwise acquire an erf in the township, until such time
as the township is declared an approved township: Provided that the provisions of this
subsection shall not be construed as prohibiting any person from purchasing land on which he
wishes to establish a township subject to a condition that upon the declaration of the township
as an approved township, one or more of the erven therein will be transferred to the seller.
(2)
Any contract entered into in conflict with the provisions of subsection (1) shall be of no
force and effect.
(3)
Any person who contravenes or fails to comply with subsection (1) shall be guilty of an
offence.
(4)
For the purpose of subsection (1)-
(a)
―steps‖ includes steps preceding an application in terms of section 69(1) or 96(1);
(b)
―any contract‖ includes a contract which is subject to any condition, including a
suspensive condition.‘
[64] Section 70 of the Ordinance permits an owner of land who has applied to
establish a township, to apply to the Director (an officer in the provincial government
designated to perform functions under the Ordinance) to enter into a contract or grant
an option contemplated in s 67(1), prior to proclamation of a township as an approved
township. Section 70 points to the manifest purpose of s 67 of the Ordinance: to protect
members of the public from buying an erf in an unproclaimed township; and to ensure
that township owners provide appropriate guarantees for the installation of the requisite
engineering services contemplated in Chapter V of the Ordinance, before selling any erf
in that township.52
52 The relevant provisions of s 70 of the Ordinance read as follows:
‗(1) After an owner of land has applied in terms of section 69(1) to establish a township, he may apply to
the Director for consent to enter into any contract contemplated in section 67(1) or to grant any option
contemplated in the latter section, and the Director may-
(a)
in the case where the owner applied to establish a residential township, in consultation with the
local authority concerned;
(b)
in any other case, in his discretion,
consent to the entering into of such contact or the granting of such option subject to any condition the
Director may deem expedient, and thereupon the Director shall notify the owner and, where applicable,
[65] None of the appellants applied to the Director, in terms of s 70 of the Ordinance,
for permission to enter into any contract prior to the proclamation of Extensions 7, 9, 11,
and 12 as townships. Indeed, when cross examined as to whether the appellants
obtained such consent, Mr Booysen declined to answer any further questions regarding
s 67 or 70 of the Ordinance, because, as he put it, he was ‗not on trial for [not]
complying with Section 67 or with Section 70‘. However, Mr Booysen was aware of
these provisions. So too, Mr Diamond. He said that since he became an estate agent,
22 years before the trial, he knew that s 67 of the Ordinance prohibited the sale of erven
in an unproclaimed township, but that its disregard is ‗common practice within the real
estate industry.‘
[66] Contracts concluded in conflict with a statutory prohibition are generally void. A
classic statement of the position was given by Innes CJ in Schierhout:53
‗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 . . . ‘.
[67] The plain wording, context and purpose of s 67 of the Ordinance,54 make it clear
that where, as in this case, any contract of sale entered into in respect of any erf in a
township which has not been declared an approved township, is a nullity. The language
of s 67(2) is unambiguous and places it beyond question that invalidity was intended:
such a contract shall be of no force and effect; and any person who enters into the
contract, is guilty of an offence.
the local authority in writing thereof and of any condition imposed.
(2) On receipt of a notice contemplated in subsection (1) the applicant shall, before entering into the
contract or granting the option, but within a period of 6 months from the date of the consent, furnish to the
local authority a guarantee of such type and for such amount as the local authority may determine and
which is otherwise to its satisfaction that he will fulfil his duties in respect of the engineering services
contemplated in Chapter V, and if he fails to do so the consent shall lapse.‘
53 Schierhout v Minister of Justice 1926 AD 99 at 109; Panamo Properties 103 (Pty) Ltd v Land and
Agricultural Development Bank of South Africa [2015] ZASCA 70; 2016 (1) SA 202 (SCA) para 22.
54 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA)
para 18.
[68] It follows that the contracts of sale in respect of Erf 390 and Erf 392 - entered into
in November 2006 and August 2007, respectively, are null and void because they were
concluded in violation of s 67(1) of the Ordinance. So too, the contracts of sale in
respect of some 300 townhouses - the bulk of which were entered into by November
2006 and by latest, January 2007. The first appellant‘s case is that it would have
deposited the income derived from all these illegal contracts into interest-bearing
investments. But the illegal contracts must be regarded as never having been
concluded.55 That being so, any conduct on the part of Mr Flusk, even if it were mala
fide, logically, could have no effect on a contract which the law regards as never having
been entered into. Put differently, the demand by Mr Flusk in 2008 for a free stand in
the township; or that Mr Diamond transfer his shares in the second appellant to a non-
governmental organisation, is not the factual cause of the first appellant‘s loss: it did not
contribute, let alone materially contribute, to the first appellant‘s loss.
[69] And it is no answer to say that the first appellant entered into the illegal and void
contracts in anticipation that the respondent would issue the s 82 certificates in respect
of Extensions 7, 9, 11, and 12. If this Court were to uphold such an argument it would
not only render s 67 of the Ordinance nugatory, but this Court would also give legal
sanction to a claim founded on a transaction that the lawgiver has expressly prohibited.
This, it cannot do. In our democratic order the courts have a duty to apply and enforce
legislation.56
[70] In Pottie,57 Fagan JA said:
‗The usual reason for holding a prohibited act to be invalid is not the inference of any
intention on the part of the Legislature to impose a deterrent penalty for which it has not
expressly provided, but the fact that recognition of the act by the Court will bring about, or give
legal sanction to, the very situation which the Legislature wishes to prevent.‘
55 Schierhout fn 3 above.
56 Cool Ideas 1186 CC v Hubbard & another [2014] ZACC 16; 2014 (4) SA 474 (CC) para 99.
57 Pottie v Kotze 1954 (3) SA 719 at 726H.
[71] In Cool Ideas,58 a majority of the Constitutional Court held that a court of law
cannot be expected to disregard a clear statutory prohibition; and recognition by a court
of a statutory prohibition backed by a criminal sanction, would be contrary to public
policy and amount to sanctioning an illegality, which is inimical to the principle of legality
and the rule of law.
[72] Consequently, recognition of the first appellant‘s claims for loss of interest,
founded squarely on contracts concluded in violation of an express statutory provision
which declares those contracts to be of no force and effect, would result in the court
lending its aid to the enforcement of illegal acts.59
[73] This brings me to legal causation: whether the mala fide conduct on the part of the
respondent is linked sufficiently closely or directly to the first appellant‘s economic loss,
for legal liability to ensue. This issue is also referred to as remoteness of damage.60 As
was said in Fourway Haulage:61
‗In the final analysis, the issue of remoteness is again determined by considerations of
policy. Broadly speaking, wrongfulness - in the case of omissions and pure economic loss - on
the one hand and remoteness on the other, perform the same function. They are both measures
of control. They both serve as a ‗longstop‘ where most right-minded people, including judges,
will regard the imposition of liability in a particular case as untenable, despite the presence of all
other elements of delictual liability.‘
[74] Likewise, in Country Cloud,62 the Constitutional Court said:
‗So the element of wrongfulness provides the necessary check on liability in these
circumstances. It functions in this context to curb liability and, in doing so, to ensure that
unmanageably wide or indeterminate liability does not eventuate and that liability is not
inappropriately allocated. But it should be noted - and this was unfortunately given little attention
in argument - that the element of causation (particularly legal causation, which is itself based on
58 Cool Ideas fn 10 above paras 53, 55, 61 and 98-99.
59 Cool Ideas fn 10 above para 77.
60 Skosana fn 1 above at 34G; Fourway Haulage fn 3 above para 30.
61 Fourway Haulage fn 3 above para 31.
62 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC
28; 2015 (1) SA 1 (CC) para 25.
policy considerations) is also a mechanism of control in pure economic loss cases that can work
in tandem with wrongfulness.‘
[75] The appellants‘ claims fail on this basis also. A strong policy consideration which
militates against the imposition of liability in this case, is that the economic loss is
inextricably linked to acts done in direct contravention of a statutory prohibition, backed
by a criminal sanction. This in itself, in my view, negates legal causation and should
non-suit the first and second appellants. Apart from this, the mala fide conduct on the
part of the respondent is not linked sufficiently closely or directly to the loss that the
appellants are alleged to have suffered. And the relationship between the respondent
and the appellants is not sufficiently proximate: under the Ordinance, a municipality‘s
duties are overwhelmingly public in nature; and those duties are to the public at large
and not to an individual developer. Indeed, the Ordinance imposes no explicit duties on
a municipality to a property developer. Further, the loss is of such a kind that it was not
reasonably foreseeable to a person in the position of the respondent, a local authority -
a lost opportunity of making an investment in an interest-bearing account, because an
official in its employ withheld a document; and, in the case of the second and third
appellants, reduction in the value of property on account of a global financial crisis
which nobody saw coming. In the circumstances, the imposition of liability on the
respondent would not only be untenable, but also give rise to indeterminate liability.
[76] The first appellant‘s claim for interest relating to the construction costs of an
office block on Erf 392 likewise cannot succeed, because it is directly founded on an act
performed in violation of the law. The particulars of claim state that but for Mr Flusk‘s
mala fide conduct, the building plans for the office block would have been approved;
and its construction would have commenced by mid-February 2008 and been
completed by the end of September 2008. On completion of the office block, the first
appellant would have been refunded the construction costs thereof in terms of an oral
agreement with the purchaser of Erf 392; and would have invested the refunded amount
in an interest-bearing investment by the end of September 2008. The respondent
pleaded that the appellants were precluded from relying on these facts to claim
damage, because their conduct was contrary to s 4 of the National Building Regulations
and Building Standards Act 103 of 1977 (the Building Regulations and Standards Act).
[77] It is common ground that construction of the office block commenced in January
2008, without building plans having been approved by the respondent. Section 4(1) of
the Building Regulations and Standards Act provides that no person shall erect any
building in respect of which plans and specifications are to be drawn and submitted
under the Act, without prior written approval of the local authority concerned. Section
4(4) makes it clear that any person who erects a building in contravention of s 4(1) is
guilty of an offence and liable on conviction to a fine not exceeding R100 for each day of
illegal construction of the building. A contract in violation of a statute which imposes a
criminal sanction is void.63 So, any refund of construction costs would have been made
pursuant to actual construction undertaken in contravention of the Building Regulations
and Standards Act. As already stated, a court cannot sanction a claim which arises from
a flagrant violation of the law.
[78] It follows that the argument of Mr Maritz, who with Mr de Koning appeared for the
appellants, that the contracts entered into in contravention of s 67 of the Ordinance, and
the Building Regulations and Standards Act, are ‗technically unlawful‘ and that the court
should adopt a ‗pragmatic approach‘ to the appellants‘ claims for damage because the
illegal contracts were completed after proclamation of the township, is untenable.
[79] In any event, the first appellant presented no evidence of any construction
agreement showing the construction costs which allegedly would have been refunded to
the purchaser of Erf 392, or of any loss occasioned by the delay in receiving payment
pursuant to such an agreement, aside from Mr Booysen‘s say-so in re-examination,
when the appellants presented a substantially different case regarding their alleged
loss, from that originally pleaded. And it is inconceivable that the first appellant, a
company, would have entered into an ‗oral‘ contract with another company, Armidillo,
63 Metro Western Cape (Pty) Ltd v Ross 1986 (3) SA 181 (A) at 188G.
for a refund of the construction costs of an office block. There is simply no evidence of
such an agreement.
[80] The appellants‘ claims for economic loss in relation to rates and taxes for the
period during which the s 82 certificates were delayed, are incompetent. On their own
showing, these claims were finally settled with the respondent in a settlement
agreement, pursuant to the review proceedings in which the appellants sought an order
compelling the respondent to issue the s 82 certificates. Moreover, the claims for rates
and taxes were never intended to form part of the appellants‘ damages claim. That
much is clear from Mr Booysen‘s evidence:
‗But what we see here in Clause 3 at least, something addressing your complaint about
having paid rates and taxes over this delayed period --- I see that in the clause. Is there a
question . . . ?
Yes, because it seems to me that your damages claim that you are envisaging, or that you have
in mind, is something different from the rates and taxes --- That is correct . . .
So, the rates and taxes and your complaint for the rates and taxes for the period delayed, is
being addressed in the settlement agreement --- That is correct . . . ‘
[81] Mr Booysen confirmed this in a letter to the respondent dated 27 March 2009, in
which he said:
‗We refer to the above matter and are advised that the item confirming that the rates and
taxes be written off was referred back and no decision was taken at the council meeting of 26
March 2009.
We have been handed the item and wish to record that this is in breach of the Settlement
Agreement as the item does not recommend that the rates and taxes be written off as agreed.
This is not only in breach of the Settlement Agreement but also not in the spirit of the
negotiations around the settlement agreement. We hereby request your urgent feedback and
advices as to how you intend to rectify this breach‘ (Emphasis in the original).‘
[82] In any event, the first appellant‘s claim for loss of interest in relation to rates and
taxes fails, because the relevant erven were sold in contravention of s 67(1) of the
Ordinance. Its claim for interest regarding the aggregate of the selling prices of the 47
townhouses that it would have received, falls into the same category.
[83] I come now to the second appellant‘s claim. It contends that it would have been
able to effect transfer of 289 erven in the township (all of which had been sold contrary
to the provisions of s 67 of the Ordinance) to purchasers, but for the respondent‘s mala
fide conduct. Alternatively, and to the extent that those deeds of sale were void, the
second appellant would (thereafter) have sold all the erven, received payment of the
purchase price of each erf at the then total market value of R181 475 000 and invested
the proceeds in an interest-bearing investment. I interpose to say that this is an
acknowledgement by the second appellant that the relevant deeds of sale were null and
void because they were concluded in contravention of s 67 of the Ordinance. This
underscores the fact that at the relevant times, Mr Booysen knew that those contracts
were illegal and a nullity. To return to the particulars of claim: as a result of the delay,
the second appellant suffered a loss of interest on the sum of R181 475 000 for the
period 1 March 2008 to 30 June 2009. Then it is said that the second appellant was
able to effect transfer and realise the proceeds of the development only substantially
later, by which time it suffered a loss equivalent to a 10 per cent drop in the market
value of the erven, amounting to R18 147 500. The second appellant also claims to
have suffered loss because it was obliged to continue to pay rates and taxes in respect
of the 289 erven during the period of delay until transfer was given to the respective
purchasers. The second appellant alleges that it suffered a total loss of R47 667 975.
[84] The respondent denied that the second appellant suffered any loss. In
amplification of that denial it pleaded that the second appellant entered into the
agreements of sale contrary to the provisions of s 67 of the Ordinance; and that the
drop in market value, the changing economic conditions and the loss alleged were
neither foreseen nor reasonably foreseeable.
[85] The second appellant‘s claim for the alleged economic loss also fails because
the 289 erven were sold in contravention of s 67 of the Ordinance. Its claim for loss of
interest is inextricably bound up with those sales, which are null and void. The mala fide
conduct on the part of the respondent, was not a factual cause of this second
appellant‘s loss, for the reasons advanced above. Further, the second appellant
appears to acknowledge that the relevant deeds of sale are indeed void, but contends
that it would have sold the 289 erven to other purchasers. However, there is no
evidence to support this. On the contrary, the facts point the other way. As already
stated, Mr Diamond testified that there were some 300 stands in the whole
development, all of which were sold by January 2007 prior to proclamation of the
township, in contravention of s 67 of the Ordinance. The second appellant‘s claim for
rates and taxes likewise fails for these reasons; and because it formed part of the
settlement agreement.
[86] Finally as regards the second appellant‘s claim, there is no evidence to support
the alleged loss equivalent to a 10 per cent drop in the market value of the 289 erven –
Mr Booysen was simply not qualified to express an opinion on this topic. But in any
event, the alleged loss in market value does not begin to meet the test for legal
causation: it is too remote. Mr Booysen conceded that nobody saw the global financial
crisis coming, nor its impact on the South African property market. He said:
‗If the US financial gurus on Wall Street did not see coming there was no way that the best
of the best that we have locally would have envisaged that . . . .‘
[87] The third appellant‘s claim for an alleged loss of some R11 million, relating to
Extensions 8 and 10 of Meyersdal Nature Estate which is registered in its name, may be
summarised as follows. The respondent ‗failed to cause the aforesaid townships to be
proclaimed as such in terms of Section 103 of the Ordinance‘. The third appellant, ‗in
order to mitigate its damages‘, did not take any steps to compel proclamation of
Extensions 8 and 10, because it would then have been liable for rates and taxes on all
the erven in the proclaimed townships. Even if Extensions 8 and 10 had been duly
proclaimed, Mr Flusk would have refused to issue the s 82 certificates in respect of
these townships. As a result of Mr Flusk‘s mala fide conduct, there was such a delay in
the proclamation of the township that by the time the respondent indicated that it was
not prepared to proclaim the township, the property market experienced a collapse that
the development was no longer economically viable. The third appellant was precluded
from selling and effecting transfer of land sold and from investing the proceeds of those
sales; and it suffered loss of interest from such investment as well as a loss of at least a
10 per cent drop in the market value of land.
[88] On the facts, the third appellant likewise did not prove causation. The cause of
whatever loss it is alleged to have suffered cannot be attributed to the failure to issue
the s 82 certificates. Put another way, the failure to issue the s 82 certificates was not
the factual cause of the loss.64 Mr Booysen himself testified that he could not ask for a s
82 certificate because Extensions 8 and 10 had not been proclaimed and that he did not
push for proclamation of Extensions 8 and 10, because third appellant did not want to
incur liability for payment of rates and taxes. So, the alleged delay in the proclamation of
Extensions 8 and 10 did not come about as a result of the failure to issue the s 82
certificates. In fact, Mr Booysen never asked for the certificates in respect of Extensions
8 and 10. Instead, the alleged delay was caused by Mr Booysen‘s deliberate decision
not to insist upon proclamation of the township, so as to avoid liability for rates and
taxes. Thus, there can be no talk of ‗mitigation of damages‘.
[89] In addition, there is simply no evidence that the respondent had indicated that it
was not prepared to proclaim Extensions 8 and 10 as townships. On the contrary, Mr
Booysen testified that nobody knew why Extensions 8 and 10 were not proclaimed at
the same time as the other extensions in Meyersdal Nature Estate. Unsurprisingly, the
third appellant abandoned its claim for damages for some R14.7 million initially brought
against the respondent, on the basis that the latter had ‗wilfully alternatively negligently
failed to proclaim Extensions 8 and 10 of the Meyersdal Nature Estate‘.
[90] Aside from this, it is common ground that there were certain issues outstanding
which prevented Extensions 8 and 10 from being proclaimed as townships. These
issues were recorded in the settlement agreement. They included the following. The
64 International Shipping Company fn 1 above at 700E-I.
developer (the third appellant) had to prove to the respondent‘s satisfaction that the
application for the opening of township registers had been properly submitted, that
those registers had indeed been opened and the third appellant was given an extension
of time in terms of s 101(2) of the Ordinance to comply with those requirements. A
notice under s 103, declaring a township an approved township, can only be
promulgated if the provisions of inter alia, s 101 have been complied with.65 Moreover,
the third appellant acknowledged that its entitlement to the proclamations of Extensions
8 and 10 was subject to the conditions contained in paragraphs 9-17 of the settlement
agreement.
[91] The third appellant has also not proved legal causation, for the reasons
advanced above. On its own evidence, the alleged loss as a result of the collapse in the
property market was not reasonably foreseeable. Mr Booysen confirmed that nobody
could have foreseen the 2008 global financial crisis, neither its impact on the South
African property market. Mr Diamond said that the marketing environment changed from
2006 to 2009; and there was a global crash of the property market in late 2008 in the
United States and Europe, resulting in a credit crunch in South Africa in 2009.
[92] Finally, the evidence discloses that at the time of the trial, in July 2015, Extension
8 had not been developed at all, and Extension 10 had been developed two years
before. The third appellant did not sell any erven in those extensions, and still has them.
Leaving aside the remoteness and foreseeability of any theoretical loss which the third
appellant might have sustained had it sold those erven, Mr Booysen‘s evidence was
that the property market after the global financial crisis was better; and that any loss it
might have sustained would have been recovered by the time of the trial - six years
later. Therefore, on the probabilities, and accepting for the purpose of argument that it
has proved causation and damage, the third appellant has not sustained any loss.
65 See s 103(1) of the Ordinance, fn 5 above.
Damage
[93] Proof of damage is fundamental to a delictual claim.66 Assessment of damage is
not the same as quantifying damage. Before quantifying damage, one must ascertain
whether any loss has in fact been suffered.67 A plaintiff must produce sufficient evidence
to enable a court to reasonably find that it is has suffered damage.68 Damage is
assessed by comparing the utility value of a plaintiff‘s patrimony before and after a
damage-causing event.69
[94] In its plea, the respondent denied that the appellants had suffered damage, and
they were thus required to prove that they had suffered loss. Common to the claims of
all three appellants, is Mr Booysen‘s say-so that they had lost revenue: interest they
were expecting to receive. His evidence as to the economic loss which the first
appellant suffered, reads as follows:
‗As a result of the delay, Mr Booysen, with the issuing of the Section 82 certificates what
were the consequences to these three companies, first, second and third plaintiffs? --- M‘Lady
firstly in respect of Extension 7, we . . . now had a completed office block, which was completed
around September 2008 and we could not rent out these buildings . . .
The office space inside the buildings? --- Or the office space inside the buildings and therefore .
. . the damages that we suffered is that we had this completed building which we could not let.
[I]n respect of the office block Extension 7. In respect of the townhouses on stand 390 . . . there
were 47 townhouses completed in June 2008 and we could not sell or transfer those stand[s], or
those sectional title unit[s] and therefore we lost interest on receiving the revenue of those sales
. . .
. . .
And had you been able to receive rental income from the letting of those premises what would
have happened to the income? ---
. . .
Well we would have put it in the bank and earn[ed] interest on it . . .
66 Neethling et al Law of Delict (2015) 7ed at 221; Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at
838H-839A.
67 J C Van der Walt and J R Midgley Principles of Delict (2016) 4ed at 304.
68 De Klerk v Absa Bank Ltd & others 2003 (4) SA 315 (SCA) para 26.
69 Neethling fn 20 at 246.
As far as Extension 7 is concerned, was there any, the remainder of that extension that was not
utilised, that you were going to deal with in some way or another? --- M‘Lady, we had a third
stand . . . and at that point in time the property market was very buoyant and we would have
been able to sell that stand to other developers around that time, as it was zoned for offices and
residential and we were able, would be able to sell those stands to other developers.
And what would you have done with the revenue received from such transaction? --- We would
also put that in the bank and earn interest on it M‘Lady.‘
[95] Mr Booysen‘s evidence regarding the economic loss suffered by the second
appellant, reads:
‗We deal now next with the consequences relating to Extensions 9, 11 and 12? --- M‘Lady,
those stands were mostly sold towards the end, during the second half of 2007. We would have
been able to transfer those stands to its various purchasers, received the revenue on those
stands and that revenue in a bank earns interest and that is how we calculated the damages we
suffered in that regard. We took investment interest, not interest one would earn if you borrowed
money.‘
[96] Mr Booysen described the economic loss which the third appellant suffered, as
follows:
‗M‘Lady, in respect of Extensions 8 and 10 . . . [t]he municipality did not proceed to
proclaim those two townships despite that request. The implication of that is, as stated before,
the market was very buoyant and we would have been able to sell those stands to other
developers for substantial prices in that time. There was a very high demand in that area, as
you can see from the rate [at] which we sold the stands, there was a very high demand for
townhouses as well, and therefore, because it was not proclaimed we could not ask for the
Section 82 certificate, and therefore we could not receive the revenue on those stands to put
into the bank and receive interest on it. . . .‘
[97] All the appellants are companies. But there is not a shred of evidence, nor a
single document or piece of paper to show any investments by the appellants in any
interest-bearing accounts, to indicate that they probably could, let alone would, have
made an investment, but that they were deprived of that opportunity and of earning
interest; and consequently that they suffered damage. In this regard, the appellants
have produced no evidence of their assets, more specifically, cash invested in short- or
long-term investments, to show a policy or track record of interest-bearing investments
that points to actual damage suffered. Indeed, there is no evidence to show that the
amounts which the appellants expected to receive from rental (which turned out to be
wrong), or the proceeds from the sales of the 47 townhouses or erven, constituted
surplus cash which they could have invested, to begin with. The demand for proof in a
case such as this, in my opinion, is more exigent – the appellants claim that they would
have deposited funds into interest-bearing investments, instead of utilising those funds
elsewhere, or in their ordinary business operations.
[98] De Klerk v Absa Bank70 is instructive on proof of damage. De Klerk, an attorney,
sued Absa Bank based on a fraudulent or negligent misrepresentation, which caused
him to make a poor investment with an assurer. His claim was based on his averment
that, had he put the money invested with the assurer in some alternative investment, he
would have been much better off. The damage which he claimed was the difference
between what his investment with the assurer had yielded and the return that he would
have received had the money been otherwise invested. The court a quo granted
absolution from the instance on the basis that De Klerk did not adduce any evidence to
prove his loss, more specifically that he did not prove that he would have invested
elsewhere had the money been available to him.71
[99] After analysing the evidence presented by an actuary called by De Klerk, who
concluded that De Klerk would have invested two thirds in growth stocks (unit trusts or
shares), one sixth in taxable interest-bearing investments and one sixth in redemption of
an interest-bearing debt such as a mortgage bond; and that he had suffered a loss of
R111 800,72 Schutz JA then turned to De Klerk‘s evidence as regards proof of damage.
He said:
70 De Klerk fn 22.
71 Ibid para 2.
72 Ibid paras 16-19.
‗[21] From the nature of his practice as an attorney he had to invest his clients‘
money daily, in transactions generally, including those related to property and deceased
estates. Some of the investment would be in call accounts, others in notice deposits,
and others in deposits for fixed terms of various durations. Concerning his own affairs,
he had life policies, endowment policies and annuities, the latter two payable when he
turned 60 or 65. An old friend was his broker and each year before 28 February, they
would review his affairs so as to ensure that he took out insurance and annuities in a
way that would minimise his tax liability. He had insurance policies other than the one
with Commercial Union. Then comes a passage which Mr Maritz, De Klerk‘s counsel
(who did not appear in the court below), emphasised heavily in argument. Some time in
1996, to his great shock, he learned for the first time that Commercial Union intended
paying him much less then he believed he had been promised. In a letter to United
Bank dated 15 November 1996 he said, with reference to the scheme:
‗Ek het die skema by u aanvaar met die uitsluitlike bedoeling om my aftredingsannuïteit
te versterk’ ( my emphasis added).
De Klerk confirmed this intention in his evidence. This statement, said Mr Maritz, expressly tells
us that his client was bent on investment and, he submitted, it is reasonable to infer that had he
not invested in the scheme he would have invested similar amounts elsewhere. Generally
annuities, he said, are not speculative investments. Add to this that not only did De Klerk in fact
invest in the scheme but he saw the matter through for the whole of ten years, notwithstanding
that in 1996 he found it difficult to keep up its payments. Indeed, by 1998, when the ten years
had run he had not only paid all the interest but had repaid some R10,000 of the loan, without
any obligation to have done so.
[22] Two arguments are raised by the respondents. One is that the fact that De Klerk‘s
circumstances were straitened in 1996 indicates that he would not, in all likelihood, have
invested the full R199 230,42 elsewhere. The other is that it was Du Toit‘s active marketing that
caused De Klerk to invest, so that it is not to be assumed that, Du Toit absent, he would have
invested. As I shall seek to explain later these points may be relevant when it comes to
quantification of the damages, but they do not in themselves negate a reasonably possible
inference that De Klerk would have invested elsewhere.‘
[100] Consequently, Schutz JA found that the statement by the court a quo that there
was no evidence to support a conclusion that De Klerk would have made alternative
investments was wrong: the evidence showed that De Klerk was a knowledgeable and
active investor; and the actuary‘s evidence could reasonably be interpreted to mean that
he had considered a spread of investments. The appeal was upheld, and the order
granting absolution from the instance was set aside.
[101] In the instant case, the appellants, by contrast, presented no evidence to show
that they have a history of investing generally, let alone investing the proceeds from the
sales of property in interest-bearing investments. Neither did they place any facts before
the court from which an intention to invest such proceeds may be inferred. There is also
no evidence of any of the appellants‘ assets or liabilities to show any cash surplus
capable of being invested. Their evidence, at its highest, is Mr Booysen‘s say-so that
they would have invested in interest-bearing investments.
[102] In any event, on his own showing, Mr Booysen‘s evidence as to the economic
loss which the appellants suffered, is unreliable, opportunistic and improbable. As
appears from his evidence quoted above, the first appellant‘s claim was prosecuted on
the basis that it was the landlord of the completed office block and the vendor of the 47
townhouses; and that it was deprived of rental and the proceeds from the sale of the 47
townhouses, for the period during which the issue of the s 82 certificates was delayed.
However, in cross-examination Mr Booysen conceded that the first appellant was not a
landlord, neither a vendor of townhouses. Instead, Armidillo was the landlord and
Chestnut Hill, the vendor. In short, the first appellant‘s initial claim was roundly refuted.
The particulars of claim were then amended to claim loss of interest on the proceeds of
the sales of Erf 390 and 392, and a refund of construction costs of an office block. Mr
Booysen knew that the appellants‘ claims for rates and taxes could not, and did not,
form part of their damages claim: they were settled in accordance with the settlement
agreement. The claims for rates and taxes are opportunistic and contrived. As regards
the second appellant, Mr Booysen knew that the sale of the 289 erven were null and
void, hence the alternative claim that if they were void, that the second appellant would
thereafter have sold those erven and invested the proceeds in an interest-bearing
investment. As already stated, there is no evidence that the 289 erven were
subsequently sold to new purchasers, which demonstrates the unreliability and
improbability of the second appellant‘s version. The third appellant‘s claim outlined
above, on the facts, is plainly untenable: there is no evidence that the respondent
refused to proclaim Extensions 8 and 10 as townships; and, on the probabilities, the
third appellant suffered no loss.
[103] Finally as regards proof of damage, a plaintiff with no right to earn lost income
from an illegal act, cannot prove that it has suffered damage in delict. In this regard,
Neethling and Potgieter say:73
‗Reinecke correctly argues that the existence of damage does not depend on
wrongfulness, but adds that the frustration of an expectancy to earn income from an illegal
activity (caused by bodily injuries) cannot be seen as damage, since an expectation of a benefit
which is contrary to law is not recognised. Although criticism has been expressed that his
approach implies that wrongfulness is elevated to a prerequisite for damage, Reinecke‘s theory
appears to be sound. In this kind of situation, it is not only damage that is absent, but also
wrongfulness, as the plaintiff had no right to earn the lost income. However, the reason for the
absence of damage is not because wrongfulness has not been proved; it is because no asset of
the plaintiff‘s patrimony (estate) has been impaired.‘ (Emphasis in the original.)
[104] The first and second appellant‘s claims for economic loss - interest they would
have derived from the proceeds of illegal and unenforceable contracts - cannot be
regarded as damage: it is an expectation of a benefit which is contrary to law and, in the
circumstances, cannot be recognised.
[105] In conclusion, the appellants have not established causation: that the alleged
conduct on the part of the respondent caused them to suffer economic loss. They have
also not proved that they suffered damage.
73 Neethling fn 20 at 227, footnotes omitted.
[106] I would accordingly dismiss the appeal.
______________
A Schippers
Acting Judge of Appeal
Cachalia JA (Dissenting Judgment)
[107] I have had the benefit of reading the judgments of Ponnan JA (‗the first
judgment‘) and Schippers AJA (‗the second judgment‘). The first judgment concludes
that the appellants have not established that the Municipality acted wrongfully in
delaying the issue of the s 82 certificates, nor suffered any loss as a result of the delay.
The second judgment also concludes that no loss was established. I regret that I am
unable to agree with their conclusions. I would uphold the appeal.
[108] The appellants, to whom it shall be convenient to refer collectively as ‗the
developer‘, seek to hold the Municipality vicariously liable in delict for pure economic
loss caused by its City Manager, Mr Flusk. The essential allegation in the particulars of
claim is that he intentionally and mala fide – and therefore, wrongfully – withheld the
issue of s 82 township certificates in a township development. Their case is that
Mr Flusk did so, on spurious and dishonest grounds, over a period of 15 months thereby
causing them to suffer patrimonial loss. The certificates were ultimately issued after the
Municipality dismissed him.
[109] In addition, the developer seeks to prove that Mr Flusk was motivated by an
ulterior purpose in that he had attempted, in return for the issue of these certificates, to
extort:
(a)
A bribe by demanding that Mr Diamond gave him a stand in one of the
developments without paying for it;
(b)
The production of a sales list of people who had bought property in these
developments; and
(c)
A transfer of Mr Diamond‘s shareholding in the second appellant to a non-
governmental organisation (NGO) of his choice.
[110] The facts upon which these allegations were founded were not pleaded, which
caused the Municipality to complain – both in the court a quo and in this court – that it
had difficulty defending the claim. The contention has some merit, but it does not avail
the Municipality in this case. For, the Municipality did not seek further particulars to
prepare for trial, as it was entitled to, under rule 21 of the Uniform Rules. The factual
disputes were thus widened and canvassed fully in the evidence. It therefore behoves
this court to deal with the appeal on this basis and not only on the pleaded case.74
[111] It is important to understand the significance of s 82 certificates in the township
development process before considering the disputes in this appeal. Once a developer
has secured land and completed environmental impact studies, approval is sought for
the approval of a township in terms of The Town-Planning and Townships Ordinance 15
of 1986 (The Ordinance). (Here, the township approval for various extensions, namely
extensions 7 to 12, was granted in June 2007.) The developer must then comply with
the pre-proclamation conditions, the most important of which is to secure a general plan
from the surveyor-general. A certificate in terms of s 101 of the Ordinance is then
obtained from the Municipality indicating such compliance. The Registrar of Deeds
notifies the Municipality that a township register has been opened and that the township
may be proclaimed in the provincial gazette. Once proclaimed the developer becomes
liable for rates and taxes. In this case the townships, with the exception of extensions 8
and 10, were proclaimed on 1 October 2007. The omission in respect of the two
extensions was apparently an oversight on the part of the Municipality.
[112] Following upon the proclamation, s 116 of the Ordinance provides for necessary
internal and external engineering services in a development. Internal services, which
are the responsibility of the developer, are those inside the boundary of the
development such as: roads and storm water; water and sewerage; electrical
installation and reticulation. External services are those outside the boundary, such as
the bulk sewer line, main electricity and bulk water supply and are generally the
responsibility of the Municipality.
74 Shill v Milner 1937 AD 101 at 105. (See noter-up for repeated application of this authority.)
[113] In regard to the installation of internal services, the procedure is that the
developer‘s engineer submits the design and diagrams to the Municipality‘s chief
engineer for approval. Here, the Municipality accepted the designs and confirmed that
there were sufficient bulk services available for the proposed township development to
go ahead. The developer then procured contractors to provide the services.
[114] From February 2007, various services were installed and meetings held with
municipal officials, who were kept abreast of developments. By 11 October 2007 the
water, sewerage and roads were 100 per cent complete with only minor snags needing
correction. Electrical reticulation was incomplete but all extensions were to be
completed by the end of November 2007. By 15 December 2007 the services were
practically or substantially completed. The developer had provided a guarantee that the
installation would be complete by mid-April, 2008. There was therefore no legal
impediment to the s 82 certificates being issued. The court a quo was clearly correct in
making this finding and in this court the Municipality did not take issue with it.
[115] It is important to note that until the s 82 certificate is issued, a developer cannot
register its ownership of an erf in a township. Registration may only take place, in the
words of the Ordinance, once the Municipality has ‗certified that it will within a period of
three months from the date of the certificate, be able to provide the erf with such
services as it may deem necessary and that it is prepared to consider an application for
the approval of a building plan in respect of the erf‘. Only then may a developer transfer
erven in a development to purchasers. It is evident therefore that any delay in the issue
of certificates may potentially have serious financial implications for a developer. It is the
developer‘s case that this is precisely what happened here.
[116] Mr Flusk became the City Manager on 1 May 2006. For present purposes I
accept that Mr Flusk initiated the Pasco investigation into the circumstances by which
the developer acquired the land in issue in this appeal after he became aware of an
anonymous tip-off that raised questions concerning the probity of a land swap
transaction by which the developer acquired land, which is the subject of the present
dispute, from the Municipality in 2005. And that some of the steps he took afterwards,
including obtaining an opinion from senior counsel regarding the Municipality‘s failure to
comply with s 14 of the Municipal Finance Management Act 56 of 2003 (the MFMA),
were actuated by this concern. I accept too that he probably believed that Mr Diamond
had acquired an interest in the development improperly, although this was never
proved. These matters are dealt with in some detail in the judgment of the court a quo
and in the first judgment. However, what is in issue in this appeal is whether Mr Flusk‘s
conduct in withholding the s 82 of the certificates was mala fide, despite his initial
concerns.
[117] On Mr Flusk‘s own evidence, but unbeknown to the developer, he had decided,
by the end of December 2007, not to issue the certificates because of these concerns.
However, as will become apparent from what follows, the evidence, in my view, showed
that in withholding these certificates he unlawfully abused his authority. What followed
over the next fifteen months was wilful and mala fide conduct by him to prevent the
certificates from being issued. In so doing he realised that his conduct would cause
harm to the developer.
[118] It is beyond dispute that by the end of December 2007, the developer had met
the requirements for the certificates to be issued. In January 2008 the developer,
represented by Mr Booysen, who was unaware that Mr Flusk had initiated investigation
into the probity of the 2005 land transaction, wrote to the Municipality to issue the
certificates urgently. The delay, he pointed out, was ‗causing substantial financial losses
daily‘. On 31 January 2008 the Municipality‘s Council passed a resolution authorising
the City Manager to regularise the land transaction following a legal opinion (the
Trengove opinion), that the position be reconsidered and that the courts be approached
to validate the transaction. Mr Flusk did not act on the resolution, even though, as Mr
Leibbrandt, the Deputy City Manager testified, he was obliged to.
[119] Mr Leibbrandt was an excellent witness and had no reason not to tell the truth.
None of his evidence was impugned in cross-examination. He was aware of Mr Flusk‘s
concerns regarding the land transaction and Mr Diamond‘s interest in the development.
His advice to Mr Flusk was to ring-fence these issues and not to make them a condition
for granting the certificates. In other words, if Mr Flusk wished to pursue these matters
he should do so through a separate process. Mr Flusk denied that Mr Leibbrandt had
given him this advice, but he cannot be believed, for it can hardly be disputed that he
was not a credible witness.
[120] Mr Booysen pressed on trying to secure the certificates and met with Mr Flusk
and his staff on 26 February 2008. He arrived at the meeting with documentation from
the Municipality showing that the requirements for the issue of the certificates had been
met. Despite this, Mr Flusk was not prepared to issue the certificates. The only reason
given on this occasion was that he had a problem with the land valuation. Mr Booysen‘s
view was that the developer had acquired the land from the Municipality properly and
that the certificates could not be withheld for an unrelated and unsubstantiated reason.
It is also apparent that whatever Mr Flusk‘s concerns with the land valuations were, he
now had an obligation, following the Council resolution, to regularise the land
transaction. Mr Booysen was, therefore, justified in insisting that if Mr Flusk did not
issue the certificates he would have no option but to seek relief in court.
[121] The developer‘s threat to seek relief in court only emboldened Mr Flusk. On 28
February 2008, he procured an extraordinary resolution from Council authorising only
him to issue s 82 certificates. Until then an official below the City Manager had
delegated authority to perform this function; for good reason: the determination of
whether engineering services were practically completed was a technical question
hardly warranting the attention of the City Manager. It is apparent that Mr Flusk took this
unusual step to obstruct the developer‘s attempts to obtain the certificates. Mr Flusk‘s
evidence was that he had done this because Mr Booysen was putting the officials under
pressure to issue the certificates. But there is, however, no suggestion that Mr Booysen
had done anything untoward. His approach to various officials was aimed at expediting
the issue of the certificates to which the developer was lawfully entitled.
[122] On 14 March 2008, Mr Booysen filed papers in the North Gauteng Division of the
High Court to compel the Municipality to issue the certificates. He alleged that all the
requirements for the issue of the s 82 certificates had been met and that Mr Flusk was
abusing his powers by withholding them. Mr Flusk opposed the application and filed a
counter-application without having obtained the authority of the Council to do so.
Despite being aware of his officials‘ advice that the requirements for the issue of the
certificates had been met he suggested, falsely, that the services had not been
satisfactory completed. His main grounds for opposing the order sought on the merits
related to the two irregularities in the land transaction: the first was that the transaction
had been approved by the Municipality‘s Corporate Affairs Committee irregularly as it
had no power to make this decision, and secondly, that the s 14(2) of the MFMA had
not been complied with. These were also the main grounds upon which he relied to
have the transaction set aside. Both these matters were dealt with by the Trengove
opinion of November 2007 in which the Municipality was advised how to proceed to
regularise the transaction. The Council of the Municipality, as I have mentioned,
authorised the City Manager (Mr Flusk) to take the necessary steps towards this end.
This was a crucially important fact that Mr Flusk was obliged to have disclosed in his
papers, but did not, which is probably why he attempted to institute the counter-
application without having obtained the authority of Council.
[123] Mr Flusk also opposed the relief claimed on the ground that the developer had
failed to use internal appeal remedies in terms of s 124 of the Ordinance. As I will
demonstrate below, this defence was also not bona fide. In the result, on 20 June 2008,
the court dismissed the application because of the developer‘s failure to use the internal
appeal appeal remedies, and Mr Flusk‘s counter-application for lack of authority.
[124] The developer then began pursuing an internal appeal before the Services
Appeal Board (SAB), established in term of s 123 of the Ordinance. The SAB may
decide various services-related disputes. The appeal was under s 124(1)(c), which
concerns decisions made under s 119 pertaining to whether engineering services have
been installed to the satisfaction of a local authority. To prepare for the appeal Mr
Booysen needed specific details for why the installed services were deficient and did
not satisfy the Municipality. This is because the grounds of appeal must, in terms of s
124(1)(c) of the Ordinance, relate to a decision made in terms of s 119, and not to any
other dispute.
[125] Thus on 1 July 2008, Mr Booysen secured a meeting with Mr Flusk to establish
why he had stated in his affidavit before the high court that the services were
incomplete. At the meeting Mr Flusk told him to put his complaint in writing and assured
him that he shall respond by 8 July 2008. Mr Booysen‘s attorneys delivered the letter to
him later that day. It said that the developer had been directed to comply with the
internal appeal procedures. Pursuant thereto it was requesting confirmation of the
decision to refuse to grant a certificate for Extension 7 and the reasons for the refusal to
enable their client to lodge the appeal.
[126] On 8 July 2008, Mr Flusk responded in a manner that can only be described as
obscurantist. The letter stated tersely that the reasons provided in his affidavits before
the high court remain the same. The attorneys responded the following day saying that
neither what he had averred in his affidavits, nor in his letter clarifies what is still
required in respect of the ‗Section 82 Certificate, the services agreement, the
stakeholder‘s agreement . . . , the status of the services and the reasons for not issuing
same . . . .‘ Mr Flusk was put on terms to furnish proper reasons by 11 July 2008. The
letter further stated that the content of his letter is ‗once again an indication of mala fides
in dealing with this matter and your failure to work towards the finalisation hereof‘. In this
regard the observation in the first judgment that the first time that the developer
mentioned mala fides in connection with Mr Flusk was in an amendment to the
pleadings is, with respect, not correct.
[127] Mr Booysen testified that, in the light of Mr Flusk‘s obscure response, he was still
not in a position to proceed with the internal appeal. So he set up a further meeting with
Mr Flusk shortly afterwards. He took his attorney along in the hope that Mr Flusk would
provide a more reasonable response this time. Mr Diamond also attended the meeting.
Mr Diamond testified that when Mr Booysen asked for the reasons for refusing to issue
the certificates, Mr Flusk responded by saying that he had already arranged to have
them typed and that they were only awaiting his signature. Both Mr Booysen and Mr
Diamond testified that Mr Flusk told them that some officials and councillors may have
bought land in this development and that he would only issue the certificates that were
awaiting his signature if they gave him the sales list indicating who had bought land in
the development. Mr Booysen responded that his request for the sales list was not a
requirement for the issue of the s 82 certificate, and he was therefore not prepared to
give it to him. Mr Diamond felt that the request for the list was a ‗witch-hunt‘ on Mr
Flusk‘s part.
[128] In his testimony, Mr Flusk admitted asking for the sales list, because, as he said,
he wanted to uncover the ‗unhealthy relationship‘ between some municipal officials,
councillors and the developer. Under cross-examination he denied having told them
why he wanted the sales list. His explanation for this, which I find not only improbable
but untruthful, was that that they knew why he wanted the list. Neither Mr Booysen‘s nor
Mr Diamond‘s evidence to the effect that Mr Flusk had told them that he would issue the
certificates once they gave him the sales list was challenged under cross-examination.
It was only when Mr Flusk was cross-examined, did he, for the first time, deny it. In the
light of the rule relating to cross-examination that it is not open to a litigant to argue a
proposition that was not put to the opposing witnesses, it must accordingly be found that
the meeting did take place and that Mr Flusk made the statements attributed to him.75
[129] Both Mr Diamond and Mr Booysen testified that a week or two later, but unknown
to Mr Booysen at the time, Mr Diamond gave the list to Mr Flusk, but still, no certificates
were forthcoming. Mr Flusk had no authority to demand the production of a sales list as
a condition for issuing a certificate. The unavoidable conclusion is that Mr Flusk was
mala fide and abused his power by extorting the production of the sales list from the
developer and Mr Diamond. In its judgment, the court a quo mentions the meeting, but
other than noting that Mr Flusk denied it, does not deal with the evidence, which in my
75 President of the RSA v South African Rugby Union 2000 (1) SA 1 (CC) paras 58-72.
view constitutes a material misdirection. The first judgment also disregards this
evidence even though the issue was fully ventilated in this court.
[130] I return to the chronology. Nothing further happened in July 2008. Mr Booysen,
as the court a quo observed, had now become desperate and turned to the new Mayor,
Ms Ntombi Mekgwe, for assistance. Mr Booysen took her on a site visit in August 2008
to show her that the engineering services had been completed. They were
accompanied by officials who were familiar with the development and had also
confirmed this earlier. Still, Mr Flusk would not issue the certificates. Mr Booysen then
phoned the Mayor to assist with the conundrum. She was unable to help him but
advised him to set up another meeting with Mr Flusk, and to request the then Deputy
City Manager, Mr Sibeko, to attend the meeting.
[131] The meeting took place on 15 August 2008. Mr Flusk, Mr Sibeko and
Mr Booysen were present. According to Mr Booysen, Mr Flusk repeated the issues he
had previously mentioned: that some councillors, particularly Mr Diamond, had an
interest in the development and the reduced price that the developer had paid for the
land it had acquired from the Municipality in 2005. Again, he gave no specific details.
The meeting left Mr Booysen none the wiser on what was required to make a case to
the SAB.
[132] On 12 September 2008, Mr Flusk wrote to the Mayor purporting to provide a
summary of the discussion he had had with Mr Booysen on the 15th of August. The letter
was not shared with Mr Booysen, and he was not aware of its existence until it was
discovered before the trial.
[133] The letter, as emerged in Mr Booysen‘s testimony, and Mr Flusk‘s cross-
examination, is littered with demonstrable falsehoods and the non-disclosure of material
facts. It says, for example, that the Municipality‘s officials had advised him that there are
‗several material reasons‘ why the certificates cannot be issued. And that his officials
had advised him that the services had not been installed to the satisfaction of the
Municipality. Mr Leibbrandt, he said, had only advised him two weeks earlier that the
services had been satisfactorily installed.
[134] Mr Leibbrandt denied this and his testimony in this regard was not challenged.
When cross-examined on this aspect, Mr Flusk accused Mr Leibbrandt of lying. The
evidence, however, was that not a single official had given Mr Flusk such advice. On the
contrary, several officials, including Mr Leibbrandt, had advised him that there were no
legal grounds to withhold the certificates. The documentary evidence also supports this.
For the reasons given earlier pertaining to the rule regarding the failure to put Mr Flusk‘s
version to Mr Leibbrandt, it must be accepted that his evidence in this respect was also
untruthful and that what had he reported to the Mayor in this regard was, likewise, false.
[135] The letter also says that the land exchange transaction had, as the Trengove
opinion had advised, contravened the MFMA and the Municipality‘s land exchange
policy. But what it omits is a reference to the Council resolution of 31 January 2008,
which required Mr Flusk to regularise the transaction. It was not a ground that could
legitimately be relied upon to prevent the issue of the certificates. Further, the letter
states, misleadingly, that Mr Diamond was a member of the Committee, which had
authorised the land alienation, the suggestion being that he had a non-disclosed conflict
of interest when the decision was made. But Mr Diamond had in fact recused himself
from the deliberations of the Committee.
[136] The letter further makes a very serious allegation that two unnamed councillors
acquired interests in these developments without payment. Apart from the fact that he
did not name the councillors, Mr Booysen was emphatic that the allegation was untrue.
His evidence in this regard was not disputed.
[137] The letter concludes by saying that the developer has consistently refused to pay
market related prices for the land it ‗unlawfully obtained‘ or to comply with the provisions
of the MFMA. And, it adds, again misleadingly, that it continues to put pressure on the
Municipality to irregularly issue the certificates. It also gives the assurance that he will
try to settle the dispute with the developer. It bears mentioning, however, that Mr Flusk
had never made a specific demand for any market related payment to be made as a
condition for the issue of the certificates, which would also have been improper. Nor did
he make compliance with the MFMA such a condition. Moreover, instead of engaging in
bona fide attempts to settle the matter and issue the certificates as was his obligation,
his conduct was one of obstinate resistance.
[138] What the content of the letter indicates is that he gave false reasons to the
Mayor, which he also withheld from the developer, in the hope of misleading her
regarding the delay with the issue of the certificates. Once again this is indicative of
mala fides on his part.
[139] Mr Leibbrandt testified that, in August or September 2008, the Mayor asked him
for a progress report regarding the 31 January 2008 Council resolution, which required
the City Manager to take steps to regularise the land swap transaction. The Mayor‘s
request, he said, left him and other officials ‗red faced‘ because they were unable to
comply. He advised the Mayor, as he had Mr Flusk, that the certificates had to be
issued and that the other matters should be ring-fenced so as not to prevent this. The
Mayor passed the information on to Mr Flusk.
[140] When Mr Flusk discovered that Mr Leibbrandt had given this advice to the Mayor
it provoked a backlash from him. He wrote to Mr Leibbrandt on 3 October 2008
accusing him of, among other things, communicating with the Mayor without informing
him and also of creating tension between himself and the Mayor. Mr Flusk informed him
that he intended suspending him and invited him to respond within three days, failing
which he would do so. On 6 October 2008 Mr Leibbrandt met with Mr Flusk and told him
that that there was no basis to suspend him. Among the reasons he gave to Mr Flusk
was that the City Manager may only suspend the Deputy City Manager after consulting
the Mayor, which he had not done.
[141] To protect himself Mr Leibbrandt informed the Mayor of his threatened
suspension. The Mayor responded by sending him a text message indicating that she
had informed Mr Flusk that if he suspended Mr Leibbrandt, she would in turn suspend
him. In the result Mr Flusk had no option but to abandon his unlawful attempt to
suspend Mr Leibbrandt.
[142] What this exchange shows is that Mr Flusk‘s vindictive behaviour extended
beyond the developer to a senior official who was only trying to do his work
professionally. It is also apparent that the Mayor was having difficulties with Mr Flusk‘s
conduct and the manner in which he was dealing with the developer.
[143] In October 2008, Mr Booysen secured yet another meeting with Mr Flusk at the
request of the Mayor to resolve the outstanding issues. Mr Booysen‘s attorney was
present, as was a Mr Mokoena from Mr Flusk‘s office. The purpose of the meeting, once
again, was to establish in which respects the developer had not complied with s 82 of
the Ordinance.
[144] According to Mr Booysen, Mr Flusk was not only unhelpful, but made a new
demand of them. In addition to the land valuation issue, Mr Flusk now said that he was
prepared to issue the certificates if Mr Diamond transferred his shareholding in the
development to an ‗NGO‘. Mr Booysen was perplexed, he said, because he did not
know what an NGO was. So he asked Mr Flusk to explain it to him. When Mr Flusk
explained that it referred to a non-governmental organisation, Mr Booysen,
understandably, became indignant. He told Mr Flusk firmly that Mr Diamond‘s
shareholding was irrelevant to the issue of the certificates, and that if he wished to
discuss this issue further he would have to do so in Mr Diamond‘s presence as he (Mr
Booysen) was not in a position to transfer Mr Diamond‘s shareholding to anybody. This
evidence was not challenged in cross-examination.
[145] The meeting agreed that Mr Flusk would prepare a list of ‗exhaustive‘ reasons
specifying why he was refusing to issue the certificates. The agreement was confirmed
in a letter to Mr Flusk and was copied to the Mayor. Mr Booysen made no mention of
the NGO issue because, as he testified, he ‗did not want to become involved in a
personal battle with Mr Flusk‘. He therefore recorded that the meeting had agreed on
the way forward in relation to the issue of the certificates.
[146] On 24 October 2008 Mr Mokoena replied to the letter ‗on instruction from the City
Manager‘. His letter did not provide any specific reasons why the certificates were not
being issued. Instead, it adopted the same unresponsive stance that had characterised
Mr Flusk‘s conduct throughout. The crux of the response is contained in the concluding
paragraph, which reads: ‗The reasons for not issuing the s 82 certificates were
contained within the affidavit related to our counter application (in response to) your
application and clearly explains our position on all issues you have raised in your
correspondence.‘
[147] It is convenient at this stage to deal with the evidence pertaining to the attempt to
extort a transfer of Mr Diamond‘s shareholding in the second appellant to an NGO of his
choice, as this is one of the grounds relied upon by the developer to prove Mr Flusk‘s
mala fide conduct.
[148] Mr Leibbrandt testified that at a meeting between himself and Mr Flusk sometime
during 2008 – the month was not mentioned – Mr Flusk had said that his main concern
with issuing the certificates was Mr Diamond‘s interest in the development, and that the
problem would be removed if Mr Diamond was prepared to transfer his shareholding to
an NGO. This evidence was not challenged in cross-examination.
[149] Mr Diamond‘s evidence was that in a meeting between him and Mr Flusk in
August or September 2008, Mr Flusk also told him that his main concern with issuing
the certificates was Mr Diamond‘s interest in the development, and that he would
immediately release the certificates if he transferred his interest in the second appellant
to an NGO of Mr Flusk‘s choice. When Mr Diamond was cross-examined the following
was put to him:
‗At some stage Mr Flusk wanted you to give up that interest because he, as far as he
was concerned you had unduly benefitted and that was Mr Flusk‘s attitude?‘
And later:
‗You see your version to Mr Flusk was that the land transaction is water under the
bridge and could not and should not be reversed and Mr Flusk said well the public you
should not have personally benefitted as a public official from the land swop.‘
And further:
‗That was the dispute. It was not that you had to give this up to an NGO.‘
[150] It is apparent from the statement put to Mr Diamond, that Mr Flusk did discuss
his interest in the development with him, that he was unhappy with it and that he wanted
him to forego it. The only dispute was over whether he had to give it up to an NGO.
However, in the course of Mr Flusk‘s evidence in chief, and when referred to
Mr Diamond‘s evidence above, he dismissed it as a ‗blatant lie‘. No mention was made
of Mr Leibbrandt‘s evidence, nor of Mr Booysen‘s.
[151] Under cross-examination Mr Flusk denied having had any discussion with
Mr Diamond about his shareholding, which completely contradicted what was put to Mr
Diamond. He also dismissed both Mr Leibbrandt‘s and Mr Booysen‘s testimony in this
regard as untrue.
[152] It can therefore hardly be disputed that Mr Flusk‘s evidence on this aspect must
also be rejected as false: First, it is at odds with what was put to Mr Diamond in cross-
examination; secondly, and as I have found in relation to the sales list, because neither
Mr Leibbrandt‘s nor Mr Booysen‘s evidence was disputed under cross-examination, it
must be accepted; thirdly, Mr Diamond‘s evidence is corroborated by both these
witnesses, and finally, it is clear from the evidence that Mr Flusk had a huge problem
with Mr Diamond‘s shareholding. The probabilities therefore support the developer‘s
case.
[153] I conclude, therefore, as I did regarding the sales list, that Mr Flusk abused his
power by attempting to extort a transfer of Mr Diamond‘s shareholding in the second
appellant to an NGO of his choice. This constitutes an independent ground for holding,
as I do, that his conduct was mala fide, and was exercised for an ulterior purpose. The
court a quo wrongly disregarded this evidence.
[154] I once again return to the chronology. Following receipt of Mr Mokoena‘s
unresponsive letter on 24 October 2008, Mr Booysen applied for a hearing to the SAB
on 30 October 2008. The hearing was scheduled for 28 November, but it was
postponed at the instance of the Municipality‘s attorneys, without the developer‘s
knowledge.
[155] On 26 November 2008 the developer‘s attorneys wrote to the Municipality‘s
attorneys to register its protest at the fact that the matter had been postponed without its
knowledge. The letter reiterated that all the engineering services had been installed and
the maintenance guarantees given by December 2007. It stated further that the
Municipality had refused to furnish any reasons for withholding the certificates and was
constantly delaying the matter being finalised, which was mala fide. It reminded the
Municipality that the delay was causing a loss to the developer of R100 000 per day. I
point out that this is another reference to Mr Flusk‘s mala fides preceding the issue of
the summons.
[156] The SAB hearing was set down for 22 January 2009. The Municipality‘s
attorneys wrote to the developer‘s attorneys on 13 January 2009 regarding the issues
that would be disputed before the SAB. Significantly, the Municipality accepted that the
issues that had been raised in the counterclaim in respect of the land swap and
alienation of land in April 2005 were not a bar to the proceedings before the SAB. It,
however, reserved the Municipality‘s right to pursue the counterclaim ‗at some later
stage.‘ It is noteworthy that this had been Mr Leibbrandt‘s advice from the very
beginning.
[157] On 14 January 2009, for the first time since the judgment of the North Gauteng
High Court on 20 June 2008, and no doubt acting on legal advice, Mr Flusk attempted
to obtain a Council resolution authorising him to pursue the counterclaim.
Unsurprisingly, the attempt failed.
[158] The SAB hearing took place, as scheduled, on 22 January 2009. The
Municipality did not oppose the relief claimed. Both parties agreed that a further
Services Agreement was unnecessary as the levels and standards of the services have
been agreed on and completed to the satisfaction of the Municipality. On the following
day the developer‘s attorneys then wrote to the Municipality noting that ‗it was indicated
by your legal team that you are still refusing to issue a Section 82 Certificate and advise
that your action is unlawful‘. The Municipality was also alerted to the fact that the sales
agreement the developer had entered into with buyers would lapse on 31 March 2009,
18 months after proclamation. This would result in damages amounting to a further
R180 million in respect of 241 sales, which would then lapse. In the circumstances it
was demanded that the certificate be issued by no later than 30 January 2009.
[159] On 23 January 2009 Mr Flusk made a second unsuccessful attempt to reverse
the 31 January 2008 Council resolution. He was placed on leave in February 2009, and
on 17 March dismissed as City Manager. According to Mr Leibbrandt, whose evidence I
have indicated was unimpeachable, Mr Flusk was dismissed because of his persistent
refusal to issue the certificates. Mr Leibbrandt was appointed to act in his stead. On 20
March 2009 the Municipality capitulated and issued certificates for Extensions 7, 9, 11
and 12 soon after. The proclamations for Extensions 8 and 10 took place on 30
September 2009, but no certificates were issued then.
[160] To summarise the position thus far: The developer established that Mr Flusk
wilfully and mala fide delayed issuing the certificates over a period of 15 months. During
this period he:
(i)
instituted a counterclaim to set aside the 2005 land swap transaction without the
authority of Council and in the face of a Council resolution on 31 January 2008 to
regularise the transaction;
(ii)
defended the application to compel the issue of the s 82 certificates in the high
court on the false ground that the developer had failed to install the engineering
services to the satisfaction of the Municipality;
(iii)
Improperly procured the striking-off from the roll of the developer‘s application on
the ground that that it had failed to prosecute an appeal to the SAB regarding the
alleged deficiency with the installation of the engineering services;
(iv)
ignored the advice of municipal officials, particularly Mr Leibbrandt‘s, to issue the
certificates because there was no lawful basis to withhold them;
(v)
threatened to suspend Mr Leibbrandt because he had given the same advice to
the Mayor;
(vi)
improperly procured a Council resolution giving him the sole authority to issue s
82 certificates for the purpose of preventing the developer from obtaining them;
(vii)
misled the Mayor and the developer by giving false reasons for withholding the
certificates;
(viii)
was unresponsive and obstructionist when asked by the developer repeatedly to
provide proper reasons for not issuing the certificates;
(ix)
caused the delay in the SAB hearing without good reason;
(x)
improperly, and for an ulterior purpose, demanded a sales list from Mr Booysen
and Mr Diamond in return for the issue of the certificates;
(xi)
improperly, and for an ulterior purpose, demanded that Mr Diamond give up his
shareholding in the second appellant before he would issue the certificates;
(xii)
generally abused his public power by obstructing the developer from acquiring
the certificates and by giving false and spurious reasons for doing so.
[161] In the light of the overwhelming evidence of mala fides on the part of Mr Flusk, it
is not strictly necessary to deal with the further allegation that he also improperly
attempted to extort the bribe of a free stand in the development in return for the issue of
the certificates. However, both the court a quo and the first judgment treat this allegation
as pivotal or foundational to the developer‘s allegation of mala fides. In my respectful
view it was not. The first judgment confirms the finding of the court a quo that the
allegation was untrue and therefore that the developer had not proved that Mr Flusk‘s
conduct, which is imputed to the Municipality, was wrongful. I shall for the sake of
fullness deal with it as well.
[162] Mr Diamond‘s evidence was that during January 2008, Mr Flusk, told him that he
wanted a stand in the development without having to pay for it and that he would delay
the issue of the certificates indefinitely until he acceded to his request. Mr Diamond
shared this information with Mr Booysen, who assured him not to worry about the threat
because the Municipality could not withhold the certificates simply because Mr Flusk
wished to benefit from it. Mr Booysen corroborated Mr Diamond‘s evidence in this
regard. The attempted bribe has its genesis in another allegation, which is that Mr Flusk
signed an ‗Offer to Purchase‘ (OTP) a stand in the development on 17 November 2006,
long before he had apparently become concerned about the probity of the land
transaction. Mr Flusk denied signing the OTP. Both the court a quo and the first
judgment implicitly conclude that the witnesses who testified on behalf of the developer
conspired to forge a document purporting to be the OTP. In the case of Mr Diamond,
the court a quo found that he had committed fraud by forging the document.
[163] The evidence as to what occurred on 17 November 2006 was given nine years
after the incident. On behalf of the developer, Mr Diamond testified that Mr Flusk
attended one of his sales marketing events, which was held in a marketing tent in the
late afternoon. There were about ten people, including Mr Booysen, in attendance. Ms
Martha Boshoff, who worked for Mr Diamond as an estate agent, assisted Mr Flusk to
choose a stand. He then concluded an OTP, which he signed in Mr Diamond‘s
presence. The offer was to purchase Erf 4 in Extension 12 for the sum of R710 000.
After concluding the OTP, Mr Diamond offered him a glass of wine, which he accepted.
Mr Flusk remained at the event for some time and even made ‗friendly advances to
some of the people‘ meaning that he had flirted with the guests. They all left at about
21h00.
[164] Mr Diamond testified that in response to a query from the African National
Congress (ANC), of which he is a member and Councillor, and which had become
aware of the dispute between Mr Flusk and himself, he submitted a written report and
the original OTP to them on 28 October 2008. On 3 November 2008 he submitted a
further document correcting the erf description from Erf 38 in the report to Erf 4.
[165] Under cross-examination he testified that the offer was turned down
‗administratively‘ because Mr Flusk had not paid the deposit. However, when it was put
to him that the clause relating to the payment of a deposit was deleted, which meant
that this could not have been the reason for the sale being turned down, Mr Diamond
maintained that it was. Later, he testified that Mr Booysen was aware that the deposit
clause was deleted and that only he had the discretion to cancel the deposit
requirement. He also testified that the OTP was not processed because of Mr Flusk‘s
insistence on a discounted price. It was also put to him that there was no explanation
why Mr Flusk had left the space on the offer providing for the details of the buyer‘s
spouse blank because he was married in community of property.
[166] In her testimony, Ms Boshoff recalled the incident vividly. She said it was a
Friday evening at about 18h00, before dusk when Mr Flusk arrived at the event in a
gold-coloured Mercedes Benz motor-vehicle. She was standing at a model of one of the
stands and asked if she could help him while he was looking at a township model.
Mr Flusk asked her whether these were all the stands, at which point Mr Diamond
approached them and introduced Mr Flusk to her as the City Manager. She testified that
she did not actually see him filling out the paperwork but she did see him and Mr
Diamond sitting at one of the tables where the paperwork for these offers was done. Mr
Diamond did the paperwork. She recalled specifically when Mr Flusk left the event
because he departed in his motor-vehicle just before she did.
[167] Under cross-examination she described Mr Flusk as a ‗bit taller‘ than counsel, Mr
Peter, that he spoke in English, that his complexion was ‗coloured, but not dark‘. When
asked whether he was not dark, she responded: ‗Ja, quite fair‘. She recalled that Mr
Flusk and Mr Diamond sat at the table for ‗quite a while‘ while doing the paperwork. And
that Mr Diamond had offered him something to eat and a glass of wine. It was put to her
that Mr Flusk declined the offer of wine to which she responded that she saw him with a
glass of wine in his hand. When asked whether anything that evening stuck out in her
memory – a case of one question too many – she said that he had made sexual
advances to Ms Irene Botha, who was present at the event. The incident annoyed Ms
Botha‘s son. Mr Flusk left about three quarters of an hour after Mr Diamond, but she
was not sure of the time.
[168] Mr Booysen testified that he was present that evening and recalled being
introduced to Mr Flusk and congratulating him on having bought a stand, which was a
reference to his having signed the OTP. He said that he had had numerous discussions
with him that evening. As to how the deposit clause came to be deleted, he testified that
he could not remember why this had happened. But, he explained the way they
managed the process, administratively, was that once the documents had been signed,
they were evaluated at Mr Diamond‘s office, and then sent over to his office. His father,
Mr Syd Booysen, who is a retired banker, was responsible for signing these OTP‘s on
behalf of the seller, which explains why his father‘s signature was on the document. If
the document needed amendment this would be discussed with him personally. It was
not unusual for the deposit clause to be deleted, because it was a rather harsh non-
refundable provision, but this would be done subsequently and not on site. Under cross-
examination it was put to Mr Booysen that Mr Flusk denied having signed the OTP.
[169] Ms Karen Pienaar was the last witness for the developer on this issue. She
testified that Mr Diamond faxed the OTP through to her office on 29 January 2009. She
gave the original document, which was filed with the ‗not accepted offers‘, to
Mr Diamond in October 2008. She also testified that the inscription ‗P Flusk‘ at the top
right-hand corner of the OTP was the handwriting of Mr Syd Booysen. She did not keep
a copy of the agreement because it had not been accepted and there was no need to
keep it. Under cross-examination it was put to her that there never was any signed
original agreement. Her response was emphatic that she had seen the original. She
also testified that she had tried to find it in her office and had also phoned the ANC
because she was aware that Mr Diamond had given the document to them.
[170] Mr Flusk was the only witness for the Municipality. He testified in chief that he
had attended the function in November 2006, very briefly. He left after ten minutes when
he realised that this was not a meeting of Mr Diamond‘s constituents, which
Mr Diamond had led him to believe was the nature of the function he was attending. He
had nothing to drink that evening, did not spend any time there – no more than ten
minutes – and did not sign an OTP before leaving.
[171] He also testified that the telephone number on the OTP was one that he had last
used in 2002, and is not one he presently uses. He described his complexion as being
dark. The court was asked to note that Mr Peter was ‗considerably taller‘ than Mr Flusk.
And he confirmed that he was married in community of property.
[172] He was cross-examined at length on the incident. He testified that even though
he does own a gold-coloured Mercedes, he was with his driver that evening and was
using a white kombi, and not his own vehicle. He was on his way home from another
function that was nearby Mr Diamond‘s. Mr Diamond approached him outside the tent
and invited him in to meet his political constituents. When he walked into the tent he
noticed that there were drinks and alcohol and that this was a marketing event for the
sale of properties, and not a meeting of Mr Diamond‘s constituents. There were three or
four people there. He immediately realised that Mr Diamond had ‗actively misled‘ him as
to the nature of the function, but he did not mention this to him. He denied having had a
look at the model of the township at all. Mr Diamond offered him a glass of wine, which
he declined, and then left, ‗almost immediately.‘
[173] When asked to say for how long he had been there, he answered that it was ‗not
more than five minutes‘. When it was put to him that in his evidence in chief, he said
that he had been there for ten minutes, he insisted, incorrectly, that he had said five to
ten minutes. He was then asked what he had done at the event for the truncated period
of five minutes while he was there. His answer, which contradicted his earlier evidence,
was that he said to Mr Diamond: ‗this is not your constituents . . . where are the
people?‘ to which Mr Diamond responded that they were ‗coming and going‘.
[174] He testified further that he had not sat at any table to fill out documentation. And
that Ms Boshoff‘s evidence in this regard was a lie. It was put to him that Ms Boshoff
had testified that she had spoken to him that evening to which he responded that he
could not recall this. But, he added, ‗it might have happened‘. When asked whether he
had looked at one of the township models he insisted emphatically that she was ‗lying‘.
As to why none of this evidence was disputed with the witnesses, he could not explain.
As to whether he had made advances to Ms Botha, he said that this was another lie.
And regarding his introduction to Mr Booysen that evening or having had a discussion
with him he repeated: ‗Another lie‘. He had never met Mr Booysen before December
2007. There was, however, no denial that Mr Booysen had been there.
[175] When it was put to Mr Flusk whether he was suggesting that Mr Booysen and
Mr Diamond were party to a conspiracy to discredit him by forging the document, he
answered in the affirmative. He added that Ms Pienaar, whose evidence was to the
effect that she had also seen the original document, was also part of the conspiracy, as
was Ms Boshoff. Regarding the apparent differences in his signatures on some of the
documents he was asked whether he accepted that his signature sometimes dipped
instead of rising in the last line, while at other times the opposite occurred. To this he
agreed. And finally, in response to Mr Flusk‘s evidence that he had not used the
telephone number on the OTP after 2002, it was put to him that it appeared from a
‗Consumer Trace Report‘ dated 13 August 2015, that he was using this number even in
2013. His response, once again was: ‗that is a lie‘.
[176] The nub of the factual dispute between the parties is whether Mr Flusk had
signed the OTP on the 17 November 2006. To decide where the truth lies, a court must
have regard to all the evidence and make findings (a) on the credibility of the witnesses;
(b) their reliability; and (c) the probabilities of each version.76 The process of reasoning
is integrated with credibility and reliability being assessed, not in isolation, but in the
light of the proven facts and the probabilities.77 The final step is to determine whether
the party burdened with the onus of proof has discharged it.
[177] The court a quo found that the OTP was not genuine but, rather, a ‗clumsy and
amateurish fraud concocted by Diamond in late 2008 when facing disciplinary charges
by his political party‘. And that there were no probabilities pointing to the attempted
extortion for a free stand. There are, with respect, some serious difficulties with the
learned judge‘s reasoning. First, to sustain this finding there would have to have been a
conspiracy between all the witnesses who testified on behalf of the developer to
fabricate what happened on the evening in question, as Mr Flusk insisted there was. But
no such suggestion was made to any of the developer‘s witnesses. Second, her finding
that Mr Diamond was a poor witness while Mr Flusk‘s evidence, though not without
fault, was consistent on this aspect is, with respect, not borne out by the record, as I
shall demonstrate below. Third, in determining the probabilities, what was required was
a weighing of all the evidence, without disregarding any of it. It is, however, apparent, as
I shall also demonstrate, that the court a quo failed to analyse the evidence of all the
witnesses, in particular that of Mr Flusk, and ignored material evidence.
[178] I turn to an evaluation of the competing versions. To have signed the OTP
Mr Flusk would have had to have spent some time at the event. It is apparent from the
evidence of all the developer‘s witnesses that Mr Flusk spent at least two hours there
having arrived at about 18h00 and departed closer to 21h00. They remembered several
important details regarding his presence. Both Mr Diamond and Ms Boshoff
remembered him having a glass of wine and that he had flirted inappropriately with one
76 Stellenbosch Farmers’ Winery Group Ltd & another v Martell et Cie & others 2003 (1) SA 11 (SCA)
para 5.
77 Santam BPK v Biddulph 2004 (5) SA 586 (SCA) para 5.
of the guests. Significantly, Ms Boshoff‘s recollection of the incident, which was very
clear, was prompted by a question that was put to her in cross-examination.
[179] Ms Boshoff remembered too that Mr Flusk had sat at one of the tables with
Mr Diamond and filled out documents, and that he had arrived and departed alone in a
gold-coloured Mercedes. Mr Booysen recalled congratulating Mr Flusk on his purchase
and then having had several discussions with him. His evidence was not impugned, and
there are no grounds to disregard it or disbelieve him.
[180] Other than disputing the evidence that Mr Flusk had taken a glass of wine, none
of the other details were disputed. In particular no suggestion was made to any of the
witnesses that he had left after spending only five to ten minutes there. The developer‘s
evidence regarding the considerable time that he had spent at the event must therefore
be accepted.
[181] By contrast Mr Flusk‘s evidence was clearly not credible. He first testified that he
had been at the event for only ten minutes. When cross-examined on what he had done
during this period, he adjusted his evidence to having been there for five to ten minutes.
When it was put to him that his earlier evidence was that he had been there for ten
minutes, he insisted that his answer had been five to ten minutes, which was incorrect.
The impression gained from his evidence was that he was attempting to reduce the time
he had spent at the event, in order to decrease the likelihood that he was present for
long enough to sign the OTP. He also contradicted himself on whether he had
mentioned to Mr Diamond that the event was not a constituency meeting. The
contradiction gives the lie to his evidence that he thought he was attending a meeting of
Mr Diamond‘s political constituency. If Mr Diamond had deliberately misled him as to
what the purpose of the event was to secure his presence there and was the reason he
left promptly when he realised this was the case, this assertion would have featured
pertinently in Mr Flusk‘s evidence in chief and in Mr Diamond‘s cross-examination. But
no mention was made of it.
[182] Also noteworthy is his evidence that he had been driven to the event by his driver
in a different motor-vehicle, and not in his Mercedes. Ms Boshoff, having met him for the
first time, would have had no reason to identify his vehicle as being the gold-coloured
Mercedes. The fact that she remembered this important detail shows that it is probable
that he did arrive and depart in this vehicle and that his evidence in this regard also falls
to be rejected, as does his evidence pertaining to the glass of wine and the fact that he
had flirted with one the guests. Ms Boshoff‘s evidence regarding the Mercedes was also
not challenged.
[183] One of the points of criticism that the court a quo made relating to Ms Boshoff‘s
evidence was that her description of Mr Flusk‘s appearance, nine years later, was
inaccurate. The criticism is, with respect, unfair. Ms Boshoff‘s evidence was not
rejected, nor was any credibility finding made against her. She was a good witness and
her detailed recollection of what transpired that evening was impressive. And as I have
previously mentioned most of her evidence was unchallenged.
[184] As far as the signing of the OTP itself is concerned, Mr Diamond‘s evidence was
that Mr Flusk had signed the document in his presence. Ms Boshoff had not seen the
document but her evidence that the two men were sitting and doing some paper work at
one of the sales tables was also not questioned. Her evidence had a ring of truth to it.
She could quite easily have adjusted her evidence to suggest that she had seen Mr
Flusk signing the document. Again, I think her evidence in this regard should have been
accepted.
[185] Ms Pienaar confirmed that she had seen the original OTP. Her evidence was
given clearly and without hesitation. It was not suggested to her that she was party to a
conspiracy to forge the OTP, but this is the necessary implication from the court a quo
having disbelieved her. Her evidence was rejected on the ground that her memory that
she had handed the original document to Mr Diamond in October 2008 was
irreconcilable with her evidence that she had searched the office a few days before she
testified to try to find it. But this finding overlooks her explanation that she had left her
employment with Mr Booysen for a period of eight months and that she therefore
thought that the document may have been returned in her absence. Her evidence that
she had phoned the ANC to establish whether they still had the document, which was
also overlooked, is also consistent with her version. In my view her testimony also
supports the existence of the OTP.
[186] In regard to the content of the OTP, Mr Diamond‘s evidence as to why the
deposit clause had been deleted, was unclear and not satisfactory. The court a quo‘s
criticism of this aspect of his evidence is not without merit. However, Mr Booysen‘s
testimony as to how OTP‘s were managed, first through Mr Diamond‘s office and then
by his father, Mr Syd Booysen, and why the deposit provision was usually deleted,
overcame some of the difficulty. The true reason for why the offer had been refused
was, however, not clarified. Also not clarified in the evidence was when Mr Flusk
became aware that his OTP had been rejected.
[187] The court a quo considered it significant, as pointers to the OTP‘s questionable
authenticity, that the telephone numbers on the document ‗supposedly‘ given by Mr
Flusk were out of date and that the space for the purchaser‘s marital status was left
blank, whereas he was married in community of property. However, in regard to the
telephone numbers it was pointed out in cross-examination that the telephone numbers
were not out of date. Importantly, this allegation was not put to Mr Diamond. And the
fact that the space for marital status was not filled in is itself not significant, much less
indicative of fraud. There are often innocent explanations for inaccuracies and
omissions on pro forma documents. I do not think it fair or justified for the court a quo to
have made a far-reaching finding of fraud on these grounds.
[188] One of the ‗difficulties‘ pointed out by the court a quo regarding Mr Diamond‘s
allegation that Mr Flusk signed the OTP was the confusion as to whether he had
purchased Erf 4, in Extension 12, as appeared from the OTP, or Erf 38, which was the
allegation Mr Diamond made to the ANC in October 2008. Mr Diamond then informed
the ANC that Mr Flusk had in fact signed for Erf 38 and not for Erf 4. There is, however,
nothing improbable in Mr Diamond‘s explanation for the error in the description of the
two properties.
[189] Neither party led expert evidence on the authenticity of the signature purporting
to be Mr Flusk‘s on the OTP. However, an important indication of the authenticity of the
OTP is the confirmation of Mr Syd Booysen‘s signature on a copy of the document, by
both Mr Booysen and Ms Pienaar, which the court a quo overlooked. There can be no
gainsaying the fact that that Mr Syd Booysen‘s signature on the document is authentic.
The authenticity of the document is further demonstrated by the fax particulars on the
document dated January 2009, which refutes the court a quo‘s finding that the
document was fabricated after summons was issued in March 2009. The document‘s
authenticity was therefore proved on a balance of probabilities. It follows that I am
unable to agree that the document was not genuine.
[190] However, it does not follow that because the OTP was genuine that the
developer had also proved the attempt to extort the bribe. I turn to consider the
evidence on this aspect. Mr Diamond‘s evidence was that after Mr Flusk had signed the
OTP, he, from time to time, asked for a discount on the stand, which he brushed aside.
Then, at a meeting in January 2008, for the first – and apparently the only – time he
demanded the stand ‗for free‘ adding, that if Mr Diamond did not accede to the request,
he would make it difficult for the development to go ahead. Mr Diamond testified that he
informed Mr Booysen, who advised him to ignore this as there was no basis for the
Municipality to legitimately prevent the development from going ahead. Mr Booysen
confirmed this communication during the course of his testimony. As I have mentioned
earlier, Mr Booysen was a good witness and there was no reason to reject his evidence
in this regard. Mr Flusk emphatically denied Mr Diamond‘s evidence.
[191] Among the reasons that the court a quo rejected the bribery allegation was
because, if true, it would have featured in the application before the North Gauteng High
Court. The developer‘s explanation for not making the allegation in the papers that it did
not want to complicate the case with side issues, was rejected as implausible. But, with
respect, it is not implausible for the developer to have decided to omit this issue from
the application to compel the Municipality to issue the certificates. Mr Booysen believed,
correctly, that there no proper grounds for the Municipality to withhold the issue of the
certificates. Furthermore, Mr Diamond was not party to the proceedings. The developer
was represented by eminent counsel in those proceedings. It is clear that all that would
have happened had the bribery allegation been made in the papers was that Mr Flusk
would have denied it. This would have resulted in a dispute of fact on the papers and
could only have further delayed the issue of the certificates.
[192] I also do not find it improbable that Mr Flusk would have signed the OTP, and
also demanded a sales list of the buyers when his name would have appeared on the
list. That was the very question that was put to Mr Booysen in cross-examination. But,
with respect, I do not find his demand for the sales list difficult to understand. The list
was sought, according to Mr Flusk, to uncover the ‗unhealthy relationship‘ between
councillors and the Municipality. It is clear from what I have found earlier that he had
extorted the list for his own ulterior purpose: the false promise that he would issue the
certificates if the list was given to him. It is equally plausible that he wanted the sales list
to confirm whether his name was still on it, bearing in mind that he would have learnt at
some stage that his offer had been rejected. There is, however, no evidence that the list
was to be publicised or made available to anyone else within the Municipality.
[193] The court a quo also made contradictory findings concerning when and why the
bribery allegation first surfaced. The one explanation given was that it was a ‗recent
fabrication‘ as the plaintiff‘s case developed through various amendments, in other
words as the trial proceeded. The other explanation was that the fraud was concocted
late in 2008 in response to disciplinary charges from Mr Diamond‘s political party. The
finding of a ‗recent fabrication‘ is, in my view, not sustainable in light of the evidence that
Mr Diamond had already mentioned to the investigators, Pasco, early in 2008, that Mr
Flusk had bought a stand in the development. That allegation, which appeared in the
Pasco report in May 2008, could only have been made if Mr Flusk had in fact signed an
OTP. The evidence that he had made the same allegation to the ANC in October 2008
and had given the original document to them also negates this finding. Furthermore, as I
have pointed out earlier, the fax particulars on the document dated January 2009, two
months before summons was issued, fully refutes the suggestion that the document
was a recent fabrication.
[194] Mr Diamond‘s evidence was not unblemished. He testified that until October
2008, when he was called to a disciplinary hearing of his political party concerning the
allegation against Mr Flusk, he considered Mr Flusk to be a man of integrity. The court a
quo found this irreconcilable with his having demanded a bribe in January that year.
There is some merit in this criticism. However, to reject his version one would also have
to reject Mr Booysen‘s evidence, and there are no proper grounds for doing so. Another
difficulty with the bribery allegation is that it was made on one occasion and never
repeated, unlike the allegations pertaining to the demands for the sales list and the
shareholding being given up to an NGO. But this is explained by the fact Mr Flusk made
several reprehensible demands at different times. And at first blush, while it may seem
improbable that Mr Flusk would have made this demand when he was apparently
concerned with the probity of the land transaction and Mr Diamond‘s possibly benefitting
improperly from the development, it is not improbable that he would have made this
demand, when he made other similar disgraceful demands. The evidence demonstrated
that Mr Flusk‘s behaviour was erratic and his conduct capricious.
[195] Mr Diamond‘s evidence did not stand alone. His evidence regarding the bribe
was corroborated by Mr Booysen, whose evidence I accept. On the other hand Mr Flusk
was the only witness for the Municipality, and his evidence, mendacious as it was, could
simply not be accepted. Having weighed both versions, which perforce required an
assessment of their credibility and reliability, and the probabilities, I am persuaded, on
balance, that the developer proved the extortion attempt.
[196] Although the court a quo found that Mr Flusk had deliberately withheld the issue
of the certificates and was ‗disingenuous‘ – in other words untruthful and dishonest – in
the explanations he gave for his conduct, it found that the ‗real reason‘ for refusing to
issue the certificates was his concern with the ‗allegations of corruption surrounding the
development and what he believed to be an illegitimate land alienation, which did not
comply with the provisions of s 14(2) of the MFMA‘. It rejected Mr Diamond‘s allegation
that Mr Flusk had attempted to extort a stand in one of the developments from him in
return for the issue of the certificates, and found, as I mentioned previously, that the
documentation produced to support the allegation was probably a ‗clumsy and
amateurish fraud concocted by Diamond‘. And further, that even though Mr Flush had
intentionally and dishonestly withheld the certificates, the appellants had not shown that
he had been ‗motivated by greed and financial gain‘. It thus concluded that his mala fide
conduct – though blameworthy – was not wrongful because it did not include ‗an
element of fraud and financial gain.‘
[197] The learned judge found support for her conclusion that Mr Flusk‘s conduct was
not wrongful in Country Cloud Trading CC v MEC, Department of Infrastructure
Development.78 The facts, which arose in a contractual setting, briefly, were these:
Country Cloud lent R12 million to a company, iLima, to enable it to perform its contract
obligations with the respondent. iLima agreed to repay Country Cloud after it had
received payment from the respondent in terms of a loan agreement. The respondent
was aware of this arrangement, but before the payment was made one of its officials
cancelled the agreement despite being aware that he was not entitled to do so.
[198] The Constitutional Court accepted79 as did this court80 that the official concerned
acted with intent – at least in the form of dolus eventualis – when he cancelled the
contract without legitimate grounds, but nevertheless reconciled himself with this
possibility and continued to do so regardless of the consequences. It transpired that the
official had come under pressure from within the department and from the media for not
having put the contract between it and iLima out to tender, and was desperately looking
78 Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC) para
47.
79 Ibid para 37.
80 Country Cloud Trading CC v MEC, Department of Infrastructure Development 2014 (2) SA 214 (SCA).
for an excuse to cancel the contract; and that the grounds he had advanced for taking
this action were unfounded.81
[199] Referring to Minister of Finance v Gore,82 which Country Cloud had relied upon
to support the contention that the official concerned had wilfully – and therefore
wrongfully – interfered in the contractual relationship between it and iLima, the
Constitutional Court said that in Gore, damages were granted against State entities
whose employees had through ‗fraudulent conduct‘ prevented the award of a tender of a
contract to the plaintiffs. It characterised their dishonesty ‗as going to the root of the
defendant‘s conduct‘. By contrast, the official‘s dishonesty, in Country Cloud, went no
further than the reasons he gave for cancelling the contract, and did therefore not rise to
the level of dishonesty or corruption that was present in Gore. The official was merely a
‗bungling public functionary, not one bent on illicit gain‘, the court said. So the policy
considerations that motivated the imposition of liability in Gore were not present in
Country Cloud.83 However, by distinguishing Gore in this manner the Constitutional
Court did not lay down a rule that State entities can only be held liable when the
impugned conduct amounts to fraud or an attempt to secure some illicit financial gain.
To the extent that the court a quo held that Country Cloud had done so, it erred. Before
us counsel for the Municipality properly conceded that the court a quo had ‗gone too far‘
in its holding.
[200] The first judgment appears to conclude that the appellants had not established
that Mr Flusk‘s conduct was wrongful mainly on the ground that the attempt to extort the
bribe – the free stand – was not proved. But this was only one aspect of the mala fide
case the developer had made out. There are four, separate, mutually reinforcing
grounds for establishing the mala fides case. The first was that Mr Flusk wilfully delayed
the issue of the certificates for a period of 15 months. His conduct was mala fide, it is
81 Ibid, paras 21 and 22.
82 Minister of Finance v Gore 2007 (1) SA 111 (SCA).
83 Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC) para
47.
contended, because he gave the developer dishonest and spurious reasons for
withholding the certificate. The second, third and fourth grounds all relate to the ulterior
purpose sought to be achieved by his mala fide conduct: namely the attempt to extort a
bribe in return for a free stand, the attempt to extort a transfer of Mr Diamond‘s
shareholding in the second appellant to an NGO of his choice, and the extortion of the
sales list in return for the issue of the certificates. The developer‘s case, as I understand
it, is that it established each of these grounds, but that any one of them would have
been sufficient to prove that the wrongfulness element of the delict. We are therefore
concerned simply with whether the developer had established wrongfulness on the part
of Mr Flusk. In this regard the question is whether considerations of public and legal
policy dictate that his conduct should attract delictual liability.
[201] Public policy is, of course, informed by constitutional norms, including and
particularly the norm of public accountability. Closely allied with this norm is the duty to
act fairly, transparently and responsively. The duty to act accountably in this broad
sense requires the State not merely to remain passive but to take positive steps,
through its officials, to fulfil the obligations the Constitution imposes upon it.84 It follows
that where the State fails to take these steps or abuses its power it violates the principle
of public accountability, which may found a claim for damages against it.85
[202] Of course, as Nugent JA pointed out in Minister of Safety and Security v Van
Duivenboden, whether the norm of accountability translates this constitutional duty into
a private law legal duty enforceable by an action for damages must depend on the
circumstances of each case.86 In this regard an important question is whether there are
effective remedies, including judicial remedies, other than an action for damages, to
vindicate the norm. Where the State‘s impugned conduct occurs in circumstances that
offer no such effective remedy the courts will ordinarily recognise a legal duty unless
there are countervailing considerations affecting the public interest that outweigh that
84 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 19-20.
85 Compare Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1
(CC) para 45.
86 Van Duivenboden (supra) fn 11.
norm. In other words they would find the impugned conduct wrongful. In Country Cloud,
for example, the plaintiff‘s reliance on the accountability norm failed mainly because it
was a stranger to the contract between the state entity and iLima, and it was thus not
able to show that any legal duty was owed to it.87 In addition the conduct of the official in
cancelling the contract, even though done intentionally, did not raise similar public-
policy concerns that arose from the conduct that was in issue in Gore.88
[203] Van Duivenboden involved the negligent failure by police officers to deprive a
person of firearms in circumstances where they had information that he was unfit to
possess them. The court found that the imposition of a legal duty on the police to
prevent harm would not have required additional resources or impeded the effecting
functioning of the police service. The constitutional norm of accountability therefore
required a legal duty to be recognised as there was no other effective way to hold the
State accountable other than through an action for damages.89 In Gore it was not even
necessary to consider whether there were remedies other than an action for damages
because ‗the cost to the public of exempting a fraudulent perpetrator from liability for
fraud would be too high.‘90
[204] The abuse of public power is what we are concerned with in this appeal. The
nature of the abuse must enter into a consideration of whether the impugned conduct
was wrongful. In England, the abuse of power – misfeasance as it is called – by a public
official is a recognised tort on its own. Lord Millet explained the ‗core concept‘ of the
abuse of power in Three Rivers DC v Bank of England (No 3)91 as follows:
‗[T]he core concept is abuse of power. This … involves other concepts, such as
dishonesty, bad faith, and improper purpose. These expressions are often used
interchangeably; in some contexts one will be more appropriate, in other contexts,
another. They are all subjective states of mind . . .
87 Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC) para
48.
88 Ibid paras 46 and 47.
89 Van Duivenboden (supra) fn 11 para 22.
90 Gore (supra) fn 9 para 88.
91 Three Rivers District Council & others v Governor and Company of the Bank of England (No 3) (CA and
HL(E)) [2003] 2 AC.
…Every power granted to a public official is granted for a public purpose. For him to
exercise it for his own private purposes, whether out of spite, malice, revenge, or merely
self-advancement, is an abuse of power. It is immaterial in such a case whether the
official acts exceeds his powers or acts according to the letter of the power: see Jones v
Swansea City Council [1990] 1 WLR 1453. His deliberate use of the power of his office
to injure the plaintiff takes his conduct outside the power (and) constitutes an abuse of
the power…‘92
[205] The relevance of this dictum of the House of Lords to the present appeal is
evident. The abuse of power is antithetical to the principle of public accountability. When
a public official acts for a private purpose, whether out of spite, revenge, malice or
simply self-advancement, he abuses his power. It is immaterial whether or not he
derives any personal gain from his conduct: it remains an abuse of power. Under the
core concept of the abuse of power are the related concepts of dishonesty, bad faith
and improper purpose or ulterior purpose. Once the abuse of power is established
liability would usually follow. In the language of wrongfulness, considerations of public
or legal policy will generally compel the imposition of delictual liability to loss resulting
from the abuse of power.93 Moreover as Lord Millet emphasised, liability cannot be
avoided by showing that the official acted not for his personal purposes but for the
benefit of the public.
[206] In the instant case the evidence established, and the court a quo found, with
respect correctly, that Mr Flusk intentionally withheld the certificates for fifteen months,
and was dishonest (and mala fide) with both the developer and the court in explaining
his conduct. The fact that in doing so he may have been acting not for his own personal
purposes, but in the belief that he was preventing a corrupt land transaction, as the
court a quo also found, does not negate his wrongful conduct. Once it is established
92 Ibid at 235-236.
93 In Gore (supra) fn 9 the court said that dishonest conduct will usually attract legal liability; In Telematrix
(Pty) Ltd v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 26 Harms JA said: ‗Decisions
made in bad faith are . . . unlawful and can give rise to a claim for damages‘.
that he used the extraordinary power given to him as the City Manager not for a public
purpose, but for another improper purpose, he abused his power.
[207] Assuming, in Mr Flusk‘s favour, that he genuinely believed that he was a
preventing a massive public fraud, an accountable City Manager, acting reasonable and
not capriciously, would have disclosed to the developer in December 2007 that he had
decided not to issue the certificates. And, he would have disclosed the factual basis and
the true reasons to the developer and the Council for not allowing the development to
proceed. He would then have promptly taken appropriate steps to have the entire
process, commencing with the land transaction in 2005, reviewed and set aside.
Instead, with full knowledge that the developer was incurring huge expenditure to
comply with s 82 of the Ordinance, he not only adopted an unresponsive stance to its
entreaties, but was deceitful in his dealings with the developer, ignored the proper
advice of his officials and misled the Mayor.
[208] The developer‘s numerous attempts – which increasingly became desperate – to
obtain the certificates, were met by obdurate resistance on the part of Mr Flusk. He was
unable honestly to point out any deficiencies with the engineering services because
there were none, which is why his allegations in his court papers before the high court
that the services were deficient and his submissions pertaining to the developer‘s failure
to use internal appeal remedies were not bona fide. His letter to the Mayor on 15 August
2008 was replete with falsehoods. Instead, as the court a quo observed, he kept on
reverting, impermissibly, to the illegal land swap and the fact that some councillors may
have unduly benefitted from the development. This is a textbook case of the mala fide
abuse of public power, not the actions of a ‗bungling official‘ merely trying to prevent the
consummation of a corrupt land deal. In the absence of any other countervailing public
interest considerations, his conduct was wrongful on this basis alone and ought to
attract liability.
[209] But, as I have found, Mr Flusk‘s conduct was even worse. He acted for an ulterior
purpose by extorting the sales list from Mr Diamond in return for which he promised to
issue the certificates, demanded that Mr Diamond transfer his interest in the second
appellant to an NGO of his choice and attempted to extort a bribe from Mr Diamond.
This is irreconcilable with the central finding of the court a quo that Mr Flusk had a
genuine belief throughout that he was preventing a massive public fraud. These are all
additional grounds for finding that his exercise of public power was mala fide and
therefore wrongful. No considerations of public or legal policy can deny the developer
delictual remedy in these circumstances.
[210] What remains is causation. The quantification of the damages stood over for later
adjudication. The developer contends that Mr Booysen‘s evidence that damages were
suffered under various heads was established and not really disputed. And that there
was a direct causal connection between the mala fide withholding of the certificates, the
resultant delay in the township development process and the loss suffered by the
appellants.
[211] As appears from the two previous judgments the first appellant‘s claim arises
from the delay in implementing the land sale agreements to Chestnut Hill and Armadillo;
and second, the delay in remuneration for the construction contracts with those two
companies to erect the town houses and office block. Both judgments hold that because
the sale agreements were concluded before the township was proclaimed in terms of s
103 of the Ordinance, and thus contravened s 67 of the Ordinance they were null and
void. And that by upholding the claim the court would impermissibly be enforcing these
agreements.
[212] In regard to the first appellant‘s claim for construction costs pursuant to the
construction of an office block, the second judgment holds, similarly, that because the
construction was undertaken without approved building plans as the National Building
Regulations and Building Standards Act 103 of 1977 (Building Standards Act) requires,
the court cannot sanction it.
[213] The second appellant‘s claim relates to the delay in receiving payment pursuant
to the sales of properties it had effected and the loss arising from the ten percent drop in
the market price in 2008. Here too the two judgments hold that because the sales were
completed prior to proclamation and thus null and void by virtue of s 67 of the
Ordinance the claim should fail, as should the claim for rates and taxes, which it was
obliged to pay during the period of the delay. The second judgment, in addition, holds
that the claim arising from the ten percent drop in the value of the property as a result of
the global financial crises fails because it was not foreseeable.
[214] The third appellant‘s claim is for the depreciation in value of the stands in the un-
proclaimed townships of Extensions 8 and 10 of the Meyersdal Estate. The Municipality
had erroneously not proclaimed these townships at the time it proclaimed the other
extensions. When the third appellant discovered this it decided not to compel the
proclamation in terms of s 103 of the Ordinance because Mr Flusk would have simply
refused to issue the certificates for these extensions. As a result of the delay, by the
time the Municipality had indicated that it was not prepared to proclaim the township,
the market experienced such a collapse that the development was no longer viable. The
third appellant was thus precluded from selling land at the then market value and
investing the proceeds before the market collapse. This loss of the value of the land to
the tune of ten percent and the loss of interest that would have been received is the
measure of the loss claimed.
[215] The first judgment holds that there was no ‗causal nexus between the failure to
proclaim the township, the s 82 certificate and the asserted loss‘, and that the loss that
resulted from the market failure was not foreseeable. Put simply the third appellant‘s
claim fails because neither factual nor legal causation was established. The second
judgment concurs in this reasoning.
[216] There is no dispute that the sale agreements, which are the subject of the first
and second appellants‘ claims, were invalid for want of compliance with s 67 of the
Ordinance. Section 67(2) expressly says so, providing that these agreements have ‗no
force and effect‘. Section 67, read with s 70, has as its purpose, to protect members of
public from unscrupulous developers seeking to sell properties in un-proclaimed
townships. However, the appellants are not seeking to enforce these admittedly illegal
agreements against any purchasers, much less take advantage of unsuspecting buyers,
who need the court‘s protection. Their claim is in delict and the award of damages they
seek is to be compensated for the difference between the position that arose as a result
of the delict and the hypothetical situation that would have obtained but for Mr Flusk‘s
wrongful conduct. In other words what is sought to be recovered is the amount by which
their patrimony has been diminished by reason of Mr Flusk‘s refusal to issue the
certificates when he should have done. Their case is that but for Mr Flusk‘s mala fide
conduct the townships would have been duly proclaimed by December 2007, the
appellants would have transferred properties to their purchasers and they would not
have suffered any loss.
[217] Once that had occurred and the parties had settled their contractual obligations
between them it would not follow that a purchaser could seek to undo the transaction on
the ground of the invalidity of the agreement. That principle was enunciated more than a
century ago by Innes J in Wilken v Kohler:94
‗It by no means follows that because a court cannot enforce a contract which the law
says shall have no force, it would 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
underhand unconditional agreement of sale of fixed property for a definite price, 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 the causa stated in the
deed of transfer was called a contract of sale, whereas it was in reality an agreement to
sell, invalid and unenforceable in law, but which both seller and purchaser proposed to
carry out. No good ground of action could be alleged in such a case; neither in the
shape of a restitutio in integrum, nor by way of a condictio could relief be claimed.
Neither party could say that he had been enriched at the expense of the other; and the
94 Wilken v Kohler 1913 AD 135 at 144; See also Taljaardt v T L Botha Properties 2008 (6) SA 207 (SCA)
para 7; Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC)
para 168.
traditio duly made with knowledge of all the facts and with the intent to pass the
dominium, and the price duly paid with similar knowledge and with the object of
acquiring the dominium would bind the respective parties.‘
[218] Now suppose, on the facts of this case, that the townships had been proclaimed
by December 2007, without delay, and that the properties duly transferred to the
purchasers in return for payment of the contract price. It seems clear that the parties
would not be able to undo the agreement notwithstanding its invalidity. This means that
a purchaser, who received fair value, would not be able to extricate himself from the
sale agreement by demanding that the seller take back the property. And the developer
would, notwithstanding the invalidity of the sale agreement, also not be required to
repay the purchase price.
[219] Once it is accepted that a contracting party is unable to undo the consequences
of an invalid contract where the parties have carried out their obligations, it must follow
that a third party is in an even weaker position to impugn its validity.95 In the present
case, as I have mentioned, we are not even concerned with the enforcement of the
contractual obligations flowing from an invalid contract. Instead, we have an attempt by
a third party – the Municipality – to invoke the invalidity of the sale agreements in a
delictual dispute involving it and the developer to avoid the consequences of the mala
fide conduct of its most senior official, the City Manager. Section 67 of the Ordinance
can manifestly not serve that purpose. To the extent that the first two judgments come
to a contrary conclusion, I respectfully disagree with them, as I do with the second
judgment‘s additional reliance on the Building Standards Act.
[220] I turn to consider the third appellant‘s claim. In regard to whether factual
causation was established the first judgment holds that there was no causal nexus
between the failure to proclaim the township and the asserted loss. I respectfully
disagree with this conclusion. It is correct that the two extensions in issue here,
Extensions 8 and 10 were inadvertently not proclaimed at the time the others were. But
95 Aussenkuhr Farms (Pty) Ltd v Trio Transport CC 2002 (4) SA 483 (SCA) para 26.
this is not the issue. It is clear from the evidence that there were two reasons that the
developer did not insist on the proclamation. First, it would have unnecessarily incurred
further rates and taxes. Secondly, and more importantly, there was no purpose in
proceeding with the proclamation in the face of Mr Flusk‘s resolute determination not to
issue the certificates. In my view the delay in the proclamation of Extensions 8 and 10,
which was directly attributable to Mr Flusk‘s wrongful conduct, was established as the
factual cause of the loss.
[221] In regard to legal causation the question is whether the Municipality should be
held liable for the harmful consequences or loss of Mr Flusk‘s conduct. Put differently
was Mr Flusk‘s mala fide conduct sufficiently closely linked to the loss for legal liability to
ensue, or was it too remote?96 The first two judgments hold that if Mr Flusk‘s conduct
was mala fide, the Municipality should nevertheless not be held liable because the loss
or harm was the result of the unforeseen market crash of 2008, which caused the
market value of the un-proclaimed township to depreciate.
[222] However, my colleagues, I think, conflate the nature of the loss with the extent of
the loss. Remoteness is concerned with whether the nature – not the extent – of the
loss is too remote or reasonably foreseeable to incur legal liability. The Municipality (and
Mr Flusk) was aware that the delay was causing harm to the developer; it was drawn to
their attention. Once that is established, as I think it clearly was, the Municipality cannot
complain that the loss was far greater than expected because of the unforeseen market
crash. In other words once the nature of the loss is reasonably foreseeable or not too
remote for liability to ensue, the extent of the loss is immaterial. If it were otherwise it
would mean that a smaller loss of, say, a five percent decrease in the market value of a
property is compensable, because that is always reasonably foreseeable, but not a ten
percent decrease because such a decrease is never foreseeable. That would be an
unwieldy horse to saddle. Given the egregious nature of Mr Flusk‘s mala fide conduct, I
96 Minister of Safety and Security v Carmichele 2002 (6) SA 305 (SCA) 332. See generally J Neethling et
al Law of Delict 5 ed (2006) at 171-174.
do not think that there are any policy considerations, based on reasonableness, fairness
and justice for not holding the Municipality liable in this case.
[223] In the result I would uphold the appeal with costs, including the costs of two
counsel.
______________
A Cachalia
Judge of Appeal
APPEARANCES:
For Appellants:
MC Maritz SC (with him LW De Koning SC)
Instructed by:
Mills & Groenewald Attorneys, Vereeniging
Phatshoane Henney Attorneys, Bloemfontein
For Respondent:
J Peter SC (with him C Georgiades and L Stroom)
Instructed by:
Nozuko Nxusani Inc., Johannesburg
Matsepes Inc., Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Home Talk Developments (Pty) Ltd & others v Ekurhuleni Metropolitan Municipality (225/2016)
[2017] ZASCA
From:
The Registrar, Supreme Court of Appeal
Date:
2 June 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.
Today, the Supreme Court of Appeal (SCA) dismissed the appellants’ claims against the judgment of
the Gauteng Local Division of the High Court, South Africa in favour of the Ekurhuleni Metropolitan
Municipality (the Municipality). The issue at the nub of this appeal concerned the question as to
whether the Municipality was vicariously liable in delict for pure economic loss suffered by the
appellants, allegedly caused by the Municipality’s former City Manager, on the basis that the City
Manager had acted mala fide in withholding the issuance of the s82 certificates.
The dispute between the parties which gave rise to the appeal originates from an alleged land swap
transaction, pursuant to which a land developer and the Municipality, each transferred land
respectively owned by them to the other for the development of what has come to be described as the
Meyersdal Nature area.
During July 2000, the Municipality approved in principle, the establishment of the Meyersdal Nature
area consisting of certain portions of land, inclusive of land involved in the land swap transaction.
Subsequent to this, the appellants were required to complete various services where the approval of a
township would be sought in terms of The Town-Planning and Townships Ordinance 15 of 1986 (the
Ordinance).
In the court a quo, it was held that it cannot be in the public interest and the interests of justice to hold
the Municipality liable for the conduct of an administrative functionary who withheld the issuance of
the s82 certificates based on the genuine belief that at the time, he was preventing fraudulent conduct
from taking place. In that court, the action was dismissed.
On appeal to the SCA, the majority found that it was by no means persuaded that the conduct the
appellants complained of was indeed the cause of their asserted loss. Based on the considerations of
legal and public policy, the SCA held that the Municipality did not act wrongfully in the delictual sense
and was not in breach of any legal duty owed by it to the appellants.
As a result, the appeal was accordingly dismissed with costs.
|
1525
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 473/2007
In the matter between:
AFFIRMATIVE PORTFOLIOS CC
APPELLANT
v
TRANSNET LIMITED t/a METRORAIL
RESPONDENT
Neutral citation:
Affirmative Portfolios v Transnet (473/2007) [2008] ZASCA
127 (30 September 2008).
Coram:
HARMS
ADP,
CAMERON,
JAFTA,
MAYA
JJA,
et
BORUCHOWITZ AJA
Heard:
22 August 2008
Delivered:
30 September 2008
Corrected:
06 October 2008
Summary:
Claim based on written agreement – whether prior oral agreement
enforceable – application of the parol evidence rule - counterclaim
based on unjustified enrichment – condictio indebiti – whether the
requirement that error not be excusable satisfied – error found not
to be excusable.
_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from: High Court, Durban (Tshabalala JP sitting as court of first
instance).
The following order is made:
(1)
The appeal succeeds to the extent set out hereunder:
(a)
The appeal against the judgment on the appellant’s claim of
R833 660.87 is dismissed;
(b)
The appeal against the counterclaim is allowed;
(c)
The respondent is to pay the costs of the appeal, including those
occasioned by the employment of two counsel.
(2)
The order of the court a quo is set aside and the following is substituted
in its stead:
‘(a)
The plaintiff’s claim for R883 660.87 is dismissed;
(b)
The defendant’s counterclaim for the amount of R515 317.45 is
dismissed;
(c)
Each party is to pay its own costs.’
______________________________________________________________
JUDGMENT
______________________________________________________________
BORUCHOWITZ AJA (HARMS ADP, CAMERON, JAFTA, MAYA JJA
concurring):
[1] The appellant instituted action against the respondent in the Durban
High Court in which it claimed, among other relief, payment of the sum of
R883 660.87. The essential basis of the claim was that the respondent had
underpaid the appellant in respect of certain services that had been rendered.
The respondent, in turn, instituted a counterclaim for re-payment of an amount
of R515 317.45 on the basis of unjustified enrichment. The matter came
before Tshabalala JP who dismissed the claim and upheld the counterclaim.
The appellant appeals against these orders with leave of the court a quo.
BACKGROUND
[2] The appellant is a labour broker. In November 1999 the Metrorail
Tender Board invited tenders for the supply of access controllers who were to
be deployed on station platforms under the control of the respondent. Their
function was to ensure that passengers boarding trains had tickets authorising
them to do so. The appellant was notified of the acceptance of its tender on
29 March 2000.
[3] Pursuant thereto a written agreement was entered into between the
parties in terms whereof the appellant was to supply 200 access controllers
for a period of 36 months commencing on 1 April 2000 at a monthly rate of
R358 800 plus VAT. Although not specifically spelled out, it is common cause
that this figure was based on an hourly rate of R15 for a maximum of 104
hours per month per controller, plus an administration fee of 15 per cent
(making a total of R17.25 per hour). The agreement was signed by the
respondent on 3 May 2000 and by the appellant on 5 May 2000. It should be
mentioned that the appellant had already been providing the services in
question to the respondent since September 1999.
[4] Clauses 10.1 and 16.1 of the agreement which are relevant for present
purposes provide as follows:
‘10.1
No deviation from the scope, pricing or programme of Service contained
herein shall be permitted unless the Client has given prior written consent . . .’
‘16.1 Unless specifically stated otherwise in the Pricing Schedules, all prices are
fixed as per the formula agreed upon in Annexure B, for the duration of the Contract
and shall not be subject to any variation, except in terms of Clause 10 in particular,
shall include all applicable taxes, duties and fees, except for Value Added Tax which
is to be stated separately.’
[5] With effect from 1 April 2000, the appellant increased the charge to
R17.25 per hour plus the administration fee of 15 per cent. The appellant says
it did so because Mr Naicker, the contracts manager of the Durban region of
the respondent had informed Mr Xaba, the sole member of the appellant, that
Mr Mncube, the Durban regional manager of the respondent, had agreed to
this increase. The respondent however disputes having agreed or instructed
the appellant to effect the said increase.
[6] The appellant paid the increased charge without complaint for the
months of April to September 2000, both months inclusive.
[7] At a meeting between the representatives of the parties held on 20
December 2000 Xaba, was told that the appellant had been charging in
excess of what was allowed in terms of the agreement and that henceforth the
appellant was to revert to charging R15 per hour per controller plus a 15 per
cent administration fee. Xaba reluctantly agreed to this but reserved the
appellant’s rights in regard thereto. From the date of that meeting the
appellant resumed charging the specified rate of R15 per hour plus 15 per
cent.
[8] In April 2002 the respondent purported to summarily terminate the
agreement. The appellant treated this as a repudiation of the agreement and
accepted this. The respondent accepted before trial that its repudiation was
unlawful and an amount of damages was agreed. The appellant thereupon
instituted the action forming the subject matter of the present appeal.
THE CLAIM
[9] The primary question is whether the written agreement was varied so
as to provide for the payment of an increased remuneration calculated on the
basis of R17.25 per hour plus the 15 per cent management fee.
[10] The crux of the appellant’s case is to be found in para 6 of the
particulars of claim where the following allegations are made:
‘6. During the month of May 2000 the aforesaid written agreement was varied orally,
or tacitly or by conduct by the parties in the following respects:
(a) [clause 10.1 of the agreement was deleted];
(b) the defendant would pay to the plaintiff an increased remuneration calculated
on the basis of R17,25 per hour (for normal hourly rates) worked by each
access controller plus the 15% management fee, such increase to be paid
from the date of such variation.
(c) Clause 16(1) was varied by the deletion of the words following on the words
“all prices” where they appear in the first line of such paragraph up to and
including the words “clause 10 in particular” where such words appear in the
third line of such clause.’
[11] There is no evidence to support the allegations in para 6 of the
particulars of claim concerning an oral variation. None of the appellant’s
witnesses testified that the parties had agreed to delete clause 10.1 or the
alleged portions of clause 16.1. Nor was there evidence that it was orally
agreed during May 2000 to increase the applicable rate.
[12] What the evidence in fact establishes is that an oral agreement
authorising the increased rate may have been entered into during April 2000.
Mr Baxter, who managed the accounting and administrative affairs of the
appellant, testified that if there was an agreement to increase the rates this
must have occurred during April 2000 because such rate was first reflected in
the appellant’s invoice which was generated by 30 April 2000. Support for
Baxter’s contention is to be found in the appellant’s letter to the respondent
dated 20 December 2000 in which it is stated that the appellant increased the
access controllers’ wages in the same month that the new rate was
communicated to the appellant.
[13] The appellant is precluded from relying on the alleged oral agreement
by virtue of the so-called ‘parol’ evidence or ‘integration’ rule. The oral
agreement for which it contends would have been entered into before the
signing of the written agreement and also contains terms which are at
variance therewith. It is a well established principle that where the parties
decide to embody their final agreement in written form the execution of the
document deprives all previous statements of their legal effect. See National
Board (Pretoria) (Pty) Ltd v Estate Swanepoel1 and cases there cited. As was
stated by Watermeyer JA in Union Government v Vianini Ferro-Concrete
Pipes (Pty) Ltd:2
‘. . . this Court has accepted the rule that when a contract has been reduced to
writing, the writing is, in general, regarded as the exclusive memorial of the
transaction and in a suit between the parties no evidence to prove its terms may be
given save the document or secondary evidence of its contents, nor may the
contents of such document be contradicted, altered, added to or varied by parol
evidence.’
[14] Not all oral or collateral agreements are necessarily deprived of legal
effect. The parol evidence rule applies only where the written agreement is or
1 1975 (3) SA 16 (A) at 26A-D.
2 1941 AD 43 at 47.
was intended to be the exclusive memorial of the agreement between the
parties. Where the written agreement is intended merely to record portion of
the agreed transaction, leaving the remainder as an oral agreement, then the
rule prevents the admission only of extrinsic evidence to contradict or vary the
written portion without precluding proof of the additional or supplemental oral
agreement. This is often referred to as the ‘partial integration’ rule. See
Johnston v Leal3 and the cases there cited.
[15] A court may look to surrounding circumstances, including the relevant
negotiations of the parties, in order to determine whether the parties intended
a written contract to be an integration of their whole transaction or merely a
partial integration. See Johnston supra 945D-E. The fact that the parties
specifically refer to a topic or subject in the wording is generally an indication
that the writing was intended to be conclusive as to that aspect of the
transaction. This point is aptly made in the following passage in Wigmore on
Evidence, s 2430:
‘(3)
In deciding upon this intent, the chief and most satisfactory index for the judge
is found in the circumstance whether or not the particular element of the alleged
extrinsic negotiation is dealt with at all in the writing. If it is mentioned, covered, or
dealt with in the writing, then presumably the writing was meant to represent all of the
transaction on that element; if it is not, then probably the writing was not intended to
embody that element of the negotiation . . . .’
[16] The question of prices and the pricing structure is a matter that was
specifically dealt with in the written agreement. The preamble expressly states
that ‘. . . the Contractor undertakes to carry out the work described in the
contract specifications at the price or prices quoted, and subject to the general
conditions of contract attached hereto’. Clause 16.1 provides that ‘. . . unless
specifically stated otherwise in the Pricing Schedules, all prices are fixed as
per the formula agreed upon.’ It follows that the written agreement must be
regarded as conclusive in regard to the applicable rate in respect of the
appellant’s services.
3 1980 (3) SA 927 (A) at 944B-E.
[17] If it was indeed the common intention of the parties that the rates be
varied the appellant could have availed itself of the equitable remedy of
rectification. In the event, however, it chose not to do so and is bound to the
terms of the written agreement.
[18] Reliance cannot be placed on the allegation in para 6 of the particulars
of claim to the effect that the agreement was varied tacitly or by conduct in the
light of the aforegoing. Furthermore clause 10.1, which is in effect a non-
variation clause, entrenches the pricing provisions against oral or tacit
variation. The binding nature of such a provision was emphasised in SA
Sentrale Ko-Op Graanmaatskappy Bpk v Shifren en andere4 and affirmed
more recently in the case of Brisley v Drotsky.5 Clause 10.1 may be varied
otherwise than in writing (as to which see Clemans v Russon Brothers (Pty)
Ltd).6 However there is no evidence that the parties agreed or even applied
their minds to the question of deleting the clause. It accordingly remains of
force and effect.
[19] It was further argued that the respondent’s letter dated 1 September
2000 constituted sufficient written authority to increase the rates. This
argument is without merit. The letter, in its terms, does not purport to address
such issue. The author, Mr Pillay, who was the then financial manager of the
Durban region of the respondent, testified that when he wrote the letter he
was not aware of any rate increase. He addressed the letter to the appellant
because it was experiencing cash flow problems.
[20] In yet a further attempt to neutralise any reliance on the non-variation
provision, the appellant sought refuge in the principles of estoppel. It was
argued that the appellant had relied, to its prejudice, on Naicker’s
representation that Mncube had authorised the charging of the increased rate.
In order to succeed with a plea of estoppel it had to be shown that Naicker’s
4 1964 (4) SA 760 (A).
5 2002 (4) SA 1 (SCA).
6 1970 (3) SA 686 (E) at 689E-F.
representation could reasonably have been expected to mislead the
appellant. See Monzali v Smith.7 The representation made could not in my
view have misled the appellant in view of the formal tender process which was
then not yet completed. In these circumstances the appellant could not
reasonably have believed that either Naicker or Mncube had authority to
increase the rates without the approval of the Tender Board. There was also
no representation emanating from the respondent itself that either Naicker or
Mncube had authority to vary the rates.
[21] Lastly, and on the assumption that the non-variation clause was
applicable, it was argued that the appellant’s invoices which were supported
by documents signed by officials of the respondent constituted sufficient
written authority to vary the rates. This argument cannot be sustained. Clause
10.1 plainly provides that no variation would be permitted unless the
respondent had given its ‘prior written consent’. The signed invoices or
payments certificates do not purport to give consent and even if one were to
construe them in that manner such consent was not given prior to any
increase.
[22] For these reasons the appeal in respect of the appellant’s claim
cannot succeed.
THE COUNTERCLAIM
[23] The respondent seeks by means of the condictio indebiti to recover
payment from the appellant of the amounts that were overpaid during the
period April to September 2000.
[24] The central requirement of the condictio indebiti is that the payment or
transfer must have been effected in the mistaken belief that the debt was due.
It is also an established requirement that the mistake, whether of fact or of
law, must be excusable: Willis Faber Enthoven (Pty) Ltd v Receiver of
7 1929 AD 382 at 386.
Revenue and another.8
[25] That there was no obligation on the respondent to pay the amounts
claimed and that the payments had been made in error can admit of no doubt.
The respondent’s officials overlooked the unauthorised increase in the rates
charged by the appellant and failed to check the rates stipulated in the
appellant’s invoices against the written agreement.
[26] The court a quo found that although the defendant’s conduct was
incompetent and negligent it could not be characterised as inexcusable as to
be unworthy of the protection of the court. Reliance in this regard was placed
on what was stated by this Court in Bowman, De Wet and Du Plessis NNO
and others v Fidelity Bank Ltd.9
[27] For the appellant it was argued that the court a quo had erred in finding
that the excusability requirement had been satisfied as the evidence showed
that in effecting payment the respondent’s officials had been grossly
negligent. It was also argued that the court a quo’s reliance on Bowman was
misplaced as the claimant in that case was an executor who fell within one of
the recognised exceptions to the excusability principle (see Bowman at 44H-
45F).
[28] Despite strident calls for its abolition, the excusability requirement has
been maintained and applied in a long line of cases beginning with Rooth v
The State.10
[29] It was authoritatively settled by this court in Willis Faber that a plaintiff
seeking to invoke the condictio indebiti must prove sufficient facts to justify a
finding that the error that gave rise to the payment was excusable. This
requirement is not immutable and admits of exceptions particularly in cases
8 1992 (4) SA 202 (A).
9 1997 (2) SA 35 (A) at 44C-G.
10 1888 (2) SAR 259.
involving payments made by persons in a representative position: see
Bowman, supra (at 40A-C).
[30] Recently there have been renewed calls by academic authors to
abolish the requirement. See Daniel Visser Unjustified Enrichment11 and
Helen Scott, ‘The Requirement of Excusable Mistake In The Context Of The
Condictio Indebiti: Scottish and South African Law Compared’.12 The present
matter is clearly not an appropriate case in which to deviate from existing
authority since the question of abolishing the excusability requirement was
neither pertinently raised nor argued by the parties.
[31] This court has been reluctant to lay down rules or formulations in order
to circumscribe what is excusable and what is not. See Bowman supra at
44D-E. One is however able to discern certain general principles that have
emerged from the decided cases. Grossly negligent conduct or inexcusable
slackness in the conduct of one’s own affairs is generally (but not necessarily)
regarded as inexcusable conduct. This has been derived from the statement
of Voet 16.2.7 that the ignorance of fact should appear to be ‘neither slack nor
studied’ (nec supine nec affectata) or of a fact concerning the plaintiff’s own
affairs.
[32] Whether the defendant had induced the mistake in the plaintiff has
often played an important part in the court’s view of what constitutes an
excusable error. See for example the facts in Willis Faber and Bowman.
[33] In Willis Faber (at 224E-G) Hefer JA provided the following indications
as to what factors might determine the excusability of a particular error:
‘It is not possible nor would it be prudent to define the circumstances in which an
error of law can be said to be excusable or, conversely, to supply a compendium of
instances where it is not. All that need be said is that, if the payer’s conduct is so
slack that he does not in the Court’s view deserve the protection of the law, he
11 (2008) 316-318
12 (2007) 124 SALJ 827.
should, as a matter of policy, not receive it. There can obviously be no rules of
thumb; conduct regarded as inexcusably slack in one case need not necessarily be
so regarded in others, and vice versa. Much will depend on the relationship between
the parties; on the conduct of the defendant who may or may not have been aware
that there was no debitum and whose conduct may or may not have contributed to
the plaintiff’s decision to pay; and on the plaintiff’s state of mind and the culpability of
his ignorance in making the payment.’
[34] The nature of the mistake perpetrated by the respondent when each
payment was made is clear, but the reason is not. The respondent has failed
to explain why the mistake occurred and why it occurred repeatedly over a
seven month period.
[35] The written agreement was readily accessible to the respondent’s
officials. It originated from a formal tender process. Its terms were approved
by the Metrorail Tender Board and were a matter of public record. The failure
by the respondent’s officials to detect the unauthorised increase and to check
the rates stipulated in the appellant’s invoices with the written agreement can
only be attributed to extreme slackness or negligence on their part.
[36] It was argued on behalf of the respondent that the overpayments were
induced by the fact that the appellant had submitted invoices claiming the
increased rate of R17.25 per hour plus the 15 per cent administration fee.
That submission cannot be sustained. The evidence of both parties was to the
effect that there was a careful checking of invoices and supporting
documentation before any payment was made.
[37] Having regard to all the circumstances I am of the view that the
respondent’s conduct was culpable to a degree rendering same inexcusable,
and for that reason the trial court ought to have dismissed the counterclaim.
[38] There is yet a further reason why the counterclaim cannot be
sustained. It is clear from the evidence that most of the moneys that the
appellant received from the respondent were paid to the appellant’s
employees and the relevant regulatory authorities. The appellant only retained
a small percentage thereof in respect of its administration fee. The extent of
the appellant’s enrichment was therefore minimal. What finds application in
the present case is the defence of non-enrichment as enunciated by this court
in African Diamond Exporters (Pty) Ltd v Barclays Bank International Ltd,13
which essentially amounts to this. Where the receiver has lost or disposed of
part of that which has been paid to him, he will only be liable for what remains
in his hands at the time when the action is instituted. See Senwes Ltd v Jan
van Heerden & Sons CC;14 J G Lotz Enrichment, 9 Lawsa (2 ed), para 213.
As the counterclaim ought, for the reasons stated, to be dismissed it is
unnecessary to determine the extent of the appellant’s enrichment.
CONCLUSION
[39] It follows that the appeal should be allowed only to the extent of the
counterclaim. As the appellant has achieved substantial success on appeal it
is entitled to its costs including those occasioned by the employment of two
counsel. As far as costs in the court below are concerned these should be
borne equally by the parties as each achieved a comparable measure of
success.
THE ORDER
[40] The following order is made:
(1)
The appeal succeeds to the extent set out hereunder:
(a)
The appeal against the judgment on the appellant’s claim of
R833 660.87 is dismissed;
(b)
The appeal against the counterclaim is allowed;
(c)
The respondent is to pay the costs of the appeal, including those
occasioned by the employment of two counsel.
13 1978 (3) SA 699 (A) at 713F-H
14 [2007] 3 All SA 24 (SCA) para 34.
(2)
The order of the court a quo is set aside and the following is substituted
in its stead.
‘(a)
The plaintiff’s claim for R883 660.87 is dismissed;
(b)
The defendant’s counterclaim for the amount of R515 317.45 is
dismissed;
(c)
Each party is to pay its own costs.’
________________________
P BORUCHOWITZ
ACTING JUDGE OF APPEAL
Appearances:
For Appellant:
D J Shaw QC
E A Matthis
Instructed by
J H Nicholson Stiller & Geshen, Musgrave
Symington & De Kok, Bloemfontein
For Respondent:
C J Pammenter SC
Z P Pungula
Instructed by
A P Shangase & Associates, Durban
Mthembu & Van Vuuren 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:
30 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
AFFIRMATIVE PORTFOLIOS CC
v
TRANSNET LTD t/a METRORAIL
MEDIA STATEMENT
The Supreme Court of Appeal (SCA) today dismissed an appeal by
Affirmative Portfolios CC against a judgment of the Durban High Court
dismissing its claim against Transnet Ltd. The SCA also upheld Affirmative
Portfolios’ appeal in respect of Transnet’s counterclaim.
The essential basis of the claim against Transnet was that it had underpaid
Affirmative Portfolios the sum of R883 660.87 in respect of services which the
latter had rendered. The SCA held that by virtue of the parol evidence rule no
reliance could be placed on the agreement contended for and the appeal thus
had to fail.
Transnet’s counterclaim was for repayment of R515 317.45. The claim was
brought on the basis that the amounts in question were paid in error and that
Affirmative Portfolios had been unjustifiably enriched at Transnet’s expense.
The evidence showed that in effecting payment Transnet’s officials had been
grossly negligent and that Affirmative Portfolios had been minimally enriched.
Consequently the appeal in respect of the counterclaim was upheld.
|
3575
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 407/2020
In the matter between:
MAXRAE ESTATES (PTY) LTD APPELLANT
and
THE MINISTER OF AGRICULTURE,
FORESTRY & FISHERIES FIRST RESPONDENT
DELEGATE OF THE MINISTER OF
AGRICULTURE, FORESTRY & FISHERIES,
LAND USE & SOIL MANAGEMENT SECOND RESPONDENT
Neutral citation: Maxrae Estates (Pty) Ltd v The Minister of Agriculture,
Forestry and Fisheries & Another (case no 407/2020) [2021]
ZASCA 73 (09 June 2021)
Coram:
WALLIS, DAMBUZA and MAKGOKA JJA, GORVEN and
UNTERHALTER AJJA
Heard:
06 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 09
June 2021.
Summary: Administrative law – Review of administrative decision taken by the
Minister of Agriculture, Forestry and Fisheries – Failure by the Minister to apply
his mind to relevant factors – decision irrational – appeal upheld.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Mdalana-
Mayisela J sitting as court of first instance):
1.
The appeal is upheld with costs.
2.
The order of the high court is set aside and replaced with the following:
‘2.1
The decision of the first respondent dated 9 November 2018,
dismissing the appeal noted by the appellant in terms of the
Subdivision of Agricultural Land Act 70 of 1970, is reviewed
and set aside.
2.2
The appeal against the refusal of the subdivision application
is remitted to the first respondent for reconsideration
2.3
The respondents are ordered to pay the applicant’s costs of the
application jointly and severally’.
JUDGMENT
Dambuza JA (Wallis, Makgoka JJA, Gorven and Unterhalter AJJA
concurring)
Introduction
[1] The appellant, Maxrae Estates (Pty) Ltd, is the registered owner of a farm
located within the City of Tshwane Metropolitan Municipality (the Municipality).
In December 2016 the appellant submitted an application to the Department of
Agriculture, Forestry and Fisheries (the Department), seeking approval for the
subdivision of a farm and for establishment of a sectional title ownership scheme
on one of the subdivided portions. That application was rejected by the delegate1
of the Minister of the Department and an appeal to the Minister against that
refusal failed. An application by the appellant to review and set aside the
Minister’s decision was dismissed by the Gauteng Division of the High Court,
Pretoria (high court, Mdalana-Mayisela J). This appeal, with the leave of the high
court, is against that order.
Background
[2] The appellant’s farm, known as Yzervarkfontein 194, lies to the North and
South of the R50 Provincial Road which links the City of Tshwane to the town
of Delmas within the Gauteng Province. One portion thereof, the proposed
Portion A, measuring 52.0708 hectares, lies to the South of the provincial road
and the remainder, measuring 487.1064 hectares, lies to the North of the road. On
the proposed Portion A there is a warehouse that receives fresh produce from
local farmers which is then packaged and distributed to different markets.
[3] During 2017 the appellant, through its agent, Metroplan Town Planners
and Urban Designers (Metroplan), applied to the Department for permission to
subdivide the farm and to establish a sectional title ownership scheme with two
sections on the proposed Portion A, where the warehouse is located. The
application was made in terms of ss 3 and 4 of the Subdivision of Agricultural
Land Act 70 of 1970 (the Act). The appellant advanced, as the reasons for the
1 In terms of s 8 of the Subdivision of Agricultural Land Act 70 of 1970 the Minister may delegate to any officer
in the Public Service any power conferred upon him by the Act, excluding the powers to make Regulations in
terms of s 10.
proposed subdivision, that it wished to expand the warehouse so as to cater for a
wider market. The operator of the warehouse needed to invest in the upgrading
of the warehouse, and therefore intended to establish a sectional title ownership
scheme to secure his financial interest over the warehouse portion and enable
further investment and the sourcing of funds to make the substantial capital
investment that the upgrade required. The extended warehouse would cover 4.2%
of the proposed Portion A, and the remaining 50 hectares of Portion A would be
retained as an agricultural unit.
[4] In anticipation of the subdivision and expansion of the warehouse, an
environmental authorisation had already been granted to the appellant by the
Gauteng Provincial Department of Agriculture and Rural Development in terms
of the provisions of the National Environmental Management Act 107 of 1998
(NEMA) and the regulations promulgated in terms thereof.2 The Municipality had
also already issued a rezoning certificate3 in relation to the farm, in terms of which
land use thereon was approved for ‘Agriculture, Farm Stall subject to Schedule
10 and one dwelling house’. These documents formed part of the appellant’s
application, together with an approval of the subdivision that had been granted
by the predecessor of the City of Tshwane Metropolitan Municipality, (the
Kungwini Local Municipality) in 2008.
[5] In a letter dated 9 November 2017, the second respondent, in her capacity
as the Minister’s delegate, dismissed the appellant’s application in the following
terms:
2 In terms of s 24 of NEMA the potential consequences or impact on the environment of certain listed activities
must be investigated, assessed and reported to the competent authority or the relevant minister in order to give
effect to the general objectives of integrated environmental management. The Environmental Authorisation dated
29 June 2017 authorised the activities listed under items numbers 24(ii) and 28(ii) of Listing Notice 1 of 2014.
3 Dated 27 July 2016.
‘The Department herewith informs you that in terms of section 4 of the Act, Act 70 of 1970, it
does not support your proposed subdivision and sectional title of the above-mentioned
property. The property is situated in an area where agricultural activities are taking place. The
proposed subdivision will perpetuate the creation of smaller portions in the area. The approval
will set a precedent for similar applications in the area. The warehouse should remain as part
of the entire farm as it is used for agricultural purposes.
The Department has a mandate to protect agricultural land for agricultural production to ensure
food security in the country.’
[6] In preparation for its appeal to the Minister against the decision of the
delegate, the appellant commissioned a specialist study by Index (Pty) Ltd
(Index), an entity with expertise in agriculture and land use, on the agricultural
potential of the farm. The Index report on the viability of agricultural activities
on the proposed portion A after the proposed subdivision of the farm, formed part
of the appeal documents.
[7] The appellant’s appeal to the Minister against the decision of his delegate
was unsuccessful. The reasons given by the Minister for dismissing the appeal
were that the proposed subdivision would:
‘2.2 . . . result in the creation of a small portion that will not be sustainable (‘viable (sic)) and
will not be resistant in the long run considering the impact of climate change.
2.3 The proposed portion A (52 Ha) will not be in line with Departmental Norms and Standards
for a sustainable viable unit under dryland nor for livestock production.
2.4 The proposed rezoning for sectional title will grant new land use rights whereas the existing
warehouse is considered as farming required infrastructures in the farming industry to support
the entire farm.
2.5 Although it was indicated that the current agricultural activities will still continue, the main
challenge is the sectional title on 2,5 hectares of the property. Such will result in the setting a
precedence for similar applications for sectional title in the area. Although [the] reason for
sectional title was to obtain finance from the bank in order to increase the fresh produce facility
which has become very small compared to the fresh produce that is received.’4
In the high court
[8] The appellant launched a review application in the high court, challenging
the dismissal of its appeal on the grounds that the Minister’s decision was
arbitrary and irrational. It contended that the Minister took into account irrelevant
factors and ignored relevant considerations, especially the Index report. The high
court dismissed the review application, having found that the Minister had
exercised his wide discretion properly, in line with the purpose of the Act, and
within the bounds of the law, by considering all information placed before him.
The court highlighted that the separation of powers doctrine required courts to be
slow to interfere with discretionary powers exercised by the executive.
On appeal
[9] The appellant contended that the Minister’s decision was arbitrary,
irrational and unreasonable, in that it was not founded on any evidence
demonstrating that the subdivision was inimical to the provisions of the Act and
would lead to the creation of an unviable agricultural land parcel. It was also
submitted that the decision was premised on irrelevant considerations and was
not rationally connected to the purpose for which the Minister’s authority was
given. According to the appellant, the subdivision would only formalise the
layout of the farm that was created by the partition effected by the R50 road. The
4 The last sentence seems to be incomplete. At the hearing of the appeal counsel who represented the Minister
could not shed any light as to this state of affairs.
appellant also maintained that the Minister ignored the fact that the farm was
surrounded by small farms which had been subdivided in terms of the Act.
[10] The Minister and his delegate (respondents) denied that the two portions
of the farm were operated independently of each other. They also contended that
the appellant’s failure to explain the role of Metroplan and Porcupine
Developments5 in the subdivision application created an impression that the real
intention behind the proposed subdivision was to sell the proposed portion A for
development of residential sectional title units. They denied that the Index report
was not considered.
The law
[11] Both parties accepted that the purpose of the Act is to prevent
fragmentation of agricultural land into small uneconomic units that might
potentially lead to rural communities being impoverished.6 Section 3(a) of the
Act prohibits the subdivision of agricultural land without the consent of the
Minister. An application for the Minister’s consent must be made by the owner
of the land concerned.7 Section 4 regulates the circumstances in which the
Minister’s written consent will be granted. In terms of s 4(2)(b) the Minister may,
in his discretion, refuse consent if he is satisfied that the land will not be used for
agricultural purposes or may, after consultation with the relevant provincial
administrator, grant conditional consent.
5 The latter is the entity which applied for the environmental authorization.
6 See Van der Bijl and Others v Louw and Another 1974 (2) SA 493 (C) at 499C-E.
7 Section 4(1)(a)(i) of the Act. In terms of s 4(1)(b) 'owner' shall have the meaning assigned to it in s 102 of the
Deeds Registries Act, 1937 (Act 47 of 1937), ie, the registered owner.
[12] The parties were in agreement that in considering the appeal the Minister
exercised a wide discretion conferred upon him under s 4(2) of the Act, and that
his decision constituted administrative action. The appeal therefore amounted to
a rehearing of the matter which could take into account new evidence. It is trite
that the exercise of public power by the executive and other public functionaries
is subject to the principle of legality. Section 6(2) of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA) enjoins the courts to review
administrative action where such was taken on the basis of irrelevant
considerations and where relevant factors were ignored. An administrative
decision must be rationally related to the purpose for which the power was given
to the administrator. As to the test on whether the exercise of public authority
passes constitutional muster, the Constitutional Court in Pharmaceutical
Manufacturers Association of South Africa and Another: In re Ex Parte President
of the Republic of South Africa and Others said:
‘The question whether a decision is rationally related to the purpose for which the power was
given calls for an objective enquiry. Otherwise a decision that, viewed objectively, is in fact
rational, might pass muster simply because the person who took it mistakenly and in good faith
believed it to be rational. Such a conclusion would place
form
above
substance
and
undermine an important constitutional principle.’8
Discussion
[13] In support of its appeal to the Minister, the appellant filed a number of
documents, including the Index report, the environmental authorisation, and an
area map depicting the appellant’s farm together with surrounding farms.
Amongst other things, in the Index report, the type of soil on proposed portion A
8 Pharmaceutical Manufacturers Association of South Africa and Another: In re Ex Parte President of the
Republic of South Africa and Others (CCT31/99) [2000] ZACC 1; 2000 (2) SA 674 (CC) para 86.
was discussed, together with the reasons for the conclusion that the proposed
development would not result in an unviable land portion.
[14] According to the Index report, the agricultural potential of the land on the
northern part of the proposed Portion A was assessed as having moderate to
severe limitations with regard to the plants that could be grown thereon. The
report concluded that despite these limitations, with the enhancement of
irrigation, the low and medium potential land could be improved to high potential
land such that vegetables and peaches could be grown under drip irrigation, rather
than dryland farming. The Index report concluded that the subdivision would
contribute to ‘optimal utilization of agricultural land and a viable agricultural
practice’, and that the extension of the warehouse would benefit the local
agricultural industry.
[15] The Minister referred to none of the factors and conclusions set out in this
or any of the other reports or documents in his decision. Instead, his decision
comprised vague conclusions which included matters in respect of which there
was no evidence before him. His conclusion that ‘the creation of a small portion
will not be sustainable viable and will not be resistant in the long run considering
the impact of climate change’ was one such example. There was no evidence
before the Minister on the impact of the subdivision on climate change. Tellingly,
his conclusions were expressed in exactly the same terms (including the editorial
errors therein) as the submissions made to him in a memorandum prepared by the
Deputy Director of the Department, Ms Marubini, on 27 June 2018 in relation to
the appeal. In that memorandum, titled ‘General Submission’, the following was
recorded:
‘General submission prepared by the Department of Agriculture, Forestry and Fisheries (Ms
M C Marubini – Deputy Director: Land Use Administration) dated 27 June 2018 and signed
as recommended by the Minister of Agriculture, Forestry and Fisheries on 9 November 2018’.
(Emphasis supplied).
[16] One can only conclude that the Minister did not apply his mind to the
information and submissions made in support of the appellant’s appeal. Instead
he extracted the recommended conclusions from the submissions made to him by
the Deputy Director. He ignored the relevant evidence and analysis bearing upon
the appeal and took into account irrelevant matters in relation to which no
evidence served before him (for example, climate change).
[17] The high court was clearly alive to the fact that the Minister had to exercise
his broad discretion within the boundaries of the law. However, it seems to have
misconstrued what, in effect, that principle entailed in this case. The high court
reasoned, erroneously, that the court was precluded from examining the propriety
of the Minister’s decision because of the broad discretion which he exercised and
his expressed intention to advance the objectives of the Act. However, the wide
Ministerial discretion essentially entailed the consideration by him of the factors
that were relevant to the decision he was required to make. The exercise of a wide
discretion was no licence for disregarding those factors and making an arbitrary
decision. And the Minister could not use the doctrine of separation of powers to
shield such arbitrary decision from review by the court. Mere mention that the
Ministerial discretion has been exercised for the given purpose was not sufficient.
The court was constrained to intervene where the decision maker had ignored the
relevant factors and taken into account irrelevant considerations.
[18] Lastly, it bears mention that even though the decision was made by the
Minister, he did not depose to the answering affidavit filed in opposition to the
review application. It was rather the Deputy Director, Ms Theresa Sebueng
Chipeta who deposed to that affidavit, on the basis that she had personal
knowledge of the contents thereof, and that she was duly authorised to do so.
There was no indication as to where her knowledge was derived from (as to the
bases on which the Minister made his decision). None of the departmental
documents in the record indicated that she had any involvement in either the
delegate's decision or that of the Minister.
[19] Furthermore, there was a disjuncture between the Minister’s decision as
communicated in his letter of 9 November 2018, and some of the reasons and
conclusions furnished in the answering affidavit. For example, in the answering
affidavit Ms Chipeta stated that the proposed subdivision and sectional title would
lead to building of residential and commercial establishments. She also contended
that a negative inference should be drawn from the appellant’s failure to explain
the role played by Metroplan and Porcupine Developments9 in the subdivision
application. All of this did not appear in the Minister’s decision. Clearly Ms
Chipeta had impermissibly included in the answering affidavit, factors to which
the Minister had had no regard when considering the appeal. Strictly speaking her
affidavit was inadmissible in the proceedings before the high court.
[20] In light of the finding I make, that the Minister did not apply his mind to
the appeal, it is only proper that the Minister’s decision be set aside and the matter
be referred back to the Minister for due consideration.
9 Porcupine Developments had commissioned the Index report.
[21] In the result:
1.
The appeal is upheld with costs.
2.
The order of the high court is set aside and replaced with the following:
‘2.1
The decision of the first respondent dated 9 November 2018,
dismissing the appeal noted by the appellant in terms of the
Subdivision of Agricultural Land Act 70 of 1970, is reviewed
and set aside.
2.2
The appeal against the refusal of the subdivision application
is remitted to the first respondent for reconsideration.
2.3
The respondents are ordered to pay the applicant’s costs of the
application jointly and severally’.
______________________
N DAMBUZA
JUDGE OF APPEAL
Appearances:
For the Appellant: M Majozi
Instructed by: Ivan Pauw and Partners, Pretoria.
Phatshoane Henny Attorneys, Bloemfontein.
For the Respondents: HC Janse Van Rensburg
Instructed by:
State Attorney, Pretoria.
State Attorney, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OFSOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED
FROM
The Registrar, Supreme Court of Appeal
DATE
09 JUNE 2021
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Maxrae Estates (Pty) Ltd v The Minister of Agriculture, Forestry and Fisheries
& Another (case no 407/2020) [2021] ZASCA 73 (06 May 2021)
MEDIA STATEMENT
Today the Supreme Court of Appeal upheld an appeal against an order of the Gauteng
High Court, Pretoria, in terms of which an application brought by the appellant, Maxrae
Estates, for review of a decision by the Minister of Agriculture, Forestry and Fisheries,
refusing subdivision of Farm Yzervarkfontein 194, was dismissed.
Maxrae Estates is the owner of the farm located within the City of Tshwane
Metropolitan Municipality. The farm lies to the North and South of the R50 Provincial
Road linking the City of Tshwane to the town of Delmas in the Gauteng Province.
Maxrae applied to the Department of Agriculture, Forestry and Fisheries for permission
to subdivide the farm and to establish a sectional title ownership scheme on it with two
sections on the southern portion as the proposed Portion A. On the proposed Portion
A there is a warehouse that receives fresh produce from local farmers for packaging
and distribution to different markets. The appellant wished to raise funds for extension
of the warehouse.
The application for permission to subdivide was rejected by the delegate of the Minister
mainly, on the ground that approval thereof would encourage establishment of sub-
economic farming units thus endangering food security. An appeal to the Minister
against that refusal failed for the same reason. The Minister was also of the view that
the smaller subdivided unit would ‘not be resistant in the long run considering the
impact of climate change’, and that Maxrae, in fact, intended to sell the farm for
establishment of residential sectional units.
The appellant brought an application in the high court challenging the decision of the
Minister on the grounds that the decision was irrational, unreasonable and arbitrary
because the Minister took into account irrelevant factors, ignored relevant factors, and
reached conclusions which were not supported by evidence. The high court dismissed
the review application. It found that the Minister had exercised his wide discretion
properly, in line with the purpose of the relevant laws and had considered all the
evidence placed before him.
In upholding the appeal against the decision of the high court, the SCA held that the
high court erred in its understanding of the Minister’s wide discretionary powers. It held
that wide Ministerial discretion was no licence for disregard of factors that were
relevant to the decision he was required to make. The SCA found that the Minister
ignored the evidence and conclusions set out in the expert reports submitted by
Maxrae and instead made vague conclusions which included matters in respect of
which there was no evidence before him. Also, rather than making an independent
assessment of the information placed before him, the Minister extracted conclusions
made in a memorandum prepared for him to sign by the Deputy Director of the
department. The SCA ordered that the matter revert to the Minister for fresh
consideration of Maxrae’s appeal.
--- ends --
|
1524
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 683/07
MURRAY ROYCE CAMPBELL
Appellant
and
WARREN BOTHA
1st Respondent
CINDY CLAIRE BOTHA
2nd Respondent
MICHELLE LYNNE BOTHA
3rd Respondent
PHILLIPA ELIZABETH LAWRENCE
4th Respondent
AMOERÉ HELEN NEL
5th Respondent
SHERIFF FOR THE DISTRICT OF HUMANSDORP
6th Respondent
KOUGA MUNICIPALITY
7th Respondent
SA HOME LOANS GUARANTEE TRUST
8th Respondent
REGISTRAR OF DEEDS, CAPE TOWN
9th Respondent
Neutral citation:
Campbell v Botha (683/07) [2008] ZASCA 126 (30 September 2008)
Coram:
STREICHER, MTHIYANE, HEHER, MLAMBO JJA and LEACH
AJA
Heard:
8 SEPTEMBER 2008
Delivered:
30 SEPTEMBER 2008
Summary:
Sale in execution – s 70 of the Magistrates’ Court Act 32 of 1944 –
there can be no sale in execution without a judgment and an
attachment in execution of that judgment.
_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from: High Court, South Eastern Cape (Froneman J sitting as
court of first instance)
The appeal succeeds with costs.
The order by the court a quo is substituted with the following order:
‘1
It is declared that
(a)
The applicant is the owner of Erf 1115 Sea Vista, in the Kouga
Municipality, Division of Humansdorp, Eatern Cape Province.
(b)
The applicant never lost his ownership of the erf pursuant to the
sale of the erf by the sixth respondent to the fifth respondent.
The other relief claimed by the applicant stands over for later
determination.
The first, second, third and fifth respondents are ordered to pay the costs
incurred in respect of the relief granted.’
____________________________________________________________
JUDGMENT
____________________________________________________________
STREICHER JA (MTHIYANE, HEHER, MLAMBO JJA and LEACH AJA
concurring)
[1] The appellant applied to the Eastern Cape High Court for an order
declaring that he is the owner of Erf 1115 Sea Vista situated in the Kouga
Municipality in the Eastern Cape Province (‘the property’) and for certain
ancillary relief. The court a quo dismissed the application but granted the
appellant leave to appeal to this court.
[2] The appellant was born on 1 January 1980. On 30 September 1998
he, assisted by his father and natural guardian, purchased the property for a
purchase price of R20 000. The property was transferred to him on 29
December 1998. At all relevant times he made use of his father’s postal
address namely P O Box 5015, Helderberg, 7135. However, as a result of a
mistake either on the part of the conveyancing attorney or the Kouga
Municipality (the seventh respondent) his address came to be incorrectly
recorded in the records of the Municipality as P O Box 5012, Helderberg,
7135. He failed to pay the rates payable in respect of the property and on
12 June 2000 the Kouga Municipality issued summons in the Humansdorp
Magistrate’s Court against him for payment of an amount of R3 311,91
being due in respect of outstanding rates plus interest. At that time he was
still a minor but the Kouga Municipality failed to cite him as being assisted
by his father. It cited him as ‘M R Campbell, an adult male of whom
further particulars are to the plaintiff unknown of P O Box 5012,
Helderberg, 7135’. An attempted service of the summons by mail was
unsuccessful as a result of which the Kouga Municipality obtained the
leave of the court to effect service by way of publication of a notice of the
proceedings in the Cape Argus newspaper. The notice was published in the
Cape Argus but did not come to the attention of the appellant or his father.
No appearance to defend was entered as a result of which a judgment by
default was granted to the Kouga Municipality on 19 October 2000. At that
time the appellant was still a minor.
[3] A warrant of execution against the property was thereafter issued and
on 23 November 2000 the court granted leave to the Kouga Municipality to
serve the warrant of execution by one placement thereof in the Cape Argus.
However, there is no record that service of the warrant was effected in
terms of the court order. On 30 March 2001 the sheriff for the district of
Humansdorp, sold the property at an auction which purported to be a sale
in execution.
[4] A professional assistant in the employ of the appellant’s attorneys,
Ms Vreugde, undertook a search in the microfilm records of the National
Library of South Africa at Cape Town. She stated that she examined every
edition of the Cape Argus published during the period 14 November 2000
to 30 March 2001 and established that the warrant of execution had never
been published. All that had been published was the court order authorising
service of the warrant by way of publication thereof in the Cape Argus.
That publication took place on 2 February 2001. It would seem that, by
mistake, the court order was published and not the warrant. Another
indication that the warrant had not been published is the fact that Mr Nel,
the attorney of the Kouga Municipality at the time when the warrant should
have been published, produced copies of the advertisement of the sale in
the Government Gazette and in the Herald newspaper but could not do so
in respect of the advertisement of the warrant.
[5] Nel simply denied that the warrant had not been published. He stated
that Mr Coetzee who was the sheriff at the time was a meticulous sheriff
who ensured that every procedure was followed prior to a sale in execution;
that the records on microfilm may not be complete; and that Vreugde may
have missed the particular advertisement. The respondents also filed an
affidavit by Coetzee in which he stated that he had been a sheriff for 39
years and that in all those years not a single sale in execution that he had
arranged had been set aside on the basis that he had not followed the
correct procedures. Prior to each sale he meticulously went through each
and every notice and judicial document pertaining to the sale so as to insure
that the procedures had been followed properly. I do not think that these
averments are sufficient to create a dispute of fact. The microfilm records
of the National Library are available for inspection. In addition, hard copies
of the Cape Argus are kept by the National Library as well as by the
University of Cape Town. Had the Kouga Municipality and its attorney Nel
considered it possible either that the microfilm records were not complete
or that Vreugde failed to conduct a proper search, they should have
investigated the matter themselves as they had been invited to do. It is not
good enough to say that the records may be incomplete or that Vreugde
may not have searched properly or that Coetzee was meticulous. Even
meticulous people make mistakes. For these reasons I am satisfied that the
appellant established that the warrant had not been published.
[6] Nel’s wife, the fifth respondent, bought the property at the auction
for an amount of R3 500 and sold it on 6 November 2002 to the fourth
respondent for R20 000. The fourth respondent had a dwelling constructed
on the property and on 11 February 2004 she sold it at a price of R560 000
to the third respondent. The third respondent in turn effected certain
improvements on the property for a total amount of R552 016,94 and on 23
March 2006 she sold an undivided third share in the property to the first
and second respondents jointly. The first, second and third respondents
thereupon caused a mortgage bond to be registered over the property in
favour of the eighth respondent to secure a loan that had been granted to
them.
[7] During or about July 2004 the appellant discovered that he was no
longer the registered owner of the property. On 16 February 2005 he
launched an application for the rescission of the judgment against him. The
application was dismissed but an appeal against such dismissal was upheld
on the ground that the judgment was void ab origine on account of the
appellant’s lack of capacity to be sued. The appellant then paid the amount
claimed in the proceedings whereupon the Kouga Municipality withdrew
the action against him and tendered a refund of the amount paid. The tender
was not accepted by the appellant.
[8] Relying on these facts and tendering to pay to the first, second and
third respondents or to such of the respondents as may satisfy the court that
they are entitled to it, the difference between the value of the property with
improvements and the value of the property without improvements, the
appellant applied for orders declaring that he is the owner of the property
and that he never lost his ownership of the property pursuant to the
purported sale in execution. He submitted that there could not have been a
valid sale in execution as there was no valid judgment in existence and as
there had not been an attachment of the property.
[9] Section 70 of the Magistrates’ Courts Act 32 of 1944 provides:
‘A sale in execution by the messenger shall not, in the case of movable property after
delivery thereof or in the case of immovable property after registration of transfer, be
liable to be impeached as against a purchaser in good faith and without notice of any
defect.’
The respondents submitted that the sale was protected by the section as the
fifth respondent as purchaser had acted in good faith and without notice of
any defect.
[10] The judge a quo said ‘that the purpose of section 70 would be
undermined if courts are too easily disposed to find that irregularities in the
execution process leads to the conclusion that a sale in execution was a
“nullity”’. He held that at the time of the purported sale in execution there
was ‘an actual court judgment in existence which was only set aside in
November 2005’ and added that he was ‘not aware of authority for the
proposition that once immovable property has been transferred under a
sale of execution the sale can be set aside upon the basis only of the
rescission of the original judgment’. He further assumed that only the order
granting leave to publish the warrant of execution had actually been
published in the Cape Argus and not the warrant itself but held that the
failure to publish the warrant was not ‘an irregularity of such a nature to
invalidate the sale in execution’. Referring to the fact that the publication of
the summons and the judgment had not elicited any response from the
applicant or his father and that notice of the sale was published in the
Government Gazette and the Eastern Province Herald prior to the sale, he
concluded that the sheriff substantially complied with what was formally
required of him.
[11] In terms of s 70 a sale in execution of immovable property may not
be impeached after registration of transfer as against a purchaser in good
faith and without notice of any defect. Section 66 provides that when a
court gives judgment for the payment of money such judgment, in case of
failure to pay such money forthwith shall be enforceable by execution
against immovable property if there is not found sufficient movable
property to satisfy the judgment. Such execution is to be effected by an
attachment of the immovable property and a sale of the attached property in
execution.1 It follows that there can be no sale in execution without a
judgment and an attachment in execution of that judgment.2 See in this
regard Reid and another v Godart and another 1938 AD 511 where De
Villiers JA said at 514:
‘[T]he word “execution” means, as it seems to me, “carrying out” of or “giving effect,”
to the judgment, in the manner provided by law; for example, . . . by a levy under a writ
of execution.’
1 Rule 43.
2 The same view is expressed in Joosub v J I Case SA (Pty) Ltd and others 1992 (2) SA 665 (N) at 673C.
Referring to this passage Friedman JP said in Jones and others v Trust
Bank of Africa Ltd and others 1993 (4) SA 415 (C) at 419G-H:
‘What is protected by s 70 is a “sale in execution”. A sale in execution is one which
follows upon a judgment of the court. The section, which was held in Sookdeyi’s case to
codify the common law, does not, in my judgment, protect a sale which does not follow
upon a judgment of the court.’3
[12] In Menqa and another v Markom and others 2008 (2) SA 120 (SCA)
this court had to consider the ambit of the section. A judgment had been
granted against Markom and pursuant to that judgment his property was
attached in terms of a warrant of execution and sold by the sheriff at a sale
which was conducted as a sale in execution of that judgment. On appeal
this court upheld the finding of the court of first instance that the warrant of
execution was invalid in that it had been issued by the clerk of the
magistrate’s court without judicial supervision as is required in terms of
s 66(1)(a) as amended by the constitutional court in Jaftha v Schoeman and
others; Van Rooyen v Stoltz and others 2005 (2) SA 140 (CC).4 In the
judgment of the majority the absence of judicial supervision imperilled
Markom’s constitutional rights under s 26(1) of the Constitution and
rendered the sale to Menqa invalid. Van Heerden JA said that to hold that
the provisions of s 70 rendered such a sale unimpeachable would defeat the
purpose of the constitutional ruling in Jaftha.5 In a minority judgment
Cloete JA, with whom Scott JA concurred, agreed with these findings of
the majority but considered it desirable to analyse the meaning of s 70 and
provide a rational basis for its interpretation.6
3 See also Maharaj Brothers v Pieterse Bros Construction (Pty) Ltd and another 1961 (2) SA 232 (N) at
238.
4 Menqa paras [15] and [28].
5 At paras [21].
6 At para [28].
[13] Having referred to Roman-Dutch authors Cloete JA disagreed with
passage in Sookdeyi and others v Sahadeo and others 1952 (4) SA 568 (A)
at 572D-E where Van Den Heever JA said in respect of s 70:
‘Had the section not contained the words “in good faith and without notice of any
defect”, a sale in execution by the messenger would after delivery or transfer have been
absolutely unassailable.’
He did so in the following terms:7
‘These dicta cannot be supported to the extent that they suggest that s 70 limits the
circumstances under which a sale in execution in a magistrates’ court can be impugned,
after delivery of movables or transfer of immovables, to the two cases mentioned in the
section.’
I do not consider it necessary to express a view on the correctness of Cloete
JA’s view. Van den Heever JA did not say that absent a judgment and a
attachment, a sale would be unassailable had the purchaser acted bona fide
and without notice of any defect. He was referring to a sale in execution
and not to a purported sale in execution. As stated above, a sale in
execution, in the present context, is a sale following upon a judgment and
an attachment in execution of that judgment. Without a judgment and an
attachment in execution of that judgment there can be no sale in execution.
[14] The judgment which gave rise to the sale in Sookdeyi was a
judgment against minors unassisted by a guardian. A minor has no locus
standi in judicio with the result that the judgment was void.8 However, the
judgment in fact existed and was treated as a judgment which could form
the basis of a sale in execution entitled to the protection afforded by s 70.
[15] In the present case the judgment that gave rise to the sale of the
property was similarly a judgment against a minor unassisted by a guardian
and therefore void. But, as in the case of Sookdeyi, the court a quo held that
7 At 140A-B.
8 Boberg’s Law of Persons and the Family 2 ed p 906.
the judgment did in fact exist at the time when the sale took place and that
that judgment, which was rescinded only after the sale, could form the
basis of a sale in execution entitled to the protection of s 70.
[16] To treat such a judgment as one that can form the basis of a sale in
execution protected by s 70 would seem to be at odds with the following
statement 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, . . . .’
And Voet 2:4:66 says:
‘Summons to law moreover, either verbal or physical, is the beginning of the institution
of all actions; and if it is left out none of the succeeding steps can hold good. The result
is that a judgment pronounced gains no force even in favour of the person who has not
been summoned and for that reason does not appear.’
But then dealing with the fact that a judgment in favour of a minor
unassisted by his guardian is valid and enforceable against the other party,
stated that ‘in that case the needful constituent and foundation of the
judicial proceeding was not wanting; for even minors, when they better
their condition, have a lawful persona standi in judicio without a
curator . . .’.
[17] Cloete JA9 is of the view that Van Den Heever JA’s statement is
obiter but, in the light of the conclusion to which I have come in respect of
the attachment of the property, I do not consider it necessary to determine
whether that is in fact so or to determine whether Van den Heever JA was
correct in considering a judgment against a minor unassisted by a guardian
to be a judgment that could form the basis of a valid sale in execution. In
this regard it should be pointed out that it was apparently not argued in
Sookdeyi that the judgment could not have formed the basis of a valid sale
in execution. It would seem that the sole issue before the court was
concerned with the incidence of the burden of proof in respect of the bona
fides or knowledge of the purchaser at the sale in question.10
[18] An attachment is effected by way of a notice by the sheriff served
together with a copy of the warrant of execution upon the execution debtor
as owner, upon the registrar of deeds, upon all registered holders of bonds
registered against the property, if the property is in the occupation of some
person other than the execution debtor, also upon such occupier and upon
the local authority in whose area the property is situated.11 Whatever the
position may be if service is not effected on any of the other interested
persons there can, in my view, never be said to have been an attachment
where neither the warrant nor the notice of attachment had been served on
or brought to the notice of the owner.
[19] In the present case neither the warrant nor the notice of attachment
was served on the appellant and he was unaware of the purported sale in
execution. In the circumstances there can be no question of the sheriff
having substantially complied with what was required for an attachment.
9 At 139C-D.
10 Modelay v Zeeman and others 1968 (4) SA 639 (A) at 643D.
11 Rule 43(2)(a).
There had been no compliance at all. The fact that it is unlikely that there
would have been any reaction from the appellant had the warrant been
published in the Cape Argus, as was found by the court a quo to have been
the case, does not assist the respondents either as such unlikelihood cannot
convert a non-attachment into an attachment.
[20] As the property had not been attached in execution of a judgment the
sale that was conducted was not a sale in execution of the judgment and
was therefore not protected by s 70. It was no more than a purported sale in
execution. Not having attached the property, the sheriff had no authority to
conduct a sale thereof and to transfer the property to the purchaser. As was
said by Maasdorp JA in Rossouw and Steenkamp v Dawson 1920 AD 173
at 180:
‘The Sheriff acting without authority is in no different position to any other person
acting without authority in selling the property of a person who has not authorised such
sale.’
It follows that the appellant remained the owner of the property.
[21] The parties were in agreement that if we came to this conclusion a
declaratory order in terms of prayers 1 and 2 of the notice of motion should
be made and that the other relief claimed should stand over for later
determination. In the result the following order is made:
The appeal succeeds with costs.
The order by the court a quo is substituted with the following order:
‘1
It is declared that
(a)
The applicant is the owner of Erf 1115 Sea Vista, in the Kouga
Municipality, Division of Humansdorp, Eatern Cape Province.
(b)
The applicant never lost his ownership of the erf pursuant to the
sale of the erf by the sixth respondent to the fifth respondent.
The other relief claimed by the applicant stands over for later
determination.
The first, second, third and fifth respondents are ordered to pay the costs
incurred in respect of the relief granted.’
__________________
P E STREICHER
JUDGE OF APPEAL
Appearances:
For Appellant:
S P Rosenberg SC
Instructed by
Lamprecht & Associates, Cape Town
C/o Joubert Galpin & Searle, Port Elizabeth
Honey Attorneys, Bloemfontein
For 1st to 3rd Respondents: B Pretorius
Instructed by
Christo Swanepoel Attorneys, Jeffreys Bay
C/o Jacques du Preez Attorneys, Port Elizabeth
Webbers, Bloemfontein
For 8th Respondent:
W J Roos
Instructed by
Velile Tinto & Associates, Pretoria
C/o Burmeister de Lange, Port Elizabeth
Du Toit Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 September 2008
Status:
Immediate
M R CAMPBELL v W BOTHA & OTHERS
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
* * *
The Supreme Court of Appeal today upheld an appeal against a judgment in the
High Court, South Eastern Cape in terms of which the court a quo dismissed an
application for a declaration that the appellant remained the owner of a property
notwithstanding the sale thereof by the sheriff at a sale which purported to be a
sale in execution.
The SCA held that there had been no attachment in that neither the warrant nor
the notice of attachment had been served on or brought to the notice of the
appellant as owner; that the sale therefore did not qualify as a sale in execution;
and that the sheriff consequently had no authority to sell the property and transfer
ownership of the property to the purchaser. For these reasons the SCA held that
the appellant remained the owner of the property.
|
1238
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Rapporteerbaar
Saaknr: 306/07
In die saak tussen:
PIETER ROSSOUW CILLIE
Appellant
en
MATTHEUS LOURENS GELDENHUYS
Respondent
Coram:
HARMS Wnde AP, STREICHER, CAMERON, PONNAN en
CACHALIA ARR
Verhoor:
06 MEI 2008
Gelewer:
22 MEI 2008
Opsomming: Verjaring – verkrygende varjaring van landelike serwitute – die verskil tussen
positiewe en negatiewe serwitute – die omvang van serwitute en die
eienaar van die dienende eiendom se bevoegdheid om die serwituut te
affekteer – die kennisleer is nie op saaklike regte van toepassing nie.
Summary: Prescription – acquisitive prescription of praedial servitudes – difference
between positive and negative servitudes – scope of servitudes and
servient owner’s power to impinge on the servitude – doctrine of notice
does not apply to real rights.
Neutral Citation: Cillie v Geldenhuys (306/07) [2008] ZASCA 54 (22 May
2008)
HARMS Wnde AP/
HARMS Wnde AP:
INLEIDING
[1] Hierdie appèl handel ten eerste met die verkryging van grondserwitute
deur middel van verjaring. Twee serwitute is ter sprake: die eerste kan met
die Romeinsregtelike servitus aquaehaustus (waterhaling uit ‘n fontein)
vergelyk word terwyl die tweede ‘n serwituut van waterleiding vanaf die
fontein (servitus aquaeductus) na die heersende eiendom is. (CG van der
Merwe Sakereg 2 uitgawe 492 (hierna ‘Van der Merwe’ genoem).) ‘n Ander
aspek van die saak is die toepassing van die kennisleer op serwituutregte wat
deur verjaring geskep is maar nie geregistreer is nie. Die slotvraag het
betrekking op die omvang van die eerste serwituut en die beperking wat dit op
die eienaar van die dienende perseel plaas om water wat ondergronds na die
fontein syfer vir eie doeleindes te onttrek.
[2] Die saak het by wyse van ‘n aansoek in die Kaapse Hooggeregshof
begin. Die huidige respondent, Geldenhuys, het in sy hoedanigheid as
eienaar van die beweerde heersende eiendom (die plaas Matjiesrivier)
aansoek gedoen om die registrasie van die twee serwitute oor die plaas
Uitkomst, die eiendom van die appellant (Cillie), beide geleë in die Ceres-
distrik in Wes-Kaap provinsie. Hy het ook om ‘n interdik wat Cillie verbied om
water wat na die fontein sypel deur middel van ‘n boorgat te onttrek, gevra.
Geldenhuys se aansoek was suksesvol maar die verhoorregter, Louw R, het
die nodige verlof tot appèl na hierdie hof toegestaan.
[3] Alvorens ek die aangevraagde regshulp in besonderhede uiteensit, is
dit nodig om kortliks met die tersaaklike feite te handel. Vir huidige doeleindes
is die detail, soos in die uitspraak benede vervat, nie ter sake nie. Matjiesrivier
grens aan Uitkomst maar is laerliggend. ‘n Fontein (die Matjiesrivierfontein) is
op ‘n afgeleë deel van Uitkomst, sowat 250 meter van die grens van
Matjiesrivier, geleë. Die water van die fontein vloei sinds menseheugenis as
gevolg van gravitasie vanaf Uitkomst na Matjiesrivier. Weens die ligging van
die fontein kon die water nie nuttig op Uitkomst aangewend word nie;
daarenteen was die fontein van groot belang vir Matjiesrivier waar dit nie
alleen drinkwater maar ook besproeiingswater verskaf het.
[4] Die fonteinwater is privaatwater soos deur die herroepe Waterwet 54
van 1956 bedoel. Dit het kragtens art 5 beteken dat die water aan die eienaar
van Uitkomst toegekom het onderhewig daaraan dat die eienaar van
Matjiesrivier geregtig was op ‘n redelike aandeel van die water uit die fontein
aangesien dit vir ‘n tydperk van meer as dertig jaar in ‘n bekende en bepaalde
kanaal soontoe gevloei het en aldaar nuttig aangewend is. Sulke gevestigde
regte word deur die huidige Nasionale Waterwet 36 van 1998 erken. Die
afvloei en ontvangs en gebruik van die water deur Matjiesrivier kon egter nie
op sigself serwituutregte skep nie omdat Matjiesrivier verplig was om die
water te ontvang en omdat die nie-gebruik van die fontein deur Uitkomst nie
die regte van Uitkomst op die fontein geaffekteer het nie (Ellis v Laubscher
1956 (4) SA 692 (A) 704B-C).
[5] Sake het gedurende die vyftigerjare van die vorige eeu ‘n belangrike
wending geneem. Die destydse eienaar van Matjiesrivier het die fontein vir
ongeveer ‘dakhoogte’ uitgegrawe, drie gate in die skaliebank met ‘n handboor
geboor en ‘n pyp vanaf die fontein na Matjiesrivier aangelê. Die pyp se roete
is ietwat korter as die natuurlike roete. Die pyp se aanvanklike deursnee is
150 mm en is ondergronds gelê. Na ongeveer 100 m lê dit bogronds, deels in
‘n erosiesloot wat dieper uitgegrawe is, en die deursnee verminder na 100
mm. Op hierdie wyse het Matjiesfontein aanspraak op al die water wat in die
fontein ontspring, gemaak. Die eienaars van Uitkomst het deurgaans aanvaar
dat die water aan Matjiesrivier toekom. Niks dui daarop dat Matjiesrivier met
die goedgunstigheid van Uitkomst die fontein oopgemaak en die pyp aangelê
het nie of dat daar ‘n ooreenkoms in dier voege tussen die betrokke eienaars
was nie. Hierdie opgesomde feite het tot die verjaringsaansprake aanleiding
gegee.
[6] Die vrede is versteur omdat Cillie gedurende 1998 in die normale loop
van sy boerdery-bedrywighede ‘n boorgat op Uitkomst geboor het. Die gat is
sowat 200 m ten suide van die fontein en 450 m vanaf die grensdraad.
Wanneer water uit die boorgat onttrek word, het dit (afhangende van die
tydperk en volume) die gevolg dat die fontein se water verminder of selfs by
tye opdroog. Hoewel Cillie bereid was om vir Geldenhuys water vir
huishoudelike doeleindes te verskaf, was Geldenhuys nie tevrede nie en dit
het direk aanleiding tot die aansoek gegee. Soos gemeld, het Geldenhuys
ten eerste ‘n verklarende bevel aangevra waarvolgens verklaar word dat
Matjiesrivier geregtig is op (a) ‘n serwituut ten opsigte van ‘al die water’
afkomstig uit die Matjiesfontein en (b) ‘n serwituut van waterleiding vanuit die
fontein oor Uitkomst. Geldenhuys het ook aanspraak op registrasie van die
twee serwitute gemaak. Daarbenewens het hy ‘n interdik aangevra wat Cillie
verbied: (a) om op enige wyse met die vrye beskikbaarheid van die water in
die fontein in te meng; (b) om water vanuit enige boorgat op Uitkomst te
onttrek op ‘n wyse wat die beskikbaarheid en die hoeveelheid water in die
fontein verminder of andersins nadelig raak; en (c) om hom te verhinder om
Uitkomst te betree om die pyplyn en sloot in stand te hou of skoon te maak.
[7] Die hof benede, wat die aangevraagde regshulp toegestaan het, het
die geskilpunte soos volg gedefinieer: (a) Of Geldenhuys en sy voorgangers
in titel deur verjaring die reg verwerf het op die gebruik van al die water uit die
fontein, die afvoer van die water in ‘n pyplyn of sloot oor Uitkomst en die
skoonmaak van die fontein en die sloot. (b) Indien ‘n serwituut wel gevestig
het (i) of Cillie gebonde is deur die tot nog toe ongeregistreerde serwituut, dit
wil sê, of Cillie die plaas Uitkomst aangekoop en verkry het met of sonder
kennis van die bestaan van die serwituut en (ii) of Geldenhuys vir Cillie mag
verhoed om ondergrondse water op Uitkomst te onttrek sodat die water wat
die fontein oplewer, hetsy verminder of die fontein laat opdroog.
VERKRYGENDE VERJARING (vraag (a))
[8] Ek begin met die eerste vraag, naamlik die verjaringsaspek. Aangesien
die verjaringstermyn gedurende die 1950s begin loop het toe die fontein
oopgegrawe en die pyp gelê is, word die saak deur sowel die herroepe
Verjaringswet 18 van 1943 as die bestaande Verjaringswet 68 van 1969
beheers. Volgens art 6 van die 1969-wet verkry iemand ’n serwituut deur
verjaring indien hy ‘openlik en asof hy daarop geregtig is’ die betrokke
serwituutregte en -bevoegdhede vir ’n ononderbroke termyn van dertig jaar
uitoefen. Die 1943-wet het anders gelui. Die serwituutsregte moes nec vi,
nec clam, nec precario uitgeoefen gewees het. Daarby het die ‘adverse user’-
vereiste gekom. Vir doeleindes van hierdie saak is die verskille nie tersake nie
aangesien beide wette in wese vereis dat die uitoefening van die
serwituutregte moes geskied het asof die eienaar van die heersende eiendom
die reghebbende was, met ander woorde, ‘n kwasi-besit in die sin van
possessio civilis. (Albert Falls Power Co (Pty) Ltd v Goge 1960 (2) SA 46 (N)).
(Vir die rede vir die veranderde woordgebruik, sien JC de Wet Opuscula
Miscellanea (1979) 85-86; 98-99.) Dit sluit in dat die uitoefening nie met die
herroepbare toestemming van Uitkomst geskied het nie,‘n aspek waarop die
weerleggingslas waarskynlik op Cillie gerus het maar wat in die lig van die
aangehaalde getuienis nie ontstaan nie. (Vir die betekenis van nec precario
waar ‘n fontein ter sprake was, sien Malan v Nabygelegen Estates 1946 AD
562 en verder Bisschop v Stafford 1974 (3) SA 1 (A) 9D-H.)
[9] Serwitute word tradisioneel tussen positiewe en negatiewe serwitute
verdeel. Die verskil tussen die twee is die volgende: In die geval van ‘n
positiewe serwituut is die serwituuthouer bevoeg om ‘n bepaalde handeling op
die dienende erf te verrig terwyl die negatiewe serwituut aan die
serwituuthouer die bevoegdheid verleen om die verrigting van ‘n bepaalde
handeling op die dienende erf te verbied. (MJ de Waal Die Vereistes vir die
Vestiging van Grondserwitute in die Suid-Afrikaanse Reg (ongepubliseerde
LLD-proefskrif ingedien by die Universiteit van Stellenbosch (1989)) 13; DJ
Cusine & RRM Paisley Servitudes and Rights of Way (1998) 34.) Bekende
voorbeelde van negatiewe serwitute is altius non tollendi (om nie hoër te bou
nie) en luminibus non officiendi (om nie lig af te sny nie), normaalweg
huisdiensbaarhede (stedelike serwitute). (Voet 8.6.11; Margate Estates Ltd v
Urtel (Pty) Ltd 1965 (1) SA 279 (N) 284H; Van der Merwe 498-499.) Die
belang van die verskil in die verjaringskonteks is daarin geleë dat dit onseker
is of verkrygende verjaring van negatiewe serwitute prakties moontlik is. Ten
minste word een of ander verbodshandeling aan die kant van die verkryger en
iets meer as blote berusting by die eienaar van die ‘dienende’ perseel vir die
duur van die verjaringsperiode vereis (Ellis v Laubscher veral op 704D-709H).
Hoewel Louw R bevind het dat die eerste serwituut ‘n negatiewe en die
tweede ‘n positiewe serwituut is, het hy bevind dat beide deur verjaring
gevestig is. Die appellant ondersteun die bevinding oor die aard van die
serwitute maar betoog dat die eerste nie deur verjaring gevestig is nie omdat
die nodige verbodshandeling nie deur Matjiesrivier verrig is nie.
[10] Die hof benede se bevinding dat die eerste serwituut ‘n negatiewe
serwituut is, is daarop gebaseer dat die serwituut vir Geldenhuys geregtig
maak om Cillie te verbied om ‘n bepaalde eiendomsbevoegdheid (om die
water van die fontein te gebruik) wat Uitkomst toekom, uit te oefen. Steun vir
hierdie standpunt is in ‘n passasie in die uitspraak van Fagan AR in Ellis v
Laubscher gevind. Ek stem nie met die uitleg van die uitspraak saam nie. Die
onvermoë van Cillie om die water uit die fontein as gevolg van verjaring te
gebruik, is ‘n gevolg van ‘n serwituut wat aan Geldenhuys die volle aanspraak
op die fontein se water gee; dit is met ander woorde die teenkant van
Geldenhuys se serwituutreg; en dit definieer nie die reg nie. Hierdie
onderskeid, so glo ek, is deur Steyn HR in Hollmann v Estate Latre 1970 (3)
SA 638 (A) op 646A-647D uitgestip. Soos reeds gemeld, het Matjiesrivier se
eienaars in ‘n daadwerklike sin die water by die fontein gaan haal deur middel
van oopgrawing van die fontein en die aanleg van die pyp. Hoewel die
waterhaal
deur
Matjiesrivier
verskil
van
die
tradisionele
servitus
aquaehaustus, is dit nie nodig om die serwituut te etiketteer omdat ‘the
number of praedial servitudes is now regarded as being practically unlimited
[and there] is no strict numerus clausus of servitutal rights’ (Lorentz v Melle
1978 (3) SA 1044 (T) 1051A). Die bevoegdheid wat deur Matjiesrivier
uitgeoefen is, is om al die water wat die fontein bereik te neem en by wyse
van die pyplyn en sloot na Matjiesrivier af te lei. Op hierdie wyse het
Matjiesrivier meer gedoen as bloot om die afvloei te ontvang (iets wat, soos
gemeld, geen regsgevolge ingehou het nie) en ook meer as om slegs sy
redelike deel volgens art 5 van die 1956 Waterwet te neem. Inderdaad het
Matjiesrivier al die regte wat aan die fontein as gevolg van die eiendomsreg in
Uitkomst kleef, toegeëien en uitgeoefen. Dit is dus nie ‘n geval van waar
Uitkomst verbied is om iets te doen nie want Uitkomst het nooit gepoog om
die fontein te gebruik nie. Dis eerder ‘n geval dat Uitkomst iets verduur het: ‘If
the servitude consists in not doing (in non faciendo), it is said to be negative
(servitus negativa); if it consists in forbearance (in patiendo), it is said to be
affirmative (servitus affirmativa), and means permission to do acts that would
otherwise be unlawful’ (WA Hunter Roman Law 2 ed (1885) 421).
[11] Die gedeelte uit Ellis v Laubscher waarop die verhoorhof staatgemaak
het, vorm deel van die opsomming van die getuienis. Daar het Fagan AR
aangeteken dat daar geen getuienis was dat die aanspraakmaker ‘ooit water
op [die teenparty se] grond gaan haal het of van [die] grond afgekeer het nie’
(op 704C-D). Hieruit het die verhoorhof die afleiding gemaak dat as iemand
water op ‘n ander se grond gaan haal of afkeer, daardie persoon deur
sodanige optrede ‘n negatiewe serwituut vestig. Aangesien ‘n negatiewe
serwituut veronderstel dat die eienaar van die heersende eiendom niks op die
dienende eiendom doen nie en dat die eienaar van die dienende eiendom
passief moet wees ten aansien van die uitoefening van ‘n bepaalde
eiendomsbevoegdheid (soos om nie op sy eiendom hoër as ‘n bepaalde
hoogte te bou nie), kan hierdie uitleg van die uitspraak nie korrek wees nie.
Hoewel die uitspraak ietwat moeilik lees, is ek van oordeel dat as mens die
uitspraak in sy geheel beskou, veral met verwysing na die voorbehoud wat
Fagan AR gestel het nl of dit ‘hoegenaamd moontlik is’ dat ‘n negatiewe
serwituut deur verjaring geskep kan word, is die betrokke uitleg nie korrek nie
(op 709F). (Inderdaad, as na die geskiedenis van verkrygende verjaring by
negatiewe serwitute gekyk word, is daar veel te sê vir die gedagte dat dit ‘a
theoretical rather than a practical possibility’ is: JE Scholtens ‘The Acquisition
of Negative Servitudes by Prescription’ (1957) 74 SALJ 135 op 138). Myns
insiens wou hy aandui dat as daardie feite teenwoordig was dit nie nodig was
om met negatiewe serwitute te handel nie omdat die serwituut dan ‘n
positiewe een sou wees, hetsy van waterhaling of waterleiding. Stawing
hiervoor is die feit dat hy die betoog oor negatiewe serwitute daarna aanhaal
en behandel en te kenne gee dat gemeenregtelik ‘n daad van aanspraak wat
‘n wetlik effektiewe beperking op die teenkant se gebruik van sy grond plaas
nodig is om ‘n negatiewe serwituut te skep (op 707C-D). Dit is ook hoe Van
der Merwe (op 533) die uitspraak verstaan asook NBS (Cape Town) (Pty) Ltd
v Citymark Investments (Pty) Ltd 1986 (2) SA 290 (C) waar gestel word dat
die eienaar van die dienende erf moes gepoog het om sy bevoegdhede uit te
oefen en dat hy daartoe verhinder is gedurende die verjaringstydperk
alvorens ‘n negatiewe serwituut kan vestig.
DIE KENNISLEER (vraag (b)(i))
[12] My gevolgtrekking is dus dat die waterhaal-serwituut waarop
Geldenhuys aanspraak maak ‘n positiewe serwituut is. Dit is die einde van die
betoog oor verjaring omdat die feite hierbo uiteengesit, bewys dat die
positiewe serwitute deur middel van verkrygende verjaring gevestig is. Hierdie
bevinding lei tot die tweede vraag, naamlik die toepassing van die kennisleer
op die feite van die saak. Hierdie aspek het ontstaan omdat Cillie die plaas
Uitkomst eers gedurende 1998 aangekoop het. Hy het naamlik beweer dat hy
nie aan enige ongeregistreerde serwitute gebonde was nie omdat hy nie
kennis van hulle bestaan gehad het nie. Die verhoorhof het egter op die
stukke bevind dat sy getuienis onwaar is en het die verweer op daardie
grondslag verwerp. Ek het ernstige twyfel oor die juistheid van die
feitebevinding maar omdat die verweer geen regsbasis het nie, is dit nie nodig
om die feite verder te oorweeg nie.
[13] Die advokate (en die verhoorhof) het van die standpunt uitgegaan dat
die kennisleer van toepassing is op saaklike regte en nie slegs op persoonlike
regte nie. Die aanname is nie korrek nie. Registrasie van ‘n serwituut is ‘n
afgeleide wyse van verkryging van ‘n saaklike reg. Omdat die causa van so ‘n
regsverkryging normaalweg ‘n ooreenkoms is, geld dit nie teenoor derdes
alvorens die saaklike reg deur registrasie gevestig is nie. Die uitsondering op
die reël is waar ‘n persoon met kennis van die ongeregistreerde reg oordrag
van die dienende erf verkry (Grant v Stonestreet 1968 (4) SA 1 (A) 20A-B).
Die verkryging van ‘n serwituut deur middel van verjaring is gans anders. Dis
‘n oorspronklike wyse van regsverkryging. Sodra die verjaringstermyn sy
verloop geneem het, vestig ‘n saaklike reg in die eienaar van die heersende
erf. Volgens art 6 van die 1969 Verjaringswet ‘verkry’ (‘acquire’) ‘n persoon ’n
serwituut deur verjaring net soos iemand deur verjaring ‘eienaar’ word van ‘n
saak (art 1: ‘a person shall by prescription become the owner’). Hierdie
saaklike reg se bestaan is nie van registrasie afhanklik nie. Saaklike regte
geld teenoor die wêreld, met of sonder kennis van hulle bestaan, met of
sonder registrasie. Daarom ook is ‘n gevestigde serwituut wat per abuis uit ‘n
titelakte weggelaat is teenoor ‘n ‘onskuldige’ koper bindend (Cape Explosive
Works Ltd v Denel (Pty) Ltd 2001 (3) SA 569 (SCA) [16]). Soos prof JE
Scholtens (1957 Annual Survey of SA Law 113-114) dit gestel het:
‘For instance, in the case of acquisition of ownership by prescription the owner may
assert his right of ownership against the world although any actual or constructive
notification of his right to the world is lacking. Our system of deeds registration is a
so-called negative system. This means that in those cases of transfer of ownership
envisaged in the Deeds Registries Act ownership will only pass by registration in the
Deeds Office. Our system does not imply, however, that the registered owner is of
necessity the owner as is the case under so-called positive systems of registration of
titles. In our system a right is real, not because the whole world has knowledge, either
actual or constructive, of its existence, but because of the nature of a real right, as
being, according to the statement commonly used, available against the world. As the
law aims to give publicity to their existence the Deeds Registry gives everybody the
opportunity to verify the existence of real rights in immovable property in so far as
these rights have to be registered in the Deeds Registry.’
Die teenoorgestelde siening van prof P van Warmelo (‘Die Reg Betreffende
Serwitute in Suid-Afrika’ 1960 Acta Juridica 106 op 114) is ongemotiveerd en
onoortuigend.
ONTTREKKING VAN WATER DEUR MIDDEL VAN DIE BOORGAT (vraag
(b)(ii)
[14] Dit laat dan vir beregting die kerngeskil, nl of Cillie geregtig is om water
uit die boorgat te onttrek wat die lewering van die fontein affekteer. Soos
gemeld, kan aanvaar word dat die boorgat ‘n invloed op die fontein het omdat
die boorgat in die fontein se ‘opvangsgebied’ geleë is en water ondergronds
na die fontein deursypel sonder om in ‘n gedefinieerde kanaal te vloei. Die hof
benede het bevind dat Cillie nie aldus mag optree nie omdat Geldenhuys ‘n
serwituutreg op al die water in die fontein deur verjaring gevestig het. Die
basis van die beslissing, aldus die hof, is nie dat Matjiesrivier ‘n serwituut deur
verjaring gevestig het op die ondergrondse water nie maar omdat die verbod
op onttrekking van die ondergrondse water ‘n uitvloeisel is van die beginsel
dat Cillie nie die uitoefening van die serwituut ongedaan mag maak nie. Louw
R het homself aan twee ou Vrystaatse beslissings, te wete Snijman v Boshoff
1905 ORC 1 en De Bruijn v Louw 1905 ORC 11 gebonde geag. Hierdie
beslissings is obiter met goedkeuring aangehaal in die Kaapse hof in Smith
v Smith (die uitspraak is volledig in die appèlsaak Smith v Smith 1914 AD 257
aangehaal) en as bindend beskou (hoewel gekritiseer sonder dat dit ‘n verskil
aan die uitslag gemaak het) in Ohlsson’s Cape Breweries Ltd v Artesian Well-
Boring Co Ltd 1919 CPD 125. Nogtans het hierdie hof in Union Government
(Minister of Railways and Harbours) v Marais 1920 AD 240 op 249 by monde
van Innes HR te kenne gegee dat die betrokke uitsprake nie die hof in
Ohlsson’s gebind het nie. Die geskiedenis van die Vrystaatse uitsprake is
deeglik deur Selikowitz R nagegaan en met volledige aanhalings geïllustreer
in De Witt v Knierim 1991 (2) SA 371 (C). (Hierdie uitspraak is op appèl deels
gehandhaaf maar die betrokke punt is nie daar aangespreek nie: De Witt v
Knierim 1994 (1) SA 350 (A).) Hy het tot die gevolgtrekking gekom dat hulle in
die betrokke opsig nie korrek is nie. Aangesien dit nie nodig is om die wiel te
herontwerp nie is ek van voorneme om myself tot algemene beginsels te
wend ten einde die saak op te los sonder om die detail-oefening te herhaal.
[15] Dit is ‘n algemene reël dat ‘n serwituuthouer in beginsel voorkeur
geniet bo die dienende eienaar ten opsigte van die omskrewe genots- en
gebruiksbevoegdhede wat die betrokke serwituut verleen (Van der Merwe
464). Die eienaar van die dienende eiendom is daarenteen slegs bevoeg om
sy saak te gebruik ‘insoverre hy nie daardeur die belange van die
serwituuthouer aantas nie’ (Van der Merwe op 465). Dit beteken dat wat die
dienende eienaar mag of nie mag doen nie van die strekwydte van die
serwituut afhang. Gaan dit om bv ‘n konsensuele serwituut, is dit ‘n kwessie
van uitleg; gaan dit om ‘n serwituut wat deur verjaring geskep is, hang dit van
die presiese aard en omvang van die reg wat aldus verwerf is, af. In hierdie
geval het die hof benede tereg bevind dat die reg wat verwerf is, die reg op al
die water wat die fontein oplewer is en dat geen reg deur verjaring op die
water alvorens dit die fontein bereik, verwerf is nie. Dit beteken volgens my
insig dat Cillie se regte ten aansien van water wat nog nie die fontein bereik
het nie, onaangeraak is en omdat Cillie nie inmeng met die onttrekking by die
fontein nie, affekteer hy nie Geldenhuys se ‘omskrewe’ genots- en
gebruiksbevoegdhede nie. Hierdie gevolgtrekking word versterk indien mens
in ag neem dat ‘n grondeienaar geregtig is om sy ondergrondse water na
goeddunke aan te wend en dat hy selfs daardeur sy buurman se water kan
afsny tensy daar een of ander verbod (soos ‘n serwituut) op sodanige
optrede rus.
[16] Hierdie beginsels is in Snijman v Boshoff toegepas want die hof het dit
duidelik gestel dat die vraag of die eienaar van die dienende erf die toevloei
van die water na ‘n fontein mag affekteer van die uitleg van die serwituut (in
daardie geval ‘n konsensuele serwituut) afhang en dat die saak ‘has nothing
to do with common law rights’ (Sir Andries Maasdorp HR op 9). In De Bruijn v
Louw het hy die basiese beginsel korrek gestel maar met verwysing na
Johannes Voet ook verder gegaan (op 18):
'There is no doubt as to what the common law rights of the proprietors of adjoining
properties are with respect to underground waters. There is no doubt that each
proprietor is entitled to dig down upon subterranean waters moving in veins and
percolations and undefined channels, even though by so doing he may divert the
water from a neighbour's well; but the case is quite different where there is a
servitude. Voet (8.3.6) clearly limits an owner's right in such a case where he says:
"It is free to every one to open up upon his own ground subterranean veins, by which
water flowing down rises on another's ground, because by so doing he makes use of
his own property; so long as a servitude to the contrary has not been established." No
man therefore has a right to interfere with underground waters where a servitude has
been established, if by so doing he prejudices the right of servitude, and this rule was
applied by this Court in the lately decided case of Snijman v Boshoff . . .. The
question in the present case therefore resolves itself into whether there was or was
not a servitude.’ (My beklemtoning.)
[17] Die vraag is gevolglik of die hof Voet (wat op die Digesta gebaseer is)
korrek verstaan het. CG Maasdorp AR het nie so gedink nie (Marais op 271):
‘But I may say that it appears to me that too wide a construction was given in those
cases [die Vrystaatse sake] to the effect of the servitude by the Court. Where a
servitude is mentioned in this connection in the Digest (39.3.21), [In die gedrukte teks
is die verwysing 9.3.21. Dis kennelik verkeerd.] it is said that:- "If water rises on my
ground, which percolates from your ground (venas habeat) and you cut off these
percolations, and in consequence the water ceases to come to me, you have done no
wrong unless I have a servitude over the water." The servitude here mentioned is one
over the percolations themselves, and not over a spring supplied by such
percolations. A servitude is generally very strictly construed, and it seems to me that
they were very liberally construed in the Free State cases.' [My beklemtoning.]
Hierdie nuanseverskil blyk ook uit Innes HR se uitspraak in dieselfde saak
waar hy dit duidelik maak dat die verbod om die watertoevoer na ‘n fontein af
te sny afhanklik is van die bestaan van ‘n ‘special servitude to prevent’ die
eienaar van die dienende eiendom (op 247) en ook uit Gane se vertaling van
Voet 8.3.6 wat verskil van dié van Sir Andries Maasdorp in die aangehaalde
gedeelte uit De Bruijn v Louw. Hierdie vertaling lui soos volg:
‘Surely if it is free to everyone to cut off on his own farm underground veins of water
by which water is carried down to another’s land and bursts out there, because he
thus employs a right of his own when no servitude to the contrary has been
established, why should he not also in the same right prevent water flowing on the
surface of his own soil from running down to farms below him?’
Voet praat dus van ‘n fontein wat op die onderste (of heersende eiendom) en
nie die boonste dienende eiendom geleë is nie en die serwituut ter sprake kan
gevolglik slegs een ‘over the percolations themselves’ wees.
[18] Ek is derhalwe van oordeel dat die veralgemening wat in Sir Andries
Maasdorp se beslissings voorkom nie geldig is nie. Ek, soos ander tevore (Du
Plessis Estates Ltd v SA Railways and Harbours 1933 EDL 140; De Witt v
Knierim 1991 (2) SA 371 (C); so ook CG Hall Maasdorp’s Institututes of SA
Law: The Law of Property (1976) 10e uitg 122 – die oorspronklike boeke is
deur Sir Andries Maasdorp geskryf – CG Hall & AP Burger Hall on Water
Rights in SA (1974) 4 uitg 102-103) verkies die benadering van De Villiers
Wnde R (die latere Sir Etienne) in Ohlsson’s (op 149):
'I come to the conclusion, therefore, if I am not bound by the Orange River Colony
decisions, that the doctrine by which the owner of a servient tenement is debarred
from reducing the flow of the spring by taking underground water not flowing in a
known and defined channel under his own land, is confined to conventional
servitudes [d w s, serwitute wat hulle oorsprong in ‘n ooreenkoms het]; that in the
case of conventional servitudes the application of the doctrine depends entirely upon
the interpretation of the agreement constituting the servitude and upon the
circumstances under which the owner of the servient tenement subsequently carries
out the operations by which the spring is reduced; that the owner of the servient
tenement will only be debarred from carrying out such operation, if it can be fairly
held to be contrary to the contemplation of the original contracting parties that he
should carry out these operations; and that in the case of a servitude where the only
stipulation is that the one owner shall be entitled to the water rising out of his
neighbour's spring, the Court would generally infer that it was in the contemplation of
the parties that the neighbour should not sink wells and abstract underground water,
if he beforehand knows, or beforehand has reasonable grounds to believe, that the
effect of his operations will be to reduce the spring.'
(Sien ook die kontrakgerigte benadering by die uitleg van ‘n serwituut in Van
den Berg v Rand Water Board 1945 AD 691 op 706-707.)
[19] Hierdie gevolgtrekking pas ook in by die uitspraak in De Klerk v
Niehaus (1897) 14 SC 302. Die eienaars van die plaas Straatskerk het vir die
verjaringstydperk gedurende die somermaande deur middel van ‘n voor al die
water uit ‘n dam op die plaas Holle Sloot onttrek. Die eienaars van Holle Sloot
het gedurende daardie periode die mening gehuldig dat die dam en die voor
aan Straatskerk behoort. Die hof, waarvan CG Maasdorp een van die regters
was, het bevind dat ‘n serwituut op al die water in die dam en voor gedurende
die somermaande ten gunste van Straatskerk gevestig het. Die eisers het
egter ‘n verdere aanspraak gemaak: hulle wou die eienaar van Holle Sloot
verbied om besproeiingswater uit die rivier bokant die dam te onttrek omdat
Holle
Sloot
gedurende
die
verjaringsperiode
geen
water
vir
besproeiingsdoeleindes aangewend het nie. Buchanan Wnde HR het soos
volg verduidelik (op 310-311):
‘It is a clearly-settled principle of law that an upper proprietor does not, by mere non-
user, lose his rights as a riparian proprietor. Plaintiff’s right to have a dam and furrow
on defendant’s land is in the nature of a positive servitude; the further right which he
claims of preventing the defendant from taking any water to which as a riparian
proprietor he is entitled above the dam is in the nature of a negative servitude. In the
absence of actual grant or of contract, to establish such a negative servitude by
prescription there must be adverse user, shown by some act done asserting the right,
acquiesced in by the upper proprietor.
...
A servitude of a right to lead out all the water which collects at a lower point of a
stream may be quite consistent with a right in the upper proprietor to exercise riparian
ownership above such spot. The use of water lower down does not do away with the
power to take water higher up the stream. The dam and furrow are necessary to the
enjoyment of the positive servitude, but they are not necessarily an assertion of
right to the negative servitude claimed.’
(Oor die trefwydte van die beklemtoonde sin sien Ellis v Laubscher 709A-E.)
GEVOLGTREKKING
[20] Hieruit volg dit dat die reg wat Matjiesrivier op al die water in die fontein
gekry het, in die omstandighede van hierdie saak, nie behels dat Uitkomst
sonder meer onbevoeg is om water wat na die fontein sypel, toe te eien nie.
Serwitute moet mins beswarend uitgelê word en die regte van dienende
eienaars so min as moontlik ingekort word. Die appèl moet gevolglik ten dele
slaag: die reg op registrasie van die serwitute moet gehandhaaf word (para 1
en 2 van die hofbevel benede) maar die interdik (paragraaf 3) moet ter syde
gestel word. Ook die kostebevel (paragraaf 4) moet ter syde gestel word
omdat Geldenhuys se sukses ten aansien van die serwituut in ‘n sin
akademies is omdat daar nooit ‘n poging was om hom van die regte soos
bevind, te ontdoen nie. Gevolglik moet Geldenhuys die gedingskoste, ook in
die hof benede, dra – telkens ook die koste van twee advokate.
[21] Die volgende bevel word uitgereik:
1.
Die appèl slaag met koste, insluitend die koste van twee advokate.
2.
Die bevel van die hof benede word gewysig met deurhaling van
paragrawe 3 en 4 en invoeging van ‘n nuwe paragraaf 3 wat soos volg lui:
‘Die applikant moet die koste van die aansoek betaal, welke koste die koste
verbonde aan die gebruik van twee advokate insluit.’
___________________________
L T C HARMS
WAARNEMENDE ADJUNK-PRESIDENT
STEM SAAM:
STREICHER AR
CAMERON AR
PONNAN AR
CACHALIA AR
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 22 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
P R CILLIE v M L GELDENHUYS
The SCA today delivered judgment in this case, which dealt with the rights to water from a fountain
on the farm Uitkomst in the Ceres district, Western Cape. The fountain is close to the border of the
farm and the water has been running down naturally due to the topography to the adjoining farm,
Matjiesrivier, where it had been used since time immemorial. The owner of Matjiesrivier, more than
30 years ago, opened the fountain and laid a pipe down to Matjiesrivier.
The owner of Uitkomst, in the ordinary course of his farming activities, had a borehole drilled some
200 m from the fountain. The extraction of water from the borehole affects the delivery of the
fountain.
The two main issues were (a) whether Matjiesrivier had, by means of prescription, obtained a
servitude over the water from the fountain and (b) if so, does that servitude prevent the owner of
Uitkomst from using his borehole to the detriment of Matjiesrivier. The SCA agreed with the
judgment of the Cape High Court concerning the first question (albeit on somewhat other grounds)
that a servitude by presciption had been established. However, it overruled the lower court on the
second question, holding that the prescriptive right did not include the right to prevent the owner of
Uitkomst of using water that is flowing towards the fountain. The servitude is limited to water as it is
emitted from the fountain.
The appeal was accordingly upheld and the interdict preventing the owner of Uitkomst to use his
borehole was set aside.
---ends---
|
4039
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 996/2021
In the matter between:
RAYMOND DANIEL DE VILLIERS
Appellant
and
THE STATE Respondent
Neutral Citation:
Raymond Daniel de Villiers v The State (996/2021) [2023]
ZASCA 83 (31 May 2023)
Coram:
ZONDI,
MOLEMELA
and
MOTHLE
JJA
and
NHLANGULELA and SIWENDU AJJA
Heard:
6 March 2023
Delivered:
31 May 2023
Summary:
Criminal Law and Procedure – compensation order – whether a
court of appeal could impose an order of compensation in terms of s 300 of
the Criminal Procedure Act 51 of 1977 – whether in consideration of an
appeal a court may widen the limited grounds of leave to appeal.
_____________________________________________________________
ORDER
_____________________________________________________________
On appeal from: Free State Division of the High Court, Bloemfontein
(Nekosie AJ with Mbhele and Daniso JJ concurring, sitting as a full court of
appeal):
1.
The appeal succeeds.
2.
The order of the Full Court of the Free State Division of the High Court
dated 8 February 2021 on appeal against sentence, is set aside and
substituted by the following:
‘(a) The sentence imposed by the Regional Court, Bloemfontein on the
appellant on 29 November 2011 is set aside and the matter is remitted to the
Regional Court, Bloemfontein for sentencing afresh.
(b) The further evidence presented by the appellant and the State and
admitted by the Full Court, shall serve before the regional court in
consideration of the sentence.’
JUDGMENT
_____________________________________________________________
Mothle JA (Zondi JA and Nhlangulela and Siwendu AJJA concurring):
[1] This is an appeal against the order by the full court of the Free State
Division of the High Court, Bloemfontein, (the full court), dated 8 February 2021.
The full court, in considering an appeal against a sentence imposed by the
regional court, Bloemfontein (regional court), dismissed the appeal which confirmed
the custodial sentence, and ordered the appellant to pay to the complainant
an amount of R900 000 (nine hundred thousand rand) within 30 days of the
order (the compensation order). The full court purported to grant the
compensation order in terms of s 300 of the Criminal Procedure Act 51 of
1977 (CPA). The crisp issue that falls to be determined in this appeal is
whether the full court acted correctly in granting the compensation order.
[2] The factual background is briefly that the appellant, Mr Raymond Daniel
de Villiers (the appellant), an accountant on 25 May 2005, received an
amount of R950 000 from a long-standing client, the complainant, Mrs Wiese,
to invest on her behalf. Mrs Wiese is a widow to Mr PJ Wiese, a farmer who
had recently passed on, and the R950 000 in issue were proceeds from the
deceased’s estate. The appellant failed to invest the money as instructed and,
instead used it for his speculative business ventures. He failed to pay the
amount to Mrs Wiese on demand and the latter laid a charge of theft against
him.
[3] The appellant was arraigned before the regional court on a charge of
fraud, and in the alternative, theft of R950 000. On 11 August 2011 the
appellant pleaded guilty to the alternative charge of theft in terms of s 112 of
the CPA and was convicted accordingly. The following evidence on sentence,
and material to the determination of this appeal, appears from the trial record
of proceedings in the regional court. First, prior to the commencement of the
trial, the appellant, through his legal representatives, proposed to enter into a
plea and sentence agreement (plea bargaining) with the prosecution, in terms
of s 105A of the CPA. The prosecution rejected the proposal and it fell
through. Second, testifying during sentencing proceedings following the
appellant’s conviction, Mrs Wiese expressed a desire to be paid back the
amount that had been stolen from her.
[4] On 29 November 2011, the regional court imposed a sentence of
seven years’ imprisonment, of which three years were suspended for three
years on condition that the appellant is not convicted of theft, fraud, attempted
theft or fraud or any offence whereby dishonesty is an element of the crime,
committed during the period of suspension. The appellant launched an
application for leave to appeal both the conviction and sentence, which
application was refused by the regional court. On 11 January 2012, he turned
to the high court on petition for leave to appeal. On 14 September 2012, the
appellant’s petition for leave to appeal against his conviction and sentence
was also refused by the high court, before Daffue J and Snellenburg AJ. The
high court further refused his application for extension of bail pending further
appeal proceedings. The appellant was incarcerated for a short period.
[5] The appellant then approached this Court on petition, simultaneously
launching a review application regarding his conviction. On 7 January 2013
the petition served before Nugent JA and Mhlantla JA, who granted the
appellant leave to appeal, only against sentence, to the full court. With the
appeal to the full court held in abeyance, the review application was heard
and dismissed by this Court on 24 March 2016 and thereafter by the
Constitutional
Court
on
August
2016.
Four
years
later,
on
9 November 2020, the full court heard the appeal against the sentence. The
appellant requested the full court to consider a change in his personal
circumstances and delivered an application to present further evidence, which
the full court granted.1
[6] The further evidence, brought nine years after his conviction and sentence in the
regional court, presented the following changed circumstances, as recorded in
para 14 of the full court judgment:
‘14.1 The appellant is now 60 years old.
14.2 He presently resides at 46 Kenneth Kaunda Road, Bayswater, Bloemfontein
which is situated above his work premises at Sebenza Accountants (Pty) Limited
where he is an accountant in association with the said Sebenza Accountants.
14.3 He has not been charged with and/or convicted of any further offences since his
conviction in 2011.
14.4 He is economically active, and a law-abiding citizen post his sentence.
14.5 Through his practise he supports approximately 23 households and presently
serves approximately 800 clients.
14.6 The appellant declares himself a devoted Christian who decided to use and
apply his professional skills to uplift and make a positive contribution to society by
providing professional advice to young aspiring and upcoming entrepreneurs free of
1 See Rail Commuters Action Group and Others v Transnet Ltd T/A Metrorail and Others
2005 (2) SA 359 (CC) para 41- 43.
charge for a period ranging between 6 and 18 months, feeding schemes in under
privileged communities and advise to elderly persons on how to invest their savings.
14.7 He has saved R1 000 000.00 which is held in trust that can be paid in restitution
to the plaintiff [the complainant].’
[7] The State did not oppose the appellant’s application to adduce further
evidence on appeal. It also presented evidence in the form of an affidavit,
deposed to by a Senior State Advocate, attached to the Specialised
Commercial Crime Unit, Bloemfontein, [in] which it asked the full court to
consider in dealing with the appellant’s request to present further evidence. In
the affidavit, the State, dealing with the history of the litigation in this matter,
concluded in paras 25 – 27 thus:
‘Although it is true that personal circumstances of an accused person may change
over a period of time the manner in which the appellant’s exercised his rights led to
this delay. His conduct in this post sentence course of action cannot [not] be ignored.
His dishonest attempt in this application to convince you of his remorse and regret is
not evident from his conduct post sentence.
Logic then dictates that my concession in the trial court that there were compelling
and substantial circumstances justifying an imposition of a lesser sentence than the
minimum sentence cannot be applicable [be] anymore because of the actions and
factors emanating post sentence as described above.
Since the sword of Iustitia (Lady Justice) is a double-edged sword that cuts both
ways and the appellant is asking in effect this Court to consider sentence afresh this
court might well allow further evidence as prayed for by the appellant and in addition
also admit the contents of this statement along the same lines as prayed for by the
appellant and call upon the Appellant to give reasons why the sentence imposed
should not be increased.’
[8] On 8 February 2021, Nekosie AJ, with Mbhele and Daniso JJ
concurring, delivered the full court judgment, wherein the appeal was
dismissed, and the custodial sentence imposed by the regional court
confirmed. Both orders appeared in paras 1 and 2 of the full court order
respectively. The full court further added paras 3 and 4 to its order, which
read thus:
‘3. In terms of section 300(1) of the Criminal Procedure Act 51 of 1977 the appellant
is ordered to pay to Amanda Wiese, the complainant in this matter, the amount of
R900 000.00 (nine hundred thousand rand) within thirty (30) days of this order.
4. The order in 3 above shall have the effect of a civil judgment as provided for in
section 300(3)(b). The registrar is directed to bring this judgment to the attention of
the registrar, Regional Court, Bloemfontein.’
[9] The appellant, aggrieved by the judgment and order of the full court,
once again approached this Court on petition, seeking special leave to appeal
against the order of the full court. This Court, per Wallis JA and Carelse AJA
on 6 May 2021, granted the appellant special leave to appeal to this Court,
limiting the leave to appeal to paras 3 and 4 of the order of the full court. It is
thus with the special leave of this Court that the appeal against paras 3 and 4
of the order is before us. I turn to deal with the question whether the
compensation order in terms of s 300 of the CPA was appropriately made.
[10] Ordinarily when a person who has suffered an injury or loss, desires to
be compensated for such injury or loss, that person would institute civil
proceedings in a civil court for relief. When that injury or loss arises out of the
commission of a crime, and criminal prosecution ensues, that person may, on
application to the criminal court conducting the trial, be awarded
compensation for the damage or loss. That would occur after the conviction of
the person responsible for such loss or damage. The award for compensation
could be made either in terms of s 297 of the CPA, where such award is made
as a condition of a suspended sentence or in terms of s 300 of the CPA,
where the amount would be payable.
[11] In Stow v Regional Magistrate, Port Elizabeth,2 the appeal court
compared and contrasted ss 297 and 300 of the CPA, which both provide for
compensation to be awarded by the criminal court, albeit under different
circumstances. The appeal court wrote:
2 Stow v Regional Magistrate, Port Elizabeth [2017] ZAECGHC 12; [2017] (2) SACR 96; 2017
(2) SACR 96 (ECG) para 64.
‘I do not agree that the different consequences flowing from compensation as a
condition of suspension and compensation in terms of s 300 result in discrimination.
Compensation as a condition of suspension is an integral part of the sentence which
has its purpose as described in Tshondeni supra. It is a flexible condition which can
be adapted to a person's means and the length of time it will take to make full
restitution. Its imposition is subject to the safeguards mentioned above. Section 300
on the other hand is a convenient means of recovering a debt without having to
institute a civil action. The order will be made for the full amount determined as
compensation for the damage or loss and would be executable for the full amount.
Section 300 can only be utilised if the victim or the state, applies for such an order.
The victim can renounce the order, which impacts on the effectiveness of the order,
whereas compensation as a condition of suspension remains the prerogative of the
court and will serve a more meaningful purpose in the sentencing process.
Section 300 is therefore only available in restricted circumstances and lacks the
flexibility which can be used in shaping a suitable sentence. If it was the only means
of ordering compensation, a valuable sentencing option would be lost.'
[12] Section 300(1) of the CPA provides:
‘(1) Where a person is convicted by a superior court, a regional court or a
magistrate’s court of an offence which has caused damage to or loss of property
(including money) belonging to some other person, the court in question may, upon
the application of the injured person or of the prosecutor acting on the instruction of
the injured person, forthwith award the injured person compensation for such
damage or loss: Provided that -
(a) a regional court or magistrate court shall not make such award if the
compensation applied for exceeds the amount determined by the Minister from time
to time by notice in the Gazette in respect of the respective courts.’
[13] First, on a proper construction of s 300(1) of the CPA, only the court
that convicted a person, referred to as ‘the court in question’ may award
compensation under the provisions of s 300 of the CPA. In this case it is the
regional court. The request made by counsel for the appellant that the full
court should not refer the matter back to the trial court, for the purpose of
imposing a compensation order in terms of s 300 of the Act, was bad in law
and the full court erred in acceding to it. The full court, as a court of appeal, is
not the court that convicted the appellant and thus it lacked the authority or
jurisdiction to award a compensation under s 300 of the CPA.
[14] Second, and related to the first issue in the preceding paragraph, in
terms of s 300 of the CPA, the compensation order is triggered ‘upon the
application of the injured person or of the prosecutor acting on the instruction
of the injured person.’ The full court did not have an application in terms of
s 300 of the CPA made to it either by Mrs Wiese or by the prosecutor on her
instruction. The application for compensation award is an essential pre-
requisite to trigger a consideration of compensation in terms of s 300 of the
CPA. The full court, therefore, erred in considering and awarding
compensation in terms of s 300 of the CPA, without an application before it.
[15] Third, it was only after hearing argument and the proceedings had
been adjourned, that the full court informed the legal representatives of the
appellant and the State, that it was considering a possible increase of the
sentence. It invited the parties to submit supplementary heads of argument. In
extending that invitation to the parties, the full court did not give notice that it
was considering invoking s 300 of the CPA. The appellant submitted the
heads of argument without specifically dealing with submissions on s 300 of
the CPA.3 The appellant was thus prejudiced in that he was not granted a
proper notice and hearing before the full court invoked the compensation
order in terms of s 300 of the CPA. Section 300 of the CPA, envisages an
inquiry to be held to determine whether it is possible to make the award. All
parties before the court must be provided an opportunity to participate in the
proceedings.
[16] Based on the findings by this Court in the preceding three paragraphs,
it suffices to conclude that the full court erred in awarding compensation in
paras 3 and 4 of its order. Counsel for the State conceded, only on the narrow
3 S v Van Rensburg 1974 (2) SA 243 (T) at 244H-245A; S v Baadjies 1977 (3) SA 61 (E) at
63A-B.
basis that the full court erred in regard to awarding a compensation in terms of
s 300 of the CPA. This concession was correctly made. Therefore, the full
court’s award of compensation in terms of s 300 of the CPA as stated in
paras 3 and 4 of its judgment, cannot stand, and it falls to be set aside.
[17] The further evidence by the appellant and the State, admitted by the
full court, was not available to the regional court during the sentence
proceedings. The setting aside of paras 3 and 4 of the full court order, leaves
that evidence still intact and available for consideration. The only court
competent to consider that evidence and impose an appropriate sentence
would, in this instance, be the trial court. Consequently, this Court is at large
to remit the matter to the regional court to determine the sentence afresh. In
S v Sion4 (Sion) the high court wrote:
’Where the complainant had merely expressed, in the course of his evidence, a
desire to be compensated, the Court on review remitted the case to the magistrate to
enable the complainant to make a proper application for compensation should he so
desire; alternatively, to enable the magistrate to impose a compensatory fine.’5
[18] Therefore, in remitting the matter back to the trial court for the purpose
of considering the issue of sentence afresh, it will be necessary for the trial
court to re-consider not only the evidence that was presented before it at the
time when it passed the original sentence, but should include the further
evidence as well. Inexorably, a reason for the widening of the terms of this
appeal beyond those that were contemplated in paras 3 and 4 of the full court
order, has emerged. In a situation that is similar to the present one, it was
stated appositely by this court in R v Mpompotshe and Another, 6as follows:
‘In any event it would always be open to this Court, if not prevented by the legal
requirements as to finality discussed in R v Sibande, 1948 (3) SA 1 (AD), and R v
Maharaj (Appellate Division 8th September 1958), to condone the delay and grant
leave to appeal on wider grounds than those allowed by the trial Judge. This appeal
4 S v Sion 1975 (2) SA 184 (NKA).
5 Ibid at 185.
6 R v Mpompotshe and Another 1958 (4) SA 471 (A) at 473E.
was therefore dealt with on the basis that leave to appeal had been granted
generally.’
[19] The principle stated above was followed in S v Safatsa and Others7
(Safatsa) thus:
‘This Court will not necessarily consider itself bound by the grounds upon which
leave has been granted.’ What has emerged as a difference in approach is that
in Safatsa, this Court went on to state as follows: ‘…A formal petition for leave to
appeal on wider grounds is not an indispensable prerequisite, since the matter is
before the Court whose members would be conversant with the record, but the
remarks I have quoted show that the Court will certainly decline to hear argument on
an additional ground of appeal if there is no reasonable prospect of success in
respect of it…’ This approach should be contrasted with that in Douglas v
Douglas8 (Douglas) where this Court again, after accepting the principle that it
will not necessarily consider itself bound by the terms of the order granting
leave to appeal, held: ‘Although leave to appeal on a ground refused by the court
which granted leave to appeal to this Court should, generally speaking, be requested
by way of petition, which would normally be considered by the court hearing the
appeal, the required leave can also be sought by way of application when the appeal
is heard. In such a case condonation for the delay in asking such leave should also
be requested.’ (Own emphasis.)
[20] In Douglas, this Court was dealing with the instance where additional
grounds of appeal were raised and leave requested to have them considered.
In such instance, it is necessary for an application to be made by the party
seeking to rely on such new grounds, to have the limit on the grounds of
appeal widened. In the present appeal, this Court is seized with different set
of circumstances. The full court had accepted ‘further evidence’ submitted in
mitigation and also in aggravation of sentence from the appellant and the
State respectively, a considerable time after the appellant had been
sentenced by the regional court. At the time this appeal was before this Court,
7 S v Safatsa and Others 1988 (1) SA 868 (A) at 877A-G.
8 Douglas v Douglas [1995] ZASCA 147; [1996] 2 All SA 1 (A).
approximately ten years had elapsed since the appellant was sentenced. As
is apparent, the full court had no jurisdiction to make a compensatory award in
terms of s 300 of the CPA, notwithstanding the receipt of the further evidence.
Similarly, this Court has no such jurisdiction. The jurisdiction lies with the trial
court, which in this instance is the regional court.
[21] I have had the pleasure of reading the judgment of my sister, Molemela
JA (the concurring judgment). I however respectfully disagree with the
conclusion in para 29 that, by not awarding compensation to the complainant,
the regional court exercised its discretion unreasonably. If it is indeed so, that
would constitute a misdirection, justifying intervention by the appeal court.
However, it is a fact that there was no ground of appeal or argument placed
before this Court, suggesting that the regional court unreasonably exercised
its discretion on sentence. It is trite that in criminal trials, the primary purpose
of determining sentence is to impose an appropriate punishment to the
convicted person. Where the trial court in its discretion deems it appropriate to
impose a custodial sentence, as it happened in this case, the question of
compensation recedes, as it would be unrealistic to expect a person in
custody to pay compensation as contemplated in s 297 of the CPA. The
regional court was under no legal obligation to suspend the whole custodial
sentence in order to award compensation. Such a decision would occur where
the regional court in the exercise of its discretion, deems it so. In S v Sadler9
this Court held that the appeal court should not erode the exercise of a
sentencing discretion by the trial court, simply because it does not accord with
what the appeal court would have imposed. It is not sufficient that the appeal
court’s own choice of sentence would have been appropriate. Therefore the
remittal of this matter to the regional court need not be burdened by any view
as to how this Court prefers to have the regional court exercise its discretion
in imposing a sentence.
9 S v Sadler 2000 (1) SACR 331 (SCA).
[22] The net effect of the finding by this Court, is that the entire order of the
full court should be set aside, and the further evidence submitted by the
appellant and the State as admitted by the full court, be remitted to the
regional court for the determination of sentence afresh.
[23] In the result, I make the following order:
1.
The appeal succeeds.
2.
The order of the Full Court of the Free State Division of the High Court
dated 8 February 2021 on appeal against sentence, is set aside and
substituted by the following:
‘(a) The sentence imposed by the Regional Court, Bloemfontein on the
appellant on 29 November 2011 is set aside and the matter is remitted to the
Regional Court, Bloemfontein for sentencing afresh.
(b) The further evidence presented by the appellant and the State and
admitted by the full court, shall serve before the regional court in
consideration of the sentence.’
__________________________
SP MOTHLE
JUDGE OF APPEAL
Molemela JA
[24] I have had the pleasure of reading the judgment of my brother, Mothle
JA (the first judgment) and agree with the outcome proposed therein.
However, I follow a different reasoning in coming to the same outcome.
[25] As the facts and authorities have correctly been canvassed in the first
judgment, there is no need for me to cover the same ground in this section of
the judgment. The record of the proceedings in the regional court reveals that
after the appellant’s conviction, there was a discussion on the issue of the
appellant offering to pay an amount of money to ameliorate the complainant’s
loss. The appellant indicated that he would be in a position to pay an amount
of R209 302.65 to the complainant the next day, and offered to pay the
balance in instalments.
[26] It is evident from the record that the complainant is a lay person and
had made it clear, in response to questions from the defence counsel, that
she was prepared to accept the appellant’s offer of paying the lump sum
indicated above, plus payment of the balance in instalments. From her
responses to the prosecutor’s questions, it was clear that the complainant was
even willing to accept an award of a lesser amount as compensation, given
her dire financial situation. Although the complainant had uncovered the theft
committed by the appellant in 2008, she had, at the time of the
commencement of the trial, not instituted a civil action for the recovery of that
money. In response to the trial court’s questions regarding why she laid
criminal charges as opposed to instituting a civil claim, if all she was
interested in was to get her money back, she stated that she had not pursued
a civil claim because she did not have enough money to do so. Notably, the
trial court, in the course of sentencing the appellant, remarked that ‘the
complainant . . . testified in this court that she would want nothing more than
to have her money back’.
[27] On the conspectus of the record, I am satisfied that the complainant
repeatedly indicated her eagerness to receive a compensation award
envisaged in s 300 of the CPA. From my point of view, the fact that the offer
for the payment of the compensation was in the form of a down-payment of a
lump sum, followed by payment of the balance in instalments and the
complainant had accepted it on that basis did not detract from it being an offer
for the payment of compensation within the contemplation of s 300 of the
CPA.10 I therefore accept that there was a proper application before the trial
court within the contemplation of s 300 of the CPA. However, the appellant’s
10 In S v Williams [2016] ZAFSHC 20 para 3 –the court, on review, held that payment of
compensation envisaged in s 300 of the CPA in monthly instalments is permissible.
counsel had made it clear that the appellant would not be able to pay off the
outstanding balance in instalments if he was incarcerated. Notwithstanding
this, I am of the view that the circumstances were such that some measure of
restorative justice would have been achieved by a compensation award
envisaged in s 297(1)(a)(i)(aa) of the CPA as the complainant’s financial loss
was as a direct result of the offence committed by the appellant. Thus, even if
the regional court had held the view that the appellant was not in a position to
pay the full amount of the loss (R950 000), and that it was therefore not an
appropriate case in which to award compensation within the contemplation of
s 300 of the CPA, nothing precluded it from ordering compensation in terms of
s 297(1)(a)(i)(aa) of the CPA. In my opinion, the concerns of victims of crime
need to be recognised in the sentencing process.
[28] In Director of Public Prosecutions, North Gauteng v Thabethe,11 in the
context of a sentence imposed in respect of a rape charge, this Court
observed that a victim’s voice deserves to be heard, given that the victim
‘bears the real brunt of the offence committed against him.’12 Although this
Court cautioned that a victim’s views are not decisive, it pointed out that it was
only fair that the victim be heard regarding how the crime had affected him or
her. In my opinion, the fact that an economic offence in respect of which a
substantial amount of money was stolen from a complainant who had not only
indicated to the court that she had no way of recouping her loss, but had
specifically requested a compensation award, rendered this case an
appropriate one for the granting of a compensation award.
[29] Even on an acceptance that the appellant was not, at the time of his
conviction, able to pay the full amount representing the complainant’s loss but
only a part thereof, the fact remains that the judgment of the regional court
does not indicate why it did not, in circumstances where it was clear that there
was no other avenue open to the complainant to recoup her substantial
11 Director of Public Prosecutions v Thabethe [2011] ZASCA 186; 2011 (2) SACR 567 (SCA).
12 Ibid para 21
financial loss from the appellant, at least consider ordering the appellant to
pay the complainant the amount he had available as a condition for
suspending part of the sentence as envisaged in s 297(1)(a)(i)(aa) of the
CPA, as this was one of the options proposed by the prosecutor. Despite an
indication that only an amount of R209 302.65 would be available to be
transferred to the complainant’s bank account the very next day, the trial court
suspended part of the appellant’s sentence without awarding the complainant
any compensation. This leads me to conclude that insufficient regard was
paid to the substantial loss that the complainant had suffered as a result of the
offence committed by the appellant, and to the complainant’s dire financial
position. While I accept that it was within the discretion of the regional court to
determine an appropriate sentence, I am of the respectful view that its
judgment does not demonstrate that it followed a victim-centred approach13
which the circumstances of this case and interests of justice required. In
failing to do so, it exercised its discretion unreasonably.14 It is for that reason
that I conclude that the full court correctly found that the sentence imposed by
the regional court had to be tampered with.
[30] Despite the aforesaid conclusion, I am of the view that once it is
accepted that the appellant was not, at the time of the trial, in a financial
position to repay the full amount to the complainant, it was not open to the full
court to make an award of compensation in terms of s 300 of the CPA, on
appeal. The full court, being a court of appeal, simply lacked the power to do
so. This is because on a proper construction of s 300(1) of the CPA, only the
regional court, as the court that convicted the appellant, could have awarded
compensation that would have the effect of a civil judgment as stipulated in
that provision. Both parties are of the view that the full court erred in issuing
13 Compare S v Matyityi 2011 (1) SACR 40 (SCA) paras 16-17. However, in this matter, the
rights of victims to participate during sentencing were emphasised in circumstances where
there was an absence of any information about the victims of rape and murder. It was in that
context that this Court urged for an increased involvement of victims in the sentencing
process.
14 See S v Pillay 1977(4) SA 531 (A) at 538A-B.
the compensation order set out in paragraphs 3 and 4 of its order. For the
reasons I have set out above, I agree with their submission.
[31] Since the appeal before us was limited to whether the full court could
award compensation on appeal, the appellant urged this Court to confine its
interference on appeal to the setting aside of paragraphs 3 and 4 of its order.
This submission fails to take into consideration that further evidence was
admitted on appeal by the full court, and its ruling in relation to the admission
of further evidence has not been attacked on appeal. In this regard, it must be
borne in mind that the admission of further evidence on appeal was at the
instance of the appellant, with no opposition from the State.
[32] The full court rightly granted the order for the admission of further
evidence, given the delays caused by the application for leave to appeal and
the application for review, respectively, resulting in a period of some nine
years elapsing before the hearing of the appeal. Thus, there were exceptional
circumstances that warranted the admission of this evidence.15 It is for this
reason that I am of the view that, to only grant an order setting aside
paragraphs 3 and 4 of the full court’s order would serve to perpetuate the
injustice occasioned by the trial court’s failure to pay due regard to the
complainant’s express wish to be awarded compensation. That being the
case, I, too, am of the view that these limited grounds of appeal ought to be
widened,16 so that sentence can be considered afresh.
[33] As explained earlier, this matter has been pending before the courts for
approximately a decade. Under different circumstances, it would have been
desirable for this Court to bring this matter to a close without remitting it back
to the regional court.17 This, it could do by replacing the full court’s order with
an order setting aside the regional court’s sentence. Cognisant of the flexibility
granted by s 297 of the CPA, it could, in replacing the sentence imposed by
15S v Rapholo 2022 (1) SACR 447 (SCA).
16 See S v Safatsa and Others, note 8 above.
17 S v M [2007] ZACC 18; 2008 (3) SA 232 (CC; 2007 (12) BCLR 1312 para 50.
the regional court, suspend part of the sentence on condition that the
appellant pays compensation to the complainant within the contemplation of
s 297(1)(a)(i)(aa). That said, a noteworthy consideration in this matter is that,
save for submissions pertaining to the setting aside of the compensation
award, both counsel made no submissions to us regarding any other aspect
of sentencing. This is probably because they did not anticipate that the
grounds of appeal could be widened. Under these circumstances, the only
appropriate order that can best serve the interests of justice is to remit the
matter to the regional court for a fresh consideration of all aspects relevant to
sentencing, including additional evidence to the effect that the appellant is
now able to pay the full amount of the complainant’s loss as compensation
within the contemplation of s 300 of the CPA. For all the reasons set out in the
preceding paragraphs, I agree with the order proposed in the first judgment.
____________________
MB MOLEMELA
JUDGE OF APPEAL
APPEARANCES:
For appellant:
D.F Dorfling SC
Instructed by:
Du Plessis & Associates
C/o Martins Attorneys, Bloemfontein
For respondent:
J.B. K Swanepoel
Instructed by:
Office
of
the
Director
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:
31 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
Raymond Daniel de Villiers v The State (996/2021) [2023] ZASCA 83 (31 May 2023)
Today the SCA handed down judgment dismissing the appeal against the decision of the Full Court
Free State Division of the High Court of South Africa, Bloemfontein (the full court).
The factual background is briefly that the appellant, an accountant received an amount of R950 000.00
on 25 May 2005, from a long-standing client, the complainant, to invest on her behalf. The appellant
failed to invest the money as instructed and instead used it for his speculative business ventures. He
paid only R50 000.00 to the complainant on demand and the latter laid a charge of theft against him.
The appellant was arraigned before the regional court on a charge for fraud, and in the alternative, theft
of R900 000. On 11 August 2011 the appellant pleaded guilty to the alternative charge of theft in terms
of s 112 of the Criminal Procedure Act (CPA) and was convicted accordingly. Testifying during the
sentencing proceedings following the appellant’s conviction, the complainant expressed a desire to be
paid back the amount that had been stolen from her. On 29 November 2011, the regional court imposed
a sentence of seven years’ imprisonment, of which three years were suspended for three years. On
9 November 2020 (nine years since his conviction and sentence in the regional court) the full court
heard the appeal against the sentence and on 8 February 2021 it delivered judgment wherein the appeal
was dismissed, and the custodial sentence imposed by the regional court confirmed. The full court
stated in paras 3 and 4 of its order, that the appellant is ordered to pay to the complainant, the amount
of R900 000 within thirty (30) days of that order.
The appellant, aggrieved by the judgment and order of the full court, approached this Court on petition,
seeking special leave to appeal against the order of the full court which was granted but limited to only
para 3 and 4 of the full court judgment.
The SCA found that: First, on a proper construction of s 300(1) of the CPA, only the court that convicted
a person, referred to as ‘the court in question’ may award compensation under the provisions of s 300
of the CPA. In this case it was the regional court. The full court, as a court of appeal, was not the court
that convicted the appellant and thus lacked the authority or jurisdiction to award a compensation order
under s 300 of the CPA. Second, in terms of s 300 of the CPA, the compensation order is triggered
‘upon the application of the injured person or of the prosecutor acting on the instruction of the injured
person.’ The full court did not have an application in terms of s 300 of the CPA made to it either by the
complainant or by the prosecutor on her instruction, which was an essential pre-requisite for
consideration of a compensation in terms of s 300 of the CPA. The full court therefore erred in
considering and awarding a compensation, without an application before it. Third, s 300 of the CPA,
envisaged an inquiry to be held to determine the award. All parties before the court must be provided
an opportunity to participate in the proceedings. The full court gave notice to the parties after the hearing
of the appeal that it is considering increasing the sentence and invited submission of further heads of
argument. Of importance, the full court did not indicate to the parties that it had in mind to invoke s 300
of the CPA. As a consequence, the appellant submitted the heads of argument without specifically
dealing with submissions on s 300 of the CPA. The appellant was thus prejudiced because he was not
granted a proper notice. Based on the above findings, the SCA concluded that the full court erred in
awarding compensation in paras 3 and 4 of its order. Therefore, the full court’s award of compensation
in terms of s 300 of the CPA was set aside and the matter was remitted to the regional court for
sentencing afresh.
In a separate judgment, Molemela JA supported the conclusion of the majority judgment on the basis
of a different reasoning. She found that the sentence imposed by the regional court did not serve the
interests of justice. She explained that by imposing a partially suspended sentence without making any
compensation award envisaged in s 297(1)(a)(i)(aa) in circumstances where (1) the complainant’s loss
was almost R1 million rand, (2) the appellant had indicated a willingness to pay a lump sum of
approximately R300 000.00 the next day, (3) the complainant had expressed a willingness to accept
part-payment of the amount stolen as compensation, (4) the complainant had indicated that she had no
other way of recouping her loss, the regional court had not exercised its sentencing discretion
reasonably, thus warranting the setting aside of that sentence.
~~~~ends~~~~
|
3567
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 445/2020
In the matter between:
COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE
APPELLANT
and
TONELERIA NACIONAL RSA (PTY) LTD
RESPONDENT
Neutral citation: Commissioner: SARS v Toneleria Nacional RSA (Pty)
Ltd (Case No 445/2020) [2021] ZASCA 65 (1 June
2021)
Coram:
NAVSA, WALLIS and MBATHA JJA and ROGERS and
POYO-DLWATI AJJA
Heard:
10 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 09h45 on 1 June 2021
Summary: Customs Duty – classification – wooden items for use in wine-
making to impart flavour to the wine – whether coopers' products.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town
(Binns-Ward J sitting as court of first instance):
The appeal is upheld with costs, such costs to include the costs of
two counsel.
The order of the high court is amended to read:
'The application is dismissed with costs such costs to include the costs of
two counsel.'
JUDGMENT
Wallis JA (Navsa and Mbatha JJA and Rogers and Poyo-Dlwati AJJA
concurring)
[1] Wooden barrels have been used for over four thousand years to store
and convey an enormous variety of goods.1 In recent times other materials,
such as cardboard, plastic and steel, have largely taken their place. They
are now primarily confined to use in the liquor industry, where they both
provide storage during the maturation process and in some, if not all,
instances the wood from which they are manufactured is treated so as to
impart flavour to the wine or other product. One finds them being used for
the maturation and storage of wine, port, sherry, rum, brandy and whisky.2
1 A general history may be found in Wikipedia at https://en.wikipedia.org/wiki/Barrel.
2 Including whiskey emanating from places outside Scotland. Wooden barrels are also used in the
maturation of tabasco sauce, balsamic vinegar and soy sauce, where they are known as kioke and made
of cedar rather than oak. In maturing wine brandy, both oak and chestnut are used. See Canas et al
'Physicochemical and sensory evaluation of wine brandies aged using oak and chestnut wood
simultaneously in wooden barrels and in stainless teel tanks with staves' (2016) 51 International Journal
of Food Science and Technology 2537-2545.
[2] The respondent, Toneleria Nacional RSA (Pty) Ltd (Toneleria), is
the South African subsidiary of a Chilean company, Toneleria Nacional
LTDA (TN), that manufactures, traditional wooden barrels for use in the
wine industry. In addition to conventional barrels, TN also manufactures
what it calls InserStaves, ShortStaves and MiniStaves (the disputed items),
which are planks or slats made of the same treated oak as barrels and cut
to different sizes.3 Toneleria imports these into South Africa and sells them
to wine producers as a cheaper alternative to traditional wooden barrels for
imparting the qualities of wood to the wine. They are attached to a frame
or rack inserted into a maturation tank, usually of stainless steel. According
to Mr Potgieter, the deponent to the founding affidavit, while not used in
making premium wines, they are used in relation to wine that 'can come
relatively near, quality-wise, to the best barrel-matured wines'. The
difference between a traditional barrel and the disputed items appears from
the photographs reproduced below showing TN's products:
3 In addition, it manufactures smaller oak products under the name of Zigzags, Viniblocks, Chips, Rice
and Powder, directed at the same purpose.
[3] The dispute between Toneleria and the appellant, the Commissioner
of the South African Revenue Service (the Commissioner, or SARS, as
appropriate) relates to the classification of the disputed items for customs
purposes in terms of Part 1 of Schedule 1 to the Customs and Excise Act
91 of 1964 (the Act). Toneleria contended that the disputed items should,
like wine barrels, be classified under tariff heading 44.16 as:
‘Casks, barrels, vats, tubs and other coopers’ products and parts thereof, of wood,
including staves.’
This tariff heading attracts no duty. SARS disagreed. On 13 June 2016 it
made a determination, under s 47 of the Act in respect of a single container
load imported from Chile, that the disputed items should be classified
under tariff heading 4409.29.90.4 Toneleria appealed to the Western Cape
Division of the High Court in terms of s 47(9)(e) of the Act. Its appeal was
upheld by Binns-Ward J and a declaratory order granted that the disputed
items, both those in the original container load that precipitated the
determination and those in four subsequent container loads, should be
classified under tariff heading 44.16. The appeal is with his leave.
Classification
4 Other aspects of the determination related to different products and are not in dispute.
[4] The proper approach to questions of classification between different
headings is well-established.5 It follows a three-stage process6:
‘Classification as between headings is a three-stage process: first, interpretation – the
ascertainment of the meaning of the words used in the headings (and relative 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 most appropriate to such goods.’
In terms of s 47(8)(a)(i) of the Act the interpretation of any tariff heading
or any tariff sub-heading in Part 1 of Schedule 1:
'shall be subject to the International Convention on the Harmonized Commodity
Description and Coding System done in Brussels on 14 June 1983 and to the
Explanatory Notes to the Harmonized System issued by the Customs Co-operation
Council, Brussels (now known as the World Customs Organisation) from time to time
…’
The Explanatory Notes do not have an overriding function, in that the
primary task of the court is to ascertain the meaning of the relevant
headings and section and chapter notes, but they are a helpful guide in
explaining or perhaps supplementing the headings, without overriding or
contradicting them.7
[5] In the present case, there are no relevant section or chapter notes, but
the explanatory note to tariff heading 44.16 reads as follows:
‘44.16 – Casks, barrels, vats, tubs and other coopers’ products and parts thereof, of
wood, including staves.
This heading is restricted to containers which are products of the coopers’ trade, that is
those of which the bodies are composed of staves with grooves into which the heads
and bottoms are fitted the shape being maintained by hoops of wood or metal.
5 Secretary for Customs and Excise v Thomas Barlow and Sons Ltd 1970 (2) SA 660 (A) (Thomas
Barlow).
6 International Business Machines SA (Pty) Ltd v Commissioner for Customs and Excise 1985 (4) SA
852 (A) at 863G-H.
7 Thomas Barlow op cit, fn 5, at 676B-C.
Coopers’ products, include casks of various kinds (tuns, barrels, hogsheads, etc)
whether tight (for wet goods) or slack (for dry goods), as well as vats, tubs, etc.
These goods may be disassembled or partly assembled, and are sometimes lined or
coated inside.
The heading also covers staves and all other wooden products, finished or not,
recognisable as parts of coopers’ products (eg. barrelheads, hoopwood cut to length and
notched at the ends for assembly).
The heading also includes unfinished staves (stavewood), that is, the strips of wood
used for forming the side, heads or bottoms of barrels and other coopers’ products. Such
stavewood may be in the form of:
(1) Strips cleft from sectors of tree trunks along the direction of the medullary rays.
Such cleft staves may also be further flat sawn on one of the principal faces, the other
face being merely trued by axe or knife.
(2) Sawn staves, provided that at least one of the two-principal faces is concave or
convex, such curved surfaces being produced by sawing with a cylindrical saw.
The heading excludes:
(a) Wood which is sawn flat on both principal faces (heading 44.07 or 44.08).
(b) Containers made of staves affixed to the heads and bottoms by nailing (heading
44.15).
(c) Casks, etc, cut to shape for use as furniture (eg, tables and chairs) (Chapter 94).’
[6] Save for the one critically important aspect, there is no particular
difficulty in construing tariff heading 44.16. It falls comfortably into two
parts, namely:
(a) Casks, barrels, vats, tubs and other coopers’ products; and
(b) Parts thereof, of wood, including staves.
Both the founding and replying affidavit advanced an argument that the
disputed items were staves in accordance with the second part of the tariff
heading. The argument was pursued, 'albeit faintly', in the High Court, but
it was rightly rejected and not pursued on appeal. The disputed items were
not produced in order to be incorporated into some other product, but were
products in their own right and imported and marketed as such. They were
not parts of other products. A stave in its ordinary sense relevant to this
tariff heading refers to:8
'Each of the thin narrow usu curved pieces of wood which, when placed together side
by side and hooped, form the side of a barrel or cask.'
[7] That left the first half of the tariff heading. The disputed items were
not casks, barrels, vats or tubs. Were they 'other coopers' products'? This
was the central issue in the case. Toneleria accepted that, as a relatively
new product, they were not traditional coopers' products, but contended
that the trade of a cooper is no longer confined to the traditional role of
manufacturing barrels, casks and other containers and has developed to
include the manufacture of alternative products for use in the wine trade.
These serve the same purpose as a barrel, but at lower cost. This is where
the parties joined issue.
[8] In accordance with the established taxonomy of classification the
first step was to ascertain the meaning of tariff heading 44.16 and in
particular the meaning of the expression 'other coopers' products'. In this
regard the judge said that it was 'the typical use of the goods in question
that fell to be established by evidence on the facts' of 'the range of products
that coopers currently make'. Accordingly, so he held, whether or not a
particular product is characteristically made by coopers is a question of fact
that is amenable to proof by evidence.
[9] In adopting this approach, the judge fell into the error of conflating
the first and second enquiries in the process of classification. The first stage
required a determination of the meaning of 'other coopers' products',
8 Shorter Oxford English Dictionary (6 ed, 2007), Vol 2, p 2994, sv 'staff', meaning 5. The Collins English
Dictionary (6 ed, 2003) defines a stave as 'any one of a number of long strips of wood joined together to
form a barrel, bucket, hull etc.'
without regard to whether the disputed items constituted 'other coopers'
products'. In the process of classification determining the meaning of the
tariff heading is the essential first stage. Only thereafter does one proceed
to the second stage of considering the nature of the products in issue to
determine in the third stage whether they fall within the class of products
identified in the tariff heading. Failing to observe that vital distinction has
the result that the nature of the products is used to colour the meaning of
the tariff heading.
[10] Maintaining a clear distinction between the first and second stages
of the determination process was vitally important in this case, because
'other coopers' products' constitutes a category of material items of a
specific type, in the same way that other items in the tariff heading, such
as casks, barrels, vats and tubs, are material items capable of definition and
description as a class of objects. The point can be illustrated by the homely
example, of whether a domestic kettle is a boiler. As the tariff heading
refers to boilers, one must in the first instance determine what is meant by
a boiler. Having done this, in the second stage the court considers the nature
of the domestic kettle. Finally, in the third stage the domestic kettle's
properties are measured against those of a boiler in the light of the meaning
ascribed to the word 'boiler' in the first stage. If one conflates the first two
by focussing on the fact that both the boiler and the domestic kettle use a
source of heating in order to boil water and produce steam, one is likely to
fall into error.9
[11] A failure to undertake the analysis in the proper stages leads, as it
did in this case, to the court analysing the nature, purpose and function of
9 The example is a simplification to illustrate the point.
the goods in issue, without having first established what kind of goods were
referred to in the tariff heading. The judgment commenced its
consideration of the question whether the goods were 'other coopers'
products' by citing a submission by counsel that the disputed items bore the
hallmarks of cooperage. It proceeded to describe the process of sourcing
oak to make the products and highlighted that it was the same process as
used for sourcing oak to make barrels. It went on to explain that the wood
used for the disputed items underwent a similar process to the wood used
for making barrels and emphasised the functional equivalence of the
disputed items and traditional barrels. After reference to a dictionary
definition of a cooper, that he recognised did not support Toneleria's case,
the judge asked rhetorically (and went on to answer affirmatively) the
question:
'But is a barrel substitute or alternative that is now commonly produced by coopers,
using many of their traditional skills and methods,10 not also a modern day 'coopers'
product?'
[12] Interpreting the tariff heading and understanding to what it refers
may require that some facts about the object or goods described in the tariff
heading be established by evidence. That was the point made by this court
in Smith Mining.11 The tariff heading under consideration referred to 'works
trucks … of the type used in factories, warehouses, dock areas or airports
for short distance transport of goods'. Of its own knowledge, the court
could not know what vehicles were used for that purpose in factories,
warehouses, dock areas or airports. Accordingly, evidence needed to be led
to show what vehicles were used for those purposes in those work
10 As will become apparent later in this judgment, there was no evidence that the production of the
disputed items involved coopers or the use of any of their traditional skills and methods.
11 Smith Mining Equipment (Pty) Ltd v The Commissioner: South African Revenue Service [2013]
ZASCA 145 para 8.
environments. In this case the relevant material is available from
dictionaries, encyclopaedias, reference books and other publications,
together with the limited evidence led by the parties on this issue.
The meaning of 'cooper' and 'other coopers' products'.
[13] A good starting point is to ascertain the meaning of a 'cooper'. In the
oldest dictionary available to me12 a cooper is defined as:
‘One who makes or repairs barrels, hogsheads, casks etc.’
Jumping forward 80 years the Shorter Oxford English Dictionary13 defines
a cooper as:
‘A skilled worker who makes and repairs wooden vessels formed of staves and hoops,
as casks, tubs, etc.’
The Cambridge English Dictionary provides the following definition:
'a person who makes and repairs barrels (= large wooden containers with a flat top and
curved sides, used for holding beer, wine etc.)
I have consulted a number of other dictionaries both printed and online. All
of them are to the same effect, so citation of further definitions would be
otiose and add nothing to our understanding of what a cooper is.14 Each
definition refers to a person who manufactures various forms of container
and the word 'etc' refers to other unspecified containers. The tariff heading
uses similar language in its reference to 'casks, barrels, vats, tubs and other
coopers' products'. That recognises that casks, barrel, vats and tubs are by
their very nature coopers' products, and the word 'other', like 'etc' in the
dictionaries, points to these being further products of a similar nature made
by coopers.
12 Websters New International Dictionary of the English Language (1927).
13 Vol 1 p 517, sv ‘cooper’.
14 The word 'cooper' appears to have its origin in corresponding Dutch or German words and
means a barrel-maker. The common surname traces its origin to people who were barrel-
makers.
[14] The cooper's craft is as ancient as the use of wooden containers such
as barrels, casks, vats, pails, troughs, churns and similar items.15
Manufacture of these items required special tools and skills in which every
cooper would be trained. All were made using staves fitted and bound
together with hoops and flat ends.16 The ubiquitous use of wooden
containers has now diminished and some more modern tools have been
adapted for use in the craft, but the evidence was that the essential process
remains the same. A brochure from Maison Louis Latour, annexed to an
affidavit on behalf of SARS, dealt with the operation of its cooperage,
which is given over to the production of wine barrels. It said that the
process had changed very little since the Middle Ages.
[15] The description in the brochure was as follows. Most of the steps in
preparing the staves used in manufacturing a barrel, such as shaving,
shortening, shaping and gouging, are now done by machine, but the
essential task of assembling the barrel is done by hand and requires a
skilled cooper. At Maison Louis Latour – a famous wine producer – only
one cooper works on each barrel, although some cooperages use
production-line processes. The production of a barrel involves the cutting
and shaping of the staves so that they fit together. They have to be bent to
form the curved external shape of a barrel, with a bulge in the middle. The
base and head have to be cut to fit the barrel. This is done by cutting
grooves (crozes)17 in the staves into which the head is fastened. The whole
is fastened together and held with hoops, usually of metal. The joins
15 Its antiquity is preserved in the United Kingdom by the Worshipful Company of Coopers which is one
of the oldest Livery Companies of the City of London and received its Royal Charter in 1501. See
https://www.coopers-hall.co.uk/history/the-companys-history accessed 9 May 2021.
See
the
description
of
'cooperage'
in
the
1911
Encyclopaedia
Britannica
at
https://en.wikisource.org/wiki/1911_Encyclop%C3%A6dia_Britannica/Cooperage
accessed
10 May 2021.
17 Technically called crozes, as are the tools used to cut the groove for holding the head and foot of the
barrel.
between the individual staves, and between the staves and the head and
base of the barrel, must be tight and permit of no leakage. All this requires
considerable skill.18 There was no evidence that the manufacture of the
disputed items required the same, or even similar skills.
[16] Against the background of the dictionary definitions and this
description of the cooper's craft, the expression 'other coopers' products' in
the tariff heading includes a variety of containers not specifically
mentioned under the general reference to 'casks, barrels, vats, tubs'.
Originally a barrel described a wooden container of a specific shape and
capacity manufactured by a cooper. It was broadly cylindrical with a bulge
around the centre section, making it easy to roll and manoeuvre, with a
capacity of approximately 120 litres. There was a range of similarly
constructed containers the largest of which was a 'tun' and then, in
descending order, a pipe or butt (half a tun), a puncheon or tertian (one
third); a hogshead (one quarter), a tierce (one sixth), a barrel (one eighth)
and a rundiet (one fourteenth). With the decline in use of wooden barrels
the expression 'barrel' has become more generic, referring generally to
containers of this broad description, but made in the traditional way. For
18 The following description of the manufacture of barrels for the Bordeaux region of France is to be
found at https://Bordeaux.com.
'COOPERS (OR BARREL MAKERS)
Wooden barrels or casks play an important role in making and aging wine, providing the wine with
aromatic notes of coconut, vanilla, buttered bread and caramel. Coopers are craftsmen who make and
repair barrels. The craft dates back centuries and has changed very little over time. Making barrels still
requires the hands of an expert. … Coopers are craftsmen who make and repair barrels. The craft dates
back centuries and has changed very little over time. Making barrels still requires the hands of an expert.
Because the wood is the key factor in the quality of the barrel, coopers hand-select the best oak, often
from European forests. Once the wood is selected, logs are split and the wood is aged naturally through
exposure to air and water. After aging, lengths of wood (called staves) are carefully shaped then
assembled. At this point, the cooper seals the joints by running a wet cloth over the staves and placing
the barrel over a fire. This stage is called chauffe, meaning “warm-up". The “toast" of the wood can be
light, medium or heavy – a decision made by the winemaker based on the style of wine to be aged and
the aromas sought. Once the warming-up is over, the wood is pliable and can gradually be arched and
tightened to obtain the shape of the barrel. The standard capacity of a Bordeaux barrel is 225 liters.
From beginning to end, the barrel making process requires approximately eight hours of work, almost all
exclusively by hand.'
example, the wine barrels that one encounters on South African wine farms
typically contain between two and three hundred litres.
[17] Apart from the different types of barrels described in para 16, other
containers made in the traditional manner by coopers included butter
churns, firkins and kegs. Some would be closed containers and others open.
The products manufactured by coopers can be described as follows:19
'There were four divisions in the cooper's craft. The "dry" or "slack" cooper made
containers that would be used to ship dry goods such as cereals, nails, tobacco, fruits,
and vegetables. The "dry-tight" cooper made casks designed to keep dry goods in and
moisture out. Gunpowder and flour casks are examples of a dry-tight cooper's work.
The "white" cooper made straight-staved containers like washtubs, buckets, and butter
churns, which would hold water and other liquids but did not allow shipping of the
liquids. Usually there was no bending of wood involved in white cooperage. The "wet"
or "tight" cooper made casks for long-term storage and transportation of liquids that
could even be under pressure, as with beer. The "general" cooper worked on ships, on
the docks, in breweries, wineries and distilleries, and in warehouses, and was
responsible for cargo while in storage or transit.'
[18] I have found only two general references to coopers making products
other than containers. The article cited in the previous paragraph said that
journeymen coopers also traditionally made wooden implements such as
rakes and wooden shovels. The other said that white coopers crafted
utensils, bowls, pails, butter churns, spoons, ladles and other kitchen
implements.20 The latter related to the colonial period in the United States.
Bar these two exceptions, the available material about the trade of a cooper
demonstrated that their function and area of expertise lay in the
19 The description is taken from https://en.wikipedia.org/wiki/Cooper_(profession). See also
https://www.britannica.com/technology/barrel-container
and
https://winehistoryproject.org/croze-
howel-or-chiv/, both accessed on 11 May 2021.
20 The reference is to a culinary education site https://www.ice.edu/blog/what-is-a-cooper accessed 11
May 2021.
manufacture of wooden containers, both closed and open. The technique
characterising a cooper's work in relation to all these items was to
manufacture staves that were fitted (not nailed) together and bound, almost
invariably with hoops of wood or iron.21 In the case of barrels and casks
and other closed containers, they would ordinarily be bent into the barrel
shape with a bulge in the centre and closed at top and bottom.
[19] SARS provided us with the extract on cooperage from The Oxford
Companion to Wine.22 The history it gave was consistent with what is set
out above. Under the heading of 'Cooperage today' it said:
'Cooperages are found wherever there is a wine or spirits business that needs barrels,
notably in America, Scotland, and France, but also in Italy, Spain, Portugal, Ireland,
eastern Europe, Germany, Australia and South Africa. They make new vats and barrels
… and/or repair or maintain older barrels and vats …'
The entry continues and deals with cooperage in the United States, France,
Italy, Spain and Portugal. Although published in 2006, when the European
Union permitted wood products to be inserted in wine for flavouring
purposes where the vintner was not maturing the wine in oak barrels, it
does not refer to such products as being manufactured by coopers.
[20] Against that background, the reference to 'other coopers' products'
in tariff heading 44.16 most obviously refers to containers similar in the
manner of their construction to the casks, barrels, vats and tubs referred to
in the opening words of the heading. These containers are manufactured
using the skill and techniques of a trained cooper. The disputed items do
not fall into this category. This is not an application of the eiusdum generis
rule of interpretation, but flows from an examination, derived from
21 Copper in the case of barrels containing gunpowder.
22 Jancis Robinson (ed) The Oxford Companion to Wine (2006, 3 ed) pp196-197, sv 'cooperage'. The
4th edition published in 2016 is not available to me.
dictionaries and similar published sources, of the work undertaken by
coopers and the nature of the products manufactured by them, using the
skills and techniques in which they have been trained.
[21] The reference to 'other coopers' products' goes further than merely
requiring that the products in question be produced by coopers or in
cooperages. The tariff heading indicates that these are products of a
distinctive nature, recognisable as coopers' products and capable of being
distinguished from other manufactured wooden products. In my view that
means that they must recognisably be products of a type and quality that
would be produced in a cooperage and require the application of the skills,
training, techniques and expertise of a trained cooper. That serves to
distinguish such items from other wooden products and, where the
products are manufactured in a cooperage, determine whether they are in
truth coopers' products and not simply a by-product of the operations of the
cooperage.
[22] This understanding of the expression 'other coopers' products' is
consistent with the explanatory note's statement that the tariff heading is
restricted to 'containers which are products of the coopers' trade, that is,
those of which the bodies are composed of staves with grooves into which
the heads and bottoms are fitted, the shape being maintained by hoops of
wood or metal'. The further provisions of the note demonstrate a familiarity
with the trade of a cooper, distinguishing as it does between tight and slack
barrels and vats and tubs. SARS contended that this was the correct
interpretation of 'other coopers' products'.
[23] In summary, it is strongly arguable that the reference in tariff
heading 44.16 to 'other coopers' products' is confined to wooden containers
and parts thereof. If that is correct it would dispose of the appeal, but it is
unnecessary to decide that finally, as more complete evidence than we
received might show that this interpretation is unduly narrow. It is therefore
preferable to adopt a more limited construction of 'other coopers' products'.
In my view it applies to wooden products, manufactured by coopers and
requiring the use of the traditional skills, techniques and expertise of a
qualified cooper.
[24] I do not think that Toneleria's invocation of the 'always speaking'
approach to the interpretation of statutes is permissible. That approach is
apt when the court is considering whether a statute extends to a situation
not foreseen at the time it was drafted. But the principle has its limits. They
were expressed as follows in Malcolm:23
'There is obvious sense in this approach when a court is confronted with a novel
situation that could not have been in the contemplation of the legislature at the time the
legislation was enacted. Courts can then, in the light of the broad purpose of the
legislation, current social conditions and technological development, determine
whether the new situation can properly, as a matter of interpretation, be encompassed
by the language. But, as Lord Bingham pointed out in Quintavalle,24 by way of
example, they cannot use the principle to extend legislation relating to dogs to cats,
however desirable such an extension may seem. In other words the principle has limits
…'
[25] Applying the principle in the context of the Harmonised System is
particularly inappropriate, because that system is constructed on the basis
that from the outset it includes all products in the course of trade, whether
in existence or still to be invented and manufactured. In other words, there
23 Malcolm v Premier, Western Cape Government [2014] ZASCA 9; 2014 (3) SA 177 (SCA) paras 10
and 11.
24 R (on the application of Quintavalle) v Secretary of State for Health [2003] UKHL 13; [2003] 2 All
ER 113 (HL) paras 8-10.
are no gaps that need filling or updating. Every product is capable of being
classified using the process of classification described above. If a product
is thought to sit uncomfortably within the applicable tariff heading or sub-
heading, that may justify an approach to the Harmonised System
Committee of the World Customs Organisation for a revision of the
relevant tariff heading or sub-heading, but that is not a matter for a national
court.25 The Harmonized System is the product of international agreements
between states, and like any international agreement it should as far as
possible be interpreted uniformly by national courts.26 It should not be
subjected to an approach to interpretation the proper purview of which is
purely domestic legislation.
Toneleria's case and the facts
[26] The broad description of the cooper's trade set out above was not
challenged. Toneleria's contention was that, with the march of progress,
coopers were no longer confined to the traditional role of manufacturing
barrels, casks and other containers, but had developed and now
manufacture alternative products for use in the wine trade, serving the same
purpose as a barrel, but at lower cost. Even if the tariff heading had been
formulated with the traditional concept of what constituted 'coopers'
products' in mind, the Harmonised System was intended to accommodate
both existing and novel products with the aim of accommodating all
products under an appropriate heading, notwithstanding that a particular
25 The following description of the process is taken from the World Customs Organisation (WCO)
website at https://wcoomd.org.
'The maintenance of the HS is a WCO priority. This activity includes measures to secure uniform
interpretation of the HS and its periodic updating in light of developments in technology and changes in
trade patterns. The WCO manages this process through the Harmonized System Committee (representing
the Contracting Parties to the HS Convention), which examines policy matters, takes decisions on
classification questions, settles disputes and prepares amendments to the Explanatory Notes. The HS
Committee also prepares amendments updating the HS every 5 – 6 years.'
26 Commissioner: SARS v Levi Strauss SA (Pty) Ltd [2021] ZASCA 32 para 36.
item was not known to, or in the minds of, those who formulated the
Harmonised System. The disputed items would be accommodated most
appropriately under tariff heading 44.16, together with traditional barrels,
as 'other coopers' products', in accordance with the third step of tariff
determination.
[27] Toneleria rested its case almost entirely on the fact that the disputed
items were made of the same oak as conventional barrels and underwent a
similar process of curing and toasting, before the oak was cut on a
conventional circular saw into the particular items. It suggested that the
only difference between the disputed items and barrels was that instead of
putting the wine into wood, the wood was being put into the wine. But in
contrast to cutting planks or slats with a conventional saw, the staves
intended for producing barrels must be fitted together on the bases; the
crozes must be cut; the barrel heads installed; and the whole bound together
with hoops.
[28] Toneleria's affidavits concentrated on the now abandoned argument
that the disputed items were staves in terms of the definition, and on trying
to show that the process of production was largely similar to that of
producing barrels. There was no attempt to trace the history of the
development of these alternative products. We do not know when they
started to be made and used in viniculture. An academic article on wine
maturation said that the use of wood shavings in wine production has been
documented in France since the nineteenth century. However, it suggested
that experiments in using pieces of oak instead of barrels commenced in
the early 1960s in new winemaking countries and was regulated in the
United States of America in 1993. Until 2006 their use was barred in the
European Union (EU).27 The International Organisation of Vine and Wine,
an intergovernmental organisation of which South Africa and most, if not
all, major wine-producing nations are members, regulated the use of pieces
of oak wood as an alternative to traditional barrel-aging by resolutions in
2001 and 2005.28 It appears therefore that the use of these alternative
products is a relatively recent phenomenon, although it has become more
widespread since 2006 when the EU sanctioned the use of such material.29
That is not in itself decisive, but it demanded some evidence to show that
this is now part of a cooper's trade so that the products are to be regarded
as coopers' products.
[29] Regrettably, other than the brochure from Maison Louis Latour and
the description of the manufacturing process used by TN, neither party
tendered evidence concerning general practice among coopers or the range
of products that coopers now produce. The judge's researches on the
internet discovered cooperages in France that have added items similar to
the disputed items to their range of barrels.30 That appears also to be the
position with Toneleria's parent company. However, there are cooperages
that exclude this type of product from their cooperage products, and
describe them separately as oak additives.31 There are also manufacturers
27 Maurizio Petrozziello et al Chemistry and Technology of Wine Aging with Oak Chips Section 1
(Introduction)
available
at
https://www.intechopen.com/books/chemistry-and-biochemistry-of-
winemaking-wine-stabilization-and-aging/chemistry-and-technology-of-wine-aging-with-oak-chips,
accessed 10 May 2021.
28 Pilar Rubio-Bretón, Teresa Garde-Cerdán and Juana Martinez 'Use of Oak Fragments during the Aging
of Red Wines' Beverages 2018, 4, 102 available at https://mdpi.com (accessed 16 May 2021). See
Resolutions OENO 9/2001 and OENO 3/2005 of the International Organisation of Vine and Wine.
29 Canas et al, 'Wine Aging Technology: Fundamental Role of Wooden Barrels' (2020) 9 Foods 1160
available at www.mdpi.com/journal/foods. The original Regulation EC 1507/2006 has been replaced by
Regulation 2019/934. Petrozziello et al, op cit, fn 28. See also Perez-Coello and Diaz-Maroto 'Volatile
Compounds and Wine Aging' in M V Morneo-Arribas, M C Polo (eds) Wine Chemistry and Biochemistry
Chapter 8C, pp 295-311 at 296.
30 They refer to their products as staves. See https://www.boutes.com/en/produits/gamme/staves/ and
https://www.boutes.com/en/produits/gamme/staves/. A domestic cooperage's website refers to 'oak
barrels and other cooperage products' which includes 'oak alternatives'. See https://capecooperage.com.
31 See http://www.apjohn.com.au/product-categories/oak-additives/.
who confine their business to such products and neither produce barrels
nor claim to be cooperages.32 One local cooperage apparently
manufactures both wine barrels and wine barrel furniture and novelty
items.33 This inconclusive, and necessarily limited, judicial review goes no
further than indicating that products similar to the disputed items are being
manufactured by some cooperages internationally, but we do not know the
extent to which this is the case.
[30] I turn then to the evidence on behalf of Toneleria. It came from
Mr Potgieter, its general manager. He has a degree in Viticulture and
Oenology, spent seven years as a winemaker and in short order became
first commercial, and then general, manager of Toneleria. His connection
with manufacturing barrels and the disputed items arises from his having
visited the parent company's factory and studied some unidentified
academic material. He is not a cooper nor does he claim any expertise in
regard to the training, techniques and skills of a cooper and his evidence
was not supported by an affidavit from a cooper.
[31] Mr Potgieter explained that the disputed items and the other ancillary
products manufactured by TN are all intended as alternatives or substitutes
for the wooden barrels traditionally used to mature wine. He highlighted
the function of the wood in the barrels to impart taste, aroma, flavour
profile and structure to the wine and the increasing cost of traditional
barrels. This led TN and, he said, its competitors worldwide, although he
did not identify them, to devise products of the same general nature as the
disputed items intended as a relatively cheaper alternative to barrels.
32 See https://oaksolutionsgroup.com/configurations/#tankstaves.
33 See https://sawinebarrels.com. The website describes only the wine barrels as coopered products.
[32] According to Mr Potgieter the use of these alternative products
enables winemakers having 'the necessary knowledge and skill' to make
wines that 'can come relatively near, quality-wise, the best barrel-matured
wines'.34 He explained that the selection of the wood and its drying,
seasoning and toasting were very similar to the treatment undergone by
wood to be used in making barrels. However, the differences between the
two were not explained, so we do to know how and why they diverge. Can
wood that would be unsuitable for the making of barrels be used to make
the disputed items, or are they made out of the offcuts after cutting the
staves and tops for barrels? How similar is the toasting process as between
barrels and the disputed items? The statement that:
‘[o]verall, the toasting process undergone by the staves is very similar to the toasting
processes undergone by barrels.’ (emphasis added)
is unhelpful, without stating the differences between the different
processes. It left too much unexplained.
[33] Mr Potgieter described TN's business as being 'a manufacturer of
wooden products related to the production and ageing of wine'. He said this
included 'staves, blocks, chips, rice and powder and 'apart from these' it
also manufactures traditional wine barrels. As its name suggests,35 he said
that TN's business 'qualifies as that of cooperage, even if one were to
restrict this term to its traditional sense'. Apparently, almost half its
business is based on barrel sales. There is no reason to doubt that TN's
business is in part the business of a cooperage, but that is not the part with
which this case is concerned. The mere fact that one half of the business is
34 Pilar Rubio-Bretón et al, op cit, fn 28 analysed the differences between different forms of aging of
wine and showed that there were different effects as to the release of chemicals and in regard to the
timing of aging. Canas et al, op cit, fn 29 refer to wine of similar quality being produced by the different
forms of aging. There does not appear to be a clear picture as to the differences between the two different
methods of maturation.
35 Tonelaria translates from Spanish into English as 'cooperage'.
a cooperage has little bearing on whether the other half fits the same
description.
[34] It emerged from Mr Potgieter's description that at the production
stage there is a divergence between the process of making barrels and the
manufacture of the disputed items. He described the cutting of the disputed
items using a circular saw according to the dimensions required by
customers. This is determined by the amount of wood that the winemaker
wants to have contact with the wine. He did not deal with the process of
preparing the staves that go into the manufacture of barrels. The size of
these is presumably not determined by the customer, but by the size of the
barrels produced by TN. The staves have to be cut and shaped in order to
enable the barrel to be constructed. We were not told how the curved shape
is achieved or whether the barrels are crafted individually or by a
production line system. The manufacture of the hoops, the assembling of
the barrels and the barrel heads, the cutting of the crozes and the process
of fitting the whole together, were not explained. Accordingly, it is
impossible for the court to know how significant these divergences are in
the greater scheme of things. All one can say is that, given the nature of a
barrel and the complexity of its construction, it is likely that it involves far
more complex work to produce a barrel than to produce the disputed items.
That is reflected in the cheaper price of the latter.
[35] The final processes in regard to the disputed items are the drilling of
the 'staves' so that they can be attached to and suspended from an
appropriate frame inside a stainless steel vat and packing in specialised
packaging to prevent them from being damaged, or absorbing unwanted
odours, being contaminated or undergoing environmental changes. By
contrast, the finishing of barrels involves the installation of barrel heads;
the cutting of holes for taps or bungs; sanding and hoop installation; and
pressure testing. We were not told anything about the packaging of barrels,
but it will not be the same as the disputed items.
Discussion
[36] The net effect of Mr Potgieter's evidence was that the processes
undertaken in the production of the disputed items and those used in
relation to barrels were directed at achieving similar results insofar as
imparting flavour, sensory profile and the like to wine. The manufacturing
processes were in some respects similar and might at points overlap,
especially in the preliminary stage of selecting and curing the wood, but it
is clear that in many respects they diverge. The disputed items may perform
a similar role to barrels insofar as the maturation of the wine and imparting
flavours to the wine is concerned, but they are fundamentally different in
not fulfilling the storage function that is, at the least, a primary purpose of
a barrel.
[37] Mr Potgieter's conclusion was that there was a 'virtually complete
functional equivalence of oak barrels' and the disputed items. He stressed
the fact that the disputed items and the wood used to make barrels
underwent very similar treatments. This distinguished them from wood
used in carpentry. He said:
‘The staves at the centre of the present dispute are, effectively, barrels in everything
except name. They are made from exactly the same sort of raw material; have
undergone exactly the same sort of production process; and serve precisely the same
function, only at slightly lower cost – indeed the goal behind their use is to simulate as
far as possible, only more cheaply, traditional barrel fermentation. The staves can be
described, in effect, as de-constructed barrels. They allow other vessels (steel tanks) to
achieve barrel-like effects without any need for the vessels to be replaced by actual
barrels, or indeed, for the vessel used to be modified in any way.’
[38] There are two problems with these contentions. The first is that the
disputed products are not performing the same functions as barrels
produced by a cooper. They are performing some of the same functions,
but not all of them. That is a significant difference. The storage function of
the barrel cannot be ignored. The second problem is that the fact that
products may serve a similar purpose or function does not mean that they
should for customs purposes fall in the same classification. Electric light
bulbs and candles serve the same purpose, but are plainly different products
and fall to be classified differently.
[39] Tellingly, Mr Potgieter did not say that the manufacture of the
disputed items is undertaken by a cooper. He did not say that the production
of the disputed items is a result of the exercise of the skill, techniques and
expertise of a cooper. Instead, he spoke of an 'employee' manually grabbing
the 'staves' and placing them in a machine for brushing. That does not seem
to require particular skill or expertise. It might well be the work of a
labourer or machine hand. He said that an 'experienced employee' used a
circular saw to cut the 'staves' according to the requirements of the
customer. The only skill that seems to require is the ability to operate the
circular saw safely and cut the pieces to the correct dimensions. There
appears to be a world of difference between cutting planks or slats using a
circular saw and the complex process of manufacturing a barrel. On the
face of it, the cutting and drilling undertaken in respect of the disputed
items does not display any features that would distinguish it from the type
of work done in a conventional workshop manufacturing wooden products
or preparing wood for use in the manufacture of wooden products. There
is no suggestion that the people who do this work in TN's factory are
trained coopers or need to be trained coopers. (The position in regard to the
barrel-making section is presumably different.)
[40] I accept that there are probably a number of companies around the
world that operate cooperages and, in addition to making barrels,
manufacture other wooden products, including some the same as, or fairly
similar to, the disputed items. This does not mean that the additional
products are coopers' products. It is significant that products of this type
can be produced without the manufacturer engaging in the concurrent
manufacture of barrels or requiring the services of a qualified cooper.
[41] To sum up, the manufacture of the disputed items is not part of the
traditional tasks of a cooper nor does their production require an
application of the skills, training, techniques and expertise of a cooper.
They are directed at serving a similar function in wine-making to a
conventional oak wine barrel, other than the storage of the wine itself.
There is no resemblance between them and barrels used in the storage and
maturation of other liquor products, such as whisky, port, sherry, brandy
or rum, or non-liquor products, such as tabasco, balsamic vinegar or soy
sauce. Those barrels and other containers produced for those purposes are
coopers' products.
[42] At the end of the day Toneleria's argument rested on nothing more
than the functional similarities between the disputed items and traditional
oak barrels arising from the selection of wood, the seasoning and toasting,
and the role they play in the maturation of wine. In my view that was
insufficient to bring the disputed items within the category of 'other
coopers' products' as described in tariff heading 44.16. They are not
products of the same or similar type to those expressly described as
coopers' products, because they are not containers. Nor does their
production require the application of the skills, techniques and expertise of
a trained cooper. The functional similarities on which Toneleria relied
accordingly did not serve to bring the disputed items within the category
of 'other coopers' products'.
[43] In the result the appeal must succeed. That renders it unnecessary
to enter into the debate whether the high court's order could encompass the
additional containers. The following order will issue:
The appeal is upheld with costs, such costs to include the costs of
two counsel.
The order of the high court is amended to read:
'The application is dismissed with costs such costs to include the costs of
two counsel.'
_________________
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
J A Meyer SC (with him L G Kilmartin)
Instructed by:
The State Attorney, Cape Town and Bloemfontein.
For respondent:
RF van Rooyen SC (with him CR Cilliers)
Instructed by:
Smith, Tabata Buchanan and Boyes, Cape Town
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 1 June 2021
STATUS Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
Commissioner: SARS v Toneleria Nacional RSA (Pty) Ltd (444/20) [2021]
ZASCA 65 (1 June 2021)
The SCA today upheld an appeal by the Commissioner: SARS against a
decision by the Western Cape Division of the High Court, upholding an appeal
by Toneleria Nacional RSA (Pty) Ltd against a SARS determination of the
customs classification of certain wooden items imported by Toneleria from
Chile for use in the maturation of wine. The wooden items are oak planks or
slats made of the same oak as wine barrels and subjected to similar
processes of curing and toasting before being cut into shape using a circular
saw. They are used by some winemakers as an alternative to maturing wine
in oak barrels, which are expensive. The planks or slats are suspended in the
wine from a frame and the winemaker. The effect in imparting flavour, aroma
and structure to the wine is similar to the effect of maturation in oak barrels.
The tariff item 44.16 under which Toneleria sought to import the
disputed items applied to 'Casks, barrels, vats, tubs and other coopers’
products and parts thereof, of wood, including staves.’ Although Toneleria
describes these items as staves, they are not staves of the type referred to in
the tariff heading, because they are independent items not intended as parts
of anything else. Nor are they casks, barrels, vats or tbs. Accordingly they
could only qualify for inclusion under tariff heading 44.16 if they were 'other
coopers' products'.
The court considered what a cooper is and held that in its ordinary
meaning it is a person who makes barrels and other similar containers using
traditional methods that have been in use for hundreds of years. The cooper
is a skilled craftsman, using special tools and techniques to produce wine
barrels and similar containers. These have distinctive features, such as the
bulge around the centre of the barrel and the hoops of metal or wood that hold
the barrel staves together. All of these features were missing from the items
imported by Toneleria. Nor was there any evidence to show that they are
generally accepted as 'coopers' products', that is, products created using the
skills and special techniques of a cooper. It is not sufficient that they may
perform some of the functions of a wooden barrel, although not its storage
function. The tariff heading required the product to be products of the skills
and techniques of a cooper. The evidence did not show that the production of
these items required any input from a cooper.
The SCA accordingly held that the imported items were not 'other
coopers' products' and therefore did not qualify for importation under tariff
heading 44.16. The appeal was upheld with costs including the costs of two
counsel.
|
2347
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 63/08
GIANFELICE PAPPALARDO
Appellant
and
GARY HAU
Respondent
Neutral citation: Pappalardo v Hau (63/08) [2009] ZASCA 160 (30 November
2009).
Coram: STREICHER, HEHER JJA, HURT, LEACH et GRIESEL AJJA
Heard: 5 NOVEMBER 2009
Delivered: 30 NOVEMBER 2009
Summary: Neighbour law ─ drainage of rainwater ─ rights and obligations of
neighbouring owners in urban environment ─ whether lower owner obliged to
accept rainwater flowing onto his property from higher lying neighbour ─
judgment in Williams v Harris 1998 (3) SA 970 (SCA) considered and
discussed ─ lower owner only obliged to accept 'natural flow' ie flow across
boundary which would have occurred before development of urban erven ─
higher owner seeking to enforce right obliged to prove what the 'natural flow'
was.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: South Gauteng High Court (Horn J sitting as court of first
instance).
1.
The appeal is upheld with costs.
2.
The order of the court below is set aside and the following order
substituted therefor:
(a)
The defendant is granted absolution from the instance.
(b)
The plaintiff is ordered to pay the defendant’s costs, including the costs
of the expert witness Korsman.
______________________________________________________________
JUDGMENT
______________________________________________________________
HURT AJA (STREICHER, HEHER JJA, LEACH et GRIESEL AJA concurring):
[1] The respondent instituted action against the appellant in the South
Gauteng High Court, seeking a declaratory order to the effect that the
respondent was entitled to insert certain drainage pipes into a boundary wall
erected by the appellant. The respondent’s complaint was that the wall was
acting as a dam to rainwater on the respondent’s property, causing flooding of
a sector of the property. The appellant’s opposition to the claim was
unsuccessful, Horn J granting a declarator in the terms sought. The appellant
appeals against the judgment with the leave of the high court.
The Setting
[2] The appellant and the respondent own adjoining erven in a township
development known as Waterford Estate in the municipal area of Sandton.
Waterford Estate is an ‘upmarket township’ which was apparently established
in about 1996. There is controlled access to the Estate, the streets are all
macadamized and reticulated electricity, water, stormwater drainage and
sewerage systems have been installed in keeping with the customary
requirements for modern township developments. The respondent’s property,
erf 945, lies to the south of the appellant’s, which is erf 944. The properties
both slope down from south to north so that erf 945 is at a higher level than
erf 944, the total fall over each property being of the order of a metre. Each
property is flanked on the east by a street called Calleto Crescent. The
common boundary is the northern boundary of erf 945 and, accordingly, the
southern one of erf 944. There is a fall of the order of 600mm from west to
east in the vicinity of the common boundary. The area of erf 945 is
approximately 800 square metres while that of erf 944 is about 700 square
metres.
[3] It is common cause that when the parties acquired their respective
properties, no building had taken place on the Waterford Estate. The
appellant built on his property before the respondent. In addition to his
residence, the appellant constructed a boundary wall along his common
boundary with erf 945. This wall, to which I will refer simply as ‘the boundary
wall’, was approximately 2 metres high and traversed the length of the
common boundary from west to east. Some time after the appellant had
completed building, and during the latter part of 2003, the respondent
constructed his residence. As well as the house itself, he built walls on the
western and eastern sides of erf 945 and embellished his side of the
boundary wall with a series of decorative arches. In the space between his
house and the northern boundary wall he built a swimming pool which was
surrounded by paving and which occupied about a third of the total distance
between the eastern and western boundaries. Judging from the scaled site
plan of the property, I think it is safe to conclude that at least seventy percent
of the site is covered by buildings, paving and the swimming pool. Cultivated
gardens and lawns cover the remainder.
History
[4] During December 2003, the respondent noticed that rainwater was
gathering in the north-western sector of his property and damming up against
the boundary wall. The respondent discussed this problem with the appellant
and suggested that the boundary wall should be breached in some way to
allow this rainwater to drain off onto the appellant’s property. There was a
conflict of fact, in the evidence, about what transpired during this discussion
but, on 27 January 2004, the appellant’s attorneys addressed a letter to the
respondent, warning him that any attempt to breach or otherwise interfere with
the integrity of the boundary wall for the purpose of discharging water onto erf
944 would be resisted. The appellant’s contention was that the respondent’s
building operations had resulted in an increase in the flow of rainwater
draining northwards off erf 945 and that the appellant was not obliged to
accept or to deal with it. The respondent instituted action against the appellant
in August 2004, claiming a declaratory order to the effect that the respondent
was entitled to insert a series of drainage pipes into the base of the boundary
wall at ground level and at sub-surface level to allow rainwater to flow from
the respondent’s property onto the appellant’s. The respondent’s contention
was that the appellant, as the owner of the lower-lying property, was obliged
to accept such water.1 In his plea, the appellant denied that the water which
the respondent sought to discharge onto his property would have flowed there
naturally. He contended that considerations of practicality favoured an
arrangement whereby the respondent discharged excess rainwater directly
from erf 945 onto Calleto Crescent, referring in this regard to s 13(2) of the
Sandton Town Planning Scheme, 1980 (to which I shall make detailed
reference later).
[5] Having heard a fairly considerable amount of evidence (and, no
doubt, argument) on the matter, the learned judge in the lower court stated his
view of the law to be applied to this sort of situation in explicit and unequivocal
terms:
‘It is common cause that water will flow naturally from the [respondent’s] property to
the [appellant’s] property. The [appellant] as the lower lying property owner is obliged
1 The Particulars of Claim were equivocal in that they made reference to the requirements of
the National Building Regulations as support for the specific declaratory relief sought.
However, in his opening address at the trial, counsel for the respondent (plaintiff) made it
clear that ‘. . . the plaintiff relies upon the common right that the lower lying property must
receive the higher lying property’s water.’
to receive natural flowing water from the [respondent’s] property – there can be no
argument with that.
. . . .
In my view Williams v Harris 1998 (3) SA 970 (SCA) not only reiterated the common
law principle that a lower lying owner must receive excess natural water from the
higher lying owner, it also, by implication, underlined the principle that each case
must be decided on its own facts. I also believe that plain common sense should play
a role. In a case such as this where a person erects an obstruction which prevents
the natural flow of water it is only fair to expect that such a person will take the
necessary steps to avoid the accumulation of water caused by such obstruction.’
[6] If only the law was so uncomplicated! The basic principle is, indeed,
captured in the actio aquae pluviae arcendae2 of Roman times. But even in
those ancient days it was found necessary to limit the lower owner’s obligation
to accept water flowing from his more elevated neighbour by excluding any
increased flow arising as a result of ‘artificial works’ (ie other than those
arising from ordinary agricultural activities) carried out on his property by the
latter. As the Roman Law was adopted and modified into its Roman Dutch
form, the limitations and qualifications to the basic rule had, perforce, to
become more detailed and sophisticated for the purpose of making provision
for such matters as urban development and altered living conditions. Writers
such as Voet,3 Grotius4 and, later, Van Leeuwen5 reported distinctions
between rules for the rural (‘rustic’) and the urban environments. They
referred to a number of servitudes that were customarily encountered as
between property owners in rural areas and a number of different servitudes
customarily encountered as between neighbouring owners in the urban
setting. An examination of these servitudes makes it clear that they were
necessary to regulate the relationship between owners of neighbouring
properties insofar as coping with water flow and drainage were concerned and
that they were used to vary or modify the common law rules which would
otherwise apply. It also appears that, in various areas, probably the equivalent
2 Voet 39.3.2.
3 39.3.4.
4 The Jurisprudence of Holland (Lee), II.34 and 35, especially II.34.15 and 16; and II.35.16
and 17.
5 Censura Forensis 2.14.22.
of the municipal areas of modern times, the ‘basic rule’ that the lower owner
should accept the natural flow of water from the higher property had been
modified.6 Judging from the nature of the ‘urban servitudes’ discussed by Voet
and Grotius, they had undoubtedly been formulated for the purely practical
purpose of catering for the restricted space and concentrated building
development that characterised (and still characterise) the urban environment.
It is not the purpose of this judgment to consider these early common law
rules, and the water servitudes which modified them, in any detail. It suffices
for present purposes to say that by the time Roman Dutch Law became our
Common Law, a distinction had already been drawn between the rights and
obligations of neighbours in regard to the regulation of water flow between
their properties in the rural context on the one hand and the urban context on
the other. There were differences of opinion amongst the writers as to what
properties were to be treated as ‘rustic’ (or ‘rural’) as opposed to ‘urban’. But
the proposed distinction was a subtle one, and it was generally accepted that
the so-called ‘urban servitudes’ applied where dwellings were involved and
the rustic ones applied to agricultural or larger tracts of cultivated property.7
[7] The reported decisions at the end of the nineteenth century and at the
beginning of the twentieth mention this distinction but always as a qualification
to the basic proposition that the lower owner is obliged to accept the natural
flow of water draining from the property of the higher neighbour.8
[8] In Bishop v Humphries 1919 WLD 13, Gregorowski J adopted a
practical approach to the problem of rainwater disposal in the urban context.
He pointed out that the very nature of the development of the urban properties
with which he was concerned would necessarily alter the natural flow of the
water from the one property to another. He described, in some detail, the
irreversible changes which development of an urban site would cause to the
6 Grotius op cit II.34.16; Van Leeuwen loc cit.
7 There is a detailed and interesting discussion of this aspect in C W Decker: Simon van
Leeuwen’s Commentaries on Roman Dutch Law (2 ed) at 289 – 290 and 305-309.
8 Eg Austen Bros v Standard Diamond Mining Co Ltd (1883) 1HCG 363, esp at 377-378.
natural lie of the land, and, accordingly, to the ‘natural flow’ of water traversing
it.9
‘The water can no longer flow as it used to flow before buildings were erected and
fences and other obstructions interposed. It would be perfectly impossible to restore
the surface as it was before it was interfered with, and let the rainwater run off as it
was accustomed to do. When it was in its natural state the surface being a slope the
water never accumulated, but ran freely off westwards and northwards . . .. When
buildings were put up extending over about half the surface of the stands with roofs
collecting the water, the natural arrangement for the flow of the water was further
disturbed and rendered impracticable. There would be more water to be got rid of
than before and the water would have been more concentrated . . . the water coming
from the roof comes in a concentrated form, hence the general doctrine has been
that an owner cannot throw the water from his roof on to the adjoining neighbour’s
land, whatever the levels may be, unless he has a servitus stillicidii recipiendi. Every
owner has to make some provision for the water coming from his roof and to provide
against such water falling on his neighbour’s land and causing damage and
inconvenience there. Similarly he cannot let the water fall from his own roof on to his
own land and claim the right to lead it through an aperture on to his neighbour’s land.
This would not be a natural flow of water, but it would be an artificial discharge
operated by the hand of man.’
As a general proposition, the learned judge went on to say:10
‘The fact is that when land is sold in small building plots, a state of things is created
and contemplated which puts an end to a large extent to the natural servitude11 which
previously existed as regards the water which falls on the plots. Each owner puts up
a building which covers a substantial part of the plot. He places an impervious
surface over the naturally porous surface of the soil. He accumulates the water
thereon. He alters the natural surface of the rest of the area of his plot by paving it or
by locating temporary structures thereon or digging it up, and thereby annihilates the
natural arrangement of the soil.’
And, finally, at the passage bridging pages 17 and 18:
‘The applicant has altered all the old conditions existing on this stand while it was
virgin soil and in a state of nature and it is quite impossible for him to throw a burden
9 At pp 15-16.
10 At p 17.
11 This term ‘natural servitude’ was used as a convenient manner of describing the common
law rights and obligations of neighbours. It is not to be construed as a ‘servitude in law’. See:
Retief v Louw (1874) 4 SC 165 at 174-175.
on the adjoining stand which is based on the assumption that his stand has
preserved rights which he himself has put an end to by his own constructions on the
property.’
[9] There are, in my view, two important features of the passages which I
have quoted above. The first is the emphasis on the ‘natural flow’ as referring
to the manner in which the water would have flowed, both as to quantity and
locality, from the one property to the other over the land in its undisturbed
state. It seems clear that, in coming to the conclusions to which I have
referred earlier, Horn J, in the lower court, paid no heed to what may be called
the ‘original pattern of flow’ from erf 945 to erf 944. Certainly none of the
witnesses who testified before him had endeavoured to establish what this
pattern of flow was or must have been, other than to say that the general
direction of flow would have been from south to north across the common
boundary.
[10] The second aspect is the particular emphasis placed on the
consideration that the upper owner has no ‘natural right’, merely as upper
owner, to concentrate the flow of water at a particular point or at particular
points. Although the quantity of water thus discharged may be equal to that
which would have crossed the boundary if the land had been undisturbed, the
lower owner would nevertheless be called upon to cope with a pattern of flow
which would not naturally have occurred. The upper owner can only impose
such a burden on his neighbour if there exists in his favour an express
servitude, whether acquired by registration, prescription or by agreement,
entitling him to do so. Although Horn J considered the practicality of the
installation of a system of drainage pipes in the boundary wall, he appears to
have overlooked the fact that those very pipes would act as conduits for a
concentrated flow of water at the points at which they emerged from the wall
on the appellants side – an arrangement which the respondent had no right,
without a servitude, to impose on the appellant.
[11] Bishop was followed in 1940 by Millin J in Green v Borstel 1940 (2) PH
M 89. The facts of that case were on all fours with those now under
consideration. The properties involved were in the urban area of Orange
Grove, Johannesburg. The owner of the lower property built a concrete wall
on his boundary to prevent stormwater flowing onto his property from the
more elevated property of his neighbour. The latter sought an order
compelling the lower owner to demolish the wall, contending that by
constructing it the lower owner had unlawfully obstructed the natural flow of
water from the upper property. Millin J held that when a township is created,
the division of the ground into small plots and the erection of structures on
them would ‘cause the storm water to flow entirely differently from the way in
which it would have flowed originally’. He dismissed the application because
the upper owner had failed to prove ‘that the water whose flow was obstructed
by the wall was water which would have flowed on to the [lower owner’s] land
even if no buildings had been erected, and the original contours of the ground
not interfered with.’
[12] A similar approach was adopted by Beadle J in Barklie v Bridle 1956
(2) SA 103 (SR). He, too, referred to Bishop with approval, although he
mentioned a possibility that the law may have been ‘too broadly’ stated in that
case.12 At page 109 he said:
‘In my view, if the owner of an urban tenement, by the lawful development of his
stand, increases, concentrates and alters the natural flow of water from his stand he
is not entitled to discharge that water on to his lower neighbour’s stand at a point
which may be most convenient to himself but most inconvenient to his lower
neighbour. He must take reasonable steps to ensure that by the discharge of that
water no injury is done to his lower neighbour; and if, by use of reasonable
measures, he can discharge that water on to the adjoining street so that the water
may be harmlessly drained down that street, then I consider he should do so.’
[13] Barklie was the subject of comment by Prof. Scholtens in the 1956
Annual Survey of South African Law.13 The learned professor expressed the
12 It is not clear, from the report, in what respects it may have been suggested that the
decision of Gregorowski J was possibly ‘too broad’.
13 At pp 134-136.
view that the decision was correct but that it could have been arrived at more
directly by reference to Grotius.14
‘Direct authority is provided by Grotius, 2.34.16, who says with regard to urban
tenements (Lee’s translation):
“For by the common law everyone must lead his water on his own land, or over his
own land out to the street”.
This rule exactly covers the facts of the present case. It is submitted that the decision
in Bishop’s case correctly states the Roman-Dutch law although a qualification is
needed where the natural situation makes it impossible to discharge rainwater on to
a street or road.’
[14] That brings me to the decision of this court in Williams v Harris 1998
(3) SA 970 (SCA) to which Horn J referred in his judgment and on which
counsel for the respondent relied heavily in support of his argument before us.
The decision is the first, as far as I am aware, in which this court was called
upon to deal with a ‘water dispute’ between residential neighbours in the
urban context. Coetzee J, who had given the judgment in the court of first
instance,15 had, on the authority of Bishop, Green and Barklie, expressed the
view that the very creation of a township resulted in an irreversible alteration
of the ‘natural land’ and that there could be no application of the principle that
higher landowners were entitled as of right to discharge rainwater onto the
property of their lower neighbours. In coming to this conclusion Coetzee J had
referred, also, to Grotius 2.34.16 and to the discussion of Barklie by Prof.
Scholtens in the 1956 Annual Survey. At the commencement of his judgment
on appeal, Marais JA emphasised16 that he felt constrained to embark on an
analysis of the common law, without having had the benefit of full argument.
The necessity for doing this, he said, was to decide whether there was
substance, in law, in the dispute on the papers as to whether the lower
property owner was obliged to tolerate any flow of water across the common
14 Op cit footnote 4, above.
15 Sub nom Harris v Williams 1998 (2) SA 263 (W).
16 At pp 981D and 984B-C.
boundary onto her property.17
[15] After a detailed investigation of the reported cases and comments by
certain writers, Marais JA concluded that the right of the owner of higher lying
property to discharge the ‘natural flow’ of rainwater onto the property of his
lower lying neighbour still exists even in urban environments. In coming to this
conclusion the learned judge pointed out that this right was not denied in
Bishop, Green and Barklie, but that in each of those cases it had been held as
a fact that the topography of the ground had been interfered with in the course
of development of the respective stands and that there was no proof that the
water which formed the subject matter of the dispute was flowing in its ‘natural
pattern’.
[16] In coming to this conclusion Marais JA made specific reference to the
comment on Barklie by Prof. Scholtens and the reference to Grotius 2.34.16.
In this connection he said:18
‘I explained earlier in this judgment why I do not consider that Bishop’s case purports
to support the notion that even rainwater which would have flowed naturally on to a
lower owner’s property must be prevented from doing so by the upper owner. I think
it is reasonably clear that Grotius is not speaking of naturally flowing rainwater but of
water (whether it be rainwater or not) which has been artificially collected by the
upper owner and which is sought to be discharged on to the lower owner’s property.
Such an interpretation harmonises the passage with another passage in Grotius,
namely 2.35.17 in which he said:
“By common law anyone may let his water flow in its natural course, from which
comes the old proverb ‘if water hurts you, you may turn it away’.”19
(Lee’s translation). The competing interpretation would result in attributing a self-
contradiction to Grotius – a highly unlikely postulate. I am aware that the first
passage cited occurs under the rubric of urban servitudes and the second under that
17 The learned judge had pointed out that there were a number of disputes of fact on the
papers and that it was necessary to decide whether the view of the judge a quo on this aspect
had been correct for the purpose of deciding whether the dispute concerning the quantity of
water involved should be one of the issues referred back to the lower court for the hearing of
oral evidence.
18 At p 983G-984B.
19 I must confess that the link between the principle and the proverb escapes me. The original
version in Dutch is 'dien water deert die water keert'. Perhaps something was lost in the
translation, but it is of no moment as far as this judgment is concerned.
of rustic servitudes but I do not think that Grotius was confining his observation in the
latter to rural situations. If it was indeed so that a fundamentally different principle
applied in urban situations I would have expected Grotius to pointedly draw attention
to the contrast.’
I am unable to agree with Marais JA’s reason for interpreting and qualifying
the passage as he did. It is clear that the whole context of chapters 34 and 35
of book 2 is one in which the learned writer was stating why the customary
servitudes had become necessary – ie that they were aimed at alleviating the
burdens thrust on owners by the common law.
[17] As I understand the issues formulated by Marais JA20 for reference to
oral evidence before the court a quo, those in respect of the water dispute
contemplate the possibility that the court hearing the evidence might
effectively order the lower owner to accept the ‘historical natural flow’ and no
more. Since, on the basis of the decisions in Bishop, Green and Barklie the
determination of the ‘natural flow’ in the urban context is rendered virtually
impossible by the very establishment of a modern urban township, it is difficult
to conceive of the form which a court order could take for the fair enforcement
of the higher owner’s right in this regard. Plainly the order could not relate to
the quantity of ‘natural flow’ only, for immediately the cogent objections to
concentration of the theoretical natural flow mentioned in Bishop21 and
Barklie22 would apply. Furthermore, proof of the natural flow after
development has taken place would almost invariably be a very complicated
(and prohibitively costly for that reason) exercise.
[18] There is accordingly much to be said for the adoption, as correctly
reflecting our common law, of the judgment in Bishop with the qualification
suggested by Prof Scholtens in the passage quoted in para13. However it is
not necessary in this case, for reasons which follow, to go that far.
20 At p 984.
21 At pp 17 and 18.
22 At p 109.
[19] It is common to all the decisions which I have discussed, even that in
Williams, that at best for the upper owner, his right only extends so far as to
require the lower neighbour to accept the ‘natural flow’. Where, as in this
case, the upper owner sues to enforce this right, it is incumbent upon him, at
very least, to prove the amount of water constituting the ‘natural flow’.23 In this
regard counsel for the respondent tried to persuade us that the onus was on
the appellant, who was responsible for causing the problem on the
respondent’s property, to establish the amount of the natural flow as the upper
limit of his obligation. But there is clearly no substance in this contention. It
flies in the face of the decision in Green and there is no suggestion
whatsoever in Williams that the approach of Millin J might be incorrect in this
respect. There was no attempt by the respondent, in the course of the trial, to
establish what the amount of the ‘natural flow’ was. Indeed, it would probably
have been a task beyond the capabilities of the expert witness called by the
respondent. In the result, the facts being on all fours with those in Green, the
respondent’s argument must fail for the same reason as the plaintiff’s did in
that case.
[20] There remain two further aspects on which I think it is necessary to
comment. The first relates to the effect of s 13(2) of the Sandton Town
Planning Scheme on the rights and obligations of the parties. It appears to
have been common cause that the provisions of the Scheme applied to the
properties in Waterford Estate. Section 13(2) reads as follows:
‘Where, in the opinion of the local authority, it is impracticable for stormwater to be
drained from higher lying erven direct to a public street, the owner of the lower24 erf
shall be obliged to accept and/or permit the passage over the erf of such stormwater:
Provided that the owner of any higher lying erf, the stormwater from which is
discharged over any lower lying erf, shall be liable to pay a proportionate share of the
cost of any pipeline or drain which the owner of such lower lying erf may find
necessary to lay in order to drain stormwater from his property.’
23 I stress that this would be the very minimum which the owner would have to establish – his
onus would ordinarily be much more complicated than this.
24 The copy of the extract of the Scheme put up as an exhibit omitted the word ‘lower’, but the
extract quoted by Horn J in his judgment, and the references in the Heads of Argument to the
section both include this word. The section would be meaningless without it and there can be
little doubt that the section in fact reads as quoted above.
It is of interest to note the similarity between these provisions and those
suggested by Prof Scholtens in the Annual Survey article. But apart from that,
it seems clear that what is clearly implied by the subsection is that, where it is
practicable to drain stormwater onto the street, the owner must do so.
However, Horn J dealt with this contention in the following terms:
‘I fail to see how this provision can be applied to the facts of this matter. It was after
all the [appellant] who raised this aspect and, if anything, it was for the [appellant],
should he have felt that the proviso applied, to prove the applicability of the town
planning provisions to this matter.’
I have premised my reference to the Town Planning Scheme on the basis that
it was common cause between the parties that s 13(2) applied. If it did not,
then cadit quaestio. In argument, counsel for the respondent did not (as I
understood him at least) try to contend that the Scheme was not applicable.
What he submitted was that the appellant bore the onus of proving that the
local authority did not hold the opinion referred to in the subsection. This is an
unduly contorted way of looking at the provision. As I have already indicated,
the subsection is based upon an assumption that water will be drained onto
the street. An owner wishing to drain it through some other course, for
instance his neighbour’s property, must obtain the opinion of the local
authority that there is no other practical means of coping with the stormwater
before he acquires the right to do so. There is accordingly no substance in the
assertion that, in the absence of any evidence of the local authority’s view on
the matter the respondent’s contention must fail. In fact it was common cause
between the experts for both sides that the respondent could construct a
sump in the north-west sector of his property and drain the excess water from
there to Calleto Crescent. The dispute about this arrangement was focused
on its cost compared to the cost of inserting pipes in the boundary wall and
draining the water to the street along the appellant’s southern boundary. But
the fact that the latter arrangement would have been cheaper than the former
hardly assists the respondent. The issue is not one of expense but of
‘practicability’. I should mention that the experts agreed that if the respondent
had installed the sump and necessary piping to Calleto Crescent before
building his swimming pool and paving its surrounds, the cost of such
installation would have been far less. In my view the provisions of the Town
Planning Scheme also operate in favour of the appellant.
[21] The last aspect concerns the case which the respondent attempted to
develop concerning alleged non-compliance by the appellant with the
provisions of the National Building Regulations and their subsidiary provisions
in the construction of the wall. Respondent and his expert witness referred to
certain regulations relating to the provision of drainage through certain walls.
There was a dispute between the experts as to whether the appellant was, in
the circumstances in which he constructed the boundary wall before the
respondent started to develop his property, even obliged to provide drainage
holes in it. The lower court did not consider the question whether on the basis
of these regulations alone, it should exercise its discretion to grant respondent
relief. Nor do I think it would have been appropriate for the court, especially on
the limited evidence before it, to exercise such a discretion in the respondent's
favour. This appeal will certainly not operate as a bar to the respondent
approaching the local authority to complain about any transgression of the
Regulations of which the appellant may have been guilty and the regulations
and the by-laws will provide the remedy if the respondent's allegations are
well founded.
[22] In the result the appeal must succeed. I make the following order:
1.
The appeal is upheld with costs.
2.
The order of the court below is set aside and the following order
substituted therefor:
(a)
The defendant is granted absolution from the instance.
(b)
The plaintiff is ordered to pay the defendant’s costs, including the costs
of the expert witness Korsman.
_______________________
N V HURT
ACTING JUDGE OF APPEAL
Appearances:
Counsel for Appellant:
A Bester
Instructed by
Kuilman Mundell & Arlow c/o Matthew Kerr-
Phillips, Johannesburg
Webbers, Bloemfontein
Counsel for Respondent: A van der Merwe
Instructed by
Vos Attorneys c/o Whalley Van Der Lith,
Johannesburg
Symington & De Kok, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 30 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
G PAPPALARDO v G HAU
1.
The Supreme Court of Appeal today allowed an appeal by a resident of a township in
Gauteng who had been ordered by the South Gauteng High Court to permit his neighbour to
insert a number of drainage ports in the wall which he had constructed along the common
boundary between the two erven. The purpose of the drainage ports was to allow rainwater
gathering on the neighbour's side of the boundary wall to flow down the natural slope of the
two properties on to the appellant's erf. The high court had held that the appellant, as the
owner of the lower lying property, was obliged to accept the water from his higher lying
neighbour.
2.
The SCA held that the appellant's obligation was limited to the 'natural flow' of
rainwater between the properties before the erven had been developed by the construction of
residences etc on them. Since there was no proof of what this 'natural flow' was and how it
would have been distributed over the common boundary, the neighbour's contention that he
was entitled to drain the water through such drainage ports could not succeed. The question
whether the Roman Dutch law recognised an obligation on the part of a lower lying owner in
the urban context to accept the 'natural flow' of rainwater from a higher lying neighbour was
discussed but not decided.
--ends--
|
3152
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 318/06
REPORTABLE
In the matter between:
JOHANNES DE WET NEL APPELLANT
and
THE STATE RESPONDENT
Before:
Cameron et Mlambo JJA et Musi AJA
Heard:
20 March 2007
Delivered: 11 May 2007
Summary:
Sentence - substantial and compelling circumstances – financial pressures and drug addiction - and
other factors – on appeal - sentence of fifteen years set aside – S v Wasserman 2004 (1) SACR 251
(T) criticised.
Neutral citation:
This judgment may be referred to as Nel v The State [2007] SCA 51
(RSA)
MLAMBO JA
[1] On 2 March 1999 the regional court sitting in Port Elizabeth convicted the
appellant, pursuant to his guilty plea, of armed robbery with aggravating
circumstances. He had committed the robbery on 19 February 1999. On 13 August
1999 after hearing expert evidence in mitigation the regional court sentenced him to
15 years’ imprisonment in terms of s 51(2)(b) of the minimum sentencing legislation
(Criminal Law Amendment Act, Act 105 of 1997).
[2] The protracted delay in the appeal being heard eight years later deserves
explanation. The regional court refused appellant’s application for leave to appeal in
terms of s 309(1)(c) of the Criminal Procedure Act 51 of 1977. He then petitioned the
Eastern Cape division of the High Court for leave to appeal against sentence. This
also was refused on 28 September 2000. Four years later, on 3 November 2004, the
appellant lodged a review application in that division seeking an order to set aside the
refusal of his petition and an order granting him leave to appeal to that division
alternatively to this court. This was a strange step and obviously ill-conceived as
Froneman J (Erasmus and Plasket JJ concurring), pointed out when he dismissed that
application on 26 October 2005.
[3] No doubt having at last received correct advice, the appellant applied to the
Eastern Cape division for leave to appeal to this court against the decision refusing
his petition. That application was granted by Pickering J (Plasket J concurring). This
is therefore an appeal against the refusal of the appellant’s petition (see S v Khoasasa
2003 (1) SA 123 (SCA)).
[4] The undisputed facts are the following: on the morning of 19 February 1999,
the appellant, armed with a firearm, went to the Lorraine Entertainment Centre in
Port Elizabeth, held up the staff, locked them in the ladies’ toilet and robbed them of
an amount of R32 595. He was arrested on the same day and when he appeared in the
regional court on 2 March 1999 he pleaded guilty and was convicted.
[5] His guilty plea in terms of s 112 of Act 51 of 1977 states, inter alia, that he
‘committed this crime as a result of financial pressure from gambling and my
business enterprises’. It also states that he used his personal revolver, having removed
the bullets before the robbery. These facts were not disputed by the state when
accepting the plea.
[6] The appellant testified in mitigation of sentence and also called a clinical
psychologist, Mr Barend Christoffel Breedt. The appellant’s evidence was that he
was suffering from a gambling addiction which had started in 1994 and which he had
failed to kick despite stopping for a short while in 1995 but which flared up again in
1996. In 1998 he gambled away ±R400 000 (R300 000 at the Fish River Sun,
R40 000 at the Lorraine Entertainment Centre and R60 000 at the 777 Casino also in
Port Elizabeth). He stated that gambling had consumed him to such an extent that
gambling houses had recognised him as one of the top ten gamblers and rewarded
him with the status of ‘most valued guest’ (MVG). This status entitled him to free
accommodation, food and drinks whenever he visited the casinos. He testified that he
spent practically all his weekends and spare time gambling.
[7] He had been generating an income in the region of R117 000 per month from a
Telkom guarding contract and from his gardening contracts. Despite this income he
steadily sank into the red because of his penchant for gambling. He had a monthly
wage bill of some R87 000 and because of gambling he found himself in dire straits
from November 1998 when Telkom opted to pay him monthly instead of weekly. On
5 February 1999 Telkom cancelled his contract. In addition he was experiencing
problems with his gardening contracts – a situation that led to his overheads far
outstripping his income and rendering him unable to pay his staff their wages. He
started taking loans from money lenders but gambled the money away in the hope of
winning.
[8] On the morning of 19 February 1999, he told the court, he desperately needed
money to pay his guards who were camped at his house waiting for their wages. He
was able to source a loan of R1 200 early that morning from a money lender, and
proceeded to Lorraine Entertainment Centre to gamble – hoping to make more money
to be able to pay his guards. He hit a winning streak and at some stage had R4 500.
As this was not enough to pay his guards he continued gambling but then lost
everything. That was (he said) when he decided to rob the Lorraine Entertainment
Centre.
[9] He went to his house, took his firearm and emptied it of all live rounds, put on
a balaclava to cover his face, and put a falsified number plate at the front (though not
the back) of his car and drove to the Lorraine Entertainment Centre. On arrival he sat
in his car for some time contemplating whether to go ahead with his plan. He
eventually decided that he had no choice and went in. He proceeded to hold up the
manageress, rounded up all the staff, locked them inside the ladies’ toilet and then
took an amount of R32 595 and left. He went to his girlfriend’s house where he left
the loot and took R500 and went to the 777 Casino to gamble yet more. In a very
short time, that is where the long arm of the law caught up with him and he was
arrested followed by the recovery of the loot at his girlfriend’s residence the next day.
It appears from his evidence that his childhood was by no means happy, being
apparently dominated by feelings of inadequacy in relation to his father. This, too, he
and his expert witness linked to his gambling pathology.
[10] The essential features of the evidence of Mr Breedt were that: generally the
appellant was emotionally immature and compulsive, had feelings of inadequacy and
low esteem which drove him to live in a fantasy world, which enabled him to
compensate for those feelings and which affected his ability to take rational decisions
within the context of his circumstances; that he was a compulsive gambler with little
or no insight into that situation, that he suffered from a personality defect manifesting
in a pathological gambling problem and a narcissistic personality; that he had reached
the third and last phase of gambling addiction which was a disorganised phase where
gambling had completely taken over his life manifested by him completely losing
control over his life, and that he remained a danger to society unless he received
treatment for his addiction.
[11] Mr Breedt testified that the appellant needed long-term psychological
treatment to deal with his gambling addiction and that long-term imprisonment and
the appellant’s removal from gambling facilities without the necessary psychological
treatment would have no effect on him. He refuted the notion that the appellant was
driven merely by egocentricism and self-centredness when he committed the offence.
He stated that as far as he was concerned the stupidity of the appellant in robbing a
place in which he was well-known showed that he had become desperate in his
specific gambling situation, a direct indication that his ability to take rational
decisions had become impaired.
[12] In imposing the sentence of 15 years the regional magistrate treated the
appellant as a first offender, and stated that he was enjoined to apply s 51(2)(b) of Act
105 of 1997 and further that, as robbery with aggravating circumstances was a very
serious offence, he was obliged to impose a minimum sentence of 15 years unless it
was shown that there were substantial and compelling circumstances justifying the
imposition of a lesser sentence. The regional magistrate found that the fact that the
appellant had emptied his firearm before he committed the robbery was irrelevant
because his victims had no way of knowing that he had done so, that the fact that the
money he robbed had been recovered was not due to his cooperation but was due to
the diligence of the police and therefore this did not lower the moral blameworthiness
of his deed. The regional magistrate reasoned that the fact that the appellant derived
no benefit from the robbery, that he had led an exemplary life and was, in his middle
age, a first offender and had showed remorse by pleading guilty, that there was no
harm occasioned to his victims and his unfortunate childhood were all factors which
any court would take into account in the normal course in mitigation of sentence. In
his view however the minimum sentencing legislation required something more to
qualify as substantial and compelling circumstances: the mere absence of aggravating
circumstances did not imply there were substantial and compelling circumstances. He
found that in the appellant’s personal circumstances he could find nothing
exceptional save that his personal situation was a lot better than the average robber.
He found that the appellant committed the offence to maintain a certain lifestyle
which could never be an acceptable reason. He concluded that even if he were to
accept that the appellant was a compulsive gambler he could not accept that it was a
valid excuse.
[13] In this court counsel for the appellant criticised the regional court’s reasoning
as rigid and incorrect. Counsel submitted that the regional magistrate was clearly
wrong in the light of S v Malgas 2001 (1) SACR 469 (SCA). Counsel submitted that
the appellant’s pathological gambling had made drastic inroads into his ability to
make rational decisions and should have been viewed on its own as a mitigating
factor and was in the nature of things a substantial and compelling circumstance
justifying the imposition of a sentence less than the ordained minimum.
[14] Counsel relied for these submissions on the decision in S v Wasserman 2004
(1) SACR 251 (T). In that case the Pretoria High Court (Patel J, Fourie AJ
concurring) imposed a sentence of correctional supervision in terms of s 276(1)(i) on
a person who had stolen more than R1 million to finance a gambling addiction. The
Court arrived at this sentence by relying, firstly, on an academic article which
apparently suggests that pathological gambling is a disease. The Court also referred
to the Canadian decision in R v Daniel S Bambury 2001 NSSC 73 and the Australian
decision in R v Petrovic [1998] VSCA 95 and concluded that pathological gambling
was on its own a mitigating factor and qualified as a substantial and compelling
circumstance justifying the imposition of a sentence less than the ordained minimum.
[15] In my view the reasoning in Wasserman was unnecessarily overbroad, and it is
not surprising that the Court was unable to find support for its views in the South
African jurisprudence. In my view the Court's approach was so broadly expressed as
to amount to an undue relegation of the retributive and deterrent elements in
sentencing in favour of the rehabilitative and reformative elements. Indeed it could
open the door to undue reliance by gambling addicts on their addiction to escape an
appropriate sentence in the form of direct imprisonment.
[16] A gambling addiction, like alcohol or drug addiction, can never operate as an
excuse for the commission of an offence. In S v Sithole 2003 (1) SACR 326 (SCA)
this court found that alcohol addiction can not be an excuse for driving under the
influence of alcohol. Conradie JA stated at 329g–h:
‘[7]
Courts in this country have long acknowledged that alcohol addiction is a disease and that it
would be to the benefit of society and of the offender if the condition can be cured. But it is
necessary to make the obvious point that drunken driving is not a disease. One is distressingly
familiar with maudlin pleas in mitigation that the drunken driver in the dock is an alcoholic, as if
the disease excused the crime. It does not.’
What is more, a reading of R v Petrovic [1998] (supra) reveals that it does not support
the approach in Wasserman. That case, like Wasserman and this case, had to do with
a pathological gambler who had committed crimes actuated by the addiction (the
offences in Petrovic ranged from theft to fraud). Delivering the main judgment,
Charles JA stated:
‘20.
The fact that an offender was motivated to the commission of the crimes in question by an
addiction to gambling will, no doubt, usually be a relevant, and may be an important consideration
for a judge sentencing the offender for these crimes. But as Tagdell, J.A. said in R. v Cavallin (…)
“It is . . . important that the public does not assume that a crime which is to some extent generated
by a gambling addiction, even if it is pathological, will, on that count, necessarily be immune from
punishment by imprisonment.”
21.
It is considerations such as these which have led this Court to say more than once that it will
be a rare case indeed where an offender can properly call for mitigation of penalty on the ground
that the crime was committed to feed a gambling addiction;. . .’
The ratio is thus clear. Whilst a gambling addiction may be found to cause the
commission of an offence, even if it is pathological (as in this case), it cannot on its
own immunise an offender from direct imprisonment. Nor indeed can it on its own
‘be a mitigating factor, let alone a substantial and compelling circumstance justifying
a departure from the prescribed sentence’, in the words of Stephan Terblanche in
South African Journal of Criminal Justice (2004) 17 at 443 who, correctly in my
view, criticises the approach in Wasserman.
[17] To find substantial and compelling circumstances, we must thus look more
broadly. I turn therefore to consider the alternative submission advanced by the
appellant’s counsel that the appellant’s addiction viewed with the other factors
amounted to substantial and compelling circumstances. Counsel for the state, whilst
lamenting the reliance on Malgas, which was not available when the regional
magistrate passed sentence and when the Eastern Cape High Court refused the
petition, submitted in this court that none of the other factors advanced amounted to
substantial and compelling circumstances, that in fact the appellant was driven by
egocentricism and the desire to maintain a certain lifestyle when he committed the
robbery. For these reasons she submitted that the 15-year sentence was justified.
[18] The plain fact is that when the regional magistrate imposed the sentence, and
the Eastern Cape High Court refused the petition, the decision in S v Malgas (supra)
had not yet been handed down. There this court settled the issue regarding the correct
meaning of ‘substantial and compelling circumstances’ and the approach to be
followed in applying it. It was not and cannot be contended that the decision is not
applicable. This court stated at 477j–478b:
‘To the extent therefore that there are dicta in the previously decided cases that suggest that there
are such factors which fall to be eliminated entirely either at the outset of the enquiry or at any
subsequent stage (eg age or the absence of previous convictions), I consider them to be erroneous.
Equally erroneous, so it seems to me, are dicta which suggest that for circumstances to qualify as
substantial and compelling they must be “exceptional” in the sense of seldom encountered or rare.
The frequency or infrequency of the existence of a set of circumstances is logically irrelevant to the
question of whether or not they are substantial and compelling.’
[19] It is apparent therefore, with the hindsight of the Malgas decision, that the
regional magistrate was incorrect in his approach. Clearly all factors are relevant; the
essential question is whether any or some or all of them amount to substantial and
compelling circumstances within the contemplation of the legislation.
[20] As previously mentioned, in his written guilty plea the appellant stated that he
‘committed this crime as a result of financial pressure from gambling and my
business activities’. These facts were accepted by the state and in convicting him the
regional magistrate stated that the appellant was found guilty ‘ooreenkomstig u pleit
van skuldig’. Clearly this entails that the state is bound by those facts (compare S v
Groenewald 2005 (2) SACR 597 (SCA)). Those facts show that the appellant’s
financial pressures and his gambling addiction were inextricably linked to the other
relevant factors, such as that he was a first offender and showed remorse by his guilty
plea. They certainly should not have been found to be irrelevant but deserved
appropriate consideration and effect in the sentencing process. The financial
pressures caused by the gambling addiction were clearly pivotal in the appellant’s
decision to commit the robbery. His objective, in that skewed state of mind, attested
to by Mr Breedt, was to rob to have access to money to ease his financial burdens
which in turn would enable him to continue gambling. In this regard Breedt testified,
and he was not seriously challenged in this, that the appellant was at the third and last
phase of gambling addiction and that he was in an almost panic condition illustrated
by the absurdity and improbability of how he went about committing the robbery.
These factors and others – such as that he ultimately derived no benefit from the
offence, emptied his firearm, did not physically injure the victims, that the robbery
was amateurish to say the least, involving a place where he was so well known – are
demonstrably weighty in assessing whether there are substantial and compelling
circumstances.
[21] In my view all these factors show that there were indeed substantial and
compelling circumstances that permitted the regional court to impose a sentence less
than the ordained minimum of 15 years. In my view, instead of the 15 year sentence a
sentence of 10 years was appropriate in the circumstances.
[22] In the circumstances the appeal succeeds and the sentence imposed by the
regional court is set aside and replaced with a sentence of 10 years’ imprisonment.
___________
D MLAMBO
JUDGE OF APPEAL
CONCUR:
CAMERON JA
MUSI AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
11 May 2007
Status:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
JOHANNES DE WET NEL v THE STATE
1.
The Supreme Court of Appeal today upheld an appeal by the appellant
against a sentence of 15 years’ imprisonment. The sentence was
imposed by the Port Elizabeth regional court and upheld by the Eastern
Cape Division of the High Court on one count of robbery with aggravating
circumstances. The appellant armed with a firearm, robbed the Lorraine
Entertainment Centre Casino in Port Elizabeth, where he was a regular
gambler, of an amount of R32 595.
2.
In imposing the sentence of 15 years the regional court found that the
appellant’s pathological gambling addiction coupled with other factors did
not amount to substantial and compelling circumstances within the
contemplation of the minimum sentencing legislation. The Supreme
Court of Appeal found that the regional court had erred in interpreting the
minimum legislation as it did and concluding that there were no
substantial and compelling circumstances. The Supreme Court of Appeal
found that the appellant’s pathological gambling coupled with other
factors amounted to substantial and compelling circumstances which
justified a sentence of less than the 15 years’ imposed. The Supreme
Court of Appeal set aside the sentence of 15 years’ imprisonment and
replaced it with a sentence of 10 years’ imprisonment.
|
4014
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 598/2021
In the matter between:
ALAN LOUIS N O
FIRST APPELLANT
BRIAN WILLIAM LOUIS N O
SECOND APPELLANT
LOUIS JACOBS CLOETE N O
THIRD APPELLANT
and
NEIL MILLER FENWICK N O
FIRST RESPONDENT
LOUIS GROUP SA (PTY) LTD
(in business rescue)
SECOND RESPONDENT
COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION
THIRD RESPONDENT
DOLE SOUTH AFRICA (PTY) LTD
FOURTH RESPONDENT
SAAD FUND MANAGEMENT (PTY) LTD
FIFTH RESPONDENT
THE TRUSTEES FOR THE TIME BEING
OF THE LGCF TRUST
SIXTH RESPONDENT
D J C DE WITT
SEVENTH RESPONDENT
THE STANDARD BANK OF SOUTH
AFRICA LIMITED
EIGHTH RESPONDENT
UKUSOLA TRADING & INVESTMENTS
(PTY) LTD
NINTH RESPONDENT
A C NEETHLING
TENTH RESPONDENT
Neutral Citation:
Louis N O and Others v Fenwick N O and Others (598/2021)
[2023] ZASCA 59 (28 April 2023)
Coram:
VAN DER MERWE, PLASKET and HUGHES JJA and BASSON and
SIWENDU AJJA
Heard:
Disposed of without oral argument in terms of s 19(a) of the Superior Courts
Act 10 of 2013
Delivered:
28 April 2023
Summary:
Company law – business rescue – binding offer in terms of s 153(1)(b)(ii)
of the Companies Act 71 of 2008 rejected – consequences of – interpretation of s
153(4) – only applicable when binding offer is accepted.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Steyn J sitting
as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Van der Merwe JA and Basson AJA (Plasket and Hughes JJA and Siwendu AJA
concurring)
[1] The parties to this appeal agreed, in terms of Rule 8(8) of the Rules of this
Court, that the matter is likely to hinge exclusively on a point of law. This is whether,
in business rescue proceedings, s 153(4) of the Companies Act 71 of 2008 (the Act)
is to be applied after a binding offer made in terms of s 153(1)(b)(ii) of the Act has
been rejected. More particularly, the issue is whether business rescue proceedings
terminate when a binding offer to purchase the voting interests of the person or
persons who opposed the adoption of a business rescue plan, is rejected or whether
the affected person who made the offer has further remedies in terms of s 153(4) of
the Act. We shall revert to the facts after setting out the relevant provisions of the Act.
Statutory framework
[2] Section 151 of the Act requires a business rescue practitioner to convene and
preside over a meeting of creditors and holders of other voting interests within ten
days after the publishing of a business rescue plan, for the purpose of considering the
plan. Section 152 regulates the procedure to be followed in considering the plan. If it
is supported by the holders of more than 75 per cent of the creditors’ voting interests,
and at least 50 per cent of the independent creditors’ voting interests (that were voted),
the business rescue plan will be considered as approved on a preliminary basis as
contemplated by s 152(2). Section 152(3)(a) provides that if a proposed business
rescue plan is not approved on a preliminary basis, the plan is rejected and may be
considered further only in terms of s 153 of the Act. It is not necessary for purposes of
this matter to consider the rights of holders of securities in this regard.
[3] Section 153 is headed ‘Failure to adopt business rescue plan’. The subsections
of relevance to this appeal read as follows:
‘(1)(a) If a business rescue plan has been rejected as contemplated in section 152(3)(a) or
(c)(ii)(bb) the practitioner may –
(i) seek a vote of approval from the holders of voting interests to prepare and publish
a revised plan; or
(ii) advise the meeting that the company will apply to a court to set aside the result of
the vote by the holders of voting interests or shareholders, as the case may be, on the
grounds that it was inappropriate.
(b) If the practitioner does not take any action contemplated in paragraph (a) –
(i) any affected person present at the meeting may –
(aa) call for a vote of approval from the holders of voting interests requiring the
practitioner to prepare and publish a revised plan; or
(bb) apply to the court to set aside the result of the vote by the holders of voting
interests or shareholders, as the case may be, on the grounds that it was
inappropriate; or
(ii) any affected person, or combination of affected persons, may make a binding offer
to purchase the voting interests of one or more persons who opposed adoption of the
business rescue plan, at a value independently and expertly determined, on the
request of the practitioner, to be a fair and reasonable estimate of the return to that
person, or those persons, if the company were to be liquidated.
. . .
(4) If an affected person makes an offer contemplated in subsection (1) (b) (ii), the practitioner
must –
(a) adjourn the meeting for no more than five business days, as necessary to afford the
practitioner an opportunity to make any necessary revisions to the business rescue plan to
appropriately reflect the results of the offer; and
(b) set a date for resumption of the meeting, without further notice, at which the provisions of
section 152 and this section will apply afresh.’
[4] Thus, once the business rescue plan is rejected, the business rescue
practitioner may, in terms of s 153(1)(a), either seek approval, from the holders of
voting interests, to prepare a revised plan, or apply to the court for an order setting
aside the result of the vote on the grounds that it was inappropriate.1 If the business
rescue practitioner fails to do so, or decides not to exercise any of these options, this
section provides an affected person with three alternative courses of action. The first
is to seek a vote of approval to prepare and publish a revised plan.2 The second is an
application to set aside the result of the vote as inappropriate3 and the third is to offer
to acquire, by means of a ‘binding offer’, the voting interests of any persons who
opposed the adoption of the plan.4 The first and second options are only available to
an affected person that is present at the meeting. The third is available to any affected
person or combination of affected persons. Once such a binding offer has been made,
according to the text of s 153(4), the business rescue practitioner must adjourn the
meeting for no more than five business days to afford the practitioner an opportunity
to make any necessary revisions to the plan to reflect ‘the results of the offer’5 and set
a date for the resumption of the meeting at which the provisions of s 152 would apply
afresh.6 As we have said, the proper interpretation of s 153(4) lies at the heart of the
appeal.
Background facts
[5] The appellants are the trustees for the time being of the Alan Louis Trust (the
Trust). The second respondent, Louis Group SA (Pty) Ltd (the company), was placed
under supervision on 26 February 2013, when business rescue commenced. At a
meeting held on 14 February 2020 the first respondent, the business rescue
practitioner,7 placed a business rescue plan (the original plan) to a vote to the creditors
of the company in terms of s 151 of the Act. The plan was rejected by the creditors
(the first vote).
[6] After the first vote, the business rescue practitioner informed the meeting that
he did not intend to proceed in terms of s 153(1)(a) of the Act. The first appellant
informed the meeting that the Trust would exercise its rights in terms of s 153(1)(b)(ii)
1 See s 153(1)(a)(i) or (ii).
2 Section 153(1)(b)(i)(aa).
3 Section 153(1)(b)(i)(bb).
4 Section 153(1)(b)(iii).
5 Section 153(4)(a).
6 Section 153(4)(b).
7 Mr Trevor Phillips was initially appointed as the business rescue practitioner of the second respondent.
Therefore, he was cited as the first respondent in the high court. Upon his passing, a notice of
substitution was filed substituting him with Mr Neil Miller Fenwick as the duly appointed business rescue
practitioner of the second respondent.
to make binding offers to purchase the voting interests held by two of the creditors of
the company, namely the fourth and fifth respondents (eventually the Trust made such
offers to all the creditors of the company). The Trust also reserved its right to apply to
court to have the first vote set aside as inappropriate in terms of s 153(1)(b)(i)(bb) of
the Act. The meeting was adjourned, to allow the Trust’s offers to the creditors to be
independently and expertly determined as contemplated by 153(1)(b)(ii) of the Act.
[7] These binding offers were thereafter made but were rejected by all the
creditors. At a reconvened meeting held on 10 March 2020, the practitioner informed
the meeting that, in light of the rejection of the binding offers, the adjourned meeting
was closed and declared his intention to apply for the conversion of the business
rescue proceedings into winding-up proceedings. The appellants objected and
insisted that the business rescue practitioner was required, once the binding offers
were rejected, to proceed in terms of s 153(4). The practitioner disagreed, adopting
the stance that s 153(4) does not contemplate a further meeting once the binding offer
has been rejected and that s 153(4) only caters for the scenario where a binding offer
has been accepted.
[8] It was against this background that the appellants launched an urgent
application in the Western Cape Division of the High Court, Cape Town (the high court)
for an order: setting aside as irregular the decision of the practitioner to close the
reconvened meeting on 10 March 2020; directing the practitioner to set a date for the
resumption of the meeting; and directing the practitioner to apply the provisions of ss
152 and 153 at the resumed meeting. The high court agreed with the respondents that
s 153(4)(b) only caters for the scenario where a binding offer has been accepted. As
a result, it dismissed the application. This appeal is with leave of the high court. Only
the company and the practitioner (collectively the respondents) opposed the appeal.
However, they agreed with the appellants that the matter be disposed of without oral
argument, in terms of s 19(a) of the Superior Courts Act 10 of 2013.
The interpretation of s 153(4) of the Act
[9] This Court is required to interpret s 153(4) in accordance with the principles
relating to statutory interpretation that have been articulated in a long line of cases,
notably in Natal Joint Municipal Pension Fund v Endumeni Municipality, where this
Court held:
‘The present state of the law can be expressed as follows. Interpretation is the process of
attributing meaning to the words used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by reading the particular
provision or provisions in the light of the document as a whole and the circumstances attendant
upon its coming into existence. Whatever the nature of the document, consideration must be
given to the language used in the light of the ordinary rules of grammar and syntax; the context
in which the provision appears; the apparent purpose to which it is directed and the material
known to those responsible for its production . . . The process is objective not subjective. A
sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results
or undermines the apparent purpose of the document . . . The “inevitable point of departure is
the language of the provision itself”, read in context and having regard to the purpose of the
provision and the background to the preparation and production of the document.’8
Fundamental to the process of interpretation, apart from the words used in the statute,
are the context and purpose of the provision under consideration. An interpretation
that leads to unbusinesslike results or undermines the apparent purpose of the statute
should be avoided.9
[10] Returning to the statute under consideration, the provisions relating to business
rescue in general, and in particular those contained in s 153, have been subjected to
criticism from this Court. In African Banking Corporation of Botswana v Kariba
Furniture Manufacturers and Others, this Court stated:
‘I do not believe it is unfair to comment that many of the provisions of the Act relating to
business rescue, and s 153 in particular, were shoddily drafted and have given rise to
considerable uncertainty. Questions which immediately spring to mind in regard to the
procedure envisaged by s 153(1)(b)(ii), and to which no answers are clearly expressed in the
Act, include (this list is not intended to be all-embracing) . . . the effect of an offer being
rejected. . .’.10 (Our emphasis.)
8 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA); [2012] 2 All SA 262 (SCA) para 18; See also Kubyana v Standard Bank of South Africa Ltd
[2014] ZACC 1; 2014 (3) SA 56 (CC); 2014 (4) BCLR 400 (CC) paras 77 & 78.
9 Ibid paras 25-26.
10 African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd and
Others [2015] ZASCA 69; 2015 (5) SA 192 (SCA); [2015] 3 All SA 10 (SCA) para 43. This sentiment
was echoed in a later judgment of this Court in FirstRand Bank Ltd v KJ Foods CC (In business rescue)
[2017] ZASCA 50; [2017] 3 All SA 1 (SCA); 2017 (5) SA 40 (SCA) (FirstRand Bank Ltd) para 74.
[11] This criticism is particularly applicable to the provisions of s 153(4). The literal
meaning of s 153(4) is clear. It says that if an affected person makes an offer, the
practitioner must act as prescribed in ss 153(4)(a) and (b). However, the parties rightly
accept that s 153(4) could not possibly bear its literal meaning. It is trite that a court
may depart from the clear and unambiguous meaning of a statutory provision to avoid
an absurdity.11 The mere making of an offer in terms of s 153(1)(b)(ii) could not have
been intended to trigger the conjunctive steps mentioned in ss 153(4)(a) and (b). And
the offer itself could have no ‘results’: that could only flow from a decision on the offer.
The appellants also recognise that a further vote on a rejected plan would make no
sense. The interpretative solution that the appellants propose amounts to this.
Irrespective of whether the offer is accepted or rejected, the practitioner must proceed
in terms of ss 153(4)(a) and (b). This brings only s 152(3)(a) into play. Its provisions –
that if a business rescue plan is not approved on a preliminary basis as contemplated
in s 152(2), the plan is rejected and may be considered further only in terms of s 153
– must be interpreted to provide the relevant affected person with a further right to call
for the approval a revised plan in terms of s153(1)(b)(i)(aa) at a resumed meeting or
to apply for the setting aside of the original vote under s 153(1)(b)(i)(bb). In contrast,
the respondents submit that on a proper construction, a fresh application of s 153 can
only arise where the binding offer is accepted, resulting in an alteration of the voting
rights, which would necessitate a second round of voting on a revised plan in terms of
s 152 of the Act.
[12] It is not in dispute that the voting interest of a creditor will be altered where a
binding offer has been accepted, as the voting interest of the creditor who accepts the
binding offer and sells their voting interests to the offeror will fall away. The creditor’s
voting interest, as explained by the court in DH Brothers Industries (Pty) Ltd v Gribnitz
NO and Others,12 ‘. . . are transferred on payment of the determined sum. Once this
has taken place, the voting interests are settled and the vote on the plan can take
place’. Conversely, a creditor who has purchased the voting interests of another will
hold an increased voting interest. This alteration in the voting interests of the creditor
sensibly and logically necessitates the resumption of the meeting at which the
11 Hanekom v Builders Market Klerksdorp (Pty) Ltd and Others [2006] ZASCA 2; 2007 (3) SA 95 (SCA)
para 7.
12 DH Brothers Industries (Pty) Ltd v Gribnitz NO and Others [2014] 1 All SA 173 (KZP); 2014 (1) SA
103 (KZP) para 60.
provisions of ss 152 and 153 will apply afresh to allow for a second vote to take place.
Should the second vote be successful, the revised plan will be adopted. If the revised
plan is again rejected, s 153 will again apply and the options referred to herein above
will once again become available to the business rescue practitioner and to any
affected person, should the practitioner decide not to take any action as contemplated
in s 153(1)(a). It is also not in dispute that where a binding offer has been rejected, the
voting interests remain unaffected.
[13] The interpretation of the respondents thus makes good sense. The construction
favoured by the appellants, on the other hand, would lead to an absurd result. After
the rejection of a binding offer, on the appellants’ interpretation, the relevant affected
person would again have the right to call for the approval of a revised plan or to apply
to the court to set aside the original vote, even though nothing has changed. This
would be manifestly absurd.
[14] This conclusion accords with the broader purpose of business rescue
proceedings, which is ‘. . . geared at providing a window of opportunity to restore an
ailing company to financial health and functionality’.13 Business rescue, as stated by
this Court in Diener NO v Minister of Justice and Others,14 ‘is not an open-ended
process. Its very rationale is that it must end, either when its aim has been attained or
when the realisation arises that rescue is not attainable’. It follows that once a
business rescue plan is accepted, it will be implemented by the business rescue
practitioner on the terms stipulated therein. But once a business rescue plan has been
put to a vote and rejected as contemplated in s 152 of the Act and, the parties have
unsuccessfully exhausted their remedies as provided for in s 153(1)(b), business
rescue must come to an end.
[15] In sum, it could not have been the legislature’s intention that a party whose
voting interests remains unaltered as a result of the rejection of a binding offer, would
be entitled to a further opportunity to exercise one of the alternatives provided for in s
153(1)(b)(i)of the Act. The interpretation contended for by the appellants simply does
not amount to a sensible and business-like interpretation of s 153(4) and would cause,
13 Ibid para 27.
14 Diener N O v Minister of Justice and Others (Diener) [2017] ZASCA 180; 2018 (2) SA 399 (SCA);
[2018] 1 All SA 317 (SCA) para 28.
as pointed out by this Court in Firstrand Bank Ltd v KJ Foods CC (in business
rescue),15 a ‘never- ending loop’. For these reasons we conclude that s 153(4) of the
Act only finds application when a binding offer in terms of s 153(1)(b)(ii) is accepted.
[16] The appeal is dismissed with costs, including the costs of two counsel.
_________________________
C H G VAN DER MERWE
JUDGE OF APPEAL
_________________________
A C BASSON
ACTING JUDGE OF APPEAL
15 Firstrand Bank Ltd fn 10 para 88.
Appearances
For the appellants:
R M van Rooyen
Instructed by:
Strauss Daly, Umhlanga
EG Cooper Majiedt Inc, Bloemfontein
For the first and second respondents:
G W Woodland SC and C Morgan
Instructed by:
Bowman Gilfillan Inc, Cape Town
Matsepes Inc, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 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
Louis N O and Others v Fenwick N O and Others (598/2021) [2023] ZASCA 59 (28 April 2023)
Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs including costs of two
counsel.
The issue before the SCA was whether in business rescue proceedings, s 153(4) of the Companies Act
71 of 2008 (the Act) is to be applied after a binding offer made in terms of s 153(1)(b)(ii) of the Act has
been rejected. More particularly, whether business rescue proceedings terminate when a binding offer
to purchase the voting interests of the person(s) who opposed the adoption of a business rescue plan
is rejected, or whether the affected person(s) who made the offer has further remedies in terms of s
153(4) of the Act.
The appellants are the trustees for the time being of the Alan Louis Trust (the Trust). The second
respondent, Louis Group SA (Pty) Ltd (the company), was placed under supervision on 26 February
2013 when business rescue commenced. At a meeting held on 14 February 2020 the first respondent
(the business rescue practitioner), placed a business rescue plan (the original plan) to a vote to the
creditors of the company in terms of s 151 of the Act. The plan was rejected by the creditors (the first
vote).
After the first vote, the business rescue practitioner informed the meeting that he did not intend to
proceed in terms of s 153(1)(a) of the Act. The first appellant informed the meeting that the Trust would
exercise its rights in terms of s 153(1)(b)(ii) to make binding offers to purchase the voting interests held
by two of the creditors of the company, namely the fourth and fifth respondents (eventually the Trust
made such offers to all the creditors of the company). The Trust also reserved its right to apply to court
to have the first vote set aside as inappropriate in terms of s 153(1)(b)(i)(bb) of the Act. The meeting
was adjourned in terms of s 153(4), to allow the Trust’s offers to the creditors to be independently and
expertly determined as contemplated by 153(1)(b)(ii) of the Act. These binding offers were thereafter
made but were rejected by all the creditors. At a reconvened meeting held on 10 March 2020, the
practitioner informed the meeting that, in light of the rejection of the binding offers, the adjourned
meeting was closed and declared his intention to apply for the conversion of the business rescue
proceedings into winding-up proceedings. The appellants objected and insisted that the business
rescue practitioner was required, once the binding offers were rejected, to proceed in terms of s 153(4).
The practitioner disagreed, adopting the stance that s 153(4) does not contemplate a further meeting
once the binding offer has been rejected and that s 153(4) only caters for the scenario where a binding
offer has been accepted.
It was against this background that the appellants launched an urgent application in the Western Cape
Division of the High Court, Cape Town (the high court) for an order: setting aside as irregular the
decision of the practitioner to close the reconvened meeting on 10 March 2020; directing the practitioner
to set a date for the resumption of the meeting; and directing the practitioner to apply the provisions of
ss 152 and 153 at the resumed meeting. The high court agreed with the respondents that s 153(4)(b)
only caters for the scenario where a binding offer has been accepted. As a result, the high court
dismissed the application.
The SCA, in coming to a conclusion, held that the literal meaning of s 153(4) is clear in that it says that
if an affected person makes an offer, the practitioner must act as prescribed in ss 153(4)(a) and (b). It
further held that it is trite that a court may depart from the clear and unambiguous meaning of a statutory
provision to avoid an absurdity and that the mere making of an offer in terms of s 153(1)(b)(ii) could not
have been intended to trigger the conjunctive steps mentioned in ss 153(4)(a) and (b).
Lastly, the SCA went further to state that it could not have been the legislature’s intention that a party
whose voting interests remains unaltered as a result of the rejection of a binding offer, would be entitled
to a further opportunity to exercise one of the alternatives provided for in s 153(1)(b)(i) of the Act, holding
that the interpretation contended for by the appellants simply does not amount to a sensible and
business-like interpretation of s 153(4) of the Act.
In the result, the SCA held that s 153(4) of the Act only finds application when a binding offer in terms
of s 153(1)(b)(ii) is accepted, thus dismissing the appeal with costs including costs of two counsel.
--------oOo--------
|
2657
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case no: 977/2013
In the matter between:
BASIL A HOLFORD APPELLANT
and
CARLEO ENTERPRISES (PTY) LTD FIRST RESPONDENT
LARIMAR GROUP LTD (formerly
PUTCO HOLDINGS LTD) SECOND RESPONDENT
PUTCO LTD THIRD RESPONDENT
P BLIEDEN N.O. FOURTH RESPONDENT
M M JOFFE N.O. FIFTH RESPONDENT
C H J BADENHORST N.O. SIXTH RESPONDENT
Neutral citation:
Holford v Carleo Enterprises (977/2013) [2014] ZASCA 195 (28
November 2014)
Coram:
Maya, Shongwe and Saldulker JJA and Mathopo and
Gorven AJJA
Heard:
4 November 2014
Delivered:
28 November 2014
Summary: Review of award of arbitration appeal panel – whether the appeal
panel exceeded its powers – whether the appeal panel committed a gross
irregularity – application of requirements for review.
___________________________________________________________________________
ORDER
________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Jansen AJ sitting as
court of first instance):
The appeal is upheld with costs, such costs to include the costs of two
counsel where employed.
The order of the North Gauteng High Court is set aside and substituted
with the following order:
„The application is dismissed with costs.‟
JUDGMENT
Gorven AJA (Maya, Shongwe and Saldulker JJA and Mathopo AJA
concurring):
[1] This appeal concerns the approach to be taken in an application which
seeks to review and set aside the decision of an arbitrator. Such an application
was brought before Jansen AJ in the North Gauteng High Court, Pretoria. In
that application, only the limited grounds afforded by s 33(1)(b) of the
Arbitration Act 42 of 1965 applied. This section reads as follows:
„(1) Where-
(b) an arbitration tribunal has committed any gross irregularity in the conduct of the
arbitration proceedings or has exceeded its powers…
the court may, on the application of any party to the reference after due notice to the other
party or parties, make an order setting the award aside.‟
These are narrow grounds for interference in an arbitral award and must be
strictly construed. As was said by O‟Regan ADCJ in Lufuno Mphaphuli and
Associates (Pty) Ltd v Andrews & another:1
„Given the approach not only in the United Kingdom (an open and democratic society within
the contemplation of s 39(2) of our Constitution), but also the international law approach as
evinced in the New York Convention (to which South Africa is a party) and the UNCITRAL
Model Law, it seems to me that the values of our Constitution will not necessarily best be
served by interpreting s 33(1) in a manner that enhances the power of courts to set aside
private arbitration awards. Indeed, the contrary seems to be the case. The international and
comparative law considered in this judgment suggests that courts should be careful not to
undermine the achievement of the goals of private arbitration by enlarging their powers of
scrutiny imprudently. Section 33(1) provides three grounds for setting aside an arbitration
award: misconduct by an arbitrator; gross irregularity in the conduct of the proceedings; and
the fact that an award has been improperly obtained. In my view, and in the light of the
reasoning in the previous paragraphs, the Constitution would require a court to construe these
grounds reasonably strictly in relation to private arbitration.‟
[2] The approach of this court to a review of an arbitration award is settled
and consistent with this dictum. As was succinctly summarised by Harms DP in
Telcordia Technologies Inc v Telkom SA Ltd:2
„By agreeing to arbitration parties to a dispute necessarily agree that the fairness of the
hearing will be determined by the provisions of the Act and nothing else.
. . . .
Last, by agreeing to arbitration the parties limit interference by courts to the ground of
procedural irregularities set out in s 33(1) of the Act. By necessary implication they waive the
right to rely on any further ground of review, “common law” or otherwise.‟
[3] It is as well to set out the procedural history of the matter. The appellant,
who had been in senior management with the third respondent, instituted action
in the South Gauteng High Court, Johannesburg against the first respondent.
1 Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews & another 2009 (4) SA 529 (CC) para 235.
2 Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) paras 50 & 51.
The appellant claimed that he had sustained damages from the breach of an
agreement he had concluded with the first respondent. The pleadings had
closed, further particulars had been sought and supplied by the parties and the
matter had been set down for trial. On the appointed day, there was no judge
available and the parties concluded a written agreement referring the matter to
arbitration. It also contained a provision for an appeal from the decision of the
arbitrator. After hearing evidence, the arbitrator granted absolution from the
instance on the basis that the appellant had failed to prove the agreement on
which he had relied in the pleadings. The appeal tribunal upheld the appeal
against this finding and awarded the appellant damages in the sum of
R3 848 000 along with interest and costs. The first three respondents then
brought an application to review and set aside the award of the appeal tribunal.
The court below granted this relief, set aside the award of the appeal tribunal
and thereafter granted leave to appeal to this court.
[4] The basis of the judgment was that the appeal tribunal had both exceeded
its powers and committed a gross irregularity. It must be said that the judgment,
although long, does not clearly set out the issues in question or employ clear
reasoning in arriving at these conclusions. The crisp issue on appeal is whether
the court below was correct in these findings. The fourth to sixth respondents,
who constituted the appeal tribunal, took no part in the matter, either in the
court below or in this court. For the sake of convenience, I shall refer to the first
three respondents as „the respondents‟.
[5] The respondents relied on a three-pronged attack against the approach of
the appeal tribunal. Two were based on the appeal tribunal having exceeded its
powers and the third was based on its having committed a latent gross
irregularity. The first was to the effect that, because the issues were defined in
the arbitration agreement as being those that arise on the pleadings, the appeal
tribunal, in finding that an agreement which was not pleaded in the particulars
of claim had been concluded, exceeded its powers. The second was that, sitting
as an appeal tribunal, it was bound by factual findings made by the arbitrator
unless it could point to a „demonstrable and material misdirection on fact‟ by
the arbitrator. In disregarding the factual finding to the effect that no oral
agreement was concluded, without doing so, the appeal tribunal therefore
exceeded its powers. The third was that the appeal tribunal failed to properly
deal with a non-disclosure by the appellant in s 311 proceedings, failed to
analyse correspondence between August and November 2002 and, finally,
failed to deal with the need of the appellant to replicate and prove that increased
earnings which he would otherwise not have received should not be taken into
account to reduce any damages he may have sustained as a result of the breach.
In the result, it was submitted that the appeal tribunal arrived at findings which
no reasonable arbitrator could have come to and thus committed a latent gross
irregularity.
[6] The appellant‟s claim was for damages alleged to have been sustained as
a consequence of the breach of an agreement whereby he would acquire
3 percent of the shares in the second respondent when it was constituted as an
empowerment company. The agreement was pleaded as follows in the
particulars of claim:
„4.1
During or about the period June 2002 until June 2005 and at or near Sandton, the
plaintiff, acting personally, and the first defendant . . . concluded an oral agreement, the
material express, alternatively tacit, further alternatively implied terms of which were as
follows:
4.1.1 the shareholding in the third defendant, alternatively in a new entity to be formed,
would be structured so as to provide for the participation of:
4.1.1.1 various black economic empowerment role players;
4.1.1.2 the senior management of the third defendant including the plaintiff;
4.1.1.3 the first defendant;
4.1.1.4 and certain of the employees of the third defendant;
4.1.2 the plaintiff would receive 3% of the issued share capital in the third defendant or the
new entity so formed;
4.1.3 the plaintiff would be required to pay par value for the plaintiff‟s shares;
4.1.4 the first defendant, as the majority shareholder, alternatively as the sole shareholder in
the third defendant, was obliged to ensure that the plaintiff obtained the plaintiff‟s shares in
the third defendant or the new entity, as the case may be;
4.1.5 the plaintiff would be obliged to sell the plaintiff‟s shares in such new entity or the
third defendant, upon his retirement from the third defendant or the new entity, as the case
might be, subject to the pre-emptive rights of the remaining shareholders;
4.1.6 the price for the sale of those shares would be a market related priced between willing
buyer and willing seller.‟
As I have mentioned, the respondents requested further particulars for trial. In
his reply, the appellant set out in detail a series of events, with reference to
documents, stretching from 2002 to 2005 which, he said, supported the
averment of the pleaded agreement having been concluded during this period.
[7] The first of the two submissions that the appeal panel exceeded its powers
is to the following effect. The respondents contended that the arbitrator was
limited to the agreement pleaded in the particulars of claim. They submitted that
the appeal tribunal impermissibly broadened the pleadings by reference to the
further particulars. In this regard, paragraph 8 of the reference to arbitration
provides that the dispute referred to arbitration „shall be as defined by the
pleadings in the action.‟ There is clear law that pleadings exclude further
particulars.3 If nothing further had been said, the matter would have fallen
squarely within the dictum in Hos+Med Medical Aid Scheme v Thebe Ya
Bophelo Healthcare Marketing & Consulting (Pty) Ltd & others,4 where Lewis
JA held as follows:
3 Ruslyn Mining & Plant Hire (Pty) Ltd v Alexkor Ltd [2012] 1 All SA 317 (SCA) para 18.
4 Hos+Med Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing & Consulting (Pty) Ltd & others
2008 (2) SA 608 (SCA) para 30.
„In my view it is clear that the only source of an arbitrator's power is the arbitration
agreement between the parties and an arbitrator cannot stray beyond their submission where
the parties have expressly defined and limited the issues, as the parties have done in this case
to the matters pleaded. Thus the arbitrator, and therefore also the appeal tribunal, had no
jurisdiction to decide a matter not pleaded.‟
Where the pleadings in that matter defined the issues to be decided, it was held
not permissible to broaden the pleadings as could a court along the lines set out
in Shill v Milner.5 In order to be broadened, the pleadings would have to be
amended.6
[8] The underlying rationale for the dictum in Hos+Med is found in the
reference to the source of an arbitrator‟s powers. In an arbitration, the autonomy
of the parties is paramount.7 In Lufuno, O‟Regan ADCJ held that:
„Parties are entitled to determine what matters are to be arbitrated, the identity of the
arbitrator, the process to be followed in the arbitration, whether there will be an appeal to an
arbitral appeal body and other similar matters.‟8
The powers of an arbitrator therefore derive from the arbitration agreement. In
the present matter, it is accordingly necessary to construe the arbitration
agreement to determine the ambit of the powers accorded to the arbitrator. In
particular, it must be determined whether the powers of the arbitrator included
the power to determine issues not arising strictly on the pleadings but which, as
would be the case with a high court judge, had been broadened by the
appropriate ventilation of issues in accordance with the principles set out in
Shill v Milner.
[9] Paragraph 21 of the arbitration agreement reads as follows:
5 Shill v Milner 1937 AD 101 at 105. This decision referred with approval to the earlier decisions to similar
effect in Robinson v Randfontein Estates GM Co Ltd 1925 AD 173 at 198 and Wynberg Municipality v Dreyer
1920 AD 439 at 443.
6 Hos+Med para 31, 32.
7 Telcordia para 4.
8 Paragraph 219.
„The arbitrator shall have such powers as are allowed by law to a High Court of the Republic
of South Africa to ensure the just, expeditious, economical and final determination of the
dispute and shall have all of the powers afforded to a judge of the High Court of South Africa
in terms of the Uniform Rules read with the provisions of the Arbitration Act.‟
In the context of how it came about that the matter was referred to arbitration
and an overall reading of the agreement, it is clear that the object of the parties
was to have the arbitrator determine the matter on the same footing as would a
judge have done had one been available in court that morning. Paragraph 21 is
entirely consistent with, and clearly gives effect to, that object. It clothed the
arbitrator with powers which placed her or him in the same position as a high
court judge dealing with a matter in the high court. As was put to counsel during
the hearing before us, a construction of the arbitration agreement as a whole,
and that paragraph in particular, indicates that what the parties intended was
simply a change of venue and presiding officer and nothing more. Since a court
would have been entitled to apply the principles set out in Shill v Milner, the
arbitrator was also entitled to do so. Accordingly, the arbitrator was entitled to
allow the issues on the pleadings to be broadened by proper ventilation where
no prejudice ensued to either party as a result.
[10] The broadening of the issues in line with the further particulars was
foreshadowed in the appellant‟s opening address. No objection was raised to
this approach by the respondents at the time or at any time thereafter. The
respondents at no stage contended that they had suffered prejudice as a result of
the broadening of the issues. The respondents did not contend that the issues
were not fully and properly ventilated. In the result, it cannot be held that the
appeal tribunal exceeded its powers in finding that an agreement, not fully
pleaded in the particulars of claim, had been concluded.
[11] The second respect in which the respondents submitted that the appeal
tribunal exceeded its powers was in its treatment of findings of fact on the part
of the arbitrator. It was submitted that the appeal tribunal was only entitled to
interfere with factual findings if there was a „demonstrable and material
misdirection on fact‟ by the tribunal of first instance.9 The respondents
contended that the appeal tribunal interfered with factual findings of the
arbitrator without referring to any such misdirections. Special reliance was
placed on what was said to be the factual finding that no oral agreement as
pleaded had been proved.
[12] In this regard, the crucial part of the award concerns whether agreement
had been reached to contract on a certain basis while agreeing to leave
outstanding matters to future negotiation or whether the parties contemplated
that consensus on the outstanding issues would have to be reached before a
binding agreement came into existence.10 The arbitrator found that the latter
position applied saying „[i]t is quite apparent from the earlier correspondence
that the parties regarded the manner and circumstances in which the members
and management would dispose of their shares as an important feature of their
proposed acquisition of the shares‟. He further held that it was „inconceivable
that the parties could have intended to conclude an agreement entitling the
members of senior management to acquire shares in the proposed company
without reaching agreement upon the terms upon which they would acquire,
hold and dispose of such shares‟. He held, specifically, with reference to the
documents and the evidence of the appellant, that the parties, far from reaching
agreement on certain terms and leaving others open for negotiation, „intended
that there must be agreement at the very least on the terms upon which the
9 The submission was couched in these terms, relying on Fourie v Firstrand Bank Ltd 2013 (1) SA 204 (SCA)
para 14 and other cases.
10 GCEE Alsthom Equipments et Enterprises Electriques, South African Division v GKN Sankey (Pty) Ltd
1987 (1) SA 81 (A) at 92A-F.
members of senior management could acquire, hold and dispose of the shares,
before a binding contract came into existence.‟ Since, he said, no such
agreement was ever reached, no agreement came into existence.
[13] The appeal tribunal found that the appellant and three other senior
managers accepted an offer communicated to them by way of a letter dated
2 August 2002. This letter communicated a resolution taken by the first
respondent on 31 July 2002 that „subject to shareholders approval [it would] sell
its Putco shares at not less than R4,00 each to a new limited company not listed
to be formed under conditions detailed hereunder . . . .‟ The conditions were,
inter alia, that the shares of ten cents each would be allocated as to 17.5 percent
to „Senior Management comprised of 7 individuals to be nominated at 2.5%
each‟ and that those shareholders wishing to sell must first offer the shares to
other existing shareholders. The tribunal disagreed with the finding of the
arbitrator that the letter of 2 August 2002 was not an offer made with the
intention to contract and that no agreement had been concluded. It found that an
agreement that the appellant would obtain a 3 percent shareholding in the
„restructured and empowered entity runs like a golden thread through all the
significant documents . . . They straddle the various empowerment models –
commencing with the MCI deal, SAFIKA and finally the successful one in
terms of which Putco‟s management and staff would be owning 43% of the
company‟.
[14] It is so that the appeal tribunal was limited to the powers of an appeal
court. In general terms, an appeal court is bound by factual findings of a trial
court. However, various factors militate against an inflexible approach in this
respect. In President of the Republic of South Africa v South African Rugby
Football Union,11 this issue was ventilated and the following principles
emerged:
a)
A distinction must be drawn between the „subjective manner in which a
witness testifies orally, as opposed to the objective content of the evidence so
given.‟12
b)
If a finding is based on the demeanour of the witness (the subjective
manner mentioned above), this is a „tricky horse to ride‟13 and not determinative
without regard to other factors, including the probabilities.14
c)
There may be a misdirection of fact by the trial judge where his or her
reasons are unsatisfactory or the record shows that he or she overlooked other
facts or probabilities.15
[15] In the first instance, the appeal tribunal found the arbitrator‟s answer to a
key question demonstrably wrong where he held that the letter of 2 August 2002
was „simply a notification to senior management of a resolution‟ taken by the
company. This flies in the face of direct, unchallenged and uncontradicted
evidence of the appellant that, when the letter was given to the senior
management at a meeting by Mr Carleo, the senior management indicated that
they accepted the offer contained in that letter. There was no evidence that,
when they did so, Mr Carleo demurred on the basis that what they purported to
accept was not an offer made with the requisite intention to contract.
[16] In addition, the finding of the arbitrator that there was only a series of
proposals without any firm agreement flies in the face of the acceptance of the
proposal of senior management dated 21 October 2002 by the resolution of
11 President of the Republic of South Africa v South African Rugby Football Union & others 2000 (1) SA 1
(CC).
12 Paragraph 77.
13 Paragraph 78, quoting S v Kelley 1980 (3) SA 301 (A) at 308B-D.
14 Paragraph 79.
15 Paragraph 80, quoting R v Dhlumayo & another 1948 (2) SA 677 (A) at 706.
11 November 2002 of the Board of the first respondent. This proposal allocated
3 percent of the shareholding to 4 members of the executive management group,
including the appellant, and 2 percent of the shareholding to 3 members of the
executive management group. It also dealt with other material aspects, including
how any sale of the shareholding to be thus acquired would take place. The
Board resolved „[t]hat the letter of the Putco Senior Management with regard to
the Empowerment Project dated 21 October 2002, be approved in its entirety.‟ It
cannot be communicated more clearly that this was intended to give rise to an
enforceable agreement.
[17] In the third place, the arbitrator himself indicated that his findings were
based on an analysis of the documents and not on the subjective way in which
the witnesses testified. He held that, „[i]n my view, the issue of whether or not a
contract was concluded can be decided based upon the contents of these
documents and the evidence of the plaintiff.‟ In such circumstances, the appeal
tribunal was in as good a position as was the arbitrator and it was not necessary
to find that he had committed a material misdirection before it could draw its
own conclusions.
[18] The net result of these three factors is that it was not shown that the
appeal tribunal was not entitled to interfere with the factual findings of the
arbitrator and, accordingly, it was not shown that the tribunal had exceeded its
powers in this respect. As Harms DP explained:
„[I]t is a fallacy to label a wrong interpretation of a contract, a wrong perception or
application of South African law, or an incorrect reliance on inadmissible evidence by the
arbitrator as a transgression of the limits of his power. The power given to the arbitrator was
to interpret the agreement, rightly or wrongly; to determine the applicable law, rightly or
wrongly; and to determine what evidence was admissible, rightly or wrongly.‟16
16 Telcordia para 86.
The second ground of attack was therefore without merit and should have been
rejected by the court below.
[19] As regards the question of a latent gross irregularity, the respondents
submitted that the appeal tribunal misconceived the nature of its enquiry. It also
failed to deal properly with the omission of the appellant, in the s 311
proceedings, to mention the existence of the agreement. In essence, they
submitted and the court below found, that the findings of the appeal tribunal
were incorrect in so many respects that the only reasonable inference to draw
was that it had committed a latent gross irregularity. The court below held that
the factual and legal findings of the appeal tribunal were „erroneous in a number
respects.‟ It went on to hold that:
„[G]iven all the factual and legal errors made by the Appeal Panel which the applicants
highlighted in argument - cannot it be said that the Appeal Panel misconstrued the entire
nature of the enquiry and did not fully understand the reasoning of the arbitrator? Can it not
be said that the cumulative effect of errors is so drastic that the Appeal Panel‟s award falls
foul of the provisions of section 33 of the Arbitration Act relied upon by the applicants?‟
[20] The starting point in determining whether a gross irregularity has been
committed is set out in Ellis v Morgan17 where Mason J laid down the basic
principle:
'But an irregularity in proceedings does not mean an incorrect judgment; it refers not to the
result, but to the methods of a trial, such as, for example, some high-handed or mistaken
action which has prevented the aggrieved party from having his case fully and fairly
determined.'
The real question concerning a gross irregularity is to determine whether there
was a flaw in the conduct of the proceedings rather than only a flaw in the
reasoning of the appeal tribunal.18
17 Ellis v Morgan; Ellis v Desai 1909 TS 576 at 581.
18 Sidumo & another v Rustenberg Platinum Mines Ltd & others 2008 (2) SA 24 (CC) para 264.
[21] The respondents contended for a latent gross irregularity. As has been
said by this court:19
„For a defect in the conduct of the proceedings to amount to a gross irregularity as
contemplated by s 145(2)(a)(ii), the arbitrator must have misconceived the nature of the
inquiry or arrived at an unreasonable result. A result will only be unreasonable if it is one that
a reasonable arbitrator could not reach on all the material that was before the arbitrator.
Material errors of fact, as well as the weight and relevance to be attached to particular facts,
are not in and of themselves sufficient for an award to be set aside, but are only of any
consequence if their effect is to render the outcome unreasonable.‟
[22] The respondent relied mainly on the appeal tribunal having ignored the
probabilities concerning the section 311 proceedings and its failure to analyse
correspondence between August and November 2002. In addition, it was
submitted that, since the respondents had pleaded that the appellant had
benefitted from an improved package as a result of the alleged breach, he was
obliged to replicate facts by which the additional income said to arise from the
breach should not be applied in reduction of his damages. Because he had not
done so, it was submitted, the appeal tribunal committed a latent gross
irregularity in awarding him the damages which it did.
[23] It was correctly submitted that a latent gross irregularity involves the
„failure by the arbitrator to take into account a material fact‟ and „includes the
converse situation of taking into account a materially irrelevant fact.‟20
Otherwise, the decision must be „substantively unreasonable in the sense that no
reasonable commissioner, acting reasonably, could have reached the decision on
the evidence and the inferences drawn from it.‟21
19 Herholdt v Nedbank Ltd (COSATU as amicus curiae) 2013 (6) SA 224 (SCA) para 25. The notion of a latent
irregularity was first introduced by Schreiner J in Goldfields Investment Ltd v City Council of
Johannesburg 1938 TPD 551.
20 Herholdt para 16.
21 Herholdt para 26, quoting the court below in that matter.
[24] The approach to the section 311 proceedings does not meet that test. The
appeal tribunal, having expressed disquiet at the appellant‟s conduct, quite
correctly held that the failure of the appellant to mention the agreement in those
proceedings did not impact on the veracity of his uncontested and unchallenged
evidence that the senior management had accepted the proposal of 2 August
2002 or on the objective evidence in terms of which the company, in its
resolution of 11 November 2002, accepted the proposal of senior management
of 31 October 2002. As regards the analysis of the correspondence, this was
specifically referred to by the appeal tribunal in its award, albeit in summarised
form containing a reference to the relevant documents in a footnote. The
analysis of the correspondence gave rise to the conclusion of the panel of the
„golden thread‟ referred to in its award. The appeal tribunal also dealt with the
point taken by the respondent that the appellant had received funds which he
would not have received but for the breach. It held that factually he did not
become a party to the third respondent‟s executive compensation scheme. Any
additional income was derived from and incentive scheme. The funds received
therefore did not result from the breach. None of these amounted to a failure to
take into account a material fact or its converse.
[25] In addition, taken as a whole, the appeal tribunal‟s decision cannot be
said to have been substantively unreasonable. It cannot be said that no
arbitrator, acting reasonably, could have reached the decision reached by the
appeal tribunal. It clearly understood the nature of the enquiry and cannot be
said to have undertaken it in the wrong manner. The result was not
unreasonable. No gross irregularity on the part of the appeal tribunal, whether
latent or otherwise, was therefore demonstrated.
[26] It was not shown that the appeal tribunal exceeded its powers in either of
the respects contended for by the respondents. Nor was it shown that the appeal
tribunal committed a gross irregularity. Accordingly, no basis was laid under
s 33(1)(b) of the Arbitration Act for reviewing and setting aside the award of the
appeal tribunal. It follows that the court below erred in doing so.
[27] In the result, the following order is granted:
The appeal is upheld with costs, such costs to include the costs of two
counsel where employed.
The order of the North Gauteng High Court is set aside and substituted
with the following order:
„The application is dismissed with costs.‟
T R Gorven
Acting Judge of Appeal
Appearances
For Appellant:
A Subel SC (with him A C Botha)
Instructed by:
Louis Gishen & Associates, Sandton
Lovius Block Attorneys, Bloemfontein
For Respondent:
P N Levenberg SC (with him A Lapan)
Instructed by:
Werksmans Incorporated, Sandown
Matsepes Inc., Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
28 November 2014
STATUS
Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
HOLFORD v CARLEO ENTERPRISES (977/2013) [2014] ZASCA 195
(28 November 2014)
The SCA today upheld an appeal by Basil A Holford against the
reviewing and setting aside in the North Gauteng High Court, Pretoria, of
an award of an arbitration appeal tribunal. The court below held that the
award was reviewable under s 33(1)(b) of the Arbitration Act 42 of 1965
in that the appeal tribunal had exceeded its powers in two respects and
had committed a latent gross irregularity.
The SCA, setting out the approach to be taken to such a review, held that
none of the three grounds on which the court below had reviewed and set
aside the award were valid. It upheld the appeal and substituted an order
dismissing the application for review with costs orders in both courts.
|
3119
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case number : 601/05
In the matter between :
SENWES LIMITED
FIRST APPELLANT
SENWESBEL LIMITED
SECOND APPELLANT
VAALHARTS CO-OPERATIVE
LIMITED
THIRD APPELLANT
and
JAN VAN HEERDEN & SONS CC
FIRST RESPONDENT
CHARLES ENGELBRECHT
SECOND RESPONDENT
LOUIS J FOURIE
THIRD RESPONDENT
CHARLES H DU P MARTINSON
FOURTH RESPONDENT
TIELMAN C L MEYER
FIFTH RESPONDENT
SUSANNA K OTTO NO
SIXTH RESPONDENT
PETRUS P V VAN WYK
SEVENTH RESPONDENT
CORAM :
SCOTT, BRAND, VAN HEERDEN,
COMBRINCK JJA et SNYDERS AJA
HEARD :
26 FEBRUARY 2007
DELIVERED :
23 MARCH 2007
Neutral citation:
This judgment may be referred to as Senwes v Van Heerden &
Sons [2007] SCA 18 (RSA)
Summary:
Vaalharts agricultural co-operative taken over by another co-
operative, Senwes, which was subsequently converted into
company – the plaintiffs, former members of Vaalharts, agreed
to take up shares in Senwes in exchange for members' levies
– whether transaction constituted an 'arrangement' in terms of
s 169A of Co-operatives Act 91 of 1981
BRAND JA/
BRAND JA:
[1] The seven respondents (plaintiffs), together with about 160
others, each instituted separate actions, on substantially the same
grounds, against the appellants (defendants) in the Kimberley High
Court. The actions of the seven plaintiffs were consolidated by
agreement between the parties. The fourth plaintiff's action fell
away when his estate was sequestrated. The remaining six then
proceeded to trial. The plaintiffs' pleadings in the consolidated
action still bear the scars of many amendments. They also retained
numerous factual allegations pleaded in support of causes of
action no longer relied upon at the trial. The trial was postponed on
many occasions and it ran for an inordinate number of days. From
its date of commencement on 19 February 2002 it stretched over
more than three years. In the end the court a quo (Majiedt J) gave
judgment in favour of the plaintiffs on 19 August 2005. The appeal
against that judgment, which has since been reported sub nom Jan
van Heerden en Seuns BK v Senwes Bpk [2006] 1 All SA 44 (NC),
is with the leave of the court a quo.
[2] The issues between the parties will best be understood in the
light of the background facts. The third defendant, Vaalharts Co-
operative Limited, had been established as an agricultural co-
operative in 1944. Until December 1996 all the plaintiffs were
members of that co-operative. The first defendant, Senwes
Limited, also started out life as an agricultural co-operative. During
April 1997, it was, however, converted into a public company
pursuant to the provisions of the Co-operatives Act 91 of 1981 ('the
Act').
[3] On 30 December 1996 Senwes and Vaalharts entered into a
written deed of sale, ('verkoop van besigheid'), in terms of which
Senwes essentially took over the business of Vaalharts as a going
concern. It acquired all the assets of Vaalharts in exchange for
most of the latter's liabilities. Some liabilities were, however,
expressly excluded from the deal. Most prominent amongst these
exclusions was the liability of Vaalharts towards its members for
the contributions they had made to its members' fund. For the sake
of brevity and convenience I will refer to these contributions as
'members' levies', though the term is not entirely accurate in that
some contributions were in fact voluntarily made.
[4] These members' levies, which played the central role in the
dispute between the parties, were governed by s 99 of Vaalharts'
statute. In terms of s 99(1), members were obliged to contribute a
certain percentage of the income they received from agricultural
produce to the members' fund. Members were also entitled,
however, to make additional voluntary contributions to the fund. At
some stage in the history of Vaalharts, these voluntary
contributions were quite popular as creating something in the
nature of a pension fund for members.
[5] From the members' point of view, the disadvantage of these
levies as an investment was the restrictions imposed on
repayment. In substance, s 99(5) of the statute provided that
members were only entitled to repayment upon termination of their
membership and then only if the directors were of the opinion that
the co-operative was in a financial position to do so. Probably as a
result of this discretion whether or not to make repayment, levies
were, for accounting purposes, looked upon as akin to share
capital and not as unsecured loans to the co-operative, which, from
a legal perspective, they obviously were.
[6] During the negotiations preceding the final conclusion of the
sale agreement with Senwes at the end of 1996, the directors of
Vaalharts were understandably anxious to secure repayment of
members' levies as part of the deal. The formula they eventually
assented to, in principle, appears from a circular which was
distributed by the directors of Vaalharts to all its members during
November 1996. Since this document was annexed to plaintiffs'
particulars of claim as 'annexure C', it was given that description in
the court a quo. I propose to follow the same terminology.
[7] Annexure C starts with an explanation by the directors of
Vaalharts as to why, as a result of the deteriorating financial
situation of the co-operative, it was compelled to sell its business
as a going concern to Senwes. The latter was, at the time, still a
co-operative but on the verge of converting into a public company.
It was pointed out in the document that, while the total sum of
members' levies owing amounted to about R50m, the financial
statements of the co-operative reflected an excess of assets over
liabilities (excluding the members' levies) of only R44m. But for the
fact that members' levies were regarded as akin to share capital,
the co-operative would thus be trading in insolvent circumstances.
Nevertheless, annexure C explained, Senwes was prepared, as
part of the package deal offered, to absorb the shortfall and to
afford the members of Vaalharts the full benefit of the members'
levies standing to their credit in the co-operative's accounts.
[8] The package deal offered also included the condition that all
members of Vaalharts should resign. Upon resignation, members
would be entitled to repayment of their levies. But, so annexure C
stated, repayment would not necessarily be in the form of cash.
Members were given two options: (a) to receive payment in cash;
or (b) to acquire, in lieu of a cash repayment, shares in Senwes in
exchange for two thirds of their levies and shares in Senwes'
holding company, Senwesbel Ltd, in exchange for the other third.
According to annexure C, the prices at which these shares would
be allocated were calculated with reference to their nett asset
value and amounted to R4,50 per share in Senwes and R6,00 per
share in Senwesbel. Another important part of the package deal
set out in annexure C was that Senwes reserved the right to resile
from the transaction if it were not satisfied with the percentage of
members who opted for shares. In fact, the deed of sale eventually
entered into in December 1996 was expressly made subject to the
suspensive condition in favour of Senwes that at least 95% of the
members take repayment of their levies in the form of shares.
[9] Attached to annexure C was a resignation form. According to
its content, the signing of this form by a member would constitute
both resignation of membership and the formal consent by the
member that the directors could proceed with the Senwes deal. It
also called upon each member to indicate which of the two options
available for repayment of his or her levies the member preferred.
An election of the share option, so the form stated, would be
regarded as an irrevocable mandate to the directors of Vaalharts to
subscribe to the number of shares to which the member would be
entitled in accordance with the agreed formula.
[10] All the plaintiffs signed the resignation form. Though the
issue was not specifically canvassed at the trial, all available
evidence seems to indicate that every member of Vaalharts did the
same. About 90% of the members, including the plaintiffs, chose
the share option. This apparently satisfied Senwes not to invoke
the 95% suspensive condition, but to go on with the sale.
[11] During 1997 effect was given to the terms of the sale. All
assets and liabilities of Vaalharts (that were not excluded from the
sale) were transferred to Senwes. Levies standing to the credit of
members who opted for shares were ceded to Senwes. When
Senwes became a public company in April 1997, these members
received the number of shares in Senwesbel and Senwes that
were allocated to them in accordance with the agreed formula.
[12] However, before long, remorse set in among some of the
lastmentioned group. They felt that they had been misled by the
representatives of Senwes, who were assisted in the process by
the directors and the auditors of Vaalharts. Though a number of
reasons for their dissatisfaction were advanced, their main
complaint related to the value of the Senwes shares. While they
were given the assurance, they said, that they were acquiring
these shares at substantially below market value, it turned out that
there was in fact a very limited market for the shares which, in the
event, traded at a price far below R4,50 per share.
[13] In November 1999 the dissatisfaction led to the institution of
proceedings by the plaintiffs and another 160 erstwhile members
of Vaalharts against Senwes, Senwesbel and Vaalharts, as well as
against the auditors of Vaalharts as the fourth defendant. Originally
the plaintiffs relied on two alternative causes of action. Their main
claim was for payment of the amounts credited to their levy
accounts that had been transferred to Senwes, against return of
the shares they had received. They based this claim on the
cancellation of a contract they allegedly concluded with Senwes,
Senwesbel and Vaalharts. This claim was brought only against the
first three defendants. In the alternative they sought to hold all four
defendants liable in delict for the damages they suffered as a result
of the Senwes transaction. Both claims were founded on
allegations of negligent misrepresentations made on behalf of the
defendants, including misrepresentations about the value of the
Senwes and Senwesbel shares.
[14] Two years after the actions were instituted, the plaintiffs
introduced a further alternative cause of action by way of an
amendment to their particulars of claim. The gravamen of this new
cause of action was that annexure C – inclusive of the resignation
form – constituted 'an arrangement' between Vaalharts and its
members as contemplated by s 169A of the Act which, in terms of
the section, required the sanction of the High Court. Because this
sanction had not been sought and obtained, so the amended
particulars averred, the arrangement was void ab initio. The
defendants' main response consisted of a denial that the
transaction constituted an 'arrangement' between Vaalharts and its
members as envisaged by s 169A.
[15] At the commencement of the proceedings the court a quo
ordered, on application by the defendants, that the question
regarding the applicability of s 169A be decided as a point in
limine, prior to the hearing of evidence. In the event, the court
decided the preliminary issue in favour of the plaintiffs.
Consequently it declared both the 'arrangement' between
Vaalharts and its members and the ensuing agreement of sale
between Vaalharts and Senwes, void ab initio. The court's reasons
for this conclusion appear from its reported judgment (see paras
16 – 40 at 49g – 62h).
[16] The effect of the declaratory order of invalidity on the further
proceedings turned out to be far-reaching. First, it led to the
summary dismissal of the plaintiffs' claim against the fourth
defendant, ie the auditors of Vaalharts. Seeing that the plaintiffs'
claims against this defendant were squarely based on the
proposition that they gave up their members' levies pursuant to a
valid agreement, the court a quo found that these claims could no
longer be sustained (see para 41 at 62h-63a of the reported
judgment). Secondly, it caused the plaintiffs to reformulate their
cause of action against the remaining defendants. What they now
sought to recover was an unjustified enrichment on the part of the
defendants on the basis of what the plaintiffs labelled the condictio
indebiti.
[17] In answer to this new cause of action, the remaining
defendants filed a special plea of prescription, contending that the
plaintiff's claim based on enrichment had become prescribed
before it was introduced for the first time in February 2002. In
addition they filed a plea on the merits in which several defences
were raised against the enrichment claim. But, as is evident from
the outcome, neither the plea of prescription nor any of the
defendant's answers on the merits found favour with the court a
quo.
[18] For the most part the various issues decided by the trial court
again arose on appeal. The question antecedent to all these
issues is, however, whether the transaction between the plaintiffs
and Vaalharts constituted 'an arrangement' between a co-
operative and its members as envisaged in s 169A of the Act. The
material provisions of the section read as follows:
'169A. Compromise and arrangement between co-operative, its members
and creditors
(1)
If any compromise or arrangement is proposed between a co-operative
and its creditors . . . or between a co-operative and its members, the court
may, on the application of the co-operative or any creditor or member of the
co-operative . . . order a meeting of the creditors . . . or of the members of the
co-operative, as the case may be, to be summoned in such manner as the
court may direct.
(2)
If a compromise or arrangement is agreed to by –
(i)
a majority in number representing three fourths in value of the
creditors . . . present and voting either in person or by proxy at the
meeting; or
(ii)
a special resolution,
as the case may be, such compromise or arrangement shall, if
sanctioned by the court, be binding on all the creditors . . . or on the
members, as the case may be, and also on the co-operative . . . .'
[19] It is clear that there are a number of transactions
contemplated by s 169A with which we are not concerned. First
among these are transactions arising from the relationship
between a co-operative and its creditors. Though the plaintiffs
were obviously also creditors of Vaalharts, they did not suggest
that that relationship is of any consequence in the present context.
The section also deals with 'compromises'. According to the
authorities, these transactions presuppose a dispute between the
parties (see eg Ex Parte Cyrildene Heights (Pty) Ltd 1966 (1) SA
307 (W) at 308G-H). Again it is not suggested that we are dealing
with a transaction of that nature. The sole question for
consideration is therefore whether there was 'an arrangement'
between Vaalharts and its members, including the plaintiffs, which
required the court's sanction in terms of s 169A.
[20] In identifying the transaction at issue, the court a quo
adopted the plaintiffs' contention by referring to the transaction
under consideration as the one 'embodied in annexure C' (see eg
para 20 at 50d-g). It is clear, however, that this cannot possibly be
correct. Annexure C did not in itself embody any transaction. It was
no more than a circular ('omsendbrief') advising the members of
Vaalharts of the reasons for a recommended transaction between
their co-operative and Senwes and of the proposed terms of that
transaction. What the document required of members, if they
supported the proposal, was to sign the resignation form which
was attached to annexure C.
[21] Signature of the resignation form brought about an
agreement between the member and the co-operative. That seems
to be the only transaction between Vaalharts and its members that
can legitimately be considered in the present context. It will be
remembered that members who signed the resignation form: (a),
authorised the directors of Vaalharts to proceed with the proposed
transaction with Senwes; (b) formally resigned their membership of
Vaalharts; and (c) exercised an election whether they wanted
payment of their levies in cash or in the form of shares. Did this
agreement constitute an 'arrangement' under s 169A? The answer
to this question will determine the outcome of the appeal.
[22] There appears to be no reported decision on the meaning of
'arrangement' in the context of s 169A of the Act. That in itself does
not result in any serious disadvantage. The wording of the section
was clearly taken over from s 311 of the Companies Act 61 of
1973 and the meaning of 'arrangement' in that section has indeed
enjoyed judicial consideration in a number of cases. As was
pointed out in some of them, the term is not one of any great
technical complexity. As a matter of ordinary English it is often
used in everyday life. It usually bears a wide meaning, extending to
transactions which would not even qualify as contracts.
[23] As was also stated in some of the cases, s 311 serves a
useful purpose in the commercial world. The same can be said
about s 169A. The potential application of the mechanism created
by the section should thus not be hampered by affording a
restricted meaning to the term of wide general import utilised by
the legislature. So, for example, it was said by Trollip J – with
reference to the similarly worded s 103(4) of the previous
Companies Act 46 of 1926 – in Du Preez v Garber: In re Die
Boerebank Bpk 1963 (1) SA 806 (W) 813C-D:
'Gower on Modern Company Law, 2nd ed. pp. 554-5, says that
'arrangements' covered by the section are of the widest character, and that
"the only limitations are that the scheme cannot authorise something contrary
to the general law or wholly ultra vires the company . . .".'
(See also eg Namex 1994 (2) SA 265 (A) 294E-F.)
[24] Nevertheless, it is clear that, despite these general
statements, some restrictions have been imposed in previous
decisions on the term 'arrangement' in s 311. The restriction most
pertinent for present purposes derives from what Coetzee DJP
described in Ex Parte NBSA Centre Ltd 1987 (2) SA 783 (T) 785G-
H as the 'inner logic' of the section as gathered from its history and
purpose. In this context he said (at 787D-H):
'The history and purpose of this section show that it is appropriate in cases
where the normal mechanisms for reaching agreement between members on
the one hand and the company on the other are not available due to the
context of the particular scheme . . .
The corollary is that where the normal mechanisms are available the scheme
of arrangement machinery is inappropriate.' (My emphasis.)
[25] The same principle appears from the judgment of Trollip J in
Cyrildene Heights (Pty) Ltd supra. After referring to his own
previous statement in Du Preez v Garber supra at 813C-D,
regarding the wide general ambit of 'arrangement' quoted earlier,
the learned judge continued as follows (at 309A-C):
'Despite that wide connotation I do not think that the offer in the present case
has been shown to be an "arrangement". In terms of the offer the company is
to pay most of its creditors in full and they are obliged and entitled to receive
such payments. The remainder of the creditors are to be paid amounts which
they have already agreed to accept in settlement. As the company is not in
liquidation there is no difficulty in effecting such proposed payments. It is not
shown, for example, that the bondholder cannot, because of the terms of its
bond, be repaid in full at this stage. Consequently there seems to be nothing
that requires to be arranged between the company and its creditors which
necessitates the invocation of sec. 103 [of Act 46 of 1926].
I cannot therefore find that the so-called compromise is an 'arrangement'. That
conclusion is supported by Ex parte British Mining Supply Co. Ltd., 1942
W.L.D. 96.'
(See also eg Ex Parte Lomati Landgoed Beherende (Edms) Bpk
1985 (2) SA 517 (W) at 521E-523D; Blackman, Jooste,
Everingham Commentary on the Companies Act, Vol 2, Revision
Service 2004, 12.4 – 12.5; Meskin Henochsberg on the
Companies Act 601.)
[26] I can find no reason to depart from the principle thus
established. On the contrary, in my view it accords with the
dictates of logic and pragmatism. The machinery of the section
was created for those arrangements which cannot conveniently be
achieved by obtaining the consent of every individual member.
Where the same result can be achieved by obtaining the consent
of every member, the section does not apply.
[27] This is even more so where the agreement is subject to the
condition that it will be agreed to by every member. In such a case,
the court's sanction can serve no purpose and can only result in a
costly and wasteful exercise. What is more, where the whole
transaction is predicated on every member's consent, insistence
on the court's sanction will enable those who agreed but, for some
or other reason, no longer wish to be bound, to avoid the
consequence of a perfectly valid agreement by subsequently
invoking the provisions of s 311 or s 169A. That result is, in my
view, untenable. After all, s 311 and s 169A were not intended to
enable the court to save members from entering into bad bargains,
but to facilitate transactions which would otherwise be practically
impossible or at least very difficult to conclude.
[28] In the present case, the proposed offer by Senwes, as
explained in annexure C, postulated that every member would sign
the resignation form. In the event, this goal appears to have been
achieved. On the authorities I have referred to, that excludes the
transaction from the ambit of s 169A. What the plaintiffs are
therefore trying to do is precisely what, in my view, s 169A was not
intended for, that is, to avoid the consequences of a bargain which
they have voluntarily concluded.
[29] The court a quo found support for its conclusion to the
contrary in the argument that the transaction was intended to have
a dramatic and far-reaching ('ingrypende') effect on the rights of
members. They lost their membership of and their claims against
one entity, so the court pointed out, in exchange for membership of
a different entity (see para 35.5 at 59a-c of the judgment). Of
course all this is perfectly true. But it seems, with respect, to miss
the point. What lies at the heart of the transaction is the
precondition that all this would only happen to members who gave
their express consent to the transaction.
[30] The other argument that found favour with the court a quo
was that the agreement between Senwes and Vaalharts made no
provision for members who did not wish to resign. Of what entity,
the court rhetorically asked, would they then be members? From
whom would they claim repayment of their membership levies?
(See para 35.4 of the judgment at 58j-59a.) The problem is that
these questions were never pertinently asked of those who
structured the transaction since the point in limine was decided
before any evidence was led. Three rather obvious solutions,
however, come to mind. The first is the pragmatic answer that in
the end there were no members who did not resign. As a fact only
those who agreed were therefore held bound. Any sanction by the
court would thus have been redundant. The question as to what
would have happened if every member did not agree, can
therefore be of no more than academic interest. The second
possible answer to this question is that, if every member did not
agree, the arrangement would not have gone through. This
prospect seems to be supported by the fact that the Senwes
proposal was expressly predicated on the consent of every
member. The third possible answer is that, in that event, Vaalharts
could have sought the court's sanction for the transaction in terms
of s 169A, which would then have bound any non-agreeing
member as well.
[31] In this court a further argument was raised on behalf of the
plaintiffs as to why the agreement between Vaalharts and its
members constituted an arrangement under s 169A. This
argument relied on the provisions of s 169C of the Act. As I
understood the argument, it was built on the proposition that
s 169C automatically rendered every agreement between a co-
operative and its members an 'arrangement' under s 169A if the
purpose of the agreement was to facilitate the amalgamation of
two or more co-operatives. There is no merit in this argument.
Section 169C operates the other way round. It only applies to
transactions which can properly be described as 'arrangements'
under s 169A. If not, the fact that the transaction satisfies the other
requirements of s 169C is of no consequence. The section does
not apply. The question whether or not a particular transaction can
properly be described as an 'arrangement' thus remains to be
determined by reference to s 169A.
[32] Since the one issue underlying all the others must therefore,
in my view, be decided against the plaintiffs, that, in reality, is the
end of the matter. The court a quo's judgment cannot stand and
the appeal must succeed. It is therefore not necessary to deal with
any of the other conclusions arrived at by the court a quo and this
court's failure to do so must not be construed as an endorsement
of their correctness. However, I propose to deal with one of these
to prevent any confusion in the future. It relates to the question of
which party bore the onus with regard to the quantum of the
plaintiffs' enrichment claims.
[33] The plaintiffs' claims were essentially for the amounts
standing to their credit in the Vaalharts members' levy account at
the time of the Senwes transaction. The defendants denied that
these amounts represented the true value of the plaintiffs' claims
against Vaalharts, inter alia, on the basis that, at that time, the
assets of the co-operative were exceeded by its liabilities. The
question then arose as to who bore the onus of proof in this factual
dispute. The court a quo decided that the onus rested on the
defendants (see para 47.5 at 70e-71f). Its underlying reasoning
appears to have been that, because the defendants had admittedly
derived some benefit from a transaction which was found to be
invalid, they had to prove that the quantum of their enrichment was
less than the amount alleged by the plaintiffs. The origin of this
reasoning appears from the court's reference (at 70h-i) to African
Diamond Exporters (Pty) Ltd v Barclays Bank International Ltd
1978 (3) SA 699 (A) at 713H and to the following statement in
LAWSA, 1st re-issue, Vol 9 para 80:
'The onus to prove non-enrichment (or diminution of enrichment) is on the
defendant and should he fail to prove it, he remains liable for the full value of
the property'.
[34] The flaw in the court a quo's line of reasoning in this regard
is that the defence raised by the defendants in this case was not
one of non-enrichment. A typical non-enrichment defence is to be
found in African Diamond Exporters, upon which the court a quo
relied. In that case the defendant admitted that it had received a
specific sum of money indebitum, but then pleaded that it had
subsequently parted with some of it without any fault of its own. It
was against this background that Muller JA stated (at 713H):
'I agree . . . that, where a plaintiff has proved an overpayment recoverable by
the condictio indebiti, the onus rests on the defendant to show that he was, in
fact, not enriched at all or was only enriched as to part of what was received.'
[35] According to established principle, the point of departure in
enrichment cases is that the onus rests on the plaintiff in respect of
every element of the cause of action relied upon (see eg Willis
Faber Enthoven (Pty) Ltd v The Receiver of Revenue 1992 (4) SA
202 (A) 224H-I). In casu the dispute related to the value of what
was transferred indebitum in the first place. There is no reason
why this should constitute an exception to the general rule. It
follows that, in my view, the plaintiffs bore the onus of proving the
value of their members' levies that were transferred to Senwes.
[36] Finally, it was contended on behalf of the plaintiffs that, if the
appeal were to succeed, the matter should be referred back to the
court a quo for the hearing of further evidence on their original
causes of action in contract and in delict, based on allegations of
negligent misrepresentation. It seems, however, that this
contention is based on a misunderstanding of the rules of civil
procedure. Barring a separation of issues, a plaintiff is required to
prove the elements of all causes of action upon which he or she
seeks to rely, albeit in the alternative. Since the plaintiffs in this
case elected to pin their colours exclusively to the enrichment
mast, there was no factual basis upon which the court a quo could
hold in their favour on any alternative ground. In the view that I
hold on the enrichment claim, it should therefore have dismissed
the plaintiffs' claims with costs. That then is the order I propose to
make.
[37] It is accordingly ordered:
(a)
The appeal is upheld with costs, including the costs of
two counsel.
(b)
The order of the court a quo is set aside and replaced
with the following:
'(i)
The plaintiffs' claims are dismissed with costs,
including the costs of two counsel.
(ii)
All costs previously reserved shall be costs in the
cause.'
..........................
F D J BRAND
JUDGE OF APPEAL.
CONCUR:
SCOTT JA
VAN HEERDEN JA
COMBRINCK JA
SNYDERS AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
In the matter between :
SENWES LIMITED
FIRST APPELLANT
SENWESBEL LIMITED
SECOND APPELLANT
VAALHARTS CO-OPERATIVE
LIMITED
THIRD APPELLANT
and
JAN VAN HEERDEN & SONS CC
FIRST RESPONDENT
CHARLES ENGELBRECHT
SECOND RESPONDENT
LOUIS J FOURIE
THIRD RESPONDENT
CHARLES H DU P MARTINSON
FOURTH RESPONDENT
TIELMAN C L MEYER
FIFTH RESPONDENT
SUSANNA K OTTO NO
SIXTH RESPONDENT
PETRUS P V VAN WYK
SEVENTH RESPONDENT
From:
The Registrar, Supreme Court of Appeal
Date:
2007-03-23
Status:
Immediate
On 23 March 2007 the SCA delivered judgment in the appeal of Senwes
Ltd against Jan van Heerden & Sons CC and six other respondents.
The matter arose from a transaction between Senwes and Vaalharts Co-
operative which was concluded at the end of 1996. In terms of the
transaction, Senwes took over the business of Vaalharts as a going
concern. Prior to the transaction, Van Heerden & Sons and the other six
respondents were members of Vaalharts. The Senwes transaction was
predicated on the condition that all Vaalharts members would resign,
which they then did. Prior to their resignation, members had claims
against Vaalharts for repayment of the amounts standing to their credit
in the Vaalharts members' levy fund. As part of the package deal
offered by Senwes, members were given an option to secure payment of
their levies in cash, or to exchange them for Senwes shares. All the
respondents were part of the group who chose the share option.
During 1997 effect was given to the terms of the Senwes transaction.
Levy claims of the members who opted for shares were ceded to
Senwes and these members received a number of shares allocated to
them in accordance with the formula upon which the parties agreed.
Before long, however, some of them were dissatisfied with the result of
the transaction and particularly with the value of the shares they
received.
In November 1999 the dissatisfaction led to the institution of separate
actions by about 160 erstwhile members of Vaalharts against Senwes in
the Kimberley High Court for payment of their members' levies against
return of the shares they received. By agreement between the parties
the cases of the six respondents were consolidated and proceeded with
as a test case. The consolidated action was postponed on many
occasions and stretched over a number of years. Eventually the High
Court gave judgment in favour of the respondents on 19 August 2005.
The High Court's judgment was based on the premise that the
agreement between Vaalharts and its members which preceded the
Senwes transaction constituted an 'arrangement' as contemplated by s
169A of the Co-operatives Act 91 of 1981. In terms of this section, so
the court found, the agreement thus required the sanction of the court.
Because the court's sanction had not been obtained, the court
concluded, the agreement was invalid and the respondents were thus
entitled to payment of their members' levies against return of the shares
they received.
On appeal the SCA, however, upheld the contention by Senwes that, on
a proper interpretation of s 169A, the agreement between Vaalharts and
its members did not constitute an arrangement under that section.
Consequently, it decided that the High Court's judgment was based on a
wrong premise. In the result the appeal succeeded with costs.
|
4149
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 903/2022
In the matter between:
MOSES MUXE MASHISANE
APPELLANT
and
NOSIPHIWE LINDA MHLAULI
RESPONDENT
Neutral citation: Mashisane v Mhlauli (903/2022) [2023] ZASCA 176 (14
December 2023)
Coram:
MBATHA, MOTHLE, HUGHES and WEINER JJA and
KEIGHTLEY AJA
Heard:
8 November 2023
Delivered:
This judgment was handed down electronically by circulation to
the parties’ legal representatives by email publication on the Supreme Court of
Appeal website and by release to SAFLII. The date and time for hand-down is
deemed to be 11h00 on 14 December 2023.
Summary:
Family law – customary law – civil procedure – declaratory relief
sought on whether parties married according to customary law – dispute of fact –
motion proceedings inappropriate.
ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Siwendu 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:
‘The application is dismissed with costs.’
JUDGMENT
Weiner JA (Mbatha, Mothle, Hughes JJA and Keightley AJA concurring):
Introduction
[1] The respondent, Ms Mhlauli, sought declaratory relief in the high court that
she and the appellant, Mr Mashisane, had concluded a valid customary marriage as
envisaged in s 3 of the Recognition of Customary Marriages Act 120 of 1998 (the
RCMA), and that they were married in community of property, profit and loss (in
COP). She also sought an order declaring that the ante-nuptial contract (ANC)
concluded between the parties was null and void. Although no detail was set out in
the founding affidavit as to what the basis for this declaration was, it appears that the
reason is that there was non-compliance with s 89 of the Deeds Registries Act 47 of
1937 (the DRA) (read with ss 86 and 87)1 because it was not registered post-nuptially
(after the customary marriage) with the leave of the court, in terms of s 21 of the
Matrimonial Property Act 88 of 1984 (the MPA).2
[2] The Gauteng Division of the High Court, Johannesburg (the high court)
granted the order, and thereafter refused leave to appeal. The matter comes before
us with the leave of this Court.
[3] The respondent had sought the relief, as the appellant disputed that he had
consented to a customary marriage, or that he was married in terms of customary
law. The appellant did not dispute that the parties had participated in certain
traditional customs and celebrations (the traditional customs), after the conclusion
of the lobolo contract. However, he contended that the purpose was only to embrace
the parties’ traditional customs. The appellant remained adamant that he had never
consented to be married under customary law, or by civil law, in COP. His case was
1 Section 86 of the DRA provides that antenuptial contracts must be registered. It provides that:
‘An antenuptial contract executed before and not registered at the commencement of this Act or executed after the
commencement of this Act, shall be registered in the manner and within the time mentioned in section eighty-seven,
and unless so registered shall be of no force or effect as against any person who is not a party thereto.’
Section 87 of the DRA provides for the manner and time of registration of antenuptial contracts. It provides that:
‘(1) An antenuptial contract executed in the Republic shall be attested by a notary and shall be registered in a deeds
registry within three months after the date of its execution or within such extended period as the court may on
application allow.’
Section 89 of the DRA provides that:
‘(1) The provisions of sections 86 and 87 shall mutatis mutandis apply in respect of-
(a) an order under section 20 of the Matrimonial Property Act, 1984, as if that order were a notarial deed; and
(b) a contract in terms of section 21 of the Matrimonial Property Act, 1984.
2 Section 21 of the MPA provides for a change of matrimonial property system. It provides that:
‘(1) A husband and wife, whether married before or after the commencement of this Act, may jointly apply to a court
for leave to change the matrimonial property system, including the marital power, which applies to their marriage, and
the court may, if satisfied that –
(a) there are sound reasons for the proposed change;
(b) sufficient notice of the proposed change has been given to all the creditors of the spouses; and
(c) no other person will be prejudiced by the proposed change,
order that such matrimonial property system shall no longer apply to their marriage and authorize them to enter into a
notarial contract by which their future matrimonial property system is regulated on such conditions as the court may
think fit.’
that the parties had, from inception of their relationship in April 2019, intended to
be married by civil law and out of community of property.
[4] The respondent disputes that this was their intention. She contends that all the
required traditional customs occurred and that they intended, and entered into, a
customary marriage. It is common cause that the customary marriage was never
registered in terms of s 4 of the RCMA.3 The issue as to whether the customary
marriage was to be one in or out of community of property, is one which the
respondent appears to vacillate upon, as will be demonstrated below.
[5] The appellant raised two issues. Firstly, in regard to consent to be married in
terms of customary law and in COP, there were material disputes of fact which could
not be decided on the papers; and secondly, and ancillary to that, that declaratory
relief was not appropriate in the circumstances.
[6] Section 3(1) of the RCMA provides:
‘3.
Requirements for validity of customary marriages.
(1)
For a customary marriage entered into after the commencement of this Act to be valid-
(a)
the prospective spouses-
(i)
must both be above the age of 18 years; and
(ii) must both consent to be married to each other under customary law; and
(b)
the marriage must be negotiated and entered into or celebrated in accordance with
customary law.’
3 Sections 4(1) and (2) of the RCMA provide that:
‘(1) The spouses of a customary marriage have a duty to ensure that their marriage is registered.
(2) Either spouse may apply to the registering officer in the prescribed form for the registration of his or her customary
marriage and must furnish the registering officer with the prescribed information and any additional information which
the registering officer may require in order to satisfy himself or herself as to the existence of the marriage.’
[7] As appears from s 3(1)(a)(ii), consent to be married under customary law is a
separate requirement. Accordingly, negotiations and celebrations alone do not signal
the conclusion of a customary marriage. They cannot oust the requirement of
consent. A distinction must also be drawn between consent to marry in general and
the more specific consent to be married under customary law. As stated above,
section 3(1)(a)(ii) requires specific consent to be married under customary law.
Background
[8] It appears to be common cause that shortly after the parties met, they began a
romantic relationship. According to the appellant, in April 2019, they discussed
marriage. They agreed that they did not want to marry under customary law because
of the consequences of such marital regime. They decided that they would be
married out of community of property with an ANC to protect their various interests.
The respondent had her own business and was a shareholder in another business
venture. The appellant had four children from previous relationships who would be
affected if the parties were married in COP. The appellant wished to protect the
financial interests of his children. The appellant also wanted to protect his assets
against any claims by his ex-wives in the event of his death. It was not in dispute
that the respondent had many debts that she had incurred before she met the
appellant, which were settled by the appellant. According to the appellant, all of
these factors led to their decision that they would not be married by customary law,
as the default position under that regime was a marriage in COP. The respondent
admits the discussions, but denies that an agreement to that effect was concluded in
April 2019.
[9] It is not disputed by the appellant that the parties observed certain of the
traditional customs. According to the appellant, this was solely to show respect to
their families and ancestors and was a precursor to the parties entering into a civil
marriage with an ANC.
[10] In essence, the appellant insists that both parties wanted a civil marriage with
an ANC which would provide for the marital regime to be out of community of
property. On the contrary, the respondent, although, in her replying affidavit appears
to concede that she agreed to be married out of community of property, now contends
for a customary marriage and for the ANC to be declared invalid, with the result that
the marriage would be in COP. The disputes are material and go to the very core of
the matter.
[11] The appellant refers to the events which took place leading up to the
conclusion of the ANC, which they had discussed in April 2019, when they first met
and well before the traditional customs were observed. After the traditional customs
were concluded, the parties attended consultations with lawyers. The ANC was
thereafter executed and registered. It provided that, inter alia, there would be no COP
between the parties and that the accrual system would be applicable to their
marriage. The appellant agreed to donate to the respondent a fifty percent share in
his property in Bryanston and a Mercedes-Benz motor vehicle. The appellant
contends that, after the ANC was executed, a date was set for the civil marriage for
November 2020, which is denied by the respondent. The relationship, however,
broke down before then.
[12] It is common cause that the appellant is Tsonga and the respondent is Xhosa.
Although this point may not have been explicitly canvassed in the affidavits, there
was no evidence as to whether their rules of customary law are the same, or indeed
what those rules require. This Court needs to have regard to what was said in
Mayelane v Ngwenyama and Another,4 where the Constitutional Court set out the
precautions that a court should heed when dealing with customary law. That case
concerned the requirement of consent of a customary wife for her husband to enter
into a further customary marriage. The Constitutional Court held that:
‘. . . The mere assertion by a party of the existence of a rule of customary law may not be enough
to establish that rule as one of law. Determination of customary law is a question of law, as is
determination of the common law. It was contended that because Ms Mayelane made a factual
averment in her papers that Xitsonga customary law required her consent for the validity of her
husband's marriage to Ms Ngwenyama, and because Ms Ngwenyama failed to rebut or reject that
averment, Ms Mayelane's averment regarding Xitsonga customary law had been sufficiently
proved…
. . . First, a Court is obliged to satisfy itself, as a matter of law, on the content of customary law . .
. It is incumbent on our Courts to take steps to satisfy themselves as to the content of customary
law and, where necessary, to evaluate local custom in order to ascertain the content of the relevant
legal rule.
Second, Courts must understand concepts such as “consent” to further customary marriages within
the framework of customary law and must be careful not to impose common-law or other
understandings of that concept. Courts must also not assume that such a notion as “consent” will
have a universal meaning across all sources of law.
. . .
It should also be borne in mind that customary law is not uniform. A particular custom may have
one of various acceptable manifestations of a consent requirement . . .’5
[13] Heeding the Constitutional Court’s warning, courts should be slow to decide
matters of this nature on affidavits alone. In this case, expert evidence on the concept
of ‘consent’ in both the Tsonga and Xhosa customary law should have been adduced
by the respondent to establish her case that the parties had consented to, and were
4 Mayelane v Ngwenyama and Another (Womens’ Legal Centre Trust and others as amici curiae) [2013] ZACC 14;
2013 (4) SA 415 (CC); 2013 (8) BCLR 918 (CC).
5 Ibid paras 47-51.
married under, customary law. This would have given the appellant the opportunity
to adduce his own expert evidence, and, if necessary, a referral to trial or oral
evidence to assist the court in deciding the issue. However, the manner in which the
respondent elected to bring her case to court deprived the appellant, and the court,
of the benefits of a thorough examination of this important issue.
[14] The same can be said of the factual issue of whether the appellant consented
to be married in COP under customary law or whether the parties had agreed to a
civil marriage with an ANC. The appellant raised genuine disputes of fact on this
issue. He explained the reasons for the traditional customs having been observed and
expressly disputed that this offered evidence of his consent to be married under
customary law rather than by way of a civil marriage.
[15] This case falls squarely within the ambit of the Plascon-Evans rule,6 as
enunciated in Wightman t/a JW Construction v Headfour (Pty) Ltd,7 where this Court
held:
‘A real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the
party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed
the fact said to be disputed.’8
[16] It was the respondent’s duty to prove her version. She made her own burden
more difficult, and exacerbated the factual disputes by raising different versions and
introducing new evidence in her replying affidavit. The respondent’s stance
vacillates from one version to another, often contradicting herself. The relief she
6 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; [1984] 2 All SA 366 (A); 1984 (3)
SA 623 (A).
7 Wightman t/a JW Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; [2008] 2 All SA 512 (SCA);
2008 (3) SA 371 (SCA).
8 Ibid para 13.
sought was to declare the customary marriage valid, and for the ANC to be declared
invalid. But, in her replying affidavit, she did not deny that the parties wanted to be
married out of community of property and executed the ANC for that purpose.
[17] This leads to the second issue raised by the appellant, namely the submission
that it was inappropriate to seek declaratory relief, in the circumstances of this case.
Further, that the court a quo exercised its discretion improperly by granting the relief.
There are two aspects to this argument which were succinctly dealt with in Cordiant
Trading CC v Daimler Chrysler Financial Services (Pty) Ltd.9 In Cordiant,10 this
Court in dealing with s 19(1)(a)(iii) of the Supreme Court Act 59 of 1959 (the
predecessor to s 21(1)(a)) referred to Durban City Council v Association of Building
Societies,11 where Watermeyer JA with reference to a section worded in identical
terms stated that ‘[t]he question whether or not an order should be made under this
section has to be examined in two stages. First the Court must be satisfied that the
applicant is a person interested in an “existing, future or contingent right or
obligation”, and then, if satisfied on that point, the Court must decide whether the
case is a proper one for the exercise of the discretion conferred on it’.12
[18] The respondent is a party who is interested in an ‘existing, future or contingent
right’. The relief she sought was not academic or abstract. The declarator she sought
was directly linked to her legal status. She wanted the court to determine that she
was married, that the marriage was under customary law, and that it was a marriage
in COP. Although the same question could have been determined in divorce
9 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd [2005] ZASCA 50; [2006] 1 All SA 103
(SCA); 2005 (6) SA 205 (SCA).
10 Ibid para 16.
11 Durban City Council v Association of Building Societies 1942 AD 27.
12 Ibid at 32.
proceedings, the respondent was entitled to seek declaratory relief to determine her
status. This does not mean, however, that the respondent was necessarily entitled to
the relief that was granted. This Court must consider the second stage of the inquiry,
namely whether the high court, in granting such relief, properly and judicially
exercised the discretion conferred on it.
[19] The high court found no irresoluble disputes of fact and accordingly based its
decision to grant the declaratory relief on that basis. As I have demonstrated above,
the disputes of fact in this case go to the very core of the matter – firstly, the
appellant’s consent, not only to be married, but to be married according to customary
law and, secondly, the validity of the ANC.
[20] The high court declared the ANC to be null and void. The high court found
that the parties’ decision to enter into the ANC was only discussed after the
customary marriage had been concluded. It was, however, common cause that the
decision to ensure that their marriage was one out of community of property with an
ANC, was discussed as early as April 2019. The appellant in his answering affidavit
refers to this discussion as follows:
‘119
I reiterate that the [respondent] and I discussed and agreed that it would be in our best
interest to enter into an ANC in order to protect our various interests in the relationship as we had
discussed at the beginning of our romantic relationship in April 2019.
I admit that in terms of the ANC:
120.1 I agreed to donate half a share of my Bryanston house to the [respondent].
120.2 I agreed to donate one motor vehicle to the [respondent].’
The respondent, in her replying affidavit, admitted the contents of those paragraphs.
[21] The appellant thus contends, and this aspect is not disputed, that the parties
always intended to enter into a marriage out of community of property (and for the
donation of a half share in the appellant’s Bryanston house and a motor vehicle).
This agreement was contained in the ANC. Thus, even if a customary marriage was
concluded, as alleged by the respondent, a court dealing with this matter at a trial,
might well recognize the post-nuptial execution of a notarial contract, which would
have a substantive bearing on the consequences on a divorce between the parties.
This issue was not considered by the high court in declaring that the ANC was
invalid. In fact, the setting aside of the ANC appears to go against the versions of
both parties as to how they wanted their marital regime to be governed.
[22] The factual disputes in this matter relating to both consent and the
consequences of the ANC are ‘first and foremost a fact-based enquiry’.13 In Clear
Enterprises (Pty) Ltd v Commissioner for the South African Revenue Services and
Others,14 Ponnan JA stated that ‘absent an undisputed factual substratum, it would
be extremely difficult to define the limits of the declaratory relief that should issue’.
[23] I am of the view that the high court did not properly exercise its discretion in
granting the declaratory relief, as the disputes in the matter could not be decided on
the affidavits. In this case, the more appropriate process would have been for the
respondent to institute a divorce as provided for in s 8 of the RCMA,15 where her
claim that the parties were married according to customary law and the consequences
13 Clear Enterprises (Pty) Ltd v Commissioner for the South African Revenue Services and Others [2011] ZASCA 164
(SCA) para 16.
14 Ibid.
15 Sections 8(1) and (4)(a) of the RCMA provide that:
‘(1) A customary marriage may only be dissolved by a court by a decree of divorce on the ground of the irretrievable
breakdown of the marriage.
. . .
(4) A court granting a decree for the dissolution of a customary marriage has –
(a) the powers contemplated in sections 7, 8, 9 and 10 of the Divorce Act, 1979, and section 24(1) of the Matrimonial
Property Act, 1984 (Act No. 88 of 1984).’
thereof would have been properly ventilated at trial. This Court is therefore at large
to set aside the order.
[24] In regard to the order to be granted, two statements of the respondent point to
the fact that the disputes of fact referred to were anticipated prior to the launch of
the application. First, in her founding affidavit, she alleges that the parties began
experiencing problems in March 2020. The respondent obtained legal advice that the
ANC was invalid, as it had been executed after the customary marriage had been
concluded. In seeking the relief which she does, she stated that ‘[t]he applicant will
continue to be prejudiced for as long as the respondent is allowed to continue to
claim that there is no marriage between the parties, and / or to illegally enforce the
antenuptial contract’. (Emphasis added.) Thus, the respondent was aware of the
appellant’s stance – he had not consented to be married under customary law, in
COP; he insisted on a civil marriage with an ANC.
[25] Second, in regard to why the customary marriage was not registered, within
the three-month period or at all,16 the respondent provides conflicting versions. In
the founding affidavit, she simply stated that it was not registered. In the replying
affidavit, her reason is that the parties chose to hide the fact of the customary
marriage, as it was cheaper to simply conclude an ANC. Further, she states that the
appellant changed his mind that the customary marriage was valid and, therefore,
the customary marriage was not registered.
16 Section 4(3)(b) of the RCMA provides that:
‘(3) A customary marriage—
(b) entered into after the commencement of this Act, must be registered within a period of three months after the
conclusion of the marriage or within such longer period as the Minister may from time to time prescribe by notice in
the Gazette.’
[26] On the facts set out above, it seems clear that the respondent not only
approached the high court using motion proceedings, which were wholly
inappropriate in the present case, but did so with the knowledge that such factual
disputes were present. In Gounder v Top Spec Investments (Pty) Ltd,17 this Court
emphasised that in electing to proceed by way of motion, with knowledge of existing
disputes of fact, an applicant risks having their application dismissed, rather than
being referred to evidence or trial. In my view, that principle applies in the present
case.
[27] In the result, the following order is granted:
The appeal is upheld with costs.
The order of the high court is set aside and replaced with the following:
‘The application is dismissed with costs.’
___________________
S E WEINER
JUDGE OF APPEAL
17 Gounder v Top Spec Investments (Pty) Ltd [2008] ZASCA 52; [2008] 3 All SA 376 (SCA); 2008 (5) SA 151 (SCA)
para 10.
Appearances
For the appellant:
N G D Maritz SC
Instructed by:
Victor Nkhwashu Attorneys, Johannesburg
Moroka Attorneys, Bloemfontein
For the respondent:
C E Thompson
Instructed by:
Martin Vermaak Attorneys, Johannesburg
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:
14 December 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form
part of the judgments of the Supreme Court of Appeal
Mashisane v Mhlauli (903/2022) [2023] ZASCA 176 (14 December 2023)
Today, the Supreme Court of Appeal (SCA) upheld an appeal with costs against the judgment of the
Gauteng Division of the High Court, Johannesburg, per Siwendu J (the high court), which granted
declaratory relief sought by the respondent. The respondent, Ms Mhlauli, had sought declaratory relief
in the high court that she and the appellant, Mr Mashisane, had concluded a valid customary marriage
as envisaged in s 3 of the Recognition of Customary Marriages Act 120 of 1998 (the RCMA), and that
they were married in community of property, profit and loss (in COP). She also sought an order
declaring that the ante-nuptial contract (ANC) concluded between the parties was null and void.
The respondent had sought the relief, as the appellant disputed that he had consented to a customary
marriage, or that he was married in terms of customary law. The appellant did not dispute that the parties
had participated in certain traditional customs and celebrations (the traditional customs), after the
conclusion of the lobolo contract. However, he contended that the purpose was only to embrace the
parties’ traditional customs. His case was that the parties had, from inception of their relationship in
April 2019, intended to be married by civil law and out of community of property. The respondent
disputed that that was their intention. She contended that all the required traditional customs occurred
and that they intended, and entered into, a customary marriage. It was common cause that the customary
marriage was never registered in terms of s 4 of the RCMA.
The issues before the SCA were, firstly, in regard to consent to be married in terms of customary law
and in COP, whether there were material disputes of fact which could not be decided on the papers; and
secondly, and ancillary to that, whether declaratory relief was not appropriate in the circumstances.
The SCA found that the disputes were material and went to the very core of the matter – firstly, the
appellant’s consent, not only to be married, but to be married according to customary law and, secondly,
the validity of the ANC. The appellant raised genuine disputes of fact. He explained the reasons for the
traditional customs having been observed and expressly disputed that that offered evidence of his
consent to be married under customary law and in community of property, rather than by way of a civil
marriage with an ANC. This case thus fell squarely within the ambit of the Plascon-Evans rule.
The SCA found further that the high court did not properly exercise its discretion in granting the
declaratory relief, as the disputes in the matter could not be decided on the affidavits. In this case, the
more appropriate process would have been for the respondent to institute a divorce as provided for in s
8 of the RCMA, where her claim that the parties were married according to customary law and the
consequences thereof would have been properly ventilated at trial. The SCA therefore found that it was
at large to set aside the order of the high court.
Accordingly, the SCA dismissed the respondent’s application, rather than it being referred to evidence
or trial in the high court. This was because on the facts the SCA found that the respondent not only
approached the high court using motion proceedings, which were wholly inappropriate in this case, but
did so with the knowledge that such factual disputes were present.
~~~~ends~~~~
|
3835
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 996/2020
In the matter between:
ADRIAN PAUL BARNES
APPELLANT
and
MANGAUNG METROPOLITAN MUNICIPALITY FIRST RESPONDENT
KETSEBAE ISRAEL KGAMANYANE
SECOND RESPONDENT
Neutral citation: Barnes v Mangaung Metropolitan Municipality and Another
(Case no 996/2020) [2022] ZASCA 77 (30 May 2022)
Coram:
VAN DER MERWE, MOLEMELA, SCHIPPERS and GORVEN JJA
and MAKAULA AJA
Heard:
18 May 2022
Delivered: 30 May 2022
Summary: Administrative law – review – principle of legality – appointment of
first chief of metropolitan police – power to appoint a person who was not a
registered traffic officer – interpretation of s 64D of South African Police Service
Act 68 of 1995 – only requirement that person be fit and proper in instance of first
chief of police – no requirement that appointee be traffic officer – appeal dismissed.
__________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: Free State Division of the High Court, Bloemfontein (Mathebula J
with Reinders J concurring), sitting as court of first instance:
The appeal is dismissed with costs.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Van der Merwe, Molemela and Schippers JJA and Makaula AJA
concurring)
[1] This appeal arises from an application to review and set aside the appointment
of the second respondent (Mr Kgamanyane) as the first executive head of the
metropolitan police service (metro police chief) of the first respondent, the
Mangaung Metropolitan Municipality (the municipality). The appellant (Mr Barnes)
was an unsuccessful applicant. Aggrieved at not having been appointed to the
position, he approached the Free State Division of the High Court (the high court).
Two judges, Mathebula J, with Reinders J concurring, dismissed the application
with costs but granted Mr Barnes leave to appeal to this Court.
[2] The position of metro police chief was advertised in July 2017. After a
shortlisting and interview process, Mr Kgamanyane and Mr Barnes emerged as the
two leading contenders. The panel conducting the interview rated Mr Kgamanyane
higher than Mr Barnes. On 17 November 2017, the council of the municipality
resolved to appoint Mr Kgamanyane as the first metro police chief. On
23 November 2017, Mr Barnes was told that his application had been unsuccessful.
Mr Kgamanyane commenced in the position on 1 January 2018.
[3] The crisp contention which founded the application by Mr Barnes was that
only a registered traffic officer could lawfully be appointed as metro police chief.
He contended that, since it was accepted that Mr Kgamanyane was not registered as
a traffic officer, his appointment was not competent in law. Put differently,
Mr Barnes contended that the municipality lacked the power to appoint
Mr Kgananyane as metro police chief unless he was a traffic officer. The founding
and supplementary affidavits raised other grounds but, by the time the matter was
argued before us, that was the only basis relied upon by Mr Barnes.
[4] The review application was brought under the principle of legality as well as
the Promotion of Administrative Justice Act 3 of 2000 (PAJA). Legality is a
fundamental principle of our law. Where an entity is accorded public power by law,
it may act only in accordance with those powers. If the entity acts outside of those
powers, the action lacks legality and may be reviewed and set aside. This was
articulated clearly in the matter of Fedsure Life Assurance Ltd and Others v Greater
Johannesburg Transitional Metropolitan Council and Others, which held:
‘It seems central to the conception of our constitutional order that the legislature and executive in
every sphere are constrained by the principle that they may exercise no power and perform no
function beyond that conferred upon them by law.’1
1 Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1999
(1) SA 374 (CC); 1998 (12) BCLR 1458 (CC) para 58.
When assessing the legality of any action, it is therefore necessary to establish
whether the entity that acted did so within the powers accorded to it (intra vires) or
beyond those powers (ultra vires).
[5] If it was a requirement that the appointee had to be registered as a traffic
officer, that requirement was not met on the facts before us. The municipality would
then have acted outside of the powers conferred on it and the appointment would be
reviewable under the principle of legality. In such a case, the application ought to
have succeeded. If the appointment amounted to administrative action as defined in
PAJA, it would also be reviewable on this ground. It was contested whether the
appointment constituted such administrative action under PAJA. In the light of this
crisp issue, however, it is not necessary to decide this point.
[6] The matter turns on an interpretation of certain sections of the South African
Police Service Act 68 of 1995 (the Act) and the regulations promulgated under it.
Section 64C(1) of the Act provides:
‘Subject to section 64D, a municipal council shall appoint a member of the municipal police
service as the executive head thereof.’
Section 64D is to the following effect:
‘When a municipal police service is established under section 64A, the municipal council in
question shall appoint a fit and proper person as first executive head of the municipal police
service.’
[7] Regulations were promulgated pursuant to the Act.2 Regulation 11(1) reads:
2 ‘Regulations for Municipal Police Services published under GN R710 in GG 20142 of 11 June 1999, as amended by
GN R854 in GG 20267 of 9 July 1999’.
‘(1) Subject to the provisions of sections 64D and 64Q,3 a person may be appointed as a member
of a municipal police service, if such person –
(a) is registered as a traffic officer in terms of the Road Traffic Act, 1989 (Act 29 of 1989);
(b) applied in the form set out in Annexure 7 and affirms under oath or by way of solemn
declaration that the particulars furnished in the application, are the truth;
(c) has permanent residence in the Republic of South Africa;
(d) is at least eighteen (18) years old of which documentary proof must be furnished;
(e) submits himself or herself to a medical examination as determined by the Executive Head and
is found to be physically and mentally fit for appointment as a member of a municipal police
service;
(f) is in possession of at least a senior certificate or equivalent qualification, of which documentary
proof must be furnished;
(g) has no previous criminal convictions (excluding previous convictions relating to political
activities in the previous dispensation) and such a person shall allow his or her fingerprints to be
taken;
(h) has successfully completed the training determined by the National Commissioner;
(i) is proficient in English;
(j) takes the Oath of Office determined by the municipal council concerned; and
(k) complies with the requirements determined by the municipal council concerned in addition to
the requirements set out in subregulations (a)-(j).’
[8] In this matter, the municipal police service had been established under s 64A.
This required the municipal council to appoint the first metro police chief. Those are
the precise circumstances covered by the provisions of s 64D. As such s 64D was
triggered and the present appointment was located squarely within its ambit. This
was correctly conceded by Mr Barnes. It was thus undisputed that the provisions of
3 Section 64Q(2)(a) reads:
‘Every person who, on the date of the establishment of a municipal police service under section 64A for a particular
municipality, is registered as a traffic officer in terms of any law and who is employed by that municipality may be
appointed as a member of the municipal police service even though the person may not comply with the training
requirements for appointment as a member of the municipal police service’.
s 64D governed the appointment. Section 64D accordingly had to be interpreted. The
approach to this process is clear:
‘Interpretation is the process of attributing meaning to the words used in a document, be it
legislation, some other statutory instrument, or contract, having regard to the context provided by
reading the particular provision or provisions in the light of the document as a whole and the
circumstances attendant upon its coming into existence. Whatever the nature of the document,
consideration must be given to the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears; the apparent purpose to which it is directed and
the material known to those responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the light of all these factors. The process is objective
not subjective. A sensible meaning is to be preferred to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert
to, and guard against, the temptation to substitute what they regard as reasonable, sensible or
businesslike for the words actually used. To do so in regard to a statute or statutory instrument is
to cross the divide between interpretation and legislation. In a contractual context it is to make a
contract for the parties other than the one they in fact made. The “inevitable point of departure is
the language of the provision itself”, read in context and having regard to the purpose of the
provision and the background to the preparation and production of the document.’4
And:
‘Whilst the starting point remains the words of the document, which are the only relevant medium
through which the parties have expressed their contractual intentions, the process of interpretation
does not stop at a perceived literal meaning of those words, but considers them in the light of all
relevant and admissible context, including the circumstances in which the document came into
being. The former distinction between permissible background and surrounding circumstances,
never very clear, has fallen away. Interpretation is no longer a process that occurs in stages but is
“essentially one unitary exercise”.’5
4 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA); [2012]
2 All SA 262 (SCA) para 18.
5 Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; [2014] 1 All
SA 517 (SCA); 2014 (2) SA 494 (SCA) para 12.
[9] Section 64D requires the municipality to ‘appoint a fit and proper person’ as
the first metro police chief. This is the single requirement. The words do not specify
that any other criteria need be considered. Section 64C(1) provides the immediate
context. It deals with appointments which follow that of the first metro police chief
and requires the municipality to ‘appoint a member of the municipal police service’.
It makes the provisions of s 64C(1) ‘subject to section 64D’. This means ineluctably
that s 64C(1) does not apply to appointments under s 64D. This contextual
interpretation is buttressed by practical considerations and makes good business
sense. The reason for this provision not applying to the first appointment is quite
simply that, at that time, there would be no members of the municipal police service
from which to appoint the first metro police chief. This was accepted by Mr Barnes
in argument. As such, he accepted that s 64C(1) did not apply to the appointment.
He could thus not base his contention that Mr Kgamanyane had to be registered as a
traffic officer on those provisions.
[10] Mr Barnes also accepted in argument that regulation 11(1)(a) did not apply to
the appointment. This concession was correct for at least three reasons. First, the
regulation relates to the appointment of a member of a municipal police service as
opposed to the metro police chief. Secondly, the regulation is pertinently made
subject to s 64D and must accordingly suffer the same consequence as reliance on
s 64C(1) dealt with above. Thirdly, the Act cannot be interpreted in the light of the
regulations promulgated under it.
[11] Before us, Mr Barnes raised only one argument in support of his contention.
It was that, in order to be a ‘fit and proper person’ as envisaged by s 64D, an
appointee had to be registered as a traffic officer. He submitted that, in the absence
of a requirement that the appointee be registered as a traffic officer, the words ‘fit
and proper person’ in s 64D would have no clear meaning in law and would be
incapable of being applied. He could cite no authority for that proposition and nor
could I find any.
[12] The words ‘fit and proper person’ are commonly used in legislation as a
criterion for appointment to various positions. A small sample of the numerous
provisions to this effect will suffice.
(a) Section 191 of the Companies Act 71 of 2008 allows the relevant Minister to set
up specialist committees and to appoint members to them. Section 192(2) sets out
requirements for persons appointed to those committees:
‘To be appointed or designated as a member of a specialist committee in terms of this section, a
person must –
(a) be a fit and proper person;
(b) have appropriate expertise or experience; and
(c) have the ability to perform effectively as a member of that committee.’
(b) Section 45(3) and (4) of the National Credit Act 34 of 2005 set out some of the
requirements for registration under that Act:
‘(3) If an application complies with the provisions of this Act and the applicant meets the criteria
set out in this Act for registration, the National Credit Regulator, after considering the application,
must register the applicant subject to section 48 unless the National Credit Regulator after
subjecting the applicant to a fit and proper test or any other prescribed test, is of the view that there
are other compelling grounds that disqualify the applicant from being registered in terms of this
Act.
(4) The Minister may prescribe the criteria to be considered in conducting a fit and proper test
contemplated in subsection (3)’.
(c) Section 174(1) of the Constitution provides:
‘Any appropriately qualified woman or man who is a fit and proper person may be appointed as a
judicial officer. Any person to be appointed to the Constitutional Court must also be a South
African citizen’.
(d) Section 2(3) of the State Attorneys Act 56 of 1957 provides:
‘The Minister of Justice and Constitutional Development may, subject to the laws governing the
public service and after consultation with the Solicitor-General, appoint –
(a) as State Attorneys, fit and proper persons who are admitted and entitled to practise as attorneys
in any division of the High Court of South Africa, and who shall be the heads of offices of State
Attorney established or deemed to have been established in terms of section 1;
(b) as many persons, who are fit and proper, and who are admitted and entitled to practise as
attorneys in any division of the High Court of South Africa, as may be necessary for the
proper performance of the business of an office of State Attorney; and
(c) such other persons as may be necessary for the proper performance of the business of an office
of State Attorney.’
(e) Section 7(1)(c) of the Legal Practice Act 28 of 2014 provides for the appointment
of certain members of the Legal Practice Council:
‘subject to subsection (3), three fit and proper persons designated by the Minister, who, in the
opinion of the Minister and by virtue of their knowledge and experience, are able to assist the
Council in achieving its objects’.
(f) And s 24(2) of that Act provides:
‘The High Court must admit to practise and authorise to be enrolled as a legal practitioner,
conveyancer or notary or any person who, upon application, satisfies the court that he or she –
(a) is duly qualified as set out in section 26;
(b) is a –
(i) South African citizen; or
(ii) permanent resident in the Republic;
(c) is a fit and proper person to be so admitted; and
(d) has served a copy of the application on the Council, containing the information as determined
in the rules within the time period determined in the rules’.
[13] In each of the above provisions, the requirement of being a fit and proper
person is a requirement in and of itself. Where other criteria are to be considered
along with that requirement, these are specified or imposed by way of regulations.
This further context to interpreting s 64D shows that the legislature chose not to add
any further criteria to that of the appointee being a fit and proper person. This also
distinguishes it from s 64C, which requires an appointee to come from the ranks of
members of a municipal police service. Under regulation 11, those ranks require
such a person to be registered as a traffic officer and meet a number of other
requirements. None of these is specified as necessary for an appointee under s 64D.
[14] The requirement of being a fit and proper person is one which has come to
have a settled meaning in our law. It is not shorn of meaning in the absence of a
requirement that the appointee had to be a traffic officer. It is capable of application
and has been applied in numerous contexts, either along with other requirements or
on its own. While s 64D does not include any further requirements, the legislature
included other requirements as regards ordinary members of a municipal police
service by way of s 64Q and regulation 11(1), and for appointments of subsequent
metro police chiefs of by way of s 64C(1). The submission that a municipality must
include a requirement that the first metro police chief be registered as a traffic officer
in order for the appointee to be a fit and proper person therefore does not pass muster.
[15] That being the case, Mr Barnes was incorrect to contend that the municipality
acted beyond its powers when it appointed Mr Kgamanyane as the first metro police
chief. The application to review the appointment was thus correctly dismissed by the
high court. The appeal must suffer the same fate. The respondents were unable to
advance any submissions in favour of their being entitled to the costs consequent on
the appointment of two counsel. The same senior counsel who represented the
respondents on appeal, appeared alone in the court a quo. In addition, the matter
resolved itself into a crisp issue, which in my view did not require the services of
two counsel. Therefore, the costs of only one counsel should be allowed on appeal.
[16] In the result, the appeal is dismissed with costs.
____________________
T R GORVEN
JUDGE OF APPEAL
Appearances
For appellant:
S Grobler SC
Instructed by:
Jacob Boucher Attorneys, Bloemfontein
For respondent:
W R Mokhare SC, with him C Lithole
Instructed by:
Rampai Attorneys, Bloemfontein.
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 May 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.
Barnes v Mangaung Metropolitan Municipality ZASCA 77 (30 May 2022)
Today the Supreme Court of Appeal dismissed an appeal from the Free State
Division of the High Court, Bloemfontein (per Mathebula J, with Reinders J
concurring. Mr Barnes and Mr Kgamanyane were the two shortlisted candidates for
the position of the first executive head of the metropolitan police service (metro
police chief) of the first respondent, the Mangaung Metropolitan Municipality (the
municipality). Mr Kgamanyane was appointed. Aggrieved at this, Mr Barnes
approached the high court to review and set aside that appointment. His application
was dismissed with costs but he was given leave to appeal to this Court.
The sole ground relied upon on appeal was that s 64D of the South African
Police Service Act 68 of 1995 (the Act) required the appointee to be a registered
traffic officer in terms of the Road Traffic Act 29 of 1989. Since it was common cause
that Mr Kgamanyane was not so registered, the appointment was made in
circumstances where the municipality had no power to do so under the principle of
legality.
The appointment was made under s 64D of the Act, which read:
‘When a municipal police service is established under section 64A, the municipal council in
question shall appoint a fit and proper person as first executive head of the municipal police
service.’
Section 64C deals with the appointment of subsequent metro police chiefs and
provides:
‘Subject to section 64D, a municipal council shall appoint a member of the municipal police
service as the executive head thereof.’
In order to a be a member of the municipal police service, a person had to be a
registered traffic officer. It was submitted that, unless this was held to be a
requirement for the first metro police chief, the words ‘fit and proper person’ in s 64D
would have no clear meaning in law and would be incapable of being applied.
The Supreme Court of Appeal undertook an interpretation of s 64D. The appointment
of the first metro police chief could not draw from members of the metropolitan police
force since there were no members at that stage. It was therefore distinguished from
subsequent appointments. In addition, it undertook a brief investigation of other
legislation concerning a requirement that a person be fit and proper. It held that this
had come to have an established meaning in our law and was capable of being
applied. For this reason, it concluded that the high court correctly dismissed the
application with costs. It followed that the appeal also had to be dismissed with costs.
|
3159
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case number : 53/04
In the matter between :
TSINYANE SOLOMON MAMUSHE
APPELLANT
and
THE STATE
RESPONDENT
CORAM :
BRAND, VAN HEERDEN JJA et THERON AJA
HEARD :
8 MAY 2007
DELIVERED :
18 MAY 2007
Summary:
Extra-curial statements by state witness – not admissible in
evidence against accused person under s 3(1)(b) of Act 45 of
1988 unless confirmed by maker in court – admission of
statements 'in the interest of justice' in terms of s 3(1)(c) of the
Act considered but refused – reliability of identification by single
remaining witness considered.
Neutral citation:
This judgment may be referred to as Mamushe v The
State [2007] SCA 58 (RSA)
JUDGMENT
_____________________________________________________
BRAND JA/
BRAND JA:
[1] The appellant stood trial in the Vereeniging Circuit Court, before
Whiting AJ and two assessors, on charges of murder, robbery, unlawful
possession of a firearm and unlawful possession of ammunition. All four
charges arose from an incident that occurred on 31 January 1997 in Evaton
near Vanderbijlpark when Mr Kapok Joseph Mhala ('the deceased') was shot
and killed in the course of an armed robbery. Despite his plea of not guilty, the
appellant was convicted on all four charges and then sentenced as follows: on
the count of murder, to life imprisonment; on the count of robbery, to 15 years
imprisonment; and on the counts of unlawful possession of a firearm and
ammunition – taken together for purposes of sentence – to 3 years
imprisonment. His appeal against these convictions and sentences is with the
leave of the court a quo.
[2] It was not in dispute that the deceased was fatally shot or that he was
robbed of virtually all the money in his possession at the time, though the
exact amount could not be established. The circumstances under which it
happened were also largely common cause. The issue was whether the
evildoer was the appellant, as alleged by the state. In essence the state's
case relied on the eyewitness testimony of Mr Kgoto Albert Ramakgula as
corroborated by the extra-curial statements of Ms Bessie Martin from which
she disassociated herself at the trial.
[3] Ramakgula was the deceased's assistant in a truck that delivered milk
on behalf of Clover Dairies to tuck shops in the Evaton area. The deceased
was the driver, who also took control of the money received from customers,
while Ramakgula was responsible for the physical deliveries. On 31 January
1997 they started their rounds at about 4 am. They made various deliveries
and on each occasion Ramakgula handed over the money he collected to the
deceased. Eventually they arrived at the tuck shop of Ms Martin where the
fatal incident occurred. This was about 10:30 in the morning. They entered
her premises through a gate and stopped near the tuck shop about 20 meters
further on.
[4] According to Ramakgula he made his delivery of milk in the shop to
one of Ms Martin's children from whom he received an amount of R60. On his
way back to the truck, he saw two men approaching from the direction of the
gate, directly behind the vehicle. There were no other persons in the vicinity.
Ramakgula got into the truck and was about to hand over the money he had
just received to the deceased, who had by that time already started the
vehicle and engaged the reverse gear. The two men Ramakgula had seen
approaching earlier then appeared one on each side of the vehicle. The one
on the driver's side had a handgun in his hand. Through the open driver's
window he fired a shot into the right side of the deceased's chest. A second
shot was fired, but at that stage Ramakgula was already jumping out of the
vehicle. As the vehicle was moving at the time when Ramakgula jumped out,
he was almost run over. The vehicle continued to move backwards until it
crashed into a stone border near the gate to the premises.
[5] The person who had fired went to the vehicle. He pushed the driver
aside and searched him. While this was happening the other person did
nothing. He just stood in front of the vehicle. After that the man with the
firearm walked away from the scene and the other one followed him until they
both disappeared around a corner. Ramakgula drove the vehicle to the police
station where he made a statement. The deceased appeared to be already
dead. They searched him but found no money on him except for R20 in his
back pocket. Although Ramakgula did not know the exact amount he handed
to the deceased, he could say that it was substantially more than R20.
[6] Ramakgula identified the man with the firearm as the appellant.
Though he did not know his name, he said, he had seen him about four or five
times over a period of about four weeks immediately prior to the incident at
various tuck shops in the vicinity. The other man, who was with the accused,
he had not seen before. He also testified that, after he had been to the police
station, he returned to the scene. There he heard Ms Martin giving the name
of the assailant to the police. He was unable, however, to remember what that
name was. During cross-examination it was put to Ramakgula that the
appellant would admit that he was in the vicinity when the deceased was shot,
but would contend that it was one Armstrong Songela and not he who was the
assailant. Ramakgula nevertheless persisted in his version that it was the
appellant who had shot the deceased.
[7] The other pillar of support for the state's case consisted of three extra-
curial statements allegedly made by Ms Martin to the investigating officer,
Detective Sergeant Khahliso Moolman, between May and October 1997.
According to the first statement, she was in her garden near the tuck shop on
31 January 1997 when she heard two shots. Immediately thereafter, she said,
a man ran past her with a firearm in his hand. She identified the man as the
appellant who was well-known to her. She called out asking what he was
doing, but he did not answer. He just kept on running. In the second and third
statements she again confirmed that the man she saw with the handgun was
the appellant, but added that she would not be willing to identify him at an
identification parade or to testify against him in court, because she feared for
her own safety as well as for the safety of her business.
[8] At the trial Ms Martin was called as a witness by the state. She
confirmed that she was the owner of the premises where the deceased had
been shot and that she heard two shots being fired that day. She denied,
however, that she saw the appellant, or for that matter, any other person with
a gun. In fact, she testified, she never even saw the appellant that day. She
also denied that she conveyed the contents of any of the three statements to
Sergeant Moolman. She admitted that she signed these statements but, she
said, she did so because Sergeant Moolman intimidated her and threatened
to arrest her if she refused to sign. What in fact happened after she heard the
shots, she testified, was that she went into her house and prayed. After that,
she saw the deceased's truck where it had crashed into the stone border and
many people gathering around it. When the people had left she went to the
vehicle where she found the deceased who was already dead.
[9] The state sought leave to hand in Ms Martin's three prior statements
under s 190(2) of the Criminal Procedure Act, 51 of 1997 in order to have her
declared a hostile witness. The trial court decided, however, that since Ms
Martin contended that the statements were made under duress, a trial-within-
a-trial should first be held to establish whether they were freely and voluntarily
made.
[10] During the trial-within-a-trial Sergeant Moolman was called to testify.
Ms Martin also gave further evidence. She persisted in her allegations of
duress which were denied by Sergeant Moolman. At the end of these
interlocutory proceedings, the trial court held that the statements had been
freely and voluntarily made and that they correctly reflected what Ms Martin
had told Sergeant Moolman at the relevant times. Thereupon the contents of
these statements were admitted against the appellant.
[11] On appeal, the court a quo was criticised, on behalf of the appellant, for
insisting on a trial-within-a-trial procedure in order to determine whether extra-
curial statements by a state witness were freely and voluntarily made. Though
there appears to be some justification for the criticism, nothing turns on it in
my view and I thus refrain from further comment on the procedure adopted by
the trial court in this regard.
[12] The appellant testified in his own defence. The contents of his
evidence was essentially as foreshadowed in what had been put to
Ramakgula. Though he admitted that he was in the vicinity of Ms Martin's tuck
shop when the incident occurred, the shots were fired, on his version, by
Armstrong Songela, who had died of unnatural causes between the date of
the incident and the trial. He was cross-examined on a so-called warning
statement he made to Sergeant Moolman at the time of his arrest in May
1997. According to the statement his version was that he was not at the scene
of the incident and that he had only heard of the attack on the deceased three
days later. The appellant denied, however, that he had ever made this
statement. Apart from finding the appellant an unreliable witness, the court a
quo concluded that the state's case was in fact strengthened by his false
version of how the killing occurred. If Songela was indeed involved, so the
court reasoned, the appellant would have made a statement implicating him
the first time he was confronted by the police, which he did not do.
[13] It is plain, in my view, that the statements by Ms Martin were of vital
importance to the state's case. If these statements were rightly admitted, it
seems almost inevitable that the conviction must be upheld. The first pivotal
question is thus – were the contents of the statements rightly admitted as
evidence against the appellant? The position with regard to an inconsistent
statement is normally that it is admissible only to discredit its maker and not to
prove the truth of its contents (see eg Hoskisson v R 1906 TS 502 at 504; R v
Deale 1929 TPD 259 at 260; Johann Kriegler & Albert Kruger Hiemstra, Suid-
Afrikaanse Strafproses 6 ed (2002) at 484). The reason is that, even where
the statement is admitted to discredit its maker, its contents remain hearsay
evidence. The court a quo appreciated this, but nevertheless found the
contents of the statement admissible under the exception provided for by
s 3(1)(b) of the Law of Evidence Amendment Act 45 of 1988 ('the Act').
Section 3(1) of the Act confirms the common law rule that hearsay is generally
not admissible in evidence. It then creates certain categories of exception.
One of these is in s 3(1)(b) which lifts the ban if 'the person upon whose
credibility the probative value of such evidence depends, himself testifies at
such proceedings'. On the basis of this section the court a quo held that:
'Although the statements are hearsay they are admissible in terms of s 3(1)(b) . . . in view of
the fact that Ms Martin herself testified at the proceedings.'
[14] From this statement it is apparent that, relying on a literal interpretation
of s 3(1)(b), the court a quo came to the conclusion that an extra-curial
hearsay statement becomes admissible as long as the maker testifies at the
hearing and that it matters not whether the maker then confirms or disavows
the statement in evidence. This conclusion is, however, in direct conflict with
the later decision of this court in S v Ndhlovu 2002 (2) SACR 325 (SCA),
which held that s 3(1)(b) only renders and extra-curial statement admissible if
it is confirmed by the maker in evidence during the court proceedings. The
reason for this decision appears, inter alia, from the following explanation by
Cameron JA (para 30 at 342e-g):
'If the witness, when called, disavows the statement, or fails to recall making it, or is unable to
affirm some detailed aspect of it . . ., the situation under the Act is not in substance materially
different from when the declarant does not testify at all. The principal reason for not allowing
hearsay evidence is that it may be untrustworthy since it cannot be subjected to cross-
examination. When the hearsay declarant is called as a witness, but does not confirm the
statement, or repudiates it, the test of cross-examination is similarly absent, and similar
safeguards are required.'
[15] The court a quo thus erred in admitting the statements in under
s 3(1)(b). It follows that the only possible basis upon which their contents
could be admitted against the appellant would be by virtue of the provisions of
s 3(1)(c). Under this section hearsay becomes admissible if the court, having
regard to the considerations listed in this sub-section, forms the opinion that it
should be admitted 'in the interest of justice'. Because of the view the court a
quo held with regard to the meaning of s 3(1)(b), it never considered
exercising its discretion under s 3(1)(c). On appeal this court has, however,
been asked by the state to admit Ms Martin's statements in terms of the last-
mentioned sub-section.
[16] I turn to the question whether we should accede to the state's request.
What has by now become axiomatic, is that our courts apply considerable
restraint in allowing (or relying on) hearsay evidence against an accused
person in criminal proceedings. The reasons for this restraint have become
equally well settled. They flow mainly from the nature of the onus that rests on
the state and from the rights of an accused person underwritten by the
Constitution (see eg S v Ramavhale 1996 (1) SACR 639 (A) at 647i-648b; S v
Ndhlovu (supra) para 16 at 337a-c). An important consideration in deciding
whether the court should overcome its general reluctance to admit the
hearsay evidence under consideration in a particular case, relates to the role
that the evidence will play. It stands to reason that a hearsay statement which
will only serve to complete a 'mosaic pattern' will be more readily admitted
than one which is destined to become a vital part of the state's case (see eg
S v Ramavhale (supra) at 649d-e). To my mind it is clear that Ms Martin's
statements will fall into the latter category.
[17] Another consideration is the reliability of the hearsay evidence. The
court a quo's reasoning in this regard appears from the following statement by
Whiting AJ:
'The effect is thus that the court has before it two conflicting versions given by Ms Martin of
what she saw on the occasion of the shooting. Often the fact that a witness has given two
conflicting versions of an event will lead a court to conclude that neither version is reliable.
But this will not always be so. Much depends on the facts and circumstances of the particular
case.
At present it is a well known fact of life in South Africa that witnesses, . . . are often very
reluctant to give evidence for fear of reprisals against them if they should do so. That Ms
Martin was indeed affected in this way in the present case is borne out by what she said in
her second and third statements to Sergeant Moolman. We can think of no reason why Ms
Martin would falsely implicate the accused. In view of the considerations I have mentioned, it
would appear to be very much against her private interest to do so. It seems very much more
likely, particularly in view of her second and third police statements, that she was too
frightened to tell the truth when she gave evidence before us.'
[18] I am prepared to accept, without deciding, that, despite her denials, Ms
Martin probably did make the statements to Sergeant Moolman and that she
was probably telling the truth when she did so. Untruthfulness, however, is not
the only danger. The other danger is that she might have been mistaken.
Particularly with reference to identification evidence, the danger of mistake
has been underscored by our courts again and again (see eg S v Mthetwa
1972 (3) SA 766 (A) at 768; S v Charzen 2006 (2) SACR 143 (SCA) para 11
at 147i-j). By its very nature, hearsay evidence cannot be tested in cross-
examination. The possibility of mistake can therefore not be excluded in this
way. The result is, in my view, that hearsay evidence of identification can only
be admitted if the possibility of mistake can be safely excluded in some other
way, eg with reference to objectively established facts.
[19] In this matter there is no way to test the accuracy of the observations
Ms Martin deposed to in her statements. On the contrary, according to her
testimony in court it would, as a result of physical obstructions impeding her
view, be virtually impossible for her to make those observations from her
garden where she stood. It is true, of course, that at that stage she was trying
her utmost to distance herself from the contents of the statements.
Nonetheless, her evidence about the physical obstructions remained
uncontested. In the circumstances the identification evidence deposed to by
Ms Martin in her statements appears to be of the most unreliable kind. For
these reasons we should not, in my view, accede to the state's request to
admit these hearsay statements under the provisions of s 3(1)((c) of the Act.
[20] The next question is whether the evidence of Ramakgula, on its own, is
sufficient to justify the appellant's conviction. The court a quo found
Ramakgula an honest witness. I have no reason to doubt the correctness of
that finding. However, the danger that again looms large, is the possibility of
mistaken identification. The court a quo found reassurance in the fact that the
witness had sufficient opportunity to make his observations in that he was
looking directly at the assailant when he fired the shot. This reassuring factor
is, however, diluted to a material extent by the contents of two statements
which Ramakgula made to the police. According to these statements he told
the police that both the assailant and his companion were armed with firearms
and that the companion was pointing a firearm at him when the killer shot the
deceased. Although Ramakgula distanced himself from these statements in
evidence, it is difficult to conceive why the police would fabricate this version.
It almost goes without saying that if this version is to be accepted,
Ramakgula's opportunity of observing the killer would be materially reduced.
[21] The court a quo also found reassurance in the fact that Ramakgula had
seen the appellant on about four occasions prior to the incident. The problem
is, however, that on Ramakgula's own version he had heard the assailant
being identified by Ms Martin shortly after the incident. Although he could not
remember the name that Ms Martin mentioned, it appears from the context
that she most probably mentioned the name of the appellant. Apart from the
inherent danger of suggestion, any mistaken identification by Ms Martin would
thus have poisoned the evidence of Ramakgula as well. Additional support for
the notion that Ramakgula's identification of the appellant may be the result of
suggestion, seems to derive from his own evidence that Moolman provided
him with some description of the appellant long before he testified in court.
Confidence in Ramakgula as a witness is further diminished by the fact that,
in a statement to Moolman, Ramakgula referred to the assailant and his
companion as 'two black men unknown to me'. In cross-examination
Ramakgula ascribed this to a misunderstanding between him and Moolman.
But according to Moolman's testimony, Ramakgula was indeed unable to give
a description of the assailant 'because of the fear he was under'. As to how
Ramakgula was then able to identify and describe the appellant at a later
stage, Moolman volunteered the following solution:
'[M]aybe that which he said in court is based on what he gathered from Evaton . . . on that
which Ms Bessie [Martin] told him.'
[22] In the light of all these difficulties, it is in my view self-evident that the
appellant cannot be convicted solely on the basis of Ramakgula's testimony.
Lastly there is the appellant's mendacity as a witness. Though false denials by
an accused person will often strengthen the state's case, it cannot serve as
the sole basis for conviction. It too often happens that innocent persons
cannot resist the temptation of putting as great a distance as possible
between themselves and criminal offences, even by deceitful means.
[23] For these reasons:
The appeal is upheld and the convictions and sentences are set aside.
.......................
F D J BRAND
JUDGE OF APPEAL
Concur:
VAN HEERDEN JA
THERON AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case number: 53/04
In the matter between
TSINYANE SOLOMON MAMUSHE
APPELLANT
and
THE STATE
RESPONDENT
From:
The Registrar, Supreme Court of Appeal
Date:
2007-05-17
Status:
Immediate
Mr Tsinyane Mamushe was convicted in the Vereeniging Circuit Court
on several charges, including murder and armed robbery and then
sentenced, effectively, to life imprisonment. Today the SCA upheld his
appeal against that judgment. In the result his convictions and the
sentences imposed by the Trial Court were set aside.
The matter arose from an incident that occurred on 31 January 1997 in
Evaton near Vanderbijlpark when Mr Kapok Mhala was shot and killed in
the course of an armed robbery. It was not in dispute that Mr Mhala was
fatally shot and that he was robbed of virtually all the money in his
possession at the time. The circumstances under which it happened
were also largely common cause. The issue was whether the evildoer
was the appellant, as alleged by the state. In essence the state's case
relied on the eyewitness testimony of Mr Kgoto Ramakgula as
corroborated by the police statements of Ms Bessie Martin.
In her statements to the police Ms Martin identified the appellant as the
person who shot the deceased. Though she was called as a witness at
the trial, she denied that she ever made those statements. Despite this
denial the Trial Court held that she did in fact make the statements and
admitted the contents thereof against the appellant.
The Supreme Court of Appeal found, however, that, although the
statements were admissible to discredit Ms Martin, their contents
remained hearsay evidence and should not have been admitted against
the appellant.
As to the only remaining evidence against the appellant, being that of
the eyewitness, Mr Ramakgula, the SCA held that there were a number
of indications that this witness might have been mistaken in identifying
the appellant and a conviction solely on the basis of Mr Ramakgula's
testimony, could therefore not be justified.
|
2250
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 372/08
JAN ABRAHAM DU PLESSIS N O First Appellant
NICOLAAS JOHANNES SMITH N O
Second Appellant
and
GOLDCO MOTOR & CYCLE SUPPLIES (PTY) LTD Respondent
Neutral citation: Du Plessis & Smith NNO v Goldco Motor & Cycle
Supplies (372/2008) [2009] ZASCA 62 (29 May
2009)
Coram:
NAVSA, LEWIS and SNYDERS JJA and
KROON and GRIESEL AJJA
Heard:
18 May 2009
Delivered:
29 May 2009
Summary:
Option to purchase immovable property deemed to have
been
exercised
by
purchaser
where
seller
has
deliberately frustrated exercise in prescribed mode.
_____________________________________________________
ORDER
On appeal from: Free State High Court (Kruger J sitting as court of first
instance).
The appeal is dismissed with costs, save that the order of the high court is
altered to read:
‘(a) The option for the purchase by the applicant of Shop 1, Prosperitas
Gebou, 133D Jan Hofmeyr Road, Welkom, from the first and second
respondents, in their capacities as trustees of the Prosperitas Trust, for the
price of R4 840 000 plus 14 per cent VAT, in terms of clause 5 of the
agreement of lease between the parties, dated 10 March 2005, is deemed to
have been exercised.
(b) The first and second respondents are ordered to take all necessary steps
to transfer the property described in (a) to the applicant against payment of
R4 840 000 plus VAT.
(c) The first and second respondents are ordered, jointly and severally, to pay
the costs of the application.’
JUDGMENTS
LEWIS JA (NAVSA and SNYDERS JJA and KROON AJA concurring)
[1] At issue in this appeal is the validity and enforceability of an option to
purchase immovable property. The appellants are trustees of a trust
(Prosperitas) which owns immovable property in Welkom. The respondent,
Goldco Motor & Cycle Supplies (Pty) Ltd (Goldco), is a company that hired
premises in a building constructed on property owned by the trust. The
premises were constructed in accordance with the specifications of Goldco’s
chairperson, Mr Boyd Cooper.
[2] The background to the matter is briefly this. Towards the end of 2004
the first appellant, Mr Jan du Plessis, approached Cooper and suggested that
Goldco take premises in a building that the trust proposed to construct in
Welkom. Goldco’s premises in Welkom had recently burned down. A week
later Cooper visited the site and considered it to be suitable. Du Plessis
offered to build premises that would be suitable for the business, and to sell
the building to Goldco. Subsequently it was agreed that Goldco would hire
only a section of the building and that a sectional title register would be
opened in respect of the building: Goldco would then purchase a unit rather
than the entire building. It was also agreed that Goldco would occupy the
premises as lessee before the sectional title register was opened.
[3] Accordingly, a lease was prepared by the trust’s attorney, Mr F
Rossouw of Rossouw & Vennote Ing (Rossouws) and was signed by Cooper
on 14 March 2005. The lease was for a period of five years since the parties
were not sure how long it would take for the sectional title register to be
opened such that the premises could be sold and transferred to Goldco. The
premises to be let were described as follows:
‘’n Perseel in die gebou, wat deur die verhuurder opgerig word te Erf 10671/A, Jan
Hofmeyrweg 133D, Welkom, soos uitgewys deur die verhuurder aan die huurder,
groot ongeveer 1331 . . . vierkante meter’.
The lease elaborated on the description by stating that the premises would be
known as ‘winkel nommer 1, Prosperitas gebou, Jan Hofmeyerweg 133D,
Welkom’. I shall revert to the description of the premises in considering the
enforceability of the option to purchase.
[4] Clause 5 of the lease reads:
‘Opsie om perseel te koop:
Die verhuurder verleen hiermee ‘n opsie aan die huurder om die perseel te koop teen
‘n koopsom van R4,000,000.00 (vier miljoen rand) plus BTW, welke koopprys sal
styg teen 10% (tien persent) per jaar vanaf 1 April 2005.
Hierdie opsie is onderworpe daaraan:
(a) dat die deeltitelregister ten opsigte van die grond en gebou waarin die perseel
geleë is, geopen word binne 24 (vier en twintig) maande na datum van
ondertekening van hierdie huurkontrak deur die verhuurder;
(b) dat die huurder hierdie opsie uitoefen deur ‘n skriftelike koopkontrak, opgestel
te word deur Mnre Rossouw & Vennote Ing van Stateway 352, Welkom,
9459, by hulle kantore te onderteken binne 24 (vier en twintig) maande na
datum van ondertekening van hierdie huurkontrak deur die verhuurder;
(c) dat die gemelde koopkontrak opgestel sal word nadat die goedgekeurde
deelplan deur die Landmeters aan Rossouw & Vennote Ing gelewer is en die
koopsaak sal omskryf word as ‘n deeltiteleenheid waarvan die deel
ooreenkom met die perseel wat verhuur word.’
I shall refer to this provision of the lease as ‘the option clause’ even though it
is contended by the trust that it did not confer an option at all – a question to
which I shall revert.
[5] The dispute between the parties arises from the failure by Rossouws to
draw up the contract for the sale of the premises envisaged in the option
clause within the stipulated period (that is, before March 2007), despite
Cooper’s timeous intimation that Goldco wished to exercise the option and
despite the receipt by Rossouws of an approved sectional plan. Moreover, the
trust subsequently refused to sell the premises to Goldco at the price that had
been agreed in the option clause. Goldco applied to the Free State High Court
for an order compelling the trust and Rossouw to draw up a written contract
pursuant to the option, tendering payment of the purchase price which had
escalated, in terms of an escalation clause, to R4 840 000. Rossouws was
cited as the third respondent in the court below. No order was made against it
and it is not a party to this appeal. The high court found for Goldco, ordering
that the written contract envisaged in the option clause be drafted and that
steps be taken by the trust to transfer the premises against payment of the
agreed price. The trust appeals with the leave of the high court.
[6] The high court accepted Goldco’s version that Cooper had advised
Rossouw several times before March 2007 that it wished to exercise the
option, but that Rossouw ignored the requests. It also accepted the argument
that the trust, through its attorney and agent, had thus deliberately frustrated
performance under the contract, and should be compelled to perform.
[7] The factual background that emerges from the founding affidavit of
Cooper, and which is uncontested, is that after the lease containing the option
clause was concluded, Cooper applied to the Standard Bank, Welkom for
finance for the purchase of the premises. The application was granted,
subject to the conditions (inter alia) that the written contract prescribed in the
option clause be drawn up and that a sectional title register be opened for the
property. (The document approving the loan anticipated that the premises
would be bought in the name of another company – a shelf company of which
Cooper was a director, but nothing turns on this since it is Goldco that seeks
relief and an order that the premises be sold and transferred to it.) Goldco in
fact took occupation of part of the premises before the lease commencement
date (1 May 2005).
[8] When approval of financing was given by the bank, Cooper took the
documentation to Rossouws. He pointed out to Rossouw that the financing
was dependent on the fulfilment of certain conditions such as the opening of
the sectional title register. Rossouw explained that he could not yet draft the
contract because the land surveyors had not provided a sectional plan,
required for the opening of a sectional title register.
[9] Cooper then visited the land surveyors in question, and the plan was
completed by 28 July 2005 and approved by the Surveyor General on 24
August 2005. The plan was sent by the land surveyors to Rossouw shortly
afterwards. Rossouw’s brother, Roelie Rossouw (R Rossouw), also an
attorney but with a practice in Bloemfontein, was mandated to see to the
opening of the sectional title register. Cooper visited him too to ensure the
opening of the register. R Rossouw explained that he could not proceed
without an instruction from the trust. Cooper was assured by Du Plessis and
both Rossouw brothers that the process of opening the register would be
expedited. Cooper considered that there was nothing further that he needed
to do. The trust denies that R Rossouw was instructed to attend to the
opening of the sectional title register.
[10] It was only in July 2006, at a function arranged by Standard Bank, that
officials of the bank asked why the transaction was taking so long to
complete. Rossouw was present, as was Cooper. The bank officials asked
about the apparent delay in the opening of the sectional title register.
Rossouw remained silent. And Cooper began to worry. The price was
escalating. He went to visit Rossouw to ask about the delay, but was advised
to speak to his own attorney.
[11] Rossouw did not depose to an affidavit and so we have no knowledge
of his version of events. Du Plessis responded that he had asked Rossouw
about the request made by Cooper: the visit had taken place, he was told,
after the option period had expired. That remains the trust’s position: the
option was not exercised timeously. In fact, even Cooper does not contend
that it was exercised in the prescribed mode timeously.
[12] Although Goldco claimed in the court below that the option had been
exercised timeously, it is clear that no written contract, as contemplated in the
option clause, had been drawn up by Rossouws and signed by the parties.
Goldco thus did not exercise the option in the manner prescribed in the option
clause. But Goldco contends, and the high court found, that Rossouw
deliberately failed to draw up the written contract timeously, and that
‘performance’ can be deemed to have occurred by virtue of the doctrine of
fictional fulfilment. It is not entirely clear to me what the high court meant
when it concluded that performance was deemed to have been made, but I
shall revert to this issue later in the judgment when dealing with fictional
fulfilment.
[13] The trust contends that the option was not exercised and that the
decision of the court below is incorrect. It raises several arguments in this
regard: that the option clause did not in fact constitute an option – a right to
purchase the premises simply by indicating acceptance in writing – but was
merely an agreement to agree; that even if it was an option it would not have
resulted in a binding contract because the description of the premises was
inadequate (an argument not made to the court below and raised at the last
minute before the hearing of the appeal by counsel for the trust); that
Rossouw was Goldco’s agent for the purpose of drafting the contract for the
sale of the land; and that there was no deliberate failure to perform. I shall
deal with each contention separately.
An option or an agreement to agree?
[14] The trust contends that because the option clause required that a
written contract for the purchase of the premises be drawn by Rossouws and
signed by the parties within 24 months of the date of the lease in order to
exercise the option, no right was actually conferred on Goldco. Goldco could
not, it was argued, bind the trust simply by advising it that the option was
being exercised. The contention that there was no option at all lacks merit.
[15] The essence of an option is that it is binding on the option grantor. It is
an offer, in this case to sell property, which cannot be revoked. It is the option
holder that has the choice whether to exercise its right.1 The principle is put
thus by R H Christie:2
‘To understand the true nature of an option it is best to analyse it into two parts – an
offer to enter into the main contract together with a concluded subsidiary contract
(the contract of option) binding the offeror to keep that offer open for a certain period.
On this analysis it is easy to see that the offeror is contractually bound to keep his
offer open, and if he breaks this contract of option by disabling himself from
performing it or by expressly or impliedly repudiating it he will be liable for damages
for breach of contract.’
[16] Could the trust with impunity have advised Goldco, within the 24-month
period, that it was not going to sell the premises to Goldco on the terms set
out in the option clause? The answer must be no: that if it did refuse to comply
1 Cairns (Pty) Ltd v Playdon 1947 EDL 145.
2 The Law of Contract in South Africa 5 ed p 54.
with its undertaking it would be guilty of breach of contract and liable to an
order for specific performance or damages.
[17] The fact that Goldco’s right could not be exercised simply by notifying
the trust (in writing) does not mean that there was no right conferred on
Goldco. The written contract envisaged in the option clause was, in my view,
no more than a prescribed mode of acceptance: the conclusion of a written
contract, drafted by Rossouws, and signed by the parties.3 That of course
raises the question what the content of the written contract envisaged by the
parties would be. Usually an option will reflect all the material terms of the
contract. Indeed, the option clause did reflect the essential terms of a contract
of sale of immovable property: the merx (whether the description is adequate
is a matter to which I shall return) and the price. What other terms would the
additional contract contain?
[18] In my view it is not necessary to answer the question, since I do not
believe that it is necessary for the parties now to enter into the agreement
originally envisaged. But this does not mean that the trust is not bound by its
undertaking to sell the premises at the price agreed. If the trust (through its
agent) deliberately frustrated the exercise of the option in the prescribed
mode, the position is not that the option falls away, but that the prescribed
mode of acceptance ceases to be such. And since the option clause
embodies all the essential terms of a contract of sale it must be enforced on
those terms.
Is the description of the premises sufficient?
[19] Shortly before the hearing the trust filed supplementary heads of
argument in which counsel argued that the premises could not be identified
without reference to the negotiations between the parties, and their conduct,
before the lease was concluded. The argument stems from the description of
the property (set out above) as premises in the building to be erected by the
3 See Driftwood Properties v McLean 1971 (3) SA 591 (A), and, most recently, Withok Small
Farms (Pty) Ltd v Amber Sunrise Properties Ltd [2008] ZASCA 131 (21 November 2008);
2009 (2) SA 504 (SCA) and Pillay v Shaik [2008] ZASCA159 (27 November 2008); [2009] 2
All SA 65 (SCA).
trust as pointed out by the trust to Goldco. Of course, in order for a contract
for the sale of land to comply with s 2(1) of the Alienation of Land Act 68 of
1981, the property sold must be identifiable from the description in the
contract itself. But it has long been settled law that objective evidence may be
adduced to identify the property. These principles relate also to options:
Hirschowitz v Moolman.4 This court has often reiterated the principle that
regard may be had to objective evidence to correlate the description in the
document with the actual property sold. In Vermeulen v Goose Valley
Investments (Pty) Ltd 5 Marais JA said:
‘What requires to be emphasised yet again is that evidence going to facilitation of the
task of relating the description of the res vendita given by the parties in their written
agreement to an area on the ground is not objectionable provided that it does not
relate to the negotiations between the parties or an ex post facto attempt to discover
their consensus, and provided further that no breach of the parol evidence rule is
involved. As long ago as 1948 this Court in Van Wyk v Rottcher’s Saw Mills (Pty)
Ltd6. . . recognised that a statutory provision that a contract of sale of land must be in
writing “cannot mean that the only evidence by which the property can be identified
must be contained in the writing . . .‘ . 7
[20] There is no need, in ascertaining precisely what and where the
premises are, to resort to the negotiations between the parties. There is clear
objective evidence. Goldco had in fact occupied the premises pursuant to the
lease. Moreover, the premises are described also as Shop 1, Prosperitas
Building, and the street address is also set out. As Goldco submits, the merx
is determinable simply by having regard to the building plan. There can be no
uncertainty as to what the merx was. This contention must thus fail.
Was Rossouw the trust’s agent?
[21] This question is germane to the application of ‘fictional fulfilment’. The
high court found that Rossouw was the trust’s agent, and that his failure to
4 1985 (3) SA 739 (A) at 765F-H and 767E-G.
5 2001 (3) SA 986 (SCA) para 14.
6 1948 (1) SA 983 (A) at 990.
7 See also, for example, Headermans (Vryburg) (Pty) Ltd v Ping Bai 1997 (3) SA 1004 (SCA)
and J R 209 Investments v Pine Villa Estates; Pine Villa Estates v J R 209 Investments [2009]
ZASCA 3 (26 February 2009); [2009] 3 All SA 32 (SCA) para 19.
draw up the written contract was attributable to the trust. The trust denied that
Rossouw was required to act as its attorney and agent. On the contrary, it
asserted, he was Goldco’s agent since only Goldco could give him the
instruction to draft the contract. The facts do not support the argument. It is
clear that Rossouw acted on behalf of the trust, and on its instructions, in
drafting the lease agreement. It was the contract prepared by him that
provided that the mode of exercising the option was through the signature of a
written contract signed by the parties. And, importantly and understandably,
subclause (c) of the option clause provided that the contract would be
prepared after the sectional title plan had been delivered to Rossouws by the
land surveyors. Throughout, it was clearly envisaged that Rossouws were the
agent of the trust, and in correspondence Rossouw referred to the trust as his
client. Indeed, Goldco could not exercise the option without the cooperation of
Rossouws. The court below thus correctly found that Rossouws was the
agent, as the attorney, of the trust.
Fictional fulfilment: frustration of the exercise of a right
[22] That brings me to the question whether the court was correct in finding
that the doctrine of fictional fulfilment was applicable. The high court found
that where a contract is subject to a condition that both parties sign it, one
party cannot escape the contract by making it impossible for the other to
sign.8 In such a case, it held, it would be assumed that the party refusing to
comply had in fact performed.
[23] It is important to understand, however, that the drafting of a written
contract to be signed by the trust and Goldco was not a condition in the true
sense. A condition is an uncertain future event. On fulfilment, a contract may
come into operation (in which case the condition is termed suspensive) or it
may be terminated (a resolutive condition). In this case the exercise of the
option was subject to one condition – the opening of the sectional title
register. It was also dependent on the performance by the trust of an
8Relying on First National Bank Ltd v Avtjoglou 2000 (1) SA 989 (C), confirmed in this respect
on appeal to the full court in Avtjoglou v First National Bank of Southern Africa Ltd [2002] 2 All
SA 1 (C). This court found that that decision, which granted provisional sentence, was not
appealable: 2004 (2) SA 453 (SCA).
obligation: procuring a written contract, on the terms set out in the option
itself, drawn by Rossouws, to be signed by the parties. But that is not a true
condition. Thus once Goldco intimated to the trust or its attorney that it wished
to exercise the option, and once the approved sectional plan was provided by
the land surveyors to Rossouws, there was an obligation imposed on the trust
to ensure that the written contract was prepared and signed by it. If anything
was then frustrated it was Goldco’s right to exercise the option, which was
rendered impossible by the failure of the trust to ensure that the prescribed
mode of exercise was available to Goldco in the agreed period.
[24] There is ample authority for the extension of the doctrine of fictional
fulfilment of conditions to the situation where there is deliberate frustration of
contractual performance. In Koenig v Johnson9 the payment of the balance of
the price of shares in a company by the purchaser was to be made on the
delivery to it of two patents. Delivery could not be made without signatures to
certain documents. The company that could procure signature refused to do
so because it believed that the patents were invalid. Wessels CJ held that
although the company genuinely believed this to be the case, the ‘condition’ of
signature should be deemed to have occurred. Although the court used the
word ‘condition’ it is clear that what was referred to was an obligation to
ensure signature.10
[25] Similarly, in East Asiatic Co Ltd v Hansen11 the court found that where
a buyer prevented a seller from performing a term of their contract of sale, on
which payment of the price was dependent, the seller was deemed to have
performed.12 Hathorn J said that both the doctrine of fictional fulfilment and
that of deemed performance spring from what Kotze JA described in MacDuff
& Co Ltd v Johannesburg Consolidated Investment Co Ltd 13 as ‘a branch of
9 1935 AD 262.
10 See in this regard Van Heerden v Hermann 1953 (3) SA 180 (T) at 187, where
Ramsbottom J said that the delivery of the patent in Koenig was not a ‘condition properly so
called’.
11 1933 NPD 297.
12 At 302.
13 1924 AD 573 at 611.
the broad equitable rule of our law that no one can take advantage of his own
wrong, for it is unjust and contrary to good faith that he should do so’.
[26] Thus although there is a distinction between a refusal to perform an
obligation upon which another party’s performance is dependent, and which
amounts to a breach of contract such that performance can be compelled (or
damages awarded), on the one hand, and the fulfilment of a condition, on the
other, in some cases, because of the deliberate frustration by a party of the
other’s right, performance will be deemed to have occurred or performance
will be ordered by a court.14 Christie15 suggests that the doctrine of fictional
fulfilment applicable to conditions has breached the division between
fulfilment of a condition and performance of a term because ‘the facts
sometimes call for the doctrine to be applied when what has not been fulfilled,
due to the deliberate action or inaction of one party, is really a term of the
contract’.
[27] Christie concludes that the doctrine of fictional fulfilment
‘ . . . applies equally to true conditions precedent and to terms of the contract that
operate as conditions precedent; that in either case it will apply when there has been
bad faith; it will also apply when there has been deliberate intention no matter the
motive, unless the terms of the contract and the surrounding circumstances indicate
to the contrary; . . . and at all levels no distinction is drawn between acts and
omissions’.
[28] Had Goldco sued the trust to compel performance before the expiry of
the option period there is no doubt that the court would have compelled the
trust to ensure compliance with the option clause. But it did not do so, and its
efforts to ensure compliance were thwarted by Rossouw, the trusts’s agent.
In my view, it would be inequitable to allow the trust to escape its obligation
through deliberately frustrating Goldco’s right to exercise the option. The trust
was in a position to ensure that the written contract, a ‘condition’ precedent to
the exercise of the option, was prepared by Rossouws and signed by it. The
14 See Scott v Poupard 1971(2) SA 373 (A) at 378H.
15 Op cit p 150.
deliberate frustration of the exercise by Goldco of its right in the prescribed
mode requires that Goldco be deemed to have done so. The effect of the
application of fictional fulfilment is thus to bind the trust after the expiry of the
option period because of its frustration of the right to exercise the option
timeously.
[29] I accordingly conclude that the court below was correct in finding that
this was a case where the doctrine of fictional fulfilment is applicable. On the
undisputed facts Goldco timeously attempted to exercise its option. It is only
because Rossouw, acting as the trust’s agent and attorney, deliberately
frustrated Goldco’s attempt to exercise its right that there was not compliance
with the option clause before its expiry. The trust cannot rely on the deliberate
failure of its agent to draw up a written contract for the sale of the premises in
order to escape its obligation to sell the premises to Goldco.16
[30] But nor, in my view, can the court order (as the high court did) that the
parties enter into the written agreement envisaged in the option clause,
because it cannot compel agreement on terms to be negotiated subsequently.
As I see the position, as indicated earlier, the prescribed mode of exercise of
the option – the signing by both parties of a written contract drafted by
Rossouws – is effectively dispensed with (or, to put the same notion
differently, deemed to have been complied with) as a result of the trust’s
frustration of the exercise of the option in that mode within the agreed time.
[31] The result is that the terms of the sale of the premises are to be found
in the option clause itself, as well, of course, as in the common law rules
governing sales. It follows that the appeal must be dismissed, but the order of
the high court changed to reflect the findings of this court.
[32] The appeal is dismissed with costs, save that the order of the high
court is altered to read:
16 Scott v Poupard at 378G-H.
‘(a) The option for the purchase by the applicant of Shop 1, Prosperitas
Gebou, 133D Jan Hofmeyr Road, Welkom, from the first and second
respondents, in their capacities as trustees of the Prosperitas Trust, for the
price of R4 840 000 plus 14 per cent VAT, in terms of clause 5 of the
agreement of lease between the parties, dated 10 March 2005, is deemed to
have been exercised.
(b) The first and second respondents are ordered to take all necessary steps
to transfer the property described in (a) to the applicant against payment of
R4 840 000 plus VAT.
(c) The first and second respondents are ordered, jointly and severally, to pay
the costs of the application.’
-------------------------
C H Lewis
Judge of Appeal
GRIESEL AJA (dissenting)
[33] I have had the advantage of reading the judgment of my colleague
Lewis JA but respectfully disagree with her conclusion that the appeal should
fail.
[34] Where I differ from my colleague is with regard to the validity of the
option clause in question.17 In order to be enforceable, an option must be
such that the substantive contract – whether sale, lease, or some other form
of contract – comes into existence without more by mere acceptance of the
offer; that is, by exercise of the option by the grantee.18 As stated in Brandt v
Spies:19
17 Quoted in para 4 above.
18 Hirschowitz v Moolman & others 1985 (3) SA 739 (A) at 767F. See also Van der Merwe et
al Contract: General Principles 3ed (2007) p 80.
19 1960 (4) SA 14 (E) at 16F–G, quoted with approval in Venter v Birchholtz 1972 (1) SA 276
(A) at 284A.
‘Through the option the grantee acquires the right to accept the offer to sell at any
time during the stipulated period; and if this right is exercised a contract of purchase
and sale is immediately brought into being. It follows that the offer must be one which
is capable of resulting in a valid contract of sale from the fact of acceptance by the
person to whom the offer is made.’
[35] It is not open to dispute that the option clause in this case contains all
the essentialia of a contract of sale. My colleague appears to regard this as
sufficient whereas I respectfully hold a different view. It is settled law that, in
order to comply with the provisions of s 2(1) of the Alienation of Land Act 68
of 1981, ‘the whole contract of sale, or at any rate all the material terms
thereof’ must be in writing.20 As explained by Corbett JA in Johnston v Leal:21
‘The material terms of the contract are not confined to those prescribing the
essentialia of a contract of sale, viz the parties to the contact, the merx and the
pretium, but include, in addition, all other material terms…. It is not easy to define
what constitutes a material term.’
What emerges clearly from the cases, though, is that ‘a material term is not
necessarily one of the essentials – parties, property and price – of a contract
of sale’.22
[36] It follows that, in order to serve as the basis for a valid contract of
sale, an option to buy land must not only contain all the essentialia of a deed
of sale; it must also contain all the other material terms thereof. I accordingly
agree with my colleague that ‘[u]sually an option will reflect all the material
terms of the contract’23 – as indeed it should. It is with the next part of her
reasoning that I have a difficulty. After pointing out that ‘the option clause did
reflect the essential terms of a contract of sale of immovable property’, my
colleague asks rhetorically: ‘What other terms would the additional contract
contain?’ In my view, it is not necessary for us to speculate as to what those
other terms might be. It was for Goldco, as applicant in the court below, to
20 Johnston v Leal 1980 (3) SA 927 (A) at 937G and the cases referred to therein.
21 At 937H.
22 Meyer v Kirner 1974 (4) SA 90 (N) at 98D, cited with approval in Johnston v Leal at 937G–
H.
23 Para 17 above.
prove the contract which it seeks to enforce.24 This means that it had to satisfy
the court that the parties had intended that the further written contract would
in fact not contain anything more than what is already contained in the lease,
ie the bare essentialia.
[37] In my view, Goldco has failed to discharge that onus. First, the
interpretation that no further material terms were necessary would make a
further written agreement completely superfluous. Second, such an inter-
pretation is contradicted by the background circumstances. It appears from a
letter dated 1 December 2004 attached to the founding affidavit that the trust
at that stage offered to sell a portion of the property – identified with reference
to erf number, surface area, dimensions and street frontage – to Goldco at a
stipulated price of R2,45 million excluding VAT and on certain further
conditions outlined in the letter. The trust described this offer as ‘ons
skriftelike aanbod in konsep vir verkoop’ of the property (emphasis added).
Significantly, the penultimate paragraph of the letter reads as follows:
‘Indien hierdie hoofbeginsels aanvaarbaar is, sal die partye toetree tot [’n] kontrak
met volle detail soos opgestel deur die oordragprokureurs Rossouw & Vennote
Welkom.’ (Emphasis added).
[38] Those ‘hoofbeginsels’ were indeed acceptable to Goldco. However,
instead of the detailed contract of sale envisaged in the letter, the parties
some 3½ months later entered into the lease, containing the option clause in
question. Having regard to these background circumstances, there can be
little doubt that the ‘skriftelike kontrak’ contemplated by the option clause is
the same as the ‘kontrak met volle detail’ referred to in the letter of 1
December 2004. The inference is irresistible that further material terms and
conditions, in addition to the essentialia already agreed upon, had indeed
been contemplated by the parties when the lease was signed. In these
circumstances, it is insufficient to hold, as my colleague does: ‘And since the
option clause embodies all the essential terms of a contract of sale it must be
24 This is a question which, according to Christie op cit p 154, ‘must now be regarded as
settled’.
enforced on those terms’.25 The question to be answered is a different one,
namely whether the option clause in fact embodies all the material terms of
the contemplated contract of sale; not just the essentialia. To my mind, the
answer to this question is no.
[39] For these reasons I am, with respect, unable to agree with my
colleague’s further statement that ‘the written contract envisaged in the option
clause was . . . no more than a prescribed mode of acceptance’.26 It is true
that clause 5(b) tends to create that impression, but then it should
immediately be pointed out that the clause is notable for its ineptitude rather
than its precision. Before acceptance can take place in the manner prescribed
by the option clause, a further written contract between the parties was
required, with neither guidelines as to the content of such contract nor any
deadlock-breaking mechanism in the event of deadlock between the parties.
In these circumstances, the option granted in terms of clause 5(b) is, in my
view, nothing more than an agreement to agree, which is insufficient to serve
as the basis for a binding agreement of sale. Put differently, the option is not
of such a nature that it is capable of resulting in a valid contract of sale from
the mere fact of acceptance thereof. All of these features, in my view, are
entirely destructive of a valid and binding option.27
[40] Had it not been for the provisions of clause 5(b), I would have had
little hesitation in holding that a valid option had been granted in favour of
Goldco. Clause 5(b), however, makes it clear that the offer to sell, as it
stands, does not purport to contain the entire offer by the offeror. Without a
complete offer, it is impossible to have a valid contract of sale complying with
the provisions of Act 68 of 1981. For these reasons I conclude that the option
in question is unenforceable.
25 Para 18 above.
26 Para 17 above.
27 Compare Letaba Sawmills (Edms) Bpk v Majovi (Edms) Bpk 1993 (1) SA 768 (A) at 773I–
774A; Namibian Minerals Corporation Ltd v Benguela Concessions Ltd 1997 (2) SA 548 (A)
at 567A–C; Premier, Free State and others v Firechem Free State (Pty) Ltd 2000 (4) SA 413
(SCA) paras 35–36.
[41] Having said that, I now wish to deal briefly with the relief claimed in
prayer 1 of the notice of motion, as ordered by the court a quo. It reads as
follows:
‘[D]at die respondente gelas word om binne tien (10) dae na datum van die verlening
van hierdie bevel ’n skriftelike koopkontrak ter uitvoering van die opsie soos
beliggaam in klousule 5 van die huurkontrak tussen die partye . . . aan [die
respondent] voor te lê vir ondertekening teen ’n koopprys van R4 840 000 plus 14%
BTW’.
[42] My colleague, with respect rightly, recoils from the prospect of
compelling agreement ‘on terms to be negotiated subsequently’.28 Her
suggested solution, as contained in para (a) of the proposed order, is,
however, equally unpalatable. Leaving aside the question whether this Court
should, in the exercise of its powers on appeal,29 mero motu amend in any
material way the relief claimed and granted in the court below, the proposed
order seeks to dispense with the peremptory requirement of a written
acceptance of the option.30 Moreover, the proposed order seeks to impose
upon the parties a written contract containing only the essentialia of a contract
of sale whereas the evidence reveals, on a balance of probability, that further
material terms were contemplated.
[43] In these circumstances, I would respectfully echo the words of
Botha JA in his minority judgment in Soteriou v Retco Poyntons (Pty) Ltd:31
‘No doubt the parties intended the clause to have business efficacy. But then, they no
doubt did not realise that an agreement to agree was devoid of legal effect. The
Court is powerless to correct their error for them. While the Court will strive not to be
a destroyer of bargains, it can never be the creator of them.’
[44] For these reasons, I would uphold the appeal, set aside the order of
the court below and substitute it with the following:
‘The application is dismissed with costs.’
28 Para 30 above.
29 Section 22 of the Supreme Court Act 59 of 1959.
30 Hirschowitz v Moolman, n 2 above, at 766D; Van der Merwe et al op cit p 83–84.
31 1985 (2) SA 922 (A) at 936I–J.
----------------------
B M Griesel
Acting Judge of Appeal
NAVSA JA (LEWIS and SNYDERS JJA and KROON AJA concurring)
[45] I have had the benefit of reading the judgments of my colleagues Lewis
JA and Griesel AJA. I agree with the reasoning and conclusions reached by
the former and I am in respectful disagreement with the latter. I am
constrained to add the comments that follow.
[46] First, it is important to note that up until the present appeal Prosperitas
had not contended that there were any terms, over and above those
contained in the option, which still had to be agreed upon. It is clear, both from
the founding and answering affidavits, that it was envisaged that it would take
up to 18 months for the sectional title register to be opened to enable a deed
of sale to be completed and that the parties provided a 24-month period to
that end. Factually, the only defence presented in the answering affidavit is
that the option had not been properly exercised by Goldco and that it was
solely to blame.
[47] Second, and perhaps more importantly, the agreement which this court
in Driftwood, referred to in para 17 by Lewis JA, held to be enforceable was in
similar terms to the option in the present case.32 The differences relate to
commission, a suspensive condition relating to the establishment of a
township and, that the purchase price was payable upon registration. The first
two aspects are inapplicable and the latter is in any event the position at
common law.
[48] Third, other than the question of the description of land which is dealt
with by Lewis JA, it was never suggested that the contents of the option would
32 At 595F-H.
otherwise not be in compliance with the provisions of the Alienation of Land
Act 68 of 1981.
[49] Fourth, Griesel AJA, in para 37 above, in interpreting the option had
regard to ‘background circumstances’. In particular, he had regard to
correspondence preceding the conclusion of the lease. It is clear that the
lease signed on 14 March 2005 superseded all prior negotiations and
agreements. It is the option contained in the lease that has to be interpreted
and applied. The option is, in my view, clear and unambiguous. It is to be
given its grammatical and ordinary meaning unless this would result in
absurdity, repugnancy or inconsistency with the rest of the document. The
circumstances in the present case are not such as to exclude the rule against
extrinsic evidence in aid of interpretation.33 The question we were called upon
to decide is whether the option was an agreement to conclude an agreement.
Lewis JA had regard to the terms of the option and in my view correctly
concluded that it did not.
[50] For all these reasons I concur in the judgment of Lewis JA.
--------------------
M S Navsa
Judge of Appeal
33 See R H Christie (op cit) p 204 and the discussion of Coopers & Lybrand v Bryant 1995 (3)
SA 761 (A) at p 205.
Appearances:
For the Appellant:
M H WESSELS SC
Instructed by:
Rosendorff, Reitz & Barry
Bloemfontein
For the Respondent:
C Ploos van Amstel SC
Instructed by:
Vermaak & Dennis
Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
29 May 2009
STATUS: Immediate
Du Plessis & Smith NNO v Goldco Motor & Cycle Supplies (372/2008)
[2009] ZASCA x (29 May 2009)
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal today dismissed an appeal against the order of
the Free State High Court that an option for the purchase of premises as a
sectional title unit was deemed to have been exercised.
The appellants, trustees of a trust that owns immovable property in Welkom,
had erected a building and built shop premises in it to Goldco’s specifications.
Goldco hired the premises, and in terms of the agreement of lease, the trust
gave Goldco an option to purchase the premises within two years of the
commencement of the lease, at a stipulated price, which would escalate over
time. The grant of the option was made subject to the condition that a
sectional title register be opened. The option clause provided also that the
option be exercised by the signing of a contract of sale, to be drafted by the
trust’s attorney, by the trust and Goldco.
Goldco had intimated to the attorney that it wished to exercise the option
within the stipulated time period. The attorney had failed to draw up the
contract within the two-year time period, despite Goldco’s requests. The high
court found that the trust had deliberately frustrated the exercise of the option.
It thus ordered the trust to ensure that the contract envisaged in the option
clause be drafted and signed.
On appeal, the majority of the SCA found that the trust had deliberately
frustrated the exercise of the option in the mode prescribed, and that the
option was thus deemed to have been exercised. Since the essential terms of
a contract of sale of land were set out in the option clause the sale was held
to be immediately enforceable and the court ordered the trust to take steps to
transfer the premises to Goldco.
------------------
|
3592
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 216/2020
In the matter between:
SPECIAL INVESTIGATING UNIT
FIRST APPELLANT
THE ACTING NATIONAL COMMISSIONER
OF THE NATIONAL DEPARTMENT OF
CORRECTIONAL SERVICES REPRESENTING
THE DEPARTMENT OF CORRECTIONAL
SERVICES FOR THE REPUBLIC OF
SOUTH AFRICA
SECOND APPELLANT
and
ENGINEERED SYSTEMS SOLUTIONS (PTY) LTD
RESPONDENT
Neutral citation: Special Investigating Unit and Another v Engineered Systems
Solutions (Pty) Ltd (Case no 216/2020) [2021] ZASCA 90
(25 June 2021)
Coram:
NAVSA, SALDULKER and DLODLO JJA and ROGERS and
MABINDLA-BOQWANA AJJA
Heard:
3 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
10h00 on 25 June 2021.
Summary: Legality review – state organs as co-applicants – validity of decisions to
award tenders – validity of pursuant contracts – whether delay unreasonable –
whether delay should be overlooked.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Mokose J, sitting
as a court of first instance):
The appeal is dismissed with costs, including costs occasioned by the employment
of two counsel.
JUDGMENT
Mabindla-Boqwana AJA (Navsa, Saldulker and Dlodlo JJA and Rogers AJA
concurring):
Introduction
[1] This is an appeal against a decision of the Gauteng Division of the High Court,
Pretoria (the high court), in terms of which it dismissed a review application brought
by the Special Investigating Unit (the SIU) and the Acting Commissioner of the
National Department of Correctional Services, representing the Department of
Correctional Services (the Department), against the respondent, Engineered Systems
Solutions (Pty) Ltd (ESS). It concerns the validity of the decisions taken by the
Department to award tenders to ESS and the subsequent service level agreement (the
SLA) concluded between the Department and ESS. The appeal is with the leave of
the high court.
[2] In the review application the SIU was the main applicant while the
Department supported the application as the second applicant. The SIU is an organ
of state established by Proclamation No. R 118 of 20011 issued in terms of s 2(1)(a)
of the Special Investigating Units and Special Tribunals Act 74 of 1996 (the SIU
Act), read with s 2(2), to investigate certain irregular and unlawful conduct by state
institutions and their employees, including serious maladministration in connection
with the affairs of any state institution; improper or unlawful conduct by employees
of any state institution; unlawful appropriation or expenditure of public money or
property; any unlawful, irregular or unapproved acquisitive act, transaction, measure
or practice having a bearing upon state property; and intentional or negligent loss of
public money or damage to public property (among others).
[3] The SIU has the power, inter alia, to ‘institute and conduct civil proceedings
in a Special Tribunal or any court of law for – (i) any relief to which the State
institution concerned is entitled, including the recovery of any damages or losses and
the prevention of potential damages or losses which may be suffered by such a State
institution; (ii) any relief relevant to any investigation; or (iii) any relief relevant to
1 Government Gazette No. 22531 of 31 July 2001.
the interests of a Special Investigating Unit’.2 The SIU also ‘may institute and
conduct civil proceedings in its own name or on behalf of a State institution in a
Special Tribunal or any court of law’.3
[4] On 15 April 2016, the President of the Republic of South Africa issued a
proclamation4 referring for investigation to the SIU, certain allegations in respect of
the affairs of the Department, relating to irregularities in the procurement of an
Electronic Monitoring System (EMS) and payments relating thereto. The SIU
alleged that its investigation revealed a number of irregularities in the procurement
processes relating to tenders awarded to ESS by the Department in relation to the
EMS. That is what led to the review application.
Background
[5] During 2011, a decision was taken by the Department to introduce, in phases,
a system (EMS) which would be used to monitor offenders who had been released
on parole and/or remand detainees who had been placed under supervision. The
system or project was initiated to immediately deal with the result of a judgment of
the Constitutional Court in terms of which inmates who had been sentenced to death
before 1 March 1994 became eligible for parole. The scope was, however, later
extended beyond that immediate need. The project would also promote public safety
by imposing restrictions on the movement of offenders and serve as a deterrent
against other non-compliant behaviour through various technologies.
2 Section 4(1)(c) of the SIU Act.
3 Section 5(5) of the SIU Act.
4 Proclamation No.R.18 of 2016, as published in Government Gazette No. 39935.
[6] A procurement project in respect of the introduction of the EMS got underway
on 8 June 2011 with a proposal to nominate members to serve on the Bid
Specification Committee (BSC) as well as the Bid Evaluation Committee and
Project Steering Committee. The nominees for the BSC held two meetings, on 7
June 2011 and 10 June 2011, prior to their formal appointment by the National
Commissioner of Correctional Services (National Commissioner) on 23 June 2011.
The manner in which these appointments were done as well as the holding of the
two meetings were identified as an irregularity by the SIU. Before us that issue was
not persisted in.
[7] On 26 August 2011, the Department advertised a tender for the ‘[s]upply,
delivery, installation, commissioning, training and maintenance of a National Pilot
Project for an electronic monitoring solution for the Department of Correctional
Services, over a one-year period’ (the pilot tender). If the pilot project proved to be
a success, a full-blown final project would be implemented. Bids were received from
various entities, including ESS.
[8] In December 2011, the pilot tender was awarded to ESS followed by a contract
concluded between the Department and ESS at a cost of R6 510 375. The pilot
project was to endure from 1 April 2012 to 31 March 2013, but the contract was
extended three times. With the final extension, the contract would expire on
30 June 2014. This, according to the appellants, was irregular and legally
impermissible, as the Department could not extend a contract that had expired. These
extensions, so the appellants contended, increased the contract price by an additional
R8 167 894 (125% of the original contract price), yielding a total price, inclusive of
extensions, of R14 678 269 (ie 225% of the initial contract price).
[9] During the pilot stage, ESS designed the EMS in consultation with the
Department. This involved a released offender being fitted with a tamperproof ankle
bracelet. The movement and location of that offender could then be monitored
electronically. ESS contracted, among others, 3M South Africa (Pty) Ltd (3M) and
Geo-Satis SA Technology (Geosatis) to provide it with the bracelets.
[10] In February 2014, the Department advertised a further tender, after a previous
one was aborted, for the ‘supply delivery, installation, commissioning, training and
maintenance of a National Electronic Monitoring Solution by way of lease for a
period of five years for the Department of Correctional Services’ (the final tender),
which was awarded to ESS in April 2014. On 21 May 2014, a Service Level
Agreement (the SLA) was concluded between the Department and ESS in respect of
the final project to the value of R301 611 772.
[11] In August 2016, the Department stopped paying ESS for services rendered,
claiming breach of contract, while it nevertheless expected ESS to continue to render
the services. This was followed by cancellation of the SLA on 15 March 2017 by the
Department. Reasons advanced for the cancellation were stated in a letter dated
13 March 2017, written to ESS by the Department’s attorneys. In the letter the
attorneys alleged that ESS had overcharged the Department by substantially
underperforming and had breached its contractual obligations.
[12] The Department further relied on the findings of the SIU that the Department
could not embark on a tender process or conclude an SLA when goods and services
procured constituted ‘information technology’ as defined in s 1 of the State
Information Technology Agency Act 88 of 1998 (the SITA Act)5 without the
involvement of the State Information Technology Agency (the IT Agency). (I shall
call this the SITA issue.)
[13] The letter further highlighted that the goods and services procured in the
tender process constituted ‘security equipment’ and ‘security services’ defined in s
1 of the Private Security Industry Regulation Act 56 of 2001 (the PSIR Act).6 For
that reason, persons and/or entities who rendered such services ought to have been
registered with the Private Security Industry Regulatory Authority (the PS
Authority) established in terms of the PSIR Act. It was alleged that the
subcontractors and personnel used by ESS to render the services were not registered
as required by the PSIR Act, and that this was a criminal offence in terms of s 38 of
the PSIR Act. (I shall call this the PS issue.)
[14] Furthermore, the Department’s attorneys alleged that ESS had made
misrepresentations in its bid documents concerning security clearance(s) by the State
Security Agency, as neither it nor its directors, personnel and subcontractors had
security clearance up to the level of ‘Confidential’, as required in terms of the SLA.
This issue was not pressed in the hearing on appeal, rightly so. ESS alleged that Mr
Francis Matabane, who was a project manager for the Department, informed ESS’
legal representatives that the inclusion of the requirement that ESS and its personnel
5 ‘Information technology’ in s 1 of the SITA Act ‘means all aspects of technology which are used to manage and
support the efficient gathering, processing, storing and dissemination of information as a strategic resource’.
6 In s 1 of the PSIR Act, ‘security equipment’ means ‘(a) an alarm system; (b) a safe, vault or secured container; (c) a
satellite tracking device, closed circuit television monitoring device or surveillance equipment; (d) a device used for
intrusion detection, access control, bomb detection, fire detection, metal detection, x-ray inspection or for securing
telephone communications; (e) a specialised device used to open, close or engage locking mechanisms; or (f) a
specialised device used to reproduce or duplicate keys or other objects which are used to unlock, close or engage
locking mechanisms’. ‘Security service’ includes ‘(h) installing, servicing or repairing security equipment’ and ‘(i)
monitoring signals or transmissions from electronic security equipment’.
must be cleared up to the purported level of confidential was an oversight on his part
during the drafting of the SLA, having made use of an old service level agreement
as a template. Despite its inclusion, the parties were of the common understanding
that only clearance in terms of the PSIR Act and criminal checks at the SAPS were
required. This allegation was also not addressed in reply by the appellants, but
simply noted. There would be no reason to reject it on the papers, similar to many
other allegations not addressed by the Department in reply.
[15] Finally, it was alleged that ESS had, as part of its tender, proposed the use of
Ekasi IT Solutions (Pty) Ltd (Ekasi), a 100% black-owned company. Ekasi’s profile,
qualifications, expertise and previous work experience featured significantly in its
bid, when it knew that it was not intending to utilise Ekasi. This, it was alleged,
constituted a misrepresentation of the facts to the Department. (I shall call this the
fronting issue.) Although in their review application the appellants alleged a number
of other irregularities as well, at the hearing of the appeal counsel for the appellants
said that he would be relying only on the SITA issue, the PS issue and the fronting
issue.
[16] The Department gave three months’ cancellation notice, which was from
1 April 2017 to 30 June 2017, during which period ESS was expected to hand over
all goods and services to the Department in terms of the Exit Management Plan as
contained in the SLA. According to the appellants, ESS refused to co-operate with
the hand-over process, and to avoid risk to public safety and security that could result
from the sudden discontinuation of the EMS from 1 July 2017, the SIU held
discussions with 3M and Geosatis to provide security bracelets for the EMS during
the cancellation period. These discussions failed to bear any fruit. After the expiry
of the three months’ cancellation period, and on 6 July 2017, the Department took a
decision to de-tag the offenders that were being monitored and continued to monitor
the affected offenders manually. It maintained that the de-tagging posed no risk to
public safety.
[17] The cancellation of the SLA was met with an urgent application, launched by
ESS in the high court on 31 March 2017, wherein ESS sought a declaratory order
that the SLA was valid and enforceable. It also sought payment of outstanding
invoices for goods it had supplied and services that it had rendered. The parties
agreed to have the dispute referred to arbitration before a retired judge. This
agreement was made an order of court on 20 April 2017. In it, the appellants reserved
their right ‘to challenge the validity of the administrative decision underpinning the
agreement and/or the agreement itself in a court of law in due course’.
[18] The arbitration served before retired Judge W J van der Merwe. During the
arbitration hearing, the Department, through its attorney, admitted liability for
services rendered by ESS and made known its intention to pay the invoices and even
offered to settle the matter. The Department however sought a postponement in order
to verify the invoices. The arbitrator refused a postponement, and the matter
proceeded. On 29 November 2017, the arbitrator ruled in favour of ESS and issued
two arbitration awards for payment in the amounts of R83 859 822 and R27 934 931
with interest at 5% above the prime lending rate. The arbitration awards were made
orders of the high court by Senyatsi AJ on 17 May 2018 and the Minister, who had
opposed the application, was ordered to pay costs on the scale as between attorney
and client. On 30 April 2018 and 23 May 2018, the Department instituted two
separate review applications for the setting aside of the arbitration awards. We were
told that these applications are still pending.
[19] The review application, which is the subject of this appeal, was lodged on 28
March 2018. In the review application, the appellants sought condonation for the
delay in bringing the application in terms of the common law, to the extent
necessary, alternatively an extension of the period of 180 days in terms of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA). They further sought
orders to review and set aside the ‘decisions taken by various officials in the employ
of [the Department] . . . underpinning:
‘2.1
the award of a tender to the Respondent, Engineered Systems Solutions (Pty) Ltd (“ESS”)
with Company Registration No. 2004/024978/07 for “a pilot project” with tender number
HK 07/2011 (“the Pilot tender”) which resulted in the appointment of ESS for a pilot project for
the “supply, delivery, installation, commissioning, training and maintenance of a national pilot
project for 12 months for an electronic monitoring solution for the Department [of] Correctional
Services” (“the Pilot project”). The Department issued Purchase Orders in the aggregate value of
R 14 678 269.50 in respect of the Pilot project; and
2.2
the award of a tender to ESS under bid number HO 01/2014 (“the Final tender”), which
resulted in the appointment of ESS for a project to “supply, deliver, install, train, commission and
maintain a National Electronic Monitoring Solution by way of lease for the period of five (5) years
for the Department of Correctional Services” (“the Final project”). The Department issued
Purchase Orders in the aggregate value of R 151 116 144.05 in respect of the Final project.’
[20] The appellants also sought the review and setting aside of the SLA(s) and any
other contracts entered into pursuant to the pilot and final tenders and/or projects;
and orders declaring that the decisions to award the tenders, and the respective
SLA(s) and other contracts, were unconstitutional, unlawful, invalid and void ab
initio. A relief of unjust enrichment was sought in the alternative.
[21] The high court dismissed the application for condonation on the basis that the
delay was unreasonable. It did not consider whether, despite the finding of
unreasonableness, the delay should nonetheless be overlooked. The high court erred
in this respect if one has regard to the principles established in various judgments,
to which I shall return.
[22] Before I deal with the main issues in the appeal, it is convenient to dispose of
some preliminary issues. The first issue is the contention by ESS that the review
application is fatally defective, because the relief sought by the appellants was in
conflict with Senyatsi AJ’s order, which made the arbitration awards orders of court.
There is no merit in this challenge. In the court order dated 20 April 2017, the SIU
and the Department clearly reserved their rights to challenge the validity of the
‘administrative decision underpinning the agreement and/or the agreement itself in
a court of law in due course’.
[23] The second contention by ESS is that the decisions sought to be reviewed
were not properly identified. That too has no merit and can be disposed of
summarily. The validity of the pilot and the final tenders to ESS as well as the
conclusion of the SLA and any other contracts between the Department and ESS
pursuant to the award of the tenders are in dispute and although the founding
affidavit is unnecessarily long the bases for the review set out above were provided.
PAJA and Legality
[24] The next question is whether PAJA finds application in this case. Post-State
Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd,7 it is now
settled that an organ of state cannot apply for the review of its own decision under
PAJA. Counsel for the appellants argued that insofar as the SIU was concerned,
7 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018 (2) BCLR 240;
2018 (2) SA 23 (CC).
PAJA would be applicable, as the SIU was not reviewing its own decision but that
of another organ of state. He contended that, although the Constitutional Court in
Gijima stated that an organ of state may not avail itself of PAJA, it went on to state,
obiter, that this did not mean one organ of state may not use PAJA against another.
In this regard, the Constitutional Court in Gijima said ‘[w]e must emphasise that the
issue has nothing to do with a scenario where an organ of state that is in a position
akin to that of a private person (natural or juristic) may be seeking to review the
decision of another organ of state’.8 (My emphasis.)
[25] Although the scenario seemed to have been left open by the Constitutional
Court in Gijima, it seems doubtful that the SIU would be regarded as being in a
position akin to that of a private person. The Constitutional Court in Gijima went on
to say ‘it seems inconsonant that the State can be both the beneficiary of the rights
and the bearer of the corresponding obligation that is intended to give effect to the
rights. This must, indeed, be an indication that only private persons enjoy rights
under section 33’,9 and by extension under PAJA. In regard to the delay question, it
would, in any event, be in favour of the appellants to proceed by way of legality than
PAJA.
Assessment of delay in legality reviews
[26] The principles applicable in assessment of delays in legality reviews are
succinctly summarised in the recent decision of this Court, Govan Mbeki
Municipality v New Integrated Credit Solutions (Pty) Ltd.10 I recount them briefly.
8 Gijima para 2.
9 Gijima para 27.
10 Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd [2021] ZASCA 34; [2021] 2 All SA 700
(SCA).
[27] The key difference between PAJA and reviews brought under the legality
principle is the 180-day limit which is applicable in PAJA as a period in which to
bring a review of an administrative action. In legality review this specified period
plays no role in the assessment of the delay.11 The test in legality review is whether
the delay is unreasonable.12 In both PAJA and legality reviews ‘the proverbial clock
starts running from the date that the applicant became aware or reasonably ought to
have become aware of the action taken’.13
[28] The Constitutional Court in Buffalo City Metropolitan Municipality v ASLA
Construction (Pty) Ltd14 endorsed the test followed by this Court in Gqwetha,15 and
later approved by the Constitutional Court in Khumalo,16 that in assessing delay the
first question to be determined is the reasonableness of the delay. If the delay is
found to be unreasonable, the next question is whether it should nevertheless be
overlooked in the interests of justice.17
[29] The reasonableness of the delay is assessed by considering the explanation for
the delay, which must cover the entire period of the delay. ‘Where the delay can be
explained and justified, then it is reasonable, and the merits of the review can be
considered . . . But . . . where there is no explanation for the delay, the delay will
necessarily be unreasonable’.18
11 ASLA para 46.
12 ASLA para 49.
13 Ibid.
14 ASLA para 48.
15 Gqwetha v Transkei Development Corporations Ltd and Others [2005] ZASCA 51; [2006] 3 All SA 245; 2006 (2)
SA 603 (SCA) para 33.
16 Khumalo and Another v Member of the Executive Council for Education, KwaZulu-Natal [2013] ZACC 49; 2014
(5) SA 579 (CC) para 49.
17 ASLA paras 48 and 50.
18 ASLA para 52.
[30] Where the delay is found to be unreasonable, there must be a basis for a court
to exercise its broad discretion to overlook it. This must be gathered from the
available facts.19 In this evaluation a number of factors must be taken into account.
The first ‘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 [the Court]’s power to grant a just and equitable
remedy and this ought to be taken into account’.20 The second factor to be considered
is the nature of the impugned decision. This entails ‘a consideration of the merits of
the legal challenge against that decision’.21 Navsa JA in South African National
Roads Agency Ltd v City of Cape Town22 highlighted the point that the merits of the
impugned decision are a critical factor in determining whether it is in the interests
of justice to condone the delay. That ‘would have to include a consideration of
whether the non-compliance with statutory prescripts was egregious’.23 A third
factor to be considered is the conduct of an applicant. In Member of the Executive
Council for Health, Eastern Cape and Another v Kirland Investments (Pty) Limited
t/a Eye & Lazer Institute,24 Cameron J stated that:
‘[T]here is a higher duty on the state to respect the law, to fulfil procedural requirements and to
tread respectfully when dealing with rights. Government is not an indigent or bewildered litigant,
adrift on a sea of litigious uncertainty, to whom the courts must extend a procedure-circumventing
lifeline. It is the Constitution’s primary agent. It must do right, and it must do it properly.’
19 ASLA para 53.
20 ASLA para 54.
21 ASLA para 55.
22 South African National Roads Agency Ltd v City of Cape Town [2016] ZASCA 122; [2016] 4 All SA 332; 2017 (1)
SA 468 (SCA).
23 SANRAL para 81.
24 Member of the Executive Council for Health, Eastern Cape and Another v Kirland Investments (Pty) Limited t/a
Eye & Lazer Institute [2014] ZACC 6; 2014 (3) SA 481 (CC) para 82.
[31] Finally, even if there is no basis to overlook the unreasonable delay, a further
principle arising from Gijima is that the court is obliged by virtue of the provisions
of s 172(1)(a) of the Constitution to declare invalid any law or conduct that is
inconsistent with the Constitution, to the extent of its invalidity.25 The Constitutional
Court in ASLA held that this applies when the unlawfulness is clear and undisputed.26
It further went on to state that the Gijima principle should ‘be interpreted narrowly
and restrictively so that the valuable rationale behind the rules of delay are not
undermined’.27 At the same time it should not be ignored, but applied where there is
indisputable and clear inconsistency with the Constitution. I now turn to the facts of
this case.
Was the delay unreasonable?
[32] The decision to award the pilot tender and the conclusion of the related
contract took place some seven years before the review application was brought,
whilst the decision to award the final tender and conclusion of the SLA was
approximately four years before the review application was launched. One glaring
fact in this case is that while the review application was brought by the SIU and the
Department as co-applicants, it deals almost exclusively with the SIU’s involvement
and its acquired knowledge of the facts. The organ of state whose decision is sought
to be reviewed and set aside took a back seat in the application.
[33] As stated in the judgments I have referred to, the applicants were obliged to
give a full account of the facts for the entire period of delay. In this case it is from
2011, when the first tender was awarded, to 2018, when the review application was
25 ASLA para 63 referring to Gijima para 52.
26 ASLA para 66.
27 ASLA para 71.
launched. According to the SIU, the proverbial clock, insofar as it was concerned,
started in September 2016, when it gained sufficient knowledge of the irregularities.
In as far as the Department is concerned, it seems to be claimed that the proverbial
clock started ticking in January 2017, when it was advised by the SIU to cancel the
agreement with the ESS.
[34] No account is given by the Department as to what occurred before 15 April
2016, when the SIU received its mandate to investigate its affairs. In fact, the
deponent to the founding affidavit, Mr Cornelius du Toit (an SIU investigator)
categorically stated that he would only deal with the supervening events which
occurred after 15 April 2016.
[35] The supporting affidavit deposed to by Mr Jephtha Mkabela, the Acting
National Commissioner of the Department and Head of Department, is unhelpful. In
it he simply ‘make[s] common cause with the SIU in every respect. Since this
Application is mainly based on investigation findings made by the SIU, as set out in
the Founding Affidavit of the SIU (as read with its annexures), and in order to avoid
unnecessary duplication, I will not repeat, or deal with the case made out by the SIU
as regards to the irregularities that occurred’. The Minister’s affidavit also did not
add any facts. It simply confirmed the authority of Mr Mkabela to institute the review
application and depose to his affidavit.
[36] This approach to adducing crucial evidence was criticised by this Court in
Drift Supersand (Pty) Ltd v Mogale City Local Municipality,28 where the Court said:
28 Drift Supersand (Pty) Ltd v Mogale City Local Municipality and Another [2017] ZASCA 118; [2017] 4 All SA 624
(SCA) para 31.
‘[T]he Municipality adopted the sloppy method of adducing evidence by way of a hearsay
allegation made by Mr Mashitisho supported by a so-called “confirmatory affidavit” by Mr Van
Wyk, who stated no more than that he had read the affidavit of Mr Mashitisho and “confirmed the
contents thereof in so far as it relates to me and any of activities”. This might be an acceptable way
of placing non-contentious or formal evidence before court, but where, as here, the evidence of a
particular witness is crucial, a court is entitled to expect the actual witness who can depose to the
events in question to do so under oath. Without doing so, a hearsay statement supported merely by
a confirmatory affidavit, in many instances, loses cogency.’
[37] It was crucial to have witnesses within the Department to depose to the events
that occurred before and after the SIU’s involvement in its affairs. Apart for there
being insufficient allegations in the founding affidavit pertaining to the decisions by
the Department to award tenders to ESS, it is not clear whether Mr Mkabela and the
Minister had personal knowledge of any of the facts in the founding affidavit
attributed to the Department. It appears that Mr Mkabela was only appointed as
Acting National Commissioner in January 2018 after the removal of Mr James
Smallberger. No one in the Department deposed to oversight measures, if any, in
relation to the procurement process. The court was not told what was done by the
Department at material times to monitor compliance with regulatory legislation.
Indeed, the court was not told that the Department commenced the review process
as soon as possible. The compelling conclusion, having regard to the timeline, is that
such an assertion was not possible.
[38] The Department had a duty to explain its actions and those of its officials.
Repeated allegations were made in the founding affidavit that ‘at all relevant times,
the Department was not aware and did not appreciate that the Contracts relevant to
the Pilot tender were unconstitutional, unlawful, invalid and void ab initio’. These
are facile and unhelpful and were made in parts of the founding affidavit dealing
with the alternative and conditional cause of action of unjust enrichment.
[39] As was stated in ASLA, organs of state ‘ought to become aware much sooner
. . . (even prior to, and without the benefit of an independent investigation), that its
employees awarded the . . . contract without going through a procurement process.
[They] must have effective structures and mechanisms in place to ensure proper
oversight for its service delivery projects. This is one of its core responsibilities. It
must detect and prevent the abuse of taxpayer’s monies. A lack of effective oversight
leads to dysfunctionality within [organs of state] by creating loopholes for fraud and
corruption’.29
[40] Mr du Toit stated in the founding affidavit that where he relied on hearsay
evidence ‘the necessary application will be made that same may be allowed’. Such
an application was not made. To the extent that Mr du Toit alleged anything of which
he or deponents to confirmatory affidavits from the Department had no personal
knowledge, it remained inadmissible hearsay evidence. We do not even know that
the responsible officials within the Department even agree that the EMS projects
were irregular in the respects identified by the SIU.
[41] The explanation given by the appellants as to what transpired from April 2016
is also unsatisfactory. The SIU alleged that after receiving its mandate to investigate
the Department on 15 April 2016, it started with its investigations in May 2016. Its
investigators, so it was alleged, had to wade through tens of thousands of documents,
which took them until August 2016. Mr du Toit became aware of Mr Nkosi, the
29 ASLA para 81.
Chief Executive Officer (CEO) of Ekasi, in September 2016, whom he requested to
comment on various documents. According to the SIU, this is when the proverbial
clock started ticking, as it then gained sufficient knowledge about the reasons for the
awarding of the tenders.
[42] The SIU had everything it needed to have to launch the review application by
early October 2016. By this time, they had consulted with Mr Nkosi of Ekasi and
received his affidavit and no new irregularities were discovered after that period.
The SIU instructed the State Attorney to brief counsel during December 2016. At
the same time, the Department had briefed its own attorney and counsel to provide
the Department with advice concerning possible breaches of contract and poor
service delivery by ESS. Counsel was eventually briefed by the SIU on
30 January 2017. This is when the SIU advised the Department to cancel the SLA
with ESS.
[43] The first consultation with counsel took place on 7 February 2017. The focus
shifted from compiling documents in preparation for the review application to
cancellation of the SLA and the court processes which followed. The SIU also
moved its attention to the hand-over process of the EMS from ESS to the
Department. The SIU, despite being a non-party to the contract, nevertheless
negotiated with the subcontractors of ESS to continue providing services when the
main contract had been cancelled, when on their own version the subcontractors did
not, in terms of prevailing legislation, qualify to render the services.
[44] There is a deafening silence about the further delay until 26 September 2017,
when counsel apparently completed the first draft of the founding affidavit, which
was sent to Mr Walser of the SIU to settle. He received it on 5 October 2017. A
further delay in finalising the review application was attributed to Mr Walser’s heavy
workload. He finally interacted with counsel in December 2017. Another delay was
allegedly caused by the change of Acting National Commissioner, whom the SIU
was only able to meet on 18 January 2018 to brief him about the application and for
him to be identified as the second applicant. No explanation was tendered of what
had occurred between the period of 18 January 2018 to 28 March 2018, when the
review application was issued, and to 5 April 2018, when it was served on ESS.
[45] Although the appellants contended that they did not sit idly by, allowing the
clock to tick away, the explanation they gave did not account for the full period. It
does not withstand scrutiny. The appellants did not act promptly in bringing the
review application. On the contrary, they dithered and focused instead,
unreasonably, on cancellation of the agreement and on other court and arbitration
processes, which the SIU admitted it was not party to until it intervened at a later
stage. The explanation consists of unaccounted periods and the delay is clearly
unreasonable.
Should the delay be overlooked?
[46] Having found the delay to be unreasonable, the next question is whether it
should be overlooked. I will first consider the nature of the impugned decision as
one of the components to be considered in this leg of the assessment.
[47] A number of irregularities were raised in the founding affidavit, but as
mentioned earlier, counsel for the appellants informed us that he was only relying
on three: the SITA issue, the PS issue and the fronting issue.
The SITA issue
[48] The appellants contended that the procurement process was unlawful and
invalid, because the pilot and final projects were concluded without the intervention
and referral to the IT Agency as required by the SITA Act, since the projects
envisaged by the Department had to do with ‘information technology’. ‘Information
technology’ is defined in the SITA Act as ‘all aspects of technology which are used
to manage and support the efficient gathering, processing, storing and dissemination
of information as a strategic resource’.30
[49] In terms of s 7(1), to achieve its objects, the IT Agency –
‘(a)
must, on behalf of a department, and may, on behalf of a public body, which so requests in
terms of subsection (4) or (5)-
(i)
provide or maintain a private telecommunication network or a value-added network service
in accordance with the Telecommunications Act, 1996 (Act No. 103 of 1996);
(ii)
provide or maintain transversal information systems; and
(iii)
provide data-processing or associated services for transversal information systems; and
(b)
may, on behalf of a department or public body, which so requests in terms of subsection
(4) or (5), provide –
(i)
training in information technology or information systems;
(ii)
application software development;
(iii)
maintenance services for information technology software or infrastructure;
(iv)
data-processing or associated services for departmentally specific information technology
applications or systems;
(v)
technical, functional or business advice or support, or research, regarding information
technology; and
(vi)
management services for information technology or information systems.’
30 Section 1 of the SITA Act.
[50] Section 7(3) provides:
‘Despite any other law to the contrary, every department must, subject to subsection (4), procure
all information technology goods or services through the Agency.’
And in terms of s 7(4), a department that wishes to acquire a service contemplated
in subsections (1)(a) ‘must (i) acquire that service from the Agency in accordance with business
and service level agreements concluded in terms of section 20; or (ii) procure that service through
the Agency in terms of subsection (3) if the Agency indicates in writing that it is unable to provide
the service itself’.
[51] If services are contemplated in terms of section 7(1)(b), a department must, in
terms of s 7(4)(b), either acquire that service from the IT Agency in accordance with
business and service level agreements concluded in terms of section 20 or procure
that service through the IT Agency in terms of subsection (3).
[52] The appellants also referred to regulation 16A6.3(e) of the Treasury
Regulations, amongst others, which states that the accounting officer or accounting
authority must ensure that contracts relating to information technology are prepared
in accordance with the SITA Act and its Regulations.
[53] In order for the SITA Act to find application in this case, the appellants had
to show that the services provided by ESS to the Department fell within the services
listed in s 7(1) of that Act. ESS alleged in its answering affidavit that it was given
assurances by the Department that the SITA Act did not apply, because the
Department did not regard the services to be rendered by ESS as information
technology services. ESS presumed this to be so, because the services it provided to
the Department primarily included the provision of hardware such as ankle bracelets
to be worn by parolees. The composite does not appear to fall within the services
contemplated within s 7. Indeed, the Department did not, prior to the review
application consider it to be so. In its opposing papers, ESS alleged that it would
have been inconceivable and impracticable to separate a tender for the bracelets from
the ‘peripheral information technology services’. This received no substantive
answer from the SIU or from the Department.
[54] ESS made further allegations in its answering affidavit that:
‘Not only was ESS given repeated assurances that this is not an IT project, but ESS was also
informed that [the IT Agency’s] participation in the Rollout Project was limited to providing the
IT Hosting environment. ESS would deploy the Electronic Monitoring Software. IT was only an
enabler to the Electronic Monitoring program, as per the tender document issued by the DCS.
Despite [the IT Agency]/DCS being obliged to provide the Hosting Environment for purposes of
deploying the monitoring software, it failed to do so and as a result and in order to ensure proper
service delivery, ESS took it upon themselves (at the request of the DCS) to provide the complete
IT environment to enable delivery of the EM program, until such time as [the IT Agency]/DCS
complied with their obligations.
Not only were ESS given repeated assurances that this was not an IT project and ESS need not be
concerned with [the IT Agency], it should also be remembered that this aspect falls within the
specific and exclusive knowledge of DCS.’
[55] There is no evidence to gainsay what has been alleged by ESS.
Extraordinarily, the Department failed to provide any explanation in the founding
affidavit in relation to its alleged non-compliance with the SITA Act as a co-
contractor or attempt to deal with ESS’ allegations in reply. Instead, they noted and
reserved them for argument. ESS’ version is accordingly not disputed on this issue.
Moreover, I am unpersuaded that the services provided by ESS are covered by the
provisions of s 7(1).
[56] Counsel for the appellants took us to the tender document prepared by the
Department, which referred to ‘System/Data Requirements’ and ‘Software
Requirements’, and to the proposal by ESS to the Department dated 10 March 2014
listing the business and system requirements, in order to demonstrate that the
functions listed therein fell within the provision of services contemplated in the
SITA Act.
[57] The issue of non-compliance with the provisions of the SITA Act is a question
of interpretation. That interpretation cannot be done in a vacuum, it must have a
factual basis. The mentioning of ‘software’ in a document is not sufficient to come
to a conclusion that the provisions of the SITA Act were involved. Whether software
services played less of a role than hardware required an understanding of the
underlying facts pertaining to the function of the ankle devices in relation to the
technology employed. It would have helped not only to have the Department’s view
on this issue but to also have someone with expertise, possibly from the IT Agency,
to give insight as to how EMS would fit into the services listed in the SITA Act. The
SIU simply listed the provisions of the SITA Act and arrived at the conclusion that
there was a breach without interrogating the difficult questions raised by ESS. I am
not satisfied that there are sufficient facts available to invalidate the contract on the
basis contended for.
The PS issue
[58] The challenge under this heading is that the goods required for the EMS’ pilot
project were deemed to constitute ‘security equipment’ and the monitoring and
service of such equipment were deemed to constitute ‘security services’ as defined
in the PSIR Act. ESS, including its subcontractors and their respective staff, were
not registered to render the security services at the time the ESS submitted its bid
response and when they purported to render services to the Department.
[59] Section 20(1)(a) of the PSIR Act prohibits the rendering of services without
a person registering as a security service provider in terms of that Act. Further, in
terms of s 20(2) a security business31 may only be registered as a service provider if
all persons performing executive or managing functions in respect of such security
business are registered as security service providers.32 In the case of a security
business which is a company, every director must be registered as a security service
provider. Any contract which is inconsistent with these provisions is invalid (s
20(3)).
[60] It is common cause that at all material times ESS was registered as a security
business. Two individuals, Mr M Ferreira and Mr P Reddy, who were performing
executive and management functions, were registered as security service providers
at the commencement of the rollout project. No specific allegations were made as to
how services provided by subcontractors, consortium partners and joint ventures
were linked to the PSIR Act. ESS alleged that individual subcontractors did not
render security services as contemplated in the PSIR Act. These allegations were
simply noted in reply by the appellants.
[61] The appellants listed a number of individuals whom it was alleged were
employed by ESS to perform security service functions without being registered. In
response thereto, ESS alleged that at all material times, the security officers it
31 In terms of s 1 of the SITA Act ‘security business’ means ‘any person who renders a security service to another for
remuneration, reward, fee or benefit, except a person acting only as a security officer’.
32 A ‘security service provider’ means ‘a person who renders a security service to another for a remuneration, reward,
fee or benefit and includes such a person who is not registered as required in terms of this Act’ (s 1 of the SITA Act).
employed were registered with the PS Authority. They were employed at different
times and accordingly their registration periods would differ. Additionally, not all
the persons mentioned in the spreadsheet attached to the founding affidavit were
employed by ESS. Of the eight that were employed during the pilot project, seven
were registered between 1999 and 2010 and one was no longer working at ESS and
therefore ESS could not obtain his certificate from the PS Authority.
[62] As to the other employees against whom non-compliance was alleged in the
founding affidavit, they either joined ESS after the pilot tender was awarded or were
registered before joining ESS. In other instances, the registration process was
delayed. The appellants did not deal with these matters in reply, they simply noted
them as matters for argument. At the end, ESS alleged substantial compliance with
the PSIR Act.
[63] Referring to ESS’ proposal dated 10 March 2014, counsel for the appellants
submitted that ESS misrepresented that it had complied with the PSIR Act when it
stated the following:
‘Vetting of personnel will take place, ensuring security clearance; currently ESS under “Good
Industry Practice” ensures that the company and required staff are PSIRA Registered. All the
current EM Staff is PSIRA vetted/registered.’
[64] The PSIR Act prohibits the rendering of security services by a person who is
not registered at the time of providing those services. A person who is not registered
before they render a service is not in breach. Therefore, a bidder whose personnel is
not registered at the time of bidding cannot be infringing the provisions in the PSIR
Act. Same should be the case when the bidder is awarded a tender but has not yet
commenced with work and does not yet have all its employees registered. It goes
without saying that when the successful tenderer actually provides the services, they
are then obliged to comply. It would make no sense to employ staff and get them
accredited in anticipation of a tender which may not be awarded.
[65] There appears to have been no misrepresentation at the time of bidding by
ESS. For there to have been misrepresentation the tender documents would have had
to require bidders to state that they were in compliance with the PSIR Act at the time
of the bidding. Firstly, the statement in ESS’ proposal, that counsel for the appellants
referred to, indicates that ‘[v]etting of personnel will take place’. An honest
statement made about what is to occur in future cannot amount to actionable
misrepresentation, even if the person who made the statement thereafter fails to do
what was needed to bring about the state of affairs in question.33
[66] Secondly, the Department could not have been induced to contract with ESS
based on the statement ‘all current ESS staff is PSIRA vetted/registered’, as this was
not a requirement in the tender document. The Department has in any event not
alleged that it was in fact so induced. While the appellants sought to provide facts
relating to non-compliance with the PSIR Act for the duration of the projects, no
focused specific allegation was made that as at 10 March 2014, some employees
were not registered, contrary to the statement made by ESS in its proposal.
[67] To the extent that there be any breach of the provisions of the statute, the PSIR
Act does not invalidate the entire contract. In terms of s 20(3) of the PSIR Act ‘[a]ny
contract, whether concluded before or after commencement of this Act, which is
inconsistent with a provision contained in subsections (1) [or (2)] . . . is invalid to
33 Feinstein v Niggli 1981 (2) SA 684 (A) at 695B-D; Watson NO v Ngonyama and Another [2021] ZASCA 74 (SCA)
para 59.
the extent to which it is so inconsistent’. As a result, the award of the contracts to
ESS are invalid only to the extent that they are inconsistent with the PSIR Act.
Notwithstanding, the appellants have not pointed to any tender specifications or
provisions of the contracts which are in conflict with the PSIR Act.
Fronting
[68] The contention in this regard is that ESS in its offer for a final bid, contained
in the letter dated 10 March 2014, made fraudulent misrepresentations that it had
partnered with and intended to use the services of a 100% black-owned
subcontractor, Ekasi, which it did not do. The alleged misrepresentations were as
follows:
‘[ESS] has partnered with Ekasi IT Solutions, a black owned and managed skills training software
and IT services company that takes IT strategy into thoroughly practical implementation. Over the
last six years Ekasi has designed and implemented superior IT based solutions for customers.
. . .
[ESS] together with Ekasi IT Solutions will make use of predominantly previously disadvantaged
individuals (PDI’s) to perform various manpower functions, eg the Control Room Monitoring
functions. This project will create approximately 100 new jobs.’
[69] It was alleged by the appellants that Mr Nkosi, who was the sole director and
CEO of Ekasi, confirmed that he was approached by TMM Holdings (Pty) Ltd
(TMM), ESS’ holding company, to be a partner or subcontractor in a bid proposal
that ESS intended to make in respect of the final tender. Mr Nkosi however never
heard anything from TMM or ESS after that time and no tender documents were
ever given to him to complete or sign in support of the tender. When he later learnt
that the final tender had been awarded, he made inquiries to ESS and was informed
that ESS did not make use of Ekasi as part of its bid proposal, which according to
the appellants was misleading.
[70] Mr Nkosi deposed to an affidavit in support of the review application, wherein
he stated that he handed ‘all the relevant tender documents needed for the
compilation of the tender documents to ESS official Mr Monde Ncapai and . . . did
also sign documents that [were] needed for the tender’. The appellants contended
that this statement was incorrect, as it was inconsistent with the rest of Mr Nkosi’s
affidavit, where he denied that the initials and signature appearing in tender
documents that were identified to him were his. It was contended that he denied
having completed these documents.
[71] Refuting these allegations ESS alleged that before the rollout tender was due
for submission, Mr Nkosi was provided with the relevant documents, which he
signed. These were collected at his residence in Soweto by Mr Ncapai. Mr Nkosi
also submitted Ekasi’s tax clearance certificates and a certified copy of his identity
document (ID). The appellants denied this but offered no alternative version. Mr
Nkosi was not asked to confirm or deny allegations made in the answering affidavit,
in this regard. Mr Ncapai’s version in fact seems to accord with Mr Nkosi’s assertion
that he signed all the documents. Whether he signed all or some is of no great
moment. If he did not sign any documents relating to the tender why would he
positively state that he did?
[72] According to Mr Ncapai, the next day, after Mr Nkosi had signed documents,
there were additional tender documents requiring his signature. Mr Ncapai called Mr
Nkosi to request him to attend at ESS’s offices in order to sign these documents. Mr
Nkosi indicated that he would not be able to attend ESS’ offices. In view of the
urgency required to submit the documents, Mr Ncapai requested Mr Nkosi’s
permission to sign on his behalf, which Mr Nkosi granted.
[73] The facts show that the final tender was submitted with the full knowledge
and participation of Mr Nkosi. Not only did he sign some documents, he gave
permission to Mr Ncapai to sign further documents on his behalf. Mr Ncapai did not
attempt to forge Mr Nkosi’s signature, he effected his own signature. This is
consistent with his version that he was permitted to do so.
[74] It is strange that ESS would go to the lengths of discussing the possibility of
partnering with Ekasi with Mr Nkosi, obtain his tax clearance certificate and a copy
of his ID, get him to sign some documents (which he accepted that he did in his
affidavit), only to conceal the rest of the documents and effect a signature of an
employee of ESS without his permission. What strengthens ESS’ version further is
that Mr Nkosi’s details including his ID number and Ekasi’s tax registration number
were filled in in the tender documents. Mr Ncapai also answered ‘yes’ next to the
question that asked whether the tax clearance certificate was submitted. Where
would Mr Ncapai have obtained this information if it was not submitted by Mr
Nkosi? The suspicion raised by counsel for the appellants that the process was
hurried is not sufficient to indicate fraudulent conduct. It was explained by Mr
Ncapai why the documents with signatures were required urgently.
[75] Counsel for the appellants sought the court to draw another inference relating
to the fact that ESS only requested invoices for training services from Ekasi a year
after the final tender was awarded (ie in or about May 2015). This issue was not
raised in the founding affidavit as a ground for review. It arose in the answering
affidavit when ESS raised an issue that the quotation (attached to the answering
affidavit) it received from Ekasi was exorbitant. Ekasi required R15 000 per person
for a five-day training course. This was way in excess of the EMS training budget.
In terms of the EMS pricing schedule, an amount of R2 896 per person was budgeted
for training. If ESS were to go with Ekasi’s quotation the total amount spent on
training 600 individuals as tendered would be R9 000 000, which is R7 262 438
more than the amount tendered for training. ESS alleged that Ekasi was informed of
this but did not change its stance. As a result, ESS decided to do the training in-
house in order to keep to the tendered amount. It partnered with another 100% black-
owned company, Nokifurn Consulting, for a completely different project of change
management.
[76] In order to show fraudulent misrepresentation, the appellants would have to
show that the false statements which induced the awarding of the tender were made
at the time of ESS submitting its proposal. From the facts set out above, no
misrepresentation could be shown. ESS submitted the bid with Ekasi’s knowledge
and participation. That changes may have occurred after the bid was awarded due to
different reasons is not a ground on which the award of the tender or the conclusion
of the contract can be found to have occurred in violation of the legality principle or
to be actionable as misrepresentation.
[77] Consequently, the appellants have failed to show non-compliance with
statutory prescripts, the tender specifications or misrepresentation on all three
challenges. Even if non-compliance were to be remotely shown in some instances,
the degree is not so egregious so as to invalidate the procurement process or the
contracts concluded. Assessed in terms of the appellants’ prospects of success in the
review application, such prospects were bleak or poor.
Conduct
[78] As to conduct, it has been demonstrated that the Department remained supine
throughout the process, even after it was alerted of any possible irregularities.
Although it took steps to terminate the SLA with ESS after receiving advice from
the SIU, it remains puzzling why it would be unsighted of any possible wrongdoing
throughout the implementation of the tender process. Not only did it fail to explain
its role in the review proceedings, it failed to provide a rule 53 record. Moreover, the
Department did not cover itself in glory during the arbitration proceedings either.
Through its attorneys, it admitted liability for the services rendered by ESS and made
an offer to pay all the invoices. The review proceedings were brought long after the
arbitration proceedings.
Prejudice
[79] The prejudice that would be caused to ESS and other service providers goes
without saying, as they rendered services to the Department in terms of the SLA
until the expiry of the cancellation period. They have undoubtedly been affected by
the inordinate delay in bringing the review application for projects which
commenced some years before the review application was brought. The parts of the
answering affidavit which indicate that the Department spoke highly of the ESS
system are unrefuted. And of course there is the arbitrator’s finding against them.
Conclusion
[80] As was held by this Court in Altech Radio Holdings (Pty) Ltd and Others v
City of Tshwane Metropolitan Municipality,34 ‘[t]he objective of state self-review
should be to promote open, responsive and accountable government. The conduct of
[the Department] renders the delay so unreasonable that it cannot be condoned
without turning a blind eye to its duty to act in a manner that promotes reliance,
34 Altech Radio Holdings (Pty) Ltd and Others v City of Tshwane Metropolitan Municipality [2020] ZASCA 122;
2021 (3) SA 25 (SCA).
accountability and rationality and that is not legally and constitutionally
unconscionable’.35
[81] In light of the inordinate delay, which has not been sufficiently explained and
which has been found to be unreasonable; the egregious conduct of the Department;
the fact that the review application has no merit; and the prejudice to be suffered by
other contracting parties, and taking into account that the challenges to the
procurement process are flimsy, the delay should not be overlooked.
[82] We do not even get to the Gijima principle of whether the decisions to award
the tenders and the service level agreement should nonetheless be set aside in terms
of s 172(1)(a) of the Constitution, as no clear unlawfulness in the awarding of the
tender and the contracts was shown on the facts. There is accordingly no reason to
interfere with the order granted by the high court.
[83] In the result, the following order is made:
The appeal is dismissed with costs, including costs occasioned by the employment
of two counsel.
________________________________
N P MABINDLA-BOQWANA
ACTING JUDGE OF APPEAL
35 Altech para 71.
APPEARANCES
For the appellants:
C E Puckrin SC (with him H C Janse van Rensburg)
Instructed by:
State Attorney, Pretoria
State Attorney, Bloemfontein
For the respondent:
M C Maritz SC (with him S G Maritz and J F van der
der Merwe)
Instructed by:
Van der Merwe & Associates, Pretoria
Honey Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
25 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
Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd
(216/2020) [2021] ZASCA 90 (25 June 2021)
The Supreme Court of Appeal (SCA) today dismissed an appeal brought by the
Special Investigating Unit (the SIU) and another appellant against the decision of the
Gauteng Division of the High Court, Pretoria (the high court) with costs, including costs
occasioned by the employment of two counsel.
The appeal concerned a review application brought by the SIU and the Acting
Commissioner of the National Department of Correctional Services, representing the
Department of Correctional Services (the Department), against the respondent,
Engineered Systems Solutions (Pty) Ltd (ESS). It concerned the validity of the
decisions taken by the Department to award tenders to ESS and the subsequent
service level agreement concluded between the Department and ESS. In the review
application the SIU was the main applicant while the Department supported the
application as the second applicant.
During 2011, a decision was taken by the Department to introduce, in phases, an
Electronic Monitoring System (EMS) which would be used to monitor offenders who
had been released on parole and/or remand detainees who had been placed under
supervision. A procurement project in respect of the introduction of the EMS got
underway in this regard. On 26 August 2011, the Department advertised a tender for
the ‘[s]upply, delivery, installation, commissioning, training and maintenance of a
National Pilot Project for an electronic monitoring solution for the Department of
Correctional Services, over a one-year period’ (the pilot tender). If the pilot project
proved to be a success, a full-blown final project would be implemented. Bids were
received from various entities, including ESS. In December 2011, the pilot tender was
awarded to ESS followed by a contract concluded between the Department and ESS
at a cost of R6 510 375. In February 2014, the Department advertised a further tender,
after a previous one was aborted, for the ‘supply delivery, installation, commissioning,
training and maintenance of a National Electronic Monitoring Solution by way of lease
for a period of five years for the Department of Correctional Services’ (the final tender),
which was awarded to ESS in April 2014. On 21 May 2014, a service level agreement
(the SLA) was concluded between the Department and ESS in respect of the final
project to the value of R301 611 772. On 15 April 2016, the President of the Republic
of South Africa issued a proclamation referring for investigation to the SIU, certain
allegations in respect of the affairs of the Department, relating to irregularities in the
procurement of the EMS and payments relating thereto. The SIU alleged that its
investigation revealed a number of irregularities in the procurement processes relating
to tenders awarded to ESS by the Department in relation to the EMS. These included
non-compliance with the State Information Technology Agency Act 88 of 1998, and
the Private Security Industry Regulation Act 56 of 2001, as well as B-BBEE fronting.
The review application, which was the subject of the appeal, was lodged on 28 March
2018. In the review application, the appellants sought condonation for the delay in
bringing the application. The appellants also sought the review and setting aside of
the SLA(s) and any other contracts entered into pursuant to the pilot and final tenders
and/or projects; and orders declaring that the decisions to award the tenders, and the
respective SLA(s) and other contracts, were unconstitutional, unlawful, invalid and
void ab initio.
The SCA held that in light of the inordinate delay, which had not been fully explained
and which had been found to be unreasonable; the egregious conduct of the
Department (which had remained supine and failed to explain its conduct); the fact
that the review application had no merit; and the prejudice that would have been
suffered by other contracting parties; and having taken into account that the
challenges to the procurement process were flimsy, the delay should not be
overlooked. The SCA thus found that it was not necessary to consider whether the
decisions to award the tenders and the SLA should nonetheless be set aside in terms
of s 172(1)(a) of the Constitution, as no clear unlawfulness in the awarding of the
tender and the contracts was shown on the facts. There was accordingly no reason to
interfere with the order granted by the high court.
~~~~ends~~~~
|
4142
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 206/2022
In the matter between:
BUYISWA GRACE PASIYA
FIRST APPELLANT
THANDI VERONICA MOHALE
SECOND APPELLANT
KOLISWA NTOBONGWANA
THIRD APPELLANT
KEELY CANCA
FOURTH APPELLANT
PRIMROSE PASIYA
FIFTH APPELLANT
YOLISA QANGULE
SIXTH APPELLANT
SHARON MNQANDI
SEVENTH APPELLANT
KOLEKA MAKHONGOLO
EIGHTH APPELLANT
PUMLA MDLELENI
NINTH APPELLANT
OUMA RAMATLODI
TENTH APPELLANT
THEMBI ZUNGU
ELEVENTH APPELLANT
and
LITHEMBA MINING (PTY) LTD
FIRST RESPONDENT
YOLISWA BALFOUR
SECOND RESPONDENT
SIPHOKAZI NYAMAKAZI
THIRD RESPONDENT
VUYOLWETHU NTOMBEKHAYA NCWAIBA
FOURTH RESPONDENT
SIVE YIBANATHI STOFILE
FIFTH RESPONDENT
NKOSI YAWO GUGUSHE
SIXTH RESPONDENT
NOSINDA TENA
SEVENTH RESPONDENT
ZODWA ENID MAHLANGU
EIGHTH RESPONDENT
NTOMBIZAKHE MADALA
NINTH RESPONDENT
NOMFANELO MAGWENTSHU
TENTH RESPONDENT
LITHEMBA INVESTMENTS (PTY) LTD
ELEVENTH RESPONDENT
THE COMPANIES AND INTELLECTUAL
TWELFTH RESPONDENT
PROPERTY COMMISSION
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 264/2022
In the matter between:
BUYISWA GRACE PASIYA
FIRST APPELLANT
THANDI VERONICA MOHALE
SECOND APPELLANT
KOLISWA NTOBONGWANA
THIRD APPELLANT
KEELY CANCA
FOURTH APPELLANT
PRIMROSE PASIYA
FIFTH APPELLANT
YOLISA QANGULE
SIXTH APPELLANT
SHARON MNQANDI
SEVENTH APPELLANT
KOLEKA MAKHONGOLO
EIGHTH APPELLANT
PUMLA MDLELENI
NINTH APPELLANT
OUMA RAMATLODI
TENTH APPELLANT
THEMBI ZUNGU
ELEVENTH APPELLANT
and
LITHEMBA MINING (PTY) LTD
FIRST RESPONDENT
YOLISWA BALFOUR
SECOND RESPONDENT
SIPHOKAZI NYAMAKAZI
THIRD RESPONDENT
VUYOLWETHU NTOMBEKHAYA NCWAIBA
FOURTH RESPONDENT
SIVE YIBANATHI STOFILE
FIFTH RESPONDENT
NKOSI YAWO GUGUSHE
SIXTH RESPONDENT
NOSINDA TENA
SEVENTH RESPONDENT
ZODWA ENID MAHLANGU
EIGHTH RESPONDENT
NTOMBIZAKHE MADALA
NINTH RESPONDENT
NOMFANELO MAGWENTSHU
TENTH RESPONDENT
LITHEMBA INVESTMENTS (PTY) LTD
ELEVENTH RESPONDENT
THE COMPANIES AND INTELLECTUAL
TWELFTH RESPONDENT
PROPERTY COMMISSION
Neutral citation:
Pasiya and Others v Lithemba Mining (Pty) Ltd and Others
(206/2022) and Pasiya and Others v Lithemba Mining (Pty) Ltd
and Others (264/2022) [2023] ZASCA 169 (01 December 2023)
Coram:
SALDULKER, ZONDI, MOTHLE and MATOJANE JJA and KATHREE-
SETILOANE AJA
Heard:
17 August 2023
Delivered:
01 December 2023
Summary: Declaratory relief – when competent under s 21(1)(c) of Superior Courts
Act 10 of 2013 – company law – whether resolutions to increase authorised share
capital and conclusion of loan agreement validly passed – dilution of shareholding
resulting from perfection of security – whether appellants’ claims have prescribed.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Grahamstown (Gwala AJ,
sitting as court of first instance):
1 The appeal is dismissed with costs including the costs of two counsel where so
employed.
2 The cross-appeal is dismissed with costs including the costs of two counsel where
so employed.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Zondi JA (Saldulker and Mothle and Matojane JJA and Kathree-Setiloane AJA
concurring):
Introduction
[1] This is an appeal against the judgment and order of Gwala AJ, sitting in the
Eastern Cape Division of the High Court, Grahamstown (high court), in which he
dismissed with costs the appellants’ application for declaratory relief. The relief sought
included an order (a) declaring as unlawful and setting aside a loan agreement
concluded between the first respondent, Lithemba Mining (Pty) Ltd (LM) and the
eleventh respondent, Lithemba Investments (Pty) Ltd (LI) in 2009; (b) declaring as
unlawful and setting aside the purported changes to the LM shareholding which
occurred in January 2010 pursuant to the loan agreement between LM and LI; and (c)
directing that any dividends to be paid by LM to its shareholders be paid in accordance
with the shareholding prior to the alleged unlawful changes. This appeal is with leave
of the high court.
[2] The fourth, fifth, sixth and eleventh respondents were aggrieved that the high
court awarded them costs on a party and party scale instead of on an attorney and
client scale. These respondents sought and obtained leave from the high court to
cross-appeal against its cost order. They contended that the appellants’ claims were
vexatious and frivolous and that the high court should have, in the exercise of its
discretion, ordered the appellants to pay their costs on an attorney and client scale.
Two main issues therefore arise in this appeal. The first, is whether the high court
erred in dismissing the appellants’ application for declaratory relief and the
consequential relief. The second, is whether the high court misdirected itself by failing
to dismiss the application with costs on a punitive scale.
Background facts
(i)
Formation of Lithemba Mining
[3] The following background facts are relevant to the consideration of the issues.
The appellants and the second respondent are all shareholders in LM. In 2000 the
second respondent, Ms Yoliswa Balfour founded LI and invited a group of black female
entrepreneurs to form a BEE investment holding company with the focus of serving as
an empowerment partner in the energy sector. Once established LI identified an
opportunity to develop a coal mine in Mpumalanga called the Wonderfontein Coal
Project (the Project).
[4] The Project involved the exploration and subsequent development of a coal
mine. The development would comprise the exploration, mining, processing, and
marketing of three million tonnes of coal per annum for the domestic and export
markets.
[5] At the LI shareholders meeting of 13 November 2004, the opportunity to invest
in the Project was presented to members of LI but they declined, apparently, for the
reason that this would have required a significant cash contribution which LI was not
able to provide. And not all of its members had the necessary financial resources or a
desire to invest in this capital-intensive opportunity. It was then resolved at this
meeting that certain of the members of LI would be free to invest in the Project through
a new entity, despite the provisions of the LI shareholders’ agreement, on the
understanding that LI would, at no cost, be entitled to 10% of non-financial obligated
equity shareholding in the investment opportunity. This was because the investment
opportunity in the Project was procured by LI. This shareholding percentage was
subsequently changed from 10% to 12% following investment in the Project by Middle
East South Africa Energy Investment Holdings (Pty) Ltd (MESA).
[6] The Project required a significant amount of investment, and the members were
informed what their individual contribution would amount to. In furtherance of the
Project an existing company, Cream Magenta (Pty) Ltd, in which the Project would be
housed and pursued, was procured. On 15 February 2005, its subscribers resolved to
change its name to LM. This is how LM was formed. While certain LI shareholders did
not take the opportunity to invest, all shareholders of LM are also shareholders of LI,
save for one individual.
[7] LM participated in the Project through various structures. LM and MESA
entered into a joint venture and by agreement established a new company called
Lithemba Wonderfontein Coal (Pty) Ltd (LWC). LM took up 80% of the shares in LWC,
while MESA took the remaining 20%. The coal mine was owned by Umsimbithi Mining
(Pty) Ltd (Umsimbithi). On 26 September 2005 LWC and Umcebo Mining (Pty) Ltd
concluded a shareholders’ agreement in terms of which they agreed to establish
Mbokodo Mining (Pty) Ltd (Mbokodo agreement) to serve as a vehicle through which
to pursue a joint venture opportunity. Mbokodo managed and operated the coal mine.
Mbokodo was the only shareholder in Umsimbithi. LWC and Umcebo Mining (Pty) Ltd
(Umcebo) were the only shareholders in Mbokodo.
[8] The Mbokodo agreement contained a number of clauses which entailed the
transfer of shares by way of deemed offers in circumstances which were potentially
prejudicial to the interest of LM shareholders, including those of LI, the effect of which
would be to reduce the shareholding of LWC in Mbokodo. A number of these related
to circumstances where LWC was unable to make funding and capitalisation
obligations set out in the Mbokodo shareholders agreement. In particular, if Mbokodo
made a cash call and LWC and LM were unable to meet their respective obligations,
they would forfeit some of the shares and thus have a reduced stake in Mbokodo.
(ii)
Capital Call
[9] At a general meeting of LM in October 2008, the LM shareholders were
informed that there would be a call for a capital contribution for the funding of the
Bankable Feasibility Study (BFS) and other costs associated with the Project. LM was
informed at the 6 March 2009 Umsimbithi Board of Directors meeting and the 16 March
2009 Mbokodo Board of Directors meeting that LWC was required to provide
additional capital to cover budget overruns, a BFS and certain guarantees. In terms of
the Mbokodo shareholders’ agreement, LWC was afforded 90 days within which to
comply with capital calls otherwise it would be deemed to have offered its shares for
sale to Umcebo. The LM Board was also informed that Umcebo threatened to stop the
Project if funds were not paid on the due date. Thus, the LM Board urgently sought
funding to cover LWC’s R4.062 million portion of the Umsimbithi capital call.
[10] Various attempts were made to raise funds from financial institutions including
Anglo Coal. At this time a group of shareholders, under the name ‘Courageous
Consortium,’ also approached several parties to seek bridging finance to make an offer
to other shareholders who wanted to sell their shares in LM without success. After the
failure of these attempts to borrow funds, a meeting of LM Board was convened on 18
March 2009 where the Board discussed the issue of funding for the pre-feasibility and
BFS stages of the Project. The Board resolved to approach LI for short-term bridging
finance for the obligation, considering that even those individual shareholders who
were unable to contribute, would still benefit through LI because of its shareholding in
LM. LI had received a distribution from lthemba Trust, which in turn had received a
distribution from Stanlib, giving LI the ability to make the loan to LM, if it so chose. The
second respondent undertook to communicate with LI and report back on the terms
and conditions, if the loan application was successful.
[11] On 31 March 2009, the LM Board convened a meeting where the terms of LI
loan agreement were discussed. The Board first approved, the terms of a convertible
short-term loan agreement to be concluded between LM and LI. Second, it resolved
to increase the authorised share capital of LM from 10,000 ordinary par value shares
of R1 each to 50,000 ordinary par value shares of R1 each. And third, it resolved that
LI would be issued the appropriate number of shares required to perfect its security
under the LI loan agreement in the event that LM and its shareholders were to default
on repayment.
[12] On 3 April 2009, a memorandum describing the general meeting of LM
shareholders to be held on 18 April 2009 was circulated to all LM’s shareholders. This
was followed up with a notice convening a meeting circulated on 8 April 2009. Since
the date set for the meeting did not accord with the 21-day notice period for the
convening of the general meeting, when notice was given to shareholders, they were
requested that if there had any objections, they should communicate such objections
to LM’s chairperson.
[13] Ahead of the LM shareholders’ meeting to be held on 18 April 2009, a report on
the Project provided by the seventh respondent, Ms Nosinda Tena, was circulated on
17 April 2009 to LM’s shareholders. The report noted that there was a budget shortfall
in the Project and that LM shareholders were required to contribute pro rata towards
the shortfall. LWC had undertaken to make the payment to Mbokodo by 30 April 2009.
The report stressed that non-performance would trigger a deemed offer as stipulated
in the shareholder agreement and that the LM Board had to do everything within its
power to ensure that the clause would not be invoked.
[14] On 8 April 2009, the LM Board informed the shareholders of the amount each
shareholder was expected to contribute. The shareholders were warned that at the
general meeting on 18 April 2009, individual shareholders would be required to
contribute to certain projects.
[15] Minutes dated 17 April 2009 detailing a meeting of LM’s Board meeting,
confirmed the minutes of the meetings of LM’s Board held via teleconference on 9
March 2009, 18 March 2009 and 31 March 2009. It further confirmed that the relevant
Board resolutions relating to the LI loan were adopted and signed.
(iii)
Shareholders meeting of 18 April 2009
[16] On 18 April 2009, a general meeting of LM’s shareholders was convened. The
shareholders were requested to confirm their consent to waive the 21-day notice
period. All members confirmed the waiver.
[17] The shareholders (including the appellants) unanimously resolved to:
(a)
Approve the conclusion of a convertible loan agreement between LM and LI.
The loan would be secured against the issuance of LM shares to LI should LM fail to
repay the loan.
(b)
Increase the authorized share capital of the company from 10,000 ordinary par
value shares of R1 each to 50,000 ordinary par value shares of R1 each.
(c)
The chairperson of the company or its company secretary was authorised to
sign all such documentation and do all such things as may be necessary for the
implementation of all resolutions taken at the meeting.
[18] On 8 May 2009, LM’s company secretary at the time lodged the special
resolution approving the increase of the authorized share capital from 10,000 to
50,000 ordinary par value shares of R1 each with the Registrar of the Companies and
Intellectual Property Commission (CIPC). The special resolution was stamped by the
Registrar on 15 May 2009.
[19] On 3 July 2009, the chairperson of the LM Board at the time, circulated a
memorandum to the shareholders in terms of which the shareholders were informed
of a capital call to reimburse LI by subscribing to additional shares at R444.44 each
pro-rata to the shareholders’ shareholding in LM. Shareholders were requested to do
so by 28 September 2009.
(iv)
Loan agreement
[20] The LI loan agreement was subsequently concluded on or about July 2009. The
essential terms of the loan agreement were:
(a)
First, LI advanced a loan in the amount of R4,062,161 bearing interest at 7.5%
on a straight-line basis. The loan was repayable no later than four calendar months
after the drawdown date namely 9 November 2009.
(b)
Second, as continuing security, LM pledged to issue to LI, if the loan amount
was not paid, such number of ordinary shares in the company as would result in LI
owning 51% of LM shareholding. Where only a portion of the repayment amount was
settled, LI would be entitled to perfect a pro-rata portion of the security.
[21] On or about 9 July 2009, LI transferred the loan amount to LM. LM, in turn, used
the loan to meet its cash call obligations and as a result the deemed offer provision in
the Mbokodo shareholder agreement was not triggered to the disadvantage of LM and
its shareholders.
[22] On 16 September 2009, the LM Board advised the shareholders of the
extension of the due date for the acquisition of new shares. The date was extended
from 28 September 2009 to 9 October 2009. The rationale for the extension was that
the LI payment date was 9 November 2009. The extended date would allow for the
necessary processes to take place. The LM Board further advised the shareholders
that Price Waterhouse Coopers (“PwC’’) had been appointed to manage and
administer the process going forward.
[23] On 9 October 2009, the LM Board advised the shareholders of a further
extension period to subscribe for additional shares in LM. The period was extended to
16 October 2009 to minimize any potential prejudice to shareholders who had not been
able to meet the initial time frames that had been set.
[24] On 19 October 2009, the LM Board advised the shareholders of a further
extension to 23 October 2009. The Board stressed that this was the final extension
because any further extensions would jeopardize LM’s ability to meet its obligations to
LI.
[25] On 20 October 2009, the Board sent a memorandum to the LM shareholders
with the subject “Mbokodo Cash Calls & Other Capital Call’’ in which the Board
confirmed that:
(a)
the memorandum was an addition to the memorandum sent on 19 October
2009;
(b)
on or about 23 October 2009, the LM Board would communicate the results of
the round of capital raising;
(c)
in the event that not all of the LM shareholders subscribed for the shares that
they were entitled to, the remaining shares would be made available to the LM
shareholders who followed their rights in respect of the first round; and
(d)
payment of the second round of capital must be cleared into the LM bank
account by no later than 30 October 2019.
[26] By 9 November 2009 when the LI loan was due for repayment, LM did not have
sufficient funding to meet its obligations to LI. Despite the various extensions sought,
none of the shareholders that sought these extensions, save for the second applicant,
in fact contributed. The shareholders that contributed were the second respondent,
third respondent, fourth respondent, the second appellant, the fifth respondent, the
seventh respondent, Pam Mdaka and Nambitha Stofile.
[27] On 11 November 2009, LI demanded payment of the loan by no later than 20
November 2009, failing which it threatened LM with legal action. On 13 November
2009, the LM Board sent a memorandum to LM’s shareholders with the subject
‘’Mbokodo Cash Calls & Other Capita Call’’ in which it advised that it had requested
an extension from LI in respect of the amount of R4 366 823.07 that became due and
payable on 9 November 2009, but it was declined, and that LI had demanded payment
of the loan amount by 20 November 2009.
[28] On 2 December 2009, a meeting of the LM Board was held at which, amongst
other matters, the transfer of shares to LI was discussed. On 16 December 2009, LM
Board met to discuss the repayment of the LI loan.
(v)
Perfection of security by Lithemba Investment
[29] As a result, LI proceeded to perfect its security under the loan agreement
through the issuance of fresh shares in LM. The effect was that LI’s shareholding in
LM increased by 5 556 shares from 12.5% to 38.11%. On 8 January 2010 a CM15
form was filed with the CIPC reflecting the issuance of fresh shares under the LI loan
agreement, whereby LI’s shareholding in LM increased from 12.5% to 38.11%, a total
of 6 806 shares.
[30] At that stage the total indebtedness of LM to LI including the interest was R4
366 823. Repayments against the loan totalling R1 897 503 were made by LM to LI
during the period 20 November and 17 December 2009. Consequently, LM was in
default in the amount of R2 469 320.
[31] Before and after LI had perfected its security, the LM Board undertook various
endeavours to avoid LM shareholders being diluted. Some of these endeavours
included engagement by certain LM shareholders with Anglo Coal which expressed
willingness to assist and offered funding of R10 million through a special purpose
vehicle. This attempt failed because most of the LM shareholders including some of
the appellants refused to participate in the process. The LM Board also engaged LI to
negotiate an agreement to buy back the shares that LI had perfected as a security for
the loan. The newly elected LI Board determined that it was not in the interests of the
LI shareholders to sell the LM shares and consequently rejected LM’s proposed share
buyback agreement.
(vi)
Dilution
[32] One of the central issues that gave rise to unhappiness among the members of
LM was the inevitable consequence of the dilution that those shareholders suffered
because of their failure to follow the rights when offered further shares to fund the loan
repayment to LI. The appellants first expressed their dissatisfaction with the LI loan in
October 2009 when some of them, through their legal representatives, wrote to LM
seeking information and documentation related to the special resolutions passed at
the meeting of April 2009. LM replied promptly explaining the events that led up to the
18 April 2009 meeting, which subsequently resulted in the resolution of the loan
agreement.
[33] The LM Board met to discuss the concerns raised. It resolved to give the
shareholders a further extension to respond to the cash call. The Board also resolved
to seek advice as to whether a meeting could be convened with the dissatisfied
shareholders to deal with the issues.
[34] On 23 October 2009, another letter was sent to LM in which the appellants,
through their attorney, recorded their objection to the special resolution adopted by LM
shareholders at the 18 April 2009 meeting. On 26 October 2009, the LM Board
convened a special meeting to discuss the issues raised by the dissatisfied
shareholders including the appellants. The meeting further suggested that a round
table discussion be held with the dissatisfied shareholders to discuss the dispute. But
before the round table discussion occurred, on 18 January 2010, the appellants’
attorney wrote again to LM demanding that LM cease all actions to implement the
special resolution and threatened legal action if the demand was ignored.
[35] Various attempts were made by the LM Board to resolve the dilution dispute.
When those attempts failed, on 8 September 2012, the LM shareholders including the
appellants and the LM Board agreed that the matter relating to the dilution of
shareholding be regarded as closed. It was decided that if any shareholder still wished
to pursue the dispute, they could do so through expedited arbitration proceedings
under the auspices of the Arbitration Foundation of South Africa (AFSA).
[36] The only step taken by the appellants was in 2013. They attempted to lodge a
claim with the Companies Tribunal. The appellants sought an order requiring the
parties to undergo conciliation, mediation or arbitration to restore the share value lost,
and/or to compensate them with shares. The Tribunal, however, dismissed the
complaint for lack of jurisdiction. Thereafter, the appellants took no further steps.
[37] LM proceeded to conduct its business in accordance with the post-dilution
shareholding proportions. The coal mine became self-sustaining and, in 2014, some
five years after LM met its cash call obligations, LM declared its first dividend. In the
years since, over R130,044,845 worth of dividends have been declared and paid by
LM to its shareholders in the post-dilution shareholding proportions, and the appellants
received these payments without objection.
[38] On 9 February 2019, the LM shareholders constituted an alternative dispute
resolution committee (the ADR committee). The ADR committee, comprising
independent persons as well as shareholder representatives, sought to develop a
commercial solution to remedy shareholder relations in the interests of the company.
The ADR committee formulated a report which was ultimately rejected by the
appellants on the basis that they were dissatisfied with the outcome despite having
actively participated in the process and even though the process was aimed at a
resolution in the best interest of LM.
Proceedings in the High Court
[39] On 29 July 2020, some 11 years after the passing of the relevant resolutions,
the appellants instituted these proceedings for the relief set out in para 1 above. In the
founding affidavit the appellants advanced various grounds on which their claim for
the declaratory relief was based.
[40] They alleged that:
(a) the second and third respondents connived to present the appellants, as
shareholders in LM, with a commercially prejudicial loan which resulted in the dilution
of the shareholding in LM and in the increase of LI’s shareholding in LM and this
resulted in the second respondent significantly benefitting in the transaction because
of her shareholding in LI;
(b) the loan was riddled with unlawfulness, improperly authorised, loan amount
inflated, loan being improperly funded and constituted a related party transaction;
(c) the minutes of the shareholders’ meeting of 18 April 2009 were misleading to the
extent that they reflected that the increase of the LM’s shares by 40,000 was
discussed;
(d) the resolutions emanating from that meeting were unlawful because no proper vote
on them was taken, and the objections to the resolutions by other shareholders with a
combined shareholding of 56%meant that the special resolution threshold could not
be achieved.
(e) other funding alternatives existed which could satisfy the capital call made to LM;
(f) the loan from LI to LM breached s 4 of the Companies Act 71 of 2008 (the 2008
Companies Act) and the Companies Act 61 of 1973 (the 1973 Companies Act)
because LI had no funds at the time it reportedly made the loan to LM; and
(g) the second respondent was not authorised by the LM shareholders to enter into
the loan agreement.
[41] The respondents opposed the relief sought. They contended that the appellants
failed to make out a case for declaratory relief. In support of this contention the
respondents stated that the loan agreement between LI and LM was lawfully
concluded. It was authorised and approved by the Board of Directors and the
shareholders’ meeting of LM on 18 April 2009. The loan was procured to meet the
cash call obligations. The respondents denied further that the loan agreement resulted
in unlawful dilution of the appellants’ shareholding in LM. They stated that the decision
was taken that the loan be secured, and specifically against the issuance of fresh
shares in LM to LI, and that LM shareholders had the opportunity to provide the
required capital, and if a shareholder failed to take up this opportunity, their
shareholding would be reduced proportionately.
[42] In addition to opposing the application on its merits, the respondents raised
procedural defences. They contended that (a) due to the numerous factual disputes
arising in the matter, the appellants should have proceeded by way of action
proceedings and not by way of motion proceedings; (b) the appellants’ claims have
prescribed (c); the appellants acquiesced to the dilution of shares (d); the appellants
have, by conduct, waived their rights; and (e) that the appellants should be estopped
from pursuing their claims.
[43] The high court with reference to Cordiant Trading CC v Daimler Chrysler
Financial Services (Pty) Ltd 1 (Cordiant) found that the appellants had established that
they had interest in an existing or contingent right by virtue of being the shareholders
in LM. However, in the exercise of its discretion, and because of the appellants’ undue
delay in instituting the proceedings, it refused to grant the declaratory relief sought and
dismissed the application with costs including costs of two counsel where so
employed.
[44] The appellants advanced two main grounds on which they based their attack
on the judgment of the high court. They submitted, first, that the high court erred in its
application of the test for declaratory relief. The high court, the appellants argued,
failed to deal with the first leg of the test. It dealt only with the delay, which is one factor
from the second leg of the test and decided the matter on that basis without
considering the merits. They submitted that the high court should have dealt with the
merits and only then should it have considered the question whether to exercise its
discretion in favour of, or against, the grant of the order.
[45] Second, it was submitted by the appellants that the high court erred in not
dealing with the merits of their claims and all of the defences raised by the
respondents. Relying on the Constitutional Court judgment in Spilhaus2 counsel for
the appellants argued that the high court should have dealt with all the issues before
it. The Constitutional Court in Spilhaus3 held that it is desirable for a lower court to
1 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd [2005] ZASCA 50; [2006] 1 All
SA 103 (SCA); 2005 (6) SA 205 (SCA) para 17.
2 Spilhaus Property Holdings (Pty) Limited and Others v MTN and Another [2019] ZACC 16; 2019 (6)
BCLR 772 (CC); 2019 (4) SA 406 (CC).
3 Spilhaus paras 44-46.
pronounce on all issues before it as the litigants are entitled to a decision on all issues
raised especially where they have an option of appealing further.
Whether the test for declaratory relief was met
[46] The question is whether the high court erred in its application of the test for
declaratory relief. In terms of s 21(1)(c) of the Superior Courts Act 10 of 2013, a high
court may, in its discretion, and at the instance of any interested person, enquire into
and determine any existing, future, or contingent right obligation, notwithstanding that
such person cannot claim any relief consequential upon the determination. The
applicant who seeks a declaratory relief must satisfy the court that he or she is a
person interested in an ‘existing, future or contingent right or obligation’ and then if
satisfied on that point, the court must decide whether the case is a proper one for the
exercise of the discretion conferred on it. The question must be examined in two
stages.
[47] This Court in Cordiant formulated a two-stage approach to be followed in
determining whether to grant the declaratory relief as follows:
‘It seems to me that once the applicant has satisfied the court that he/she is interested in an
‘existing, future or contingent right or obligation’, the court is obliged by the subsection to
exercise its discretion. This does not, however, mean that the court is bound to grant a
declarator but that it must consider and decide whether it should refuse or grant the order,
following an examination of all relevant factors. In my view, the statement in the above dictum,
to the effect that once satisfied that the applicant is an interested person, ‘the Court must
decide whether the case is a proper one for the exercise of the discretion’ should be read in
its proper context. Watermeyer JA could not have meant that in spite of the applicant
establishing, to the satisfaction of the court, the prerequisite factors for the exercise of the
discretion the court could still be required to determine whether it was competent to exercise
it. What the learned Judge meant is further clarified by the opening words in the dictum which
indicate clearly that the enquiry was directed at determining whether to grant a declaratory
order or not, something which would constitute the exercise of a discretion as envisaged in
the subsection…’4
4 Cordiant fn 1 para 17.
[48] The appellants’ contention that the high court failed to correctly apply the test
for declaratory relief must fail. The high court considered the first leg of the test. It
found that the appellant had an interest in an existing or contingent right, as they are
shareholders in LM and their shareholding was diluted. This affected them not only in
relation to the sharing of dividends but also in relation to the voting rights, and thus the
first stage of the test was established. Thereafter the high court turned to the second
leg of the inquiry. It found that this was not the case where the court ought to exercise
its discretion in favour of granting the declaratory order sought. This was so, reasoned
the high court, because the appellants unduly delayed in approaching the court for
their relief which they sought. The appellants only sought the court’s intervention in
2020 imploring it to ‘turn the wheels back to the position prevailing in 2009’. It found
that whilst the appellants did nothing to vindicate their rights, LM and other
shareholders proceeded to organize their lives, planned, and conducted the business
in accordance with the position after the dilution of the shares and a number of
decisions had been made since 2009 relying upon resolutions which the appellants
belatedly sought to be declared unlawful.
[49] As regards the interests of other shareholders, the high court found that LM and
the other shareholders would suffer great inconvenience and prejudice should the
status quo be changed after so many years. Furthermore, it held that it would be unjust
to the other shareholders, who paid and met their financial obligations at the time, to
accede to the relief sought by the appellants. One of the factors the high court
considered in exercising its discretion against granting the declaratory relief sought,
was the effect of prescription on the appellants’ claims. It found that even if the
declaratory order were to be made, it would have no practical effect as the appellants
would not be able to claim the restoration of the shares, and payment of dividends in
accordance with the shareholding applicable before the changes in the shareholding.
This was because those claims would have been extinguished by prescription as a
dilution of shareholding occurred in 2009. Having considered all the relevant factors,
the high court found that there was no basis for it to exercise its discretion in favour of
granting the declaratory relief sought by the appellants.
[50] The appellants have not demonstrated why they contend that the high court
did not exercise its discretion judicially, or why it was influenced by wrong principles
or misdirected itself in respect of the facts. In Recycling and Economic Development
Initiative of South Africa v Minister of Environmental Affairs; Kusaga Taka Consulting
(Pty) Ltd v Minister of Environmental Affairs5 (REDISA) this Court held, with regards
to the exercise of a discretion, that on appeal a court will only interfere if the trial court
exercised its discretion on the wrong principle or made a decision that was not
reasonably open to it.
[51] Since the high court correctly applied the test applicable to declaratory orders,
the attack on its judgment based on this ground must fail. There is therefore no basis
for this Court to conclude that the high court misdirected itself on the facts or the law
in the exercise of its discretion, or that it exercised its discretion injudiciously.
Whether the loan was unlawful
[52] To the extent that the high court erred in not dealing with the merits of the
appellants’ claim, I shall address them. But before I do so, it is necessary to distinguish
the appellants’ pleaded case from their case on appeal. The case that is advanced by
the appellants in their heads of argument differs in material respects to the one they
advanced in their papers. Nowhere in their papers in the court a quo did the appellants
seek the setting aside of the impugned minutes and resolutions of the 18 April 2009
meeting, that gave effect to loan agreement between LM and LI. This ground is raised
for the first time in the heads of argument in the appeal. On appeal, the appellants
advance three grounds on which they seek the setting aside of the underlying
resolutions. They contend, in this regard, that:
(a) the reasons given to the LM shareholders were different to those relied on by the
LM Board of Directors to change LM’s authorised share capital;
(b) the intended increase was for 10,000 shares and not 40,000 shares; and
(c) the way the loan agreement was thrust upon the appellants, and subsequently
adopted, breached the provisions of the 2008 Companies Act and the 1973
Companies Act. The appellants argue that a decision of a company’s board to increase
a company’s authorised share capital must be exercised in accordance with the
directors’ duties as set out in s 76 of the 2008 Companies Act, including the duty to
5 Recycling and Economic Development Initiative of South Africa v Minister of Environmental Affairs;
Kusaga Taka Consulting (Pty) Ltd v Minister of Environmental Affairs [2019] ZASCA 1; [2019] 2 All SA
1 (SCA); 2019 (3) SA 251 (SCA) para 87.
act in good faith and for a proper purpose. They aver that viewed objectively, the LM
Board did not act in good faith and in the best interests of LM when they increased its
authorised share capital.
[53] The appellants’ case raises an important question regarding the identity of the
Companies Act applicable to this dispute. Should it be determined in terms of the 1973
Companies Act or the 2008 Companies Act? During the hearing a considerable
amount of time was spent on this issue. The respondents submitted that the 2008
Companies Act does not find application whereas the appellants argued that it does
and relied on it for this contention on s 224 of the 2008 Companies Act which deals
with transitional arrangements. The appellants referred to items 2, 4, 7 and 11 of
Schedule 5 in support of their contention that the Legislature intended the 2008
Companies Act to apply to the transactions under consideration as from 1 May 2011
when it came into operation.
[54] The respondents’ submission that the 1973 Companies Act and not the 2008
Companies Act applies to the dispute, is correct. My conclusion is based on the
following grounds. First, the general rule is that, in the absence of express provision
to the contrary, statutes should be considered as affecting future matters only. This
means that the 2008 Companies Act must be construed as operating only on facts
that came into existence after its passing (Veldman v Director of Public Prosecutions,
Witwatersrand Local Division).6
[55] The events giving rise to the dispute occurred before the 2008 Companies Act
came into operation. The demand for capital contribution was made in 2009. The
relevant loan agreement was concluded on 6 July 2009. The resolutions concerned
were passed and registered with the Registrar in 2009 and LI’s security under the loan
agreement was perfected in 2010. It is clear that at this stage the transactions were
implemented, and rights had vested.
6 Veldman v Director of Public Prosecutions, Witwatersrand Local Division [2005] ZACC 22; 2007(3)
SA 210 (CC) paras 26-27.
[56] As a result of the transactions which were implemented under the 1973
Companies Act rights accrued or were acquired and obligations were incurred. The
repeal of the 1973 Companies Act did not affect the rights which any person acquired
before the repeal and did not extinguish any obligations any person incurred before
the repeal. That much follows from the provisions of s 12(2) of the Interpretation Act
33 of 1957:
‘Where a law repeals any other law, then unless the contrary intention appears, the repeal
shall not-
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any law so repealed or anything duly done or suffered
under the law so repealed; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any law
so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed
against any law so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege,
obligation, liability, forfeiture or punishment as is in this subsection mentioned, and any such
investigation, legal proceeding or remedy may be instituted, continued or enforced, and any
such penalty, forfeiture or punishment may be imposed, as if the repealing law had not been
passed.’
There is nothing in the 2008 Companies Act to suggest that the provisions of s 12(2)
(c) of the Interpretation Act should not apply to a right which accrued to any person or
an obligation which was incurred as a result of implementation of transactions under
the 1973 Companies Act.
[57] Second, the transitional arrangements in Schedule 5 of the 2008 Companies
Act are also unhelpful as these provisions relate to matters that were pending
resolution as at the date the 2008 Companies Act was made effective. Section 224 of
the 2008 Companies Act appears under the heading ‘Consequential amendments,
repeal of laws and transitional arrangements.’ Section 224(1) repeals the 1973
Companies Act subject to subsection (3), which preserves certain transitional
arrangements in Schedule 5. Schedule 5 of the 2008 Companies Act sets out the
transitional arrangements applicable to pre-existing companies and how they are to
be regulated ‘as of the general effective date’, being 1 May 2011.
[58] Item 4(3A) of Schedule 5 does not support the appellants’ argument. It provides
that ‘if, before the general effective date, the shareholders of a pre-existing company
had adopted any agreement between or among themselves, under whatever style or
title, comparable in purpose and effect to the agreement contemplated in s 15(7), any
such agreement continues to have the same force and effect – (a) as of the general
effective date, for a period of two years, despite section 15(7), or until changed by the
shareholders who are parties to the agreement…’ It therefore does not apply to
agreements such as the loan agreement between LM and LI, but only to shareholders’
agreements.
[59] Item 7 deals with ‘Company Finance and Governance. Item 7(5) makes
provision for the 2008 Companies Act to apply as from 1 May 2011 relating to the
duties, conduct and liability of directors of the pre-existing companies despite anything
to the contrary in a company’s Memorandum of Incorporation. This must relate to the
acts performed as from 1 May 2011 and not those that were performed or done before
1 May 2011. It follows that the dispute should be determined in terms of the 1973
Companies Act which is the statute that applied when the relevant transactions were
concluded.
[60] I proceed to consider the merits of the appellants’ claim as set out in their
application and in their heads of argument on appeal. The relief sought by the
appellants in the notice of motion is unsustainable. The undisputed facts show that the
loan agreement was lawfully authorised, concluded and repaid; the changes to the
shareholding were lawfully and properly authorised and effected; and dividends were
declared and paid in accordance with the changed shareholding. The loan agreement
and the board and shareholder authorisations approving its conclusion and repayment
complied with the 1973 Companies Act.
(i)
LM Board Resolutions
[61] As regards the Board resolutions it is not seriously disputed that the Board and
shareholder meetings and all resolutions passed at such meetings, approving the loan,
were recorded in the minutes. Section 205 of the 1973 Companies Act provides that
where minutes have been made of the proceedings at any general meeting of a
company, such meeting will be deemed to have been duly held and convened, and all
proceedings will be deemed to have been duly held and convened, and all
proceedings will be deemed to be valid, until the contrary is proved.
[62] Accordingly, all proceedings and resolutions recorded and passed at LM Board
and shareholders’ meetings are deemed to have been valid, unless the contrary is
proved. The contrary has never been proven, nor did the applicants adduce any proof
that would suggest that such grounds exist, particularly given the effluxion of some ten
years since these events in question took place.
[63] In terms of article 75 of the Table B Articles, the quorum of the meetings of
directors may be fixed by the directors and, unless so fixed, shall, when the number
of directors exceeds three, be three, and if the number of directors does not exceed
three, it shall be two. At the time of LM’s board meetings dated 18 March 2009 and 31
March 2009, LM had four directors: namely, Ms Balfour, Ms Tena, Ms Mahlangu and
Ms Nyamakazi, the third respondent. Accordingly, the quorum for the board meeting
was sufficiently met.
[64] Article 73 of the Table B Articles provides that questions arising at any meeting
shall be decided by a majority of votes. Article 74 of the Table B Articles provides that
a director may not vote in respect of any contract or proposed contract with the
company in which he or she is interested, or any matter arising therefrom, and if he or
she does so vote, his or her vote will not be counted. All of the 2009 directors were
shareholders of LI at the time of the passing of the relevant resolutions, and the 2009
Directors’ interests in this regard were public knowledge and known to both the Board
and shareholders at the time. On the basis that the resolutions passed by the Board
were unanimously approved, and further approved by LM’s shareholders, they were
thus validly passed.
(ii)
Shareholders’ resolutions
[65] Article 34 of the Table B Articles provides that an annual general meeting for
the passing of a special resolution must be called by not less than 21 clear days’ notice
in writing and article 35 of the Table B Articles provides that, unless provided
otherwise, a quorum for such a meeting shall be two members present in person or
by proxy.
[66] Article 34 of the Table B Articles provides that the notice of a general meeting
must specify the place, the day and the hour of the meeting and must be given in
manner set out in the Table B Articles or in such other manner, if any, as may be
prescribed by the company in a general meeting, to such persons as are entitled to
receive such notices from the company. The notice of 3 April 2009 convening the
shareholders meeting of 18 April 2009 specified the place, the day and the hour of the
meeting and further set out the resolutions to be tabled at the meeting.
[67] Further, LM’s shareholders agreed to waive the 21-day notice period, as set out
in the minutes of the meeting. In terms of s 186 of the 1973 Companies Act and article
34 of the Table B Articles, a meeting of a company is deemed to have been duly called,
in the case, if a meeting which is called on a short notice period, if it is agreed before
or at the meeting by a majority of shareholders having a right to attend and vote at
such meeting who hold not less than 95% of the voting rights. The minutes of the
meeting reflect that the meeting was attended by the shareholders holding 97.5% of
the voting rights, and that the waiver of the notice period was agreed by all. The
quorum requirement for the shareholders meeting was sufficiently met as the general
meeting was attended by 14 shareholders and six proxies.
[68] Article 47 of the Table B Articles provides that, subject to any rights or
restrictions for the time being attached to any class or classes of shares, on a show of
hands every member present in person, and if a body corporate, its representative,
will have one vote, and on a poll every member present in person or by proxy will be
entitled to exercise the voting rights as determined by a company’s articles.
[69] The minutes of the meeting further reflect that the shareholders in attendance
were asked if they had any objections in respect of the loan agreement and it was
recorded that there were no objections in respect of the resolutions relating to the LI
loan and issuance of LM shares as security. The resolution was thus unanimously
adopted at the meeting.
[70] The minute of the meeting also records that LM’s shareholders were requested
to participate in signing the requisite documents to pass the special resolution because
of the time constraints, all the shareholders agreed that the chairperson of the meeting
could sign the special resolution on their behalf. Therefore, on the basis that the notice
of the meeting was properly given, the notice period was waived, and the quorum for
the meeting was sufficiently met, the resolutions tabled at the meeting were lawfully
passed and adopted.
(iii)
Validity of the shares issuance
[71] In terms of s 221 of the 1973 Companies Act, the directors of a company did
not have the power to allot or issue shares of the company without the prior approval
of the company in a general meeting. The issue of shares to LI was approved by the
shareholders at the general meeting held on 18 April 2008.
[72] Section 92 of the 1973 Companies Act provides that a company may not issue
shares unless the full issue price of, or other consideration for, such shares has been
paid to, and received by, the company. As the shares issued to LI were issued in terms
of the LI loan agreement, i.e., by way of set-off against the portion of the loan amount
that remained outstanding, that amount was paid to and received by LM by way of set-
off.
[73] Section 93 of the 1973 Companies Act provides that whenever a company
makes any allotment of its shares, the company must within one month thereafter
lodge with the CIPC:
‘(b)
in the case of shares allocated otherwise than for cash, a copy of the contract
in writing constituting the title of the allottee to the allotment, together with any contract
of sale, or for service or other consideration in respect of which that allotment was (or
if such contract is not in writing, a memorandum containing full particulars of such
contract), and a return in the prescribed form stating the number and description of the
shares allotted, the name and address of such allottee and the consideration for which
they have been allotted.’ (Emphasis added.)
[74] The return of allotment in respect of the issue of shares subsequent to the rights
issue was lodged with the CIPC by LM’s company secretary at the time, PwC, within
one month. The shares were therefore validly issued to LI in accordance with the
provisions of the 1973 Companies Act.
[75] The appellants in their heads of arguments advance a new ground on which
they rely for the setting aside of the relevant resolutions. They contend that the LM
Board did not act in good faith and in the interests of LM when they resolved to
increase its authorized share capital. In support of this contention the appellants
submit that the LM Board should have provided, but failed, to provide them as
shareholders with sufficient information regarding the reason for the increase of the
LM share capital. This contention relies for support on Trinity Asset Management (Pty)
Limited and Others v Investec Bank Limited and Others7 (Trinity) and CDH Invest NV
v Petrotank South Africa (Pty) Ltd and Another8 (CDH Invest NV HC) which was
confirmed on appeal by this Court in CDH Invest NV v Petrotank South Africa (Pty) Ltd
and Others 9 (CDH Invest NV SCA).
[76] The appellants’ reliance on Trinity is misplaced. Trinity does not apply to the facts
of the present case. Trinity only decided that a company's shareholders have a right
to receive accurate information and to seek an interdict to stop a shareholders’
meeting until correct information has been furnished. It does not support a proposition
that a shareholder is entitled to claim the failure to receive accurate information
entitling him to a declaration that the resolutions adopted, and the acts subsequently
taken by the company are unlawful.
[77] The issue in Trinity was whether the court below was correct to dismiss an
application by a company’s shareholders to declare a loan agreement between the
company and the creditor on the basis that the shareholders did not have locus standi.
7 Trinity Asset Management (Pty) Limited and Others v Investec Bank Limited and Others [2008] ZASCA
158; 2009 (4) SA 89 (SCA); [2009] 2 All SA 449 (SCA).
8 CDH Invest NV v Petrotank South Africa (Pty) Ltd and Another [2017] ZAGPJHC 324; [2018] 1 All SA
450 (GJ); 2018 (3) SA 157 (GJ).
9CDH Invest NV v Petrotank South Africa (Pty) Ltd and Others [2019] ZASCA 53; 2019 (4) SA 436
(SCA).
This Court held that the shareholder’s right to seek the declarator was triggered by the
fact that a meeting had been called at which the members were asked to ratify the
loan agreement. Before the shareholders could decide whether to attend the meeting
to vote for or against the resolutions, or to give proxies to others to vote for or against
on their behalf, or to do none of these things and to leave it to the majority to decide,
they needed to have sufficient information to be able to come to an intelligent
conclusion on the matter on which they were asked to vote. This right arises from a
term implied in the company contract.
[78] This Court went on to hold that:
‘Regard being had to the fact that an individual shareholder will be bound by the votes of the
majority it must follow that the shareholder’s rights extend not only to his or her being furnished
with the necessary information but that all his or her fellow shareholders also receive such
information. It also follows that a shareholder has the right flowing from the company contract
to insist that he or she and his or her fellow shareholders do not receive information which is
inaccurate and to enforce such right by applying for an interdict to prevent a meeting from
proceeding.’ 10
[79] In this case, the minutes of the general meeting show that:
(a)
the general meeting of 18 April 2009 was attended by shareholders
representing 97.5% of the total voting rights of all shareholders of LM;
(b)
all shareholders agreed to waive their 21-day notice period right;
a comprehensive report was represented to LM shareholders describing the need to
raise funds to contribute to the BFS to avoid the deemed offer provisions;
(c)
the LM shareholders were provided with detailed information regarding the
Loan Agreement and its terms;
(d)
the meeting was attended by Mr Andrew Thomas, an independent consultant,
who explained the deemed offer provisions and provided advice and answered various
questions on the loan agreement, including the security provisions under the loan
agreement. Having done so, he requested LM shareholders to indicate if there were
any objections to the resolution taken;
(e)
on this basis the shareholders adopted various resolutions unanimously,
including that LM conclude the LI loan agreement; LM would pledge shares to LI as
10 Trinity fn 8 para 36
security for the loan; the authorized share capital of LM be increased by 40 000
ordinary shares; and PwC in East London be instructed to register the above with the
Companies and Intellectual Registration Office (CIPRO) and to issue the appropriate
shares to LI to perfect its security on default. PwC proceeded to lodge the resolutions
with CIPRO by filing the necessary CM26 and CM11 forms, which were accepted on
19 May 2009.
[80] Similarly, it is clear on the facts that the CDH Invest SCA judgment does not
apply because LM’s Board exercised their powers bona fide in the interest of the
company. In CDH Invest SCA this Court held that:
‘CDH’s directors knew on 28 March 2014 that the round robin resolution upon which the
directors were called to vote was contrary to the proclaimed purpose. They also knew
that it was contrary to the MOU. Nonetheless on 31 March 2014 they signed the
resolution. The egregious conduct on the part of CDH's directors was compounded when,
on 4 April 2014, CDH's directors were reminded that the resolution was contrary to the
express purpose as contained in the preamble to the resolution. Mr Sontshaka of
Amabubesi wrote to Stadler on 4 April 2014 in this connection:
"It should be noted that there is no impediment in terms of the MOI against employing the
methods in s 36(2)(a) and (b) and s 36(3). Therefore, the MOI can be amended by any
one of the above methods, but only to the extent that it reflects 100 000 (one hundred
thousand) authorised shares, which have already been issued, instead of the current 1 000
(one thousand) shares. The current resolution requiring that the authorised share be increased
to 1 000 000 (one million) is incorrect and needs to be amended accordingly."
Notwithstanding these objections, and significantly employing the services of a firm other than
Petro tank's appointed auditors, the majority proceeded to give effect to the resolution by
submitting the resolution to the CIPC for filing.’11
[81] In the present case the LM Board acted in the best interests of LM in securing
the loan to ensure that it could meet the capital call. Although only seven LM
shareholders accepted the opportunity and participated by purchasing the additional
shares, all LM shareholders benefited, either directly and/or indirectly. As a
11 CDH Invest NV SCA fn 10 para 22.
consequence of LI having enabled LM to meet a capital call, both the shareholders
of LM and of LI greatly benefited over the years from the dividends which flowed
through these companies from LWC. Had this capital call not been met, these
dividends would not have been received by LM or by LI and both sets of shareholders
would have been deprived of substantial funds which are to date in excess of R130
million. Had LI not granted a loan to LM, LM would not have been in a position
financially to meet the capital call and all LI and LM shareholders would have lost the
benefit of the Project.
[82] The relief sought by the appellants in prayer 3 of the notice of motion, namely
an order directing that dividends be paid by LM in accordance with the shareholding
prior to January 2010 is not competent unless the shares held by LI and those
shareholders who raised funds and participated in the rights issue are transferred to
the appellants. The transactions which gave rise to the dilution of the appellants’
shareholding were concluded in 2009 and implemented in 2010 when the share
register was updated to reflect an increase of LI shareholding in LM. The dilution was
based on a single act which occurred more than three years before the appellants
instituted these proceedings. It did not constitute a continuous wrong.12 The claim for
the delivery of shares therefore prescribed in 2013. In the light of the conclusion I
have reached, it is unnecessary to consider the rest of the technical defences raised
by the respondents.
Cross Appeal
[83] As regards the fourth, fifth, sixth and eleventh respondents’ conditional cross-
appeal on the incorrect scale of costs granted by the high court, I am satisfied that
the high court did not misdirect itself by not awarding costs on a punitive scale against
the appellants. There is no basis to find that the proceedings brought by the
appellants are frivolous and vexatious. As shareholders of LM, they have a right to
bring the proceedings to challenge LM’s decisions which gave rise to the reduction of
their shareholding in LM. The high court exercised its discretion judicially and that
being the case there is no basis to interfere with the high court’s cost order.13
12 Barnett v Minister of Land Affairs [2007] ZASCA 95 para 20.
13Florence v Government of the Republic of South Africa [2014] ZACC 22; 2014 (6) SA 456 (CC); 2014
(10) BCLR 1137 (CC) paras 113-114.
Therefore, the cross-appeal must fail.
Order
[84] In the result I make the following order:
1 The appeal is dismissed with costs including the costs of two counsel where so
employed.
2 The cross-appeal is dismissed with costs including the costs of two counsel where
so employed.
_________________
D H ZONDI
JUDGE OF APPEAL
APPEARANCES
For Appellants:
T Ngcukaitobi SC, K Premhid
Instructed by:
Madlanga & Partners Inc Attorneys,
Sandton
Lovius Block Attorneys, Bloemfontein
For first Respondent:
T J B Bokaba SC and M Kruger
Instructed by:
Webber Wentzel Attorneys, Sandton
Honey Attorneys, Bloemfontein
For second, eighth and tenth
Respondents:
P L Carstensen SC
Instructed by:
Edward Nathan Sonnenbergs, Sandton
Webbers Attorneys, Bloemfontein
For fourth, fifth, sixth and eleventh
Respondents:
R G Buchanan SC and D van Niekerk
Instructed by:
Cliffe Dekker Hofmeyer Inc, Cape Town
Claude Reid 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:
01 December 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Pasiya and Others v Lithemba Mining (Pty) Ltd and Others (264/2022) [2023] ZASCA 169 (01
December 2023)
Today the SCA dismissed with costs, an appeal and cross-appeal, including costs of two counsel on
both appeals, against the decision of the Eastern Cape Division of the High Court, Grahamstown (the
high court).
This was an appeal against the judgment and order of the high court, where it dismissed with costs the
appellants’ application for declaratory relief. The relief sought included an order (a) declaring as unlawful
and setting aside a loan agreement concluded between the first respondent, Lithemba Mining (Pty) Ltd
(LM) and the eleventh respondent, Lithemba Investments (Pty) Ltd (LI) in 2009; (b) declaring as unlawful
and setting aside the purported changes to the LM shareholding which occurred in January 2010
pursuant to the loan agreement between LM and LI; and (c) directing that any dividends to be paid by
LM to its shareholders be paid in accordance with the shareholding prior to the alleged unlawful
changes. This appeal was with leave of the high court. The fourth, fifth, sixth and eleventh respondents
were also aggrieved that the high court had awarded them costs on a party and party scale instead of
on an attorney and client scale. These respondents sought and obtained leave from the high court to
cross-appeal against its cost order. They contended that the appellants’ claims were vexatious and
frivolous and that the high court should have, in the exercise of its discretion, ordered the appellants to
pay their costs on an attorney and client scale.
Two main issues therefore arouse in this appeal. The first, was whether the high court erred in
dismissing the appellants’ application for declaratory relief and the consequential relief. The second,
was whether the high court misdirected itself by failing to dismiss the application with costs on a punitive
scale.
The appellants advanced two main grounds on which they based their attack on the judgment of the
high court. They submitted, first, that the high court erred in its application of the test for declaratory
relief. The high court, the appellants argued, failed to deal with the first leg of the test. It dealt only with
the delay, which was one factor from the second leg of the test and decided the matter on that basis
without considering the merits. They submitted that the high court should have dealt with the merits and
only then to have considered the question whether to exercise its discretion in favour of, or against, the
grant of the order. Second, it was submitted by the appellants that the high court erred in not dealing
with the merits of their claims and all of the defences raised by the respondents. Relying on the
Constitutional Court judgment in Spilhaus Property Holdings (Pty) Limited and Others v MTN and
Another [2019] ZACC 16; 2019 (6) BCLR 772 (CC); 2019 (4) SA 406 (CC), counsel for the appellants
argued that the high court should have dealt with all the issues before it, especially where they had an
option of appealing further.
Regarding the first point of contention raised by the appellants, the SCA held that the high court correctly
applied the test applicable to declaratory orders and that the attack on its judgment based on that
ground must fail. The SCA further held that there was no basis to conclude that the high court
misdirected itself on the facts or the law in the exercise of its discretion, or that it exercised its discretion
injudiciously. Additionally, the SCA held that the high court had in fact considered the first leg of the
test. It found that the appellant had an interest in an existing or contingent right, as they were
shareholders in LM and their shareholding was diluted. That affected them not only in relation to the
sharing of dividends but also in relation to the voting rights, and thus the first stage of the test was
established. Thereafter the high court turned to the second leg of the inquiry. It correctly found that this
was not the case where the court ought to have exercised its discretion in favour of granting the
declaratory order sought. This was so, reasoned the high court, because the appellants unduly delayed
in approaching the court for their relief which they sought. The appellants only sought the court’s
intervention in 2020 where it implored the high court to turn the wheels back to the position prevailing
in 2009. It found that whilst the appellants did nothing to vindicate their rights, LM and other
shareholders proceeded to organize their lives, planned, and conducted the business in accordance
with the position after the dilution of the shares and the number of decisions had been made since 2009
relying upon resolutions which the appellants belatedly sought to be declared unlawful. As regards the
interests of other shareholders the high court correctly found that LM and the other shareholders would
suffer great inconvenience and prejudice should the status quo be changed after so many years.
Furthermore, that it would be unjust to the other shareholders, who paid and met their financial
obligations at the time, to accede to the relief sought by the appellants. One of the factors the high court
considered in exercising its discretion against granting the declaratory relief sought, was the effect of
prescription on the appellants’ claims. It found that even if the declaratory order were to be made it
would have no practical effect in that the appellants would not be able to claim the restoration of the
shares and payment of dividends in accordance with the shareholding applicable before the changes
in the shareholding as such claims would have been extinguished by prescription as a dilution of
shareholding occurred in 2009. After having regard to all the relevant factors, the high court correctly
found that there was no basis for it to have exercised its discretion in favour of granting the declaratory
relief sought by the appellants. When it came to the second point of contention raised by the appellants,
the SCA held that the relief sought by the appellants in the notice of motion was unsustainable. The
undisputed facts, according to the SCA, show that the loan agreement was lawfully authorised,
concluded and repaid; the changes to the shareholding were lawfully and properly authorised and
effected; and dividends were declared and paid in accordance with the changed shareholding. The loan
agreement and the board and shareholder authorisations which approved its conclusion and repayment
complied with the 1973 Companies Act. With regards to the cross-appeal instituted by the respondents,
the SCA held that it was satisfied that that the high court had not misdirected itself by not awarding
costs on a punitive scale against the appellants. There was no basis, according to the SCA, to have
found that the proceedings brought by the appellants were frivolous and vexatious. As shareholders of
LM, they had a right to bring the proceedings to challenge LM’s decisions which gave rise to the
reduction of their shareholding in LM. The SCA also held that the high court exercised its discretion
judicially and that there was no basis to interfere with the high court’s cost order. Therefore, the cross-
appeal must fail.
~~~~ends~~~~
|
1245
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 638/06
Reportable
In the matter between:
NOMTHA MAKAMBI
APPELLANT
and
THE MEMBER OF THE EXECUTIVE COUNCIL
THE DEPARTMENT OF EDUCATION,
EASTERN CAPE PROVINCE
RESPONDENT
CORAM:
FARLAM, NUGENT, MLAMBO, MAYA JJA et MHLANTLA
AJA
HEARD:
18 MARCH 2008
DELIVERED:
29 MAY 2008
SUMMARY:
Constitutional Law - whether High Court has jurisdiction to review
termination of emoluments and benefits of educator in state school.
Neutral citation: This judgment may be referred to as Makambi v MEC, Education,
Eastern Cape (638/06) [2008] ZASCA 61 (29 May 2008).
__________________________________________________
FARLAM JA
[1] This is an appeal from a judgment of Manjezi AJ sitting in the Bhisho
High Court.
[2] The appellant in this matter is an educator. She started her teaching
career with the Eastern Cape Department of Education in May 1997 when she
took up a temporary contract appointment at the Kubusie State School near
Stutterheim in the King William’s Town district. Although the period of her initial
appointment was from 22 May 1997 to 31 December 1997 she continued to
work at that school until early in 2004 when she was advised by the department
that she would be transferred to the Tyilekani Primary School.
[3] The letter she received from the department, which was dated 31 March
2004, read as follows:
‘RE: TEMPORARY PLACEMENT AS AN ADDITIONAL EDUCATOR:
PERSAL NO 53208862 YOURSELF: Ms NOMTHA MAKAMBI
1.
Kindly be informed that you will be placed additional to the establishment of TYILEKANI
PRIMARY SCHOOL until further notice.
2.
Your co-operation is highly appreciated.’
[4] The appellant thereafter discharged her duties as an educator at the
Tyilekani Primary School. In June 2004 she received a further letter from the
department dated 15 June 2004. In the heading to this letter she was reflected
as being on the staff establishment of the Kubusie State Primary School, the
school at which she had taught before being transferred to the Tyilekani Farm
School. The letter read as follows:
‘DECLARING YOURSELF IN ADDITION OF THE STAFF ESTABLISHMENT OF THE ABOVE
SHOOL
The post allocation of schools has been revised with effect from 1 January 2004.
After following the prescribed steps, you have been declared as in addition and must be
redeployed.
If it is known that a vacancy will occur in your school within six months, you will be considered
for the post and absorption will depend on the requirements of the post and your experience
and qualifications.
If you cannot be absorbed in a vacancy in your school the opportunity will be afforded to you to
apply for posts elsewhere in the District through a closed vacancy bulletin.
Meanwhile you are required to continue at your current school and to perform the duties that the
Principal requires you to perform, until you receive your placement letter.’
[5] From the commencement of the appellant’s employment in 1997 she
received her monthly emoluments and other concomitant benefits on the 20th of
each month. On 20 August 2004 she did not receive her emoluments and other
benefits. This was despite the fact that she had not received the further notice
referred to in the department’s letter of 31 March 2004 nor the placement letter
referred to in the department’s letter of 15 June 2004 nor any other notification.
[6] On 20 August 2004, accompanied by Mr Z.H. Mzili, the principal of the
Kubusie State School, the appellant had an interview with a Mr Tshabe, a
senior official of the department, who stated that the appellant was a temporary
educator and that the department was entitled to terminate her employment. On
23 August 2004 the principal, vice-chairperson and secretary of the Kubusie
State School wrote to the department requesting that the appellant be employed
as a permanent educator.
[7] On 7 October 2004, in a letter signed by the district director for the King
William’s Town district, the department wrote as follows to the appellant:
‘REQUEST FOR AMENDMENT OF NATURE OF APPOINTMENT FROM TEMPORARY TO
PERMANENT CS EDUCATOR: YOURSELF
Kindly be advised that the application for the change of your nature of appointment from
temporary to permanent CS educator has not been approved.
Your status therefore remains unchanged.’
[8] On 12 November 2004 the appellant brought an application as a matter
of urgency against the respondent, the member of the executive council for the
province of the Eastern Cape responsible for education, seeking, inter alia,
orders:
(a)
‘directing that the administrative action of the Respondent, in terminating
the payment of the [appellant’s] emoluments and the curtailment of her
concomitant benefits with effect from 1 August 2004 be judicially
reviewed and declared unlawful in terms of the provisions of the
Promotion of Administrative Justice Act 3 of 2000, and reinstating her
benefits associated with her employment by the Respondent with effect
from 1 August 2002’; and
(b)
‘declaring [her] status as an educator to be of a permanent nature’.
[9] In her founding affidavit the appellant contended that the department’s
conduct in terminating her emoluments in the way it did constituted ‘an unfair
labour practice as contemplated by section 8 of the Constitution’. (It was
common cause at the hearing of the appeal that what was meant was s 23 of
the Constitution.) She also contended that the department’s conduct constituted
‘administrative action which is unlawful, unreasonable and procedurally unfair
as is contemplated by section 33 of the Constitution’.
[10] The deponent to the answering affidavit filed on behalf of the respondent,
Mr Fikile Xasa, the district director of the department stationed in King William’s
Town, averred that the appellant was at all relevant times a temporary educator
in the employ of the department and that the department was entitled to
terminate her employment. Before dealing with the merits of her application,
however he raised three in limine objections to her application, two of which
were upheld by the court a quo. These were:
(1)
that she had not exhausted the internal remedies available to her because she had not
made use of the grievance procedure set forth in Chapter H of the Personal
Administrative Measures of the Education Labour Relations Council as required by s
7(2)(a) of the Promotion of Administrative Justice Act 3 of 2000; and
(2)
that the High Court did not have jurisdiction to hear the application as the administrative
action of which the appellant complained amounted to an unfair labour practice and
should have been dealt with in terms of s 191 of the Labour Relations Act 66 of 1995.
[11] Manjezi AJ, after hearing argument in the matter, made an order on 2
December 2004 dismissing the application with costs. As I have said he upheld
the two in limine objections summarised above. He added:
‘I find it therefore unnecessary to determine the merits of the application.’
[12] This appeal was originally set down for hearing on 13 November last
year but was removed from the roll and then set down for hearing on 18 March
this year at the request of the parties. The request was based on the fact that it
was anticipated that the ground covered by the second point in limine would be
decided by the Constitutional Court in Chirwa v Transnet Limited and Others,
the decision in which was expected towards the end of November last year. The
Constitutional Court’s decision was in fact delivered on 28 November 2007. It
has since been reported: see Chirwa v Transnet Ltd 2008 (3) BCLR 251 (CC).
[13] Ms Collett, who appeared for the appellant, endeavoured to distinguish
the present case from Chirwa because, as she put it, from the outset the
appellant did not base her case on its being a labour dispute as such but relied
on an alleged violation of her constitutional right to just administrative action,
unlike Ms Chirwa who first took her complaint to the Commission for
Conciliation, Mediation and Arbitration and only went to the High Court when
conciliation failed. While it is true that in this case, unlike in Chirwa, the
appellant did not first seek to initiate the process in the Commission for
Conciliation, Mediation and Arbitration, I do not think that is a material
distinction. Chirwa has held that a claimant in the position of the appellant (and
Mrs Chirwa) does not have an election, and thus the fact that the appellant did
not make an election is immaterial.
[14] Ms Collett also submitted, relying on the recent decisions of Revelas J in
the South Eastern Cape Local Division in Mkumatela v Nelson Mandela
Metropolitan Municipality, case no 2314/06, delivered 28 January 2008, and
Froneman J in the Bhisho High Court in Nakin v MEC, Department of
Education, Eastern Cape Province, case no 77/2007, delivered on 22 February
2008 that the Constitutional Court in Chirwa did not overrule its earlier decision
in Fredericks v MEC for Education and Training, Eastern Cape, 2002 (2) SA
693 (CC), and that the appellant was entitled on the strength of that decision to
bring her claim in the High Court.
[15] It is true that the majority in Chirwa did not overrule Fredericks but were
content to distinguish it. For the purposes of considering Ms Collett’s
submission on this point it is necessary to have regard to the basis on which
Fredericks was distinguished in Skweyiya J’s judgment in order to ascertain
where he drew the line between the two cases and on which side of that line the
present case falls. The matter was dealt with in paras 56 to 61 of Skweyiya J’s
judgment. Para 58 includes the following:
‘Notably, the applicants in Fredericks expressly disavowed any reliance on section 23(1) of the
Constitution, which entrenches the right to a fair labour practice. Nor did the claimants in
Fredericks rely on the fair labour practice provisions of the LRA [the Labour Relations Act 66 of
1995] or any other provision of the LRA.’
It is correct that the appellant did not rely on any of the provisions of the LRA
but she did in terms rely on s 23(1) of the Constitution, which entrenches the
right to fair labour practices. As Skweyiya J put it (at para 66), ‘the LRA seeks to
regulate and give effect to’ this section of the Constitution.
[16] It is instructive in this regard to examine Ms Chirwa’s claim, which it was
held she could not bring in the High Court. As appears from para 157 of the
dissenting judgment of Langa CJ, with whom Mokgoro and O’Regan JJ
concurred, she contended that her dismissal was administrative action as
understood by the Promotion of Administrative Justice Act 3 of 2000 (which I
shall call in what follows ‘PAJA’). The administrative action of which she
complained contravened, so she alleged, (i) s 3(2)(b) of PAJA for failing to
provide proper notice; (ii) s 6(2)(a)(iii) of PAJA because the administrator who
took the decision to dismiss her was biased; (iii) s3(3)(a) of PAJA because she
was prevented from obtaining assistance or representation; (iv) s 6(2)(b) of
PAJA because a mandatory and material procedure prescribed by an
empowering provision was not complied with; and (v) s 6(2)(f)(i) because the
action taken against her contravened another law. Ms Chirwa sought in respect
of the last two complaints to rely on items 8 and 9 of Schedule 8 to the LRA.
Because of this Skweyiya J held (at para 61) that ‘when she approached the
High Court she made it clear that her claim was based on a violation of the
provisions of the LRA’.
[17] When one compares the complaints set out in the appellant’s founding
affidavit, which I have summarised in para 9 above, with those on which Ms
Chirwa relied it is clear that it is not possible to hold that this case falls on the
Fredericks side of the line of distinction drawn in the Chirwa case. It follows that
Ms Collett’s submission that Fredericks applies cannot be upheld.
[18] Mr Bloem, who appeared for the respondent, contended before us that
the effect of the Chirwa decision is that the appellant may not pursue her claim
in the High Court and that the appeal accordingly falls to be dismissed. I think
that is correct.
[19] In the circumstances I am of the view that the appeal should fail. In view
of the fact that the appellant came to court to assert what she perceived to be
her rights under the Constitution I do not think that a costs order should have
been made against her in the court a quo nor should such an order be made in
this court.
[20] The following order is made:
1.
Subject to paragraph 2 the appeal is dismissed.
2.
The order made in the court a quo on 2 December 2004 is amended by
the deletion of paragraph 2 thereof.
_________________
IG FARLAM
JUDGE OF APPEAL
CONCUR:
MLAMBO JA)
MAYA JA)
MHLANTLA AJA)
NUGENT JA:
[21] I concur in the order that is proposed by my colleague but I prefer to set
out separately the reason for my concurrence lest it be misunderstood. The
problem that I have arises from the Constitutional Court’s recent decision in
Chirwa v Transnet Limited,1 which purported to distinguish, but not overrule, its
earlier contrary decision in Fredericks v MEC for Education and Training,
Eastern Cape.2 The Chirwa decision presents itself for application in this case –
which is materially indistinguishable from both Chirwa and Fredericks on the
jurisdictional question. But regrettably I can find no clear legal – as opposed to
policy – reason for the outcome in Chirwa. Nonetheless, as I explain presently
when elaborating upon the reasons for my conclusion, apart from its
jurisdictional ruling Chirwa indicates that the dismissal of a public-service
employee does not constitute administrative action. That finding is equally
applicable to this case and it is on that narrow basis that I agree that the appeal
should fail.
[22] The appellant was employed in the public service. She claims that her
right to just administrative action – having its source in s 33 of the Constitution
and elaborated and codified in the Promotion of Administrative Justice Act 3 of
20003 (PAJA) – was infringed by her employer. She applied to the high court for
an order to remedy the alleged infringement. Her employer (for whom the
respondent has been nominally cited) objected to the jurisdiction of that court to
consider her claim and the objection succeeded. (The court below also ruled on
another preliminary point but that need not be dealt with.)
[23] Jurisdictional objections of the kind that are relevant to this case have
shown remarkable resilience. They were taken on similar grounds in four cases
that came before this court – Fedlife Assurance Ltd v Wolfaardt,4 United
National Public Servants Association of SA v Digomo NO,5 Boxer Superstores,
Mthatha v Mbenya6 and Transnet Ltd v Chirwa7 – and were consistently
dismissed. A similar objection was also unanimously dismissed by the
1 2008 (3) BCLR 251 (CC).
2 2002 (2) SA 693 (CC).
3 Minister of Health v New Clicks SA (Pty) Ltd 2006 (2) SA 311 (CC) para 95.
4 2002 (1) SA 49 (SCA).
5 [2005] 26 ILJ 1957 (SCA).
6 2007 (5) SA 450 (SCA).
7 [2007] 1 All SA 184 (SCA).
Constitutional Court in Fredericks v MEC for Education and Training, Eastern
Cape.8
[24] In Chirwa the claim (brought in the high court) was also for the
enforcement of the claimant’s constitutional right to just administrative action
(through the medium of PAJA) as it had been in all the cases to which I have
referred (but for Fedlife9). This court held that the claim fell within the ordinary
jurisdiction of the high court, but four members were equally divided on whether
the dismissal of the claimant constituted ‘administrative action’ as contemplated
by PAJA. (The conclusion reached by Conradie JA was decisive against the
claimant but it went off on other grounds.10)
[25] On appeal to the Constitutional Court the claimant’s appeal was
unanimously dismissed. Eight members of that court11 held that the high court
had no jurisdiction to consider the claim. Seven of those members (Skweyiya J
excluded) went on to hold that the dismissal did not constitute administrative
action. A minority (Langa CJ with the concurrence of Mokgoro and O’Regan J)
held that the high court had jurisdiction to consider the claim but that the
dismissal did not constitute administrative action.
[26] It is the decision of the majority on the jurisdictional question that raises
the difficulty in this case. We are now confronted by two decisions of the
Constitutional Court – its unanimous decision in Fredericks and its majority
decision in Chirwa – that seem to oblige us to go in diametrically opposed
directions on that issue. That resulted in submissions being made by counsel
that were simple and symmetrical. Counsel for the respondent submitted that
the decision of the majority of the Constitutional Court in Chirwa obliges us to
uphold the jurisdictional objection (and thus dismiss the appeal). Counsel for the
appellant submitted that the unanimous decision of the Constitutional Court in
Fredericks (which was not overruled in Chirwa) obliges us to dismiss the
jurisdictional objection (and thus uphold the appeal). Counsel for the appellant
also submitted that this case is distinguishable from Chirwa but for reasons that
8 2002 (2) SA 693 (CC).
9 The claim in Fedlife was for the enforcement of a contractual right.
10 For a discussion of the judgment of Conradie JA in this court see D Holness and G Devenish: ‘The law in relation to
claims relating to dismissal: jurisprudential principle or legal pragmatism?’ (2008) 71 THRHR p. 142.
11 Moseneke DCJ, Madala, Ngcobo, Nkabinde, Sachs, Skweyiya and Van der Westhuizen JJ and Navsa AJ.
will become apparent I need not deal with that submission.
[27] Our rules of precedent require a court generally to follow the decisions of
a court of higher authority. I do not think that rule is without limitations but it is
not necessary to explore those limitations in this case.
[28] What a court is to do when confronted with conflicting decisions of a
higher court has naturally received little attention in systems that observe the
ordinary rules of precedent. But Salmond on Jurisprudence suggests the
following solution:12
‘Where authorities of equal standing are irreconcilably in conflict, a lower court has the same
freedom to pick and choose between them as the schizophrenic [higher] court itself. The lower
court may refuse to follow the later decision on the ground that it was arrived a per incuriam, or
it may follow such decision on the ground that it is the latest authority. Which of these two
courses the court adopts depends, or should depend, upon its own view of what the law ought
to be.’
The author describes the freedom that the higher court (and by extension the
lower court) has as follows:
‘Although the later court is not bound by the decision so given per incuriam, this does not mean
that it is bound by the first case. Perhaps in strict logic the first case should be binding, since it
should never have been departed from, and was only departed from per incuriam. However, this
is not the rule. The rule is that where there are previous inconsistent decisions of its own, the
court is free to follow either. It can follow the earlier, but equally, if it thinks fit, it can follow the
later.’
[29] It is in that context that an analysis of the decision in Chirwa becomes
necessary but some background is helpful to that analysis.
[30] Whether a court has jurisdiction (in the sense that is now relevant) to
consider a particular claim depends upon the nature of the rights that the
claimant seeks to enforce. (Whether the claim is good or bad in law is
immaterial to the jurisdictional enquiry.13) I think it can be taken to be trite that a
claim for the enforcement of the constitutional right to just administrative action
(through the medium of PAJA) falls within the ordinary jurisdiction of the high
courts. Section 157(2) of the Labour Relations Act (LRA) confers concurrent
12 12 ed by PJ Fitzgerald p. 152-53.
13 Cf Langa CJ in Chirwa para 155.
jurisdiction on the Labour Court in respect of such claims in certain
circumstances.14 It follows that a claim that falls within the terms of that section
is capable of being pursued either in the high court or in the Labour Court. Any
suggestion that the effect of that section is to oust the ordinary jurisdiction of the
high courts in respect of such claims was firmly put to rest in Fredericks in the
following terms:15
‘Whatever else its import, s 157(2) cannot be interpreted as ousting the jurisdiction of the High
Court since it expressly provides for a concurrent jurisdiction.’
There are also various rights that are accorded to employees by the LRA that
are not enforceable in the high courts but only through the mechanisms that are
provided for in the LRA.
[31] The jurisprudential objections that were taken in the cases I have
referred to – and that was taken in this case – were all taken on the same basis.
In each case it was contended by the objector that the claim was not what it
purported to be (a claim for enforcement of the right to just administrative action
that fell within the jurisdiction of the high courts16) but was instead a claim for
enforcement of rights conferred upon the claimant by the LRA (which falls
outside the jurisdiction of the high courts). In effect the objectors purported to
substitute the claim that had been made with the claim that had not been made
by calling it the latter.
[32] But things cannot be made to be what they are not merely by calling
them something else and that applies as much to legal claims as to other
things. Where the lower courts construed the claim to be other than the claim
that it purported to be17 the objections were consistently upheld. Where courts
dealt with the objection on the basis that the claims were indeed what they
purported to be the objections were consistently dismissed.18 In both cases the
outcome was inevitable, depending upon whether the claim was dealt with for
14 Section 157(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;
(b) any dispute over the constitutionality of any executive or administrative act or conduct, or any threatened
executive or administrative act or conduct, by the State in its capacity as an employer; and
(c)
the application of any law for the administration of which the Minister is responsible.’
15 Para 41.
16 But for Fedlife, in which the claim was for the enforcement of a contractual right.
17 Sometimes purporting to ‘characterise’ the claim but in truth substituting one claim for the other.
18 This court in Fedlife, Digomo, Boxer Superstores and Chirwa, and a unanimous Constitutional Court in Fredericks.
what it was, or whether it was substituted in effect with a claim that it was not.
[33] That problem did not arise in Chirwa – although there are passages in
the two majority judgments that might at face value suggest the contrary.19 One
thing is clear beyond a shadow of doubt – notwithstanding other difficulties I
have had interpreting those judgments – which is that the court construed the
claim as being one for the enforcement of the claimant’s constitutional right to
just administrative action (which is what the claim purported to be). For had the
claim been construed to be anything else the court would not have been
capable of finding (as both the majority and the minority found) that the
dismissal of the appellant did not constitute administrative action – the question
whether the dismissal constituted administrative action could simply not have
arisen.
[34] That the claim in that case was a claim for the enforcement of the
constitutional right to just administrative action must necessarily be the starting
point for the enquiry as to whether the high court had jurisdiction.
Notwithstanding close and repeated study of the majority judgments over a
considerable period of time I regret that I have not been able to discover a legal
basis for the finding that the high court has no jurisdiction over a claim of that
kind. I have already pointed out that it is trite that a claim for the enforcement of
the constitutional right to just administrative action falls within the ordinary
jurisdiction of the high courts. The fact that the claim arises from an employment
relationship does not place it within the exclusive jurisdiction reserved to the
Labour Court by s 157(1) of the LRA (as pointed out by Skweyiya J,20 citing with
approval the decision in Fredericks on that point.21) And if the claim falls within
the ambit of s 157(2) then the ordinary jurisdiction of the high courts is expressly
preserved (as pointed out in Fredericks and not overruled by Chirwa).
[35] But if Chirwa and Fredericks were at one on the nature of the claim that
was in issue in each case, and on the proper construction of the applicable law,
19 See Skweyiya J at para 63 in which the word ‘claim’ is incorrectly used. What was said in that paragraph to be the
claim was instead the allegations and submissions made by the claimant in support of her claim. Also Ngcobo J at
para 125, which refers to what the ‘dispute concerns’ whereas the proper enquiry is what rights the claim seeks to
enforce.
20 Skweyiya J at para 25.
21 Fredericks para 40.
one is left with the question why the outcome in each case differed.
[36] In attempting to resolve that question I have not found it helpful to
scrutinise sentences, or even paragraphs, of the majority judgments in isolation,
because on the face of it there seem to me to be inconsistencies. I think that
the import of Chirwa more easily becomes apparent from viewing the judgments
more broadly and as a whole. From that perspective it seems to me that the
distinction between that case and Fredericks does not lie in opposing views
held by the respective courts on the law but lies rather in the premise upon
which each was decided.
[37] I think a fair reading of the two judgments makes it clear that the majority
was of the view that the objective of the Act was both to encompass employees
in the public service and also to be exhaustive of their rights arising from their
employment, notwithstanding that the legislature had expressed itself to the
contrary in s 157(2).22 With that as its starting point the majority considered it to
be desirable as a matter of policy that such employees should pursue
complaints arising from their employment only through the mechanisms of the
Labour Relations Act and to attain that objective it decided that the high courts
must not exercise their ordinary jurisdiction in such cases.
[38] That construction of the judgments seems to me to be consistent with the
various references to what should or should not be permitted (expressed in
various ways)23 in contradistinction to what is or is not permitted by the statute.
It also explains why Fredericks was not overruled as a matter of law (the
majority distinguished it on its facts but I am unable to see how the factual
distinction that was relied upon could be material). It is also the only
construction that would be consistent with the appeal by the majority to the
legislature to revisit s 157(2) of the LRA,24 for if the outcome that it considered
to be desirable had been one that the law dictated there would be no cause for
legislative intervention. Moreover, that construction of the majority judgments
seems to me to be expressly acknowledged by the observation of Skweyiya J
22 Ngcobo J observed that the word ‘concurrent’ in that section was ‘unfortunate’ for the achievement of the supposed
objective of the Act.
23 See Skweyiya J at paras 65, 66, 67 and 68 and Ngcobo J at paras 125 and 126.
24 See Skweyiya J at para 71.
that
‘although one should be ‘loathe [to deprive] a litigant of existing rights where she or he is
accorded more than one right by the Constitution or any other enabling legislation, it is
unsatisfactory that the High Court should be approached to decide review applications in terms
of PAJA where the LRA already regulates the same issue to be reviewed.’25
[39] While the outcome in Chirwa might indeed be desirable I am not at all
sure that this court is bound – or even permitted – to adopt and apply a
supposed policy if the legislature has not embodied that policy in law. I share
the following reservation that was expressed by the Chief Justice:26
‘We must be careful, as a court, not to substitute our preferred policy choices for those of the
Legislature. The Legislature is the democratically elected body entrusted with legislative powers
and this Court must respect the legislation it enacts, as long as the legislation does not offend
the Constitution.’
[40] Fortunately I have not found it necessary to confront that question in this
case. Applying the decision in Fredericks – which seems to me to be good law
until it is overruled or superseded by amending legislation – I think the appeal
must in any event be dismissed.
[41] Ten members of the Constitutional Court held in Chirwa that the
dismissal that was there in issue did not constitute administrative action as
contemplated by PAJA and on that ground alone the appeal in that case fell to
be dismissed. (If the high court did not have jurisdiction to pronounce upon the
merits of the claim then it seems to me that the Constitutional Court similarly
had no jurisdiction and its finding on that issue would not be authoritative but on
the approach that I take to the matter that difficulty does not arise.) On that
issue I think I am bound to follow the decision of the Constitutional Court27
whatever my own view might be on the matter. I do not think the conduct that is
complained of in this case is materially distinguishable from the conduct that
25 Para 40. Although the judgment of Conradie JA in this court is also difficult to deconstruct it seems to reflect a similar
approach.
26 Para 174.
27 By which I mean the ten members (excluding Skweyiya J) who decided that issue.
was in issue in Chirwa. It is on that ground that I agree that the appeal should
be dismissed and concur in the order proposed by my colleague.
____________________
R.W. NUGENT
JUDGE OF APPEAL
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
May 2007
STATUS: Immediate
Makambi v MEC for the Executive Council, Department of Education,
Eastern Cape Province
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 a claim by an employee for
the review of a decision of the provincial authorities to terminate her
employment benefits.
The employee had sought to assert her constitutional right to just
administrative action in seeking to review the decision. In a similar case that
came before the Constitutional Court (in the matter of Chirwa v Transnet Ltd
2008 (3) BCLR 251 (CC)) that court held that employees in the public service
may not assert their constitutional right to just administrative action if the
conduct that was complained of arose from their employment. It held that the
only recourse that they had was to pursue a claim under the Labour Relations
Act.
The SCA held that that decision was determinative of the case before it and
on that ground dismissed an appeal from the Bisho High Court that had
rejected the complainant’s claim.
|
3230
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number : 338/06
Reportable
In the matter between :
N Z MNGOMEZULU
FIRST APPELLANT
V G NGCOBONDWANE
SECOND APPELLANT
and
NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
FIRST RESPONDENT
MINISTER OF SAFETY AND SECURITY
SECOND RESPONDENT
CORAM :
CLOETE, VAN HEERDEN et COMBRINCK JJA
HEARD :
10 SEPTEMBER 2007
DELIVERED :
28 SEPTEMBER 2007
Summary: A direction granted ex parte in terms of the Interception and
Monitoring Prohibition Act 127 of 1992 is provisional and subject to
reconsideration, but there must be a legitimate purpose for its reconsideration.
Where the purpose is to protect fair trial rights it is premature to seek, in
advance of a pending trial, to have the direction reconsidered with a view to
obtaining a declaratory order that information obtained pursuant to the
direction, was unlawfully obtained.
Neutral citation: This judgment may be referred to as Mngomezulu v NDPP
[2007] SCA 129 (RSA).
_________________________________________________________
CLOETE JA/
CLOETE JA:
[1] The appellants were charged in the Wynberg Regional Court (Transvaal) with
contravening s 5(b), alternatively s 4(b), of Act 140 of 1992 viz dealing in, or being in
possession of, a dangerous or undesirable dependence-producing substance
(methaqualone, commonly known as mandrax). They have not yet pleaded to the
charges.
[2] The trial was due to commence on 20 June 2005.The appellants’ attorney
was furnished with a copy of the police docket, from which it appeared that a
direction had been issued by a judge in chambers in terms of s 2(2) of the
Interception and Monitoring Prohibition Act.1 The direction authorised the
interception and monitoring of any communication on specified telecommunication
lines of, amongst others, the first appellant. The direction did not concern the second
appellant.
[3] On 30 May 2005 a copy of the application for the direction was furnished to
the attorney by the prosecutrix at the former’s request, but certain information had
been deleted as, according to the letter under cover of which the copy of the
application was sent: ‘This information concerns ongoing investigations and it cannot
be disclosed at this stage.’ Some of the deleted information was subsequently
furnished because, according to the investigating officer, ‘the reasons that initially
necessitated the deletion thereof are no longer applicable’; the remainder was not.
The nature of the information that was still withheld and the reasons for this appear
from the affidavit of the investigating officer:
‘[T]he aforesaid deleted portion contains names of seven persons or individuals who are currently2
under investigation by the West Organized Crime Unit for offences in terms of Act 140 of 1992 as
amended i.e dealing in dangerous dependence-producing substances and/or undesirable
dependence-producing substances.
1 127 of 1992. The whole of this Act has been repealed by s 62(1) of the Regulation of Interception of
Communications and Provision of Communications ─ related Information Act 70 of 2002. Section
62(1) will come into operation on a date to be fixed by the President by proclamation in the Gazette as
will the transitional provisions in ss (2) to (5).
2 Emphasis in the original.
The reason for the non-disclosure of the identities of the aforesaid seven persons is that their
disclosure would seriously compromise police investigations currently underway against them in that
these individuals would become aware that the police are investigating them and successfully cover
their tracks or go into hiding. According to my informant, these persons are known to First and Second
Respondent [sic; sc “Applicants”].’
[4] The appellants then brought motion proceedings in the Johannesburg High
Court in terms of a notice of motion dated 19 August 2005. The relief sought was in
two parts. The first part, part A, which both appellants sought, was for an order
directing the NDPP (the first respondent in the court a quo and on appeal),
alternatively the Minister of Safety and Security (the second respondent in the court
a quo and on appeal), to furnish them with a full and unedited copy of all the
documents placed before the judge in chambers in support of the application made
in terms of the Act, and leave to supplement the founding affidavit on receipt of those
documents. The second part, part B, which only the first appellant sought, was for an
order setting aside the decision of the judge in chambers and an order directing that
all telecommunications monitored, recorded and transcribed pursuant to the judge’s
decision had been unlawfully obtained.
[5] Section 2(2) of the Act provides that a judge may direct that postal articles
and communications may be intercepted and that conversations may be monitored.
Section 3 deals with the issue of the direction: subsections (1)(b)(i) and (ii) set out
the requirements which must be satisfied for the direction to be issued; subsection
(4) allows the duration of the direction to be extended; and subsection (5) provides:
‘An application referred to in subsection (1)(b)(i) or (ii) or subsection 4 shall be heard and the direction
issued without any notice to the person, body or organisation to which the application applies and
without hearing such person, body or organisation.’
[6] Masipa J in the court a quo found that an order contemplated in s 3(5) is a
final order, and that the section excludes any subsequent challenge thereto. This
interpretation cannot be supported. An order granted ex parte is usually regarded as
provisional, irrespective of its wording: Pretoria Portland Cement Co Ltd v
Competition Commission.3 Section 3(5) must be interpreted as excluding a hearing
only at the time when the application is made and the direction issued and not as
precluding a subsequent challenge to the validity of the direction by way of an
answering affidavit to the original application. Initial secrecy would be necessary in
order not to defeat the very purpose of the direction: a person who knows that his or
her telephone line is going to be monitored would hardly make or receive
incriminating telephone calls. But there is no reason for secrecy to be maintained
once the order has been executed or the person concerned has become aware of its
operation and wishes to challenge its validity. In terms of s 39(2) of the Constitution,
it is the interpretation which promotes the spirit, purport and objects of the Bill of
Rights which must be preferred: Investigating Directorate: Serious Economic
Offences v Hyundai Motor Distributors (Pty) Ltd: In re Hyundai Motor Distributors
(Pty) Ltd v Smit NO.4 The interpretation placed on the section by the court a quo
altogether excludes the fair hearing rights of persons affected by a direction whereas
the other, legitimate interpretation which I have given merely limits them. The latter
interpretation is accordingly to be preferred.5
[7] I turn to consider the allegations made in the founding affidavit and the
arguments advanced in support thereof. The first appellant said in the founding
affidavit:
’26.1
I am advised that I have a right, prior to my trial taking place, to have access to all the
information in the possession of the State relating to the charges against me. . . .
26.2
. . .
26.3
I am advised that I am entitled to a full copy of the application in the form in which it was
considered by the judge who granted the direction in terms of the Interception and Monitoring
Prohibition Act.
26.4
I am entitled to this in order properly to prepare for my trial. It is not possible properly to
prepare for my trial and to consider the contents of the application for a direction unless I have been
supplied with the full contents of the application. . . .
26.5
The contents of the edited or deleted portions are pivotal to an understanding of the full
3 2003 (2) SA 385 (SCA) paras 45-47.
4 2001 (1) SA 545 (CC) paras 21-26.
5 See also National Director of Public Prosecutions v Mohamed NO 2003 (1) SACR 561 (CC) paras
33-52.
content of the application. Any criticism that I may have, or indeed that I may not have, of the contents
of the application may be changed completely by a perusal of the deleted portions. They may indicate
that the State had a good case for applying for the direction, or they may indicate, by virtue of their
contents, that the State had no basis to bring such an application. I cannot decide which unless I am
given access to the edited or deleted portions.
26.6
I am advised, and I believe, that an application under this Act for a direction is no less an ex
parte application than any other application, be it one brought before the High Court in the normal
course, or be it one brought for a search warrant such as under the NPA Act or under the Criminal
Procedure Act. I am advised, and accept, that in any circumstances where my rights to privacy are
invaded, or any rights at all are invaded, by means of an application brought to a judge in chambers, I
am entitled to bring the matter before a court once more for that court to decide whether the order
should have been granted.6 In this instance it is the decision to grant a direction under Section 2(2) of
the Interception and Monitoring Prohibition Act that would fall for reconsideration.
26.7
I am advised by my attorneys that the contents of the State’s docket reveal that very many
conversations were monitored, purportedly or allegedly under the auspices or power of the direction
issued by the judge in chambers. In the event that that direction was lawfully issued, this may have
the consequence that the monitored telephone conversations may be admissible in a court of law. For
example, admissible in the trial which I am due to face.
26.8
On the other hand, if that order should never have been granted and was therefore unlawfully
obtained, then it may well be that a court will refuse to admit the fruits of the unlawful action by the
State, in this instance the unlawful interception and monitoring of telephone conversations. In order to
consider whether the direction was lawfully obtained, I am entitled to consider, in full, all of the
documents placed before the judge in chambers upon which the order was granted. This I cannot do
where the State had exercised editing or deletion powers over the document.’
[8] The assertion in the founding affidavit that the information still being withheld
by the prosecutrix is necessary to enable the first appellant to prepare for trial was
not pressed in argument, and rightly so in view of the following passages which
appear respectively in the first respondent’s answering affidavit deposed to by the
prosecutrix and the affidavit of the investigating officer deposed to on behalf of the
second respondent:
The prosecutrix:
‘7.
My view that the information requested is not reasonably required in order to enable the
defence to prepare for trial is premised on the fact that the deleted information comprises only names
6 Emphasis supplied.
of individuals who are not witnesses in the pending criminal case. Further, these individuals are still
being investigated by the police and have accordingly not made any statement to the police, either
incriminatory or exculpatory to First and Second Applicant.
8.
I further do not intend to use the names of the aforesaid individuals in the prosecution of
Applicants in the pending criminal case.’
The investigating officer:
’26.
Further, I wish to clearly state that the aforesaid persons whose names have been deleted . . .
are not witnesses for the state. As already indicated the aforesaid persons have not been interviewed
by myself or any of my colleagues and I have thus no evidence from these individuals either
implicating or favourable to First and Second Applicants.’
[9] Counsel placed much stress in argument on that portion of para 26.6 of the
founding affidavit which I have italicized in para [7] above. The submission was that
reconsideration of the direction given by the judge in chambers in terms of the Act
might assist the first appellant in the pending criminal trial if the direction were to be
set aside, and that the setting aside of the direction would be a necessary precursor
to a civil claim for damages for unlawful invasion of privacy ─ but that the first
appellant was, irrespective of these considerations, entitled as of right to have the
order reconsidered. I cannot agree with this latter submission.
[10] It does not follow from the fact that a person’s rights have been invaded in
consequence of an order granted ex parte, that such person is without more entitled
to have the order reconsidered. Reconsideration of the order is not an end in itself.
Nor is it to be had simply for the asking. A court will not be detained by an academic
exercise. Such reconsideration must be for a legitimate purpose, namely, to enforce
a right by, for example, a claim for damages, return of documents seized or some
other relief which would or might flow from the reconsideration. And if the relief is not
competent, reconsideration of the order would serve no purpose.
[11] I am unable to identify in the founding affidavit any purpose for the
reconsideration of the order save to protect the first appellant’s right to a fair trial.
The passage italicized was made in the context of the protection of that right. The
relief sought cannot be granted on the basis that the first appellant might perhaps
wish to bring (unspecified) civil proceedings to vindicate his rights to privacy or some
other (unspecified) right should a reconsideration of the direction result in a finding
that his rights were invaded unlawfully: the first appellant himself has not said that he
is contemplating civil proceedings. The argument advanced on his behalf that he
might bring such proceedings is accordingly without factual foundation.
[12] It is clear from the notice of motion that the first appellant seeks the
information that has been withheld with a view to obtaining an order setting the
direction aside; and it is equally clear from the founding affidavit that his purpose in
doing so is to protect his fair trial rights in the pending criminal trial. There are
several decisions of this court which hold that, save in an exceptional case, a court
will not issue a declaratory order affecting criminal proceedings: see eg Attorney-
General, Natal v Johnstone & Co Ltd;7 Wahlhaus v Additional Magistrate,
Johannesburg;8 Ismail v Additional Magistrate, Wynberg9 and cf S v Mhlungu,10 S v
Western Areas Ltd11 and S v Friedman (2).12 The decision of the majority of the
Constitutional Court in Ferreira v Levin NO; Vryenhoek v Powell NO13 is
distinguishable. In that matter the appellant faced a choice between answering self-
incriminating questions at an insolvency enquiry, with the risk that his answers could
be used against him were he subsequently to be prosecuted, or refusing to answer
the questions and risk being prosecuted for his refusal. Unlike the present case, the
appellants’ rights were under real and immediate threat.14 The position which
applies in a case such as the present appears from the following quotation from
Wahlhaus:15
‘The present case has no special features and cannot rightly be brought within the ambit of the
Johnstone & Co decision supra. Apart from the fact that the petition neither referred to, nor sought
7 1946 AD 256.
8 1959 (3) SA 113 (A).
9 1963 (1) SA 1 (A).
10 1995 (3) SA 867 (CC) para 59 at 895F, the minority judgment of Kentridge AJ.
11 2005 (5) SA 214 (SCA).
12 1996 (1) SACR 196 (W) which refers to decisions in Canada.
13 1996 (1) SA 984 (CC).
14 See the remarks by Chaskalson P in para 163, and contrast the views expressed in the minority
judgments of Ackermann J, para 41; Kriegler J, paras 198-9 and 206; and Sachs J, para 248.
15 At 118H-119B.
any relief by way of, a declaration of rights, it is clear that the present would not be a suitable case for
the granting of the very special relief entailed in the Court’s exercising its discretion under s 102 of Act
46 of 193516 to make a declaratory order in relation to a criminal case. The appellants are alleged to
have committed a crime. The normal method of determining the correctness, or otherwise, of that
allegation is by way of the full investigation of a criminal trial. There is a total absence of any of the
types of consideration which induced this Court to make a declaratory order in the Johnstone case
supra. Nor, indeed, does the case even contain any law point which, if resolved in appellants’ favour,
would dispose of the criminal charge, or a substantial portion of it.’
[13] The present is not an exceptional case. There is no reason to believe that an
order declaring that any evidence obtained pursuant to the direction was unlawfully
obtained, would curtail the trial ─ the first appellant has not even alleged that there is
a likelihood that such evidence will be tendered. If it is, then that will be the time for
its admissibility to be attacked. It will be for the magistrate to decide whether the
evidence was unconstitutionally obtained. If he does come to that conclusion, that
will also not necessarily be an end of the matter for it will then be for him to decide
whether the evidence should be excluded in terms of s 35(5) of the Constitution:17
Ferreira v Levin NO; Vryenhoek v Powell NO;18 Key v Attorney-General, Cape
Provincial Division;19 S v Dlamini; S v Dladla; S v Joubert; S v Schietekat.20
[14] Nor can it be argued that the appellants require an unedited copy of the
application placed before the judge in chambers to enable them to prepare for trial in
case the State should seek to rely on evidence obtained pursuant to the direction.
That application can be made when and if it is established that the State will indeed
seek to rely on such evidence and it should in any event be directed to the trial court.
16 Which corresponds to the present s 19(1)(a)(iii) of the Supreme Court Act 59 of 1959, viz ‘A
provincial or local division . . . shall . . . have power ─
(iii) in its discretion, and at the instance of any interested person, to enquire into and determine any
existing, future or contingent right or obligation, notwithstanding that such person cannot claim any
relief consequential upon the determination.’
17 ‘Evidence obtained in any 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.’
18 Above, n 13, para 153.
19 1996 (4) SA 187 (CC) para 13.
20 1999 (4) SA 623 (CC) para 98.
[15] In the circumstances the first appellant has not made out a case for the relief
sought by him. The order made by the court a quo, albeit for reasons which cannot
be supported on appeal, must therefore stand.
[16] The second appellant’s application for disclosure of the names which have
been deleted may be disposed of shortly. He said, in his replying affidavit:
‘My interest in this application is to demonstrate, from my perspective, that the South African Police
Services or any other law enforcement agency at no time had any suspicion that I was involved
together with the First Applicant, or together with any other person in any criminal conduct
whatsoever, and, in particular, in the alleged drug dealing offences with which I and the First Applicant
are charged. . . . [T]he revelation of [the information withheld] will most certainly not refer in any way
to me. Thus, in my trial, and in due course, I will be able to demonstrate, as corroboration for my
defence of non-involvement in any drug dealing, that the South African Police Services at no time
suspected me or linked me with any one allegedly involved in drug dealing and in particular with
anything that is alleged against the First Applicant.’
The reasoning is fallacious. It does not follow that because the second respondent’s
name does not appear on the list of alleged drug dealers which the State seeks to
withhold, that the SAPS did not suspect he was involved in drug dealing or that the
absence of his name from that list would ‘corroborate’ his defence of non-
involvement in drug dealing. The proposition advanced on behalf of the second
appellant in argument ─ that ‘he is entitled to all the information in the possession of
the State for the purposes of preparing for his criminal trial’ ─ is far too widely stated
and is not the effect of Shabalala v Attorney-General Transvaal,21 the case which
was prayed in aid of the proposition. What Mahomed DP said in that case was:
‘The basic test in the present matter must be whether the right to a fair trial in terms of s 25(3)22
includes the right to have access to a police docket or the relevant part thereof. This is not a question
which can be answered in the abstract. It is essentially a question to be answered having regard to
the particular circumstances of each case.’23
[17] That brings me to the question of costs. The second appellant has been
entirely unsuccessful on appeal and there is no reason why costs should not follow
21 1996 (1) SA 725 (CC).
22 Of the Interim Constitution, Act 200 of 1993; see now s 35(3) of the Constitution.
23 Para 36.
the result. The first appellant on the other hand has succeeded on appeal to the
extent that the ratio of the court a quo has been overruled on appeal, which could
have future significance if the trial magistrate is called upon to consider whether
evidence tendered by the State was obtained unlawfully. But had the first appellant
not brought the application ─ and he ought not to have done so ─ he would not have
been faced with an adverse judgment, so the costs of the appeal necessary to
overrule that judgment can fairly be laid at his door. The respondents did not seek to
support it. On the separate issue, whether the information withheld should be
disclosed to him, he has failed. So far as the costs in the court a quo are concerned,
first appellant’s counsel submitted that the first appellant had been partially
successful in that he had obtained some information which was withheld until the
answering affidavit was filed. It was not suggested that that information was of any
use save to attack the validity of the direction; and the first appellant’s attempt to do
so has failed. In the circumstances I see no reason to disturb the costs order made
by the court a quo.
[18] The appeals are dismissed, with costs.
______________
T D CLOETE
JUDGE OF APPEAL
Concur: Combrinck JA
[19] I have had the privilege of reading the judgment of Cloete JA. I agree with his
reasoning and conclusions, save for one reservation ─ the inclusion of para [10]. In
my view, for the reasons appearing in paras [11] and [12] of his judgment, the first
appellant’s rather belated claim to the right of privacy, as distinct from its assertion in
relation to his fair trial right, was resorted to merely as a stratagem to overcome the
legitimate refusal by the State to disclose privileged information. To my mind, that in
effect is the end of the enquiry.
________________
B J VAN HEERDEN
JUDGE OF APPEAL
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 September 2007
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal
N Z MNGOMEZULU & ANOTHER v NDPP & ANOTHER
1.
The appellants were charged in the Magistrate’s Court, Wynberg
(Gauteng) with dealing in Mandrax. The SAPS had obtained an order
from a judge in chambers entitling the first appellant’s telephone
conversations to be monitored and recorded. The appellants wished to
consider having the order set aside as they were concerned that
transcripts of the intercepted telephone calls might be used against them
at their trial. They sought a copy of the application for the order for this
purpose. The State provided a copy of the application but blanked out
the names of persons who were still under investigation for drug dealing.
The appellants sought to compel the State to provide the missing
information.
2.
The Johannesburg High Court refused the application. The SCA
dismissed the appeal on the basis that the application was premature.
The SCA held that if and when the State tendered intercepted
information at the appellants’ trial, that was the time for them to object to
its production and to mount any attack on the way in which it was
obtained.
--ends--
|
2748
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 523/11
Not reportable
In the matter between:
MEMBER OF THE EXECUTIVE COUNCIL
APPELLANT
FOR EDUCATION: MPUMALANGA
and
ONICA SKHOSANA obo SOLOMON SKHOSANA
RESPONDENT
Neutral citation:
MEC for Education: Mpumalanga v Skhosana (523/11)
[2012] ZASCA 63 (17 May 2012)
Coram:
Nugent, Heher, Cachalia JJA, McLaren and Petse AJJA
Heard:
3 May 2012
Delivered:
17 May 2012
Summary:
Negligence – child learner injured after device with protruding
copper wires exploded in his hands – whether teacher ought to have
foreseen harm.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Matojane J sitting as court
of first instance):
The appeal is dismissed with costs of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (NUGENT JA AND McLAREN AJA CONCURRING):
[1] This is an appeal from the North Gauteng High Court (Matojane J) holding
the Mpumalanga Provincial Government vicariously liable for the injuries
sustained by a twelve-year old Grade 5 school-learner, Solomon Skhosana, on
15 August 2007. The incident happened when a device that Solomon was
playing with exploded causing injuries to his forearms, stomach and legs. His
mother, Ms Onica Skhosana, acting in her own right and on behalf of her son,
sued the Provincial Government, nominally represented by the MEC, for her
damages. Her case was that Solomon’s teacher could have prevented the
incident, but had wrongfully and negligently failed to do so.
[2] At the commencement of the trial the learned judge separated the issues
of liability and the quantum of damages. The trial then proceeded only on the
matter of liability while the question of damages stood over for later
determination. At the end of the plaintiff’s case the defendant closed its case
without leading any evidence. The court upheld the claim and refused the MEC
leave to appeal against its order. This court, however, granted the necessary
leave.
[3] The essential facts in this case are not in dispute. They appear from the
testimony of Solomon and his mother. His was the only evidence regarding the
circumstances in which he was injured. He testified that before leaving for school
on the morning of the incident, he asked his mother to give him a battery for a
ship-building school project. She gave one to him; it was a small torch-battery.
She considered his request to be neither dangerous nor unusual as learners
were frequently requested to bring appliances to school for their projects.
[4] Solomon arrived at his school – the Tjhidelane Primary School in
Mpumalanga. During a technology lesson that morning, one of his class-mates,
Mbali, was playing with a device. Their teacher, Ms Pendile Mashiane,
confiscated it and asked Mbali to accompany her to the staff room, which she
did. After a while, Mbali returned to the classroom alone, and took her seat for
the remaining lessons.
[5] The school-day ended at 13h30 in the ordinary course. Solomon and
Mbali made their way to the school exit, where they were to wait for their
transportation. She had in her possession a device described by Solomon as a
‘battery-like device with two wires’, which she gave to him. She told him to
connect the device to the battery that he had for his ship-building project. But he
did not do so immediately.
[6] At about 14h00 Mbali’s mother arrived in her car to collect her. They left,
leaving Solomon alone outside the school-gate, where he waited for his
transportation. He had Mbali’s device and his battery with him. He connected the
wires protruding from Mbali’s device to his battery. This caused the device to
explode, which injured the boy.
[7] The evidence is perfunctory on whether the device that exploded was of
the same kind as the device that had been confiscated earlier. But in cross-
examination it was put to Solomon that a teacher would testify that the
confiscated device was ‘a bunch of wires with at the end some copper things
protruding from this bunch of wires’. Although the teacher was not called to
testify, what was put to Solomon can be accepted as the defendant’s version and
is binding on the MEC.1
[8] From a comparison of the confiscated device, and the device that
exploded later, it is probable that they were of the same kind. I did not
understand Mr Nonyane, who appeared for the MEC, to put this in issue. And
being of the same kind it follows that both would explode if an electrical current
was passed through them. This too was common cause.
[9] Before us the only issue in dispute was whether the teacher who found the
apparatus in the child’s possession was negligent in failing to ensure that she did
not come into possession of another. And it was accepted, correctly, that if
negligence was established, the teacher’s conduct was also wrongful.
[10] To determine negligence the courts employ the classic three-part test as
formulated in Kruger v Coetzee:
(a)
would a reasonable person, in the same circumstances as the defendant,
have foreseen the possibility of harm to the plaintiff;
(b)
would a reasonable person have taken steps to guard against that
possibility;
(c)
did the defendant fail to take steps which he or she should have taken to
guard against it?2
If each part is confirmed, then the defendant is said to have failed to measure up
to the standard of a reasonable person, and is consequently negligent.3
1 Nkuta v Santam Assuransie Maatskappy Bpk 1975 (4) SA 848 (A) at 853G-H.
2 Kruger v Coetzee 1966 (2) SA 428 (A) at 430.
[11] Mr Nonyane submitted that the device that the teacher confiscated from
Mbali appeared innocuous, and she could therefore not reasonably have
foreseen its potential danger. Put another way, the object would not have alerted
a reasonable person to the fact that it was explosive. On the other hand
Mr Ströh, who appeared for Ms Skhosana, contended that a reasonable person
in the teacher’s position would have recognised that if an electrical current was
passed through an unfamiliar battery-like object with wires attached to it, harm
could possibly be caused.
[12] An electrical device is inherently capable of being harmful, albeit not
necessarily by explosion. In my view, a reasonable teacher who discovers such a
device – particularly one that is unusual – would be placed on enquiry to
establish whether or not it is harmful by taking steps to discover what the device
is. Needless to say, once having discovered it is, a reasonable teacher would
take further steps to ensure that harm does not occur.
[13] I think it is clear that no such enquiry was made – indeed it was the MEC’s
case that no enquiry was called for – and in my view that omission was negligent.
Had enquiry been made it would have been discovered that the confiscated
device was an explosive. And having made this discovery, which I would think
would have caused considerable alarm, a reasonable teacher would not merely
have confiscated what had been found, but would also have taken further
precautionary measures to establish the source of the device so as to ensure
that no other such devices came into possession of the child – or indeed of any
other child. That was correctly not placed in issue, nor was it placed in issue that
had that been done Mbali would probably not have been in possession of the
explosive, and the explosion would not have occurred.
3 J Burchell Principles of Delict (1 ed) 1993 p 86.
[14] It follows that the teacher was indeed negligent in failing to establish what
the device was, and her negligence caused the harm. In those circumstances the
appeal must be dismissed. The following order is made:
The appeal is dismissed with costs of two counsel.
_________________
A CACHALIA
JUDGE OF APPEAL
HEHER JA (PETSE AJA CONCURRING):
[15] While I have an understanding for the position of the child plaintiff in this
case, sympathy cannot supplement a lack of evidence.
[16] The evidence, read together with the cross-examination by the
defendant’s counsel, suggests that a teacher, who may have been either Ms
Aphane or Ms Mashiane initially confiscated what later proved to be an explosive
device because it was proving a distraction during lessons. She apparently took
both the child Mbali – who seems to have brought it to school – and the device to
the staff room.
[17] The circumstances of its return to Mbali were completely unexplained.
There is, for example, no evidence (nor any justifying an inference) that the same
teacher was responsible for both confiscation and return.
[18] Assuming in favour of the plaintiff that the same person was involved,
then the test for negligence on her part requires consideration of how a
reasonable teacher in the same circumstances would have behaved. The
application of that test presupposes that the court is adequately apprised of the
circumstances.
[19] On all relevant aspects of the matter I consider that the plaintiff’s evidence
was inadequate. I say this fully conscious of the fact that some aspects might
have required the teacher to be called as a witness.
[20] The plaintiff’s case is silent on the age, training, skills, experience and
worldly knowledge of the teacher concerned. This might not matter as much in a
more sophisticated context but here one does not even know whether the school
environment was urban or rural.
[21] Was the device such as reasonably to convey to this teacher that it
presented a possibility of harm to a child? In this regard the size, shape, get-up
and construction of the object in question are relevant. Could it be opened? Were
there any outward indications of potential hazard? All that the evidence tells us is
a proposition put by counsel (apparently derived from Ms Aphane) that when she
told Mbali to hand the device over it looked like ‘a bunch of wires with some
copper things protruding from the bunch’ and she took it and put it in her pocket
(which suggests a limited size). This description of itself was not sufficient to
suggest a potential danger to a person uninformed as to the nature of explosives
and how they might be detonated, for example, as the evidence suggests, by
connecting the object to an ordinary small torch battery. (It is not suggested that
the object was dangerous in its physical characteristics, such as having sharp
edges.) One does not know whether the school was located in a mining area
where the fact of explosives and their general use are matters of common
experience. Nor was there evidence that the device in its general appearance
resembled a detonator or something of that nature.
[22] Assuming that the object was sufficient to induce a suspicion of danger,
there was no evidence of opportunity for enquiry and advice in the school
environment in question. In such circumstances, unless there were real grounds
to fear resultant harm, there would have been no reason not to return the object
with an appropriate warning.
[23] The plaintiff’s case left the court with unanswered questions on all these
material aspects. I do not consider that the onus was discharged. Absolution
from the instance would have been the appropriate order.
_________________
J A HEHER
JUDGE OF APPEAL
APPEARANCES
For Appellant:
P Nonyane
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
For Respondent:
J H Ströh SC (with him J A du Plessis)
Instructed by:
O Joubert Attorneys, Pretoria
Bezuidenhouts Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
17 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.
MEC FOR EDUCATION: MPUMALANGA v SKHOSANA
The Supreme Court of Appeal (SCA) today held, by a majority, that the MEC for
Education: Mpumalanga was liable for the injury sustained by a twelve-year old Grade 5
school-learner (Solomon Skhosana) at Tjhidelane Primary School when an explosive
device exploded in his hands. The incident occurred on 15 August 2007 outside the school
premises. It then dismissed an appeal by the MEC against an order of the North Gauteng
High Court, Pretoria.
The evidence established that on that day a teacher at the school, Ms Pendile Mashiane, had
earlier confiscated a device from Solomon’s classmate, Mbali. The teacher did not establish
what the device was and whether or not it was harmful. After the school-day had ended
Solomon and Mbali made their way to the school exit, where they were to wait for their
transportation. Mbali had a device in her possession which Solomon described as a
‘battery-like device with two wires’, which she gave to him. She told him that he should
connect the device to the battery that he had for his ship-building project. After Mbali had
left and Solomon was alone, he connected the wires protruding from Mbali’s device to his
battery. This caused the device to explode, which injured him. As a result of the injury Ms
Onica Skhosana, Solomon’s mother, sued the MEC in the high court. The high court found
that the MEC was liable for the injury sustained by Solomon.
In dismissing the appeal, the majority found that the teacher was negligent in failing to
establish what the device was, and that her negligence had caused the harm. The minority
found that the evidence was inadequate to establish negligence. It held that absolution from
the instance would have been the appropriate order.
|
3781
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 256/2021
In the matter between:
THE MINISTER OF HEALTH FIRST APPELLANT
THE SOUTH AFRICAN HEALTH PRODUCTS
REGULATORY AUTHORITY SECOND APPELLANT
and
THE ALLIANCE OF NATURAL HEALTH
PRODUCTS (SOUTH AFRICA) RESPONDENT
Neutral citation: Minister of Health and Another v Alliance of Natural Health Products
(South Africa) (Case no 256/2021) [2022] ZASCA 49 (11 April 2022)
Coram:
VAN DER MERWE, SCHIPPERS AND NICHOLLS JJA and TSOKA
and MOLEFE AJJA
Heard:
7 March 2022
Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email. It has been published on the
Supreme Court of Appeal website and released to SAFLII. The date
and time for hand-down is deemed to be 09h45 on 11 April 2022.
Summary:
Medicine – regulations under Medicines and Related Substances Act 101
of 1965 (the Act) – ultra vires to extent that they purport to regulate substances that are
not medicines as defined in the Act.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Kubushi J sitting as court
of first instance):
The order of the court a quo is varied by deleting para 2 thereof and by
substituting the words ‘South African Health Products Regulatory Authority’ with
the words ‘Minister’.
The appeal is dismissed with costs, including the costs of two counsel.
The cross-appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Van der Merwe JA (Schippers and Nicholls JJA and Tsoka and Molefe AJJA
concurring)
[1] The Minister of Health (the Minister) is the first appellant in this matter.
The second appellant is the South African Health Products Regulatory Authority (the
Authority). It was established as an organ of state and juristic person by s 2 of the
Medicines and Related Substances Act 101 of 1965 (the Act). The respondent is The
Alliance of Natural Health Products (South Africa) (the Alliance), a voluntary association
with the capacity to sue or be sued in its own name.
[2] After a public consultative process that had stretched over several years and in
consultation with the Authority, the Minister, acting in terms of s 35 of the Act, made the
regulations that are the subject of this appeal. They are the General Regulations
published on 25 August 2017 under GN 859, in GG 41064 (the regulations). The Alliance
sought declaratory orders as well as the review and setting aside of the regulations, in
whole or in part, in the Gauteng Division of the High Court, Pretoria. As I shall explain,
Kubushi J partly upheld the challenge to the regulations, hence the appeal. Broadly
stated, the issue in the appeal is whether any review ground of the Alliance was good.
[3] In essence, the Act is aimed at regulating four types of things. They are:
medicines; scheduled substances; medical devices and in vitro diagnostic devices (IVDs).
The Act defines each type in comprehensive terms. For the said purpose, the Act affords
functions and powers to both the Minister and the Authority. In terms of s 22A, the Minister
may prescribe scheduled substances on the recommendation of the Authority.
The section provides for the scheduling of prescribed substances on different levels
(Schedules 0 to 6). The manner in which the availability of these substances to the public
is controlled, depends on the level of scheduling.
[4] Section 14 of the Act provides that the Authority may from time to time determine
that a medicine, medical device, IVD or any class or category of any of them, shall be
subject to registration. The procedure for registration is set out in s 16. Section 1(3)
provides:
‘In determining whether or not the registration or availability of a medicine is in the public interest,
regard shall be had only to the safety, quality and therapeutic efficacy thereof in relation to its
effect on the health of man or any animal, as the case may be.’
[5] It appeared from the evidence that there is a substantial market worldwide and in
South Africa for complementary medicines and health supplements. There was no
dispute that this market should be regulated in the public interest. That, in the main, was
the purpose of the replacement of the previous General Regulations under the Act, with
the current ones. The regulations therefore introduced a new category, namely
complementary medicines (Category D). They are subcategorised into discipline-specific
medicines and health supplements. Complementary medicines in each of the two
subcategories that are intended for use in humans, consist, in terms of Annexure 1 to the
regulations, of the following:
‘33. Complementary Medicines: Discipline-Specific Traditional Claims
33.1 Aromatherapy
33.2 Homeopathy
33.3 Phytotherapy
33.4 Traditional Chinese Medicine
33.5 Unani Medicine
33.6 Western Herbal Medicine
33.7 Combination Product
33.8 Other Herbal
34.
Complementary Medicines: Health Supplements
34.1 Amino acids
34.2 Aminosaccharides
34.3 Animal Extracts, Products and Derivatives
34.5 Carotenoids
34.5 Enzymes
34.6 Fats, Oils and Fatty Acids
34.7 Minerals
34.8 Polyphenols (including Bioflavonoids)
34.9 Probiotics
34.10 Saccharides (including prebiotics)
34.11 Vitamins
34.12 Multiple substance formulation
34.13 Other’
[6] The regulations attach a number of obligations to complementary medicines and,
where applicable, health supplements. These include obligations in respect of: the
labelling of containers (reg 10(1)(cc) and 10(3)(b)); furnishing of professional information
in hard copy or electronically (reg 11(2)(t)); providing a patient information leaflet
(reg 12(2)(n)); and advertising (reg 42(5)(c)(ii)). There can be no doubt that compliance
with these obligations requires significant effort and costs.
[7] The review ground relied upon in the Alliance’s founding affidavit was that the
scope and ambit of the regulations exceeded the rule-making powers of the Minister in
terms of the Act. In essence, the contention was that the Minister was only empowered
to regulate medicines and scheduled substances within the meaning of the Act. However,
so it was contended, the regulations purported to regulate substances that were neither
medicines nor scheduled substances and, to that extent, they were ultra vires (the ultra
vires ground).
[8] In its supplementary founding affidavit in terms of Uniform rule 53(4), the Alliance
put forward two additional review grounds. These were firstly that despite having
published draft regulations for public comment on 27 January 2017, the Minister failed to
consider the comments received in response thereto (or a summary thereof).
The contention was that this tainted the regulations with procedural unfairness under the
Promotion of Administrative Justice Act 3 of 2000 (PAJA), or with procedural irrationality
under the principle of legality (the procedural ground). In the second place, the Alliance
relied upon the substantive irrationality of the regulations. This was principally based on
evidence that the Authority was faced with a considerable backlog of applications for the
registration of substances, that had built up over a number of years. In the light hereof,
the Alliance averred that in the absence of evidence that the Authority would have the
capacity to cope with additional demands that the regulations placed on it, the regulations
were irrational.
[9] In the answering affidavit on their behalf, the Minister and the Authority
(collectively the appellants) contended that the application raised an impermissible
abstract challenge. They denied that the regulations were ultra vires in any respect, on
the basis that the definition of ‘medicine’ in the Act was sufficiently wide to include all
complementary medicines and health supplements as defined in the regulations. These
definitions lie at the heart of the dispute between the parties and I shall reproduce them
shortly.
[10] With regard to the procedural ground, the Minister confirmed on oath that he had
considered the comments received in response to the 2017 draft regulations. The alleged
substantive irrationality was similarly disputed on the basis of factual allegations that
could not be rejected out of hand. In sum they were: that when the Authority was
established during 2015, it inherited a backlog of applications for registration that had built
up under the auspices of its predecessor; that the focus had since shifted from the drafting
of the regulations and guidelines thereto to implementation; that the budget and resources
of the Authority had been increased; that its structural organisation had been improved;
and that therefore it had the capacity to administer the regulations.
[11] The court a quo rejected the argument that the application constituted an
impermissible abstract challenge and found for the Alliance on the ultra vires ground.
In the result it found it unnecessary to consider the other review grounds. It considered
that the partial declaration of invalidity in respect of the regulations should be suspended
for a period of 12 months and made the following order on the merits:
‘2.
The definition of “medicine” in section 1 of the Medicines and Related Substances Act
No.101 of 1965 is declared to apply only to substances that are used or purport to be suitable for
use or are manufactured or sold for use in the diagnosis, treatment, mitigation, modification or
prevention of maladies, in order to achieve a medicinal or therapeutic purpose, in human beings
and animals.
3.
The General Regulations promulgated on 25 August 2017 under General Notice 859 in
Government 41064 are declared unlawful to the extent that they apply to “complementary
medicines” and “health supplements” that are not “medicines” or “Scheduled substances” as
defined in section 1 of the Medicines and Related Substances Act No. 101 of 1965.
4.
The declaration of invalidity is suspended for a period of twelve (12) months to allow the
South African Health Products Regulatory Authority an opportunity to correct the defect.’
[12] The court a quo granted leave to appeal to the appellants. It also gave leave to
the Alliance to cross-appeal against para 4 of its order. The Alliance supported paras 2
and 3 of the order before us on all the aforesaid grounds. I find it expedient, however, to
first consider the ultra vires ground.
[13] The appellants persisted with the argument that the challenge to the regulations
on the ultra vires ground was impermissibly abstract. The Alliance readily conceded the
abstract nature of this part of its application on the basis that it did not relate to a particular
set of facts. If the regulations, or part thereof, are beyond the powers of the Minister, they
are invalid under the Constitution. It follows that the judgment in Savoi and Others v
National Director of Public Prosecutions and Another [2014] ZACC 5; 2014 (5) BCLR 606
(CC); 2014 (1) SACR 545 (CC); 2014 (5) SA 317 (CC) at paras 9-13, is in point. It tells us
that the abstract nature of an application brings two factors to the fore. The first is
standing, that is, whether the applicant is entitled to challenge the validity of the provisions
in question. If so, the second factor is the application of the heavy burden on the applicant
to show that the provisions are constitutionally unsound or invalid merely on their face.
[14] The Alliance acts on behalf of its members, which include manufacturers and
retailers of complementary medicines and health supplements. Their rights are directly
affected in an adverse manner by what they perceive to be invalid regulatory measures.
The Alliance therefore clearly had standing to attack the regulations on this ground and
the appellants did not contend otherwise.
[15] I deal below with whether the regulations are ultra vires merely on their face.
Before I do so, I need to say something about the applicability of PAJA to the making of
the regulations. I intend to follow the approach of this court in Esau and Others v Minister
of Cooperative Governance and Traditional Affairs and Others [2021] ZASCA 9; [2021] 2
All SA 357 (SCA); 2021 (3) SA 593 (SCA) at paras 77-84. In City of Tshwane Metropolitan
Municipality v Cable City (Pty) Ltd [2009] ZASCA 87; [2010] 1 All SA 1 (SCA); 2010 (3)
SA 598 (SCA) para 10, Maya JA, writing for the court and with reference to the judgment
of Chaskalson CJ in Minister of Health and Another NO v New Clicks South Africa (Pty)
Ltd and Others (Treatment Action Campaign and Innovative Medicines SA as Amici
Curiae) [2005] ZACC 14; 2006 (2) SA 311 (CC); 2006 (1) BCLR 1 (CC) para 113,
expressed agreement with the contention that the making of regulations by a Minister
constitutes administrative action within the meaning of PAJA. We are bound by this
dictum unless we are convinced that it is clearly wrong. No attempt at all was made to
convince us of that. In the result the matter had to be decided under PAJA.
[16] Section 35(1) of the Act provides for no less than 45 topics in respect of which
the Minister is empowered to make regulations. Most of them relate directly to medicines,
scheduled substances, medical devices or IVDs. The few that do not, are not applicable
to substances that are not medicines. What remains is s 35(1)(xlv), which provides for the
making of regulations:
‘[G]enerally for the efficient carrying out of the objects and purposes of this Act, and the generality
of this provision shall not be limited by the preceding paragraphs of this subsection.’
[17] The Act does not tabulate its objects and purposes and they have to be gathered
from its provisions as a whole, including the objects of the Authority in terms of s 2A,
namely:
‘Objects of Authority – The objects of the Authority are to provide for the monitoring, evaluation,
regulation, investigation, inspection, registration and control of medicines, Scheduled substances,
clinical trials and medical devices, IVDs and related matters in the public interest.’
I am prepared to accept, therefore, that the objects and purposes of the Act include
matters related to the regulation and control etc of medicines and scheduled substances.
[18] It is important to note that the Act does not in this regard refer to substances
related to medicines but to matters related to the regulation, registration and control of
medicines. Therefore, despite the wide wording of s 35(1)(xlv), it is difficult to comprehend
that it encompasses a power to regulate substances that are not medicines in terms of
the Act. In any event, it was clear from the answering affidavit and reaffirmed before us,
that the case for the appellants was that the regulations purport only to regulate medicines
within the meaning of the Act. Whether that is so, as I have said, is the nub of the case.
[19] The definition of ‘medicine’ in the Act is the following:
‘(a) . . . any substance or mixture of substances used or purporting to be suitable for use or
manufactured or sold for use in—
(i) the diagnosis, treatment, mitigation, modification or prevention of disease, abnormal
physical or mental state or the symptoms thereof in humans; or
(ii) restoring, correcting or modifying any somatic or psychic or organic function in humans;
and
(b) includes any veterinary medicine.’
The appeal does not concern para (b) of the definition.
[20] To qualify as a medicine, a substance (or a mixture of substances) must: be used;
purport to be suitable for use; or be manufactured or sold for use for a purpose set out in
subparas (a)(i) or (a)(ii) of the definition. It was rightly common cause between the parties
that on a sensible contextual interpretation of the definition these are limited to therapeutic
or medicinal purposes. The heads of argument of the appellants therefore aptly stated
that medicines ‘must always have or claim to have a therapeutic purpose’. This makes
eminent sense. On this interpretation, drinking water is clearly not a medicine under the
Act, but water that is claimed to have the ability to cure a disease, would be one.
[21] The regulations define ‘complementary medicine’ as any substance or mixture of
substances that:
‘(a) originates from plants, fungi, algae, seaweeds, lichens, minerals, animals or other substance
as determined by the Authority;
(b) is used or purporting to be suitable for use or manufactured or sold for use –
(i) in maintaining, complementing or assisting the physical or mental state; or
(ii) to diagnose, treat, mitigate, modify, alleviate or prevent disease or illness or the symptoms
or signs thereof or abnormal physical or mental state of a human being or animal; and
(c) is used –
(i) as a health supplement; or
(ii) in accordance with those disciplines as determined by the Authority.’
[22] Thus, to qualify as a ‘complementary medicine’, a substance must comply with
each of paras (a), (b) and (c) of the definition. Paragraph (a) sets a requirement of origin,
in wide terms. Paragraph (b) departs from the definition of ‘medicine’ in the Act.
The addition of the word ‘alleviate’ in subpara (b)(ii) is not material. The same does not,
however, apply to the phrase ‘maintaining, complementing or assisting the physical or
mental state’ in subpara (b)(i). It does not restrict complementary medicines to
substances that have or claim to have a therapeutic purpose. On the contrary, on its plain
meaning subpara (b)(i) has nothing to do with somatic, psychic or organic malfunctioning,
but refers to contributing to (maintaining, complementing or assisting) the normal
functions of the human body or mind (the physical or mental state).
[23] As I have said, in terms of para (c) a complementary medicine must also be used
as a health supplement or ‘in accordance with those disciplines as determined by the
Authority’. In terms of the regulations ‘as determined by the Authority’ means as
determined by it in guidelines published from time to time. The evidence did not reveal
anything in that regard.
[24] However, ‘health supplement’ is defined as follows:
‘. . . any substance, extract or mixture of substances as determined by the Authority, sold in
dosage forms used or purported for use in restoring, correcting or modifying any physical or
mental state by –
(a) complementing health;
(b) supplementing the diet; or
(c) a nutritional effect,
and excludes injectable preparations, medicines or substances listed as Schedule 1 or higher in
the Act.’
[25] It is true that this definition echoes the phrase ‘restoring, correcting or modifying’
in subpara (a)(ii) of the definition of ‘medicine’ in the Act. But the definition of ‘health
supplement’ does not end there. It proceeds to state the additional requirement that the
restoring, correcting or modifying has to be achieved by: complementing health;
supplementing a diet; or a nutritional effect. Clearly therefore, this third element of the
definition of ‘complementary medicine’ takes it even further away from substances that
have or claim to have a therapeutic purpose. Whilst some complementary medicines and
health supplements as defined in the regulations would be medicines under the Act, many
would not.
[26] In sum, the regulations purport to regulate substantial numbers of substances
that are not medicines under the Act. The court a quo correctly concluded that, to this
extent, the regulations are ultra vires and invalid. Paragraph 3 of its order cannot be
faulted. It follows that the appeal must fail on the ultra vires ground and that it is
unnecessary to make a final determination of the other review grounds.
[27] In my view, however, para 2 of the order cannot stand. That is so for two reasons.
The first is that the judgment of the court a quo demonstrated that there had been no
dispute as to the proper interpretation of the definition of ‘medicine’ in the Act before it.
It is trite that a court should not issue a declarator in answer to a hypothetical or academic
question. Secondly, this part of the order impermissibly departed from the language of
the Act. It not only introduced the word ‘maladies’, but failed to give due recognition to
subpara (a)(ii) of the definition of ‘medicine’. As the propriety of para 2 of the order was
raised mero motu by this court, setting it aside should not entitle the appellants to costs.
[28] It remains to consider the cross-appeal against the suspension of the declaration
of invalidity. The Alliance contended that there was no justification for the suspension.
However, it appeared not to have recognised that the court a quo had in this regard
exercised a true or strict discretion that may not lightly be interfered with. See Trencon
Construction (Pty) Ltd v Industrial Development Corporation of South Africa Limited and
Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC)
paras 88-90. I find no reason in principle to interfere with the suspension order. It was at
least justified on the following basis. As I have said, it is widely accepted that there is a
public interest need to also regulate complementary medicines and health supplements
that are not medicines under the Act. Therefore, it is in the public interest to regulate these
substances under the regulations during the interim period of consideration of the
appropriate regulation thereof. The cross-appeal must therefore fail. However, para 4 of
the order should be altered to refer to the Minister and not to the Authority.
[29] For these reasons the following order is issued:
The order of the court a quo is varied by deleting para 2 thereof and by
substituting the words ‘South African Health Products Regulatory Authority’ with
the words ‘Minister’.
The appeal is dismissed with costs, including the costs of two counsel.
The cross-appeal is dismissed with costs, including the costs of two counsel.
_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
Appearances:
For appellants:
G Marcus SC (with him N Rajab-Budlender SC)
Instructed by:
State Attorney, Pretoria
State Attorney, Bloemfontein
For respondent:
D Borgström SC (with him M Seape)
Instructed by:
Cliffe Dekker Hofmeyer Inc., Sandton
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:
11 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
Minister of Health and Another v Alliance of Natural Health Products (South Africa) (Case no 256/2021)
[2022] ZASCA 49 (11 April 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs, the appeal
and cross-appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high
court).
The issue in this appeal was whether any review ground of the Alliance was good.
The Minister of Health (the Minister) is the first appellant in this matter. The second appellant is the
South African Health Products Regulatory Authority (the Authority). It was established as an organ of
state and juristic person by s 2 of the Medicines and Related Substances Act 101 of 1965 (the Act).
The respondent is the Alliance of Natural Health Products (South Africa) (the Alliance), a voluntary
association with the capacity to sue or be sued in its own name.
After a public consultative process that had stretched over several years and in consultation with the
Authority, the Minister, acting in terms of s 35 of the Act, made the regulations that are the subject of
this appeal. They are the General Regulations published on 25 August 2017 under GN 859, in GG
41064 (the regulations). It appeared from the evidence that there was a substantial market worldwide
and in South Africa for complementary medicines and health supplements. There was no dispute that
this market should be regulated in the public interest. That, in the main, was the purpose of the
replacement of the previous General Regulations under the Act, with the current ones. The regulations
therefore introduced a new category, to wit complementary medicines (Category D).
The Alliance sought declaratory orders as well as the review and setting aside of these regulations, in
whole or in part, in the high court. The Alliance contended that the Minister was only empowered to
regulate medicines and scheduled substances within the meaning of the Act. However, so it submitted,
the regulations purported to regulate substances that were neither medicines nor scheduled substances
and, to that extent, they were ultra vires (the ultra vires ground). The high court partly upheld the
challenge to the regulations. It considered that the partial declaration of invalidity in respect of the
regulations should be suspended for a period of 12 months. The Alliance cross-appealed against the
suspension of the declaration of invalidity.
The SCA held that the regulations purported to regulate substantial numbers of substances that were
not medicines under the Act. Therefore, held the SCA, the high court correctly concluded that the
regulations were ultra vires and invalid. The SCA therefore held that the appeal must fail on the ultra
vires ground and that it was unnecessary to make a final determination of the other review grounds. In
respect of the cross-appeal, the SCA held that there was no reason in principle to interfere with the
suspension order.
~~~~ends~
|
3888
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no. 734/2021
In the matter between:
ZURICH INSURANCE COMPANY SOUTH AFRICA LTD
Appellant
and
GAUTENG PROVINCIAL GOVERNMENT
Respondent
Neutral citation:
Zurich Insurance Company South Africa Ltd v Gauteng Provincial
Government (Case no. 734/2021) [2022] ZASCA 127 (28 September 2022)
Coram:
Ponnan and Plasket JJA and Basson, Weiner and Siwendu AJJA
Heard:
16 August 2022
Delivered:
28 September 2022
Summary:
Insurance contract – damage to rock mass when tunnels for Gautrain
Rapid Rail System constructed – whether insured’s claim had prescribed – whether
rock mass surrounding tunnel void part of property insured – whether order declaring
insured’s right to indemnification, and to be paid such amounts as are later proved, an
effective order.
ORDER
On appeal from: Gauteng Local Division of the High Court, Johannesburg (Wepener
J sitting as court of first instance).
The appeal is dismissed with costs including the costs of two counsel.
JUDGMENT
Plasket JA (Ponnan JA and Basson, Weiner and Siwendu AJJA concurring)
[1] This appeal, against an order made by Wepener J in the Gauteng Local Division
of the High Court, Johannesburg (the high court), concerns a claim for the enforcement
of a contract of insurance (the policy) concluded by the appellant, the Zurich Insurance
Company South Africa Ltd (Zurich) with, inter alia, the respondent, the Gauteng
Provincial Government (the province). After the province had discovered what it
believed to be damage to parts of the tunnel system in which the Gautrain Rapid Rail
System operates, and Zurich had repudiated a claim made in terms of the policy, the
province issued summons in which it claimed declaratory relief to the effect that Zurich
was obliged to indemnify it in respect of the repair, replacement or making good of the
damage to the tunnels, and that it was required to pay the province the amount that it
proved in due course in respect of its loss. It also sought costs of suit.
[2] After a lengthy trial, Wepener J issued an order essentially in the terms sought
by the province. His order reads as follows:
‘1
Subject to all the terms and conditions of the policy, it is declared that the defendant is
obliged to indemnify the plaintiff for the cost of replacing and/or repairing and/or making good
all damage (as defined in [paragraph 15] of the particulars of claim) to the tunnels from
Rosebank Station to Marlboro Portal as described in [paragraph 11] of the plaintiff’s particulars
of claim.1
It is declared that the defendant, on the basis of prayer 1 above, is required to pay to
the plaintiff such amount as is proved by the plaintiff as constituting the cost of replacing and/or
repairing and/or making good all damage to the tunnels as described in paragraph 15 of the
particulars of claim, subject to the limit of indemnity and deductibles as set out in the policy.
The defendant is to pay the plaintiff’s costs of suit, including the costs occasioned by
the employment of two counsel.’
[3] On the application of Zurich, he granted leave to appeal directly to this court. In
his judgment, he said that while a large number of grounds had been raised in the
notice of appeal, they were ‘reduced to three during argument’ and that he was of the
view that there were only prospects of success on appeal ‘on these three issues’. His
order reads as follows:
‘I consequently grant leave to appeal to the Supreme Court of Appeal on the following issues:
Whether the order issued by this court is capable of practical enforcement;
Whether the respondent’s claim has become prescribed;
Whether the rock surrounding the void formed part of the property insured.’
[4] It appeared, on the face of it, that Wepener J may have sought to grant leave
to appeal against three of his reasons for upholding the province’s claim. It is a
foundational procedural principle that an appeal lies against a substantive order of a
court rather than against the reasons for its judgment.2 If it had been Wepener J’s
intention to grant leave to appeal against his reasons, his order may have been
incompetent. The result would then have been that we would have had no jurisdiction
to entertain the appeal.3
1 I have, in the square brackets in paragraph 1 of the order, corrected two patent errors. In its original
form, the order transposed paragraphs 11 and 15 of the particulars of claim. Paragraph 11 defined the
tunnels that were the subject of the claim, while paragraph 15 set out the damage that the province
alleged it had suffered.
2 Administrator, Cape and Another v Ntshwaqela and Others [1989] ZASCA 167; 1990 (1) SA 705 (A)
at 715D; South African Reserve Bank v Khumalo and Another [2010] ZASCA 53; 2010 (5) SA 449
(SCA) para 4; Tecmed Africa (Pty) Ltd v Minister of Health and Another [2012] ZASCA 64; [2012] 4 All
SA 149 (SCA) paras 16-17.
3 Molteno Bros v South African Railways 1936 AD 408 at 413.
[5] Both Mr Loxton, for Zurich, and Mr Subel, for the province, submitted that this
had not been Wepener J’s intention and that, even if he had not expressed himself as
clearly as he might have, he had intended to grant leave to appeal against his order
but to limit the grounds of appeal. Court orders, like other written instruments, must be
interpreted in a unitary, holistic process having regard to the words used, the
contextual setting and the apparent intended purpose.4 This order is to be interpreted
within the context of it being trite law that ‘leave to appeal may be limited so as to allow
only particular grounds of appeal to be advanced’5 and of the clear indication in
paragraphs 1 and 2 of the judgment that Wepener J had applied his mind to the
grounds of appeal that had, in his view, reasonable prospects of success.
[6] It is clear in these circumstances that Wepener J intended to grant leave to
appeal against the entire order that he had made but that he considered only three of
the various grounds advanced by Zurich to have any prospects of success.
Understood thus, the order granting leave to appeal is not irregular, with the result that
we have jurisdiction to consider and determine this appeal.
The background
[7] The Gautrain is a joint venture between the province and a private entity. In
terms of a concession agreement, the province granted to Bombela Concession
Company (Pty) Ltd (Bombela) a concession to design, construct, partially finance,
operate, maintain and generate income from the Gautrain for the duration of the
concession.
[8] The Gautrain runs from Park Station in the central business district of
Johannesburg, past a number of stations including Rosebank and the Marlboro Portal,
to the Oliver Tambo International Airport, on one line, and to Hatfield in Pretoria, on
another. Parts of the rail network are below ground in tunnels, while others are above
ground. This matter concerns the construction of tunnels between the stations of
4 Firestone South Africa (Pty) Ltd v Gentiruco AG 1977 (4) SA 298 (A) at 304D-F; Natal Joint Municipal
Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18; Capitec
Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA
99; 2022 (1) SA 100 (SCA) para 25.
5 Douglas v Douglas [1995] ZASCA 147; [1996] 2 All SA 1 (A) at 8i-j.
Rosebank and Sandton, on the one hand, and Sandton and the Marlboro Portal, on
the other.
[9] The construction that was envisaged was defined in the concession agreement
as ‘the works’, a term that meant all work that was to be undertaken to achieve the
objects of the agreement, including the construction of tunnels. In terms of a schedule
to the concession agreement, tunnels were to be constructed so that they would
comply with specified permissible water-flow limits and were to be sufficiently water-
tight to ensure that the long term ambient hydrological conditions around any of the
tunnels would not be disturbed.
[10] The parties who were insured in terms of the policy included the province;
Bombela (described as the principal); Bombela TKC (Pty) Ltd (described as the
contractor) and ‘all contractors and sub-contractors of any tier in connection with THE
PROJECT’; the ‘Material Contractor and Sub contractors of the Material Contractor’;
‘Lenders Agent, the Lenders and Security Company’; and consultants, designers,
suppliers and advisers ‘of any tier’, as well as the ‘Independent Certifier and others
providing goods or services in connection with THE PROJECT’. These broad
categories of bodies were defined as ‘the insured’. Various aspects of the project were
performed by different Bombela-related entities such as Bombela TKC (Pty) Ltd,
mentioned above, and Bombela Civils Joint Venture (Pty) Ltd. For the sake of
convenience, I shall, in what follows, refer to all of the Bombela entities simply as
Bombela, without distinguishing between them.
[11] The purpose of the policy was to indemnify the insured against any damage
contemplated by it, and to pay to or indemnify the insured for the full cost of the
replacement, repair or making good of the damage. In broad terms, it covered ‘the
project’ which was defined to mean the ‘financing, pre-fabrication, design, engineering,
procurement, construction, erection, hot testing, commissioning, operation and
maintenance’ of the Gautrain, ‘all associated and ancillary works in connection
therewith’ and ‘any Contract or Agreement written or implied entered into by the
INSURED in connection therewith’.6
6 I have added punctuation to enhance readability. I shall do so below whenever I cite the policy.
[12] The ingress of water, when tunnels are constructed below the water table, is
always a serious engineering concern. The reason is obvious: the excavation process,
especially the drill and blast method used in the construction of the tunnels in question,
disturbs the rock mass around the void that is created and renders that rock more
permeable. As was explained by Dr Nick Barton, an engineer with significant expertise
in rock mechanics and whose evidence was accepted by the high court, damage is
caused by an ‘increase and extension of the excavation disturbed zone’ with the result
that ‘joint deformation is increased, blast gasses penetrate deeper, over-break may
occur, and inflow is enhanced due to a general increase in joint apertures, in addition
to less well controlled blast-induced fracturing’. Professor Steinar Roald, an eminent
civil engineering expert in the field of grouting, whose evidence was also accepted by
the high court, explained that a ‘tunnel below the ground water table will serve as a
large drainage pipe that lowers the ground water level’.
[13] It is no longer in dispute in this appeal, in the light of the limited leave to appeal
that was granted by the high court, that what was described by Dr Barton and professor
Roald is precisely what occurred in the tunnels in issue in this matter. Dr Barton
explained the problem thus:
‘A tunnel releasing about 250 Olympic swimming pools of water per year (>600 000 000
litres/year) from 20 litres/second out-of-the-tunnels flow over approximately 10 km, therefore
drawing down the water table, is obviously an undesirable and environmentally damaging
construction. Of particular concern to Gautrain/Province is that the internal environment of
their rail tunnel, being much wetter and more humid than intended, has prejudiced the life-time
and need for maintenance. Unfortunately, the tunnel cannot be “fixed” without great expense
and long-term alternative service measures. All this is because the desirable high-pressure
pre-injection was not performed, even though it was designed. It now can no longer be
performed. The “pre” (ahead of the tunnel face) is lost forever.’
[14] When the excavation of a tunnel is planned and designed, mitigation measures
are required to prevent the sorts of mishaps described by Dr Barton. He referred to
the usual method as high pressure pre-injection, or pre-grouting. This method involves
the high pressure spraying of grout as the tunnel is excavated, with the purpose of
sealing fissures in the surrounding rock mass created by the stresses placed on it by
the excavation process, particularly the drilling and blasting. Pre-grouting was planned
for the construction of the tunnels in question but, in the words of Dr Barton, was
‘inexplicably dropped by the contractor’.
[15] If a tunnel has been constructed without pre-grouting having been done, an
immense remedial problem is created. Post-grouting is a poor alternative for pre-
grouting because it is far less effective, is more difficult to apply and is both more time-
consuming and costly. Lining the affected tunnels with cast concrete and membranes
would, on the face of it, appear to be a more effective method of repair but practical
problems stand in the way of its application. Dr Barton explained that ‘as the tunnel is
“live”, such major remedial work would lead to a massive disruption of passenger
services’. In these circumstances, he said, the only feasible remedy may be the
construction of new tunnels. But this is a debate for another day.
[16] A number of material facts are common cause. They are, first, that the tunnels
did not meet the specifications that had been set as to the maximum permissible levels
of water ingress. The second is that the construction of the tunnels is covered by the
policy, although what is meant by the term ‘tunnel’ remains in dispute. The third is that
no pre-grouting work was performed in the construction of the tunnels in question.
Fourthly, it was accepted by all that the damage in respect of which the province
sought to be indemnified occurred as a result of the construction of the tunnels.
[17] It is also not in dispute that payment of the premiums stipulated in the policy
were up-to-date. It can also be accepted as settled that proper notice of the claim was
given to Zurich by the province.
The issues
[18] I now turn to a consideration of the three issues that require determination in
this appeal. The first is whether the province’s claim against Zurich had prescribed.
The second is whether the rock mass that surrounds the void of the tunnels is part of
the property insured. The third is the propriety and effectiveness of the high court’s
order.
Prescription
[19] In terms of s 11(d) of the Prescription Act 68 of 1969, the prescription period in
respect of the debt in this case is three years. Section 12(1) provides that, as a general
rule, ‘prescription shall commence to run as soon as the debt is due’. Section 12(3)
states that the 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’ but includes a
proviso that ‘a creditor shall be deemed to have such knowledge if he could have
acquired it by exercising reasonable care’. Prescription may be interrupted in various
ways including, in terms of s 15(1), ‘by the service on the debtor of any process
whereby the creditor claims payment of the debt’.
[20] The onus of establishing that a claim has prescribed rests on the party raising
prescription – in this case, Zurich. In order to discharge that onus, the onus-bearing
party is required to prove the date when prescription began to run and that the other
party had the requisite knowledge of the material facts from which the debt arose at
that time.7
[21] The nature of the knowledge that a party is required to have in order for
prescription to start running was set out thus by this court in Truter and Another v
Deysel:8
‘For the purposes of the Act, the term “debt due” means a debt, including a delictual debt,
which is owing and payable. A debt is due in this sense when the creditor acquires a complete
cause of action for the recovery of the debt, that is, when the entire set of facts which the
creditor must prove in order to succeed with his or her claim against the debtor is in place or,
in other words, when everything has happened which would entitle the creditor to institute
action and to pursue his or her claim.’
The position was summarized by Cameron and Brand JJA in Minister of Finance and
Others v Gore NO9 when they stated that, for purposes of prescription, ‘time begins to
7 Gericke v Sack 1978 (1) SA 821 (A) at 827H-828C; Links v Department of Health, Northern Province
[2016] ZACC 10; 2016 (4) SA 414 (CC) paras 24 and 44.
8 Truter and Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) para 16. See too Evins v
Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838D-H; MacKenzie v Farmers Co-operative Meat
Industries Ltd 1922 AD 16 at 23; Abrahamse & Sons v SA Railways and Harbours 1933 CPD 626 at
637.
9 Minister of Finance and Others v Gore NO [2006] ZASCA 98; 2007 (1) SA 111 (SCA) para 17.
run against the creditor when it has the minimum facts that are necessary to institute
action’.
[22] Gore also dealt with what was meant by knowledge, on the part of a creditor,
of the facts constituting their cause of action. Cameron and Brand JJA held in this
respect:10
‘[18] Rabie certainly did cry fraud soon after 3D-ID lost the tender. But what did he know when
he did so? The defendants' argument seems to us to mistake the nature of “knowledge” that
is required to trigger the running of prescriptive time. Mere opinion or supposition is not
enough: there must be justified, true belief. Belief, on its own, is insufficient. Belief that
happens to be true (as Rabie had) is also insufficient. For there to be knowledge, the belief
must be justified.
[19] It is well established in our law that:
(a)
Knowledge is not confined to the mental state of awareness of facts that is
produced by personally witnessing or participating in events, or by being the direct recipient
of first-hand evidence about them.
(b)
It extends to a conviction or belief that is engendered by or inferred from
attendant circumstances.
(c)
On the other hand, mere suspicion not amounting to conviction or belief
justifiably inferred from attendant circumstances does not amount to knowledge.
It follows that belief that is without apparent warrant is not knowledge; nor is assertion and
unjustified suspicion, however passionately harboured; still less, is vehemently controverted
allegation or subjective conviction.’
[23] Zurich pleaded that the province’s claim against it had prescribed. Construction
of one of the tunnels was completed by 4 January 2009, and of the second tunnel by
2 July 2009. If there had been damage caused to them, no further damage could have
been caused by the contractors after these dates. The province was, at all times,
aware of the identity of the defendant. It was also aware of the facts giving rise to the
debt from these dates on, or it ought reasonably to have had this knowledge from
these dates on. As a result, Zurich alleged, prescription began to run on 4 January
2009, in the case of the first tunnel, and on 2 July 2009 in the case of the second
10 Paras 18-19.
tunnel. The claims prescribed three years later, not having been interrupted by the
service of summons, which only occurred on 26 February 2015.
[24] The province replicated to the plea of prescription. It simply denied that the
claim had prescribed.
[25] Zurich led no evidence in order to establish its defence of prescription. Instead,
it relied on an inference that, if damage had been caused, it was the result of the drilling
and blasting method of excavation. It also argued that the province must have been
aware of the damage that it alleged because it had a support team in place to monitor
the construction of the tunnels, and that this team, made up of suitably qualified
people, must have observed the damage at the time of the construction.
[26] The province’s answer to this was that matters were not that simple. It led the
evidence of one witness on the prescription issue. He was Mr David Marx. He was
employed to render commercial and dispute management to the Gautrain
Management Agency. He is a civil engineer and holds, in addition to a master’s degree
in civil engineering, a Master of Business Administration degree. He testified about the
process that unfolded from when the construction of the tunnels commenced until the
service of summons on Zurich. Strong credibility findings in his favour were made by
Wepener J and, it seems to me, justifiably so.
[27] As to the first point raised by Zurich, Mr Marx testified that the support team did
its work principally by way of desk-top monitoring. There was consequently no
specialist on-site oversight by the support team. It is so, however, that the support
team had been informed that no pre-grouting had been done. It also understood that
the water ingress tolerance specifications that had been agreed to were the 10x10
water inflow specification – a ‘local’ tolerance not exceeding 10 litres of water per
minute per any 10 metres of tunnel – and the 1x1 water inflow specification – a
seepage rate for the entire tunnel not exceeding one litre of water per square metre
per day.
[28] The problem of excessive water ingress into the tunnels arose at an early stage.
The province was aware of the problem, but not of its cause, and had engaged with
Bombela in relation thereto. It adopted a cautious approach and also notified Zurich
on a number of occasions that it believed that it may have had a claim in terms of the
policy. It was, however, faced with a problem: while the excessive ingress of water
could have been caused by any number of factors, it was not able to identify any
damage. On each occasion, Zurich’s assessors investigated and reported that they
had found no sign of damage.
[29] The province had been assured by Bombela that the problem would be
remedied. Instead, however, a dispute developed between the province and Bombela
about the applicable specifications and whether the tunnels were compliant with the
specifications. The dispute was referred for resolution in terms of the concession
agreement. The tribunal of first instance, the Dispute Resolution Board (DRB), found
on 10 June 2011 that, for the most part, the tunnels were compliant with the 10x10
specification, which was the agreed specification. One section of the tunnels was not
compliant with this specification, and it ordered Bombela to perform remedial work on
this section.
[30] Once this finding was made, the province was bound by it. Clause 6.4 of
Schedule 10 of the concession agreement provided that ‘[u]nless and until any
decision issued by the DRB is overturned in Arbitration in terms of clause 8 of
Schedule 10, it shall be binding on the parties’. The result was that if the water ingress
was the manifestation of damage, the province had to accept that no damage had
occurred because, subject to the remedial work that had been ordered by the DRB,
the tunnels had been found to be compliant with the specifications.
[31] The province referred the DRB’s decision to arbitration. An arbitration award
was made on 23 November 2013. The arbitration panel (retired judges Streicher and
Combrinck JJA and Joffe J) found that both the 10x10 and 1x1 specifications were
contemplated by the concession agreement and that:
‘1.2
The sections of the tunnel Park to E2, Rosebank to Sandton and Sandton to Marlboro
fail to comply with the Concession Specifications in that the rate of water infiltration into these
sections exceeds the maximum infiltration rate of 1 litre/m2/day.
1.3
The section of the tunnel Park to E2 fails to comply with the Concession Specifications
in that the rate of water infiltration into this section exceeds the maximum infiltration rate
permitted at any isolated section of 10 metres namely 10 litres/min/10 metres.’
[32] It was only after the arbitration award was handed down that the province
began, once again, to investigate whether there was damage to the tunnels, as
contemplated by the policy. In March 2014, it consulted with professor Roald on the
issue. He was not able to provide an answer but suggested that the province consult
with an expert in rock mechanics, such as Dr Barton. He was duly approached and
came to South Africa in April 2014. He attended joint meetings of the province and
Bombela. In the words of Mr Marx, he ‘shared his damages proposition . . . with
Bombela’. The province made Dr Barton available to Bombela because it took the view
that Bombela, as one of the insured in terms of the policy and the concessionaire,
should initiate the claim if damage could be identified. As it happened, Bombela was
reluctant to make a claim, so the province did so itself.
[33] It was only after Dr Barton had explained the concept of excavation disturbance
zones (EDZs) that the province realized that indemnifiable damage may have been
caused to the tunnels. He explained the effects of tunneling, especially by means of
drilling and blasting, in terms of four EDZs. The first, EDZ1, involves the disturbance
due to the stress redistribution in the rock mass as a result of the excavation of the
void. The second, EDZ2, is the disturbance arising from the deformation of rock joints
following the stress redistribution in the rock mass. The third, EDZ3, is the cracking,
loosening and enhanced permeability in the rock mass as a result of the penetration
of blast gases and shock-loading. The fourth, EDZ4, is the unnecessary deeper
damage in the form of deepened joint deformation caused by a failure to pre-grout
when this is required. He explained the connection between the EDZs as follows:
‘Within and beyond the unavoidable disturbances caused by excavation . . . is damage caused
by defective design and/or omission of pre-injection. Deformation is inevitably increased, blast
gasses are bound to penetrate deeper, more over-break may occur and inflow is unavoidably
enhanced, all due to a failure to pre-grout. We can collectively refer to these unwanted and
unplanned disturbances as the damage EDZ.’
[34] In May 2014, Dr Barton investigated whether damage in the form of EDZ4 was
present in the tunnels. He concluded and expressed the opinion that the failure to pre-
grout when blasting had caused EDZ4 damage to the rock mass surrounding the void
of the tunnel. And, as Wepener J observed in his judgment, ‘EDZ4 is a specialist matter
and not, as far as the evidence before me showed, physically detectable during an
inspection’.
[35] By letter dated 5 February 2015, the province made a claim against Zurich in
terms of the policy. On 25 February 2015, summons was served on Zurich.
[36] In order to have a complete cause of action, the province had to have
knowledge that damage to the tunnels had occurred. It is clear from the chronology of
events that I have outlined that the province may have suspected for some time that
damage to the tunnels had been caused. It could, however, not quite identify the
damage or its cause and neither could the assessors when they investigated on the
strength of the province’s concerns. It was only when Dr Barton alerted them to the
possibility of EDZ4 damage, and then confirmed this to be the case, that the requisite
knowledge of damage could be attributed to the province. That occurred in about May
2014.
[37] It is necessary to stress the following two points. First, the province acquired
actual knowledge of damage in 2014 but it was not possible for it to have had
knowledge attributed to it any earlier because of the specialized knowledge and
expertise necessary to establish that damage had occurred. Secondly, when Dr Barton
deduced that EDZ4 damage had been caused, he established a fact, rather than an
inference of negligence or a conclusion of law. Only then could it be said that the
province had a ‘complete cause of action’.
[38] In the result, prescription began to run in May 2014 and was interrupted by the
service of summons in February 2015, some nine months later. Consequently, as far
less than three years separated these two events, the province’s claim had not
prescribed and the court below was correct when it held that the plea of prescription
had to fail.
Is the rock mass surrounding the tunnels part of the property insured?
[39] Paragraph 15 of the province’s particulars of claim deal with the damage to the
property insured. It pleaded that: (a) Bombela, its contractors and sub-contractors
‘undertook the design and construction of the tunnels and provided the materials for
purposes of doing so’; (b) as a result of ‘defective design, plan, specification, material
and/or workmanship’ they damaged the property insured, ‘more particularly the
tunnels’; and (c) the damage was caused by ‘failing to pre-grout’ in order to meet the
agreed specifications and consisted of ‘an increased and extended “excavation
disturbed zone”’ that resulted in ‘more deeply penetrating joint adjustments and
generally increased joint deformation, and thus unnecessarily increased permeability
and resulting water inflow, due to an increase in joint apertures’.
[40] The damage was said to be ’in excess of what would normally have been
expected if good industry practices’ had been adopted in the design and construction
of the tunnels; and was attributable to ‘a combination of defective design, plan,
specification and poor workmanship due, predominantly, to the absence of an
adequately planned and executed pre-grouting strategy’.
[41] Zurich’s plea to paragraph 15 anticipated its plea of prescription and also
denied that ‘there was any damage occasioned to any Property Insured as alleged or
at all’. It also denied that whatever damage may have been occasioned ‘amounts to
damage as envisaged in the policy and it denies that any damage was occasioned to
PROPERTY INSURED’. In this way, the question whether the rock mass surrounding
the tunnels was property insured, as defined in the policy, was raised.
[42] As a result of the limitation of the grounds of appeal by Wepener J, two
important issues are no longer in dispute. They are that damage occurred and that the
damage was caused to the rock mass that surrounds the tunnels. The correctness or
otherwise of Zurich argument that the rock mass is not part of the property insured
depends, ultimately, on an interpretation of the policy, and an answer to the question
‘what is a tunnel?’.
[43] In Centriq Insurance Company Ltd v Oosthuizen and Another,11 Cachalia JA
made the point that while insurance contracts must be interpreted like any other written
instrument – having regard to language, context and purpose in a unitary exercise
aimed at achieving a commercially sensible result12 -- their specific purpose activates
other considerations too. He stated in this regard:13
‘But because insurance contracts have a risk-transferring purpose containing particular
provisions, regard must be had to how the courts approach their interpretation specifically.
Thus, any provision that places a limitation upon an obligation to indemnify is usually
restrictively interpreted, for it is the insurer's duty to spell out clearly the specific risks it wishes
to exclude. In the event of real ambiguity the doctrine of interpretation, contra proferentem,
applies and the policy is also generally construed against the insurer who frames the policy
and inserts the exclusion. But, like other aids to the interpretation of contracts of this nature,
the doctrine must not be applied mechanically, for exclusion clauses, like other contractual
clauses, must be construed in accordance with their language, context and purpose with a
view to achieving a commercially sensible result.’
He also sounded a word of caution – that ‘courts are not entitled, simply because the
policy appears to drive a hard bargain, to lean to a construction more favourable to an
insured than the language of the contract, properly construed, permits’.14
[44] I turn to the policy and its terms. In the preamble to the policy, the insurers, in
return for the payment of premiums by the insured, agreed to indemnify them ‘against
all such DAMAGE or liability as herein provided’. The term ‘damage’ is defined in the
definition clause to mean ‘physical DAMAGE’, including ‘physical loss or physical
destruction’.
[45] In the summary that follows the preamble, the project that is the subject of the
policy is described as the ‘financing, pre-fabrication, design, engineering,
procurement, construction, erection, hot-testing, commissioning, operation and
maintenance of the Gautrain Rapid Rail Link in the Republic of South Africa and all
associated and ancillary works in connection therewith’. In the definitions clause it is
11 Centriq Insurance Company Ltd v Oosthuizen and Another [2019] ZASCA 11; 2019 (3) SA 387 (SCA).
12 Para 17.
13 Para 18.
14 Para 21.
stated that the project ‘shall be as stated in the Summary and any Contract or
Agreement, written or implied, entered into by the INSURED in connection therewith’.
[46] The term ‘PROPERTY INSURED’ has two components. It is defined, in the first
place, to mean ‘the permanent and TEMPORARY WORKS including Rolling Stock
and materials contained therein and other property used or for use in connection with
THE PROJECT including site camps and installations of any kind and free issue
materials’, and secondly, to mean tunnel boring machinery. The term ‘TEMPORARY
WORKS’ is defined as ‘all things, including access scaffolding erected or constructed
for the purpose of making possible the erection or installation of the permanent works
and which it is intended shall not pass to the ownership of the Principal’. Although
‘permanent works’ is not defined, it appears to be all works other than temporary
works.
[47] The term ‘TUNNEL WORKS’ is also defined. It means ‘works intended to create
any sub ground surface, passage, cavern or tunnel, including shafts, however
constructed, including cut and cover and station boxes below ground’, but the
definition shall not apply ‘to foundation works nor basement levels for above ground
surface structures, or fitting out or other similar works’.
[48] The definition of ‘CIVIL WORKS’ is also relevant. This term is defined to mean
‘Tunnel Works (but not their contents), Station Box structures (but not their contents),
Buildings (but not their contents), Bridges, Embankments, Cuttings, Foundations and
Roads’.
[49] In section 1 of the policy, under a heading ‘MATERIAL DAMAGE’, what was
termed an ‘Operative Clause’ reads as follows:
‘Except as hereinbefore excluded, the Insurers will pay to or indemnify the INSURED under
this Policy for the full cost of replacing and/or repairing and/or making good DAMAGE to the
PROPERTY INSURED howsoever caused occurring during the Period of Insurance.’
[50] Four clauses refer specifically to the tunnel works. One of the deductibles in
Section 1 relates to a deductible of R7 100 000 for ‘any one EVENT in respect of
DAMAGE to TUNNEL WORKS’. And in the exclusions to Section 1, clause 8 is
devoted in its entirety to exclusions in respect of tunnel works. A final sub-clause of
clause 8 makes it clear that tunnel works are part of the property insured. This sub-
clause reads:
‘In the event of indemnifiable loss or damage the maximum amount payable under this Policy
shall be limited to the expenses incurred to reinstate PROPERTY INSURED A to a standard
or condition technically equivalent to that which existed immediately before the occurrence of
loss or damage but not in excess of the percentage stated below of the original average per-
metre construction cost of the immediate damaged area.’
[51] In the memoranda to Section 1, the insurers undertook to pay the ‘costs and
expenses necessarily and reasonably incurred by THE INSURED in the removal and
disposal of debris, detritus and material foreign to THE PROJECT’ in respect of tunnel
works, subject to an indemnity limit. Similar provisions apply to extra charges such as
overtime and night work in respect of tunnel works.
[52] From the above, it seems to me that the policy is intended to give extremely
wide cover to the insured. That cover operates in respect of damage to ‘the
PROPERTY INSURED howsoever caused’, subject to various limitations and
exclusions. In this scheme, a number of terms that have been defined in the policy,
such as ‘property insured’, ‘tunnel works’ and ‘civil works’, tend to overlap: what
emerges clearly enough, however, is that tunnel works, being permanent works, fall
within the definition of the property insured, and tunnels works specifically include
tunnels. Tunnel works are also the subject of specific exclusions and limitations. They
would only be subject to those exclusions and limitations if they were part of the
property insured.
[53] What the policy does not do, however, is define what is meant by a tunnel. The
dictionary definition of a tunnel is ‘an artificial underground passage, as built through
a hill or under a building . . .’.15 It can, I believe, be inferred that an underground
passage has, of necessity, a floor, a roof and sides and that they comprise the
surrounding rock mass through which the passage was excavated.
15 Concise Oxford English Dictionary (12 ed) (2011).
[54] I turn to the evidence of Dr Barton and professor Roald as to what, in civil
engineering terms, a tunnel is. I do so because the context within which the policy,
and the word ‘tunnel’ that appears in it, must be interpreted is a massive civil
engineering project involving, centrally, the excavation of tunnels through rock. When
the word ‘tunnel’ was used in the policy, it must have been used as a technical, civil
engineering term. In circumstances such as this, expert evidence is admissible, and
does not offend the parol evidence rule. In Wides v Davidson16 Claasen J held that ‘it
is a clear principle that oral evidence may be given to prove that a word used in a
contract has a special meaning in a particular locality, trade or usage if it was intended
that the word was to be used in that special sense’. So too, an expert may explain the
meaning of technical terms, but they may not venture their opinion of what they believe
the document being interpreted means.17
[55] In the executive summary of Dr Barton’s expert report he said that, in the light
of Zurich’s argument, he had to devote ‘considerable space’ to a ‘rock mechanics
explanation that the rock mass surrounding the actual cylindrical excavation is very
much part of, indeed by far the most essential component, of any and all tunnels in
rock masses’. He described Zurich’s contrary contention as ‘extra-ordinary’ and one
which he had never encountered before ‘during a long career and hundreds of projects
in more than three-dozen countries’.
[56] The reason why the rock mass is such an essential component of a tunnel is
because of its load-bearing capacity. The concept that it is a fundamental component
of the tunnel is a universally accepted one among tunnel designers throughout the
world. The surrounding rock mass is crucial to the stability of tunnels, whether man-
made or naturally formed. The rock mass has, Dr Barton said, even been described
as the ‘principal structural material’ involved in the construction of a tunnel, being far
stronger than concrete or steel. These materials simply cannot withstand the
tremendous loads involved, and which are instead ‘distributed through as much as
tens of metres of rock mass’.18
16 Wides v Davidson 1959 (4) SA 678 (W) at 681D-E.
17 Gentiruco AG v Firestone (SA) (Pty) Ltd 1972 (1) SA 589 (A) at 617F-618C; KPMG Chartered
Accountants (SA) v Securefin Ltd and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA) para 40.
18 Dr Barton said that at a depth of 40 metres below surface, ‘there are already 100 tons/square meter
of vertical rock stress’.
[57] Simply put, without the surrounding rock mass ‘with typically a “cylinder
thickness” of at least one tunnel diameter, and without its multiple-component
response to excavation, thereby allowing the newly excavated tunnel to exist, there
can be no tunnel, by simple definition’. As a result, the entire ‘tunnel-forming cylinder
. . . is the tunnel by default’. This exposition was summarized by Dr Barton as follows:
‘A “rock” tunnel cannot exist unless it is surrounded by its own load-bearing “cylinder” of rock,
estimated to be at least one tunnel diameter thickness for convenience. This “cylinder” would
also be the appropriate volume into which the micro-cements could have penetrated, (say 0
to 10m from the tunnel periphery), if pre-grouting had been performed. The rock blocks and
rock joints in this nearest “10m thick cylinder” take an active and necessary part in the stress
redistribution, which compensates for removal of the stressed rock from within the newly
created tunnel void. The load that immediately builds up in the surrounding rock “cylinder” (in
fact it starts to build up also about one diameter ahead of any given tunnel face) allows the
formation of the more or less stable tunnel structure. Clearly the surrounding rock is the main
element of the insured property.’
[58] I have quoted from Dr Barton’s expert report but what he has written therein is
consistent with his evidence, which Wepener J accepted without qualification. His
opinion that the surrounding rock mass is an indispensable component of a tunnel was
supported by professor Roald, whose evidence was also accepted without
qualification by Wepener J. Professor Roald made the point that ‘[t]unnelers around
the world have long recognized that the rock mass surrounding a tunnel forms the
principal component of the tunnel structure’ and that they recognize that even if a
tunnel requires a lining, ‘the most important component of the structure is the
ground/rock surrounding the tunnel’. From this he concluded that ‘what constitutes a
tunnel is far more than just the (final) tunnel lining’.
[59] In civil engineering terms, then, a tunnel is more than the void left after the
excavation process. It includes the natural support for the void, without which there
would be no tunnel. A tunnel such as those with which this case is concerned, is
therefore a void surrounded by its own load-bearing cylinder of rock of about one
tunnel diameter in thickness. The parties, in agreeing to the terms of the policy in
relation to a civil engineering project involving, inter alia, the construction of tunnels in
rock, must have had the above concept of a tunnel in mind when they included tunnels
as part of ‘tunnel works’ within the property insured. The contextual evidence of Dr
Barton and professor Roald points decisively to this meaning of the term. This too, is
a commercially sensible interpretation as it avoids a patent absurdity – the contrary
interpretation of only a void being part of the property insured would make no sense
at all because, by definition, no damage could ever be caused to a void; and the
inclusion of it in the policy, subject to exclusions and limitations, would have been an
elaborate act of futility.
[60] I conclude, therefore, that the property insured by the policy includes the rock
mass that surrounds the void created by the process of excavation. The result is that
the EDZ4 damage caused by the failure to pre-grout the tunnels is indemnifiable in
terms of the policy.
The enforceability of the order
[61] I have quoted the order made by Wepener J in paragraph [2] above. It has,
apart from costs, two operative parts. Paragraph 1 fixed Zurich’s liability by declaring
that it was obliged to indemnify the province for the cost of replacing, repairing or
making good the damage to the tunnels. The damage referred to was that alleged in
paragraph 15 of the particulars of claim, and the tunnels were those referred to in
paragraph 11 of the particulars of claim. This declaration of Zurich’s liability was made
subject to ‘all the terms and conditions of the policy’.
[62] In paragraph 2, it was declared ‘on the basis of prayer 1 above’, that Zurich was
obliged to pay the province the amount that it proved to be the cost of remedying the
damage to the tunnels but this obligation was made ‘subject to the limit of liability and
deductibles as set out in the policy’.
[63] Orders like the one made by Wepener J are not unusual in claims of this nature.
In Cape Town Municipality and Another v Allianz Insurance Co Ltd19 Howie J explained
the rationale and effect of the two-stage process as follows:
19 Cape Town Municipality and Another v Allianz Insurance Co Ltd 1990 (1) SA 313 (C) at 332H-333B.
‘Plaintiffs are quite patently not seeking to obtain payment of part of the indemnity now and
part later. They are seeking to enforce their rights to the indemnity. If further proceedings are
instituted by plaintiffs in due course to exact payment from defendant pursuant to judgment in
the present case, such further action will be necessary by reason of the fact that the present
action is only concerned with the issue of liability, and the further action will cover elements of
plaintiffs' claim not canvassed in the current action. Conversely, those elements of the claim
covered in the present matter will be res judicata hereafter. But the two actions together will
still deal only with one cause of action. Although the relief sought in the present case differs
from the relief which will, on the above supposition, be sought in the second action, the precise
form of the relief and, if it is monetary relief, the quantum thereof, are not elements of the
cause of action. For example, if D commits continuing wrongful acts accompanied by fault and
thereby causes damages to P's property with consequent patrimonial loss, P's cause of action
is fixed irrespective of whether he sues for damages or applies for an interdict.’
[64] And, in Cadac (Pty) Ltd v Weber-Stephen Products Co and Others20 Harms DP
held that, from a procedural point of view, this two-stage process was acceptable:
‘I cannot see any objection why, as a matter of principle and in a particular case, a plaintiff
who wishes to have the issue of liability decided before embarking on quantification, may not
claim a declaratory order to the effect that the defendant is liable, and pray for an order that
the quantification stand over for later adjudication. It works in intellectual property cases, albeit
because of specific legislation, but in the light of a court's inherent jurisdiction to regulate its
own process in the interests of justice — a power derived from common law and now
entrenched in the Constitution (s 173) — I can see no justification for refusing to extend the
practice to other cases. The plaintiff may run a risk if it decides to follow this route because of
the court's discretion in relation to interest orders. It might find that interest is only to run from
the date when the debtor was able to assess the quantum of the claim. Another risk is that a
court may conclude that the issues of liability and quantum are so interlinked that it is unable
to decide the one without the other.’
In this matter, given the complexity of the issues not only on the merits but also, I
would imagine, on the quantification of the damage, it was eminently reasonable for
the province to proceed by way of the two stage process.
[65] Zurich’s complaint about the order is that, to quote from its heads of argument,
it ‘does not bring finality to the dispute as it does not leave only the issue of quantum
20 Cadac (Pty) Ltd v Weber-Stephen Products Co and Others [2010] ZASCA 105; 2011 (3) SA 570
(SCA) para 13.
to be determined’. It was argued on this basis that the order was the result of an
improper exercise of a discretion on the part of Wepener J, was unenforceable as a
result and ought to be set aside.
[66] Zurich’s attack on the order is premised on the argument that it did not draw a
clear distinction between the merits and quantum. This was said to be so in the sense
that the declarator in respect of the indemnity in paragraph 1 was made subject to ‘all
the terms and conditions of the policy’; and that the declaratory order in paragraph 2,
to the effect that Zurich was required to pay the amount proved by the province in
respect of the damage it suffered, was made subject to ‘the limit of liability and
deductibles as set out in the policy’.
[67] Even if Zurich’s argument was correct that elements of the merits were left
undecided that, on its own, would not render the order vague, ambiguous and
unenforceable. Whatever issues remain for determination in the second stage of the
proceedings are not res judicata.
[68] The order unambiguously gives effect to the high court’s finding that the
damage to the tunnels alleged by the province fell within the terms of the policy, and
that Zurich was, as a result, obliged to indemnify the province. When it did so, it
rendered this issue res judicata. It disposed finally of it and left the remaining issues
to be determined later. The provisos to paragraphs 1 and 2 of the order do not concern
whether Zurich was liable to indemnify the province, but the quantification of the
damage that it suffered. They, and paragraph 2 in particular, postulate the second
stage of the proceedings concerning proof of the amount that it will cost to remedy the
damage, less any relevant exclusions and limits.
[69] This, it would appear, was precisely what Zurich had in mind, when it pleaded
in the alternative to there having been no damage to the tunnels, that ‘insofar as
Plaintiff’s claim is in respect of alleged damage to Tunnel Works, its entitlement to
indemnification is limited to the cost it has actually incurred to reinstate the damaged
property as is provided for in the final paragraph of clause 8 of the EXCLUSION TO
SECTION 1 clause’. The second stage of the process envisages the quantification of
the province’s claim. In so doing, the order sensibly makes provision for exclusions
and limitations specified in the policy to be taken into account, to the extent that they
apply.
[70] The order of the high court is clear, unambiguous and enforceable. Zurich’s
argument to the contrary is untenable.
Conclusion
[71] The three grounds in respect of which leave to appeal was granted have all
been decided against Zurich and in favour of the province. The result is that the appeal
must fail.
[72] I make the following order:
The appeal is dismissed with costs, including the costs of two counsel.
________________________
C Plasket
Judge of Appeal
APPEARANCES
For the appellant:
C Loxton SC (with D Smith)
Instructed by:
Knowles
Husain
Lindsay
Inc,
Johannesburg
McIntyre Van der Post, Bloemfontein
For the respondent:
A Subel SC (with A C Botha SC)
Instructed by:
Werksmans 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
28 September 2022
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Zurich Insurance Company South Africa Ltd v Gauteng Provincial Government
(734/2021) [2022] ZASCA 127 (28 September 2022)
MEDIA STATEMENT
The Supreme Court of Appeal (SCA) today dismissed the appeal of the Zurich
Insurance Company South Africa Ltd (Zurich) against the Gauteng Provincial
Government (the provincial government). The appeal concerned whether Zurich was
liable, in terms of a contract of insurance (the policy), to indemnify the provincial
government, as an insured, in respect of damage that had been caused during the
construction of tunnels for the Gautrain Rapid Rail System (the Gautrain).
The Gauteng Local Division of the High Court, Johannesburg (the trial court),
had found that Zurich was liable to indemnify the provincial government for the
damage to the tunnels and that it was liable to pay whatever damages were proved in
due course. When it granted leave to appeal to the SCA, it limited that leave to three
grounds, namely whether the provincial government’s claim against Zurich had
prescribed; whether the rock mass surrounding the void of the tunnels was part of the
insured property, it being accepted that the damage was caused to the surrounding
rock mass; and whether the order, which envisaged a two stage process for the
finalisation of the claim, was enforceable.
Because of the limited grounds of appeal, the damage to the rock mass was
not in dispute. When the tunnels were designed, provision was made for the pre-
grouting of the rock mass as the excavation process progressed. In the construction
process, however, pre-grouting was inexplicably not done. The provincial government
suspected that damage had been caused to the tunnels because of the excessive
ingress of water into the tunnels. In due course, an international expert in rock
mechanics was able to identify the damage as increased permeability in the rock mass
surrounding the tunnel voids due to the failure to per-grout the tunnels.
By the time this expert had ascertained that there was indeed damage to the
tunnels, more than three years had elapsed since the completion of their construction.
Zurich pleaded as a result that the provincial government’s claim against it had
prescribed. The SCA upheld the finding of the trial court that the claim had not
prescribed. In order for prescription to start running, the provincial government had to
have knowledge of the damage, in order to complete its cause of action. It had
suspected that there may have been damage and had reported its suspicions to
Zurich, but the assessors sent to inspect the tunnels had found no damage. It was
only when the expert alerted the province to the damage that he, through his expert
knowledge had been able to identify, that the provincial government could be said to
have had knowledge of the damage, and thus a complete cause of action. As
summons was issued well within three years of the acquisition of this knowledge, the
claim had not prescribed.
The second point on appeal was whether the rock mass surrounding the void
of the tunnels was part of the property insured in terms of the policy. This required an
interpretation of the policy, as well as of the term ‘tunnel’. It was clear from the policy
that damage to the tunnels were covered. The court considered the dictionary
definition of the word ‘tunnel’. It was ‘an artificial passage, as built through hills or under
a building’. This definition, the court said, of necessity included the floor, roof and sides
of the passage, which comprised the surrounding rock mass through which the tunnel
was excavated. This understanding of the word was also consistent with what was
meant by a tunnel in civil engineering terms. The rock mass surrounding the void of a
tunnel was considered to be an essential component of a tunnel because of its load-
bearing capacity, and crucial for the stability of a tunnel. Without the surrounding rock
mass, there can be no tunnel. On this basis, the SCA, again upholding the reasoning
of the trial court, held that the rock mass surrounding the tunnels was part of the
property insured in terms of the policy.
The third point was that the two-stage order was defective and unenforceable
as it did not finally dispose of the merits of the dispute. This argument, the SCA held
was erroneous. The trial court had found that Zurich was liable to indemnify the
provincial government. In the second stage of the process contemplated by the order,
the quantum of the claim was to be determined, and in that process limitations of
liability and exclusions, as contained in the policy, had to be taken into account.
Understood in this way there was nothing ambiguous about the order issued by the
trial court, and it was enforceable.
The appeal was accordingly dismissed with costs, including the costs of two
counsel, on all three grounds.
|
3543
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 235/2020
In the matter between:
TRAMORE PROPERTY GROUP (PTY) LTD
APPELLANT
and
VOSLOORUS SQUARE CC
RESPONDENT
Neutral citation: Tramore Property Group (Pty) Ltd v Vosloorus Square
CC (Case no 235/2020) [2021] ZASCA 41 (13 April 2021)
Coram:
MBHA, NICHOLLS and MBATHA JJA and GORVEN and
GOOSEN AJJA
Heard:
11 March 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 SAFLI. The date and time for hand-down is
deemed to be 10h00 on 13 April 2021.
Summary: Contract – Property Law – enforceability of contract of sale of
property of another – no basis for cancellation – locus standi – seller disposed
of rights to require owner to transfer under sale agreement – owner withdrew
opposition to transfer – claim for transfer enforceable.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Neukircher
J, Tuchten and Teffo JJ concurring, sitting as Full Court):
The appeal is dismissed with costs.
JUDGMENT
Gorven AJA (Mbha, Nicholls and Mbatha JJA and Goosen AJA
concurring):
[1] On 17 September 1991, the City Council of Vosloorus (the council) and
Permprop (Pty) Ltd (Permprop) concluded a written agreement. It was termed
an ‘Agreement of Exchange of Land by Leasehold’ (the exchange agreement).
At the time, Permprop owned certain land, which the council required. As a
result, specified properties owned by Permprop (the Tramore properties) were
to be disposed of to the council. In turn, specified properties owned by the
council (the council properties) were to be disposed of to Permprop. The
agreement was that the transfers should be simultaneous. No money was to
change hands. The council took occupation of the Tramore properties
pursuant to the exchange agreement. It erected a large school on these
properties. No transfers of any of the properties concerned have taken place.
[2] The Ekhuruleni Metropolitan Municipality (the municipality) is the
successor in title to the council. Permprop changed its name to that of the
appellant (Tramore).
[3] On 7 April 2000, Tramore and the respondent (Vosloorus Square)
concluded two written agreements. Both were styled ‘Agreement of Sale of
Land’. In one, Tramore agreed to sell to Vosloorus Square the council
properties (the sale agreement). All of the council properties are undeveloped.
In the other, Tramore agreed to sell to Vosloorus Square certain other
properties. The second sale agreement is not relevant to the present matter.
[4] On 19 September 2012, the Gauteng Department of Housing
proclaimed a township (the township), which included the council properties.
Certain properties were made subject to special conditions in the
proclamation. These included the requirement that:
‘The internal roads on the erf shall be constructed and maintained by the registered owner
to the satisfaction of the local authority . . . .’
It is common cause that the rights in the council properties have been
converted from leasehold to outright ownership.
[5] Vosloorus Square requested that Tramore transfer the council
properties to it. Tramore refused to do so. This prompted an application to the
Gauteng Division of the High Court, Pretoria, in which Vosloorus Square
sought the following relief:1
‘1.
The Registrar of Deeds, Johannesburg, shall simultaneously record and give effect
to the following transfers of property:
1 This is the relief applied for by the time the hearing took place.
a.
Erven 21686 to 21708 Vosloorus Extension 29 be transferred from [the
municipality] to [Vosloorus Square]; being first transferred (insofar as is necessary)
from [the municipality] to [Tramore];
b.
Erven 14258, 14259, 14260 and 14261, Vosloorus Extension 30, be
transferred from [Tramore] to [the municipality];
c.
In the event of any of the aforenamed Respondents do not sign whatever
documents and deeds might normally be required to effect the aforesaid transfers
and registrations, the Sheriff having jurisdiction . . . shall execute and sign such
documents in their stead.
2.
Costs of the application are to be paid by [Tramore].’
Both Tramore and the municipality were cited as respondents in the
application. Both opposed it and delivered answering affidavits, after which
the municipality withdrew its opposition, leaving Tramore as the only party
opposing.
[6] The court of first instance, per Mavundla J, dismissed the application
with costs on the basis that Vosloorus Square lacked the requisite locus standi
to obtain the relief sought. He granted leave to appeal to the Full Court of the
Gauteng Division, Pretoria. That court, per Neukircher J, with Tuchten and
Teffo JJ concurring, upheld the appeal and substituted the following order for
that of the court of first instance:
‘2.1
[T]hat the [municipality] and [Tramore] are ordered to take all steps necessary to
transfer to each other the land envisaged in the Exchange Agreement dated 1991 and that
pari passu therewith [Tramore] shall pass transfer of the properties received from [the
municipality] to [Vosloorus Square];
2.2
the Services Agreement signed by [the municipality] and [Tramore] respectively
on 29 May 2013 and 14 February 2014 remains in esse and is ceded and assigned from
[Tramore] to [Vosloorus Square];
2.3
[Tramore] is ordered to pay [Vosloorus Square’s] costs.’
It is this order which is appealed against by Tramore with the special leave of
this court. The municipality takes no part in the appeal.
[7] As will have become apparent, much time has elapsed since the
exchange agreement was concluded in 1991. This, also, since the sale
agreement was concluded in 2000 and the proclamation of the township took
place in 2012. After the conclusion of the sale agreement, negotiations took
place between Vosloorus Square and the municipality. In these, the
municipality was clearly aware of the sale agreement and that it was
Vosloorus Square, and not Tramore, that would develop the council
properties. As will be seen, the municipality has never objected to Vosloorus
Square being the developer of the council properties.
[8] The main substantive ground on which Tramore opposed the
application was that the sale agreement was cancelled on 8 July 2014. It
claimed that Vosloorus Square had breached its obligations under the sale
agreement. The purported breach was of clause 10.3 of the sale agreement.
This provides:
‘The purchaser undertakes to provide guarantees for internal services and bulk
contributions as may be required by the local authority pursuant to proclamation of the
township or subdivision and transfer of the property within 14 days of being called upon
to do so by the seller.’
Tramore claimed that Vosloorus Square failed to provide the requisite
guarantees when called upon by Tramore to do so. In support of this claim,
Tramore called in aid a series of email communications.
[9] Before dealing with the communications on which Tramore relies, it
will assist to provide some context. Vosloorus Square applied to the
municipality for the rezoning of the council properties to residential within a
township. On 6 October 2011, Ms Dowd, the Manager: Corporate and Legal
Services for the municipality, wrote to the representative of Vosloorus Square
saying that she would recommend Vosloorus’ rezoning application to the
Department City Planning, subject to the submission of certain documents.
Vosloorus Square provided the required documents. The township was
accordingly proclaimed on 19 September 2012. On 10 October 2012, Ms
Dowd requested the Director: Planning Water Services to furnish her with
conditions he wished to be included in the services agreement. In this
communication she indicated that Tramore had sold the council properties to
Vosloorus Square but that, because the exchange agreement had not been
amended to substitute the latter for Tramore, the services agreement would
have to be concluded between the municipality and Tramore.
[10] The municipality then set out certain requirements for the services to
be provided by Vosloorus Square when it developed the council properties.
As a result, Vosloorus Square furnished the municipality with the following
reports:
(a) A storm water report;
(b) A water and sewer report;
(c) An electricity reticulation report; and
(d) A dolomite stability investigation report.
These were considered and approved by the municipality prior to preparation
of the services agreement referred to below. The cost to Vosloorus Square of
obtaining the various reports exceeded R1 127 813.48.
[11] On 29 May 2013, after receiving and approving the said reports, the
municipality signed what is referred to as a Services Agreement (the services
agreement) which, as foreshadowed in Ms Dowds’s letter of 10 October 2012,
reflected Tramore as the other party. In the services agreement, the
municipality fixed a guarantee for ‘all defects occurring in the roads and
storm-water’ at R485 000. Although the services agreement requires many
other services from the developer, no further guarantees are fixed in it
concerning those other services. At this stage only the municipality had signed
the services agreement.
[12] The sequence of the communications and events relied on by Tramore
to support its assertion of a breach of clause 10.3 of the sale agreement
follows.
(a) On 29 May 2013, the municipality signed the services agreement, fixing
the above guarantee at R485 000.
(b) On 29 July 2013, a representative of Vosloorus Square sent an email to
Tramore, copied to the municipality. In it, Vosloorus Square indicated that it
was prepared to issue an irrevocable guarantee.
(c) On 31 July 2013, Tramore sent an email to Vosloorus Square and copied
the municipality. In the section headed ‘Council Guarantees’, it said that the
consulting engineers of Vosloorus Square should ‘now establish the cost of
the internal services and council should agree to the services and the cost
thereof and the amount of the guarantee they require’. It went on to say that it
required a letter from the municipality confirming this.
(d) On 12 August 2013, Vosloorus sent an email to Tramore confirming that
the consulting engineers were engaged in the suggested process.
(e) On 16 October 2013, Vosloorus Square sent an email to the municipality
and copied Tramore. The email referred to that of Tramore of 31 July 2013
and said:
‘[W]e confirm that we have established the cost of the internal services and further confirm
we are prepared to issue the required irrevocable bank guarantees to council as stipulated
on the service agreement.
Can you kindly confirm this as stated by Mr Roye in his mail below, dated 31st July 2013
and request his availability any time next week for the signing of the service agreement at
your office.’
It also confirmed that it was prepared to enter into a cession of the services
agreement.
(f) The response from the municipality, sent by Ms Dowd on 18 October 2013,
is to the effect that, since the municipality had signed the services agreement,
Tramore should do so. The municipality did not respond to the question raised
by Vosloorus Square concerning what had been said of guarantees in the email
of Tramore dated 31 July 2013.
(g) This reply caused Tramore and Vosloorus Square to draft an addendum to
the services agreement. This sought to substitute Vosloorus Square as the
developer and provided that the municipality agreed to this substitution and
to Vosloorus Square taking over all of the obligations of the developer under
the services agreement. A copy of the draft addendum was sent to the
municipality for approval on 31 October 2013.
(h) No response from the municipality was put up in the papers.
(i) Tramore signed both the services agreement and the addendum on 14
February 2014. Vosloorus Square had signed the addendum a few days before.
The addendum has not been signed by the municipality but there is no
indication that it objects to it. All indications are to the contrary, and
Vosloorus Square stated in the application, without challenge, that the
municipality had no objection to it.
(j) On 19 June 2014, attorneys for Tramore addressed a letter (the breach
letter) to Vosloorus Square. It recorded that the latter had breached clause 10.3
of the sale agreement by failing ‘to furnish guarantees for the internal services
and bulk contributions within 14 days of being called upon by the seller to do
so’. It contended that the ‘most recent occasion’ on which Vosloorus Square
had been called upon by Tramore to provide guarantees was ‘at a meeting . .
. on or about July 2013’. It also indicated that the terms of the guarantees must
be acceptable to Tramore and the municipality and called upon Vosloorus
Square to remedy the breach and furnish the required guarantees within 7
days.
(k) On 8 July 2014 the said attorneys delivered a letter to Vosloorus Square
purporting to cancel the sale agreement on the basis that Vosloorus Square
had ‘failed to furnish the guarantees for the internal services and bulk
contributions within the specified 7 days as demanded.’
[13] The contentions of Tramore concerning cancellation must be
considered against this background. Tramore claims that clause 10.3 entitled
it to call upon Vosloorus Square to provide guarantees. What is required of
Vosloorus Square by clause 10.3 is that it ‘provide guarantees . . . as may be
required by the local authority’. This, of course, means that, until the
municipality requires guarantees, Vosloorus Square is not obliged to provide
them. The necessary corollary to this is that Tramore is not entitled to call
upon Vosloorus Square to do so.
[14] Tramore submitted that the services agreement showed that the
municipality had fixed the amount of the guarantee for ‘defects occurring in
the roads and storm-water’ at R485 000. This, it said, showed that the
municipality had ‘required’ the guarantees. But this clearly did not call for
them to be furnished at this stage. During argument, Tramore was constrained
to concede that there is no evidence that the municipality had called for any
guarantees. As such, it cannot be said that it had ‘required’ the guarantees at
the time Tramore purported to call for the guarantees and, based on the failure
of Vosloorus Square to provide them, to cancel the sale agreement.
[15] Tramore then submitted that the amount of the guarantee had been
fixed. But Tramore did not itself treat the services agreement as determinative
of the amount or amounts. Subsequent to signature by the municipality of the
services agreement, on 31 July 2013, it sent an email to Vosloorus Square and
the municipality. It stated that, after the consulting engineers of Vosloorus
Square had established the cost of the internal services, ‘council should agree
to the services and the cost thereof and the amount of the guarantee they
require’. This was sent on the last day of the month during which Tramore
claimed that it had demanded that Vosloorus Square furnish the guarantees.
There could clearly have been no breach based on the amount of the
guarantees having been clarified.
[16] Further, Vosloorus Square had tendered the requisite guarantees in the
email to the municipality of 16 October 2013. This referred to the email of
Tramore of 31 July 2013, which stated that the municipality should agree the
amount. The municipality did not respond to this tender by Vosloorus Square
and specify the amount it would require. Nor did it indicate that it required
that the guarantees be furnished at that stage.
[17] Finally, in the breach letter the attorneys for Tramore indicated that the
terms of any guarantee must be acceptable. There is no assertion, let alone
evidence, that any terms were ever agreed. All that was put up in the papers
was a pro forma document headed ‘Guarantee’, which is in the form of a deed
of suretyship, for damages sustained by the municipality by non-performance
of obligations under an unspecified memorandum of agreement concluded
between the municipality and the ‘Township Owner’ for an unspecified
amount. It also includes a suretyship for the obligation to construct a
‘consumer communal substation’, referencing clause 1.1.4 of the ‘Contract’.
No such clause appears in the services agreement and no such provision is
required of the developer. It is clear, accordingly, that no agreement had been
reached on the terms of any guarantees to be furnished by Vosloorus Square.
[18] This means that Tramore did not show that the municipality had
requested that the guarantees be furnished. It did not show that the amount
had been finally specified and it did not show that any terms had been
suggested by the municipality or agreed between it and either Tramore or
Vosloorus Square. It was therefore not competent for Tramore to have
demanded guarantees under clause 10.3 because there is no indication that the
guarantees were ‘required by the local authority’. There is thus no basis on
which Tramore was entitled to cancel the sale agreement. Vosloorus Square
correctly regarded the purported cancellation as a repudiation of the sale
agreement and elected to enforce it.
[19] Two further substantive defences to the claim in the application to
specific performance of the sale agreement were raised. First, Tramore
claimed that Vosloorus Square had not performed its reciprocal obligations.
As such, it could not require Tramore to perform its obligations. The
reciprocal obligation relied upon by Tramore was that of Vosloorus Square to
provide guarantees under clause 10.3. In essence, this raises the same issue of
non-compliance on which the defence of cancellation was founded. It must
accordingly meet the same fate as that defence. Secondly, Tramore contended
that there was a statutory bar to the relief sought but abandoned this defence
at the outset of the hearing before us. In my view, this abandonment was
correct. Nothing more need accordingly be said about it. The substantive
defences raised by Tramore were thus correctly dismissed by the full court.
[20] The issue on which the court of first instance found against Vosloorus
Square was that there was no contractual privity between it and the
municipality. For this reason, it lacked the requisite locus standi to enforce
transfer from the municipality to Tramore, which is a necessary precursor to
enforcing the sale agreement. This point was taken in the papers only by the
municipality and not by Tramore. As indicated, the municipality withdrew its
opposition to the application and has elected not to join in this appeal. This
despite the order requiring it to transfer the council properties to Tramore
against transfer of the Tramore properties to it. Tramore, however, relied on
it as a point of law as it is entitled to do. In essence, the argument is that the
exchange agreement was concluded between Tramore and the municipality.
Because Vosloorus Square was not a party to it, only Tramore could enforce
performance by the municipality. This defence must now be considered.
[21] Tramore requested transfer of the council properties sometime prior to
20 January 2014. The response of the municipality on that date said that ‘the
properties . . . will not be transferred to yourself in order for you to transfer
the properties which you sold to Vusi Khumalo, until such time as the
properties in Vosloorus X30 are transferred to the council.’ In other words,
the municipality simply required the simultaneous transfer of Tramore’s
properties if Tramore wished to obtain transfer of the council properties. This
was required under the exchange agreement. No other bar to the request for
transfer was raised or has since been raised. It should be mentioned that Vusi
Khumalo, mentioned in this communication, has at all times represented
Vosloorus Square.
[22] In considering this defence, an evaluation of the obligations of Tramore
under the sale agreement is required, along with the context in which it was
concluded. While a person may sell property belonging to another, the usual
position is that the only obligation resting on the seller is to give possession
to the purchaser and to indemnify the purchaser against eviction by the owner.
The seller is generally not obliged to transfer ownership to the purchaser. This
position was established as far back as 1897 in the matter of Theron and Du
Plessis v Schoombie,2 where De Villiers CJ, beginning with a quotation from
Benjamin on Sales,3 said:
“On the completion of the contract of sale,” he says, “the vendor was bound simply to
deliver possession, and the buyer had no right to object that the vendor was not owner. But
the possession thus to be transferred was something more than the mere manual delivery,
and the Romans had a special term for it; it must be vacua possessio, a free and undisturbed
possession, not in contest when delivered. And if the vendor knew that he was not the
2 Theron and Du Plessis v Schoombie (1897) 14 SC 193.
3 Benjamin on Sales 4 ed at 377.
owner and made a sale to a buyer ignorant of that fact, so as wilfully to expose the latter to
the danger of eviction, the vendor's conduct was deemed fraudulent, and the buyer was
authorised to bring an equitable suit, ex empto, without waiting for an eviction.” These
principles have not been materially modified by the Dutch law. Under that law the sale of
a thing belonging to another was not illegal if made bona fide, but was subject to the buyer's
right to be indemnified against eviction.’4
In the sale agreement, however, Tramore went further than undertaking to
give possession of the council properties to Vosloorus Square. This had
already taken place. Tramore did not only sell the council properties but
undertook that Vosloorus Square would obtain transfer.
[23] In the founding affidavit, Vosloorus Square asserted that the sale
agreement ‘constitutes a complete sale and alienation to the Applicant of all
rights, title and interest that Tramore has or had (in terms of the Exchange
Agreement) in the Council Land’. This assertion was not challenged by
Tramore but must, of course, be consistent with the sale agreement.
[24] The sale agreement is not particularly elegantly drafted but certain
factors bearing on its interpretation make the assertion more probable than
not. The property sold is described as ‘proposed erven’ in the still undeclared
township. It requires Vosloorus Square to finalise the township at its own cost.
It requires Vosloorus to provide the guarantees required by the municipality
of Tramore in the exchange agreement ‘pursuant to proclamation of the
township’. It also requires that Vosloorus Square conclude a services
agreement with the municipality. All of these are consistent with a disposal of
the rights of Tramore under the exchange agreement. It can hardly be
4 Theron and Du Plessis v Schoombie fn 2 above at 198-199.
considered that the sale agreement would allow Vosloorus Square to deal
directly with the municipality concerning land to which Tramore was entitled
under the exchange agreement, unless Tramore had disposed of its rights
under that agreement to Vosloorus Square. This is further buttressed by the
addendum to the services agreement in which Tramore cedes and assigns its
rights under the services agreement to Vosloorus Square.
[25] And this was recognised by the municipality; it undertook negotiations
with Vosloorus Square concerning property which it had agreed to transfer to
Tramore. The negotiations related specifically to the application of Vosloorus
Square, and not Tramore, to have the township proclaimed. Ms Dowd called
on Vosloorus Square, not Tramore, to submit documents before she would
recommend the proclamation of the township. Having received the requisite
documents from Vosloorus Square, she recommended proclamation, which
took place shortly thereafter. Straight after it was proclaimed, she wrote to the
Director: Planning Water Services enquiring what he required in a services
agreement. The municipality then requested reports from Vosloorus Square
and approved them before drafting the services agreement, which dealt with
the services covered by the reports.
[26] The fact that the services agreement reflected that Tramore had the
obligation to provide the services is consistent with the legal position. Ms
Dowd, in her letter to the Director: Planning Water Services, stated that
Tramore had sold the council properties to Vosloorus Square and that, in terms
of the sale agreement, the latter ‘shall be obliged to conclude a services
agreement with the Council’. She went on to say that the exchange agreement
‘has not been amended to make provision for the agreement that exists
between Messrs Tramore and Mr Khumalo and therefore the Council is
obliged to enter into a services agreement with Messrs Tramore . . .’.
[27] Although this was not addressed in the judgment of either of the courts
below, or the heads of argument, or in argument before us, the position of Ms
Dowd is correct. For the municipality to be bound by any delegation of the
obligations of Tramore under the exchange agreement to Vosloorus Square, it
would have to have accepted the delegation. This is because instead of looking
to Tramore to perform its obligations, it would have to look to Vosloorus
Square to perform the obligations of Tramore under the exchange agreement.
And because the municipality had not accepted the delegation, the obligations
remain those of Tramore. It is presumably on that basis that she required that
the services agreement should be concluded between the municipality and
Tramore, as Tramore was obliged to do under the exchange agreement. This
is also why the addendum to the services agreement drawn up by Tramore
made provision for acceptance of the delegation of obligations contained in it
by the municipality. Because the municipality did not sign the addendum, the
municipality remains entitled to look to Tramore to perform the obligations
resting on it under the services agreement.
[28] The position is, accordingly, that Tramore was entitled to dispose of its
rights under both the exchange agreement and the services agreement without
acceptance by the municipality. Vosloorus Square is entitled to enforce the
rights of Tramore under the exchange agreement, including that the
municipality transfer the council properties to Tramore. But, until the
municipality accepts that Tramore can delegate its obligations under those
agreements to Vosloorus Square, Tramore remains obligated. Vosloorus
Square is entitled to enforce the rights of Tramore under the exchange
agreement to transfer of the council properties and, by virtue of the sale
agreement, to require Tramore to perform its reciprocal obligation to transfer
Tramore’s properties to the municipality. Specific performance of Tramore
under the sale agreement to perform its obligation to transfer the Tramore
properties to the municipality requires Tramore to give effect to its obligation
to transfer the Tramore properties to the municipality. All of this is what
Vosloorus Square sought to achieve in the application and has been given
effect in the order of the full court.
[29] The municipality has nowhere indicated that it would not be prepared
to give effect to the exchange agreement, as long as it obtains transfer of
Tramore’s properties. The only other obligation of Tramore to the
municipality under the exchange agreement is to sign a services agreement.
This had already been done. Vosloorus Square has undertaken to Tramore to
perform its obligations under the services agreement by way of the addendum.
The proposed delegation of Tramore’s obligations is still capable of being
accepted by the municipality by its signing the addendum.
[30] In the result, it is my view that the full court was correct, albeit for
different reasons, to hold that Vosloorus Square obtained the rights of
Tramore to enforce the exchange agreement. This is presumably why the
municipality, having initially taken the point that there was no contractual
privity between it and Vosloorus Square and that the latter could not enforce
the exchange agreement, withdrew its opposition and elected not to take up
the cudgels in the appeal against the order of the full court
[31] In the result, the appeal is dismissed with costs.
________________________
GORVEN AJA
ACTING JUDGE OF APPEAL
APPEARANCES
For appellant:
H P West
Instructed by:
Van Der Meer & Schoonbee, Johannesburg
Lovius Block Incorporated, Bloemfontein
For respondent:
B G Savvas
Instructed by:
Venn & Muller Incorporated, Pretoria
J L Jordaan 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:
13 April 2021
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
Tramore Property Group (PTY) LTD v Vosloorus Square CC (Case no: 235/2020)
[2021] ZASCA 41
__________________________________________________________________
Today the Supreme Court of Appeal dismissed an appeal against an order of the
Gauteng Division of the High Court, Pretoria (per Neukircher J, Tuchten and Teffo
JJ concurring, sitting as a Full Court). Tramore Property Group (Pty) Ltd (Tramore)
had contracted with the Ekhuruleni Metropolitan Municipality (the Municipality) to
exchange certain of their respective immovable properties in 1991 (the exchange
agreement). In 2000, Tramore sold (the sale agreement) the properties of the
Municipality (the council properties) which were to be exchanged to Vosloorus
Square CC (Vosloorus Square). Although occupation of the properties owned by
Tramore had been given to the Municipality and vice versa, the transfer of the
respective properties had not taken place. Pursuant to the sale agreement,
Vosloorus Square took occupation of the council properties and applied to the
Municipality to proclaim a township which included the council properties. The
township was proclaimed at the instance of the Municipality in 2012 after Vosloorus
Square had provided the Municipality with various reports detailing the services
which Vosloorus Square would install on the council properties. At all times,
Vosloorus undertook to do so and to provide guarantees to that effect.
A dispute arose in 2014 between Tramore and Vosloorus Square. The sale
agreement provided that Tramore could demand that Vosloorus Square provide the
guarantees when required by the Municipality. Tramore called on Vosloorus Square
to provide the guarantees and claimed that, because this was not done, it had
cancelled the sale agreement. The Supreme Court of Appeal held that the sale
agreement provided that Vosloorus Square should furnish guarantees only when
they were required by the Municipality. Because the Municipality had not indicated
that it required them, the purported cancellation was of no force and effect.
Vosloorus Square applied for the transfer of the council properties, requiring
Tramore to transfer its properties to the Municipality simultaneously. Tramore
contended that Vosloorus Square had no locus standi to enforce the exchange
agreement against the Municipality. The Supreme Court of Appeal, however, held
that the sale agreement, properly construed, disposed to Vosloorus Square the
rights of Tramore to enforce the exchange agreement. Tramore retained its
obligations under the exchange agreement. It was accordingly obliged to transfer the
Tramore properties to the Municipality against transfer to it and thereafter Vosloorus
Square of the council properties. The full court had accordingly correctly granted
such an order.
For these reasons, the appeal was dismissed with costs.
|
3797
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 935/2020
In the matter between:
KGORO CONSORTIUM (PTY) LTD FIRST APPELLANT
REGIMENTS CAPITAL (PTY) LTD
(In liquidation)
SECOND APPELLANT
and
CEDAR PARK PROPERTIES 39 (PTY) LTD
(In liquidation) FIRST RESPONDENT
VANTAGE MEZZANINE FUND II
PARTNERSHIP
SECOND RESPONDENT
CITY OF JOHANNESBURG METROPOLITAN
MUNICIPALITY THIRD RESPONDENT
And in the matter of:
SMIT SEWGOOLAM INCORPORATED APPELLANT
In re:
KGORO CONSORTIUM (PTY) LTD FIRST APPELLANT
REGIMENTS CAPITAL (PTY) LTD
(In liquidation)
SECOND APPELLANT
and
CEDAR PARK PROPERTIES 39 (PTY) LTD
(In liquidation) FIRST RESPONDENT
VANTAGE MEZZANINE FUND II
PARTNERSHIP
SECOND RESPONDENT
CITY OF JOHANNESBURG METROPOLITAN
MUNICIPALITY THIRD RESPONDENT
Neutral Citation: Kgoro Consortium (Pty) Ltd and Another v Cedar Park
Properties 39 (Pty) Ltd and Others (935/2020) [2022] ZASCA
65 (9 May 2022)
Coram:
VAN DER MERWE, PLASKET, MBATHA and CARELSE
JJA and MATOJANE AJA
Heard:
9 March 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 is
deemed to be 10h00 on 9 May 2022.
Summary: Company law – business rescue proceedings – whether reasonable
prospect of rescuing company as contemplated in s 131(4)(a) of Companies Act
71 of 2008.
Costs – costs de bonis propriis ordered against attorneys – no opportunity afforded
to state case – special costs order set aside.
_________________________________________________________________
ORDER
_________________________________________________________________
On appeal from: Gauteng Local Division of the High Court, Johannesburg (Twala
J, sitting as court of first instance):
In the Kgoro appeal:
The second respondent’s application for leave to file supplementary heads
of argument is dismissed with costs.
The appeal is dismissed with costs.
In the Smit Sewgoolam appeal:
The appeal is upheld with costs.
Paragraph 3 of the order of the court a quo is set aside.
_________________________________________________________________
JUDGMENT
_________________________________________________________________
Mbatha JA (Van der Merwe JA, Plasket JA and Carelse JA and Matojane
AJ concurring)
[1] On 30 June 2020, the Gauteng Division of the High Court, Johannesburg
(the high court) dismissed an application for the placing of the first respondent,
Cedar Park Properties 39 (Pty) Ltd (in liquidation) (Cedar Park), under supervision
and commencing business rescue proceedings (para 2 of the order). The
application was brought by the first appellant, Kgoro Consortium (Pty) Ltd
(Kgoro). The second appellant, Regiments Capital (Pty) Ltd (in liquidation)
(Regiments) intervened to support the application. The second respondent,
Vantage Mezzanine Fund II Partnership (Vantage), opposed the application. The
high court ordered the attorneys for the appellants, Smit Sewgoolam Incorporated
(Smit Sewgoolam), to pay Vantage’s costs de bonis propriis on the attorney and
client scale (para 3 of the order). It also directed the Registrar of the high court to
forward a copy of its judgment to the Gauteng Legal Practice Council for an
investigation into the conduct of the responsible attorney at Smit Sewgoolam (para
5 of the order). With the leave of the high court, the appellants appeal against para
2 of the order. Smit Sewgoolam appeals against paras 3 and 5 of the order, with
the leave of the court a quo. Regiments did not participate in the appeal.
Kgoro appeal
[2] The background of the matter is as follows. Cedar Park is a wholly owned
subsidiary of Kgoro. Regiments is the majority shareholder in Kgoro. Cedar Park
was used as a special purpose vehicle for the purchase of the property described as
the Remaining Extent of Erf 575, Sandown Extension 49 Township, Gauteng (the
property) and the development thereof by the construction of residential units,
shops, business premises and hotels. The property was secured from the City of
Johannesburg Metropolitan Municipality (City of Johannesburg), the third
respondent, for the sum of R280 million, with payment to be made once the
property was developed.
[3] On 5 June 2013, Cedar Park concluded a loan facility agreement with
Vantage in the amount of R150 million in respect of the development of the
property, which became due and payable, together with interest, on 30 June 2018.
Kgoro provided a guarantee for Cedar Park’s indebtedness to Vantage. As a
consequence, Kgoro pledged and ceded all rights, title and interest in its shares in
Cedar Park in favour of Vantage as security for the guaranteed obligations. It is
common cause that Cedar Park failed to meet its obligations in terms of the loan
facility agreement.
[4] As a consequence, on 6 December 2018, Vantage launched an application
for the winding-up of Cedar Park for failing to make payment in the amount of
more than R300 million that was due and owing. When Cedar Park failed to file
an answering affidavit, Vantage enrolled the liquidation application for hearing on
the unopposed roll for 18 February 2019. However, three days before, on 15
February 2019, Kgoro lodged the application to place Cedar Park under
supervision and commence business rescue. The application for liquidation,
therefore, had to be removed from the court roll.
[5] Vantage consequently brought an application to intervene in the business
rescue application and filed an answering affidavit thereto. Kgoro failed to file a
replying affidavit thereto within the prescribed time limits, which prompted
Vantage to enrol the application for hearing. This was, however, followed by the
application to intervene in the proceedings by Regiments. After Kgoro finally filed
its replying affidavit to Vantage’s answering affidavit in the business rescue
application in respect of Cedar Park, the application came before Twala J, in the
high court.
[6] Before the high court, the appellants sought to make out a case for placing
Cedar Park under supervision and commence business rescue in terms of s 131(4)
of the Companies Act 71 of 2008 (the Companies Act) on the basis that it was
financially distressed, that it was just and equitable that it be placed under
supervision, and that there were reasonable prospects of rescuing it. In essence, the
appellants’ case was that the ‘Kgoro Sandton’ development was a valuable project
with great financial prospects, as the property was situated in a sought after part of
Gauteng, namely Sandton. The value of the property on the open market was said
to be at least R1,494 billion and the forced sale value R1,046 billion. It was
described as a financially viable project which had attracted a lot of interest from
potential purchasers, irrespective of the delays in the development of the property
occasioned by the late registration of the property in Cedar Park’s name, the
opposition from neighbouring property owners and the delay in obtaining vacant
possession.
[7] On the other hand, Vantage contended that the appellants had not made out
a case on the papers for such relief and that there were no reasonable prospects of
Cedar Park being rescued, that a liquidation of Cedar Park would be to the
advantage of creditors and that the appellants were dilatory in the conduct of the
proceedings to the prejudice of the creditors of Cedar Park. Vantage advanced two
main arguments: First, Kgoro did not have the locus standi to bring the application,
on the basis that it had ceded all its shares to Vantage in securitatem debiti, and as
a result it was not an affected person. Second, the appellants had failed to show
that there would be a reasonable prospect of rescuing Cedar Park as contemplated
in s 131(4)(a) of the Companies Act. I find it expedient to first determine the
second argument.
[8] The application was brought in terms of s 131(1) of the Companies Act.
Section 131(4) provides that after considering the application in terms of subsec 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.’
Affected persons, like Vantage, are of course allowed to challenge the application,
on the basis of its not meeting the requirements in s 131(4) of the Companies Act.
[9] Rescuing a company means achieving the goals set out in the definition of
business rescue in s 128(1)(b) of the Companies Act. The goals contemplated in s
128(1)(b)(iii) of the Companies Act are as follows: a primary goal to facilitate the
continued existence of the company in a state of solvency; and a secondary goal,
which is provided in the 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.
Accordingly, it was imperative for Kgoro to set out grounds for a reasonable
prospect of achieving the goals set out in s 128(1)(b) of the Companies Act, in
order to satisfy the requirements for the business rescue application.
[10] It was common cause that Cedar Park was financially distressed in terms of
the Companies Act. The question, therefore, turns on the consideration of whether
the appellants made out a case for achieving any of the two objectives set out in s
128(1)(b)(iii) of the Companies Act. The applicant in business rescue proceedings
bears the onus to prove that the company under consideration would have
reasonable prospects of recovery. This is a factual question, for which a material
foundation needs to be laid out in the founding affidavit by the applicant for
business rescue.
[11] In determining this issue, the court a quo relied on passages in Koen and
Another v Wedgewood Village Golf & Country Estate (Pty) Ltd and Others 2012
(2) SA 378 (WCC) and Southern Palace Investments 265 (Pty) Ltd v Midnight
Storm Investments 386 (Pty) Ltd 2012 (2) SA 423 (WCC). Counsel for Vantage
correctly conceded that the court a quo had erred in this regard. In Oakdene Square
Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and
Others [2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All SA 303 (SCA)
paras 30-31, this Court said:
‘[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).’
[12] This Court in Newcity Group (Pty) Ltd v Pellow NO and Others [2014]
ZASCA 162 (SCA), endorsed the meaning of the phrase ‘reasonable prospect’ as
set out in the Oakdene judgment. It stated as follows at para 16:
‘. . . properly described [reasonable prospect means] a yardstick higher than “a mere prima facie
case or an arguable possibility” but lesser than a “reasonable probability” – a prospect based on
reasonable grounds to be established by a business rescue applicant in accordance with the rules
of motion proceedings.’
In this regard, ‘vague and speculative suggestions’ will not suffice. It is important
to take cognisance of what this Court said in Panamo Properties (Pty) Ltd and
Another v Nel N O and Others [2015] ZASCA 76; 2015 (5) SA 63 (SCA); [2015]
3 All SA 274 (SCA) para 1, that business rescue proceedings under the Companies
Act are intended to provide for the efficient rescue and recovery of financially
distressed companies, in a manner that balances the rights and interest of all the
relevant stakeholders. It held further that these proceedings contemplate the
temporary supervision of the company and its business by a business rescue
practitioner.
[13] The question is whether Kgoro nevertheless made a case for placing Cedar
Park in business rescue. As I have said, this requires an analysis of its founding
affidavit. Before I do so, I have to consider Vantage’s application for leave to file
supplementary heads of argument. The purpose hereof was to refer this Court to a
multitude of paragraphs in two reports of the Judicial Commission of Enquiry into
State Capture. These were purportedly references in the reports to Regiments and
individuals connected to it. On the strength hereof Vantage sought to argue that
this Court should ‘. . . draw negative inferences against the case for the business
rescue of Cedar Park’. It suffices to say that it would be quite impermissible for
this Court to have regard to (selective) passages in a report that was not introduced
into evidence and that in any event did not relate to Kgoro or Cedar Park. The
application must be dismissed with costs.
[14] It appeared from the evidence that, despite the loan obtained from Vantage,
Cedar Park had not meaningfully commenced the envisaged development of the
property and was unable to pay its debts. In its founding affidavit Kgoro said that
the construction in respect of the project would take five to ten years at a cost of
in excess of R6 billion. In the founding affidavit Kgoro paid no more than lip
service to achieving the primary goal of the continued existence of Cedar Park as
a solvent company. The court a quo correctly pointed out that Kgoro presented no
evidence as to how the construction costs would be financed in an accepted
business rescue plan. Kgoro’s case fell woefully short of showing a reasonable
prospect of Cedar Park continuing with the development of the property on a
solvent basis. In fact, the whole tenor and import of the application was that the
development project, including the property, could be sold for around the amounts
mentioned above.
[15] In this regard, Kgoro relied in the founding affidavit on an agreement of sale
called the Cedar Park Sale of Development Enterprise Agreement (the Sale of
Enterprise Agreement), concluded in 2018, as a financially viable offer on the table
from a potential buyer of the Kgoro Sandton development. This agreement was
subject to a number of suspensive conditions to be fulfilled at various time periods.
At the hearing before us counsel for Kgoro accepted that this agreement had lapsed
for want of fulfilment of the suspensive conditions. The other evidence in the
founding affidavit as to the interest in purchasing the development enterprise was
rather vague and tentative. But even if it is accepted that there was interest in
acquiring the development, it is to no avail. The mere fact that the development
could be sold did not result in showing the aforesaid alternative object of business
rescue. Kgoro had to go further and show that business rescue would result in a
better return for creditors or shareholders of Cedar Park than would result from
immediate liquidation. As Brand JA said in Oakdene para 33, an applicant that
relies on this ground for business rescue cannot simply offer ‘. . . an alternative,
informal kind of winding-up’. Kgoro made no attempt in the founding affidavit to
show that such a better return would be achieved by placing Cedar Park in business
rescue.
[16] In sum, the aforementioned contentions raised by Kgoro go against the
principles set out in Oakdene, where this Court held that the primary goal is to
facilitate the continued existence of the company in a state of solvency 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 the immediate liquidation. This Court in Oakdene held that the requirements
for granting an order in terms of s 131 of the Companies Act entail that the
company under consideration must have reasonable prospect of recovery or of a
better return. In the result, I find that Kgoro failed to meet the threshold required
to put Cedar Park under supervision and commence business rescue. It follows that
it is not necessary to consider Vantage’s contentions as to lack of locus standi on
the part of Kgoro. For these reasons the Kgoro appeal must fail.
Smit Sewgoolam appeal
[17] As I have said, Smit Sewgoolam was ordered to pay costs de bonis propriis
on a punitive scale and the high court directed that the Registrar forward the
judgment to the Gauteng Legal Practice Council to investigate the conduct of the
attorney involved in this matter. In essence, the court a quo penalised Smit
Sewgoolam for failing to disclose that a previous order of the high court had
interdicted the implementation of the Sale of Enterprise Agreement.
[18] There is no basis to interfere with the referral under para 5 of the order.
There were prima facie reasons for an investigation into the conduct in question.
As to para 3 of the order, it is trite that costs de bonis propriis should only be
ordered in exceptional circumstances (Grobbelaar v Grobbelaar 1959 (4) SA 719
(A) at 725). There must have been conduct which is egregious on the part of the
particular attorney to attract such an order of costs. The assessment of the gravity
of the conduct is objective and lies at the discretion of the court (See Public
Protector v South African Reserve Bank [2019] ZACC 29; 2019 (9) BCLR 1113
(CC); 2019 (6) SA 253 (CC)). The Constitutional Court in SA Liquor Traders’
Association and Others v Chairperson, Gauteng Liquor Board and Others [2006]
ZACC 7; 2009 (1) SA 565 (CC); 2006 (8) BCLR 901 (CC) para 54, held that an
order for costs de bonis propriis is made against attorneys where a court is satisfied
that there has been negligence in a serious degree which warrants an order of costs
being made as a mark of the court’s displeasure. In the light of what follows,
however, it is not necessary to consider the alleged misconduct on the part of Smit
Sewgoolam.
[19] Such an order may not be made against a party or person that had not been
afforded a proper opportunity to respond to the allegations in question and to state
his or her case in respect of the envisaged costs order. See, for instance, the
judgments of this Court in C B and Another v H B 2021 (6) SA 332 (SCA) para 20
and Chithi and Others; In re: Luhlwini Mchunu Community v Hancock and Others
[2021] ZASCA 123 (SCA). This is the reason why the costs order against Smit
Sewgoolam cannot stand. Although Vantage alluded to this in its answering
affidavit in opposition to the business rescue application and Kgoro responded
thereto in the replying affidavit, the draft order that Vantage subsequently
presented to the court a quo reasonably indicated to Smit Sewgoolam that no costs
order would be sought against it. The court a quo did not call upon Smit
Sewgoolam to explain itself. In the circumstances, it was denied an opportunity to
state its case. In the result, its appeal must succeed with costs.
[20] In consequence of the aforegoing,the following orders are issued:
In the Kgoro appeal:
The second respondent’s application for leave to file supplementary heads
of argument is dismissed with costs.
The appeal is dismissed with costs.
In the Smit Sewgoolam appeal:
The appeal is upheld with costs.
Paragraph 3 of the order of the court a quo is set aside.
____________________
Y T MBATHA
JUDGE OF APPEAL
APPEARANCES
For first appellant:
M v R Potgieter SC (with T Scott)
Instructed by:
Smit Sewgoolam Incorporated, Johannesburg
McIntyre Van der Post Incorporated,
Bloemfontein
For second respondent:
K van Huyssteen
Instructed by:
Fluxmans Incorporated, Johannesburg
Lovius Block Attorneys, Bloemfontein
For Smit Sewgoolam:
T Scott
Instructed by:
Smit Sewgoolam Incorporated, Johannesburg
McIntyre Van der Post 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:
9 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
Kgoro Consortium (Pty) Ltd and Another v Cedar Park Properties 39 (Pty) Ltd and
Others (935/2020) [2022] ZASCA 65 (9 May 2022)
The Supreme Court of Appeal (SCA) today dismissed an appeal with costs brought by
the appellants against the decision of the Gauteng Division of the High Court,
Johannesburg (the high court). The SCA, in addition, upheld with costs a further
appeal brought by the attorneys for the appellants, and thus set aside the decision of
the high court that they pay costs de bonis propriis on a punitive scale.
The first appellant, Kgoro Consortium (Pty) Ltd (Kgoro), brought an application in the
high court for the placing of the first respondent, Cedar Park Properties 39 (Pty) Ltd
(in liquidation) (Cedar Park), under supervision and commencing business rescue
proceedings. The second appellant, Regiments Capital (Pty) Ltd (in liquidation)
(Regiments) intervened to support the application. The second respondent, Vantage
Mezzanine Fund II Partnership (Vantage), opposed the application. The high court
dismissed the business rescue application (para 2 of the order). Additionally, the high
court ordered the attorneys for the appellants, Smit Sewgoolam Incorporated (Smit
Sewgoolam) to pay Vantage’s costs de bonis propriis on the attorney and client scale
(para 3 of the order), as well as directed the Registrar of the high court to forward a
copy of its judgment to the Gauteng Legal Practice Council for an investigation into
the conduct of the responsible attorney at Smit Sewgoolam (para 5 of the order). The
appellants appealed against para 2 of the order (the Kgoro appeal). Smit Sewgoolam
appealed against paras 3 and 5 of the order (the Smit Sewgoolam appeal). Regiments
did not participate in the appeal.
With regard to the Kgoro appeal, the background of the matter was as follows. Cedar
Park was a wholly owned subsidiary of Kgoro. Regiments was the majority
shareholder in Kgoro. Cedar Park was used as a special purpose vehicle for the
purchase of the property described as the Remaining Extent of Erf 575, Sandown
Extension 49 Township, Gauteng (the property) and the development thereof by the
construction of residential units, shops, business premises and hotels. The property
was secured from the City of Johannesburg Metropolitan Municipality (City of
Johannesburg), the third respondent, for the sum of R280 million, with payment to be
made once the property was developed. On 5 June 2013, Cedar Park concluded a
loan facility agreement with Vantage in the amount of R150 million in respect of the
development of the property, which became due and payable, together with interest,
on 30 June 2018. Kgoro provided a guarantee for Cedar Park’s indebtedness to
Vantage. As a consequence, Kgoro pledged and ceded all rights, title and interest in
its shares in Cedar Park in favour of Vantage as security for the guaranteed
obligations. It was common cause that Cedar Park failed to meet its obligations in
terms of the loan facility agreement. As a consequence, on 6 December 2018,
Vantage launched an application for the winding-up of Cedar Park for failing to make
payment in the amount of more than R300 million that was due and owing. However,
on 15 February 2019, before the liquidation application was heard, Kgoro lodged the
application to place Cedar Park under supervision and commence business rescue.
The application for liquidation, therefore, had to be removed from the court roll.
Vantage consequently brought an application to intervene in the business rescue
application. This was followed by the application to intervene in the proceedings by
Regiments. The application came before Twala J, in the high court.
It was common cause that Cedar Park was financially distressed in terms of the
Companies Act. The SCA found that the question, therefore, turned on the
consideration of whether the appellants had made out a case for achieving any of the
two objectives set out in s 128(1)(b)(iii) of the Companies Act. The SCA thus found
that Kgoro bore the onus to prove that Cedar Park would have reasonable prospects
of recovery. This was a factual question, for which a material foundation needed to be
laid out in its founding affidavit.
The SCA found that the contentions raised by Kgoro went against the principles set
out in Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein
(Kyalami) (Pty) Ltd and Others [2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All
SA 303 (SCA), wherein it was held that the requirements for granting an order in terms
of s 131 of the Companies Act entailed that the company under consideration must
have had reasonable prospect of recovery or of a better return. The SCA held that
Kgoro failed to meet the threshold required to put Cedar Park under supervision and
commence business rescue. It followed that it was not necessary to consider
Vantage’s contentions as to lack of locus standi on the part of Kgoro. The Kgoro appeal
thus failed.
With regard to the Smit Sewgoolam appeal, the SCA found that the court a quo, in
essence, penalised Smit Sewgoolam for failing to disclose that a previous order of the
high court had interdicted the implementation of an agreement of sale called the Cedar
Park Sale of Development Enterprise Agreement (the Sale of Enterprise Agreement),
concluded in 2018, as a purportedly financially viable offer on the table from a potential
buyer of the Kgoro Sandton development.
The SCA held that costs de bonis propriis should only be ordered in exceptional
circumstances, and such an order may not be made against a party or person that had
not been afforded a proper opportunity to respond to the allegations in question and
to state his or her case in respect of the envisaged costs order. The SCA found that
the court a quo had not called upon Smit Sewgoolam to explain itself. In the
circumstances, it was denied an opportunity to state its case. The SCA thus held that
its appeal against the punitive costs order (para 3 of the high court’s order) succeeded
with costs.
Lastly, the SCA held that there was no basis to interfere with the referral of the
judgment to the Gauteng Legal Practice Council under para 5 of the high court’s order.
This, on the basis that there were prima facie reasons for an investigation into the
attorney’s conduct in question.
~~~~ends~~~~
|
3237
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 671/06
Reportable
In the matter between:
THINT (PTY) LTD
APPELLANT
and
NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS
FIRST RESPONDENT
THE INVESTIGATING DIRECTOR:
DIRECTORATE OF
SPECIAL OPERATIONS
SECOND RESPONDENT
JOHAN DU PLOOY
THIRD RESPONDENT
CORAM:
FARLAM, NUGENT, CLOETE, PONNAN et MLAMBO
JJA
HEARD:
29 AUGUST 2007
DELIVERED:
8 NOVEMBER 2007
SUMMARY:
Search and seizure – search warrant – validity of –
warrants issued in terms of s 29 of National Prosecuting
Authority Act 32 of 1989 – whether references to
suspected offences inappropriately vague.
ORDER OF COURT SET OUT IN PARA 14 IN JUDGMENT OF NUGENT JA.
Neutral citation:
This judgment may be referred to as Thint (Pty) Ltd v
National Director of Public Prosecutions [2007] SCA
136 (RSA).
______________________________________________________________
FARLAM JA
[1] This is an appeal from a judgment of Du Plessis J, sitting in the
Pretoria High Court, in which he dismissed with costs the appellant’s
application for orders (a) setting aside a search warrant issued by Ngoepe JP
in chambers in the Pretoria High Court, in terms of s 29(4) of the National
Prosecuting Authority Act 32 of 1998; (b) declaring the searches and the
seizures conducted pursuant to the warrant at the appellant’s office in Pretoria
to be unlawful; (c) directing the respondents, the National Director of Public
Prosecutions, the Investigating Director of the Directorate of Special
Operations and Mr Johan du Plooy, a senior special investigator in the
Directorate of Special Operations, to return to the appellant all items seized
during the said searches and to deliver all minor images made of computer
items seized; and (d) ordering the respondents to pay costs on the attorney
and client scale, including the cost of three counsel.
[2] The warrant which forms the subject matter of this appeal was issued
by Ngoepe JP on 12 August 2005 together with a further 21 warrants
authorising searches and seizures at other premises in Pretoria and
elsewhere in the country. The operative part of the warrant was in identical
terms to the corresponding parts of the other warrants. Attached to it were two
annexures. The first annexure contained twenty two paragraphs, the wording
of which closely followed, with the necessary adjustments, twenty two of the
paragraphs in the corresponding annexure to twenty of the other warrants
authorised on the same day.
[3] On the morning of 18 August 2005 the warrants issued by Ngoepe JP
in respect of the office of the appellant was executed by members of the
Directorate of Special Operations of the National Prosecuting Authority. At the
same time most of the other warrants authorised by Ngoepe JP were also
executed. They included a warrant in respect of the Pretoria residence of Mr
PJMR Moynot, who is a director of the appellant. The remaining warrants
were issued in respect of homes and offices or former offices of Mr Jacob
Zuma as well as the home and office of his former attorney, Ms J Mahomed,
and the office of his present attorney, Mr M Hulley
[4] Mr and Mrs Moynot were originally co-applicants in this application,
seeking orders in respect of the items seized at their residence. The
respondents conceded that the warrant issued in respect of their home was
invalid, returned the items seized and tendered to pay costs up to the date of
tender. In the circumstances, save for a preservation order in respect of a
plan of Mr and Mrs Moynot’s home, which was made by agreement, no order
was made in respect of that part of the application which related to the items
seized at the Moynots’ home and it does not figure in this appeal.
[5] On 26 August 2005 Ms Mahomed brought an application in the
Johannesburg High Court for, inter alia, relief similar to that sought by the
appellant in the present matter, which relief was granted to her on 9
September 2005 by Hussain J. Subsequently Mr Zuma and Mr Hulley
successfully brought a similar application in the Durban High Court, where
Hurt J granted them the relief they sought. The respondents in the
applications heard by Hussain J and Hurt J appealed to this court against the
orders given against them and their appeals were argued on the two days
preceding the day on which the present appeal was argued. The judgments in
those appeals are being handed down simultaneously with the judgment in
this matter.
[6] In the Mahomed appeal the appellants, who are the first two
respondents in this appeal, conceded that the warrant issued in respect of Ms
Mahomed’s home and offices and the resulting seizures effected pursuant
thereto were invalid with the result, so they stated, that their appeal had to be
dismissed subject to a variation to the orders granted by the court a quo
providing for the preservation of the original items seized under the warrants
or copies thereof. Ms Mahomed opposed the variation sought and the appeal
was then argued solely on the issue as to whether the order granted by
Hussain J should be varied by the insertion of a preservation order.
[7] In the appeal against the order granted by Hurt J in the application
brought by Mr Zuma and Mr Hulley the appellants did not concede that the
warrants and the execution thereof were invalid but they argued in the
alternative that if they failed on the validity issue a preservation order should
nevertheless be made.
[8] For the reasons given in the judgment in the appeal relating to the
application brought by Mr Zuma and Mr Hulley, which in my view, are
applicable here, I am satisfied that the appeal against the dismissal of the
appellant’s application should succeed. I am also satisfied for the reasons set
out in that judgment that a preservation order should be made.
[9] By agreement between the parties certain documents which the
appellants’ representatives said were privileged were placed in bags which
were sealed and subsequently handed over to the registrar of the Pretoria
High Court for safekeeping. The other items which were seized were taken
away by the respondents’ representatives. During the execution of the warrant
mirror images were made of the hard drives from Mr Moynot’s laptop and the
computer of Ms N Govender, Mr Moynot’s personal assistant. Apart from the
documents in sealed bags in the custody of the registrar, the other items
seized under the warrant are in the possession of the respondents. If a
preservation order is to be made in this matter it will have to provide for the
handing over to the appellant’s representatives of items presently in the
possession of the respondents and all copies made thereof and of the
documents presently in the custody of the registrar and the preservation by
the registrar of copies of the items to be handed over by the respondents and
by him.
[10] As far as the costs order sought in the court a quo is concerned I do
not think that a case was made out for costs on the attorney and client scale
or for the costs of three, as opposed to two, counsel.
[11] In my opinion an order in the following terms should be made:
1.
The appeal is dismissed with costs including those occasioned by the
employment of two counsel.
2.
The order of the High Court is set aside and replaced by an order in the
following terms:
‘1.
The search warrant attached to the Notice of Motion as Annexure “J” is
set aside and it is declared that the searches and seizures conducted on 18
August 2005 at or in the premises referred to in Annexure “J” were unlawful.
2 (a) The respondents are ordered to hand over to the registrar forthwith all
items seized and removed from the respective premises in terms of the
aforesaid warrant (apart from items already in the custody of the registrar),
together with all copies of such items which the respondents or their agents
may have made while the items have been in their possession, irrespective of
the means by which such copies have been made or taken.
(b)
The registrar is ordered to make copies (either in person or through a
delegate) in the presence of the attorneys for the first applicant and the
respondents of all the documents seized pursuant to the warrants referred to
in paragraph 1 and to cause images of all computer materials seized pursuant
to such warrants to be made by an expert appointed by the registrar and must
hand over to the first applicant’s attorneys the originals of the documents and
the computer materials seized and all copies of such items which the
respondents or their agents may have made while the items have been in the
possession (irrespective of the means by which such copies have been made
or taken) once the copying process is complete.
(c)
The registrar is directed to retain the copies and computer images
made in terms of subparagraph (b) and to keep them accessible, safe and
intact under seal until:
(i)
notified by the respondents that the retained items or any of them may
be returned to the first applicant; or
(ii)
if proceedings are instituted pursuant to the investigation referred to in
the founding affidavit placed before Ngoepe JP when the said warrants
were authorised, the conclusion of such proceedings; or
(iii)
the date upon which the first respondent decides not to institute or to
abandon such proceedings;
whereupon the items so retained must be returned to the first applicant.
(d)
The provisions of subparagraphs (b) and (c) are subject to:
(i)
any order of any competent court (whether obtained at the instance of
the first applicant or the respondents);
(ii)
the lawful execution of any search warrant obtained in the future; or
(iii)
the duty of the registrar or representatives of the first applicant to
comply with any lawful subpoena issued in the future
(e)
The respondents must not take any step to obtain access to any of the
retained or returned items unless they give the first applicant reasonable prior
notice before any such step is taken: in particular, but without derogating from
the generality of this provision, the respondents may not take any such step
without giving the first applicant:
(i)
reasonable prior notice of any application for a search warrant or an
order directing the registrar or representatives of the first applicant to
deliver or release any retained or returned item; and
(ii)
a reasonable opportunity to challenge in court any subpoena before the
registrar or a representative of the first applicant is obliged to comply
with it.
(f)
The respondents must pay all costs of implementing the provisions of
this paragraph.
3.
The respondents are ordered to pay the first applicant’s costs in this
application, including those occasioned by the employment of two counsel.’
_______________
IG FARLAM
JUDGE OF APPEAL
CLOETE JA)
CONCUR
NUGENT JA:
[12] The material facts and issues in this case are fully set out in the
judgment of my colleague Farlam and need not be repeated. I am unable to
agree with the order that he proposes.
[13] As pointed out by my colleague the warrants that are now in issue are
not materially different to the warrants that were considered in National
Director of Public Prosecutions and Others v Zuma and Another, the judgment
in which is to be delivered simultaneously with this judgment. For the reasons
given in my judgment in that matter I am of the view that the warrants in this
case were similarly valid and that the order made by Du Plessis J was correct.
I agree with my colleague that costs on a punitive scale and the costs of three
counsel are not warranted.
[14] The appeal is dismissed with costs that include the costs occasioned
by the employment of two counsel.
__________________
R.W. NUGENT
JUDGE OF APPEAL
PONNAN JA )
CONCUR
MLAMBO 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:
8 NOVEMBER 2007
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
The Supreme Court of Appeal today dismissed the appeal brought by Thint (Pty) Ltd
against an order made by Mr Justice Du Plessis in the Pretoria High Court dismissing
its application for an order setting aside the warrant issued by the Judge President of
the Transvaal Provincial Division authorising the search of its offices in Pretoria.
Appeal Judge Nugent, with whom Appeal Judges Ponnan and Mlambo agreed, stated
that for the reasons he had given in the appeal brought by the National Director of
Public Prosecutions against the order made in favour of Mr Jacob Zuma and his
attorney, Mr Michael Hulley, by Mr Justice Hurt in the Durban High Court that Thint
(Pty) Ltd’s appeal had to fail.
In a minority judgment with which Appeal Judge Cloete concurred, Appeal Judge
Farlam said that the Thint (Pty) Ltd’s appeal should succeed, for the reasons he had
given in his minority judgment in the appeal brought by the National Director of
Public Prosecutions against Mr Justice Hurt’s judgment.
|
3684
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 545/2020
In the matter between:
SIMON JOHN NASH
FIRST APPELLANT
CADAC (PTY) LIMITED SECOND APPELLANT
ANTOINETTE CRONJE THIRD APPELLANT
IRIS ROSE SCHOEMAN FOURTH APPELLANT
SAMANTHA MAYS FIFTH APPELLANT
and
THE CADAC PENSION FUND (IN
CURATORSHIP) (REGISTRATION
NUMBER: 12/8/0020425) FIRST RESPONDENT
ANTONY LOUIS MOSTERT NO SECOND RESPONDENT
JOHAN ESTERHUIZEN NO THIRD RESPONDENT
KAREN KEEVY NO FOURTH RESPONDENT
NMG ADMINISTRATORS (PTY) LIMITED
(REGISTRATION NUMBER: 1998/005937/07) FIFTH RESPONDENT
Neutral citation: Simon Nash and Others v The Cadac Pension Fund (In
Curatorship) (Registration Number: 12/8/0020425) and
Others (545/2020) [2021] ZASCA 144 (11 October 2021)
Coram:
DAMBUZA, MAKGOKA and MBATHA JJA and
LEDWABA and UNTERHALTER AJJA
Heard:
17 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 12h00 on 11
October 2021.
Summary: Application for interim interdict – whether requirements for interim
order were met – whether the appellant should have brought a separate prior
application to institute the application – leave had been sought – no requirement
for separate prior application for leave – requirements for intervention by
additional appellants were met - requirements for interim interdict met – appeal
succeeds.
ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Francis J
sitting as court of first instance):
The appeal is upheld with costs.
The order of the Gauteng Division of the High Court, Johannesburg is set
aside and is substituted with the following order:
‘(1)
The first applicant is granted leave to institute the interim relief
application.
(2)
The second applicant is granted leave to intervene and is joined in
the main application.
(3)
The third, fourth and fifth applicants are granted leave to intervene
and are joined in the interim application.
(4)
Pending the finalisation of the main application instituted on 9
December 2019,
4.1 An interim interdict is granted against curators of the first respondent
(second, third and fourth respondents) and the fifth respondent the
administrator from:
4.1.1 refusing to accept further contributions from or on behalf of
the second applicant and/or the members of the first respondent.
4.1.2 refunding any contributions from or on behalf of the second
applicant and/or members of the first respondent.
(5)
The respondents are jointly and severally ordered to pay the costs,
including costs of employment of two counsel.’
JUDGMENT
Ledwaba AJA (Dambuza, Makgoka and Mbatha JJA and Unterhalter AJA
concurring)
Introduction
[1] This is an appeal against an order granted by the Gauteng Division of the
High Court, Johannesburg (the high court), per Francis J, on 14 May 2020, in
terms of which two urgent interlocutory applications were dismissed. In the first
application, the first appellant, Mr Simon Nash (Mr Nash) sought an interdict
against the second to fourth respondents being the curators of the first respondent,
the CADAC Pension Fund (in curatorship), together with the fifth respondent,
NMG Administrators (Pty) Ltd (the Fund administrator). The interdict was sought
as provisional relief, pending the determination of the main application brought
by Mr Nash a few months earlier, on 19 December 2019, against the same
respondents and the Fund. In the same urgent application CADAC (Pty) Ltd
(CADAC) sought leave to intervene in the main application. In the second
application the third to fifth appellants, Ms Antoinette Cronje, Ms Iris Schoeman,
and Ms Samantha Mays (the intervenors) sought to intervene in the interlocutory
application.
[2] The high court dismissed both applications – the interdict application was
dismissed on the basis that Mr Nash had failed to obtain the leave of the court to
institute the application as required in terms of two orders of the same court (per
Claassen and Matojane JJ), and the intervention applications on the basis of the
dismissal of the interdict application. This appeal, against the order of the high
court, is brought with its leave.
Background
[3] The court order of 14 May 2020 had been preceded by a long history of
civil and criminal litigation between Mr Nash and the curators of the Fund (Mr
Anton Mostert, Mr Johan Esterhuizen and Ms Karen Keevy). The issues raised
in those court proceedings concerned surplus funds that were withdrawn from
eight pension funds, of which the CADAC Pension Fund was one. The
withdrawals were effected through a scheme termed the ‘Ghavalas scheme’ and
were unlawfully appropriated to certain persons and entities, including Mr Nash
and his erstwhile business associate, Mr Ghavalas. The scheme entailed that the
funds were divested of most of their most active members who were transferred
to another pension fund, leaving the first fund with a large surplus that would then
be accessed by the principal employer and other parties.
[4] As a result, the pension funds were either placed under curatorship or were
wound up. Mr Mostert was appointed a co-curator and/or liquidator of all of the
funds. His extensive involvement in the liquidation and curatorship of the pension
funds resulted in an acrimonious relationship between him and Mr Nash,
culminating in numerous court battles between them.1
[5] Relevant to this appeal is that on 21 December 2010 the CADAC Pension
Fund was placed under provisional curatorship in terms of an order of the high
court (Claassen J). At the time Mr Nash was a member of the Fund, having been
a member since 1995. He was the director and chairman of CADAC, the principal
employer in relation to the Fund, with a casting vote. He was also the chairman
1 The Financial Services Board and the Registrar of Pension Funds also had to enter the fray. See for example,
Executive Officer of the Financial Services Board (the FSB) v Cadac Pension Fund; In Re: Executive Officer of
the Financial Services Board v Cadac Pension Fund and Others [2013] ZAGPJHC 401; Mostert and Others v
Nash and Another [2018] ZASCA 62; [2018] 3 All SA 1 (SCA); 2018 (5) SA 409 (SCA); and an unreported
judgment in Simon Nash and Another v The Executive Officer of the Financial Services Board Case No 31650/12
(Gauteng Division of the High Court, Johannesburg).
and a trustee of the Fund. His wife, Mrs Elena Formo-Nash, was a director of
CADAC and a trustee of the Fund.
[6] The relationship between Mr Mostert and Mr Nash was adversarial. In one
instance, Mr Nash instituted court proceedings to set aside Mr Mostert’s
appointments as curator and liquidator and challenged his entitlement to fees in
relation to the discharge of his duties.
[7] In another instance, Mr Mostert alleged that Mr Nash, through the
Ghavalas scheme, had unlawfully transferred a surplus of R36 million from the
Sable Pension Fund to ‘his’ company, Midmacor Industries Limited. He also
alleged that Mr Nash had misappropriated R11 million from the CADAC Pension
Fund with the intention of using it to finance his defence in a criminal trial. Mr
Nash responded by accusing Mr Mostert of involvement in corrupt activities and
exerting undue influence on the executive members of the Financial Services
Board (FSB). These allegations resulted in Mr Mostert obtaining an interdict
against Mr Nash in the high court on 14 August 2018, barring him from
‘disseminating defamatory allegations’ about Mr Mostert.
[8] After Mr Nash had turned 70, in November 2018, he gave notice to NMG
of the withdrawal of his pension benefit of R36 525 806.31 from the Fund. The
effective date of his withdrawal was stated as 31 May 2019. On 22 October 2019
he was advised that the fund’s curators had instructed NMG to flag his benefit in
terms of s 37D of the Pension Funds Act 24 of 1956 (the Act).2 As a result, NMG
did not process the requested withdrawal. It is in this context that on 6 December
2019 Mr Nash launched the main application seeking the declaratory order that
the instruction to flag his pension benefits be declared unlawful, that he was
2 In terms of s 37D an amount due by a member of a pension fund to his or her employer in certain specified
circumstances may be deducted from the member’s benefit on withdrawal of the member’s benefits from the fund.
entitled to withdraw the benefits, and that the respondents be directed to pay them
to him.
[9] Whilst that application was pending, during April 2020 the curators
notified Mr Nash (and other members) that from that time the Fund would be
treated as a ‘closed fund’ and that no further contributions would be accepted
from them. Instead, all of their past contributions would be refunded to them. This
led to the urgent interlocutory application for an interdict which was dismissed
by the high court.
[10] In his answering affidavit in the interlocutory application, Mr Mostert
contended that the application was an abuse of court process and part of the
‘lawfare’ that had been conducted by Mr Nash against him since the
commencement of the curatorship in December 2010. He maintained that Mr
Nash had manipulated the Fund to his benefit by causing unsuspecting employees
to deposit moneys into the Fund which had closed down and become paid up in
March 2003. He highlighted that the transfer of the members of the Fund to the
Optimum Pension Fund was approved by the Registrar of Pension Funds on 25
April 2005. However, in September 2004, Mr Nash attempted, impermissibly, to
retrospectively (with effect from February 2003) transfer the employees and new
members, including himself, back to the paid-up Fund, at a time when its rules
had not been amended as required in terms of s 12 of the Act.
[11] Mr Mostert contended further that, to Mr Nash’s knowledge, the Fund’s
evaluator had advised the curators that no benefit statements should be issued in
respect of membership of the Fund until the question of the administration of the
Fund has been resolved, including the fact that the Fund had become a paid-up
fund from 01 March 2003. He contended that, in any event, Mr Nash had failed
to obtain the prior approval of the court to launch proceedings against him, as
required by the court orders granted by Claassen and Matojane JJ.
[12] As stated, the high court upheld Mr Mostert’s contentions and dismissed
the application for the interdict on the basis that Mr Nash had failed first to seek
the leave of the court, before instituting the proceedings, having been declared to
be a vexatious litigant in terms of the order of 14 August 2018 (Matojane J). On
appeal, Mr Nash and the CADAC contended that none of the two court orders
‘were an impediment’ to their ‘right of access to court’. It was also submitted on
their behalf that a proper case was made out in the urgent application and they
were entitled to the interdictory relief that they sought.
The issues
[13] The issues that arise for determination in this appeal are: first, whether Mr
Nash and CADAC required the leave of the court, when they launched the urgent
application in April 2020. A related issue is whether Mr Nash and the other
appellants should have brought a separate application for leave prior to launching
the interdict application. If they did not have to do so, then a determination must
be made as to whether a proper case was made out for the interim interdict that
was sought. Furthermore, if Mr Nash did not require prior leave of the court, then
the application for intervention must be determined, and lastly the question
whether a proper was made out for an interdict will be considered. I turn first to
the issue of leave.
Leave to institute proceedings
[14] In the relevant part the order of 21 December 2010 (Claassen J) provided
that:
‘All actions, proceedings, the execution of writs, summonses and other processes against the
Fund, [shall] be stayed and be not instituted (sic) or proceeded with without the leave of the
Court.’
In the relevant part the order of 14 August 2018 (Matojane J) provided that:
‘3. The first and fourth respondents are ordered to first obtain the leave of the Court as a
prerequisite to instituting any further proceedings against the applicant.’
In view of the conclusion we reach in respect of the issue whether Mr Nash
required the leave of the court to institute the interdict proceedings, it is not
necessary to interpret the court orders. This is all the more so because the
respondents’ submissions on this issue migrated somewhat, from the appellants
not having sought leave as required by the orders, to their having failed to seek
leave separately, prior to launching the application for an interdict.
[15] It is necessary to highlight that the order of 14 August 2018 that requires
Mr Nash first to obtain the leave of court before instituting proceedings against
Mr Mostert and his co-respondents, was intended to curb the vexatious conduct
of Mr Nash. Matojane J found Mr Nash to have been:
‘dishonest and motivated by ulterior motive to disrupt the progression of the administration of
the Sable Fund, the Power Pack Fund and the Cadac Fund by bringing a series of applications
aimed at delaying and derailing civil and criminal [litigation] against him and Midmacor.’
The intention therefore was that further proceedings brought by Mr Nash should
be scrutinised by a court. Such assessment could only be made taking into account
the basis for such further proceedings.
[16] Insofar as Mr Nash was required to seek leave to institute proceedings
against Mr Mostert, he did seek leave. So did CADAC.3 In para 2 of the
application for interim interdict an order was sought:
‘2. Granting the First Applicant [Mr Nash], leave to institute this Application and to seek the
relief set out hereafter, as contemplated in terms of paragraph 4 of the order of the above court
3 CADAC could only have been required to seek leave as per order of Claassen J.
under case number: 2010/50596, granted on 21 December 2010 [the order of provisional
curatorship] and in paragraph 3 of the order of the above court under case number 64664/2017
dated 14 August 2018.
3. Granting the Second Applicant [Cadac], insofar as it is necessary, leave to intervene in the
Application instituted by the First Applicant under the above case number in terms of the notice
of motion dated 9 December 2019 [the main application].’
[17] The contention by Mr Mostert that a separate prior application for leave
was required is mere formalism. The facts on which the prior application would
have been brought would have been exactly the same as those advanced in
support of the application for an interdict. The court was entitled to consider the
application for leave together with the application for the interim interdict,
particularly in view of the cost implications that would result from the duplication
entailed in the separate application for leave contended for by Mr Mostert. The
order simply required that leave first be obtained. There is no reason why the
application to obtain such leave should not have been contained in the same
application that sought substantive relief. The high court was in a position first to
determine whether leave should be granted to bring the proceedings, and if such
leave was granted, then to proceed to hear the merits of the substantive
application. Such an approach is practical and entirely consistent with the order
made by Matojane J. The application for an interdict which he sought to bring
was neither frivolous nor vexatious. Leave should have been granted.
The application for intervention
[18] The application(s) were dismissed by the high court based on the dismissal
of the interim interdict application. The high court reasoned that the intervenors
had only sought to support the unsustainable application brought by Mr Nash and
that they brought nothing new to the proceedings. There was no finding, however,
in the judgment of the high court that the intervenors had not demonstrated a legal
interest as envisaged in Uniform Court Rule 12, which could be prejudicially
affected in the subject matter of the proceedings. The rejected pension
contributions had been made by CADAC as the employer. The members’ legal
interest and the prejudice that they stood to suffer, individually, is apparent from
the discussion on the interim interdict. The submission that they were Mr Nash’s
alter ego is unsustainable. The parties should have been allowed to intervene and
have their interests considered and, ultimately, protected.
Entitlement to an interim interdict
[19] Essentially, in the main application, Mr Nash, having been informed that
his pension benefits had been flagged, sought a declarator that he was entitled to
his full pension benefits and an order that such benefits be paid to him. Until
March 2020 the appellants’ pension contributions were accepted by the Fund.
Indeed, the issues relating to the management or administration of the Fund
during the period commencing March 2003 were to be decided in the main
application. The decision by the curators to determine those issues by excluding
the appellants from the Fund in March 2020 was taken abruptly, without
consulting the appellants, at the start of the national lockdown declared in terms
of the Disaster Management Act 57 of 2002. The decision to exclude them posed
significant irreparable prejudice to them as they would be left without pension
and related benefits. The evidence was also that they would be liable for income
tax on the refunded contribution.
[20] The appellants had therefore established a prima facie right which was
under threat as a result of the conduct of the curators. Their request to the curators
to maintain the status quo, which had prevailed for decades, pending the outcome
of the main application was rejected. None of these facts were in dispute. The
appellants had no option but to approach the court for relief. The balance of
convenience favoured them. The requirements for a provisional interdict had been
met.
[21] It was submitted on behalf of the respondents that the interim interdict
would entitle Mr Nash to act as if he was a member of the Fund when he was, in
fact, not. It is not clear that the interim interdict has any such entailment. It simply
preserves the status quo until the issue of Mr Nash’s membership can be
determined in the main application. Should Mr Nash threaten to take any action
that would subvert that determination, the respondents may approach the courts
to preserve the status quo.
[22] The appellants sought an order that the respondents be directed to ‘continue
administering [the Fund] in terms of the Pension Funds Act, 1956 (as amended)
and the Rules of the First Respondent’. This prayer is framed in impermissibly
wide terms and cannot be granted for that reason. The appellants will be
sufficiently protected in the interim if their contributions must continue to be
accepted and not refunded. How those contributions should have been dealt with
is a matter for the main application.
[23] Accordingly the appeal must succeed. The following order is granted:
The appeal is upheld with costs.
The order of the Gauteng Division of the High Court, Johannesburg is set
aside and is substituted with the following order:
‘(1)
The first applicant is granted leave to institute the interim relief
application.
(2)
The second applicant is granted leave to intervene and is joined in
the main application.
(3)
The third, fourth and fifth applicants are granted leave to intervene
and are joined in the interim application.
(4)
Pending the finalisation of the main application instituted on 9
December 2019,
4.1 An interim interdict is granted against curators of the first respondent
(second, third and fourth respondents) and the fifth respondent the
administrator from:
4.1.1 refusing to accept further contributions from or on behalf of
the second applicant and/or the members of the first respondent.
4.1.2 refunding any contributions from or on behalf of the second
applicant and/or members of the first respondent.
(5)
The respondents are jointly and severally ordered to pay the costs,
including costs of employment of two counsel.’
________________________
LEDWABA AJA
ACTING JUDGE OF APPEAL
Appearances:
For first and second appellants:
Greg Wickins SC
Instructed by:
KWA Attorneys, Johannesburg
Hill, McHardy & Herbst Attorneys,
Bloemfontein
For third to fifth appellants:
Sarah Pudifin-Jones
Instructed by:
Ian Levitt Attorneys, Sandton
Lovius Block Inc, Bloemfontein
For first to fourth respondents: J G Wasserman SC with S Quinn
Instructed by:
Assheton-Smith Inc, Cape Town
Michael Du Plessis Attorneys,
Bloemfontein
|
THE SUPREME COURT OF APPEAL OFSOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED
FROM
The Registrar, Supreme Court of Appeal
DATE
11 October 2021
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part
of the judgment.
Simon Nash and Others v The Cadac Pension Fund (In curatorship)
(Registration Number: 12/8/0020425) and Others (case no 545/2020) [2021]
ZASCA 144 (11 October 2021)
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) upheld an appeal against an order of the
Gauteng Division of the High Court, Johannesburg (high court) in terms of which an
application for an interdict was dismissed. The appellant, Simon Nash, approached
the high court seeking an urgent interdict against the Cadac Pension Fund (in
curatorship), its curators and its administrator, NMG Administrator. Cadac (Pty) Ltd,
the employer, in relation to the Fund, sought to intervene in the interdict application.
So did three other members of the Fund. All these applications were dismissed by the
high court.
The applications were prompted by communication sent by the Fund administrators to
Mr Nash and other members of the Fund in March 2020 to the effect that their pension
contributions would no longer be accepted by the bank and that contributions received
from them during the period commencing from March 2003 to April 2020 would be
refunded to them. When the communication was received, a court application between
Mr Nash and the Fund together with its curators and administrators, was pending in
the high court in relation to pension benefits due to Mr Nash. The background to these
events is that, until December 2010 when the Fund was placed under curatorship, Mr
Nash had been one of its trustees. He was also a director of Cadac Pty Ltd.
After turning 70 in November 2018, Mr Nash gave notice to NMG for the withdrawal of
his pension benefit of R36 525 806.31 from the Fund. The withdrawal date of the
benefit was stated as 31 May 2019. However, he was advised by the fund
administrators that the curators had instructed that his benefit be flagged in terms of
section 37D of the Pension Fund Act 24 of 1956. This turn of events was rooted in a
long history of litigation between Mr Nash and the Fund curators, particularly Mr
Mostert who was a co-curator and co-liquidator in seven other Funds in which Mr Nash
had been involved which were also placed in curatorship or liquidation following
fraudulent withdrawal of surplus funds from them through a scheme that came to be
known as the ‘Ghavalas scheme’. Mr Nash and his erstwhile business Associate,
Ghavalas were implicated in the scheme.
Court proceedings instituted by Mr Mostert following an exchange of accusations
between himself and Mr Nash, led to the high court, in August 2018, making findings
that Mr Nash was a dishonest and vexatious litigant, among other things. The court
then ordered that Nash had to first obtain the leave of the court as a prerequisite to
instituting any further proceedings against Mr Mostert.
When the appellants instituted the urgent interdict application against the respondents
in April 2020, the response was that Mr Nash and Cadac had failed to first obtain leave
of court to institute proceedings. The respondents also maintained that the appellants
also failed to meet an obligation under the 2010 court order of curatorship, to seek
leave of court prior to instituting proceedings against the Fund.
The SCA was satisfied that Mr Nash and Cadac did seek leave to institute the
proceedings. It rejected the submission that the application for leave should have been
brought separately from and prior to the interdict application. It considered that the
prior application argument by the respondents was mere formalism; that the court had
a discretion to grant leave, and further that both the leave and interdict applications
were based on the same facts. The SCA also found that the appellants had established
a right that required protection. Further the right was under threat by the threatened
conduct of refunding the appellants’ pension contributions, which could leave them
without pension and open them to income tax liability. The SCA also found that the
both Cadac and the other intervenors had a legal right to the subject matter of the
litigation. The court then set aside the order of the high court and granted the interdict.
--- ends --
|
3940
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1271/2021
In the matter between:
LIEUTENANT COLONEL K B O’BRIEN N O
APPELLANT
and
THE MINISTER OF DEFENCE AND
MILITARY VETERANS
FIRST RESPONDENT
CHIEF OF SOUTH AFRICAN NATIONAL
DEFENCE FORCE
SECOND RESPONDENT
SECRETARY FOR DEFENCE
THIRD RESPONDENT
THE SOUTH AFRICAN NATIONAL
DEFENCE FORCE
FOURTH RESPONDENT
STAFF SERGEANT DT MOKOENA
FIFTH RESPONDENT
LIEUTENANT PZ MABULA
SIXTH RESPONDENT
Neutral citation:
Lieutenant Colonel KB O’Brien NO v The Minister of Defence
and Military Veterans and Others (Case no 1271/2021) [2022]
ZASCA 178 (13 December 2022)
Coram:
PONNAN, NICHOLLS, GORVEN and MABINDLA-BOQWANA JJA
and CHETTY AJA
Heard:
22 November 2022
Delivered:
13 December 2022
Summary:
Review – review of judgments and orders of Military Judge - delay and
condonation – whether applicants in review application who were not parties to the
criminal proceedings had standing – whether gross irregularity in the proceedings –
cross application – constitutional challenge to ss 101 and 102 of the Defence Act 42
of 2002 and ss 15 and 17 of the Military Discipline Supplementary Measures Act 16
of 1999 – abstract or hypothetical.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Van der Schyff J,
sitting as court of first instance):
Save for setting aside paragraphs 6 and 10 of the order of the high court, the appeal
is dismissed.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Ponnan JA and Chetty AJA (Nicholls, Gorven and Mabindla-Boqwana JJA
concurring)
[1] The Military Discipline Supplementary Measures Act 16 of 1999 (the MDSMA),
which came into force on 28 May 1999, established a new military court system that
replaced the military court and court martial under the repealed and amended
provisions of the Defence Act1 and the Military Discipline Code.2 The objects of the
MDSMA are to:
‘(a) provide for the continued proper administration of military justice and the maintenance of
discipline;
(b) create military courts in order to maintain military discipline; and
(c) ensure a fair military trial and an accused’s access to the High Court of South Africa’.3
1 Defence Act 44 of 1957. See Freedom of Expression Institute v President, Ordinary Court Martial
1999 (2) SA 471 (C) and President, Ordinary Court Martial v Freedom of Expression Institute 1999 (4)
SA 682 (CC).
2 First Schedule to the Defence Act 44 of 1957.
3 Section 2 of the MDSMA.
The MDSMA established a four-tier system of military courts, consisting of the Court
of Military Appeals, the Court of a Senior Military Judge, the Court of a Military Judge,
and the commanding officer’s disciplinary hearing.4
[2] For present purposes, the following provisions of the MDSMA are relevant:
’13
Assignment of functions
(1)
Only an appropriately qualified officer holding a degree in law and of a rank not below
that of colonel or its equivalent, with not less than five years appropriate experience as a
practising advocate or attorney of the High Court of South Africa, or five years experience in
the administration of criminal justice or military justice, may be assigned to the function of –
(a)
Director: Military Judges;
(b)
Director: Military Prosecutions;
(c)
Director: Military Defence Counsel; or
(d)
Director: Military Judicial Reviews.
(2)
Only an appropriately qualified officer holding a degree in law may be assigned to the
function of –
(a)
senior military judge or military judge;
(b)
review counsel;
(c)
senior defence counsel or defence counsel; or
(d)
senior prosecution counsel.
(3)
Only an appropriately qualified officer or other member who holds a degree in law or
who has otherwise been trained in law may be assigned to the function of prosecution counsel.
Minister’s powers in respect of assignment
(1)
The Minister shall assign officers to the functions –
(a)
At the level of Director referred to in section 13 (1); and
(b)
Of senior military judge or military judge referred to in section 13 (2) (a)
On the recommendation of the Adjutant General: Provided that the Director: Military Judges
shall be deemed to have been assigned the function of senior military judge.
(2)
The Adjutant General shall not recommend any officer for assignment to any function
referred to in subsection (1) unless, upon due and diligent enquiry, the Adjutant General is
4 Section 6 of the MDSMA.
convinced that the officer is a fit and proper person of sound character who meets the
requirements prescribed in this Act for such assignment.
(3)
Subject to section 16 and the control of the Minister, the Adjutant General may assign
any officer or member to any function –
(a)
Referred to in section 13 (2) (b), (c) and (d) or (3); or
(b)
Attached to any approved military legal services post other than those referred to in
this Act.
(4)
Officers and members assigned to functions in terms of this section shall perform those
functions in a manner which is consistent with properly given policy directives, but which is
otherwise free from executive or command interference.
Period of Assignment
An assignment in terms of this Chapter shall be for a fixed period or coupled to a specific
deployment, operation or exercise.
. . .
Removal from assignment
The Minister, acting upon the recommendation of the Adjutant General, may remove a person
from the function assigned to him or her for the reason of that assignee’s incapacity,
incompetence or misconduct, or at his or her own written request.’
[3] The appellant, Lieutenant Colonel O'Brien, is a former military judge. In 2014,
he took to making remarks in matters that came before him about the brief, renewable
assignments of military judges (which was usually for a year at a time) and the
implications that held for the institutional independence of military courts. He also
supplied the parties with a document headed ‘MILITARY JUDGES’ CONCERNS
REGARDING THE CONSTITUTIONALITY OF THE ASSIGNMENT AS A MILITARY
JUDGE’, which, inter alia, read:
‘8.
Court is of the view that Sec 14(1)(b) MDSMA might be unconstitutional based on the
following:
a.
Fixed term from 19 May 2014 – 31 March 2015, does not meet the requirement that
the military judge shall have security of tenure of office.
b.
There may have been Executive interference in the functioning of the Military Courts
and/or the assignment of the Military Judges for 2014/15:
i.
During February/March 2014 all Military Judges were required to provide their court
hours for the previous three years to the Adjutant General who in turn provided this information
to C SANDF, who in turn provided this information to the Minister. The amount of court hours
of each Military Judge could have played a pivotal role in the assignment of the Military Judges
for 2014/15.
ii.
This was confirmed by the Minister’s assignment in mid-April 2014 of Military Judges
with satisfactory court hours. Unfortunately, I was only assigned on 19 May 2014, after I had
had to provide an explanation for my unsatisfactory amount of court hours for 2013/14 ie. 103
court hours. My explanation being I had only sat as a Military Judge for two weeks in June
2013 and from 15 January – 28 February 2014 due to the fact that I had attended the SAMHS
Junior Command and Staff Course from July – December 2013.
9.
This court has addressed its concerns in respect of the assignment of Military Judges
to both the Director Military Judges and to the Officer in Charge Operations Support Legsato.
10.
COURT IS WELL AWARE OF THE PROVISIONS OF Sec 170 Constitution which
states that, “Court of a status lower than the High Court may not rule on the constitutionality
of any legislation.”
11.
Purposes of this trial court is bound to accept that the provisions of Sec 14(1)(b) of the
MDSMA are constitutional and that we may then proceed.
12.
Court wishes to give both Counsel an opportunity to place on record whether they are
willing to proceed and if so whether Defence Counsel has any other objections in respect of
the jurisdiction of the court or in respect of the charges that they do not disclose an offence?’
[4] This appears to have provoked some disquiet in the then Review Counsel,
Lieutenant Colonel Kriek. On 6 November 2014, he wrote for the attention of the
Director: Military Judicial Reviews:
‘1.
Upon review of various records of proceedings of cases presided over by [the
appellant], review counsel has noticed that [the appellant] . . . has raised concerns regarding
the constitutionality of his appointment as military judge.
2.
. . . Reference to the concerns regarding the constitutionality of his appointment as
military judge is made before plea where after both prosecutor and defence counsel is asked
whether they have any objection to the jurisdiction of the court. Up to date no party has
indicated any objection in this regard.’
Reference was then made to six matters, whereafter the document proceeded:
‘8.
It is submitted that the constitutional issue raised by [the appellant] does not fall within
the ambit of the procedural course of a court case constituted by the [MDSMA]. It is important
that the integrity of the military and senior military judges as well as the integrity of the military
court system be without any reproach. Where a presiding judge challenges his/her own
appointment in open court, the credibility of the military legal system is challenged. The
question must also be raised as to why a military judge who believes his appointment to
preside in a military court is unconstitutional would continue with the matters before him even
though the trial/s [will] be ultra vires and therefore null and void.
9.
It is submitted that the appointment of [the appellant] as a military judge was done in
accordance with the [MDSMA]. Regard must be had to the fact that [the appellant] implies that
he cannot be independent and beyond command influence in his administration of justice, due
to the fact that his appointment as military judge does not provide for permanent tenure.
Review Counsel is unsure as to the motivation for placing the “jurisdictional” issue on record
during every trial. Does [the appellant] feel intimidated by the administrative decision to
appoint all functional counsel for a period of one year and wants to place on record that his
judicial decisions are directed by his wish to remain a military judge until he reaches
retirement? Or may the motivation be to cause his removal from his current assignment
because, in effect, all judgments and sentences passed by him are ultra vires? It is submitted
that the correct course of action for a judge who believes his appointment as a military judge
voids his jurisdiction and is unconstitutional, would be to recuse himself from presiding in any
military judicial matter.
10.
It is submitted that this matter be administratively dealt with in order to resolve this
conflict. It is unacceptable to place the military judicial system in disrepute by criticising the
very legislation which gives effect thereto.
11.
For further action.’
[5] That letter elicited, inter alia, the following response from the appellant on 28
November 2014:
’13.
It has never been the member’s intention to doubt the validity of the provisions of the
MDSMA. The member accepts that he was lawfully assigned to the function of a Military Judge
on 19 May 2014 and that this assignment is valid until 31 March 2015.
. . .
17.
The contents of, “‘Military Judges’ concerns regarding the constitutionality of the
assignment of a military judge”, should be seen in the light of being obiter dicta comments and
an effort to raise awareness amongst the military legal fraternity of similar situations in foreign
military judicial systems.’
[6] On 5 December 2015, the then Director: Military Judges (the DMJ), Brigadier
General Slabbert, held a meeting with the appellant to express his concern that in
having once again raised the constitutionality of assignments of military judges in open
court, the appellant had breached a previous undertaking. In the course of that
meeting, the appellant was instructed not to use the military court as a forum for his
‘awareness campaigns and constructive criticism’. He was advised to use the proper
channels of command and that if he were to persist in his conduct it may impact on
his future assignment as a military judge. Following that meeting, the appellant wrote
to the DMJ that he:
‘. . . appreciates that the discussion was conducted in an open and honest fashion that the
[appellant] was given an opportunity to address concerns raised by the DMJ and [Lieutenant
Colonel Kriek].
The [appellant] once again wishes to re-iterate, that it was never [his] intention to do any harm
or embarrassment to any member . . . and if any member had perceived [his] response in a
way that could have caused them any harm or embarrassment, [the appellant] wishes to
apologise unreservedly.’
[7] During August 2016, two matters came before the appellant in which there had
been substantial delays caused in large measure, so he suggests, by the failure of the
Minister of Defence and Military Veterans (the Minister) to assign military judges. In
the first, involving Staff Sergeant Mokoena (the Mokoena matter), there had been a
three-and-a-half-year delay. In the second, involving then Candidate Officer (later
Lieutenant) Mabula (the Mabula matter), there had been a delay of some 14 months.
Counsel for the defence contended in each that the matter fell to be struck from the
roll on account of the unreasonable delay. In his ex tempore ruling on that question
on 25 August 2016, which was followed by a written judgment delivered four days later
on 29 August 2016, the appellant repeated his concerns about the constitutionality of
appointing military judges on brief renewable terms and the implications that held for
the independence of military courts.
[8] In that regard, the appellant’s judgment reads:
‘12.
An aspect that the Court raised in respect of its concerns regarding the constitutionality
of the assignment of military judges was the delay in the assignment of Military Judges in
general (including that of the Military Judge) in these particular cases. The fact that for a period
of 15 months (01 April 2015 – 30 May 2016), the Military Judge was not assigned could have
a bearing on the outcome of whether there had been an unreasonable delay in the
proceedings in terms of sec 342A CPA. This 15 month, non-assignment is the longest period
since the enactment of the MDSMA, that Military Judges have not been assigned. This Court,
in passing, wishes to emphasise that as a Military Judge, I have taken an oath of Office, to
uphold the Constitution and I will do this to the best of my ability. It may, however, become
more difficult to perform this function independently as required by the Constitution when one
is not aware of the objective criteria required for an assignment as a Military Judge. It would
seem that different criteria may be used to determine who is assigned or not assigned as a
Military Judge. One year, it is court hours, another year, it is that you must be in possession
of a secret security clearance and unfortunately there appears to be no semblance of
transparency in respect of the recommendation and / or appointment process to be considered
as a fit and proper person to serve as a Military Judge. The Court also in Trial Annexure E to
the court proceedings, highlighted some of its concerns in respect of the lack of tenure of
Office of a Military Judge and referred in particular to the case of Justice Alliance v President
of Republic of South Africa (2011) ZACC 23 at par 38 and 73.’
[9] The appellant then proceeded to consider whether ‘the Military Court [has]
jurisdiction to conduct an investigation in terms of sec 342A of the Criminal Procedure
Act (the CPA)’. On that score, he concluded that ‘the provisions of sec 342A CPA may
be considered as best calculated to do justice and shall be utilized in respect of
handling of unreasonable delays in military courts.’ The appellant then stated:
‘In respect of the period 01 Apr 2015 – 30 May 2016, the court finds that there was an
unreasonable delay and the authority responsible is the [Minister] who for reasons unknown
to the Court did not assign the Military Judge. The Court wishes to indicate that in this case
the Court did not consider it necessary to subpoena the Honourable Minister to give evidence
to explain her actions, however, in future cases, it may be necessary for the Court to subpoena
the Honourable Minister to explain her actions should the circumstances of the case require
the Court to subpoena the Honourable Minister.’
[10] Notably, the appellant acknowledged that in terms of s 170 of the Constitution,
he had no power to rule on the constitutionality of legislation or conduct and although
he recognised that he ‘may be venturing into uncharted waters’, he nonetheless
considered that he was ‘constitutionally bound’ to make the following orders:
‘a.
In terms sec 342A(3)(e) CPA, it is ordered that the Acting Officer – in – Charge
Operations Support Legsato shall serve a copy of the written court ruling, a copy of the Military
Judges Concerns in respect of the Constitutionality of the Assignment of Military Judges, a
copy of Prosecution Counsel and Defence Counsel’s Heads of Argument, on the Director
Military Prosecutions by 05 September 2016 to investigate any possible disciplinary action
that may be taken against members of his staff and / or any person who performed the function
of Prosecution Counsel at the sec 29 arraignment of the Accused (MOKOENA) on 23
November 2012.
b.
In terms of Sec 342A(3)(e) CPA it is ordered that the Acting Officer – in – Charge
Operations Support Legsato shall serve a copy of the written court ruling, a copy of the Military
Judges Concerns in respect of the Constitutionality of the Assignment of Military Judges, a
copy of Prosecution Counsel and Defence Counsel’s Heads of Argument on the Acting Chief
Defence Legal Services by 05 September 2016 for his information.
c.
In terms sec 342A(3)(e) CPA, it is ordered that the Acting Officer – in – Charge
Operations Support Legsato shall serve a copy of the written court ruling, a copy of the Military
Judges Concerns in respect of the Constitutionality of the Assignment of Military Judges, a
copy of Prosecution Counsel and Defence Counsel’s Heads of Argument on the
Commander – in – Chief of the South African National Defence Force, the Honourable
President of the Republic of South Africa by 05 September 2016 to investigate any possible
disciplinary action that may be taken against the Honourable Minister of Defence and Military
Veterans in respect of her failure to assign the Military Judge over the period of 01 April
2015 – 30 May 2016.
d.
The Acting Officer – Charge Operations Support Legsato must provide written
confirmation to this Court by 12 September 2016 that the written court ruling, copy of the
Military Judges Concerns in respect of the Constitutionality of the Assignment of Military
Judges, a copy of Prosecution Counsel and Defence Counsel’s Heads of Argument has been
served on the abovementioned persons.
e.
The Director Military Prosecutions and the Honourable President must provide written
confirmation to this Court by 31 October 2016 confirming what actions, if any, have been taken
against any of their staff members or against the Honourable Minister of Defence and Military
Veterans respectively.
f.
The Court declines to strike these cases from the roll and the cases will proceed to
trial.'
[11] After delivery of the judgment, and whilst both matters were still pending, the
appellant was once again called to a meeting with the DMJ, which took place on 5
September 2016. During the course of the meeting, the DMJ expressed his
dissatisfaction that the appellant had repeated his concerns in open court and in his
rulings. According to the appellant, the DMJ reiterated that his assignment as a military
court judge was at risk, if he continued making those statements and he was asked to
furnish a written undertaking that he would not to do so in the future. The appellant’s
response was that he was uncomfortable discussing the matter as the trials were still
ongoing and that he considered the demand for a written undertaking to be unlawful
and unconstitutional. In a letter written by the appellant to the DMJ after that meeting,
he asserted that if the latter or any other member was of the view that he was
incompetent or had committed misconduct then an independent person (preferably a
judge of the high court) should be appointed to investigate those claims and make a
recommendation. The appellant concluded the letter by reserving his rights to institute
contempt proceedings should he be obstructed from carrying out his functions as a
judge. The next day the DMJ replied to the appellant; he suggested that if the appellant
continued to be concerned with the constitutionality of the assignment of military
judges, then he should simply recuse himself from all matters.
[12] On 8 September 2016, the appellant wrote to both the prosecution and defence
counsel in the Mokoena and Mabula matters. He set out details of his meeting with
the DMJ and the correspondence exchanged thereafter. The appellant requested a
pre-trial conference with counsel. On 15 September 2016, the appellant received a
letter from the then Adjutant General, Major General Mmono (the AG) headed
‘withdrawal of authority to sit as a military judge’, which proceeded to inform the
appellant that a Board of Inquiry (the BOI) had been convened in terms of ss 101 and
102 of the Defence Act 42 of 2002 (the Defence Act), and requested him to fully co-
operate with the investigation. On 22 September 2016, the appellant responded to the
AG’s letter; he undertook to co-operate fully with the BOI and requested a copy of the
convening order.
[13] On 4 October 2016, the appellant sent an email to the prosecutor and defence
counsel in the Mokoena and Mabula matters, as he put it ‘to inform both parties of
recent developments’. The email continued:
‘On 15 Sep 16, I received a letter from the [AG] informing me that as a result of my letter dated
06 Sep 16, he had convened a [BOI]. I was informed that I would not be able to proceed to
the DRC, but that I could still conduct cases in SA and I was to make myself available for the
Board.
. . .
I have still not received a copy of the Convening Order as I had requested on 22 Sep 16. At
this stage, I have no idea as to the terms of reference of the Board and I am sure that questions
will be asked regarding decisions and comments that I have made in these cases as well as
other cases.
I wish to advise Counsel that I may be in a predicament in that I am obligated to answer
questions at the Board in respect of matters that are sub judice. Failure to answer questions
at a Board can constitute an offence. I do not wish to pre-empt the Board, but I thought it wise
to inform both Counsel of the latest developments. This correspondence will also form part of
the Court record of both cases.’
[14] On 10 October 2016, the appellant was told to present himself the following
day for the commencement of the BOI. The next day he attended the first sitting of the
BOI, comprising Brigadier General Myburgh (Director, Military Judicial Reviews), as
the President and the late Rear Admiral Masutha (Director, Military Defence Counsel).
The appellant was furnished with a copy of the AG’s convening order, dated 15
September 2016 ‘to investigate and report on the circumstances and factual issues
surrounding the constitutional exclamations made by [the appellant] presiding as a
military judge in military court cases in August 2016. Paragraph 3 of the Order
provided:
‘a.
To investigate whether [the appellant] acted within the letter and spirit of the
Constitution, the [MDSMA], [the Code], the Rule of Procedure and any other relevant
legislation whilst presiding in the two cases of S v Cpl P.Z. Mabula and S v S Sgt D.T.
Mokoena (August 2016)
b.
Did his conduct bring the administration of military justice into disrepute.
c.
Whether the member is to be considered a fit and proper person to continue serving
as a military judge.
d.
The seriousness and implications of recent events, and consequences that it may have
for the DLSD / SANDF.
e.
The action required to prevent a re-occurrence, as well as to ease the results.
f.
Any related matters which may be brought to the board’s attention during the inquiry.
g.
Rectification action and corrective measures including disciplinary steps to be taken.’
[15] On 12 October 2016, the appellant contacted both prosecution and defence
counsel in the Mokoena and Mabula matters to confirm that they and the accused in
those matters would be available at 3pm on 14 October 2016 for a ruling that he
intended delivering in open court. It was a lengthy ruling, in course of which the
appellant referred to his previous order, proceeded to read into the record the
correspondence and recount in detail the events since then. Thereafter, the appellant
noted:
‘60.
I am giving notice to the Honourable Minister of Defence, Chief SANDF, Secretary of
Defence, Mmono, Slabbert, Myburgh, Masutha and Mbangatha that amongst other things, I
will be requesting the following relief from the High Court on an urgent basis:
a.
An interdict from the High Court to prevent any further “attacks” on me in my capacity
as a Military Judge,
b.
To interdict Slabbert from continuing with his instruction to me on 05 September 2016,
c.
To interdict Mmono instructing me that I may not proceed with any new cases,
d.
To interdict Mmono, Myburgh and Masutha from continuing with the DLSD Board of
Inquiry under Convening Order no 03/2016,
e.
To interdict Mmono, Slabbert, Myburgh, Mbangatha and Masutha from performing any
activities towards myself as a Military Judge which could interfere with the institutional
independence of the Court of Military Judge.
f.
Further and / or alternative relief.
61.
I am giving notice to the Honourable Minister of Defence, Chief SANDF, Secretary of
Defence, Mmono, Slabbert, Myburgh, Masutha and Mbangatha that amongst other things, I
will be requesting the following relief from the High Court on the normal Motion Court roll:
a.
To review the Court Orders that in my capacity as a Military Judge, I made on 29
August 2016,
b.
To review the Court Orders that in my capacity as a Military Judge, I will be making
today.
c.
To provide guidance to me as a Military Judge as to whether I may make obiter dicta
comments in respect of the issue of the constitutionality of sections of the MDSMA relating to
the assignment of Military Judges during open court.
d.
To provide guidance to the DLSD as to whether any of the provisions in the MDSMA
relating to the assignment of Military Judges are constitutional,
e.
To provide guidance to me as a Military Judge as to whether the actions of Mmono,
Slabbert, Myburgh, Masutha and Mbangatha prima facie constitute contempt of court and
furthermore what actions, if any, should be taken against them in respect of possibly having
the members charged for contempt of court ex facie.’
[16] The appellant then proceeded to issue the following orders:
‘a.
The Adjudant, Operations Support Legsato (who is also the Acting Court Manager)
shall serve a copy of the record of proceedings of these cases at the offices of the General
Bar Council of South Africa as well as on the Law Society of South Africa for those bodies to
take the necessary steps they deem fit, against Maj General S.B. Mmono, Brigadier General
G.I. Slabbert, Brigadier General A. Myburgh, Brigadier General R.M. Mbangata and Rear
Admiral (Junior Grade) R.P. Masutha should any of these members be subject to the ethical
codes of these organisations.
b.
The Adjudant, Operations Support Legsato shall serve a copy of the record of
proceedings on the Judicial Service Commission as well as on the Magistrates’ Commission
for these institutions to take note of the conduct of the aforementioned DLSD members. It
should be noted that the Honourable Judge Legodi, who is the Chairperson of the Court of
Military Appeals is also the Chairperson of the Magistrate’s Commission.
c.
The Adjudant, Operations Support Legsato shall serve a copy of the record of
proceedings on the honourable Minister of Defence for her to consider whether Maj General
S.B. Mmono, Brigadier General G.I. Slabbert, Brigadier General A. Myburgh, Brigadier
General R.M. Mbangata and Rear Admiral (Junior Grade) R.P. Masutha still comply with the
provisions of sec 54(2)(g) Defence Act, and to make recommendations to the Commander –
in – Chief, the Honourable President of the Republic of South Africa in this regard.
d.
Although I, as a Military Judge, wish to reassure all Counsel involved in these cases
and the accused that I take my Oath of Office extremely seriously and that to the best of my
ability I am impartial, and act without fear, favour or prejudice, I cannot guarantee that the
accused will receive a fair trial as contemplated in sec 35 of the Constitution due to the fact
that objectively the institutional independence of this Court has been targeted, tarnished and
severely prejudiced to such an extent that I have no option but to recuse myself as the Military
Judge in these cases.’
[17] Following upon the judgment of 14 October 2016, so states the appellant, save
for finalising two part-heard matters, he was ‘allocated no new matters and was
effectively placed on suspension’, until his appointment came to an end on 31 March
2017. After the appellant’s recusal, both the Mokoena and Mabula matters proceeded
to trial before a different military judge. In the former, the accused was acquitted on 1
February 2017 and, in the latter, the accused was found guilty and sentenced to
dismissal from the South African National Defence Force (the SANDF) on 12
December 2017.
[18] The hearing before the BOI resumed on 18 October 2016. On 31 October 2016,
the appellant was handed an amendment to the convening order, which expanded the
scope of the BOI to investigate his ‘constitutional exclamations in all matters, not just
his rulings in August 2016’. He was also handed an order requiring his attendance
before the BOI on 8 November 2016. The appellant thereafter consulted with his
present attorney, who, on 2 November 2016, despatched a letter to the AG. In that
letter it was asserted that the convening of the BOI ‘to investigate the conduct of a
military judge, particularly where those investigations relate to the content and
methods of a military judge’s judgments and orders was unlawful and
unconstitutional’. The letter demanded that the BOI be dissolved with immediate
effect. In his response on 7 November 2016, the AG indicated that he ‘had convened
the BOI in terms of s 101(2) of the Defence Act 42 of 2002 and that he believed this
was necessary in the execution of his responsibilities’.
[19] When the BOI resumed on 12 December 2016, the appellant sought a ruling
that ‘it was not empowered under section 101 and 102 of the Defence Act 2002 to
investigate the conduct of a sitting military judge, particularly where that investigation
relates to the merits of a judge’s judgments and orders’. After hearing detailed
argument, the BOI was postponed until January 2017 for a ruling. On 24 January
2017, the appellant and his attorney were informed that the AG had intimated that he
needed more time to make a decision on the appellant’s submissions. The matter was
then postponed to February 2017, when the appellant was informed that the BOI had
received an instruction from the AG to continue with the hearing. The BOI concluded
hearing evidence on 13 April 2017.
[20] On 11 December 2017, the appellant was called to a meeting, scheduled for
the next day, with the new Adjutant General, Major General Mnisi (the new AG). By
that stage, the BOI had still not made a recommendation to the AG. The appellant was
informed that the BOI would be held in abeyance until he (the new AG) had decided
on an appropriate course. On the 23 February 2018, the appellant’s attorney
complained in a letter to the new AG that there had been an unreasonable delay in
the finalisation of the BOI. The letter demanded that the BOI either be finalised or
withdrawn within 21 days. That letter elicited the following response on 6 March 2018:
‘The AG is concerned as to whether some of the orders made by [the appellant] can be
subjected to administrative review in the form of a [BOI]. The [AG] is of the view that the order
in question should be subjected to a judicial review process.
The Office has instructed the Office of the State Attorney (Pretoria) to brief counsel to take
some points of [the appellant’s] orders under review.
Until the review process is finalised, the BOI is placed in abeyance without any prejudice to
the member. For this reason, this Office cannot withdraw as requested in your letter.’
[21] The review application was launched in the Gauteng Division of the High Court,
Pretoria (the high court) by the Minister, the Chief of the SANDF, the Secretary of the
Defence and Military Veterans and the SANDF, as the first to fourth applicants,
(collectively referred to as the Defence Force) in October 2018. The appellant, Staff
Sergeant Mokoena and Lieutenant Mabula were cited as the first to third respondents
respectively. The latter two did not participate in the proceedings, either in this Court
or the one below. The Defence Force, inter alia, sought to review and set aside the
majority of the orders handed down by the appellant in the Mokoena and Mabula
matters.
[22] The response of the appellant to the review application was, to say the least,
curious. In his answering affidavit the appellant stated:
‘5.
The rulings speak for themselves. I do not intend to defend the substance of those
rulings in detail in these proceedings, beyond providing further explanation and context to
assist this court.
6.
The central issue is not the rulings. Instead, the true issue is the applicants’ conduct
in response to my rulings. Their conduct reflects disregard for the constitutionally guaranteed
independence of the military courts, which is further evident from the views expressed in the
applicants’ founding affidavit.’
Despite stating that he did ‘not intend to defend the substance of [his] rulings’, the
appellant proceeded to oppose the application on three grounds: first, that there had
been an unreasonable delay in bringing the application, which should not be
condoned; second, that the Defence Force had no standing to review his rulings; and,
third, the review lacked merit. In addition, the appellant brought a counter application
for ‘constitutional relief aimed at supporting the institutional independence of the
military courts under the existing statutory framework’. As he put it: ‘[my] core concern
is to ensure that the military judges are not subjected to the type of treatment that I
have experienced and to ensure that military judges are able to perform their functions
in a constitutionally secure environment’.
[23] The notice of motion in the counter application provided:
‘First challenge: Boards of inquiry
It is declared that, on a proper interpretation of sections 101 and 102 of the Defence
Act 42 of 2002, members of the executive are not permitted to convene boards of inquiry to
investigate military judges and senior military judges (“military judges”) and the content and
merits of their judgments and rulings.
In the alternative to paragraph 1, sections 101 and 102 are unconstitutional and invalid
to the extent that they permit members of the executive to convene boards of inquiry to
investigate military judges and the content and merits of their judgments and rulings.
It is declared that the board of inquiry convened to investigate Lt Col K.B. O’Brien
under convening order no CDLS 1/C/106/29 is unlawful and unconstitutional.
It is declared that the proceedings instituted by the Applicants in this Court under case
number 76995/18 are unlawful and unconstitutional
Second challenge: Removal of military judges
Section 17 of the Military Discipline Supplementary Measures Act 16 of 1999 (“the
MDSMA”) is unconstitutional and invalid to the extent that it empowers the Minister, acting on
the recommendation of the Adjutant General, to remove a military judge and that the Minister
may do so without any independent inquiry into the fitness of the military judge to hold office.
Third challenge: Renewable assignments of military judges
It is declared that on a proper interpretation of section 15 of the MDSMA, the Minister,
acting on the recommendation of the Adjutant General, is not empowered to assign military
judges for renewable periods.
In the alternative to paragraph 3, section 15 of the MDSMA is unconstitutional and
invalid to the extent that it empowers the Minister, acting on the recommendation of the
Adjutant General, to assign military judges for renewable periods.
It is declared that the existing practice of assigning military judges for renewable
periods of one to two years is unconstitutional and unlawful.
General
The declarations of constitutional invalidity sought in paragraphs 2, 5 and 7 above are
suspended for a period of 12 months to allow Parliament to correct the defects.’
[24] The review application succeeded and the cross application failed before Van
der Schyff J in the high court. Save for paragraph f declining to strike the Mokoena
and Mabula matters from the roll, the high court set aside the remaining orders issued
by the appellant on 25 and 29 August 2016, and in that regard, ordered each party to
pay its own costs. And, save for paragraph d, pursuant to which the appellant recused
himself from hearing both matters, the remaining orders that issued on 14 October
2016 were set aside with costs. Each of the constitutional challenges failed,
consequently the cross application was dismissed with costs. In each instance, the
costs were to include those consequent upon the employment of two counsel. The
appellant appeals, with the leave of the high court, against the upholding of the
Defence Force’s review application, the dismissal of his cross application and the
costs orders that issued against him.
[25] Preliminarily, it is perhaps necessary to record that whilst the Defence Force
(notionally at least) is not, so to speak, ‘an indigent and bewildered litigant, adrift in a
sea of litigious uncertainty, to whom the courts must extend a procedure-
circumventing lifeline’,5 the unavoidable conclusion in this case is that it may have
been poorly advised. The papers filed both in the review application, as also, in
opposition to the counter application, were superficial and generally unconvincing;
failing, as they did, to meaningfully rise to a host of challenges or to properly engage
with many of the issues that called for adjudication. The same holds true for the heads
of argument filed on appeal and the oral submissions from the bar in this Court.
5 MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (3)
SA 481 (CC) para 82.
The review application
[26] As before the high court the appellant persists on appeal, with the same three
grounds raised in opposition to the review application, namely that: (i) there had been
an unreasonable delay on the part of the Defence Force in bringing the review
application; (ii) the Defence Force lacked standing; and, (iii) the review lacked merit
inasmuch as the Defence Force had failed to show a gross irregularity in the
proceedings.
As to the first:
[27] It is contended on behalf of the appellant that the delay in launching the review
application is so manifestly unreasonable that it should not have been overlooked or
condoned by the high court. The delay rule is a principle that flows directly from the
rule of law and its requirement for certainty.6 The Constitutional Court has held that
there is a strong public interest in both certainty and finality.7 As it was put by this
Court in Valor IT v Premier, North West Province and Others:
‘Whether a delay is unreasonable is a factual issue that involves the making of a value
judgment. Whether, in the event of the delay being found to be unreasonable, condonation
should be granted involves a ‘factual, multi-factor and context-sensitive’ enquiry in which a
range of factors – the length of the delay, the reasons for it, the prejudice to the parties that it
may cause, the fullness of the explanation, the prospects of success on the merits – are all
considered and weighed before a discretion is exercised one way or the other.’8
[28] It was incumbent on the Defence Force to provide a full explanation covering
the entire period of the delay. The explanation, such as it is, for the most part fell far
short of that yardstick, consequently the high court took the view that the explanation
for the delay is ‘less than satisfactory’. It did, however, weigh that against, amongst
6 Altech Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan Municipality [2020]
ZASCA 122; 2021 (3) SA 25 (SCA) para 16.
7 Khumalo and Another v Member of Executive Council for Education: KwaZulu-Natal [2013] ZACC 49;
2014 (5) SA 579 (CC) para 47.
8 Valor IT v Premier, North West Province and Others [2020] ZASCA 62; [2020] 3 All SA 397 (SCA)
para 30; See also Aurecon South Africa (Pty) Ltd v City of Cape Town [2015] ZASCA 209; 2016 (2) SA
199 (SCA) para 17; City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5; 2017 (4) SA
223 (CC) para 46.
other things, the ‘importance of the matter’, ‘the prospects of success’, ‘the
administration of justice’ and ‘the absence of prejudice’. Weighing those
considerations, the one against the other, the high court arrived at the conclusion that
condonation should be granted.
[29] Importantly, we are not simply at large to interfere with the discretion exercised
by the high court. In that regard, the distinction as to whether the discretion exercised
by the high court in granting condonation was one in the ‘true’ or ‘loose’ sense is
important. The importance of the distinction, as the Constitutional Court explained in
Trencon Construction (Pty) Limited v Industrial Development Corporation of South
Africa Limited and Another, is that it dictates the standard of interference by this court.9
However, as the Constitutional Court emphasised, ‘even where a discretion in the
loose sense is conferred on a lower court, an appellate court’s power to interfere may
be curtailed by broader policy considerations. Therefore, whenever an appellate court
interferes with a discretion in the loose sense, it must be guarded.’10
[30] In Florence, Moseneke DCJ stated:
‘Where a court is granted wide decision-making powers with a number of options or variables,
an appellate court may not interfere unless it is clear that the choice the court has preferred
is at odds with the law. If the impugned decision lies within a range of permissible decisions,
an appeal court may not interfere only because it favours a different option within the range.
This principle of appellate restraint preserves judicial comity. It fosters certainty in the
application of the law and favours finality in judicial decision-making.’11
[31] Here, not only has no warrant been shown to exist for interference with the
discretion exercised by the high court in condoning the delay, but as the high court
9 Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and
Another [2015] ZACC 22; 2015 (5) SA 245 (CC) paras 82–97.
10 Ibid para 82.
11 Florence v Government of the Republic of South Africa [2014] ZACC 22; 2014 (6) SA 456 (CC) para
113.
appreciated, because this question is ineluctably bound to the prospects of success,12
it is necessary, as that court also did, to enter into the merits of the review application.
Without in any way seeking to pre-empt the discussion on the merits that follows later,
for the present, it is important to record that counsel for the appellant was constrained
to concede that paragraph e of the order of 29 August 2016 that ‘the Director Military
Prosecutions and the Honourable President must provide written confirmation to this
Court by 31 October 2016 confirming what actions, if any, they have taken against
any of their staff members or against [the Minister] respectively’, cannot stand and
thus falls to be set aside. Absent paragraph e, paragraph a, which required service on
the Director Military Prosecutions for him ‘to investigate any possible disciplinary
action that may be taken against his staff’ and, paragraph c, which required service
on the President for him to ‘investigate any possible disciplinary action that may be
taken against [the Minister]’, may well be ‘indeterminate, open ended and
irredeemably vague’.13 In that, they arguably may also be susceptible to being set
aside. To that extent, at the very least, there are cognisable prospects of success in
the review application. This must mean that the grant of condonation by the high court
cannot be disturbed.
As to the second:
[32] It is contended that, inasmuch as each of the applicants in the review
application were not parties to the criminal proceedings before the appellant, the
orders, such as they were, did not trigger any cognisable grounds of standing to bring
review proceedings. It is indeed so that a court ‘will invalidate an order only if the right
remedy is sought by the right person in the right proceedings and circumstances’.14 It
cannot however go unnoticed that on 14 October 2016 and, in the course of his
judgment, the appellant had himself given notice of his intention to bring proceedings
to, inter alia, review the court orders made on 29 August 2016, as well as the orders
that he was going to make on that day. The appellant also intimated that he would be
12 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited [2019] ZACC 15; 2019 (6)
BCLR 661 (CC); 2019 (4) SA 331 (CC).
13 Minister of Water and Environmental Affairs v Kloof Conservancy [2015] ZASCA 177; [2016] 1 All SA
676 (SCA) para 13.
14 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) quoting with approval Wade Administrative Law 7th ed (by H W R Wade
and Christopher Forsyth) at 342-4.
seeking interdictory relief on an urgent basis and guidance from the high court as to
whether he may make ‘obiter dicta comments in respect of the issue of the
constitutionality of sections of the MDSMA relating to the assignment of Military
Judges during open court’. He evidently thought it important that the high court speak
on these matters. It is thus passing strange that in the circumstances the appellant
chose to object to the Defence Force’s standing. One would have thought that a review
application, whether at his or the Defence Force’s instance, would be welcome and
put to rest the very issues that had caused him such great consternation.
[33] Be that as it may, the high court took the view that:
‘If a military judge’s conduct is irregular and ultra vires and the irregular conduct results in a
court order that would otherwise not have been granted or exceeds the jurisdiction of such a
military court, applicants with the necessary standing will have recourse to this court to have
those orders reviewed and set aside.
The Minister is implicated in the [appellant’s] judgment and order of 25 and 29 August 2016.
The [appellant] held that the Minister’s failure to appoint military judges contributed to the
delay in finalising the trials . . . The [appellant] directed the President to investigate any
possible disciplinary action that may be taken against the Minister and report back to the court
before a stipulated period confirming what actions, if any, have been taken against the
Minister. In view of the finding made against the Minister, that her failure to appoint military
judges contributed to the undue delay, the necessary nexus was established for the Minister
to approach this court for the review of the order. The Minister has a direct and substantial
interest in the order granted. The same can be said regarding the order granted on 14 October
2016. In this instance, the Minister was ordered to investigate whether certain officers
complied with the provisions of s 54(2)(g) of the Defence Act and to make recommendations
to the President. These orders were made without providing any of the affected persons an
opportunity to present their respective cases to the court. The Minister has a direct and
substantial interest in the order that obliges her to conduct an investigation. She therefore has
the necessary standing in this court to challenge the validity of the order. There is no merit in
this point in limine.’
[34] What is more, the appellant had issued orders appertaining to a range of senior
officers in the SANDF. In each of his covering letters referring ‘the record of
proceedings and court rulings’ to the ‘Chairperson of the General Bar Council of South
Africa’ (the GCB), the ‘Chairperson of the Judicial Service Commission’ (the JSC), the
‘Chairperson of the Magistrates Commission’ (the Magistrates Commission) and the
‘Chairperson of the Law Society of the Northern Provinces’ (the Law Society), the
appellant stated:
‘The Court ruling dated 14 October 2016 provides the factual basis upon which I as a Military
Judge am of the prima facie view that [the GCB, JSC etc] should investigate whether the
conduct of the members as mentioned in paragraph 62 of the Court ruling amounts to
unethical and/or unprofessional conduct’.
The appellant identified the members as Major General SB Mmono, Brigadier General
GI Slabbert, Brigadier General A Myburgh, Brigadier General RM Mbangatha and
Rear Admiral (Junior Grade) RP Masutha and made reference to the identity and force
numbers of each. His covering letter concluded:
‘I am prima facie of the view that their conduct amounts to Contempt of Court ex facie and it
would be appreciated if any of these members are subject to your ethical code of conduct that
their conduct should be investigated.’
Whilst each of the GCB, JSC, Magistrates Commission and Law Society
acknowledged receipt of the appellant’s letter, only the last intimated that none of the
persons mentioned are registered with it and as such they were unable to investigate
their conduct.
[35] In his letter to the Minister, the appellant went further. He stated:
‘The Court ruling dated 14 October 2016 provides the factual basis upon which I as a Military
Judge was of the view that the Honourable Minister should investigate whether the conduct
of the officers as mentioned in paragraph 63(c) of the Court ruling is of sufficient grounds to
request the Commander-in-Chief to withdraw their Officer’s Deeds of Commission.’
Once again, he added ‘I am prima facie of the view that their conduct amounts to
Contempt of Court ex facie.’ It is plain from these letters that were addressed to
various professional and institutional bodies, that they were intended to be acted upon
and appear to call the lie to the assertion in his answering affidavit to the review
application that: ‘the effect of my order was simply to bring my ruling to the attention
of these individuals and bodies I did not order these parties to take disciplinary action
or to conduct further investigations’.
[36] As Froneman J observed in Bezuidenhout v Patensie Sitrus Beherend BPK
2001 (2) SA 224 (E) at 229 B-C:
'An order of a court of law stands until set aside by a court of competent jurisdiction. Until that
is done the court order must be obeyed even if it may be wrong (Culverwell v Beira 1992 (4)
SA 490 (W) at 494A-C). A person may even be barred from approaching the court until he or
she has obeyed an order of court that has not been properly set aside (Hadkinson v Hadkinson
[1952] 2 All ER 567 (CA); Bylieveldt v Redpath 1982 (1) SA 702 (A) at 714).'15
[37] To that, may be added, that litigants who are required to comply with court
orders, at the risk otherwise of being in contempt if they do not, must know with clarity
what is required of them.16 As it was put in Minister of Water and Environmental Affairs
v Kloof Conservancy:
‘An order or decision of a court binds all those to whom, and all organs of State to which, it
applies. All laws must be written in a clear and accessible manner. Impermissibly vague
provisions violate the rule of law, which is a founding principle of our Constitution. Orders of
court must comply with this standard.’17
[38] There were only two orders directly relevant to the prosecution and defence in
the Mokoena and Mabula matters. The first was the order declining to strike the
matters from the roll and the second was the order pursuant to which the appellant
mero motu recused himself. For the rest, the greater part was pure surplusage and
gratuitous. Those orders did not further impact in any meaningful or tangible manner
on the prosecution or defence. They would accordingly only have had a passing
interest in whether or not the orders withstand further judicial scrutiny. Not so the
15 Cited with approval in Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development
Company Ltd & others [2013] ZASCA 5; [2013] 2 All SA 251 (SCA) para 17.
16 Minister of Home Affairs v Scalabrini Centre & others [2013] ZASCA 134; 2013 (6) SA 421 (SCA);
[2013] 4 All SA 571 (SCA) para 77.
17 Minister of Water and Environmental Affairs v Kloof Conservancy fn 13 above para 14.
officers in the Defence Force, who, whilst not parties to the proceedings and without
having been heard, found themselves on the wrong side of the appellant’s judgments.
Those subject to the appellant’s judgments (which he has not attempted to justify) may
well have grave difficulty in discerning what steps they are required to take to comply
with them. They would need to know with a measure of confidence what they are
obliged by the order of court to do or not do as the case may be. They have a direct
interest in the relief sought. It follows that in according standing to the Defence Force
the high court can hardly be faulted. Were it otherwise, the Defence Force would have
no machinery to cause the appellant’s judgment to be corrected or to reverse any of
the orders that are still extant and continue to operate against senior officers in the
SANDF.
As to the third:
[39] The contention advanced is that although the Defence Force had alleged
numerous irregularities in the appellant’s judgments, that was insufficient, inasmuch
as it had failed to show a gross irregularity. Thus, so the contention went, even were
it to be accepted that the appellant’s judgment was incorrect - an incorrect judgment
is not an irregularity. An irregularity refers to the method of conducting the trial. And,
for an irregularity to be gross, it must be of such a serious nature that the case was
not fully and fairly determined. In this regard, reliance was sought to be placed on
what was said by Schreiner J in Goldfields Investment v City Council of
Johannesburg.18
[40] That case dealt with the review of a lower court on the ground of gross
irregularity. It held that ‘the term encompasses the case where a decision-maker
misconceives the whole nature of the inquiry or his duties in connection therewith’.19
As Harms JA pointed out in Telcordia Technologies Inc v Telcom SA Ltd:20
18 Goldfields Investment Ltd and Another v City Council of Johannesburg and Another 1938 TPD 551.
19 Telcordia Technologies Inc v Telcom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266; [2007] 2 All SA
243; 2007 (5) BCLR 503 (SCA) para 71.
20 Ibid paras 72-73
‘It is useful to begin with the oft quoted statement from Ellis v Morgan21 where Mason
J laid down the basic principle in these terms:
“but an irregularity in the proceedings does not mean an incorrect judgment; it refers not to
the result, but to the methods of the trial, such as for example, some high-handed or mistaken
action which has prevented the aggrieved party from having his case fully and fairly
determined.”
The Goldfields Investment qualification to this general principle dealt with two situations. The
one is where the decision-making body misconceives its mandate, whether statutory or
consensual. By misconceiving the nature of the inquiry a hearing cannot in principle be fair
because the body fails to perform its mandate. Goldfields Investment provides a good
example. According to the applicable Rating Ordinance the aggrieved person was entitled to
appeal to the magistrates’ court against the value put on property for rating purposes by the
local authority. The appeal was not an ordinary appeal but involved, in terms of the Ordinance,
a rehearing with evidence. The magistrate refused to conduct a rehearing and limited the
inquiry to a determination of the question whether the valuation had been ‘manifestly
untenable’. This meant that the appellant did not have an appeal hearing (to which it was
entitled) at all because the magistrate had failed to consider the issue prescribed by statute.
The magistrate had asked himself the wrong question, that is, a question other than that which
the Act directed him to ask. In the sense the hearing was unfair. Against that setting the words
of Schreiner J should be understood.
‘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 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
21 Ellis v Morgan; Ellis v Dessai 1909 TS 576 at 581.
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. I agree that in the present case
the facts fall within this latter class of case, and that the magistrate, owing to the erroneous
view which he held as to his functions, really never dealt with the matter before him in the
manner which was contemplated by the section. That being so, there was a gross irregularity,
and the proceedings should be set aside.’22
[41] The appellant sought refuge in the expression ‘obiter dicta comments’.
However, that hollow euphemism is neither an accurate nor a fair reflection of what
happened. Tellingly, orders of court can hardly attract the appellation ‘obiter’. There
was no attempt whatsoever by the appellant to justify the orders granted by him. Nor
was there any attempt to defend them. That is hardly surprising because none of those
orders had been sought by any of the parties before him. He took it upon himself to
mero motu raise a range of issues and then to pronounce on them; thus in effect
becoming a judge in his own cause. In so doing, he allowed his personal feelings of
disquiet to intrude upon the discharge of his judicial duty. Not just that, the reach of
his orders went way beyond the strictures of the matters that served before him.
[42] Judges speak through their judgments. For a military judge to say of senior
officers in the Defence Force that ‘[his] court ruling provides the factual basis’ upon
which he is of the ‘prima facie view’ that there should be an investigation to determine
whether their conduct amounts to ‘unethical and/or unprofessional conduct’ or
‘Contempt of Court’ or that their ‘Officer’s Deeds of Commission’ be withdrawn, is a
most serious matter. There could however not be any ‘factual basis’ to speak of,
because no evidence had been placed before the appellant. The reference to ‘factual
basis’, which, in truth, is a rendition in the appellant’s judgment of his personal views,
22 Goldfields Investment Ltd fn 18 above at 560-561.
is thus inapposite and misleading. Had the orders been acted upon, the potential for
harm (which would have gone way beyond just reputational harm) to the officers
concerned was immense. It is no answer to say, as the appellant does, that his orders
were not acted upon. That was purely fortuitous. He obviously intended for them to
have force. Why else would he otherwise have issued them?
[43] A judicial officer can only perform his demanding and socially important duty
properly if he also stands guard over himself.23 It may be said that the appellant
breached several canons of good judicial behaviour. He was obliged to conduct the
trials before him in accordance with rules and principles that the law requires. He
failed. Basic tenets of judicial propriety and fairness were ignored. Language,
particularly in the context of the courtroom, is important and in this case, there are
several instances where it was been singularly unfortunate. The appellant, by his
language, tone and manner, seems to have overlooked the usual disinterested role of
a judge in a trial. His preoccupation with issues that had become all-consuming made
it difficult for him to objectively and dispassionately decide matters that came before
him from a position of relative detachment. This bent or predisposition also meant that
he deprived himself of the advantage of calm and dispassionate observation.
[44] As Harms DP pointed out in National Director of Public Prosecutions v Zuma:
‘. . . in exercising the judicial function judges are themselves constrained by the law. The
underlying theme of the court’s judgment was that the judiciary is independent; that judges
are no respecters of persons; and that they stand between the subject and any attempted
encroachments on liberties by the executive . . . This commendable approach was
unfortunately subverted by a failure to confine the judgment to the issues before the court; by
deciding matters that were not germane or relevant; by creating new factual issues; by making
gratuitous findings against persons who were not called upon to defend themselves; by failing
to distinguish between allegation, fact and suspicion; and by transgressing the proper
boundaries between judicial, executive and legislative functions.
Judges as members of civil society are entitled to hold views about issues of the day and they
may express their views provided they do not compromise their judicial office. But they are
23 S v Sallem 1987 (4) SA 772 (A).
not entitled to inject their personal views into judgments or express their political preferences.
. .24
[45] Thus, owing to his erroneous views and his preoccupation with issues that
affected him personally, which he impermissibly injected into his judgments, one
would have to say that the appellant wholly misconceived the nature of the enquiry
and his duties in connection therewith.25 Accordingly, he never truly applied his mind
to the issues before him and wrongly decided a range of issues that were not properly
before him. Those were issues justiciable on review.26
[46] It follows that the appeal in respect of the review application must fail.
The cross application
[47] The appellant did not seek to review and set aside the various decisions of
which he complained. In the cross application, which did not squarely meet the review
application, he contented himself with a series of what may be described as ‘abstract’
or ‘hypothetical’ constitutional challenges. In that regard what was said by Kriegler J
in Ferreira v Levin NO bears repeating:
‘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
24 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 and 16.
25 See also Telcordia Technologies Inc v Telcom SA Ltd fn 19 above paras 72 – 79.
26 Local Road Transportation Board v Durban City Council 1965 (1) SA 586 (A) at 598A-D.
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.’27
[48] In a similar vein, in Coin Security Group (Pty) Ltd v SA National Union for
Security Officers,28 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’.
[49] The constitutional challenge to ss 101 and 102 of the Defence Act 42 of 2002,
can be disposed of quite easily. Section 101 is headed ‘Convening boards of inquiry’.
Subsection 1 provides:
‘The Minister, the Secretary for Defence or the Chief of the Defence Force may, at any time
or place, convene a board of inquiry to inquire into any matter concerning the Department,
any employee thereof or any member of the Defence Force or any auxiliary service, any public
property or the property or affairs of any institution or any regimental or sports funds of the
said Force, and to report thereon or to make a recommendation.’
[50] At the bar, we were informed that the Defence Force would not be proceeding
with the BOI, which had been held in abeyance pending the review application. This
means that the issue, certainly as between the appellant and the Defence Force, has
become moot. And, given the reservations expressed by the new AG himself as to the
appropriateness of invoking those provisions for application to a military judge, as well
as the unlikelihood of a recurrence of the question in the future, there plainly is no live
issue as between the present parties upon which this Court need speak. Thus,
however the question is answered, the position of the parties will remain unaltered
27 Ferreira v Levin NO & others; Vryenhoek and Others v Powell NO & others [1995] ZACC 13; 1996
(1) SA 984 (CC); 1996 (1) BCLR 1 para 199.
28 Coin Security Group (Pty) Ltd v SA National Union for Security Officers & others [2000] ZASCA
137; 2001 (2) SA 872 (SCA) para 9.
and the outcome, certainly as far as this case is concerned, will be a matter of
complete indifference to them.
[51] The same may be said of the second constitutional challenge. No evidence
whatsoever was adduced that the appellant faced removal for whatever reason as a
military judge. It was stated by the appellant:
‘223
I further submit that section 17 of the MDSMA is unconstitutional to the extent that it
places the power to remove military judges in the hands of members of the executive.
Section 17 empowers the Minister, acting upon the recommendation of the [AG], to
remove a military judge due to incapacity, incompetence or misconduct.
As explained above, the [AG] is a member of the executive who is answerable to the
Minister and may be dismissed or suspended by the Minister. The [AG] is not an independent
actor by any measure.
. . .
As indicated above, it is constitutionally impermissible for members of the executive to
hold the power to exercise discipline over judicial officers.
This unconstitutional state of affairs is aggravated by the fact that the determination of
whether a military judge is fit for office is vested exclusively in the [AG] and the Minister. There
is no requirement that this determination be made by an independent body that is separate
from the executive.
On this basis, section 17 of the MDSMA is an unconstitutional breach of the
requirements of judicial independence.’
[52] This constituted the high water mark of the appellant’s case. In it, there is not
the faintest hint that the AG had even contemplated a recommendation to the Minister
that the appellant be removed, much less that the Minister had ever considered doing
so. There is no suggestion in the papers that the invocation of s 17 of the MDSMA
had so much as even featured in the thinking of either of them.
[53] Like the second constitutional challenge, the third, too, rested not upon a true
factual foundation, but instead an entirely speculative hypothesis. In the document,
styled ‘Military Judges’ concerns . . .’, the appellant had initially expressed the view
that: ‘Sec 14(1)(b) MDSMA might be unconstitutional’; the appointment for a ‘fixed
term . . . does not meet the requirement that the military judge shall have security of
tenure’; and, ‘there may have been Executive interference in the functioning of the
Military Courts and/or the assignment of the Military Judges for 2014/15’.
Subsequently, in his judgment, the appellant touched on aspects ‘regarding the
constitutionality of the assignment of military judges’, which included ‘the delay in the
assignment of Military Judges in general (including that of the Military Judge) in these
particular cases’; a lack of awareness of the ‘objective criteria required for an
assignment as a Military Judge’; and, the ‘lack of tenure of Office of a Military Judge’.
[54] What the quoted excerpts show is not just a manifest inability to properly
articulate the complaint, but also a constantly evolving one. It grew from the rather
vague assertion that s 14(1)(b) ‘might be unconstitutional’ or ‘there may have been
Executive interference’, to a challenge the precise contours of which still remain to be
clearly defined. Shifting targets, it goes without saying, can hardly conduce to clarity.
Thus, by the time that the counter application had come to be filed, the appellant had
set his sights on s 15, not s 14 as presaged in his earlier utterances.
[55] Despite the fact that s 15 is an extension of the Minister’s powers under s 14,
and the two sections being inextricably linked to each other, in the case, as it evolved,
the appellant no longer had any quarrel with the power afforded to the Minister by s
14 to assign an officer to the function of a military judge. Nor did he have any quarrel
with the power of the Minister under s 15 to make any assignment contemplated in ss
13 and 14 for a fixed period (whatever the duration of that period may be) or coupled
to a specific deployment, operation or exercise (such as by way of example as debated
at the bar a foreign deployment). This is hardly surprising because s 15 relates to the
assignment of officers to the whole range of functions envisaged in Chapter 3, not just
that of a military judge.
[56] Accordingly, the constitutional challenge as it eventually came to be articulated
on the papers, was a far more narrowly circumscribed one. In that regard, the
appellant stated:
‘240
I regard my time as a military judge as the highlight of my career. An appointment and
assignment as a military judge is a prestigious event that confers greater status and respect.
As a result, it is reasonable to anticipate that military judges may be inclined to temper their
reviews or adjust their judgments to secure further assignments. At the very least, it creates
a reasonable apprehension that these pressures might be brought to bear on military judges.
. . .
In these circumstances, renewable terms would lead a reasonable person, who is
aware of the context, to form the impression that military judges and senior military judges
lack sufficient institutional independence.
Therefore, I submit that on a proper interpretation of section 15 of the MDSMA, the
Minister (acting on the recommendation of the [AG]) is not empowered to assign military
judges on renewable terms.
243.1 Section 15 does not give the Minister any express power to make renewable
assignments of military judges: It provides that assignments for all officers under Chapter 3 of
the Act (included prosecutors, defence counsel and military judges) “shall be for a fixed period
or coupled to a specific deployment, operation or exercise”. No mention is made of renewable
assignments.’
[57] However, once it is accepted that the Minister can assign officers to the function
of a military judge and can do so for a fixed period of whatever duration, it is difficult
to see why the Minister cannot renew such an appointment. It must be said that there
can be little to choose between a series of successive appointments for a fixed period
and the renewal of an appointment after it has run its term. Here as well, the case
advanced in support of the s 15 challenge is a purely conjectural one. It rests on the
assertion that it may be ‘reasonable to anticipate that military judges may be inclined
to temper their reviews or adjust their judgments to secure further assignments’. But,
once again there is nothing to suggest that any military judge has been put to such a
choice. To suggest that a judge may be conscripted to one or other end is a most
serious allegation. It ill behoves the appellant to raise an allegation such as this, in this
vague and unsubstantiated fashion. The insinuation that a judge may ‘adjust a
judgment’ to ‘secure further assignments’ is nothing short of scandalous. Absent a
proper factual foundation (of which there is none) any apprehension of such possibility
can hardly be reasonable.
[58] What the appellant really seeks is to have this Court express a view on legal
issues that he hopes to have decided, which would not in any way affect his position
relative to the Defence Force. No doubt, any future matters (should there be such) will
be decided by that court, as this was, on its own peculiar facts. It must also be
accepted, as the appellant recognised, that none of the other military judges shared
his constitutional concerns. He also appreciated that whatever he said was to raise
awareness, had no precedential significance and was thus not binding on his
colleagues.
[59] In effect what the appellant is seeking is legal advice from this Court in respect
of legal disputes that may or may not arise in the future. But, as Innes CJ observed in
Geldenhuys & Neethling v Beuthin:
‘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.’29
In National Coalition for Gay and Lesbian Equality v Minister of Home Affairs, 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.’ 30
29 Geldenhuys & Neethling v Beuthin 1918 AD 426 at 441.
30 National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs & others [1999]
ZACC 17; 2000 (2) SA 1; 2000 (1) BCLR 39 para 21 at footnote 18.
[60] It follows that the appeal against the dismissal of the cross application must
also fail.
[61] Costs remain: The high court ordered the appellant to pay the costs of the:
(a) ‘review of the orders granted on 14 October 2016’ (para 6); and (b) counter-
application (para 10). In arriving at that conclusion, the high court held that there was
‘no reason to deviate from the principle that costs follow the result’. However, that was
to ignore the well-established principle that ‘in general, the courts will only grant a
costs order against a judicial officer in a dispute over the performance of their judicial
functions where bad faith on their part has been proven’.31 The high court did not enter
into that enquiry and made no findings of bad faith or other serious misconduct. In
respect of the counter application, the high court had no regard to the Biowatch
principle pertaining to costs in constitutional matters.32 On this basis, those costs
orders cannot stand, irrespective of the outcome of the appeal.
[62] In the result, save for setting aside paragraphs 6 and 10 of the order of the high
court, the appeal is dismissed.
_________________
V M PONNAN
JUDGE OF APPEAL
_________________
M CHETTY
ACTING JUDGE OF APPEAL
31 Pangarker v Botha [2014] ZASCA 78; [2014] 3 All SA 538 (SCA); 2015 (1) SA 503 (SCA) para 39.
32 Biowatch Trust v Registrar Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC);
2009 (10) BCLR 1014 (CC) at paras 21-24.
APPEARANCES
For appellant:
G Marcus SC, C McConnachie and M Marongo
Instructed by:
Griesel & Breytenbach Attorneys
Phatshoane Henney Attorneys, Bloemfontein
For 1st to 4th respondents:
EK Tsatsi SC and TC Kwinda
Instructed by:
The 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:
13 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
Lieutenant Colonel KB O’Brien NO v The Minister of Defence and Military Veterans and Others
(1271/2021) [2022] ZASCA 178 (13 December 2022)
Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal, save for
setting aside paragraphs 6 and 10 of the order, against the decision of the Gauteng Division of the High
Court, Pretoria (the high court) which upheld an application by the Minister of Defence and other parties
associated with the South African National Defence Force (SANDF) to review and set aside certain
orders made by the appellant, Lieutenant Colonel O’Brien, a former military judge. In 2014, the appellant
took to making remarks concerning the brief renewable assignments of military judges and the
implications of this for the independence of military courts. He expressed his views while presiding over
matters as a military judge. His remarks caused disquiet within the SANDF, with the independence of
the military courts being called into question.
On 5 December 2015, the former Director: Military Judges (the DMJ), Brigadier General Slabbert, held
a meeting with the appellant after he raised the constitutionality of assignments of military judges in
open court. In the course of that meeting, the appellant was instructed not to use the military court as a
forum for 'awareness campaigns and constructive criticism'.
In August 2016, the appellant presided in two trials where the accused encountered substantial delays
before their matters could come before the military courts. This prompted an application on behalf of
the accused for their matters to be struck from the roll on account of the unreasonable delay. The
appellant dismissed the applications but seized the opportunity to repeat his concerns about the
constitutionality of appointing military judges on brief renewable assignments, and its implications for
the independence of military courts. The appellant issued orders in terms of s342A of the Criminal
Procedure Act, directing officers in charge of the SANDF to investigate possible disciplinary action
against members of staff, as well as the Minister of Defence in respect of her failure to assign military
judges for a specific period. He further directed that his ruling be served on the President, and for the
President to indicate what steps he intended taking against the Minister of Defence.
In the aftermath of the ruling and orders, the appellant was counselled by the Director of Military Judges
that if he continued on this path, future assignments to him as a military judge, were at risk. It was
suggested to the appellant that he should recuse himself from the pending trials before him, in light of
his views. The appellant thereafter informed the parties that he would be recusing himself, but not
without first bringing to their attention that the Adjutant-General (AG) had decided to appoint a Board of
Inquiry into his conduct as a military judge – described as his ‘constitutional exclamations’. The
appellant responded by threatening court action if the SANDF proceeded with the Board of Inquiry. He
then issued various orders directing the AG and others to serve a copy of his rulings of the General
Council of the Bar (GCB), the Judicial Service Commission and the Minister of Defence to consider
what steps, if any, they would take against certain named members of the defence force. In the period
that followed, the two trials over which the appellant was due to preside were allocated to other military
judges for finalisation. The appellant was not assigned further duties as a military judge.
Once the new AG had been appointed, a view was taken that the Board of Inquiry was an inappropriate
mechanism to inquire into the appellant’s conduct. After a lengthy delay, the Minister of Defence and
other respondents brought review proceedings to set aside the orders issued by the appellant, except
for those where he recused himself. The appellant opposed the application which sought to set aside
his orders. Although he proclaimed not to defend the substance of his rulings, he proceeded to oppose
the application on grounds of undue delay, that the SANDF lacked standing to review his rulings and
that the review was without merit. He brought a counter application challenging the constitutionality of
sections 101 and 102 of the Defence Act on the basis that it allows for a member of the Executive to
convene a Board of Inquiry to investigate military judges. In addition, he challenged the provisions of
sections 17 of the Military Discipline Supplementary Measure Act 16 of 1999 to the extent that it
empowers the Minister, acting on the recommendation of the AG, to remove a military judge. The third
challenge was directed at section 15 of the MDSMA which empowers the Minister, acting on the
recommendation of the AG, to assign military judges for renewal periods.
The review application succeeded before the high court, which also dismissed the constitutional
challenges. It ordered the appellant to pay the costs occasioned by the constitutional challenge, as well
as the application to set aside orders which followed his recusal. The matter came before the SCA with
the leave of the high court.
The SCA found no grounds to interfere with the decision of the high court to condone the delay in
bringing the review proceedings, based in part on the prospects of success in setting aside the offending
orders issued by the appellant. The appellant’s orders directed a host of bodies, including the General
Council of the Bar, the Chairperson of the Magistrate’s Commission and the Chairperson of the Law
Society of the Northern Provinces to take certain measures against named members of the SANDF.
Such orders would remain binding until set aside by a court of competent jurisdiction. The SCA found
that respondents could not be faulted for bringing the review application to set aside the offending
orders, particularly where orders are issued against persons who were not parties to the litigation.
The Court also found that the appellant, as a judicial officer, sought to give expression to his personal
views of the military courts, and the extent to which he considered it lacking in independence. In doing
so, he breached several canons of good judicial behaviour. His pre-occupation with these issues blurred
his objectivity. In the result, he did not truly apply his mind to the issues before him and accordingly the
orders issued could not stand.
As to the challenges directed at various statutory provisions providing for the establishment of a Board
of Inquiry to investigate military judges; the powers of the Minister to remove a military judge and the
assignment of military judges to brief, renewable periods – all were dismissed on grounds of being
either ‘abstract’ or ‘hypothetical’. The issue pertaining to the Board of Inquiry became moot once the
new AG expressed the inappropriateness of this mechanism being applicable to a military judge. There
was therefore no live issue between the parties.
Similarly, there was no evidence of any attempt to remove the appellant from his position as a military
judge, and no basis to challenge the provisions of s17 of the MDSMA. While the appellant only sought
to challenge s15 of the MDSMA allowing the Minister to appoint military judges for fixed, renewable
periods, there was no challenge to s14 in respect of the Minister’s power to assign military judges. The
SCA found that there was nothing to support the contention that military judges may be inclined to adjust
their judgments to secure further assignments. Accordingly, the counter application could not succeed.
The SCA set aside the high court’s decision in which the appellant was ordered to pay the costs of the
failed constitutional challenge and those of the review pertaining to the decision to recuse himself in
two trials. The SCA considered that the Biowatch principles should apply. Moreover, the proceedings
in the high court were instituted against the appellant in his capacity as a judicial officer, without any
finding of bad faith on his part. The order of costs against the appellant could not stand.
Accordingly, the appeal against the decision of the high court, except for the issue of costs, was
dismissed.
~~~~ends~~~~
|
2904
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 20003/2014
Reportable
In the matter between:
Firstrand Bank Limited
Appellant
and
Raymond Clyde Kona First Respondent
Amie Gertrude Kona Second Respondent
Neutral Citation: Firstrand Bank v Kona & another 20003/2014 [2015] ZASCA 11
(13 March 2015)
Coram: Mpati P, Cachalia and Mbha JJA and Van der Merwe and Meyer AJJA
Heard:
26 February 2015
Delivered: 13 March 2015
Summary: National Credit Act 34 of 2005 – interpretation of s 88(3) – existence of
debt re-arrangement order not a bar to the grant of a sequestration order.
Court – precedent and stare decisis – observance of doctrine mandatory.
___________________________________________________________________
ORDER
On appeal from: North Gauteng High Court, Pretoria (Phatudi J sitting as court of
first instance):
(a)
The appeal succeeds with costs, which costs shall be paid out of the joint
estate of the respondents as part of the costs of sequestration.
(b)
The order of the court a quo is set aside and replaced with:
‗The joint estate of the respondents is placed under final sequestration.‘
__________________________________________________________________
JUDGMENT
Meyer AJA (Mpati P, Cachalia and Mbha JJA and Van der Merwe AJA
concurring)
[1] This is an appeal against an order of the North Gauteng High Court, Pretoria
(Phatudi J) on 7 March 2014 discharging a provisional order of sequestration of the
joint estate of the respondents, who are married in community of property. The
appeal is with leave of the high court.
[2] It is common cause that the appellant has a liquidated claim against the
respondents. As at 26 August 2011 their indebtedness to the appellant amounted to
R953 903.48 plus interest thereon at the rate of 7.30 per cent per annum. The
indebtedness arose as a result of an overdraft facility the appellant had granted to
the respondents pursuant to the conclusion of a written loan agreement on 7 August
2006. The facility was subsequently increased. The moneys borrowed from the
appellant were secured by a first and a second mortgage bond registered in favour
of the appellant over an immovable property owned by the respondents and in which
they reside. The National Credit Act 34 of 2005 (the NCA) applies to the loan
agreement. The appellant is a ‗credit provider‘ and each respondent a ‗consumer‘ as
contemplated in s 1 of the NCA.
[3] During the year 2008 the respondents applied to a registered debt counsellor,
Mr Rael Zimmerman, for a debt review in terms of s 86(1) of the NCA. They
submitted an application, as required in terms of reg 24(1)(a) read with Form 16 of
the regulations promulgated in GN R489, GG 28864, 31 May 2006 (the NCA
regulations) to the debt counsellor. The debt counsellor dispatched notices dated 25
July 2008 in accordance with s 86(4)(b) read with reg 24(2) and Form 17.1 to credit
bureaux and the respondents‘ credit providers that were listed in their application,
advising them that the respondents have applied for debt review in terms of s 86 of
the NCA. He conducted an assessment in terms of s 86(6) and concluded that the
respondents were over-indebted. He thereafter sent further notices dated 3
September 2008 in accordance with reg 24(10) and Form 17.2 to credit bureaux and
the respondents‘ credit providers advising them that the respondents‘ application for
debt review had been successful and that their debt obligations were being
restructured.
[4] The proposal which the debt counsellor made to the respondents‘ credit
providers, including the appellant, reflects a substantial monthly shortage of their
income over their expenditure. The debt counsellor recommended that the period for
payment in respect of each credit agreement be extended and that the monthly
payments be reduced accordingly. He also recommended that the interest accruing
on the debt owed to the appellant be reduced to a rate of 5 per cent per annum.
Interest reductions in respect of other debts were also recommended. The appellant
was one of the credit providers which did not consent to the debt counsellor‘s
proposal.
[5] The debt re-arrangement order proposed was put before the Magistrate‘s
Court, Alberton, in terms of s 86(7), read with ss 87 and 79 of the NCA, by means of
a substantive application. BMW Financial Services (SA) (Pty) Ltd and the appellant
opposed the application. On 20 August 2009 the magistrates‘ court issued an order
declaring the respondents to be over-indebted and re-arranging their obligations in
accordance with the debt re-arrangement proposed by the debt counsellor.
(Whether the reduction in contractually agreed interest rates renders the debt re-
arrangement order invalid as contended for by the appellant is a matter that needs
not be decided in this matter.) The respondents failed to effect proper and punctual
payment to the appellant of the reduced monthly instalments due to it in terms of the
debt re-arrangement order.
[6] Because the respondents were in default under the loan agreement and with
their obligations in terms of the debt re-arrangement order, the appellant adopted the
stance that it was entitled to enforce its rights and securities under the loan
agreement and mortgage bonds in terms of s 88(3) of the NCA. Section 88(3) reads
as follows:
‗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.‘
(Section 86(4)(b)(i) referred to in s 88(3), read with reg 24(2) and Form 17.1, enjoins
a debt counsellor to notify all credit providers listed in a consumer‘s application that
the consumer has applied for debt review in terms of s 86 of the NCA. The
references in s 88(3) to other provisions of the NCA are not presently relevant.)
[7] The appellant accordingly instituted an action against the respondents in the
North Gauteng High Court on 20 January 2011 claiming payment of the sum of R923
911.72, interest thereon at the rate of 7.30 per cent per annum from 1 January 2011,
an order declaring the immovable property executable and costs on the scale as
between attorney and client. The action was defended and the respondents
successfully resisted summary judgment.
[8] On 5 March 2012 the appellant launched an application for the sequestration
of the respondents‘ joint estate. It relied on the outstanding indebtedness as at 26
August 2011 of R953 903.48 and interest thereon at the rate of 7.30 per cent per
annum. The respondents opposed the sequestration application, and answering and
replying affidavits were exchanged. On 5 August 2013 the opposed application for
the provisional sequestration of the respondents‘ joint estate was heard by Van
Oosten J. His judgment was delivered on 8 August 2013. He issued an order
provisionally sequestrating the respondents‘ joint estate and a rule nisi calling upon
the respondents and all other interested parties to show cause on the return day why
the provisional order should not be confirmed.
[9] On 19 September 2013 the respondents launched an interlocutory application
in which they sought to set aside the provisional order. The appellant filed an
affidavit in opposition to this application. I need not express any view on this
somewhat unusual procedure that was adopted. It was not objected to by the
appellant. On 7 March 2014 Phatudi J made an order setting aside the provisional
order, discharged the rule nisi and ordered the appellant to pay the respondents‘
costs.
[10] In setting aside the provisional sequestration order the high court held that an
application by a credit provider for the sequestration of a consumer‘s estate
constitutes ‗other judicial process‘ in terms of s 88(3) of the NCA by which the credit
provider exercises or enforces a right under the credit agreement between itself and
the consumer. The words ‗other judicial process‘, so the high court held, mean ‗any
motion proceedings including sequestration applications‘. The high court also
inferred from the appellant‘s ‗papers and submissions made‘ that it ‗opted to pursue
the recovery of the debt by way of insolvency proceedings‘. The high court further
held that a debt re-arrangement order contemplated in s 86(7)(c)(ii) of the NCA,
unless and until set aside by a competent court, constitutes a bar to the compulsory
sequestration of a consumer‘s estate.
[11] The appellant‘s purpose in applying for the sequestration of the respondents‘
estate may well have been to obtain payment of its debt. However, Solomon JA said
this in Estate Logie v Priest 1926 AD 312 at 319:
‗It appears to me that it is perfectly legitimate for a creditor to take insolvency proceedings
against a debtor for the purpose of obtaining payment of his debt. In truth that is the motive
by which persons, as a rule are actuated in claiming sequestration orders. They are not
influenced by altruistic considerations or regard for the benefit of other creditors, who are
able to look after themselves. What they want is payment of their debt, or as much of it as
they can get.‘
A credit provider‘s motive is irrelevant to the question whether sequestration
proceedings are proceedings to ‗exercise or enforce by litigation or other judicial
process any right or security‘ as characterized by s 88(3) of the NCA. (See Investec
Bank Ltd & another v Mutemeri & another 2010 (1) SA 265 (GSJ) paras 27-28;
Firstrand Bank Ltd v Evans 2011 (4) SA 597 (KZD) paras 23-24.)
[12] In Naidoo v ABSA Bank Ltd 2010 (4) SA 597 (SCA) para 4 this court held ‗that
sequestration proceedings are not in and of themselves ―legal proceedings to
enforce the agreement‖ within the meaning of s 129(1)(b)‘. In this regard Cachalia
JA said the following:
‗Mr Reddy's submission, as I understand it, implicitly contains a concession that
sequestration proceedings are not in and of themselves ―legal proceedings to enforce the
agreement‖ within the meaning of s 129(1)(b). That his concession is correct is clear from
the recent judgment in Investec Bank Ltd and Another v Mutemeri and Another, where
Trengove AJ concluded that an order for the sequestration of a debtor's estate is not an
order for the enforcement of the sequestrating creditor's claim, and sequestration is thus not
a legal proceeding to enforce an agreement. He did so after carefully considering the
authorities which have held that – ―sequestration proceedings are instituted by a creditor
against a debtor not for the purpose of claiming something from the latter, but for the
purpose of setting the machinery of the law in motion to have the debtor declared insolvent‖ -
they are not proceedings ―for the recovery of a debt‖. The learned judge's reasoning
accords with this court's description of a sequestration order as a species of execution,
affecting not only the rights of the two litigants, but also of third parties, and involves the
distribution of the insolvent's property to various creditors, while restricting those creditors'
ordinary remedies and imposing disabilities on the insolvent - it is not an ordinary judgment
entitling a creditor to execute against a debtor.‘
(Footnotes are omitted.)
[13] The same reasoning, as was pointed out by Wallis J in Evans, para 25-
‗. . . also led Trengove AJ to conclude that sequestration proceedings are not proceedings
―in respect of a credit agreement‖ within the meaning of s 130(3) of the Act, or an endeavour
to exercise or enforce by litigation or other judicial process any right or security under the
credit agreement as referred to in s 88(3) of the NCA.‘
Wallis J, bound to accept the authority and the binding force of a decision of this
court as he was, followed these conclusions and the reasoning by which they were
arrived at and added-
‗. . . that it avoids what would otherwise be the very odd conclusion, that the NCA operates
to preclude credit providers from sequestrating the estates of their debtors, but does not
prevent other creditors from doing so. If sequestration of a person's estate, while they are
under debt review, was to be rendered impermissible, there appears to be no sound reason
why it should be available to creditors who are not credit providers under the NCA.
Conversely, there is no obvious reason why credit providers should be a class of creditor
excluded from invoking the mechanisms of the Insolvency Act.‘
[14] I conclude, therefore, that an application by a credit provider for the
sequestration of a consumer‘s estate in which it relies on its claim in terms of a credit
agreement to qualify as a creditor for the purpose of instituting sequestration
proceedings does not constitute ‗litigation or other judicial process‘ by which the
credit provider exercises or enforces any right or security under the credit agreement
within the meaning of s 88(3) of the NCA. An application for the sequestration of a
consumer‘s estate is thus not precluded by the prohibition on the institution of
proceedings envisaged in s 88(3) of the NCA.
[15] Recognizing that the provisions of s 88(3) constitute no bar to the institution of
sequestration proceedings implies further that the existence or validity of a debt re-
arrangement order is immaterial to an application for sequestration of the
consumer‘s estate, unless the debt re-arrangement order is raised as a circumstance
for the court to exercise its discretion in favour of the debtor. (See Evans, paras 29-
37.) Circumstances that would have justified the high court to have exercised the
discretion vested in it in terms of s 12(1) of the Insolvency Act 24 of 1936 in favour of
the respondents are absent. There is no evidence that establishes that the
respondents‘ debts would be paid within a reasonable time. On the contrary, the
evidence shows that the respondents did not comply with the terms of the debt re-
arrangement order and that the payments made to the appellants in terms of that
order did not even discharge the monthly interest accruing on the debt.
[16] Finally, I consider it necessary to express a view on the high court‘s
conclusion that a debt re-arrangement order contemplated in s 86(7)(c)(ii) of the
NCA constitutes a bar to the compulsory sequestration of a consumer‘s estate,
unless and until set aside by a competent court. That conclusion is premised on the
erroneous finding that an application for sequestration seeks to enforce the credit
agreement, and is in conflict with this court‘s interpretation in Naidoo. It
misconstrues the nature and effect of a debt re-arrangement order.
[17] As was said by Wallis J in Evans, para 35-
‗[t]he effect of a debt re-arrangement order is to place a moratorium on credit providers
pursuing their contractual remedies, for so long as the debtor complies with the terms of the
debt re-arrangement order. Once it is recognised that an application for sequestration is not
the enforcement of the credit agreement, it must follow that any moratorium to claiming
payment, under the credit agreement that exists by virtue of a debt re-arrangement order, is
not a bar to the grant of a sequestration order.‘
[18] The moratorium is lifted by operation of law - and accordingly without the
need to have the debt re-arrangement order set aside - once the consumer is in
default of the relevant credit agreement and is in default of the debt re-arrangement
order. In Firstrand Bank Ltd v Fillis 2010 (6) SA 565 (ECP) para 16, Eksteen J, in
construing s 88(3) of the NCA, stated that-
‗[i]t follows . . . that once the jurisdictional requirement set out in s 88(3)(a) co-exists with any
one of the jurisdictional requirements set out in s 88(3)(b), the credit provider is at liberty to
proceed and to exercise and enforce, by litigation or other judicial process, any right or
security under his credit agreement, without further notice.‘
[19] Both the Constitutional Court in Ferris & another v Firstrand Bank Ltd 2014 (3)
SA 39 (CC) para 16, and this court recently in Jili v Firstrand Bank (763/13) [2014]
ZASCA 183 (26 November 2014) para 22, cited with approval the passage in Fillis
quoted above. Moseneke ACJ, in delivering the unanimous judgment of the court in
Ferris, said the following:
‗[14] . . . Once the restructuring order had been breached, FirstRand was entitled to enforce
the loan without further notice. This is clear from the wording of the relevant sections of the
Act. Section 88(3)(b)(ii) does not require further notice — it merely precludes a credit
provider from enforcing a debt under debt review unless, among other things, the debtor
defaults on a debt-restructuring order. Moreover, s 129(2) expressly stipulates that the
requirement to send a notice under s 129(1) is not applicable to debts subject to debt-
restructuring orders.‘
[20] Leach JA in Jili, para 25, concluded that-
‗. . . the appellant‘s default under the debt re-arrangement order entitled the respondent,
without further ado, to proceed to recover the motor vehicle in question from her.‘
[21] The decision of this court in Naidoo and that of the Constitutional Court in
Ferris were referred to in the judgment of the high court. The legal principles
enunciated in the two decisions were binding on that court and precluded it from
arriving at any of the three conclusions to which I have referred. The statement of
principle by Didcott J in Credex Finance (Pty) Ltd v Kuhn 1977 (3) SA 482 (N) that is
thus concisely summarised in the headnote to that judgment is in point:
‗The doctrine of judicial precedent would be subverted if judicial officers, of their own accord
or at the instance of litigants, were to refuse to follow decisions binding on them in the hope
that appellate tribunals with the power to do so might be persuaded to reverse the decisions
and thus to vindicate them ex post facto. Such a course cannot be tolerated.‘
[22] The Constitutional Court, in Camps Bay Ratepayers’ and Residents’
Association & another v Harrison & another 2011 (4) SA 42 (CC), paras 28-30,
expressed itself in no uncertain terms about observance by courts of the maxim
stare decisis or the doctrine of precedent. Brand AJ, in delivering the unanimous
judgment of the court said:
‗Considerations underlying the doctrine were formulated extensively by Hahlo & Kahn [Hahlo
& Kahn The South African Legal System and its Background (Juta), Cape Town 1968) at
214-15]. What it boils down to, according to the authors, is: '(C)ertainty, predictability,
reliability, equality, uniformity, convenience: these are the principal advantages to be gained
by a legal system from the principle of stare decisis.' 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 that 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.‘
(Footnotes are omitted.)
[23] The formal and substantive requisites for a final sequestration order have
been established. There are no circumstances that warrant the exercise of a court‘s
discretion in favour of the respondents. The high court should have sequestrated the
joint estate of the respondents.
[24] In the result the following order is made:
(a)
The appeal succeeds with costs, which costs shall be paid out of the joint
estate of the respondents as part of the costs of sequestration.
(b)
The order of the court a quo is set aside and replaced with:
‗The joint estate of the respondents is placed under final sequestration.‘
___________________
PA Meyer
Acting Judge of Appeal
APPEARANCES
For Appellant:
L Meintjes
Instructed by:
Rorich Wolmarans & Luderitz Inc, Pretoria
Symington & De Kok, Bloemfontein
For Respondent:
SS Cohen
Instructed by:
Ledwaba
Attorneys
c/o
Phukubye
Attorneys, Pretoria
Moroka Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
13 March 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Firstrand Bank v Kona & another (20003/2014) [2015] ZASCA 11
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) upheld the appeal by Firstrand Bank (the appellant) and
set aside the order of the North Gauteng High Court, Pretoria. In the result, the joint estate of
Raymond Clyde Kona and Amie Gertrude Kona (the respondents) was placed under final
sequestration.
The issue before the SCA was whether s88 (3) of the National Credit Act (the Act) prevented a credit
provider from applying for the sequestration of a consumer where that consumer was the subject of a
debt-rearrangement order.
The appellant had a liquidated claim of around R950 000 against the joint estate of the respondents.
The provisions of the Act applied to the relevant transaction and the appellant was a ‘credit provider’
and the respondents were ‘consumers’ for the purposes of the Act. In 2009, the respondents were
declared over-indebted by a magistrate’s court and their debts were re-arranged. Subsequently, they
failed to meet their obligations to the appellant in terms of the debt-rearrangement order. The
appellant accordingly sought to have the joint estate of the respondents sequestrated.
The respondents argued that the appellants were prohibited from applying for their sequestration in
terms of s 88(3) of the Act, which provides inter alia that a credit provider who has received notice of
an application for debt review may not ‘exercise or enforce by litigation or other judicial process any
right or security under [an affected] credit agreement’ unless certain conditions are met. The court a
quo upheld the respondents’ argument, and ruled that a sequestration application constituted ‘other
judicial process’, that the appellant intended to pursue recovery of the debt through sequestration
proceedings, and that a debt-rearrangement order under the Act, unless and until set aside by a
competent court, constitutes a bar to the compulsory sequestration of a consumer’s estate.
The SCA, referring to a number of cases previously decided both by itself as well as by the
Constitutional Court, held that there was clear authority to the effect (i) that sequestration proceedings
are not treated as ‘other judicial process’ for the enforcement of a credit agreement for the purposes
of the Act, and that s (88)(3) therefore does not impose a bar on the institution of sequestration
proceedings; (ii) that the motive of the appellant in applying for sequestration is irrelevant in this
context; and (iii) that the moratorium imposed by the debt-rearrangement order is automatically lifted
once the conditions in s88 (3) are met. It is not necessary to have the moratorium lifted by court
order. Therefore, the decision of the court a quo was incorrect and was set aside.
The SCA further expressed its displeasure with the court a quo, which referred to a number of cases
which were binding on it but nevertheless came to a conclusion contrary to those decisions and the
established law. The SCA reaffirmed the importance of the principle of stare decisis and the binding
nature of precedent, and held that the high court should not have ruled as it did.
--- ends ---
|
3921
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 755/2021
In the matter between:
MADRASAH TALEEMUDDEEN ISLAMIC
INSTITUTE
APPELLANT
and
CHANDRA GIRI ELLAURIE FIRST RESPONDENT
eTHEKWINI MUNICIPALITY SECOND RESPONDENT
Neutral citation: Madrasah Taleemuddeen Islamic Institute v Chandra Giri
Ellaurie and Another (755/2021) [2022] ZASCA 160 (24
November 2022)
Coram:
DAMBUZA ADP and GORVEN and HUGHES JJA, and
MUSI and DAFFUE AJJA
Heard:
19 September 2022
Delivered:
24 November 2022
Summary:
Nuisance – the right to undisturbed use and enjoyment of own
property is not unlimited – reasonable interference is to be expected depending
on the circumstances in a specific neighbourhood – oversensitivity or personal
peculiarities do not serve as a standard for reasonableness – the question of
whether the interfering conduct is constitutionally guaranteed is a relevant
consideration – principles governing interdicts restated.
ORDER
On appeal from: KwaZulu-Natal Division of the High Court, Durban (Mngadi J
sitting as court of first instance):
The appeal is upheld with costs, including the costs of two counsel where
so employed.
The judgment of the high court is set aside and replaced with the following:
‘The application is dismissed with costs.’
JUDGMENT
Dambuza ADP (Gorven and Hughes JJA and Musi and Daffue AJJA
concurring):
[1] When is noise emanating from a neighbour’s immovable property
actionable in law? The first respondent in this appeal, Mr Chandra Giri Ellaurie,
obtained an interdict in the KwaZulu-Natal Division of the High Court, Durban
(the high court) against the appellant, Madrasah Taleemuddeen Islamic Institute
(the madrasah)1, in terms of which the high court ordered that the sound of the
‘Call to Prayer’ (the Azaan) generated from the madrasah’s immovable property,
should not be heard at Mr Ellaurie’s property. Mr Ellaurie had also sought orders
that the madrasah cease its operations on the property, that it be divested of the
property, and that the property be sold to either a state organ, or a non-Muslim
South African, a Non-Governmental Organisation, a Non-Profit Organisation, or
1 The name ‘madrasah’ in itself signifies a school of Islamic studies.
a Public Benefit Organisation. The high court only granted the interdict in relation
to the Azaan – that the madrasah had to ensure that the Azaan would ‘not [be]
audible within the buildings on [Mr Ellaurie’s] property’. The madrasah appeals
against this order, with the leave of this Court.
[2] Mr Ellaurie lives about 20 metres from the madrasah’s property in Isipingo
Beach, South of eThekwini in the KwaZulu-Natal Province. On its property the
madrasah conducts a school for Islamic studies. About 340 students live in
boarding facilities on the madrasah property, which is spread over three lots.
There is a mosque located on the madrasah property. Every day five daily prayers
are performed in the mosque. Each prayer is preceded by the Azaan, which is
delivered by a Muadhin, to remind people of the Islamic faith to come to prayer.
It is the Azaan that had to be inaudible at Mr Ellaurie’s property, in terms of the
court order.
[3] Although there is no cross-appeal in respect of the dismissal of the claim
for eviction of the madrasah and confiscation of its immovable properties, in his
heads of argument, Mr Ellaurie repeated this claim and set out numerous reasons
why the madrasah should be driven out of Isipingo Beach. Most of these reasons
reveal his abhorrence of the Islamic faith. Not all of these reasons are repeated in
this judgment, as no useful purpose will be served by doing so.
[4] Of relevance to the noise nuisance claim, is Mr Ellaurie’s complaint that
the Azaans invaded his personal space and that they happened at an ‘unearthly
time’, the first being around 03h30 at the start of summer. He complained that
they gave a ‘distinctly Muslim atmosphere to the area’, and a lot of non-Muslim
people found them repugnant. He lamented the growth of the Muslim community
in Isipingo Beach over the 15 years preceding his application to court, and argued
that, as a result of their dominance in the town, Muslim people had become
arrogant. He believed that Islam promotes racism, bigotry and sexism, and pays
no regard to the Constitution. He blamed the Constitution for affording protection
to all religions, and maintained that, in relation to Islam, the protection is
undeserved and must have been extended only as a result of unawareness of the
inequities ingrained therein.
[5] Prior to the interdict application, various forms of intervention were
undertaken to attempt to resolve the dispute between Mr Ellaurie and the
madrasah. These included an unsuccessful attempt by the second respondent, the
eThekwini Municipality (the city), to mediate in 2003, and another mediation
attempt by the South African Human Rights Council (SAHRC). Mr Ellaurie
bemoaned what he considered to be the City’s approval of non-compliant building
plans and failure to sanction the madrasah for various structures that it allegedly
constructed illegally on its properties. However, he did not pertinently challenge
the decisions taken by the city in relation to those buildings. His application was
only directed at what he considered to be the nuisance caused by the madrasah.
[6] In granting the interdict, the high court found that the freedom of religion
guaranteed in the Constitution was no ‘guarantee [of the] practice or
manifestations of religion’. Therefore, the madrasah had to demonstrate that the
Azaan was essential to the practice of its religion. All that Mr Ellaurie had to
prove was interference with enjoyment of his ‘private space’. I do not agree.
[7] The main principle of our neighbour law is that, whilst everyone has a right
to undisturbed use and enjoyment of their own property, such right is not
unlimited. A limited interference with property rights and enjoyment thereof by
owners of other properties in the same neighbourhood is expected and acceptable
in law.2 Mutual tolerance is a civic value that is restricted by the legal yardstick
of reasonableness. In Holland v Scott,3 one of the earliest South African nuisance
cases,4 the court stressed the contextual nature of the test into the reasonableness
of the interference from a neighbouring property. The court held that for nuisance
to be actionable it had to seriously and materially interfere with the plaintiff’s
ordinary comfort and existence. This remains the test in our law to date.
[8] It has also been expressed as follows:
‘The determination of when an interference so exceeds the limits of expected toleration is
achieved by invoking the test of what, in the given circumstances, is reasonable. The criterion
used involves an objective evaluation of the circumstances and milieu in which the alleged
nuisance has occurred. The purpose of such evaluation is to decide whether it is fair or
appropriate to require the complainant to tolerate the interference or whether the perpetrator
ought to be compelled to terminate the activities giving rise to the harm.’5
[9] The factors relevant in determining whether the reasonableness threshold
has been breached include: the seriousness of the interference; the time and
duration of the interference; the possibility of avoiding the harm; and the
applicant’s sensitivity thereto.6 The interference is not considered to be
unreasonable when the harm or complaint in respect thereof arises from a special
or extraordinary sensitivity of the plaintiff or applicant to the activity complained
of.7 In De Charmoy v Day Star Hatchery (Pty) Ltd,8 the court put it thus:
2 31 Lawsa 3 ed paras 172 and 174.
3 Holland v Scott (1881-1882) 2 EDC 307.
4 In which guidance was sought from English case law.
5 Lawsa fn 2 above para 174.
6 Ibid para 175.
7 Ibid para 176.
8 In De Charmoy v Day Star Hatchery (Pty) Ltd 1967 (4) SA 188 (D), the court considered whether noise made
by chickens on a chicken farm was actionable.
‘The test, moreover, is an objective one in the sense that not the individual reaction of a delicate
or highly sensitive person who truthfully complains that he finds the noise to be intolerable is
to be decisive, but the reaction of “the reasonable man” – one who, according to ordinary
standards of comfort and convenience, and without any peculiar sensitivity to the particular
noise, would find it, if not quite intolerable, a serious impediment to the ordinary and reasonable
enjoyment of his property.’9
[10] In Rogers v Elliott,10 the Massachusetts Supreme Judicial Court considered
whether the defendant was liable for damages suffered by the plaintiff as a result
of noise caused by the repeated ringing of church bells in a Roman Catholic
Church located opposite his house. The noise threw the plaintiff, who was
suffering from sun stroke, into violent convulsions on each of the eight occasions
when the church bells were rung. His claim for delictual damages was founded
on the contention that the ringing of the bells was a nuisance. The court held that
the interference or harm occasioned to the plaintiff was not unreasonable, because
he suffered from a condition that caused him to be extraordinarily sensitive to the
noise nuisance on which his claim was founded. In this regard, the court stated:
‘In an action of this kind, a fundamental question is, by what standard, as against the interests
of the neighbor, is one’s right to use his real estate to be measured.
. . .
In connection with the importance of the business from which it proceeds, that must be
determined by the effect of noise upon people generally, and not upon those, on the one hand,
who are peculiarly susceptible to it, or those, on the other, who by long experience have learned
to endure it without inconvenience; not upon those whose strong nerves and robust health
enable them to endure the greater disturbances without suffering, nor upon those whose mental
or physical condition makes them painfully sensitive to everything about them.’11
9 Ibid at 192E-F.
10 Rogers v Elliott 146 Mass. 349, 15 N.E. (768).
11 Ibid at 351.
[11] Mr Ellaurie’s application for an interdict failed to meet the legal
requirements for the relief he sought. Because he sought a final interdict, he first
had to establish a clear right. Then, he had to demonstrate that the nature and/or
level of noise unreasonably interfered with his established right. He also had to
show that he had no other satisfactory alternative remedy. Contrary to the
approach by the high court, it was, in fact, Mr Ellaurie who had to satisfy the
requirements for the interdict sought, and to satisfy the court, in particular, that
the interference with his comfort was unreasonable. The madrasah had no
responsibility to show that the Azaan was essential to its religious practice.
[12] Although Mr Ellaurie explained that the first of five daily Azaans was at
03h30, he did not explain what exactly the nature and level of the noise was, and
how long it lasted in each instance. He tendered no evidence of what a reasonable
Azaan would be in the circumstances. Instead, the evidence tendered was that of
his profound dislike of Islam. In fact, he would rather have the Azaan banned
from Isipingo Beach altogether.
[13] In addition to his assertions as already set out above, Mr Ellaurie took
exception to what he considered to be elevation of the Islamic faith above all other
religions, which, according to him, were denigrated in the Qur’an. He referred to
the Azaan as a ‘foreign sound that invades the public and private space’, that
‘bears down on [him]’, over which he has no control, and which robs him of the
opportunity ‘to the quiet enjoyment of [his] property’. It is apparent from his
founding affidavit that he discovered most of the information on which his
averments are based from research he undertook after he had resolved to approach
the court for an interdict application.
[14] Apart from failing to provide evidence of unreasonable interference in the
circumstances, Mr Ellaurie placed himself within the realm of a specially or
extraordinarily sensitive complainant. The reasonableness (or otherwise) of the
Azaan could not be judged by his standards, the essence of which was a deep
aversion to the Islamic faith. It had to be judged by the standard of an ordinary
person living in Isipingo Beach. On this there was, at best, a paucity of evidence.
[15] Given the finding by the high court that manifestation of religious freedoms
is not guaranteed in the Constitution, it is necessary to say something on the
protection afforded to the interfering conduct by the Constitution. Section 15(1)
and (2) of the Constitution guarantees freedom of religion as follows:
‘(1)
Everyone has the right to freedom of conscience, religion, thought, belief and opinion.
(2)
Religious observances may be conducted at state-aided institutions, provided that –
(a) those observances follow rules made by the appropriate public authorities;
(b) they are conducted on an equitable basis; and
(c) attendance at them is free and voluntary.’
[16] The Constitution therefore does not only provide protection for different
religious beliefs and affiliation, it also guarantees the freedom to observe and
manifest the different religious beliefs. For effective observance or practice of
these religious freedoms, the Constitution sets an overarching standard of
‘equitable’ for the different religions, and leaves it to public authorities to
regulate, more specifically, such practices. The Constitution then prohibits
discrimination on the basis of religious belief, culture or affiliation.12 Having
regard to all these considerations, there can be no room for the conclusion that the
Constitution provides no guarantee for religious practices.
12 Section 9 of the Constitution.
[17] This interpretation of the Constitution is consistent with the findings of the
Constitutional Court in Christian Education South Africa v Minister of
Education.13 Therein, the Constitutional Court interpreted s 15 of the Constitution
as follows:
‘I will start with section 15 which deals with freedom of religion, belief and opinion. The
meaning of a similar provision in the interim Constitution was considered by Chaskalson P in
S v Lawrence; S v Negal; S v Solberg where he made the following observation:
“In the [R v Big M Drug Mart Ltd] case Dickson CJC said:
‘The essence of the concept of freedom of religion is the right to entertain such religious beliefs
as a person chooses, the right to declare religious beliefs openly and without fear of hindrance
or reprisal, and the right to manifest religious belief by worship and practice or by teaching and
dissemination.”.’14
[18] Similarly, in Prince v Law Society of the Cape of Good Hope,15 the
Constitutional Court confirmed the universal right to a religion of choice, the right
to manifest openly that or any other religion, and freedom from restraint when
observing or manifesting a religious belief. The submission was well made on
behalf of the madrasah that the reasonableness assessment in this case had to take
into account and balance the countervailing constitutional rights. There was no
room for these considerations in Mr Ellaurie’s convictions. Having regard to all
these factors, the appeal must succeed.
[19] As to the costs, in Biowatch Trust v Registrar, Genetic Resources,16 the
Constitutional Court outlined, as some of the guidelines for determining costs
awards, considerations such as the character of the litigation and the conduct of
13 Christian Education South Africa v Minister of Education 2000 (4) SA 757 (CC); 2000 (10) BCLR 1051 (CC).
14 Ibid para 18. References omitted.
15 Prince v President of the Law Society of the Cape of Good Hope and Others 2002 (3) BCLR 231 (CC); 2002
(2) SA 744 (CC) para 18.
16 Biowatch Trust v Registrar, Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10)
BCLR 1014 (CC).
the parties in pursuing it. Of importance is whether a costs award would hinder or
promote the advancement of constitutional justice. In this case, Mr Ellaurie did
not seek to assert his rights against the State. His motivation for pursuing litigation
was not advancement of constitutional justice, but rather his dislike of Islam. The
madrasah has no fiscal resources comparable to that of government. There can
thus be no reason for costs not to follow the result.
[20] Therefore, the following order shall issue:
The appeal is upheld with costs, including the costs of two counsel where
so employed.
The judgment of the high court is set aside and replaced with the following:
‘The application is dismissed with costs.’
________________________
N DAMBUZA
ACTING DEPUTY PRESIDENT
APPEARANCES
For appellant:
R Bhana SC and R Itzkin
Instructed by:
Abba Parak Inc, Johannesburg
Webbers, Bloemfontein
For first respondent:
C G Ellaurie (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:
24 November 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form
part of the judgments of the Supreme Court of Appeal
Madrasah Taleemuddeen Islamic Institute v Chandra Giri Ellaurie and Another (755/2021) [2022]
ZASCA 160 (24 November 2022)
The Supreme Court of Appeal upheld with costs, an appeal against the judgment of the KwaZulu-Natal
Division of the High Court, Durban, which granted an interdict against the appellant, Madrasah
Taleemuddeen Islamic Institute. The interdict application had been brought by Mr Chandra Giri
Ellaurie. In terms of the interdict the high court ordered that the sound of the ‘Call to Prayer’ (the Azaan)
generated from the madrasah’s immovable property, should not be heard at Mr Ellaurie’s property.
The appeal to the SCA therefore concerned the question of when noise emanating from a neighbour’s
immovable property is actionable in law.
The facts of the matter were as follows. Mr Ellaurie lived about 20 metres from the madrasah’s property
in Isipingo Beach, South of eThekwini in the KwaZulu-Natal Province. On its property the madrasah
conducted a school for Islamic studies. There was a mosque located on the madrasah property. Every
day, five daily prayers were performed in the mosque. Each prayer was preceded by the Azaan, which
was delivered by a Muadhin, to remind people of the Islamic faith to come to prayer.
Prior to the interdict application, various forms of intervention were undertaken to attempt to resolve
the dispute between Mr Ellaurie and the madrasah. These included an unsuccessful attempt by the
second respondent, the eThekwini Municipality the city, to mediate in 2003, and another mediation
attempt by the South African Human Rights Council.
The SCA found that contrary to the approach by the high court, it was, in fact, Mr Ellaurie who had to
satisfy the requirements for the interdict sought, and to prove to the court, in particular, that the
interference with his comfort was unreasonable. The madrasah had no responsibility to show that the
Azaan was essential to its religious practice, as the high court had found. The SCA held that Mr
Ellaurie’s application for an interdict failed to meet the legal requirements for the relief he sought.
The SCA found that although Mr Ellaurie explained that the first of five daily Azaans was at 03h30, he
did not explain what exactly the nature and level of the noise was, and how long it lasted in each
instance. He tendered no evidence of what a reasonable Azaan would be in the circumstances. Instead,
the evidence tendered was that of his profound dislike of Islam.
The SCA found further that apart from failing to provide evidence of unreasonable interference in the
circumstances, Mr Ellaurie placed himself within the realm of a specially or extraordinarily sensitive
complainant. The reasonableness (or otherwise) of the Azaan could not be judged by his standards, the
essence of which was a deep aversion to the Islamic faith. It had to be judged by the standard of an
ordinary person living in Isipingo Beach. On this, the SCA found that there was, at best, a paucity of
evidence.
Notably, the SCA found that the high court erred in its conclusion that the Constitution provided no
guarantee for religious practices. The Constitution did not only provide protection for different religious
beliefs and affiliation, it also guaranteed the freedom to observe and manifest the different religious
beliefs.
In the light thereof, the SCA found that Mr Ellaurie’s convictions had no regard for the consideration
that the reasonableness assessment had to take into account and balance the countervailing
constitutional rights of the respective parties. Having regard to all these factors, the SCA held that the
appeal must therefore succeed. It set the interdict aside.
~~~~ends~~~~
|
1357
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 391/09
In the matter between:
SELVIN LABAN NAIDOO Appellant
v
ABSA BANK LTD Respondent
Neutral citation:
Naidoo v ABSA Bank (391/2009) [2010] ZASCA 72
(27 May 2010)
Coram:
Mthiyane, Heher, Cachalia, Shongwe and Tshiqi JJA
Heard:
11 May 2010
Delivered:
27 May 2010
Summary: A credit provider need not comply with the procedure provided for in
s 129(1)(a) of the National Credit Act 34 of 2005 before instituting sequestration
proceedings against a debtor because such proceedings are not proceedings to
enforce a credit agreement.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: KwaZulu-Natal High Court, Durban (Gyanda J sitting as court
of first instance).
The following order is made:
(i)
The appeal is dismissed with costs;
(ii)
The application to lead further evidence is dismissed with each party
paying its own costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Mthiyane, Heher, Shongwe and Tshiqi JJA concurring):
[1] The appellant was sequestrated by an order of Gyanda J at the
respondent’s instance in the Durban High Court on 25 May 2009. The
sequestration order followed the appellant’s failure to meet his payments to the
respondent under instalment sale agreements relating to six motor vehicles and
two home loan agreements. The National Credit Act 34 of 2005 (‘the NCA’)
applies to these agreements – the appellant is a ‘consumer’ and the respondent
a ‘credit provider’ as envisaged in s 1 of the NCA.1
1 'consumer', in respect of a credit agreement to which this Act applies, means-
(a) the party to whom goods or services are sold under a discount transaction, incidental credit
agreement or instalment agreement;
(b) the party to whom money is paid, or credit granted, under a pawn transaction;
(c) the party to whom credit is granted under a credit facility;
(d) the mortgagor under a mortgage agreement;
(e) the borrower under a secured loan;
(f) the lessee under a lease;
(g) the guarantor under a credit guarantee; or
(h) the party to whom or at whose direction money is advanced or credit granted under any other
credit agreement;
[2] The appellant contends that it was not competent for the respondent to
have instituted proceedings for his sequestration before complying with the
procedure provided for in s 129(1)(a) of the NCA. (This section is set out in
para 3 below.) The appellant did not raise this defence in his papers opposing
the sequestration application in the high court. Nor did he do so when he
appeared personally before the learned judge to resist the application for his final
sequestration. His counsel, however, invoked it as a ground in his application for
leave to appeal against the sequestration order. The high court accordingly
referred the dispute to this court by granting the necessary leave.
[3] Mr Reddy, who appears for the appellant, came into the matter belatedly
after counsel who had prepared written submissions withdrew. So, adopting his
predecessor’s written argument, he submits that the procedures before debt
enforcement provided for in s 129(1)(a) read with s 130(3) of the NCA should be
interpreted to cover circumstances relating not only to the enforcement of a credit
agreement but also to sequestration proceedings since the unpaid claims, which
are the subject of the sequestration application, arise from credit agreements to
which the NCA applies. The relevant parts of these provisions read as follows:
‘Section 129 Required procedures before debt enforcement
(1)
If the consumer is in default under a credit agreement, the credit provider –
(a)
may draw the default to the notice of the consumer in writing and propose
that the consumer refer the credit agreement to a debt counsellor,
alternative dispute resolution agent, consumer court or ombud with
'credit provider', in respect of a credit agreement to which this Act applies, means-
(a) the party who supplies goods or services under a discount transaction, incidental credit
agreement or instalment agreement;
(b) the party who advances money or credit under a pawn transaction;
(c) the party who extends credit under a credit facility;
(d) the mortgagee under a mortgage agreement;
(e) the lender under a secured loan;
(f) the lessor under a lease;
(g) the party to whom an assurance or promise is made under a credit guarantee;
(h) the party who advances money or credit to another under any other credit agreement; or
(i) any other person who acquires the rights of a credit provider under a credit agreement after it
has been entered into.
jurisdiction, with the intent that the parties resolve any dispute under the
agreement or develop and agree on a plan to bring the payments under
the agreement up to date; and
(b)
. . . may not commence any legal proceedings to enforce the agreement
before –
(i)
first providing notice to the consumer, as contemplated in
paragraph (a) . . .
(ii)
. . .’
and
‘Section 130 Debt Procedures in a Court
. . .
(3)
Despite any provision of law or contract to the contrary, in any proceedings
commenced in a court in respect of a credit agreement to which this Act applies,
the court may determine the matter only if the court is satisfied that –
(a)
in the case of proceedings to which sections 127, 129 or 131 apply, the
procedures required by those sections have been complied with;
(b)
. . .’
[4] Mr Reddy’s submission, as I understand it, implicitly contains a
concession that sequestration proceedings are not in and of themselves ‘legal
proceedings to enforce the agreement’ within the meaning of s 129(1)(b). That
his concession is correct is clear from the recent judgment in Investec Bank Ltd v
Mutemeri2 where Trengove AJ concluded that an order for the sequestration of a
debtor’s estate is not an order for the enforcement of the sequestrating creditor’s
claim and sequestration is thus not a legal proceeding to enforce an agreement.3
He did so after carefully considering the authorities which have held that
‘sequestration proceedings are instituted by a creditor against a debtor not for the
purpose of claiming something from the latter, but for the purpose of setting the
2 2010 (1) SA 265 (GSJ) at paras 27-31.
3 Ibid para 31.
machinery of the law in motion to have the debtor declared insolvent’4 – they are
not proceedings ‘for the recovery of a debt’.5 The learned judge’s reasoning
accords with this court’s description of a sequestration order as a species of
execution, affecting not only the rights of the two litigants but also of third parties,
and involves the distribution of the insolvent’s property to various creditors, while
restricting those creditors’ ordinary remedies and imposing disabilities on the
insolvent – it is not an ordinary judgment entitling a creditor to execute against a
debtor.6
[5] However, Mr Reddy contends that the effect of s 130(3)(a) of the NCA,
when read with s 129(1), indicates that the legislature intended to encompass all
proceedings to which the NCA applies and not merely proceedings to enforce a
credit agreement. This is because, he submits, the words in s 130(3) ‘despite any
provision of law or contract to the contrary, in any proceedings commenced in a
court in respect of a credit agreement to which this Act applies. . .’ suggest that
all proceedings of which the underlying causa is a credit agreement to which the
NCA applies fall within its ambit.
[6] Read in isolation the language of s 130(3) may convey the meaning for
which the appellant contends. In Ex Parte Ford and Two Similar Cases7 the court
was faced with the question whether s 85 of the NCA was applicable to
proceedings for the voluntary surrender of an estate. The section’s phraseology
is almost identical to that of s 130(3) and gives the court a discretion ‘despite any
provision of law or agreement to the contrary, in any court proceedings in which a
credit agreement is being considered’ to refer the matter to a debt counsellor for
debt review.8 And once a debt counsellor becomes involved the credit provider
4 Collett v Priest 1931 AD 290 at 299.
5 Prudential Shippers SA Ltd v Tempest Clothing Co (Pty) Ltd 1976 (2) SA 856 (W) at 863D-
865A. Although not cited by Trengove AJ the same conclusion was arrived at in WP Koöperatief
Bpk v Louw 1995 (4) SA 978 (C) at 987G.
6 Samsudin v De Villiers Berrange NO [2006] SCA 79 (RSA).
7 2009 (3) SA 376 (WCC).
8 Section 86.
‘may not exercise or enforce by litigation or other judicial process any right . . ..’9
The learned judge observed that the language of s 130(3) is cast widely and the
limitation of the provision to proceedings in which a credit agreement is being
considered did not imply that the proceedings in question were restricted only to
those in which the enforcement of a credit agreement is in issue. And so, the
court concluded, s 85 was also applicable to proceedings for voluntary surrender
under the Insolvency Act.10 Whether the learned judge was correct in this
conclusion I need not decide because Ford is distinguishable from the present
matter. Section 85, which Ford was concerned with, is to be found in Part D of
Chapter 4 and provides for the alleviation of over-indebtedness through a
process of debt relief in the form of debt restructuring.11 Sections 129-133 on the
other hand deal with debt enforcement and are to be found in Part C of
Chapter 6. Section 130(3) must therefore be interpreted in the context of that part
of the chapter within which it is situated – not in isolation and outside of its
context.
[7] It is clear from the language employed in s 130(3)(a) that the proceedings
referred to there do not extend the remit of s 129, as the appellant contends, but
as Trengove AJ has correctly pointed out, it simply provides that where a credit
provider decides to institute proceedings to enforce the agreement, he may do so
only after having complied with the procedure in s 129(1)(a).12 Similarly the
reference in s 130(3)(a) to s 127 and to s 131 refers specifically to procedures
which are applicable to those proceedings involving the surrender and
attachment of goods respectively under a credit agreement – not to ‘any
proceedings’ concerning a credit agreement. It follows that the appellant’s
insistence that the respondent had to comply with the procedure provided for in
9 Section 88(3).
10 See above (n7) at para 12.
11 For a discussion of this judgment see Van Heerden and Boraine ‘The Interaction Between the
Debt Relief Measures in the National Credit Act 34 of 2005 and Aspects of Insolvency Law’ 2009
(12) 3 PELJ 22 at 46.
12 See Mutemeri (above) (n 2) at para 33. For a discussion of this judgment see Boraine and Van
Heerden ‘Is Sequestration “Debt Enforcement” for Purposes of the National Credit Act 34 of
2005?’ (Soon to be published in PELJ.)
s 129(1)(a) before commencing sequestration proceedings against him has no
merit.
[8] It bears mentioning that academic writers have observed that it is not
completely clear whether the word ‘enforce’ as it is used in s 129(1)(b) carries the
meaning which is usually ascribed to it in legal parlance – the enforcement of
payment or of another contractual obligation – or includes the credit provider’s
remedy to cancel the agreement and claim damages. Enforcement and
cancellation are mutually exclusive remedies and a credit provider must, in the
event of a debtor’s breach of an agreement, elect which of the two courses to
pursue. They conclude that ‘enforce’ must bear a wider meaning so as to include
all contractual remedies, including cancellation. This interpretation, they say, will
avoid a debtor being left without the procedural protection of s 129(1)(a) in the
event of a credit provider electing to cancel the agreement.13 This view was
endorsed recently by a full court in Absa Bank Ltd v De Villiers.14 It is, however,
not necessary for me to say more on this question because on either
interpretation and for the reasons already given a sequestration proceeding is not
the kind of proceeding to which s 129(1)(b) refers.
[9] There remains one other matter. The respondent brought an application to
lead further evidence in this court to prove that it had in any event complied with
s 129(1)(a). It asked for costs of the application only if the appellant opposed it.
The appellant did so vigorously. It is therefore necessary to decide the question
of costs in this application.
[10] It appears from the respondent’s application that, after leave to appeal had
been granted, its attorneys discovered fortuitously that they had posted s 129
notices to the appellant’s chosen domicilium citandi et executandi. The notices
stated that if the appellant did not avail himself of the remedies to which
13 J M Otto The National Credit Act Explained (2006) p 87-88; Van Heerden and Boraine (n9)
p 39-41.
14 2009 (5) SA 40 (C).
consumers are entitled under s 129(1)(a) it would institute legal proceedings for
the return of the goods and hold the appellant liable for any damages it may have
suffered. After the appellant had failed to respond to the notices, the respondent
instituted sequestration proceedings against him. The respondent sought to
place this further evidence before us as a precautionary measure in the event of
it being unsuccessful in its main submission.
[11] Even though I have held that a credit provider need not comply with the
procedure provided for in s 129(1)(a) before instituting sequestration proceedings
against a consumer (the s 129 notices are therefore immaterial to the outcome of
this appeal) it should be borne in mind that when the high court granted leave to
appeal to this court there was no decided case on this question. The Mutemeri
judgment was delivered after the high court granted the appellant leave to appeal
on this point. So, given the uncertainty on this legal issue, the respondent in my
view acted reasonably by attempting to place this evidence before this court. The
appellant’s opposition to the application on the other hand was not based on
whether the evidence sought to be admitted on appeal was relevant. Instead he
attempted, without any factual basis, to impugn the respondent’s motives in
bringing the application. However, because of the view I have taken on how
s 129(1) and s 130(3) should properly be interpreted, the further evidence has no
bearing on the outcome of the appeal. In the circumstances I think it is
appropriate for each party to pay its own costs on this aspect.
[12] In the result I make the following order:
(i)
The appeal is dismissed with costs;
(ii)
The application to lead further evidence is dismissed with each party
paying its own costs.
_________________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
APPELLANTS:
G Reddy
Instructed by Anand Pillay & Associates,
Pietermaritzburg
Symington & De Kok, Bloemfontein
RESPONDENT:
A Stokes SC
Instructed by Johnston & Partners, Durban
Naudes, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date:
27 May 2010
Status: Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
S L NAIDOO V ABSA BANK LTD
The Supreme Court of Appeal (SCA) today dismissed an appeal against an
order of sequestration granted by Gyanda J in the KwaZulu-Natal High Court,
Durban. It held that a credit provider need not comply with the procedure
provided for in s 129(1)(a) of the National Credit Act 34 of 2005 (‘the Act’)
before instituting sequestration proceedings against a debtor because such
proceedings are not proceedings to enforce a credit agreement.
The appellant, Mr Selvan Laban Naidoo, contended that it was not competent
for the respondent, Absa Bank Ltd, to have instituted proceedings for his
sequestration before complying with the procedure provided for in s 129(1)(a)
of the Act. (Section 129 deals with required procedures before debt
enforcement.) It was submitted on behalf of the appellant that section 129(1)(a)
read with s 130(3) of the Act should be interpreted to cover circumstances
relating not only to the enforcement of a credit agreement but also to
sequestration proceedings as the unpaid claims which are the subject of the
sequestration application arise from credit agreements to which the Act applies.
(Section 130(3)(a) provides that in ‘any proceeding’ concerning credit
agreement the procedure provided for in s 129 must, where appropriate, be
followed.)
The SCA reasoned that from the language employed in s 130(3)(a), the
proceedings referred to there do not extend the reach of s 129 to proceedings
that do not involve the enforcement of a credit agreement, it simply provides
that where a credit provider decides to institute proceedings to enforce the
agreement, he may do so after having complied with the procedure in
s 129(1)(a).
---ends---
|
4163
|
non-electoral
|
2024
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 957/2022
In the matter between:
THEMBA JUSTICE XIMBA
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Ximba v The State (957/2022) [2023] ZASCA 6 (19 January
2024)
Coram:
NICHOLLS,
MOTHLE,
MABINDLA-BOQWANA
and
MEYER JJA and KATHREE-SETILOANE AJA
Heard:
02 November 2023
Delivered:
19 January 2024
Summary:
Criminal Law – Rape conviction – whether finding of the trial
court correct – held – the complainant was brutally raped – the appellant was the
perpetrator – the appellant’s bare denial is not reasonably possibly true.
ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Adams J and
Alberts AJ, sitting as a court of appeal):
The appeal against conviction is dismissed
JUDGMENT
Nicholls JA (Mothle, Mabindla-Boqwana and Meyer JJA and Kathree-
Setiloane AJA concurring):
[1] The appellant was charged with the rape of an 18 year old woman during the
period September and October 2015. He was found guilty by the Regional Court,
Germiston and sentenced to life imprisonment. On 19 October 2018, the appellant’s
appeal against conviction and sentence was dismissed by the Gauteng Division of
the High Court, Johannesburg (the high court). Special leave to appeal was
subsequently granted by this Court on both conviction and sentence. The appellant
has withdrawn his appeal against sentence and, accordingly, all that is before this
Court is an appeal against conviction.
[2] There is no dispute that the complainant was brutally raped. The question is
whether the appellant was the perpetrator, as alleged by the complainant. The
appellant did not provide a plea explanation in terms of s 115 of the Criminal
Procedure Act 51 of 1977. Instead, he elected to remain silent. As the evidence
proceeded, it became apparent that his defence was a bare denial.
[3] The complainant is a vulnerable young woman. She was abandoned at birth
and has lived in shelters and foster homes, in the Durban area, all her life. In 2015,
she was living with her new foster mother, Ms Ndondwe Mzaca. Living conditions
were not ideal. Ms Mzaca was unemployed and the family had to share one room.
During this period Ms Mzaca was visited by her friend, Ms Nthandazo Ndungane,
who resided in Leondale, Johannesburg area. Ms Ndungane indicated that she
needed a domestic worker at her home. It was agreed that the complainant should be
sent to live with Ms Ndungane, to assist her with domestic work. The complainant
did not meet Ms Ndungane while she was in Durban, nor was she consulted about
this arrangement.
[4] In September 2015, as a result of the agreement between Ms Mzaca and
Ms Ndungane, the complainant boarded a bus for Johannesburg and was sent to live
with Ms Ndungane. Ms Ndungane had a three bedroomed house and the complainant
had her own bedroom. The appellant was Ms Ndungane’s partner and the father of
her two year old child who, at the time, resided in Zola with family members. The
appellant resided in Vosloorus and would sleep over at Ms Ndungane’s residence
from time to time. It is in dispute whether he also visited during the week as alleged
by the complainant or only over weekends as contended by the appellant and Ms
Ndungane.
[5] The complainant gave evidence of the several times that she was raped by the
appellant. She said that she was introduced to the appellant soon after she had arrived
in Leondale. One night when Ms Ndungane was in Zola with her child, the appellant
came into her bedroom and raped her. When Ms Ndungane returned the following
day, the complainant did not inform her of what had transpired as they were not well
acquainted and the complainant was scared to inform her. In October 2015, the
complainant returned to Durban. Although she did not tell Ms Mzaca about the rape,
she informed her that she did not want to return to Leondale. Her request was
brushed aside and Ms Mzaca told her that her bus ticket to Gauteng had been
purchased and she had no choice but to return.
[6] On the complainant’s arrival in Gauteng she was again met by Ms Ndungane.
One night, the appellant came into her room while she was sleeping and started to
undress her. When she resisted, he slapped her. Ms Ndungane came into the room
while the appellant was on top of the complainant and told her that she must co-
operate with the appellant. He then proceeded to rape her.
[7] After that incident, the complainant said that she became incontinent and was
taken by Ms Ndungane to Chris Hani Baragwanath Hospital (Baragwanath
Hospital). Three days after that, she ‘fainted’ and was taken back to Baragwanath
hospital, where she was admitted. She was advised by the hospital staff that she had
a problem with her womb. This was a pre-existing condition. The complainant did
not inform the medical staff that she had been raped. Ms Ndungane and the appellant
fetched her once she had been discharged.
[8] The complainant testified that on the same evening and once Ms Ndungane
had left for Zola, the appellant was visited by four friends at Ms Ndungane’s house.
The appellant came into the complainant’s bedroom and raped her. After he had
wiped her vagina with a towel, he then let his friends ‘take over’. When she started
screaming, the appellant injected her in the buttocks. She began to feel dizzy and no
longer put up any resistance. The first friend used a condom and he raped her; and
the second man also raped her. When the third friend started raping her, she tried to
resist. The appellant picked up a stick that was being used to block off the door, and
hit her on the head. She was again injected and the rape proceeded. The fourth man
raped her.
[9] After the gang rape, the complainant said she had sent a text message to
Captain Dube, a Durban based female police officer, who was the investigating
officer in a case where the complainant had been gang raped in the Durban area a
year earlier. Captain Dube responded that she would send police in Johannesburg to
assist the complainant. When the Johannesburg police telephoned the complainant,
she was unable to answer because the appellant and his friends were still present.
They telephoned the complainant again, later, to request directions to the Leondale
residence, which she was unable to provide.
[10] A few days later, the complainant ‘passed out’. She was taken to Baragwanath
Hospital, where she was admitted. Whilst in hospital, she communicated with
Captain Dube, who promised to fetch her. She asked one of the sisters at the hospital
to give Captain Dube directions. However, before Captain Dube fetched her from
the hospital, the appellant and Ms Ndungane demanded her discharge and took her
back to the Leondale residence. She did not tell Ms Ndungane that Captain Dube
was coming to fetch her, as she did not want to alert her.
[11] According to the complainant, the three of them arrived at the Leondale
residence at 11h00. Ms Ndungane went to work, and the appellant remained at the
house. At around 14h00, the appellant began watching a pornographic video and
insisted that she watch the video with him. After that, he instructed her to go into her
bedroom. First, he inserted his penis into her vagina and then instructed her to
perform oral sex on him. Thereafter he told her to wash herself as she had been
bleeding.
[12] On the date of her appointment for a medical check-up, Ms Ndungane took
the complainant to Natalspruit Hospital and then went on to work. The complainant
contacted Captain Dube and requested that she come and fetch her from the hospital.
As Captain Dube did not know the way to Natalspruit Hospital, the complainant
gave her the name of a mall within the vicinity of the hospital. Captain Dube,
accompanied by Captain Muvango, collected her from the mall and drove her to
Durban where she was put in a place of safety. A few days later, she was taken to a
district surgeon, Dr Savvas Atholiades (Dr Atholiades). A statement was taken from
the complainant at the Cato Manor Police Station, KwaZulu-Natal, by Captain
Muvango. The statement made by the complainant does not differ in any material
respect from her evidence.
[13] From her testimony, it seems that the complainant felt that she had no-one to
turn to about her ordeal. Ms Ndungane telephoned Ms Mzaca, the complainant’s
foster mother in Durban, to complain that the complainant was not obeying the rules.
The complainant was told by both Ms Mzaca and Ms Ndungane to be obedient.
Captain Dube was the only person whom she trusted sufficiently to confide in about
the multiple rapes.
[14] Captain Dube corroborated the complaint’s version that she had sent her
various text messages informing her that she had been raped by the appellant. The
first message from the complainant was to the effect that she was in Johannesburg,
had a problem and wanted to communicate with Captain Dube. Because she was too
busy, Captain Dube initially ignored the messages. Later, Captain Dube received a
message from the complainant in which she stated that she had been raped by the
boyfriend of the “aunty” (Ms Ndungane). Captain Dube advised the complainant to
inform the aunt of what was happening. The complainant told her that when she
telephoned the aunt, she merely said that she must leave her alone. It is unclear
whether this was a reference to Ms Mzaca or Ms Ndungane.
[15] On another occasion, the complainant informed Captain Dube that she had
been gang raped by the appellant and three other men. Captain Dube said that she
had telephoned the police in Johannesburg to assist the complainant. However,
because the complainant had given them the incorrect address, they were unable to
find the house. The complainant had also informed Captain Dube that she had been
assaulted by the appellant who had injured her arm during the course of the rape and
she had been admitted to Baragwanath Hospital. She begged Captain Dube to fetch
her from Johannesburg where she was being sexually abused. When Captain Dube
telephoned the complainant the following day, the call was answered by a person
who said that she was a nurse and that the complainant was in ‘a coma’.
[16] Captain Dube then made arrangements to go to Johannesburg with a
colleague, Captain Muvango, to fetch the complainant and bring her back to Durban.
When she telephoned the complainant to tell her that they were on their way, the
complainant told her that she had been discharged by the appellant and Ms
Ndungane. Because she was unable to provide them with her home address, they
collected her at the Natalspruit Mall. On 23 October 2015, Captain Dube and Captain
Muvango drove with the complainant to Durban, where she was placed in a shelter
for abused women.
[17] Captain Dube made a statement to Captain Muvango once they were in
Durban. This statement was made with the aid of Captain Dube’s cell phone records
and was thus a more accurate reflection of the dates and times of calls and text
messages that she received from the complainant. The first call was on 13 October
2015. The next day, Captain Dube received a text message asking why she had not
responded as the complainant had a problem. Further calls and/or text messages were
received between 15 and 16 October 2015. On 16 October 2015, the complainant
sent Captain Dube text messages, at about 16h00 and 23h00, complaining she had
been raped. On 22 October 2015, Captain Dube received a text message from the
complainant asking to be taken to Durban and that she could be collected at
Natalspruit Hospital where she had an appointment. She was finally collected from
the Natalspruit Mall, at 12h00 on 23 October 2015, and taken to Durban.
[18] That the complainant had been raped was confirmed by Dr Atholiades, who
examined her on 26 October 2015, and completed the J88 form. His extensive
experience in examining gynaecological patients and rape and trauma victims was
not challenged. On examination of the complainant, he found extensive swelling and
bruising of the vaginal area: the frenulum of the clitoris was swollen, the labia
minora was swollen; the cervix was swollen, but there was no bleeding or discharge.
The hymen was so swollen that it was closed. The opening is usually measured in
millimetres with a ruler. However, in this case there was no opening at all because
of the swelling due to trauma of the alleged sexual assault. The digital and rectal
examination did not support nor refute the allegation of anal penetration.
[19] Dr Atholiades could not determine what was used to penetrate the
complainant. Nor was he able to determine exactly when the injuries occurred,
except to say they were fresh injuries in keeping with a recent sexual assault. This
could have occurred three to five days before the examination; however, in his
opinion it was definitely not a year ago. Dr Atholiades stated that the injuries were,
in all probability, as a result of the alleged rape on 21 October 2015. When asked, in
cross examination, whether it was possible that the complainant had had consensual
sex, he responded that he did not think it appropriate to ask the complainant that
question, ‘because of the trauma in her genitalia, so much bruising and swelling and
the tear’.
[20] The appellant denied ever having raped the complainant. In fact, he contended
that he was never alone with her on any occasion. He testified that he lived 20
minutes away from Ms Ndungane’s home and spoke to her daily on the phone. When
the complainant was living with Ms Ndungane during September and October 2015,
he was adamant that he only visited Ms Ndungane over weekends, and public
holidays. He also recalled that he only ever came on Saturdays, not Fridays. It was
on these occasions that he would see the complainant. He never accompanied her to
hospital but was aware of her attending Natalspruit Hospital. On the day she was
fetched by Captain Dube, he stated that he was asked by Ms Ndungane to check on
the complainant at the hospital. When he got there he found Ms Ndungane outside
the hospital. Ms Ndungane told him that the hospital had informed her that they had
no record of the complainant having been there.
[21] Curiously, the appellant testified that he first saw the complainant in 2014,
when she visited Ms Ndungane with her mother and younger brother. This was not
a version put to the complainant or supported by Ms Ndungane, who said that the
first time she met the complainant was in 2016 when she fetched her from the
Germiston bus rank. She later changed this to 2015.
[22] The appellant’s version that he was never alone with the complainant, was
supported by Ms Ndungane. She testified that she had been in a relationship with the
appellant for nine years and that he had never once visited her on a week day. He
would always inform her telephonically beforehand that he was coming. Ms
Ndungane was adamant that she never arrived home to find the appellant with the
complainant and at no point were the complainant and the appellant left alone in the
house. It was put to the complainant in cross examination that the appellant only
visited on two occasions, and only at night on those two occasions. This was not the
evidence of either the appellant or Ms Ndungane, who said the appellant was present
over three weekends during the period that the complainant was working for her.
Ms Ndungane’s memory as to exactly when the appellant visited cannot be
considered to be reliable in view of the fact that when she gave her evidence in
November 2017, she could not properly recall whether these events occurred in 2015
or 2016.
[23] It was accepted by both the appellant and Ms Ndungane that the complainant
had no friends in Gauteng and knew no-one. It seems that although she was 17 or 18
years of age at the time, the complainant looked very young for her age. The
appellant referred to her as ‘the child’ while Ms Ndungane said she was surprised to
find that she was so young and wanted to arrange schooling for her. By the time she
testified, the complainant had passed her matric. She was clearly an intelligent young
woman.
[24] Ms Ndungane described their relationship as being of a mother and child in
the early stages. The complainant was clearly desperate for a mother figure and
originally thought that she had found one in Ms Ndungane. Letters of love and
appreciation were written to Ms Ndungane. However, as testified to by both the
appellant and Ms Ndungane, this relationship soon soured. Later, the complainant’s
behaviour towards Ms Ndungane changed to such an extent that she refused to come
out of her bedroom and would only communicate with her by Whatsapp messages.
Ms Ndungane attributed this to her refusal to give her consent to allow the
complainant to be operated on at a hospital in Johannesburg.
[25] The trial court found that Ms Ndungane was a biased witness and that her
version that the appellant and the complainant were never alone together fell to be
rejected. The high court, although it did not deal directly with the evidence of
Ms Ndungane, rejected the appellant’s version as supported by Ms Ndungane. The
irrefutable fact remains that the only truly independent witnesses were Captain Dube
and Dr Atholiades, the district surgeon. Captain Dube’s evidence, as the person to
whom the complainant made the first report of the rape, was consistent with the
version of the complainant that she had been repeatedly raped by the appellant, and
that on one occasion she had been gang raped by the appellant and his friends. Dr
Atholiades found evidence of a vicious sexual assault which was consistent with the
allegations made by the complainant.
[26] Invariably, in any rape matter, the complainant will be a single witness. There
is no formula for assessing the credibility of a single witness. A trial court should
consider the evidence in its totality and should determine whether the truth has been
told, despite any shortcomings and contradictions.1 As has been repeatedly stated by
this Court, 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
1 S v Sauls 1981(3) SA 172 (A) at 180F.
improbabilities on both sides and, having done so, decide whether the balance
weighs so heavily in favour of the State as to exclude any reasonable doubt about
the accused’s guilt.2 In other words, 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.
[27] Adopting this approach and considering the evidence holistically, as every
court is enjoined to do, the undisputed facts reveal the following: The complainant
knew no-one in Johannesburg. Initially, she was loving and communicative with
Ms Ndungane, but this changed to such an extent that in the end she would go into
her room and only communicate with Ms Ndungane by Whatsapp messages. When
she went back to Durban she told her foster mother, Ms Mzaca, that she did not want
to return to Gauteng to live with Ms Ndungane. The complainant informed Captain
Dube that she was being repeatedly sexually assaulted by the appellant. Captain
Dube fetched her from Johannesburg and placed her in a place of safety in Durban.
From there and a few days later, the complainant was seen by a district surgeon who
found evidence of a violent rape having taken place in the previous few days.
[28] Despite there being some discrepancies in respect of dates and times, there
can be no doubt that the complainant informed Captain Dube that she had been raped
numerous times by the appellant. The report to Captain Dube supports the
consistency of the complainant’s version and therefore her credibility.3 Her
subsequent behaviour of withdrawing, refusing to come out of her bedroom and only
communicating with Ms Ndungane by Whatsapp messages is consistent with her
emotional turmoil following sexual assaults in the home of Ms Ndungane. To find
2 S v Chabalala 2003(1) SACR 134 (SCA) para 15.
3 S v Hammond 2004 (2) SACR 303 (SCA); [2004] 4 All SA 5 (SCA).
otherwise, would mean that the complainant was raped repeatedly by a stranger, or
another person known to her. She then, for unknown reasons, decided to exonerate
the true rapist and blame the appellant. There is no suggestion of the complainant
even being acquainted with other people in Gauteng. Nor is there evidence that she
had a motive to falsely accuse the appellant.
[29] On these facts, I am led to the ineluctable conclusion that the complainant was
brutally raped, and that the appellant was the perpetrator thereof. The appellant’s
bare denial is not reasonably possibly true.
[30] The following order is made:
The appeal against conviction is dismissed.
__________________________
C E HEATON NICHOLLS
JUDGE OF APPEAL
Appearances
For the appellant:
R du Plessis
Instructed by:
Bloemfontein Justice Centre, Bloemfontein
For the respondent:
J Masina
Instructed by:
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
19 January 2024
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Ximba v The State (957/2022) [2023] ZASCA 6 (19 January 2024)
Today the Supreme Court of Appeal (SCA) handed down a judgment dismissing an appeal against the
decision of the Gauteng Division of the High Court, Johannesburg (the high court).
The issue before the SCA was whether the appellant was the perpetrator, as alleged by the
complainant, and whether the trial court was correct to have convicted the appellant on the rape charges
against him.
The complainant, an 18-year-old woman, is a vulnerable young woman who had been abandoned at
birth and sexually abused from an early age. During September and October 2015 she was sent to
Johannesburg from Durban to do domestic work for a friend of her foster mother, Ms N. The appellant
was the partner of Ms N, and father of her child. Over this period the complainant alleged she was raped
by the appellant and also gang raped by the appellant and his friends on one occasion. The complainant
contacted a female captain from a police station in Durban whom she informed about the rapes. The
police captain finally fetched her from Johannesburg and took her to a place of safety in Durban. A few
days later she was examined by the district surgeon who confirmed that the complainant had been the
victim of a brutal sexual assault. He also confirmed that the injuries were recent and that the extent of
the injuries ruled out the possibility of consent. The complainant laid charges and the appellant was
arrested for rape.
During the trial, the appellant denied that he had raped the complainant and contended that he was
never alone with the complainant. The appellant’s evidence was supported by Ms N. They both noted
that the complainant did not have any friends or acquaintances in Johannesburg. The trial court found
that Ms N was a biased witness and that her version that the appellant and the complainant were never
alone together fell to be rejected. Following this, the appellant was convicted in the regional court
(Germiston) on the charges of rape and was sentenced to life imprisonment. The matter was appealed
to high court which also rejected the version of the appellant and confirmed the conviction and sentence
of the trial court. The appellant was granted special leave to appeal at the SCA. The appellant withdrew
the appeal against sentence and therefore the appeal is against conviction only.
The SCA held that, in rape matters, the complainant is usually a single witness. The SCA held that 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, decide whether the
balance weighs so heavily in favour of the State as to exclude any reasonable doubt about the
accused’s guilt.
Adopting this approach and considering the evidence holistically, the SCA took into account the
following undisputed facts. The complainant knew no-one in Johannesburg. Initially, she was loving and
communicative with Ms N but this changed to such an extent that in the end she would go into her room
and only communicate with Ms N by WhatsApp messages. The first time that she went back to Durban
she told her foster mother that she did not want to return to Gauteng to live with Ms N. This request was
ignored. The complainant informed the captain that she was being repeatedly raped by the appellant.
The captain fetched her from Johannesburg and placed her in a place of safety in Durban. A few days
later, the complainant was seen by a district surgeon who found evidence of a violent rape having taken
place in the previous few days.
The SCA held that the reports that the complainant made to the captain supported the consistency of
the version of the complainant, and thus her credibility. The district surgeon corroborated the
complainant’s version that she had been the victim of a violent sexual assault. There is no suggestion
that the complainant was acquainted with people in Gauteng other than Ms N and her family and the
appellant.
On the above facts the SCA held that the complainant was brutally raped, and that the appellant was
the perpetrator thereof. The appellant’s bare denial was not reasonably possibly true. As a result, the
SCA dismissed the appeal against the conviction.
~~~~ends~~~~
|
2965
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 170/2014
In the matter between:
LODHI 5 PROPERTIES INVESTMENTS CC FIRST APPELLANT
LODHI 4 PROPERTIES INVESTMENTS (PTY) LTD SECOND APPELLANT
MUHAMMED ISLAM LODHI THIRD APPELLANT
and
FIRSTRAND BANK LIMITED RESPONDENT
Neutral citation: Lodhi 5 Properties Investments v Firstrand Bank Limited
(170/14)[2015] ZASCA 72 (22 May 2015)
Coram:
Maya, Majiedt, Pillay, Mbha JJA and Schoeman AJA
Heard:
4 MARCH 2015
Delivered:
22 May 2015
Summary:
Loan agreement – respondent bank entitled to restitution in light
of lapse of loan and agency agreements in terms of which loan
lent and advanced to first appellant before debt extinguished –
mora interest payable in respect of loan agreement governed by
Shari’ah (Islamic) law which prohibits the charging of interest
for a loan – order granting appellants’ final winding up
justified.
___________________________________________________________
ORDER
__________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Molefe J
sitting as court of first instance):
1 Save to the extent below, the appeal is dismissed with costs,
including the costs of two counsel.
2 Paragraphs 38 (i) and (ii) of the order of the court below are set aside
and replaced with the following:
‘Muhammad Islam Lodhi shall pay to the applicant R2 642 006.98
together with interest thereon at the rate of 15,5 per cent per annum as
from 15 June 2012 to date of payment.’
___________________________________________________________
JUDGMENT
___________________________________________________________
Maya JA (Majiedt, Pillay, Mbha JJA and Schoeman AJA concurring):
[1] This is an appeal against orders granted against the appellants by
the Gauteng Division of the High Court, Pretoria (Molefe J) in three
separate applications brought by the respondent, FirstRand Bank Limited
(the bank). In terms of these orders, the first and second appellants, Lodhi
5 Properties Investments CC (Lodhi 5) and Lodhi 4 Properties
Investments (Pty) Limited (Lodhi 4) were placed under final winding up.
The third appellant (Mr Lodhi) was ordered to pay the bank a sum of
R10 328 574, 25 together with interest at the rate of 15,5 per cent per
annum from 18 April 2011 until date of payment. The appeal seeks a
dismissal of the applications with costs and serves before this court with
the leave of the court below.
[2] Lodhi 5 is a close corporation registered in accordance with the
laws of the Republic of South Africa. Its sole asset is immovable
property, Erf 24 Kramerville Township, Johannesburg. It is one of a
group of entities, the Lodhi Group, which include Lodhi 4, through which
Mr Lodhi, the sole member of Lodhi 5, conducts business involving rare
and fine art, sporting goods, auctioneering and textile industries.
[3] The bank offers its Islamic customers certain specialised services
and products compliant with Shari’ah (Islamic) law which cater for
Islam’s prohibition on the charging of interest. These include an Islamic
Finance Residential Property Offering which includes an agency
agreement that allows the bank to act as an agent when purchasing
property on behalf of its customers in return for a fixed agency fee. In
June 2008 the bank lent and advanced to Lodhi 5, without interest, a sum
of R9,6 million repayable in 120 monthly instalments of R88 000, in
terms of this dispensation. The loan was for the purchase of Erf 24,
Kramerville Township and a neighbouring property, Erf 29 (the
property). On 7 May 2008 Lodhi 4 and Mr Lodhi had executed a
suretyship bond in the bank’s favour securing the indebtedness of Lodhi
5. And on 19 June 2008 Lodhi 5 and Lodhi 4 respectively registered a
covering mortgage bond and a suretyship bond in the bank’s favour.
[4] Lodhi 5 made regular payments to the bank in discharge of the loan
until May 2009 and from July to September 2009. During the ensuing
lull, in November 2009, the Registrar of the Companies and Intellectual
Property Registration Office (CIPRO) placed Lodhi 5 in deregistration,
which was made final in July 2010, for failing to submit its annual return.
However, the deregistration was subsequently reversed1 at the instance of
the bank which sought to safeguard its interests as Lodhi 5’s creditor. In
May 2010 Lodhi 5 made a large payment towards the discharge of the
loan in the sum of R5 million from an insurance pay-out, which will be
discussed later in the judgment. No further payments were made
thereafter.
[5] On 18 April 2011 the bank sent a statutory demand to Lodhi 5 in
terms of s 69 of the Close Corporations Act 69 of 1984 (the Close
Corporations Act)2 and a letter of demand to Mr Lodhi. On 25 May 2011
it sent a statutory demand to Lodhi 4 in terms of s 345 of the Companies
Act 61 of 1973 (the Companies Act).3 The statutory demands stated that
if payment of the sums claimed was not made within 21 days of receipt
1 In terms of section 26(6) and (7) of the Close Corporations Act which provide:
‘(6) The Registrar may on application by any interested person, if he or she is satisfied that a
corporation was at the time of its deregistration carrying on business or was in operation, or that it is
otherwise just that the registration of the corporation be restored, restore the said registration.
(7) The Registrar shall give notice of the restoration of the registration of a corporation in the Gazette,
and as from the date of such notice–
(a) the corporation shall be deemed to have continued in existence as from the date of deregistration as
if it had not been deregistered.’
2 The section provides for circumstances under which a corporation may be deemed unable to pay its
debts for purposes of its winding up. The relevant part reads:
‘Circumstances under which corporation deemed unable to pay debts
(1) For the purposes of section 68 (c) a corporation shall be deemed to be unable to pay its debts, if –
(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of not less than
two hundred rand then due has served on the corporation, by delivering it at its registered office, a
demand requiring the corporation to pay the sum so due, and the corporation has for 21 days thereafter
neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor.’
3 The section provides for circumstances under which a company is deemed unable to pay its debts for
purposes of its winding up and reads in relevant part:
‘When company deemed unable to pay its debts
(1) A company or body corporate shall be deemed to be unable to pay its debts if –
(a) a creditor, by cession or otherwise, to whom the company is indebted in a sum not less than one
hundred rand then due –
(i) has served on the company, by leaving the same at its registered office, a demand requiring the
company to pay the sum so due; or
(ii) …
and the company or body corporate has for three weeks thereafter neglected to pay the sum, or to
secure or compound for it to the reasonable satisfaction of the creditor.’
thereof, Lodhi 5 and Lodhi 4 would be deemed unable to pay their debts.
The appellants did not respond to the letters of demands.
[6] On 5 July 2011 the bank launched the court proceedings in which it
mainly sought to have Lodhi 5 and Lodhi 4 placed under final winding up
and Mr Lodhi ordered to pay the outstanding amount on the loan. The
bank relied on the written, interest free loan agreement (the loan
agreement) in terms of which it alleged to have lent and advanced to
Lodhi 5 a sum of R9,6 million. The bank further relied upon a written
‘Agency and
Administration
Services Agreement’ (the agency
agreement). In terms of the agency agreement, the bank, acting as Lodhi
5’s exclusive agent, would purchase the property on its behalf. An
administration fee for those services was payable by Lodhi 5 to the bank
in a sum of R7 600 560 (plus VAT) payable in 120 equal monthly
instalments. The bank alleged that Lodhi 5 had fallen into arrears in terms
of both agreements and that sums of R3 609 331,52 and R6 773 242,73
remained owing as capital in terms of the loan agreement and the balance
of administration fees in terms of the agency agreement, respectively.
[7] The appellants did not dispute the loan agreement which they
admitted Mr Lodhi had signed. They also admitted that a capital sum of
R2 682 627 remained owing under the agreement. But they contended
that this debt was not yet due and payable because the bank had not
accelerated the repayment of instalments in terms of the loan agreement
and that the payment of R5 million amounted to prepayment of 62
instalments and years’ worth of instalments in advance. Furthermore, a
suspensive condition to which the loan agreement was subject was never
fulfilled to bring the agreements into effect. Regarding the agency
agreement, they denied that it came into effect on the ground that it was
never signed. They argued further that even if the agency agreement had
been signed it was, nevertheless, not implemented according to its terms
because the bank did not perform any of the obligations it undertook as
their agent in terms thereof. Thus, it was contended that the bank earned
no agency fee which amounted to interest in breach of Shari’ah law in
any event.
[8] In response, the bank averred in a supplementary affidavit (one of
several allowed by the high court) filed late into the proceedings, that the
agency agreement, which it alleged it could not locate, had been signed
by an official who was no longer in its employ and was unavailable to
comment. The bank accepted that if the court below found that the
agency agreement never came into force and effect by reason of non-
signature, in light of the absence of proof that it was signed, then the loan
agreement would be similarly affected by reason of clause 4. The latter
provision required that the agency agreement be signed and become
unconditional. But the bank contended that even if the loan and agency
agreements were invalid it was still entitled to the restitution of the
outstanding balance of R7 007 297,51 (a claim which the appellants
unsuccessfully argued had prescribed in the high court and which they
wisely did not raise on appeal). This amount comprised the initial capital
loan of R9,6 million less all payments made by Lodhi 5 under both
agreements, together with interest at 15,5 per cent from June 2008, the
date of the initial advance of the loan.
[9] The court below found that both agreements were valid and
enforceable as they had been signed and were compliant with Shari’ah
law. The court accordingly granted judgment against Mr Lodhi in the full
amount and interest initially claimed. The court below also granted the
liquidation applications against Lodhi 4 and Lodhi 5. This was on the
basis that these entities had no valid defence and were clearly unable to
pay their debts, which were due and payable.
[10] On appeal the issues crystallised to whether (a) Lodhi 4 and Lodhi
5 were correctly placed under winding up, (b) the appeal should succeed
partially by the reduction of the amount in the order granted against Mr
Lodhi to the capital amount of R2 642 006,98 admitted as outstanding,
and (c) Mr Lodhi is liable to pay interest on such amount and if so, from
which date.
[11] The appellants challenged all the conclusions of the court below.
They argued that the bank’s main claims were wrongly granted on an
unfounded premise that the agreements came into effect. This was not
proved, they argued, because the agency agreement was not signed and
the bank itself had ultimately conceded that the issue had to be decided
on the appellants’ version. It was further contended that the appellants’
resistance to the claims was justified as the bank subsequently abandoned
them and claimed restitution. In terms of the loan agreement, this position
conflicted with the bank’s allegation that the suspensive conditions had
been fulfilled (which the bank failed to prove in any event). Thus the
amounts claimed in the letters of demand were not due and payable at the
time. And the bank could claim restitution of the capital outstanding from
Lodhi 5 only and not against the sureties. It was further argued that the
award of interest had no basis in law even if the outstanding debt was due
and payable. This was so because the parties’ intention to conclude an
interest free loan agreement governed by Shari’ah law excluded the
application of the Prescribed Rate of Interest Act 55 of 1975 (the Act)4
upon which the bank relied. It was then contended that the bank’s success
in its main claim meant that its alternative claim for restitution had failed
and could not be pursued on appeal in the absence of a cross-appeal as the
bank sought to do.
The winding-up proceedings
[12] As indicated above, the liquidation applications were based on the
deeming provisions in s 69 of the Close Corporations Act and s 345 of the
Companies Act – that Lodhi 5 and Lodhi 4 should be deemed unable to
pay their debts by neglecting to pay, secure or compound their debts
demanded by the bank and should therefore be wound up in terms of s
344(f) of the Companies Act.5 In its supplementary affidavit the bank also
alleged that the financial statements of Lodhi 5 and Lodhi 4 showed that
their liabilities exceeded their assets. They were also unable to pay their
debts and were therefore commercially insolvent.
[13] The bank’s locus standi as Lodhi 5’s creditor was not in dispute.
The appellants only denied neglecting to pay the debt. They contended
that it was not yet due and payable when the bank demanded payment in
view of the loan and agency agreements’ lapse, the advance payment of
R5 million and the bank’s failure to accelerate payment of the instalments
in terms of the loan agreement. In their supplementary replying affidavits
they contended that Lodhi 5’s financial situation had since stabilised.
4 Section 1(1) of the Prescribed Rate of Interest Act 55 of 1975 provides that ‘[i]f a debt bears interest
and the rate at which the interest is to be calculated is not governed by any other law or by an
agreement or a trade custom or in any other manner, such interest shall be calculated at the rate
prescribed under subsection (2) as at the time when such interest begins to run, unless a court of law,
on grounds of special circumstances relating to that debt, orders otherwise.’
5 Section 344(f) of the Companies Act provides: ‘A company may be wound up by the Court if –
. . . the company is unable to pay its debts as described in section 345’.
[14] The contention that the bank did not invoke the acceleration clause
under the loan agreement may be dealt with shortly. Clause 18.2 of the
loan agreement gave the bank the right in the event of a breach of its
terms, by written notice, to ‘declare all or any part of the Capital
Outstandings to be immediately due and payable whereupon the Capital
Outstandings shall become immediately due and payable; and/or enforce
any or all of its rights under the Security Documents’6. The bank
expressly invoked these provisions in its letter of demand of 18 April
2011 which stated that ‘[i]n light of the aforesaid breach, [the bank] has
instructed us to declare all the Capital Outstandings of the Loan
Agreement … to be immediately due and payable’.
[15] There is similarly no merit in the appellants’ contentions
concerning the R5 million insurance pay-out. Clause 17.2.2 of the loan
agreement specifically provided for the manner in which such funds
(arising from insurance that it took out as cover against damage to or
destruction of the property) were to be utilised. If any event which gave
rise to a claim under the insurance occurred, the bank would, at its sole
discretion, be entitled to apply the insurance proceeds against the ‘capital
outstandings’. And to the extent that any balance of the ‘capital
outstandings’ remained thereafter, such balance would remain a debt due
by Lodhi 5 to the bank. Even on Lodhi 5’s case, after its loan account was
credited with the payment of the R5 million, a substantial balance
nevertheless remained outstanding on the capital debt. Needless to say, on
the above provisions such payment certainly did not absolve Lodhi 5
from discharging its obligations in the terms specified in the loan
6 The loan agreement defines ‘capital outstandings’ as the aggregate of all amounts of principal and all
and any other amounts due and payable to the bank under the loan agreement and ‘security documents’
as the mortgage bond and any further agreements entered into at any time by or on behalf of Lodhi 5 or
any other person as security for its obligations to the bank under the loan agreement.
agreement. The bank was wholly entitled to insist on the continued
payment of instalments, and upon the full debt becoming due and
payable, to insist on payment in full.
[16] As for the statutory notices to which the appellants did not respond,
the background leading to their issue was not disputed. Pursuant to a
meeting between the parties’ representatives, including Mr Lodhi, on 10
February 2010, the bank recorded that the arrears on Lodhi 5’s debt stood
at R725 074,40 which it was unable to pay arising from cash flow
problems. Mr Lodhi subsequently confirmed the correctness of these
statements in writing and made certain proposals to the bank regarding
payment of the arrears. The debt was not settled and a year later, on 21
February 2011, the bank sent Lodhi 5 a letter of demand which was
followed by the statutory notice of 18 April 2011 to which there was no
response as already mentioned. This gave rise to the deemed inability to
pay.
[17] In addition to this, the financial statements of both Lodhi 5 and
Lodhi 4 and their failure to make any payment barring the R5 million
since 2009, despite their insistence that they were able to pay their debts,
subsequently showed their actual inability to pay their debts. According
to their financial statements, as at 28 February 2010 Lodhi 5 owed the
bank R2 682 675 and Lodhi 4, which carried a further liability on the
basis of its suretyship, was trading at a loss. The situation had not
changed by July 2012. Quite clearly, the two entities are commercially
insolvent and the court below correctly ordered their final winding-up.
The suretyships’ liability
[18] For the assertion that the restitution claim lies only against Lodhi 5,
Lodhi 4 and Mr Lodhi relied on clause 4.4 of the loan agreement on
which the claim for restitution is based. The clause reads:
‘In the event that the Suspensive Conditions are not fulfilled on or before 31 May
2008, or such other date as may be agreed in writing between the Parties on or before
that date, then this Agreement, save for the provisions of this clause and of clauses 1,
2, 20, 22, 23, 24, 25, 26, 27 and 28 which shall remain of full force and effect, shall
never become of any force or effect, and no Party shall have any claim against any
other Party for anything done hereunder or arising herefrom, save as a result of a
breach of any of the provisions of this clause 4 by any party, and the parties shall be
restored to the status quo ante.’
[19] It was argued on the appellants’ behalf that it was clear from the
wording of the clause that if the suspensive conditions were not fulfilled
after the advance of the loan, the claim would be limited to one of
restitution between the bank and Lodhi 5 only. The words ‘no Party shall
have any claim against any other Party’ in the clause referred to parties
such as the sureties, so it was contended. And a claim would not lie
against the sureties here because to claim restitution, the bank would first
have to tender release of all securities in terms of the loan agreement,
which it had not done.
[20] This argument however ignores the provisions of the deed of
suretyship. In terms of clause 1 thereof, Mr Lodhi and Lodhi 4 bound
themselves jointly and severally as sureties for and co-principal debtors
with Lodhi 5 ‘for the due and punctual performance by [Lodhi 5] and
each of the sureties of all their obligations to the bank … now due, owing
and payable or becoming due, owing and payable in the future from any
cause whatsoever’. Clause 3 made provision for the sureties to ‘be bound
by all admissions or acknowledgements of indebtedness made or given at
any time by [Lodhi 5] to the [bank] now or in the future in regard to any
obligation or liability for which [the] suretyship is given’. These
provisions obviously impose no condition on the bank to first release the
suretyship to be able to claim against Lodhi 5 and its sureties. The rights
and the obligations of the parties must be determined with reference to
the terms of the deed of suretyship.7 Furthermore, it does not appear that
clause 4.4 itself requires the bank to tender release of the securities if the
loan agreement lapsed, as seems to have happened here, in the absence of
satisfactory proof that the bank signed the agency agreement.
Mr Lodhi’s liability
[21] Regarding Mr Lodhi’s liability as Lodhi 5’s surety, it was
conceded on the bank’s behalf at the outset that the amount in the order
granted by the court below against him should be reduced to the admitted
outstanding capital sum. The bank however insisted that he was liable for
interest on the reduced sum at the legal rate at the material time, 15,5 per
cent, calculated from the date of delivery of the supplementary affidavit
in which restitution was claimed. I find nothing wrong with this stance.
[22] The contention that the bank should have cross-appealed against
the finding of the court below, that the agreements were valid and binding
to sustain its claim for restitution, need only be stated to be rejected. An
appeal lies only against a judgment or order of court and not its
7 Bock & others v Duburoro Investments (Pty) Ltd 2004 (2) SA 242 (SCA) para 29.
reasoning.8 Therefore, quite apart from the fact that the bank had no
reason to appeal against the order which granted the precise relief it
sought, it could not have challenged the finding of the court below on the
status of the two agreements even if it so wished. It is not necessary for a
plaintiff to cross-appeal where a reduction of the quantum of damages
awarded by a trial court is sought by a defendant because such reduction
is not a substantive judgment or order but rather a finding or ruling which
the court is required to make in its assessment of damages to be awarded.9
By parity of reasoning, there was no basis for a cross-appeal here too.
The judgments of this court in Giliomee v Cilliers and Southern Sun
Hotel Corporation (Pty) Ltd v G & W Leases CC upon which the
appellants relied in this regard are clearly distinguished by their own
facts.10
[23] On the question of interest, it seems to me that the appellants’
argument misconceives the nature of the interest sought here – that it was
not based on the enforcement of a contractual undertaking but rather on
Lodhi 5’s default. It is trite that a party which has been deprived of the
use of its capital for a period of time has suffered a loss which, in the
normal course of events, will be compensated by an award of mora
interest.11 The term mora simply means delay or default; interest a
tempore morae constitutes the damages that flow naturally (without the
need to place the debtor in mora) from the contract itself by reason of a
8 Western Johannesburg Rent Board & another v Ursula Mansions (Pty) Ltd 1948 (3) SA 353 (A) at
355.
9 Bay Passenger Transport Ltd v Franzen 1975 (1) SA 269 (A); Gentiruco AG v Firestone SA (Pty) Ltd
1972 (1) SA 589 (A).
10 Giliomee v Cilliers 1958 (3) SA 97 (A); Southern Sun Hotel Corporation (Pty) Ltd v G & W Leases
CC [1999] 1 All SA 497 (A).
11 Crookes Brothers Ltd v Regional Land Claims Commission, Mpumalanga 2013 (2) SA 259 (SCA)
para 16; Thoroughbred Breeders’ Association v Price Waterhouse 2001 (4) SA 551 (SCA) para 85;
Bellairs v Hodnett& another 1978 (1) SA 1109 (A) at 1145D-G.
debtor having failed to perform a contractual obligation within the agreed
time.12 Lodhi 5 unlawfully delayed payment of its outstanding debt to the
bank. It is therefore liable to compensate the bank for its failure to
perform on the due date at the legal rate as prescribed by s 1(2) of the
Act.13 This obligation, which arose on 15 December 2012 when the bank
claimed restitution in its supplementary affidavit, has nothing to do with
and is not affected by the Shari’ah law’s prohibition against payment of
interest on a loan debt.
[24] In the result the following order is made:
1 Save to the extent below, the appeal is dismissed with costs, including
the costs of two counsel.
2 Paragraph 38 (i) and (ii) of the order of the court below are set aside
and replaced with the following:
‘Muhammad Islam Lodhi shall pay to the applicant R2 642 006.98
together with interest thereon at the rate of 15,5 per cent per annum as
from 15 June 2012 to date of payment.’
____________________________
MML Maya
Judge of Appeal
12 Scoin Trading(Pty) Ltd v Bernstein 2011 (2) SA 118 (SCA).
13 Davehill (Pty) Ltd & others v Community Development Board 1988 (1) SA 290 (A) at 299B; Land
and Agricultural Development Bank of South Africa v Ryton Estates (Pty) Ltd & others [2013] All SA
385 (SCA) paras 19 and 20.
APPEARANCES:
For the Appellants:
JD Maritz SC (with him PL Uys)
Instructed by:
Savage Jooste & Adams, Pretoria
AP Pretorius & Partners, Bloemfontein
For Respondent:
A Subel SC (with him JE Smit)
Instructed by:
Edward Nathan Sonnenbergs Inc, Pretoria
Rosendorff Reitz Barry 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
22 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.
Lodhi 5 Properties Investments v Firstrand Bank Limited (170/14) [2015] ZASCA 72
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) partially dismissed the appeal against a judgment of
Gauteng Division, Pretoria brought by Lodhi 5 Properties Investments CC (Lodhi 5), Lodhi 4
Properties Investments (Pty) Ltd (Lodhi 4) against a winding-up order granted against them but
reduced the amount payable by their co-appellant, Mr Muhammed Islam Lodhi, to Firstrand Bank
Limited (the Bank) from R10 328 574,25 to R2 642 006,98. The appellants were ordered to pay the
costs of the appeal including the costs of two counsel.
The issues before the SCA were whether (a) Lodhi 4 and Lodhi 5 were correctly placed under
liquidation; (b) whether the amount that Mr Lodhi had been ordered to pay to the Bank should be
reduced; and (c) whether Mr Lodhi was liable to pay interest on the outstanding balance.
In June 2008, Lodhi 5 concluded a loan agreement with Firstrand Bank in terms of which the bank
granted him a loan structured to comply with Shari’ah (Islamic) law, which prohibits the charging of
interest on a loan debt. As security for this debt, Lodhi 4 and Mr Lodhi executed suretyship bonds in
the bank’s favour. Lodhi 5 defaulted on repayments and, following demand to which there was no
response , the bank applied for an order that Mr Lodhi pay the outstanding balance together, and for
the winding up of Lodhi 4 and Lodhi 5.
As to issue (a), the SCA found that Lodhi 4 and Lodhi 5 were both clearly commercially insolvent and
upheld the winding up order. As to issue (b), the Bank conceded that the amount payable should be
reduced to the capital amount admitted as outstanding by the appellants and so, to that extent, the
SCA altered the order granted against Mr Lodhi. As to issue (c), the SCA held that Mr Lodhi was
liable to pay the interest claimed by the bank. This was so despite the Shari’ah law prohibition against
the charging of interest on loan debts because the mora interest ordered in this matter was not
interest in terms of a loan contract. Rather, it was a form of damages that flow naturally from the
contract itself by reason of the debtor having failed to perform a contractual obligation within the
agreed time (here Lodhi 5’s delayed payment of its outstanding debt to the bank). It has nothing to do
with and is not affected by the Shari’ah law prohibition against payment of interest on a loan debt.
Accordingly, the application of the Prescribed Rate of Interest Act 55 of 1975 was not excluded.
--- ends ---
|
4100
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No. 696/2022
In the matter between:
MANTIS INVESTMENTS HOLDINGS (PTY) LIMITED FIRST APPELLANT
ADRIAN JOHN FAULKNER GARDINER SECOND APPELLANT
and
WERNER DE JAGER N.O. FIRST RESPONDENT
CAROL-ANN SCHRӦDER N.O.
SECOND RESPONDENT
Neutral Citation:
Mantis Investments Holdings v De Jager N O (696/2022) [2023]
ZASCA 134 (18 October 2023)
Coram:
PONNAN and MBATHA JJA, KATHREE-SETILOANE, KEIGHTLEY and
UNTERHALTER AJJA
Heard:
16 August 2023
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representatives via email, publication on the Supreme Court of Appeal website
and release to SAFLII. The date and time for hand-down is deemed to be 11:00 am
on 18 October 2023.
Summary:
Sections 44 and 151 of the Insolvency Act – Master’s decision admitting
a creditor’s claim against a company in liquidation stands unless set aside on review
in terms of s 151 thereof. Section 31 of Insolvency Act – in an action to set aside a
collusive disposition – no entitlement to contest a proved claim of creditor.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Makanda (Beneke AJ)
sitting as a court of first instance:
The appeal is dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Kathree-Setiloane AJA (Ponnan and Mbatha JJA, Keightley and Unterhalter
AJJA concurring):
[1] Werner de Jager, the first respondent and Carol Ann-Schröder, the second
respondent (the liquidators), are the duly appointed joint liquidators of
No. 1 Watt Street (Pty) Ltd (Watt Street).1 Mantis Investment Holdings (Pty) Ltd
(Mantis), the first appellant, is a shareholder in Watt Street. Mr Adrian John Faulkner
Gardiner (Mr Gardiner), the second appellant, is a director of both Mantis and Watt
Street.2
[2] The appellants appeal against the judgment and order of Beneke AJ in the
Eastern Cape Division of the High Court, Makanda (the high court) in which it, inter
alia, made an order that the appellants are not lawfully entitled to contest the claims
proved by the Eastern Cape Development Corporation (ECDC) in the liquidation
proceedings of Watt Street. The matter before the high court proceeded by way of a
special case in terms of rule 33(1) of the Uniform Rules of Court.
[3] The special case has its genesis in an action, which the liquidators instituted
against the appellants to set aside a collusive disposition of the assets of Watt Street.
The agreed facts which form the background to the action are that, during 2005, ECDC
1 Watt Street was formerly known as Mantis Group Holdings (Pty) Ltd.
2 Mantis and Mr Gardiner are referred to collectively as ‘the appellants’ in the judgment.
advanced certain monies to Bushman Sands Development (Pty) Ltd (Bushman
Sands). Watt Street bound itself as surety and co-principal debtor, with Bushman
Sands, to ECDC.
[4] As a result of the failure of Bushman Sands to repay the loan to ECDC, the latter
instituted an action in the Eastern Cape Division of the High Court, Gqeberha
(Gqeberha high court)3 against Watt Street and Bushman Sands for, inter alia,
payment of the amount of about R19 million (the ECDC action). Watt Street defended
the ECDC action.
[5] Shortly before the commencement of the trial in the ECDC action, Mantis,
represented by Mr Gardiner, brought an application in the Gqeberha high court,4 for
the liquidation of Watt Street. Mantis contended, in this application, that it was a
creditor of Watt Street for an amount of about R2.5 million arising from certain
unsecured and interest free loans advanced to Watt Street, without specified
repayment terms. In November 2014, the Gqeberha high court placed Watt Street in
final winding-up.
[6] ECDC and Mantis proved claims against Watt Street in terms of s 445 of the
Insolvency Act 24 of 1936 (the Act). Despite Mantis disputing the claim of ECDC, it
3 Case No. 1165/2012.
4 Case No. 3805/14.
5 Section 44 of the Insolvency Act, in relevant part, provides:
‘44 Proof of liquidated claims against estate
(1) Any person or the representative of any person who has a liquidated claim against an insolvent
estate, the cause of which arose before the sequestration of that estate, may, at any time before the
final distribution of that estate in terms of section one hundred and thirteen, but subject to the provisions
of section one hundred and four, prove that claim in the manner hereinafter provided: Provided that no
claim shall be proved against an estate after the expiration of a period of three months as from the
conclusion of the second meeting of creditors of the estate, except with leave of the Court or the Master,
and on payment of such sum to cover the cost or any part thereof, occasioned by the late proof of the
claim, as the Court or Master may direct.
. . .
(3) A claim made against an insolvent estate shall be proved at a meeting of the creditors of that estate
to the satisfaction of the officer presiding at that meeting, who shall admit or reject the claim: Provided
that the rejection of a claim shall not debar the claimant from proving that claim at a subsequent meeting
of creditors or from establishing his claim by an action at law, but subject to the provisions of section
seventy-five: and provided further that if a creditor has twenty-four or more hours before the time
advertised for the commencement of a meeting of creditors submitted to the officer who is to preside at
was proved and accepted by the Master of the Gqeberha high court (the Master).
Mantis’ claim was also accepted by the Master.
[7] The liquidators’ cause of action to set aside what it describes as a collusive
disposition is premised on s 31 of the Act.6 The liquidators pleaded, inter alia, as
follows in the particulars of claim:
that meeting the affidavit and other documents mentioned in subsection (4), he shall be deemed to have
tendered proof of his claim at that meeting.
(4) Every such claim shall be proved by affidavit in a form corresponding substantially with Form C or
D in the First Schedule to this Act. That affidavit may be made by the creditor or by any person fully
cognizant of the claim, who shall set forth in the affidavit the facts upon which his knowledge of the
claim is based and the nature and particulars of the claim, whether it was acquired by cession after the
institution of the proceedings by which the estate was sequestrated, and if the creditor holds security
therefor, the nature and particulars of that security and in the case of security other than movable
property which he has realized in terms of section eighty-three, the amount at which he values the
security. The said affidavit or a copy thereof and any documents submitted in support of the claim shall
be delivered at the office of the officer who is to preside at the meeting of creditors not later than twenty-
four hours before the advertised time of the meeting at which the creditor concerned intends to prove
the claim, failing which the claim shall not be admitted to proof at that meeting, unless the presiding
officer is of opinion that through no fault of the creditor he has been unable to deliver such evidences
of his claim within the prescribed period: Provided that if a creditor has proved an incorrect claim, he
may, with the consent in writing of the Master given after consultation with the trustee and on such
conditions as the Master may think fit to impose correct his claim or submit a fresh correct claim.
(5) Any document by this section required to be delivered before a meeting of creditors at the office of
the officer who is to preside at that meeting, shall be open for inspection at such office during office
hours free of charge by any creditor, the trustee or the insolvent or the representative of any of them.
(6) A claim against an insolvent’s estate for payment of the purchase price of goods sold and delivered
to the insolvent on an open account shall not be admitted to proof unless a statement is submitted in
support of such claim showing the monthly total and a brief description of the purchases and payments
for the full period of trading or for the period of twelve months immediately before the date of
sequestration, whichever is the lesser.
(7) The officer presiding at any meeting of creditors may of his own motion or at the request of the
trustee or his agent or at the request of any creditor who has proved his claim, or his agent, call upon
any person present at the meeting who wishes to prove or who has at any time proved a claim against
the estate to take an oath, to be administered by the said officer, and to submit to interrogation by the
said officer or by the trustee or his agent or by a creditor or the agent of a creditor whose claim has
been proved, in regard to the said claim.
(8) If any person who wishes to prove or who has at any time proved a claim against the estate is absent
from a meeting of creditors the officer who presided or who presides thereat, may summon him in writing
to appear before him at a place and time stated in the summons, for the purpose of being interrogated
by the said officer or by the trustee or his agent or by a creditor or the agent of a creditor whose claim
has been proved, and I he appears in answer to the summons the provisions of subsection (7) shall
apply.
(9) If any such person fails without reasonable excuse to appear in answer to such summons or having
appeared or when present at any meeting of creditors refuses to take the oath or to submit to the said
interrogation or to answer fully and satisfactorily any lawful question put to him, his claim, if already
proved, may be expunged by the Master, and if not yet proved, may be rejected.’
6 Section 31 of the Insolvency Act provides:
‘(a) The appellants had embarked upon a restructuring of Watt Street which resulted in the
disposal and transfer of its assets, and a declaration and payment of a dividend in an amount
exceeding R64 million from Watt Street to Mantis, as its shareholder;
(b) The appellants effectively denuded Watt Street of all its significant assets despite being
aware that there existed an actual or contingent liability due by it to ECDC;
(c) As a result, Watt Street was not in a position to meet its obligations to pay an amount
purportedly owing to ECDC;
(d) The disposal and transfer of assets and the declaration and payment of a dividend, had
the effect of prejudicing the creditors of Watt Street and, in particular, ECDC;
(d) Watt Street, Mantis and Mr Gardiner intended to defraud ECDC by deliberately prejudicing
and frustrating its claims against Watt Street, such that there is no prospect of any dividend to
be paid in Watt Street; and
(e) As parties to the collusive disposition, Mantis and Mr Gardiner are jointly and severally
liable to make good the loss caused to Watt Street and are obliged to pay a penalty in the
amount of R64 million for its benefit.’
[8] The liquidators accordingly sought an order: (a) setting aside the disposal and
transfer of the assets and the declaration and payment of a dividend in an amount of
not less than R64 million in terms of s 31 of the Act; (b) that the said sum be paid to
the liquidators of Watt Street; (c) declaring that Mantis is to forfeit any claim it may
have against Watt Street; (d) for payment of compensation and a penalty in the sum
of R64 million; and (e) for costs.
[9] In answer, the appellants filed a plea in which they admitted that ECDC had
proved a claim against Watt Street in the amount of about R19 million. They, however,
denied that the amount claimed (or any lesser amount) was due, owing, and payable
‘31 Collusive dealings before sequestration
(1) After the sequestration of a debtor’s estate the court may set aside any transaction entered into by
the debtor before the sequestration, whereby he, in collusion with another person, disposed of property
belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his
creditors above another.
(2) Any person who was a party to such collusive disposition shall be liable to make good any loss
thereby caused to the estate, by way of penalty, such sum as the court may adjudge, not exceeding the
amount by which he would have benefited by such dealing if it had not been set aside; and if he is a
creditor he shall also forfeit his claim against the estate.
(3) Such compensation and penalty may be recovered in any action to set aside the transaction in
question.’
to ECDC. They also denied that the restructuring, rationalization and declaration of a
dividend constituted a collusive agreement which prejudiced the creditors of Watt
Street, and more particularly ECDC. The appellants furthermore pleaded that, from
time to time, Bushman Sands (the principal debtor) had effected payments to ECDC
and continued to do so.
[10] The liquidators filed a replication in which they contended that: (a) the Master’s
decision to admit ECDC’s claim constitutes an administrative act which exists as a fact
and has legal effect until set aside; (b) neither of the appellants sought to review the
Master’s decision; (c) consequently, any determination in the action that ECDC does
not have a claim against Watt Street is precluded. In answer, the appellants filed a
rejoinder in which they contended that they are not bound, in the action, by the decision
of the Master to admit the claim, as it was made in the context of a claim by ECDC
against Watt Street. They also contended that in law, it was incumbent upon the
liquidators to establish, as a prerequisite to a claim based on a collusive disposition
that, at the date of the institution of the action, ECDC was, and is, a creditor of the
company in liquidation.
[11] Two questions arose, namely whether the appellants were entitled to: (a) contest
the claim of ECDC as against the principal debtor (Bushman’s Sands); and, (b) revisit
the indebtedness and quantum of ECDC’s claim against the surety. On
1 December 2020, the high court made an order separating those issues from the
remainder of the issues in the action.7
[12] Having heard argument, the high court found that the decision of the Master to
accept a claim under s 44 of the Act constitutes administrative action, which exists and
continues to have legal consequences until and unless it is reviewed and set aside in
terms of s 151 of the Act.8 Relying for support on the decision of Bester NO and Others
v CTS Trailers (Pty) Ltd and Another,9 it concluded that ‘[a]bsent a successful
7 Order of the Eastern Cape Division of the High Court, Makhanda: De Jager N O and Another v Mantis
Investments Holdings (Pty) Ltd and Another [2021] ZAECGHC 120.
8 See para 16 below.
9 Bester N O and Others v CTS Trailers (Pty) Ltd and Another [2020] ZAWCHC 169; 2021 (4) SA 167
(WCC).
application for the review and setting aside of an acceptance of a claim, and even
despite objections to the claim having merit, the decision of the Master to accept a
creditor’s claim must stand’.10 The high court accordingly made the following order:
‘1.The [appellants] are not lawfully entitled to revisit the indebtedness of No. 1 Watt Street
(Pty) Ltd (previously known as Mantis Group Holdings (Pty) Ltd) – (and referred hereinafter
as “the company in liquidation”) as set out in paragraphs 7.3, 7.4, 7.5, and 7.6 of the particulars
of claim read with paragraphs 6 and 7 of the [appellants’] plea, and read further with the
[respondents’] replication and the [appellants’] rejoinder and the [respondents’] surrejoinder
filed of record;
2. The [appellants] are not lawfully entitled to continue to contest the claims proved by ECDC
in the liquidation proceedings of the company in liquidation, as set out in paragraph 7.7 and
7.8 of the particulars of claim, read with paragraphs 9 and 10 of the [appellants] plea, and
further read with the [respondents’] replication, the [appellants’] rejoinder, and the
[respondents’] surrejoinder filed of record; and
3. The costs occasioned by the separated special case, including the costs of the application
for separation, including the costs of two counsel where so utilized, shall be borne by the
appellants.’
[13] The appeal against the order of the high court is before us with the leave of this
Court. In my view, the appeal can be disposed of on a narrower basis than that
foreshadowed in the pleadings. Both the appellants and the liquidators appeared to
accept this during argument in the appeal.
[14] Section 4411 of the Act deals comprehensively with the procedure for the proof
of liquidated claims against an insolvent estate. In Caldeira v The Master and Another,
Levinsohn J said that ‘[t]he proof of claim procedure enables creditors to prove their
claims in a relatively simple and expeditious fashion’.12 More recently in Breda N O v
Master of the High Court, Kimberley,13 this Court observed that: ‘[a] presiding officer
does not adjudicate upon the claim as a court of law, is not required to examine a
10 Bester paras 21-27. Although Bester deals with a decision made by the Master in terms of s 46 of the
Insolvency Act and not s 44, it affirms the principle that, a decision taken by the Master in terms of the
Insolvency Act has legal consequences until set aside.
11 See fn 6 above.
12 Caldeira v The Master and Another 1996 (1) SA 868 (NPD) at 873H-874F.
13 Breda N O v Master of the High Court, Kimberley [2015] ZASCA 166.
claim too critically and only has to be satisfied that the claim is prima facie proved’.14
Put differently, the Master must examine the proof of claims’ documents to determine
whether they disclose prima facie the existence of an enforceable claim.
[15] Where a Master admits a claim, the Master cannot subsequently alter that
decision.15 This does not, however, mean that the Master’s decision to admit the claim
is conclusive and payable out of property of the insolvent estate. That is so because,
at this stage, the admission of the claim is provisional. This means that it is open to
the liquidator to dispute the claim by following the procedure envisaged in s 45(3) of
the Act which provides:
‘If the trustee disputes a claim after it has been proved against the estate at a meeting of
creditors, he shall report the fact in writing to the Master and shall state in his report his reasons
for disputing the claim. Thereupon the Master may confirm the claim, . . . reduce or disallow
the claim, and if he has done so, he shall forthwith notify the claimant in writing: Provided that
such reduction or disallowance shall not debar the claimant from establishing his claim by an
action at law, but subject to the provisions of section seventy-five’.
[16] If the liquidator is dissatisfied with the Master’s decision to admit the claim of a
creditor, he or she may apply to court to review it in terms of s 151 of the Act which
provides:
‘Subject to the provisions of section fifty-seven any person aggrieved by any decision, ruling,
order or taxation of the Master or by a decision, ruling or order of an officer presiding at a
meeting of creditors may bring it under review by the court and to that end may apply to the
court by motion, after notice to the Master or to the presiding officer, as the case may be and
to any person whose interests are affected: Provided that if all or most of the creditors are
affected, notice to the trustee shall be deemed to be notice to all such creditors; and provided
further that the court shall not re-open any duly confirmed trustee’s account otherwise than as
is provided in section one hundred and twelve.’
[17] A liquidator may not review the decision of the Master to admit the claim, unless
the liquidator has followed the procedure contemplated in s 45(3) of the Act, which is
14 Ibid para 23.
15 Ben Rossouw Motors v Druker NO and Others 1975 (1) SA 821 (W) at 823; [1975] 1 All SA 311 (W)
at 314.
peremptory.16 A creditor who has unsuccessfully objected to the Master’s decision to
admit the claim, may take the Master’s decision on review in terms of s 151 of the
Act.17 The Master’s decision to reject a creditor’s proved claim may also be taken on
review by the aggrieved creditor. However, where no steps are taken to review the
Master’s decision to admit or reject a proved claim, that claim becomes conclusive
and enforceable in law against the company in liquidation. In that event, the Master’s
decision would stand.
[18] As the appellants, in the present matter, did not challenge the Master’s decision
to admit ECDC’s claim in terms of s 151 of the Act, the Master’s decision stands. The
consequence is that ECDC is factually and legally a creditor of the company in
liquidation. The appellants had a tailor-made remedy in terms of the Act to review the
Master’s decision but did not do so.
[19] The legislature has provided parties in the position of the appellants with a suite
of statutory remedies. In argument, the appellants appeared to accept that reliance on
the common law as the basis to assert a claim, is bound to result in an incongruity with
the overall scheme of the Act. Any decision on that claim could notionally be at odds
with the decision of the Master to admit such claim to proof, where, as here, the Master
was not cited nor afforded an opportunity to defend his or her decision. It follows that
in circumstances such as the present, a litigant, in the position of the appellants, who
is aggrieved by a decision of the Master to admit to proof a claim against an insolvent
estate, would be restricted to the remedy of a review under s 151 of the Act.
[20] Several consequences arise from the final winding-up of a company. Foremost
is the creation of a concursus creditorum, the effect of which was described by this
Court in Walker v Syfret N O:18 ‘. . . the hand of the law is laid upon the estate, and at once
the rights of the general body of creditors have to be taken into consideration. No transaction
can thereafter be entered into with regard to estate matters by a single creditor to the prejudice
16 Estate Jeewa v The Master and Bukhsh (1927) NLR 86; Estate Wilson v Estate Giddy, Giddy and
White and Others 1937 AD 239.
17 Noord-kaaplandse Ko-op Lewendehawe Agentskap Bpk v Van Rooyen and Others 1977 (1) SA 403
(NC) at 406-407.
18 Walker v Syfret NO 1911 AD 141.
of the general body. The claim of each creditor must be dealt with as it existed at the issue of
the order.’
[21] ECDC is a creditor with a proved claim that is enforceable against Watt Street.
That decision has not been set aside on review. It therefore stands. The appellants,
however, seek to avoid this legal consequence by contending that it is incumbent on
the liquidators to establish, as a pre-requisite to their claim that, at the date of institution
of the action ECDC was, and is, a creditor in respect of the amount claimed. To require
this of the liquidators, in the face of ECDC’s pre-existing proved claim, is to negate the
comprehensive set of measures in the Act to protect creditors.
[22] In the result, the appeal must fail. I make the following order:
The appeal is dismissed with costs.
_______________________
F KATHREE-SETILOANE
ACTING JUDGE OF APPEAL
Appearances
For the appellants:
A Beyleveld SC
Instructed by:
BLC Attorneys, c/o Wheeldon Rushmere & Cole
Inc, Grahamstown
Symington De Kok, Bloemfontein
For the respondents:
RG Buchanan SC
Instructed by:
Tabata Smith Inc, c/o Nettletons Attorneys,
Grahamstown
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:
18 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
Mantis Investments Holdings v De Jager N O (696/2022) [2023] ZASCA 134 (18 October 2023)
Today, the Supreme Court of Appeal (SCA) dismissed an appeal from the Eastern Cape Division of the
High Court, Makanda (high court). The appeal emanated from an order of the high court that the
appellants were not entitled to contest the claims proved by the Eastern Cape Development Corporation
(ECDC) in the liquidation of No. 1 Watt Street (Pty) Ltd (Watt Street). The case has its genesis in an
action which the liquidators instituted against the appellants to set aside a collusive disposition of the
assets of Watt Street.
The facts of the matter were that ECDC advanced money to Bushman Sands Development (Pty) Ltd
(Bushman Sands), and Watt Street bound itself as surety and co-principal debtor with Bushman Sands
to ECDC. ECDC instituted action against Bushman Sands and Watt Street after Bushman Sands
defaulted on their loan to ECDC. Mantis Investment Holdings (Pty) Ltd (Mantis), being a shareholder of
Watt Street, applied for the liquidation of Watt Street and shortly before the trial, Mantis claimed that it
was a creditor of Watt Street for certain unsecured and interest free loans advanced to Watt Street.
ECDC and Mantis managed to prove their claims against Watt Street in terms of s 44 of the Insolvency
Act 24 of 1936 (the Act), and the claims were accepted by the Master of the High Court after Watt Street
was ultimately placed in final winding-up. The high court found that the decision of the Master to accept
a claim under s 44 of the Act constitutes administrative action, which existed and continued to have
legal consequences until and unless it is reviewed and set aside in terms of s 151 of the Act.
Upon appeal, this Court held that s 44 dealt comprehensively with the procedure for the proof of
liquidated claims against an insolvent estate. Where a Master admits a claim, it cannot subsequently
alter the decision. If a liquidator was unsatisfied with the Master’s decision, a court could be approached
to review the matter in terms of s 151 of the Act. This Court found that since no steps were taken to
review the Master’s decision, the claim became conclusive and enforceable against the company in
liquidation.
Consequently, the SCA held that where a party is aggrieved by a decision of the Master to admit proof
of a claim against an insolvent estate, such party is limited to the remedy of a review under s 151 of the
Act. In the result, the appeal was dismissed.
|
3996
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 017/2022
In the matter between:
NSS obo AS
APPELLANT
and
MEC FOR HEALTH, EASTERN CAPE PROVINCE RESPONDENT
Neutral citation: NSS obo AS v MEC for Health, Eastern Cape Province
(Case no 017/22) [2023] ZASCA 41 (31 March 2023)
Coram:
VAN DER MERWE, SCHIPPERS and GORVEN JJA, and
OLSEN and MALI AJJA
Heard:
15 March 2023
Delivered:
31 March 2023
Summary:
Evidence – statement by party that opponent’s expert opinion
can be handed in as evidence – not a ‘fact admitted’ on the record of proceedings
within the meaning of s 15 of the Civil Proceedings Evidence Act 25 of 1965 –
decision on expert evidence for the court – party cannot bind court to opinion of
opponent’s expert – court entitled to make findings contrary to opinions of
experts.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Mthatha
(Nhlangulela DJP sitting as court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the high court is set aside and replaced by the following order:
‘The application for an order that the plaintiff is not entitled to adduce
evidence in order to disprove the contents of Prof Lotz’s report dated 30 July
2015, and Dr Alheit’s report dated 27 July 2018, is dismissed with costs,
including the costs of two counsel.’
________________________________________________________________
JUDGMENT
________________________________________________________________
Schippers JA (Van der Merwe and Gorven JJA and Olsen and Mali AJJA
concurring)
[1] The appellant (plaintiff), the mother and natural guardian of her minor son
(the child), sued the respondent (defendant) in the Eastern Cape Division of the
High Court, Mthatha (the high court) for compensation on behalf of the child who
in 2006, sustained perinatal asphyxia during labour, which rendered him a
cerebral palsy quadriplegic.1 In the particulars of claim the plaintiff alleges that
the defendant’s employees at St Patrick’s Hospital, Mthatha, breached an
agreement to provide her with obstetric, maternal and neonatal care with
1 The plaintiff also claimed compensation for injuries suffered in her personal capacity.
reasonable skill and diligence; alternatively, that they were negligent in failing to
provide her with such care, resulting in irreversible and thus permanent injury to
the child.2
[2] The trial of the plaintiff’s action is pending in the high court. It could not
proceed when, during the presentation of her case, the high court made an order
which prevents the plaintiff from adducing crucial expert evidence in support of
her claim, on the basis that that evidence was precluded by the provisions of the
Civil Proceedings Evidence Act 25 of 1965 (the Act). The appeal is with its leave.
[3] The basic facts are uncontroversial and can be shortly stated. In terms of
the Uniform Rules of Court, the plaintiff gave notice of her intention to present
expert evidence by two specialist paediatric radiologists, Prof J W Lotz and Dr B
Alheit, and delivered summaries of their opinions and reasons. In a report dated
30 July 2015, and based on a magnetic resonance imaging (MRI) scan, Prof Lotz
opined that the ‘MRI features are diagnostic of an acute profound hypoxic
injury in a term brain in a chronic stage of evolution’.3 This injury results from
a combined insult of hypoxia (lack of oxygen) and ischaemia (not enough blood
pressure due to circulatory collapse) to the brain.
[4] Dr Alheit expressed a similar opinion in respect of this MRI scan in his
report dated 27 July 2019:
‘The MRI features, in the appropriate clinical context, are considered as diagnostic of an acute
profound (central) hypoxic ischaemic injury of the brain, as seen from 35-36 weeks’
gestation onwards, now visualised in the chronic stage of evolution on the MR scan done at the
age of 9 years and 4 months.’4
2 Section 28(2) of the Constitution provides:
‘A child's best interests are of paramount importance in every matter concerning the child.’
3 Emphasis in the original.
4 Emphasis in the original.
[5] The defendant sought to turn these opinions to her advantage, by informing
the plaintiff’s attorney in correspondence dated 5 April 2018 and 21 August 2019,
that both the expert summaries of Prof Lotz and Dr Alheit were ‘admitted’; and
that they could ‘be handed in as evidence in the case’. In this correspondence the
defendant specifically recorded her ‘admission’ that the child had sustained an
acute hypoxic ischaemic injury (HII), ie the injury was sudden, unexpected or
without warning. In what follows, I refer to all of this as ‘the purported
admission’.
[6] An acute profound HII must be distinguished from a partial prolonged HII.
According to the reports by both experts, an acute profound HII is essentially a
severe asphyxial event (deficient supply of oxygen) that occurs suddenly and
progresses rapidly in term neonates, resulting in a primarily central pattern of
injury involving the deep grey matter of the brain. The cause of an acute profound
HII is generally referred to as ‘a sentinel event’. Partial prolonged partial HII
develops over a period of time, allowing compensatory redistribution of blood
flow to occur, which results in a different pattern of injury to the white matter or
peripheral structures of the brain. The importance of the distinction is that experts
in many cases have opined that the onset of an acute profound HII is often
undetectable, as a result of which claimants have been non-suited for failing to
prove causation.5
[7] The plaintiff delivered a supplementary report by Dr Alheit dated
21 August 2019 (the supplementary report), in which he stated that he had
expressed the opinion in his report of 27 July 2019 ‘without knowledge of the
clinical background’, and that he subsequently became aware that the child did
5 M obo M v Member of the Executive Council for Health, Eastern Cape [2017] ZAECMHC 6; Magqeya v MEC
for Health, Eastern Cape [2018] ZASCA 141; AN v MEC for Health, Eastern Cape [2019] ZASCA 102; The
Member of the Executive Council for Health, Eastern Cape v Zimbini Mpetsheni oho Luyanda Mpetsheni [2020]
ZASCA 169; The Member of the Executive Council for Health, Eastern Cape v DL obo AL [2021] ZASCA 68.
not suffer an intrapartum sentinel event. The significance of this is stated in the
report as follows:
‘5.
This type of injury was originally claimed to be the result of a sentinel event. While the
final circulatory collapse may occur suddenly, earlier experimental research has shown that
repeated transient episodes of asphyxia over a 2-hour period, compromise the ability of the
heart to tolerate additional insults, which then result in specific hypoxic ischaemic injury of the
central grey nuclei. The events that lead up to the circulatory collapse can more accurately be
divided into “external” sentinel (obstetric emergency) and “internal” sentinel events.
6.
The “external” sentinel events are identified and well described in the literature (abruptio
placenta, uterine rupture, cord rupture, cord prolapse, shoulder dystocia and maternal cardiac
arrest). These events are by and large unpredictable and lead to a sudden severe lack of blood
supply to the foetus which could lead to APHII.
7.
However, the large majority of cases with hypoxic ischaemic encephalopathy do not
suffer external sentinel events during labour. In one published study of children, who developed
HII in the absence of a sentinel obstetric emergency event, gradual emergence of a non-
reassuring foetal condition, which emerged 81 to 221 minutes prior to delivery, was described.
(Murray et al Am J Perinatal 2009). The eventual circulatory collapse, necessary for HII to
develop in these children, can be regarded as an internal sentinel event.’
[8] It appears that the supplementary report elicited the following response by
the State Attorney in a letter to the plaintiff’s attorney, dated 21 August 2019:
‘5. Defendant has . . . placed on record that the nature of injury being sudden, unexpected and
without warning, is admitted.
6. We hereby give notice that any attempt by plaintiff to disprove the above nature and
description of the injury, mentioned whether through evidence or otherwise, will be objected
to by defendant in terms of the provisions of section 15(1) of the Civil Proceedings Evidence
Act 25 of 1965.’
[9] Dr Alheit confirmed the supplementary report in evidence. In short, he
explained that the injury pattern described in his report of 27 July 2019 could
result without an obstetric sentinel event; that although the injury is described as
an acute profound HII, that does not necessarily mean that there was an abrupt
interruption of the blood supply, but one which could develop over a period of
time; and that this view is supported in the literature.
[10] The plaintiff then called Dr A Redfern, a paediatrician, as an expert, after
which the case was postponed. Subsequently Dr Alheit filed a third report dated
8 March 2021, in which he expressed the following opinion. The MRI features
are diagnostic of a basal ganglia and thalamus (BGT) central HII of the brain. If
there is a history of an intrapartum sentinel event, then this injury pattern could
be due to an acute profound hypoxic ischaemic event. In the absence of a recorded
obstetric emergency sentinel event, it is not possible to determine the timing,
during labour, of the injury from the MRI features alone. The timing and
mechanism of injury should be addressed by obstetricians and neuro-
paediatricians.
[11] When the trial resumed on 15 November 2021, the defendant applied for
an order that the plaintiff was not entitled to present evidence to disprove the
‘facts’ set out in the reports by Prof Lotz and Dr Alheit, dated 30 July 2015 and
27 July 2019, respectively. The basis of the application was that the defendant
had admitted these reports in terms of s 15 of the Act. It provides:
‘Admissions on record
It shall not be necessary for any party in any civil proceedings to prove nor shall it be competent
for any such party to disprove any fact admitted on the record of such proceedings.’
[12] The high court (Nhlangulela DJP) granted the application and made the
order sought by the defendant. Given that this order was made in the course of
proceedings and at first blush seems interlocutory, the first question is whether it
is appealable. The general rule is that a judgment or order is appealable if it is a
decision which has three attributes: it must be final and not susceptible to
alteration by the court of first instance; it must be definitive of the rights of the
parties; and it must have the effect of disposing of a substantial part of the relief
claimed in the main proceedings.6 However, this Court has held that the rule is
not cast in stone and the three attributes are not exhaustive.7 More recently, the
classification of an order is not determinative of whether it is appealable;8 rather,
the question is whether it is in the interests of justice that an order be corrected.9
[13] Thus, in NDPP v King,10 Nugent JA said:
‘[W]hen the question arises whether an order is appealable, what is most often being asked is
not whether the order is capable of being corrected, but rather whether it should be corrected
in isolation and before the proceedings have run their full course. . . . [T]wo competing
principles come into play when the question is asked. On the one hand justice would seem to
require that every decision of a lower court should be capable not only of being corrected, but
also of being corrected forthwith before it has any consequences, while on the other hand the
delay and inconvenience that might result if every decision is subject to appeal as and when it
is made might itself defeat the attainment of justice.’11
[14] Applied to the present case, it is beyond question that the interests of justice
require that the high court’s order be corrected forthwith. It was wrongly made
for the reasons set out below. The defendant is seeking to eliminate all evidence
which suggests that the HII which the child sustained, was not sudden or without
warning. Fundamentally, the order irreparably prejudices the child, who is
permanently disabled and whose best interests are paramount, by preventing the
plaintiff from placing evidence which might be held to be decisive before the trial
court in support of her claim.12 Solely for this reason, the order is appealable.
6 Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 532I-J. Although this case was decided under the
now repealed Supreme Court Act 59 of 1959, the position is no different under the Superior Courts Act 10 of
2013. See DRDGOLD Limited and Another v Nkala and Others [2023] ZASCA 9 and the authorities collected in
para 27.
7 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1986 (3) SA 1 (A) at 10F; Phillips v SA Reserve
Bank 2013 (6) SA 450 (SCA) para … 457D-E.
8 Health Professions Council of South Africa and Another v Emergency Medical Supplies and Training CC t/a
EMS [2010] ZASCA 65; 2010 (6) SA 469 (SCA) para 19.
9 Government of the Republic of South Africa and Others v Von Abo [2011] ZASCA 65; 2011 (5) SA 262 (SCA)
para 17.
10 National Director of Public Prosecutions v King [2010] ZASCA 8; 2010 (2) SACR 146 (SCA); 2010 (7) BCLR
656.
11 Ibid para 50.
12 See fn 2.
[15] The order renders Dr Alheit’s evidence on the supplementary report
inadmissible (that an acute profound HII could ensue without an obstetric sentinel
event). It further precludes the plaintiff from adducing any expert medical
evidence in support of Dr Alheit’s opinion. In the latter regard, the plaintiff
intends to present evidence by Dr Yatish Kara, a neuro-paediatrician, and
Dr Ashraf Ebrahim, a specialist obstetrician and gynaecologist. In Dr Kara’s
opinion, the view that the HII in this case probably occurred in the last 30 minutes
of labour (based on the MRI scan finding of BGT injury), is not supported in the
literature, which states that the pattern of injury can occur over hours (a prolonged
period); and that one cannot time an injury based solely on MRI scan findings.
Similarly, Dr Ebrahim is of the view that since there is no evidence of a perinatal
sentinel event, the time of the injury cannot be determined with certainty, save to
say that it probably occurred during labour; and that BGT injury is the most
prevalent injury pattern in a neonatal HII without a perinatal sentinel event.
[16] A further reason which renders the order appealable is that the
administration of justice has been impeded, in that the high court has foreclosed
its own assessment of Dr Alheit’s evidence (and that of Dr Kara and Dr Ebrahim).
The court is duty-bound to assess expert evidence, together with all the other
evidence adduced by the parties to the litigation.13 It must be satisfied that the
expert’s opinion is based on facts and underpinned by proper reasoning.14 But
here, the high court has already excluded from its assessment of the expert
evidence, the possibility that in the absence of a sentinel obstetric event, the
pattern of injury sustained by the child could have occurred over a prolonged
period, and was not sudden. I revert below to the duty of a court when assessing
expert evidence.
13 HAL obo MML v MEC for Health, Free State [2021] ZASCA 149 (HAL) para 226, citing with approval Huntley
v Simmons [2010] EWCA Civ 54 para 9.
14 Ibid.
[17] That brings me to s 15 of the Act. It finds no application in this case, for
the simple reason that the purported admission is neither an admission, nor a
formal admission within the meaning of s 15. On first principles, an admission is
a statement adverse to the party making it.15 The purported admission is not an
admission by the plaintiff, of a fact which she does not dispute. Neither is it an
admission by the defendant – it is not an acknowledgement of a fact detrimental
to her cause.
[18] The purported admission is not a formal admission. Section 15 deals only
with a ‘fact admitted on the record of . . . proceedings’ (a wider concept than
pleadings). Such an admission is generally made in pleadings. Thus, rule 22(2)
of the Uniform Rules requires a defendant in her plea to admit or deny, or confess
and avoid, all the material facts alleged in the combined summons. The latter rule
must be read together with rule 22(3), which states that every allegation of fact in
the combined summons that ‘is not stated in the plea to be denied or to be
admitted, shall be deemed to be admitted’.16 A formal admission may also be
made orally or in court by the litigant or her representative.17 The purported
admission (made in correspondence) was not admitted on the record of
proceedings before us and is accordingly not a formal admission as contemplated
in s 15 of the Act.
[19] A party must intend to make a formal admission. The requisite intention is
determined subjectively. The admission is binding on its maker and normally
cannot be withdrawn or contradicted unless certain legal requirements have been
met. 18 A formal admission is regarded as conclusive proof of an admitted fact,
15 18 LAWSA 3 ed para 157; C W H Schmidt and H Rademeyer Bewysreg 4 ed (2000) at 204 (Bewysreg); Law of
Evidence Lexis Nexis 3 ed 1-7.
16 Principles of Evidence at 507 para 26.4.
17 Hoffman and Zeffert The South African Law of Evidence 3 ed at 1066 (The South African Law of Evidence);
P J Schwikkard and S E Van der Merwe Principles of Evidence 4 ed (2015) at 507 para 26.4.
18 Ibid at 506 para 26.2.1.
‘rendering it unnecessary for the other party to adduce evidence to prove the
admitted fact, and incompetent for the party making it to adduce evidence to
contradict it’.19 It is this effect of a formal admission that is regulated by s 15 of
the Act.20
[20] Since a formal admission has important and serious evidential implications
for its maker, the latter must intend the admission to be an admission of fact which
she does not wish to dispute.21 Thus, this Court has held that ‘it must clearly and
unequivocally appear from the pleadings that the alleged admission has been
made expressly, or by necessary implication, or according to rule 22(3) by
omitting to deny or deal with the relevant allegation of fact in the plaintiff’s
claim’.22
[21] In the present case and as already stated, there is simply no formal
admission by the plaintiff on the record that the child suffered an acute profound
HII, which can be regarded as conclusive proof of that fact. The reports by
Prof Lotz and Dr Alheit are nothing more than opinions based on their
interpretation of an MRI scan of the brain, performed on 15 July 2015. Section 15
of the Act is not engaged at all.
[22] The defendant however sought refuge in MEC for Health, Eastern Cape v
DL obo AL,23 in which this Court referred to an argument by the appellant in that
case, that the court below had misdirected itself. It was submitted that the court
disregarded two of the appellant’s expert reports, which by agreement had been
admitted into evidence, and preferred the evidence of the respondent’s expert,
despite the latter’s evidence being contrary to the former’s reports. For that
19 Gordon v Tarnow 1947 (3) SA 525 (A) at 531; Ibid at 506 para 26.2.1.
20 Principles of Evidence at 507 para 26.4; The South African Law of Evidence at 1066; Bewysreg at 505.
21 Ibid.
22 AA Mutual Insurance Association v Biddulph and Another 1976 (1) SA 725 (A) at 735.
23 The MEC for Health, Eastern Cape v DL obo AL fn 5 para 22.
submission the appellant relied on s 15 of the Act. Molemela JA remarked that
she was not aware of any authority that had deviated from the trite principle
enunciated in that provision. To the extent that this remark could be understood
as meaning that s 15 applies to expert opinions, it should not be followed.
[23] The purported admission must be seen for what it is: an opportunistic
attempt by the defendant to utilise to her own advantage the opinions by the
plaintiff’s expert witnesses – untested by cross-examination – under the guise of
a ‘fact’ admitted by the defendant in terms of s 15 of the Act. Little wonder then,
that the defendant was constrained to submit that the word ‘fact’ must be
interpreted as meaning ‘information used as evidence or as part of a report’,24
wrenched from its context in s 15.
[24] What is more, a party cannot bind the court to the opinion of her opponent’s
expert witness, by merely conceding that that opinion is correct. Indeed, this
illustrates why an expert’s opinion is not a fact, within the meaning of s 15 of the
Act. Put simply, the decision on the opinion is for the court, not the witness. For
this reason, it is open to the judge to make findings contrary to the opinions of
experts, even where their reports are agreed.25 In S v M,26 Kriegler J aptly
described the position thus:
‘A court’s approach to expert evidence has been dealt with on many occasions. The court is
not bound by expert evidence. It is the presiding officer’s function ultimately to make up his
own mind. He has to evaluate the expertise of the witness. He has to weigh the cogency of the
witness’s evidence in the contextual matrix of the case with which he is seized. He has to gauge
the quality of the expert qua witness. However, the wise judicial officer does not lightly reject
expert evidence on matters falling within the purview of the expert witness’s field.’27
24 The definition of ‘fact’ relied on was that in the Oxford SA Dictionary 2016 at 977.
25 T Hodgkinson Expert Evidence: Law and Practice (1990) at 352.
26 S v M 1991 (2) SACR 91 (T).
27 Ibid at 99J-100A, emphasis in the original.
[25] It is a settled principle that in order to evaluate expert evidence, the court
must be apprised of and analyse the process of reasoning which led to the expert’s
conclusion, including the premises from which that reasoning proceeds.28 The
court must be satisfied that the opinion is based on facts and that the expert has
reached a defensible conclusion on the matter.29 The purported admission by the
defendant cannot, and does not, absolve the court from this duty. Even if experts
agree on a matter within their joint expertise, that is merely part of the total body
of evidence. The court must still assess the joint opinion and decide whether to
accept it.30
[26] Otherwise viewed, it would mean that when a party admits the correctness
of an expert’s opinion and the reasons for it, as the defendant purported to do in
this case, both the opposing party and the court are bound by that admission.
Despite being the arbiter of the dispute, the court may then not reject the expert’s
opinion, even if it is wholly indefensible. Such an approach is untenable, and at
odds with the rule that experts have a principal and overriding duty to the court,
not to the party by whom they are retained, to contribute to the just determination
of disputes.31
[27] In the result, the following order is issued:
The appeal is upheld with costs, including the costs of two counsel.
The order of the high court is set aside and replaced by the following order:
28 Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft Für Schädlingsbekämpfung MBH 1976 (3) SA 352
(A) at 371F-G.
29 HAL fn 13 para 220.
30 Ibid para 229. This however is subject to the qualification that where experts agree on factual issues and the
applicable approach to technical analysis, the litigants are bound by such agreement, unless it has been withdrawn
and no prejudice results, or any prejudice caused can be cured by a postponement or an appropriate costs order.
See Bee v Road Accident Fund [2018] ZASCA 52; 2018 (4) SA 366 (SCA) para 73; HAL fn 13 para 229.
31 National Justice Compania Naviera SA v Prudential Assurance Co Ltd: ‘The Ikarian Reefe’ [1993] 2 Lloyd’s
Rep 68 at 81-82.
‘The application for an order that the plaintiff is not entitled to adduce
evidence in order to disprove the contents of Prof Lotz’s report dated 30 July
2015, and Dr Alheit’s report dated 27 July 2018, is dismissed with costs,
including the costs of two counsel.’
__________________
A SCHIPPERS
JUDGE OF APPEAL
Appearances:
For appellant:
P A C Rowan SC and S J Sephton
Instructed by:
Z Y M Ndzabela Incorporated, Butterworth
Matsepes Incorporated, Bloemfontein
For respondent:
P J De Bruyn SC and S Gagela
Instructed by:
The State Attorney, 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:
31 March 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does
not form part of the judgments of the Supreme Court of Appeal
NSS obo AS v The MEC for Health, Eastern Cape Province [2023] ZASCA 41
The Supreme Court of Appeal (SCA) today upheld an appeal against an order by the Eastern
Cape Division of the High Court, Mthatha (high court), that the appellant (plaintiff) was not
entitled to adduce evidence to disprove the contents of two expert reports. The SCA replaced
the high court’s order with an order dismissing the application by the respondent (defendant).
The plaintiff, the mother and natural guardian of her minor son (the child), sued the defendant,
the MEC for Health, Eastern Cape Province, for compensation on behalf of her child who
sustained perinatal asphyxia during labour, rendering him a cerebral palsy quadriplegic. She
alleged that this occurred as a result of the negligence of the respondent’s employees at St.
Patrick’s Hospital, Mthatha. The trial is pending in the high court, but could not proceed when
the high court made an order preventing the plaintiff from adducing crucial expert evidence in
support of the claim.
In 2015, the plaintiff filed reports by two specialist paediatric radiologists who expressed an
opinion, based on a magnetic resonance imaging (MRI) scan, that the child sustained an acute
profound hypoxic ischaemic injury (the reports). The defendant informed the plaintiff that the
reports were ‘admitted’ and could be used as evidence in the case (the purported admission).
When the plaintiff sought to present evidence deviating from the reports, the plaintiff applied
to the high court for an order that the plaintiff was prevented from doing so in terms of s 15 of
the Civil Proceedings Evidence Act 25 of 1965 (the Act). The high court granted the order.
The SCA held that the purported admission was not an admission – a statement adverse to the
party making it – by the plaintiff, of a fact which she did not dispute. It was also not a formal
admission as envisaged in s 15 of the Act, because it was not admitted on the record of
proceedings. Section 15 of the Act did not apply to the case. The reports were merely opinions
and could not serve as the basis for an admission under the Act. Moreover, the defendant could
not bind the court to the opinion of her opponent’s expert witness, by conceding that the opinion
is correct. Even if experts agree on a matter within their joint expertise, that is merely a part of
the total body of evidence. The court must still assess the joint opinion and decide whether to
accept it. The appeal was accordingly upheld. The order of the high court was set aside and
replaced with an order dismissing the defendant’s application.
--------oOo--------
|
2491
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 300/2013
Not reportable
In the matter between:
LEEROY BENSON Appellant
and
THE STATE
Respondent
Neutral citation: Benson v the State (300/13) [2014] ZASCA 26 (28 March
2014)
Coram:
Ponnan, Maya and Willis JJA
Heard:
20 March 2014
Delivered:
28 March 2014
Summary:
Evidence – murder – confusing and contradictory –
conviction not justified.
ORDER
On appeal from: Western Cape High Court, Cape Town (Griesel J and
Dolamo AJ sitting as court of appeal):
The appeal is upheld.
The order of the high court is set aside and the following is substituted
therefor:
‘The conviction and sentence on the charge of murder are set aside.’
JUDGMENT
Willis JA (Ponnan and Maya JJA concurring):
[1] The appellant was arraigned before the regional court in Somerset-
West on a charge of murder. He was found guilty and sentenced to 12 years’
imprisonment, of which five years were suspended on appropriate conditions,
the magistrate having found that there were substantial and compelling
circumstances which justified a departure from the prescribed minimum
sentence provided for in the Criminal Law Amendment Act 105 of 1997.
[2] The appellant applied to the magistrate for leave to appeal against his
conviction only, which leave was granted. Although the Western Cape High
Court (Griesel J and Dolamo AJ) dismissed the appeal, it granted the
appellant, on application, leave to appeal further to this court. The application
for leave to appeal was supported by the State. The appellant has been on
bail throughout the proceedings, including the appeals. Bail was originally set
at R500 but on granting the appellant leave to appeal to this court the amount
was increased to R1000.
[3] It is common cause that Ricardo Andrews (the deceased) died at
Goniew Park, Villiersdorp either late at night on Friday, 6 October 2007 or in
the early hours of the morning on Saturday, 7 October 2007 as a result of a
head injury caused by the application of a blunt object to his skull with force. It
is also common cause that both the deceased and the appellant had attended
a dance at the community hall, in the company of others, on the night in
question. Alcohol had been liberally consumed by those who attended the
event, including the deceased.
[4] Nehemiah Marthinus, a witness for the State, said that fights broke out
among ‘tjommies’ (friends) at this function. There were two of these fights, the
second being a follow-up to the first. The first fight took place outside the hall
but within the precinct thereof, the second in a street nearby. Mr Marthinus
said that the deceased had been involved in both fights and that his death
ensued as a result of the second. According to the admitted post mortem
report, there was a single injury to the head of the deceased, from which
injury he died. Mr Marthinus had already consumed four quarts of beer in the
time immediately preceding the fatal incident. Mr Marthinus denied that he
had been under the influence of alcohol.
[5] Mr Marthinus described how the appellant had been sitting in a motor
vehicle outside the function for some time and had driven off later in the
evening with one ‘Papskep’. This occurred after the first fight had taken place.
At this time Mr Marthinus said that he also left the party on foot. He continued
to say in his evidence that while walking along the road he encountered an
altercation between the deceased and others and that there were about six or
seven persons who participated in this fracas and that the appellant who had,
by this time, alighted from his motor vehicle, joined the fray.
[6] Mr Marthinus said that he saw the appellant hit the deceased once on
the head with a short, fat object that appeared to be black in colour,
whereupon the deceased fell to the ground. He said the instrument in
question appeared to have been made of hard rubber or plastic. This
contrasts with the allegation in the charge sheet that a knobkierie had been
used. Mr Marthinus, who had last seen the deceased lying on the ground
said that he then departed from the scene, together with the appellant, in the
motor vehicle. Mr Marthinus said that Mr Lesley Dick drove off in his own
vehicle. Mr Lesley Dick, when testifying on behalf of the State, said that he,
together with Mr Marthinus and the appellant, drove off in his, Mr Dick’s,
vehicle. Mr Dick did not see anyone strike the blow to the deceased’s head.
[7] Ms Elmarie Jantjies, another State witness, who had also attended the
party, testified for the State, said that she had seen the appellant strike the
deceased about three times. She described the instrument as a ‘stok
voorwerp’. She said that she could not describe precisely what type of object
it was that the appellant had used. According to Ms Jantjies, two of these
blows hit the deceased on his head. She said that she and her friend Hema,
(a reference to Mr Marthinus), had tried to intervene to prevent the appellant
from hitting the deceased but the appellant had successfully resisted them.
[8] The appellant, when he gave evidence said that Mr Marthinus had
struck the deceased on the head with a shifting spanner. The appellant added
that Mr Dick had joined in the assault on the deceased by kicking him in the
ribs. This version was at no stage in the trial put to Mr Dick.
[9] After the appellant had closed his case, there had been an
adjournment. When proceedings resumed, the appellant had obtained the
services of a different legal representative. The appellant’s new legal
representative applied for leave to re-open his case in order to call Ms Louise
Louw in his defence. The magistrate acceded to this request. In her evidence-
in-chief, Ms Louw said that Mr Marthinus had hit the deceased on the head
with what appeared to be a shifting spanner. Under cross-examination, she
said that she had seen the appellant hit the deceased. She contradicted
herself on this aspect. When she had initially been approached by the police
to tell them what she had seen during the incident in which the deceased had
been killed, she had refused to do so. She said then that she had been under
the influence of alcohol at the time when the deceased had been assaulted.
[10] There are discrepancies in the versions given by the State witnesses.
For example, Mr Marthinus and Mr Dick gave different versions as to how,
precisely, the appellant had left the scene after the deceased had received
the fatal blow; Mr Marthinus described the instrument used by the appellant to
hit the deceased as appearing to have been made of hard rubber or plastic,
Ms Jantjies described it as resembling a ‘stok voorwerp’. Ms Jantjies, unlike
the other State witnesses, made no mention of any stones having been
thrown during the fights in question.
[11] The backdrop to the scene where the killing of the deceased took place
presents a picture that was tense and fast-moving, exacerbated by occurring
during the diminished visibility of the night. It was also an event at which
young people had consumed vast amounts of liquor. Counsel for the State
conceded that from the record it could not be deduced who did what, to whom
and when.
[12] The magistrate unfortunately descended into the arena and even put
questions to the appellant about a statement which he had made shortly after
his arrest which had not been adduced as evidence during the State’s case.
The appellant’s first legal representative in the early stages of the trial was
clearly inexperienced and failed to perform basic duties like putting the
version of the appellant to the State’s witnesses. When the appellant, for
readily understandable reasons, had appointed new counsel and sought an
opportunity to cross-examine the State’s witnesses, inter alia, for the purpose
of testing the appellant’s version against this, the magistrate disallowed this.
The fact that the appellant was denied a procedurally fair trial might, in itself,
have justified the intervention by this court in respect of the conviction. It is
fortunately not necessary to make any firm finding in that regard.
[13] The primary difficulty for the State, as counsel on its behalf fairly and
correctly conceded in this court, lies in the evidence itself. It was confused
and, on the essential elements of the crime, contradictory. When the evidence
is viewed in its totality, there is too much uncertainty surrounding the critically
important facts to allow a court safely to convict and, for this reason alone, the
conviction cannot stand.
[14] The order of this court is the following:
The appeal is upheld.
The order of the high court is set aside and the following is substituted
therefor:
‘The conviction and sentence on the charge of murder are set aside.’
_____________________
N P WILLIS
JUDGE OF APPEAL
APPEARANCES:
For the Appellant:
R Kassel
Instructed by:
Kassel Sklaar Cohen & Co, Cape Town
c/o Symington & De Kock, Bloemfontein
For the Respondent:
S F A Raphaels
Instructed by:
The Director of Public Prosecutions, Cape
Town
c/o 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
28 March 2014
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does
not form part of the judgment.
Benson v the State (300/13) [2014] ZASCA 26 (28 March 2014)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
Today the Supreme Court of Appeal (SCA) upheld an appeal by Mr Leeroy Benson
who had been convicted of murder and set aside the conviction and sentence. Mr
Benson had been convicted on a charge of murder in the regional court in Somerset-
West. He had been sentenced to 12 years’ imprisonment, of which five years were
suspended on appropriate conditions, the magistrate having found that there were
substantial and compelling circumstances which justified a departure from the
prescribed minimum sentence provided for in the Criminal Law Amendment Act 105
of 1997.
The appellant had appealed to the Western Cape High Court. Although that court
dismissed the appeal, it granted the appellant leave to appeal further to this court.
The incident giving rise to the charge occurred in October 2007 and was related to a
dance party at a community hall during which alcohol had been liberally consumed
by those who attended the event, including the deceased.
The deceased had died from a single injury to the head administered with a blunt
object. The incident occurred in a situation that was tense and fast-moving. The
accuracy of observation had been affected by the diminished visibility of the night
and the consumption by young people of vast amounts of liquor. Counsel for the
State conceded that from the record it could not be deduced who did what, to whom
and when.
The evidence was confused and, on the essential elements of the crime,
contradictory. There was too much uncertainty surrounding the critically important
facts to allow a court safely to convict and, for this reason, the conviction could not
stand.
.
The court upheld the appeal and set aside the conviction and sentence on the
charge of murder.
|
3974
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1221/2021
In the matter between:
ELRICH RUWAYNE SMITH N O
FIRST APPELLANT
KAREN FORTEIN N O
SECOND APPELLANT
MPOYANA LAZARUS LEDWABA N O
THIRD APPELLANT
(In their capacity as joint liquidators of
BZM Transport (Pty) Ltd (in liquidation)
Master’s ref: B20/2019)
and
MASTER OF THE HIGH COURT
FREE STATE DIVISION, BLOEMFONTEIN FIRST RESPONDENT
WILHELM FREDERIK ENGELBRECHT SECOND RESPONDENT
Neutral Citation: Smith N O and Others v Master of the High Court, Free State
Division, Bloemfontein and Another (1221/2021) [2023]
ZASCA 21 (8 March 2023)
Coram:
MAKGOKA, NICHOLLS and CARELSE JJA and MJALI and
SIWENDU AJJA
Heard:
21 November 2022
Delivered: 8 March 2023
Summary: Company law ─ Companies Act 61 of 1973 ─ company in
liquidation ─ enquiry under s 417 ─ whether only the Master may examine
witnesses at such enquiry.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Free State Division of the High Court, Bloemfontein (Mbhele
ADJP and Van Zyl J, sitting as court of first instance):
The appeal is upheld with costs, such costs to include the costs of two
counsel.
The order of the high court is set aside and replaced with the following
order:
The application is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
Siwendu AJA (Makgoka, Nicholls and Carelse JJA and Mjali AJA
concurring):
[1] This appeal concerns the interpretation of s 417 of the Companies
Act 61 of 19731 (the Act). More particularly, it concerns the question of who may
interrogate witnesses summoned to appear at an enquiry convened by the Master
of the high court (the Master) in terms of the section. The principal question is
whether only the Master, and no one else, may examine such witnesses as is
contended by the second respondent.
1 Schedule 5, Items 9(1) to (3) of the Companies Act 71 of 2008 states that Chapter 14 of the old Companies Act
61 of 1973 dealing with winding up and liquidation of companies continues to apply. See also Murray and Others
NNO v African Global Holdings (Pty) Ltd and Others [2019] ZASCA 152; 2020 (2) SA 93 (SCA); [2020] 1 All
SA 64 (SCA) para 23.
[2] When a company is placed in liquidation,2 the Act authorises the court or
the Master ─ at their own volition or on application by a liquidator, a creditor, a
member or a party with an interest in the matter ─ to conduct a private enquiry to
obtain information about the affairs, conduct of business and trade dealings of the
company in terms of s 417 of the Act.
[3] The appellants (the liquidators) were appointed as joint liquidators of BZM
Transport (Pty) Ltd (BZM), which was liquidated on 29 August 2019 following
failed business rescue proceedings. Mr Engelbrecht, was the Chief Executive
Officer of BZM before its liquidation.
[4] The liquidators complained that Mr Engelbrecht hindered the fulfilment of
their statutory duties3 when he refused to: (a) hand over BZM’s books, records
and documents; (b) point out and hand over its assets as they appear in the asset
register; (c) disclose payments allegedly made to him and other related entities;
and (d) provide agreements pertaining to company debtors. They successfully
applied to the Master to convene an enquiry into the business affairs of BZM in
terms of s 417 of the Act. Mr Engelbrecht was summoned to appear before the
enquiry together with members of his family, who were employed by BZM.
[5] At the enquiry, which was presided over by the Assistant Master, Mr
Engelbrecht and the liquidators were legally represented. Before Mr Engelbrecht
and his family members could be called for examination, his legal representative
objected to the proceedings on account that ‘only the Master’ and ‘no one else’
was entitled to interrogate witnesses. The Assistant Master dismissed the
2 Section 388 of the Companies Act 61 of 1973 applies to enquiries arising from a voluntary liquidation, while
s 417 relates to a company in an involuntary liquidation on account of an inability to pay its debts. An application
for an enquiry is not confined to the named parties, as any person may apply for such an examination in terms of
s 417(6).
3 The duties of a liquidator are found in ss 391 to 410 of the Act.
contention. Consequently, Mr Engelbrecht applied to the high court to review and
set aside the enquiry on the same basis contended before the Assistant Master.
[6] Section 417, in relevant parts, states:
‘(1) In any winding-up of a company unable to pay its debts, the Master or the Court may, at
any time after a winding-up order has been made, summon before him or it any director or
officer of the company or person known or suspected to have in his possession any property of
the company or believed to be indebted to the company, or any person whom the Master or the
Court deems capable of giving information concerning the trade, dealings, affairs or property
of the company.
(1A) Any person summoned under subsection (1) may be represented at his attendance before
the Master or the Court by an attorney with or without counsel.
(2)(a) The Master or the Court may examine any person summoned under subsection (1) on
oath or affirmation concerning any matter referred to in that subsection, either orally or on
written interrogatories, and may reduce his answers to writing and require him to sign them.’
Section 417 must be read with s 418 titled ‘Examination by commissioners’,
which, in relevant parts, provides:
‘(1)(a) Every magistrate and every other person appointed for the purpose by the Master or the
Court shall be a commissioner for the purpose of taking evidence or holding any enquiry under
this Act in connection with the winding-up of any company.
(b) The Master or the Court may refer the whole or any part of the examination of any witness
or of any enquiry under this Act to any such commissioner, whether or not he is within the
jurisdiction of the Court which issued the winding-up order.
(c) The Master, if he has not himself been appointed under paragraph (a), the liquidator or any
creditor, member or contributory of the company may be represented at such an examination
or enquiry by an attorney, with or without counsel, who shall be entitled to interrogate any
witness: Provided that a commissioner shall disallow any question which is irrelevant or would
in his opinion prolong the interrogation unnecessarily.
. . .
(2) A commissioner shall in any matter referred to him have the same powers of summoning
and examining witnesses and of requiring the production of documents, as the Master who or
the Court which appointed him, and, if the commissioner is a magistrate, of punishing
defaulting or recalcitrant witnesses, or causing defaulting witnesses to be apprehended, and of
determining questions relating to any lien with regard to documents, as the Court referred to in
section 417.’
[7] The Free State Division of the High Court, Bloemfontein (the high court),
agreed with Mr Engelbrecht, reviewed the enquiry and set it aside. After holding
that the enquiry was null and void ab initio, the high court struck out the record
of the proceedings. The appeal is with the leave of the high court. The Master did
not participate in the appeal.
[8] The high court considered three decisions dealing with s 417, namely Swart
v Master of the High Court and Others4 (Swart); Garcao v Majiedt N O and
Others5 (Garcao I); and Garcao v The Master of the Northern Cape High Court,
Kimberley and Others (Garcao II).6 Citing Blackman, Jooste & Everingham
(Blackman).7The court in Swart held that ‘. . . s 417(2)(a) empowers only the
court or the Master to examine persons summoned before it or him.’8 (My
emphasis.) The conclusion is premised on a distinction drawn between ss 417 and
418 as well as the opinion by the authors that, unlike a court, the Master lacks
inherent discretion to determine who may attend and interrogate witnesses.
[9] The high court also relied on the remarks made in Garcao I where, in
relation to the enquiry under consideration, the liquidators were represented by
attorneys who had examined the witnesses. The allegation was that the Assistant
Master, presided over the proceedings but did not examine witnesses. While in
that case, the court correctly observed that a commissioner who conducts an
enquiry under s 418 has the same powers of examination as the court or Master
4 Swart and Others v Master of the High Court and Others 2012 (4) SA 219 (GNP) (Swart).
5 Garcao v Majiedt N O and Others [2013] ZANCHC 20 (Garcao I).
6 Garcao v Master of the Northern Cape High Court, Kimberley and Others [2015] ZANCHC 10 (Garcao II).
The Court does not have the benefit of the high court’s reasoning in the main judgment. It was provided with the
judgment in respect of the application for leave to appeal. The main judgment appears not to have been reported.
7 MS Blackman, RD Jooste & GK Everingham Commentary on the Companies Act (2) 2005 at 14-448.
8 Swart at 221H.
appointing him or her, it nevertheless concluded that s 417(2)(a) appears to
confine the task of examining witnesses to the court or the Master only. It reached
the same conclusion as the court in Swart, and held that the Master has no inherent
discretion to determine who may attend and interrogate witnesses.9 In Garcao II
the court did not follow the decisions in Swart and Garcao I. Thus, there are
conflicting decisions on the interpretation of the section.
[10] The contention by the liquidators is based on the language employed and
the history of the section. They submit that the use of the word ‘may’ signals the
directory rather than a peremptory nature of the section, accordingly, the Master
or the court has a discretion on how to conduct the proceedings. They contend
that, s 417 in some material respects mirror s 155 of the repealed Companies Act
46 of 1926 (the old Act),10 the predecessor to the Act and s 155 of the old Act
was considered in R v Herholdt and Others (Herholdt).11
[11] Mr Engelbrecht on the other hand relied on the decision in Swart and
contended that ss 417 and 418 are distinct provisions under which an enquiry may
be conducted. He contends that the Master did not delegate her authority to a
commissioner as would have been the case had the enquiry been convened under
s 418. He placed emphasis on the fact that the subpoena summoning him to the
enquiry was issued under s 417. The thrust of the proposition advanced on his
behalf is that, absent a reference to s 418 in the subpoena, which would permit
9 Garcao I fn 6 above para 22.5.
10 Section 155(1) of the Companies Act 46 of 1926 states that ‘the Court may, after it has made a winding-up
order, summon before it any officer of the company or person known or suspected to have in his possession any
property of the company or supposed to be indebted to the company, or any person whom the Court deems capable
of giving information concerning the trade, dealings, affairs, or property of the company’. Section 155(2) states,
‘The Court may examine him on oath concerning the same, either by word of mouth or on written interrogatories,
and may reduce his answers to writing and require him to sign them and he may be required to answer any question
put to him on the examination, notwithstanding that the answer might tend to incriminate him, and any answer
given to any such question may thereafter be used in evidence against him.’
11 R v Herholdt and Others 1957 (3) SA 236 (A); [1957] 3 All SA 105 (A) at 116-117.
the interrogation by the liquidators, it was impermissible for the Assistant Master
to allow the questioning of witnesses by the liquidators.
[12] The proposition by counsel for the liquidators that this court must have
regard to the peremptory rather than the directory nature of the provision is not
entirely correct and must be tempered by the finding in African Christian
Democratic Party v Electoral Commission and Others.12 There, it was held that
a narrowly textual and legalistic approach to interpretation is to be avoided. The
adoption of a purposive approach in our law rendered obsolete all previous
attempts to determine whether a statutory provision is directory or peremptory on
the basis of the wording and subject of the text of the provision.13 It was also
contended on behalf of the liquidators that a similar interpretation to that
advanced by Mr Engelbrecht was rejected by Fagan CJ in Herholdt. This
overstates the obiter remarks made in Herholdt. Those observations were made
in the context of an enquiry conducted in terms of s 194 of the old Act, the
forerunner to s 418. They predate the Companies Amendment Act 29 of 1985,
which extended the power to conduct enquiries under the section to the Master.
The effect of the amendment meant that an enquiry convened under s 417 would
be either that of the court or the Master.14 It is necessary that we should consider
the provision squarely, commencing with the language employed; the context in
which the provision appears; and its apparent purpose and practical effect, all of
which must be examined objectively.15
12 African Democratic Christian Party v Electoral Commission and Others [2006] ZACC 1; 2006 (3) SA 305
(CC); 2006 (5) BCLR 579 (CC).
13 Ibid para 25, citing from Weenen Transitional Local Council v Van Dyk 2002 (4) SA 653 (SCA); [2002] 2 All
SA 482 (A) para 13.
14 Bernstein and Others v Bester NO and Others 1996 (4) BCLR 449 (CC); 1996 (2) SA 751 (CC) (Bernstein)
para 35 confirms the decision in Van der Berg v Schulte 1990 (1) SA 500 at 509E that in an enquiry convened by
the Master in terms of s 417, there may be no need for intervention by a Court at all. The power conferred to the
Master in terms of s 418(3) to delegate the enquiry to a Magistrate or a Commissioner means the Master acts
independently. The Magistrate or the Commissioner report to the Master.
15 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA).
[13] There is no dispute that while s 417 confers upon the court or the Master
the power to conduct the enquiry, s 418 permits a delegation to conduct the
enquiry as a whole or in part, either to a magistrate or a commissioner.16 It is also
correct that when the two sections are juxtaposed with one another, s 417 (2)(a)
provides that the Master ‘may examine any person’ before him or her but does
not prescribe who else may examine such persons. In contrast, s 418(1)(c)
expressly identifies a category of people who may be represented and interrogate
witnesses thereat. As I understand the submission by Mr Engelbrecht, it is
premised on the fact that s 418(1)(c) specifically provides for the interrogation of
witnesses by or on behalf of liquidators, creditors and contributories while a
similar provision is absent in s 417.
[14] An examination of the text of the section demonstrates its enabling nature.
Its context and history were considered by the Constitutional Court in Ferreira v
Levin NO and Others; Vryenhoek v Powell NO and Others17 and Berstein and
Others v Bester and Others NNO18 (Bernstein). These decisions stress the
importance, public utility and purpose of the provisions. Dealing with this
purpose, the Court in Bernstein emphasised that:
‘The enquiry under sections 417 and 418 has many objectives.
(a) It is undoubtedly meant to assist liquidators in discharging these abovementioned duties so
that they can determine the most advantageous course to adopt in regard to the liquidation of
the company.
(b) In particular it is aimed at achieving the primary goal of liquidators, namely to determine
what the assets and liabilities of the company are, to recover the assets and to pay the liabilities
and to do so in a way which will best serve the interests of the company’s creditors.
(c) Liquidators have a duty to enquire into the company’s affairs.
. . .
16 Section 418(2) imports the same powers held by the Master to a Magistrate or a Commissioner.
17 Ferreira v Levin N O and Others; Vryenhoek and Others v Powell N O and Others 1996 (1) SA 984 (CC); 1996
(1) BCLR 1.
18 Bernstein fn 14 above para 16. See also Meskin et al Insolvency Law para 8.5.2, where it is noted that save for
part of s 417(2)(b), all provisions of ss 417 and 418 were not found to be constitutionally invalid.
(g) . . . In these circumstances it is in the interest of creditors and the public generally to compel
such persons to assist.’19
In sum: the sections are designed to ensure that those responsible for
mismanagement of the affairs of a company like BZM are compelled to provide
the necessary information to enable the liquidators to fulfil their statutory duty
and recover assets in the interests of creditors and the public.
[15] By prefixing s 417(2)(a) with the word ‘only’ before the phrase ‘the Master
or the Court may examine’, Mr Engelbrecht imposes restrictive language not
provided in the text. Furthermore, it cannot be said that the phrase, ‘summoned
before him’ indicates that only the Master may interrogate a witness or that the
expression has a bearing on the nature or the conduct of the enquiry. The
contention by Mr Engelbrecht is untenable.
[16] Contrary to the submission made on behalf of Mr Engelbrecht, and the
court’s finding in Swart, ss 417 and 418 are not distinct but rather complementary
provisions. They provide for a dual method for holding the enquiry and are to be
read together.20 An important prism overlooked by the high court is the effect of
the 1985 amendment and the original nature of the power conferred by the
section, which granted the Master the same powers as that of a court. The
proceedings over which the Master presides are quasi-judicial in nature. He or
she determines which witnesses should be called, the manner in which evidence
will be received and how to conduct the enquiry.21
[17] The absence of a corresponding provision which identifies a category of
persons who may be represented and interrogate witnesses in s 417 is of no
19 Bernstein fn 14 above para 16.
20 Bernstein comprehensively discusses the import and significance of the enquiries conducted in terms of ss 417
and 418.
21 Section 417(2)(a) of the Act.
moment. In my view, its presence in s 418 is consistent with the legislative
intention to define the parameters of the delegation whenever an enquiry is
delegated by the Master to an external party. As the source of the delegation, the
Master cannot delegate a function or power she does not already possess. An
absurdity would result if s 418(c) were interpreted to limit the original powers
and functions of the Master. In holding that only the court but not the Master has
inherent discretion to determine who may attend the enquiry and interrogate
witnesses, the high court and the courts in Swart and Garcao I erred.
[18] There can be no doubt that whenever a s 417 enquiry is called for, the
liquidators, the court or the Master will be strangers to some of the intricate
operations and affairs of the company in liquidation. Depending on the
circumstances of each case, the information may lie in the exclusive domain of a
creditor or some other party with an interest in the matter. Practically, it makes
logical sense that the party in possession of the relevant information is best placed
to interrogate a particular witness. To say that only the Master may interrogate
witnesses because it is not explicitly provided for in s 417 is inconsistent with its
purpose and would stultify the provision and the objectives confirmed in
Bernstein.
[19] The high court and the courts in Swart and Garcao I misconstrued the
section and thus erred. The appeal must succeed. Given the importance of the
matter and the question of law involved, I am of the view that costs of two counsel
are warranted.
Order
[20] In the result, the following order is made:
The appeal is upheld with costs, such costs to include the costs of two
counsel.
The order of the high court is set aside and replaced with the following
order:
The application is dismissed with costs.
__________________________
N T Y SIWENDU
ACTING JUDGE OF APPEAL
Makgoka JA (Nicholls and Carelse JJA and Mjali and Siwendu AJJA
concurring):
[21] I concur in the order of the judgment of Siwendu AJA and the reasoning
underpinning it. In addition, I set out the legislative history of ss 417 and 418,
which I posit, induces an easy discernment of the ‘intention of the Legislature’22
when the provisions were enacted. In Santam Ltd v Taylor,23 the court interpreted
s 22(1)(bb) of the Compulsory Motor Vehicle Insurance Act 56 of 1972, by
having regard to the historical perspective of the legislation, and found that an
examination of the historical background left no doubt as to what had been
intended by the Legislature. In my view this is the case here. In Natal Joint
22 I use the phrase ‘the intention of the Legislature’ guardedly and simply for lack of better expression, for, as
explained in Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA
262 (SCA); 2012 (4) SA 593 (SCA) para 21:
‘Critics of the expression ‘the intention of the legislature’ are not saying that the law-maker does not exist or that
those responsible for making a particular law do not have a broad purpose that is encapsulated in the language of
the law. The stress placed in modern statutory construction on the purpose of the statute and identifying the
mischief at which it is aimed should dispel such a notion. The criticism is that there is no such thing as the intention
of the legislature in relation to the meaning of specific provisions in a statute, particularly as they may fall to be
interpreted in circumstances that were not present to the minds of those involved in their preparation. Accordingly
to characterise the task of interpretation as a search for such an ephemeral and possibly chimerical meaning is
unrealistic and misleading.’
23 Santam Insurance Ltd v Taylor 1985 (1) SA 514 (A) at 526I-527 (C).
Municipal Pension Fund v Endumeni Municipality 24 (Endumeni), this Court
identified ‘the material known to those responsible for enactment of the
provision’, one of the factors that might aid in the interpretative exercise. This
too, is apposite in this case.
[22] The predecessor to s 417, s 155 of the Companies Act 46 of 1926 (the old
Companies Act), has its provenance in s 115 of the English Companies Act of
1862 (the English Act). The history and purpose of s 115 of the English Act, as
well as the nature of the proceedings thereunder were considered in S v Heller
(Heller).25 One of the old English cases referred to in that case is Learoyd v
Halifax Joint Stock Banking Co. (1893) 1 Ch.D.686, where Stirling J explained
how s 115 of the English Companies Act and its predecessors were applied:
‘The client, then, in this case, having the power of obtaining information conferred upon him
by the 27th section of the Act of 1883 (i.e. Bankruptcy Act) goes to his solicitor and asks for
his advice. The solicitor says: ‘You have the power of getting information which I advise you
to avail yourself of, so that I may have the means of advising you.’ The trustee then takes out
a summons, and gets leave to examine certain persons named. His solicitor personally conducts
the examination and gets a transcript of the proceedings.’ (Emphasis added.)
[23] In Herholdt,26 reference was made to another old English case, In re
Silkstone and Dodworth Coal and Iron Company, Whitworth’s case (1881) 19
Ch. D. 118 (C.A.), where Jessel M.R. is quoted as follows regarding s 115 (at
120-1):
‘As I understand the 115th section of the Companies Act, 1862, it gives the Judge discretion
both as to the extent of the examination and as to the occasions on which it will be ordered,
and also as to the persons who are to conduct it. Now, considering that the object for which the
examination is ordered, is discovery, it is the better and the usual course to entrust the
24 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262; 2012
(4) SA 593 (SCA) para 18; Airports Company South Africa v Big Five Duty Free (Pty) Ltd [2018] ZACC 33; 2019
(2) BCLR 165; 2019 (5) SA 1 (CC) para 29.
25 S v Heller 1969 (2) SA 361 (W) at 363A-364J.
26 Herholdt at 251A-D.
examination to the official liquidator, who is under the control of the Court, and represents the
whole company, creditors, and contributories.’
[24] From this it is clear that English Judges were never themselves constrained
to conduct the interrogation of persons summoned to the enquiry, despite the
wording of the section. They always maintained the discretion in respect of the
manner in which the interrogations were to be conducted, including who may
interrogate those summoned to appear at the enquiry – be it liquidators or
creditors. It appears that even before the enactment of s 115 of the Companies
Act of 1942, the practice followed in England was adopted in the Transvaal.27
[25] Consistent with the practice in England, in Heller, depositions at an
enquiry held in terms of s 155 were obtained by the liquidator. The court
emphasised that the object of the enquiry was to enable the liquidator to obtain
information in order to decide what course to take on behalf of the company,
either contemplated or pending.
[26] In Herholdt the court authorised an enquiry in terms of s 155, read with
s 194 of the old Companies Act of 1926 (respectively the fore-runners to ss 417
and 418), and appointed a commissioner in terms of s 194 to conduct the enquiry.
The liquidator was represented by counsel who interrogated the persons
summoned in terms of s 194. The appeal was against the conviction in a criminal
trial which took place subsequent to the enquiry. One of the contentions on appeal
was that answers given at the enquiry under s 155 were inadmissible in a
subsequent criminal trial because they were given in response to questions by
counsel for the liquidator and not by the commissioner.
27 See for example, Ex Parte Liquidators of Argue & Co. Ltd 1920 TPD 200, where the full bench considered a
similar provision – s 151 of the Transvaal Companies Act 31 of 1909.
[27] The appellants in Herholdt raised an argument similar to the one asserted
by the respondent in the present case, ie when the enquiry was one held under
s 155 no one other than the court had the right to examine witnesses, and that it
was an irregularity for the commissioner to allow questions to be put by counsel
for the liquidator. Because the enquiry in that matter was held in terms of s 155
of the Companies Act, read with s 194 (the fore-runner to s 418) in terms of which
a commissioner had been appointed, the court found it unnecessary ‘to try to
define the extent of the court’s powers under sec. 155. . .’. However, Fagan CJ,
in an obiter dictum, was sceptical of the submission that when an enquiry was
held under s 155 (the fore-runner to s 417), no one other than the court had the
right to examine witnesses.
[28] It can be accepted that when s 417 was enacted in the repealed Companies
Act of 1973, it was intended that the practice as adopted in English law, namely,
to allow liquidators and creditors to interrogate persons summoned to a private
enquiry, to apply in South Africa. Therefore, where the court authorises such an
enquiry, it is not obliged by the wording of s 417(2) to conduct the interrogation
itself. In its discretion, when granting an order for the enquiry, the court would
no doubt give directions as to how the enquiry was to be conducted, including the
manner in which those summoned are to be interrogated.
[29] The power to examine those summoned to the enquiry under the old s 155
and later under s 417, was originally reserved for the court. However, this
changed in 1985 when that power was extended to the Master pursuant to the
Companies Amendment Act 29 of 1985. Thus, the effect of the 1985 amendment
is that the enquiry which hitherto was presided over by the court, can now be
presided over by either the court or the Master, depending to whom the
application for an enquiry was made. When granting the request to convene the
enquiry, the court or the Master can either require the person summoned to
respond to interrogatories, which would be drawn up by the liquidator or a
creditor who sought the enquiry, or orally. In the latter event the court or the
Master may, in their discretion, direct the liquidator or a creditor, or their
representatives, to interrogate the persons so summoned.
[30] I comment briefly on the reasoning in Swart and Garcao I. As a preface, I
consider the central flaw in these decisions to be that, both placed a literal
construction on the wording of s 417. On its plain and literal reading, the
provision mentions only the court and the Master as having the power to
interrogate those summoned to the enquiry in terms of s 417. But, as stated in
Cool Ideas 1186 CC v Hubbard, the words in a statute can only be given their
ordinary grammatical meaning, if that would not result in an absurdity.28 As
correctly pointed out in the first judgment, a literal construction of the provision,
without considering its purpose, would result in an absurdity.
[31] All statutory provisions must be interpreted to avoid absurdity. This is
subject to three interrelated riders, namely that: (a) statutory provisions should
always be interpreted purposively; (b) the relevant statutory provision must be
properly contextualised; and (c) all statutes must be construed consistently with
the Constitution.29 One must therefore, on the basis of Endumeni, consider among
others, the context in which the interrogation of those summoned in terms of s
417, appears in the section.30
[32] Unfortunately, in both Swart and Garcao I, these fundamental interpretive
prescripts were not heeded. In both, it was accepted that in terms of s 417, the
court has inherent discretion to determine who may attend the enquiry and
28 Ibid para 28.
29 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (8) BCLR 869; 2014 (4) SA 474 (CC)
para 28.
30 Ibid para 18.
interrogate the persons summoned to the enquiry. But both held that the Master
has no such discretion. In Swart, reliance was placed on the following passage in
Blackman et al31 (Blackman) for that proposition:
‘Section 417(2)(a) empowers only the court or the Master to examine persons summoned
before it or him. Section 418(2) provides that a commissioner has the same powers of
examining witnesses as the court which or the Master who appointed him. In the case of
an enquiry held by the court [in terms of s 417], the court has an inherent discretion to determine
who may attend the enquiry and interrogate the witnesses. But the Master has no
inherent powers . . . .’32 (Emphasis added.)
[33] I disagree with the above proposition. I have already alluded to the 1985
amendment in terms of which the power to examine witnesses (originally
reserved for the court), was extended to the Master. There is nothing in the
amendment to suggest that the power extended to the Master was supposed to be
any different to that which had, up to the point of the 1985 amendment, been
exercised by the court. This includes the power to permit the liquidator or a
creditor to conduct the interrogation to the extent that the Master regards as
appropriate. As mentioned already, the effect of the amendment is that the Master
exercised the same power as hitherto exercised by the court. Viewed in this light,
the reasoning in both Swart and Garcao I does not bear scrutiny.
[34] This brings me to a related aspect concerning the intersection between
ss 417 and 418 insofar as the right of liquidators, creditors and contributories to
interrogate persons summoned at the enquiry, is concerned. To recap, s 418(1)(c)
reads as follows:
‘The Master, if he has not himself been appointed under paragraph (a), the liquidator or any
creditor, member or contributory of the company may be represented at such an examination
or enquiry by an attorney, with or without counsel, who shall be entitled to interrogate any
31 MS Blackman, RD Jooste & GK Everingham Commentary on the Companies Act (2) 2005.
32 Ibid 14-480.
witness: Provided that a commissioner shall disallow any question which is irrelevant or would
in his opinion prolong the interrogation unnecessarily.’
[35] There is no such corresponding right in s 417. Swart interpreted this as an
indication that the legislature had intended its absence in s 417 to restrict the
interrogation to the court or the Master, to the exclusion of anyone else. For this
conclusion, reliance was placed upon the following commentary in Blackman:
‘Although an enquiry under s 417 that is referred to a commission remains a s 417 enquiry, it
becomes subject also to provisions of s 418. One significant change that this brings about is
that, while s 417 empowers only the court or the Master to examine persons summoned before
it or him (s 417(2)(a)), s 418(1)(c) entitles the liquidator or any creditor, member or
contributory of the company at an examination or enquiry before a commissioner, to be
represented by an attorney, with or without counsel, who may interrogate any witness. The
Court has, of course, an inherent discretion to determine who may attend and interrogate
witnesses at an enquiry conducted by it. But no one is entitled to attend or interrogate as of
right.’33
[36] With respect, this passage misses an important point. The very fact that the
court (or the Master after 1985) exercises inherent discretionary power to allow
the liquidators to interrogate those summoned to an enquiry in terms of s 417,
made it unnecessary for a legislative provision. In other words, there was no need
to statutorily give the court or the Master the power they both already had. On the
other hand, a commissioner appointed in terms of s 418 has no such inherent
discretionary power because he or she is a delegatee. As explained in Van der
Berg v Schulte:34
‘His is a statutory appointment. He can only be appointed by the Master or the Court under
s 418 and he therefore derives his powers solely from the provisions of that section. He has
no inherent or common law powers. He does not sit in a judicial capacity.’35
33 Blackman fn 27 at 14-448.
34 Van der Berg v Schulte 1990 (1) SA 500 (C).
35 Fn 30 above at 502.
[37] Thus, in the absence of an express legislative provision in s 418(1)(c) to
allow the interrogation by those mentioned in the section, the commissioner
would not have the same power. Viewed in this light, the provision of the right in
s 418(1)(c), and its absence in s 417, makes perfect sense. What is more, the
commentary in Blackman fails to take into consideration: (a) the legislative
history of s 417 and the cases referred to in Heller and Herholdt; and (b) the
purpose of ss 417 and 418 as articulated by the Constitutional Court in Bernstein.
[38] From a practical point of view, it is quite understandable why a court itself
or the Master himself or herself would not conduct the interrogation. As explained
in Venter v Williams,36 ordinarily the court (or the Master after 1985) would not
have knowledge of the facts of the matter unless these were provided by the
liquidator, with or without the assistance of creditors. The case where the court
or Master conducts an enquiry without a commissioner, as was the position in the
present case, is indeed a rare one. In practice, the Master invariably appoints a
commissioner in terms of s 418 to conduct the enquiry, usually senior counsel or
a retired Judge. But that does not detract from the fact that, on the proper
construction of s 417, the Master is entitled to preside over the enquiry in terms
of s 417 and allow those summoned to the enquiry to be interrogated by, or on
behalf of, liquidators or creditors.
[39] For these additional reasons, I concur in the order of the first judgment
upholding the appeal.
36 Venter v Williams and Another 1982 (2) SA 310 (N) at 11.
___________________
T MAKGOKA
JUDGE OF APPEAL
Appearances
For the appellants:
P J Zietsman SC and S Tsangarakis
Instructed by:
Phatshoane Henney Inc, Bloemfontein
For the respondent:
C J Hendriks
Instructed by:
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:
8 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
Smith N O and Others v Master of the High Court, Free State Division, Bloemfontein &
Another (1221/2021) [2023] ZASCA 21 (8 March 2023)
Today, the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal
against the decision of the Free State Division of the High Court, Bloemfontein (the high court).
The issue before the SCA was whether only the Master of the high court (the Master), and no
one else, may examine witnesses subpoenaed at an enquiry convened by the Master in terms
of s 417 of the Companies Act 61 of 1973 (the Act).
The appellants (the liquidators) were appointed as joint liquidators of BZM Transport (Pty) Ltd
(BZM), which was liquidated on 29 August 2019 following failed business rescue proceedings.
The respondent, Mr Engelbrecht, was the Chief Executive Officer of BZM before its
liquidation. The liquidators complained that the respondent hindered the fulfilment of their
statutory duties when he refused to: (a) hand over BZM’s books, records and documents; (b)
point out and hand over its assets as they appear in the asset register; (c) disclose payments
allegedly made to the respondent and other related entities; and (d) provide agreements
pertaining to company debtors. They successfully applied to the Master to convene an enquiry
into the business affairs of BZM in terms of s 417 of the Act. The respondent was subpoenaed
to appear before the enquiry together with members of his family, who were employed by
BZM.
At the enquiry, which was presided over by the Assistant Master, the liquidators and the
respondent were legally represented. Before the respondent and his family members could be
called for examination, his legal representative objected to the proceedings on account that
‘only the Master’ and ‘no one else’ was entitled to interrogate witnesses. The Assistant Master
dismissed the contention. Consequently, the respondent applied to the high court to review and
set aside the enquiry on the same basis contended before the Assistant Master.
The SCA examined the text, and confirmed the enabling nature of the provision. It held that by
prefixing section 417(2)(a) with the word ‘only’ before the phrase ‘the Master or the Court
may examine’, the respondent imposed a restrictive language not provided in the text. Sections
417 and 418 are not distinct but rather complementary provisions which must be read together.
They provide for a dual method for holding the enquiry. The absence of a provision in s 417
which identifies a category of persons who may be represented and interrogate witnesses in s
417 is of no moment. The high court overlooked the effect of the 1985 amendment and the
original nature of the power conferred by the section which granted the Master the same powers
as that of a court. As the source of the delegation, the Master cannot delegate a function or
power she does not already possess.
The SCA held that there can be no doubt that whenever a s 417 enquiry is called for, the
liquidators, the court or the Master will be strangers to some of the intricate operations and
affairs of the company in liquidation. Depending on the circumstances of each case, the
information may lie in the exclusive domain of a creditor or some other party with an interest
in the matter. Practically, it makes logical sense that the party in possession of the relevant
information is best placed to interrogate a particular witness. It held that to say that ‘only the
Master’ may interrogate witnesses because it is not explicitly provided for in s 417 is
inconsistent with its purpose and would stultify the provision and its objective.
In his concurring judgment, Makgoka JA held that this interpretation of s 417 is consistent with
its legislative history. Makgoka JA accepted that when s 417 was enacted it was intended that
the practice as adopted in English law, namely to allow liquidators and creditors to interrogate
persons summoned to a private enquiry, to apply in South Africa and considered in S v Heller
1969 (2) 316 (W). Even before the enactment of s 115 of the Companies Act of 1942, the
practice followed in England was adopted in the then Transvaal. It is accepted that when s 417
was enacted in the repealed Companies of 1973, it was intended that the practice as adopted
under English law, namely to allow liquidators and creditors to interrogate persons summoned
to a private enquiry, to apply in South Africa. In Swart and Garcao I, it was accepted that in
terms of s 417, the court has inherent discretion to determine who may attend the enquiry and
interrogate the persons summoned to the enquiry. In Swart, reliance was placed on a passage
in Blackman et al which incorrectly held that unlike a court, the Master has no
inherent discretion to determine who may attend the enquiry and interrogate the witnesses such
discretion. Blackman failed to take into consideration the legislative history.
The effect of the 1985 amendment is that the Master exercised the same power as exercised by
the court. As to the intersection between the two provisions, Swart interpreted absence in s 417
similar provision as in s 418(1)(c) as a restriction of the interrogation to the court or the Master,
to the exclusion of anyone else. The very fact that the court (or the Master after 1985) exercises
inherent discretionary power to allow the liquidators to interrogate those summoned to an
enquiry in terms of s 417, made it unnecessary for a legislative provision for that power to be
enacted. The absence of an express legislative provision in s 418(1)(c) to allow the
interrogation by those mentioned in the section, the commissioner would not have the same
power to allow them to interrogate the summoned persons. Viewed in this light, the provision
of the right in s 418(1)(c), and its absence in s 417, makes perfect sense.
~~~~ends~~~~
|
3386
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1109/19
In the matter between:
DIRECTOR OF PUBLIC PROSECUTIONS: LIMPOPO APPELLANT
and
LASABATHA LUCAS MOLOPE FIRST RESPONDENT
JACK LETSOALO SECOND RESPONDENT
Neutral citation: Director of Public Prosecutions: Limpopo v Molope and
Another (Case no 1109/19) [2020] ZASCA 69 (18 June 2020)
Coram:
CACHALIA, SALDULKER and DLODLO JJA
Heard:
19 February 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 for hand-down is deemed to be on 18 June
2020.
Summary: Reservation of law in terms of s 319 of the Criminal Procedure Act
51 of 1977 – accused discharged at the end of the State’s case – whether point of
law properly reserved – whether conduct of accused fell within the ambit of the
offences of kidnapping and murder committed in furtherance of a common
purpose – appeal dismissed.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Sikhwari AJ
sitting as court of first instance):
The appeal is dismissed.
____________________________________________________________
JUDGMENT
________________________________________________________________
Cachalia JA (dissenting):
[1] I would uphold the appeal. The two respondents, Lasabatha Lucas Molope
(Molope) and Jack Letsoalo (Letsoalo), and three other accused were arraigned
in the Limpopo High Court, Polokwane; on two counts of kidnapping and two
counts of murder. The charges arose from a series of incidents on 11 October
2017, which culminated in two young men, Thato Present Maake (Thato) and
Mmakelesti William Maake (Willy) losing their lives. They were aged 28 and 33
respectively.
[2] The indictment alleged that the five accused and other members of the
community of Makgwareng Section, Ga-Molepo Village in Polokwane, believed
that the deceased were responsible for a ‘spate of robberies’ in the area. They
kidnapped the deceased, took them to a mountain and brutally assaulted them.
Thato died on the scene and Willy succumbed to his injuries in hospital two weeks
later. The post-mortem report attributed the cause of Thato’s death to ‘multiple
blunt force injuries’ and Willy’s death to ‘head and crush injuries due to blunt
force trauma’. The murder charge included the allegation that the offence was
committed in furtherance of a common purpose.
[3] The two respondents were accused 1 and 2 respectively. Accused 5 fell ill
and his trial was separated. The trial proceeded against the respondents and
accused 3 and 4. The State led the evidence of two persons, Thabang John
Mangena (Mangena) and Malampa Martina Mametja (Mametja). At the end of
the State’s case the defence applied for all the accused to be discharged in terms
of s 174 of the Criminal Procedure Act 51 of 1977 (the CPA). The State did not
oppose the application in respect of accused 3 and 4, as there was no evidence
that required an answer from them. It did, however, resist the application for the
discharge of the respondents on the ground that there was direct evidence
implicating them in the commission of these crimes and particularly of their
having participated in the assault of the deceased persons.
[4] The trial court (Sikhwari AJ), however, found ‘material contradictions’ in
the State’s case and thus ordered the discharge of the respondents on the two main
charges of kidnapping and murder. This, despite having found that there was
‘sufficient evidence upon which a court may convict on the alternative verdict of
assault with intent to do grievous bodily harm against both respondents’. The trial
court went on to convict the respondents of the crime of assault GBH – a
competent verdict for murder – after the respondents had closed their case and
elected not to testify. The judge also said, when sentencing them, that the
deceased had been subjected to these assaults ‘for a very long time’ and
significantly, that the respondents had ‘initiated’ the ‘mob justice’ that culminated
in the two men losing their lives.1
[5] The fact that the trial court made these findings against the respondents and
yet discharged them at the end of the State’s case on the main counts lies at the
1 The respondents were given lenient sentences of four years’ imprisonment, wholly suspended for a period of
five years on condition that they did not commit another crime of which violence is an element during this period.
They were also declared unfit to possess firearms.
heart of the State’s contention that it erred in law. The State therefore applied to
the trial court to reserve a question of law in terms of s 319 of the CPA.2
[6] The State initially applied to reserve two questions of law. These were
stated as follows:
(i)
At the close of the State case, did the evidence of Thabo John Mangena
and Malampa Martina Mametja constitute a prima facie case against the
respondents on all counts;
(ii)
Did the Honourable Court comply with s 146 by granting a discharge in
terms of s 174 on two counts of kidnapping, without giving reasons for doing so?
[7] During the hearing of the application the State withdrew the second
question. The judge was satisfied that the question posed raised a question of law
as envisaged in s 319 and granted leave to this Court.
[8] The parties then filed heads of argument in this Court. In a nutshell, the
State contended that there was prima facie evidence against the respondents on
both counts (kidnapping and murder) at the end of the State’s case, and that the
court was not competent to discharge them merely because there were
contradictions in its case. That determination could only have been made, so it
contended, at the end of the trial after the respondents had been put on their
defence. The respondents on the other hand contended that the trial judge properly
exercised his discretion in discharging them and that in any event, even if the
judge had erred in his assessment of the facts, this was not a point of law that
could legitimately be reserved in terms of s 319.
2 Section 319(1) of the CPA provides:
‘(1) If any question of law arises on the trial in a superior court of any person for any offence, that court may of
its own motion or at the request either of the prosecutor or the accused reserve that question for the consideration
of the Appellate Division, and thereupon the first-mentioned court shall state the question reserved and shall direct
that it be specially entered in the record and that a copy thereof be transmitted to the registrar of the Appellate
Division.’
[9] Before the hearing the parties were invited to submit supplementary heads
of argument in the light of this Court’s recent judgment in DPP, Western Cape v
Schoeman.3 There the court reiterated the rule that before a question of law is
reserved under this section three requisites must be met. First, the question must
be framed accurately leaving no doubt what the legal point is; secondly, the facts
upon which the point hinges must be clear; and thirdly, these facts should be set
out fully in the record together with the question of law.4
[10] Unless the State does this, the court continued, it may not be possible for
an appeal court to establish with certainty what the conclusions made by the trial
court on the legal point were. So where it is unclear from the judgment of the trial
court what its findings of fact are, it is necessary for the State to request it to
clarify its findings. If this is not done, the point of law is not properly reserved.5
[11] It is apparent that this injunction was not met. Leaving aside for the
moment whether the question posed raised a proper question of law, the facts
upon which the point of law were said to hinge were not set out in the State’s
application. What the State did was to summarise the evidence that was led
without setting out the trial court’s factual findings. It must be pointed out that
the trial court’s judgment in the discharge application is not a model of clarity. If
this was the reason the State was unable to set out the facts, it should have asked
the trial court to clarify its findings of fact. It did not do that either. The trial court
also had a duty to ensure that its factual findings underpinning the point of law
were properly set out. But, regrettably, it also did not do so. Despite this
shortcoming, the trial court was content to reserve the question as one of law
falling within the ambit of the section.
3 DPP, Western Cape v Schoeman and Another [2019] ZASCA 158.
4 Ibid para 39.
5 Ibid para 40.
[12] There would therefore be good reason for this Court to dismiss the
application. But I do not think we should adopt this course here. The State’s
failure to set out the facts in its application or request the trial court to clarify its
factual findings is deserving of censure, as is the failure of the trial court to
diligently perform its function in this regard. But an appeal court must always
consider the possible prejudice to both parties before deciding to dismiss the
application on this ground. The merits of the application must unavoidably enter
into this assessment.
[13] The State’s failure to comply with the requirements of s 319 was not
exclusively of its making. It was faced with an unclear judgment by the trial court
and its failure to state the facts upon which it reserved the point of law. Secondly,
as I shall demonstrate below, it is possible to glean the factual findings of the trial
court, which give rise to the dispute over the point of law, without difficulty or
contestation. And finally, as I shall also demonstrate, despite the shortcoming in
its formulation of the point of law, in substance what we are concerned with here
is a dispute over a point of law and not merely dispute over the trial court’s
assessment of the facts. These factors cumulatively outweigh whatever prejudice
the respondents may suffer by allowing the appeal to proceed.6
[14] Our focus in the analysis of whether the point of law was properly reserved
must be on the trial court’s judgment in the discharge application. However it
must be borne in mind that the trial court’s findings in the discharge application,
at the end of the trial and those referred to in the judgment on sentence arise from
the same evidence of the two State witnesses. It is therefore proper to have regard
to the three judgments to establish the proven facts.
6 Cf S v Petro Louise Enterprises (Pty) Ltd and Others [1978] 1 All SA 571 (T); 1978 (1) SA 271 (T) at 276E-H.
[15] Before establishing the factual findings of the trial court it is necessary to
bear in mind the essential elements of the offences of kidnapping and murder
committed in furtherance of a common purpose, for which the respondents were
discharged. Kidnapping, is the act of unlawfully and intentionally depriving a
person of their freedom against their will. Murder involves the unlawful and
intentional killing of another person. Where two or more perpetrators perform
unlawful acts together in bringing about this result they are said to act in
furtherance of a common purpose. Their individual acts must manifest an active
association with the common purpose of the group to murder the person, provided
that each accused is proved to have the requisite dolus. The acts of the group that
caused the death of the deceased are then imputed to each accused.7 These
requirements must be borne in mind when assessing whether the proven facts fell
within the scope of these offences.
[16] The State’s evidence against the respondents was the following: Mangena,
the first State witness, met Letsoalo at the Paledi Shopping Mall and accompanied
him to Nedbank, located inside the Mall. Mangena was Willy’s uncle. Whilst at
the bank Letsoalo received a phone call, probably from Molope. Letsoalo and
Mangena then left the bank and boarded a taxi where they drove to a place
between Ga-Makanye and Ga-Thoka Villages.
[17] Upon their arrival there in the early afternoon they saw Thato in the
company of Molope. Letsoalo then demanded that Thato return the television he
had stolen from him. Thato denied having stolen the television and attempted to
flee, but Letsoalo apprehended him. The two respondents then began assaulting
him with their fists on his face and his body. This sustained assault lasted for
about three minutes, until another taxi arrived on the scene.
7 S v Safatsa and Others [1988] 4 All SA 239 (AD); 1988 (1) SA 868 (A) at 901H-J.
[18] The respondents thereafter escorted Thato to the taxi and boarded it with
him. Mangena also came aboard. From there the taxi was directed to drive to a
taxi rank near the Paledi Shopping Mall. Upon their arrival there they all alighted
from the taxi. Molope announced, to the other taxi drivers gathered there that they
had apprehended – referring to Thato – a television thief. The other taxi drivers
then began to gather around Thato threateningly.
[19] Accused 5, who is known as ‘Small’ arrived on the scene and told Thato
menacingly that: ‘you are going to take out the television today’. He then walked
to one of the taxis parked there and removed a wheel-spanner from it. In the
meantime the respondents resumed assaulting Thato. He fell to the ground and
they began kicking him. Small then handed the wheel-spanner to Letsoalo, who
used it to hit Thato over the left side of his head, causing an open wound from
where he started bleeding. At the same time he repeated Small’s threat to Thato
that he must tell them where he had left the television. Molope insisted that Thato
had stolen the television, but he denied this.
[20] Molope would not relent and Thato, under compulsion, said that he had
heard that Willy had stolen the television. Still, Molope was not satisfied until
Thato gave in and admitted that they both had done so. The respondents then
arranged for a taxi to transport them to Willy’s home. Mangena, concerned that
some harm was to be visited on his nephew, Willy, asked to accompany them,
and did. The taxi left with the driver, the two respondents, Thato, and another
person who was described as having a light complexion. Mangena occupied the
rear seat.
[21] On route to Willy’s home Mangena notified his younger brother, via a
‘WhatsApp’ message, of the impending danger to Willy. He also overheard
Letsoalo phoning another person, Dimakatjo to tell him that they had found the
person they had been looking for and that they were on their way to Makgwareng.
They arrived there and picked up Dimakatjo. From there they drove to Molope’s
home from where he collected two sjamboks, a knobkierie and a crowbar. They
then drove to Willy’s home where they all alighted from the taxi. The driver left
thereafter.
[22] The two respondents and Small entered the home. Willy was there with a
man by the name Mapiti. Mapiti’s mother was also present. They were enjoying
a cup of tea when Letsoalo demanded his television from Willy. Willy asked what
he was referring to. Letsoalo answered that it was his television that he had stolen
from his home the previous evening. The respondents then pushed Mapiti and his
mother aside, grabbed hold of Willy and dragged him outside onto a veranda. As
they reached a gate, Small struck Willy on the top of his head with the crowbar,
causing him to bleed immediately.
[23] The respondents then dragged Willy outside the yard to where Thato was
standing. The two respondents then began assaulting Thato and Willy with
sjamboks all over their bodies while Small weighed in with a knobkierie. The
assault continued until the two helpless men admitted to having hidden the
televisions near a dam and a mountain nearby.
[24] Mametja, the second State witness, was Willy’s neighbour. She witnessed
the incident outside the house. However, she testified that Letsoalo had a crowbar
instead of sjambok, as Mangena had testified. Her recollection was that Letsoalo
had struck Willy over the head with the crowbar causing him to bleed. She also
said the respondents and Small had assaulted the two men indiscriminately with
the instruments at their disposal. According to her, the assaults lasted some time
until Thato and Willy were taken away. Some community members joined as the
two men were led away.
[25] The two helpless men were then marched to the mountain, where the
assaults continued, with members of the community joining in. Thato collapsed
and died on the scene. Mangena moved to the side and phoned the police. An
ambulance arrived and declared that Thato had died. Willy was rushed to hospital
where he succumbed to his injuries two weeks later.
[26] The evidence established, at least on a prima facie basis, that both
respondents were instrumental in using force to deprive both Thato and Willy of
their freedom; that they both participated in their brutal assaults and that they
initiated this form of ‘mob justice’ – to use the trial court’s description in its
judgment on sentence – which ultimately caused the death of both deceased.
Prima facie, therefore, they not only had a case to answer on both the main counts
of kidnapping and murder as charged, but the inference that they had the
necessary mens rea when they committed these crimes was also irresistible.
[27] However, as I have mentioned, they were inexplicably discharged in terms
of s 174. Significantly, the essential facts established above were not seriously in
dispute. What the defence put in issue was the precise role that each of them
played in the chain of events. In this regard it focussed its cross-examination on
the apparent contradictions between Mangena’s oral testimony and his statement
to the police.
[28] The judge was persuaded that these contradictions were ‘material’ and thus
fatal to the State’s case. He identified five such contradictions:
(i)
Mangena’s statement said that Molope had phoned Letsoalo while they
were in the bank, but in his oral testimony he said he did not know who made the
call;
(ii)
In his statement he identified Letsoalo as having fetched the wheel-spanner
from the taxi; he testified however that it was Small did this;
(iii)
The written statement made no reference to Dimakatjo, whereas in his oral
testimony he pertinently referred to Letsoalo as having phoned him to say that
they had found the suspect;
(iv)
In his written statement he said that they found Willy and Mapiti at Willy’s
home, but in his oral testimony he said that Mapiti’s mother was also there;
(v)
Letsoalo whipped Willy with a sjambok whilst in Willy’s home, the
statement read; but in his oral testimony he testified that Letsoalo only grabbed
Willy, he did not see him whip him at that stage.
[29] For the sake of completeness I mention that the judge referred to Mametja’s
testimony only to point out that she would have overheard the conversation where
Thato told Willy to hand over the television to the respondents, if this were true.
But he made no mention of her important evidence that placed both respondents
at the scene of Willy’s home, observing the assaults and their being taken away
to the mountain.
[30] The State persuasively contended that the judge wrongly found the
contradictions between the Mangena’s oral testimony and police statement to be
material. In fact the finding is perplexing more so because in his judgment
convicting the respondents for assault GBH, the judge explicitly found,
contradicting his earlier finding, that these contradictions not material ‘in so far
as the assault GBH charge is concerned’. It is difficult to understand how these
contradictions were not material on the assault GBH charge but material on the
murder charge. And further in the judgment on sentence, as I have mentioned, he
found that ‘this mob justice was initiated by accused 1 and 2’. These findings are
completely at odds with his findings in the discharge application.
[31] But even if the contradictions were of a kind that could be described as
‘material’ this was not sufficient to discharge the accused. The threshold
requirement for a discharge at the end of the State’s case in terms of s 1748 is
whether there is evidence upon which a court might reasonably convict. If there
is no evidence the court is entitled to discharge the accused. The fact that there
may be contradictions in the State’s case, whether material or not, does not in
itself give a judge the competence to discharge the accused. The evidence must,
in addition, be of a quality that no court might reasonably convict.9
[32] The trial judge set out the threshold requirement for a discharge of an
accused, without error. He therefore appears to have concluded – but did not
explicitly say this – that the material contradictions in the State’s case had the
effect that there was no evidence upon which a court might reasonably convict.
In this he erred egregiously because there was more than adequate evidence for
the respondents to answer. At first blush the error seems to be one of fact as to
whether there was sufficient evidence justifying the discharge of the respondents
at the end of the State’s case. This would not afford a proper basis for the
reservation of a point of law under s 319.
[33] I must therefore return to the reserved ‘point of law’, which in summary is
whether the evidence of the two State witnesses constituted a prima facie case
against the respondents on all counts.
[34] Ordinarily a question framed in this manner, would only involve an inquiry
as to whether the court had assessed the evidence properly in arriving at this
conclusion. This would not raise a question of law. But where the question
8 Section 174 provides: ‘If, at the close of the case for the prosecution at any trial, the court is of the opinion that
there is no evidence that the accused committed the offence referred to in the charge or any offence of which he
may be convicted on the charge, it may return a verdict of not guilty.’
9 See generally: A Kruger Hiemstra’s Criminal Procedure (May 2019 online) at 22-75.
reserved requires an enquiry into the essence and scope of the crime, it is a
question of law whether the facts proved brought the conduct of the accused
within the scope or ambit of the crime charged.10
[35] In the present matter the trial judge did not in his judgment identify the
essential elements of the offences of kidnapping or of murder when committed in
furtherance of a common purpose. And I think it is doubtful, to put it at its lowest,
that trial judge understood, as Botha J, said in S v Petro Louise Enterprises (Pty)
Ltd and Others11 ‘the precise scope, nature or interpretation of the elements’ of
these offences. Simply put the judgment does not manifest any indication that the
judge understood the nature of the conduct that had to be proved to bring it within
the ambit of these crimes. For it is incomprehensible that he could find on the one
hand as a fact, and beyond a reasonable doubt, that the respondents had initiated
a form of ‘mob justice’ that involved taking the two deceased persons against
their will (kidnapping) and assaulting them with intent to do grievous bodily
harm, which resulted in their deaths (murder). But also conclude, on the other
hand, that there was no evidence upon which a court might reasonably find them
guilty on the two main counts.
[36] The State therefore formulated its question inelegantly. But the judge did
understand that it was properly raising a point of law, and not merely a factual
issue disguised as a point of law, as the courts have frequently found in response
to the State’s invocation of s 319 to contest an acquittal of a criminal accused.
The true question raised by the point of law was whether, on the proven facts, the
conduct of the respondents prima facie brought it within the ambit of the crimes
of kidnapping and murder. Had the question been formulated in this way, which
in substance is what the question was aimed at, the answer to this question would
10 DPP, Western Cape v Schoeman and Another (above) para 51.
11 S v Petro Louise Enterprises (Pty) Ltd and Others (above) at 279E-H.
have been obvious. There is no doubt that the question raised by the State required
an enquiry into whether the proven facts fell within the ambit of the two main
offences.12 That quintessentially raised a point of law. I would therefore have
upheld the reservation of the point of law, set aside the order of the trial court
discharging the respondents and remitted the matter to high court for retrial on
the murder and kidnapping charges.
_____ _____________
A CACHALIA
JUDGE OF APPEAL
Saldulker JA (Dlodlo JA concurring):
[37] I have had the benefit of reading the judgment of my brother Cachalia JA.
The facts have been conveniently set out by him and there is no need to repeat
same. I, however find myself in respectful disagreement with my brother’s
reasoning and order for the following reasons.
[38] Section 319 of the CPA provides:
‘(1) If any question of law arises on the trial in a superior court of any person for any offence,
that court may of its own motion or at the request either of the prosecutor or the accused reserve
that question for the consideration of the Appellate Division, and thereupon the first-
mentioned court shall state the question reserved and shall direct that it be specially entered
in the record and that a copy thereof be transmitted to the registrar of the Appellate Division.’
(2) The grounds upon which any objection to an indictment is taken shall, for the purposes of
this section, be deemed to be questions of law.
(3) The provisions of sections 317(2) (4) and (5) and 318(2) shall apply mutatis mutandis with
reference to all proceedings under this section.’ (My emphasis.)
12 Cf S v Petro Louise Enterprises (Pty) Ltd and Others (above) where the court found there was no doubt in the
appeal court or the court a quo regarding the elements of the offence with which the accused were charged, nor
was there any doubt as to the scope, nature or interpretation of the elements of the offence. The magistrate had
found that one of the elements had not been proved. In the circumstance of that case this was a finding of fact,
pure and simple.
[39] The provisions of s 319 of the CPA are peremptory and require strict
compliance, as its purpose is to limit appeals by the State. It should be mentioned
that s 319 has been subjected to a detailed analysis in a number of judgments,
both by this Court and the Constitutional Court.13 Its principles have accordingly
been firmly established in our law.
[40] Two decades ago, in Director of Public Prosecutions, Natal v Magidela
and Others14 this Court eloquently and commendably set out the position of the
relevant law stating that:
‘The provisions of section 319 and its predecessors have been the subject of judicial
interpretation over the years and in order to see whether the requirements of the section were
complied with in this case it is important to consider how the section has been construed. The
first requirement is not complied with simply by stating a question of law. At least two other
requisites must be met. The first is that the question must be framed by the Judge "so as
accurately to express the legal point which he had in mind" (R v Kewelram 1922 AD 1 at 3).
Secondly, there must be certainty concerning the facts on which the legal point is intended to
hinge. This requires the court to record the factual findings on which the point of law is
dependent (S v Nkwenja en ‘n Ander 1985 (2) SA 560 (A) at 567B-G). What is more, the
relevant facts should be set out fully in the record as part of the question of law (S v
Goliath 1972 (3) SA 1 (A) at 9H-10A). These requirements have been repeatedly emphasised
in this Court and are firmly established (see, for example, S v Khoza en Andere 1991 (1) SA
793 (A) at 796E-I). The point of law, moreover, should be readily apparent from the record for
if it is not, the question cannot be said to arise "on the trial" of a person (S v Mulayo 1962 (2)
SA 522 (A) at 526-527). Non constat that the point should be formally raised at the trial: it is
sufficient if it "comes into existence" during the hearing (R v Laubscher 1926 AD 276 at 280; R
v Tucker 1953 (3) SA 150 (A) at 158H-159H). It follows from these requirements that there
13 S v Basson [2004] ZACC 13; 2005 (1) SA 171 (CC); 2004 (6) BCLR 620 (CC); See also Magmoed v Janse van
Rensburg and Others [1993] 4 All SA 175 (A); 1993 (1) SA 777 (A); 1993 (1) SACR 67 (A), and S v Petro Louise
Enterprises (Pty) Ltd and Others [1978] 1 All SA 571 (T); 1978 (1) SA 271 (T), both of which have received the
express imprimatur of the Constitutional Court in S v Basson; and S v Boekhoud [2011] ZASCA 48; 2011 (2)
SACR 124 (SCA).
14 Director of Public Prosecutions, Natal v Magidela and Others [2000] 2 All SA 337 (A); 2000 (1) SACR 458
(SCA) para 9.
should be certainty not only on the factual issues on which the point of law is based but also
regarding the law point that was in issue at the trial.’ (My emphasis.)
[41] Furthermore the authors Du Toit et al in the Commentary on the Criminal
Procedure Act state: 15
‘The trial court must refer to those facts in its judgment as part of the reserved question of law
(S v Nkwenja en 'n ander 1985 (2) SA 560 (A) 567B). Furthermore, whenever the State has a
question of law reserved which rests on particular facts, the State must have those facts fully
placed on record and in particular as part of the setting out of the question of law.’
[42] All of the above considerations need to be borne in mind in the assessment
as to whether a question of law has been properly reserved, and whether it should
be answered in favour of the State. The registrar of this Court, on the instructions
of the presiding Judge addressed a letter to the State, the contents of which read:
‘The presiding judge has directed that the parties’ attention be drawn to this Court’s recent
judgment in DPP, Western Cape v Schoeman & Another (904/2017) [2019] ZASCA 158 (28
November 2019). In the light thereof the DPP is requested to consider whether it persists with
the appeal. If so, the parties will be required to deal comprehensively with the judgment in their
submissions. A response is required from the DPP on or before 13 February 2020.’
[43] In Director of Public Prosecutions: Western Cape v Schoeman,16 a very
recent judgment of this Court, it was pointed out at para 39 that before a question
of law may be reserved under s 319 there are certain requirements that must be
met, they are:
‘First, it is essential that the question is framed accurately leaving no doubt what the legal point
is. Secondly, the facts upon which the point hinges must be clear. Thirdly, they should be set
out fully in the record together with the question of law.’
And further at para 40 the court said:
‘Unless the State does this, it may not be possible for a court of appeal to establish with
certainty what the conclusions on the legal point, which the trial court arrived at, are. Where it
15 E Du Toit et al Commentary on the Criminal Procedure Act (2012) at RS 48.
16 Director of Public Prosecutions, Western Cape v Schoeman and Another [2019] ZASCA 158.
is unclear from the judgment of the trial court what its findings of fact are, it is therefore
necessary to request the trial judge to clarify its factual findings. Where this is not done, the
point of law is not properly reserved.’ (My emphasis.)
[44] From a careful analysis of all the above considerations, it is clear that none
of the requirements of s 319 have been complied with in this matter by both the
State and the trial court. The trial court did not frame a question of law in its
judgment in the s 319 application for the consideration of this Court, nor did it
record the factual findings on which the purported point of law was dependent.
The trial court had a duty to set out the relevant facts fully in the record as part of
the question of law. As I have said, there must be certainty not only on the factual
issues on which the point of law is based, but also regarding the point of law that
was in issue at the trial. Regrettably, the point of law is not readily apparent from
the record, and thus it cannot be said to have arisen ‘on the trial’ of a person (see
para 9 of Magidela above). As is evident from the judgment of the trial court, its
factual findings lack clarity and are confusing to say the least. Another relevant
factor is that the trial court did not give any reasons for the granting of the s 319
application, which it ought to have done in terms of s 14617 of the CPA.
[45] There were serious shortcomings in the State’s application in terms of
s 319, which in my view are insurmountable. An examination of the s 319
application by the State pertinently illustrates that the facts upon which the point
of law were said to hinge were not set out in its application. The State merely
summarised the evidence of the witnesses without analysing the facts. It failed to
set out the trial court’s factual findings on which the reserved question ought to
have been considered. In the circumstances of this case, where it was not clear
what facts the trial court accepted to be the facts proved in this case, it was
17 ‘146. Reasons for decision by superior court in criminal trial
A judge presiding at a criminal trial in a superior court shall –
(a) where he decides any question of law, including any question under paragraph (c) of the proviso to section
145(4) whether any matter constitutes a question of law or a question of fact, give the reasons for his decision.’
necessary for the State to request the trial court to clarify its factual findings.18
Regrettably this was not done. Despite these shortcomings the trial court
nevertheless reserved the question as one of law.
[46] Before us, counsel for the State accepted, when questioned by the bench,
that it had not properly formulated the question of law as required by the
provisions of s 319, and that the question of law was thus defective. Nevertheless,
the State persisted with the appeal, contending that the defects were not fatal to
its application, if a proper question of law could be reformulated on the basis
suggested by the presiding Judge during the hearing, namely in the following
terms:
‘[W]hether the court could competently discharge the accused at the end of the State’s case
without enquiring into whether their conduct in assaulting the deceased prima facie brought it
within the ambit of the crime of murder committed in the furtherance of a common purpose.’
[47] Notwithstanding that it was unable to refer to any provisions of the CPA
which allowed this Court to reformulate a defective question of law, the State
urged this Court to condone its non-compliance with the provisions of s 319 and
uphold the appeal in the interests of justice. In its supplementary heads of
argument, the State requested this Court not to dismiss the appeal but to consider
two options: that this Court postpone the matter sine die and make an order that
the appeal be enrolled only after the trial court has complied with s 319, by stating
specifically the question of law that has been reserved; or remove the matter from
the roll with an order that the appeal be enrolled only after the court a quo has
complied with s 319 by stating in the record precisely which question of law has
been reserved.
18 See Schoeman para 40.
[48] As the respondents were not in custody, the State contended that the
proposed order will not cause substantial prejudice to them. Furthermore, the
State submitted that ‘the effect of such a proposed order would be a balancing act
to ensure adherence to the provisions of s 319 on the one hand, and ensuring that
those against whom the State has prima facie evidence, and who have allegedly
committed two counts of murder, do not escape re-trial on account of
technicality’. In contrast, counsel for the respondents contended that this Court
could not reformulate the question of law, and that if this matter were to be
remitted to the trial court, it would be prejudicial to the respondents who were no
longer in custody.
[49] I have considered the options suggested by the State, but in my view they
are not viable. Although the State submits that the respondents will not suffer
substantial prejudice, on the contrary, the purpose of the proposed orders is clear.
Both options envisage the remittal to the trial court not only to cure the defect in
the s 319 application, but also as submitted by the State, to ensure that the
respondents do not escape a retrial. The respondents stood trial on serious
charges, and were discharged on the main counts of murder and kidnapping, and
convicted on a lesser charge of assault to do grievous bodily harm. In my view,
in these circumstances, the possible prejudice19 to the respondents who received
a suspended sentence for assault to do grievous bodily harm, cannot be ruled out.
[50] For the reasons already alluded to, not only was the question of law not
accurately framed by the trial court, and the facts upon which the point hinged
not clear, but the State also did not properly formulate the question of law. These
failures are deserving of censure. In any event, in the context of this case, it is my
prima facie view that the reserved question, which in summary is whether the
evidence of Mr Mangena and Mrs Mametja constituted a prima facie case against
19 See S v Basson fn 3 paras 60-64. See also Magmoed fn 3 at 202.
the respondents on all counts, clearly requires an inquiry into the assessment of
the evidence by the trial court. This raises in essence a question of fact, rather
than one of law. Thus in the final analysis, the requirements of s 319 have not
been complied with, and therefore the appeal should fail on these grounds alone.
[51] My brother Cachalia JA agrees that neither the State nor the trial court
complied with the requirements of s 319, and that ‘there would therefore be good
reason for this Court to dismiss the application’, on this ground alone. However,
in his view, it is not the course to be adopted in this particular matter, as an appeal
court must always consider the possible prejudice to both parties before deciding
to dismiss an application. In Cachalia JA’s view the State’s failure to comply with
s 319 was not exclusively of its making, as it was faced with an unclear judgment
by the trial court, compounded by its failure to state the facts upon which it
reserved the point of law. In his view, despite the shortcomings in the formulation
of the point of law, the appeal should proceed, as it was possible to glean the
factual findings of the trial court, which gave rise to the dispute over the point of
law, without difficulty or contestation. I am in respectful disagreement with this
view.
[52] My brother Cachalia JA accepts that there were many aspects of the trial
court’s judgment that were problematic inter alia: the trial Judge did not identify
the essential elements of the offences of kidnapping or murder when committed
in the furtherance of a common purpose; it is doubtful whether the trial court
understood, as Botha J, said in S v Petro Louise Enterprises (Pty) Ltd and Others
1978 (1) SA 271(T), the precise scope, nature or interpretations of the elements
of these offences, nor the conduct that had to be proved to bring it within the
ambit of these crimes. According to him, all of this led to the State formulating
its question inelegantly. He states that in actual fact, had the question been
formulated in the following terms: whether on the proven facts, the conduct of
the respondents prima facie brought it within the ambit of the crimes of
kidnapping and murder, ‘which in substance is what the question was aimed at,
the answer to this question would have been obvious’. Thus he concludes that
‘there is no doubt that the question raised by the State required an enquiry into
whether the proven facts fell within the ambit of the two main offences. That
quintessentially raised a point of law’. I disagree with this conclusion.
[53] In my view, the trial court’s judgment contains many aspects which are
troubling. Given the factual circumstances, it is disquieting (and perplexing as
my brother Cachalia JA puts it) that the trial court having ruled that there was a
prima facie case of assault against the respondents, and having found that they
were guilty of those charges, appeared not to have enquired into whether those
assaults also amounted to prima facie evidence on the main charge of murder, nor
did it say why that fell short of murder. This reasoning appears to be implausible.
[54] Furthermore, the findings made by the trial court in its judgment on the
discharge of the respondents, and their subsequent conviction on the assault
counts, lack clarity and are confusing. However, as these aspects do not arise for
adjudication before this Court, this Court cannot clarify the reasoning of the trial
court. In the circumstances, as the judgment of the trial court is unclear on
important aspects, it is difficult, to glean from the judgment, the factual findings
which were material to formulating the question of law.
[55] This is a court of appeal, its function is not to seek to discover reasons
adverse to the conclusions of the trial judge.20 The inquiry before this Court is
whether the question of law was properly reserved, which question, in view of all
the aforegoing, must be answered in the negative. It is true that no judgment is
20 See R v Dhlumayo [1948] 2 All SA 566 (A); 1948 (2) SA 677 (A) about the reluctance to disturb the trial court’s
findings on questions of fact.
perfect and all embracing, but it does not necessarily follow that, because certain
aspects were not mentioned in the judgment, they were not considered. In
Schoeman at para 39 this Court said:
‘The State has a right of appeal only against a trial court’s mistakes of law, not its mistakes of
fact. Indeed, Du Toit, De Jager, Paizes, Skeen and Van der Merwe stress that this restriction
will not be relaxed by the fact that the trial judge considered the facts incorrectly.’
[56] Implicit in the provisions of s 319 of the CPA is the prerogative and the
duty of the ‘first mentioned court’ (the trial court), the high court in this instance,
to properly and accurately frame the question of law for consideration by a court
of appeal. This Court, being a court of appeal is in no position to formulate the
question of law, and then answer it as being properly reserved in favour of the
State. And even if it could, there is no factual basis on which to determine the
reserved question. More pertinently, to do so, would set a precedent for future
defective applications such as these.
[57] Notwithstanding the strict application of the section and the law that has
been adopted in this matter, courts have, in the past, albeit with a note of caution,
reluctantly allowed the appeal to proceed even though the requirements were not
met. I refer to the case of S v Petro Louise Enterprises (Pty) Ltd and Others 1978
(1) SA 271 (T),21 where the court entertained the appeal, even though the
magistrate had failed in a material respect to comply with the requirements of
formulating a stated case in terms of s 104(1) and rule 67(10) (now ss 310 and
414 of the CPA). However, in the final analysis, Botha J held that the State had
reserved a question of fact, and accordingly dismissed the appeal. It is important
to re-iterate the caution expressed by Botha J in Petro Louise, which in my view
is well founded, and equally apposite in the matter before us:
‘Generally speaking, I think that this court will decline to hear an appeal under sec.104(1) –
where the magistrate has failed in a material respect to comply with the requirements of
21 S v Petro Louise Enterprises (Pty) Ltd and Others fn 6 at 279E-H.
formulating a stated case in terms of s104(1) and Rule 67 [now secs 310 and 414 of the CPA],
in spite of the unfortunate prejudice and inconvenience that may result to the appellant and the
respondent from such a step – which is all the more reason, of course, why magistrates should
be meticulous in performing their duties in this regard. In the present case, the stated case is
so pronouncedly defective that there would have been ample justification for us to have refused
to entertain the appeal. However, when this possibility was mooted at the outset of the
argument, counsel for both sides, stressing that the problem was not of their or their clients’
making, urged us to be indulgent and to listen to their arguments. We allowed ourselves to be
persuaded to do that. The fact that we were prepared to hear the present appeal, in the
particular circumstances present here, should not, however, be regarded as a precedent that
in future cases of a similar nature this court will be equally indulgent.’ (My emphasis.)
[58] Following upon the approach by Botha J in Petro Louise, a similar note of
caution was expressed in S v Nzimande,22 where the high court proceeded to
entertain the appeal (on the basis of the question as formulated by the State) even
though the case stated by the magistrate was defective and did not comply with
the requirements of s 310 of the CPA. The high court said at paras 10 and 11:
‘Several cases are referred to by appellant’s counsel which clearly decide that if the casus is
not set out properly, the court cannot hear the matter, and applies a rather strict application
of the section and the rule . . . Appellant does however go further and refers to the judgment of
Botha J in S v Petro Louise . . . In this case Botha J said the following:
“Generally speaking I think this court will decline to hear an appeal under sec 104 where the
magistrate has failed in a material respect to comply with the requirements of formulating a
stated case . . . The fact that we were prepared to hear the appeal. . . should not be regarded
as a precedent in future cases. . . .”
Although Botha J did not intend his judgment to be used as a precedent, it nevertheless stands
as a reported judgment. I for one cannot ignore it. In fact I tend to agree with his approach.
The section as it stands is very unsatisfactory in a case where the magistrate does not do justice
22 S v Nzimande 2007 (2) SACR 391 (T) and S v Nzimande [2010] ZASCA 80; 2010 (2) SACR 517 (SCA), where
the parties were agreed that the stated case did not comply with the requirements of s 310 of the CPA, and the
parties urged the court in their interest to entertain the appeal despite the shortcomings, which it proceeded to do.
On appeal, this Court said: ‘Thus the true complaint of the State was not that the magistrate had committed any
error of law, but that he had drawn incorrect inference from the facts. Judging from the evidence, as well as the
judgment of the High Court, this complaint may well be valid – an issue on which we do not have to make a
finding. Suffice it to say that such error (if it was one) was one of fact, which did not confer the State the right to
appeal against the acquittal of the appellant’.
to it. One or all of the parties involved therein are then prejudiced. This is not in the interests
of justice. It seems to me that where a case is of such a nature that the true casus can be gleaned
from the record and the heads of argument, there is no reason why a court should not entertain
the matter.’ (My emphasis.)
The high court then proceeded to entertain the appeal. This was subsequently
overturned by this Court on appeal to it by the State, on the basis that the high
court had no jurisdiction to entertain the appeal, which fell to be struck off the
roll.
[59] Both the courts in Petro Louise and Nzimande have expressly cautioned
that the fact that they were prepared to hear the appeals should not be regarded as
a precedent in future cases. This clearly illustrates that where a question of law
has not been properly formulated, the appeals should be proceeded with
circumspection, or perhaps not at all. The import of the following dictum in Petro
Louise at page 576 should resonate:
‘[I]t is important that magistrates who are requested to state a case in terms of s 104 and rule
67 should take great care in complying with the requirements of those provisions, especially in
relation to the recital of the facts found and the formulation of the question of law involved.
Lack of clarity and precision in drafting a stated case very often can lead to confusion as to
the actual issues at stake and cause unnecessary trouble and inconvenience to the Court of
appeal. This was pertinently demonstrated in the present case, where a good deal of time was
taken up in argument in an effort to glean from the magistrate’s judgment those findings of fact
which were material to the alleged questions of law.’ (My emphasis.)
[60] To a large extent, the State’s real complaint in this matter is that the
evidence was assessed by the trial court in such a manner that no reasonable court
would have acquitted the respondents on the charges of murder. Undoubtedly this
is a serious matter where two young men lost their lives. So viewed, and in light
of the evidence as well as the judgment of the trial court, this complaint may
justifiably be valid. However, this Court is not sitting in judgment on the factual
findings of the trial court, and is in any event precluded from entertaining an
appeal from the State on the facts.
[61] I align myself with the sentiments expressed by this Court in Schoeman
where the following is said at paras 73-74:
‘As Corbett CJ pointed out in Magmoed, even where there are “strong indications” from the
evidence that there were cogent reasons to convict an accused “[t]hese considerations” must
not. . . be allowed to obscure one’s perception of the legal and policy issues involved in
permitting s 319 to be utilized in the manner the prosecution in this case wishes to use it; or to
weaken one’s resolve to maintain what appears to be sound legal practice.
Put simply, the mere fact the judicial process has become flawed by the way a trial court goes
about assessing the evidence before it, does not justify permitting s 319 to be used by the
prosecution to reserve a point of law for what is in truth misdirection of fact. That
impermissibly undermines the clear language of the section and the deliberate choice of the
legislature to restrict appeals in terms of the section to questions of law.’
[62] The effective prosecution of crime is an important constitutional objective.
The State was afforded the right to appeal a question of law to the Supreme Court
of Appeal and should have done so properly, considering it had all the resources
available to it at its disposal. A basic trawl through the cases would have revealed
that the requirements of s 319 are peremptory, and that the question of law must
be framed accurately by the State and the trial court for the consideration of this
Court. In performing this duty the trial court must be meticulous.23 Regrettably,
this was not done. In my view for all of the above reasons, this appeal must fail.
[63] In the result, the following order is made:
The appeal is dismissed.
23 See Petro Louise fn 6 para 276; see Nzimande fn 22 paras 10 and 11; S v Kameli [1997] 3 All SA 230 (Ck) at
239.
______________________
H K SALDULKER
JUDGE OF APPEAL
Appearances
For appellant:
M Sebelebele
Instructed by:
Director of Public Prosecutions, Limpopo
Director of Public Prosecutions, Bloemfontein
For respondent:
L M Manzini
Instructed by:
Legal Aid, Limpopo
Legal Aid, 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
18 June 2020
STATUS
Immediate
Director of Public Prosecutions: Limpopo v Molope and Another (Case no
1109/2019) [2020] ZASCA 69 (18 June 2020)
Please note that the media summary is intended for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Today the Supreme Court of Appeal (the SCA) dismissed the appeal of the appellant, the Director of
Public Prosecutions: Limpopo (the State), against the decision of the Limpopo Division of the High Court
(the high court).
The respondents, Lasabatha Lucas Molope and Jack Letsoalo, were arraigned in the high court on two
counts of kidnapping and two counts of murder in furtherance of a common purpose. The charges
pertained to a series of incidents that involved mob justice, which culminated in the death of two young
men. At the end of the State’s case, the respondents applied to be discharged in terms of s 174 of the
Criminal Procedure Act 51 of 1977 (CPA). The high court found ‘material contradictions’ in the State’s
case and thus ordered the discharge of the respondents on the two main charges of kidnapping and
murder. This, despite having found that there was ‘sufficient evidence upon which a court may convict
on the alternative verdict of assault with intent to do grievous bodily harm against both respondents’.
The high court went on to convict the respondents of the crime of assault GBH. The State then reserved
two questions of law in terms of s 319 of the CPA, withdrawing one during the hearing of the appeal.
The issue before the SCA was whether the question of law was properly reserved. The SCA, held that
in a reservation of a question of law the following three requirements ought to be met: first, the question
must be framed accurately leaving no doubt what the legal point was; second, the facts upon which the
point hinges must be clear; and third, the facts should be set out fully in the record together with the
question of law.
The SCA held that in the present case, there were serious shortcomings in the State’s application. It
was clear that none of the requirements of s 319 of the CPA had been complied with by both the high
court and the State. The high court did not frame a question of law in its judgment in the s 319 application
for the consideration of this Court, nor did it record the factual findings on which the purported point of
law was dependent. Furthermore, the judgment of the trial court was unclear on important aspects. The
State accepted that it had not properly formulated the question of law as required by the provisions of
s 319.
The majority (Saldulker and Dlodlo JJA) held that the State and the high court had not properly
formulated the question of law, and the appeal was dismissed. In a dissenting judgment Cachalia JA
upheld the appeal, even though there were shortcomings in the formulation of the point of law, on the
basis that it was possible to glean the factual findings of the trial court which gave rise to the dispute
over the point of law.
The majority held further that not only was the question of law not accurately framed by the trial court,
and the facts upon which the point hinged not clear, but the State also did not properly formulate the
question of law. The SCA went on to state that implicit in the provisions of s 319 of the CPA was the
prerogative and the duty of the ‘first mentioned court’ (the trial court), the high court in this instance, to
properly and accurately frame the question of law for consideration by a court of appeal. This Court,
being a court of appeal was in no position to formulate the question of law, and then answer it as being
properly reserved in favour of the State. And even if it could, there was no factual basis on which to
determine the reserved question. More pertinently, to do so, would set a precedent for future defective
applications such as these. In the circumstances, the appeal fell to be dismissed.
|
454
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 006/2015
In the matter between:
THE MINISTER OF SAFETY AND SECURITY FIRST APPELLANT
THE DIRECTOR OF PUBLIC PROSECUTIONS
GAUTENG LOCAL DIVISION SECOND APPELLANT
and
TEMBOP RECOVERY CC FIRST RESPONDENT
STAR DIAMOND CUTTING WORKS CC SECOND RESPONDENT
GIANDOMENICO (MARIO) MUGNAIONI THIRD RESPONDENT
MARCELLINO MUGNAIONI FOURTH RESPONDENT
GIANDOMENICO FLORIDO SALVATORE
MUGNAIONI JNR
FIFTH RESPONDENT
MARIA ROSARIA MUGNAIONI SIXTH RESPONDENT
GOFFREDO MUGNAIONI SEVENTH RESPONDENT
Neutral citation:
Minister of Safety and Security v Tembop Recovery (006/15) [2016]
ZASCA 52 (1 April 2016)
Coram:
Leach, Saldulker, Dambuza, Mathopo JJA and Baartman AJA
Heard:
18 March 2016
Delivered:
1 April 2016
Summary:
Civil Procedure ─ Uniform rules of court ─ application to strike out the defence in
application for return of items seized in terms of warrant of search and seizure ─ where such
application is made, and criminal proceedings are pending or have been reinstituted, court must
consider the interests of justice, policy and public considerations in the exercise of its discretion
to grant order ─ court should be loath to issue civil declaratory orders in matters which are the
subject of criminal proceedings.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: The South Gauteng Local Division of the High Court, Johannesburg
(Vorster AJ sitting as court of first instance):
1 The application for leave to appeal is granted.
2 The appeal is upheld.
3 Paragraphs 1, 2 and 3 of the order of the high court of 29 August 2014, dismissing the
appellants’ application for condonation and, striking out the appellants’ defence to the
main application are set aside and substituted with the following:
‘1.1 The respondents are ordered to comply with the applicants’ notice in terms of rule
35(12) read with rule (13) of the Uniform rules within ten (10) days of this order.
1.2 In the event of the respondents failing to comply with paragraph 1.1 of the order, the
applicants may apply on the same papers duly amplified to strike out the respondents’
defence to the main application.
2 Late filing of the respondents’ rule 6(5)(d)(iii) notice is condoned.
3 The respondents are to pay the costs of this application as well as the costs of their
application for condonation.’
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Mathopo JA (Leach, Saldulker, Dambuza JJA and Baartman AJA concurring):
[1] This is an application for leave to appeal against a judgment of the South
Gauteng Local Division of the High Court, Johannesburg, (Vorster AJ) in which the
appellants’ application for leave to appeal and condonation was dismissed. The high
court held that in the absence of compliance with a notice issued by the respondents’ in
terms of rule 35(12) read together with rule 35(13) of the Uniform rules, the respondents
were entitled to an order for the striking out of the appellants defence to the main
application. The high court also ordered that the appellants pay the respondents’ costs
on a scale as between attorney and own client. The high court refused leave to appeal.
On petition, this court granted leave to appeal against that finding and ordered that the
parties be prepared if called upon to do so, to argue the merits in terms of s 17(2)(b)
and (d) of the Superior Courts Act 10 of 2013 (the Act).
Background
[2] A brief background to the matter is as follows. During 2009, the South African
Police Services (SAPS) commissioned a special investigation project named Project
Nemesis, established after a formal investigation was authorised in December 2007
relating to an alleged platinum syndicate. During these investigations, SAPS opened
some 50 dockets in various jurisdictions in the country relating to the syndicate.
[3] As part of the investigations, the third and fourth respondents were implicated in,
and it was alleged that they were involved in an organised fashion over a period of time,
possessed and dealt with metals or precious groups of metals, in particular platinum,
which was either stolen or illegally obtained. During 2011, the police secured warrants
for the search and seizure of these alleged illegal precious group metals and other
items associated with the crime committed and obtained warrants to arrest implicated
persons, who included the third and fourth respondents. The evidence gathered during
the investigations indicated that they were linked to organised smuggling and illegal
export of unwrought precious metals from the Republic of South Africa to refineries
abroad.
[4] The third and fourth respondents, as well as other accused persons were
arrested and charged in terms of the Prevention and Combating of Corrupt Activities Act
12 of 2004 (POCA) in the Krugersdorp Regional Court on 29 September 2011. The
crimes for which they were charged were allegedly committed in districts within the
North West, North Gauteng and South Gauteng Provinces. The case was postponed
several times for a variety of reasons, chief amongst which was the fact that the State
was not ready to proceed because it was in the process of centralising the matter, and
intended to indict the third and fourth respondents, and other accused persons for
contravention of the certain provisions of the POCA. On 23 August 2013, the defence
successfully objected to a further postponement and the State provisionally withdrew
the charges against them.
Issues
[5] The preliminary issues in this appeal are the high court’s refusal of the
appellants’ (a) application for leave to appeal and (b) application for condonation for the
late filing of their rule 6(5)(d)(iii) notice. The main issue of substance is whether the high
court correctly exercised its discretion when it struck out the appellants’ defence to the
main application whilst criminal proceedings were pending. These issues are
considered below.
The application for leave to appeal
[6] The high court correctly found that on a plain reading of rules 35(12) and 35(13),
the respondents are entitled to documents which were relied upon in the appellants
answering affidavit. Because the appellants had not filed any opposing affidavit to the
notice in terms of rules 35(12) and (13), it dismissed the application for leave to appeal
on the basis that there were no reasonable prospect of success on appeal. The
attention of the high court was drawn to a number of judgments of this court which held
that courts should be loath to issue civil declarators in matters which are the subject of
criminal proceedings. The appellants thus have an arguable case and therefore have
some prospects of success on appeal. There are compelling reasons why the appeal
should be heard. It is also in the interest of justice that leave to appeal be granted. I turn
to consider the application for condonation.
Condonation
[7] It is trite that an application for condonation will be granted on good cause
shown. There are several factors that a court would generally take into account when
considering whether or not to exercise discretion, such as the reasons for lateness, the
importance of the case, the prejudice to be suffered by the opposing party, and whether
there are any prospects of success.
[8] The appellants sought condonation for the late filing of the notice in terms of rule
6(5)(d)(iii) which they filed on 18 July 2014. The explanation for the delay was described
by the appellants in the high court as ‘the respondents rule 6(5)(d)(iii) was unfortunately
only filed on 15 July 2014 as a result of counsel’s unavailability before that time.’
Because no condonation application had been filed by 24 July 2014, being the date
allocated for the hearing of the interlocutory application, the matter was postponed to 27
August 2014. The appellants submit that the respondents suffered no prejudice as a
result of the delay and contend that the interlocutory application was overtaken by
events once the criminal charges were reinstated, which they were on 11 July 2014.
(Those proceedings are still pending, apparently awaiting the finalisation of this appeal.)
[9] Although the explanation of the appellants’ is far from satisfactory. There were
indeed reasonable prospects of success in the case. The high court should have
exercised its discretion and granted condonation instead of dismissing the application.
However, the opposition to the condonation application was not unreasonable and the
appellants who sought the indulgence should bear the cost of obtaining it. I turn to deal
with the merits of the interlocutory application.
Interlocutory application
[10] Spurred on, no doubt by the provisional withdrawal of the charges and the failure
of the State to recharge them as it had threatened to do, the respondents launched
motion proceedings (the main application) on 12 February 2014, for the return of all
seized items under the search and seizure warrant. At that stage the State had not yet
served any indictment on them in terms of POCA and the authorisation for centralisation
of the cases because the crimes were allegedly committed in various jurisdictions,
namely North West, Northern Gauteng and South Gauteng, had not been obtained. In
addition the forensic reports were still outstanding. The centralisation authorisation was
necessary because it was the State’s intention that all the pending cases be
consolidated and be tried in one court, in this regard the South Gauteng Local Division
of the High Court, Johannesburg.
[11] The appellants opposed the main application and filed an opposing affidavit in
which reference was made to several documents supported by annexures (in which the
seized items were listed). They contended that the relief sought by the respondents was
incompetent in law because the respondents were not entitled to possess some of the
seized items, either as they were to be used as evidence in pending criminal
proceedings or as their possession in the hands of the respondents would be unlawful.
In the opposing affidavit reference was made to the fact that the Mugnaioni family (who
are related to the respondents) operated a recovery works plant with an expired refinery
licence and further that they were not allowed or entitled to possess Precious Group
Metals (PGM) and uncut diamonds at their premises.
[12] After the appellants had filed their opposing affidavit, the respondents did not file
a replying affidavit. Instead they filed a notice in terms of 35(12) read with rule 35(13) on
14 April 2014, requesting the appellant to produce and make available some of the
documentation referred to in the State’s opposing affidavit of warrant officer Meyer, an
investigating officer in the criminal proceedings. The appellants did not oppose the rule
35(12) and (13) notice. Instead, their attorney wrote to the respondents attorneys on 13
May 2014 and indicated to the respondents that they were not entitled to the documents
requested. The appellants placed reliance for this proposition on the judgment in
Stevens & others v Magistrate Swart & others 2014 (2) SA 150 (GSJ) where it was held
that the provisions of rule 35(12) read with rule 35(13) were not applicable to motion
proceedings until the stage where the court has issued an order directing it to do so.
[13] Rule 35(12) and (13) and rule 30A provide as follows:
‘(12) Any party to any proceeding may at any time before the hearing thereof deliver a notice as
near as may be in accordance with Form 15 in the First Schedule to any other party in whose
pleadings or affidavits reference is made to any document or tape recording to produce such
document or tape recording for his inspection and to permit him to make a copy or transcription
thereof. Any party failing to comply with such notice shall not, save with the leave of the court,
use such document or tape recording in such proceeding provided that any other party may use
such document or tape recording.
(13) The provisions of this rule relating to discovery shall mutatis mutandis apply, in so far as
the court may direct, to applications.’
Rule 30A provides:
‘(1) Where a party fails to comply with these rules or with a request made or notice given
pursuant thereto, any other party may notify the defaulting party that he or she intends, after the
lapse of 10 days, to apply for an order that such rule, notice or request be complied with or that
the claim or defence be struck out.
(2) Failing compliance within 10 days, application may on notice be made to the court and the
court may make such order thereon as it seems meet.’
Clearly the appellants were misguided, because there is no obligation on a party
seeking to exercise the provisions of rule 35(12) to first secure a directive from the court
to do so. The mere reference of a document in the affidavit entitles the other party to
seek or request that the documents be produced. See Machingawuta & others v Mogale
Alloys (Pty) Ltd & others 2012 (4) SA 113 (GSJ).1 In so far as Stevens held to the
contrary, it was wrongly decided.
[14] As a result of the appellants’ failure to oppose the interlocutory application, the
respondents filed a notice in terms of rule 30A of the Uniform rules to strike out the
appellants defence to the main application (the interlocutory application). The appellant
did not oppose this application. Relying on the Stevens judgment, and being of the view
that the step taken by the respondent was premature and irregular, they took no steps
to set aside the rule 30A notice as an irregular proceeding in terms of rule 30. The
respondents, as they were entitled to do, enrolled the matter for hearing on the
unopposed roll for 24 July 2014. In the meantime, the second appellant decided to
officially institute the criminal prosecution against the third, fourth and other accused
persons. On 11 July 2014, the criminal case was transferred to the high court and
postponed, pending the outcome of these motion proceedings.
[15] On 18 July 2014, without seeking condonation, the appellants served and filed a
notice in terms of rule 6(5)(d)(iii) of the Uniform rules in which they raised three points of
1 See further Moulded Components & Rotomoulding South Africa (Pty) Ltd v Coucourakis & another 1979
(2) SA 457 (W) at 460H-461E.
law, namely, privilege, reinstitution of the criminal proceedings, and repeated their
assertion that the respondents were not entitled to the documents. They also made
various factual assertions and explained why they had ignored both the rule 35(12)
notice and that under rule 30A. The belated stance of the appellants resulted in the
matter being postponed to 26 August 2014. On 28 July 2014, the appellants delivered
an application for condonation for the late filing of the rule 6 notice. As stated earlier, the
high court thereafter dismissed the condonation application and struck out the
appellants defence to the main application in terms of rule 30(A).
[16] The gravamen of the respondents’ submission in relation to the interlocutory
application was that the appellants should have delivered an answering affidavit and not
a notice in terms of rule 6(5)(d)(iii). The appellants concede that they were misguided
about the correct legal procedure applicable to rule 35(12) applications but contend that
the high court exercised its discretion wrongly when it struck out the appellants’ defence
to the main application.
[17] In this court, the cornerstone of the appellants’ argument was that once criminal
charges were reinstated, the interests of justice, policy and public considerations
outweighed the interests of the respondents. In essence the case advanced for the
appellants is that the respondents did not suffer any prejudice as a result of the late
introduction of the rule 6(5)(d)(iii) notice, because it was foreshadowed in the appellants
letter dated 13 May 2014.
[18] Properly understood, the argument of the appellants was the following. The effect
of the order of the striking out the defence of the appellants was that the items which
were lawfully seized pursuant to a valid search and seizure warrant would be returned
to the respondents and other accused persons even though some of the accused may
not lawfully possess them, as there were no exceptional circumstances warranting the
return of the items at this stage. We were urged to accept that the high court
misdirected itself when it held that the merits of the main applications were irrelevant
and the point of law relating to civil declarators affecting criminal proceedings was
unsustainable. In support of its argument reliance was placed on Wahlhaus & others v
Additional Magistrate, Johannesburg & another 1959 (3) SA 113 (A) at 118H-119I
where the court dealing with a civil declaratory order said the following:
‘The present case has no special features and cannot rightly be brought within the ambit of the
Johnstone & Co decision, supra. Apart from the fact that the petition neither referred to, nor
sought any relief by way of, a declaration of rights, it is clear that the present would not be a
suitable case for the granting of the very special relief entailed in the Court’s exercising its
discretion under s 102 of Act 46 of 1935 to make a declaratory order in relation to a criminal
case. The appellants are alleged to have committed a crime. The normal method of determining
the correctness, or otherwise, of that allegation is by way of the full investigation of a criminal
trial. There is a total absence of any of the types of consideration which induced this Court to
make a declaratory order in the Johnstone case supra. Nor, indeed does the case even contain
any law point which, if resolved in appellant’s favour, would dispose of the criminal charge, or a
substantial portion of it.’
[19] This view was endorsed in NDPP v King2 where this court also expressed itself
as follows:
‘Fairness is not a one-way street conferring an unlimited right on an accused to demand the
most favourable possible treatment, but also requires fairness to the public as represented by
the State. This does not mean that the accused's right should be subordinated to the public's
interest in the protection and suppression of crime; however, the purpose of the fair trial
provision is not to make it impracticable to conduct a prosecution. The fair trial right does not
mean a predilection for technical niceties and ingenious legal stratagems, or to encourage
preliminary litigation ─ a pervasive feature of white collar crime cases in this country. To the
contrary: courts should within the confines of fairness actively discourage preliminary litigation.
Courts should further be aware that persons facing serious charges ─ and especially minimum
sentences ─ have little inclination to co-operate in a process that may lead to their conviction
and 'any new procedure can offer opportunities capable of exploitation to obstruct and delay'.
One can add the tendency of such accused, instead of confronting the charge, of attacking the
prosecution.’3
2 National Director of Public Prosecutions v King [2010] ZASCA 9; 2010 (2) SACR 116 (SCA) para 5.
3 See also Mngomezulu & another v National Director of Public Prosecutions & another [2007] ZASCA
129; 2008 (1) SACR 105 (SCA) paras 12-14.
In Van der Merwe v National Director for Public Prosecutions [2010] ZASCA 129; 2011
(1) SACR 94 (SCA) para 32, this court held that litigation of this kind falls squarely into
the category of preliminary litigation that ought to be avoided or discouraged.
[20] The respondents’ counter argument was the following. Quite correctly, they
submitted that the appellants were not entitled to resort to rule 6(5)(d)(iii) to place
evidence before the court of the facts which should have been placed by way of an
opposing affidavit. The argument advanced is that the appellants’ sought to introduce
evidential material that would have been placed before the court by way of an opposing
affidavit, thus denying the respondents the opportunity to deal with these facts. It was
contended that the reinstitution of criminal proceedings was a stratagem aimed at
persuading the court that the State was ready to proceed with the trial when it was not.
It was further submitted that the appellants’ were not entitled to seize and retain the
items simply because of a pending criminal trial. The submission made in this regard
was that the institution of criminal prosecution does not constitute a bar against the
relief sought. Correctly understood, the respondents pin their hopes on the legal
assertion that in the main application, the State cannot prove the criminal activity as
alleged in respect of the items which the respondents seek to be returned to them. I do
not agree. Amongst the items sought to be returned are exhibits which are intended to
be used at the pending criminal trial. Returning them to the respondents will defeat the
purpose for which they were secured.
[21] What emerges clearly from the above-cases is that although there is no absolute
bar from adjudicating such issues during the interlocutory applications, applications
amounting to preliminary litigation pending the outcome of criminal proceedings should
not be encouraged as it is the duty of the criminal trial to deal with all issues relating to
the aspects that will affect the criminal trial. The duty to examine or adjudicate the
lawfulness or otherwise of the search and seizure resides with the trial court. A decision
by a civil court to interfere with the trial court’s decision should be exercised sparingly, in
exceptional circumstances. (See Wahlhaus). In my view where a court is approached
for a relief, as in the present case, it must in the exercise of its discretion have recourse
inter alia to the following, (a) the main issues between the parties, (b) return of items
seized in connection with a criminal trial; (c) the reason why the documents cannot be
furnished at that stage, (d) the likely impact the release of the documents would have on
the pending trial and (e) finally, the prejudice that may be suffered by either party if the
order is refused or granted.
[22] The exhibits which have been seized are required by the State to attempt to
prove its case against the third and fourth respondents, as well as other accused
persons, and form an integral part of the State’s case in the pending criminal trial.
Returning the items seized to the respondents would seriously undermine and impact
negatively on the State’s case. There is no reason to believe that the respondents’
rights are under threat and neither will their rights to a fair trial be infringed. In my view
no grave injustice would result if the issues raised by the respondents in the main
application are determined by the trial court. The respondents will have an opportunity
to challenge each and every aspect of the warrants and evidence obtained against them
at the trial. It will be for the trial court to decide whether the warrants and evidence were
unconstitutionally obtained, and the trial court will decide whether such evidence should
be admitted or not.
[23] It was thus necessary that the high court strike a balance between the policy
considerations, public interest, interests of justice and the rights of the respondents. In
my view, the court a quo failed to do so. It adopted the most draconian option of striking
out the defence to the main application without affording the appellants the opportunity
to remedy their default. In terms of rule 30A(2) it should have exercised its discretion
and ordered the appellants’ to comply with the request for discovery in terms of rule
35(12) and (13). Had there then been non-compliance with that order, the court could
on further application have considered striking out the defence. Such an approach
would have been far more in accordance with justice. As the high court did not seek
compliance with the rule but ordered the striking out of the appellants defence, it
misdirected itself, entitling this court to interfere with its order. For these reasons, the
appeal must succeed.
Costs
[24] The high court ordered the appellants to pay the respondents costs on a scale of
attorney and own client. It was driven to this conclusion by the appellants’ misguided
interpretation to the rules and reliance on the Stevens case. I accept that the conduct of
the appellants was less than satisfactory and dilatory but that does not mean that it
should be mulcted with a punitive costs order. In the circumstances an appropriate
costs order would be one on a party and party scale.
[25] However, counsel for the appellants correctly conceded that in the light of the
woefully inept conduct of the appellants’ case, including the necessity to seek
condonation in this court, despite their success the appellants ought not to be awarded
their appeal costs. The effect of this is that each party would pay their costs of appeal.
[26] The following order is made:
1 The application for leave to appeal is granted.
2 The appeal is upheld.
3 Paragraphs 1, 2 and 3 of the order of the high court of 29 August 2014, dismissing the
appellants’ application for condonation and, striking out the appellants’ defence to the
main application are set aside and substituted with the following:
‘1.1 The respondents are ordered to comply with the applicants’ notice in terms of rule
35(12) read with rule 35(13) of the Uniform rules within ten (10) days of this order.
1.2 In the event of the respondents failing to comply with paragraph 1.1 of the order, the
applicants may apply on the same papers duly amplified to strike out the respondents’
defence to the main application.
2 Late filing of the respondents’ rule 6(5)(d)(iii) notice is condoned.
3 The respondents are to pay the costs of this application as well as the costs of their
application for condonation.’
_____________
R S Mathopo
Judge of Appeal
Appearances
For Appellants:
D J Joubert SC (with him M Kgomongwe)
Instructed by:
The State Attorney, Johannesburg
The State Attorney, Bloemfontein
For Respondents:
D Dörfling SC
Instructed by:
Xenophontos Attorneys, Johannesburg
Martins Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
1 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.
Minister of Safety and Security v Tembop Recovery (006/15) [2016] ZASCA 52 (1 April
2016)
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) granted leave to appeal to the Minister of Safety and
Security and the Director of Public Prosecutions, Gauteng Local Division (the appellants) and upheld
the appeal against the order by the Gauteng Local Division of the High Court, Johannesburg (the high
court).
This appeal, though civil in nature, arose as a result of a criminal matter which is still pending. During
2011, the police secured search and seizure warrants against the third and fourth respondents, after
it was alleged that they were involved in a syndicate which allegedly smuggled and exported platinum
Gauteng and North West regions. The police seized several items from the respondents and after
further investigations, the third and fourth respondents were charged under the Prevention and
Combating of Corrupt Activities Act 12 of 2004 (POCA). The prosecution of the matter was not
expeditious, and after several postponements of the trial in the Krugersdorp Regional Court, mainly at
the State’s instance, the State provisionally withdrew the charges against the third and fourth
respondents. According to the State, it required these postponements because it was in the process
of obtaining permission from the Director of Public Prosecutions in North West and Gauteng, to hold
the trial in Johannesburg, as the crimes had been committed in both these North West and Gauteng
and also because it was in the process of amending the indictment to include charges under POCA
against the third and fourth respondents, and other accused.
After the State provisionally withdrew the charges against the third and fourth respondents, they
applied to the high court for an order to direct the State to return to them, the items which had been
seized under the warrants (the main application). The appellants opposed this application and in their
opposing affidavit, made reference to several documents. The respondents then issued notice in
terms of Uniform rule 35(12) and (13), requesting the appellants to provide them with the documents
which they had referred to in the opposing affidavit. The appellants failed to provide these documents,
resulting in the respondents lodging an interlocutory application in the high court, in terms of Uniform
rule 30A, this time to strike out the respondent’s defence in the main application. This interlocutory
application was enrolled for hearing, and on the day that it was heard, the appellants delivered a
notice in terms of Uniform rule 6(5)(d)(iii) refusing to provide the documents, and raising points of
law, including privilege and the reinstitution of the criminal proceedings against the third and fourth
respondents. As a result of the delivery of the notice, the hearing was postponed and was again
heard on 26 August 2014. They also had to deliver an application for condonation for the late delivery
of the rule 6 notice.
The high court dismissed the appellants’ condonation application and granted the respondents’
application to strike out the appellants’ defence in the main application. The result was that the main
application, being the application to return the seized items, was now unopposed. This was in spite of
the rule 6 notice indicating that the State had reinstituted the charges against the third and fourth
respondents.
The appellants appealed the high court’s order, and leave to appeal was refused, with the result that
the appellants lodged these proceedings in the SCA.
In the SCA, the issues for determination were whether the appellants’ application for leave to appeal
and application for condonation for the late filing of their rule 6(5)(d)(iii) notice were correctly
dismissed. The court also had to decide whether the high court properly exercised its discretion when
it struck out the appellants’ defence to the main application whilst criminal proceedings were pending.
The SCA granted the appellants leave to appeal and the application for condonation in relation to the
late filing of the rule 6 notice. In considering the interlocutory application, it held that applications
amounting to preliminary litigation pending the outcome of criminal proceedings should not be
encouraged as it is the duty of the criminal trial to deal with all issues relating to the aspects that will
affect the criminal trial. The SCA cautioned that decisions by a civil court to interfere with the trial
court’s decision should be exercised sparingly, in exceptional circumstances only. The court further
said that the high court should strike a balance between the policy considerations, public interest,
interests of justice and the rights of the respondents, and that in this instance, the high court had
failed to do so.
--- ends ---
|
3283
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1177/2018
In the matter between:
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD
APPELLANT
and
BONENE SEBAJOA
1ST RESPONDENT
CHITUMBO. FERNANDO M
2ND RESPONDENT
CUNA, ALCIDO X
3RD RESPONDENT
FEKO, STEPHEN L
4TH RESPONDENT
HENENG JOHN Q
5TH RESPONDENT
HLOAI. MABOBOSANE M
6TH RESPONDENT
KHABO, ALBERT
7TH RESPONDENT
KHOASE, RANTHLOISI
8TH RESPONDENT
KHOBAI, DANIEL S
9TH RESPONDENT
KOTELI, BERINARD M
10TH RESPONDENT
LLTSOANE, KETHANG A
11TH RESPONDENT
MABOTE, THAE30
12TH RESPONDENT
MAGULE, BERNARDO M
13TH RESPONDENT
MAHASE, MAKOMENG P
14TH RESPONDENT
MAKHABENG L
15TH RESPONDENT
MALIBA, STEPHEN M
16TH RESPONDENT
MATELA, MATELA B
17TH RESPONDENT
MATHUNYE, KOSTINA B
18TH RESPONDENT
MATSOAPE, ALPHONCE T
19TH RESPONDENT
MOHALE, TLOHANG J
20TH RESPONDENT
MOHOANG, ZAKARIA M
21ST RESPONDENT
MOIMA, SEABATA E
22ND RESPONDENT
MOKHAHLANE. MONTINYANE A
23RD RESPONDENT
MOKHALI. TSOKELO
24TH RESPONDENT
MOKOENA, MOLEBATSI M
25TH RESPONDENT
MOLOMO, NKHETHELENG
26TH RESPONDENT
MOMOANE, MAPHALE A
27TH RESPONDENT
MOSHOESHOE, LELINGOANA
28TH RESPONDENT
MOTABO, MOTLALEPULA
29TH RESPONDENT
NKHASI, NTJA I
30TH RESPONDENT
NKOE, NKOEJ
31ST RESPONDENT
NQHAI, SIMON M
32ND RESPONDENT
PHAMOTSE, ALFRED B
33RD RESPONDENT
PHAROE, SIMON T
34TH RESPONDENT
RAMABELE M
35TH RESPONDENT
RAMBO, LETEKETOA A
36TH RESPONDENT
RAPOSO, MANUEL B
37TH RESPONDENT
SEJELAMPENG, MOHLALEFI
38TH RESPONDENT
SEKETE, THABISO A
39TH RESPONDENT
SEKOAI, MPHO J
40TH RESPONDENT
SEKOTOLANE, TIEHO J
41ST RESPONDENT
SETHELA, PETROSE T
42ND RESPONDENT
SONDI, SAMUEL S
43RD RESPONDENT
TEBOHO, L
44th RESPONDENT
THAABE, EDWIN L
45TH RESPONDENT
TSOANE, ISHMAEL T
46TH RESPONDENT
TSOANE, THABO A
47TH RESPONDENT
BILA, JOSE
48TH RESPONDENT
BRANTI, TANDEKILEW
49TH RESPONDENT
CAKATA, BEKIMBEKO
50TH RESPONDENT
CHAMBALE, JOAO
51ST RESPONDENT
DLELAPHANTSI, BUYELEKA YA
52ND RESPONDENT
GAONWE, TSHIRELETSO
53RD RESPONDENT
GAUDA, REENTSENG
54TH RESPONDENT
GWENTSHE, PASCALIS R
55TH RESPONDENT
KOASHE, THAPELO V
56TH RESPONDENT
LESHOBORO, NAMANE
57TH RESPONDENT
MACHOBANE, SEKHONYANA W
58TH RESPONDENT
MADLONGO, MZOLISI A
59TH RESPONDENT
MAGABAVANA, XOLILE L
60TH RESPONDENT
MAKHELE, LEJONE P
61ST RESPONDENT
MALAM BE, ABSALOM A
62ND RESPONDENT
MASOETSA, S
63RD RESPONDENT
MAYILA. MAKABONGWE
64TH RESPONDENT
MKHIZE, JABULANE S
65TH RESPONDENT
MOHALE, LEBUAJOANG P
66TH RESPONDENT
MOSHAPANE, THABANG B
67TH RESPONDENT
MOSOEU, THABISO
68TH RESPONDENT
MOTSEWABANGWE. BALEKANE E
69TH RESPONDENT
MSENA, MOTLATSI
70TH RESPONDENT
NAPE, MOHATO P
71ST RESPONDENT
NDONGENI, RICHARD D
72ND RESPONDENT
NTSINYI. TSIETSI
73RD RESPONDENT
PEDRO, FERNANDO A
74TH RESPONDENT
PETLANE, PETRUS M
75TH RESPONDENT
PHOLO, THASO A
76TH RESPONDENT
RAMAKOA, MASEBO 0
77TH RESPONDENT
RAMBO, KGOPOTSO E
78TH RESPONDENT
SETWABA, PINKIE G
79TH RESPONDENT
SIPOMPO, FEZEKILE
80TH RESPONDENT
TINENTE, VICTOR
81ST RESPONDENT
TSENASE, LEKHOOA E
82ND RESPONDENT
TSOANA, MOJALETA
83RD RESPONDENT
BELE, THABANG A
84TH RESPONDENT
KHOSA, SHOKWANA S
85TH RESPONDENT
LETJEBA, NICHOLAS L
86TH RESPONDENT
MABOKA, WRENFORD M
87TH RESPONDENT
MABUZA, JOHANES
88TH RESPONDENT
MACHOCHOKO, JOHANNES L
89TH RESPONDENT
MAHLOMAHOLO, MAULE
90TH RESPONDENT
MALULEKE; BEN R
91ST RESPONDENT
MASSANGO, JOSE 0
92ND RESPONDENT
MBHELE, SIPHO C
93RD RESPONDENT
MOKOENANYANE, LOBIEANE I
94TH RESPONDENT
MOLEKO, TANKISO M
95TH RESPONDENT
MONESA, KOPE S
96TH RESPONDENT
MOSO, TSELISO
97TH RESPONDENT
MOTSELEKATSI, MOSIMANEWAKGANG J
98TH RESPONDENT
NGOBENI, MBUSO A
99TH RESPONDENT
NTSIHLELE, SELLO L
100TH RESPONDENT
QHOAI, LEPHOI F
101ST RESPONDENT
SIGAUQUE, MANUEL J
102ND RESPONDENT
TEKANE, THAKAMANG
103RD RESPONDENT
THABANE THABO E
104TH RESPONDENT
KAO, MOTHEOLANE C
105TH RESPONDENT
LENYATSA, NTSAPI
106TH RESPONDENT
LETSOKA, MAKHA THA
107TH RESPONDENT
MONYAKE, RAPU/...E A
108TH RESPONDENT
MOTSEKI, RATAELM
109TH RESPONDENT
MUSSUMBE, BENEDITO A
110TH RESPONDENT
SEMPE, SAMUEL K
111TH RESPONDENT
SETLHAKO, ISAAC M
112TH RESPONDENT
SHANGE, MOSALA
113TH RESPONDENT
DIKILOKHWE, GATERS
114TH RESPONDENT
FOSA, SIDWELL T
115TH RESPONDENT
JAKOBO MANGALISO
116TH RESPONDENT
KOELE, SECHABA E
117TH RESPONDENT
KUNENE, MOTLATSIE
118TH RESPONDENT
KWENYELA, DIKOKO
119 RESPONDENT
LEKOMOLA, THABO A
120TH RESPONDENT
LENYETA, MAIWE
121ST RESPONDENT
LETHIBELANE, EL YUS K
122ND RESPONDENT
LIKOTSI, BETHUEL
123RD RESPONDENT
LUSISI, DAVID V
124TH RESPONDENT
MAHAO, TEBOHO J
125TH RESPONDENT
MALISE. FRANCIS M
126TH RESPONDENT
MASOKA, ANTHONY P
127TH RESPONDENT
MASWELE. EDWARD
128TH RESPONDENT
MAZIKWANA, AUBERTSON S
129TH RESPONDENT
MEMANI, BATHATHU A
130TH RESPONDENT
MKA TSHANE, SIMPHlWE S
131ST RESPONDENT
MOETA, TEFO S
132ND RESPONDENT
MOHLOMi, ELIAS P
133RD RESPONDENT
MOKGARA, JULIUS M
134TH RESPONDENT
MOKHALI, RAMABANTA J
135TH RESPONDENT
MOKOENA, LEHLOHONOLO P
136TH RESPONDENT
MOLELEKOA, LETSOKO
137TH RESPONDENT
MONESA, LEBOHANG S
138TH RESPONDENT
MOSESANE, DANIEL S
139TH RESPONDENT
MOSHE, T
140TH RESPONDENT
MOTAUNG, MOITHERI E
141ST RESPONDENT
MPASI, PABALLO
142ND RESPONDENT
MPHAHLELE, KOKETSO T
143RD RESPONDENT
NGADA, ROBERT M
144TH RESPONDENT
NGANGEZWE, MLANGABEZI
145TH RESPONDENT
NTLAETOA, MOMO
146TH RESPONDENT
NTSOHI, TSEK1S0 E
147TH RESPONDENT
PEYANA, MNTUWOMZI
148TH RESPONDENT
PHAMOTSE. PHILLIP L
149TH RESPONDENT
PHATSISI, TSEBO
150TH RESPONDENT
RABIRI, PTROSE P
151ST RESPONDENT
RAMABELE, SIPHA J
152ND RESPONDENT
RASMENI, LARENG W
153RD RESPONDENT
SEPEAME, EMANUEL M
154TH RESPONDENT
SIMELANE, GERAME A
155TH RESPONDENT
SINDANE, TSIDISO P
156TH RESPONDENT
SITOE, ALCIDIO S
157TH RESPONDENT
SITGE, FILJMAO M
158TH RESPONDENT
TAU, ISAAC M
159TH RESPONDENT
THABO, JOEL
160TH RESPONDENT
TSOLA, PETROS N
161ST RESPONDENT
MOSEBI, SETHASAKELE MATHEWS
162ND RESPONDENT
KOOMA, LEFU
163RD RESPONDENT
MOLOPJ; THABO
164TH RESPONDENT
NTHO, ROBERT
165TH RESPONDENT
NTHOFE: ELA, M
166TH RESPONDENT
SIBIYA, JOSEPH L
167TH RESPONDENT
RUSTENBURG LOCAL MUNICIPALITY
168TH RESPONDENT
THE PROVINCIAL DIRECTOR, DEPARTMENT OF
RURAL DEVELOPMENT AND LAND AFFAIRS
169TH RESPONDENT
CIRCLE CATERING AND ACCOMMODATION
(PTY) LTD
170TH RESPONDENT
OTTO JOHAN WENHOLD
171ST RESPONDENT
Neutral citation: Aquarius Platinum (SA) (Pty) v Bonene & others (1177/2018) [2019]
ZASCA 07 (16 March 2020)
Coram:
MAYA P, SALDULKER, VAN DER MERWE and MOCUMIE JJA and
DOLAMO AJA
Heard:
5 November 2019
Delivered:
16 March 2020
Summary: Land – eviction under Extension of Security of Tenure Act 62 of 1997
(ESTA) – ESTA requires two consecutive steps to be taken before an eviction order may
be granted – first, the right of residence of an occupier must be terminated in terms of s
8 – thereafter, a notice of intention to obtain eviction order must be given to the occupier
in terms of s 9 – failure to allege and prove termination of right of residence fatal to
application for eviction.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Land Claims Court, Johannesburg (Ncube AJ sitting as court of first
instance):
The appeal is dismissed with costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
The Court:
[1] This is an appeal against an order of the Land Claims Court (the LCC) dismissing
an application by the appellant, Aquarius Platinum (South Africa) (Pty) Ltd, for the eviction
of the 1st to the 167th respondents (the occupiers) under the Extension of Security of
Tenure Act 62 of 1997 (ESTA). The 171st respondent, Mr Otto Johan Wenhold, is the
owner of two portions of the farm Kroondal 304, Rustenburg, North West Province
(collectively referred to as ‘the farm’). Mr Wenhold did not participate in the appeal.
Neither did the 168th respondent, the Rustenburg Local Municipality, the 169th
respondent, the Provincial Director of the Department of Rural Development and Land
Affairs and the 170th respondent, Circle Catering and Accommodation (Pty) Ltd (Circle
Catering). The appeal is with the leave of the LCC (Ncube AJ).
[2] The material background facts are not in dispute. The appellant contracted Murray
& Roberts Cementation (Pty) Ltd (MRC) to perform mining operations at the Kroondal
Platinum Mine on the farm as well as the Marikana Platinum Mine. The occupiers were
employed by MRC and resided in hostels situated on the farm and at Marikana Platinum
Mine. During 2009 the occupiers and thousands of their co-workers participated in an
unprotected strike. At the conclusion of internal disciplinary proceedings, the occupiers
were all dismissed from that employment. They, however, challenged their dismissals
through the processes provided under the Labour Relations Act 66 of 1995 (the LRA).
[3] However, on 2 September 2009, the appellant approached the North West Division
of the High Court, Mahikeng (the high court) for an order evicting the occupiers from the
various hostels. On 8 September 2009 the high court granted the eviction order. Pursuant
thereto, the occupiers were evicted from the hostels. After the eviction of the occupiers,
these hostels were demolished. The occupiers, however, successfully challenged the
high court’s order in the LCC. On 20 September 2009, Bam JP ordered the restoration of
the occupiers’ rights of residence in terms of ESTA. As a result, the occupiers resumed
residence in reconstructed hostel facilities on the farm. Circle Catering manages this
hostel on behalf of Mr Wenhold.
[4] During 2012 the appellant became the employer of the occupiers by virtue of the
provisions of s 197 of the LRA, after determination of the agreement between the
applicant and MRC. In continued compliance with Bam JP’s order, the appellant entered
into a lease agreement in respect of the hostel on the farm with Circle Catering acting on
behalf of Mr Wenhold. Thus, the occupiers continued to exercise their rights of residence
in terms of ESTA on the farm.
[5] Protracted labour litigation ensued in the meantime. By 2 December 2014, the
litigation in respect of the 1st to 113th respondents had been concluded. Their employment
with the appellant had therefore been terminated by 2 December 2014. The litigation in
respect of the 114th to 161st respondents was similarly concluded on 13 November 2015
and as of that date they were no more employed by the appellant. The final determination
of the litigation in respect of the 162nd respondent, resulting in the termination of his
employment with the appellant, took place on 14 April 2016. In respect of the 163rd to
167th respondents, this took place on 26 April 2016.
[6] On 24 and 25 February 2015, the appellant served notices of the intention to
obtain an eviction order in terms of s 9(2)(d)(i) of ESTA on the 1st to 161st, the 164th and
the 166th to 167th respondents. Similar notices were served on the remaining occupiers
(the 162nd, 163rd and 165th respondents) on 3 June 2016. It appears therefore that eviction
notices were served on the 114th to 161st, the 164th and the 166th to 167th respondents
before the final termination of their employment. The appellant launched its application
for the eviction of the occupiers on 20 September 2016.
[7] The LCC decided the matter in favour of the respondents, and dismissed the
application for the eviction of the occupiers. It found, after considering both ss 8 and 9 of
ESTA, that:
‘[T]ermination of employment does not necessarily and automatically lead to the termination of
the occupier’s right of residence. The Act envisages a two-stage procedure before an order of
eviction may be granted. The first stage is the giving of a notice of termination of the right of
residence in terms of s 8. The manner in which this kind of notice is to be given is not prescribed.
The second stage is the giving of a notice of eviction in terms of s 9 (2)(d). The manner in which
this second notice is to be given, is prescribed in accordance with s 28(i)(b) of the Act. . . .’
[8] The LCC also held that:
‘[17] [T]he use of the phrase “may be terminated” in section 8(2) postulates a situation where the
owner or person in charge has a discretion. In other words, there will be cases where, despite the
fact that employment has been terminated, but the owner still in his or her discretion decides to
permit the former employee to continue to reside on the premises. Therefore, termination of
employment does not automatically lead to termination of the occupier’s right of residence. A
separate and specific notice of termination of right of residence is required.’
Thus, the LCC found that the appellant failed to satisfy the first statutory requirement for
the granting of an order of eviction. In our view, for the reasons mentioned below, the
LCC correctly dismissed the appellant’s application for the eviction of the first to the 167th
respondents (the occupiers) for failure to comply with the provisions of s 8 of ESTA.
[9] It is convenient to set out the relevant provisions of ESTA:
‘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.
(2) The right of residence of an occupier who is an employee and whose right of residence arises
solely from an employment agreement, may be terminated if the occupier resigns from
employment or is dismissed in accordance with the provisions of the Labour Relations Act.
(3) Any dispute over whether an occupier's employment has terminated as contemplated in
subsection (2), shall be dealt with in accordance with the provisions of the Labour Relations Act,
and the termination shall take effect when any dispute over the termination has been determined
in accordance with that Act.
. . .
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.’
[10] Both this Court and the Constitutional Court have authoritatively interpreted these
provisions. Approximately two decades ago, this Court found in Mkangeli and Others v
Joubert and Others1 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
1 Mkangeli and Others v Joubert and Others [2002] ZASCA 13; [2002] 2 All SA 473 (A); 2002 (4) SA 36
(SCA) paras 12-13.
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)).’
[11] In Sterklewies2 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.’
[12] The Constitutional Court said the following in Snyders:3
‘If a person has a right of residence on someone else’s land under ESTA, that person may not be
evicted from that land before that right has been terminated. In other words, the owner of land
must terminate the person’s right of residence first before he or she can seek an order to evict
2 Sterklewies (Pty) Ltd t/a Harrismith Feedlot v Msimanga and Others [2012] ZASCA 77; 2012 (5) SA 392
(SCA) para 16.
3 Snyders and Others v De Jager and Others [2016] ZACC 55; 2017 (3) SA 545 (CC) para 68.
the person. However, it must be borne in mind that the termination of a right of residence is
required to be just and equitable in terms of section 8(1) of ESTA. Section 8(2) deals with the
right of residence of an occupier who is an employee of the owner of the land or of the person in
charge and whose right of residence arises solely from an employment agreement. It provides
that such a right of residence may be terminated “if the occupier resigns from employment or is
dismissed in accordance with the provisions of the Labour Relations Act.’
And at para 56:
‘Section 8(1) makes it clear that the termination of a 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
right of residence to be just and equitable. The requirement for procedural fairness is captured in
section 8(1)(e).’4
And further at para 73:
‘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 section 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 Magistrate’s
Court evidence that showed that the termination of Mr Snyders’ right of residence was just and
equitable.’
[13] Thus, both the clear meaning of the language of these sections and their context
(the need to protect the rights of residence of vulnerable persons) indicate a two-stage
procedure. Section 8 provides for the termination of the right of residence of an occupier,
4 Snyders fn 4 para 56.
which must be on lawful ground and just and equitable, taking into account, inter alia, the
fairness of the procedure followed before the decision was made to terminate the right of
residence. Section 8 at least requires that a decision to terminate the right of residence
must be communicated to the occupier. Section 9(2) then provides for the power to order
eviction if, inter alia, the occupier’s right of residence has been terminated in terms of s
8, the occupier nevertheless did not vacate the land and the owner or person in charge
has, after the termination of the right of residence, given two months’ written notice of the
intention to obtain an eviction order. Section 8(2) must of course be read with s 8(1) and
provides for a specific instance of what may constitute a just and equitable ground for the
termination of a right of residence.
[14] It is common cause that the appellant did not terminate the right of residence of
any of the occupiers. It is clear from the papers that the appellant failed to appreciate the
need to comply with this legal requirement. In its founding affidavit the appellant, on the
one hand, erroneously equated the termination of employment with termination of the
right of residence, and on the other, stated that the occupiers’ right of residence had to
be terminated by the court. In their answering affidavit the occupiers admitted the
termination of their employment, but pertinently denied that their rights of residence had
been terminated. This elicited the quite untenable response in the replying affidavit that
in the light of the admission of the termination of their employment, the occupiers ‘. . .
have failed to provide reasons why they still have rights in terms of ESTA or in terms of
any other law to continue to occupy the hostel’. As we have said, it was for the appellant
to allege and prove, in addition to the termination of the employment of the occupiers,
that their rights of residence had been terminated.
[15] The appellant only served notices in terms of s 9(2)(d)(i) on the occupiers. And in
respect of a substantial number of them (the 114th – 161st, 164th, 166th and 167th
respondents), this took place even before their employment was finally terminated.
[16] It follows that the appellant’s case for eviction of the occupiers suffered from a fatal
defect and therefore the appeal must fail.
[17] In the result we make the following order:
The appeal is dismissed with costs.
____________________________
M M MAYA
PRESIDENT
____________________________
H K SALDULKER
JUDGE OF APPEAL
____________________________
C H G VAN DER MERWE
JUDGE OF APPEAL
____________________________
B C MOCUMIE
JUDGE OF APPEAL
____________________________
M J DOLAMO
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant:
PL Mokoena SC, with him M Majozi and S Kunene
Instructed by:
Werksmans Attorneys, Johannesburg
c/o Symington De Kok, Bloemfontein
For 1st to 167th Respondent:
JJ Botha
Instructed by:
Matshitse Attorneys, Potchefstroom
c/o Bezuidenhout Attorneys, Bloemfontein
For 168th Respondent:
No appearance
M E Tlou Attorneys & Associates, Mahikeng
c/o Moroka Attorneys, Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
16 March 2020
STATUS
Immediate
Aquarius Platinum (South Africa) (Pty) Ltd v Bonene Sebajoa and 170 Others
(1177/2018) [2020] ZASCA 07 (16 March 2020)
Please note that the media summary is intended for the benefit of the media and does not form part of
the judgment of the Supreme Court of Appeal.
Today the Supreme Court of Appeal (SCA) dismissed the appeal of the appellant, Aquarius Platinum
(South Africa) (Pty) Ltd, against the decision of the Land Claims Court, Johannesburg (LCC).
The appellant contracted a third party to perform mining operations at the Kroondal Platinum Mine, on
a farm in Rustenburg, North West Province and on the Marikana Platinum Mine. The 1st to 167th
respondents (the occupiers) were employed by the third party and resided in hostels on the farm and
at Marikana Platinum Mine.
The occupiers participated in an unprotected strike and were dismissed. The occupiers challenged their
dismissal under the Labour Relations Act 66 of 1995 (the LRA). The appellant then applied and was
granted an eviction order under the Extension of Security of Tenure Act 62 of 1997 (ESTA) against the
occupiers in the North West Division of the High Court, Mahikeng (the high court). The occupiers
successfully challenged the high court’s order in the LCC, where the restoration of the occupiers’ rights
of residence in terms of ESTA was ordered. The occupiers then resumed residence on the farm.
The appellant then became the employer of the occupiers by virtue of s 197 of the LRA and the
occupiers continued to exercise their rights of residence in terms of ESTA. After protracted labour
litigation, the occupiers were dismissed. The appellant served notice of its intention to obtain an eviction
order on the occupiers in terms of s 9(2)(d)(i) of ESTA, some having been served before the final
termination of the employment of some of the occupiers. The appellant then launched an application
for the eviction of the occupiers in the LCC, which was dismissed. The appellants then appealed this
decision to the SCA.
The SCA held that ss 8 and 9 of the ESTA had been authoritatively interpreted to require the proper
termination of occupiers’ rights of residence. It held that these sections require a two-stage procedure
that involves: first, the termination of the occupiers’ right of residence in terms of s 8 of ESTA; and
second, before an eviction order can be sought, occupiers must be given notice of the intention to seek
their eviction in terms of s 9(2)(d)(i) of ESTA.
The SCA held that it was common cause that the appellant had not terminated any of the occupiers’
right of residence. It held that the appellant failed to appreciate the need to comply with this legal
requirement. And it is the duty of the appellant to allege and prove, in addition to the termination of the
employment of the occupiers, that their rights of residence had been terminated.
The SCA further held that in the present case the appellant had only served notices in terms of
s 9(2)(d)(i) on the occupiers. And in respect of a substantial number of them, this took place before their
employment was finally terminated. In the circumstances, the appellant’s case for the eviction of the
occupiers suffered from a fatal defect. The appeal was accordingly dismissed.
|
2809
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 779/11
Reportable
In the matter between:
SENTINEL MINING INDUSTRY RETIREMENT FUND FIRST APPELLANT
FLUXMANS ATTORNEYS INC
SECOND APPELLANT
and
WAZ PROPS (PTY) LTD
FIRST RESPONDENT
WERLEX PROPERTIES (PTY) LTD
SECOND RESPONDENT
Neutral citation: Sentinel Mining Industry Retirement Fund v Waz Props
(Pty) Ltd (779/11) [2012] ZASCA 124 (21 September 2012).
Coram:
Cloete, Malan, Shongwe and Tshiqi JJA and Southwood AJA
Heard:
15 August 2012
Delivered:
21 September 2012
Summary:
Contract: use of heading in interpretation; incorporation
of tacit term.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Willis J sitting as
court of first instance):
The appeal is dismissed with costs.
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (MALAN, SHONGWE, TSHIQI JJA AND SOUTHWOOD AJA
CONCURRING):
[1] Waz Props (Pty) Ltd and Sentinel Mining Industry Retirement Fund
(SMIRF) entered into a contract pursuant to which Waz Props caused Werlex
Properties (Pty) Ltd to have a guarantee issued by ABSA in favour of SMIRF’s
attorneys. The guarantee was presented for payment and paid. In the court
below, Waz Props and Werlex (the applicants) instituted motion proceedings
against SMIRF and its attorneys for repayment of the amount of the
guarantee. They succeeded before Willis J, who subsequently granted leave
to appeal to this court.
[2] The background to the contract is the following. Waz Props owned
properties in Elton Hill, Johannesburg. SMIRF owned the Melrose Arch
Development and wished to embark on a project (the project) to upgrade Park
Road, Birnam, which is in close proximity to the properties owned by Waz
Props. Waz Props applied to the local authority for permission to rezone the
properties. SMIRF lodged an objection to the rezoning. The applicants alleged
in their founding affidavit that:
‘The objection was without any merit, and was aimed at pressuring [Waz Props] into
making a contribution to the [project].’
This allegation was admitted by SMIRF in its answering affidavit. SMIRF
withdrew the objection when Waz Props entered into the contract.
[3] The contract contained the following terms, which it is unfortunately
necessary to quote in full (the ‘owner’ is Waz Props):
‘3.
Owner’s Obligations
The owner agrees and undertakes to effect payment of its pro-rata share of the Park
Road Upgrading Project the total cost in an amount of R115 531.87 (one hundred
and fifteen thousand five hundred and thirty one rand and eighty seven cents).
4.
Method of payment
The owner will secure its obligations in terms of this agreement in either of the
following manners:-
4.1
the owner shall within 7 (seven) days of signature hereto, either:-
4.1.1 effect payment by way of a bank transfer, which the owner undertakes to
effect directly into the account of the Attorneys, Nedbank Rosebank Branch, Branch
Code 195805, Account Number 1958 506060 which Attorneys Northrand Business
Branch, Branch Code 148-905, Account Number 1489-085-586, which Attorneys are
hereby authorised to invest such sum in an interest bearing account with a registered
bank or financial institution and in terms of Section 78(2A) of the Attorneys Act 53 of
1979. The said account will be in the name of Fluxmans Inc. with a reference to the
aforesaid section of the Attorneys Act but will be identified with the name “Park Road
Upgrading Project” and the interest earned thereon will accrue for the benefit of the
Park Road Upgrading Project;
alternatively
4.1.2 secure payment by way of a registered bank or financial institution guarantee
substantially similar to the of the draft guarantee annexed as Annexure “B”;
or
4.2
the owner:-
4.2.1 agrees to register the following restrictive condition against the Title Deeds of
the property, imposed by and in favour of SMIRF:
“Restrictive Condition:
1.
The property shall not be used for any purpose other than in
accordance with its present zoning, without the prior written consent of
SMIRF or its successors-in-title, first having been had and obtained.
2.
In the event of the property being sold or disposed of in any manner
whatsoever, then and in such event the owner will ensure that the amount
referred to in 3, (which in this instance will escalate at a rate of 10% (ten
percentum) per annum, escalated from the date of registration of the
restrictive condition until date of payment, compounded monthly), is [to] be
paid to SMIRF out of the proceeds of the sale and the owner shall ensure
further that an appropriate registered bank or financial institution guarantee is
furnished to the Attorneys, which guarantee shall be drawn in favour of
SMIRF or its nominee and expressed to be payable free of exchange against
registration of transfer.”
4.2.2 to that end the owner simultaneously with its signature to this agreement
gives and grants to SMIRF an irrevocable power of attorney in its name place and
stead and at the owner’s own cost and expense, to register the abovementioned
restrictive condition against the Title Deed of the property, hereby ratifying, allowing
and confirming and promising to ratify, allow and confirm all and whatsoever the said
Attorneys shall lawfully do or cause to be done by virtue of this authority, upon and
subject to the terms set out in Annexure “C” which Power of Attorney shall remain
valid and in full force and effect during the currency of the agreement;
4.2.3 undertakes to contribute the sum of R1 500.00 (one thousand five hundred
rand), plus VAT, towards the costs of registering the said restrictive conditions;
4.2.4 undertakes to effect payment of the costs associated with the obtaining of
appropriate consents from any bondholders in respect of mortgage bonds registered
over the properties.
5.
Non-completion of the Park Road Upgrading Project
5.1
In the event that the Park Road Upgrading Project is not completed by 1 April
2009 then and in such event, the interest bearing account referred to in 4.1.1 shall be
closed and the amount referred to in 3 together with the owner’s pro rata share of the
interest earned thereon (less any administration charges) shall be refunded to the
owner.
5.2
Upon the happening of the event referred to in 5.1, SMIRF undertakes, at its
cost and expense, to procure the cancellation of the caveat referred to in 4.2.1.’
[4] There were therefore three options open to Waz Props in terms of
clause 4:
(a)
To pay the amount mentioned in clause 3 to SMIRF’s attorneys. In that
event, the amount was to be invested in an interest bearing account and the
interest would accrue for the benefit of the project. (Option 1.)
(b)
To provide a guarantee from a financial institution. In that event, the
draft guarantee annexed to the contract provided that Waz Props would have
to pay the amount mentioned in clause 3 plus interest at ten per cent per
annum compounded monthly. (Option 2.)
(c)
To register a restrictive condition against the title deeds of its properties
in terms of which it undertook, if the properties were disposed of, to ensure
that the amount referred to in clause 3, escalated at ten per cent per annum
compounded monthly, would be paid to SMIRF from the proceeds of the sale.
(Option 3.)
[5] Waz Props chose option 2 and at the suit of Werlex (acting on behalf of
Waz Props) a guarantee was issued pursuant to the provisions of clause
4.1.2, in terms of which ABSA undertook to pay SMIRF’s attorneys
R115 531.87 together with interest at 10% per annum from 27 February 2004
(the day after the contract) to date of payment calculated daily and
compounded monthly. The ‘conditions of payment’ clause in the guarantee
contained only one condition, namely:
‘Upon receipt of a Completion Certificate signed by the Quantity Surveyor, confirming
that construction of the upgrade to the “Park Road Upgrading Project” has been
satisfactorily completed.’
The undertaking given by ABSA contained no expiry date. It was not
irrevocable and expressly provided that:
‘The original of this letter must be returned on payment being effected or upon receipt
of notice of withdrawal.’
[6] The project was not completed by 1 April 2009 (the date mentioned in
clause 5 of the contract). It was, however, completed on 15 February 2010
and a completion certificate signed by the civil engineer was issued on 22
February 2010. The applicants made nothing of the fact that the completion
certificate was not signed by the quantity surveyor as envisaged in the
guarantee. SMIRF’s attorneys presented the guarantee for payment on 26
March 2010. Despite an objection by Waz Props on 30 March 2010
addressed to SMIRF’s attorneys, ABSA on 6 April 2010 paid out
R207 810.35, being the amount of R115 531.87 referred to in clause 3 of the
agreement plus interest calculated as set out in the guarantee, to SMIRF’s
attorneys and debited the account of Werlex. The applicants then commenced
the motion proceedings in the South Gauteng High Court, Johannesburg, that
culminated in this appeal.
[7] It is not disputed that ABSA was obliged to make the payment to
SMIRF’s attorneys: Lombard Insurance Co Ltd v Landmark Holdings (Pty) Ltd
2010 (2) SA 86 (SCA) paras 20 and 21. This is accordingly not the
appropriate case to reconsider the correctness of the majority judgment in
Dormell Properties 282 CC v Renasa Insurance Co Ltd & others NNO 2011
(1) SA 70 (SCA). The applicants’ case is that SMIRF’s attorneys were not
entitled to present the guarantee as Waz Props’ obligation under the contract
to make payment had lapsed.
[8] The applicants argued that clause 5 of the contract contains a
resolutive condition which terminated the obligation to pay the amount of
R115 531.87 and any further obligations under clause 4, and which was
express in respect of the obligations undertaken under clause 4.1.1 (option 1)
and clause 4.2 (option 3), but tacit in respect of clause 4.1.2 (option 2). The
respondents argued that clause 3 contained what counsel termed Waz Props’
‘primary obligation’; clause 4 dealt with security for payment of that amount;
and clause 5 provided that if the project had not been completed by 1 April
2009, two types of security ─ those envisaged in options 1 and 3 ─ would be
released; but that this did not apply in the case of the security under option 2.
Counsel further submitted that in every case the obligation to pay the amount
referred to in clause 3 remained, whatever happened to the security in terms
of clause 4; and that in the case of option 2, there was no basis to import a
tacit term into clause 5 that if the project were not completed by 1 April 2009,
the security provided under option 2 should suffer the same fate as the
security provided under options 1 or 3.
[9] I have difficulties with the interpretation placed on the contract by
SMIRF’s counsel. The obligation imposed on Waz Props is not confined to
clause 3. Nor is clause 4 confined to the provision of security. Further financial
obligations are imposed on Waz Props by each option in clause 4: in the case
of option 1, Waz Props loses the interest on the amount in clause 3 and the
interest accrues to SMIRF’s project; in the case of option 2, Waz Props has to
pay interest on the amount in clause 3 to SMIRF; and in the case of option 3,
Waz Props has to pay the amount in clause 3 increased by ten per cent per
annum. It cannot therefore be said that clause 3 contains a primary obligation
and clause 4 contains provisions solely relating to security for payment of that
primary obligation. Undoubtedly clause 4 provides for security, but that is not
its only effect. It also determines the amount to be paid, which will vary
depending upon the option chosen.
[10] Furthermore, it seems to me that the three options for which clause 4
provides, also constitute the three agreed methods of payment (impliedly in
the case of option 1). That accords with the scheme of the contract. Clause 3
begins ‘[Waz Props] agrees and undertakes to effect payment . . .’. The
immediately following clause is headed ‘Method of Payment’. In the absence
of express provision to the contrary, headings in contracts can be taken into
account in interpreting the contract.1 It seems to me common sense that
where a heading conflicts with the body of the contract, it must be the body of
the contract which prevails because the parties’ intention is more likely to
appear from the provisions they have spelt out than from an abbreviation they
have chosen to identify the effect of those provisions;2 but that where the
heading and the detailed provisions can be read together, that should be
done. And in the present case, they can. Clause 4 is headed ‘Method of
Payment’. The body of the clause begins ‘The owner will secure its obligations
in terms of this agreement in either of the following manners . . .’. The
respondents’ counsel argued that because method of payment and security
for payment are different concepts, regard could only be had to the provisions
of the clause and that the heading should be ignored. But if the terms of the
three options provided in clause 4 are considered, it is apparent that each
serves the purpose both of securing the amount payable and specifying the
method of payment in terms of that option (as I have said, in the case of
option 1 by necessary implication). I cannot agree with the respondents’
1 Parkinson v Mathews & Drysdale 1930 WLD 58; Bekker v Western Province Sports Club
(Inc) 1972 (3) SA 803 (C) at 818-819.
2 Contrast the position where writing appears in the margin or elsewhere in a typed or printed
contract: Robertson & Thompson v Finch 4 East 130 at 136 and 140-141, 102 ER 779 at
782-4; Wessels Law of Contract in South Africa 2 ed (1951) paras 1981-1982; Hayne & Co
Ltd v Central Agency for Co-operative Societies (in liquidation) 1938 AD 352 at 365-366;
Trever Investments (Pty) Ltd v Friedhelm Investments (Pty) Ltd 1982 (1) SA 7 (A) at 15A-C
and authorities there quoted.
counsel that in the two cases dealt with by clause 5 (options 1 and 3) the
obligation to pay the amount mentioned in clause 3 survives. There is no
provision as to how payment shall be made other than in clause 4, and the
amount payable depends on the option chosen. There is no express residual
obligation to pay the amount in clause 3 at some future and undefined date. In
the circumstances I am of the view that clause 4 is exhaustive of the methods
by which payment can be made.
[11] I therefore interpret the effect of clause 5 of the contract, read with
options 1 and 3, to mean that if the project is not completed by 1 April 2009,
the obligation to pay ─ and not merely the obligation to provide security ─
lapses. Consequently in regard to option 1, if the resolutive condition is
fulfilled, the amount referred to in clause 3 and the accrued interest has to be
refunded to Waz Props; and in regard to option 3, the restrictive condition has
to be cancelled because there is no longer an obligation to secure. In both
cases, the method of payment falls away because the debt is no longer
payable.
[12] The interpretation I have given accords to my mind with commercial
sense: the objection by SMIRF to Waz Props’ rezoning application was, it is
common cause, without any merit and made for an ulterior purpose. The date
referred to in clause 5 is some five years after the contract was concluded. I
can therefore readily understand a property developer in the position of Waz
Props adopting the attitude that it would only make a contribution to SMIRF’s
project, which it would otherwise not be obliged to make and which escalated
as time went by, if the project were to be completed by a certain date. The
position is not analogous to that of a house owner whose house is completed
late, as the respondents’ counsel submitted, because the project was not
being constructed at the instance of Waz Props.
[13] I now turn to the question whether a tacit term should be incorporated
into clause 5 of the contract to the effect that if the project was not completed
by 1 April 2009, the guarantee in option 2 would also lapse ─ ie a term that
the guarantee would not be presented in such a case because the amount
guaranteed would no longer be owing.
[14] The respondents relied strongly on the decision in Union Government
(Minister of Railways) v Faux Ltd 1916 AD 105 where Solomon JA said at
112:
‘Now it is needless to say that a Court should be very slow to imply a term in a
contract which is not to be found there, more particularly in a case like the present,
where in the printed conditions the whole subject is dealt with in the greatest detail;
and where the condition which we are asked to imply, is one of the very greatest
importance on a matter which could not possibly have been absent from the minds of
the parties at the time when the agreement was made.’
The respondents also emphasised that the court must be satisfied not that it
would be reasonable to incorporate the term, but that incorporation was
necessary. I unhesitatingly agree that ordinarily a court would be very slow to
incorporate a tacit term so fundamental that it constituted a resolutive
condition which would put an end to the contract altogether, and the passage
quoted from Faux would be directly in point. But here, as I have already
found, the contract expressly contained such resolutive conditions in the case
of options 1 and 3 read with clause 5. And I cannot accept that if the project
was not completed by 1 April 2009 SMIRF would lose the interest under
option 1 or the ten per cent per annum increase under option 3, but not the
interest under option 2. It was suggested in argument on behalf of SMIRF that
the security provisions under option 1 and 3 were more onerous than the
security provisions under option 2; and that the parties accordingly
contemplated that if five years passed, the more onerous securities would be
released. I am by no means convinced that the premise on which this
argument is based is correct. But I remain unconvinced why the parties
should intend that in the case of two of the options SMIRF would lose
significant pecuniary advantages but not in the case of the remaining option.
That anomaly has not been explained. And, as I have said, clause 4 does not
merely provide for security.
[15] The court below reasoned as follows:
‘To my mind, if one was to ask an innocent bystander whether it must have been
intended by the parties that if the Park Road Upgrading Project was not completed by
1 April 2009 and if the first applicant paid a sum of money into an interest-bearing
trust account and had been repaid [option 1], would it have been their intention that
the first respondent would not call up the guarantee issued [under option 2] instead?
To my mind the answer to this question has to be, “Of course”.’
I agree. The same reasoning applies if option 3 is used in the place of option
1; and both together are to my mind conclusive.
[16] It may well be asked why the contract makes express provision if
option 1 or 3 is chosen and the project is not completed by 1 April 2009, but
makes no such provision in respect of option 2. There is, however, a
difference between options 1 and 3 on the one hand, and option 2 on the
other. It was necessary in the case of option 1 to provide expressly what
would happen to the interest, which until then had accrued for the benefit of
the project, because the parties intended the interest to be paid to Waz Props;
and it was also necessary in the case of option 3 to provide expressly for the
cancellation of the caveat and the fact that such cancellation would be at
SMIRF’s expense. But it was not necessary to provide expressly what would
happen in the case of the guarantee. The parties could of course have done
so, but it was not essential. The right to present the guarantee would simply
have lapsed.
[17] I am not prepared to find, as submitted on behalf of the respondents,
that the applicants’ failure to ask for the return of the guarantee after 1 April
2009 evidences an interpretation of the contract inconsistent with the
interpretation which they now advance, and consistent with the interpretation
the respondents place on the contract. That conduct is equally consistent with
lax administration or a belief that SMIRF would not act in bad faith and cause
its attorneys to present the guarantee. Waz Props certainly reacted
immediately after it was brought to its attention that SMIRF’s attorneys
intended presenting the guarantee for payment. Nor do I attach significance to
the fact that the applicants caused a guarantee to be drawn up which did not
provide that it would lapse on 1 April 2009. The guarantee provided was not
irrevocable. It could accordingly have been withdrawn after 1 April 2009.
[18] I should also deal with the argument advanced on behalf of the
respondents that the applicants are not entitled to the relief sought because
there is a dispute of fact, in as much as the applicants assert a tacit term and
the respondents deny that there was one. The argument rests upon a
misconception. There is no dispute in regard to the facts on which the
applicants rely for a tacit term to be inferred. Those facts ─ particularly the
express terms of the contract ─ are common cause.
[19] Finally, I should deal with the suggestion made during argument that
the tacit term for which the applicants contend would, if inserted in clause 5,
contradict the express terms of the guarantee, which, because they are
incorporated by reference in an annexure to the agreement, form part of the
agreement itself. But that is not so. The express condition of payment to
which the guarantee was subject, is receipt of a completion certificate signed
by the quantity surveyor confirming that the project had been satisfactorily
completed. The insertion of a tacit term in clause 5 that the guarantee would
not be presented after 1 April 2009, would supplement the express term and
not contradict it.
[20] To my mind, once the contract is read as a whole, the intention of the
parties can readily be ascertained. Waz Props, which had no obligation to do
so, agreed to pay an amount to SMIRF to be calculated, secured and paid in
one of three ways. If the purpose for which the amount was to be paid had not
been achieved within five years, Waz Props’ continually increasing obligation
fell away ─ expressly in respect of options 1 and 3, and tacitly in respect of
option 2.
[21] The appeal is dismissed with costs.
___________
T D CLOETE
JUDGE OF APPEAL
APPEARANCES:
For First Appellant:
L J van der Merwe SC
Instructed by:
Fluxmans Inc, Rosebank
McIntyre & Van der Post, Bloemfontein
For Respondents:
J J Bitter
Instructed by:
Webber Wentzel, Johannesburg
Matsepes Incorporated, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 21 September 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
SENTINEL MINING INDUSTRY RETIREMENT FUND v WAZ PROPS (PTY) LTD
1.
Sentinel Mining Industry Retirement Fund (SMIRF), the owner of the Melrose Arch
Development in Johannesburg, objected to rezoning applications made by Waz Props (Pty)
Ltd in respect of properties in Elton Hill. The objection was withdrawn when Waz Props
entered into a contract with SMIRF to contribute to the upgrading of Park Road, Birnam.
Wazprops furnished a guarantee for the amount of its contribution.
2.
The SCA interpreted the contract to mean that if the upgrading had not been
completed within five years, SMIRF was not entitled to present the guarantee for payment.
As SMIRF had done so, the SCA confirmed the order of the Johannesburg High Court
directing SMIRF to repay to Wazprops the amount received under the guarantee.
--ends--
|
3547
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 299/2020
In the matter between:
BRUCE GORDON McMILLAN
APPELLANT
and
BATE CHUBB & DICKSON INCORPORATED
RESPONDENT
Neutral citation:
McMillan v Bate Chubb & Dickson Incorporated (Case no
299/2020) [2021] ZASCA 45 (15 April 2021)
Coram:
ZONDI, MOCUMIE and SCHIPPERS JJA and GORVEN and EKSTEEN
AJJA
Heard:
19 February 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 15 April 2021.
Summary: Prescription: firm of attorneys sued for breach of mandate arising out of
drafting an antenuptial contract subsequently found invalid by court – whether
prescription begins to run on date of judgment declaring the antenuptial contract
invalid – prescription begins to run as soon as the creditor acquires knowledge of the
facts necessary to institute action –whether costs of two counsel should be awarded.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, East London (Makaula J)
sitting as court of first instance:
The appeal is dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Zondi JA (Mocumie and Schippers JJA and Gorven and Eksteen AJJA
concurring):
[1] On 13 October 2017, the appellant, Mr McMillan, instituted action in the Eastern
Cape Division of the High Court, East London against the respondent, a law firm, for
damages for breach of an oral mandate. The summons was issued on 13 October
2017. The record does not indicate when it was served. The respondent delivered a
special plea in terms of which it contended that the appellant’s claim had prescribed.
By agreement between the parties, the court a quo (Makaula J) made an order in terms
of rule 33(4) of the Uniform Rules of Court (the separation order) that certain specified
issues including those arising from the respondent’s special plea, be separately
adjudicated before all other issues.
[2] Makaula J, after hearing evidence on the separated issues, upheld the special
plea. The learned judge considered it unnecessary to determine the further issues
raised in the separation order in the light of his conclusion on the prescription point.
He granted the appellant leave to appeal to this Court. The parties agreed that if we
were to uphold the appeal in respect of the prescription issue, we should deal with
other issues separated, rather than referring the matter back to the court below.
[3] I consider it convenient to deal first with the prescription point, because if the
appeal in respect thereof is dismissed, it will become unnecessary to consider the
further issues in the separation order. The issue is whether the court a quo was correct
to hold that when the summons was issued on 13 October 2017, the appellant’s claim
had become prescribed. Stated differently, the question is: when did prescription start
to run in respect of the appellant’s claim for damages against the respondent? In terms
of s 11(d) of the Prescription Act 68 of 1969 (the Act), this claim is subject to a three-
year extinctive prescription period. The respondent alleged that prescription started
running on 9 or 12 May 2014, when its director had advised the appellant to consult a
different attorney, as he had a potential claim against the respondent, and not on 18
October 2016, when the high court declared that the antenuptial contract was invalid,
as contended by the appellant. The respondent claimed that the three-year
prescription period ended on 12 May 2017. On that premise, by the time the summons
was issued, his claim had already prescribed.
[4] The answer to this question depends on the interpretation of s 12(3) of the Act
and its application to the facts of this case. The respondent bears the onus to prove
that the appellant’s claim had become prescribed by 13 October 2017.
[5] For the purposes of the adjudication of the prescription point, the following facts
are common cause or not seriously disputed. During or about November 1998, and at
East London, the appellant and the respondent entered into an oral agreement in
terms of which the appellant gave the respondent an oral mandate to prepare an
antenuptial contract for the purposes of regulating the financial affairs of the intended
marriage between the appellant and one Rosemary Lois Jannaway (the appellant’s
former wife).
[6] The express and material terms of the oral mandate given to the respondent,
according to the appellant, were that the respondent should prepare a written
antenuptial contract which would exclude all community of property between the
appellant and his former wife, and for the accrual system to apply to the marriage. The
antenuptial contract should exclude from the accrual all the business assets owned by
the appellant, comprising a farm together with livestock and implements, shares, and
loan accounts, valued at R810 105.
[7] The respondent accepted the mandate as aforesaid, and prepared an
antenuptial contract which they presented to the appellant and his former wife for
signature on 1 December 1998. The appellant alleged that in breach of the oral
mandate, the respondent failed to prepare the antenuptial contract in accordance with
their instructions.
[8] He averred that the respondent in fact drew up an antenuptial contract, dated
1 December 1998, which was declared to be void ab initio. The divorce action was
heard by Plasket J. In it, the appellant’s former wife contended that the antenuptial
contract was void ab initio. Soon after this plea in the divorce was delivered, on 9 May
2014, the respondent firm orally advised the appellant that this point had been taken,
that the appellant might have a claim against the respondent and that he should
consult another attorney to take the matter further. This was followed by a
communication in writing to that effect, dated 12 May 2014. This will be dealt with in
more detail below. The new attorney represented the appellant in the divorce action
which culminated in an order by Plasket J, declaring the antenuptial contract to be void
ab initio. On this basis, it was held that the marriage was one in community of property
and the estate was dealt with on that basis, which meant that all of the business assets
fell into the joint estate. The respondent was thus obliged to pay his former wife 50
percent of his net estate which amounted to R4 885 073.
[9] As I have stated, the respondent pleaded that the appellant’s claim had become
prescribed. It asserted that the breach of mandate relied upon by the appellant
occurred in 1998, which was more than three years prior to the issue of summons. In
the alternative, the respondent alleged that, on or about 9 May 2014, the appellant
was informed during the consultation with Mr Kretzmann, a director of the respondent,
that there appeared to be a problem with the terms of the written contract and that he
may have a claim against the respondent. This advice was subsequently confirmed by
the respondent in a letter addressed to the appellant on 12 May 2014.
[10] The respondent accordingly argued that as at 9 May 2014, alternatively, 12 May
2014, the appellant was aware of all the material facts upon which the purported claim
against it could be formulated, but he nevertheless failed to institute action within a
period of three years from either of those dates. The respondent accordingly
contended that the appellant’s claim had prescribed in terms of s 12(1) Act.
[11] The respondent denied that it had breached their oral mandate or that it failed
to prepare an antenuptial contract in accordance with the appellant’s instructions. It
contended that it had executed the mandate according to the standards of a
reasonable attorney of average ability. It alleged that at the time of the drafting of the
antenuptial agreement, it did not anticipate, nor could it have been anticipated by a
reasonable attorney, that the antenuptial contract which it had drafted, could or would
be declared null and void later.
[12] The appellant replicated to the respondent’s special plea and denied that his
claim had become prescribed. He asserted that he could not have acquired knowledge
that a debt was due to him by the respondent at any time before final judgment had
been delivered in the divorce action, which was finalised before Plasket J.
[13] The appellant further alleged that the respondent and its directors, at all
material times, disputed that there was any valid claim against the respondent and the
respondent’s director, Mr Schultz, testified under oath that he had fully complied with
the mandate given to the respondent, as pleaded in the particulars of claim. The
appellant argued that, absent a concession that there had been a breach of the
mandate, or that the respondent was liable to the appellant for the consequence of
such a breach, the appellant could not have known that the antenuptial contract was
invalid, until such time as the high court pronounced pertinently on the validity and
enforceability of the antenuptial contract.
[14] The appellant testified on the issues that were separated by the court a quo.
The purpose of his evidence was to show that, by reason of the provisions of s 12(3)
of the Act, prescription only began to run once Plasket J delivered his judgment on 18
October 2016, which declared the antenuptial contract to be invalid and void ab initio.
[15] The appellant’s evidence was to the following effect. During 1998, the appellant
and his ex-wife intended to get married. At the time, the appellant was a production
manager at the East London abattoirs. He had known the respondent firm for some
time in his capacity as one of the directors of Elliot Brothers Auctioneers. It provided
legal advice to them on business-related matters. During December 1998, the
appellant and his other directors had a meeting with two of the attorneys of the
respondent firm. After the meeting, the appellant mentioned to them that he was about
to get married and he needed to have an antenuptial contract prepared. He was
introduced to Mr Nico Schultz (Mr Schultz), who was one of the directors of the
respondent. The appellant had a brief discussion with Mr Schultz during which the
appellant explained the nature of the legal advice he was seeking.
[16] A date was arranged for the second meeting with Mr Schultz. The appellant
was asked to attend the second meeting with his former wife and to bring their identity
documents and a list of assets and their values, which would also indicate assets
which he wanted to be excluded from the accrual system. The appellant, in the
presence of his former wife, prepared a list of assets with a total value of R810 105.
The nett value of his former wife’s estate at the time was R20 000.
[17] At the second meeting with Mr Schultz, the appellant and his former wife
provided Mr Schultz with the documentation he had requested for purposes of
preparing an antenuptial contract. The appellant and his former wife agreed that they
intended to get married out of community of property, subject to the accrual system.
They instructed Mr Schultz to prepare the antenuptial contract, reflecting their
marriage as such. It was held by Plasket J that no further terms were agreed upon
between the parties and that the first time they were confronted with clauses 4 and 5
of the antenuptial contract was when it was presented to them for signing.
[18] Some few days later, the appellant and his former wife attended at the
respondent’s office to sign the antenuptial contract. It was read to them by Mr Schultz
in the presence of Mr Kay, a notary public, also employed by the respondent.
[19] The relevant provisions of the antenuptial contract read as follows:
‘1.
That there shall be no community of property between them.
2.
That there shall be no community of profit or loss between them.
3.
That the marriage shall be subject to the accrual system in terms of the provisions of
Chapter 1 of the Matrimonial Property Act, 1984 (Act No 88 of 1984).
4.
That for the purpose of proof of the net value of their respective estates at the
commencement of the intended marriage the intended spouses declared the net value of their
respective estates to be as follows:
4.1
that of the said BRUCE GORDON McMILLAN is R810 105,00 consisting of:-
4.1.1 Farm 656 Monte Rosa
480 000,00
4.1.2 Elliot Brothers Loan Account
100 000,00
4.1.3 Elliot Brothers Shares
100,00
4.1.4 Tomlinson & Wootton Loan Account
30 000,00
4.1.5 Tomlinson & Wootton Shares
5,00
4.1.6 Livestock and Implements
160 000,00
4.1.7 Motor Vehicle
40 000,00
R810 105,00
4.2
that of the said ROSEMARY LOIS JANNAWAY is R20 000,00 in respect of cash on
hand.
5.
That the assets of the parties or either of them, which are listed hereunder, or any other
asset acquired by such party by virtue of his/her possession or former possession of such
assets, shall not be taken into account as part of such party’s estate at either the
commencement or the dissolution of the marriage.
The assets of BRUCE GORDON McMILLAN so to be excluded are:-
(a)
All business interests presently owned or to be acquired in the future.
The assets of ROSEMARY LOIS JANNAWAY so to be excluded are NIL.’
[20] The appellant was not aware that the antenuptial contract, which he and his
former wife concluded, did not correctly reflect his intention to exclude from the accrual
system his business assets, valued at R810 105. He became aware of that fact when
his former wife instituted divorce proceedings against him, in which she, inter alia,
sought an order declaring the antenuptial contract to be void and her marriage to be
one in community of property. The issue concerning the validity and enforceability of
the antenuptial contract was referred to Plasket J for determination on a separated
basis. In the event, the learned judge concluded that clauses 4 and 5 of the antenuptial
contract are contradictory and irreconcilable. He found the antenuptial contract to be
void on account of vagueness. In reaching his conclusion, Plasket J relied on the
judgment of this Court in B v B [2014] ZASCA 14, in which an antenuptial contract with
provisions similar to the one under consideration was held void for vagueness,
because two of its clauses were so contradictory and incoherent.
[21] The circumstances in which the appellant was made aware that the antenuptial
contract could be invalid were the following. On 7 March 2014, he attended a meeting
at the respondent’s offices with Ms Amanda Fredericks and Mr Kretzmann, both in the
employment of the respondent firm, to explore how the divorce between him and his
former wife could be settled.
[22] At this meeting, the possibility of rectifying the antenuptial contract was
explored, because of a perceived conflict between clauses 4.1 and 5 thereof. The
strategy used was to first attempt to settle the divorce, which the appellant did. When
that failed, a decision was taken by the appellant, on the advice of Ms Fredericks that
counsel would need to be instructed to draft pleadings, including a claim for
rectification.
[23] On 14 April 2014, the appellant attended a consultation with Ms Fredericks and
the appointed counsel for the purpose of providing instructions to counsel for a plea
and counterclaim, including a claim for rectification of the antenuptial contract.
[24] On 9 May 2014, the appellant attended a further consultation at the
respondent’s offices with Ms Fredericks and Mr Kretzmann. There he was advised by
Mr Kretzmann that there was a problem with the antenuptial contract drafted by the
respondent, that the drafters may have made an error and that because of a conflict
of interest between the respondent and the appellant, he should seek independent
legal advice. The appellant left the offices of the respondent after the consultation on
9 May 2014 with his file and subsequently consulted with Mr Graham Bell of Cooper
Conroy Bell & Richards Incorporated (Cooper Conroy).
[25] The discussion of 9 May 2014 was confirmed in a letter addressed to the
appellant by Mr Kretzmann on 12 May 2014. In the letter the appellant was again
advised of the error in the antenuptial contract which may lead to a claim against the
respondent, that as a result, the respondent was withdrawing as the appellant’s
attorney of record and that he should seek further legal advice.
[26] The respondent formally withdrew as the appellant’s attorney of record in the
divorce proceedings by way of notice of withdrawal, dated 9 May 2014, served upon
the appellant’s former wife’s attorneys on 13 May 2014.
[27] Cooper Conroy filed a notice of appointment as attorneys of record on the
appellant’s behalf on 28 May 2014, which notice was dated 20 May 2014, and
proceeded to act for the appellant throughout his divorce proceedings and still
represents the appellant in the current proceedings.
[28] The appellant filed a plea and counterclaim, the latter dated 16 July 2014,
during July 2014. The counterclaim included a claim for rectification which clearly
recognised the error in the antenuptial contract and the need for such rectification by
the appellant. As regards rectification and the contention that the appellant had to wait
for this defence to be determined by Plasket J before all the facts could be known, it
is significant that the appellant made a crucial concession noted in the judgment of
Plasket J. This was that no agreement had been reached at all between him and his
former wife on the terms of the agreement prior to signature of the antenuptial contract.
A prior agreement, which was not reflected in the written contract due to a common
mistake of the parties, is a prerequisite to a successful claim for rectification. Without
any prior agreement as to the terms, a claim for rectification could not succeed.
[29] The appellant conceded that his own attorney, Mr Graham Bell, could have
assessed the risk or potential of a claim against the respondent in May 2014, and that
he was aware when he left the respondent’s offices that he ‘may’ have a claim against
them. This concession must be correct, because the judgment of this Court in B v B,1
dealing with a matter on all fours with the present one, had been handed down in
March 2014. Likewise, as mentioned above, the attorney would have been able to
1 B v B [2014] ZASCA 14.
advise that, if no prior agreement had been reached as to the terms of the agreement,
the claim for rectification could not succeed.
[30] The court a quo determined that the appellant’s claim had become prescribed.
It rejected the appellant’s contention that the prescription started running in October
2016, which was based on the allegation that the appellant could not have acquired
knowledge that a debt was due to him by the respondent at any time before the final
judgment that was delivered by Plasket J. As para 64 of the court a quo’s judgment is
central to its finding, it must be quoted in full:
‘But in May 2014, it became apparent that there was a problem with the ANC. Such problem
necessitated the defendant’s withdrawal from representing the plaintiff. In the words of the
defendant a “potential claim” and conflict “of interest” was looming. The plaintiff was alarmed
by the events to realise that his assets were at stake as a consequence of the divorce and the
discovering of the reality that validity of the ANC was in question. It became apparent that
there was a conflict between clauses 4.1 and [5] of the ANC hence there was an application
for its rectification. As at that stage it became manifest that the plaintiff was to a large extent
going to lose his assets as a consequence of the wrong manner in which the contract was
drafted hence the application for rectification was pursued.’
[31] The court a quo concluded at para 67:
‘Based on the facts, the plaintiff’s cause of action was complete in May 2014 except for a
pronouncement by Plasket J on the validity of the ANC. Furthermore, pursuing his cause of
action, the plaintiff was not dependant on Plasket J’s judgment. I do not agree with the
submission by Mr Cole in this regard for the reasons discussed above. It might have been
“one piece of evidence which was lacking to prove” his case.’ (Emphasis added.)
[32] The comment made by the court a quo in the last sentence of para 67 of the
judgment is rather unfortunate, as it tends to muddy its reasoning. In argument before
us, it was heavily relied upon by the appellant's counsel as providing support for the
contention that the appellant’s cause of action could not have been complete before a
finding was made by the high court, declaring the antenuptial contract invalid. But that
reliance was misplaced.
[33] It is a settled principle that, when interpreting a court’s judgment or order, the
court’s intention must be ascertained primarily from the language of the judgment or
order according to the usual well-known rules of interpretation. The judgment or order,
and the court’s reasons for giving it, must be read as a whole in order to ascertain its
intention. If, on such a reading, the meaning of the judgment or order is clear and
unambiguous, no extrinsic fact is admissible to contradict, vary, qualify, or supplement
it.2 The court a quo held that the appellant’s claim had prescribed. It is in this context
that the court a quo’s statement in the last sentence of para 67 should be understood.
[34] The appellant challenged the findings of the court a quo on two main grounds.
It was submitted by the appellant firstly, that the court a quo erred in holding that the
appellant had a complete cause of action for professional negligence against the
respondent on 12 May 2014 in circumstances where the antenuptial contract was only
declared invalid by Plasket J in the divorce proceedings in October 2016. Before then,
so ran the argument, nobody could have anticipated a problem. Both the appellant
and his former wife had considered the antenuptial contract to be valid. It was
accordingly submitted by the appellant that prescription could not have commenced
running before the judgment of Plasket J in October 2016. The appellant, it was
argued, could not have sued the respondent. Secondly, it was submitted by the
appellant that, as the respondent’s directors disputed that there was a claim against
the respondent for professional negligence, he could not have known that the
antenuptial contract was invalid. Thus, prescription only began to run once Plasket J
delivered his judgment on 18 October 2016 regarding the validity of the antenuptial
contract. Before then, he did not have the necessary facts upon which to formulate a
claim against the respondent.
[35] I reject the appellant’s contention that, prior to the declaration of invalidity of the
antenuptial contract by Plasket J in October 2016, he could not have had knowledge
of all the material facts he needed before he could institute legal proceedings against
the respondent. In order to succeed in an action for damages against an attorney for
professional negligence, a plaintiff is required to allege and prove: (a) a mandate given
to and accepted by the attorney; (b) a breach of the mandate; (c) negligence in the
sense that the attorney did not exercise the degree of skill, knowledge and diligence
2 Firestone South Africa (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A) at 304D-F; Newlands Surgical
Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd [2015] ZASCA 25; 2015 (4) SA 34 (SCA) para 10.
expected of an average practising attorney; (d) that he had suffered damages; and (e)
that damages were within the contemplation of the parties when the mandate was
extended. In this case there can be little dispute about (a), (b), (c) and (e). As to (d),
the appellant had been sued by his wife for half of his estate. He had approached the
respondent to defend the claim when they advised him that there was a problem with
the drafting of the antenuptial contract. It was manifest at that stage that he had
suffered damages as a result of the error.
[36] Section 12 of the Act provides as follows:
‘(1)
Subject to the provisions of subsections (2), (3), and (4), prescription shall commence
to run as soon as the debt is due.
. . .
(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.’
[37] As I have said, the appellant had acquired knowledge of all necessary facts on
which to sue the respondent on 9 May 2014, when he attended a consultation at the
respondent’s offices. Thereafter the appellant was given his divorce file and went to
see another attorney on the same day. The discussion that took place at the meeting
of 9 May 2014, was confirmed in a letter addressed by Mr Kretzmann to the appellant
on 12 May 2014. The letter reads:
‘Dear Bruce,
McMILLAN DIVORCE
1.
I refer to our meeting on Friday 9 May 2014.
2.
The Antenuptial Contract seems to contain an error and mistake which may be
attributable to the drafter thereof and notary public (Nico Schultz and Chris Kay) both
of whom were in the employ of Bate Chubb & Dickson Inc. at the time. Without any
admission of liability or negligence, we have informed you that this may lead to a claim
against our firm for which you should seek independent advice. I confirm that in the
circumstances we need to withdraw from representing you any further.
3.
In accord, we have now filed a Notice of Withdrawal of Acting (attached). Your new
attorneys should file a Notice of Acting as soon as possible.
4.
We wish you well.’
[38] The period of prescription begins to run against a creditor when the creditor has
the minimum facts which are necessary to institute action.3 As this Court recently held
in Fluxmans Incorporated v Levenson:4
‘Knowledge that the relevant agreement did not comply with the provisions of the Act is not a
fact which the respondent needed to acquire to complete a cause of action and was therefore
not relevant to the running of prescription. This Court stated in Gore NO para 17 that the period
of prescription begins to run against the creditor when it has minimum facts that are necessary
to institute action. The running of prescription is not postponed until it becomes aware of the
full extent of its rights nor until it has evidence that would prove a case “comfortably”. The
“fact” on which the respondent relies for the contention that the period of prescription began
to run in February 2014, is knowledge about the legal status of the agreement, which is
irrelevant to the commencement of prescription. It may be that before February 2014 the
respondent did not appreciate the legal consequences which flowed from the facts, but his
failure to do so did not delay the date on which the prescription began to run. Knowledge of
invalidity of the contingency fee agreement or knowledge of its non-compliance with the
provision of the Act is one and the same thing otherwise stated or expressed differently. That
the contingency fees agreements such as the present one, which do not comply with the Act,
are invalid is a legal position that obtained since the decision of this court in Price Waterhouse
Coopers Inc and is therefore not a fact which the respondent had to establish in order to
complete his cause of action. Section 12(3) of the Prescription Act requires knowledge only of
the material facts from which the prescriptive period begins to run – it does not require
knowledge of the legal conclusion (that the known facts constitute invalidity) (Claasen v Bester
[2011] ZASCA 197; 2012 (2) SA 404 (SCA).’ (Emphasis added.) (Footnote omitted.)
[39] Section 12 requires knowledge only of the material facts from which the
prescriptive period begins to run ─ it does not require knowledge of the legal
3 Minister of Finance and Others v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA); 2007 (1) SA
111 (SCA) para 17.
4 Fluxmans Incorporated v Levenson [2016] ZASCA 183; [2017] 1 All SA 313 (SCA); 2017 (2) SA 520
(SCA) para 42.
consequences.5 Accordingly, the appellant’s cause of action was complete as soon as
he was informed on 9 May 2014 of the potential conflict of interest arising from the fact
the respondent’s directors may have drafted the antenuptial contract incorrectly. There
is no reason in logic or in law, why he could not successfully have joined the
respondent as a third party in the divorce proceedings at that stage, claiming payment
from it of any sum which he may be ordered to pay to his former wife as a result of the
respondent’s negligence.
[40] The appellant’s second contention that, due to the respondent’s directors’
failure to concede liability, he could not have had salient facts upon which to formulate
a claim against the respondent until such time as the high court pronounced pertinently
on the validity of the antenuptial contract in October 2016, is also rejected. The
Constitutional Court in Links6 held that it is not necessary for a party relying on
prescription to accept liability.
[41] In conclusion, the appeal must be dismissed. The court a quo correctly found
that the appellant’s claim, which he instituted on 13 October 2017, had become
prescribed. He acquired knowledge of all the material facts on which to institute his
claim against the respondent on 9 or 12 May 2014. Consequently, prescription began
to run on 9 or 12 May 2014 when the appellant was informed that there was a problem
with the antenuptial contract, arising from the perceived conflict between the
provisions of clause 4 and clause 5. That is the date when he acquired knowledge of
all material facts on which to institute a claim for damages against the respondent.
Prescription did not commence to run on 18 October 2016 when Plasket J delivered
his judgment on the invalidity of the antenuptial contract. It may be that the appellant
had not appreciated the legal consequences flowing from the facts, but his failure to
do so did not delay the date prescription commenced to run. Similarly, the
respondent’s failure to concede liability did not delay the date prescription began to
run. In light of the conclusion I have reached on the prescription point, which is
5 Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning and Local
Government, Gauteng [2009] ZASCA 25; 2009 (3) SA 577 (SCA); [2009] 3 All SA 475 (SCA) para 37.
6 Links v Member of the Executive Council, Department of Health, Northern Cape Province [2016]
ZACC 10; 2016 (5) BCLR 656 (CC); 2016 (4) SA 414 (CC) para 42.
dispositive of the appeal, it is unnecessary to consider the further issues raised in the
separation order.
[42] As regards the issue of costs, the respondent sought costs of two counsel to
be awarded. In my view, the matter did not deserve the services of two counsel. The
issue for determination was a narrow one, which, despite its importance, was not
complex. In the circumstances, costs of only one counsel will be awarded.
[43] In the result, the appeal is dismissed with costs.
_________________
Zondi JA
Judge of Appeal
Appearances:
For appellant:
S H Cole
Instructed by:
Cooper Conroy Bell & Richards Inc, East London
Webbers Attorneys, Bloemfontein
For respondent:
E A S Ford SC (with him J J Nepgen)
Instructed by:
Joubert, Galpin & Searle Inc, Port Elizabeth
c/o Bate Chubb & Dickson Inc, East London
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:
15 April 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and
does not form part of the judgments of the Supreme Court of Appeal
McMillan v Bate Chubb & Dickson Incorporated (299/2020) [2021] ZASCA 45 (15 April 2021)
The Supreme Court of Appeal (SCA) today dismissed with costs an appeal brought by Mr
Bruce Gordon McMillan (Mr McMillan) against Bate Chubb & Dickson Incorporated and upheld
the decision of the Eastern Cape Division of the High Court, East London (the high court).
The issue before the SCA was whether, as at the time of service of the summons on 13
October 2017, in respect of an action instituted by Mr McMillan against the respondent, a law
firm, for damages for breach of an oral mandate, the appellant’s claim had become prescribed.
During or about November 1998, and at East London, the appellant and the respondent
entered into an oral agreement in terms of which the appellant gave the respondent an oral
mandate to prepare an antenuptial contract for the purposes of regulating the financial affairs
of the intended marriage between the appellant and one Rosemary Lois Jannaway, the
appellant’s former wife. On 13 October 2017, the appellant instituted action in the high court
against the respondent for damages for breach of the oral mandate. The appellant alleged
that the respondent failed to prepare the antenuptial contract in accordance with their
instructions. He averred that the respondent in fact drew up an antenuptial contract, which
was, in a later divorce action, declared to be void ab initio. The respondent alleged that
prescription started running on 9 or 12 May 2014, when the respondent advised the appellant
to consult a different attorney, as he had a potential claim against the respondent, and not on
18 October 2016, when the divorce court declared that the antenuptial contract was invalid,
as contended by the appellant. The respondent claimed that the three-year prescription period
ended on 12 May 2017. On that premise, by the time the summons was served on the
respondent, his claim had prescribed.
The SCA held that the appellant’s claim had become prescribed. This conclusion was based
on the finding that he acquired knowledge of all the material facts on which to institute his
claim against the respondent on 9 or 12 May 2014. Consequently, prescription began to run
on 9 or 12 May 2014 when the appellant was informed that there was a problem with the
antenuptial contract, which arose from the perceived conflict between the provisions of clause
4 and clause 5. The SCA held further that it may have been that the appellant had not
appreciated the legal consequences flowing from the facts, but his failure to do so did not
delay the date prescription commenced to run. Similarly, the respondent’s failure to concede
liability did not delay the date prescription began to run. The SCA found that, in the light of the
conclusion on the prescription point, which was dispositive of the appeal, it was unnecessary
to consider further issues raised in the separation order.
~~~~ends~~~~
|
1495
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20626/14
In the matter between:
THE SALEM PARTY CLUB
FIRST APPELLANT
THE LINDALE TRUST
SECOND APPELLANT
HENDRIK JOHANNES NEL
THIRD APPELLANT
CUAN KING
FOURTH APPELLANT
JOHATHAN GOTTFRIED STANDER
FIFTH APPELLANTS
& MARIA PAULINA STANDER
DAVID CRAWFORD GOWANS
SIXTH APPELLANT
WILLEM CHRISTIAAN LODEWYK SCHOONBEE
SEVENTH APPELLANT
EZRA CHRISTIAAN SCHOONBEE
EIGHTH APPELLANT
KIKUYU LODGE
NINTH APPELLANT
JONATHAN FLETCHER HARRIS
TENTH APPELLANT
PATRICK GRANT BRADFIELD
ELEVENTH APPELLANT
E S A LODGES (PTY) LTD
TWELFTH APPELLANT
SEVEN SUMMITS PROPERTY
THIRTEENTH APPELLANT
INVESTMENTS (PTY) LTD
KENNETH JAMES SEYMOUR RICHARDSON
FOURTEENTH APPELLANT
VARYLYNN SHARRON HILL
FIFTEENTH APPELLANT
PHILLIP GEOFFREY AMM
SIXTEENTH APPELLANT
PATRICK GRANT BRADFIELD
SEVENTEENTH APPELLANT
and
THE SALEM COMMUNITY
FIRST RESPONDENT
THE GOVERNMENT OF THE REPUBLIC
SECOND RESPONDENT
OF SOUTH AFRICA
THE MINISTER OF RURAL DEVELOPMENT
THIRD RESPONDENT
AND LAND REFORM
THE DEPARTMENT OF RURAL DEVELOPMENT
FOURTH RESPONDENT
AND LAND REFORM
THE CHIEF DIRECTOR OF THE DEPARTMENT
FIFTH RESPONDENT
OF LAND AFFAIRS
THE PROVINCIAL OFFICE OF THE DEPARTMENT
SIXTH RESPONDENT
OF RURAL DEVELOPMENT AND LAND REFORM
THE MAKANA MUNICIPALITY
SEVENTH RESPONDENT
THE REGISTRAR OF DEEDS
EIGHTH RESPONDENT
THE LAND CLAIMS COMMISSION EASTERN CAPE
NINTH RESPONDENT
Neutral Citation:
Salem Party Club v Salem Community (20626/14) [2016]
ZASCA 203 (13 December 2016)
Coram:
Cachalia, Seriti, Pillay, Mbha and Dambuza JJA
Heard:
19 February 2016
Delivered:
13 December 2016
Summary: Land claim to the Salem Commonage under Restitution of Land Rights
Act 22 of 1994 (the Act): whether requirements for restitution established: Hearsay
and expert historical evidence: proper approach to and admissibility of: approach to
evidence as decreed in the Act to be applied in a manner consistent with the spirit
and purpose of the Act.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Land Claims Court, Grahamstown (Sardiwalla AJ sitting as court of
first instance), judgment reported sub nom as Salem Community v Government of
the Republic of South Africa and others (Regional Land Claims Commission, Eastern
Cape as referring party) [2015] 2 All SA 58 (LCC):
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Cachalia JA (dissenting)
Table of Contents
Introduction ................................................................................................................ 4
Synopsis of the Evidence ......................................................................................... 11
Historical Background .............................................................................................. 13
The period 1780-1820 .......................................................................................... 13
The period 1820-1878 .......................................................................................... 20
The period 1878-1900 .......................................................................................... 27
The period 1900-1942 .......................................................................................... 31
Conclusions on the historical background ............................................................ 52
The Viva Voce Evidence .......................................................................................... 55
Mr Vincent Paul .................................................................................................... 55
Professor Martin Legassick .................................................................................. 63
Professor Hermann Giliomee ............................................................................... 72
Professor Legassick‟s Supplementary Response ................................................. 77
The claimants‟ evidence ....................................................................................... 78
The landowners‟ evidence .................................................................................... 92
The Proper Approach to the Evidence ................................................................... 115
The arguments raised by the Commission and the claimants regarding the nature
of this appeal ...................................................................................................... 116
The claims advanced by the Commission and the claimants ............................. 118
The applicable principles relating to the evaluation of evidence in this matter .... 124
Evaluation of the Evidence ..................................................................................... 128
Evaluation of the oral evidence ........................................................................... 128
Evaluation of the expert testimony ...................................................................... 138
Determination of the issues .................................................................................... 139
The Legal Principles Pertaining to Loss of Indigenous Title and Their Application 142
Were the forebears of the claimants a community? ............................................ 147
The nature and content of the rights in issue ...................................................... 153
Was there a dispossession? ............................................................................... 156
A racially discriminatory law or practice? ............................................................ 158
Conclusions ...................................................................................................... 1600
The Validity of the Lodgement ................................................................................ 162
Costs ...................................................................................................................... 164
The Second Judgment............................................................................................ 165
Judgment delay.................................................................................................. ..... 169
Second Judgment (Pillay and Dambuza JJA concurring Seriti and Mbha JJA)..... 171
Introduction
[1] This appeal, from the Land Claims Court (the LCC), concerns a dispute over
land rights in respect of a portion of land once known as the Salem Commonage. It
is situated some 20 km south of Grahamstown in the Eastern Cape, and measures
7 698 morgen in extent. It is properly described as: „Remainder of the farm Salem,
No. 498 and portions 1 to 3, 7, 8, 13 to 17, 19 to 33, 35, 36 and 38 of the farm Salem
No 498, district of Albany‟.
[2] The first appellant and 16 others – the affected landowners – appeal the
judgment of the LCC which had found that a „community‟ as defined in s 1 of the
Restitution of Land Rights Act 22 of 1994 (the Act) existed, and was dispossessed of
„a right in land‟ after June 1913 as a result of past racially discriminatory laws and
practices in terms of s 2 of the Act. This appeal is with leave of the LCC.
[3] The word „commonage‟ comes from England and describes the „condition of
land held in common, or subject to rights of common‟. The „right of common‟ usually
refers to „the right of pasturing animals on common land‟,1 but is not restricted to this
purpose. More specifically it denotes an „estate or property held in common‟.2
[4] The Commonage was part of a bigger piece of land allotted to one of several
groups of between 4000-5000 British settlers by the British Colonial Government in
the first half of the nineteenth century. They settled in different locations in the
Zuurveld, a part of which became the district of Albany, between the Bushmans and
1 The Oxford English Dictionary 2 ed (1989) at 568.
2 Ibid.
lower Fish Rivers, to the west and east respectively, and became known as the 1820
settlers.
[5] One of these groups was led by Mr Hezekiah Sephton. They settled in Salem
in the vicinity of the Assegaaibos River, and were known as the Salem Party or the
Salem Group. They established farms and used the Commonage for their common
benefit. Some of the appellants descend directly from the original settlers while
others bought their farms from the original settlers or their descendants. These farms
are now used for commercial farming. For present purposes it will be convenient to
refer to the settlers and their successors in title as the landowners.
[6] The first to ninth respondents (excluding the seventh and eighth respondents)
oppose this appeal, but only the Regional Land Claims Commission (the
Commission), and the Salem Community filed heads of argument. The community
comprising some 152 persons claim to be descendants and beneficiaries of Xhosa
speaking people, who it is alleged occupied the Commonage, but lost their rights to
this land when they were dispossessed. The nature of the alleged dispossession
shifted a number of times during the course of the proceedings, but at the time of the
lodgement of the claim, it was said to have occurred through an order of the Eastern
Districts Division of the Grahamstown Supreme Court), granted in 1940, subdividing
the Commonage between the landowners. I shall refer to this „community‟ as the
claimants.
[7] The claimants lodged their claim in 1998. The Commission appointed
Mr Vincent Paul as its project officer to investigate the claim in terms of s 12 of the
Act. He compiled a report as a result of which the Commission validated the claim.
The report was also the foundation of the Commission‟s referral of the claim to the
LCC under s 14(1) of the Act. In terms of s 14(2)(d) the Commission sought relief,
amongst others, for:
(i)
the rights of the claimants to be „upgraded to that of full ownership‟, and for
(ii)
full ownership rights to the Commonage to be restored to the claimants
through a legal entity that will be created for this purpose.
[8] It is implicit in the unusual form of relief sought by the Commission that, in its
view, the forebears of the claimants could not have had full ownership rights to the
Commonage. There could be no other reason why the Commission asked the LCC
to „upgrade‟ the rights of the claimants to full ownership rights. Nonetheless, as is
evident from the pleadings set out below, full ownership rights are claimed, an issue
to which I shall return.
[9] The referral document, the claimants‟ statement of claim (which admits all the
averments in the referral document), and the further particulars furnished in
response to the landowners‟ request for further particulars, constitute the material
allegations upon which the claim is founded. The essential averments are difficult to
follow and in some instances contradictory. But, as far as I can glean, they are the
following:
(i)
The claimants are a „community‟ of black families whose forebears
traditionally occupied the entire Commonage from the 1800s.
(ii)
They acquired „ownership rights, residential rights, grazing rights, and the
right to use land for agricultural purposes, access to firewood, burial sites and the
use of land as Commonage for the entire community‟;
(iii)
In addition to the rights mentioned above, the community also occupied the
Commonage beneficially for more than ten years.
(iv)
The rights were acquired from a Chief Dayile – the last chief of the community
– and were exercised in accordance with shared rules of usage under traditional law
and the so-called location rules.
(v)
The Natives Land Act 27 of 1913 was passed to prohibit blacks from owning
land outside of scheduled areas, and the Commonage was not a scheduled area.
(vi)
In 1926 the community, which then consisted of several hundred, was
„herded‟ into a location on the Commonage and placed under the control of a „native
superintendent‟.
(vii)
The
subdivision
of
the
Commonage
was
facilitated
through
the
implementation of s 49 of Ordinance 10 of 1921 (erroneously referred to as s 47) and
the Natives (Urban Areas) Act 21 of 1923, which entitled the Native Commissioner to
restrict and control the rights of the black community;
(viii)
In 1940 the Village Management Board, which represented the landowners,
who owned the adjoining farms in the village of Salem, applied to the Supreme Court
in Grahamstown to subdivide the Commonage and have it transferred into the
names of the individual landowners.
(ix)
The court granted the application against the background of the racially
discriminatory legislation then in existence, which formed the basis of the
dispossession of the community‟s rights over the Commonage. Most of the land was
bought by white farmers under the Native Trust and Land Act 18 of 1936.
(x)
Pursuant thereto the location, which was then occupied by 500 members, was
disestablished in 1941.
(xi)
The dispossession of the community‟s rights began in 1947 and continued
until the 1980s.
[10] The landowners submitted a comprehensive response to the referral
document in which they set out the history of what occurred on the Commonage
from 1820, when the settlers arrived in Salem. It will become apparent from the way
the proceedings unfolded in the LCC, and from its findings, that a proper
understanding of this history is necessary. I discuss this later.
[11] For now, it is sufficient to set out the bare bones of their defence: When the
Sephton Party of the 1820 settlers arrived in Salem, there were no other people,
black or white, occupying this land. The Colonial Government granted the land,
which included the Commonage, to these settlers. The settlers were given allotments
of erven on which they built their homes and cultivated their crops. The Commonage
was strictly limited to the grazing of their livestock. No cultivation of crops or
residential accommodation was permitted. The landowners zealously protected their
collective interest in the Commonage. The effect of this was that each settler owned
his allotted erven and an undivided share of the Commonage.
[12] In time the landowners individually began to employ labourers. And later,
some of those labourers and their families were permitted to occupy a small portion
of the Commonage so long as they remained in employment. In return they paid a
rental to the Salem Village Management Board (the Board), a body the landowners
created to manage their collective interest in the Commonage. In some instances the
owners permitted their employees to graze their own cattle as part of the owner‟s
quota of grazing cattle.
[13] The employees, therefore, never acquired any right in land over the
Commonage, whether traditional or otherwise. Nor did they constitute a „community‟
who had any right to this land.
[14] The landowners sought a court order to subdivide the Commonage in 1940
because of disputes between themselves over its usage. The order was not sought
or granted as a result of any racially discriminatory law or practice. Its effect was to
end the joint ownership of the Commonage and to vest individual ownership of part
of the Commonage in each landowner.
Synopsis of the Evidence
[15] The following witnesses testified on behalf the Commission:
(i)
Mr Vincent Quba Paul, whose investigation and report formed the basis of the
Commission‟s referral to the LCC, was called to explain the grounds for validating
the claim.
(ii)
Professor Martin Legassick,3 a historian, prepared two reports, and testified
that the claimants: (a) had „indigenous rights as descendants of Xhosa who occupied
the south-eastern Zuurveld before it was colonised by European settlers‟, and
(b) „independently of their claim to indigenous rights‟, had built up „rights to land and
cultivation‟ because their forebears occupied a location called „Salem commonage‟
from 1879 to1884 until they were dispossessed and evicted as a result of a racially
discriminatory practice in the 1940s.
(iii)
Mr Garth Chandler, a land surveyor, prepared a report for the Commission, as
did Mr Adie Gerber on behalf of the landowners. Whilst Chandler testified, Gerber
did not. They prepared a joint minute, after examining aerial photographs showing
the locations of all the traditional dwellings in the greater Salem area in 1942. They
observed that the traditional dwellings on the Commonage had pathways connecting
them to commercial farms indicating that that their occupants may have been
farmworkers.
[16] The claimants called two witnesses. The first, Mr Msele Nondzube, is the
claimants‟ primary witness and it is largely on his evidence that their case rests.
3 Professor Legassick, sadly, died in March 2016.
Importantly, his was the only testimony to support the averment that the claimants
derived their rights in the Commonage through Chief Dayile. The second witness,
Mr Ndoyityile Ngqiyaza, testified that he was born on the Commonage where his
father cut firewood for sale and also ploughed the land. After the land was
demarcated following the court order in 1940 his father was compelled to work for
one of the farmers.
[17] On behalf of the landowners, Professor Hermann Giliomee, also an historian,
submitted two reports. In his testimony he confirmed his conclusions, which were
diametrically opposed to Professor Legassick‟s, that there were no grounds for the
claimants to support the claims to indigenous title or that they had „built up‟ rights as
a community in the latter part of the nineteenth century.
[18] The landowners called six other witnesses to refute the claimants‟ case that
an independent community of black people lived on the Commonage with land
rights. They were Messrs David Mullins, Spencer Hill, Cuan King, Albert Van
Rensburg and also Mrs Alice Bradfield and Mrs Ethel Page. Their evidence was to
the effect that Africans, who resided on the Commonage, did so as employees of the
landowners, and not as an independent community, who determined their own rules
for the allocation and use of land rights.
[19] Material on the history of the period in issue, including historical texts upon
which Professors Legassick and Giliomee relied to support their views, forms part of
the record. The parties also prepared a core bundle of documents that were used at
the trial without proof of their authenticity. The historical material and documents
provide the factual and contextual background to the disputes in this matter. Where I
have relied on other historical material, this is clearly referenced.
Historical Background
[20] Although it was not the claimants‟ pleaded case, the LCC found that „the
Xhosa‟ originally occupied the Zuurveld, including the Commonage, in the eighteenth
century and acquired indigenous rights to this land then. The claimants, it found,
regarded themselves to be an integral part of those original occupants and thus
retained their indigenous rights.4 Consequently, it is necessary to begin this potted
historical narrative in the latter part of the eighteenth century.
The period 1780-1820
[21] From 1652 until 1795, the Dutch were the colonial masters of the Cape,
including, eventually the area with which this case is concerned. In 1795, Britain took
control of the Cape but returned it to the Dutch in 1803, only to occupy it again in
1806. The Cape remained a British colony until 1910 when the Union of South Africa
was established by the South Africa Act of 1909.5
4 Salem Community v Government of the Republic of South Africa & others (Regional Land Claims
Commission, Eastern Cape as referring party) [2015] 2 All SA 58 (LCC) paras 114 and 148.
5 T R H Davenport and Christopher Saunders South Africa: A Modern History 5 ed (2000) at p 36.
[22] From about 1780 the Cape Colony and the Xhosa had conflicting claims to
the area between the Great Fish River to the east and the Sundays River to the
west. The area included the Zuurveld where the Gqunukhwebe, a Xhosa tribe, was
firmly established since about 1750, first under Tshaka and then under his son
Chungwa.6 Chungwa‟s behaviour, like those of other chiefs further to the east, was
motivated by a „desire to maintain his autonomy while maintaining his herds‟.7
6 J B Peires The House of Phalo: A History of the Xhosa People in the Days of their Independence
(1982) at 59-65; Area depicted in map showing the shifting frontiers 1779-1848, reproduced in
R Lubke & I de Moor (ed) Field Guide to the Eastern & Southern Cape Coasts (1998) at 80.
7 J B Peires The House of Phalo (1982) at 58.
[23] Later, Dutch farmers (Boers) began moving into the area and occupied loan
farms for which they paid a rental to the colonial authorities. This, they claimed, gave
them rights to this land. By about 1790, there were 148 Boer families (about 1000
people) living on these farms.8 There was on-going friction between the Xhosa and
Boers regarding grazing, land possession and cattle raiding. Neither Xhosa nor Boer,
it seems, were wholly innocent or wholly culpable.9
[24] Between 1779 and 1799 three Frontier Wars were fought between Boers and
the Xhosa without any permanent resolution. 10
[25] In 1793, Ndlambe, the Regent for the Xhosa nation, had sided with a Boer
commando led by Barend Lindeque to drive all the Xhosa across the Fish River. In
1797, Ngqika became Paramount Chief of the Xhosa. Both Ngqika and Ndlambe
were aware that the Cape Colony considered the Fish River to be the boundary
dividing it from Xhosa territory further to the east. Ngqika respected that boundary
and undertook to prevent his followers from crossing it. There is also evidence of
Ndlambe having urged minor chiefs to withdraw across the Fish River to maintain
peace with the Colony. Ndlambe would later rebel against Ngqika, who had moved
west of the Fish River, and claim part of the Zuurveld.11
8 Jan C Visagie Bevolkingsgroepe en Aansprake op Grond in die Suurveld (2012) at 8, citing G M
Theal (ed) Records of the Cape Colony Vol II (1897) at 393, which contains an entry in a journal by
Bresler dated 18/2/1799..
9 See eg J B Peires The House of Phalo (1982) at 56-58.
10 Ibid.
11 H Giliomee Supplementary Expert Report.
[26] By about 1799 the Zuurveld Xhosa were occupying the area along the banks
of the Sundays and Bushmans Rivers.12 But there is no indication in the historical
material placed before us – other than in the evidence of Nondzube – of any Xhosa
occupation of the area that is the subject of the present dispute. The papers,
however, show that one of the loan farms occupied by a Boer, Mr Barend Bouer in
1785, was on land in the vicinity of where the Sephton Party later settled. It seems
that Bouer had moved upstream along the Assegaaibos River, before their arrival. 13
[27] In July 1786 the boundaries of the Graaff-Reinet District were proclaimed.14
The eastern boundary of the new district was the same as the eastern frontier of the
Cape Colony, which stretched from the coast up to the Great Fish River, to the
confluence of the Fish River and the Baviaans River, and across the Winterberg to
the Tarka River. This included the Zuurveld, all of which was now part of the Dutch
Colony.15
[28] In 1806 the British annexed the Dutch Colony and the area it encompassed.
They thus acquired sovereignty over the area, including the Zuurveld. But this act of
12 Ben Maclennan A Proper Degree of Terror: John Graham and the Cape’s Eastern Frontier (1986)
at 46-47.
13 A E Makin The 1820 Settlers of Salem (Hezekia Sephton’s Party) (1971) at 34-35.
14 Hermann Giliomee „The Eastern Frontier, 1770-1812‟ in Richard Elphick and Hermann Giliomee
(eds) The Shaping of South African Society 1652-1840 (1989) at 422-423.
15 J S Bergh and J C Visagie The Eastern Cape Frontier Zone 1660-1980: A cartographic guide for
historical research (1985) at 10-11.
annexation did not, in and of itself, extinguish any of the land rights the Xhosa or
Boer inhabitants may have had at the time.16
[29] It is important to be cognisant that strife between Xhosa and Boer was not the
only conflict in the Zuurveld.17 The Boers were dissatisfied with various aspects of
British control over the territory. This dissatisfaction resulted in two Boer rebellions in
1799 and 1801, and one later in 1815 at Slagters Nek, on the Baviaans River.18 And
among the Xhosa too, there were disputes over land. Chungwa, for example,
clashed with Ndlambe, who had taken over his old grazing lands along the
Bushmans River.19 There is, however, no evidence of these disputes extending to
Salem. Chungwa‟s name is today associated with „Conga‟s Kraal‟, where he lived,
and is situated about 50 to 60 kilometres from Salem.20
[30] In 1811 the Cape Colony, under whose jurisdiction the Zuurveld now fell,
decided to end the perpetual conflict there. To this end it implemented a frontier
policy aimed at establishing a fixed and regulated frontier between black and white.21
16 Richtersveld Community & others v Alexkor Ltd & another [2003] ZASCA 14; 2003 (6) SA 104
(SCA) para 49. The principle underlying the SCA‟s finding in this regard was confirmed by the
Constitutional Court in Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC
18; 2004 (5) SA 460 (CC) para 69.
17 B Maclennan A Proper Degree of Terror (1986) at 639.
18 R Lubke & I de Moor (ed) Field Guide to the Eastern & Southern Cape Coasts (1998) at 434.
19 J B Peires The House of Phalo (1982) at 57.
20 H Giliomee‟s Supplementary Expert Report.
21 R Lubke & I de Moor (ed) Field Guide to the Eastern & Southern Cape Coasts (1998) at 435.
[31] Lieutenant Colonel Graham was appointed to perform this task, which he
undertook with concentrated brutality. Supported by an army of British troops,
frontier farmers and a regiment that included Khoikhoi soldiers, the entire Zuurveld
was cleared of all Xhosa presence in what became known as the Fourth Frontier
War of 1811-1812.22 Chungwa was killed. An estimated 20 000 Xhosa, were driven
east, across the Fish River. A few hundred were killed, and many cattle seized in the
operation. The Fish River was fortified to keep the Xhosa out and it became the
boundary between the Cape Colony to the west and the Xhosa to the east. With the
expulsion of the Xhosa by force of arms they were dispossessed of the land they had
occupied for about 60 years. As I explain below, this expulsion would have
terminated whatever „right in land‟ they may have had.23 The policy of racial
separation had now begun in earnest.24
[32] In 1817 there was a meeting called by Governor Lord Charles Somerset at
which Ngqika and Ndlambe were present. Somerset‟s purpose was to „renew the
friendship between the Colony and the Xhosa‟, but it seems that the main objective
was to stop „the thieving of livestock and the murder of colonists that sometimes
accompanied it‟. Ngqika made no claim to land to the west of the Fish River. But
while acknowledging his authority he pointed out that he had no power over other
chiefs. And an impossible burden would be placed on him if he were to be held
22 J B Peires The House of Phalo (1982) at 65.
23 Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC 18; 2004 (5) SA 460
(CC) para 70.
24 Noël Mostert Frontiers – The Epic of South Africa’s Creation and the Tragedy of the Xhosa People
(1993) at 389-390.
accountable for the actions of others. He, however, undertook to do his best with his
own people.25
[33] In 1819 a new Frontier War – the Fifth – began. It appears to have been
triggered by the unauthorised action of Lieutenant Colonel Brereton, the newly
installed military commander at Grahamstown. He led a commando to the east and
raided 23 000 cattle from the Xhosa. They retaliated, determined to recover their
cattle, by invading the colony and besieging Grahamstown in 1819. But they were
repelled, and driven out, this time across the Keiskamma River, further to the east of
the Fish River. The area between these rivers became „ceded‟ or „neutral‟ territory,
which neither Xhosa nor white colonists were allowed to occupy.26 Somerset secured
this arrangement with Ngqika, the paramount chief of all Xhosa.27
[34] It was the policy of the then Colonial Government under Somerset to create a
buffer area between Xhosa and the white inhabitants which included the Zuurveld, in
which British settlers would soon settle. The „ceded‟ territory would form a part of this
buffer.
[35] The plan to populate the Eastern Cape, and particularly the Zuurveld, with
British settlers was motivated by the need to strengthen the eastern boundary
25 Ibid at 449- 450.
26 Ibid at 467-507.
27 J C Visagie Bevolkingsgroepe en Aansprake op Grond in die Suurveld (2012) at 14, citing G M
Theal (ed) Records of the Cape Colony XII (Intelligence from the Camp of Gwangwa), which contains
a detailed record dated 15/10/1819 of the meeting between Somerset and Ngqika, at 342-345.
separating the colonists from the Xhosa. This involved establishing a denser
agricultural population of whites as there were insufficient numbers of Boers there.
And with Britain beset by its own problems of poverty and unemployment, there were
enough people willing to travel to the southern tip of Africa to start a new life here. In
total, some 54 settler parties, numbering between 4000-5000 people were settled all
over the Zuurveld.28 By the end of July 1820, the Zuurveld, now the district of Albany
with its headquarters in Grahamstown established in 1812, and depopulated of all
Xhosa presence, bore no resemblance to what it had looked like a decade earlier.
The period 1820-1878
[36] The Sephton Party settled on the piece of land, measuring 5914 morgen, or
11828 acres in extent allocated to them, which they named Salem.29 This included
the Commonage. They soon erected a civic centre from the dilapidated reed and
wattle building Bouer had left behind. In August 1820, a Sunday school was started.
28 Ibid at 15-16.
29 See the inserted map showing the original location of the settler parties of the Albany Settlement,
1820, reproduced in R Lubke & I de Moor (ed) Field Guide to the Eastern & Southern Cape Coasts
(1998) at 436. The Sephton Party is at number 43 on the key, and Salem is the settlement located
roughly in the centre of the map.
[37] The settlers soon took control of the Commonage. A minute of a meeting of
the Sephton settlers in 1824 recorded that a total of 74 shares or subdivisions were
provided giving each subdivision rights over 160 acres of the Commonage. Land
was allotted to the Minister of the Church for the erection of a chapel, a burial ground
and a church. Land was also made available for a school. The right of pasturage was
limited to ten head of cattle and ten sheep per 100 acres and a further five sheep for
every head of cattle withdrawn, and with two steers (until two years old) reckoned as
one head of cattle. The wood, reeds and thatch on the Commonage not included in
homesteads or enclosures were to be common to all for home consumption and
were not to be sold without the consent of the party of settlers. If so disposed the
profits or produce was for the general benefit of the settlers. Natural springs were
open for the use of all for culinary purposes and had to be accessible to all. Provision
was also made for roads. During November 1826 the colonial authority surveyed the
land allotted to the settlers, thus demarcating the boundaries of the settlement.
[38] Other than reports of cattle theft by „natives from across the border‟ there was
no contact between settlers and Xhosa-speaking people in the early years.30 The
apparent tranquillity of the Albany District was disturbed in December 1834 with
news of huge Xhosa armies sweeping into the colony, provoking panic amongst the
settlers. Grahamstown, and the nearby villages of Bathurst and Salem became
„hastily improvised laagers‟. The villagers were inadequately armed and ill-
prepared.31 The Sixth Frontier War had begun.
[39] In Bathurst the invaders captured cattle, and the villagers fled in a convoy. In
Salem it was reported that one of the settlers persuaded the raiders to leave them be
in return for food provisions. The Salem settlers were not harmed, and the attackers
moved on. No part of the Albany District was occupied. The war finally ended some
nine months later with the Xhosa again suffering heavier casualties than the British.32
30 A Makin The 1820 Settlers of Salem (1971) at 43.
31 N Mostert Frontiers (1992) at 663-673.
32 Ibid at 676-779.
[40] Mostert observes that the war hardened the attitudes of the settlers and
„hastened the evolution of what is South Africa‟s modern society and the aggravated
racism of the British settlers was to be a significant factor in it, with repercussions
throughout the nineteenth century and into the twentieth century‟.33 In all likelihood
the Salem settlers would also have had this outlook, which would have extended to
the Africans with whom they would later enter into master-servant relationships
towards the end of the nineteenth century.
[41] On 15 December 1836 the first portion of the Commonage was formally
granted to the settlers on a system known as perpetual quitrent, while the second
portion was granted to them on 23 November 1847, on the same terms. The second
portion was granted in terms of the provisions of Ordinance 15 of 1844. It provided
for extensions of land grants to be registered in the Land Registers of the Colony,
thus giving the settlers registered title to the erven and shares in the Commonage.
[42] Such land grants were hereditary, and owners had the right to sell the erven
with their share of the Commonage. The purpose was to give security of tenure to
the farmers and to encourage them to develop the farms. Farms were marked by
beacons and registered as diagrams. Rents were adjusted according the size and
quality of the land.34
33 Ibid at 778.
34 N Mostert Frontiers (1992) at 399.
[43] In 1848, the security of tenure of the Salem settlers was further entrenched
when their quitrent rights were converted into freehold rights after all rental payments
had been redeemed. The allotment of the Commonage to the Salem settlers entitled
each owner of an erf to an undivided share in the Commonage. Freehold title
therefore gave the settlers permanent and absolute tenure over the land with
freedom to dispose of their erven and shares in the Commonage, and is a pivotal
factor in the resolution of the issues in this appeal.
[44] Almost 100 years later, in 1940, the Grahamstown Supreme Court said that
the grant contemplated the permanent settlement of settlers at Salem. It was of
grazing land to the Salem Party of erf-holders to be held communally, and if a person
ceased to be an erf-holder, he ceased to have any right in the Commonage.
[45] The settlers formed a committee to manage their collective interest in the
Commonage (the Committee).35 Minutes of meetings reflect constant supervision of
its usage. Thus the Committee took steps to ensure that the owners of the
homesteads did not erect buildings on the Commonage (1856), ensured that
whoever took wood for their private use was limited to the quantity and levied a cost
per load (1861) and stopped cattle grazing by inhabitants of a nearby mission
station, Farmerfield (1862). The Committee also formulated regulations „for the better
management of the Salem lands and the Commonage‟. The proposed regulations
included determining the numbers of livestock the owners would be entitled to graze
35 See eg A E Makin The 1820 Settlers of Salem (1971) at 62-63.
(1866). The Committee also leased a small portion of the Commonage measuring
two acres for a period of five years (1887).
[46] The settlers used the Commonage for other collective purposes as well. In
1832 a Church was built. A cricket ground was established in 1844, and is still used
today. Much later, possibly in 1894, a community hall was built. A cattle-dipping tank
was also built in 1912. All of these events took place before 1913, which is the cut-off
date for claims under the Act, and undermines the claim by the claimants to rights
over the entire Commonage.
[47] During this period three more Frontier Wars – the Seventh in 1846, the Eighth
in 1850, and the Ninth in 1877 – were fought. None of these wars concerned land
occupied by the 1820 settlers. The Seventh took place largely in the Amathole
Mountains, far from the disputed area in this case, and there is no evidence that any
of the fighting occurred in Salem or its surrounds. The Eighth was largely in British
Kaffraria – the area between the Keiskamma and Great Kei Rivers – east of the
Albany District and the „ceded‟ territory. There was, however, some conflict within the
„ceded‟ territory, but there is no evidence that it crossed over the Great Fish River
and affected any part of the Zuurveld, including Salem. The Ninth and final Frontier
War resulted in a severe defeat for the Xhosa after which their leaders fled into the
Amathole Mountains, and further north.36 After those defeats the Xhosa were made
to surrender even more territory to the British. So ended, Mostert observes, 100
36 N Mostert Frontiers (1992) at 1249-1250. The LCC mistakenly believed that there were ten wars
(see Salem Community (LCC) para 137).
years of war between the Xhosa and the Cape Colony, and led to the military fall and
subjugation of the Xhosa nation.37
[48] From the time of the arrival of the 1820 settlers until 1878, almost 60 years
later, there is no evidence of any significant African presence in Salem. This is hardly
surprising as the policy of the Colonial Government was to restrict their entry into the
area under its control except for the purpose of obtaining employment. This policy
was the precursor to the „pass laws‟ introduced during the Apartheid era.
[49] The policy to restrict African entry into the Colony except to obtain
employment was explicitly stated in the ignominiously named Kafir Employment Act
27 of 1857. This law was passed in the aftermath of the tragic events of 1856 -1857
– which the LCC erroneously thought was a Frontier War – when the Xhosa heeded
the delusion of prophetess Nongqawuse to kill their cattle in the belief that the British
settlers would be driven into the sea, and a new prosperity would arise. Huge
numbers of Xhosa people, who heeded her call, died of starvation while many others
were forced to seek employment in the Cape Colony.38
[50] By the late 1860s there were more than 500 Africans living with 985 cattle on
21 farms at Assegaai Bush, approximately 40 km from Salem, while at Kierage there
37 Ibid at 1254; South African History Online Frontier or Xhosa Wars 1779-1879: Colonisation and
Land
Supremacy,
available
at:
http://v1.sahistory.org.za/pages/governence-
projects/frontier_wars/frontier_wars.htm (accessed 7 June 2016).
38 See M Legassick‟s Expert Report and the authorities therein cited.
were some 2 500 living on 39 farms. Many would have been labour-tenants or rent
paying tenants, while sharecropping between Africans and farmers, who had run into
financial difficulties, was also prevalent.39 There is no evidence of Africans living
there in any other capacity.
The period 1878-1900
[51] Subsequent developments in Salem and on the Commonage in particular,
must therefore be considered against the background of the Colonial Government‟s
policy as it applied to Africans at the time.
[52] As Africans began to seek employment and live in areas now under the
jurisdiction of the Colonial Government, laws were passed to regulate this
development and to prevent illegal squatting. The Native Locations Act 6 of 1876
and its amendment by Act 8 of 1878 were the initial steps in this direction. They
applied to the dwellings of „Natives‟, defined as „Kafirs [Xhosa], Fingoes, Basutos,
Hottentots, Bushmen and the like‟, who were not in the employ of the owner of the
private property on which the dwellings were erected. An owner of private property
could establish a „native location‟ – defined as exceeding five huts within one square
mile – only with the consent of the Governor. An inspector of native locations was to
be appointed to „supervise and manage‟ such locations. The inspector‟s functions
included collection of a hut tax from each occupier in the location. Any livestock in
the location had to be registered, and if not, was liable to be impounded.
39 See H Giliomee‟s Supplementary Expert Report and the authority therein cited.
[53] As the influx of and the need for African labour increased these laws were
repealed and replaced by the Native Locations Act 37 of 1884, which provided for
the better supervision of these locations and the more efficient collection of hut
taxes. The definition of a „Native Location‟ was relaxed to cover any number of
dwellings on any farm occupied by three or more male adults, instead of five
dwellings, as its predecessors had provided for. The Governor‟s consent was still
required for the establishment of a „Native Location‟.
[54] This statute, therefore, restricted the occupation of land by Africans on private
property, which included common land such as the Commonage in issue in this
case. It is apparent that any rights the occupants derived from residing in a „Native
Location‟ – probably as tenants – could only be acquired through agreement with the
owner of the private property on which the location had been established. Some of
these tenants may have been what historian Professor Colin Bundy has referred to
as „squatter-peasants‟, who had entered into leases with farmers to farm a plot of
land so as to avoid wage labour.40
[55] The Village Management Boards Act 29 of 1881 provided for the
establishment of management boards to regulate villages and communities such as
in Salem. Section 19 provided for:
„the management and protection of all common pasture lands and the preservation of all
vegetation thereon, and the fixing of the number and description of any live-stock any
40 See H Giliomee‟s Supplementary Expert Report, citing C Bundy The Emergence and Decline of the
South African Peasantry (1979) at 134.
inhabitant shall be allowed to keep and depasture thereon . . . or . . . the impounding of all
animals trespassing on such common lands‟.
Pursuant to this Act the Salem Village Management Board (the Board) was
established to ensure proper control over the Commonage. In effect it continued to
function as its predecessor, the Committee, had done. It is beyond dispute that by
virtue of the power vested in the Board it exercised exclusive control by law over the
Commonage on behalf the landowners.
[56] The first indication of any African presence in Salem is in a report on the
„Returns of Natives, Stock etc‟ of the Inspector of Native Locations for the District of
Lower Albany. The report includes the locality, the name of the proprietor, number of
huts on each farm, population size and livestock. The first report compiled in 1878
recorded that there was one dwelling on the Commonage with three people residing
there without cattle. There were, however, significantly more Africans and huts on
some of the landowners‟ farms; for example there were eight huts, 41 Africans and
68 cattle on Mr Hill‟s farm. Throughout the district and in Salem there were 322 huts
and an African population of 1533.
[57] The Inspector continued to render returns for Lower Albany until the end of
August 1884, when he reported 24 huts, 130 people and 70 cattle on the
Commonage. This was his last report because the management of the Commonage
was now, in his words, „under the Village Management Act‟. In other words the
management of the Commonage, including the collection of hut taxes, was
henceforth the responsibility of the Board. It must follow that any „right‟ Africans may
have had to reside in a hut on any of the erven or on the Commonage could only
have been derived through agreement with the landowner or the Board.
[58] There is, however, no evidence of what occurred on the Commonage over the
following 20 years. But some indication of what may have happened may be gleaned
from Fiona Vernal‟s study of the Farmerfield Mission, which was close to Salem.41
Concerning the period 1884-1916, she writes that Farmerfield tenants faced the
same economic woes as other Africans in the Albany District. This, together with
pressures on Africans to support the British after the outbreak of the South African
War in 1899 caused thousands to leave Albany creating a temporary labour
shortage.
[59] But Albany offered few opportunities for economic advancement and no
residential options aside from white owned farms or overcrowded locations. This
situation, commented the civil commissioner for the Albany District in 1899, „does not
lend itself to the improvement of the native who can never become more than a
servant or tenant at the pleasure of a landlord‟. And that other than in African
locations on the outskirts of Grahamstown, „there is no place where the native can
make himself a permanent home, consequently there is little room for improvement‟.
Dispossessed of land and too poor to purchase any, Vernal continues, Africans
sought employment on white farms and entered into sharecropping arrangements to
41 Fiona Vernal The Farmerfield Mission – A Christian Community in South Africa, 1838-2008 (2012)
at 198.
make ends meet. It is likely that these conditions were generally prevalent in the
district.
The period 1900-1942
[60] By the turn of the twentieth century labour requirements of white farmers had
changed and the policy of prohibiting their employees from residing in locations on
their properties began to hamper them. The Native Locations Act 37 of 1884, which
gave effect to that policy, was repealed and replaced by the Private Locations Act 32
of 1909. Although this Act did not apply to the Commonage, which was administered
under the Village Management Act,42 its paternalistic tone and policy objectives were
to be mirrored in the location regulations promulgated for the Commonage a decade
later. In addition, it was possible for the Governor to extend the operation of the
Private Locations Act to areas such as the Commonage,43 though this never
happened.
[61] The Private Locations Act had as it general purpose to „regulate the residence
of natives on private property in rural areas in the Cape Province‟.44 It therefore
provided for labour tenants to reside in „private locations‟ established on the farms
with the consent of a local magistrate. This would allow farmers „to keep upon their
farms a certain number of men in addition to their continuous employees‟ in order to
meet their seasonal labour requirements. But each application to establish a private
42 Section 15 of the Private Locations Act 32 of 1909.
43 Ibid.
44 See the Memorandum on Private Locations Act 32 of 1909 (Cape) and Regulations thereunder.
location would be carefully scrutinised so as to prevent „any large influx of natives as
squatters into a European farming area‟. Among its other purposes was to prevent or
minimise „the evils arising from the system known as “Kaffir Farming” . . . and
preventing
native
residents
from
becoming
a
nuisance
to
neighbouring
landowners‟.45
[62] The Board continued to exercise control over the Commonage under s 19 of
the Village Management Act. A letter from the Colonial Secretary to the Board on
7 November 1906 pertinently pointed out that the right of pasturage belonged only to
the „inhabitants‟, which both Professor Legassick and Professor Giliomee accepted
was a reference to the landowners. Another letter from the Colonial Secretary‟s Law
Department on 19 December 1907 regarding the fencing off of the Commonage
warned that this would endanger the „commonage rights‟ of other title holders. In
1910 the Board made regulations pertaining to the presence of dogs on the
Commonage, demonstrating its active involvement over a range of issues pertaining
to the area.
[63] Around 1916, (although this is not completely clear from the record) it seems
that regulations46 were adopted to inter alia control grazing rights on the
Commonage, which were restricted to the landowners and their lessees.47 Africans
could lease grazing rights from a landowner only if they were sole occupiers of an erf
or resident in Salem and in the service of a white resident, but the landowner had to
45 Ibid.
46 Regulations Touching Kaffir Beer & Knobkerries under Act 12 of 1893.
47 Ibid reg 23.
give notice to the Board of such intent.48 Furthermore, no person was entitled to live
on the Commonage without the Board‟s permission unless a hut tax was paid for
each hut.49
[64] The Board also had regulations dealing with „native locations‟ on the
Commonage promulgated in 1917 (the location regulations).50 They permitted the
Board to set aside a portion of the Commonage for the purpose of a „native location‟
and to appoint a superintendent to oversee the location.51 A person wishing to reside
in the location had to apply for a site-permit from the superintendent, and had to pay
a site-rental.52 The hut or dwelling was deemed to be the Board‟s property, and if the
holder of a site-permit was ejected from or left the building, compensation was
payable for its value.53
[65] The location regulations were promulgated under s 147 of the South Africa
Act 1909. The expressions „site-rental‟ and „site-permit‟ were used in place of a „hut
tax‟. The reason was, as the Secretary for Native Affairs explained to the Provincial
Secretary in a letter dated 9 December 1915, „hut tax‟ had a special meaning
applying to taxation under several statutes, and its use in connection with local
payments could cause confusion. Legassick testified that such taxes conferred rights
48 Ibid reg 25.
49 Ibid reg 32.
50 Location, Knobkerry, Kafir Beer and Curfew Regulations, adopted 13 June 1917 under Acts 23 of
1897 and 12 of 1893 and 30 of 1895. In 1919, these regulations were repealed and replaced by new
regulations covering the same subject matter. The differences between the two sets are not material
to this judgment.
51 Ibid reg 2.
52 Ibid reg 3.
53 Ibid.
of residence to the African community on the Commonage. I deal with his evidence
later in this judgment.
[66] The location regulations also prohibited residents from grazing animals on the
Commonage,54 open-air dancing and assembly55 or subletting their dwellings without
the superintendent‟s permission.56 Residents were furthermore prohibited from
carrying „knobkerries‟,57 subjected to curfews under which they were not permitted to
be in public spaces between 21h00 and 04h00,58 or to make „Kafir Beer‟ without the
Board‟s permission.59
[67] However, as early as February 1920, the Board had practical difficulties with
there only being a single location on the Commonage, because it meant that
employees (servants and farmworkers) of the landowners would have to live some
distance from their places of employment. The Board therefore sought the
Administrator‟s permission to amend the location regulations so as to allow the
employees to erect huts on the Commonage closer to their places of employment
and to designate each hut so erected as a location under the express control of the
Board. The Administrator responded by saying that because ownership of the
Commonage is vested in the landowners, and not the Government, he had no
54 Ibid reg 7.
55 Ibid reg 19.
56 Ibid reg 24.
57 Ibid reg 29.
58 Ibid reg 30.
59 Ibid reg 31.
objection to the regulations being amended. But he advised the Board to seek the
advice of the Commissioner of Native Affairs in Pretoria.
[68] Accordingly, on 10 May 1920, the Board wrote to the Commissioner
(Secretary) of Native Affairs concerning this problem. In addition the letter mentions
that sharecroppers occupied some of the huts on the Commonage also close to the
private erven for the convenience of the landowners. The Board also sought advice
on the status of huts that were removed from the location where the location
regulations applied and the rest of the Commonage, which fell under the Board‟s
jurisdiction where the regulations did not apply; the huts were now erected on private
erven where the site-rental for which the regulations provided was not applicable.
[69] On 17 May 1920, the Secretary responded by advising that s 19 of the Village
Management Act gave the Board authority to deal with huts on the Commonage.
However, he went on to say that where parts of the Commonage (outside of the
location) had been leased for agricultural purposes, the Board had forfeited its
control and could not object to a lessee allowing his „native servants‟ to reside there.
The solution to this problem, he advised, was to „make it a condition of such leases
that no native should be permitted to reside on the land leased without the
permission of the Board‟. This exchange of correspondence suggests that Africans
living on the Commonage at that stage did so at the behest of the landowners, who
had leased parts of the Commonage, outside of the location, from the Board for their
employees, labour tenants and those with whom they may have had sharecropping
arrangements.
[70] In the meantime the arrangement whereby some landowners leased parts of
the Commonage from the Board began to generate discord among other
landowners. This appears from a letter that Mr Gardner, an erstwhile member of the
Board, wrote to the Administrator on 13 November 1920 complaining that the Board
was managing the affairs of the Commonage to the detriment of the inhabitants. In
particular, he complained that the Board was leasing parts of the Commonage
without collecting sufficient rental and allowing „squatting natives‟ to erect huts in the
location, graze their cattle and cut firewood on the Commonage at a nominal charge.
He also complained that the Board permitted some of the lessees to allow
sharecroppers to plough the land that had been leased. Gardner asked the
Administrator to appoint a commission of enquiry to investigate these matters.
[71] The Board responded to the complaint in a letter to the Magistrate in
Grahamstown dated 21 January 1921. The main points were the following:
(i)
Because the Commonage was more extensive than was necessary to meet
the pastoral requirements of the erf-holders, a portion was set aside and fenced for
their use at a rental of 2/6d per acre.
(ii)
It was common practice for erf-holders to engage the services of labour
tenants who were allowed to let and cultivate land allocated for this purpose.
(iii)
The rental had been reduced from 2/6d per acre to 1d per acre because the
drought brought many people in Salem to the verge of starvation.
(iv)
It was acknowledged that letting parts of the Commonage was illegal, but the
practice had begun some time ago, when Gardner was a member of the Board,
before the present Board was elected. The current Board continued the practice as it
was advantageous to the erf-holders.
(v)
Some land had been set aside for the servants of the white inhabitants; this
was in the interests of the whole community.
(vi)
No unemployed „native males‟ over the age of 18 years were allowed to
reside in the location.
(vii)
The charge for firewood was 4/6d per load. The Board had no power to
prevent any erf-holder or lawful occupier from cutting wood on the Commonage and
there was nothing to prevent such erf-holder or occupier from allowing his servants
to use a portion thereof.
(viii)
Many of the erf-holders would welcome a scheme for the division of the
Commonage amongst the erf-holders as had been done in the Stockenström District,
as this would result in better use of the Commonage for farming purposes.
[72] There were no further developments regarding Gardner‟s complaint.
Nevertheless, the Board continued to be confronted with problems over the
management and the application of the location regulations to the Commonage.
[73] The minutes of a meeting of the Board‟s Public Finance Committee in June
1921 alluded to some of these: the increasing laxity in collecting revenue from huts
and for grazing; the inconsistency in allowing some members of the community to
graze large herds free of charge while others had been charged grazing fees for their
servants‟ stock, countenancing the practice of „native half-sowers‟ (sharecroppers)
and indiscriminate wood cutting by „native squatters‟.
[74] The meeting concluded that the continued existence of the location and
appointment of a superintendent was not justified „as it would be a simple matter for
every employer of labour to be responsible for the proper housing of his monthly
servants, subject to the satisfaction of the Board‟. By 1934 this was precisely what
happened, when the location ceased to exist.
[75] Among the remedies suggested to deal with its management problems were
that „masters‟ were to take responsibility to collect „Native dues‟ from their own
servants and all chopping of wood by „Natives for selling purposes be stopped‟.
Further, erf-holders should desist from letting „grazing rights to Natives and others
outside the jurisdiction of the Board‟.
[76] Another problem that appears to have arisen was that the original boundaries
dividing the farms from the Commonage were no longer clear. This resulted in some
of the landowners erecting structures that encroached on the common land. The
Board sought the surveyor-general‟s advice on this matter. In an undated letter the
surveyor-general recommended that in every case of obvious encroachment, where
it had existed for more than 30 years, and the party refused to surrender it, he be
allowed to remain in possession, as he would have proved „prescriptive occupation‟,
ie acquisitive prescription. Where he could not prove this he should be compelled to
remove the encroachment or pay a rental to the Board. The surveyor-general
emphasised that the „common land is a valuable asset of the Board and it is to every
erf-holder‟s advantage to jealously protect it from unlawful occupation and to assist
the Board to do so‟. He also advised the Board to resurvey the farms so as to
establish their boundaries clearly. There is no indication in this letter that the Board
was concerned about any encroachment or unlawful occupation of the Commonage
by Africans.
[77] On 5 August 1921, Ordinance 10 of 1921, „the Village Management Boards
Ordinance, 1921‟ was promulgated. It repealed the Village Management Act of 1881,
which had hitherto regulated the activities of village management boards such as
Salem‟s. Section 61(32) gave the Board the power to make regulations for
„management and protection‟ of the Commonage, which merely continued the power
it had already exercised for 40 years, and before this, when the Committee managed
the community‟s affairs. Section 61(32) also allowed it to control the numbers of
livestock inhabitants were entitled keep and depasture on the Commonage. An
„inhabitant‟ was defined as a person who occupies property of a value of not less
than 100 pounds within the Board‟s area, which de facto excluded Africans from
grazing their cattle on the Commonage.
[78] This regulation created difficulties as some of the erf-holders claimed an
entitlement to graze their full quota of livestock, which would include cattle of their
employees. In response to a query from the Board as to how to deal with the
problem, the Provincial Secretary, on 18 October 1921, advised that s 61(32) of the
Ordinance permitted it to debar erf-holders from leasing their grazing rights and
empower itself to grant such rights to non-inhabitants.
[79] But this did not deal with the difficulty of distinguishing between cattle of
„Europeans‟ and „Natives‟. The Board therefore sought the advice of the Provincial
Secretary as to whether it would be permissible to insist that „Natives‟ branded their
cattle so as to distinguish theirs from those of „Europeans‟. On 4 March 1923, the
Provincial Secretary advised that any regulation dealing with this matter would have
to apply equally to „Natives and Europeans as a regulation . . . applying solely to
Natives from the provisions of which Europeans are exempt, would amount to class
legislation and, as such, would be ultra vires‟.
[80] On 14 June 1923 the Natives (Urban Areas) Act 21 of 1923 came into force. It
gave municipalities greater powers to segregate housing, to police African
communities and to control their movement through the pass system. By regulating
the movement of Africans between rural and urban areas and providing for locations
to be created for African occupation, the Union Government hoped to stem the tide
of urbanisation away from rural areas.60 Section 23(3)(c) of this Act provided for local
authorities, which included village management boards in terms of s 29, to regulate
the management and control of these locations. But as was mentioned earlier, there
was a strong view within the Board and among the erf-holders that the establishment
of a location on the Commonage would be counterproductive.
60 J M Pienaar Land Reform (2014) at 95.
[81] This notwithstanding, on 23 July 1926, the Provincial Secretary (on behalf of
the Board) sought the advice of the Magistrate, Alexandria as to whether the existing
„Native Location‟ may, with the approval of the Minister of Native Affairs, be
established under the Natives (Urban Areas) Act. This request was referred to the
Magistrate, Grahamstown, as Salem fell within the latter‟s jurisdiction.
[82] After investigating the matter, the Magistrate, Grahamstown wrote to the
Provincial Secretary, Cape Town on 10 September 1926 recommending that the
location not be established under the Act. He explained that the Board had a very
small rateable valuation, with practically no funds, and did not wish to establish a
location. Moreover, he continued, there were only 25 „European‟ rate-payers and
only ten „Native‟ adults living in the present location under „practically rural
conditions‟. There were no further developments regarding the establishment of a
location for a few years after this.
[83] On 11 September 1929, the issue that had arisen some eight years earlier in
the meeting of the Board‟s Public Finance Committee – the subdivision of the
Commonage among the landowners – was revived. The Board wrote to the
Administrator on behalf of the landowners to seek his advice on whether this course
of action was permissible.
[84] The
correspondence
between
the
Board
and
various
government
departments after this reveals that there was at least one significant legal
impediment to subdividing the Commonage between the present landowners. This
was, as a letter from the Registrar of Deeds to the Provincial Secretary on 31 August
1931 pointed out, the condition of the original grant to the settlers stated that shares
of grazing rights over the Commonage could only be transferred by the sale of a
share or shares in the original arable lands or homestead of the settling party. Yet in
some cases, grazing rights were sold off the allotments to which they originally
belonged, apparently after the Deeds Office had sanctioned this. It was, therefore,
unclear whether the current landowners had the right to subdivide the Commonage.
[85] Meanwhile, on 7 December 1931, the Assistant Health Officer for King
William‟s Town visited Salem to inspect conditions in Salem. Among the
observations he made in a report to the Acting Secretary for Public Health, Pretoria
were: that there were presently only 22 families on the 50 allotments, the total
„European population‟ being 96; the Borough Ranger was the superintendent of the
location in which ten families resided; each family paid a site-rent and had a small
plot around his hut for cultivation; only „natives‟ employed in the settlement were
allowed to reside in the location; most of the inhabitants kept their „native employees‟
on their own properties and there were three „natives‟ employed for the eradication of
cactus. The report concluded that the health of the community was „very good‟. The
report made no mention of Africans residing anywhere else on the Commonage.
[86] The following health report was dated 30 June 1932. It records the „White
population‟ being approximately 84, and the estimated „Native population possibly
300-400. No figures available‟. It also notes that there is a „small native location of
some half dozen huts; Most natives reside on the owners‟ private erven‟. The health
report a year later, in June 1933, repeated most of the information in the earlier
report (including the estimated „Native‟ population) except for recording the „White‟
population as 90. These health reports are important because they confirm that apart
from the ten African families who were living in the location at the time, most of the
other employees were living on the properties of their employers. The LCC, as I
discuss later, completely misconstrued these reports by finding that they confirmed a
significant occupation of Africans on the Commonage.
[87] By June 1934, two years later, the Health Report stated that the „White
population was approximately 100‟ and the „Native‟ population unknown. Significantly
it recorded that the „Native Location‟ had been done away with, with „Natives‟ now
residing on their employers‟ land, as the Board‟s Public Finance Committee said
should happen in 1921. Again, there was no mention of Africans residing on any part
of the Commonage.
[88] During this time the Board continued to lease parts of the common land
adjoining the landowners‟ private property to the landowners in return for which they
paid rent to the Board. One such example was to Mr Henson, who had erected his
dwelling on one acre, had arable land of three acres, two acres for a camp and two
acres for „native huts‟. In his case, therefore, Africans residing on the portion of the
Commonage he leased would have done so by virtue of individual agreements with
him.
[89] One of the proposals was for a five-year lease for 160 morgen on the
common land to Mr Hill. Because of the huge extent of the land sought to be leased,
there were objections from other landowners. So, the Board forwarded his
application to the Administrator for approval on 6 August 1934. Hill had, however, in
the face of the objections agreed that his application could be held over pending the
Board‟s investigation into the feasibility of subdividing the Commonage among the
erf-holders proportionately.
[90] The leasing of parts of the Commonage was beset with problems.
Correspondence between an erf-holder and the Administrator in December 1934
mentions that one of the Board members, Mr Dickinson, had been leasing 20 acres
for 25 years at a rental of 1/6 per annum an acre. However, the measurement of the
leased area showed that he had enclosed 31 acres, 11 acres more than he had
been paying for.
[91] Another Board member, Mr Hewson, resided on the Commonage, as did his
brother. They paid the Board 2/6 a year. By residing on the Commonage, and not on
a farm, they evaded the payment of rates and taxes, as the Commonage was not
taxed as rateable property. It also transpired that Board members had been leasing
some of the Commonage to people who were not erf-holders. In one case Mr Hall,
who was a Board member at the time, had also leased ground even though he was
not an erf-holder. The Board‟s function was to represent the collective interest of erf-
holders to the common land, and therefore, only such people were eligible to be
Board members.
[92] The difficulties that had arisen over the leasing of parts of the Commonage
gave further impetus to the proposal to subdivide the land among the owners. The
Board motivated this on the basis that the whole Commonage would then become
rateable property.
[93] In June 1935, the Board sought advice from attorneys on whether erf-holders
could fence in and cultivate portions of the Commonage for their own use. Their legal
opinion was that this would only be possible if all erf-holders agreed. This followed
implicitly from the fact that ownership of the Commonage vested in the erf-holders
for their collective benefit; the Board could not itself grant such consent as it merely
managed the Commonage on their behalf.
[94] In 1936 the erf-holders began to press the subdivision issue again. On
14 January 1936 its attorneys wrote to the Provincial Secretary to motivate their
case. The letter stated that the Board had limited funds to combat the growth of
noxious weeds on the Commonage, which had also become a breeding ground for
jackals to the intense annoyance of the farmers; further that there was dissatisfaction
because this land area could not be farmed communally, their stock got mixed, inter-
bred, could not be camped and were lost to the owners.
[95] The letter stated that the erf-holders, who owned rights to the Commonage,
had been trying to secure unanimity to subdivide the land so that each owner could
fence, clean and cultivate the land for his own benefit. They had, however, not been
able to do so because one of the owners was „sufficiently cantankerous to disagree
although she makes very little use of the Commonage herself‟. Accordingly, the
Administrator‟s assistance was sought to resolve this quandary by introducing
legislation to allow for the subdivision despite the opposition of an erf-holder. In a
letter dated 29 February 1936, the erf-holders‟ attorneys requested that the proviso
to s 49 of the Village Management Boards Ordinance 10 of 1921 be repealed so as
to enable the Administrator to grant consent to the Board for this purpose.61
[96] The Provincial Secretary replied to the Board‟s attorneys on 2 April 1936. He
considered it not possible for the matter to be dealt with by way of the proposed
legislative amendment as, in his view, this would allow local authorities to interfere
with the ownership rights of erf-holders who had placed land under their control. His
advice was that the matter should be dealt with by obtaining the authority of a court
to transfer an equitable portion of the area to each owner. This had apparently been
the course adopted by the Bradshaw Party of settlers, who had obtained a court
order in its favour on 18 May 1928.62 On 6 August 1936, the Provincial Secretary
informed the Board that the Administrator had refused its request to amend s 49 of
the Village Management Boards Ordinance.
61 Section 49 provided as follows:
„As to the disposing, enclosing, etc., of village lands.
49. When the Board shall at any meeting duly convened for that purpose, resolve that it is expedient
to dispose of or alienate or permit to be built upon, enclosed, or cultivated, any lands, whether
common pasture lands or not, which shall be vested in the said Board, or which, not being Crown
land, are under the control of the board it shall be lawful for the Board to apply, in writing, for the
consent of the Administrator to the proposed sale, lease or other arrangement for the occupation or
enclosure of any part or portion of such lands, and upon obtaining such consent, but not otherwise, to
execute or carry into effect such sale, lease or other arrangement: provided that no lands the
ownership of which is not vested in the Board shall be dealt with under this section except with the
consent of the owner thereof.‟ (emphasis added)
62 Ex parte Bradfield & Three Others (EDL) unreported case (18 May 1928).
[97] On 16 January 1940 the Board instituted ex parte proceedings in the
Grahamstown Supreme Court for an order subdividing the Commonage in proportion
of 153 morgen to each of the original erven. The application was brought in the
name of the Board‟s Chairman, Mr Gardiner. The factual basis for the relief sought
appeared from the unreported judgment of the court in Ex Parte Gardiner: In re
Salem Commonage.63 They were:
„[T]he commonage is too large for the small number of erf-holders, with the consequence
that stock are often lost or stolen; that the Village Management Board has not the means so
to adequately control it as to keep strangers‟ stock from trespassing or to keep down the
growth of noxious weeds and the extension of erosion; that jackals and other vermin breed
on the commonage, and that there is no means of eliminating them; that erf-holders cannot
keep good stock owing to their own stock mingling with and becoming contaminated by
inferior stock; and that erf-holders are unable to fence off and cultivate portions of the
commonage for their private use.‟64
[98] It is evident that there is no reference to Africans residing or „squatting‟ in a
location or elsewhere on the Commonage among the problems the landowners were
concerned about. Nor did they rely on any racially discriminatory laws to support
their cause of action. Their primary contention was that the erf-holders were in law
absolute co-owners in undivided shares of the Commonage, and thus entitled to the
order sought. The learned judges (Gane J, Lansdown JP concurring) concluded that
the grants did not make the settlers co-owners in undivided shares of the land, for if
63 Ex Parte Gardiner: In re Salem Commonage (EDL) unreported case (29 February 1940).
64 Ibid at 1.
they were, it would have been a simple matter to approach the Registrar of Deeds to
partition the land.65
[99] The grant, said the court, contemplated the permanent settlement of settlers
at Salem.66 It was of grazing land to the Salem Party of erf-holders to be held
communally, and if a person ceased to be an erf-holder, he ceased to have any right
in the Commonage.67 Of particular interest was that the court compared the rights of
erf-holders over the Commonage to „native law‟ which, the court noted, also
recognises that land held under tribal tenure belongs to the tribe, and not the
individuals who constitute it. On the face of it, so the court reasoned, the relief
sought was incompetent.
[100] However, given the difficulties faced by the erf-holders alluded to above, the
court decided to leave the matter in the hands of the Administrator to exercise his
discretion regarding the subdivision. Paradoxically, it considered that s 49 of
Ordinance 10 of 1921, which the Administrator had refused to amend to deal with
this issue, properly interpreted, gave him this authority. The Court accordingly issued
a rule nisi on 29 February 1940 calling on all interested parties to show cause why
the Administrator should not consent to the subdivision. It was ordered that the rule
nisi was to be published twice in the Daily Mail, and twice in the Union Government
Gazette, with an interval of not less than six weeks between the two publications. It
was also to be served upon the Minister of Lands for the Union of South Africa and
65 Ibid at 3.
66 Ibid at 4.
67 Ibid at 6.
upon the Administrator, the Registrar of Deeds, and the Department of Education,
because of its possible interest in the school on the Commonage.
[101] On behalf of the Administrator, the Provincial Secretary wrote to the
Magistrate, Grahamstown, to examine the issue and express an opinion on the
matter. After investigating the matter the Magistrate wrote to the Administrator on
8 May 1940 recommending the subdivision. He expressed his reasons as follows:
„. . . [T]he only persons who can claim to make use of the Commonage now, would not suffer
in any way if the Commonage were subdivided . . . .
The only persons who might feel annoyed would be those who have been making a profit
out of grazing the animals of friends and Natives on the Commonage.
. . . The position would now appear to be that the Commonage is now used by persons,
some of whom have a good class of stock and others only scrub animals. There are
unending squabbles in consequence, and certain owners quite rightly take strong exception
to the subletting of grazing rights to certain undesirable persons who are not erfholders.
Certain of the erfholders could make very good use of the portion of the ground for
agricultural purposes or gardening or both, and are prevented from making a fair living out of
their property . . . . Also, as long as the present state of affairs exists this very large
Commonage must be used solely for grazing, and the difficulty of collecting stock for dipping,
and the consequent increase in the difficulty in keeping down tick-borne diseases, make the
duties of the cattle cleansing officers almost impossible of satisfactory performance.‟
(emphasis in italics added, underlining in original)
[102] After the Administrator‟s consent had been secured for the proposed
subdivision, the court granted a final order on 8 August 1940. Following the final
order for subdivision of the Commonage, the Native Commissioner recommended
the disestablishment of the location on 15 July 1941. He did so after visiting the area
in the presence of the Chairman of the Board a week earlier. He discovered that
there was only one disused and dilapidated hut where the location had previously
existed. That hut had been occupied by an African employee of the Board. The
location was 15 acres in extent – less than one per cent of the land mass of the
Commonage – and had ceased to exist some years earlier.
[103] The location, he learnt, had never been properly defined by resolution of the
Board, but a portion of the Commonage was set aside for use as one. A
superintendent, as envisaged in the regulations, was not appointed, and the location
regulations were never really put into operation.
[104] Regarding the population size he reported the following:
„The European population of the village is between 90 and 100 with 25 families, while the
Native population is about 500, of whom about 50 work as servants. These servants live on
the premises of their employers, and on the present Commonage which is privately owned. I
am given to understand that certain Europeans have permitted squatting in the past, but I
am asking the local District Commandant to investigate the matter.‟
[105] The estimate of 500 Africans living in the Village seems excessive when one
has regard to the number of dwellings there were at the time, as I point out below.
Be that is it may, the Commissioner was concerned with the disestablishment of the
location on the Commonage, and not with whether there were Africans living
elsewhere on the Commonage. He was not conducting some sort of population
census as the LCC misleadingly put to Mr van Rensburg during his testimony, which
is dealt with later.
[106] What is however clear from this report is that the estimated 50 servants
resided on both the premises of their employers, and on the Commonage – in all
likelihood on the portions that had been leased by erf-holders such as Henson. The
Commissioner‟s conclusion was that even if the labour requirements on the farms
increased in the future „there would be ample room on each farm for these Natives to
live as each farm will range in extent from 150 to 600 morgen‟. The recommendation
for the location to be disestablished because it served no proper purpose echoed the
view of the Board‟s Public Finance Committee two decades earlier.
[107] Following the Commissioner‟s recommendation the Minister of Native Affairs
formally, acting under s 2 of the Natives (Urban Areas) Act, abolished the location on
14 November 1941. This seems to be why the claimants were misled into thinking
that the „dispossession‟ occurred as a result of this racially discriminatory law.
[108] In regard to where Africans in Salem were residing in 1942 the aerial
photographs of traditional dwellings taken at the time were inspected by Mr Chandler
for the Commission and Mr Gerber for the landowners. They prepared a joint minute.
Their pertinent findings, as appearing in the joint minute and the evidence of
Mr Chandler, were:
(i)
There were 48 traditional dwellings in the greater Salem area of which 22
were on the original farms and 26 on the Commonage around the Assegaai River
adjacent to the farms;
(ii)
There were pathways from the 26 dwellings on the Commonage leading to
the farms. This may indicate that these dwellings were occupied by farmworkers.
The LCC overlooked this crucial evidence.
[109] On 15 February 1943 the Board informed the Administrator that the Board
would cease to function once the land was surveyed and the subdivision was
completed. It had in the meantime stopped exercising its right of control over the
Commonage and no longer issued permits for wood or other materials, or leased the
Commonage for grazing. The subdivision of the Commonage was finalised some
time in 1943. Thereafter, the Board ceased to exist.
Conclusions on the historical background
[110] This history and documentary evidence suggest the following conclusions:
(i)
Before the 1820 settlers arrived and settled in the Zuurveld, the Xhosa
speaking tribes who had occupied parts of this area since about 1750, but not
Salem, had been expelled in 1811 during the Fourth Frontier War.
(ii)
The settlers settled all over the Zuurveld, which became the District of Albany,
on (now) unoccupied land, formally granted them by the Cape Colony, including in
Salem.
(iii)
The Salem settlers were initially granted the Commonage on a system of
quitrent, which was converted into freehold title in 1848, after their rental payments
had been redeemed. The settlers exercised authority over the Commonage.
(iv)
After the cattle-killings in 1856-1857, Africans began to seek employment in
the District of Albany and the Cape Colony passed laws to control and regulate these
developments. Land held in common, such as the Commonage, was also governed
by laws that empowered the Board to exercise authority over the Commonage,
which it did.
(v)
From about 1878, Africans who sought employment in Salem resided on the
private erven of the landowners and on the Commonage with the permission or the
agreement of landowners. Among those who entered into such arrangements were
labour-tenants and sharecroppers.
(vi)
Among the Africans who resided on the Commonage were those who resided
in the location, which covered a small area of 15 acres, measuring less than one per
cent of the land mass of the Commonage. The number of huts in the location never
exceeded ten, and from about 1920, the landowners felt that the establishment of a
location would create difficulties for their employees because of its distance from
their farms. Most employees were therefore housed on the properties of their
employers. And by about 1933 the location had ceased to exist.
(vii)
There is no documentary evidence of any community or group of people being
„herded‟ into a location and thereafter forced to abandon this location, as the
claimants have pleaded.
(viii)
The landowners had difficulties managing the Commonage for the reasons
mentioned earlier and therefore sought and obtained a court order in 1940 to
subdivide the Commonage.
(ix)
The aerial photographs of 1942 show that that there were 48 huts in Salem of
which 22 were on private erven and the remaining 26 on the Commonage in close
proximity to the private farms, and connected by paths to the farms. In the absence
of any other evidence to the contrary, the 26 dwellings on the Commonage were in
all likelihood occupied by Africans who worked for landowners.
(x)
Even assuming that some of these Africans did not work directly for the
landowners, it is clear that at least a substantial portion did (as evidenced by the
pathways in the aerial photographs). And, given the jealousy with which the
Commonage was guarded by the settler community, and the fact that the African
community was tolerated only because it provided labour for the farms in the area, it
seems likely that the African community as a whole occupied a form of servant-
master relationship with the landowners.
(xi)
There is no documentary evidence of an independent African community of
500 people residing on the Commonage or in the location, much less of such a
community exercising any authority over this land at any time. The documentary
evidence points firmly to the contrary.
The Viva Voce Evidence
[111] The LCC set out the evidence neither fully nor fairly. It is therefore necessary
for this court to do so.
Mr Vincent Paul
[112] The first witness for the Commission was Paul. It was on the basis of his
report to the Commission that this claim was validated. Neither his report nor his
evidence is easy to follow.
[113] His evidence in chief, read with his report, appears to amount to the following:
The forebears of the community occupied the Commonage „as far back as the
1800s‟, although this date is not really relevant because his investigation was
concerned with events after 1913. The community had „ownership rights, residential
rights, grazing rights and the right to use land for agricultural activities, access to
firewood and the use of the land for burying the dead‟. They also practised
sharecropping with white people and combined their cattle for ploughing. The native
returns of 1880 indicate that there were nine huts, 42 people and 47 cattle on the
Commonage, which proves that there were „natives‟ living on the Commonage. A
location was established on the Commonage in 1926. Thereafter, the landowners
decided to divide up the Commonage among themselves, without consulting the
African community, who rightfully owned this land.
[114] The African community was dispossessed of these rights with the
implementation of s 47 of Ordinance 10 of 1921 through the court order subdividing
the Commonage, and the disestablishment of the Location under the Native (Urban
Areas) Act 21 of 1923. The dispossession began around 1947 and dragged on until
the 1980s. Africans, who were living on the Commonage, numbering some 450
people, were, after they were dispossessed, permitted to „squat by their families‟ on
the farms of the landowners, while others left to live in Grahamstown. The
community was no longer able to produce from the land and were forced to sell their
livestock.
[115] As to how the community had decided where its members were permitted to
plough or to graze their cattle, his testimony describes an idyllic state. He was told,
he says, that the families of the claimants combined their oxen and ploughed
collectively. No specific areas were allotted for this purpose because the land
belonged to the whole community. Their kraals and huts were scattered over the
Commonage. The cattle belonged to the whole community. They produced enough
for the Community and the surplus was sold. No one else was allowed to use this
land. The community had no written rules but had their own traditional way of doing
things.
[116] Later on, he testified that the community lived by these unwritten rules passed
down the generations and also by the rules of the location regulations. But his
version of how this community organised itself was contradicted by the version
Mr Notshe put to him on behalf of the claimants.
[117] Mr Notshe put to him that the claimants would testify (and Nondzube later did)
that under the rules governing access to the land each family was given a piece of
land where they lived, while their cattle were allowed to graze on communal land.
When the head of the family died the eldest son inherited that piece of land. And
when new families arrived on the common land, the head of that family would ask
the chief to allocate a piece of land to him for his homestead. The newcomers‟ cattle
would also graze on communal land.
[118] Despite this version of the existence of a highly organised system of rules at
the head of which was a chief who exercised ultimate authority being totally at odds
with that of Paul‟s idyllic system, he testified that he did not dispute it. When
challenged on how he could have „misunderstood‟ the nature of the community‟s
social system in such a gross manner, he was unable to give an answer.
[119] Under cross-examination by Mr Roberts for the landowners he was asked
whether he had examined the returns of the Native inspector of 1878, which formed
part of the bundle of documents. He responded that he did not have time to look at
them. When asked to examine the document and comment upon the entry that in
1878 there was only one hut and three people on the Commonage, without livestock
or farming equipment, he answered, evasively, that this was before 1913. When
pressed further as to whether one hut and three people constitute a community, he
responded, again elusively, that he disagreed because the people he interviewed
told him they were a community.
[120] Regarding the methodology he used to compile his report, he testified that in
June and July 2003, he interviewed three people from whom he took statements.
These were Mr Lindile Magwala, Mrs Nofikile Simayile and Mr Tim Ngqiyaza Ncede.
These statements and the archival information formed the basis of the report. He
conceded that he had not examined many of the documents that were placed before
the court.
[121] Asked to comment on another report contained in the document bundle,
prepared for the Commission by a consultant, Itemba, on 9 September 2002 and
which was signed by Mr Gwanya, the Regional Land Claims Commissioner,
indicating that the people who were dispossessed were labour tenants, he said that
he was not aware of this report when he commenced his investigations. He then
testified that it was merely a preliminary report. His investigation showed that the
community was reduced to labour tenants as a result of the dispossession, and they
were not labour tenants before this.
[122] He was questioned about why he had not interviewed the landowners before
preparing his report. He first responded that he had a meeting with them but they did
not cooperate. He then adjusted his evidence saying that he arrived at the meeting
to tell them that there was a claim against their land, not to interview them. The
Commission had instructed him not to interview the landowners, because „that is the
process of restitution; you deal with the people who are affected . . . .‟ By this he
meant the claimants.
[123] When asked to confirm whether the land was vacant when the 1820 settlers
arrived in Salem, he answered unclearly, evasively and contrary to the documentary
evidence and the facts. The following exchange occurred between Mr Roberts and
Paul:
„Adv Roberts: When the 1820 settlers arrived there, this land was not vacant, were people
living there. Is that what you are saying? – People who were there were . . . forced out of the
land at the time they arrived.
Who forced them out? – They were forced out by those who wanted to buy the land.
So they were forced out by the settlers . . .-- They were forced out by the white people.
Which white people? – South African white people.
Were they forced out by the Salem settlers or someone else? – The white people pushed
the black people out. They were pushing them out because they wanted to put in the settlers
in that land.‟
[124] Thereafter, the following exchange took place between Mr Roberts and Paul,
whose responses were again obtuse:
„Adv Roberts: „Now let us get back to what information you obtained on the three people that
you interviewed. Did you establish from them whether they occupied the entire commonage
or just portions of the commonage? –
According to the people traditionally they occupy the land.
The entire commonage? – According to them yes.
Did you establish from them whether…they were aware of the Village Management Board?
– They were aware.
And were they aware of the fact that the Village Management Board had authority over the
commonage? – They were not aware, sorry. They were not aware of the specific of the
functions of the Village Management Board because they were not part of it.
Did they acknowledge that, did they say that any portions of the commonage had been
occupied by white people? -- Yes.
So they acknowledged that white people had certain rights on the commonage. – They
acknowledged certain rights after they were pushed over or forced to move some to move
further.
When was that Mr Paul? – That was during the dispossession.
That is from 1947 according to you. – That was at the time of dispossession after 1913.
And is it your evidence that after 1913 up till this date of dispossession only the black people
occupied the commonage to the exclusion of the white people or not? – No I did not say they
were not there. They were around.
So the white people were there. – They were there.
Where were they? – Which period are you referring to?
To dispossession, I have said 1913 to 1947. – They were around because they forced
themselves into the land as I indicated.
When did they force themselves onto the land? – As it clearly stated the (indistinct) had land
even before 1913 because they forced themselves after the people were chased away
forced themselves onto the land even before 1913.
I do not understand that. Can you just explain? Are you referring to the commonage? – I am
referring to the commonage.
When did this forcing onto the land commence? – They forced themselves when they arrived
because people were pushed over during the wars. They stayed on the area. There …was a
portion of land that was undivided which was divided at a later stage.
Sorry can you just speak up please. Sorry Mr Paul? Maybe it is my age, I do not know. Can
you just, sorry just repeat it? – I am saying they forced themselves into the land and they
stayed on their erven.
Yes? – There was a portion of land that was still, I mean undivided as a commonage. When
it was proposed that it must be divided, that is when the people because the case that we
are dealing with here is after 1913 case.
Ja. – That is when people they totally dispossessed of their land.
Let us take 1913 as a starting point. Who then occupied the commonage? – As I indicated
the black people were part of that.
What does that mean? Did they occupy only a portion of the commonage or the entire
commonage in 1913? – Because the way things were done to them they still regarded
themselves as owners of the land because they were not consulted. The process was not fit
for them so in their minds they still kept that this is our land.
Mr Paul I will ask this question again. What was the factual situation as at 1913? Did the
black people occupy the entire commonage or not? – They said it was their land.
Sorry, they said it is their land. – They said it was their land.
The question is still did they physically occupy the entire commonage as at 1913? Or did
they not tell you that? – All they said the land was theirs.
So they did not tell you that as at 1913 they occupied the entire commonage? – They said
they occupied the land. They stayed there and according to them and because of the history
on that land that land was theirs.‟ (emphasis in bold and italics added, italics in original)
[125] He was then asked whether the areas where the cricket field was established
(in 1844), the Methodist Church (in 1832) and the Civic hall (in 1894) were part of the
claim to which he answered in the affirmative. This was followed by another
incoherent response:
„Adv Roberts: So do you concede that there was no dispossession after 1913 of that
particular area which includes the church, the lands, the hall and the cricket ground. -- As I
said there were properties that were reduced because of the occupation then.‟
[126] It was put to Paul that his interview with Mrs Simayile, one of the three people
he interviewed to establish the claim, recorded that she was born on Mr Lloyd‟s farm
in 1905, which he confirmed. Thereafter the following exchange took place:
„Adv Roberts: She was therefore not born on the commonage, correct? – She was born on
the farm that is within the commonage in Tyelera.
. . . But what it then means is that the farm of Mr Lloyd was situated on the commonage –
according to what she said.
Surely you must have accepted what she said or did you reject what she said to you? – Mine
was to interview her and hear what she says; that was my duty.
What she clearly told you we read this she was born on the farm of which the owner was
Mr Lloyd. And if that was on the commonage Mr Lloyd was resident on the commonage,
correct? – Yes.‟
[127] He confirmed too that the first time he had heard of Chief Dayile was during
the inspection in loco, just before the hearing commenced, and that nobody he had
interviewed or his archival investigations brought the existence of any such chief to
light before this. The existence and role of Dayile is one of the central disputes in this
case, and it is crucial to the claimants‟ case that the community derived its right in
land on the Commonage through him.
[128] The Commission did not adduce evidence from a single claimant to
corroborate Paul‟s hearsay evidence as to what was said to him during his oral
interviews. Instead they sought to rely on the expert testimony of Professor
Legassick to which I now turn.
Professor Martin Legassick
[129] Legassick‟s evidence, as I indicated at the outset, was aimed at establishing
that the claimants had indigenous rights over the Commonage arising from the
Xhosa occupation of the Zuurveld in the eighteenth century, and independently of
these rights had acquired rights as descendants of those persons who had occupied
a location on the Commonage since 1879.
[130] His original report traces the occupation and expulsion of the Xhosa from the
Zuurveld, the arrival of the settlers, and attempts by the Xhosa to return to the Cape
Colony thereafter. The report does not deal with the acquisition of indigenous rights
by any Xhosa speaking community in the Zuurveld or any part of Salem.
[131] His three key findings were: first, the native returns from 1878 to 1884
indicated that the habitation of the Commonage by „natives‟ was „officially
recognised‟. They therefore had „rights to occupy the land‟, and „rights to graze cattle
on it‟. Because they had occupied the land for a long time – about six decades – they
would have established explicit or implicit rules of behaviour, including those
determining access to land such as grazing livestock, where to plough, collect wood
and bury their dead. They thus constituted a „partly self-sufficient community‟. The
second finding was that the population figures from June 1884 to July 1941 showed
that a substantial black population had not lived in the location and could not all have
been servants; so they probably lived on the Commonage. And finally, because they
had not been consulted by state officials – by the Board, the Magistrate or the Court
– concerning the subdivision of the Commonage, or of the disestablishment of the
location, this constituted a racially discriminatory practice, which „violated their right
of occupation and dispossessed them‟.
[132] In his evidence in chief he testified that the Xhosa never accepted their
expulsion, because they besieged Grahamstown after this in 1819 to „remove this
alien town from the Zuurveld and recover their land‟. But he acknowledged that they
had been unsuccessful in achieving this. Nevertheless, he testified, after the settlers
arrived in 1820, there is no reason to suppose that the Xhosa would not have
returned to their land between 1820 and 1870.
[133] Regarding the period after 1870 he offered the opinion that because Africans
living on the Commonage and elsewhere were required to pay a hut tax this
necessarily implied that they had had a right to occupy this land. The reports of the
Native Commissioner in 1883 to the effect that Africans living in those huts appeared
to be „of a better class‟ whose huts „are larger and cleaner‟ was indicative, he
testified, of people „subsisting for themselves‟, and not having resided there as farm
labourers.
[134] The establishment of the Board under Act 29 of 1881, and the promulgation of
the 1906 regulations, to manage communal areas on behalf of the landowners, he
testified, „ignored‟ and „infringed‟ the existing rights of Africans residing on the
Commonage.
[135] The reference in the Board records to squatters on the Commonage, he said,
was probably a reference to „people who were living on the Commonage, ploughing
the land and grazing cattle, but also possibly to supplement their subsistence by
working for the farmers‟.
[136] In regard to the claimants‟ assertion in the „List of Agreed Facts‟ to the effect
that the Board‟s location regulations recognised the Xhosa as inhabitants, and
implied that all the inhabitants had lived in the location, he said that he had
incorrectly approved of this because of the pressure of time when he was compiling
his report. He testified that the true position was that there was small population
inside the location and there was a population outside. Those outside the location
were referred to as squatters because they were not recognised by the Board, and
those inside the location had rights under the regulations. But the regulations were
never put into operation because the Board was never properly in control of the
location or the Commonage. So, he concluded, the community conducted their
affairs on the basis of unwritten rules.
[137] With reference to the magistrate‟s report in July 1941, estimating that there
had been 500 Africans of which 50 were servants living with the farmers, he testified
that the remaining 450 were therefore not employees and had lived on the
Commonage. The correspondence on cattle branding also indicated that the
provincial authorities were aware of the existence of Africans on the Commonage.
And he agreed with Paul‟s evidence that the community had combined their oxen for
ploughing purposes and that they had cattle that grazed on the Commonage.
[138] He concluded, in his evidence in chief, that Africans who lived on the
Commonage „may well have been connected to Africans who lived there in the
eighteenth century, in one way or another who had established rights through the
Cape Colony and their registration as hut tax payers in the 1870s and 1880s‟. They
lived there until the 1940s and were dispossessed by the judgment of the court, the
actions of the Administrator and the disestablishment of the location in 1941.
[139] Under cross-examination by Mr Roberts he insisted, incorrectly, that he had
not used the word „infringe‟ to describe the impact of the 1906 regulations on
Africans exercising their rights on the Commonage; he had used the word „ignore‟.
When it was proved to him by reference to the record that he had used this word he
answered that he had been referred to the 1881 Act, not the regulations, and that the
Act and regulations should not be conflated. He then testified that the Act was
framed in ignorance of the fact that there was an African community on the
Commonage, and when the Board formulated the regulations, it had infringed their
rights, but the Act ignored their rights. But pressed further, he accepted that by
providing that the right to pasture had belonged to white residents only, its effect was
to exclude or ignore blacks from having this right; in other words it took the right
away.
[140] Later on, when it was put to him that the effect of the regulations was that the
African community was no longer able to decide where their livestock could graze
because this was subject to the Board‟s control, his answered in a manner that
became a constant refrain in this case: „there was an attempt to control‟. In response
to a further question whether this in fact took away their rights, he responded
emphatically: „I say it‟s an infringement of their existing rights‟. And further, this was
done on the basis of a racially discriminatory piece of legislation. It must be pointed
out that this evidence all dealt with events before the cut-off date for the institution of
land claims in 1913.
[141] When asked further whether three people and one hut in 1877, as recorded
by the Inspector in 1878, constituted a community, he first resisted answering the
question, and then grudgingly accepted that it is possible that no community existed
then. However, he insisted, the three people already had rights and as more people
joined they formed a community and acquired those rights. He then conceded that
the three people would initially have had individual rights, but, he insisted, these
rights would later have been „transformed‟ into the rights of a community.
[142] Questioned further as to whether he accepted that the settlers became co-
owners of the Commonage when it was granted to them, he responded that he could
not comment on this because he is not a lawyer. When it was explained what this
meant he conceded it. But he then added that as he understood it, they had the
rights to graze cattle on the Commonage, but he was „not sure whether this (gave)
them ownership‟.
[143] When questioned on why he had testified that the government had officially
recognised the right of Africans to reside on private property, such as the
Commonage, when the Native Location Act 6 of 1876 specifically dealt with huts or
dwellings erected on private property, he answered that the Commonage was
„common property‟, not private property. It was put to him that the interpretation of
the statute is a matter of law to which he responded that it was a question of
grammar, not law.
[144] It was put to him that if the community now claiming the land only came into
existence after 1877, they could not have acquired rights as a community because
the land already belonged to the settlers. He responded that he disagreed with this
proposition but without explaining the basis for his disagreement.
[145] In regard to why he was able to say that by 1884 a community had been
established on the Commonage, he answered that because there were 130 people
with 70 cattle, they would have had to have decided where to graze their cattle, erect
their dwellings and would have had „laws and regulations‟, thus constituting a
community; this, he continued, was a matter of „common sense‟. He conceded,
however, that he had not investigated what the rules by which the community
functioned were; his brief was only to examine the documentary record, and not to
investigate the structure of the community.
[146] It was put to him that the 1866 regulations, which predated any African
presence on the Commonage, also made it clear that landowners of the erven had a
share in the Commonage. He answered that if there were Africans then, they were
ignored. He was asked whether the regulations suggested that the landowners
controlled the Commonage to which he responded that (similar to the 1906
regulations) the 1866 regulations on paper did not create control; „there was an
attempt to control‟.
[147] As to whether there were any complaints from Africans to the magistrate in
1941 regarding any interference with their rights, he responded that by the 1940s
they would have been „terrified of white power and intimidated from making
complaints‟, an answer which he admits was speculative but, he retorted, was in
response to a speculative question.
[148] In response to Chandler‟s report, and in particular that the 26 dwellings of
Africans on the Commonage in 1942 were in close proximity to farming operations
on the farms and indicated that they had probably been occupied by farm workers,
he accepted that he was not an expert on this question and was therefore not able to
challenge this evidence.
[149] The cross-examination thus far dealt with the rights that the African people
acquired after 1880 by residing on the Commonage; not with indigenous rights. On
this question – the acquisition of indigenous rights – he testified as follows:
„I have an open viewpoint. I believe that the Xhosa do have indigenous rights to the Zuurveld
. . . and whether these Xhosa were there in the 1870s; it‟s possible that they inherited those
ancestral rights as indigenous rights, but certainly those rights were confirmed by the Cape
Government through its actions, through the Inspector of Native locations, the collection of
hut taxes etc.‟
[150] It was put to him that the effect of the conquest of the Zuurveld in 1811 by
British forces, together with the fact that that Cape Colony exercised exclusive
control over the area thereafter, meant that any indigenous rights the Xhosa had
over the area were extinguished. He responded that he does not accept that – an
issue on which he was not qualified to give an opinion. When asked by the court how
one established that a community had indigenous rights, he answered that his
expertise, as an historian was to show that people – in this case the Xhosa –
occupied the Zuurveld before the Whites had arrived there. He presumed that this
gave them legal rights but he accepted that the determination of this question is one
of law, and not of history. In response to a further question from Mr Roberts as to
whether it was his contention that because the Xhosa had occupied the Zuurveld in
the eighteenth century that they may claim indigenous rights for the entire territory,
he responded that they could.
[151] On the issue whether the Africans lived on the Commonage to the exclusion
of the landowners, he answered that the landowners had not lived on the
Commonage; they only had rights to graze their cattle there. However, Africans also
had cattle on the Commonage, and lived there with „rights‟. But he avoided
answering the question directly.
[152] After Legassick‟s testimony was concluded, the claimants called their two
witness, Messrs Nondzube and Ngqiyaza. Thereafter, midway through the
landowner‟s case and after Professor Giliomee had testified on behalf of the
landowners, the court recalled Legassick.
[153] It will, however, be appropriate to set out Giliomee‟s evidence at this stage
and Legassick‟s subsequent testimony thereafter.
Professor Hermann Giliomee
[154] The landowners called Giliomee to provide an opinion on Legassick‟s views
regarding the land rights of the claimants, its factual basis, to conduct his further
research and to prepare a report on these matters. In summary his opinion was that
the Xhosa existed as a political entity – not a cultural or linguistic entity as Legassick
suggests – in the eighteenth century headed by a king. Its borders were defined by
the extent of the land occupied by chiefdoms subject to the ruling Tshawe clan. Land
occupied by a Xhosa chief would have been claimed as Xhosa territory, unless the
King denied any such claim, as Ngqika did in respect of the Zuurveld. Any claims to
land made by the Xhosa as a cultural and linguistic unit as it is considered today
would be inconsistent with political claims that were then made by tribes on the
grounds of prior occupation. Such claims were recognised by Professor Jeffrey
Peires, the leading historian on the Xhosa.68
68 See eg H Giliomee‟s Expert Report.
[155] He testified that the first farms were given to the Boers in the Zuurveld in
1779. By the early 1790s, 150 Boer families were reported to be living in the
Zuurveld. Between 1793 and 1811, growing Xhosa numbers and extensive cattle
raids caused large numbers of Boers to flee. By 1808, Ndlambe, who was no longer
a Regent, claimed the Zuurveld on two grounds: he bought it from the Boers and he
won it in war, not on the basis of prior occupation.
[156] The Gqunukhwebe did claim the right to live in the Zuurveld on the basis of
prior occupation, but were expelled in 1811-1812 and never returned as a
community. There were three waves of new immigrants to the area after the settlers
arrived. The first were Tswana-speaking, the second the Mfengu and the third were
Xhosa – but not the Gqunukwhebe – who fled to the Albany district after the cattle
killing in 1856. It is therefore „highly unlikely‟, he said, that anyone claiming to be a
descendant of the Gqunukwhebe, who lived in the Zuurveld during that period would
have lived in Salem 100 years later. And any other Xhosa tribe claiming indigenous
rights on the basis of the Gqunukwhebe occupation would have been in an even
weaker position to assert any right to the Commonage based on indigenous title.
[157] There is no evidence of any Xhosa clan or community living on the land that
became known as the Salem Commonage before the expulsion. After the expulsion
there was no occupation of the Commonage by any Xhosa community. And the
Cape Colony became the single authority over the Zuurveld.
[158] Once white power had been established over the Zuurveld, he continued, the
relationship between masters and servants would have evolved towards an unequal
and exploitative one. This would have made it unlikely that the British settlers and
their descendants would have allowed their labourers or other Africans living on the
Commonage to establish rights.
[159] The legislation passed by the Cape Parliament shows that Africans could not
have maintained sufficient autonomy to „build up‟ rights as a community, as
Legassick suggested they did. With reference to Legassick‟s contention that the
acquisition of rights to the Commonage was „the reciprocal side of paying taxes‟,
Giliomee pointed out that the purpose of the Native Location Act 6 of 1876 was the
opposite. Their purpose was „to reduce the number of idle squatters‟ (namely, rent
paying tenants economically acting on their own behalf).69
[160] In Giliomee‟s opinion, Legassick‟s formulation of the claim is one in which the
claim is made by a community or people as descendants of the Xhosa nation to the
Zuurveld without any borders or reference to the land that is the subject of this
dispute. Giliomee says that such a claim is extraordinary because all frontier conflicts
over land were between political authorities over contested boundaries. And there
was no evidence of the existence of a community as contemplated in the Act.
69 H Giliomee‟s Supplementary Expert Report, citing C Bundy The Rise and Fall of the South African
Peasantry (1979) at 78.
[161] Giliomee refuted Legassick‟s contention that the Xhosa attack on
Grahamstown in 1819, led by the prophet Makana, was to recover land lost in the
expulsion, as not based on any factual or documentary evidence. And he points out
that all writers on the frontier have commented that the attack by Makana was to
recover cattle seized from the Xhosa by Lieutenant Colonel Brereton.70
[162] In regard to whether an autonomous community of African farmers – an
African peasantry as historians call them – emerged in the Albany and adjoining
districts, and Salem in particular, during the latter part of the nineteenth century,
Giliomee pointed out that a large number of Africans settled on alienated Crown land
or the farms of absentee landlords making a living as labour-tenants or as rent-
paying tenants. So, in the vicinity of Salem, the farmers were likely to have permitted
their labourers to graze their stock on the Commonage. But there is no reference to
African farmers living there in any capacity other than as wage labourers and labour
tenants, who received cattle as a supplement to, or in place of, wages. Such
labourers were allowed to graze their cattle on the Commonage, but it is unlikely that
they would have „built up‟ rights as Legassick contends they did. The documentary
evidence, Giliomee maintained, suggests the contrary.
[163] Giliomee also testified that he doubted Nondzube‟s evidence, which is
considered later, to the effect that his great-grandfather trekked past a kraal that
existed where the Grahamstown Cathedral (established in 1824) en route to the
70 H Giliomee‟s Supplementary Expert Report.
Commonage before 1811. This is because if there was an African Kraal at that spot
there would probably have been reports indicating this in district documents. And
given Nondzube‟s present age, which is 68, it is unlikely that he would have had a
great-grandfather over 100 years of age to have told that story.
[164] A hut tax, Giliomee explained, was imposed on indigenous people universally
in British Colonies to force them into wage labour, and to inject more cash into the
economy; they were not aimed at whites. If a farmer in Salem did not want an African
to live in a hut, or if the tax was not paid, he could simply terminate the employment
and evict him from the property. So Africans living there did so at the pleasure of the
owner.
[165] Under cross-examination Mr Krige attempted to debate the interpretation of
the laws and regulations that were passed towards the end of the nineteenth century
regarding African occupation of white owned land with Giliomee. The essential
proposition put to Giliomee was that these laws granted Africans rights to live on the
Commonage. As with Legassick‟s evidence on these aspects, these are not
questions that Giliomee was qualified to answer, and they should not have been
allowed.
[166] It is further put to him that the claimants didn‟t know whether they were
Gqunukwhebe, or Xhosa falling under Ndlambe, and that his suggestions that
Xhosas owed different allegiances was simply one of divide and rule, which he
denied. This question, however, makes clear that the present descendants do not
claim any rights by virtue of being Gqunukhwebe.
[167] Much of the cross-examination also involved Mr Krige arguing with Giliomee
instead of putting questions for the purpose of establishing or disproving facts.
[168] Mr Notshe, for the claimants also put questions to Giliomee without
challenging his central contentions. Surprisingly, he did not challenge the evidence in
which Giliomee called into question Nondzube‟s assertion that his great-grandfather
had passed through an African kraal where the Cathedral is now situated in
Grahamstown in the latter part of the eighteenth century.
Professor Legassick’s Supplementary Response
[169] In his supplementary report in response to Giliomee‟s supplementary report
and evidence Legassick became more assertive about the claimant‟s indigenous
right to the Salem Commonage. Contrary to his initial view that he had an open mind
on this question he now asserted that to prove indigenous rights „it is merely
necessary to show that Salem was within the bounds of Xhosa territory at the time
that European settlers established officially-titled farms in the Zuurveld‟. The
evidence was challenged in cross-examination on the ground that this would mean
that anyone showing some tribal affiliation with the Xhosa would be entitled to assert
a claim over the entire territory. He insisted that they could, which he was also not
qualified to give an opinion on, and which I later point out the Act does not sanction.
The claimants’ evidence
Mr Msele Nondzube
[170] As Mr Nondzube‟s testimony lies at the heart of the claimant‟s case, it is
necessary to set it out in some detail. I mentioned earlier that it is primarily upon his
hearsay evidence that the claimants‟ claim to have „held‟ the Commonage in
accordance with indigenous law rests. He is Chairman of the Community Property
Association established to pursue this claim. His evidence in chief was as follows.
[171] He was born on the Commonage, which he knows to be called Tyelera, on
16 April 1945. He was thus 68 when he testified. The place of his birth was on what
became Mr Jack Hill‟s farm, near the graveyards of his family.
[172] His grandfather was Landonda Nondzube. He learnt from Landoda where his
family had come from. Landoda had explained that they were originally from the
Transkei where they grazed their cattle. They moved to Dikeni, now known as Alice,
and from there to Tyelera. They travelled through Grahamstown, it seems, before the
town was established, but before the expulsion in 1811. There was a Chief‟s kraal
where the Cathedral in Grahamstown is now situated. They have several clan names
but are collectively known as the Jwara, and are of Xhosa descent.
[173] He was unable to say when Landonda was born. Landonda‟s father –
Nondzube‟s great-grandfather – was Phuphana. Landonda told Nondzube that when
they arrived in Tyelera he was a „small boy‟ and Phuphana was a young man. They
were one of the first families to settle there and when more people arrived they
called the place Lokishi. They were given a place to live and an area to graze their
cattle and cultivate land.
[174] Some of the other places, apart from Lokishi, where people lived were
Nkotyo, Ntyuweni, Maglolomini and Mantyi. They all had burial sites but most people
were buried in Lokishi at a place called Soxhenxa. There are also graves that belong
to the Lonzobe family under a Mqwashu tree (milkwood tree), and another grave site
at Mtyuwani.
[175] He was not aware whether there was a leader at the time but he was told that
as time went by a leader was appointed for them by the Paramount Chief from the
Transkei. There were two leaders, of which Phuphana was one, and the other was
Dayile, who he testified, „most of the people‟ talked about. These leaders executed
the orders of the Paramount Chief. Dayile was not of royal blood because he
belonged to the Mantakwendas clan. All the people fell under Dayile‟s authority. He
qualified this by testifying that Dayile was entrusted to carry out the duties of a Chief,
but was himself not one.
[176] The role of these leaders was to ensure that the people to whom they had
allotted land used it properly. They also mediated disputes in the community. Where
the leader lived, he learnt, was regarded as a „great place‟.
[177] His grandfather told him that there were corn fields where they lived and the
boys would herd the cattle over these fields, until they reached the river called
Qhora.
[178] The community participated in initiation ceremonies where young boys were
circumcised. When a son was ready to leave his homestead his father would give
him an axe, which symbolically entitled him to set up their own homestead. The chief
would then make a piece of land available for this purpose, as he would do for any
newcomer to the area. They also practised traditional medicine involving a white clay
to cure illness and for use by women who have given birth. The clay was also used
during initiation ceremonies.
[179] Phuphana, to whom reference was made earlier, was appointed as a leader
by the Chief from Mngqesha. When this happened Phuphana had to leave the
location and stay at a place that later became Mr Hill‟s farm. Phuphana and
Landonda considered this land to be their own.
[180] He related a story that he had heard from Landonda involving Mr Gush, one
of the 1820 settlers, which occurred in 1835: A Xhosa impi arrived at Salem. And the
Xhosa people living behind the church on the Commonage joined the impi on the
opposite hill. Phuphana was one of these people. They stood on one side and Gush
and the army he had arrived with in 1820, on the other. Gush and another white man
approached the impi unarmed. He told them that they had not come to fight. He
offered seeds to plant because theirs, Gush said, was not of a good quality.
[181] They then began arguing about how they were going to share the land. But
the white people then recorded the incident differently. They said the Xhosa were
hungry and Gush had given them bread. But that was not true because when the
settlers arrived „our grandfathers were cultivating the land, they were planting there‟.
He testified that this incident, involving Gush, took place long after his family had
arrived in Tyelera.
[182] Nondzube was taken through various places pointed out during the inspection
in loco, which he confirmed was the general area where Dayile‟s homestead and
their arable land were situated.
[183] Under cross-examination he was asked whether his father also related some
of these stories to him. He first evaded answering the question directly; then he
admitted that his father had also told him about what had happened. Pressed further
about whether his father had one discussion with him or several, he again elided a
clear response and answered that he had heard these things when they sat down as
a family, and the elderly people told them these stories. And, he continued, as the
children grew up they also related the stories to one another. When asked whether
he had told his counsel that he had heard these stories, not just from his grandfather
but from other family members as well, he once again avoided answering clearly
until the question was repeated. He then answered that he had not conveyed this
information to him.
[184] His grandfather, Landonda, died in the 1960s. His father was Jamani Sukula.
He lived some distance from the Nondzubes. He also lived in Tyelera, but not at the
same place that Jack Hill had taken over. At this point in his testimony, he described
Tyelera as „the whole area we called commonage or Zuurveld, all that belongs to the
black people‟.
[185] He is asked whether his father lived on the Kings‟ farm when he was born, to
which he responded that when he began to understand things, his father was living
on Mr Ross Atwell‟s farm after the area was subdivided. When asked if this was on
one of the privately owned pieces of land he answered unclearly: „that place was
Tyelera that is; that entire place was Tyelera and then they demarcated it and took it
over‟. The court then asked him: „So Tyelera was the area where the white
community lived on farms as well as the Commonage, is that what you are saying‟?
He responds, again unclearly: „Tyelera is a place where black people first arrived
and settled there, our grandfathers, there (were) no white people at that time.‟
[186] In response to a further question as to how Salem got its name, he answered
almost as a child telling a story would:
„My grandfather says when the white people arrived there, they were led by Colonel Graham
and their religious leader was William Shaw. Then on a certain morning Graham woke up
and went to William Shaw and asked him what name they should give this place. William
Shaw went to sleep and said I am going to tell you the next day. The next morning William
Shaw woke up, went to Graham and said they are going to call this place Salem, which
means bees.‟
When asked further whether his grandfather mentioned all these names, such as
William Shaw, he answered that his grandfather had not mentioned this but that he
added both William Shaw‟s and Colonel Graham‟s names himself from what he
learnt of the history of the white people. So, from this evidence it appears that some
of what he learnt was from his grandfather and other things he learnt himself, and
also from his father. These answers reveal that the sources of information upon
which his evidence is based are unclear and, as I discuss later when evaluating this
evidence, it is an important reason why it ought not to have been accorded any
weight by the trial court.
[187] He testified that his father was born on 28 September 1899 and he died on
24 August 1997. Apart from Nondzube himself, his father had four other children:
Fundeswa, Angelina and George, who all bore the surname Sukula, and one other
child, who died at around 12 years‟ of age. He took on his mother‟s surname,
„Nonzube‟. His claim as a beneficiary, however, was made under the Sukula name,
after his paternal grandfather, Mr Kifa Sukula, and not his mother‟s name.
[188] He testified further that he had attended a school in Salem and went as far as
standard four. He could not remember the name of the farms in the area. All he
could remember was that the place where he was born was handed over to Hill
before his birth. After that they moved to Mr Knoud‟s farm, which is also in Tyelera.
Knoud bought the farm from Mr Robyn Bradfield. He moved to Knoud‟s farm with
Landonda. His farm was nearer to the school than Hill‟s farm was.
[189] He testified further that his great-grandfather, Phuphana came from Dikeni,
now called Alice. When asked whether he came from the Transkei he agreed. He
came with his family and was accompanied by other families.
[190] It was put to him that the experts could find no evidence of any hut on Hill‟s erf
in 1942, neither was there any archaeological evidence of any graves there. He
responded that his grandfather lived there and that the Nondzube family graves were
there. And he insisted incredulously that when he went to school they passed the
spot where he could see his „grandfather‟s old bones lying around there‟. He
speculated that the whites must have ploughed the land; that is why there was no
evidence of graves.
[191] It was put to him that one of the spots to which he had pointed where there
had allegedly been graves was under a milkwood tree where a few stones were
found during the inspection, and that tree is in an area that was not part of their
claim. In response, he insisted incorrectly that it was.
[192] It was put to him that the photographs taken in 1942 show that there were no
huts scattered around the Commonage but were concentrated close to the private
erven. He responded argumentatively: „What I see here after the white people
dispossessed us they took photographs; now after they have chased people away,
now you are showing us these photographs‟. He was then asked whether they had
done this deliberately to which he answered that they had. And, he continued: „It‟s
what I think considering the things the . . . white people did to us‟.
[193] It was put to him further that the evidence on behalf of the landowners would
be that apart from one area he had pointed out on the Commonage as being arable
land, which had been ploughed by a landowner, none of the areas had been
ploughed by anyone. And that his identification of those areas as having been
ploughed by Africans was incorrect. Again, he insisted, that his grandfather had told
him that „they were ploughing there up until the road and over to Qgoga . . . up to the
road from Mr Bradfield‟s farm to Seven Fountains‟.
[194] An example of one of the areas that Nondzube pointed out to be arable land
cultivated by the African people belonged to Jack Hill; and it was put to him that Hill‟s
descendants applied to the Department of Agriculture in 1984 to cultivate virgin soil
(ie land that had never been ploughed before), indicating that this land could not
have been cultivated by anyone before this. In response he steadfastly insisted that
his grandfather had told him this, and therefore it was true.
[195] He was asked to comment on two other areas he had pointed out as having
been occupied by Africans, which are not part of this claim, and falls within the
private erven of the landowners. He responded by saying that he could not
understand why this area is not part of the claim because it was in Tyelera, which,
contrary to his earlier description, he now described as „the whole of that area which
they call Salem is Tyelera‟.
[196] Regarding his evidence concerning Dayile, it was put to him that he had not
been able to point out the location of Dayile‟s homestead during the inspection in
loco. He responded by saying that „when we were there and I was pointing out where
he was living, [the people attending] said [they] were tired and [we] did not go there‟.
He was then asked why this had not been recorded in the minutes of the inspection
because they recorded that „the exact area of his homestead is unknown‟. It bears
mentioning that his answers at the inspection were recorded on a dictation-phone.
He responded unconvincingly: „I said, I . . . can take you to that place and . . . tell you
that his house was in this area, but not to point out the exact place‟. When it was put
to him that what he was saying now in court was also not recorded in the minutes he
replied: „I am not going to dispute that but what I am telling you, it is as it is, but it is
like I am telling you‟.
[197] His answers in response to questions about whether he told Paul about Dayile
are also telling:
„Mr Roberts: Did he ever consult you about this claim? – Paul was always amongst us
because he was investigating the claim, I cannot say that I told him this or I told him that but
he was always amongst us.
Did you tell him what your grandfather told you? – I am not sure but there is nothing written
down which I said to Paul.
So did you tell him that there was a Chief Dayile? – I have already mentioned that there
were many things which we have discussed . . .
Did you tell him that there was a Chief Dayile? – Whoever told him because all of us, it is a
story related to us by our forefathers, I do not maybe I told him, or I did not tell him, because
all of us know that story because that is how our history was relayed.
Well when he was questioned, he said he did not know that name? – That would surprise
me . . .‟
[198] Concerning what his grandfather had told him about Colonel Graham‟s
expulsion of Africans from the Zuurveld in 1811 he testified that he was told that they
had fled to a place called Mnameni, which is now Alexandria. And then,
incredulously adds, they took shelter in the forest and returned to Tyelera when it
was calm.
[199] The conclusion of his cross-examination is even more telling; in effect he
conceded the landowner‟s case, which the LCC also disregarded completely:
„Mr Roberts: . . . [D]id your grandfather tell you that white people also grazed their cattle on
the commonage, yes or no? – My grandfather told me that when they were being killed by
Colonel Graham and they ran away, on their coming back, they would have stolen their
cattle and that is how they had possession of cattle and they grazed them in that
commonage.
So the white people did graze live stock on the commonage . . .? – Yes that is what my
grandfather says.
And were those cattle also grazed together with the cattle of black people when they
returned? – That is correct.
And the white people also erected houses on the commonage? – When?
Together the white people also ploughed on the commonage? – That is correct.
And the white people also erected houses on the commonage? – I say bear in mind that
when you are conquered, the person do what he likes with your thing.
And did the black people start to work for the white people? – They did work for the white for
the reasons which I have put forward; I can even add other reasons.
So there was a stage when the white farmers were farming and the black people
commenced being employed by the white people . . .? – I did not deny that . . . I said they
were conquered.
So once they were conquered the land belonged to the white people, is that what you are
saying? – Yes, the reason that we have come to this Court is because they are now claiming
the land and we are also claiming the land is ours.
Now did the black people work for the white people on the erven . . . and on the
commonage? – Yes.
And they subjected them to the rules of white people when they were employed? – Yes I
have told this Court that, if you are conquered the conquered person obeys the rules of the
conqueror.
So…after the land had been conquered the whites decided what would happen on the
commonage, not the blacks? – Yes without consulting the . . . oppressed people, they did
what they liked.
So . . . Dayile could not decide any more what he wanted to do on the commonage on his
own . . . he lost his superiority as a chief or headman when the whites conquered the
commonage . . .? – That is correct.
. . . After the conquering the blacks had no say of what must happen on the commonage? –
That is correct.
And the whites then controlled the commonage? – That is correct.‟
After this catastrophic concession by Nondzube, Mr Notshe attempted to rescue the
claimants‟ case in re-examination by asking him whether the loss of power referred
to above occurred before or after demarcation. Nondzube responded that it was after
the demarcation that the chiefs lost their power. However, in further cross-
examination by Mr Roberts, Nondzube confirmed that the black people were
conquered by Colonel Graham „[a]nd all the other people who came after Colonel
Graham‟. In other words, the conquest occurred long before the demarcation.
Mr Ndoyityile Ngqiyaza
[200] The only other witness for the claimants was Mr Ndoyityile Ngqiyaza who
testified that he was born „in Salem at Lokishi‟. He is uneducated and his evidence
was not easy to follow. He was unable to say when he was born, but his birth
certificate indicated that he was born in June 1942. He comes from the Mqarwane
clan. They lived in a home, made of trees and mud and had cattle and goats.
[201] His father supported the family by selling firewood in Grahamstown and
cultivated lands in a place called Thafeni. He testified that they took the cattle long
distances to graze. He left home after demarcation because there was nothing else
left at home.
[202] His father then started working for Mr Bradfield. Bradfield would not allow his
father‟s cattle on the farm; so he had to sell them. He was unable to say when his
father died but he had heard from his sister that their mother died in 1940. Her grave
is at Lokishi. When asked whether she died before or after demarcation, he replied
that it was afterwards. His father‟s grave is on Bradfield‟s farm.
[203] Under cross-examination he testified that he would not be able to identify his
place of birth in Thafeni. He agreed that during the inspection in loco he was not able
to identify the place. He testified that their home where he was born was about 400-
500 meters from the lime pit. He said that they had always lived there and had not
moved there from any other place. There were several other huts and families near
them, also close to the lime pit.
[204] It was put to him that one of Bradfield‟s relatives, Andrew Bradfield, said that
he could not remember him. He answered that this was because Andrew was very
young when he left. It was put to him that aerial photographs of the area showed that
there were no huts in the vicinity of the lime pit in 1942. He insisted, however, that
there were.
[205] In response to a question what demarcation meant to him, he answered that
they were told that this farm belonged to one person and that farm to another
person. Demarcation „was made for white people and two coloured people‟. Not for
black people. „[I]t brought hunger and we had no place to store our mielies.‟
[206] After a lunch adjournment, it was put to him that his parents only moved to the
Bradfield‟s farm in the 1960s, long after demarcation. His answer to this (contrary to
his earlier evidence) is that this was correct, they had moved there after Mr Don
Bradfield had died. Asked whether he had stayed at Mr Walter Penny‟s farm before
this he answered that his elder brother Tim had lived with the Pennys. He was asked
again whether he was born on Bradfield‟s farm. He answered that he was not. And
then the following exchange took place:
„Mr Roberts: Where were you born then? – I was born at this place now; it is Hobbits, which
belonged to [Don Bradfield‟s] father.
Just give us the name again of that place? – Lokishi
And where were you born, just tell us again . . . were you born on the Lokishi or at
Mr Bradfield‟s place
Mr Notshe: He is [inaudible] the witness, the witness has said four times, at [inaudible]
Lokishi.‟
[207] He testified that Mr Tim Ngqiyaza was his elder brother; who had died three
years earlier. Tim stayed with Walter Penny and had been employed by him.
The landowners’ evidence
Mr Arthur David Mullins
[208] Mullins was the first witness to testify on behalf of the landowners. His father
moved from what was then Rhodesia in 1952 to Salem and farmed on the farm
Moorelands, which is adjacent to the claimed area. Mullins was born there in 1955.
His father farmed pineapples, vegetables and beef cattle.
[209] In 1964 Mullins senior took occupation of another farm, Avondale. He sold
Moorelands to Mr Barret Fowlds. Avondale was virgin land, except for parts of the
erven and a small piece of the Commonage where the previous owner, Mr Ross
Attwell had grown pineapples.
[210] Upon their arrival at Avondale, the farm had two employees, one of whom
was Mr Jamani Sukula, Nondzube‟s father. Sukula‟s age was then 65. He was
revered on the farm as the senior citizen. He had two daughters and a son George.
In later years Mullins became aware of a fourth child, Nondzube. When Sukula died
30 years later at the age of 94, Mullins was asked to read the eulogy at his burial
ceremony. Sukula had played an important role in Mullins‟ life for more than 30 years
and at the burial, Mullins was presented with a certificate of appreciation signed by,
amongst others, Nondzube himself.
[211] During the 1980s Mullins senior bought the adjoining farms of Salem Park,
Devonshire and Willowbank, and also a portion of Pleasant Prospect. All of these
farms are in the claimed area.
[212] Mullins is a linguist and speaks isiXhosa fluently; he conversed frequently with
Sukula. Sukula told him that his father, Mr Willie Kifa Sukula (Nondzube‟s
grandfather), came from Seven Fountains and then moved to the farm Kingston
where he worked for the King family. Seven Fountains is not within the claimed area.
Kingston is contiguous to Avondale. They lived on the southern side of the Kingston
homestead, ie on the erf, and not on the Commonage. And when they moved to
Avondale they likewise lived on the erf.
[213] In the 1970s, as Sukula was ageing, Mullins senior built a brick home for him
on the Commonage, 300 metres from the edge of the erven. The reason was that his
previous dwelling was in the valley where it became very cold in winter.
[214] The second employee referred to earlier, who was on Avondale when the
Mullins family took occupation, was Mr Nimrod Plaatjie, who is also one of the
claimants. He also lived on an erf slightly north-west of where Sukula had lived. He
also requested to move because he had taken over the management of the
livestock. So Mullins senior built a home for him too, on the erf.
[215] Neither Sukula nor Plaatjie had their own livestock. Mullins senior assisted
them to plough a small piece of land where they could grow vegetables. The
Plaatjies had been on Avondale for about 25 years before the Mullins‟ had arrived
there in 1964, and Sukula had been working on the farm for 40 years, since 1924.
[216] During his frequent conversations with Sukula, the latter described how his
previous employer, Attwell, would, after the cattle had been milked, let them out for
grazing on the Commonage. Sukula would then walk for a distance, sometimes to
the edge of the Bushmans River, to collect them.
[217] Sukula described the Commonage as a „vast open piece of land‟. The
landowners grazed their cattle there and the cattle often got mixed up. The black
people who lived on the Commonage were close to the erven where they were
employed. He never suggested that they had any right to arable land, or that the
whites had taken their land.
[218] Sukula never mentioned that there were chiefs or headmen called Dayile or
Klaas Nondzube (another name for Phuphana). Each individual farm had their own
elders and they had served as a leadership group on that farm. They decided on
disputes within the community who lived on the farms, and on initiation ceremonies.
Where the disputes involved members from another community, the elders of the
two communities would get together to solve them, and if still unresolved, the police
would be called in and the matter would be taken to a magistrate. There was no chief
or headman‟s court. With regard to initiation ceremonies they first received
permission from the farmer because there were rules such as the prohibition of
snaring and hunting while the initiate was in the bush.
[219] The employees were given burial sites on the farms. On Avondale, for
example, Mullins senior designated an area and when that area became congested,
Mullins designated a second burial site. It is here that Sukula is buried. There are a
number of graves at this site. As far as he is aware the landowners respected these
grave sites.
[220] On their farms Avondale and Devonshire, in order to farm pineapples, they
had to clear substantial areas of bush and applied for permission to the Department
of Agriculture for this purpose. Of the farms that Mullins senior, and then Mullins
himself eventually owned, constituting seven portions of land in total, there were no
remains of arable land made by black people. The only piece of arable land when
they arrived in 1964 was a small piece of land on which Ross Atwell grew
pineapples, and there was a garden adjacent to the homes of the Sukulas and the
Plaatjies‟.
[221] He was taken to some of the aerial photographs used as exhibits, and in
particular some of the points on those photographs that Nondzube had testified
about. One of the areas on exhibit „P‟ (one of the 1942 aerial photographs), was land
that he had owned until recently. It was a portion of the farm Salem Park that had
previously been owned by Mr Cecil Tarr, Mr Spencer Hill, and originally by Mr John
Harrison. A small portion of this land, in the south-western corner was fenced off and
used for commercial farming. Before this the area was virgin bush consisting of
thickened edible berry and mixed grass in between.
[222] Mr Gordon Hill lived in the area coloured in blue next to areas 21, 25, 26 and
27 in Mullins‟ father‟s lifetime. That is where the lone standing milkwood tree – the
Mngqesha tree referred to by Nondzube – is situated. Hill ploughed that whole area.
On the south-eastern portion of that area, in between areas 26, 27, 28 and 29 there
is an area coloured in light green. This was part of the Commonage and had always
been grazing ground, except for a small piece adjacent to erf 544.
[223] Next to Jack Hill‟s erf, number 545, there is a dam built in the kloof. It was
built for stock watering purposes. Mullins owned that after 2001. In addition he
identified the areas he had owned until he had sold them to the government after a
claim had been lodged against them. Until then he had been the chairman of the
farmer‟s association. He sold the land for commercial reasons and not because he
believed that there was any validity to the claim.
[224] Regarding Nondzube‟s evidence that the Commonage was called Tyelera, he
testified that this was „completely incorrect‟:
„Tyelera is the Kariega River that runs to the north of the claimed area; it rises below that the
Highlands mountain and runs through a number of farms in the valley . . . [and] into the sea
at Kenton on Sea. The Tyelera has no reference to Salem whatsoever.‟
Mullins testified that African people refer to Salem as „Esalem‟, and if one used it as
an adjective there would be an „L‟ in front. The area referred to in the evidence as
Thafeni, is actually „Ethafeni‟ and on the 1942 map it would be the flat area to the
south.
[225] Between 1948-1954, there was a pineapple boom in the area resulting in a
huge influx of Africans into the area to perform manual labour. The 1949 aerial
photographs showed the homesteads of African people. The 1955 aerial
photographs indicated a further expansion of arable land. In comparison with the
1942 maps, which showed very little agricultural activity other than grazing, the 1955
map revealed blocks of land that had been ploughed.
[226] Under cross-examination from Mr Krige he was asked to comment about
events before the 1820 settlers arrived and thereafter, the evidence of the historians
and the content of historical texts despite his making clear that he was „not aware‟ of
the history of that time. He was also asked whether he had any knowledge of
Africans living independently on the Commonage before his father had arrived to
which he responded that he had no personal knowledge. He was also requested to
comment on the documents that form part of the record, including his attitude to the
laws and regulations passed to restrict Africans.
[227] Under cross-examination by Mr Notshe he was asked whether he denied
Nondzube‟s evidence that Phuphana had settled in Salem before the settlers arrived
to which he responded that this could not be correct if one considers what his age
would have been. He explained that on the basis that Nondzube was 68 years‟ old
when he testified, and is ten years older than him; Nondzube‟s grandfather,
Landonda, would probably have been born around ten years before his own
grandfather. Mullins‟ grandfather was born in 1886, and so Landonda would probably
have been born around 1875. On this basis Phuphana, Nondzube‟s great-
grandfather, would probably have been born around 1840-1845 because most
people have children between the ages of 25-30. However, on Nondzube‟s version,
Phuphana was already a grown man in 1812, and would have been born somewhere
in the 1700s. He also would have been 80-90 when Landonda, his son, was born in
1875, which is unlikely.
Mr Spencer Hill
[228] Hill was born in 1949 and farms in the Southwell area close to Salem. His
farm is not the subject of this claim. His grandfather was Jack Hill, who was born in
1896 and died in 1981, at the age of 85, when he was 32. He is related to Thomas
Hill referred to in the minutes of the Salem Committee of 1847. The minutes of 1887
reflect that two Hills were present at the meeting. One is his great-grandfather, and
the other his great-grandfather‟s brother. He grew up on the Rippley farm, which his
father acquired in 1946, after the Second World War. The farm adjoined Jack Hill‟s
farm, which he visited frequently.
[229] His grandfather lived on the piece of ground number 545 on Exhibit „S‟ with
his two sisters. He also owned erven 542, 543 and 544.
[230] His grandfather told him that the Commonage was where the erf owners were
allowed to run their stock. Most of them had employees who had worked on the
farms, collected cattle and did general housework, gardening and whatever else.
They lived close to the homesteads because transport was a problem; everybody
walked to work.
[231] Hill also told him that the landowners had a village management board that
made the rules regarding the grazing of their cattle on the Commonage.
[232] Regarding the now much spoken about mngqesha or milkwood tree, and the
area surrounding it at points 21, 25, 26 and 27, the erf was part of the farm Rippley.
His father sold it to Mr Havengouws. He visited the place many times; there were
never African people living there. They ploughed the area from boundary to
boundary and he never saw any graves or human remains there.
[233] The area to the left of that area shaded light green and, numbered 26, 27, 28
and 29 was part of the Commonage where the landowners grazed their cattle. It is
across the road from the farm Rippley. This section was never ploughed. It has „red
grass‟, which could not grow on land that had been ploughed.
[234] He confirmed Mullins‟ evidence regarding why a dam was built in the
Sephton‟s Kloof on the Commonage in 1847; because they needed permanent water
for their stock. The Kloof is just below the area on which his grandfather lived and
shows that the landowners used the Commonage for their benefit.
[235] The area on Exhibit „S‟, numbered 21, 23, 24 and 25 also coloured in light
green was the farm Salem Park, which he had owned. He had bought it from
Harrison. Except for a small portion at 21 and 25 of a few morgen that had been
ploughed, the rest was virgin bush. Harrison used that portion, which he had fenced
off, to plant for his stock. In 1972, after Hill had bought it from Harrison, he applied to
the Department of Agriculture to clear the bush and plough the virgin soil. The
application was approved.
[236] The 1942 map, Exhibit „P‟, shows that there were no huts on Rippley. In 1942,
when his father moved to Rippley it was a bare piece of ground. They built a „wattle
and daub‟ house to live in and started farming. There was no labour either. When the
pineapple boom came, there was an influx of labour and the huts on the 1949 map,
Exhibit „S‟ reflect this. The farm was sold to Mr Tarr, who sold it to Mullins. Someone
else now owns it.
[237] Under cross-examination he was asked by Mr Krige to confirm that when he
grew up in the 1950s „the whole of Salem and the former commonage of Salem was
White farmland and Blacks were there as labourers and servants‟. He did. And
further whether his grandfather had told him that in 1941 that there was an
independent African community numbering 450 people living on the Commonage to
which he answered emphatically: „Definitely not‟.
[238] Regarding his application to plough virgin land in 1972, Mr Krige put to him
that if ploughed soil is left for 30 years, it is „axiomatic‟ that it would return to its
original state. Again he answers emphatically: „Definitely not‟. His evidence on this
crucial aspect was not contradicted and completely negates the claimants‟ case that
an African community had been ploughing parts of the Commonage for its benefit.
Mrs Ethel Phyllis Page
[239] Mrs Page was born in March 1926 in Grahamstown and was 87 years old at
the time she testified. Her maiden surname was Van Rensburg. Her parents moved
to Salem in 1934, when she was nine. Her father bought a property called the
Residency, which had previously been occupied by Mr Rex Mathews. She attended
school next to the church until standard six and Victoria Girls High in Grahamstown
afterwards. She later worked in Salem as the postmistress for two years. She
married at 20 and moved to Springs, in the then Transvaal, in 1946. She returned
annually to visit her parents.
[240] As she was growing up she visited the homesteads of the Hills, Harris and
Panel families. In fact everybody visited each other. She remembers visiting the
Masons at the farm Devonshire, which borders the Residency. That farm was
occupied by Mr Gush in earlier years. The Kings lived a distance away and came to
Salem Village on horse and cart.
[241] She recalls what happened when the Commonage was cut up and
demarcated. Her father was allocated the farm Philmon‟s Hoek. Her brother, Fred
lived there and he had erected a fence around it.
[242] The landowners used the Commonage to graze their cattle, but were not
allowed to plough or erect homesteads there. Mr Fletcher Harris was in charge of the
Board. She could not remember how many cattle each farmer was allowed to graze
on the Commonage but she thought it was 20, which was the number of cattle her
father had.
[243] Her father employed one male employee and a female maid for the house.
Her name was Dorris, but she could not remember the male employee‟s name. They
lived on another farm, not on the Commonage. She thought that they were not
allowed any cattle on the Commonage.
[244] Jack Hill‟s farm was some distance from theirs. His sisters lived with him and
she visited them. She would take the road going up towards the flats, which she
remembered is called Voortrekker Road, on the way to Seven Fountains. The Seven
Fountains Road is linked to the Kenton-on-Sea Road. She rode her bicycle on the
road often, about once a month, and further on the main road towards Alexandria.
After she became tired of this road, she used other roads.
[245] She saw no black residential area on Hill‟s property. It was originally all bush,
and he opened it up to plough. She would have been about 14 or 15 years old at the
time she was cycling around the area. When she left Salem after getting married,
there were still no black people living there. She remembered the milkwood tree on
that property as well. There were no black people living there either. She was taken
through Exhibit „P‟ and pointed out the road she used, where Hill‟s property was
situated.
[246] In an area shaded blue on the map she was asked whether there was a
homestead of black people living there to which she answered: „I never saw
anybody‟. She was taken further to points 26, 27, 28 and 29 and asked whether
there was any ploughing there, as the claimants allege. Again she answered that she
saw nothing like that. There was no ploughing, only grass and cattle grazing, which
confirms the Spencer Hill‟s evidence. Particularly in relation to point 29 she was
asked whether she had seen or heard of a homestead of Chief Dayile. She
answered that she used to ride her bicycle past that spot and never saw any black
person there.
[247] She identified another area, where Penny‟s cottage was near to the post
office where she worked. Again, she testified that no black people lived there while
she was in Salem. She testified further that most of the black people who received
mail at the post office were from Farmerfield, not from Salem. There may have been,
she said, „one or two‟ from Salem.
[248] At point „K‟ on the map she was taken to points 17, 18, 30 and 3, demarcated
in light blue on the map, which was alleged to be „the main homestead area of black
people‟. There too she saw no homestead of black people. She added: „The only
people that were there were the people that were working on the farms and they
lived on each farm‟.
[249] Before demarcation and the fencing of the area, her father and brothers used
to round up their cattle that grazed on the Commonage.
[250] The farmers on their neighbouring farms, the Harris‟ and Burris‟, employed
labour who lived on their farms. The property belonging to the Panels was also in an
area where there was „just bush and grass‟. There was no African homestead there.
[251] Under cross-examination by Mr Krige she maintained that she saw no
Africans on the Commonage or in the area where Dayile‟s homestead is alleged to
have been. When asked whether it is possible that she had not noticed them, she
answered that she would have noticed had there been anybody there. She testified
that she would have been 16-17 when she cycled in the area, and the only „native
huts‟ she saw were those on Hill‟s property.
[252] In response to a question whether her memory had faded after 60 years, she
responded that she had a very good memory. She was asked whether she was
aware that there was a location to which she answered that she was not. She also
testified she was not aware of Africans who had cattle on the Commonage.
[253] She remembered, after thinking about it overnight, that her father had two
African families living on their property. The first family consisted of an adult male,
along with his wife and a daughter. There was only an adult male in the other.
[254] The following exchange between Mrs Page and Notshe appeared in the
record:
„Mr Notshe: You admitted that there were blacks living at Salem during the time . . .? – On
the person‟s property there would be one or two huts.
Mrs Page is it your evidence that all the blacks who were at Salem were living on people‟s
farms and were servants? – That is right.
. . . Are you saying this as a fact that all blacks at Salem were working as servants and were
staying on their employers‟ farms? – Yes
You are saying this as a fact? – Yes‟
And later:
„Mrs Page how do you know that they were living on the farms? – Well Salem is a small
place you know?
Yes. So? – The friends that I had, we knew that they lived on the farm. Where else would
they live? They could not come and live on another person‟s farm.
They lived on the native location. – Where was that? . . . I do not know the place you are
talking about.‟
And a bit later:
„The blacks who were living there were growing their own food. Some of them even selling it
in Grahamstown. – I do not know where they got their food. I did not see any blacks living in
clusters. They lived on the farms and they got rations from the farmers.‟
[255] After this, the court took over the cross-examination, inappropriately:
„Court: Mrs Page just to try and get some clarity on this. You have told us what you saw. –
Yes
And what you can remember. Now if there were other black families and homesteads and
settlements and commonages that were around in the vicinity that you did not see, would
that necessarily mean that they were not there or you just did not see them? – I never saw
anybody.
But there may well have been? – Roaming around?
Yes, no I accept that. I know you have indicated repeatedly that you did not see people
walking around, but if there were villages in the area . . . – I would have seen them or known
about them.
You did not see them? – I did not; personally I did not see them.
Yes, but if there is other evidence to indicate that they were in fact there, you cannot really
dispute that? – Because I did not see it.
Because you did not see it and whilst you were riding bicycles on the gravel road and there
were bushes on both sides, am I right? – Yes.
It was a bushy area. It was a lovely green, lush, bushy area? – Yes.
You did not peep through the bushes to see how many huts were there? – No
You enjoyed your ride? – Correct, but if there were any people roaming about we would
have known, because the man that rode the horses around would have known.
Yes. Let us talk about you. Forget the man with the horses. When you were riding the
bicycle. – Yes.
On this gravel road with bushes on both sides, you were having fun as a young girl of fifteen
and sixteen. – Yes.
You were not particularly bothered about peeping through the bushes to see who lives there,
which hut is there, how many blacks are lurking around, because there are bushes that you
cannot see it whilst you are riding your bicycle. You are concentrating on the road. Is that not
the case? – I would say so yes.‟
Mr Alwyn Cuan King
[256] Mr King was born in 1954 and resides on the farm Kingston. It is currently
registered as farm 536 and was part of the old lot number 38 in his name. His father,
Alfred, born in 1906, was the previous owner. They also owned farm number 539,
which was part of the original lot 41.
[257] His father settled on the farm in 1936, which his father‟s two aunts owned
earlier. Alfred moved there to assist his aunts and started farming himself at the age
of 30. He died in 1989. Thomas King, one of the original settlers, was related to
them.
[258] He was aware that the Commonage was separate from the allotments. From
the conversations with his father, he had learnt that Alfred‟s aunts had employees,
which he had taken over from them. They employed four families. Three lived on the
erven and the other on the Commonage just off the erven.
[259] Alfred‟s aunts initially resisted the subdivision because they wanted a piece of
ground on the other side of the Assegaai River, which now runs through the
property.
[260] The Board was in control of the Commonage at that time. It ensured strict
control measures regarding its usage. No ploughing was allowed unless permission
was given. The number of cattle allowed to graze on the Commonage was restricted
depending on the size of the erven the landowner owned. No buildings were
permitted. When the rules were transgressed meetings were held and those
responsible would have been „sternly dealt with‟.
[261] There was never any mention of an independent black community having
lived on the Commonage. His father would not have permitted it. King was also an
avid cricketer and is familiar with the cricket field included in this claim. To the best of
his knowledge it was never used as grazing area.
[262] He confirmed Mullins‟ testimony that Salem is not referred to as Tyelera.
Africans refer to the Kariega River as Tyelera. He also confirmed that the area
demarcated by points 21, 22, 23 and 24 on Exhibit „P‟ was virgin land until Spencer
Hill was given permission to plough it. Importantly, he adds that once land is
ploughed it cannot be restored to virgin land, as the types of grasses and trees that
naturally grew do not return by themselves. This evidence too is consistent with
Spencer Hill‟s testimony.
[263] In regard to the incident involving Gush and the impi in 1835, he testified that
what he had heard of the incident from his family was different to how Nondzube had
explained it in court. As far as he knew, there was only one group of attacking
Xhosa. He had never heard of there being members of a locally resident Xhosa
community coming from behind the Salem Church and joining the attacking force. He
heard the different version of the incident from his wife, who is a direct descendant of
Gush, from her father and from Mrs Merry Mason.
[264] In regard to the area marked as „M1‟ and „M2‟ just above Penny‟s place he
had never heard of that place being an African residential area. Most of the areas
pointed out during the inspection were situated on private erven, not on the
Commonage.
[265] Under cross-examination, Mr Krige put a patently incorrect „fact‟ to King,
which was that one of the motivations given for the disestablishment of the location
in 1941 was because there had been 450 squatters there, to which he responded
that he would not know about that.
Mrs Alice Theresa Bradfield
[266] Mrs Bradfield was born in 1957 and married Mr Andrew Bradfield, the son of
Mr Don Bradfield, who settled on the farm Providence in Salem in 1940 at the age of
about 20-21. She came to Salem for the first time in 1974.
[267] She had access to her father-in-law‟s wage books. From the 1945 entries the
first indicates that Mr Roman Jakala was employed at a salary of one pound per
month. A further entry showed that Don Bradfield had purchased a bicycle for one of
his employees because he travelled a distance to work. There are also entries in
1967 and 1969 showing that two of his employees owned cattle. He did not prohibit
his employees from having cattle on the farm.
Mr Albert Alexander van Rensburg
[268] Mr van Rensburg was the last witness. Born in 1923, he was two months‟
short of 90 when he testified. Sadly, he also passed away recently. Page, who
testified earlier, was his sister. He also moved to Salem with his parents and settled
with them at the Residency. He attended school in Salem and then went to
Alexandria High School where he completed standard eight.
[269] His father had 36-40 cattle that grazed on the Commonage. They rounded up
the cattle every fortnight. He had two African families who built huts opposite the
road from their house, on his property. They were employed after the
Van Rensburgs arrived there. One of the employees was from the adjacent area of
Farmerfield. They usually helped his father to round up the cattle and sometimes he
did so as well, on horseback. The cattle walked long distances and sometimes went
as far as the flatlands, and even the Bushmans River. One of the families had their
own cattle and his father had some oxen, which helped with the ploughing. Their
cattle also grazed on the Commonage.
[270] He testified that he had never seen any African settlement on any portion of
the Hill‟s property. In regard to whether the entire Commonage was under the control
of the claimants he answers: „No such thing‟. He also never saw any ploughing or
African huts on the Commonage. He also never saw any homestead of any chief. He
would have seen it if it was there. He would definitely have known had there been
black people in charge of the Commonage.
[271] Under cross-examination by Mr Krige, he testified that he was not aware of
any location on the Commonage. With reference to the report of the Native
Commissioner in 1941 that there were about 25 white families with about 500
Africans of whom 50 worked as servants, the questioning proceeded with the Court
again improperly intervening. Once more, the witness delivers some telling
responses:
„Mr Krige: [The report] says the European population of the village is between ninety and a
hundred with 25 families, while the native population is about five hundred of whom fifty
worked as servants. I see you are laughing. – No, I never saw anything like that.
These servants lived on the premises of their employers. . . That is fifty and he goes on to
say that “I am given to understand that certain Europeans have permitted squatting in the
past.” – Squatting?
Yes. – That I know nothing about.
You see Mr Van Rensburg I put to you that there are two possibilities. One is that the native
commissioner was lying when he stated that that there were five hundred blacks living at
Salem. – Look I can only speak the truth. I never saw anything like that.
The other possibility is that you did not notice these black people because you were not
specifically looking for them. You were looking for cattle or you were looking for buck to
shoot. – Now look we are not all blind. You see whether there are huts or groups of people
living and that would . . . [interrupted]
Court: Were you, 1941, you must have been about sixteen years of age.
Mr Krige: 1939 judge.
Court: 1939?
Mr Krige: 1939 and he would have been sixteen.
Court: Sixteen, yes that is right. You would have been sixteen years of age. Would you have
taken an interest in all these issues about huts and the kraals or would you still have been a
young man? – No look you know, you are going out. You do not just ride blindly. You notice
things. So you would have noticed if there were huts built on the flats or whatever and I can
truthfully say I never saw something like that .
. . . Now it may be that you did not see it, but the commission records that there were in fact
blacks. Can you deny that? – Well look I never ever saw it. I can only speak (of) what I saw.
That‟s fine.
Mr Krige: But the possibility is that you did not see because they were in an area where you
were not? – Not five hundred people. Hell you could not miss something like that. How many
huts would be included?
Court: So just for my understanding and really this confuses me . . . [T]he government at the
time was conducting some form of census or statistic to establish how many people were
there. Now when you say emphatically that you saw nobody, are they lying? – Well I am not
saying they are lying, but I can only say what I did not see.
Mr Krige: Are you suggesting that you did not see them, but you are not stating that they
were not there, just that you did not see them? – You know if you do not see something then
obviously it is not there.
No there is a further deduction from that. If you did not see it, it is that you did not look
properly and that is why you did not see it. – No, that is not possible.
So you are saying categorically that the native commissioner was wrong? – Well look I can
only say what I saw, nothing. There was nothing.
. . .
Court: (to Mr Krige) I think he is a Jehovah‟s witness and he says he never speaks a lie and
it is only the truth. So he may not just have seen it. I do not think you can take it any further.‟
And later:
„Mr Krige: Now as far as black huts on the commonage are concerned, you said that you
never saw any . . . ? Could it be that you had not observed any because you were not
looking for native huts? – Look you know, one is not entirely blind to anything that is taking
place when you are going through such areas quite regularly. You would notice if there were
huts on the flats.‟
Apart from the dubious value of this line of questioning, counsel‟s persistence in
repeatedly pressurising an aged witness for the desired concession, aided and
abetted by the court‟s condescending intervention, is to be deprecated.
[272] In response to questions regarding the conditions under which his father‟s
employees worked, his answers yielded the following: One of the families had oxen
and a wagon. They used the oxen for ploughing the „little land around the house‟ for
his father. He gave them a portion of land across the road and there they were
allowed to plough and plant whatever they wanted for themselves. He could not say
whether his father had paid them because he did not know what arrangement they
had with him.
[273] Mr Krige suggests to him that his memory must be failing because these
events took place a long time ago to which he responds: „Look my mind is pretty
clear and I know and can only tell you . . . what I know‟.
[274] Under further cross-examination, Mr Notshe covered the same area as
Mr Krige did in attempting, unsuccessfully, to get the witness to admit that he could
have missed an African settlement on the Commonage, and that he could not
categorically deny that Dayile was the leader of the African community. The court
intervened and in an inappropriately patronising tone said to Mr Notshe, with
reference to Van Rensburg‟s evidence:
„Remember you are dealing with an old man and you must take into account that his
memory has faded and the fact that his almost every answer is not a direct answer, because
he either does not understand or he just has a mind set about how he is going to respond.‟
[275] I have read and reread Van Rensburg‟s evidence; the record does not support
the judge‟s observation that his memory had faded and that he was not giving direct
answers to questions. On the contrary his evidence was clear and to the point. This
is despite the fact that he was being badgered by counsel and treated in a
condescending manner by the court. It is, furthermore, inappropriate and improper
for a court to declare its findings on credibility in respect of a witness before the
witness has completed testifying and without having heard argument on the issue.
By acting in the way in which it did, the court erred grievously.
The Proper Approach to the Evidence
[276] It is trite that in civil disputes the party claiming something from the other party
in a court of law has to satisfy the court on a balance of probabilities that he or she is
entitled to it. The standard is no different with claims for the restitution of land under
the Act. In appeals against the factual findings of a trial court, the position was set
out thus by Zulman JA in Santam Bpk v Biddulph [2004] ZASCA 11; 2004 (5) SA 586
(SCA) para 5:
„Whilst a Court of appeal is generally reluctant to disturb findings which depend on credibility
it is trite that it will do so where such findings are plainly wrong (R v Dhlumayo and Another
1948 (2) SA 677 (A) at 706). This is especially so where the reasons given for the finding are
seriously flawed. Overemphasis of the advantages which a trial Court enjoys is to be
avoided, lest an appellant's right of appeal “becomes illusory” (Protea Assurance Co Ltd v
Casey 1970 (2) SA 643 (A) at 648D-E and Munster Estates (Pty) Ltd v Killarney Hills (Pty)
Ltd 1979 (1) SA 621 (A) at 623H-624A). It is equally true that findings of credibility cannot be
judged in isolation, but require to be considered in the light of proven facts and the
probabilities of the matter under consideration.‟
For reasons that will become apparent, I am of the view that the LCC misdirected
itself in its assessment of the evidence and its consequent factual findings.
The arguments raised by the Commission and the claimants regarding the
nature of this appeal
[277] The Commission advanced a curious argument before us regarding the power
of this court to interfere with the decision of the LCC. It contended that in upholding
the claim the LCC was exercising its wide remedial powers under s 33 and s 35 of
the Act. And it was therefore exercising a „true and strict discretion‟ with which an
appellate court may only interfere on very narrow grounds. It cited the Constitutional
Court‟s judgment in Florence v Government of South Africa71 to support this
proposition.
71 Florence v Government of the Republic of South Africa [2014] ZACC 22; 2014 (6) SA 456 (CC)
paras 111-117.
[278] The issue in Florence was whether the LCC had exercised its remedial
discretion properly in determining the appropriate form of equitable redress. There
was no dispute between the parties that the Florence family had been dispossessed
of a right in land.72 The dispute before us, by contrast, is whether a right in land
existed (and if so, what the nature of the right was), and whether, and if so, when
dispossession occurred. These are factual matters the claimants have to prove, as
they would have to do in any civil dispute.
[279] Questions of legal right are generally resolved by the application of the law
and not by the exercise of judicial discretion. If the claimants are successful in their
claim the issue regarding the feasibility of restoring the land to the claimants, or
ordering some other form of compensation, which was deferred for later
consideration, shall then arise. And it is then and only then that the LCC will be
asked to exercise its remedial discretion. Mr Krige was constrained to concede this.
[280] The claimants advance an even stranger argument to prevent this court from
examining the merits of the dispute. It was contended on their behalf that once the
Commission validated the claim the landowners had to review that decision under
s 6 of the Promotion of Administrative Justice Act 3 of 2000. Thus, the contention
went, the landowners bore the onus of proving that the decision was irrational, ie that
the decision was not one to which the Commission could reasonably have come on
the evidence.
72 Ibid para 12.
[281] Unsurprisingly, Mr Notshe advanced no authority to support this contention.
What is surprising, however, and deserving of censure, is that he did not draw the
court‟s attention to contrary authority: In Phillips v Minister of Rural Development73
the LCC rejected this very argument – raised by Mr Notshe himself – on the ground
that the Commission did not adjudicate or decide on the merits of a claim. This is the
function of the court. In that case, which was obviously correctly decided, Meer J
cited three other cases to support her conclusion, one from the LCC (Farjas (Pty) Ltd
& another v Regional Land Claims Commissioner, KwaZulu-Natal)74 and two from
this court (Gamevest (Pty) Ltd v Regional Land Claims Commissioner, Northern
Province and Mpumalanga75 and Mahlangu NO v Minister of Land Affairs).76
The claims advanced by the Commission and the claimants
[282] The claimants and the Commission, which supports the claim, therefore bear
the onus to establish:77
(a)
The claimants are a community;
(b)
who had a right in land;
(c)
that was dispossessed;
(d)
after 19 June 1913;
73 Phillips v Minister of Rural Development and Land Reform & another [2014] 4 All SA 100 (LCC)
paras 31-32.
74 Farjas (Pty) Ltd & another v Regional Land Claims Commissioner, KwaZulu-Natal 1998 (2) SA 900
(LCC) para 41.
75 Gamevest (Pty) Ltd v Regional Land Claims Commissioner, Northern Province and Mpumalanga &
others [2002] ZASCA 117; 2003 (1) SA 373 (SCA) paras 28–29.
76Mahlangu NO v Minister of Land Affairs & others [2004] ZASCA 74; 2005 (1) SA 451 (SCA) para 13.
77 See s 2(1)(d), s 2(1)(e) and s 2(2) of the Act.
(e)
as a result of past discriminatory laws and practices;
(f)
the claim was lodged no later than 31 December 1998; and
(g)
no just and equitable compensation was received for the dispossession.
For present purposes it is only elements (a) to (e) that are in dispute, and (f) only to
the extent of whether a valid claim was lodged.
[283] Before I evaluate the evidence it is important to point out that the claimants
and the Commission advanced a hotchpotch of vague, confusing, and contradictory
claims that developed during the trial. The LCC glossed over this.
[284] In their statement of claim the claimants alleged that they are a „community‟ of
black families whose forebears traditionally occupied the entire Commonage from
the 1800s. It is apparent from Paul‟s evidence that the date related to the latter part
of the nineteenth century – from about 1880 – because this was the period he
investigated. On the basis of this date the case was that the community occupied the
Commonage and exercised traditional or indigenous rights to the land from about
1880.
[285] However, in response to a request for further particulars by the landowners as
to whether the claimants admitted or denied that the Commonage was awarded to
the 1820 settlers, the claimants responded by admitting that the Commonage was
awarded to the settlers, but claimed that the AmaXhosa had occupied the entire
Zuurveld, including the Commonage before this. And by implication the claimants,
who are also of Xhosa descent, are descendants of the people who had occupied
the Commonage during that period.
[286] This meant that the claim to indigenous title over the Commonage was being
advanced on two entirely different grounds: the first by virtue of being descendants
of those who had occupied the land after 1880, and the second by being
descendants of those who occupied the land before 1820. Moreover, the claims
were being advanced together and not in the alternative.
[287] A completely different claim – the third claim – was advanced by the
Commission‟s expert witness, Legassick, which was that the community occupied
the Commonage from about 1880 and had „built up‟ rights by virtue of having paid
location taxes.
[288] The Commission‟s and claimants‟ assertion that an African „community‟
occupied the Commonage independently and autonomously on the basis of shared
rules regarding access to the land was also contradictory. Paul sought to make the
case that the community had no rules but had their own traditional way of doing
things, which he did not elaborate upon. The claimants‟ case directly contradicted
the Commission‟s: their case was that the community had derived their rules of
access to the land from a chief or headman by the name of Dayile. And yet a third
„inherently contradictory‟78 assertion, as the LCC characterised it, was that the
community derived their shared rules from the location regulations.
[289] Regarding the nature of the rights that were alleged to have been lost through
dispossession the Commission‟s initial investigation came to the conclusion that
these were labour-tenancy rights. However, this was not the approach taken in the
litigation. The case pleaded, following Paul‟s investigation and as set out in the
claimants‟ statement of claim was that the rights lost were „ownership rights,
residential rights, grazing rights and rights to use the land for agricultural purposes,
access to firewood, burial sites and the use of land as commonage for the entire
community‟. In its referral of the claim to the LCC for adjudication the relief sought by
the Commission was for the court to „upgrade the rights to full ownership rights‟. This
could only have meant, as I have indicated at the outset, that the claimants could not
have had ownership rights.
[290] Regarding the dispossession, again several different and contradictory claims
were made. The pleaded case was that in 1926 the community, then consisting of
500 people, occupied the entire Commonage. They were then „herded‟ into a
location on the Commonage and placed under the control of a „native
superintendent‟. This action was facilitated through the implementation of s 47 of
Ordinance 10 of 1921 and the Natives (Urban Areas) Act 21 of 1923, which entitled
78 As described in Salem Community (LCC) para 135.
the Native Commissioner to restrict and control the rights of the black community.
The implication is that the dispossession took place in 1926.
[291] But the other case pleaded is that the dispossession took place through the
court order that was granted by the Grahamstown Supreme Court in 1940, which
allowed the landowners to subdivide the Commonage and disestablish the location,
where the African Community had acquired rights. The court granted the application,
it is alleged, against the background of the racially discriminatory legislation then in
existence and the location was consequently disestablished in 1941, thereby
dispossessing the African Community of its rights.
[292] In the evidence of Legassick, a new ground was advanced to support the idea
that a racially discriminatory practice – not racially discriminatory laws – underpinned
the dispossession; the practice was the failure by the Board, the judges of the
Supreme Court and the magistrate, to consult the African community before ordering
the subdivision of the Commonage. In argument before us, when confronted with the
inherent difficulties with this evidence Mr Krige sought to make yet another case: the
racially discriminatory practice was the failure of the court to treat the African
community equally, a contention that is difficult to understand.
[293] In summary therefore the Commission and the claimants advanced vague,
confusing and contradictory claims regarding the nature of the rights the community
was alleged to have had over the Commonage, the rules under which access to the
land was determined, how and when the dispossession took place and the racially
discriminatory practice or laws that resulted in the dispossession.
[294] The following questions arise in this appeal:
(i)
Did a Xhosa community or anyone else occupy the Commonage before the
settlers arrived in 1820?
(ii)
If there was such a community, what was the nature and content of the rights
they acquired over this land?
(iii)
Did this community have any relationship to the community that is alleged to
have been dispossessed of its rights in the middle of the twentieth century?
(iv)
Did the expulsion of the Xhosa from the Zuurveld in 1811 extinguish any
rights that they may have held over this area and the Commonage in particular?
(v)
What was the legal effect of the award of freehold title to the settlers in 1848?
(vi)
Did a „community‟ as defined in the Act exist on the Commonage from 1878 to
the 1980s?
(vii)
What was the nature and content of the rights this community possessed?
(viii)
Was this community dispossessed of any of its rights? And if so when and
how?
(ix)
if there was a dispossession of any of the community‟s rights, was this the
result of a racially discriminatory law or practice?
The applicable principles relating to the evaluation of evidence in this matter
[295] The answers to these questions shall follow from an evaluation of the
evidence. As is apparent from what has been said earlier there are fundamental
disputes regarding the credibility of the various factual witnesses, their reliability and
the probabilities. The technique employed in resolving such disputes is well-known,
but it is necessary to quote the approach as formulated by Nienaber JA in
Stellenbosch Farmers’ Winery Group & another v Martell et Cie79 in full. I do so
because the LCC completely disregarded all rules in the manner it approached the
evidence. This was incorrect. There is no reason to reject these elementary
principles simply because this is a land restitution matter. The LCC‟s failure to do so
is a misdirection that goes to the heart of its factual findings. Nienaber JA said the
following:
„The technique generally employed by courts in resolving factual disputes of this nature may
conveniently be summarised as follows. To come to a conclusion on the disputed issues a
court must make findings on (a) the credibility of the various factual witnesses; (b) their
reliability; and (c) the probabilities. As to (a), the court‟s finding on the credibility of a
particular witness will depend on its impression about the veracity of the witness. That in turn
will depend on a variety of subsidiary factors, not necessarily in order of importance, such as
(i) the witness‟s candour and demeanour in the witness-box, (ii) his bias, latent and blatant,
(iii) internal contradictions in his evidence, (iv) external contradictions with what was pleaded
or put on his behalf, or with established fact or with his own extracurial statements or
actions, (v) the probability or improbability of particular aspects of his version, (vi) the calibre
and cogency of his performance compared to that of other witnesses testifying about the
same incident or events. As to (b), a witness‟s reliability will depend, apart from the factors
79 Stellenbosch Farmers’ Winery Group & another v Martell et Cie & others [2002] ZASCA 98; 2003
(1) SA 11 (SCA) para 5.
mentioned under (a)(ii), (iv) and (v) above, on (i) the opportunities he had to experience or
observe the event in question and (ii) the quality, integrity and independence of his recall
thereof. As to (c), this necessitates an analysis and evaluation of the probability or
improbability of each party‟s version on each of the disputed issues. In the light of its
assessment of (a), (b) and (c) the court will then, as a final step, determine whether the party
burdened with the onus of proof has succeeded in discharging it. The hard case, which will
doubtless be the rare one, occurs when a court‟s credibility findings compel it in one
direction and its evaluation of the general probabilities in another. The more convincing the
former, the less convincing will be the latter. But when all factors are equipoised probabilities
prevail.‟
[296] The parties also adduced both hearsay evidence and expert evidence
regarding the historical facts relevant to this claim. They were entitled to do so under
ss 30(1) and (2) of the Act, which allows all evidence that may be „relevant and
cogent‟ to be admitted, even if it would not ordinarily be admissible. The court is,
however, not obliged to admit such evidence; it has a discretion to do so. And in this
regard a court must remain alive to the dangers posed by the admission of hearsay
evidence.
[297] Section 30(3) of the Act says that the court shall give such weight to any
evidence adduced in terms of the preceding sections as it deems appropriate. This
simply means that, as with all relevant evidence that is admitted, it must be sifted,
weighed and evaluated in light of other evidence in order to give each piece of
evidence the weight to which it is entitled. Some evidence may be unreliable and will
be discarded completely, while other evidence will be given some weight but
discounted.80 None may simply be ignored. It is self-evident that the process of fact-
finding in this way must be underpinned by clear legal reasoning.
[298] The final category of evidence with which we are concerned is the expert
evidence. The role of historians, as expert witnesses, has as far as I am aware, not
received any particular attention by our courts. The issue is relevant in this case
because the two historians who testified, Legassick and Giliomee, differed sharply
on whether: there were Africans living on the Commonage before the expulsion of
the Xhosa from the Zuurveld in 1811; the descendants of those people returned from
about 1878 and resumed their communal existence on the Commonage; and
whether the documentary evidence showed that this community, in addition, were
permitted to „build up‟ rights on the Commonage by the landowners. They differed
not only over the facts and the inferences that may legitimately be drawn from these
facts, but also on the proper methodology to be used to arrive at their conclusions.
[299] The use of expert evidence to assist the court to establish „historical facts
relevant to a particular claim‟ is specifically sanctioned by s 30(2)(b) of the Act. There
is good reason for this. In Marvel Characters Inc v Kirby81 the United States Court of
Appeals for the Second Circuit said the following about the value of such evidence:
„We have no doubt that a historian‟s “specialized knowledge” could potentially aid a trier of
fact in some cases. A historian could, for example, help to identify, gauge the reliability of,
and interpret evidence that would otherwise elude, mislead, or remain opaque to a
80 Frederick Schauer Thinking like A Lawyer: A New Introduction to Legal Reasoning (1999) at 210.
81 Marvel Characters, Inc. v. Kirby 726 F.3d 119 (2d Cir. 2013) at 16-17.
layperson. [A] historian‟s task is “to choose reliable sources, to read them reliably, and to put
them together in ways that provide reliable narratives about the past”. He or she might
helpfully synthesize dense or voluminous historical texts. Or such a witness might offer
background knowledge or context that illuminates or places in perspective past events.‟
(footnotes omitted)
[300] A court must approach such evidence as it would any expert testimony. In
this regard Addleson J in Menday v Protea Assurance Co Ltd82 explained that:
„In essence the function of an expert is to assist the Court to reach a conclusion on matters
on which the Court itself does not have the necessary knowledge to decide. It is not the
mere opinion of the witness which is decisive but his ability to satisfy the Court that, because
of his special skill, training or experience, the reasons for the opinion which he expresses
are acceptable.‟
[301] But courts must also be alive to the dangers inherent in expert testimony. This
is especially so because theories are sometimes advanced on the basis of untested
and supposedly neutral facts; and conclusions drawn to confirm those theories.
Ultimately, a court looks for the same qualities in historians as it would of other
expert witnesses: appropriate specialisation, thorough research, and conclusions
that are well supported by the record.83
82 Menday v Protea Assurance Co Ltd 1976 (1) SA 565 (E) at 569B-C.
83 John A Neuenschwander „Historians as Expert Witnesses: The View from the Bench‟ 30(3)
Organization
of
American
Historians
Newsletter
(Aug
2002),
available
at:
https://archives.iupui.edu/handle/2450/6017 (accessed 11 June 2016).
[302] In regard to establishing „historical facts‟ it should be borne in mind that fact
finding – even of historical facts – is the responsibility of the trier of fact, not the
historian. A historian may give his opinion on the facts established from historical
texts and documents and provide his reasons for these conclusions. This may aid
the court, but it cannot displace the court‟s duty to establish the facts. A court must
thus be alert to the dangers of such testimony particularly when it is directed towards
supporting partisan causes, as in the present case. In addition, expert testimony –
including that of historians – as to what the law is or what a document means is
generally not admissible. With that in mind I turn to the evaluation of the evidence.
Evaluation of the Evidence
Evaluation of the oral evidence
[303] Nondzube‟s hearsay evidence was relied upon to prove that an African
„community‟ as defined in the Act resided on the Commonage before the 1820
settlers arrived, and remained until allegedly dispossessed of its rights, more than
120 years later. The LCC found that he was an honest and reliable witness, but the
record shows the contrary.
[304] His evidence of when his great-grandfather, Phuphana, together with his
grandfather, Landonda, travelled through the area where Grahamstown Cathedral
was later built and settled on the Commonage is risible. They would have had to
have undertaken this journey before the founding of Grahamstown in 1812. And,
according to Nondzube, Landonda was a little boy at the time. He died only in the
1960s, which means he would have undertaken this journey more than 150 years
before his death, which is impossible.
[305] Added to this piece of fiction is the story that Phuphana was part of the impi
preparing to attack the Salem Village in 1835, but which abandoned the attack
following negotiations with Gush. Phuphana would probably have been between 20-
35 years of age when he passed Grahamstown before 1812 with Landonda. This
would have made him 45-50, an unlikely age for a warrior. In addition, the sequence
of events itself is bizarre. If it is to be believed, Phuphana had been living on the
Commonage for decades and had been coexisting peacefully with the neighbouring
settler village for around 15 years. Nevertheless, he joined the group of Xhosa
intending to attack the village, thought better of it when presented with seed, and
then returned to his land as if nothing had ever happened, and no further hostilities
ever occurred.
[306] Nondzube‟s evidence is also inconsistent with contemporary written records,
which establish that the Xhosa were expelled from the Zuurveld in 1811 and driven
beyond the Great Fish River and that when the settlers arrived in Salem, nine years
after the expulsion of the Xhosa, there was no sign of human habitation, other than
the derelict remains of the Bouer farm. Apart from the Gush incident in 1835, there is
no other evidence of any African presence in Salem until 1878, approximately seven
decades after the war of expulsion, when there were three Africans reported to be
resident on the Commonage. It is highly unlikely that there was a significant African
presence before this, because the minutes of the Committee meetings of the settlers
give no such indication. And, as should be clear from the discussion above, the
Committee would have been quite distressed if an African community had been
living on what it considered to be its Commonage. There is also no reason to believe
that it would have hidden such distress and not recorded anything in its minutes.
This is, to say the least, highly improbable.
[307] Nondzube‟s evidence concerning the existence of a headman or chief by the
name of Dayile, which lies at the heart of the claim, is also totally unreliable. It will be
recalled that his testimony was that this man was the leader of the community and
resided in a homestead on the Commonage, presumably with his family. Dayile
determined where families would live, work the land and graze their cattle. In other
words, he determined the rules regarding the community‟s access to the land.
[308] His hearsay evidence on this aspect stood alone; it was at odds with Paul‟s
evidence for the Commission (which included records of interviews with other
members of the claimant community), the credible direct evidence of Page and her
brother Van Rensburg, and the objective evidence of the land surveyors. The expert
historians were also unaware of the existence of any chief on the Commonage.
[309] Paul, who had investigated the claim and gathered information from some of
the claimants, had only heard of Dayile‟s existence for the first time at the inspection
in loco, and not from any of the other claimants with whom he had spoken. Paul‟s
report and evidence regarding the shared rules under which the community existed
never mentioned Dayile. When this was put to Nondzube in cross-examination, his
response was merely to express surprise.
[310] During the inspection in loco, Nondzube pointed out the general area where
he was told that Dayile‟s homestead had existed. However, the minutes recorded
that he did not point out the exact location. The reason he gave during his testimony
for why he had not identified the exact spot was because the members of the court
attending the inspection were tired. He was not able to provide any credible
explanation why this had not been recorded in the minutes of the inspection.
[311] Page and Van Rensburg lived on the private erf of their father, and were
familiar with the Commonage. Page rode her bicycle over the whole area, and Van
Rensburg went hunting and rode on horseback to retrieve his father‟s cattle during
their teenage years, between 1930 and 1940. They were emphatic that they had
never heard of Dayile or seen any homestead in the vicinity of the area that
Nondzube had identified as where Dayile‟s homestead had existed. Neither did they
see any evidence of other homesteads or areas of the Commonage that had been
ploughed by Africans.
[312] Their evidence is pertinently supported by the 1942 aerial photographs and
the common cause evidence of the of the land surveyors, Chandler and Gerber, who
found no evidence of huts or dwellings all over the Commonage, other than those
close to the private erven of the landowners. This evidence is also corroborated by
Mullins, Hill and King.
[313] Chandler‟s evidence warrants closer attention not only because it is vital to
the outcome of this appeal, but also because the LCC inexplicably simply ignored it
in its evaluation of the evidence. Chandler‟s observations were that most dwellings
were around the Assegaai River on the perimeter of the erven. A number of
dwellings, which were not claimed, were on the erven. Chandler and Gerber agreed
that in 1942, ie five years before the dispossessions had allegedly begun, there were
48 dwellings. Of these, 22 were on the erven and the remaining 26, which were on
the Commonage, were in close proximity to the erven and linked by pathways to the
commercial farming operations of the landowners. In my view, the most plausible
probable inference to be drawn from these facts is that most or all of the occupants
of the 26 dwellings were farm labourers and possibly labour tenants, and not
members of an independent autonomous community with no connection to the
landowners.
[314] This evidence is significant for another reason. The claimants placed much
store on the Native Commissioner‟s estimate in July 1941 of approximately 500
Africans living on both the private erven and the Commonage, of which 50 were
servants. They submitted, therefore, that the remaining 450 people were not
employed by the landowners and probably resided on the Commonage as an
independent community. As an aside, this was contrary to their pleaded case that
there were 500 people living in the location. However, in any event, these figures
and the inference sought to be drawn are contradicted by the aerial photographs. It
is impossible that 450 people were living on the Commonage in 26 huts – an
average of 17.3 people per hut – while 50 people were living on the erven in 22 huts.
It seems far more likely that the spread of people between the Commonage and the
erven was closer to equal. And, in addition, given that there were only 48 huts in
1942, the population figure of 500 (ie more than 10 people per hut) seems
improbably high. There is a strong likelihood that the total population was less than
half of that. And, if that is correct, instead of there being 450 non-servants to 50
servants, the figure would be closer to 200 non-servants to 50 servants. Bearing in
mind that these „non-servants‟ would include children and elderly people, this would
make it even more difficult to characterise the community as independent and
autonomous.
[315] However, what is not only improbable, but cannot even be reasonably
possibly true from Nondzube‟s evidence, is that for a period spanning more than 50
years, when Dayile was supposedly allocating land on the Commonage to his
subjects according to rules with which the community supposedly complied, there is
not a single indication in the minutes of any Board meeting, or any of the documents
spanning this period, of his existence. The proposition that for more than half a
century he could have existed and parcelled out land owned and controlled by the
landowners, to an independent autonomous community, without the landowners
being aware or taking any steps to challenge or document this, beggars belief. But
even if Dayile existed and allocated land to people, he had no right to do so because
the Commonage belonged to the landowners. Consequently, he was not able to
transfer rights in that land to anyone.
[316] Ultimately, there was just no objective or corroboratory evidence for Dayile‟s
existence: when he was born or died; when he arrived in Salem, whether he died
there or departed from the area; where he resided or whether he had a family. He
was no more than an apparition. So when a member of this court enquired from
Mr Notshe when Dayile was supposed to have been present on the Commonage, he
was driven to speculate, without reference to the record, that this was „before and
after 1913‟.
[317] Another telling bit of evidence, which Nondzube only disclosed under cross-
examination, was the existence of his father, Mr Jamani Sukula. He was born in
1899 and died working for Mullins at the ripe old age of 94. Mullins had a close
relationship with him. Nondzube testified that he had heard the same stories that
Landonda had related to him regarding their occupation of the land from Sukula.
[318] According to Mullins undisputed evidence, Sukula had worked and lived on
the Attwell farm since about 1924. He had never mentioned the existence of Dayile
or any independent community on the Commonage. Significantly, Nondzube‟s land
claim was made under the name of his paternal grandfather, Kifa – Sukula‟s father –
and not under his maternal family name, Nondzube. There was no attempt by
Nondzube to explain how it was possible for his father to have been an employee of
several landowners, while all his other relatives (including his grandfather) belonged
to an independent community. The likelihood is that his other relatives too, were
employed on the farms.
[319] Another piece of his evidence demonstrating his total lack of any reliability
was his testimony regarding what the name „Tyelera‟ referred to. He gave several
inconsistent versions: Tyelera was the whole of Salem; it referred to the Zuurveld; it
was one of the areas where the community ploughed and it referred to the
Commonage. Both Mullins and King contradicted him explaining that Tyelera derived
its name from the Kariega River. Mullins testified that Africans referred to Salem as
Esalem. Their evidence was consistent and unshaken.
[320] It is therefore not surprising that at the end of his cross-examination,
Nondzube‟s version, that of an independent community governed by Dayile‟s rules,
fell apart with him conceding that the landowners determined the rules over the
Commonage. Despite this issue being central to the claimants‟ case, and
Nondzube‟s concession being nothing short of calamitous, the LCC simply ignored it.
[321] This does not mean that Africans who were residing on private erven and on
the Commonage did not live by customary rules or practices. It is clear from the
evidence that there were rules and norms governing social practices. However,
because the African community was not independent and autonomous and did not
have control over the land in the area, the rules did not extend to aspects of life such
as allocation of land and grazing rights. Mullins evidence as to how the community
functioned was persuasive and credible, unlike Nondzube‟s. Paul‟s evidence on this
issue on behalf of the Commission was vague and, by his own admission, had not
been properly investigated.
[322] Nondzube‟s evidence therefore did not establish that a „community‟ as defined
in the Act existed at any stage from about 1800 to 1940. His hearsay evidence
should have been disregarded as being completely unreliable, and accorded no
weight whatsoever. The failure on the part of the LCC to do so was a misdirection.
[323] Ngqiyaza was the only other witness for the claimants. The LCC found him
also to have been a reliable witness. His evidence was sometimes difficult to follow,
perhaps due to his lack of education and literacy. He explained that demarcation
brought suffering because his father could no longer obtain firewood from the
Commonage for sale in Grahamstown. This may possibly have been the result of the
farms having been fenced off and subdivided.
[324] But parts of his evidence were not satisfactory. It is not clear whether he was
born in Lokishi (the location) or on Bradfield‟s farm. His evidence that there were
several dwellings next to his home in the vicinity of the lime pit is inconsistent with
Chandler‟s evidence as to where dwellings were situated in 1942.
[325] The main difficulty with his evidence that he was born in the location in 1942 –
if his birth certificate is correct – is that the location had ceased to exist by 1934 and
was formally disestablished at about the time he was born. It is also apparent from
the interview Paul conducted with Mr Tim Ngqiyaza, who was Ngqiyaza‟s older
brother and is sadly also deceased, that he was also born in the location and had
always worked for Walter Penny, which means he was a farm-worker and always
resided in the area as an employee. There is no indication from the recorded
interview with Tim Ngqiyaza that his father was not employed on any farm.
[326] In my view, apart from the obvious difficulty that Ngqiyaza‟s evidence is
inconsistent with Chandler‟s observations, and is also unclear, it does not materially
advance the claimants‟ case. I accordingly discount it, as the LCC should have done.
[327] I have set out Paul‟s evidence in some detail earlier. He was argumentative
and evasive. Some of his answers were incoherent. He was not able to deal with
questions about: whether the Commonage was occupied by Africans when the
settlers arrived; whether they were they forced out and by whom and whether this
happened before or after 1913; whether the Africans occupied the entire
Commonage or part of it; how occupation of the entire Commonage would have
been possible in the face of the settlers having erected buildings and developed a
cricket field on it; where the landowners were and what they were doing while the
African community occupied the Commonage and whether the community was
aware of the existence of the Board. The answers to these questions were vital to
the Commission‟s (and the claimants‟) case.
[328] It is also apparent that the laws he mentioned as having resulted in the
racially discriminatory dispossession of the African community, namely Ordinance 10
of 1921 and the Native (Urban) Areas Act 21 of 1923, discussed earlier, had no
bearing on the issues in this case either. The LCC did not rely on them for this
purpose, and even though the location was formally disestablished on 14 November
1942 in terms of the Native (Urban) Areas Act of 1923, the facts show that the
location had ceased to exist by 1934. This is fatal to the claimants‟ pleaded case that
the dispossession occurred in 1942 after the formal disestablishment of the location.
[329] The importance of Paul‟s interview with both Tim Ngqiyaza and Mrs Nofikile
Simayile was this. It appears from Tim Ngqiyaza‟s interview that he was always an
employee of a landowner. And Simayile was born on Mr Lloyd‟s farm in 1905. This
means that they resided on the farms of, or worked for, landowners and could not
possibly have been part of a community that lived independently of the landowners.
[330] In general it is apparent that he conducted a very superficial investigation
regarding the disputed issues in this case. No weight can or should have been
attached to his evidence.
Evaluation of the expert testimony
[331] Legassick‟s brief was to examine the documentary evidence and give his
opinion on it. His testimony, however, went well beyond this.
[332] He testified that: Xhosas had acquired indigenous rights over the
Commonage before the settlers arrived in Salem in 1820; the legislation and
regulations in force between 1870 and 1940 allowed them to build up legal rights; it
was a question of common sense, not law that a „community‟ existed on the
Commonage; the interpretation of laws and regulations were questions of grammar,
not law; the legal rights of Africans living on the Commonage were violated because
the African community were not consulted by state officials – by the Board, the
Magistrate and the Grahamstown Supreme Court – concerning the subdivision of the
Commonage, or of the disestablishment of the location, which constituted a racially
discriminatory practice, and „violated their right of occupation and dispossessed
them‟. His opinion on all of these questions, being questions of law, was inadmissible
and should not have been admitted.
[333] In regard to his opinion on the documentary evidence, the court, as I have
said, is the ultimate arbiter of what facts are established by this evidence and the
inferences that should properly be drawn from these facts. I find that Giliomee‟s
evidence on the disputed issues accorded more closely with my assessment of the
evidence. In particular his evidence is supported by clear facts from the historical
record that an independent autonomous African community could have existed on
the Commonage.
Determination of the issues
[334] Having considered all the evidence, I must now decide the issues that arise
as set out earlier. The first three issues may be considered together. These are:
(i) whether a Xhosa community or anyone else occupied the Commonage before the
settlers arrived in 1820; (ii) if there was such a community, what was the nature and
content of the rights they acquired over this land, and (iii) if so, did this community
have any relationship to the community that was alleged to have been dispossessed
of its rights in the middle of the twentieth century.
[335] It is undoubtedly so that Xhosa-speaking people occupied parts of the
Zuurveld from about 1750, before any white occupation of this area. And, thereafter
there were conflicting claims not only between colonisers and colonised, but also
among the Xhosa themselves, as is evident from the dispute between Chungwa and
Ndlambe. But this does not help us establish whether any community occupied the
Commonage as a fact before 1820.
[336] Legassick‟s suggestion that it is sufficient to show that the Xhosa occupied
the Zuurveld to lay claim to the Commonage cannot be correct. He was not an
expert on matters pertaining to the acquisition of territorial rights by tribes, clans or
political entities and the claimants led no other expert evidence on this issue.
[337] If Legassick is correct, this would mean that anyone, who was a descendant
of any Xhosa tribe or clan that occupied the Zuurveld before 1820, would have a
claim not only over the Commonage but over the entire Zuurveld. This would include
not only the private erven adjoining the Commonage, which is not part of the claim,
but every farm and town, including Grahamstown. The Act does not recognise claims
of this nature.
[338] So, it is necessary for the claimants to prove that there was in fact a
community that occupied the Commonage during that period. There is, however, no
such historical evidence. The only evidence that we have is of the Bouer farm,
established in the immediate vicinity of the Commonage in 1785, which had been
abandoned when the 1820 settlers arrived.
[339] Paul‟s speculative and Nondzube‟s fanciful and demonstrably false evidence
of prior African occupation of the Commonage I have already rejected. The record
also shows that the first African presence on the Commonage appears from the
report of the Inspector of Native Locations in 1878, 58 years after the settlers arrived.
It indicates that there were three „natives‟ and one hut on the Commonage. The
claimants therefore did not establish a factual basis for the assertion that they were
descendants of a community that occupied the Commonage before 1820. That
disposes of the first three issues in this appeal.
[340] The fourth issue to be decided is whether the expulsion of the Xhosa from the
Zuurveld in 1811 extinguished any rights they may have held over this area and the
Commonage in particular. And the fifth, what the legal effect of the award of freehold
title to the settlers in 1848 was.
[341] It is not strictly necessary to investigate the fourth issue, because I have found
that the claimants have failed to prove that a Xhosa community occupied the
Commonage before 1820 and therefore that they had any rights over it. However, in
view of the approach taken by the LCC, and the claimants, the issue must be dealt
with. It is therefore necessary to explore the legal principles pertaining to the loss of
indigenous rights.
The Legal Principles Pertaining to Loss of Indigenous Title and Their
Application
[342] In Alexkor Ltd v The Richtersveld Community (CC)84 the Constitutional Court
described indigenous law as a:
„[S]ystem of law that was known to the community, practised and passed on from generation
to generation. It is a system of law that has its own values and norms. Throughout its history
it has evolved and developed to meet the changing needs of the community . . .
The determination of the real character of indigenous title to land . . . involves the study of
the history of a particular community and its usages. So does the determination of its
content.‟
[343] A „right in land‟ as defined in the Act85 is not confined to common law property
rights but is of wide import. It means:
„[A]ny right in land whether registered or unregistered, and may include the interest of a
labour tenant and sharecropper, a customary law interest, the interest of a beneficiary under
a trust arrangement and beneficial occupation for a continuous period of not less than 10
years prior to the dispossession in question.‟
84 Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC 18; 2004 (5) SA 460
(CC) paras 53 and 57.
85 Section 1 of the Act.
[344] However, to establish indigenous title, it must be shown that indigenous
people claiming such title exclusively and effectively occupied the land, even if only
seasonally, as is consistent with a nomadic lifestyle.86 This may be established by
judicial notice, reference to writers on the topic and other authorities and sources,
and may include the evidence of witnesses if necessary.87 The landowners dispute
that the claimants have proved indigenous title.
[345] In Richtersveld Community v Alexkor Ltd (SCA),88 this court recognised that
any sovereign exercise of power by the State may extinguish indigenous land rights.
But this would require a clear intention and conduct on its part evincing such
intention. A grant of land to another person would be such a case.89 It thus approved
the following dictum from the Australian case of Mabo v The State of Queensland
(No.2):90
„Where the Crown has validly alienated land by granting an interest that is wholly or partially
inconsistent with a continuing right to enjoy native title, native title is extinguished to the
extent of the inconsistency. Thus native title has been extinguished by grants of estates of
freehold or of leases . . . .‟
86 Richtersveld Community & others v Alexkor Ltd & another [2003] ZASCA 14; 2003 (6) SA 104
(SCA) para 23.
87 Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC 18; 2004 (5) SA 460
(CC) paras 52 and 54.
88 Richtersveld Community & others v Alexkor Ltd & another [2003] ZASCA 14; 2003 (6) SA 104
(SCA).
89 Ibid para 40.
90 Mabo & others v The State of Queensland (No 2) (1992) 175 CLR 1 (HCA) para 69.
[346] In Alexkor Ltd v The Richtersveld Community (CC)91 the Constitutional Court
said that indigenous law ownership may be extinguished if:
„(a)
the laws of the Crown expressly extinguished the Community's customary law
ownership of the land;
(b)
the laws of the Crown . . . rendered the exercise of any of the material incidents of
the indigenous law right to ownership unlawful;
(c)
the Community was granted limited rights in respect of the land by the Crown in
circumstances where the only reasonable inference to be drawn is that the rights of
indigenous law ownership were extinguished; or
(d)
the land was taken by force.‟
It is thus clear that once indigenous rights are extinguished, either by law or by force,
they cease to exist. And conversely such rights can only be regained by law (or,
historically, by force).
[347] Among the questions with which we are concerned in this case is whether the
forcible expulsion of the Xhosa people from the Zuurveld in 1811, and the
subsequent grant of land, including the Commonage, to the Salem settlers, first
through quitrent, and thereafter freehold title, had the effect of extinguishing any
indigenous title to land of anyone claiming such title may have had.
91 Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC 18; 2004 (5) SA 460
(CC) para 70.
[348] From the principles enunciated above, it is clear that any claim to indigenous
title over any part of the Zuurveld was extinguished by the brutal expulsion of all
Xhosa-speaking people in 1811.
[349] The LCC however found that the Xhosa factually never lost their rights. It
reasoned that after the Fourth Frontier War during which the Xhosa were expelled
from the Zuurveld, there were six more Frontier Wars in the Zuurveld. And thus that:
„[T]here is no evidence that the settlers at any time managed to have complete authority over
the Zuurveld and that the Xhosa relinquished their rights and were completely expelled.‟92
[350] The impact of the further wars was, however, not explored in the evidence
and there was no basis for the court to make this factual finding. However, from
Mostert‟s study of the Frontier Wars93 it is clear that there were only five more
Frontier Wars between 1835 and 1878, not six. And only the sixth, in 1835, involved
contact with the settlers in the Zuurveld, and ended in defeat for the Xhosa. On that
occasion the settlers at Salem were not attacked and no attempt was made to take
over the land they had occupied. The incident is referred to earlier involving the
meeting between Gush and the impi.
[351] Thereafter the theatre of conflict was concentrated mainly in the area between
the Great Fish and Great Kei Rivers, far to the east of the Zuurveld. And none of
92 Salem Community (LCC) para 141.
93 N Mostert Frontiers (1992).
those wars, spanning more than 40 years, involved any of the land occupied by any
of the 1820 settlers. So there is no basis whatsoever for the LCC‟s conclusion that
after the expulsion in 1811, any part of the Albany district, including Salem Village or
the Commonage was re-occupied by those who were expelled. Indeed, this flies in
the face of the historical record. The fact that some of the Xhosa may have wished to
return, of which there is no evidence, or may have believed that they were entitled to
the land, has no bearing on the issue.
[352] The fifth issue concerns the legal effect of the award of the Commonage to
the settlers in 1848. The Grahamstown Supreme Court held that the grant
contemplated the permanent settlement of settlers at Salem.94 It was of grazing land
to the Salem Party of erf-holders to be held communally. Simply put the landowners
owned the land communally. The court compared the rights of erf-holders on the
Commonage to „native law‟ which also recognised that land held under tribal tenure
belonged to the tribe, and not the individuals, who constitute it. It is therefore beyond
any doubt that the nature and content of the ownership right awarded to the settlers
rendered it incompatible with the exercise of any indigenous rights by any other
community. The award was therefore akin to the Crown by law expressly
extinguishing any claims to prior ownership.95
[353] The LCC misunderstood the landowners‟ case to be that their common law
rights should prevail over the unregistered indigenous rights the claimants held over
94 Ex Parte Gardiner: In re Salem Commonage (EDL) unreported case (29 February 1940).
95 Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC 18; 2004 (5) SA 460
(CC) para 70.
the disputed land. 96 But this was not their case; their case was that the claimants did
not have any rights – indigenous or common law – as a community, which could
have been dispossessed as contemplated by the Act. The events before and after
the award are completely consistent with this. The LCC appears to have arrived at a
similar conclusion to the one reached here after finding that over time the written
rules of the Board „took predominance over traditional and customary rules, as the
two were inherently contradictory‟.97 However, this conclusion flies in the face of its
main conclusion that the claimants had established indigenous title.
Were the forebears of the claimants a community?
[354] I turn to the sixth, and central issue, whether an independent „community‟ as
contemplated in the Act existed from between 1878 and the middle of the twentieth
century. In Department of Land Affairs v Goedgelegen Tropical Fruits (Pty) Ltd,98 the
Constitutional Court propounded a two-pronged test in order to determine whether a
claim was in fact a community claim by establishing whether the community
(a) retained much of their identity and cohesion as part of the original clan; and (b)
„held‟ and determined access to the land in common through shared rules.99
[355] The LCC held that the claimants had established that they were a „community‟
as contemplated in the Act and had resided on the Commonage on the basis of
96 Salem Community (LCC) para 118.
97 Ibid para 135.
98 Department of Land Affairs & others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007
(6) SA 199 (CC).
99 See generally J M Pienaar Land Reform (2014) at 546.
shared rules. In coming to this conclusion it accepted the evidence of Nondzube and
Ngqiziya as „honest and credible‟ and rejected the landowners‟ evidence as
improbable. It found that the documentary evidence supported the claimants‟
case.100 It is startling that even though the claimants‟ case on this aspect rested
primarily of the existence of Dayile, which the landowners contested vigorously it
was apparently not material to the court‟s reasoning.101
[356] The judgment upholds the claim that an autonomous community with rights in
land, who were not employees of the landowners, resided on the Commonage. It
says that the rights of the claimants were not merely economic rights to graze and
cultivate in a particular area, but were rights of families connected to their forebears.
And yet the concluding paragraph of the judgment perplexingly finds the opposite,
totally contradicting the main premise of the judgment:
„[T]hey were not simply there by the grace and the favour of the Colonialists. The
paternalistic and feudal-type relationship involved contributions by the family, who worked
the lands of the farmer.‟
[357] To have „worked the lands of the farmer‟ in a „feudal-type‟ relationship, the
claimants‟ forebears would have had „master-servant‟ relationships with the farmers.
The further obvious implication of this passage is that the farmers owned this land,
100 Salem Community (LCC) para 124.
101 The LCC mentions Dayile briefly in paras 16 and 71, but appears not to consider his existence or
lack thereof relevant to the outcome of the claim.
and contrary to the LCC‟s conclusion, the community could only have been there „by
the grace and favour‟ of the landowners.
[358] I have already held that Paul‟s and Nondzube‟s evidence of the existence of a
community as contemplated in the Act cannot be given any weight. However, in
regard to the documentary evidence, the LCC found that it supported the claimant‟s
case. It found:
„None of the witnesses of the [landowners] could proffer an explanation for the large native
population. . . [The 1878] native returns indicate that there were 42 natives, 47 cattle and 9
huts on the Commonage.‟102
And later:
„In 1932, only 6 huts were on the Location yet there were 300-400 natives. It can be inferred
that these natives were not all living in 6 huts. And it is Mr Nondzube‟s testimony that they
lived on the Commonage.‟103
[359] The Commission supported this finding, adding that by July 1941 there was
an African population of 500 on the Commonage.
[360] These figures are quoted selectively and do not give the true picture. The
historical narrative shows that the settlers controlled the Commonage since their
arrival by establishing a Committee for this purpose. By 1848 they owned the
Commonage. Africans began seeking employment in the area in the latter part of the
102 Salem Community (LCC) para 129.
103 Ibid para 132.
nineteenth century. Some obtained employment from the landowners, while others
were labour tenants or had sharecropping arrangements with landowners.
[361] The legislation passed during this period and early in the twentieth century
was aimed at controlling this phenomenon. It also gave landowners the power to
exercise control over the Commonage. They did so. The Commonage was never
abandoned as derelict and the landowners never gave up ownership – the evidence
shows quite the contrary. They used the land for their collective benefit.
[362] The presence of Africans in Salem and on the Commonage must be seen in
this light. The recorded figures of 1878-1884 show that there were indeed Africans
residing on the Commonage. But the figures also show that there were significantly
higher numbers of Africans living on the private erven. The most plausible probable
inference to be drawn from this fact is that people on the Commonage were residing
there by virtue of having entered into individual agreements with landowners, as
„servants or tenants of the landlord‟ and not by virtue of rules that the Africans
themselves determined, much less by virtue of the authority of the mythical Dayile.
[363] It is significant that the figure of 24 huts on the Commonage in 1884 did not
change materially over 60 years because by 1942, according to Chandler‟s
undisputed evidence, there were only 26 huts on the Commonage. There was
therefore no growth in the numbers of Africans living there, which can only mean that
Africans were not settling freely on the Commonage.
[364] The LCC‟s inference relating to the population figures in 1932 was based on
the health report of that year, and is also incorrect. It is true that the report stated that
there were only six huts in the location, but it also stated pertinently that there were
no accurate figures of the African population, which was „possibly‟ about 300-400.
However, vitally, what the LCC omits to mention is the comment in this report that
most of these people live on the private erven of the owners, which contradicts the
finding that they were living on the Commonage. Even more telling is that the LCC
ignored the earlier health report of December 1931 that there were ten African
families living in the location and that only Africans employed in the settlement were
allowed to reside in the location; and that „most of the inhabitants kept their native
employees on their own properties‟. The June 1934 report, which the LCC also does
not refer to, stated that the number of Africans were unknown, but that the „Native
Location‟ had been done away with, and ‘Natives’ were now residing on their
employers’ land. None of these reports make mention of Africans residing on any
part of the Commonage outside of the location.
[365] These health reports, therefore, do not corroborate the claimants‟ evidence
that Africans lived as an independent community outside the location and all over the
Commonage, but point to the opposite conclusion; most resided on the private erven
of the landowners. They corroborate the landowner‟s version and particularly the
direct eyewitness testimony of Page and Van Rensburg.
[366] The estimate of 500 Africans living in Salem in 1941, as appears in the
Magistrate‟s report is, as I have said earlier, probably higher than the actual number
of Africans who were living in Salem at the time. Chandler‟s evidence indicates that
there were 26 huts on the Commonage close to the private erven and the other 22
on the private erven. And the most plausible probable inference from this fact is that
the people residing in these 48 huts were employed in some capacity by the
landowners.
[367] In Goedgelegen104 the Constitutional Court said that the „acid test‟ is whether
the community derived its right of occupation from their own shared rules or those of
the employer. If the rules came from the employer the employee had to obey them.
In that case it found that labour tenancy rights of the Popela community did not vest
in the community.
[368] In my view, the claimants failed to prove that they were descendants of a
community as contemplated in the Act. Their forbears as a fact never „held‟ the land
in common. On the contrary, the evidence points conclusively the other way. The
Commonage was owned and held by the landowners for more than a century; the
rules governing its use were determined by the landowners through the Committee
and the Board they had established for this purpose. And this happened within the
legislative framework aimed at controlling and restricting the rights of African people
at the time.
104 Department of Land Affairs & others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12;
2007 (6) SA 199 (CC) paras 45-47.
[369] It is an understatement to characterise the conditions to control and regulate
African occupancy on the Commonage as oppressive. While limited rights were
given to those who had permission to erect dwellings or huts, the Board and the
landowners determined the rules for occupancy, within the legislative framework of
the time. The social mores among the white settlers at the time would also have
ensured that they maintained their dominance over the African community. This is
antithetical to any notion of African people acquiring rights and living on the
Commonage independently as a community by their own shared rules. The
claimants‟ case of an independent and autonomous African community having lived
on the Commonage therefore fails Popela’s „acid test.‟
The nature and content of the rights in issue
[370] This brings me to the seventh issue, which is the nature and content of the
rights the African community did have. The pleaded case was that they possessed
the full panoply of rights, including the right of ownership over the entire
Commonage. They also claimed that they had beneficially occupied this land. The
LCC did not analyse these rights but found that they had a „right to be there‟105 and
that this right was connected to their „indigenous forebears‟.106 It also fixed the date
of dispossession as 1947, for which there was no evidence.107
105 Salem Community (LCC) para 147.
106 Ibid para 161.
107 Ibid para 123.
[371] I have mentioned that the „right‟ in land alleged to have been dispossessed is
of wide import. It is therefore necessary for the claimants to properly identify the
nature and content of the right to enable a court to ultimately determine what
appropriate relief should be granted. If, for example, the right lost was one of
ownership, the appropriate relief may be to restore the land. On the other hand, if the
right lost was only one of occupation, a court may order restoration of that right only
or equivalent compensation.108 The proper identification of the right may also require
that a date of dispossession be determined so that the court can properly quantify
the claim.109
[372] It is clear from what I have said earlier, that the African community who lived
on the private erven and the Commonage did so by virtue of their relationship with
their employers. And in the times they were living, it is appropriate to describe this as
a master-servant relationship, which is not to be confused with the enlightened
labour relations regime with which we are familiar today. So whatever „rights‟, if any,
the individual members of the community may have acquired on land that belonged
to the landowners, this would have been as a result of the incidence of their
employment relationships with their employers and not by virtue of being members of
an independent community.
[373] In argument before us it was hardly surprising that Mr Krige was not able to
sustain the case of an independent community with rights of ownership over the
108 Alexkor Ltd & another v The Richtersveld Community & others [2003] ZACC 18; 2004 (5) SA 460
(CC) para 45.
109 Ibid para 101.
entire Commonage. Instead he retreated into first contending that not all of those
who made up the community had ownership rights; some of them, he speculated,
may have been labour tenants or had other forms of employment with the
landowners. And later he vacillated again, contending that the community exercised
joint ownership with the landowners, a contention that he was not able to support on
any factual basis. In this regard it must be pointed out that joint ownership could only
have arisen by agreement of the parties. And there is no such evidence.
[374] Mr Notshe advanced a novel idea – not pleaded or explored in the evidence –
that the African community exercised a parallel system of ownership with the
landowners. As I understand the contention it is that a system of registered common
law rights of the landowners co-existed with the indigenous rights of the African
people over the Commonage. I am not aware that any such claim has been
recognised in our law and no authority was advanced to support it. However, even if
such a parallel system of ownership rights could exist, I have found that the exercise
of any indigenous title to the Commonage was inconsistent with the award of
ownership rights to the settler community in 1848, and accordingly the indigenous
title was extinguished. On the facts, the suggestion that some system of parallel
ownership – indigenous or otherwise – existed alongside the ownership of the
landowners, in which they either acquiesced or of which they were unaware, is
simply untenable.
[375] Having concluded that there was no „community‟ as contemplated in the Act, it
is not strictly necessary to deal with the remaining two issues, namely whether this
community was dispossessed of any of its rights; and secondly, if there was any
dispossession, whether this was as a result of a racially discriminatory law or
practice. However, for the sake of fullness I shall consider these issues briefly.
Was there a dispossession?
[376] The pleaded case of the claimants was that there were 500 people residing in
the location and that this community was dispossessed of its right in land through de-
proclamation of the location, not the subdivision of the Commonage. Neither the
Commission nor the claimants adduced any evidence to prove their pleaded case,
and the documentary evidence points the other way. The evidence as contained in
the magistrate‟s letter of 15 July 1941 and the 1934 health report was that the
location had ceased to exist several years earlier. De-proclamation was, therefore, a
formality and had no bearing on anyone‟s rights as there was no one residing in the
location at the time.
[377] The LCC held that „in the case of Salem the dispossession was “completed or
consummated” by 1947‟.110 How this conclusion was reached does not appear from
the judgment, and was not examined in the evidence. The pleaded case was that the
dispossession only began in 1947, and continued until the 1980s.
110 Salem Community (LCC) para 123.
[378] The dispossession of a right in land may of course occur over a long period of
time and can be the cumulative effect of various laws and practices.111 But this must
be „as a result‟ of a racially discriminatory law or practice. In Goedgelegen, the
Constitutional Court interpreted this requirement to mean „as a consequence‟ of, and
it need not be „solely as a consequence of‟ the racially discriminatory laws and
practices. However, the consequence should not be remote, which means that there
should be a reasonable connection between the racially discriminatory laws and
practices of the State on the one hand and the dispossession on the other. A
context-sensitive appraisal of all the factors is necessary for this determination.112
[379] There was, however, no evidence led as to how and when the dispossession
took place. The objective evidence was that there were 26 dwellings on the
Commonage, which I have held was likely to have been occupied by people who had
some sort of employment relationship with the landowners. There was no clear
evidence – apart from the unsatisfactory evidence of Ngqiyaza – that any of them
were „dispossessed‟ within the meaning of the Act following the court order
permitting the subdivision, in 1941. The LCC‟s finding that the dispossession was
completed by 1947 before 1993 is not understood113 and is not supported by the
facts.
111 J M Pienaar Land Reform (2014) at 549.
112 Department of Land Affairs & others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12;
2007 (6) SA 199 (CC) para 69.
113 Salem Community (LCC) para 123.
A racially discriminatory law or practice?
[380] In regard to the final issue, whether there was dispossession as a result of
any racially discriminatory law or practice, the pleaded case was that the laws
through which this happened were the 1913 Land Act, s 49 of Ordinance 10 of 1921,
the Natives (Urban Areas) Act 21 of 1923, and the Native Trust and Land Act 18 of
1936.
[381] Neither the 1913 Land Act, nor the Native Trust and Land Act were used by
the landowners to dispossess the claimants as had been pleaded. These statutes
did not feature in the evidence for good reason: they were entirely irrelevant to this
case. The location was disestablished formally under s 2 of the Natives (Urban
Areas) Act of 1923, on 14 November 1941. But it had already ceased to exist several
years earlier. So it had no bearing on the issues in this case either.
[382] The only relevant statute was the Ordinance, which provided for the
management of villages and communities not being municipalities. It applied to the
Board‟s management of the Commonage. The Grahamstown Supreme Court held
that s 49 permitted the Administrator to authorise the subdivision of the Commonage
into the names of the individual landowners. Neither the claimants nor the LCC relied
on the Ordinance to prove a connection between the alleged dispossession and this
law, which in itself was not racially discriminatory.
[383] Instead, an entirely different case was advanced on the basis of Legassick‟s
inadmissible testimony: the black community was not consulted by the Board, the
magistrate, the Administrator of the Cape Province and the judges of the
Grahamstown Supreme Court, which violated their rights and dispossessed them.
The decision to subdivide the Commonage was therefore a racially discriminatory
practice by state officials.
[384] The LCC upheld this contention finding that:
„The decision ignored the natives, despite being aware of them, only because they were
Black, they could not have rights and they did not need to be consulted despite the fact that
they were affected. This was a racially discriminatory practice.‟114
[385] Legassick had no facts before him to justify these legal conclusions on which
he was obviously not qualified to testify. And the LCC had no proper basis to rely on
his evidence for this purpose. The history of events leading to the subdivision is
detailed earlier in this judgment.
[386] The LCC also found that „the judge‟ who granted the subdivision order was
aware of „Natives on the Commonage‟ but ignored them in ordering the
subdivision.115 As I have pointed out above, the LCC made this finding on the basis
of the letter emanating from the magistrate that was wrongly attributed as having
emanated from „the judge‟ – there were two judges who granted the rule nisi, not one
– and then misconstrued its contents. The LCC‟s adverse remarks made about the
114 Salem Community (LCC) para 155.
115 Ibid para 154.
judge having „ignored‟ the „Natives‟ is therefore regrettable. In any event, whether the
Africans living on the Commonage had an interest in the matter depended on the
nature of their rights: the landowners asserted a right of joint ownership and, as I
have shown, any Africans living on the Commonage did so as a result of having
been permitted to do so by the landowners. They therefor had no legal interest that
would have entitled them to notice or to be heard. That would still be the legal
position today.
[387] The matter that concerned the Board for about 20 years was how the
landowners could use the Commonage optimally for their own benefit. The Board
concluded, as did the magistrate who compiled the report for the Administrator, that
the African employees would be properly accommodated on the private erven of the
landowners. Who they consulted in the process is not known and does not appear
from the evidence. The court issued a rule nisi, which was widely published, allowing
all interested parties to show cause why the subdivision should not be confirmed.
There was no opposition and the rule was accordingly confirmed six months later.
The LCC had no grounds to make this finding: it was not an issue on the pleadings
and had no factual or legal basis.
Conclusions
[388] To conclude, the Commission and the claimants set out to prove that an
African community occupied the entire Commonage from about the latter part of the
nineteenth century until 1947. They had full ownership rights and the panoply of
other rights arising from the incidence of their ownership. They derived their
ownership through indigenous law from a chief or headman named Dayile, who had
a homestead on the Commonage. They also acquired rights in land through the
location regulations. However, in about 1926 they were herded into a location, which
was de-proclaimed in 1941. At the time there were 500 people living in the location.
The de-proclamation of the location and its disestablishment resulted in the
dispossession of their rights over a period from 1947 until the 1980s. The
dispossession occurred as a result of various racially discriminatory laws.
[389] The Commission and the claimants, upon whom the onus rested, were not
able to prove any of these allegations. Instead their case changed as the trial
progressed, and ultimately bore no resemblance to the pleaded case. They made up
the case as they went along, and during argument in this court it unsurprisingly fell
apart completely, with counsel unable to maintain a coherent or consistent position
on any of the disputed issues
[390] Paul was a very poor witness. The expert evidence of Legassick was largely
inadmissible, unhelpful and not supported by the record. The hearsay evidence of
Nondzube was unreliable, as was Ngqiyaza‟s. No weight should have been given to
their evidence. It is not clear why the claimants relied only on two witnesses to
support this claim. But it is apparent from the way the case was pleaded and then
unfolded that it lacked any credibility.
[391] By contrast, the evidence of the landowners resonated with the documentary
evidence, as did the evidence of their expert Giliomee, even though his opinion on
the legal questions he was asked to comment upon should also not have been
allowed. Mullins, Page and Van Rensburg were particularly good witnesses. It is
incomprehensible how the LCC so easily disregarded their testimony. In doing so
without reason, it misdirected itself.
[392] At the heart of the case of the landowners lay the inescapable fact that the
settlers were awarded freehold title over the Commonage in 1848. Their
descendants and successors in title retained this right and held the land collectively
until it was subdivided between them in 1941. This right is and was incompatible with
the exercise of any indigenous rights over the land, much less any rights acquired
through location rules. The settler community, initially through their Committee and
subsequently through the Board, managed their interest in the Commonage for their
collective benefit. Their rules determined theirs and anyone else‟s access to the
land. No one else could or was entitled to assume this authority. And no one did.
The Validity of the Lodgement
[393] The landowners also take issue with what they contend was the failure of the
claimants to produce evidence that they had authorised the lodgement of the claim.
The lodgement of the claim, they contend, is therefore a nullity. Section 10(3) of the
Act provides:
„If a claim is lodged on behalf of a community the basis on which it is contended that the
person submitting the form represents such community, shall be declared in full and any
appropriate resolution or document supporting such contention shall accompany the form at
the time of lodgement: Provided that the regional land claims commissioner having
jurisdiction in respect of the land in question may permit such resolution or document to be
lodged at a later stage.‟
[394] The claim form, forming part of the referral did not have annexed to it any
„resolution or document‟ authorising Mr Madlavu to lodge the claim; neither was
evidence led of any such „resolution or document‟ having been lodged at a later
stage. Before us the Commission contended that the constitution of the claimant
committee, which was attached to Paul‟s report to the Commission, is such a
„document‟ as contemplated in the section. However, a constitution is a body of
principles and rules by which an organisation is governed. It does not itself confer
authority on Madlavu to lodge the claim on the claimants‟ behalf. On the face of it,
therefore, Madlavu had no authority to lodge this claim.
[395] The lodgement of claims in compliance with s 10(3) is not merely a technical
matter. The purpose of this provision is to ensure that no improperly authorised claim
is entertained, and to avoid fraudulent and competing claims. The court also takes
judicial notice of the fact that several community claims have been confronted with
these difficulties. In this case, it is clear from the evidence, to put it at its lowest, that
some of the claimants may have been descendants of employees of the landowners,
which disqualifies them as claimants to this community claim. In fact during the
hearing counsel for the Commission conceded this much. When asked how many of
the claimants fell into this category, he was unable to say. This raises serious
questions regarding the validity of the claim. In my view the „Salem Community‟ did
not prove that Mr Madlavu was authorised to lodge the claim on their behalf. For this
additional reason the claim must fail.
Costs
[396] I turn to the question of costs. The landowners were put through much trouble
and expense to defend a claim that was still-born. The Commission not only failed to
investigate the claim properly, but Paul‟s report, which formed the basis of the
referral to the LCC, was shoddy and unprofessional. His testimony was disgraceful.
It may perhaps be that some individual members of the claimant community do have
valid individual claims of some sort under the Act, but the Commission regrettably
never investigated this properly. This is particularly troubling given that the
Commission‟s initial investigation concluded that the rights allegedly dispossessed
were labour-tenant rights, but Paul apparently refused to follow or investigate this.
[397] No proper case was made for the landowners to answer. In fact they were
placed in the invidious position of having to deal with a moving target on almost
every issue in circumstances where the court was at best supine, and at worst gave
the appearance of being unreceptive to their case. Their fears were confirmed with
the dismissive manner in which the court dealt with their evidence. What followed
was a judgment of the LCC replete with factual and legal errors.
[398] The pleadings of the Commission and the claimants were ill-considered,
poorly prepared, and even worse, bore little resemblance to the evidence that was
led. This court recently reaffirmed the rule that once the pleadings have defined the
dispute between the parties, the court must determine that dispute and that dispute
alone.116 While the parties may be given greater latitude in the way they plead their
case in land claims such as this one, the rules of pleading cannot be totally
disregarded. This case is one of the worst examples of the violation of this rule that I
have seen.
[399] Counsel for the Commission, in particular, often traversed irrelevant material.
A stark example was his cross-examination of Mullins, much of which was irrelevant
and gratuitously offensive. Another was Legassick‟s testimony, much of which was
inadmissible, unhelpful and traversed questions outside the pleadings. This
necessitated the landowners having to instruct Giliomee to provide a contrary view.
The expert evidence took 15 days. The evidence of the claimants, particularly of
Nonzube, was very poor. The landowners are therefore entitled to their costs,
including the costs incurred for Giliomee. I would have been inclined to grant a
punitive costs order, at least against the Commission, had the landowners asked for
it. However, as I have found that the „Salem Community‟ was not shown to have
authorised the lodgement of the claim, no costs order should be made against it.
The second judgment
[400] I have read the judgment that Pillay JA and Dambuza JA (the second
judgment) have jointly prepared. Regrettably, it suffers from the same malaise that is
evident from the judgment of the LCC: it misconstrues the legal issues and treats the
evidence in a one sided and legally impermissible manner. A comparison between
the two judgments is striking. The main judgment deals in detail with all the
116 Fischer & another v Ramahlele & others [2014] ZASCA 88; 2014 (4) SA 614 (SCA) para 13.
evidence: documentary, viva voce and expert, and supports its findings through clear
legal reasoning. By contrast the second judgment approaches the evidence in a
selective and generalised manner, fails to evaluate it properly, and reaches factual
conclusions on dubious legal grounds.
[401] Regarding its treatment of the legal issues, the second judgment fails to
determine whether the claimants had established each of the requirements of s 2 of
the Act. It finds that a „community existed‟ but does not deal with the „acid test‟
enunciated in Goedgelegen, which is whether the members of the community
derived their right or permission to occupy parts of the Commonage through their
own shared rules determined by Dayile or by the landowners. It finds further that the
community was dispossessed of a „right in land‟ by virtue of having beneficially
occupied the land from the „1870‟s to the 1940‟s‟ but does not explain how this
community was able to acquire this right in the face of the undisputed fact that
ownership of the Commonage vested jointly in the landowning community, who
exercised authority over through the Board until 1943.
[402] The second judgment also overlooks the fact that the claimants claim the
entire Commonage despite the fact that the landowners built a church, a community
hall, a cattle–building tank and established a cricket field there all before 1913. This
means that if there was a dispossession of rights on these parts of the Commonage,
the claimants could, at the very least, not lawfully reclaim them. Furthermore, the
second judgment avoids dealing with the legal difficulty of determining a date or
dates of the alleged dispossession against the pleaded case (not supported by any
evidence) that this occurred over more than three decades. It elides the requirement
for the dispossession to have been as a result of a racially discriminatory law or
practice by finding, presumably on the basis of Legassick‟s inadmissible evidence,
that the „failure to consult‟ the community, including the „process‟ and „conduct‟ of
dispossession was racially discriminatory in „nature‟; and ignores the fact that the
pleaded case relied on racially discriminatory laws as the reason for the alleged
dispossession, which was found to be baseless. In short, whereas the main
judgment found that none of the requirements had been proved, the second
judgment, without a proper evaluation of the evidence or clear legal reasoning, found
that all of them were.
[403] The main judgment found that the submissions on behalf of the Commission
and claimants respectively to the effect that a system of „joint‟ or „parallel‟ ownership
existed between the landowners and the claimant community were unmeritorious. It
must be borne in mind that these submissions were advanced in response to
questions from the bench after neither the Commission nor the claimants could
sustain the case of an independent autonomous community exclusively occupying
the entire Commonage at any stage for more than 170 years. Indeed, during the
debate in court that case fell apart. It is, therefore, astonishing that the second
judgment avoids this issue completely.
[404] The second judgment appears to accept that the Commonage was granted to
the landowners for their common use and benefit. But it then suggests that this
meant that the Commonage was a „public resource‟ to be used in the „public interest‟
and for the „public benefit‟. So that when the „African occupants‟ were „forced‟ off the
Commonage following the court order in 1940, „this event . . . serve(d) as a
conclusive bridge by which the claimants must succeed in asserting their rights in
land‟.
[405] The short answer is that this case was never made and there is no suggestion
of it in the evidence. It was not put to the parties during the hearing, and it is
impermissible to make a finding of this nature without having allowed the parties to
respond to it. It is also obviously wrong. How is it possible for land that was given to
landowners for their common use and benefit to become a public resource for use
and benefit of the general public or in the public interest unless the land was
expropriated for this purpose? And if the land was for use in the public interest, how
can the claimants claim to have acquired rights in it? The reasoning is, with respect,
difficult to understand.
[406] Regarding its treatment of the evidence the second judgment appears to find
the evidence of the claimants preferable to that of the landowners. It also prefers
Legassick‟s expert testimony to Giliomee‟s. And it finds that the documentary
evidence supports the claimants‟ case. However, it deals with the detailed reasons
given in the main judgment superficially, without refuting its reasoning; for example,
the main judgment shows exhaustively why Nondzube‟s evidence is not only
improbable, but implausible. And it demonstrates with reference to the record how he
effectively conceded the landowners‟ case by accepting that the African occupants of
the Commonage obeyed „the rules of the conqueror‟, which refers to the landowners.
But the second judgment elides this.
[407] By contrast, to cite another example, when dealing with the landowners‟
evidence, the second judgment rejects Mrs Page‟s credible evidence for the flimsiest
of reasons by pointing to an apparent single inconsistency in her evidence when she
said that the two employees who had worked for her father lived elsewhere, but
under cross-examination said that having thought about it overnight she
remembered that they had lived on the farm. Mr van Rensburg, her brother,
confirmed this. So there was no inconsistency in her evidence at all. The second
judgment overlooks Van Rensburg‟s direct credible evidence regarding the existence
of African homesteads and ploughed areas on the Commonage, which corroborated
Page‟s evidence. And it further overlooks the fact that their evidence was validated
by the land surveyors, Chandler and Gerber, and also by Mullins, Hill and King.
[408] With regard to the historical expert evidence the second judgment does not
take issue with the main judgment‟s legal analysis of the admissibility of some of
Legassick‟s opinion evidence. Despite this, it concurs with his inadmissible legal
conclusions on, inter alia, the existence of a community with land rights to the
Commonage.
Judgment Delay
[409] Courts, including appellate courts, are required to deliver judgments
expeditiously because litigants are entitled to know where they stand. Undue delays
in delivering judgments undermine public confidence in the judiciary. Where there
are delays it is desirable for courts to provide a proper explanation for it. What
follows is an explanation for the delay in delivering this judgment.
[410] This matter was heard on 19 February 2016 at the commencement of a busy
term. Pillay JA was allocated the responsibility for writing the judgment. However, as
the judges of appeal disagreed on the result, with my view being in the minority, I
undertook to write the first judgment. As is evident from its length and the issues
traversed its preparation required a considerable amount of research and time, with
the court having limited research capacity. The judgment was circulated to other
members of the bench on 16 June 2016, four months after the hearing. Pillay JA,
who is the first author of the second judgment, took ill on 5 June 2016 and was
incapacitated as a result until 30 September 2016.
[411] As this is a dissenting judgment I would have made the following order:
The appeal is upheld with costs including the costs of two counsel.
The second to the sixth respondents and the ninth respondent shall jointly and
severally be liable for these costs.
The order of the Land Claims Court is set aside and replaced with the
following:
„The claim is dismissed with costs, including the costs of two counsel. The
costs shall include the cost incurred for Professor Hermann Giliomee. The
second to the fifth plaintiffs, and the Regional Land Claims Commission, shall
jointly and severally be liable for these costs.‟
________________
A Cachalia
Judge of Appeal
Pillay and Dambuza JJA (Seriti and Mbha JJA concurring)
[412] We have read the judgment of our colleague Cachalia JA and regrettably we
do not agree with his approach to the appeal, the reasoning he adopts and the
conclusion he reaches. In reaching our conclusion we adopt a different approach to
that of our colleague in considering the pleadings, the evidence led in the Land
Claims Court (LCC) and the legal principles applicable thereto. This judgment must
thus be read in the context of what Cachalia JA has stated in his judgment. Much of
what follows is contextually related to the evidence he refers to and it is not
necessary to repeat. In dealing with the evidence, we will thus only set out certain
portions not mentioned by Cachalia JA.
[413] The claim that was referred by the Commission on Restitution of Land Rights
(the Commission) to the LCC is founded on occupation of the land in question for a
continuous period of more than ten years subsequent to June 1913. Our view is that,
on a holistic consideration, the evidence supports the claimants‟ contention that their
forebears were a community that was dispossessed of rights in the Salem
Commonage land.117
[414] It is helpful, even before we consider the evidence, to briefly set out the
background against which the law applicable to land claims is constructed. The
Republic of South Africa is one of the youngest democracies. It has recently
117 See reference in the definition to „community‟ in s 1 of the Restitution of Land Rights Act 22 of
1994 (the Act), as „any group of persons whose rights in land are derived from shared rules
determining access to land held in common by such group‟.
emerged from a period of almost 350 years of discriminatory policy and practice
which was systematically designed and maintained, in various ways, including
legislation and violence, to racially and economically advantage, exclusively, those
who landed on the shores of the Republic, first from the Netherlands (1652), and
then later from Britain (1820), at the expense of those who had been living on the
land prior to that. The latter were African while the former white.118 This systematic
policy and practice, which included land reservation and segregation, formed the
fundamental basis for colonial rule and later, apartheid in South Africa.119 The Land
Act of 1913 formed the cornerstone of the apartheid land dispossession apparatus,
causing Sol Plaatje famously to exclaim: „Awaking on Friday morning, June 20,
1913, the South African Native found himself, not actually a slave, but a pariah in the
land of his birth‟.120 It is common cause between the parties (and generally accepted)
that what is now known as the Eastern Cape, did not escape this pattern and that the
African people who lived in this region were, also at some time, dispossessed of their
land. During preparations to establish a new democratic government in 1994, the
history of dispossession of land and the need for remedial action was recognised,
and, upon adoption of the interim Constitution in 1994 (and the final one in 1996),
provision was made for steps to be taken by government to restore the rights in land
118 It is necessary to make this point since the distinction was an important cog in implementing the
discriminatory systems, informally and formally, by which African people were treated for the benefit
of white people. M K Roberts „Black land tenure: Disabilities and some rights‟ in A J Rycroft et al (eds)
Race and the law in South Africa (1987) 119-138 at 119. See also Jacob Dlamini „The land and its
languages: Edward Tsewu and the pre-history of the 1913 Land Act‟ in Ben Cousins & Cherryl Walker
Land divided, land restored: Land reform in South Africa for the 21st Century (2015) 40-55.
119 With the advent of colonialization in South Africa, a legislative process was started which
eventually restricted 80 per cent of the South African population to ownership (or quasi ownership) of
13 per cent of the country‟s land. See Hanri Mostert „Land restitution, social justice and development
in South Africa „(2002) SALJ 400 at 401.
120 Juanita Pienaar & Jason Brickhill „Land‟ in Stuart Woolman & Michael Bishop Constitutional law of
South Africa 2 ed (Revision Service 6, 2014) 48-1 – 48-68 at 48-1, quoting Sol T Plaatje Native Life in
South Africa (first published in 1916, republished in 1982), which work was a foremost response to
the Native Land Act that provides an account of the origins of the legislation and its devastating
immediate impacts for Blacks in South Africa.
to those so dispossessed, or to their descendants.121 In so doing, the Restitution of
Land Rights Act 22 of 1994 (the Act) was passed by Parliament,122 The Act must be
read with s 25(7) of the Constitution 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.123
[415] The Act forms part of the constitutional framework for land reform aimed at
redressing the past injustices of dispossession in this country. It is steeped in a
challenging constitutional context in which the public interest imperative of land
reform is pitted against constitutional protection of private property rights.124 Against
this background the Legislature has used specific language, in the Act, as a tool to
achieve land reform in the country and to remedy the injustices which flow from the
dispossession.125 The Act requires historically determined justice and the application
121 The Interim Constitution of the Republic of South Africa (Act 200 of 1993) contained positive rights
for the restitution of land rights in ss 28 and 121 to 123, from which flowed the Restitution of Land
Rights Act 22 of 1994, which was enacted shortly after the transition to democracy, and has remained
in force, although subject to several amendments, under the final Constitution, 1996. The drafters of
the final Constitution, 1996 also inserted s 25(7) and (8) to place beyond doubt, a positive land reform
restitutionary justice provision within the Bill of Rights. See a brief drafting history of the property by
Pienaar & Brickhill Constitutional law of South Africa at 48-3. For the historical background to the
property clause in the Interim Constitution see A Eisenberg „Land‟ in M Chaskalson et al (eds)
Constitutional Law of South Africa 1 ed (Revision Service 3, 1998) 40-1 – 40-5.
122 For a history and analysis of the Act see Pienaar Land reform 533-658; Miller & Pope Land title in
South Africa 313-397; and Jaichand Restitution of land rights 53-76.
123 In Department of Land Affairs & others v Goedgelegen Tropical Fruits (Pty) Ltd 2007 (6) SA 199
(CC) Moseneke DCJ said: „[32] . . . [R]estitution of land rights and land reform are constitutional
issues. They sit in the heartland of the protective, restitutionary and land reform design of s 25 of the
Constitution.‟ He went on in para [53]: „It is by now trite that not only the empowering provision of the
Constitution but also of the Restitution Act must be understood purposively because it is remedial
legislation umbilically linked to the Constitution.‟
124 Section 22(1)(cA) of the Act. See also ss 25(4), (6) and (7) of the Constitution.
125 See s 2(1) of the Act setting out the requirements for a claim, as interpreted with authority in
Alexkor Ltd & another v The Richtersveld Community & others 2004 (5) SA 460 (CC) („Alexkor‟) para
6. And although in the different context of evictions, the injustices of dispossession were concisely
of the principles of equity and fairness.126 So the Act clearly implores the courts to
lean towards granting rights in land where it would be just and equitable to do so
within the context of the provisions of the Act.127
[416] The history against which land reform and claims are set plays a pivotal role
in the determination of justice.128 It is clear from the provisions of the Act that the
Legislature recognised that some of the true history of land occupation and
ownership in this country would not be easy to establish. Accordingly the Act
specifically contains certain peculiar features which are intended to grant to the
specialised LCC, when adjudicating land claims, latitude to admit all relevant
evidence in order to determine such history. The Act is therefore an extraordinary
piece of legislation, sui generis, which generates processes and approaches not
normally associated with normal litigation and rules of practice. It is therefore
important to examine some of those special provisions which give structure and
effect to the land claims processes.
captured by Sachs J in Port Elizabeth Municipality v Various Occupiers 2005 (1) SA 217 (CC) („PE
Municipality‟) paras 9-10.
126 See s 25(7) of the Constitution, which refers to „equitable redress‟. See also Mark Euijen and
Clive Plasket „Constitutional protection of property and land reform‟ (2003) Annual Survey 430 at 441:
„[T]he entire purpose [of the Act] is to turn back the clock and rewrite history along more equitable
lines.‟
127 Moseneke DCJ in KwaLindile Community v King Sabata Dalindyebo Municipality [2013] ZACC 6;
2013 (6) SA 193 (CC) („KwaLindlile‟) para 33, described a claim for restoration of dispossessed rights
in land as a „pre-eminent constitutional issue‟ and as „a vital part of the constitutional quest to heal
divisions and exclusions of the past‟. See also Alexkor para 98. And see also Pienaar & Brickhill
Constitutional law of South Africa at 48-54, where factors which are taken into consideration by the
LCC including „justice and fairness‟ are noted; and 48-5 – 48-8, where it is noted that when
interpreting land reform legislation, the founding values of the Constitution are likely to have a „tilt‟
effect which gives greater weight to the rights and interests of the vulnerable and landless. Further
see G Budlender „The Constitutional Protection of Property Rights‟ in G Budlender, J Latsky & T Roux
Juta’s New Land Law (1998) at 1-69; Murphy Confronting past injustices at 116, in whose analysis
says that the LCC „ideally should be a court of equity‟.
128 See, as prefaced, in: Land Access Movement of South Africa & others v Chairperson, National
Council of Provinces & others [2016] ZACC 22; 2016 (5) SA 635 (CC) para 1; KwaLindlile para 39;
and Alexkor paras 34-41.
[417] The claim was brought in terms of s 2(1) of the Act which provides that:
„A person shall be entitled to restitution of a right in land if-
(a)
he or she is a person dispossessed of a right in land after 19 June 1913 as a result of
past discriminatory laws or practices; or
(b)
it is a deceased estate dispossessed of a right in land after 19 June 1913 as a result
of past discriminatory laws or practices; or
(c)
he or she is a direct descendant of a person referred in paragraph (a) who has died
without lodging a claim and has no ascendant who-
(i)
is a direct descendant of a person referred to in paragraph (a); and
(ii)
has lodged a claim for the restitution of a right in land; or
(d)
it is a community or part of a community dispossessed of a right in land after 19
June 1913 as a result of past racially discriminatory laws or practices; and
(e)
the claim for such restitution is lodged not later than 31 December 1998.‟129
[418] In terms of s 1 of the Act „restitution of a right in land‟ means (a) „the
restoration of a right in land‟; or (b) „equitable redress‟. A „right in land‟ means „any
right in land whether registered or unregistered, and may include the interest of a
labour tenant and sharecropper, a customary law interest, the interest of a
beneficiary under a trust arrangement and continuous beneficial occupation for a
period of not less than 10 years prior to the dispossession in question‟. „Racially
discriminatory practices‟ mean „racially discriminatory practices, acts or omissions,
direct or indirect, by (a) any department of State or administration in the national,
129 Subsection 2(1)(e) of the Act has since been substituted by s 1 of the Restitution of Land Rights
Amendment Act 15 of 2014 , which sought to change the time for lodging claims to 30 June 2019.
This Act has been declared unconstitutional in the matter of Land Access Movement of South Africa &
others v Chairperson of the National Council of Provinces & others [2016] ZACC 22; 2016 (5) SA 635
(CC).
provincial or local sphere of government; (b) any other functionary or institution
which exercised public power or performed a public function in terms of any
legislation‟.130
[419] The Act provides an avenue to reclaim rights in land dispossessed after 19
June 1913.131 It provides for the establishment of the Commission on Restitution of
Land Rights whose function it is to assist and facilitate the land claims processes.132
The Commission operates as an important administrative „initial filter and first
adjudication point . . . set up in such a way that a serious attempt is made at the
outset to solve each land claim in a non-adversarial manner.‟133 Only if that process
does not succeed is a claim referred for adjudication‟.134 As part of its facilitative role,
the Commission is empowered and obliged to give assistance to claimants in the
preparation, submission and prosecution of their land claims.135
[420] The Act also provides for the establishment of the LCC136 for the
consideration of land claim disputes. The LCC is a specialist court.137 When the
130 Alexkor para 6.
131 See long title and s 2 of the Act. See also Alexkor paras 37-41.
132 Section 6 of the Act.
133 Visser & Roux Confronting past injustices at 96.
134 Ibid.
135 Section 6(1)(b)-(eA) of the Act. See also rules 5 and 6 of the Restitution of Land Rights Act, 1994:
Rules regarding procedure of Commission, GN R703, GG 16407, 12 May 1995. See also Transvaal
Agricultural Union v Minister of Land Affairs & another 1997 (2) SA 621 (CC) para 15.
136 Section 22. Farjas (Pty) Ltd v Minister of Agriculture and Land Affairs 2013 (3) SA 263 (SCA) paras
7 and 8; Concerned Land Claimants Organisation of Port Elizabeth v Port Elizabeth Land and
Community Restoration Association & others [2006] ZACC 14; 2007 (2) SA 531 (CC) para 19 – which
postulate that we ought to defer to the specialist jurisprudence of the Land Claims Court as opposed
to superimposing the traditional interpretation and evidence rules we ordinarily apply.
137 „[E]xercising power in a forum “where the conflicting values as embodied in the constitutional
property clauses take on concrete form.”‟Florence v Government of the Republic of South Africa
[2014] ZACC 22; 2014 (6) SA 456 (CC) para 25. The Constitutional Court has held that it would be
Commission refers the matter to the LCC it must request the Minister of Land Affairs
to issue a certificate as to whether or not restitution is feasible.138 Land claims are
therefore put through an elaborate investigative, administrative and quasi
adjudicative process before they are referred for adjudication to the LCC. Of
significance, in relation to the functioning of the LCC, s 33 of the Act enjoins that
court to have regard to the commitment to afford restitution of rights in land to
persons or communities dispossessed as a result of racially discriminatory laws or
practices. The LCC must also have regard to the need to remedy past violations of
human rights, requirements of equity and justice, and the need to avoid major social
disruption.139 One of the special features of the Act is the unqualified provision for a
court, at the hearing of an appeal, to hear further evidence.140 A further significant
attribute is the similarly uncircumscribed provision for admission of „any evidence‟,
including expert reports, archival records and hearsay evidence,141 whether or not
such evidence would be admissible in any other court of law. In Executor Estate late
slow to hear appeals from specialist courts unless important issues of principle are raised. See
National Education Health and Allied Workers Union v University of Cape Town & others 2003 (3) SA
1 (CC) paras 30-31.
138 Section 15 of the Act. See Macleantown Residents Association: Re Certain erven and commonage
in Macleantown 1996 (4) SA 1272 (LCC) at 1282. For the purposes of the certification process, see
Visser & Roux Confronting past injustices at 96-97.
139 Section 33(a), (b), (c), and (d) of the Act. Department of Land Affairs v Goedgelegen Tropical
Fruits (Pty) Ltd [2007] ZACC 12; 2007 (6) SA 199 (CC) para 53. This approach has been endorsed in
subsequent decisions of the Constitutional Court, for example Bakgatla-Ba-Kgafela Communal
Property Association v Bakgatla-Ba-Kgafela Tribal Authority & others [2015] ZACC 25; 2015 (6) SA
32 (CC) para 35; and Minister of Mineral Resources & others v Sishen Iron Ore Company (Pty) Ltd &
another [2013] ZACC 45; 2014 (2) SA 603 (CC) para 47.
140 Section 28N. See also rules 9(2), 28, 38(5)(b), 45(1)(a), and 49(1)(b) of the Land Claims Court,
Restitution of Land Rights Act, 1994: Land Claims Court Rules, GN R300, GG 17804, 21 February
1997.
141 Section 30. Section 30(1) and (2)(a) of the Act. See also in this regard Department of Land Affairs
v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (6) SA 199 (CC) para 57, where
Moseneke DCJ alluded to „historical facts on State policy, practices and laws premised on archival
materials‟ as cogent and properly admissible; and Ex parte Former Highland Residents; In re: Ash &
others v Department of Land Affairs [2000] 2 All SA 26 (LCC) para 15, where Gildenhuys J held that
the court would nevertheless insist on the best available evidence.
Phillips and others v Government of the Republic of South Africa and another142 at
583, Erasmus J remarked that s 30 relaxes the normal rules relating to the
admission of inter alia, hearsay evidence before the LCC. These, and other distinct
attributes in the Act, clearly imply that the courts, when considering disputed land
claims, should liberally lean towards the realization of the objectives of the Act.143 It
is through application of these provisions and the philosophy underpinning the
purpose of the Act that we reach a different conclusion to that of our colleague.
[421] It is true that the rights on which the claimants relied for their claim (as set out
in the claim form lodged with the Commission) differ from those which formed the
basis of the referral by the Commission to the LCC. When lodging their claim with
the Commission the claimants asserted their traditional rights in the land claimed,
derived from occupation of the land by their forebears, as the original occupants of
the „native location‟ which was sold to white farmers in about 1947. As against this,
the Commission, after investigations headed by Mr Paul, referred to the LCC, a
„claim for restitution of the (community‟s) rights in land relating to the Salem
Commonage, based on dispossession of the claimants’ ancestors of land which they
had occupied for a period in excess of 10 years.
142 Executor Estate late Phillips and others v Government of the Republic of South Africa and another
[2003] 3 All SA 575 (C).
143 Sections 28N, 30 and 33 of the Act. In Port Elizabeth Municipality v Various Occupiers 2005 (1) SA
217 (CC), in relation to the PIE Act, the constitutional said the following, which is equally applicable in
this instance: „[36] The court is thus called upon to go beyond its normal functions and to engage in
active judicial management according to equitable principles of an ongoing, stressful and law-
governed social process. This has major implications for the manner in which it must deal with the
issues before it, how it should approach questions of evidence, the procedures it may adopt, the way
in which it exercises its powers and the orders it might make. The Constitution and PIE require that, in
addition to considering the lawfulness of the occupation, the court must have regard to the interests
and circumstances of the occupier and pay due regard to broader considerations of fairness and other
constitutional values, so as to produce a just and equitable result.‟
[422] The Commission stated in its referral statement that the claimants‟ ancestors-
„. . . [L]ived on the land for many years before dispossession occurred. Certain areas were
designated for ploughing, eg Tyelera, Thafeni, Lusenge, and Emagolomeni etc. Cattle were
combined so that a large span of oxen could be created for ploughing . . . sharecropping was
also practiced with some white people who did not have oxen. The appropriate nature of the
rights that claimants had on the claimed land originated from the beneficial use for grazing
and farming and occupational rights which they acquired and used in accordance with
shared rules of usage, both in terms of traditional laws as well as so-called location rules’.
(My emphasis.)
[423] The Commission further stated that in the 1940s (about 1947), the white
community desired to take over the commonage and applied to the Supreme Court
in Grahamstown to sub-divide the commonage and transfer and incorporated it into
the individual titles, in the names of the farmers who owned adjoining properties in
the village of Salem.
[424] It is also true that witnesses who testified on behalf of the claimants insisted in
their evidence that the claimant‟s ancestors were holders of traditional rights in the
land, thus re-asserting their traditional rights as initially declared in the claim form.
On application of ordinary civil law principles and rules these changes in the rights
declared would be viewed as defects which could, on their own, result in the
dismissal of the claim. Our colleague refers unfavourably to these inconsistencies
and in our view, wrongly finds that the claim, as lodged, was invalid. The claim, as
asserted in the claim form, the referral by the Commission, the evidence and the
apparent variations in the nature of the rights which form the basis of the claim, must
be interpreted within the spirit and purpose of the Act and the role of the Commission
as set out therein. The terms of the referral resulted from the processes and
investigation provided for by ss 11, 11A and 12 of the Act.144 The Commission,
having conducted investigations as aforesaid, into the claim, concluded that the
claimants‟ rights to the land were more properly founded on continuous occupation
of the land as provided for in the Act. The fact that the Commission reached a
different conclusion from that of the claimants as to the nature of their rights, and the
fact that, in their evidence, the claimants and their witnesses continued to assert
traditional rights does not detract from the totality of the claim and the evidence in
relation to the rights asserted in the referral to the LCC.
[425] For completeness sake, although detailed in the main judgment, the
appellants‟ (landowners) case in the court below was briefly that, in the 1700s, the
Zuurveld in which area the commonage fell, was taken from the African indigenous
people by conquest as a result of the Fourth Frontier War in 1811 - 1812. They relied
on that conquest, and argued that the conquest destroyed any right the claimants‟
forebears might have had in the land in question. Consequently no reliance on such
rights in furthering the claim could be placed. Their case is further that when the
144 Section 11 of the Act makes provision for the procedure after the lodgement of a claim. It gives the
Commissioner a discretion to dismiss a frivolous claim and sets out a comprehensive process to be
followed including publication in the Gazette where the claim has merit. Section 11A provides for the
withdrawal or amendment of the notice of claim following publication of the claim in the Gazette and
representations made as result of that process from the relevant stakeholders. And s 12 sets out the
Commission‟s powers to investigate the claim and importantly in subsec (3), it provides that: „If a
claimant is not able to provide all the information necessary for the adequate submission or
investigation of a claim, the regional land claims commissioner concerned shall direct an officer
contemplated in section 8 to take all reasonable steps to have this information made available.‟ The
legislative scheme provides for and accommodates substantial amendments to claims given this
elaborate investigative process, thus freeing the land claims process from the strict rules for
pleadings.
British settlers arrived in the Zuurland in the 1820s there was no community of
African people on that land. (with any rights to it). They also asserted that no African
people lived on the commonage during the relevant period at all. Yet they conceded
that there were African people, a handful of employees of the erven owners, who
lived on the commonage.
[426] Therefore it is not only the claimants‟ case that varied during the proceedings.
The appellants‟ response, could, on a strict interpretation also be considered
contradictory. However, a rigid approach to this inconsistency would be inimical to
the spirit and purpose of the Act. Instead, a comprehensive and holistic inquiry into
the truth is required.
[427] We do not intend to repeat the documented historical background to the
settlement of the Zuurveld. It is set out in the main judgment. We record, however,
that, as is widely known, the documented history as to the settlement, in this country,
by white people, and the whereabouts of the indigenous people at various stages of
that settlement, remains deeply controversial for various reasons.145 This judgment is
not intended to be a discourse of those controversies. The claim, as referred to the
145 For example Worden notes that: „The earliest histories of South Africa were mainly concerned with
its white inhabitants. It is true that writings by missionaries, administrators and American intellectuals
such as Sol Plaatje and Tiyo Soga in the late nineteenth and early twentieth centuries did pay
attention to the experience of American communities, but these did not find their way into the
mainstream of historical scholarship . . . Afrikaners nationalist writers tended instead to laud the
achievements of the trekkers and their descendants, while English-speaking historians placed
emphasis on the role of the British government and settlers.‟ Nigel Worden The making of modern
South Africa: Conquest, apartheid, democracy 5 ed (2012) at 2. See also Annie E Coombes (ed)
Rethinking settler colonialism: History and memory in Australia, Canada, Aotearo New Zealand and
South Africa (2006) 1-12. And further see Paul Ricoeur & Charles A Kelbley History and truth (1965)
21-40; Aniruddha Chowdhury Post-deconstructive subjectivity and history: Phenomenology, critical
theory and postcolonial thought (2014).
LCC by the Commission, can be determined on the evidence starting from the late
nineteenth century. The earlier historical background, going back to the eighteenth
century, serves a very limited and peripheral contextual role to this dispute.
[428] Although we have approached the matter in the manner set out above, there
is however, a crucial legal finding made by our colleague, relating to the earlier
history, which we consider necessary to deal with. This relates to whether the defeat
of the African people of the Zuurveld, in the Fourth Frontier War, extinguished their
traditional rights in the Zuurveld land. Contrary to the finding by our colleague,146 we
do not agree that such traditional rights were extinguished by the conquest. We
accept, however, that, in respect of the land allocated to the 1820 Settlers to live on
in the 1820s only, these rights were extinguished through a State-sanctioned
administrative process in the form of the allotments to the British Settlers.
[429] In concluding that the Fourth Frontier War resulted in extinction of the
traditional rights in land of the indigenous people of Zuurveld, our colleague has
relied on a remark made by the Constitutional Court in Alexkor Ltd & another v The
Richtersveld Community & others147 (Alexkor) para 70, that:
„After annexation, the right of the Richtersveld community to indigenous law ownership could
have been extinguished in a number of ways. The Richtersveld Community would have lost
its indigenous law ownership if:
. . .
146 Paragraph 347.
147 Alexkor Ltd & another v The Richtersveld Community & others 2004 (5) SA 460 (CC) (Alexkor).
(d) the land was taken by force.‟
[430] Firstly, in this case, although disputed by the landowners‟ historian, there is
evidence that, having defeated the Africans and the Khoi inhabitants of the Zuurveld
in that war, Colonel Graham allowed some of them to return to the land and to
resume their subsistence farming activities. Secondly, in Alexkor the Constitutional
Court was not concerned with loss of indigenous rights in land as a result of
conquest. In fact, the court, at para 70 said that „[t]his case is not concerned with the
forcibly taking of land‟. That court therefore, while seemingly approving it, did not
comprehensively consider the exhaustive analysis of the issue by this court in
Richtersveld Community & others v Alexkor Ltd & another (Richtersveld).148
[431] In paras 48 to 50 of Richtersveld, Vivier ADP affirmed the recognition of
indigenous rights in land by the Dutch and the English colonists who came to this
country in the early nineteenth century. The learned judge went on to compare the
acquisition of the Richtersveld by Proclamation with a hypothetical acquisition by
conquest or cession. He found that both had the same consequences as
annexation.149 He cited, with approval, the following passage by Brennan J in Mabo
and Others v The State of Queensland (No 2) (1992) 175 CLR 1 (HCA) (at 57):150
148 Richtersveld Community & others v Alexkor Ltd & another 2003 (6) SA 104 (SCA) paras 34-50,
particularly para 49 where Vivier ADP for the unanimous court said: „In my view, it is clear from the
Articles of Capitulation that when the British Crown acquired sovereignty of the Cape Colony by
conquest and cession in 1806 the indigenous land rights of the inhabitants were recognised and
respected.‟
149 Paragraph 52.
150 Paragraph 60.
„The preferable rule equates the indigenous inhabitants of a settled colony with the
inhabitants of a conquered colony in respect of their rights and interests in land and
recognises in the indigenous inhabitants of a settled colony the rights and interests
recognised by the Privy Council in In re Southern Rhodesia [[1919] AC 211 (PC)] as
surviving to the benefit of the residents of a conquered colony.‟
In Mabo, the High Court of Australia recognised the existence of native title to lands
previously annexed under Imperial Authority. In so doing, the Court rejected the
fiction of terra nullius and found that native title was not inconsistent with the Crown's
radical title over its acquired lands. The existence of native title, the Court held, does
not depend upon positive acts of recognition, rather it arises from proof that a group
has a right to use or occupy particular land including uses tied to the community's
traditional lifestyle. In drawing upon international law to bolster its conclusions, the
High Court ushers in a new era for aboriginal land claims and portends new
directions for Australian jurisprudence.151 There is no indication, in Alexkor, that the
Constitutional Court intended to alter this settled legal position.152
[432] Even further, as discussed more fully below, it was an express policy of the
British, on settlement in various parts of the Cape Colony, not to unduly interfere with
indigenous land rights, and generally, with the African way of life and indigenous
administration. This had in fact been founded on the trite English constitutional and
151 Gary D Meyers and John Mugambwa The Mabo Decision: Australian Aboriginal Land Rights in
Transition 23 Envtl. L. 1203 (1993).
152 Jérémie Gilbert Indigenous Peoples’ land rights under International Law: From victims to actors 2
ed (2016) at 1-57, especially at 32. See John Westlake KC International Law, Part 2: War (1907) at
42; L Oppenheim International Law: A Treaties, Vol 2: Disputes, war and neutrality 7 ed (1952) edited
by H Lauterpacht para 140; Malcom N Shaw QC International Law 7 ed (2014) at 361-362; John
Dugard International Law: A South African perspective 4 ed (2011) at 132-133. See also United
States v Percheman 32 US (1833) 51; Certain Questions Relating to Settlers of German Origin in the
Territory Ceded by Germany to Poland, 1923 PCIJ (ser. B) No 6 (Sep 10).
international law doctrines of acquired rights and continuity (also doctrine of
aboriginal title) which favours the continuation of pre-existing customary land rights.
See, in that regard the English locus classicus, Campbell v Hall (1774) 1 Cowp 204;
98 ER 1045 (KB) at 1047, where Lord Mansfield explained that: „The laws of the
conquered country continue in force until they are altered by the conqueror,‟ through
the proper legislative processes of the conqueror to introduce new laws in the
conquered country. It was through these very doctrines (together with the 1806
capitulation conditions) that Roman-Dutch law survived the British acquisition of
sovereignty over the Cape colony when they affirmed the protection of the rights of
all „burghers and inhabitants‟ of the Cape. Professor Jérémie Gilbert writes that, in
international law, even at the time of conquest or annexation, the victorious party
must respect the doctrine of „acquired rights‟, the significance of which is to posit the
trite (conventional and customary international) principle that, a change of
sovereignty over territory does not affect the property rights of the inhabitants.153 In
particular, he says:
„Under British colonial laws, when a conquest was made, there were two approaches to the
effect of the acquisition of territory on the customary land rights of the inhabitants. The first
approach was based on the doctrine of continuity, which favoured the continuation of pre-
existing customary land rights, the idea being that conquest did not adversely affect these
153 Gilbert Indigenous Peoples’ Land Rights under International Law at 32. See also United States v
Percheman 32 US (1833) 51; Certain Questions Relating to Settlers of German Origin in the Territory
Ceded by Germany to Poland, 1923 PCIJ (ser. B) No 6 (Sep 10). And also see Westlake International
Law at 42, noting the classic principle that: „Permission to enemy subjects to remain in the country . . .
must in common sense carry with it permission to enjoy their property while so remaining. And if
enemy subjects being in the country may enjoy their property, it would be inequitable to confiscate
that of those who are not in it and therefore as individuals cause no danger.‟ And also Oppenheim
International Law para 140, where the learned author notes that: „Immovable private enemy property
may under no circumstances or conditions be appropriated by an invading belligerent. Should he
confiscate and sell private land or buildings, the buyer would acquire no right whatever to the
property.‟ Further see L Benjamin Ederington „Property as a natural institution: The separation of
property from sovereignty in International Law‟ (1997) 13 American University Law Review 263.
rights unless there is an express legislative intent to do so. The second approach was based
on the doctrine of recognition. This doctrine affirmed that rights to land had to be given a
formal recognition by the new power, as annexation resulted in the abolition of all pre-
existing rights.‟154 (Footnotes omitted.)
[433] It seems to us that, against these clear pronouncements on the issue the
obiter remark by the Constitutional Court should not be too readily interpreted as a
conclusive revocation of settled domestic and international law on the issue. We
therefore disagree with our colleague‟s conclusion that the Fourth Frontier War
conquest resulted in a total extinction of indigenous rights in land. It is our view that
the concession made on behalf of either the Commission or the claimants to a
general extinction of traditional rights in land as a result of conquest was incorrectly
made.
[434] Turning to the evidence, the main judgment concludes that, save for
employees of some of the landowners, there is no evidence of occupation of the
commonage by an indigenous community as alleged by the claimants.155 This
conclusion is premised on criticism of the evidence of all the witnesses who testified
on behalf of the Commission and the claimants as extremely poor and even
fabricated and on the discounting of the archival evidence. On the other hand, the
evidence of all the witnesses who testified on behalf of the landowners is accepted
by our colleague as unblemished.
154 Ibid at 32-33. See also Shaw International Law at 361-362.
155 Paragraphs 387-390.
[435] In our view the archival evidence relating to the period starting from the late
1870s to the late 1940s, on its own, lends objective and independent support to the
claim based on occupation of the Salem Commonage by a community of African
indigenous people, as a community, as contended by the Commission. This
evidence is, in fact, conclusive on the issue. It is true that some of the oral evidence
led on behalf of the Commission is capable of criticism. But so too is the evidence
led on behalf of the landowners. Some of the deficiencies were to be expected
because none of the witnesses, both for the appellants and the claimants, had
sufficient personal knowledge of relevant information. Some of them were not yet
born at the relevant time. Even those witnesses that were alive, were either too
young at the time or knew very little, if anything, of what was going on around them.
It would be unsafe to rely solely on their evidence without regard to corroborative
records.
[436] The evidence shows that after the Fourth Frontier war, in 1811 to 1812, the
Africans never regained general administrative authority over the Zuurveld area
within which Salem is located. Instead, by 1881 the Salem Village Management
Board (the board) was the administrative authority over the Salem Village, including
the Salem commonage. But there is no evidence that the board assumed active or
actual control over the commonage. Indeed, there is evidence that its failure to do so
gave rise to discontent and indeed uncertainty as to who officially controlled and
managed the commonage, if at all. This will be dealt with in more detail below.
[437] Prior to the installation of the board, the civil commissioner of Grahamstown
performed supervisory duties over the native locations around Grahamstown,
including the Salem commonage upon which there was no formally defined location.
As inspector of native locations, the magistrate did periodical inspections of the
commonage, and kept records of the number of „natives‟ living thereon, their huts
and livestock. These records show that in 1877 there was one hut with three people
on the commonage. The number of people grew steadily, such that by June 1884
there were 24 huts with a total of 130 people living there. This is where the records
of the Inspector of Native Locations end. The inspections stopped, presumably
because the board was established as the local authority over Salem, including the
commonage, and was to continue the functions previously performed by the
inspector. But, as already stated, that never happened. The only significant task
relating to the indigenous people living on the commonage that the board embarked
on was to prepare for the establishment of a formal Native Location within the
commonage. Further evidence of the extent of occupation of the commonage by
Africans only appears in correspondence between the board and the officials of the
Cape Government.
[438] During 1915 to 1916 the board contemplated establishing a Native location
within the commonage as provided for in the Native Locations Act 10 of 1870. In its
preamble this Act provided that it was intended to provide for the management of
native locations and other communities and for regulation of rights on
commonages.156 With regard to the Salem Commonage, it was contemplated that
the occupation of the commonage would continue in a more structured form, much in
the manner provided for in the Native (Urban) Areas Act 21 of 1923. Indeed
occupation of the commonage by Africans was beneficial to the landowners because
it facilitated ready access to labour and the exploitative sharecropping practices.
However there is no evidence or record that any landowner or even the board gave
consent for occupation of the commonage by a specific African or indigenous
employee. On the other hand, there is documentary evidence of leases granted by
the board to white farmers who were not erven owners, to conduct farming activities
on the commonage. Our conclusion is that no consent was ever given to indigenous
occupants of commonage to occupy the commonage.
[439] It is true that the regulations issued under Act 12 of 1893 regulated life in
Salem prohibited settlement on the commonage. But, clearly, the open occupation
on the commonage by the indigenous people was never policed, curtailed or stopped
in any way. Instead, some of the erven owner collaborated with the African
commonage occupants in their farming endeavours.
[440] In preparation for the establishment of the Native Location, land was
demarcated within the commonage and correspondence was exchanged between
the board and the Cape Government on the content of regulations that were to
regulate life on the commonage Native Location. The regulations were approved by
156 It would appear that the term „location‟ was already in use to describe „native‟ settlement or places
where indigenous people lived.
the Governor General in 1917157 and promulgated under Government Notice No 454
of 1919. They provided, amongst other things, for natives to be holders of site
permits in respect of the sites which would be allocated within the Native Location. A
„Location Official” would keep a record of the dwellings in the location and a stock
register in which would be recorded the number of livestock belonging to the
residents of the Native Location. Young natives (from 15 years old in respect of men
and from 17 years old in respect of women) would be obliged to work for the white
residents of the village when called upon to do so, at a prescribed fee. Resistance to
such a call up would result in the recalcitrant youth, together with the owner of the
hut in which such youth resided, losing the right to live in the native location.158 It is
our view that the need to establish a „Native Location‟ on the Commonage further
enhances the claim that their ancestors lived on the Commonage with an active
social life within their community.
[441] The establishment of the commonage Native Location was later abandoned
and the regulations were never enforced by the board. In any event, the evidence
shows that in reality there was confusion on the issue of whether the board, in fact,
157 In terms of s 147 of the Union of South Africa Act 11 of 1909, which provided the following:
„The control and administration of native affairs and of matters specially or differentially affecting
Asiatics throughout the Union shall vest in the Governor-General in Council, who shall exercise all
special powers in regard to native administration hitherto vested in the Governors of the Colonies or
exercised by them as supreme chiefs, and any lands vested in the Governor or Governor and
Executive Council of any colony for the purpose of reserves for native locations shall vest in the
Governor-General in Council, who shall exercise all special powers in relation to such reserves as
may hitherto have been exercisable by any such Governor or Governor and Executive Council, and
no lands set aside for the occupation of natives which cannot at the establishment of the Union be
alienated except by an Art of the Colonial Legislature shall be alienated or in any way diverted from
the purposes for which they are set apart except under the authority of an Act of Parliament.‟
158 The second commission had recommended that „the main principles relating to locations on private
property should be applied to natives on crown lands other than those duly set apart as native
reserves or locations, and that sanction for native occupation on such crown lands should not be
given unless an adequate rent is charged to the native‟s occupier, based upon the producing value of
the land‟ (at 18 of report).
had authority over the commonage and the people living thereon. For example,
some of the landowners sought to have the homes of their employees that were
already built on the commonage, but outside the portion demarcated for the location
to be considered part of the contemplated Native Location. In motivation for this
proposal it was stated that because of the vast size of the commonage (20 000
acres) some of the landowners‟ erven were far from the planned location, so their
workers would arrive late at work and leave early to get to their homes before dark.
The board pointed out that under the Regulations, huts placed anywhere on the
common land, other than the demarcated area, were not under its jurisdiction. In a
letter to the Native Commissioner dated 10 May 1920, the chairman of the board
expressed concern that the huts in question belonged to persons who were „monthly
employees on the erven‟ and to „half sowers‟. This letter is important for several
reasons. Inter alia, it shows that the board was aware of the existence of the
inhabitants of the commonage. It also shows that the board did not consider itself as
having jurisdiction over the commonage. Finally, the letter also shows that, not only
did the employees of the landowners live on the commonage but importantly, it also
puts paid to the assertion that the African people living on the commonage were
workers only and „allowed‟ to be there at the goodwill of the landowners. Before us
counsel for the landowners could not explain the legal basis on which individual
landowners gave consent to his or her employee to live on the commonage.
[442] By the early 1920s the land owners had become dissatisfied with the manner
in which the board had, over the years, conducted the affairs in Salem. They were of
the view that the board had shirked its authority over the commonage. The
administration of the commonage had become too „chaotic‟ for the liking of some of
the landowners. Some of the land owners started having disputes amongst
themselves in respect of, inter alia, grazing fees charged to outsiders (other farmers
who did not own erven). These disputes became difficult for the board to manage,
resulting in some of the landowners forming a separate committee, chaired by Mr
Leslie Basil Gardiner. The causes of unhappiness included the failure of the board to
control the „natives‟ living on the commonage and their livestock, which negatively
affected the thoroughbred breeding industry and the quality of produce because their
livestock (bulls and stallions) mixed with those belonging to the African occupants on
the commonage. Consequently farming could not be conducted properly. Complaints
also related to aggressive land usage methods by white farmers who were not
landowners. One of these farmers was Mr Robin Bradfield, who started cultivating,
with impunity, vast tracts of land within the commonage. Incidentally, a statement
taken from Lindile Magwala, one of the claimants interviewed by the Commission
during the investigation of the claim, refers specifically to the disgruntlement
amongst the landowners as a result of Mr Bradfield‟s aggressive use of land on the
commonage.
[443] There is also evidence that land on the commonage was leased to some
board members (eg, Mr R Dickinson) who were not erven-owners and were
perceived as abusing their leases. Another board member, Mr Luigi Henson and his
brother, John Hewson, lived on the commonage, paying boarding of 2s 6d per year
and thus regarded as „evading rates and taxes‟. The disgruntlement over the
Africans living on the commonage, their ever increasing livestock which was
regarded as of inferior quality, interference with the farming activities of the whites on
the commonage led to calls for the commonage to be subdivided and transferred to
the erven-owners.
[444] In a letter dated 13 November 1920 Mr Gardiner requested the Provincial
Administrator to set up a commission to investigate how the board was conducting
the affairs in Salem. He expressed complaints relating to the failure of the board to
monitor and enforce rules on transgressors, including breach, by some of the
landowners, of an agreement that native half sowers would not be allowed to plough
on a specified 400 acre piece of land which was specially reserved for use by the
landowners. Mr Gardiner also alleged that the board had been allowing natives to
squat, erect huts and to graze their cattle on common land at a nominal charge of 6
d per head per month, to the detriment of the land owners. The board also allowed
the natives to cut fire wood which they transported to Grahamstown and sold for £3 –
£5. In fact the records reveal that the Africans living on the commonage were
engaged in vibrant business activities.
[445] Further complaints related to the trapping of game and the „robbing‟ of
beehives by the African inhabitants of the commonage. In all, the Africans residing
on the commonage had become a nuisance to some landowners. However, some
landowners found them to be valuable partners in their farming endeavours. Mr
Gardiner expressed concern that „if something is not done, the natives will soon be in
possession [of the whole commonage] within the next five years‟.
[446] In a letter to the Administrator (dated 21 January 1921), the board responded
by asserting that it was common practice for European occupiers of land to engage
the services of labour tenants who received portions of land as partial remuneration
for their services. It stated that „unless the custom is abused, there is nothing
particularly reprehensible about it‟. Notably, this response, which was a general
assertion, was not a denial of the increase in the numbers of Africans living on the
commonage nor their activities. Importantly, the board did not refute occupation of
the Commonage by African people who, the evidence shows, were also living there
and part of a social structure that had developed over time – both within the closer
community and generally, at least, with some of the landowners.
[447] By 1929 the majority of the erven owners were strongly advocating for
subdivision of the commonage and transfer thereof to each one of them in proportion
to their shares or their allotments. At some stage leasing subdivided portions of the
commonage to the erven owners was explored. However, the board had no funds to
enable it to prepare the commonage land for such leases. For example, it had no
funds to facilitate removal of cactus on the land.
[448] Although the official Salem Commonage Native Location was never
significantly occupied, there was some limited occupation thereof. At some stage
there were six huts on the demarcated portion. At the same time (about the year
1932) about 300 to 400 African people lived within the commonage. The number
was later estimated at 500 inhabitants, about 50 of whom were employed on the
erven and staying thereon. In 1934 the native location was disestablished. However,
the disestablishment of the location did not necessarily coincide with the actual
expulsion or eviction. Therefore although most people dispossessed of rights in land
lived outside the area demarcated for the location, the statement that the claimants‟
forebears were dispossessed of rights to land in the location is not without
foundation because a few families lived within the area demarcated to be the native
location.
[449] The landowners approached the Supreme Court (Grahamstown) for an order
authorising the subdivision. In 1940 the court granted the order. Correspondence
exchanged between the board, the Cape Administrator and the remarks made by
Gane J who granted the order are strong indicators as to the view held by the Cape
Government and the court regarding the ownership rights which the landowners
claimed to have to the commonage. These views become relevant and are
discussed later in this judgement in relation to whether the commonage was the
private property of the landowners in respect of which no restitution of land rights can
be made.
[450] It is evident from the archival records that, apart from their financial
obligations to the board, the African occupants of the commonage were left to
regulate their own lives within the commonage. They decided (on their own) where
each family would settle within the commonage, which piece of land each family
would plough, where to graze their cattle, where they would bury their dead, where
they would access wood and water and where they would perform their customary
rituals. These were the different facets of their beneficial occupation. And they were
guided by African traditional laws and custom in enjoying such beneficial occupation,
as the commission asserted.
[451] Much was made of the fact that the board was the official structure that was in
„control‟ of the Salem village, including the commonage, and that the 1866 and 1906
regulations governed life in the village, including location of grazing lands. But, apart
from revenue collection there is no evidence that the 1906 regulations were enforced
on the Africans living in the commonage. And, as already shown, although the
1915/16 regulations, intended specifically for the African community, were
promulgated, they were never enforced because the native location was never
significantly occupied. Instead the inhabitants of the commonage remained free to
access land as they determined, according to their traditional laws and customs.159
[452] As stated earlier, it was a documented policy of the British Colonists, in line
with English constitutional law, not to interfere with indigenous laws and customs.160
The (Sir Barry) Commission on Native Laws and Customs, Cape of Good Hope,
1881-1883, a commission that was set up to investigate and to advise on native laws
and customs during 1881 to 1883, recorded that:161
159 For example, when the board was requested to declare the houses on the commonage to be part
of the native location.
160 Paragraph 19 above.
161 P A Linington A summary of the reports of certain pre-Union Commissions on Native Affairs
(1924) 1-13 at 2. The Commission‟s terms of reference had, inter alia, been: „To enquire into the
Native Customs in the matter of land tenure and to make such suggestions regarding to tenure of land
as may seem best suited to carry out when practicable the policy of the Cape Colony in the matter of
individual tenure‟ and „To report on the advisability of introducing some system of local self-
government in Native Territories.‟
„In 1835, natives living between Keiskama and Kei Rivers were declared British subjects,
retaining possession of their lands and locations but governed by Colonial law and authority .
. . In 1836 new treaties were entered into with the Natives living East of the Great Fish River,
acknowledging their independence and recognising their full right to adhere to Native Laws
and Customs. . . . War occurred again in 1850 and lasted to 1853 and after its conclusion Sir
George Cathcart treated British Kaffraria as a “conquered territory in military occupation” and
laid down the following principles for its government, viz., that the Colonists be restricted to
their limits and that the Kafirs be not prematurely annexed to the Colony and subjected to
Colonial laws but be allowed, as British subjects, to be governed as to their interior discipline
by their Chiefs in accordance with Native Laws and Customs until European influence shall
have removed objectionable and bad practices.‟
[453] The Commission concluded:162
„Many of the existing Kafir Laws and Customs are so interwoven with the social conditions
and ordinary institutions of the native population that any premature attempt to break them
down or sweep them away would be dangerous, besides defeating the object in view. We
consider it would be most inexpedient wholly to supersede the native system by the
application of Colonial Law in its entirety; and we have directed our attention to the drafting
of a special code which would leave such of their customary laws as are not opposed to the
universal principles of morality and humanity, substantially unaltered and at the same time
secure a uniform and equitable administration of justice in accordance with civilised usage
and practice.‟
162 Ibid at 3.
[454] This policy undermines the argument, on behalf of the landowners, that it is
improbable that the board would have allowed freedom of way of life and a traditional
administrative structure on the commonage parallel to that of the board. Therefore
the criticism relating to lack of credible evidence about the existence of Chief Dayile
does nothing to bolster the appellants‟ contention that the people who lived on the
community were not a community. The fact is that the Colonists acknowledged the
African traditional leadership structures and even encouraged them. Even if it is
accepted that the evidence relating to Chief Dayile and his background is unclear,
documented history supports the contention that, as in all African communities, there
must have been a traditional leadership structure on the commonage. Clearer
evidence about the existence of Chief Dayile would not have, on its own, constituted,
comprehensive evidence of shared rules of accessing rights in the commonage land.
[455] The board did not allocate land to the commonage inhabitants for residential
and agricultural or farming purposes. It did not provide grave sites or establish a
water or wood resources. These aspects must have been regulated by the
established African community based system of rules and custom which was shared
by those living on the commonage. As will be set out below, in the discussion of the
oral evidence led before the LCC, one of the appellants‟ witnesses testified that there
was a traditional leadership structure on the commonage, consisting of a group of
male elders.
[456] There is no evidential basis to discount the estimates of the African population
that lived on the commonage. The main judgment highlights the fact that a report of
the Assistant Health officer dated 7 December 1931 makes no mention of Africans
living on the commonage. But that report does not say they were no Africans on the
commonage at the time. And more telling is the later report dated 30 June 1932, also
from the Health office, which estimated the number of Africans living on the
commonage at 300 to 400. The report of 30 June 1932 recorded that „white
population of Salem V. M Board area approximately 84. Native population possibly
300-400 – no recent figures available. These records constitute independent
evidence which is consistent with seven decades of community life on the
commonage. The view that the estimate of 450 people on the commonage is
improbable because such a number could not be accommodated in the twenty-six
huts shown in the 1942 aerial photograph does not take into account that by 1884
there were already 24 huts and 130 people on the commonage. In fact these
undisputed figures show that by 1884 there was already a community of African
people living on the commonage. It is probable that there by 1942 there were more
than 24 huts on the commonage as will become clear below.
[457] Mr Adie Gerber prepared a report on the observations by the archaeologists,
Tim Hart and David Halkett who were appointed to conduct an information gathering
survey of the Albany District. They inspected various grave and hut sites on the
commonage. Their conclusions, drawn from the observations made during the
inspection, were:
„Our field observations led us to conclude that there is ample evidence of human occupation
of the farms that make up the land that was once the Salem Commonage. This consists of
dwelling houses, places where natural resources were exploited (lime quarry and springs)
and numerous graves which were pointed out by our informants. Unfortunately the
circumstances under which we were working were restrictive – the survey is by no means
comprehensive, and in many places dense vegetation cover impeded our ability to observe
the ground surface.‟
[458] Even in the restricted circumstances under which the archaeologists
conducted the inspection,163 according to their „table of observations and co-
ordinates‟ they observed, at least 47 huts and possible huts.164 The following also
appears on the report:
„The party was escorted to a large known cemetery that our informants told us was related to
the old “location” in Salem. Our inspection revealed that this was indeed a large “informal”
burial ground of some 200-300 graves (again estimates difficult due to dense vegetation).
The site extends up to the existing Salem – Alexandria Road and further to that is bisected
by the remains of an earlier historic road alignment. Mr Nondzube informed us that when he
was young, he remembers human bones being exposed when the current road was built
which implies that the cemetery extended to the crest of the slope. We inspected the road
cuttings for evidence of graves or human remains but saw none. Bone does not preserve
well once it is exposed to the elements‟.
[459] Regarding the 1942 aerial photographs on which the appellants‟ contention of
a handful of labour tenants is founded, Mr Gerber‟s report reveals that:
163 The report refers to restrictions as a result of dense grass and bush cover which restricted what Mr
Gerber and the archaeologists were immediately able to see in the study area.
164 They were not able to establish when exactly these huts were built and were of the view that such
an investigation would require more time.
„On our return from the inspection, 1942 aerial photographs were made available to us that
reflected the southern portion of the commonage but excluded the area of Salem and farms
to the north. On aerial photographs of 1942 only one very small settlement was observed on
the commonage land. None of the numerous settlement sites depicted on the 1:50 000 maps
were present indicating that there was a fluorescence of population after the subdivision of
the land took place. Further analysis of the complete aerial photograph set is desirable.‟
It therefore seems to us that the 1942 aerial photographs depicting a few huts are far
from conclusive on the issue, particularly in the light of the more reliable evidence
that as far back as the 1880s there were already 24 huts on the commonage and
what Hart and Halkett recently observed during their investigations. The aerial
photographs showing footpaths between the erven and these few hut-remains are
equally inconclusive. This is understandable because of the thick undergrowth which
is likely to have prevented an accurate aerial view and photographs.
[460] Consequently, the independent evidence contained in the archival records
and the aerial photographs shows that over the seven decades, starting from the
1870s, indigenous people occupied the Salem commonage until the 1940s when it
was subdivided and the subdivided portions were allocated to the white farmers of
Salem, the effect of which was racially discriminatory as is evident in the
correspondence penned by Gardner, as leader of a disgruntled group of landowners,
prior to and including the application to the Grahamstown Supreme Court. A result of
the subdivision and transfer of the commonage to the individual landowners was
dispossession of the African inhabitants of their rights therein. Interestingly, under
prescriptive acquisition they would have acquired ownership thereof, at least by the
early 1900s.
[461] It was submitted on behalf of the landowners that the African people who lived
on the commonage or their descendants are not entitled to restitution of any rights in
land because in 1878 only one family, consisting of three people, was found on the
commonage. That family did not constitute a community for purposes of the Act, so it
was argued. Neither did the 130 people that lived on the commonage in 1884. The
contention was that, essentially, the forebears referred to by the community were
illegal squatters who did not „build up‟ any rights during the period that they lived on
the commonage. This argument misses the basic approach to land claims and
indeed the spirit of the Act. The fundamental principle that governs land claims is
that the determination of the existence of rights, the nature thereof, and whether
such rights should be restored is not made according to the laws which prevailed at
the time of occupation.165 The determination is made within the current land
restitution legal framework. For obvious reasons, the African community living on the
commonage could have no rights based on the laws of the time during which it lived
on the commonage. Further the fact that in 1878 only a family of three lived on the
commonage does not detract from the fact that over time the inhabitants of the
commonage grew in number, such that by the time they were dispossessed of
access to the commonage, they were a community of several hundred people. The
evidence shows the existence of a community, although it was conveniently invisible,
save as a source of labour and the benefits derived from its members‟ skills as half
165 This approach has been criticized as unduly narrow and restraining the purpose of the Act. See in
this regard Mark Euijen and Clive Plasket „Constitutional protection of property and land reform‟
(2003) Annual Survey 429-455 at 441 where they criticise this court‟s endorsement of the starting
point of the court a quo in that case, namely that the title of the claimants to the land had to be judged
solely with reference to the 'conditions and rules in existence at the time' (para 62 in the judgment on
appeal). Their view of this is that: „[I]it seems parsimonious in the extreme, if not plainly illogical, when
applying a statute whose entire purpose is to turn back the clock and rewrite history along more
equitable lines, to import a narrow common-law view, itself not free from controversy, into a statutory
definition of “rights in land” that clearly attempts to broaden the vision of rights and interests in land
beyond those recognized by the common law.‟
sowers. These are the very injustices that the current legal dispensation is designed
to remedy. The argument of the landowners flies in the face of the fundamental spirit
and purpose of the Act, which is to restore the dignity of people who suffered the
shame of being caused to be pariahs from their homes.
[462] Turning to the oral evidence led before the LCC, Professor Legassick testified
as an expert historian on behalf of the claimants and Professor Gilliome testified on
behalf of the landowners. Again, their evidence is set out in the main judgment. Apart
from giving opinion as to the early (pre-18th century) settlement of the Zuurveld, both
experts also gave their opinion on the issue of occupation of the Salem commonage
by a community of indigenous people as alleged. Their opinion was based on the
content of the archival records.
[463] Professor Legassick‟s evidence and opinion was that the archival records
supported a claim based on both traditional rights and on occupation of the
commonage for a period of ten years as provided in s 2 of the Act. As to the claim
referred to the LCC he opined that:
„These returns [by the inspector of native locations] are significant. They indicate that the
habitation of the Salem Commonage by natives was officially recognized as legitimate by the
Cape Government. The population of Salem Commonage, in other words had rights to
occupy the land and rights to graze cattle on it. Even though the returns ceased, the
population with their cattle remained in occupation of the land. Already in 1883 they had
been there for six years. Ten years residence is required to establish beneficial occupation
and to guarantee rights – and certainly they remained for that length of time. In fact there is
no evidence that they were removed – until their dispossession in the 1940s, sixty years, or
some two or three generations later. People occupying the land in a given place for two to
three generations must interact with one another, visit each other, do things together,
establish rules of behaviour, including those determining access to the land, and in other
words, must constitute a community, at least partly self-sufficient.‟
[464] Professor Legassick was criticised for this opinion on the basis that on the
claimant‟s own version, the alleged occupation of the commonage was never
authorised by the board. Our colleague finds that his evidence was inadmissible and
that his rationale that the occupation of the commonage was recognised was false
because the board exercised strict control over access to the commonage, to the
extent that no unauthorised persons could settle thereon.
[465] We have already expressed our disagreement in this regard. Even if he was
not qualified to give an opinion on the nature of the rights on which the claim was
founded, his evidence was based on the same records that we remain entitled to
consider and from which we draw our own conclusions. As stated, from its
establishment, the board paid no regard to life on the commonage. The meticulous
records that had been kept by the Inspector of Native Locations were discontinued.
There is no evidence that the board kept record of statistics of the inhabitants of the
commonage and their livestock, or erven-owners who had given permission to their
employees to reside on the commonage, or where exactly, on the commonage those
employees were permitted to live. It was the lack of control by the board over the
commonage that led to complaints against it and its eventual replacement. As we
have already stated the issue of the rights that accrued to the community must be
determined through the prism of the Act, rather than the laws that were applicable at
the time of occupation. The test is whether on application of the provisions of the Act
to the facts as they existed or unfolded over time, the members of the community
acquired rights in the land on which they lived, viz the Commonage.
[466] Professor Legassick‟s contention that the occupation by the community was
recognised by the authorities is based on the evidence that the occupants of the
commonage were caused to pay certain dues and taxes for their occupation and for
the livestock they kept. It is not in dispute that they paid these dues and taxes.
Professor Legassick‟s inability to understand how people could be caused to pay
dues and taxes, yet their existence be disputed, is quite understandable.
[467] Further, Professor Legassick‟s conclusion that the occupants of the
commonage constituted a community is drawn from the evidence showing that life
on the commonage was orderly or systematic. The inhabitants were a cohesive
community unit. Land was accessed in a shared pattern for residential purposes,
access to water and wood, ploughing, performing of rituals or customs and for
burying the dead.166 They pooled their cattle for purposes of ploughing (Amabhoxo).
They made communal decisions as to when and where boys and girls would be
initiated. They attended each other‟s traditional ceremonies and they regarded
themselves as a distinct community amongst other communities in the region.
166 Further details appear in the report of the archaeologists, Mr Nondzube and Mr Ngqiyaza, about
which more is said later in this judgment.
[468] The conclusion, by Professor Legassick, that the Africans who occupied the
commonage were recognised by the Cape Government as occupants of the
commonage accords with logic and the probabilities when one considers the fact that
they paid Hut Tax to the authorities, their livestock was recorded by the inspector
independently of that of the erven holders, they also paid dues for grazing their cattle
on the commonage and a monthly fee for cutting wood. Over and above that, the
complaints about the African nuisance fortifies this. It is also relevant that when the
erven owners sought to have the Africans forced to brand their cattle, to distinguish
them from those of the erven owners, the Administrator rejected the proposal,
asserting that the proposed law would be ultra vires as it would be discriminatory (as
between the erven-owners and the Africans).
[469] Our view regarding the criticism levelled at Mr Paul‟s is similar to that
expressed above in respect of the evidence of Professor Legassick. Mr Paul‟s
evidence and conclusions were founded on the same bases as those of Professor
Legassick, particularly, his support for a claim based on traditional rights. Mr Paul‟s
evidence mainly consisted of conclusions drawn from the archival records. In the
same way as Professor Legassick, the criticism against Mr Paul‟s evidence related
to his opinion that the land claim is founded on traditional or indigenous rights
because the claimant‟s ancestors were the original occupiers of the land in question.
We accept that their insistence on asserting the claimants‟ traditional rights is
irrelevant in as far as proving a claim founded on beneficial occupation for a period in
excess of 10 years. However where their evidence supports that claim it cannot be
ignored. The court remains enjoined to consider all the evidence before it.
[470] Mr Paul‟s report formed the basis for the referral of the claim by the
commission to the LCC in terms of s 14(2) of the Act. The report reveals that at
some stage during the investigation of the land claim, some of the landowners were
prepared to and others did relinquish ownership to portions of the claimed land.
However settlement negotiations with the current landowners failed as the parties
could not agree on the pay-outs.
[471] Mr Misile Nondzube bore the brunt of the criticism in our colleague‟s
judgment. We accept that his evidence was not a model in clarity. But the criticism of
his identification of certain sites, such as Chief Dayile‟s kraal, his family‟s gravesite
and ploughing fields must also be viewed in proper context. In his report Mr Gerber
said the following about the assertions made by Mr Nondzube:
„Mr Nondzube indicated that the graves were of relatives of his. We were informed that there
were huts a short distance away but these had been destroyed by ploughing. There were no
visible indicators. The graves themselves were identified to us as being directly under the
cover of a tree. The only indicators of human activity were about 5 rocks which had been
transported onto the site and a single low mound under a bush. We could not determine if
the mound was human made or had accumulated as a result of windblown debris and
humus trapped by the bush. Our informants told us that the stones were on the site because
they had been placed there as a token of respect by persons visiting the graves. A
contrasting explanation was given by Mr Theo Harris (interviewed two days subsequently)
who said that the stones were thrown onto the site by farmers to get them away from the
planting and ploughing activities.
We are unable to confirm the presence of the graves independently of the oral history
provided by our informants. The only feasible way to do this would be to open the ground
and check for the presence of human remains.‟
[472] The archaeologists were not dismissive of the allegations made by Mr
Nondzube and his companions. They did not find them bizarre. Their comments
were only that the allegations could not be independently confirmed. Even if Mr
Nondzube‟s allegation about the graves of his family is discounted, that does not
mean that all his evidence was devoid of value. Certain portions of his evidence are
borne out by some of the documented history. For example, he testified that he was
told that Chief Dayile, who became the traditional leader within the commonage, was
not born of royal blood and that as a minor chief, he reported to the paramount chief
who had remained in the Transkei.
[473] We disagree with our colleague‟s finding that the claim hinged solely on the
evidence of Mr Nonzube and more specifically on proof of the existence of Chief
Dayile. The Act does not prescribe proof of a specific personality as a requirement
for a Community. It requires a „group of person whose rights in land are derived from
shared rules determining access to land held in common by such group, and
includes part of any such group.‟167 We reiterate that in the referral, the Commission
said, the rights which the community had were „acquired and used in accordance
with shared rules of usage, both in terms of traditional laws as well as so-called
location rules‟. The fact that the existence of Chief Dayile‟s was not conclusively
167 Section 2 of the Act
established was not fatal to the land claim. As shown above, features in the life of
the commonage community, such as an established orderly settlement pattern,
common traditional practices, pooling of resources for farming purposes, economic
activity, and a leadership structure, demonstrate that the occupants of the
commonage were an established community as envisaged in s 2 of the Act168, with
or without their chief.
[474] For the same reasons, the short-comings in the evidence of Mr Ndoyisile
Ngqiyaza are not destructive of the land claim. We accept again, that his evidence is
not a model in clarity. It is difficult to discern, from his evidence, which events
happened while his family lived at the „location‟ prior to subdivision and which
happened when his family lived on Mr Don Bradfield‟s farm after the subdivision. He
also testified that his mother‟s grave was in the location, yet during cross-
examination he said his mother died when his family already lived on Mr Bradfield‟s
farm. Whilst this is not necessarily contradictory his evidence on these aspects
remains unclear. He obviously had difficulty testifying with reference to specific
years. Yet he was consistent in his version that his father went to work for Mr
Bradfield after the subdivision and that at that time he no longer had his own
livestock. Prior to this, when they still lived in the location, his father sold wood in
Grahamstown. He insisted that his family left their home in the location as a result of
the subdivision of the commonage. This is consistent with the general body of
evidence and apart from the inconsistencies, there is ample documentary
corroboration for what he generally testified.
168 See the definition of „Community‟ under s 1 of the Act.
[475] In our view, just as the oral evidence led on behalf of the commission and the
claimants was not perfect, so too was the evidence led on behalf of the appellants.
Apart from Mrs Page and her brother the witnesses who testified on behalf of the
landowners were only born after the subdivision. Their direct evidence relates to the
period starting after the subdivision. Reference to the earlier period was based on
hearsay.
[476] We first consider the evidence of the landowners‟ expert, Professor Hermann
Gilliomee. He disputed that the first occupants of the Zuurveld were indigenous
people. Both Professor Gilliomee who testified on behalf of the appellants and Dr
Visagie whose expert report forms part of the record asserted that the prior
occupation of the land by AmaXhosa was temporary or sporadic and did not
constitute permanent settlement that could give rise to indigenous rights. We are of
the view that the evidence and most historical writings prove the contrary. We re-
iterate, however, that the real issue is the continuous occupation of the Salem
commonage by a community of indigenous people for a period in excess of ten
years, subsequent to 1913, not what occurred before.
[477] The evidence of Mr David Mullins was based on hearsay from his father. His
father farmed with beef cattle, vegetables and pineapples on the farm Moorelands
from 1952 and moved to the farm Avondale in 1964. Later he bought more farms,
Salem Park, Devonshire, Willow Bank and a portion of the farm Pleasant Prospect,
which were all within the claimed land but have since been sold to the Government.
It will be noted that Mr Mullin‟s father would have settled on the claimed land some
time after the subdivision. He would therefore have related to his son what he
himself had heard from other people. Mr David Mullins‟ evidence is relevant on two
aspects: firstly, that the farm Avondale was virgin land when his family acquired it.
The landowner‟ contention was that the land could not have been inhabited and
cultivated by the claimants‟ forebears. However, Mr Mullins‟ evidence cannot detract
from the value of the archival evidence on the presence of African people on the
commonage from the 1870s to the 1940s. Moreover, it had not been the
Commission‟s case that every inch of the commonage had been cultivated.
[478] The second relevant aspect of Mr Mullins‟ evidence was that Mr Nondzube‟s
father, Jamani Sukula, had told him (Mullins) that prior to working for Mr Mullins‟
father he (Sukula) had come from the „Seven Fountains area‟,169 and that he had first
worked for the Kings family on the Kingston farm. The suggestion from this assertion
was that Mr Nondzube‟s evidence on what his father had told him as the history of
his people, particularly that they had lived on the Salem Commonage, was false.
However, there was no indication in Mr Mullins‟ evidence as to when and where
exactly Mr Sukula would have lived in the „Seven Fountains area‟ or worked for the
Kings, and where the „Seven Fountains Area‟ he was referring to was, relative to the
Salem Commonage. Again, it is important to note that the Mullins family arrived in
South Africa from Zimbabwe in 1952. His assertion that before subdivision the
residents of the commonage were a handful of people employed on the erven must
be considered together with the objective evidence on record.
169 Which does not form part of the claim.
[479] The evidence of Mr Spencer Hill is also significant. In relation to Mr
Nondzube‟s evidence that his family lived on a certain portion of the commonage in
the vicinity of a Milkwood tree where he had pointed out the graves of his relatives.
According to Mr Hill that portion of land is part of the Rippley Farm on which he was
raised. His father bought it as part of Pleasant Prospect in 1949. It was common
cause that the Ripley Farm used to be part of the commonage. It was awarded to Mr
Hill‟s grandfather as one of the owners of the erven upon the subdivision. According
to Mr Hill his family had ploughed the land „from boundary to boundary‟ and had
never uncovered any graves thereon. We have already referred to the remarks made
by the archaeologists in respect Mr Nondzube‟s identification of the alleged
gravesite. There is no indication in the archaeologists‟ report that the gravesite had
been ploughed over. Instead the only comment made to them to refute the version
that the land around the milkwood tree was a gravesite was that the stones found
under the tree had been removed from land that was being ploughed. It is striking
that the claimants‟ witnesses and those interviewed during the investigation of the
claim appeared to be familiar with this part of the commonage, referring to it as
eMqwashini, uMqwashu being the IsiXhosa name for a milkwood tree. It must be
said, for the sake of completeness, that by the time the matter came before the LCC,
the farm Ripley had been „returned to the community‟. Mr Dyakala presently lives on
it.
[480] Mrs Ethel Page was 87 years old when she gave evidence in the LCC. She
was born in Grahamstown in 1926 and moved to Salem in 1934 when she was about
eight years old. Her father had bought the Residency farm from the magistrate, Mr
Mathews. When the commonage was subdivided her father was allocated a further
farm thereon, the Philemon‟s Hoek by virtue of his ownership of the Residency.
[481] In our view the evidence of Mrs Page was the most inconsistent. Particularly
considering that she was testifying about her personal experience and observations.
She initially testified that she did not know where the two African employees who
worked for her family lived. She insisted that they did not live at her home. Later she
admitted that they lived on her father‟s farm. She denied that there ever was a „black
residential area‟ where the commonage used to be. This cannot be correct given the
independent body of the archival evidence referred to above.
[482] She testified that as a young girl she used to ride her bicycle throughout the
Village and she never saw any African person living on the commonage. However,
during cross-examination she admitted that „they might have been there, but we did
not notice them‟.
[483] It seems that Mrs Page never took interest even in the African people that
were part of her daily life and lived in her home. She could not recall their names and
did not know where they lived. It was unrealistic therefore to expect that she would
know of the existence of Chief Dayile or any traditional leadership structure on the
commonage about whom she was asked. Her evidence could not form a credible
foundation to refute Chief Dayile‟s existence. Moreover, there was no reason for her
to make a mental note of this since at the time, there could not have been any
reason for her to do so.
[484] The evidence of Mr Cuan Alwyn King did not take the matter any further,
except for the admission that one of the African families that worked for his father‟s
aunts lived on the commonage. His evidence was that his father‟s aunts, from whom
his father acquired the farm Kingston, employed four Africans, three of whom lived
with their families on the farm and one who lived on the commonage. He asserted
that his father had told him that his aunts had obtained permission from the board for
this family to live on the commonage. But his evidence in this regard was uncertain.
He initially testified that „the family probably had permission‟. Later, under cross-
examination, he testified that his father had told him that „there was permission‟. As
expressed earlier this is inconsistent with the board‟s express disavowal of any
authority over the huts built by the African people on the commonage. On the other
hand, the evidence shows that the landowners considered the board as having had
such authority.
[485] Mrs Bradfield had married into the Bradfield family in 1974. Her evidence
related to affairs on her father-in-law‟s farm (Donald Bradfield) as in 1945, based on
her interpretation of entries made in Mr Bradfield‟s diary. The high water mark of her
evidence related to an entry in that diary, dated 30 April 1945, that Mr Bradfield
bought a bicycle for his employee, Mr Dyakala. Mrs Bradfield‟s opinion was that Mr
Bradfield must have bought the bicycle because Mr Dyakala „came from a distance
away‟ from the farm. But she later testified that Mr Dyakala lived on Mr Bradfield‟s
farm and not on the commonage as Mr Dyakala‟s descendants claimed. Again, this
evidence takes the matter no further. It neither contradicts nor supports the versions
put forward by the parties. It was common cause that after the court order authorised
the subdivision, from the 1940s, some of the occupants of the commonage moved
onto the farms where they were employed, others went to live in nearby
communities, including Grahamstown.
[486] Mr van Rensburg, is a brother to Mrs Page. He was also adamant that he
never saw any African people living on the commonage as he grew up in Salem. He
testified that his father‟s two employees lived on his father‟s farm and received food
rations as part of their wages. But, in striking contradiction to Mrs Page, according to
Mr Van Rensburg the employees each had eight cattle, including oxen with which
they ploughed their garden patches and their employer‟s land. It appears that Mr van
Rensburg (the father) did not have any oxen. Mr van Rensburg did not know whether
the employees were sharecroppers, but „they were allowed to have and to keep
these oxen on the farm, on the property, and because of that they never got paid, but
they were given land, a big piece of ground, to plough and plant for themselves‟.
[487] In summary, the extensive evidence led before the LCC related to occupation
of the Zuurveld Region, firstly by the indigenous people of South Africa,170 the arrival
of the Dutch during the seventeenth century and the British settlers in the 19th
century, the wars and battles waged between the AmaXhosa and both the Dutch and
170 In this case comprising of the AmaXhosa and the Khoi people.
British colonists, the ultimate defeat of the AmaXhosa, their colonisation and
reduction to farm workers, their occupation of the commonage and finally, their
expulsion therefrom in the 1940s. Notably some of the landowners accepted in their
evidence that there was some form of leadership amidst the community of African
people. According to the landowners, however, each farm had its own group of
elderly men who were tasked with facilitating the resolution of disputes and also
cultural and traditional practices. We do not understand how the allegation can be
sustained in light of the fact that, at least in so far as Ms Page is concerned, they
only had two male workers on their farm and there were only two or three employee
families on most farms.
[488] We have already set out the basis for our conclusion that the evidence proves
that a community of indigenous people lived on the commonage as asserted by the
Commission and the claimants. The contention, by the claimants, that the occupants
of the commonage were their ancestors, AmaXhosa of the Jwara clan, accords with
the history alluded to. Their shared traditional rules, customs and principles
determined their way of life within the commonage and their rules for accessing the
land for their livelihood. This, coupled with the fact that the African community,
alluded to above, had been on the commonage over time, and seen in certain
quarters to be of nuisance by the 1940s, lends credence to their claim.
[489] We next consider whether the perpetual quitrent grant and the subsequent
freehold title issued to the British Settlers in respect of the commonage, are a bar to
the land claim or restitution of the land to the claimants. The landowners‟ argument is
that no claim can validly lie in respect of the commonage because, even if
occupation is proved, the land was already privately owned and held by a freehold
title when the Africans settled thereon.
[490] In respect of the commonage, both the Quitrent Title and the Deed of Grant
accorded to the British settlers‟ shares which allowed them access to the
commonage, in proportion to the size of their allotments, for purposes of pasturage
and water, wood, reeds and thatch grass collection. The shares were described as
relating to:
„A piece of land measuring 2 333 morgen, situate in the district of Albany on the Bushman‟s
River, granted as Commonage to the Salem Party of Settlers on 15th December 1836‟; and
„A piece of land constituting 5355 morgen 555 square roods, situate in the District of Albany,
granted to the present and future proprietors of Locations in the Salem Party, on 23rd
November 1847, being the grazing ground or common land of the said Party.‟ (My
emphasis.)
[491] Essentially the shares were granted to enable access to the commonage land
for the enjoyment of a common benefit available to the then present and future
Salem landowners. Interestingly, there is evidence that 22 of the original (50)
members Sephton party of settlers that had settled in Salem had abandoned their
allotments by 1931 due to hardships of farming activities. They therefore must have
also abandoned their shares to access the commonage. In a letter dated 14 January
1936 attorneys Whiteside and Stapleton (representing the landowners, it would
seem) wrote as follows to the Cape Provincial Secretary:
„The rights to the commonage are held by 25 erfholders who have from time to time held
meetings to discuss the situation owing to intense dissatisfaction that arises from the fact
that such huge land cannot be farmed satisfactorily on a communal basis . . .
. . . The present commonage is of absurd size for a small community of about 100
inhabitants and of these only 25 owning commonage rights. These erfholders holding such
rights will be quite prepared to agree that a portion of the commonage be retained by the
Board for general use of the public as there is always more than sufficient land for all
purposes.‟
Clearly about half of the original landowners had abandoned their rights to access
the commonage.
[492] Further, the Cape Administration also abandoned its right to claim transfer to
it of a portion of the commonage based on its ownership of the village school
property. It considered that the attendant transfer and maintenance costs of an
additional property would be prohibitive; and the school was, in any event, unlikely to
require additional space in the foreseeable future. On the evidence before us, those
portions of the commonage which were abandoned were, without any legal basis,
subsumed by the remaining landowners on subdivision.
[493] Our view that the commonage served as a public resource is fortified by the
following remarks made by Gane J in the Grahamstown High Court when
considering the application for subdivision of the commonage. The learned judge
remarked that it was most unusual for members of a local authority (the board) to
hand over all their rights to the commonage to private owners. In addition, the
Administrator of the Cape Colony considered the subdivision to be particularly
„unusual‟ as it would result in the board being left without „common land‟.
[494] The following remarks by the Administrator in a letter written to the board are
also telling:
„7. It might be as well at this stage to point out that the question of the subdivision of this
commonage was taken to court at the instance of the Administration and of the Registrar of
Deeds entirely through a misapprehension. Originally the applicants approached this office
and alleged that they were the owners, in community of property, of the so called
commonage of Salem, and they asked for your consent to the division of these common
lands amongst the applicants so that each might have individual ownership of a portion of
the lands. The Administration advised the applicants that it had no power to direct the
Registrar of Deeds to give them transfer of portions of the land, and in this the Registrar of
Deeds concurred, stating that an order of court would be necessary to effect transfer of the
land. When the matter came to court the judge pointed out that this was not the correct legal
position, but that the Administrator had full power to act in terms of s 49 of Ordinance No 10
of 1921, ie the ordinary provision under which the village management Boards are
authorized to dispose of land…
8. In view of the considerable amount of money spent by the applicants in approaching the
Court, and in order to expedite settlement of the matter as much as possible, the Judge
allowed the issue of the Rule Nisi previously referred to. The position is, however, that apart
from the fact that the applicants have been to court, this matter comes before you as an
ordinary application by a Village Management Board to dispose of its lands.
9. Provision is made in s 49 for the leasing of commonage lands, and had this matter been
submitted to the Administration correctly in the first instance, it would have been suggested
to the Board that the best way to meet this position would be to grant long leases of portions
of the commonage, subject to conditions to be approved by you, In this way each of the
applicants would enjoy practical ownership of a portion of the ownership for say 25 or 30
years, but at the end of that period the position could be reviewed in the light of the
circumstances then existing and the Board would have the land as an asset for the benefit of
the community of Salem. In view of the expense which has been incurred by the applicants,
however, there is little likelihood that they would agree to such a solution for the matter. In
the circumstances I consider that, taking into account the opinion that has been expressed
by the Magistrate of Grahamstown … it would be as we to agree to the subdivision of the
whole commonage subject to the conditions such as those following being registered against
the transfer deed of each of the subdivided portions:
(i)
that the portion sold shall remain as commonage for the lot to which it is allocated
and shall not be sold apart therefrom;
(ii)
that the right of access to the various portions should be safeguarded.‟
[495] Indeed the consent of the Administrator was granted under these conditions.
And on subdivision of the commonage, the proposed conditions were incorporated
into the title deeds relating to the subdivided portions.
[496] Despite these sentiments expressed by both the Learned Judge and the
Administrator, the subdivision was allowed and the African occupants of the
Commonage were forced off it. It is this event which serves as a conclusive bridge
by which the claimants must succeed in asserting their rights in the land.
[497] All this, in our view, shows that the understanding of those in authority was
that the commonage served a public interest and that this position should continue.
The contents of the letter from Whiteside and Stapleton show a recognition of the
fact that the commonage served as a public resource.
[498] Not so long after the subdivision, in about 1950 the landowners wanted
permission to sell their portions of the commonage separately from their original
erven. This, of course, was contrary to the conditions in their title deeds which were
intended to ensure that the land remained available for public benefit. The
Administrator refused stating that the Commonage remained necessary and that he
anticipated that if the farmers were allowed to sell their portions of the commonage
as they sought „after a while the owners of the village plots [would] again start
agitating for commonage rights‟. However, despite the opposition, the landowners
eventually got their way, and sold the commonage portions.
[499] The evidence demonstrates that the commonage land was always intended to
serve as a public resource. The private ownership contended for cannot was
contrived. In our view a finding that ignores this background defeats the core
purpose of the Act.
[500] Turning to our colleague‟s finding that the dispossession of the commonage
community was not a result of a racially discriminatory law or practice, we disagree.
The dispossession was patently racially discriminatory. The failure to consult or in
any way take the interests of the community into account, and the process which
forced hundreds of African people away from their homes on the commonage for the
benefit of 25 white farmers was crude and racially discriminatory conduct. The court
order could not cleanse the dispossession of its racially discriminatory nature.
[501] Our colleague finds that the claimants‟ land claim was invalidly lodged and
that the claim must fail for this reason alone. We disagree. The importance of the
requirement set in s 10 (3) is not to be undermined. However, the question of
compliance should not be approached as a mechanical exercise. Recently, this court
has held that when interpreting specific provisions in contracts or legislation regard
must be had to the document as a whole, and that „whatever the nature of the
document, consideration must be given to the language used in the light of the
ordinary rules of grammar and syntax; the context in which the provision appears;
the apparent purpose to which it is directed and the material known at the time of its
production‟. See Natal Joint Pension Fund v Endumeni Municipality.171
[502] Further, an examination of comparable legislation shows that similar
provisions have not been rigidly interpreted by courts. For example Rule 7(1) of the
Uniform Rules of Court provides that:
„Power of Attorney
(1)
Subject to the provisions of subrules (2) and (3) a power of attorney to act need not
be filed, but the authority of anyone acting on behalf of a party, may within 10 days after it
171 (920/2010) [2012] ZASCA 13 at para 18.
has come to the notice of a party that such person is so acting, or with the leave of the court
on good cause shown at anytime before judgment, be disputed, whereafter such person may
no longer act unless he satisfied the court that he is authorised so to act, and to enable him
to do so the court may postpone the hearing of the action or application‟
[503] in Tattersall and Another v Nedcor Bank Ltd 172in which the authority of a bank
manager to launch court proceedings on behalf of the bank was challenged the court
accepted the averment in the founding affidavit that the bank manager was „duly
authorised‟ to launch the proceedings At 228G-H the court held that:
„A copy of the resolution of a company authorising the bringing of an application need not
always be annexed. Nor does s 242(4) of the Companies Act 61 of 1973 (to the effect that a
minute of the meeting of directors which purports to be signed by the chairman of that
meeting as evidence of the proceedings at that meeting) provide the exclusive method of
proving a company‟s resolution … There may be sufficient alliunde evidence‟.
[504] In this case, when considering this issue, the LCC stated as follows:
„The provisions of this section must be read in context, it [s 10(3)] was clearly designed to
give ample leeway to a claimant who is often not acquainted with the legalities of a process
and simply wishes to lodge a claim in a representative capacity unlike other legislation such
as Companies Act which is specific and peremptory on the question of resolutions and
authority to act. It is unfortunate that the claim form does not specifically require to be filed at
the time of lodgement but simply requests „capacity‟. It is wishful thinking to expect an
ordinary Community representative to assume that his capacity must be supported by a
172 [1995]] ZASCA 30; 1995(3) SA 222 (A); See also Corrplo 358 Close Corporation v Charters
(844/2011) [2011] ZAECGHC 27 (1 July 2011).
resolution. Mr Paul in his evidence testified that the constitution of the claimant community
was accepted by the Regional Land Claims Commissioner and the claim was validated. The
claim form was lodged on 24 December 1998 and it was conceded by the Land-Owner
Defendants after being placed in dispute. The Land-Owner Defendants did not question the
Plaintiff‟s (sic) witnesses or Mr Paul regarding Mr Madinda‟s (Madlavu‟s) authority to lodge
the claim‟.
[505] Although the provisions of s10(3) of the Act are, in fact, couched in more
peremptory terms than those of Rule 7(1) of the Uniform Rules of Court we are of the
view that the LCC adopted the correct approach on the issue. Courts cannot adopt a
more rigid approach to proof of authority from a community such as the claimants in
this case than it does in the case of sophisticated and legally represented directors
of companies. This would be too formalistic. In fact it is clear that this community had
structured itself into a group in order to claim their rights in land and the smaller
group of listed representatives acted on its behalf. Particularly in light of the fact that
the Commission, for whose benefit the requirement is set, will still conduct
investigations into the merits of the claim. The constitution of the „claimant
committee‟ sets out as its objective the return of the land of [their] forebears to the
Salem community. (It is headed, in IsiXhosa: „Abantu okanye inzala yabantu base
Salem banqwenela ukubuyiselwa kwilizwe loo Khokho babo nelilifa kubo‟). Mr
Madlavu‟s name is listed in the claim form as one of the community representatives.
We do not dispute that more explicit proof of authority would better serve the
purposes of the Act. And, perhaps the Commission could have structured the claim
form more comprehensibly. But there is no evidence that the claimants failed to
furnish any information required from them by the Commission. To non-suit them in
these circumstances would be insensible and would defeat the purpose of the Act.
[506] Finally, we agree with our colleague that the submission, on behalf of the
claimants, that the challenge to the decision of the Commision on the claim should
have been made by way of a review, is without merit. Section 14 (1) of the Act is
clear as to the procedure following the investigation of the claim by the
Commissioner. The section provides that:
„If upon completion of an investigation by the Commission in respect of specific claim-
(a)
The parties to any dispute arising from the claim agree in writing that it is not possible
to settle the claim by mediation and negotiation;
(b)
The regional land claims commissioner certifies that it is not feasible to resolve any
dispute arising from such claim by mediation and negotiation; or
(c)
. . .
(d)
The regional land claims commissioner is of the opinion that the claim is ready for
hearing by the Court,
The regional land claims commissioner having jurisdiction shall certify accordingly and refer
the matter to court.‟
This claim was therefore properly referred the LCC.
[507] All in all, we are satisfied that the evidence showed not only that an African
community inhabited the commonage from the 1870s to the 1940s when it was
dispossessed of beneficial rights deriving from such occupation, but also that it is just
and equitable for an order of restitution of the rights in land to be granted. In the
circumstances the appeal falls to be dismissed.
[508] For these reasons, the following order is made:
The appeal is dismissed with costs, including the costs of two counsel.
________________
R Pillay
Judge of Appeal
_______________
N Dambuza
Judge of Appeal
APPEARANCES
For Appellants:
M G Roberts SC (with him C G van der
Walt)
Instructed by:
Messrs Cox & Partners, Vryheid
Symington & De Kok, Bloemfontein
For First Respondent:
V S Notshe SC (with him M Kgatla)
Instructed by:
Malusi & Co Attorneys, Berea
Maduba Attorneys, Bloemfontein
For Second to Ninth Respondent:
J Krige (with him B Joseph)
The State Attorney, 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
13 December 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Salem Party Club v Salem Community (20626/14) [2016] ZASCA 203
(13 December 2016)
MEDIA STATEMENT
Today the Supreme Court of Appeal handed down a judgment dismissing and appeal by a number of
farmers (landowners) against an order of the Land Claims Court (the LCC) in for restitution of rights in
land was granted in relation to a portion of land which was once known as the Salem Commonage.
The LCC had granted the order of restitution in favour of the claimant community known as the Salem
Community.
The land to which the claim relates lies about 20km to the south of Grahamstown in the Albany
District, Eastern Cape. It measures about 7 698 morgen. It is part of a bigger piece of land allocated
to a group of about 50 British Settlers were known as the Salem Party, by the British Colonial
Government, during the 1820s. Each family was allocated a farm and the commonage in the nearby
area was used for the benefit of the whole group. In 1940 the Supreme Court in Grahamstown
granted a court order in terms of which the commonage was to be subdivided and allocated to the
landowners in proportion to the shares held by each one of them. The African families who lived on
the commonage at the time had to seek refuge elsewhere.
On 24 December 1998 the Salem community lodged a land claim with the office of the Commission
on Restitution of Land Rights in East London, in respect of the Salem Commonage. When lodging the
claim the claimants alleged that their forebears occupied the land from the 1800s and that in about
1947 the land was subdivided and transferred to white farmers. As a result their forebears lost
‘ownership rights’, residential rights, grazing rights, rights to access firewood, to bury their dead and
the rights to use the land as a commonage for the entire community.
After investigating the merits of the land claim, the Commission concluded that an African community
lived on the commonage from the 1870s until the 1940s when its members had to relocate
elsewhere. The Commission concluded that the claimants were entitled to restitution of rights in the
Salem commonage land as their ancestors were dispossessed thereof as envisaged in section 2 of
the Restitution of Rights in Land Act 22 of 1994 (Restitution Act). The landowners rejected the
conclusion reached by the Commission and, when no settlement could be reached between the
landowners and the claimants the Commission referred the dispute to the LCC, which found in favour
of the claimants.
In dismissing the landowners’ appeal against the decision of the Land Claims Commission, the
Supreme Court highlighted the unorthodox approach ordained in the Restitution Act. The Court found
that the Restitution Act requires that all the evidence on record: the independent documentary
evidence, expert evidence, hearsay evidence and ordinary oral evidence, should be considered
holistically. In this case, documents and records of the Cape Colony Administration obtained from the
National Archives in Cape Town constituted strong independent evidence which showed that and
African community lived on the commonage from the 1870s until the commonage land was
subdivided in the 1940s and transferred to individual landowners. The court further found that
although oral evidence was led in the LCC on behalf of the claimants and the landowners were open
to criticism, the independent evidence showed conclusively that during this period African people
lived on the commonage according to traditional customs which constituted their system of shared
rules for accessing land for various aspects of their lives. It found that the process which culminated
in the court order of the Grahamstown Supreme Court was racially discriminatory. Further, the court
found that rejecting the claim because of a failure to file a resolution by the community authorizing Mr
Madlavu to lodge the claim, would be unjust and inconsistent to the spirit of the Restitution Act
particularly as the Commission had accepted the constitution of the claimant community as sufficient
authority to act and had not required further information from the claimants.
In a minority judgment, Cachalia JA found that no proper documents had been furnished to the
Commission to prove that Mr Madlavu had been authorized to lodge the claim on behalf of the
community. For that reason the claim should fail. Further, that the evidence showed that the few
Africans who lived on the commonage worked on the farms and derived the right to live there from
the consent given by their employers did so by permission of their employers. They therefore never
acquired any rights in relation to the commonage land. He also found that defects in the evidence of
the witnesses who testified on behalf of the Commission and the community were fatal to the claim
and that there was no evidence that the claimants’ forebears were a community as defined in the
Restitution Act and the court order of the Grahamstown court did not constitute discriminatory law or
practice as envisaged in the Restitution Act.
--- ends ---
|
1774
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 379/2010
In the matter between:
GROUP FIVE CONSTRUCTION (PTY) LIMITED
Appellant
and
THE MINISTER OF WATER AFFAIRS AND FORESTRY
Respondent
Neutral citation:
GROUP FIVE v MINISTER WATER AFFAIRS
(379/10) [2011] ZASCA 17 (14 March 2011)
Coram:
HARMS DP, STREICHER, BRAND, SHONGWE and
THERON JJA
Heard:
1 MARCH 2011
Delivered:
14 MARCH 2011
SUMMARY: Building Contract – claims for additional payment or
compensation – special plea of prescription
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: North Gauteng High Court (Pretoria) (Southwood J sitting as court
of first instance).
The appeal is dismissed with costs including costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SHONGWE JA (HARMS DP, STREICHER, BRAND and THERON JJA
concurring):
[1] The appellant, Group Five Construction (Pty) Limited, instituted a claim
against the respondent, the Minister of Water Affairs and Forestry, for moneys
allegedly due in terms of a contract for the construction of the Injaka dam and
appurtenant works for the Sabie River Government Water Scheme. Four of the
claims arose from claims submitted by the appellant in terms of clause 51 of the
contract, which entitled the appellant to claim for additional payment or
compensation in prescribed circumstances. The fifth claim, claim E, did not arise for
adjudication.
[2] The respondent raised a special plea of prescription and the court below
decided to hear this issue separately. The parties placed a list of agreed facts before
the court, and led evidence. However, the validity of the special plea depended in the
main on an interpretation of the rather complicated contract which had to be read
with two amendments agreed to between the parties. These amendments affected
clause 61 of the main contract and provided for a new dispute resolution mechanism
of submitting disputes to a dispute review board, in lieu of mediation, which was
obliged, during the course of the contract, to attempt to settle disputes that arose
between the contractor and the employer pursuant to the rejection by the engineer of
claims submitted.
[3] The amendment provided in summary that the board had to make
recommendations to the parties. These became final and binding on the parties if
they were accepted by them in writing. To the extent that a recommendation was not
acceptable in writing by the parties, either party was entitled to refer the unresolved
matter to court provided that the particular party had within 60 days, given written
notice of its intention to do so. Otherwise the decision of the engineer was to become
final and binding.
[4] Therefore the crisp issue between the parties was whether the appellant’s
claims, which were the subject of this process, became ‘due’ at the stage when the
said written notice was given or whether these claims only became due after
completion of the ‘works’ as defined in the contract (as contended by the appellant).
The relevance of the issue is to be found in section 12(1) of the Prescription Act 68
of 1969, which provides that prescription commences ‘to run as soon as the debt is
due’. It is common cause that if the appellant’s causes of action were ripe and
complete when the notices were given these claims had clearly become prescribed.
[5] Southwood J, in a detailed and thorough judgment, reported as Group Five
Construction (Pty) Limited v Minister of Water Affairs & Forestry (39161/05) [2010]
ZAGPPHC 36 (5 May 2010), came to the conclusion that the claims indeed became
prescribed. In spite of a valiant attempt by the appellant’s counsel to convince us
otherwise, he missed the point in that he argued that the claims were based on an
estimate and consequently represented an advance and not a complete claim ‘of
which the debtor is under an obligation to perform immediately’. We are satisfied that
Southwood J’s judgment is unassailable and that the argument does not warrant
another judgment consisting of the same reasons albeit in different words.
[6] The appeal is dismissed with costs including costs of two counsel.
_________________
J SHONGWE
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
G D Harpur SC
N D Lange
Instructed by:
Garlicke & Bousfield Inc
UMHLANGA ROCKS
Claude Reid Inc
BLOEMFONTEIN
For Respondents:
R J Raath SC
P M Mtshaulana SC
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
From:
The Registrar, Supreme Court of Appeal
Date:
14 March 2011
Status:
Immediate
Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal.
GROUP FIVE v MINISTER WATER AFFAIRS
The Supreme Court of Appeal today dismissed an appeal by Group Five
Construction (Pty) Ltd against a judgment of he North Gauteng High Court
(Pretoria) upholding a special plea of prescription.
Group Five had claimed certain additional moneys against the Minister of
Water Affairs and Forestry due in terms of a contract for the construction of
the Injaka Dam for the Sabie River Government Water Scheme. Four of the
claims arose from claims submitted by Group Five in terms of clause 51 of the
contract, which entitled Group Five to claim additional payment or
compensation in prescribed circumstances.
The Minister raised a special plea of prescription which was upheld by the
Court below. The validity of the special plea depended in the main on an
interpretatrion of the rather complicated contract which had to be read with
two amendments agreed to between the parties. These amendments affected
clause 61 of the main contract and provided for a new dispute resolution
mechanism by using a dispute review board in lieu of mediation pursuant to
the rejection by the engineer of claims submitted.
The terms of the new dispute resolution mechanism were that the board had
to make a recommendation to the parties. These became final and binding on
the parties if accepted in writing. However, if not, either party was entitled to
refer the unresolved matter to court. Otherwise the decision of the engineer
was to become final and binding.
Group Five contended that the claims were due at the completion of the
construction, wherweas the Minister was of the view that the claims were due
upon notice by either party refering the dispute to court. Section 12(1) of the
Prtescription Act 68 of 1969 provides that prescription commences ‘to run as
soon as the debt is due’. It is common cause that if Group Five’s causes of
action were ripe and complete when the notices were given these claims had
clearly become prescribed.
This court fully associated itself with the detailed judgment of the court below
and did not deem it necessary to add or subtract to the said judgment.
|
3890
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 401/2021
In the matter between:
N’WANDLAMHARHI COMMUNAL
PROPERTY ASSOCIATION
FIRST APPELLANT
MALAMALA GAME RESERVE (PTY) LTD
SECOND APPELLANT
and
HELEN LYNNE WESTCOTT
FIRST RESPONDENT
CAROLINE CLARE CORMACK
SECOND RESPONDENT
RODRICK ANTON BEAUMONT
THIRD RESPONDENT
MICHAEL HEMINGFORD BEAUMONT
FOURTH RESPONDENT
Neutral citation:
N’Wandlamharhi Communal Property Association and Another
v Westcott and Others (401/2021) [2022] ZASCA 129 (3 October 2022)
Coram:
VAN DER MERWE and MOTHLE JJA and MUSI, KGOELE and
WEINER AJJA
Heard:
22 August 2022
Delivered:
3 October 2022
Summary:
Property – servitude – rights of access to and occupation of immovable
properties – rights constitute subtraction from dominium of land – no intention on part
of landowners granting rights to bind successors in title – no rights to registration of
servitudes created.
ORDER
On appeal from: Mpumalanga Division of the High Court, Mbombela, (Mashile J,
Mphahlele J and Greyling Coetzer AJ concurring), sitting as court of appeal:
1 The appeal is upheld with costs, including the costs of two counsel.
2 The order of the full court is set aside and replaced with an order dismissing the
appeal with costs, including the costs of two counsel.
JUDGMENT
Van der Merwe JA (Mothle JA and Musi, Kgoele and Weiner AJJA concurring)
[1] The first appellant, the N’Wandlamharhi Communal Property Association, is the
registered owner of a number of immovable properties that comprise the MalaMala
Private Game Reserve (MalaMala) in Mpumalanga. These properties include portion 1
of Charleston 378 KU (Charleston South) and the remaining extent of Charleston 378
KU (Charleston North). The second appellant, MalaMala Game Reserve (Pty) Ltd,
operates MalaMala in terms of a lease agreement with the first appellant. The first
respondent, Ms Helen Lynne Westcott, and the second respondent, Ms Caroline Clare
Cormack, are sisters. The third respondent, Mr Rodrick Anton Beaumont, and the fourth
respondent, Mr Michael Hemingford Beaumont, are brothers and first cousins of the
first and second respondents. Broadly stated, the question in the appeal is whether the
respondents have rights of access to and occupation of Charleston South and
Charleston North (collectively the Charleston properties) that are enforceable against
the appellants. The question must be answered in the light of the background that
follows.
Background
[2] The original farm Charleston belonged to Mr Frans Unger, the maternal
grandfather of the respondents. During 1958 the original farm was subdivided into two
equal portions, each approximately 1801 hectares in extent, thereby constituting the
Charleston properties. Their common boundary is on the southern side of Charleston
North and on the northern side of Charleston South. Each adjoins the Kruger National
Park on the western side thereof. This boundary is not fenced. The Sand River
traverses both the Charleston properties roughly from north to south.
[3] Ms Nan Yvonne Trollip (previously Westcott) and Ms Phyllis Marie Beaumont
were daughters of Mr Unger. Ms Trollip was the mother of the first and second
respondents and Ms Beaumont the mother of the third and fourth respondents. During
the mid-1950’s Ms Trollip established a camp on the western bank of the Sand River,
on what is now Charleston South (the Charleston South Camp). During or about 1956,
Ms Beaumont and her husband similarly built a camp on the western bank of the Sand
River, on what is now Charleston North (the Charleston North Camp). Over the years
various changes and additions were made to each camp. The locations of the camps
provided unique opportunities for the appreciation and enjoyment of nature. Both the
Trollip and Beaumont families were committed to nature conservation and, as one
could imagine, they had many memorable and exciting times at the respective camps.
[4] During 1964 Ms Trollip became the registered owner of the Charleston South
and Ms Beaumont that of Charleston North. From January 1965 the Charleston
properties formed part of a proclaimed reserve named Sabi Sand Wildtuin, as did the
other properties that presently constitute MalaMala. Since July 2006, however,
MalaMala was managed as an autonomous private game reserve within the proclaimed
reserve. It is a highly sought-after eco-tourism destination.
[5] By 1986 Ms Trollip had caused the incorporation of a company named
Charleston Farm (Pty) Ltd. All 300 of the issued shares in the company belonged to
her. On 26 February 1986, Ms Trollip entered into a sale of shares agreement with
Rattray Reserves (Pty) Ltd (Rattray Reserves), in terms of which she sold and
transferred two thirds of the shares in Charleston Farm (Pty) Ltd to Rattray Reserves.
The sale of shares agreement was subject to the execution of, first, an agreement of
sale between Ms Trollip and Charleston Farm (Pty) Ltd for the sale of Charleston South
and, second, a shareholders agreement between Ms Trollip and Rattray Reserves in
respect of their shareholding in Charleston Farm (Pty) Ltd.
[6] The first suspensive condition was duly fulfilled and Charleston South
transferred to Charleston Farm (Pty) Ltd. The envisaged shareholders agreement was
also entered into on 26 February 1986. Ms Trollip signed the shareholders agreement
in her personal capacity as well as in the capacity as duly authorised representative of
Charleston Farm (Pty) Ltd. The upshot of all this was that Ms Trollip (one third) and
Rattray Reserves (two thirds) became the shareholders in Charleston Farm (Pty) Ltd,
which owned Charleston South.
[7] By 1986 Ms Beaumont had created a family trust, the Spulula Family Trust. The
Spulula Family Trust held all the issued shares in a company called Charleston North
(Pty) Ltd. On 8 September 1986, the Spulula Family Trust also entered into a sale of
shares agreement and shareholders agreement with Rattray Reserves. The terms and
conditions of these agreements were virtually identical to those of the agreements
between Ms Trollip and Rattray Reserves. The sale of shares agreement was also
signed by Ms Beaumont in her personal capacity, as well as by an authorised
representative of Charleston North (Pty) Ltd. The execution of these agreements
created the similar position that the Spulula Family Trust (one third) and Rattray
Reserves (two thirds) held the shares in Charleston North (Pty) Ltd, which company
was the registered owner of Charleston North.
[8] These shareholders agreements are central to the determination of the matter
and I shall make reference to their material terms shortly. It is necessary, however, to
set out the subsequent changes effected to the shareholding in the two Charleston
companies. During 1987, Rattray Reserves transferred its shares in the Charleston
companies to a close corporation, MalaMala Ranch CC. That close corporation was
later converted into a company named MalaMala Ranch (Pty) Ltd. As was envisaged
in the shareholders agreement between Ms Trollip and Rattray Reserves, the former
transferred her one third shareholding in Charleston Farm (Pty) Ltd to the Nan Trollip
Trust during 1993.
[9] Clause 9 of each shareholders agreement placed limitations on the disposal of
shares in the Charleston companies to third parties. In essence, clause 9.2 provided
that a shareholder may only dispose of shares to a third party if all the shares held by
it are disposed of and the other shareholder did not accept an offer to purchase the
shares at the same price and on the same terms than those offered by the third party.
Clause 9.4 set out a discrete procedure whereby a shareholder could give an option to
the other shareholder to either sell its shares or to purchase the offering shareholder’s
shares at a consideration per share mentioned in the notice. The shareholder receiving
the notice could then either buy or sell at the price contained in the notice.
[10] On 13 September 2010, the Nan Trollip Trust and the Spulula Family Trust each
gave notice to MalaMala Ranch (Pty) Ltd in terms of clause 9.4 of the respective
shareholders agreements. By then both Ms Trollip and Ms Beaumont had passed
away. Contrary to the expectations of the respondents, MalaMala Ranch (Pty) Ltd
opted to purchase the shares in the Charleston companies rather than to sell its shares.
As a result, the respective minority shareholdings in the Charleston companies were
sold to MalaMala Ranch (Pty) Ltd and it became the sole shareholder of both.
[11] In the meantime, a claim for the restitution of rights under the Restitution of
Land Rights Act 22 of 1994 was instituted in respect of the properties comprising
MalaMala. The owners of the properties, as well as the respondents, disputed the
claim. Eventually the Minister of Rural Development and Land Reform decided to
restore these properties to the claimant community and made State funds available for
the purchase of the land.
[12] This led to a sale agreement in terms of which the MalaMala land was sold to
the Department of Rural Development and Land Reform. The Department transferred
the properties to the first appellant on 30 October 2013. Thus the first appellant became
the registered owner of the properties comprising MalaMala, including of course the
Charleston properties. The agreement in terms of which the second appellant conducts
the operation of MalaMala, was entered into on 1 March 2016.
Terms of the shareholders agreements
[13] In terms of the shareholders agreement in respect of Charleston Farm (Pty) Ltd,
‘NT’ was stated to ‘mean and include Nan Yvonne Trollip and her Successors in Title’.
‘NT’s Successors in Title’ referred to Ms Trollip’s husband as well as to the first and
second respondents. In the shareholders agreement pertaining to Charleston North
(Pty) Ltd, ‘PB’ similarly meant Ms Beaumont and her ‘Successors in Title’, which
referred to the third and fourth respondents. The expression ‘the Trust’ referred to the
Spulula Family Trust. For convenience I proceed to reproduce the material terms of the
Charleston North (Pty) Ltd shareholders agreement. As I have said, the other
shareholders agreement contained corresponding provisions regarding Ms Trollip, the
first and second respondents, Charleston Farm (Pty) Ltd, Charleston South and the
Nan Trollip Trust.
[14] The agreement defined ‘Viewing Rights’ in the following terms:
‘[S]hall mean the right of access to and egress from and of traversing Charleston North, whether
on foot or in a vehicle or in or on any other form of transport, for the purpose of viewing fauna
and flora, including the right to exercise such other rights in regard to Charleston North as shall
be implicit in or incidental to the viewing of fauna and flora . . .’
The definition of ‘Affiliate’ included a holding company of Rattray Reserves, a subsidiary
of Rattray Reserves and a company in which the managing director of Rattray
Reserves directly or indirectly held a controlling interest. MalaMala Ranch (Pty) Ltd was
an ‘Affiliate’.
[15] Clauses 2.1 and 2.2 recorded that Charleston North (Pty) Ltd had purchased
Charleston North from the Spulula Family Trust and that the latter had sold two thirds
of the shares in that company to Rattray Reserves. Clause 2.3 proceeded to say:
‘The Parties wish to record their respective rights and obligations as shareholders in the
Company and to provide for the creation and entrenchment of the right to use and occupy
Charleston North Camp and the Viewing Rights in favour of PB.’
[16] Clause 11.1 provided:
’11.1
PB shall have:
11.1.1
the sole and exclusive use and occupation of Charleston North Camp;
11.1.2
Viewing Rights;
11.1.3
the right to bring guests, who shall at all times be accompanied by PB, and not
exceeding 16 (sixteen) in number, upon Charleston North in the normal course
of the exercise of the rights hereby granted to PB provided that no
consideration shall be given to or received by PB for the benefits enjoyed by
such guests, provided further that PB shall procure that such guests shall
abide by the provisions of this agreement; . . .’
I refer to these rights as the occupation and viewing rights.
[17] In terms of clause 11.2, Rattray Reserves undertook obligations to facilitate the
exercise of the occupation and viewing rights through Charleston North (Pty) Ltd or an
‘Affiliate’. These were to supervise and maintain the Charleston North Camp and to
make a four-wheel drive vehicle and three servants available to the occupants of the
camp. Clause 11.3 provided for rights similar to the ‘Viewing Rights’ to Ms Beaumont
(not ‘PB’ as defined) in respect of other properties owned by or under the control of
Rattray Reserves or an ‘Affiliate’.
[18] Clause 11.4 read:
‘To the extent that the Viewing Rights and/or the rights hereby granted to PB in respect of
Charleston North Camp are or may at any time in the future become registrable against the
title deeds of the Company over Charleston North, Rattray Reserves shall, upon request in
writing by PB addressed to the Company, and at the cost of PB, procure the adoption of all
such resolutions, the granting of all such powers, the signature and lodgement of all such
applications and the taking of all such other steps as may be necessary or expedient for the
purpose of procuring registration of such rights in the appropriated Deeds Registry.’
[19] Clause 11.6 provided:
‘Should PB or the Trust sell or otherwise dispose of the Shares held by PB or the Trust, to any
person other than Rattray Reserves or an Affiliate, the rights created in terms of clauses 11.1,
11.2 and 11.3 shall terminate with effect from the date of such sale. Should, however, the
Shares be sold, or otherwise disposed of to Rattray Reserves or an Affiliate, the said rights
shall endure until the death of the last dying of PB’s Successors in Title.’
Litigation History
[20] Despite the developments set out above, the respondents continued to exercise
the occupation and viewing rights. Soon after the second appellant took control of the
management of MalaMala, however, it took the stance that the occupation and viewing
rights had ceased to exist. It accordingly notified the respondents that they would not
be granted access to MalaMala after 31 July 2016. That sparked the litigation that led
to the present appeal.
[21] The respondents launched an application in the Mpumalanga Division of the
High Court, Mbombela, for the enforcement of the occupation and viewing rights. Their
principal contention was that clause 11.1 read with clause 11.6 of the shareholders
agreements afforded them the right to the registration of servitudes against the title
deeds of the Charleston properties. In the alternative, on the basis that the occupation
and viewing rights constituted mere personal rights, their case was that these rights
were enforceable against the appellants through the doctrine of notice.
[22] The appellants’ main argument was that a proper interpretation of the
shareholders agreements indicated that no servitudal rights had been granted. Their
alternative contention was that the provisions of s 3 of the Subdivision of Agricultural
Land Act 70 of 1970 rendered the occupation and viewing rights invalid and
unenforceable. The premise of the argument was that the Charleston properties
constituted agricultural land. The appellants proceeded to contend that the rights to ‘the
sole and exclusive use and occupation’ of the approximately 0,5 hectares upon which
each of the two camps were situated, amounted to a subdivision of agricultural land
without the required written consent of the Minister of Agriculture.
[23] The matter came before Legodi JP. He rejected the argument that the
provisions of the Subdivision of Agricultural Land Act were applicable, on the basis that
the grant of the occupation and viewing rights did not amount to a subdivision of land.
He held, however, that the occupation and viewing rights were neither servitudal rights
nor enforceable against the appellants under the doctrine of notice. He consequently
dismissed the application of the respondents with costs, such costs to include the costs
of two counsel.
[24] With the leave of this court, the respondents appealed to the full court of that
division. That court (Mashile J, Mphahlele J and Greyling Coetzer AJ concurring)
upheld the appeal. It made short shrift of the argument based on the Subdivision of
Agricultural Land Act. It framed its conclusion on the enforcement of the occupation
and viewing rights in these terms:
‘A simple fact is, however, that the rights have always been registrable. Whether the rights
were registrable or not would be rendered irrelevant in an instance where the shares were sold
to a party outside of the Rattray Group. Now that they have been acquired by a company within
the Group, the Appellants can exercise their choice to register them.’
And:
‘The conclusion on this question ought to be that the rights of the Appellants have always been
enforceable regardless of whether or not they were in addition, registrable.’
It proceeded to grant the order sought by the respondents and directed the appellants,
jointly and severally, to pay the costs of the application and of the appeal, including the
costs of two counsel. The present appeal is with the special leave of this court.
Rights to registration of servitudes
[25] In the light of what I have said, the first issue is whether the respondents were
afforded servitudal rights. A servitude is a real right to use the property of another in a
particular manner, irrespective of a change in ownership of that property. The right may
be attached to a particular dominant tenement (praedial servitude) or to a particular
person (personal servitude) and comes into existence upon its registration in the Deeds
Office, save where the servitude is acquired by prescription. See Cillie v Geldenhuys
[2008] ZASCA 54; [2008] All SA 507 (SCA); 2009 (2) SA 325 (SCA) para 13 and A J
Van der Walt The Law of Servitudes 1 ed (2016) at 322.
[26] The personal right to claim the registration of the servitude (ius in personam ad
rem acquirendam) may of course arise from an agreement. Such a right would exist
where on a proper interpretation of the agreement, two requirements are met, namely:
(a)
The person who created the right intended to bind the present owner of the
property as well as successors in title; and
(b)
The right resulted in a subtraction from the dominium of the land against which
it is registered.
See Ethekwini Municipality v Mounthaven (Pty) Ltd [2018] ZACC 43; 2019 (4) SA 394
(CC) para 11 and 27 Lawsa 2 ed paras 63-65. There is a presumption against the
creation of a servitude and in cases of doubt or ambiguity the court will adopt the
construction that least encumbers the servient tenement. See Willoughby’s
Consolidated Co Ltd v Copthall Stores Ltd 1918 AD 1 at 16, Kruger v Joles Eiendom
(Pty) Ltd and Another [2008] ZASCA 138; [2009] 1 All SA 553 (SCA); 2009 (3) SA 5
(SCA) para 8 and 24 Lawsa 2 ed para 543.
[27] Under the doctrine of notice, the personal right to claim the registration of a
servitude is also enforceable against a person who bears knowledge thereof. See
Bowring NO v Vrededorp Properties CC and Another 2007 (5) SA 391 paras 7-8.
Where an interpretation of the agreement in accordance with the ordinary well-known
principles of construction leads to the conclusion that any one of the requirements
above is absent, the right to use the property is not registerable. If the intention is only
to bind the present owner, the right is not registrable even though it amounts to a
subtraction from the dominium of the property concerned. In this regard s 63(1) of the
Deeds Registries Act 47 of 1937 provides:
‘No 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: Provided that a deed containing such a condition as
aforesaid may be registered if, in the opinion of the registrar, such condition is complimentary
or otherwise ancillary to a registrable condition or right contained or conferred in such deed.’
[28] At the outset of the analysis it is necessary to place the references in the
shareholders agreements to the successors in title of Ms Trollip and Ms Beaumont
respectively in proper perspective. It is clear from their context that these were not
references to successors in title in the ordinary meaning thereof. They were mere
convenient labels to refer to the persons who were also offered the occupation and
viewing rights, but were not parties to the shareholders agreements, such as the
respondents. I do accept, however, that the respondents duly accepted the benefits
that had so been offered to them by agreement between the parties to the shareholders
agreements.
[29] The appellants correctly conceded that the Charleston companies were parties
to the respective shareholders agreements. In my view, the occupation and viewing
rights constituted subtraction from the dominium of the respective Charleston
properties. It is common cause that at all relevant times the appellants had knowledge
of the respondents’ claims to the occupation and viewing rights. It follows that in the
event of a finding that the Charleston companies intended their respective successors
in title to be bound to the occupation and viewing rights, they would be enforceable
against the appellants. As I shall show, however, this is where the respondents’ case
flounders.
[30] I find no indication in the shareholders agreements of an intention on the part
of the Charleston companies to bind their respective successors in title. In this regard
the respondents relied on clauses 2.3 and 11.4 of the shareholders agreements, quoted
above. But these provisions are neutral and do not support the respondents’ argument.
Clause 11.4, in particular, clearly stated that to the extent that the occupation and
viewing rights ‘are or may at any time in the future become registrable against the title
deeds’, Rattray Reserves would be obliged to take the steps necessary to effect such
registration.
[31] In addition, the arrangements between the respective shareholders in terms of
the shareholders agreements point the other way. In this regard the appellants referred
to two categories of entrenchments in the shareholders agreements. The first category
imposed limitations on the disposal of the respective Charleston properties. The
shareholders agreements provided: that the minority shareholder would be entitled to
have a director on the board of directors; that in the absence of that director there would
not be a quorum; and that the respective Charleston properties could only be sold or
disposed of with the unanimous approval of the board of directors. The parties to the
shareholders agreements thus contemplated that the Charleston properties might be
disposed of, but made no provision for the survival of the occupation and viewing rights
in such an event.
[32] The second category imposed limitations on the sale of the shares in the
Charleston companies to third parties, subject to detailed exceptions. This takes one
to clause 11.6 of the shareholders agreements. It will be recalled that it explicitly stated
that should the minority shareholding be sold to anyone other than Rattray Reserves
or an ‘Affiliate’, the occupation and viewing rights would terminate.
[33] Thus, in terms of the shareholders agreements the occupation and viewing
rights would not survive the disposal of the Charleston properties or even the sale of
the minority shareholding in a Charleston company to a third party. This is inconsistent
with an intention on the part of the Charleston companies to bind their successors in
title to the occupation and viewing rights. In sum, not only did the Charleston companies
not bind their successors in title, but their shareholders arranged their affairs on that
understanding. I therefore conclude that the respondents were not afforded the right to
have the occupation and viewing rights registered against the title deeds of the
Charleston properties and that they in fact terminated when the Charleston properties
were sold.
Alternative arguments
[34] As I have said, the respondents argued in the alternative that even if they had
no rights to obtain the registration of servitudes, the occupation and viewing rights
should be enforced against the appellants under the doctrine of notice. It has been said
that this anomalous doctrine is a purely equitable one, aimed at tempering the strict
precedence of real rights over personal rights in appropriate circumstances. See
Meridian Bay Restaurant (Pty) Ltd and Others v Mitchell SC NO [2011] ZASCA 30;
2011 (4) SA 1 (SCA) para 13. In terms of the doctrine, limited real effect is given to a
personal right against those who have knowledge of the right. The respondents
contended that, in the circumstances, their mere personal rights against the Charleston
companies were protectable under the doctrine of notice by analogy or judgments such
as Associated South African Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien (Pty)
Ltd en Andere 1982 (3) SA 893 (A) (right of pre-emption) and Cussons en Andere v
Kroon 2001 (4) SA 833 (SCA) (right of partner to consent to alienation of partnership
asset).
[35] In Cussons v Kroon para 12, Streicher JA held that the underlying reason for
the enforcement in Associated Bakeries of the right of pre-emption against the person
who had knowledge thereof, was that the latter wrongfully interfered with the personal
right of the former. This appears to me to be a sound and principled basis upon which
the future application of the doctrine of notice to mere personal rights should be
considered. See also Meridian Bay paras 19-21. But this issue does not arise in this
case, for the simple reason that I have held that the occupation and viewing rights had
terminated when the Charleston companies disposed of the Charleston properties.
Nothing remained that could be protected under the doctrine of notice.
[36] In the circumstances it is unnecessary to consider the argument based on the
Subdivision of Agricultural Land Act. It follows that the appeal must succeed and that
the order of Legodi JP should be reinstated. Costs should follow the result of both
appeals. It was not in dispute that the employment of two counsel was reasonable.
[37] For these reasons the following order is issued:
The appeal is upheld with costs, including the costs of two counsel.
The order of the full court is set aside and replaced with an order dismissing the
appeal with costs, including the costs of two counsel.
_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
Appearances:
For appellants:
G L Grobler SC and H S Havenga SC
Instructed by:
Larson Falconer Hassan Parsee Inc, Umhlanga Rocks
Symington & De Kok, Bloemfontein.
For respondents:
M du P van der Nest SC and D A Turner
Instructed by:
Bowman Gilfillan Inc, Johannesburg
McIntyre & Van der Post, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
3 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
N’Wandlamharhi Communal Property Association and Another v Westcott and Others (401/2021)
[2022] ZASCA 129 (3 October 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal against the
decision of the full court of the Mpumalanga Division of the High Court, Mbombela and reinstated the
order of the court of first instance.
The issue before the SCA was whether the respondents had rights of access to and occupation of
Charleston South and Charleston North (collectively the Charleston properties) that were enforceable
against the appellants.
The first appellant, the N’Wandlamharhi Communal Property Association, is the registered owner of a
number of immovable properties that comprise the MalaMala Private Game Reserve (MalaMala) in
Mpumalanga. These properties include portion 1 of Charleston 378 KU (Charleston South) and the
remaining extent of Charleston 378 KU (Charleston North). The second appellant, MalaMala Game
Reserve (Pty) Ltd, operates MalaMala in terms of a lease agreement with the first appellant. The first
respondent, Ms Helen Lynne Westcott, and the second respondent, Ms Caroline Clare Cormack, are
sisters. The third respondent, Mr Rodrick Anton Beaumont, and the fourth respondent, Mr Michael
Hemingford Beaumont, are brothers and first cousins of the first and second respondent.
The original farm Charleston belonged to Mr Frans Unger. During 1958 the original farm was subdivided
into two equal portions, each approximately 1801 hectares in extent, thereby constituting the Charleston
properties. Ms Nan Yvonne Trollip (previously Westcott) and Ms Phyllis Marie Beaumont were
daughters of Mr Unger. Ms Trollip was the mother of the first and second respondent and Ms Beaumont
the mother of the third and fourth respondent. During the mid-1950’s Ms Trollip established a camp on
the western bank of the Sand River, on what is now Charleston South (the Charleston South Camp).
At about the same time, Ms Beaumont established a similar camp, on what is now Charleston North
(the Charleston North Camp). During 1964 Ms Trollip became the registered owner of the Charleston
South and Ms Beaumont that of Charleston North.
By 1986 Ms Trollip had caused the incorporation of a company named Charleston Farm (Pty) Ltd. All
300 of the issued shares in the company belonged to her. On 26 February 1986, Ms Trollip entered into
a sale of shares agreement with Rattray Reserves (Pty) Ltd (Rattray Reserves), in terms of which she
sold and transferred two thirds of the shares in Charleston Farm (Pty) Ltd to Rattray Reserves. The sale
of shares agreement was subject to the execution of, first, an agreement of sale between Ms Trollip
and Charleston Farm (Pty) Ltd for the sale of Charleston South and, second, a shareholders agreement
between Ms Trollip and Rattray Reserves in respect of their shareholding in Charleston Farm (Pty) Ltd.
By 1986 Ms Beaumont had created a family trust, the Spulula Family Trust. The Spulula Family Trust
held all the issued shares in a company called Charleston North (Pty) Ltd. On 8 September 1986, the
Spulula Family Trust also entered into a sale of shares agreement and shareholders agreement with
Rattray Reserves. The terms and conditions of these agreements were virtually identical to those of the
agreements between Ms Trollip and Rattray Reserves. The shareholders agreements provided for
occupation and viewing rights of Ms Trollip, Ms Beaumont and the respondents in respect of the
Charleston South Camp and the Charleston North Camp respectively.
During 1987, Rattray Reserves transferred its shares in the Charleston companies to a close
corporation, MalaMala Ranch CC. That close corporation was later converted into a company named
MalaMala Ranch (Pty) Ltd. As was envisaged in the shareholders agreement between Ms Trollip and
Rattray Reserves, the former transferred her one third shareholding in Charleston Farm (Pty) Ltd to the
Nan Trollip Trust during 1993.
Clause 9 of each shareholders agreement placed limitations on the disposal of shares in the Charleston
companies to third parties. In essence, clause 9.2 provided that a shareholder may only dispose of
shares to a third party if all the shares held by it are disposed of and the other shareholder did not
accept an offer to purchase the shares at the same price and on the same terms than those offered by
the third party.
In the meantime, a claim for the restitution of rights under the Restitution of Land Rights Act 22 of 1994
was instituted in respect of the properties comprising MalaMala. Eventually the Minister of Rural
Development and Land Reform decided to restore these properties to the claimant community and
made State funds available for the purchase of the land. The Department transferred the properties to
the first appellant on 30 October 2013. Thus the first appellant became the registered owner of the
properties comprising MalaMala, including of course the Charleston properties.
Soon after the second appellant took control of the management of MalaMala, however, it took the
stance that the occupation and viewing rights had ceased to exist. It accordingly notified the
respondents that they would not be granted access to MalaMala after 31 July 2016. That sparked the
litigation that led to the present appeal.
The respondents launched an application in the high court for the enforcement of the occupation and
viewing rights. Their principal contention was that clause 11.1 read with clause 11.6 of the shareholders
agreements afforded them the right to the registration of servitudes against the title deeds of the
Charleston properties
The SCA held that the shareholders agreements evinced no retention on the part of the Charleston
companies to bind their successors in title to the occupation and viewing rights. The SCA also found
that the shareholders agreements made provision for two categories of entrenchments. The first
category imposed limitations on the disposal of the respective Charleston properties. The SCA found
that parties to the shareholders agreements contemplated that the Charleston properties might be
disposed of, but made no provision for the survival of the occupation and viewing rights in such an
event. The second category imposed limitations on the sale of the shares in the Charleston companies
to third parties, subject to detailed exceptions. Clause 11.6 explicitly stated that should the minority
shareholding be sold to anyone other than Rattray Reserves or an ‘Affiliate’, the occupation and viewing
rights would terminate. The SCA therefore concluded that the respondents were not afforded the right
to have the occupation and viewing rights registered against the title deeds of the Charleston properties
and that they in fact terminated when the Charleston properties were sold.
In the alternative, the respondents argued that even if they had no rights to obtain the registration of
servitudes, the occupation and viewing rights should be enforced against the appellants under the
doctrine of notice. The SCA held that for the simple reason that it held that the occupation and viewing
rights had terminated when the Charleston companies disposed of the Charleston properties, nothing
remained that could be protected under the doctrine of notice.
~~~~ends~~~~
|
2245
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 258/08
MKITHI JAPHET MATHENJWA NO
First Appellant
JERE OLPAS GUMBI NO
Second Appellant
EMMANUEL CEBO GUMBI NO
Third Appellant
GUGU SYDNEY GUMBI NO
Fourth Appellant
GQAMANGAYE MICHAEL GUMBI NO
Fifth Appellant
BHINJA MIKAYELI MATHENJWA NO
Sixth Appellant
MANDLA ELLIOT GUMBI NO
Seventh Appellant
LONDO ISRAEL GUMBI NO
Eighth Appellant
NTOMBEMHLOPHE ELIZABETH NGCAMPHALALAI NO
Ninth Appellant
MBEKISENI ZEBLON GUMBI NO
Tenth Appellant
SINDOSOWE MONICA MATHENJWA NO
Eleventh Appellant
and
MAGUDU GAME COMPANY (PTY) LTD
Respondent
Neutral citation:
Mathenjwa v Magudu Game Company (258/08) [2009]
ZASCA 57 (28 MAY 2009)
Coram:
STREICHER ADP, NUGENT, LEWIS, PONNAN JJA
AND KROON AJA
Heard:
12 MAY 2009
Delivered:
28 MAY 2009
Summary:
Wild animals - ownership in – whether ownership
acquired and thereafter lost.
ORDER
On appeal from: High Court Pietermaritzburg (Koen J sitting as a court of
first instance).
The appeal is dismissed with costs.
JUDGMENT
KROON AJA (STREICHER ADP, NUGENT, LEWIS, PONNAN JJA
concurring)
[1] This appeal relates to a vindicatory application launched by the
respondent in the Pietermaritzburg High Court in which the eleven appellants
inter alios were cited as respondents. (The respondent did not pursue relief
against three further entities cited as respondents in the court a quo, and they
are not involved in this appeal). The matter concerns the ownership of wild
animals.
[2] The appellants are the trustees of the Emwokweni Community Trust
(the Trust) which, representing a local community, is the owner of certain
farms situate in the Magudu area, Vryheid, Kwazulu-Natal (the trust
properties). The respondent is a registered company and conducts the
business of the Magudu Game Reserve, which adjoins the trust properties.
[3] The relief sought by the respondent was the following:
(a)
a declarator that it is the owner of all the game presently on the trust
properties, as well as all game as may in future enter upon the properties from
the Magudu Game Reserve, or alternatively, is entitled to possession thereof.
(b)
an order that the Trust, its employees, and/or any associates through
the Trust be interdicted from interfering with, dealing in, hunting, removing
and/or in any way becoming involved with the said game;
(c)
a declarator that the respondent is entitled to enter upon the trust
properties for purposes of removing the game and relocating same to the
Magudu Game Reserve.
[4] By agreement between the parties the issues embraced in the relief
sought were referred for the hearing of oral evidence. Subsequent to the
hearing of the oral evidence the court a quo (Koen J) was advised that the
parties were agreed:
(a)
that the game in issue was confined to specific species. (In
correspondence preceding the launch of the application the Trust conceded
that the elephants, rhinoceroses and buffaloes on the trust properties, did not
belong to the Trust and no claim was laid thereto. The court a quo was
advised that this was a gratuitous concession, not based on any legal
principle. (In fact, in the correspondence the Trust’s attorneys advised the
respondent’s attorneys that the three species in question could be removed by
the respondent));
(b)
that the interdict referred to in the notice of motion (if granted) should
extend only to ‘disposing of, dealing in, hunting and removing’ the game until
the respondent had removed the game from the trust properties.
[5] In the result, the court a quo in substance granted the relief sought (in
respect of the specified game, as agreed). It is that decision which the
appellants seek to assail in this appeal. The appeal is with the leave of the
court a quo.
BACKGROUND
[6] In 1995 three farmers, Mr Greeff (representing Die Greeff Eiendoms
Trust), Mr Crafford (representing the Mahlatini Game Ranch (Pty) Ltd) and Mr
Coetzer, whose farms were contiguous, agreed to remove the fences between
their farms to form a game reserve, allowing the game on the farms to range
freely between the various properties. They decided to form a company (the
respondent) which, the respondent alleged, would own the game on the
reserve. Various agreements were signed by the parties for the
implementation of their arrangement. (Certain terms of these agreements will
receive closer attention later in this judgment). The court a quo referred to the
contracting parties as ‘the founders’.
[7] In 2001 a Mr Bouwer, the owner of the trust properties inter alia,
entered into negotiations with the respondent and joined the venture, and the
fences between the reserve and his land, including the trust properties, were
subsequently removed and his land and game were added to the reserve. In
2001 Bouwer signed certain of the agreements referred to in the preceding
paragraph, as also other agreements with the respondent.
[8] Around the perimeter of the reserve the fence was upgraded and
electrified. In the case of Bouwer’s properties these steps were taken before
the internal fences between those properties and the remainder of the reserve
were removed.
[9] In April 2006 Bouwer claimed that his agreement with the respondent
was void and he sought restitution, including all the proceeds received from
the sale of game emanating from his properties to various hunters since 2001.
[10] In May 2006, the Trust acquired ownership of the trust properties
pursuant to a successful land claim under the Restitution of Land Claims Act
22 of 1994 and the purchase by the State, through the Regional Land Claims
Commissioner, of the properties from Bouwer. After the purchase the
properties were transferred to the Trust.
[11] For the purposes of the acquisition of the trust properties by the Land
Claims Commission on behalf of the Trust from Bouwer the land was valued
by an appraiser, Mr Pretorius. In his report, confirmed in his evidence, he
recorded that in arriving at a value he took into account that, as he had been
told by both Greeff and Bouwer, ownership of the game on the properties
vested in the respondent and game counts could not be done as the
properties were managed together with the greater Magudu Game Reserve
comprising a total of some 15 000 hectares, accommodating four of the big
five wild animals (lions being excluded), but, on the other hand, that game did
occur on or traverse the trust properties.
[12] After taking transfer of the trust properties the Trust declined to become
a member of the Magudu Game Reserve. Following on disagreements
between the Trust and the respondent (the former wishing to grant hunting
concessions on the trust properties) the Trust denied the respondent, its
employees or agents any right of access to the properties and in fact obtained
an interdict against such access (required by the respondent, so Greeff
averred, for maintenance and conservation purposes). (According to the
judgment of the court a quo an interim working arrangement was, however,
subsequently reached which operates pending the outcome of the
proceedings, and the interim interdict was discharged. We were advised from
the Bar that the interim arrangement permits hunting to take place on the trust
properties subject to the proceeds being deposited into a trust account.) The
position remains that there are no fences between the trust properties and the
land comprising the reserve.
[13] The institution of the present litigation ensued. The essential questions
that fell to be decided were whether the respondent acquired ownership of the
game in question and, if so, whether it retained or lost such ownership.
THE AGREEMENTS SIGNED
[14] The founders signed an ‘Umbrella Agreement’, a document titled ‘The
Magudu Game Reserve Association Constitution’, a ‘Shareholders’
Agreement’, a ‘Game Valuation and Count Agreement’, various ‘Use
Agreements’ and ‘Agreements of Game Purchased’.
The effect of these agreements was that the shareholding of each of the
founders in the respondent (the incorporation of which was envisaged and
was subsequently effected) was determined with reference to the size of their
respective properties, and a monetary adjustment was made with reference
to the value of the game found on each founder’s land (as agreed) and
contributed to the joint venture, so that a shareholder’s total contribution to the
venture (consisting of game, or game and money) corresponded with his
shareholding. Each shareholder, however, retained ownership of the property
made available to the scheme by him or it.
[15] Pursuant to the negotiations with Bouwer in respect of the addition of
his land and game to the Magudu Game Reserve on a similar basis, the
agreements (with the exception of the ‘Use Agreements’) were extended to,
and some new agreements concluded with, him. On 5 March 2003 Bouwer
appended his signature to the ‘Umbrella Agreement’, the ‘Constitution’, a
‘Deed of Acceptance of Membership of the Magudu Game Reserve
Association’ and the ‘Shareholders’ Agreement’. He also signed (on a date
not specified) a ‘Record of Agreement’ between himself and the respondent.
On 7 July 2003 he signed a ‘Koopooreenkoms’ (‘purchase agreement’)
providing for the purchase by the respondent from him of certain land and the
game thereon as a going concern.
[16] The final arrangement with Bouwer, although similar to that between
the three founding members, was, however, not identical. Initially, the ‘Record
of Agreement’ (which, while not being a model of clarity, reflected an
agreement in principle) provided inter alia that:
(a)
Bouwer’s properties (set out in an annexure) would form part of the
Magudu Game Reserve;
(b)
Bouwer would acquire a 20 per cent shareholding in the respondent (to
be transferred to him from the existing shareholders);
(c)
the value of all the game on the extended reserve was R24 370 000;
(d)
the consideration for the shareholding (R4 874 000, being 20 per cent
of R24 370 000) would be settled by the selling of certain land and game to
the existing shareholders as well as a cash payment, made up as follows:
land (± 1650 hectares at R1 100 each): R1 815 000
game:
R1 289 840
cash:
R1 769 160.
(e)
all internal fencing was to be taken away by not later than August 2002.
(In fact, Greeff testified that a delay supervened).
[17] However, it was thereafter agreed that the shareholding in the
respondent be increased and that Bouwer receive 20 per cent of the
increased shareholding (from the respondent) for the consideration of
R4 874 000. The ‘Koopooreenkoms’ was thereafter concluded. The total
consideration payable by the respondent in terms thereof was R1 951 105,
which included R572 605 in respect of game. The land which was the subject
of the agreement comprised portions of two of the properties referred to in the
annexure to the ‘Record of Agreement’ (which rendered it necessary for
subdivisions to be effected). The reasons for the restricted sale of ground
need not be set out. According to Greeff the game reflected by the sum of
R572 605 was the estimated amount of game on the properties in question at
the time.
[18] At a late stage in his oral testimony Greeff seemed to suggest that the
game to the value of R572 605 may have been in addition to the game to the
value of R1 289 840 referred to in the ‘Record of Agreement’. However, to the
extent that that was the import of his evidence, he was clearly confused and
mistaken in this regard. There was no suggestion that in the interim Bouwer
had introduced further game onto his properties and Greeff had earlier stated
that the game referred to in the ‘Record of Agreement’ was that which was on
all of the properties referred to in the annexure thereto.
[19] In the result, therefore, the final arrangement was that as a quid pro
quo for his 20 per cent shareholding Bouwer would be credited with the sale
price provided for in the ‘Koopooreenkoms’; transfer the land referred to in the
‘Koopooreenkoms’ to the respondent; make the remainder of the land referred
to in the annexure to the ‘Record of Agreement’ (of which he would remain the
owner) available to the respondent as part of the extended reserve; contribute
game to a total value of R1 289 840 to the venture; and make payment of the
cash amount of R1 769 160.
[20] The cash amount involved was paid by Bouwer (albeit to the other
shareholders, not the respondent). The land referred to in the
‘Koopooreenkoms’ was, however, never transferred to the respondent and no
shares were ever issued to Bouwer. The agreements with him remained
executory and became the subject of ongoing litigation between the parties.
However, the result of the removal of the fences between Bouwer’s properties
and the other land utilized by the respondent was that the game that was on
Bouwer’s properties intermingled and roamed freely with the other game over
the extended reserve.
[21] Both prior to and subsequent to the negotiations and agreements
concluded with Bouwer, the respondent acquired substantial amounts of
further game (over and above that originally on the land) by purchase or
barter, and added same to the reserve. Progeny has also been born to the
game on the land.
THE ORAL EVIDENCE
[22] Greeff, a director of the respondent, deposed to the founding and
replying affidavits on behalf of the respondent. He also gave evidence at the
oral hearing. In addition to sketching the history of the matter, including the
various agreements signed, his testimony was to the effect that the owners of
the land which formed the constituent parts of the game reserve all agreed
that the respondent would become owner of all the game on the reserve and
that was their common intention. Crafford (whose interest in the venture was
at a later stage acquired by Greeff) also testified that as far as he was
concerned, when the internal fences were removed, so that the game could
roam over the entire reserve, the respondent became the owner of the game.
Under cross-examination, however, he agreed that the way in which the game
previously on the farms was dealt with was governed by the terms of the
various agreements ‘as they interacted with each other’, that there were no
separate oral agreements that did not form part thereof and that the
consequences of the arrangement were to be found ‘on an interpretation
basis’.
[23] The Trust did not tender any oral testimony. Its stance in the
answering affidavit filed on its behalf, and in cross-examination during the oral
testimony, was that the respondent was put to the proof of its allegation of its
ownership of the game in question and that the various agreements invoked
by the respondent did not substantiate its claim.
THE JUDGMENT OF THE COURT A QUO
[24] Koen J had regard to the following common law principles relating to
the ownership in game:
(a)
Wild animals which are in a natural state of freedom become the
property of their captor wherever and however captured provided that apart
from physical control, the animus to be the owner is also present;
(b)
A wild animal which escapes from physical control, disappears from the
sight of its previous owner and regains its natural state of freedom becomes
res nullius with a consequent loss of ownership.1
[25] The learned judge further held, correctly, that the abstract theory
applies in our law in respect of the passing of ownership in property.2 In terms
thereof, a valid underlying transaction or iusta causa traditionis is not a
requirement for the valid transfer of ownership. Provided that the agreement
to transfer ownership (the ‘real agreement’ or ‘saaklike ooreenkoms’) is valid,
ownership will pass in pursuance and on implementation thereof,
notwithstanding that the causa (the ‘verbintenisskeppende ooreenkoms’ or
‘contractual agreement’) may be defective. In other words all that is required is
delivery (actual or constructive) coupled with an intention to pass and receive
ownership.
1 Van der Merwe, Things, 27 Lawsa, paras 325 and 406.
2 Commissioner of Customs and Excise v Randles Brothers and Hudson 1941 AD 369 at 198-199;
Trust Bank van Afrika Bpk v Western Bank Bpk 1978 (4) SA 281 (A) at 301; Air-Kel(Edms) Bpk h/a
Merkel Motors v Bodenstein 1980 (3) SA 917 (A) at 922.
[26] The conclusion reached by the learned judge was that the individual
parties to the game reserve venture (who were the owners of the game on
their respective properties prior to the dropping of the internal fences)
intended that ownership of the game pass to the respondent, that the latter
intended to receive ownership and that delivery of the game was effected
when the internal fences were dropped. He reached this conclusion based on
his assessment of the evidence, the probabilities and the interpretation to be
placed on the various agreements signed (insofar as these might have had a
bearing on the question of whether there was the requisite intention).
[27] In respect of the requirement of control for there to be ownership in the
game at common law, it was held that the upgraded electrified perimeter
fence around the extended reserve (which was game proof) afforded the
requisite control. That control (over game that happened to be on the trust
properties) was not lost when the Trust barred the respondent from access to
the trust properties and the respondent remained owner of all the game on the
extended reserve as it was before the Trust decided not to be a member of
the reserve.
[28] One last aspect was the subject of dispute in the court a quo. The
appellants argued that in the event of the court deciding the matter in favour of
the respondent, a time limit should be placed on the opportunity to be afforded
to the respondent to remove its game, of one winter season (that being the
season of the year when removal of game from one area to another can be
undertaken). The respondent contended for a minimum of two winter
seasons. The learned judge commented that the issue of what would
constitute a reasonable period was not canvassed in the papers or the
evidence, and might very well require input from experts. He was not
prepared, in the absence of the issue being fully ventilated between the
parties, to make an arbitrary determination. He therefore stated that he would
grant the relief in the form sought and if the parties could not reach agreement
and either party acted unreasonably, the court would have to be approached
for the issue to be determined.
CONTENTIONS OF THE RESPONDENT
[29] The basis on which the respondent argued that it became the owner of
all the game in the reserve was framed as follows:
(a)
When the reserve was created and the fences removed it was the
intention of the farmers concerned that the respondent would become the
owner and controller of their game; the respondent was created for that
purpose3. The ‘real agreement’ consisting of the intention to transfer and
receive ownership of the game is evidenced by the conduct of the owners
who contributed land to the venture and removed the internal fences, thus
allowing their game, previously confined to their respective properties, to
move between the various properties and to intermingle.
3 The ‘Shareholders Agreement’ referred to in paras [14] and [15] above recorded that the
respondent had as its purpose ‘…..carrying on the business of the conservation of veld and
wild game resources on a commercial basis primarily in the area of land to be called the
Magudu Game Reserve’.
(b)
It would in fact not have been practicable for the individual farmers to
retain ownership of the game which they contributed. The game roamed over
the whole reserve, moving freely from one farm to another.4
(c)
The game intermingled and it became impossible to identify the game
contributed by each farmer.
(d)
Delivery of the game to the respondent took place when the internal
fences were removed (thus enabling the game to roam as referred to above).
The game reserve was securely enclosed by an electrified game fence on the
perimeter thereof. The respondent accordingly assumed the required control
over all the game.
(e)
The respondent later introduced further game to the reserve, which it
had acquired by purchase or barter. The benefit of the progeny of the game
in the reserve also accrued to it.
(f)
The
appellants
made
the
concession
concerning
elephants,
rhinoceroses and buffaloes referred to earlier.5
[30] It was further submitted on behalf of the respondent that nothing in the
written agreements signed by the parties detracts from the notion that it was
the common intention that ownership in the game would pass from the
farmers to the respondent. On the contrary, so it was argued, the contents of
the documents underlined the existence of the common intention contended
for. Counsel pointed inter alia to the following:
(a)
One of the suspensive conditions in the ‘Umbrella Agreement’ was the
signing of an agreement between the parties to the effect that they have
4 The founding affidavit, deposed to by Greeff, further recorded that because of drought
conditions game migrated to Bouwer’s farms and during 2002/2003 the respondent moved a
considerable number of the game to those farms to take advantage of the available grazing
there.
5 Para [4] above.
agreed to the valuation and count of all game. A formula was provided for a
monetary adjustment so as to achieve an equal contribution of game, or game
and money, relative to the shareholding of the parties.
(b)
Various provisions in the agreements were to the effect that, to the
exclusion of a party thereto, the respondent would be entitled to undertake the
control and administration of all culling, catching and hunting of game on a
party’s land and to trade therein commercially, the nett proceeds thereof to
accrue to the respondent and be treated as income of the respondent. The
parties were not to permit capturing, hunting or shooting of game on their
respective properties and would not be permitted to engage in hunting without
a written permit issued by the respondent (and subject to any conditions laid
down by the respondent) and payment of the prescribed fees to the
respondent. An infraction of these provisions by any party would visit him or it
with liability to pay a compensatory fine.
(c)
A formula was to be applicable when a new member joined the reserve
and added his land and game to it. In terms of the ‘Record of Agreement’ (as
later modified) concluded between the respondent, the Magudu Game
Reserve Association and Bouwer he would acquire a 20 per cent
shareholding in the respondent, for which he would pay by way of land, use of
land, game and cash. The clear effect of the above, so it was argued,
supported the contention that on joining the reserve Bouwer would not retain
ownership of his game.
(d)
Clause 5 of the ‘Use Agreements’ (Bouwer did not sign such an
agreement) provided that in the event of a land owner ceasing to be a
member of the association he would be obliged to re-erect fences on his land
(to separate same from the properties remaining in the reserve) and the
respondent would be entitled to capture and remove all wild game from his
land. (My emphasis). (The clause further provided that the departing member
would receive no compensation in respect of the game so removed other than
through the compulsory sale and purchase of any shares he has in the
respondent).
(e)
Clause 4 of the ‘Use Agreements made provision for a waiver of
ownership in the following terms:
‘The Landowner also expressly waives any right to or claim to ownership of any wild
game traversing his land from time to time, such waiver to be in favour of [the
respondent].’
[31] Counsel also invoked the following conduct on the part of the parties:
(a)
Hunting on the reserve was done by professional hunters, pursuant to
contracts concluded with the respondent, and the profits accrued to the
respondent. Supporting documentation in substantiation hereof was placed
before the court a quo.6
(b)
Further documentation substantiated that the respondent had also
engaged both in the purchase of game to be added to the reserve as well as
in the sale of game to other persons.
(c)
As was deposed to by Mr Redelinghuys, the chartered accountant who
attended to the preparation of the respondent’s financial statements, the
game was reflected therein as an asset of the respondent. Similarly, the
6 In the founding affidavit Greeff recorded that the hunting concessions granted during 2004
included concessions granted specifically in respect of the land that subsequently became the
trust properties and a hunting camp was leased from Bouwer for this purpose. In his replying
affidavit Greeff referred to invoices issued by the respondent to Bouwer for game he had shot
on the reserve and game he purchased from the respondent, as well as invoices relating to
game meat that Bouwer had purchased from the respondent.
statements reflected expenses for the purchase of game and income from the
sale of game.
(It may be added that in correspondence between Greeff and the Land Claims
Commissioner the former recorded inter alia that the respondent is the owner
of all game in the game reserve in that it had purchased all the initial game on
Bouwer’s properties for the amount of R1 289 840, and already owned the
balance of the game in the reserve).
[32] Counsel further invoked the fact that the agreement in terms of which
Bouwer disposed of the trust properties to the National Department of Land
Affairs (which in turn transferred the land to the appellants) concerned only
the sale of the land and said nothing about game.
[33] Counsel also adverted to the evidence of Bouwer contained in the
affidavit filed by him. (Bouwer, who was cited as the 14th respondent in the
court a quo, recorded that he had no personal interest in the application,
abided the decision of the court and filed the affidavit for the assistance of the
court). He stated inter alia that the respondent purchased his game and that
after the internal fences had been dropped the respondent used all the game
in its operation. 7
7 It may further be recorded that in proceedings instituted by the respondent against Bouwer
in the Johannesburg High Court for the enforcement of the sale of the land referred to in the
‘Koopooreenkoms’ (which are still pending), the papers in which were by agreement placed
before Koen J, Bouwer filed an affidavit which contained the following passage:
‘I have paid the cash amount to the shareholders and the Applicant (the present respondent)
has taken over the game that was on my farms. This we did by dropping the fences between
the properties and the game was then allowed to move over the boundaries to the various
properties. Since then the Applicant has been using the game in its game farming operations.’
[34] In respect of the contention on behalf of the Trust that the respondent
had lost its ownership of the game in question, counsel supported the
approach adopted by Koen J. He pointed out that the game remains where it
was from the outset, roaming all over the reserve, including the trust
properties, but confined by the perimeter fence. He submitted that the refusal
by the appellants to allow the respondent to remove game that happens to be
on the trust properties to the remainder of the reserve, does not constitute a
loss of control leading to a loss of ownership. He labelled the refusal as an
unlawful attempt by the appellants to appropriate to themselves game which is
owned by the respondent.
[35] Finally, counsel supported the approach of Koen J with regard to the
formulation of the order relating to the removal by the respondent of the game
from the trust properties. He emphasized that the respondent cannot begin
with the relocation process until the Trust has constructed a fence between its
land and the reserve. He added that the Trust can hardly complain about the
fact that the animals are grazing on their land (about which more later when
the Trust’s submissions are considered) when it refuses to allow the
respondent to remove the animals.
[36] In my judgment, the argument on behalf of the respondent set out in
the preceding paragraphs in general carries persuasion, as will appear from
the discussion that follows on the contentions raised on behalf of the Trust.
THE CONTENTIONS OF THE TRUST
[37] Mr Pillemer (who, with Mr Voormolen, appeared for the Trust)
confirmed that in the court below the Trust had not disputed that prior to the
dropping of the internal fences the parties to the game reserve venture were
the owners of the game on their respective properties, and intimated that his
stance in the appeal was the same. He submitted, however, on the grounds
discussed below, that the respondent had not acquired ownership of any of
the game on the properties.
[38] Reliance was placed on the evidence of the appraiser, Pretorius,
referred to earlier,8 that in valuing the trust properties he took into account that
game from time to time roamed over the properties. The answer thereto is
three-fold. First, the relevance of this evidence is not apparent. Second, the
evidence merely reflected the factual position. Third, it is no counter to the
point taken on behalf of the respondent that the subject matter of the sale
from Bouwer to the State was the land and not the game thereon.
[39] Counsel sought to stress that there was no written agreement that
expressly purported to transfer ownership of the wild animals in the Magudu
Game Reserve to the respondent, and certainly none that transferred
ownership from Bouwer, since, so it was contended, the agreements he
signed remain executory and disputed. Furthermore, so the argument
continued, with the transfer of the land to the appellants the agreements had
become impossible of performance.
8 Para [11] above.
[40] I will later deal more fully with the Trust’s contentions founded on the
contents of the various agreements. At this stage it is only necessary to
repeat that the court a quo correctly proceeded on the basis that the abstract
theory of the passing of ownership applies in our law, and that the fact that
the agreements relating to Bouwer are executory and the subject of dispute,
as well as the fact that Bouwer has transferred part of his land to a third party,
relate to the ‘verbintenisskeppende ooreenkoms’ and any defect therein would
not affect the passing of ownership in the game in question if the ‘real
agreement’ relating thereto was valid and implemented.
[41] Counsel adverted to the fact that the trust properties are mountainous
bushveld where animals would ‘disappear from sight’ soon after they cross the
boundary into the land. Notwithstanding that the animals are restrained by the
perimeter fence running along the outer boundary of the properties the
questions to be answered, counsel said, are whether or not animals that enter
the trust properties and disappear from sight are at common law deemed to
have regained their natural freedom and whether there is the required degree
of control in a ‘vast’ mountainous area to which the entity claiming ownership
of the animals has no right of entry, and, if so, does the control relate to all
animals on the land, including progeny and those that occur naturally and
were not introduced.
[42] It was submitted that the court a quo, in applying the abstract theory in
relation to the transfer of ownership, erred by confusing the authorities dealing
with ‘the validity of the underlying agreements with the need for an
interpretation of the agreements and whether the parties intended thereby to
pass ownership of the game to the respondent’. However, counsel added
that the question must always be whether or not there was delivery from the
transferor to the transferee with the reciprocal intention both to transfer and
acquire ownership, respectively, and in that regard the intention of the parties
must be measured against the provisions of the common law relating to the
acquisition and retention of ownership of wild animals.
[43] These latter statements correctly reflect the principles of the abstract
theory. The earlier statement is not wholly in accordance therewith. While
counsel correctly submitted that the interpretation of the underlying
agreements is relevant to the extent that they bear on the question whether
the parties had the required reciprocal intention, the question is not whether
the parties intended that ownership pass via the agreements. The legal issue
is whether there was a valid ‘real agreement’ to transfer ownership on
delivery.
[44] The argument was that on a careful analysis of the agreements the
court a quo ought to have concluded that:
(a)
the agreements, noticeably, refrained from stating that the respondent
would become the owner of the game within the Magudu Game Reserve;
(b)
the agreements contained a number of provisions inconsistent with the
respondent acquiring ownership of the game (as opposed to the right to
manage, capture and exploit the game);
[45] However, while it is true that there was no express statement in the
agreements that the respondent would acquire ownership of the game, I am
persuaded that the provisions invoked by the respondent, discussed earlier in
this judgment, can only be interpreted as carrying the necessary implication
that the respondent was to acquire ownership of the game. And, as will
appear below, I am not persuaded that there are any provisions in the
agreements inconsistent with the respondent acquiring ownership of the
game.
[46] Counsel submitted that in contradistinction to a reference to the
respondent becoming the owner of the game, the agreements used language
(such as ‘manage’, ‘control’, ‘administer’ and ‘use’) which suggests an
awareness of the limitations placed by the common law upon the ownership of
wild game. The short answer to the submission is that the agreements must
be interpreted in their entirety. If that exercise is undertaken, then, firstly, it is
apparent that the wording referred to by counsel was entirely appropriate in
the context of the respondent conducting the business of ‘the conservation of
veld and wild game resources on a commercial basis’ and accepting
responsibility ‘for the management and conservation of all veld and wild game
resources in the reserve including the land . . . on a commercial basis for its
own account’, on land which belonged to other persons or entities. Secondly,
the wording must be read together with other provisions in the agreements
which import the necessary implication that the respondent was to become
the owner of the game. Asked to elucidate how what he referred to as the
common law limitations on the ownership of game affected the question
whether the intention was that the respondent acquire ownership of the game,
counsel stated that he was referring to the requirement of control over the
game. I will revert to this issue below.
[47] Counsel next focused attention on the waiver provision in clause 4 of
the ‘Use Agreements’.9 It was submitted that this express waiver was entirely
inconsistent with an intention by the parties that the ownership of the wild
game be transferred to the respondent when the internal fences were
dropped. The essential basis of the submission was that if ownership in the
game was intended to pass to the respondent when the internal fences were
dropped, it was unnecessary to make provision for the waiver. The allied
submission was that the finding of the Court a quo that the waiver was
included ex abundante cautela is contrary to the presumption against
tautology or superfluity in contracts, included as part of the rules of
interpretation of contracts.
[48] I fail to understand why the waiver was said to be inconsistent with the
intention in question. I do not agree that the language utilised by Koen J
offends against the presumption referred to. I do agree with the learned
judge’s approach that, in effect, the provisions underscored the common
intention that the respondent become the owner of the game – at the time the
fences were dropped. It bears mention that counsel did not seek to suggest
what other effect the waiver had on the members’ ownership of the game on
their land.
[49] Similar comments apply to counsel’s submission that the provisions in
the ‘Use Agreements’ relating to the exclusion of compensation to the
landowner in respect of game captured and removed from his land by the
9 Para [30](e) above.
respondent (upon termination of his membership of the association)10 were
entirely inconsistent with an intention to transfer ownership of the game to
the respondent when the fences were dropped. Counsel offered no
submissions against the proposition that at least at that stage a transfer of
ownership would take place. He sought to argue that the then capture and
removal of the game by the respondent and the fencing off of the member’s
land would meet the requirements of the common law requirements for the
acquisition of ownership in wild game. However, counsel did not suggest any
reason why the parties would have wanted to delay transfer of ownership in
the game to the time when a member’s membership of the association came
to an end, instead of an immediate transfer of ownership when the member
joined the venture. And as set out above there is every indication that the
latter was intended. Counsel did not proffer an explanation for the provision
that no compensation be paid notwithstanding that, as was accepted,
ownership in the game on the member’s land immediately prior to his joining
the venture reposed in him. The argument also loses sight of the
considerations, dealt with earlier, arising out of the intermingling and free
roaming of game over the whole of the reserve.
[50] Counsel next referred to the provisions relating to the entitlement of the
respondent, to the exclusion of the members of the association, in respect of
hunting operations on the reserve (and other associated rights) and to receive
the proceeds thereof.11 The argument, if I understood it correctly, was that if
the respondent had become owner of all the game it was unnecessary to
10 Para [30](d) above.
11 Para [30](b) above.
provide for the respondent to have exclusive rights on this score. It was
suggested that the purpose of the provisions was to accord the respondent
rights despite the ownership of the game remaining with the landowners.
However, far from these provisions being inconsistent with an intention that
the respondent acquire ownership of the game contributed by the members to
the venture, in my view they underscore that intention.
[51] The essential submission on behalf of the appellants, based on the
factors referred to above, was that on a proper analysis of the agreements
they created personal rights to exploit the resources found on the land (which
included, but were not limited, to game) in favour of the respondent, but fell
short of reflecting an intention to transfer ownership of the game to the
respondent, probably, counsel said, on the basis that the ownership of wild
game which occurs naturally, is at common law problematic. (Again, it may be
repeated, counsel invoked the requirement of control ─ an aspect dealt with
below.) I am unable to agree. As already recorded, nothing in the agreements
casts doubt on the notion that the intention of the parties was that ownership
in the game was to pass to the respondent and thus to create real rights.
[52] With reference to the ‘Koopooreenkoms’ concluded between Bouwer
and the respondent in July 2003, in terms of which the land specified therein
and the game thereon (valued at R572 605) were sold to the respondent as a
going concern, counsel pointed to the fact that the fences had by then already
been dropped. Ergo, so the argument ran, Bouwer’s state of mind at the time
the fences were dropped must have been that he retained ownership of the
game on his land. If, on the other hand, as Greeff suggested, the game
referred to in the ‘Koopooreenkoms’ was additional game, then, even if
Bouwer had intended the ownership of the game originally described to pass
with the dropping of the fences, he could not have intended to pass ownership
of the remaining game referred to in the ‘Koopooreenkoms’. This, counsel
said, highlighted the problem of ownership of wild animals that wander and
cannot be individually identified, and the agreement (which in fact was never
executed) presented a ‘significant’ obstacle in drawing the inference of an
intention to pass ownership of all of Bouwer’s game to the respondent when
the fences were dropped. The short answer to the argument, however, is that,
as I have already found,12 the game referred to in the ‘Koopooreenkoms’
formed part of the total game Bouwer was to contribute to the venture. That
contribution was part of Bouwer’s quid pro quo for the shareholding he would
obtain in the respondent and the only inference is that the game contributed
was to become the property of the respondent.
[53] In the final result, counsel’s argument (apart from the reliance on his
interpretation of the various agreements) boiled down to the following. With
Bouwer’s entry into the game reserve venture and the dropping of the internal
fences between his properties and the remainder of the reserve an additional
approximately 10 000 hectares was added to the venture (which up to then
had embraced approximately 5 000 hectares). The additional land, and
specifically the trust properties, was rugged and mountainous where game
could, and did, factually ‘disappear from sight’. That circumstance, taken
together with what counsel referred to as the ‘vastness’ of the reserve area
rendered the ‘recovery of game’ a difficult procedure. Accordingly,
12 Para [18] above.
notwithstanding that the upgraded and electrified perimeter fence effectively
contained the specified game within the confines of the extended reserve, the
element of control required for ownership in game was absent. Integral to the
argument was the submission, with allusion to the ‘vastness’ of the land, that it
was a question of degree whether the requisite control was present. The
required degree, so it was argued, was not met in the instant case.
[54] Pressed on what he contended had become of the ownership that the
parties to the game reserve venture had had in the game that was on their
respective properties prior to the dropping of the internal fences counsel’s final
stance, on the basis set out in the preceding paragraph, was that all the game
in the reserve had become res nullius. In developing his argument, if I
understood it correctly, counsel submitted that the parties had probably not
given thought to what would happen to the ownership in their game, but the
effect of relinquishing control of the game when the internal fences were
dropped (as counsel contended for) was the loss of ownership.
[55] The argument cannot be upheld. In
the
first
place,
as
already
recorded, the intention of the parties to the venture was that ownership in all
the game in the reserve would pass to the respondent. Secondly, I am
unpersuaded by the argument that control over the game was factually
relinquished. As appears from the decisions in the cases referred to in the
following three paragraphs (to which Mr Ploos van Amstel, for the respondent,
referred us) the applicable common law principles, when applied to the facts
of the present matter, dispose of the submission.
[56] In Richter v du Plooy13 the plaintiff kept 57 wildebeest on 800 morgen
of land which was enclosed. Some of the animals strayed onto an adjoining
farm where two of them were shot. It was held14 that the size of the enclosure
did not exclude that the confinement of the animals was of such a character
as to make the animals the property of their captor, but that their confinement
(having regard to the nature of the animals, the extent of the enclosure, the
object of preserving the animals and their susceptibility to the control and
management of man) was not sufficient to take them out of the category of
wild animals and if they emerged from their place of detention they became
res nullius. While detained, however, they were the property of the landowner.
(It may be noted that the headnote of the case does not correctly reflect what
was decided.)
[57] In Lamont v Heyns & Another15 the plaintiff kept 110 blesbok in an
enclosed camp some 250 to 300 morgen in extent. The defendants entered
the plaintiff’s land and shot some of the animals. It was argued on their behalf
that the blesbok were wild animals not in the possession of the plaintiff and
therefore not his property. The judgment contains the following passage:
‘Under such circumstances it would cause great surprise to farmers if the Court were
to hold that the blesbok in question were not the property of the plaintiff. But it is
contended on behalf of the respondents that that is the law, and various authorities
were referred to. . . . And Voet says that wild animals which we have confined in
zoological preserves or fish which we have cast into fish ponds are under our control,
and are therefore owned by us; but . . . wild animals roaming about in fenced woods
13 1921 OPD 117.
14 At 118-119.
15 1938 TPD 22.
are left to their natural liberty, nor are they possessed by anyone; because fences
are put up rather for defining boundaries than for the custody or closing in of wild
animals. It may have been the case at the time and in the country in respect of which
Voet was writing that fences were put up for defining boundaries rather than for
closing in wild animals, but we must deal with the facts in the present case.’16
It was concluded that although the blesbok were wild animals the plaintiff kept
such control over them as to make him the owner of the animals.
[58] In Strydom v Liebenberg17 game was kept on 140 hectares enclosed
with game proof fencing. Portion of the land was owned by the plaintiff and the
remainder by a company of which he was the sole shareholder and director.
The company was liquidated and the land belonging to it was sold to the
defendants. The agreement of sale did not include the game. The defendants
erected a fence between the two portions of land thereby denying the plaintiff
access to the game on the land previously owned by the company. The
defendants contended that the plaintiff had lost ownership in that game as he
no longer exercised control thereof: the game had therefore become res
nullius. The contention was rejected on the basis that the game remained
confined within the land that had been fenced and had not regained their
natural state.
[59] In the present matter regard must be had to the nature of the game
reserve venture conducted by the respondent (ie large scale game-farming). It
was for the purpose of carrying on that venture that the perimeter fence had
16 At 24-25.
17 [2007] ZASCA 117.
been upgraded and electrified, which resulted in the game being confined
within the boundaries of the reserve. That confinement, coupled with the
purpose thereof, and seen in the light of the approach adopted in the three
cases discussed above, constituted the requisite control to vest ownership of
the game in the respondent. The size of the reserve and the circumstance that
‘recovery of the game’ might be a difficult and time consuming exercise do not
affect that conclusion; recovery of the game would eventually be achieved.
FINDING
[60] I conclude accordingly that the respondent acquired ownership of all
the game in the reserve in that:
(a)
the respondent and the founders had the common intention that
ownership of the game on the land of the founders would pass to the
respondent, and subsequently the respondent and Bouwer had the common
intention that ownership of the game on the land of Bouwer would pass to the
respondent;
(b)
actual delivery of the game took place when the internal fences were
dropped, alternatively constructive delivery took place by virtue of the fences
being dropped followed by the then possession of game by the landowners on
behalf of the respondent;
(c)
ownership of the further game introduced into the reserve by the
respondent was acquired by it by purchase or barter;
(d)
the progeny of the game on the reserve accrued to the respondent.
DID THE RESPONDENT LOSE OWNERSHIP OF ANY OF THE GAME?
[61] Counsel’s argument embraced an attack on Koen J’s finding that the
wild animals from time to time on the properties now registered in the name of
the Trust had not regained their natural state of freedom such as to amount to
a loss of ownership. It was submitted that the only form of control previously
exercised by the respondent of the game on the properties was the fencing in
of the game by the external fence. However, so the argument continued, for a
considerable period the respondent has effectively had no means to enter
upon that land to maintain the fences or to exercise any other control. It had
been open to the respondent, aware of the land claim, to protect its rights by
moving the animals from the farms in question onto the remainder of the
reserve and erecting fences to keep them there. It elected not to do so. That,
counsel said, amounted to an abandonment of control, and if the respondent
previously had ownership of the game, it thereby lost such ownership.
[62] The argument cannot prevail. The evidence was that there were
negotiations between the respondent and the Trust concerning the latter’s
becoming a member of the association. These did not bear fruit. But, as
already found, immediately prior to the Trust adopting the stance that it would
not allow the respondent’s representatives onto its land the respondent did
have effective control over the game, and owned same. It is only that stance
of the appellants that interfered with the respondent’s exercise of its rights of
ownership and prevented it from removing the animals when it wished to do
so, and it still so wishes. I align myself with the approach that Koen J adopted
on that score and endorse the finding that the respondent did not lose control
of the game on the trust properties and that it retained ownership of the game.
[63] It was submitted that representatives of the respondent may in terms of
the court order enter upon the trust properties to remove game (without there
being any limitation as to the number of entries, and that the Trust must
tolerate that situation for an indefinite period ‘until such times as the
respondent has removed its game from the properties’. However, as Koen J
pointed out the modus operandi of the relocation was not canvassed in
evidence before him. He accordingly granted the order in the form sought and
recorded that should any disputes between the parties arise which they are
unable to resolve the court would have to be approached to determine those
disputes. In my judgment, that approach was a proper one.
[64] It was next said that in the meantime, and until the game is removed,
the respondent enjoys the benefit of the animals grazing upon the trust
properties, to the detriment of the Trust, and without compensation. The short
answer to the objection is that it does not lie in the mouth of the Trust to
invoke the objection when it has itself, by its own conduct, denied the
respondent access to its properties for the purposes of the relocation.
However, if it considers that it has a claim for compensation it is at liberty to
pursue same. It may further be noted that the issue was not raised before the
court a quo.
REPLACEMENT OF INTERNAL FENCING
[65] The circumstance of the absence of internal fencing between the
reserve and the trust properties was also raised in argument. A suggestion
was made in the respondent’s papers that the appellants are obliged to erect
such fences (presumably on the basis that their predecessor in title, Bouwer,
was, in terms of his agreement with the respondent, obliged to replace internal
fences when he withdrew from the venture). It is not necessary, nor possible,
in the present judgment, to pronounce on the validity of that stance. The
respondent may have to erect the fencing itself (and Greeff in fact testified
that the respondent was entitled to do so) to enable it effectively to relocate its
game, and thereafter seek whatever remedy it feels it may have against either
Bouwer or the Trust; or it may approach the court to resolve the issue of
responsibility for the erection of the fencing.
ORDER
[66] The appeal is dismissed with costs.
_____________________
F KROON
ACTING JUDGE OF APPEAL
Appearances:
For Appellants:
M Pillemer SC
A V Voormolen
Instructed by:
Brett Purdon Attorneys
Durban
Honey Attorneys
Bloemfontein
For Respondent:
J A Ploos van Amstel SC
Instructed by:
Harvey, Nossel & Turnbull
Johannesburg
Lovius Block Attorneys
Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
28 May 2009
STATUS: Immediate
Mathenjwa N O & others v Magudu Game Company (258/08) [2009]
ZASCA 57 (May 2009)
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal today dismissed an appeal against a finding of
the Pietermaritzburg High Court that animals on a game reserve, enclosed by
electrified game fencing, belonged to the respondent game company.
In 1995 the owners of a number of farms in the Magudu area, Vryheid, in
KwaZulu Natal had formed a reserve on their farms and constituted the
respondent company to manage the reserve and the game. In 2001 they had
been joined by a neighbouring landowner, Mr Bouwer, who had entered into
various contracts in terms of which he gave control of the game on his farms
to the game company. The fences between the farms were all taken down
and the game roamed freely on the land forming the reserve. The game
company, the high court held, had acquired ownership of the game through a
number of ways: barter, sale, the birth of progeny and capture.
Some of the Bouwer land subsequently formed the subject of a claim for the
restitution of land, and was purchased from Bouwer by the Regional Land
Claims Commissioner and transferred to a community trust. The appellants
were all trustees of the trust. They attempted to prevent employees of the
game company from gaining access to their land and from hunting or in any
way dealing with the game on the trust land. The game company accordingly
sought an order that it was the owner of all game on the trust property, and
that it was entitled to enter the property to recover its game. (The trust had
conceded that some species which did not occur naturally in the area could
be removed.) The high court found that the game company remained owner
of the game despite the fact that the trust land was excluded from the reserve.
The principal issue before the high court was whether the game company had
acquired the game originally on the Bouwer farms that were transferred to the
trust. It was argued by the trust that Bouwer had not transferred ownership of
the game on his property to the game company, but merely handed the
control and management of the animals to it. It also argued that since the
game company did not have actual control of the game because the reserve
was very large, the animals had reverted to a state where they were free –
unowned by anyone. The common law principle is that wild animals belong to
no one unless captured and kept under the owner’s control.
The SCA confirmed the high court’s finding that the game company had
acquired ownership and kept control of the game within the reserve. Although
the game roamed freely it could not escape the reserve and was in effect
controlled by the game company. The trust was not therefore entitled to
prevent access by the game company to its land to capture the game, and
was obliged to allow the game company to recover it. Accordingly, the appeal
was dismissed.
----------
|
205
|
non-electoral
|
2018
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 245/2017
In the matter between
JOHN WALKER POOLS
APPLICANT
and
CONSOLIDATED AONE TRADE & INVEST
6 (PTY) LTD (IN LIQUIDATION)
FIRST RESPONDENT
IMPERIAL CROWN TRADING (PTY) LTD
(IN LIQUIDATION)
SECOND RESPONDENT
Neutral citation:
John Walker Pools v Consolidated Aone Trade & Invest 6 (Pty)
Ltd (in liquidation) & another (245/2017) [2018] ZASCA 012 (8 March 2018)
Coram:
Shongwe ADP, Willis and Mocumie JJA and Mothle and Rogers
AJJA
Heard:
23 February 2018
Delivered:
8 March 2018
Summary:
Application for leave to appeal – whether proposed appeal
would have any practical effect or result – such to be determined without reference
to costs, save under exceptional circumstances – appeal in this case would have no
practical effect because applicant’s alleged right of occupation in ejectment
proceedings expired in September 2017 – no exceptional circumstances justifying
appeal on costs.
Costs - application for leave to appeal – proposed appeal becoming moot during
pendency of application in Supreme Court of Appeal – duty of litigants to make
reasonable proposals inter se on costs to avoid need for court’s intervention –
appropriate in present case to consider merits of application to determine costs –
proposed appeal enjoying no prospects of success on merits – applicant ordered to
pay costs.
_________________________________________________________
ORDER
___________________________________________________________________
Application for leave to appeal from: KwaZulu-Natal Division, Pietermaritzburg
(Steyn J sitting as court of first instance):
The application for leave to appeal is dismissed with costs.
JUDGMENT
___________________________________________________________________
Rogers AJA (Shongwe ADP, Willis and Mocumie JJA and Mothle AJA
concurring)
[1] This is an application for leave to appeal which has been referred to open
court for argument. I shall refer to the applicant, John Walker Pools, as JWP; the
first respondent, Consolidated Aone Trade & Invest 6 (Pty) Ltd (in liquidation) as
CAT; and the second respondent, Imperial Crown Trading (Pty) Ltd (in liquidation),
as ICT. The order of the court a quo was for the eviction of JWP, at CAT’s instance,
from shop premises in Ballito Bay Mall (the Mall) plus costs. The court a quo
dismissed JWP’s application for leave to appeal. JWP applied to this court for leave
to appeal and it is this application which is now before us.
[2] At the commencement of the hearing before us the presiding judge raised
with the applicant’s counsel whether the proposed appeal had not become moot.
Subject to the question of mootness, the test we must apply is not whether JWP’s
proposed appeal should succeed but whether there are reasonable prospects of
success in the proposed appeal. The active parties before us were JWP and CAT.
[3] To understand the question of mootness, I must provide some brief
background. CAT’s application for eviction was based on an allegation that it was
the owner of the premises and that JWP was in unlawful occupation of the premises.
This sufficed to place on JWP the onus of setting up a right of occupation.1 JWP’s
defence was that it was entitled to occupy the shop by virtue of an alleged lease with
ICT. In his first answering affidavit, the deponent on behalf of JWP, Mr Dharman
Rajoo, the sole proprietor of the business, did not attach a copy of the lease. In its
replying affidavit the deponent for CAT contended that the answering affidavit did
not disclose a defence because the lease was not attached and no particulars
thereof were furnished. CAT alleged, further, that since ICT’s right to occupy the
premises had been terminated, any rights JWP might have against ICT did not give
it a defence against CAT.
[4] In a supplementary answering affidavit Mr Rajoo attached the lease,
explaining why he had not been able to do so earlier. The attached document
purported to be a lease between ICT and JWP for the period October 2012 to
September 2017.
[5] The matter came before Steyn J on 16 August 2016. JWP failed to file heads
of argument. Mr Rajoo appeared in person. He told the judge that his attorneys had
withdrawn the previous week and that his new attorney was not available on that
day. The court a quo refused a postponement and granted the eviction order.
[6] The application in this court does not raise, as a ground of appeal, that the
court a quo wrongly refused the postponement or that JWP should be permitted to
adduce further evidence on appeal. In the circumstances, facts and documents in
the application for leave which were not before the court a quo must be disregarded
in assessing whether JWP has reasonable prospects of success.
[7] The question of mootness arises from the fact that JWP’s alleged entitlement
to occupy the premises terminated at the end of September 2017. We were told
from the bar that JWP did not then vacate the premises and that, as was the case
when the eviction application was launched, it has persisted in its failure to pay rent.
Be that as it may, it is clear that a decision on appeal would have no practical effect
or result because, at best for JWP, an appeal court might find that it was entitled to
1 Chetty v Naidoo 1974 (3) SA 13 (A) at 20A-E; Airports Company South Africa Soc Limited v Airports
Bookshops (Pty) Limited t/a Exclusive Books [2016] ZASCA 129; 2017 (3) SA 128 (SCA) para 24.
occupy the premises until the end of September 2017, a question which is now
academic.
[8] Counsel for JWP conceded that the only practical effect which an appeal
order would have was in relation to costs. In terms of s 16(2)(a)(ii) of the Superior
Courts Act 10 of 2013, the question whether a decision would have practical effect
or result is, save under exceptional circumstances, to be determined without
reference to any consideration of costs. The costs referred to in this provision are
the costs incurred in the court against whose decision the appellant or would-be
appellant is seeking to appeal, not the costs in the appellate court. The section is
concerned with the decision of the court a quo and the circumstances in which an
appeal against the decision of that court can be dismissed without an enquiry into
the merits. If the costs incurred in the court a quo court were very substantial, this
might constitute an exceptional circumstance leading to the conclusion that a
reversal of that court’s decision would have practical effect.2
[9] In the present case there are no exceptional circumstances which make it just
for an appellate court to reassess the costs order made by the court a quo against
JWP. In the circumstances, leave to appeal must be refused.
[10] The remaining question is what to do about the costs of the application in this
court. Where an appeal or proposed appeal has become moot by the time leave to
appeal is first sought, it will generally be appropriate to order the appellant or would-
be appellant to pay costs, since the proposed appeal was stillborn from the outset.
Different considerations apply where the appeal or proposed appeal becomes moot
at a later time. The appellant or would-be appellant may consider that the appeal
had good merits and that it should not be mulcted in costs for the period up to the
date on which the appeal became moot. The other party may hold a different view.
As a general rule, litigants and their legal representatives are under a duty, where
an appeal or proposed appeal becomes moot during the pendency of appellate
proceedings, to contribute to the efficient use of judicial resources by making
sensible proposals so that an appellate court’s intervention is not needed. If a
2 See, eg, Oudebaaskraal (Edms) Bpk & andere v Jansen van Vuuren & andere 2001 (2) SA 806
(SCA) at 812D-E.
reasonable proposal by one of the litigants is rejected by the other, this would play
an important part in the appropriate costs order. Apart from taking a realistic view on
prospects of success, litigants should take into account, among other factors, the
extent of the costs already incurred; the additional costs that will be incurred if the
appellate proceedings are not promptly terminated; the size of the appeal record;
and the likely time it would take an appellate court to form a view on the merits of
the moot appeal. There must be a proper sense of proportion when incurring costs
and calling upon judicial resources.
[11] In the present case JWP applied to the court a quo for leave to appeal by way
of an application dated 14 September 2016. The application for leave was argued in
the court a quo on 14 February 2017 and refused on the same day. The application
in this court was brought on 15 March 2017. Following the filing of answering and
replying papers, two judges of this court on 15 May 2017 directed that the
application be argued in open court. The appeal only became moot at the end of
September 2017. Substantial costs had by then been incurred. The record is short
(a single volume) and it is a matter of no great difficulty to form a view on the merits.
If in October 2017 JWP had withdrawn its application for leave to appeal and
tendered costs, that would no doubt have been acceptable to CAT. If JWP had
withdrawn its application without tendering costs, CAT would almost certainly have
rejected the withdrawal. Solely for the purpose of arriving at a just order on costs, I
shall briefly discuss the merits to demonstrate why such a rejection would have
been reasonable.
[12] In my view JWP’s opposing papers in the eviction application did not disclose
a defence. JWP did not dispute that CAT was the owner of the premises. JWP did
not allege facts to show that a lease with ICT gave JWP any right of occupation as
against the owner.
[13] Counsel for JWP submitted that the facts showing that JWP’s lease with ICT
gave it a right of occupation against CAT appeared sufficiently from CAT’s founding
papers. As background to the facts on which counsel relied, it is necessary to
mention that CAT was placed in provisional liquidation on 19 September 2013 and
in final liquidation on 20 March 2014; and that ICT, which by October 2013 was in
business rescue, was placed in provisional liquidation on 22 November 2013 and in
final liquidation on 17 January 2014. The facts alleged in CAT’s founding papers
pertaining to ICT (which were not denied in JWP’s answering papers) were:
(i) that on 8 October 2013 CAT’s provisional liquidators wrote to the attorneys acting
for ICT and for its business rescue practitioner, terminating ‘the agreement that ICT
relied on for its occupation of the Mall and its right to let premises in the Mall to
tenants’;
(ii) that on 9 October 2013 CAT’s provisional liquidators addressed a further letter to
the said attorneys, terminating ‘the sale agreement which was purportedly
concluded’ between CAT and ICT and in terms whereof ICT had purchased two
sections in the sectional title scheme proposed to be established in respect of the
Mall and terminating ‘any other occupation agreement which placed ICT in
occupation of the Mall’;
(iii) that on 29 October 2014 the attorneys acting for CAT’s provisional liquidators
wrote to ICT’s provisional liquidators, terminating ‘any agreements existing between’
ICT and CAT ‘regarding the occupation, letting out or sale of the Mall, including but
not limited to the sale agreement dated 1 December 2009’;
(iv) that, in the premises, ‘any right which ICT had to conclude agreements of lease
with tenants of the Mall and any right which ICT had to continue to act as landlord
and give occupation and possession of premises at the Mall to tenants’ were
terminated by 9 October 2013, alternatively by 29 October 2014.
[14] Counsel for JWP argued that these facts showed that there was an ‘agency
agreement’ between CAT and ICT; that, ‘on a proper construction’ of the founding
papers, CAT had ‘conceded’ that its rights as owner had been ‘relinquished to ICT’;
and that the relinquished rights were CAT’s ‘right to sell its property and lease its
property out’. The allegations in question show no such thing. The documents
embodying the agreement or agreements between CAT and ICT did not form part of
the eviction papers. CAT simply stated that any agreements on which ICT might
have relied to occupy and let out premises had been terminated. CAT did not allege
that there were in fact any agreements which gave ICT the right to let out premises.
[15] In any event, the very allegations on which counsel relied included the
allegation that such rights as ICT might have had to occupy and let out the premises
had been terminated. JWP did not place the validity of the terminations in issue. On
ordinary principles, a sub-lessee cannot raise, against the owner, a lease which it
has with the owner’s lessee.3 The position would be different if, in the present case,
ICT had concluded a lease with JWP as an agent for CAT, but the allegations I have
summarised from the founding papers do not show such to have been the case nor
did JWP’s opposing papers allege agency. The lease on which JWP relied, including
the very detailed standard terms and conditions, made no reference whatsoever to
CAT. CAT was not called upon to reply to a defence based on agency.
[16] Given its very bleak prospects on the merits had the proposed appeal not
become moot, JWP should be ordered to pay the costs of the application in this
court for leave to appeal. (JWP has already been ordered to pay the costs of the
application for leave to appeal in the court a quo.) Counsel for CAT submitted that
these costs should be on a punitive scale. This is something to which I have given
careful consideration. There is much to criticise about JWP’s conduct. JWP appears
to have bought itself time by pursuing an unmeritorious application for leave to
appeal, all the while failing to pay rent. Furthermore, it did not vacate the premises
at the end of September 2017 and did not curtail further costs by raising the
question of mootness with CAT. However, the facts regarding its continued
occupation and non-payment of rent were communicated to us informally from the
bar and have thus not been canvassed in affidavits. It may also be mentioned that
CAT could have, but did not, take the initiative in raising the question of mootness.
CAT also did not give notice that it would be seeking a punitive costs order. While
this last consideration is not decisive, I am narrowly persuaded that we should not
mark our displeasure by way of a special costs order.
[17] The following order is made:
The application for leave to appeal is dismissed with costs.
__________________
OL Rogers
Acting Judge of Appeal
3 Ntai & others v Vereeniging Town Council & another 1953 (4) SA 579 (A) at 589A-D; Ellerine
Brothers (Pty) Ltd v McCarthy Ltd [2014] ZASCA 46; 2014 (4) SA 22 (SCA) para 5.
APPEARANCES
For Applicant:
J P Broster
Instructed by
Leon Pillay & Company Attorneys, Durban
c/o Bezuidenhouts Inc, Bloemfontein
For First Respondent:
G M E Lotz SC
Instructed by
Edward Nathan Sonnenbergs Inc, Umhlanga
c/o McIntyre van der Post, Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
8 March 2018
STATUS
Immediate
John Walker Pools v Consolidated Aone Trade & Invest 6 (Pty) Ltd (in
liquidation) & another (245/2017 [2018] ZASCA 012 (8 March 2018)
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
The Supreme Court of Appeal (the SCA) today dismissed with costs an
application for leave to appeal which had been referred to open court for
argument. The application was against a refusal by the KwaZulu Natal
Division of the High Court, Pietermaritzburg, to grant leave to appeal against
an order evicting the applicant from commercial premises.
The SCA found that the application for leave to appeal should be refused
because an order on appeal would have no practical effect or result. This
flowed from the fact that the applicant’s defence to eviction was based on an
alleged lease agreement which came to an end while the application for leave
to appeal was pending in the SCA.
The SCA held that where an appeal or application for leave to appeal
becomes moot during the pendency of proceedings in the appellate court, it is
the duty of litigants to make sensible proposals inter se with a view to bringing
the pending proceedings to an end without the need for the appellate court’s
intervention. The parties’ proposals should be informed by a realistic
assessment of their respective prospects of success, the extent of costs
already incurred in the appellate process, the costs that will still be incurred if
the proceedings are not promptly terminated, the size of the appeal record
and the likely time it would take an appellate court to form a view on the
merits of the moot appeal for purposes of determining costs. There must be a
proper sense of proportion when incurring costs and calling upon judicial
resources.
In the present case the SCA itself raised the question of mootness. Since
neither of the parties had done so, and because the record was short and the
issue uncomplicated, the SCA considered the merits of the moot appeal solely
for the purposes of determining the costs of the application for leave to
appeal. Since the applicant’s prospects of success on the merits were poor,
the applicant was ordered to pay the costs of the application.
~~ ends~~
|
1211
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 250/07
Name of ship: MV ‘SNOW CRYSTAL’
In the matter between:
TRANSNET LIMITED t/a NATIONAL PORTS AUTHORITY Appellant
and
THE OWNER OF THE MV ‘SNOW CRYSTAL’
Respondent
______________________________________________________________
Coram:
SCOTT, FARLAM, CLOETE, COMBRINCK JJA et
HURT AJA
Date of hearing:
3 MARCH 2008
Date of delivery: 27 MARCH 2008
Summary: Use of dry dock – does dock master contract or perform administrative
function? – mora ex re – supervening impossibility – damages – general or special.
Neutral citation: Transnet Ltd v The MV Snow Crystal (250/07) [2008] ZASCA 27 (27
March 2008)
______________________________________________________________
SCOTT JA/…
SCOTT JA:
[1] The respondent is Snow Crystal Ltd, a company registered in the
Cayman Islands. It is the owner of the MV Snow Crystal, a fruit carrying reefer
vessel which is managed by Holy House Shipping AB of Stockholm, Sweden.
It instituted an action in personam against the appellant in the High Court,
Cape Town, (exercising its admiralty jurisdiction) for the payment of damages
arising from the failure on the part of the latter to make the Sturrock dry dock
in Cape Town harbour available for the docking of the vessel during the
period 1 to 14 December 2001. The matter came before Davis J who upheld
the respondent’s claim for damages under certain heads but rejected its claim
under others. The appeal is with the leave of the court a quo. There is no
cross-appeal.
[2] It was common cause both in this court and in the court below that the
respondent’s claim was a maritime claim within the meaning of s 1 of the
Admiralty Jurisdiction Regulation Act 105 of 1983. It was also common cause
that in terms of s 6(1)(b) of that Act the law to be applied was ‘the Roman-
Dutch law applicable in the Republic’. In its plea the appellant denied the
existence of the contract relied upon by the respondent. The issues on appeal
were the existence or otherwise of a contract between the parties, and if there
was a contract, its nature and scope, its terms, whether the appellant was
precluded from performing by reason of a supervening impossibility, and the
respondent’s entitlement to damages. Before dealing with these issues it is
necessary to set out the facts upon which the respondent based its claims.
Much is common cause.
[3] In 2002 the Snow Crystal was on time charter to Universal Reefers. In
terms of the charterparty, which made provision for a ‘long term’ charter, the
charterers were given the option of trading with the vessel for either eight
months of the year or for the full year. The charterers chose the eight-month
option for 2002. It was the practice of Holy House Shipping to operate the
vessel on the spot market during the off-hire period. In that year, however, it
was decided to use part of the four-month period to have the vessel repaired
and surveyed for classification purposes. The charter period had been
negotiated to recommence in Cape Town on 14 December 2002. Mr Thure
Gellerbrant, a technical superintendent in the employ of Holy House Shipping,
accordingly made arrangements for the vessel to be laid-up and dry docked in
Cape Town. The first step in the process was to contact Mr Ivan Separovic.
He was both the sole member of I Separovic CC, which traded in Cape Town
as Ivan Engineering, and the proprietor of Quay Maritime Services. Ivan
Engineering was duly engaged to carry out the steel and pipe repairs on the
vessel and Separovic in his capacity as proprietor of Quay Maritime Services,
was instructed by Gellerbrant to make a dry dock booking.
[4] Separovic spoke to Mr Etienne Gouws, the dock master, as early as
March 2002. The latter advised Separovic that the Sturrock dry dock was
available for the period 1 December to 14 December 2002 and a booking was
made for that period. On 15 March 2002 Separovic wrote to Captain Lock, the
acting port captain, recording that the dry dock had been booked for that
period, describing the work to be done on the Snow Crystal and seeking
information regarding the availability of berth 700, being the repair berth, from
October to December 2002.
[5] Early in June 2002 Gouws requested Separovic to put in what he
described as an ‘official booking’ for the vessel. Separovic duly completed a
printed form prepared by the appellant. It is necessary to describe this form in
some detail. It is headed ‘Portnet: Port of Cape Town’ with a subheading
‘Application for the use of drydock, or syncrolift’ (Portnet is a division of the
appellant). The form, as filled in, commences ‘I/we Quay Maritime Services
request that the vessel: Snow Crystal be dry docked . . . from 1.12.2002
(date) to 14.12.2002 (date)’. What follows is a record of the vessel’s
particulars such as gross tonnage, overall length and ‘extreme’ breadth.
Spaces for other particulars such as the vessel’s draft were left uncompleted.
The document was signed by Separovic and dated 5 June 2002 as agent for
the vessel. It is not disputed that he had authority to do so. A space left for the
signature of the dock master was left blank. The words ‘See reverse side for
conditions’ are printed at the foot of the page. The reverse side of the form
contained three printed paragraphs. The first was headed ‘Declaration’. Its
grammatical construction is less than perfect and it contains a number of
printing errors. It is necessary to quote it in full.
DECLARATION
‘I
(1)
Declare regulations 60(1) of the Regulations for the Harbours of the Republic of
South Africa and that I understand and concur with the Provisions of that regulations.
(2)
That all shore-side connections required by the vessel, especially fire-fighting water
connections, is my responsibility and are operating to my satisfaction and that the ongoing
integrity of these connections shall be my responsibility for the duration of the period which
my vessel occupies the Drydock.
(3)
I take note that the salt water is free of charge and fresh water is payable as per
Harbour Tariff book and agree to monitor the consuming thereof in order to accept the
Applicable charges.
(4)
That the sides of my vessel will be kept clear by removing all over board smoking
buoys, EPIRB buoys, lights etc which might be in the way of the crane wires.
(5)
Only accredited shiprepair firms to be used.
(6)
The gangway on board to be kept in a sole and serviceable condition and not
misused.’
It is common cause that in subparagraph (1) the reference to ‘Regulations
60(1)’ should be to ‘Regulation 61’ and that the words ‘to be applicable’
should be inserted after the words ‘South Africa’. Paragraph 2 of the reverse
side of the form deals with spray painting in the Robinson dry dock and when
the syncrolift is used. Paragraph 3 contains various conditions relating to
pollution control in the dry dock facilities.1
[6] Regulation 61(1) is of particular importance. It reads:
‘(1)
Before a ship is admitted to a drydock in a harbour the name and full particulars of
the ship shall be entered in a book to be kept for that purpose at the port office of the harbour,
and the owner, master or agent of the ship shall sign an agreement acknowledging himself to
1 The Regulations for the Harbours of the Republic of South Africa were promulgated in terms
of s 73(1) of the South African Transport Services Act 65 of 1981. In terms of s 21(2) of the
Legal Succession to the South African Transport Services Act 9 of 1989 the regulations
continue to be in force and are deemed to have been promulgated in terms of s 21(1) of the
latter Act.
be bound by the following conditions and undertaking to pay the applicable charges specified
in the Official Harbour Tariff Book.’
I interpose that Gouws explained in his evidence that the form completed and
signed by Separovic was called ‘an application form’ but it was ‘basically’ the
agreement envisaged in regulation 61(1). As stated in that regulation, the
‘conditions’ by which the owner, master or agent agrees to be bound are set
out in regulations 61(2) to (19). Not all of these have a bearing on the issues
in the appeal and I quote below those that have some relevance to a greater
or lesser degree.
‘(2)
When ship may lose her turn.
Should a ship not be placed in a drydock on a day duly appointed for that purpose
owing to the default of the master, such ship shall, if the drydock be required for other
ships, lose her turn in the order shown in the entry book, and the master, owner or
agent of such ship shall pay to the Transport Services the expenses, if any, which
may have been incurred in preparing the drydock for the reception of such ship.
(3)
When preference may be given.
Notwithstanding any previous arrangements to the contrary, the port captain may give
priority to any ship in a damaged or leaky condition or to a ship that requires a
drydock for a period not exceeding seventy two hours.
(4)
No ship to have absolute right to use drydock.
No ship shall have an absolute right to the use of a drydock either in turn or at any
other time. The decision of the port captain in all cases of dispute as to turn, shall be
final.
(5)
. . .
(6)
Ships to be drydocked under supervision of dockmaster.
Every ship shall be drydocked under the direction and supervision of the dockmaster
and in the presence of the master, whose duty it shall be to be present at the time
appointed for drydocking, and to remain there until such drydocking is completed.
(7)
When ship to be considered as properly placed on blocks or cradle.
When the dockmaster has declared a ship to have been properly and safely placed
upon the blocks of a drydock or cradle of a slip, the master shall forthwith satisfy
himself that his ship has been so properly and safely placed, whereupon the ship
shall be deemed to have been properly and safely drydocked or slipped.
(8)
How two or more ships in one drydock to be dealt with.
(a)
When two or more ships are in joint occupation of a drydock such ships shall
remain in the drydock until such time as all are capable of being floated; but
no ship shall be charged for the use of the drydock beyond the time she
actually requires it; provided that the master of such ship has given to the
port captain twenty four hours notice in writing of the readiness of his ship to
leave the drydock and the port captain is satisfied that the notice is correctly
given.
(b)
The port captain may, however, after having given twenty four hours written
notice, forthwith order the undocking of any or all of such ships as may be
ready to leave the drydock, and may also admit any other ship to the
occupation of the drydock, jointly with a ship already in occupation thereof.
(9)
Limit of time for occupation of a drydock.
(a)
No ship shall remain in occupation of a drydock for a longer period than four
days, except by the authority of the port captain.
(b)
The master of a ship shall arrange for such overtime to be worked in carrying
out repairs as the port captain may consider necessary.
(10)
Ships failing to leave drydock.
A ship which fails to leave a drydock on the expiration of the period agreed upon may,
if the drydock be required by another ship, be removed at the expense of the owner
of such ship after twenty four hours written notice has been given. If the ship should
not then be capable of being floated, the port captain may cause such ship to be
made capable of being floated at the expense of its owner.’
[7] I return to the narrative. On 20 August 2002 Separovic wrote to the port
captain, Captain Peter Stowe, confirming the berthing of the Snow Crystal and
recording that the vessel was booked to be dry docked for two weeks from 1
December 2002. The letter further sets out the nature of some of the major
work to be done on the vessel.
[8] The Snow Crystal arrived in Cape Town on 16 October 2002. The
internal work was commenced immediately according to the schedule
prepared by Gellerbrant who at that stage spent about a week in Cape Town.
Gellerbrant returned on 26 November 2002 to oversee the dry docking of the
vessel.
[9] One of the two vessels then in the Sturrock dry dock was the MV Gulf
Fleet 29. It had been booked for the period 7 to 30 November but had entered
the dry dock six days late on 13 November. The owner had, however, assured
Gouws that the work would be completed in 14 days. On 26 November Mr
John Marques of Globe Engineering (Pty) Ltd, the manager in charge of the
repairs to the Gulf Fleet 29, advised Gouws that he was running one to two
days late. Gouws informed Separovic and they discussed putting the Globe
Engineering on notice as provided for in regulation 61(10). Gouws said that he
telephoned Marques who adopted a hostile attitude and told Gouws the notice
would mean nothing because the hull of the Gulf Fleet 29 was ‘open’. But on
that same day, 26 November 2002, the dry dock had been flooded and the
Gulf Fleet 29 ‘floated on her tank tops’ so as to enable the other vessel to
leave the dock. The Gulf Fleet 29 was settled back on her blocks the following
day, 27 November. The expression ‘floating on the tank tops’ means in effect
floating the vessel with certain sections flooded, in this case by reason of
openings of about a square metre on both the port and starboard sides of the
hull which permitted the ingress of water. It should be mentioned at this stage
that Mr Paul Coxin, a marine engineer and surveyor who gave evidence on
behalf of the appellant, conceded in cross-examination that the owners would
not have permitted the Gulf Fleet 29 to be floated if the vessel was not
structurally sound.
[10] On 28 November Gellerbrant visited the workshop of Globe
Engineering which was situated in close proximity to the Sturrock dry dock.
He said he spoke to Marques who was uncooperative and took up the attitude
that the Gulf Fleet 29 would remain in the dry dock until the work was finished,
however long it took. According to Gellerbrant, the openings in the hull where
the plating had been cropped out could be closed in a matter of hours.
[11] On the same day, 28 November, Gouws met with Mr Tom Larkin, the
commercial manager of Globe Engineering, and offered him the use of the
Robinson dry dock. That dry dock, built in the 19th century, was too small for
the Snow Crystal but was large enough to accommodate the Gulf Fleet 29.
Gouws said that his proposal was not well received by Larkin. The Robinson
dry dock was at the other side of the harbour and Larkin was not prepared to
have the vessel taken there floating on her ‘tank tops’. He said that in any
event the vessel would be leaving the Sturrock dock on 4 December. Gouws
testified that by 28 November he was in ‘big trouble’ and ‘getting desperate’
because the ‘whole world was aware of the seriousness [of the situation]’. It
was for this reason, he said, that he was even prepared to consider floating
the Gulf Fleet 29 to the Robinson dock on her tank tops.
[12] On Friday 29 November 2002 Gouws sent Gellerbrant an e-mail which
read:
‘This serves to confirm your drydock booking by Thure Gellerbrant for Mv Snow Cristal on
05/06/02 for Sturrock drydock on or about 01/12/02. However the drydock is running behind
schedule at present and therefore we can only drydock you on or about 06/12/02. We regret
any inconvenience caused.’
He explained that he had said 6 December 2002 because he anticipated it
could take time to set up the blocks for the Snow Crystal.
[13] Both Gellerbrant and Separovic were of the view that the openings in
the hull of the Gulf Fleet 29 could easily be closed and on receipt of the email
Gellerbrant spoke to Gouws and indicated to him that the respondent was
prepared to pay the expenses involved in moving the vessel to the Robinson
dock. It is necessary to record that the experts who testified on behalf of both
parties were in agreement that it would have been a simple matter to close up
the openings in the hull to enable the vessel to be taken to the Robinson dry
dock. Coxin stressed, however, that for this to have been done the vessel
would have to have had the necessary structural integrity. As previously
indicated, Coxin acknowledged that the vessel must have had the necessary
structural integrity for it to be floated on the top tanks on 26 to 27 November.
[14] On Wednesday, 3 December, Marques advised Gouws that the
surveyors had condemned the keel coolers of the Gulf Fleet 29. These are
situated at the bottom of the vessel and their function is to cool the water in
the engine cooling system. Their condemnation at such a late stage was
advanced by Marques as a reason for further delay. He advised Gouws that
the vessel would accordingly leave the dry dock only on 6 December 2002. It
transpired, however, that the coolers were internal and not external so that if it
were necessary to re-float the vessel, it would have been a simple matter to
weld up the pit or fit a steel plate over whatever hole that was there.
[15] On Thursday 4 December Marques advised Gouws that because it had
been raining the Gulf Fleet 29 would not be leaving the dry dock over the
weekend and that he planned to undock the vessel on Monday 9 December.
On 5 December Gellerbrant and Separovic met with Stowe (the port captain)
and Gouws, to discuss the situation. Gellerbrant explained that he would
probably have to change his plans completely and that somebody would have
to pay. Gouws’s attitude was that what had happened was not his fault. He
also told Gellerbrant that they could expect the Snow Crystal to enter the dry
dock on 10 December at the earliest. The following day Gellerbrant wrote to
the director of the port authority advising him of what had happened and that
he would have to cancel the dry docking of the vessel in Cape Town. On 10
December 2002 and on the instructions of Gellerbrant, Separovic cancelled
the dry docking. On the same day the Gulf Fleet 29 finally left the dock.
[16] Gellerbrant immediately took steps to engage a diving company to
scrape the bottom of the vessel and polish the propeller. He explained that
this was a temporary measure but that it was necessary to remove the growth
which would otherwise have retarded the movement of the vessel through the
water and increased the fuel consumption. This, he said, was all the more
necessary as the vessel had been alongside in port since 16 October 2002
and the absence of movement resulted in a rapid increase in the growth on
the hull and propeller. He also arranged to have the top-side and boot top of
the vessel painted so that she would be in a condition to be presented to the
charterers when loading was to commence on 14 December 2002. The vessel
was subsequently dry docked from 15 November to 1 December 2003 in
Varna, Bulgaria, where the work that would have been done in the Sturrock
dock was done with some minor additional work.
[17] When the matter first came before Davis J the learned judge was
asked to decide a single issue on the basis of an agreed statement of facts.
That issue, separated by prior agreement, was whether regulation 61(4)
(quoted in para 6 above), in any event, had the effect of absolving the
appellant from liability for any damages which may have been caused to the
appellant as a result of a failure on the part of the appellant to comply with its
contractual obligations. In a separate judgment the judge found that regulation
61(4) did not have that effect. The appellant lodged an application for leave to
appeal but did not persist in the application.
[18] I turn now to the first issue raised on appeal; was there a contract? On
behalf of the appellant it was contended that the relationship between the
parties was governed by the regulations, that the booking was not made
animo contrahendi and hence there was no contract. Counsel argued that the
port captain and those under him, such as the dock master, were constrained
to act in terms of the regulations and there was no need for ship owners
wishing to make use of the harbour and its facilities to enter into a contract for
that purpose. Those facilities, so it was argued, were available to be used on
the basis set out in the regulations and against payment of the charges set
out in the Official Harbour Tariff Book; all that was necessary for those
wishing to use a particular facility was for them to make appropriate
arrangements with the officials of the appellant. In short, the submission was
that they book the facilities, they do not enter into contracts for that purpose.
[19] The appellant was established in pursuance of s 2(1) of the Legal
Succession to the South African Transport Services Act 9 of 1989. Although it
is ‘competition- and profit-orientated’,2 the State owns all its shares and it
remains an organ of state exercising a public power and performing a public
function which includes the provision of transport services in the public
interest.3 The regulations, in turn, provide for a regulatory scheme for the
conduct of operations in harbours. Many are indubitably public law provisions
regulating public law relationships. To mention just a few, regulations 2 and
11 provide that permission of the port captain is required before a ship may
enter a harbour or, within a harbour, shift from the berth assigned to her;
regulation 4 provides that no ship may enter a harbour until the proper signal
has been displayed at the port control; regulation 38 prohibits the deposit of
foreign matter in a harbour; regulation 161 provides that any person who
contravenes or fails to comply with any of the regulations shall be liable on
2 Transnet Ltd v Goodman Brothers (Pty) Ltd 2001(1) SA 853 (SCA) at 870G.
3 Transnet Ltd v SA Machinery Co (Pty) Ltd 2006 (6) SA 285 (SCA) para 8 at 290C-D.
conviction to a fine not exceeding eight hundred rand or imprisonment for a
period not exceeding two years.
[20] There are other regulations, however, which are couched in the
language of contract. Regulations 34 and 35, for example, make provision for
the ‘hire’ of cranes and floating cranes and detail the terms and conditions
that are to apply. These include when the ‘hire charges’ are to commence,
limitations as to the use to which cranes may be put ‘while under hire’ and the
non-liability of the appellant ‘for any loss or delay suffered by the hirer’.
Regulation 61 is even more specific. In terms of regulation 61(1) the ship
owner or agent is to ‘sign an agreement’ (in practice the application form
referred to in para 5 above) in terms of which he acknowledges himself to be
bound by the ‘conditions’ in regulation 61 and undertakes to pay the
applicable charges specified in the Official Harbour Tariff Book.
[21] An organ of state which is empowered by statute to contract is obliged
to exercise its contractual rights with due regard to public duties of fairness.4 It
could not, for example, refuse without good reason to contract with a
particular person. Its decision in such an event would constitute administrative
action and would be reviewable.5 Even when it is clear that an organ of state
has in fact entered into a contract, it may still be difficult, depending on the
circumstances, to determine where the line is to be drawn between, on the
one hand, its public duties of fairness and on the other its contractual
obligations, or indeed the extent to which the two may overlap, if at all.
However in the present case, as I have indicated, the appellant’s initial stance
was that there was no contract at all. On this basis it contended that any
remedies that the respondent may have had were confined to those at public
law and that the respondent had accordingly misconceived its remedy.
[22] I do not think that this can be correct. It is not disputed that the
appellant was empowered to enter into contracts. It is also clear that the
4 Logbro Properties CC v Bedderson NO 2003 (2) SA 460 (SCA) para 11 at 467H.
5 Grey’s Marine Hout Bay (Pty) Ltd v Minister of Public Works 2005 (6) SA 313 (SCA) para 28
at 325E.
respondent in effect gave an undertaking to be bound by the conditions
referred to in regulations 61(2) to 61(19) and to pay the applicable charges.
That undertaking, which was accepted by the appellant, was an ordinary
commercial undertaking given in this instance by a peregrine. In these
circumstances, counsel for the appellant found themselves obliged to
concede that had the Snow Crystal been dry docked, the respondent would
have been liable to the appellant for such charges. Indeed, any suggestion
that in that event the only remedy available to the appellant would have been
to institute a prosecution would be untenable. But the only basis upon which
that liability could arise would be in contract. If there was no contract, there
could be no liability.
[23] In response to this difficulty, counsel shifted their ground somewhat
and advanced a further argument which, as I understood it, was that the
contract entered into between the respondent and the dock master on behalf
of the appellant was not a contract with reciprocal obligations. The argument
was that the undertaking given by the respondent to pay the charges and
abide by the conditions, although giving rise to contractual obligations, was
not given in return for an undertaking to make the dry dock available but was
given merely in anticipation of the dock master exercising his statutory power
derived from the regulations to make the dock available. Consequently, so the
argument proceeded, the dock master had no obligation in contract to make
the dock available and his failure to do so could not give rise to liability in
contract.
[24] I must confess that this construction of the contractual relationship
between the parties strikes me as contrived. An undertaking to pay is not one
normally given without a reciprocal obligation, save for donations. Indeed, I
would imagine that the suggestion that the undertaking was given other than
in return for a reciprocal obligation would come somewhat as a surprise for
the respondent. But this aside, there is, I think, a sound basis for rejecting the
contention. The agreement contemplated in regulation 61(1) is not one that is
limited simply to the ship owner acknowledging himself to be bound by the
conditions and undertaking to pay the specified charges. The agreement
contemplated is one which includes a term - and a most important term from
the ship owner’s point of view – as to when the ship is to enter the dry dock
and the duration of her stay. This much is clear from the provisions of
regulation 61(10) which makes provision for the removal of a ship which fails
to leave the dry dock ‘on the expiration of the period agreed upon’ (my
emphasis). In the present case, it is clear that it was a term of the agreement,
subject to a degree of flexibility to which I shall refer later, that the Snow
Crystal would enter the dry dock on 1 December 2002 and leave on 14
December 2002. The term was of importance to the respondent; the schedule
of the vessel had been arranged to fit in with the period she would be in dry
dock. But the regulations do not determine the period; it is determined by
agreement between the parties. To suggest in these circumstances that the
obligation to pay was assumed other than in return for a reciprocal obligation
on the part of the appellant to make the dry dock available for the period
agreed upon is simply to ignore the commercial nature of the transaction and
in my view cannot be upheld.
[25] The obligation in contract to make the dock available was, however,
subject both to certain limitations and to a degree of flexibility. As to the
limitations, the respondent pleaded that it was a tacit term that the appellant
would be relieved of its obligation in the circumstances referred to in
regulation 61(3) or in the event of a dispute as to turn referred to in regulation
61(4). Neither of these occurred and they need not be considered. The
respondent also pleaded that it was a tacit term of the agreement that the
appellant would be relieved of its obligation if for some reason beyond its
control it was not possible to make the dry dock available. This was not a tacit
term in the true sense. It is always possible, as a matter of law, for a party to
raise the defence of impossibility of performance. The onus of establishing
that defence is upon the party raising it and I do not think that the fact it was
pleaded by the respondent (as plaintiff) can alter the onus of proof.
[26] As far as the question of flexibility is concerned, Gouws stressed that in
his letter of 29 November 2002 he had referred to the period for which the
Snow Crystal had been booked as ‘about’ 1 December 2002 to 14 December
2002. He pointed out that by the very nature of the operation of a dry dock
there had to be a degree of flexibility. This was not disputed by the
respondent. Gellerbrant testified that he had made some allowance for a
possible delay and, as I understood his evidence, the work on the Snow
Crystal could have been completed by 14 December 2002 even if the vessel
had entered the dry-dock as late as 4 December 2002. He acknowledged that
delays of two to three days in a dry dock being made available do occur from
time to time but this, he said, was not normal. In the present case, as I have
said, the Gulf Fleet 29 left the dock on 10 December so that it would only
have become available for the Snow Crystal on 11 or possibly 12 December.
[27] It is trite law that when a contract fixes the time for performance, mora
will arise from the contract itself and hence the mora is said to be ex re. In
such a case there is no need for the creditor to make a demand to place the
debtor in mora. Where the contract fixes the time for performance as ‘about’ a
certain date, or, I should add, it is contemplated by the parties that some
latitude will be allowed, the same principle is said to apply, it being in such a
case a matter of interpretation how much latitude was intended.6 In the
present case, time was clearly of the essence. Ships operate on tight
schedules and Gouws was at all times aware of this. Even as early as 28
November 2002 Gouws regarded himself as being in ‘big trouble’ in the face
of the respondent’s need to have its vessel dry docked. Regulation 61(10)
makes provision for 24 hours notice being given to a ship that fails to leave
the dry dock on the expiration of the period agreed upon. That notice can only
be given once the period expires. The latitude contemplated must accordingly
have been longer than the notice period but not by much. In my view, the
appellant must be regarded as having being in mora from at least 4 December
2002.
[28] This brings me to the appellant’s defence of supervening impossibility
of performance. As a general rule impossibility of performance brought about
by vis major or casus fortuitus will excuse performance of a contract.
6 Bergl & Co v Trott Bros (1903) 24 NLR 503; Christie The Law of Contract in South Africa 5
ed 498.
But it will not always do so. In each case it is necessary to ‘look to the nature
of the contract, the relation of the parties, the circumstances of the case, and
the nature of the impossibility invoked by the defendant, to see whether the
general rule ought, in the particular circumstances of the case, to be applied’.7
The rule will not avail a defendant if the impossibility is self-created;8 nor will it
avail the defendant if the impossibility is due to his or her fault.9 Save possibly
in circumstances where a plaintiff seeks specific performance, the onus of
proving the impossibility will lie upon the defendant.10
[29] In the present case the ‘impossibility’ on which the appellant relied was
the physical presence of the Gulf Fleet 29 in the Sturrock dry dock and the
apparent refusal of Globe Engineering to countenance a move to the
Robinson dry dock which was available. The proposal to move the Gulf Fleet
29 was put to Globe Engineering as early as 28 November 2002. On that
same day the vessel was floated on her tank tops and must have been
structurally sound. It was ultimately common cause between the experts that
had the vessel been ordered to move it would have been a relatively simple
matter to close up the openings in the hull and move the vessel to the
Robinson dry dock. In terms of regulation 61(10), which was a term of the
appellant’s contract with the owner of the vessel, the dock master had the
power, on 24 hours written notice, to take action to remove the vessel from
the dry dock. Nonetheless, the dock master failed to give such notice for fear
of upsetting the contractors who had adopted an uncooperative attitude and in
the belief that the notice would not be heeded. His approach to the problem,
he explained, was to try to keep everyone ‘quiet and calm and get the job
done’. But it was obviously convenient for Globe Engineering to complete the
work while the vessel was in the Sturrock dock. Their workshop was close to
the Sturrock dock and the move would have caused a disruption in the
7 Per Stratford J in Herman v Shapiro & Co 1926 TPD 367 at 373 quoted with approval in
Nuclear Fuels Corporation of SA (Pty) Ltd v Orda AG 1996 (4) SA 1190 (SCA) at 1206D-E.
8 South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) paras 23-25).
9 MacDuff & Co Ltd (In Liquidation) v Johannesburg Consolidated Investment Co Ltd 1924 AD
573 at 601.
10 Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd 1982(1) SA 398 (A) at 442B-443F.
progress of the work. It is no doubt for this reason that Marques adopted the
hostile and uncooperative attitude that he did.
[30] It was a term of the contract between the parties that the dock master
would have the power afforded to him in terms of regulation 61(!0). The
respondent was accordingly entitled to expect the dock master to exercise
that power when the Gulf Fleet 29 failed to vacate the dry dock. In these
circumstances, I do not think it was open to the dock master simply to take up
the attitude that notice to the Gulf Fleet 29 would have served no purpose. As
I have said, the Robinson dry dock was available and with a minimum of work
the vessel could have been made capable of being moved to that dock. Had
notice been given it is probable that Globe Engineering’s bluff would have
been called. I am unpersuaded that the appellant discharged the burden of
establishing that performance of its obligation in terms of the contract was
rendered impossible.
[31] I turn finally to the question of damages. The court a quo awarded
damages under three heads. The first was in respect of the costs of cleaning
the bottom of the vessel and the propeller while the vessel was afloat in Cape
Town harbour. The evidence was that this was a temporary measure
necessary to remove the accumulated underwater growth so as to enable the
vessel to operate efficiently until such time as the work could be done properly
in a dry dock. The appellant contended that it had not been shown that the
work was necessary. The court a quo found that it had been shown to be
necessary and I can see no reason for interfering with that finding. It was not
in dispute that the charges of the contractor who did the work were
reasonable.
[32] The second head related to certain of the costs associated with the
painting of the vessel. Before the vessel left Cape Town harbour and while
afloat, her boot topping and top sides were painted. The condition of the
paintwork was such that these had to be painted before the vessel could be
presented to the charterers. Had the work been carried out in the dry dock the
paint would have lasted until the next dry docking three years later. But
because it was done with the vessel in the water it was necessary for certain
of the work to be redone when the vessel was painted in dry dock at Varna.
Again, the reasonableness of the amount claimed for this work was not in
dispute.
[33] The damages awarded under the third head were in respect of loss of
charter hire during the period 15 November 2003 to 1 December 2003 while
the vessel was dry docked in Varna. Mr Andrew Hamill, the head of the
operations and chartering department of Holy House, testified that when
Universal Reefers, the charterers of the Snow Crystal, exercised the eight-
month option, the vessel was chartered on the spot market during the
remaining four months of the year. He said that Universal Reefers had chosen
the eight-month option in 2003 as they had done in 2002. He explained that it
was part of his function to keep abreast of the rates at which vessels were
chartered on the spot market. Relying on the rate at which a similar vessel
was chartered for the period November to December 2003 he expressed the
view that had the Snow Crystal been available to be chartered on the spot
market during the period she was in dry dock at Varna, Holy House would
have been able to obtain hire in an amount of US$0,46 per cubic foot net per
day. On this basis he calculated the loss suffered during the period in
question to be US$156 424,63. He explained, too, that because the
commencement
of
the
eight-month
or
12-month
period
was
not
predetermined it would have been possible to negotiate the commencement
date to fit in with the expiry of the spot charter. Hamil’s evidence was not
disputed and was accepted by the trial judge.
[34] The principal attack on the award of damages under all three heads
was founded on the submission that none of these flowed naturally and
generally from the breach relied upon by the respondent and that they were to
be regarded as special damages. Accordingly, so it was argued, it was
incumbent on the respondent to show not only that it was contemplated at the
time of contracting that such damages would flow from the breach but also, in
the light of Lavery & Co v Jungheinrich11, that the contract was entered into on
the basis of the parties’ knowledge of special circumstances so that in
substance they formed part of the contract itself.
[35] The distinction between ‘general damages’ and ‘special damages’
(being no more than convenient labels) formulated by Trollip JA in Schatz
Investments (Pty) Ltd v Kalovyrnas ‘broadly and without any pretence at
precision’12 was refined by Corbett JA in Holmdene Brickworks (Pty) Ltd v
Roberts Construction Co Ltd13 as being between:
‘(a) those damages that flow naturally and generally from the kind of breach of contract in
question and which the law presumes the parties contemplated as a probable result of the
breach, and (b) those damages that, although caused by the breach of contract, are ordinarily
regarded in law as being too remote to be recoverable unless, in the special circumstances
attending the conclusion of the contract, the parties actually or presumptively contemplated
that they would probably result from its breach.’
In Thoroughbred Breeders’ Association v Price Waterhouse14 Nienaber JA
doubted whether by the use of the word ‘probable’ in (a) in the passage
quoted above, Corbett JA intended to introduce ‘high probability’ as a further
limiting factor under the first subrule. After referring to authorities both in
South Africa and in England, Nienaber JA concluded that the harm that had to
be contemplated was no more than harm ‘as a realistic possibility’. Whether
such harm would be contemplated or not, ie in the case of the first subrule,
may be inferred from ‘the subject-matter and terms of the contract itself’.15 On
that premise the inquiry is essentially whether the harm as a realistic
possibility was reasonably foreseeable. As observed by Vieyra AJ (with whom
Marais J and Jansen J concurred) in Bruce NO v Berman.16
11 1931 AD 156. See also Schatz Investments (Pty) Ltd v Kalovyrnas 1976 (2) SA 545 (A)
where at 551B it was suggested that the approach adopted in Lavery be reconsidered.
12 1976 (2) SA 545 (A) at 550C-E.
13 1977 (3) SA 670 (A) at 687D-F.
14 2001 (4) SA 551 (SCA) para 49.
15 Shatz Investments (Pty) Ltd v Kalovyrnas 1976 (2) SA 545 (A) at 552B.
16 1963 (3) SA 21 (T) at 24A-B.
‘. . . one inevitably is concerned with the question of foreseeability because unless one can
say that the defaulting party should have foreseen the consequences of his breach one can
hardly be heard to contend that the loss can be reasonably said to flow naturally.’
To sum up therefore, to answer the question whether damages flow naturally
and generally from the breach one must inquire whether, having regard to the
subject-matter and terms of the contract, the harm that was suffered can be
said to have been reasonably foreseeable as a realistic possibility. In the case
of ‘special damages’, on the other hand, the foreseeability of the harm
suffered will be dependent on the existence of special circumstances known
to the parties at the time of contracting. For the reasons that follow it is
unnecessary for the purpose of this judgment to revisit the decision in Lavery
& Co v Jungheinrich and to consider the further question whether the contract
must be entered into ‘on the basis’ of the parties’ knowledge of those
circumstances.
[36] It is common knowledge in shipping circles that ships operate on tight
schedules and to delay a ship or disrupt its schedule can and usually does
have far-reaching commercial consequences. This was emphasized by
Didcott J in Katagum Wholesale Commodities Co Ltd v The MV Paz17 who
observed, albeit in the context of attachments:
‘To stop or delay [a ship’s] departure from one of our ports, to interrupt its voyage for longer
than the period it was due to remain, can have and usually has consequences which are
damaging to its owner or charterer, not to mention those who are relying upon its arrival at
other ports to load or discharge cargo.’18
In the present case the Snow Crystal was to be dry docked for the relatively
lengthy period of 14 days for general repairs and surveying for classification
purposes. It goes without saying that the managers of the vessel would have
planned a schedule around the period the vessel would be dry docked and
during which the vessel would necessarily be off hire or otherwise out of
17 1984 (3) SA 261 (N) at 269H
18 Quoted with approval by Corbett CJ in Bocimar NV v Kotor Overseas Shipping Ltd 1994 (2)
SA 563 (A) at 581G-H.
commission. Indeed, the period 1 to 14 December 2002 had been agreed
upon at least six months in advance. In these circumstances, the last minute
failure of the appellant to make the dry dock available for the period agreed
upon would inevitably mean that the vessel would again have to go off hire or
be out of commission when dry docked at some time in the future. The loss of
hire sustained while the vessel was dry docked in Varna was therefore, in my
view, clearly foreseeable as a natural consequence of the breach and its
foreseeability was not dependent on the existence of special circumstances.
By the same token an experienced dock master, such as Gouws, would have
known or at the least would have regarded it as highly probable that as soon
as the repair work was completed and the vessel left the dry dock she would
go back on hire or into service in accordance with a pre-planned schedule.
Once the planned dry docking did not come about, the need for some
temporary work to enable the vessel to go back into service or, for that matter,
the possibility of work that had to be done while the vessel was afloat having
to be redone when the vessel was subsequently dry docked, would be
foreseeable as a realistic possibility. It is true that the precise nature of such
work may not have been foreseen, but that would not mean that the loss did
not flow naturally from the breach.
[37] It follows that in my view the court a quo was correct in awarding the
damages it did and the appeal must fail.
[38] The appeal is dismissed with costs, such costs to include those
occasioned by the employment of two counsel.
__________
D G SCOTT
JUDGE OF APPEAL
CONCUR:
FARLAM
JA
CLOETE
JA
COMBRINCK JA
HURT
AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
TRANSNET LIMITED t/a NATIONAL PORTS AUTHORITY/THE OWNER OF
THE MV ‘SNOW CRYSTAL’
From :
The Registrar, Supreme Court of Appeal
Date:
27 March 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 owner of the MV Snow Crystal, a company registered in the Cayman
Islands, was booked to enter the Sturrock dry dock in Cape Town
harbour on 1 December 2002 and remain in the dry dock until 14
December 2002. The booking was made in June of that year and the
operators of the vessel had planned the schedule for the vessel around
this period. The Snow Crystal was, however, unable to enter the dock on
1 December because it was occupied by another vessel whose owner
refused to move her to the smaller Robinson dry dock which was big
enough to accommodate that vessel but too small to accommodate the
Snow Crystal. Although the dock master had the power under the
harbour regulations to give the owner 24 hours notice to vacate the
harbour he declined to do so.
The owner of the Snow Crystal sued Transnet in the Cape High Court for
damages for breach of contract. Transnet denied that there was a
contract and averred that the dock master was merely exercising an
administrative function when taking bookings for the dry dock. This
defence was rejected by the Cape Town High Court and that court’s
decision was upheld on appeal by the Supreme Court of Appeal.
--- ends---
|
3853
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 108/2021
In the matter between:
LLOYD EUGENE HENDRICKS
APPELLANT
and
THE CHURCH OF THE PROVINCE OF SOUTHERN
AFRICA, DIOCESE OF FREE STATE
RESPONDENT
Neutral citation:
Hendricks v The Church of the Province of Southern Africa,
Diocese of Free State (108/2021) [2022] ZASCA 95 (20 June
2022)
Coram:
MOLEMELA, NICHOLLS AND MBATHA JJA AND MATOJANE
AND WEINER AJJA
Heard:
10 March 2022
Delivered:
20 June 2022
Summary: Canons applicable to the Anglican Church in relation to a request by the
Bishop that a cleric be relocated to another parish – interpretation of Canon 25(6) –
procedural fairness relating to the decision.
ORDER
On appeal from: The High Court of South Africa, Free State Division, Bloemfontein
(Naidoo J with Chesiwe J concurring):
The appeal is dismissed with costs.
JUDGMENT
Weiner AJA (Nicholls JA and Matojane AJA concurring)
Introduction
[1] This appeal concerns a decision of the respondent, the Church of the Province
of Southern Africa, Diocese of Free State (‘the Church’), to revoke the appellant’s
licence to practise as a priest. The Church is a unit of the Anglican Church of Southern
Africa and falls under the Diocese of Bishop Dintoe (the ‘Bishop’). The decision to
revoke his licence was taken as a consequence of the respondent’s refusal to move
to an alternative parish when requested to do so by the Bishop. The appellant
appealed the Bishop’s decision to the Archbishop. The Archbishop confirmed the
Bishop’s decision.
[2] The appellant launched an application in the Free State High Court (the high
court) seeking, in terms of s 6 of the Promotion of Administrative Justice Act 3 of 2000
(PAJA), alternatively, the common law, the review and setting aside of the Church’s
decision. He asked for consequential relief in the form of reinstatement as a priest and,
specifically that he be stationed back at St Margaret’s Church in Bloemfontein, where
he was previously located.
[3] The appellant initially submitted in the high court that the revocation of his
licence by the Bishop’s office amounted to administrative action. The high court found
that the decision of the Bishop did not amount to administrative action and was
therefore not reviewable under PAJA. In this regard, the high court referred to Calibre
Clinical Consultants (Pty) Ltd v National Bargaining Council for the Road Freight
Industry and Another,1 where this Court found that, for PAJA to operate, there must
be a ‘governmental element’ to the impugned decision. Where a body is a voluntary
association, and not a public body and is not connected to the State, its powers are
contractual and not statutory.2 It found that PAJA was not applicable.
[4] The high court dismissed the application. In arriving at this decision, it relied
on the decision of Plasket J (as he then was) in Wings Park Port Elizabeth (Pty)
Ltd v MEC, Environmental Affairs, Eastern Cape and Others.3 It found that the
review application stood to be dismissed as the appellant had failed to seek an
order reviewing the decision of the Archbishop. Such failure rendered the
application for review academic, as the finding of the Archbishop would still stand
even if the Bishop’s decision was set aside. The high court relied in this regard on
the following statement by Plasket J:
‘When an applicant has suffered an unfavourable decision at first instance and it is confirmed
on appeal, the situation is somewhat different. Both decisions must be taken on review and,
for the applicant to achieve success, usually both decisions will have to be set aside’.4
[5] At the hearing, the parties appeared to be ad idem that PAJA was not
applicable. The Bishop’s decision did not amount to administrative action. The high
court did not arrive at its decision based upon the applicability of PAJA, the common
law grounds of review or the procedural irregularities alleged. Having set out certain
principles in regard to these issues, it dismissed the review by relying on the decision
in Wings Park and found the appeal to be academic, as the appellant had not sought
to review the decision of the Archbishop. The high court correctly recognised that the
conduct of a non-statutory body, such as a Church, must still comply with procedural
fairness, subject to its own rules and regulations.
1 Calibre Clinical Consultants (Pty) Ltd and Another v National Bargaining Council for the Road Freight
Industry and Another [2010] ZASCA 94; 2010 (5) SA 457 (SCA); [2010] 4 All SA 561 (SCA).
2 Cronje v United Cricket Board of South Africa 2001 (4) SA 1361 (T) at 1375D-E.
3 Wings Park Port Elizabeth (Pty) Ltd v MEC, Environmental Affairs, Eastern Cape and Others
2019 (2) SA 606 ECG (Wings Park).
4 Ibid para [34].
[6] In this Court, it appeared from the heads of argument that the appellant sought
to have this Court overturn and set aside the high court’s decision solely on the basis
that the high court erred in its application of and reliance on the Wings Park decision.
[7] However, the appellant sought to rely on two additional grounds of appeal at
the hearing. Firstly, the appellant submitted that the Church had failed to satisfy the
jurisdictional prerequisites called for in applying the relevant Canons. He contended
that having regard to the provisions of Canon 25(6), Canons 37(1) (h)–(p), and 39
were applicable. Secondly, he sought to deal with the merits of the review in regard to
certain procedural irregularities. These related to the Bishop’s failure to furnish him
with reasons for the decision to move the appellant to a different parish and to afford
him a proper hearing regarding both the required move and the revocation of his
licence. Although these issues were raised in the high court, the merits of these two
grounds of appeal were not dealt with in the appellant’s heads of argument. It bears
repetition that the appellant did not seek to review the Bishop’s decision that he be
moved; he only sought to review the decision to revoke his licence.
[8] The Canons relevant to the appeal are set out below:
Canon 25(6) (Change of Incumbent or assistant Cleric) provides that:
‘If the Bishop of the Diocese considers that for pastoral reasons the work of God in a Pastoral
Charge demands that there should be a change of Incumbent or other licensed cleric, or that
for medical reasons the cleric concerned is unable to undertake adequately the functions or
responsibilities of office, the Bishop shall (failing the consent of the said cleric to the change)
take counsel with the Chapter of the Cathedral Church, or with the Senate, as the case may
be, or if there be no Chapter or Senate, with three priests of the Diocese, and if the majority
of them agree to such a course, after giving the said cleric an opportunity to be heard, the
Bishop shall offer the cleric another ministry in the Diocese, stipendiary if the ministry was
stipendiary. Should there be none in the Diocese, then the Bishop shall seek in consultation
with the cleric another suitable ministry within the Province. However, if it appears to the
Bishop, either before embarking on this process or during the process itself, that the reason
for the need for a change in fact relates mainly or substantially to matters which could
constitute charges or accusations in terms of Canon 37.1, then in the absence of any charge
under Canon 37.1, . . . the Bishop shall proceed in terms of Canon 39, in respect of those
matters and, in respect of any balance of issues that remain, may continue with the search
should that be appropriate.’
Canon 25(7) (Revocation of licence) provides that:
If the said cleric refuses to accept another ministry so offered, the Bishop, upon being
satisfied after pastoral ministration that no other course is possible, shall have the right
upon notice to the cleric to revoke, upon the expiration of three months’ notice, the
letters of institution, or the licence, as the case may be, subject to section 8 of this
Canon.
Canon 25(8) provides that . . . the said cleric may, within two months of the date of
such notice given, appeal to the Metropolitan (or, if the Metropolitan be the Bishop
concerned, to the Dean of the Province), who shall then decide upon review whether
or not the proposed revocation shall take effect.
Canon 37 provides for judicial proceedings. It sets out a list of the charges or
accusations upon which any Bishop, priest, or deacon of this Province may be
presented for trial’. The appellant sought to rely upon (h) to (p) of the list.5
Canon 39 provides for the procedures to be followed once Canon 37 comes into
operation. This Canon is applicable if the charges against a priest are presented for
trial.
Background
[9] It is common cause that the Church is regulated by its Constitution and Canons,
developed over many years. The Church’s power is derived from the Canons and
because it is a universitas, from a contract, in this case, between the appellant and
the Church.
5(h) conduct giving just cause for scandal or offence; including without limitation, offensive or abusive
language, and any inappropriate relationship or activity of whatsoever nature;
(i) fraudulent, corrupt or dishonest conduct;
(j) negligence or recklessness in the management or control of church property or funds (including
responsibility for the abuse of discretionary funds or breach of other fiduciary duties;
(k) misappropriation or misuse of church property or funds;
(l) violation of the Constitution or Canons of the Church of this Province or of Resolution of Permanent
Force No 5;
(m) conduct amounting to a breach or breaches of the trust relationship between the accused and any
Bishop (including the Metropolitan) or any other cleric or body with whom a trust relationship should
exist for any reason,
(n) negligent or wilful contravention of, or negligent or wilful failure to fulfil responsibilities or functions
under, the Constitution or Canons of the Church, the Acts, rules or regulations, either of the Provincial
Synod, or of the Diocesan Synod of the Diocese in which the cleric holds office, or of the office itself, or
acts or omissions in conflict with his or her Oaths or Declarations on taking office;
(o) refusal to obey a reasonable and lawful instruction from the Metropolitan, Bishop, Dean,
Archdeacon, or any other person authorised by any of the aforegoing or by any provision of the
Constitution or Canons to give such an instruction;
(p) neglect of the duties of office.
[10] The Canons regulate many issues, including the appointment and tenure of the
clergy and the election of bishops. They also deal with disciplinary issues relating to
priests and bishops. The Church has three levels of clergy: bishops, priests, and
deacons. Matters of placement of the clergy are a diocesan responsibility, carried out
by the Bishop.
[11] It is also common cause that the moving of clergy to different parishes and
ministries is the prerogative of the Church. The appellant stated that, at the time he
was ordained as a priest, he publicly affirmed and answered certain standard
questions. These confirmed, in his words:
‘. . . that he or she was “called by God and His Church to the life and the work of a priest” and
that he or she accepts “the discipline of this church and [will] reverently obey [his or her] bishop
and other ministers set over [him or her] in the Lord.”’
[12] A priest is also required to take an oath of ‘canonical obedience’, which commits
him or her to obedience to his or her ecclesiastical superior, in accordance with the
Canons. In the present case, the Bishop was the appellant’s ecclesiastical superior.
[13] The Constitution and Canons set out the circumstances and the procedure by
which a priest’s licence may be revoked. One of the ways in which this may occur is
where a priest is charged with a disciplinary offence, brought before an ecclesiastical
tribunal, and found guilty after being heard.
Chronology of Events
[14] In 2017, aspersions were cast against the appellant in relation to his dealings
with the Church and financial mismanagement issues. On 10 January 2018, a
Diocesan Resource Team was established to intervene at St Margaret’s following the
allegations made against the appellant. A recommendation was made that the
appellant should be taken to task on disciplinary grounds, but it appears that the
Church did not do so. As far as the Church was concerned, those charges had been
dealt with.
[15] In March 2018, the Bishop informed the appellant that he was considering
moving some of the priests of the Church. Pursuant thereto, on 27 June 2018, the
Bishop sent a letter to the appellant stating that the Bishop’s office intended to move
him from St Margaret’s with effect from November/December 2018. He was invited to
engage with the Bishop’s office in this regard. The appellant responded by asking the
Bishop ‘to shed some light on your reasons for the decision’.
[16] Following this response, the appellant and the Bishop met on 20 July 2018. At
the meeting, the appellant was informed that the decision to move him resulted from
the unhappiness of some parish members. On 30 August 2018, the appellant was
requested to visit parishes in Welkom and Ladybrand as prospective parishes.
[17] The appellant refused to do so. He stated that he was not amenable to the
aforesaid proposal as the Bishop had failed to provide any reasons for placement at
another parish. He then communicated to the Bishop, on 12 September 2018, that, by
visiting the other parishes, it could be construed that he was ‘in agreement with a
process with which he had ‘a number of unresolved concerns. He, therefore,
requested that such meetings be postponed until his concerns were addressed.
[18] In such correspondence, the appellant confirmed that, in terms of Canon 25(6),
clergy placements rest with the Bishop. However, he complained that proper
procedures had not been followed in his removal from St Margaret’s. He questioned
the motives behind the decision to move him and the reliance on the view of
‘concerned parishioners’.
[19] On 14 September 2018, the Bishop responded by referring to the appellant’s
quote that the Canons provide that the clergy placement is a decision of the Bishop.
The Bishop explained further that:
‘The Office of the Bishop has decided to move you from St Margaret’s for a new fresh start at
this church. We believe that this will also give you a new fresh start away from St Margaret’s.
We are aware that you may not agree with this thinking and decision but it is what the Bishop’s
Office has decided.’
[20] This fresh start appears to have been a reference to the disharmony in the
parish, as certain members of the congregation remained dissatisfied as no action had
been taken against the appellant in 2017. The view was that a fresh start would be in
both the Church’s and the appellant’s best interests. It was further emphasised that
clergy are often moved to different parishes. In this regard, the appellant's personal
concerns were also taken into account, as they were when he was placed at St
Margaret’s. The Bishop stated that:
‘It will not be in our interest to engage you in what you believe are the reasons for requesting
you to move from St Margaret’s as stated in your letter. The fact of the matter is that the life of
full-time clergy has that element of being moved from one pastoral charge to the other.’
[21] The appellant remained dissatisfied and continuously asked for better reasons
to be furnished to him. The Church believed that it had acted within the realms
provided for in the Canons, and pressed the appellant to accept the decision and make
plans to move to an alternative parish.
[22] On request from the Bishop regarding his plans in this regard, the appellant
responded on 24 October 2018 that he had no plans. On 31 October 2018, the Bishop
accordingly informed the appellant that, as he had refused to visit the other parishes,
and accept the Bishop’s decision, the Bishop’s office had no alternative other than to
invoke Canon 25(6) of the Constitution. The Bishop informed the appellant:
‘We request that you state in writing by this Friday 02nd November 2018 your refusal to be
moved from the Parish of St Margaret’s Bloemfontein. Please also be warned that should your
response not be received by the stipulated time, this process will proceed with or without your
response.’
[23] The appellant was apparently on leave until 12 November 2018 but responded
on 14 November 2018. He informed the Bishop that he still did not agree with the
Bishop's decision because due process was not followed in arriving at the decision
and that his reluctance to be moved from the Parish of St Margaret’s was due to the
fact that to date, the Bishop had not yet provided him with reasons for the decision.
[24] The Bishop replied that neither the Canons, nor the Act, nor any rule requires
that reasons be provided to a priest for his or her moving from a Parish. To this, the
appellant replied on 16 November 2018, stating that the decision to move should not
be taken arbitrarily, but based on justifiable pastoral reasons.
[25] The Bishop’s office informed the appellant that the matter was being referred
to the Bishop’s Council in terms of Canon 25(6). On 6 December 2018, the Church
informed the appellant that, at the sitting of the Bishop’s Council meeting on
29 November 2018, the Council unanimously gave their support to the Bishop’s office
to invoke Canon 25(6) against him. This meant that the Bishop’s office was
empowered to revoke the appellant’s licence within the Diocese of the Free State. The
letter also set out the reasons for the decision to revoke his licence. These included:
(a)
All clergy were informed of pending moves to be made in February 2018;
(b)
The appellant had refused to take up the Rectorship at St Patrick’s when
requested;
(c)
On being informed of the Bishop’s decision to move the appellant from
St Margaret’s, the appellant stated that the decision was improper and continued to
request reasons;
(d)
He refused to visit the parishes of Welkom and Ladybrand, when requested;
(e)
When it was suggested that Canon 25 (6) was to be invoked, the appellant
responded that Canon 25(6) required reasons to be given reasons for the decision to
be moved.
(f)
The appellant’s conduct amounted to canonical disobedience, which was in
breach of both the Constitution and the Canons of the Church.
[26] This letter also informed the appellant that:
‘You are now being made aware that the next step to follow with Canon 25(6) is for you to
meet with the Bishop’s office to hear you out and to consider as to whether there could be any
possibilities to salvage your stay in the Diocese of the Free State.’
[27] The appellant did not avail himself of this opportunity. Instead, on
31 December 2018, he wrote to the Bishop indicating that he intended to appeal the
decision of the Bishop’s office to revoke his licence in terms of Canon 25(8). The
decision to revoke was therefore suspended pending his appeal to the Archbishop.
His letter further said:
‘You advised in your letter of the 6th of December 2018 “that the next step to follow with Canon
25(6) is for [me] to meet with the Bishop's office to hear [me] out and to consider as to whether
there could be any possibilities to salvage [my] stay at the Diocese of the Free State”. I believe
that you closed this door for me when you advised me that you were no longer going to engage
me any further regarding this matter and that I was free and welcome to approach any
structure or office of the Anglican Church be it Diocesan or Provincial on this matter.’
[28] The reference to not further engaging with the appellant related to the Bishop’s
decision to move him, not the decision to revoke his licence. In regard to the latter
decision, he was afforded the opportunity to engage with the Bishop’s office, which he
refused.
[29] On 2 January 2019, the Bishop’s office informed the appellant that, as a result
of his continued challenge of its decision, his deliberate and wilful ignorance of its
directives, and his deliberate and wilful failure to meet with the Bishop to discuss his
future in the Diocese of the Free State, it had taken a decision to officially revoke his
licence in the Diocese of the Free State with effect from 1 January 2019. The
appellant’s persistent refusal to accept alternative placement at another parish within
the Church precipitated this decision.
Procedural fairness
[30] Although the appellant’s counsel submitted that the appellant did not refuse to
move, no other conclusion can be reached in this regard. His persistent refusal to
accept the decision of the Bishop and to meet with the Bishop and/or other structures
of the Church undoubtedly amounted to a refusal to comply.
[31] The appellant held the view that the Church’s decision (that of the Bishop) had
to be based upon valid and justifiable reasons. The Church contended that this was
diametrically opposed to the notion and accepted interpretation of the Canons, which
provide that the placement of the clergy falls within the exclusive prerogative of the
Church.
[32] The appellant relied upon Joseph and Others v City Of Johannesburg and
Others,6 where it was stated that Hoexter7 described the importance of procedural
fairness in this way:
6 Joseph and Others v City Of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC);
2010(4) SA 55 CC para [41].
7 Hoexter Administrative Law in South Africa at 326-7.
‘Procedural fairness . . . is concerned with giving people an opportunity to participate in the
decisions that will affect them, and – crucially – a chance of influencing the outcome of those
decisions. Su participation is a safeguard that not only signals respect for the dignity and worth
of the participants, but is also likely to improve the quality and rationality of administrative
decision-making and to enhance its legitimacy.’ (Footnote omitted.)
Analysis
[33] It is clear from the correspondence that passed between the Bishop’s office and
the appellant that it was accepted that decisions on the placement of clergy were the
prerogative of the Bishop. More importantly, reasons were provided on several
occasions; however, the appellant was not satisfied with the reasons. He was given
the opportunity to be heard, and to engage with the relevant structures. He refused
these invitations.
[34] As stated above, the appellant did not seek to review the Bishop’s decision that
he be moved; he sought to review the decision to revoke his licence. He was invited
to participate in the decisions. He refused the invitations to do so. The appellant cannot
rely upon his own recalcitrant conduct to raise the issue of procedural irregularity.
[35] It is necessary to analyse the relevant Canons to determine their applicability in
the circumstances of the present appeal. In summary, Canon 25(6) provides that if the
Bishop considers that, for pastoral reasons, the work of God demands that there
should be a change of a cleric at a parish, the Bishop shall (failing the consent of the
said cleric to the change) take counsel with three priests of the Diocese and if the
majority of them agree, after giving the said cleric an opportunity to be heard, the
Bishop shall offer the cleric another ministry in the Diocese.
[36] As appears from the chronology of events set out above, the appellant was
informed of the prospective move and that he should engage with the Bishop in this
regard. The appellant required reasons for the move. The Bishop and the appellant
then met, and the Bishop informed the appellant that there was disharmony in the
parish between the appellant and certain parishioners. These reasons did not satisfy
the appellant. He stated that due process was not followed because he was not given
adequate reasons.
[37] In the correspondence, the appellant acknowledged that clergy placements rest
with the Bishop in terms of Canon 25(6). The appellant was also reminded that the life
of full-time clergy has the element of being moved from one pastoral charge to another.
He, however, complained that proper procedures had not been followed in his removal
from St Margaret’s. He questioned the motives behind the decision to move him and
the reliance on the view of ‘concerned parishioners’.
[38] The appellant was asked to visit prospective parishes, which he refused to do
until he was furnished with reasons for the move. The Bishop responded by stating
that the Canons did not require reasons to be given. In any event, reasons had been
given - there was disharmony, and a fresh start for both the appellant and the parish
was considered appropriate. As the appellant had refused to consent to the move, the
Bishop followed the prescripts of Canon 25(6). The appellant was informed that the
matter was to be referred to the Bishop’s Council, which it was. The Council supported
the Bishop’s decision to invoke Canon 25(6).
[39] The appellant was then informed that he should meet with the Bishop’s office
to hear him out and consider whether there were any possibilities to salvage his stay
in the Diocese. He did not take up the opportunity. The Bishop thus informed the
appellant that, as a result of his continued challenge of the Church’s decision, and his
failure to meet with the Bishop to discuss his future in the Diocese, the Church had
taken a decision to officially revoke his licence, in terms of Canon 25(7).
[40] The appellant argued that he was not offered pastoral ministration in breach of
Canon 25(6) and 25(7). However, from the correspondence referred to above, it is
clear that meetings with the Church were offered on several occasions, but the
appellant never took up the offer.
[41] In regard to Canons 37(1) and Canon 39, the appellant at no stage in the
correspondence relied upon these Canons. At the hearing, his counsel contended that
the reasons for requiring him to move were not purely pastoral, as they involved the
allegations relating to the events of 2017, where there were aspersions cast on him
involving financial mismanagement of church funds. He thus contended that Canon
25(6) required that’ if the Bishop was of the view:
‘either before embarking on this process or during the process itself, that the reason for the
need for a change in fact relates … to matters which could constitute charges or accusations
in terms of Canon 37.1, then in the absence of any charge under Canon 37.1, the Bishop shall
proceed in terms of Canon 39, in respect of those matters and, in respect of any balance of
issues that remain, may continue with the search should that be appropriate’. (Emphasis
added.)
[42] Canon 37(1) refers to charges or accusations relating, inter alia, to financial
mismanagement. The appellant submitted that because he had previously been
accused of such offences, the provisions of Canon 25(6) emphasised above required
that Canon 39 be implemented. Canon 39 sets out in detail the processes to be
followed, in dealing with complaints, accusations, and sanctions. The appellant
contended that the Church did not follow the required procedure in the appellant’s
case.
[43] The appellant submitted that the reasons that the Bishop required him to move
were because of the previous aspersions cast upon him and that such allegations were
covered in the provisions of Canon 37. He relied for this submission on the Bishop’s
letter to the Archbishop on 31 January 2019, where the Bishop referred to a request
for him to clarify the pastoral reasons for the appellant’s requested move. The Bishop
referred the Archbishop to certain correspondence from parishioners who were
unhappy with the appellant’s conduct at St Margaret’s, which involved complaints from
parishioners about, inter alia, financial mismanagement and the fact that these had
not been dealt with satisfactorily was causing disharmony in the parish. Thus the
appellant submitted that the allegations made in 2017 formed the basis for the request
to move, and he was entitled to the benefit of Canon 39.
[44] The fact that the Archbishop requested reasons and the Bishop referred to the
reasons for the disharmony does not mean that the Bishop’s decision was based upon
the allegations made in 2017. The Bishop explained to the Archbishop the background
which had caused the disharmony. The disharmony and not the actual allegations
formed the basis of the Bishop’s decision. This disharmony was the reason given
throughout for the Bishop’s decision.
[45] Canon 37(1) provides specifically for two procedures. If no charges have yet
been laid, then the Bishop shall proceed in terms of Canon 39. But, whilst those
procedures are being followed in pursuance of a prospective trial, the Bishop is to
continue to deal with the issue of the move of the cleric.
[46] Two issues arise from these provisions: Firstly, there must be an intention to
proceed to trial with those charges. In this case, it is clear that this was not the position.
The allegations had been dealt with in 2017/18, and there was no intention on the part
of the Church to proceed to trial on them. Secondly, if applicable, the procedures under
Canon 39 would not interfere with the Bishop’s powers to continue to deal with the
prospective move of the appellant.
[47] It is also necessary to take cognisance of the fact that courts are reluctant to
involve themselves in the internal affairs of a religious body.8 This Court in De Lange
v Presiding Bishop, Methodist Church of Southern Africa and Another (De Lange) held
that:9
‘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.
High Court judgments . . . 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.’
This was a comment made by Ponnan JA in the majority judgment in this Court. The
Constitutional Court in De Lange v Presiding Bishop of the Methodist Church of
Southern Africa for the Time Being and Another, 10 referred to this view as follows:
‘The Supreme Court of Appeal held that the doctrine of entanglement strongly informs courts
not to get involved in religious doctrinal issues. The effect of the doctrine is that courts are
8 De Lange v Presiding Bishop, Methodist Church of Southern Africa and Another 2015(1) SA 106
(SCA) at 127E-G.
9 Ibid at 39-40.
10 De Lange v Presiding Bishop of the Methodist Church of Southern Africa for the Time Being and
Another CCT223/14C [2015] ZACC 35; 2016 (1) BCLR 1 (CC); 2016 (2) SA 1 (CC).
reluctant to interfere with religious doctrinal disputes. See also Supreme Court of Appeal
judgment id at para 33, where the Supreme Court of Appeal discusses Ryland v Edros 1997
(2) SA 690 (C) wherein the High Court recognised this doctrine as part of our new
constitutional dispensation.’11
[48] Although the present matter involves certain procedural issues, it is in essence
a matter dealing with doctrinal issues dealing with the placement of clergy and the
consequences of disobeying a decision of the Bishop. In my view, and for the reasons
stated above, Canon 25(6) was correctly applied. The issue of placement of clergy is
the prerogative of the Bishop. He followed all the requisite procedural steps in making
his decision to move the appellant and in deciding to revoke the appellant’s licence.
Procedural fairness in line with the rules and regulations of the Church was complied
with. The reasons provided by the Bishop for the move did not require the invocation
of Canon 37(1) and/or Canon 39.
[49] The appeal must therefore fail, and the issue as to whether it was necessary to
impugn the Archbishop’s decision does not, therefore, arise and need not be dealt
with.
[50] Accordingly, I make the following order:
The appeal is dismissed with costs.
_______________________
S E WEINER
ACTING JUDGE OF APPEAL
Molemela JA (Mbatha JA concurring)
[51] I have read the judgment of my colleague, Weiner AJA (the majority judgment).
In paragraph 48 of the judgment, it is stated that the Bishop followed all the requisite
procedural steps in making his decision to move the appellant and in deciding to
11 Ibid fn 21 in reference to the SCA judgment at para 30.
revoke the appellant’s licence. It is also stated that procedural fairness in line with the
rules and regulations of the Church was complied with. For reasons furnished in the
succeeding paragraphs, I respectfully disagree with the reasoning and conclusion of
the majority judgment.
[52] Although the appeal was premised on the failure of procedural fairness, it can,
however, not be disposed of without traversing the substantive issues raised in the
papers before us. I will demonstrate that the revocation of the appellant’s licence, with
its drastic consequences, was a direct result of a failure to follow peremptory
procedures laid down in the Church’s canons. Furthermore, to the extent that
unsubstantiated allegations were regarded as ‘evidence’ of wrongdoing on the
appellant’s part without following the steps set out in canon 39 (referring the
complaints to a Board of Enquiry), the decision was irrational.
[53] Before I delve deeper into the issues, there is a contention that needs to be
debunked from the outset. Relying on this Court’s judgment in De Lange, it was
contended that courts are reluctant to involve themselves in the intimate affairs of
religious bodies.12 This contention does not take proper account of the nature of the
dispute that was raised for determination in De Lange. Further, and in any event, it is
necessary to pay due regard to the following dictum in De Lange because it provides
important context to para 39 of that judgment:
‘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.’13 (Emphasis added).
It is plain from the passage above that there are circumstances in which courts are
required to intervene in disputes involving religious bodies. To my mind, this can only
mean that where religious bodies have proceeded in a manner that is not consonant
with the principles of natural justice, courts will intervene. While I agree that a court
12 De Lange v Presiding Bishop, Methodist Church of Southern Africa and Another [2014] ZASCA 151;
2015 (1) SA 106 (SCA); [2015] 1 All SA 121 (SCA) para 39.
13 De Lange v Presiding Bishop, Methodist Church of Southern Africa and Another [2014] ZASCA 151;
2015 (1) SA 106 (SCA); [2015] 1 All SA 121 (SCA) para 38.
should refrain from determining religious doctrinal issues in order to avoid
entanglement,14 it bears emphasising that the majority judgment in De Lange did not
introduce a blanket prohibition on the determination of disputes that involve religious
bodies. From my point of view, the high court’s deference was uncalled for, because
the dispute before it did not pertain to doctrinal issues or customs constituting the core
of religious functions. Crucially, the instant matter does not pertain to an individual
who, having voluntarily committed himself to a religious association’s rules, is not
prepared to accept the outcome of a fair hearing conducted by the same body. The
fatal defect in the Bishop’s decision is that it is tainted by a procedurally unfair process.
[54] Juxtaposing the main dispute in the instant matter with what the court had to
determine in Lakeside Colony of Hutterian Brethren v Hofer (as set out in the passage
above), the similarity is that in the instant matter, too, the high court was not called
upon to review the merits of doctrinal issues of the Church. Rather, at the heart of the
parties’ dispute is the Church’s failure to afford the appellant the protection of its own
canons relating to the observance of the well-known audi alteram partem principle.
Put differently, the appellant was denied the procedural protections afforded by the
very canons of the respondent, and this brings the dispute within the realm of the
exceptions envisaged in para 39 of De Lange. Plainly, the respondent’s reliance on
De Lange is misplaced.
[55] It is interesting to note that the role of the courts in matters of this nature was
recognised as early as 1863 in the judgment of Long v Bishop of Cape Town,15 where
the colonial court in South Africa recognised the principles of natural justice. It held
that if a religious body constitutes a tribunal to determine disputes, it has to proceed
in a manner consonant with the principles of natural justice. As a consequence, a
sentence of suspension or deprivation visited by the Bishop of Cape Town on an
incumbent who had refused to give notice in his Church for the election of delegates
to the Synod was considered unwarranted. I refer to this matter only to highlight that
the court’s intervention has consistently been recognised when a sanction had the
effect of depriving the incumbent of due process.
14 Ibid para 39.
15 Long v Bishop of Cape Town [1863] Eng R 277, (1863) 1 M00 PC Ns 411, (1863) 15 ER.
[56] In my opinion, there is no reason why religious bodies should not, like other
domestic tribunals, observe principles of fair play.16 This is more so where they have
constitutions that urge them to comply with their own rules and regulations. It would
be a sad day if a laudable approach which was embraced long before the advent of
the Constitution was to be jettisoned in a constitutional democracy. I now consider why
the high court dismissed the appellant’s application for review.
[57] As rightly stated in the majority judgment, the high court dismissed the
appellant’s review application on the basis that the appellant had failed to seek an
order reviewing the decision of the Archbishop. The majority judgment then found
that the issue about the failure to impugn the decision of the Archbishop did not
arise because the appellant had not shown that the Bishop had failed to comply
with the canons. Since I believe that the Bishop did not comply with canon 25(6)
and that his decision was irrational and consequently reviewable, I am obliged to
deal with the high court’s finding in this part of the judgment. It is to that aspect
that I now turn.
[58] It bears mentioning that despite finding that PAJA was not applicable, the
high court, purporting to rely on the decision in Wings Park, held that the failure to
impugn the decision of the Archbishop rendered the application for review
academic, as the finding of the Archbishop would still stand even if the Bishop’s
decision was set aside. I disagree with the high court’s finding and its ruling
dismissing the application. In my view, Wings Park is distinguishable from the
present matter because procedural unfairness was not raised as an issue in that
matter. Furthermore, PAJA is not applicable in casu, and the Bishop’s decision did not
amount to administrative action.
[59] In any event, it is important to note that the court’s findings in Wings Park were
made with reference to circumstances where the internal appeal amounted to a
hearing de novo. In this matter, the role of the Archbishop was only to decide whether
the revocation of the appellant’s licence should take effect. The Archbishop’s appeal
16 Turner v Jockey Club of SA 1974 (3) SA 633 at 644 G-H.
was not a re-hearing of the matter;17 the manner in which it was conducted attests to
this. In Minister of Environmental Affairs and Tourism and Another v Scenematic
Fourteen (Pty) Ltd,18 it was held that the effect of a gross procedural irregularity in the
first decision could not, in any way, have been cured by an appeal process that did
not constitute a re-hearing of the matter. Based on the same reasoning, I am of the
view that the procedural unfairness which manifested itself in denying the appellant in
this matter a hearing and failing to ventilate the allegations against him as envisaged
in canon 39, was so material that it can only be concluded that what was laid before
the Archbishop for consideration on appeal was a fatally tainted process. Given that
the appeal process did not constitute a re-hearing of the matter, it could not have cured
the defects in the Bishop’s process.19
[60] Furthermore, and in any event, to the extent that Wings Park relied on
Oudekraal, it is noteworthy that, in Seale v Van Rooyen NO and Others; Provincial
Government, North West Province v Van Rooyen NO and Others,20 this Court held
that where an administrative action was invalid, consequent acts had legal effect only
as long as the initial act was not set aside by a competent court. However, if the first
administrative act was set aside, the second act that depended for its validity on the
first act would also be rendered invalid, as the legal foundation for its performance was
no longer extant. In making the point that the high court’s reliance on Oudekraal was
misplaced, I need only reiterate what was stated in MEC for Health, Eastern Cape and
Another v Kirland Investments (Pty) Ltd,21 where the Constitutional Court held as
follows:
‘In Seale v Van Rooyen NO and Others; Provincial Government, North West Province v Van
Rooyen NO and Others [2008] ZASCA 28; 2008 (4) SA 43 (SCA) at para 14, the Court,
applying Oudekraal, held that acts performed on the basis of the validity of a prior act are
themselves invalid if and when the first decision is set aside. At para 13 the Court rightly
17 For a distinction between a narrow and a wide appeal, see Tikly and Others v Johannes NO and
Others 1963 (2) SA 588 (T) at 590F-591A.
18 Minister of Environmental Affairs and Tourism and Another v Scenematic Fourteen (Pty) Ltd [2005]
2 All SA 239 (SCA) para 33-35.
19 Police and Prisons Civil Rights Union and Others v Minister of Correctional Services and Others 2008
(3) SA 91 (E) at para 33, 34, 74-76.
20 [2008] ZASCA 28; 2008 (4) SA 43 (SCA) at para 14.
21MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (5)
BCLR 547 (CC); 2014 (3) SA 481 (CC) fn 74.
rejected an argument, in misconceived reliance on Oudekraal, that the later (second) act could
remain valid despite the setting aside of the first.’
[61] Reverting to the facts of this matter, the Archbishop’s decision (the second
decision) was only limited to deciding whether the revocation of the licence should
take effect. He, therefore, entertained the internal appeal on the assumption that the
Bishop’s decision was valid. By parity of reasoning, it follows that, once the Bishop’s
decision (the first decision) is set aside, the Archbishop’s decision will, by application
of the law, be of no force and effect as it would have been taken consequent to an
invalid act.
[62] It is now convenient to briefly consider the submissions of the parties in relation
to substantive issues. The provisions of canon 25(6) have been set out in para 8 of
the majority judgment. It is clear from these provisions that if a priest has not consented
to the placement change, the Bishop shall take counsel with the following incumbents:
the Chapter of the Cathedral Church or the Senate, or, in the absence of these, with
three priests of the Diocese. However, if either before embarking on the process, or
during the process itself, it becomes evident that the reasons for the placement change
relate substantially to matters which could constitute charges, then the Bishop shall
proceed in terms of canon 39, which enjoins the Bishop to refer the matter to a Board
of Enquiry. It is discernible from a plain reading of this canon that a priest who has not
consented to a placement change has a right to be heard. This provision is peremptory
and does not give a Bishop discretion.
[63] A proper interpretation of the proviso in canon 25(6) is key in this matter. It
provides that:
‘. . . if it appears to the Bishop, either before embarking on this process or during the process
itself, that the reason for the need for a change in fact relates mainly or substantially to matters
which could constitute charges or accusations in terms of canon [37(1)], then in the absence
of any charge under canon [37(1)], the Bishop ‘shall’ proceed in terms of canon 39 . . ..’
(Emphasis added.)
[64] Significantly, the document entitled Licensing of the Clergy, referred to by the
appellant as ‘the monograph’ published by the respondent and which was an exhibit
in the proceedings, states as follows:
‘The pastoral course is laid out in Canons 25(6) to (8), which specify the course to be followed
in the circumstances set out in those Canons. If it is found that the problem at the heart of the
matter in fact lies in acts or omissions which could form the basis of charges under Canon
37(1), then the pastoral process must be deferred or abandoned and the disciplinary Canons
in Chapter VII applied. Nothing entitles a Bishop to withdraw a licence on a discretionary basis.
Considering the position and role of a Minister . . . this is appropriate.’ (Emphasis added.)
It is telling that this monograph states that the pastoral process ‘must be deferred or
abandoned and that the disciplinary canons in Chapter VII be applied.’
[65] The passage above makes it plain that in circumstances like the present, where
the placement to another parish was prompted by allegations of financial
mismanagement (which are proscribed in canon 37), the process enunciated in
canon 39 should have been followed. Any other interpretation of canon 25(6), read
with canon 37 and 39, would simply fall foul of the trite principles of interpretation
propounded in Natal Joint Municipal Pension Fund v Endumeni Municipality.22 The
architecture of the canons is unmistakeably based on fairness and due process at
every level. The monograph emphasises the need to adhere carefully to the
procedures set out in the Canons when considering the withdrawal of a license’. The
appellant, however, was not afforded this due process.
[66] It is undisputed that in the discussion about the intention to change the
appellant’s placement, which took place on 20 July 2018, the Bishop disclosed to the
appellant that the placement change was because parishioners were unhappy with
him. As will become evident from the Bishop’s averments, it appears that from the
outset, the Bishop’s reason for moving the appellant was the discontent arising from
allegations of financial mismanagement. Given that these allegations were the
foundation of the decision to remove the appellant from St Margaret’s parish, the
Bishop ought to have put the machinery set out in canon 39 in motion the moment it
22 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262
(SCA); 2012 (4) SA 593 (SCA) para 18.
became apparent to him that the appellant was not consenting to the placement
change. I will return later to this aspect.
[67] It is obvious from the correspondence exchanged after the meeting of 20 July
2018 that the appellant was interested in finding out who was unhappy with him and
why that was the case and that he was not consenting to the change in placement. I
can find nothing wrong with the appellant’s interest in the source of the parishioner’s
discontent, given the stipulations of the proviso in canon 25(6), which is set out in para
63 above.
[68] In the appellant’s letter to the Bishop, dated 12 September 2018, he quoted
parts of canon 25(6) and expressly stated that the procedures laid down in canon 25(6)
pertaining to his right to be heard by the incumbents mentioned in that canon had not
been afforded to him. He mentioned that he was not keen to meet with the church-
wardens as per the Bishop’s proposal. He openly indicated that his reluctance to do
so stemmed from his belief that meeting with the church-wardens could be perceived
as agreeing to the placement change. This letter would have left the Bishop with a
clear impression that the appellant was not amenable to the change. Despite this, the
Bishop’s response dated 14 September 2018 did not pertinently address itself to the
issue of non-compliance with those procedures and merely emphasised that the
prerogative of clergy placement rests with the Diocesan Bishop.
[69] On 14 November 2018, the appellant stated that the reason for disagreeing with
the invocation of canon 25(6) was that due process was not followed in arriving at that
decision. Contrary to the plain provisions of canon 25(6), which decrees that if the
majority of the incumbents mentioned in that canon agree that he should be moved,
he must be given an opportunity to be heard, the Bishop informed the appellant that
he was referring him to the Bishop’s Council (council) but did not invite him to that
meeting. Once that meeting of the council had taken place, no further opportunity to
be heard was given to the appellant.
[70] Instead, in a letter dated 6 December 2018, the appellant was informed that the
Bishop’s office has been ‘empowered to revoke [his] license’. The Bishop then recited
the reasons that had led to the revocation of his licence. At that stage, it was beyond
doubt that the decision to revoke the appellant’s licence had already been taken. It is
on this basis that the appellant indicated his intention to appeal that decision within the
contemplation of canon 25(8). Moreover, despite the canons advocating for
transparency and fair application of the rules of natural justice, it was also apparent
that the decision to revoke the appellant’s licence was taken without affording him the
right to be heard by the council. In a letter dated 2 January 2019, the Bishop
bemoaned the appellant’s decision to lodge an internal appeal and stated that it
showed his ‘total disregard and disrespect for the Bishop’s office’. It is difficult to
comprehend how the appellant’s exercise of the right to appeal afforded by the canons
could be equated to disrespect.
[71] I am unable to find persuasion in the submission that the reasons for removing
the appellant from St Margret Parish were of a pastoral nature. In this regard, it is
important to consider what the Bishop considered to be ‘pastoral reasons’. It is telling
that in his letter to the Archbishop, the Bishop inter alia stated that moving the appellant
from St Margaret’s parish was ‘largely because of the issues that came to light in 2017.’
He further said:
‘[The] appellant was requested to move from St Margaret’s due to pastoral reasons . . ..’ The
Bishop’s office had to intervene as the parish was really starting to suffer significantly through
divisions and people moving away. We have attached some of the evidence as in Annexure
A pages 1–19.’ (Emphasis added).
[72] As regards the passage in the preceding paragraph, it is striking that the
appellant’s assertion (in his letter dated 17 July 2018) that ‘there has been a general
positive spirit among parishioners with a number of new members joining the parish’
was never disputed. This is the same letter that the Bishop, in his affidavit, described
as ‘important’. The undisputed statement made in the appellant’s letter refutes any
suggestion that there was general discontent among parishioners causing them to
leave on account of the appellant’s conduct.
[73] It is clear from the annexures sent by the Bishop to the Archbishop as ‘evidence’
that the transgressions the appellant was accused of were those censured in canon
37(1)(p)–(q). The Bishop conceded this. It is noteworthy that in one of these
annexures, the Bishop personally stated that there had been ‘a number of allegations
that have been raised with regard to administration, financial and ministry’ of the
appellant.
[74] Referring to the discussion that took place in July 2018 between him and the
appellant concerning the placement change, the Bishop averred as follows in his
answering affidavit: ‘it is correct that I mentioned to him that certain members of the
parish were unhappy with issues relating to inter alia financial- and administrative
management of his parish’. This averment is far-reaching as it reveals that from the
outset, the real reason for the placement change was types of misconduct which fell
squarely within the purview of canon 37(1)(k) and (j). It is for this reason that I opine
that the Bishop ought to have invoked canon 39 from the outset. It is disconcerting
that in his letter to the Archbishop, the Bishop deemed it appropriate to describe
unsubstantiated allegations as ‘evidence’ despite the fact that the appellant had never
been given an opportunity of challenging them.
[75] Notably, the Bishop did not dispute that in 2017, there was a recommendation
that the appellant be taken to task on disciplinary grounds. It is common cause that no
disciplinary steps were initiated against the appellant. Notwithstanding this, the Bishop
averred that the fact that disciplinary charges were recommended was ‘one of the
reasons that ultimately informed the decision concerning his placement’. Against the
background of these averments, there is no need to speculate about the pastoral
reasons that, subjectively, informed the decision to remove the appellant from St
Margaret’s parish. The Bishop spelt them out in his affidavit. It is significant that all the
accusations levelled against the appellant are transgressions listed in canon 37(1).
Unquestionably, the circumstances of this matter cried out for the invocation of the
proviso in canon 25(6). On the plain reading of that proviso, there can be no doubt that
the Bishop was, in the absence of a charge envisaged in canon 37(1), enjoined to
proceed in terms of canon 39. He did not do so.
[76] Had canon 39 been invoked, the Bishop would have referred the matter to the
Board, at which forum the appellant would have had the right to lead and give evidence
and cross-examine witnesses. Depending on the recommendation of the Board, the
matter could have been referred to a Tribunal, alternatively laid to rest. In this way, the
appellant’s guilt or innocence could have definitively been resolved in a forum where
he would have been entitled to refute the allegations. Finalisation of these processes
would probably have restored harmony in the parish. Instead of invoking disciplinary
processes stipulated in 25(6) read with canon 37 and 39, a lot of time was dedicated
to exchanging letters. In lieu of ventilating the issues at the appropriate forum, a flawed
procedure was followed. This approach unfairly denied the appellant a chance to state
his side of the story and to clear his name.
[77] A contextual reading of the correspondence sent by the appellant leaves one
with no doubt that the appellant was aggrieved by the fact that the reason for his
placement change was related to serious but unsubstantiated allegations, and that he
considered this unfair because the injunctions of the canons had not been followed.
That he did not, in his correspondence, expressly mention canon 37 is of no moment,
in my view. Of significance is that he alluded to these canons in his founding and
supplementary affidavit.
[78] Correctly, the majority judgment acknowledges that, by the Bishop’s own
admission, there were complaints from parishioners about financial mismanagement
and the fact that these had not been dealt with satisfactorily was causing disharmony
in the parish.23 This state of affairs attested to the rationale for the need to defer to
the placement pending the canon 39 processes, as set out in the canon 25(6)
proviso, which is that another parish should not have to inherit the service of a priest
who has a cloud of serious allegations hanging over his head. On the facts of this
case, the inextricable link between the unsubstantiated allegations and the decision to
change the appellant’s placement could not be clearer. It is for this very reason that I
do not agree with the majority judgment’s finding that the disharmony and not the
actual allegations formed the basis of the Bishop’s reasons.
[79] In his correspondence, the Bishop did not explain why the appellant was not,
within the contemplation of canon 25(6), afforded the right to be heard. Instead, on 18
November, he was merely informed that the council would determine his future but
was not afforded an opportunity to be heard by that council. Thereafter, he was merely
apprised that at the sitting of the council, it had expressed its support for the Bishop’s
23 Majority judgment at para 43.
decision. It cannot be right that disharmony among parishioners is addressed by
encroaching on the rights afforded to a priest in terms of the canons. Doing so in
contravention of the canons amounts to a serious irregularity, in my view.
[80] Much was made about the fact that in the letter dated 14 September 2018, the
appellant was informed that moving him away from St Margaret’s would give the
Church and him ‘a fresh start.’ As stated before, it was evident that the appellant was
very keen to clear his name. Instead of affording him the right to be heard by referring
the process to the Board of Enquiry or Tribunal, a decision was made to move him to
another parish under a cloud. It is difficult to imagine how the appellant could possibly
make a fresh start with a cloud of unsubstantiated allegations hanging over his head.
[81] There can be no doubt that both the Church and the applicant would get ‘a fresh
start’ in the true sense of that expression only once the Board of Enquiry or the Tribunal
had finalised the disciplinary processes set forth in the canons. Under the
circumstances, the appellant’s statement to the Bishop in his letter dated
14 November 2018, opining that due process was not followed in arriving at the
decision to remove him from St Margaret, was a correct encapsulation of what had
eventuated. It is ironic that his steadfastness in wanting to clear his name is what led
to his licence being revoked; this, despite the very nature of the allegations levelled
against him requiring the invocation of disciplinary processes set forth in
canon 37 and 39.
[82] The total disregard of fundamental principles of fairness enunciated in the
respondent’s canons warranted the high court’s intervention by way of a review, all the
more so because the decision of the Bishop is far-reaching. On this aspect, the
appellant explained that as a result of the revocation of his licence, he is not allowed
to hold any office or perform any ministry within the respondent Church. It offends
one’s sense of justice that such a drastic decision can be arrived at based on
unsubstantiated allegations made by parishioners against a priest without affording
the latter an opportunity of refuting such allegations.
[83] The vocation of priesthood does not disentitle priests from enjoying the
protection that comes with the application of principles of natural justice as espoused
in our Constitution. To my mind, there is no reason why our courts cannot adjudicate
disputes emanating from organisations,24 including churches,25 which have
incorporated these laudable principles of natural justice in their constitutions and their
rules and regulations. Our courts have, in a plethora of cases, including those
predating the Constitution, not shied away from this responsibility and should not do
so in this case.26
[84] To sum up, on a plain reading of canon 25(6) and the monograph, it is clear
that the Bishop did not have an unfettered discretion to move the appellant. The
procedure laid down in Canon 25(6) is peremptory and may not be dispensed with
where accusations of impropriety or financial mismanagement have been levelled
against a cleric. In my opinion, the clear and peremptory provisions of the proviso in
canon 25(6), which call for the invocation of canon 39, were inexplicably disregarded.
[85] The undisputed evidence shows that the decision to change the appellant’s
placement at St Margaret’s parish was predicated exclusively on serious allegations
which called for the invocation of canon 39. There is no evidence of a ‘balance of
issues’, i.e. reasons unrelated to canon 37(1), which could have prompted the Bishop
to proceed with the placement change before invoking canon 39. That being the case,
the placement ought to have been deferred while the machinery in canon 39 was being
set in motion. Instead of invoking canon 39, the Bishop proceeded to revoke the
appellant’s licence. Clearly, the decision to revoke the appellant’s licence was taken
prematurely and was irrational.
[86] The procedurally flawed decision to change the appellant’s placement was
obviously the root cause of the revocation of the appellant’s licence. Given that this
procedural irregularity goes to the root of fairness principles espoused in the
Constitution and the respondent’s own canons, I am of the view that the only
24 Dabner v SA Railway and Harbours 1920 AD 583 at 589; Jockey Club of South Africa and Others v
Feldman 1942 AD 340 at 351.
25 Taylor v Kurtsag NO and Others 2005(1) SA 362 (W) at 382.
26Theron en Andere v Ring van Wellington van die NG Sending Kerk in Suid Afrika en Andere 1976(2)
SA 1; Mbombo v Church of the Province of Southern Africa, Diocese of Highveld [2011] ZAGPJHC
93.Fortuin v Church of Christ Mission of the Republic of South Africa and Others [2016] ZAECPEHC
18; Bisho Mlibo Ngewu v The Anglican Church of Southern Africa and Ten Others [2016] ZAKZPHC 88
para 33.
appropriate remedy is for the proceedings to start de novo before the respondent and
for the stipulations of the proviso in canon 25(6) to be complied with.
[87] Based on all the circumstances and upon a conspectus of all the relevant facts,
I conclude that the high court should have reviewed and set aside the Bishop’s
decision with costs. I would therefore uphold the appeal with costs, set aside the
decision of the High Court and replace it with an order reviewing and setting aside the
Bishop’s decision (and any acts consequent upon it) with costs and remitting the
matter back to the respondent for the holding of an inquiry envisaged in canon 39.
__________________
M B MOLEMELA
JUDGE OF APPEAL
Appearances:
For the Appellant:
R van der Merwe
Instructed by:
Phatshoane Henney Attorneys,
Bloemfontein
For the Respondent:
S Grobler SC
Instructed by:
Mhlokonya 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:
20 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
Hendricks v The Church of the Province of Southern Africa, Diocese of Free State (108/2021) [2022]
ZASCA 95 (20 June 2022)
_________________________________________________________________________________
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs, an appeal
against the decision of the Free State Division of the High Court, Bloemfontein
This appeal concerned a decision of the respondent, the Church of the Province of Southern Africa,
Diocese of Free State to revoke the appellant’s licence to practise as a priest. The decision to revoke
his licence was taken as a consequence of the appellant’s refusal to move to an alternative parish when
requested to do so by the Bishop. The appellant appealed the Bishop’s decision to the Archbishop. The
Archbishop confirmed the Bishop’s decision.
The relevant Canons of the respondent were relied upon by the majority and minority judgment in
arriving at the decision.
Canon 26 provides that if the Bishop of the Diocese considers that for pastoral reasons the work of God
in a Pastoral Charge demands that there should be a change of a cleric, the Bishop shall (failing the
consent of the cleric to the change) take counsel with…three priests of the Diocese, and if the majority
of them agree, after giving the said cleric an opportunity to be heard, the Bishop shall offer the cleric
another ministry in the Diocese. ‘However, if it appears to the Bishop, either before embarking on this
process or during the process, that the reason for the need for a change relates to matters which could
constitute charges or accusations in terms of Canon 37.1, then in the absence of any charge under
Canon 37.1, . . . the Bishop shall proceed in terms of Canon 39, in respect of those matters and, in
respect of any balance of issues that remain, may continue with the search should that be appropriate.’
Canon 25(7) provides that If the cleric refuses to accept another ministry offered, the Bishop, upon
being satisfied after pastoral ministration that no other course is possible, shall have the right upon
notice to the cleric to revoke, upon the expiration of three months’ notice, the licence, of the cleric,
subject to the right to appeal to the Archbishop.
Canon 37 provides for judicial proceedings. It sets out a list of the charges or accusations upon which
any priest may be presented for trial. These include, inter alia, financial mismanagement. Canon 39
provides for the procedures to be followed once Canon 37 comes into operation. In 2017, aspersions
were cast against the appellant in relation to his dealings with the respondent and financial
mismanagement issues. As far as the Respondent was concerned, those charges had been dealt with.
Thus no trial was contemplated.
In 2018, the Bishop informed the appellant that he was considering moving some of the priests and that
the Bishop’s office intended to move him from St Margaret’s with effect from November/December 2018.
He was invited to engage with the Bishop’s office in this regard. The appellant refused to consent to the
move.do so. He stated the Bishop had failed to provide reasons for placement at another parish. The
appellant refused to visit the other parishes suggested, meet with structures of the respondent, or
accept the Bishop’s decision. He was thus informed that the Bishop’s office had no alternative other
than to invoke Canon 25(6) of the Constitution. On several occasions the appellant was given reasons
for the move. There were certain aspersions made against the appellant, which the Respondent failed
to deal with adequately. Thus, there was disharmony amongst parishioners. It was thought that a fresh
start would be a positive move for both the appellant and the parish. The appellant was not satisfied
with the reasons given by the Bishop.
The Bishop’s office informed the appellant that the matter was being referred to the Bishop’s Council in
terms of Canon 25(6). On 6 December 2018, the Respondent informed the appellant that, at the sitting
of the Bishop’s Council meeting the Council unanimously gave their support to the Bishop’s office to
invoke Canon 25(6) against him. This meant that the Bishop’s office was empowered to revoke the
appellant’s licence within the Diocese of the Free State. As a result of his continued challenge of its
decision, his deliberate and wilful ignorance of its directives, and his deliberate and wilful failure to meet
with the Bishop to discuss his future in the Diocese of the Free State, the respondent had taken a
decision to officially revoke his licence in the Diocese of the Free State.
The majority judgment found that the respondent had followed the prescripts of the Canons. The Bishop
had followed all the requisite procedural steps in making his decision to move the appellant and in
deciding to revoke the appellant’s licence. Procedural fairness in line with the rules and regulations of
the Respondent was complied with. He was given the opportunity to be heard, and to engage with the
relevant structures. He refused these invitations. It was not necessary, in the circumstances for the
respondent to have invoked Canons 37(1) and 39.
In a dissenting judgment, it was found that the proper procedures were not followed. The charges
relating to financial mismanagement were the reasons for the respondent’s decision. The dissenting
judges stated that financial management issues were the reason for the move and were matters which
‘could constitute charges or accusations in terms of Canon 37.1. They referred to Canon 25(6) which
stated that ….’ in the absence of any charge under Canon 37.1, the Bishop shall proceed in terms of
Canon 39, in respect of those matters and, in respect of any balance of issues that remain, may continue
with the search should that be appropriate’
The minority judgment found that the decision to change the appellant’s placement was because of the
financial mismanagement issues. It found that there was a total disregard of fundamental principles of
fairness enunciated in the respondent’s canons which warranted the high court’s intervention by way of
a review.
The minority judgment found that the undisputed evidence showed that the decision to change the
appellant’s placement was predicated exclusively on serious allegations, which called for the invocation
for canon 39. It therefore found that the change in placement ought to have been deferred while the
machinery in canon 39 was being set in motion. The minority judgment found that based on all the
circumstances and a conspectus of all the relevant facts, the High Court should have reviewed and set
aside the Bishop’s decision as it was irrational. The minority judgment concluded that it would have
upheld the appeal with costs, set aside the decision of the High Court and replaced it with an order
reviewing and setting aside the Bishop’s decision with costs, and remitting the matter back to the
respondent for the holding of an enquiry envisaged in canon 39.
|
3020
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 97/2015
In the matter between:
THOMAS RECKSON MUKONA APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Mukona v The State (97/15) [2015] ZASCA 128 (28
September 2015)
Coram:
Leach, Willis and Mathopo JJA
Heard:
28 August 2015
Delivered:
28 September 2015
Summary: Criminal appeal against conviction and sentence ─ appellant
convicted of murder, arson and three counts of attempted murder ─
failure by appellant to refute State case ─ effect of failure by the
appellant to refute the State’s case ─ appellant also failing to give
evidence in mitigation of sentence ─ conviction upheld ─ sentences
ordered to run concurrently.
___________________________________________________________
ORDER
On appeal from: The Limpopo High Court, Thohoyandou (Hetisani J
sitting as court of first instance):
1. The appeal against convictions is dismissed.
2. The appeal against sentence in respect of counts 1, 2, 3 and 4 is
dismissed.
3. The appeal against the sentence in respect of count 5 is upheld. The
sentence imposed is set aside and replaced with the sentence of 15 years
imprisonment.
4. The sentences imposed in respect of counts 2, 3, 4 and 5 are ordered to
run concurrently with the sentence imposed in respect of count 1. The
total effective sentence is thus life imprisonment.
JUDGMENT
Mathopo JA (Leach and Willis JJA concurring):
[1] In October 2002, the appellant, Mr Mukona, was convicted of
murder, three counts of attempted murder and one count of arson in what
was then known as the Venda High Court (Hetisani J)1 on 22 October
2002. Having found that there were no substantial and compelling
circumstances justifying a deviation from the minimum sentence
prescribed under s 51(1) of the Criminal Law Amendment Act 105 of
1 That court was subsequently renamed the Limpopo High Court, Thohoyandou after 1 March 2009,
and it was again renamed the Limpopo Local Division from 23 August 2013. See Renaming of High
Courts 2014 (3) SA 319.
1997 (the Act), the trial court sentenced him to life imprisonment in
respect of the murder of his son (Moboya); ten years imprisonment in
respect of the arson count; ten years imprisonment on each of the
attempted murders of Mr Freddy Thagwana (Mr Thagwana) and his
former wife, Ms Reneth Mulondo (Ms Mulondo); and, lastly, 35 years
imprisonment in respect of the attempted murder of his daughter
Mulanda. The sentences in respect of the three counts of attempted
murder (counts 3, 4 and 5) were ordered to run concurrently with the
sentence in respect of murder (count 1). In the result, the total effective
sentence imposed on the appellant was life imprisonment. Kganyago AJ
who dealt with the application for leave to appeal against convictions and
sentences, granted leave to appeal to this court on 13 June 2012.
[2] The undisputed evidence of the State is that the appellant was
unhappy that his former wife, Ms Mulondo, had formed a relationship
with Mr Thagwana and that they were living together as husband and
wife. The evidence of Ms Mulondo is that the appellant tried on several
occasions to win her back but she declined his advances. This incensed
the appellant to the extent that he tried to influence Mr Thagwana to
break up with Ms Mulondo by suggesting that Ms Mulondo was only
interested in Mr Thagwana because of his money. There is also evidence
that the appellant visited Mr Thagwana’s workplace twice and tried to
influence him to terminate the relationship with Ms Mulondo.
[3] When all these attempts failed, jealousy got the better of the
appellant as the facts of this case will illustrate. At midnight on 20
October 2001 Mr Thagwana and Ms Mulondo were woken from their
sleep to find their house on fire. They tried to extinguish the blaze but to
no avail, and were only able to escape being burnt to death by escaping
from a window. Mr Thagwana sustained burns on the shoulders and Ms
Mulondo suffered burns on the arm and both required medical treatment
for their burns. After reporting the incident at the police station, they went
home and then noticed an open two litre petrol container and a small blue
shawl lying next to the entrance of the door. The shawl was folded and
soaked in petrol and had clearly been used to start the fire. Ms Mulondo
recognised the shawl as belonging to her daughter, Mulanda, who
together with her son, Moboya, was living with the appellant at the time.
She informed the police about her findings. According to her evidence,
this shawl was given to Mulanda by one of the appellant’s girlfriends, Ms
Elisa Netshiphugana (Ms Netshiphugana). Even though Ms Mulondo
could not explain with certainty how she identified the shawl, her
evidence that it belonged to her daughter and that the children had never
visited Mr Thagwana’s homestead was not challenged. The tenor of her
evidence is that the appellant must have brought the shawl to the scene.
[4] Ms Netshiphugana, a former lover of the appellant, testified that
Mulanda had stayed with her for a long period of time and that she gave
the shawl to her to carry her toys. When she was shown the photographs
of the shawl in court, she without hesitation stated that it was indeed the
same shawl that she had given Mulanda. In cross-examination she readily
conceded that she could not identify any distinguishing features of the
shawl, but was adamant that this was the shawl which she had given to
Mulanda. Ms Netshiphugana’s evidence in essence corroborated to a
large extent the evidence of Ms Mulondo.
[5] As a result of this shawl, Inspector Makungo and his colleague
Nemabolo went to the appellant’s house, travelling in a marked police
vehicle. After asking for directions to the appellant’s home they
eventually saw him coming out his house. They called him but he ignored
them and ran away towards and disappeared into the bush. Nemabolo
knew the appellant very well. It was broad daylight, visibility was good,
and there is no possibility of mistaken identity.
[6] At the time the police had a suspect in another case in their vehicle.
They took this person to the police station and then returned to the
appellant’s home. In a rondavel, they found the appellant’s two children,
both of whom had been chopped in the head with an axe. The son,
Moboya was dead but Mulanda, although grievously injured, was alive
and was moving her hand. Paramedics and a fingerprint expert and
photographer were also called to the scene.
[7] Nelson Nematshema, a police officer, photographer and fingerprint
expert testified that, at the scene of the arson, he took photographs of the
shawl as well as a two litre container which was containing petrol. At the
appellant’s homestead she found two children one deceased and the other
alive. Next to the children was an axe. He uplifted the fingerprints from
the left-hand side of the handle of the axe and the fingerprints were later
found to match that of the appellant.
[8] Very little, if any, is in dispute between the State and the defence
with regard to the facts and circumstances surrounding the burning down
of Mr Thagwana’s homestead. More especially is this the case because
the appellant elected not to testify and thus did not materially dispute the
State’s case.
[9] The State’s case in respect of the arson and attempted murders of
Mr Thagwana and Ms Mulondo rested on the inferences to be drawn from
the evidence of the two complainants as well as that of Ms Netshiphugana
and the police officers who attended the scene of the arson, where the
shawl was found. The uncontroverted evidence of Mr Thagwana and Ms
Mulondo is that the children of the latter had never visited the former’s
homestead. Indeed, the appellant refused them permission to visit their
mother at Mr Thagwana’s homestead. Ms Netshiphugana, the appellant’s
former girlfriend testified that she gave the shawl to the appellant’s
daughter. She gave a general description of the shawl but in essence she
was adamant that the shawl found at Mr Thagwana’s homestead, was
identical to the one she had given to the appellant’s child. Despite this,
the appellant elected not to take the stand and refute the allegations.
[10] We were urged to accept that, once the State witnesses conceded
that they could not say with certainty that the shawl found at the scene
was the same shawl as the one belonging to Mulanda, the inference as to
the guilt of the appellant could not be drawn and that there was no case
for the appellant to answer. When assessing circumstantial evidence, a
court needs, however, to be careful not to approach such evidence on a
piecemeal basis but to consider the evidence in its totality. (See S v Reddy
1996 (2) SACR (A) at 8C.) In this regard the two cardinal rules of logic
in the often quoted the dictum of R v Blom2 must be borne in mind. In the
present matter, each separate piece of evidence linking the appellant to
the burning down of Mr Thagwana’s homestead viewed on its own and
analysed in isolation may not be sufficient for a conviction. However,
approaching the evidence holistically, as one must, the totality of the
evidence against the appellant that pointed towards him being the person
2 R v Blom 1939 AD 188 at 202-203.
responsible. (See S v Van der Meyden3 and S v Trainor.4)
[11] All that evidence called for an answer yet the appellant chose to
counter it with nothing preferring to shun the witness stand. The choice to
remain silent in the face of the weight of evidence implicating him in a
criminal conduct is suggestive of the fact that he had no answer for it.
The cumulative effect of the circumstantial evidence against the
appellant, coupled with his failure to testify, leads to the inescapable
inference being drawn that he was the person who set the homestead of
Mr Thagwana on fire. Any lingering doubt about this is dispelled by his
reaction of fleeing from the police when they wanted to talk to him
immediately after the event.
[12] In setting a fire of this nature, the inference is further inescapable
that the appellant’s sole purpose was to cause the death of those in the
house. He must have realised at that stage that prospects of reconciling
with Ms Mulondo were non-existent and for this reason he decided to try
and kill her and the new man in her life. Accordingly there is no merit in
the appeal against convictions for arson and attempted murders of Mr
Thagwana and Ms Mulondo.
[13] The evidence implicating the appellant to the murder and attempted
murder of his children is straightforward. An important fact which weighs
heavily against him is that shortly before the children were discovered he
was seen running away from his homestead by two police officers. When
they tried to chase him he disappeared into the bush or mountain. The
police officers later went to his house where they found the children in a
3 S v Van der Meyden 1999 (1) SACR 447 (W) at 449h-450b.
4 S V Trainor 2003 (1) SACR 35 (SCA) paras 8 and 9.
bloodied state, already dead at that time and next to them were an axe and
a brown rope. The other child was severely assaulted and was bleeding.
There was blood all over the floor and no one else in the house. The
fingerprints uplifted from the axe matched those of the appellant. Sight
must not be lost of the fact that the children were living with the
appellant. No one save for the appellant was seen leaving the homestead.
Despite all this strongly incriminating evidence, the appellant elected not
to testify to explain why he absconded. His version put in cross-
examination that he had left early for work that day cannot be accepted in
the light of the direct and undisputed evidence of the two police officers
who saw him running away from them at 10h30 in the morning. It also
does not explain why, on his own version put in cross-examination, he
would have left his two young children unattended for a month before he
was arrested. The submission by his counsel that the children could have
been attacked by an intruder was rightly rejected by the trial court. All
these factors ineluctably point towards the guilt of the appellant. The only
inference that could be drawn is that he was responsible for the murder
and attempted murder of his children. It follows that the appeal against
convictions must fail.
[14] In this court the sentence was attacked on two grounds. First, that
the court below applied the provisions of the Act without prior warning to
the appellant. Secondly, that the sentence imposed by the trial court was
shockingly inappropriate because the trial court relied on brief personal
information before sentencing the appellant and failed to direct that a
presentencing report be obtained. It was argued that, because of the
paucity of the information the trial court was in no position to properly
exercise its discretion in determining the appropriate sentence, and
misdirected itself in failing to call for more facts, including pre-
sentencing reports.
[15] There is no merit in this contention. The appellant’s personal
circumstances were adduced from the bar by his counsel as follows: (a)
He is 44 years old with four children, one of whom he has murdered; (b)
He is employed earning a salary of R90,00 per day. He was not a first
offender. He has three relevant previous convictions, one for murder
committed during 1991 (for which he was sentenced to 14 years’
imprisonment, four years of which were conditionally suspended) and
two for assault with intent to do grievous bodily harm committed during
1990 and 2001. All these offences indicate a propensity for violence. The
appellant was represented throughout the trial. The facts which were
submitted were those which counsel for the appellant deemed sufficient
to assist the court in mitigation. There is no evidence to suggest that other
relevant facts were suppressed by him or deliberately omitted. All that
was submitted adequately described the appellant personal circumstances
and there is no suggestion that more could have been added or rather that
he was denied an opportunity to do so. In my view there is no basis to
attack the trial court’s approach and conclusions on this ground.
[16] Regarding the trial court’s alleged failure to forewarn the appellant
of the applicability of the minimum sentencing provisions of the Act,
counsel for the state rightly contended that the appellant was legally
represented and he must have been aware of the provisions of the Act.
The reason is that, during the sentencing stage, his counsel alluded to the
provisions of the Act. In my view, there is nothing to show that the
appellant was prejudiced by the State’s failure to draw attention in the
charge sheet to the minimum sentences he faced. (See S v Ndlovu.5)
[17] In this court counsel for the appellant conceded, correctly in my
view, that the provisions of the Act are applicable. His argument that the
trial court should have found that substantial and compelling
circumstances existed is not supported by any evidence due to the
appellant’s reluctance to adduce any such evidence. As a result of that
approach, the trial judge had no option but to apply the provisions of the
Act and did not deviate therefrom for flimsy reasons. (See S v Malgas6
and S v Matyityi.7) The facts of the case in any event called out for the
imposition of life imprisonment on the charge of murder.
[18] There is no doubt that the offences were serious to the extreme.
What is aggravating is the fact that the arson, murder and attempted
murders were committed in the sanctity of the complainants’ homes. The
children had looked to the appellant for protection and guidance. Instead
he abused his position of trust, and killed and injured them. This must
have been emotional, traumatic and devastating for the young defenceless
children to have had to suffer at the hands of their father. As a result of
the assault, Mulanda has been semi-paralysed and been left mentally
impaired. She is probably fortunate to have survived but will forever live
with the fact that her condition was caused by her father. The appellant
showed no remorse for his actions and persisted on his innocence and did
not testify or adduce evidence aimed at demonstrating his remorse or
contrition.
5 S v Ndlovu 2003 (1) SACR 331 (SCA).
6 S v Malgas 2001 (2) SA 1222 (SCA).
7 S v Matyitya 2011 (1) SACR 40 (SCA).
[19] Even though the trial court ordered the sentences in count 1, 2, 3, 4
and 5 to run concurrently with the sentence imposed in count 1 (life
imprisonment), no explanation was given why a sentence of 35 years was
imposed in respect of the attempted murder of the appellant’s child
Mulanda. I am satisfied that although the appellant deserves a lengthy
period of imprisonment, 35 years imprisonment is totally out of
proportion to the nature of the offence, the interest of society and fails to
take into account the personal circumstances of the appellant. In my view
a sentence of 15 years imprisonment would give recognition to the
justifiable abhorrence invoked by the callousness of the deed whilst not
destroying the appellant on the altar of general deterrence. The appeal
against sentence therefore succeeds to this limited extent only.
[20] I therefore make the following order:
1. The appeal against convictions is dismissed.
2. The appeal against sentence in respect of counts 1, 2, 3 and 4 is
dismissed.
3. The appeal against the sentence in respect of count 5 is upheld. The
sentence imposed is set aside and replaced with the sentence of 15 years
imprisonment.
4. The sentences imposed in respect of counts 2, 3, 4 and 5 are ordered to
run concurrently with the sentence imposed in respect of count 1. The
total effective sentence is thus life imprisonment.
______________
R S Mathopo
Judge of Appeal
Appearances
For Appellant:
A L Thomu
Instructed by:
Bloemfontein Justice Centre, Bloemfontein
For Respondent:
R J Makhera
Instructed by:
Director of Public Prosecutions, Thohoyandou
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
28 September 2015
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
Mukona v The State (97/15) [2015] ZASCA 128 (28 September 2015)
The Supreme Court of Appeal (SCA) today handed down judgment in a criminal appeal in which it
upheld the appellant’s conviction for murder, arson and three counts of attempted murder due to his
failure to refute the State’s case.
The State presented evidence during the trial was that the appellant, Mr Mukona, was unhappy that
his former wife, Ms Mulondo, had formed a relationship with Mr Thagwana and that they were living
together as husband and wife. He had tried on several occasions to win Ms Mulondo back but she
declined his advances. When all these attempts failed, jealousy got the better of him and at midnight
on 20 October 2001, Mr Thagwana and Ms Mulondo were woken from their sleep to find their house
on fire. Mr Thagwana and Ms Mulondo suffered burns from the fire. They noticed an open two litre
petrol container and a small blue shawl lying next to the entrance of the house, soaked in petrol and
had been used to start the fire. Ms Mulondo recognised the shawl as belonging to her daughter,
Mulanda, who together with her son was living with the appellant at the time. She reported this to the
police. When the police went to the appellant’s house, they saw him coming out, and when they
called him he ran away and disappeared into the bush. One of them knew the appellant very well and
it was broad daylight and thus positively identified him. In the appellant’s home, they found the
appellant’s two children, both of whom had been hewn in the head with an axe. The son was dead
but Mulanda the daughter, although grievously injured, was alive and was moving her hand.
Fingerprints taken from the axe matched those of the appellant.
Despite this evidence, the appellant elected not to testify and thus did not materially dispute the
State’s case. Resultantly, the trial court convicted the appellant based on the evidence and inferences
drawn from it. The appellant further failed to testify in mitigation of sentence and the aforementioned
sentences were resultantly given. The court a quo found that there were no substantial and
compelling circumstances justifying a deviation from the prescribed minimum sentences under s
51(1) of the Criminal Law Amendment Act 105 of 1997 (the Act). It sentenced him to life
imprisonment in respect of the murder of his minor son; ten years’ imprisonment for arson; ten years’
imprisonment on each of the two counts of the attempted murder of his former wife Ms Mulondo and
of Mr Thagwana, the subsequent husband of Ms Mulondo. And, lastly, the court sentences the
appellant to 35 years’ imprisonment in respect of the attempted murder of his daughter Mulanda. The
sentences in respect of the three counts of attempted murder (counts 3, 4 and 5) were ordered to run
concurrently with the sentence in respect of murder (count 1). The total effective sentence imposed
by the court a quo on the appellant was life imprisonment. The appellant was granted leave to appeal
to the SCA by the court a quo against the convictions and sentences.
On appeal, the conviction was challenged on the basis of the inferences drawn by the trial court;
while the sentences were attacked on two grounds. First, that the court below applied the provisions
of the Act without prior warning to the appellant. Secondly, that the sentence imposed by the trial
court was shockingly inappropriate because the trial court relied on brief personal information before
sentencing the appellant and failed to direct that a presentencing report be obtained.
The SCA held in respect of the conviction that when assessing circumstantial evidence, courts need
to be careful not to approach such evidence on a piecemeal basis, but to consider it in its totality. In
this regard the SCA held that rules of logic must be borne in mind and it found that viewed holistically,
the evidence pointed toward him being perpetrator of the crimes, and it called for him to explain his
version, which he failed to do and leading to the negative inferences drawn against him.
The SCA held in respect of the sentences that:
(a) the appellant was represented and must have been aware of the provisions of the Act as his
counsel alluded to the provisions during sentencing and that nothing showed that the appellant
was prejudiced by the State’s failure to draw attention in the charge sheet to the minimum
sentences he faced.
(b) The appellant’s contention that there were substantial and compelling circumstances existed is not
supported by any evidence due to the appellant’s reluctance to adduce evidence and that in the
result the trial court was obliged to impose the minimum sentences.
The SCA found that no explanation was given why the trial court imposed a sentence of 35 years’
imprisonment in respect of appellant’s attempted murder of his daughter and that it was out of
proportion to the nature of the offence. The court found that a sentence of 15 years’ imprisonment
would be appropriate.
The SCA accordingly dismissed the appeal against the conviction and sentence of the appellant,
upheld the appeal against sentence in respect of the attempted murder of the appellant’s daughter
and ordered that the sentences run concurrently.
--- ends ---
|
2894
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 1075/2013
In the matter between:
STUPEL & BERMAN INCORPORATED
APPELLANT
and
RODEL FINANCIAL SERVICES (PTY) LTD
RESPONDENT
Neutral citation:
Stupel & Berman v Rodel Financial Services (1075/2013) [2015]
ZASCA 1 (27 February 2015).
Coram:
Brand, Mhlantla, Willis JJA and Fourie and Gorven AJJA
Heard:
17 February 2015
Delivered:
27 February 2015
Summary: Undertaking by the appellant as conveyancer – on instructions of the
seller – to pay proceeds of sale to the respondent upon transfer of immovable
property – the appellant not an adjectus solutionis causa but an agent whose
instructions to pay the respondent could and had been revoked by the seller as
principal.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (C J Claassen J
sitting as court of first instance):
1 The appeal is upheld with costs including the costs of two counsel.
2 Paragraphs (a) and (b) of the order of the high court are set aside and replaced
with the following:
‘The plaintiff’s claim against the first defendant is dismissed with costs, including the
costs consequent upon the employment of two counsel wherever applicable.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Brand JA (Mhlantla, Willis JJA and Fourie and Gorven AJJA concurring):
[1] The appellant, Stupel & Berman Inc (Stupel & Berman), is a firm of attorneys.
The respondent, Rodel Financial Services (Pty) Ltd (Rodel) is a financial institution.
Rodel instituted action in the court a quo against Stupel & Berman, as first defendant
and one of its directors, Mr Berman, as second defendant, for payment of the
amount of R1 763 489 together with interest and costs. When the matter came
before Claassen J, he was presented with a stated case. Consequently, no evidence
was led at the trial. In the event, the court a quo upheld Rodel’s claim against Stupel
& Berman while the second defendant was absolved from the instance with costs.
The appeal by Stupel & Berman against the first part of the order directed against it
– which is embodied in paragraphs (a) and (b) of the order – is with the leave of the
court a quo. Rodel’s cross-appeal against the second part in favour of Mr Berman
was abandoned before the hearing of the appeal.
Background
[2] The background extracted from the stated case is unfortunately somewhat
complicated. Hopefully the effort to simplify what follows will not have the opposite
effect. Stupel & Berman was appointed to act as conveyancer in the registration of
transfer of an immovable property in Norwood, Johannesburg. The property was
sold at an auction by Amber Falcon Properties 3 (Pty) Ltd (Amber Falcon) to Cross
Atlantic Properties 186 (Pty) Ltd (Cross Atlantic) for a purchase price of R7.2 million.
At the time the property was bonded in favour of Mercantile Bank Ltd for an amount
slightly in excess of R5 million. In terms of the sale agreement the purchase price
was, of course, payable upon registration of transfer. While awaiting that transfer,
Amber Falcon obtained bridging finance loans from Rodel in terms of two
discounting agreements. Pursuant to these two agreements, dated 31 August 2010
and 2 September 2010, Rodel advanced amounts of R850 000 and R550 000,
respectively, to Amber Falcon. Both these agreements consisted of two parts: a
schedule and a document entitled ‘Terms and Conditions’.
[3] The schedules referred to the details of the sale of the Norwood property,
including the names of the parties, the purchase price and so forth. They were
signed on behalf of Amber Falcon, Rodel and Stupel & Berman, the latter in its
capacity as the appointed conveyancers. It is common cause, however, that Stupel
& Berman was not a party to the two discounting agreements and that they were in
fact unaware of the ‘Terms and Conditions’ set out in the second part. In both
schedules Amber Falcon confirmed that ‘I hereby cede, transfer and make over to
Rodel my/our right title and interest in and to the proceeds against payment of [the
loan]’. ‘Proceeds’ is defined in the Terms and Conditions as the net amount payable
to Amber Falcon in terms of the sale, after deduction of the bond, agent’s
commission and other expenses. Lastly, both schedules contained a section entitled
‘Undertaking by Conveyancer’, which was signed on behalf of Stupel & Berman.
Although strictly speaking it signed two of these undertakings, there was in effect
only one. As it happened, this undertaking eventually constituted the nub of Rodel’s
claim in this case. By the nature of things, a more detailed discussion of its terms is
therefore bound to follow. For introductory purposes, I find it sufficient to say,
however, that in terms of the undertaking Stupel & Berman confirmed that it was
attending to the registration of transfer of the property in terms of the sale; that it had
received irrevocable instructions from the seller, Amber Falcon, to pay the amount
payable to Rodel under the discounting agreement from the proceeds of the sale;
and that it undertook to pay this amount within 72 hours of registration of transfer
‘unless prevented by interdict or operation of law’.
[4] The next episode of relevance occurred on 22 October 2010 when Amber
Falcon, through its representative, Mr Nathan Blumenthal (Blumenthal), notified
Rodel that it had cancelled the sale agreement with Cross Atlantic; but, that the
property was remarketed at a higher price and would be auctioned on 24 November
2010; that the advances from Rodel under the discount agreements were therefore
well-secured; and that Stupel & Berman would attend to the transfer of the property
to the new purchaser under the subsequent sale. On the same day Stupel & Berman
conveyed essentially the same information to Rodel. The response on behalf of
Rodel was that ‘we are comfortable with the situation as explained by you’. However,
things did not turn out as planned. On 8 November 2010 Cross Atlantic brought an
urgent application for an interdict against disposal of the property by Amber Falcon,
which interdict was granted on 24 November 2010. This dispute was subsequently
settled on 25 January 2011. Part of the settlement was that the transfer of the
property to Cross Atlantic would proceed.
[5] In the light of the settlement, Stupel & Berman informed a representative of
Rodel, Ms Tammy Hall, on 3 February 2011, that the sale between Amber Falcon
and Cross Atlantic was proceeding and that it was just waiting for the purchaser to
pay the transfer duty. But on the very same day, 3 February 2011, Blumenthal
conveyed a contradictory message to the same Ms Hall. The crux of this message
was that Amber Falcon had lost the court case; that the interdict against alienation of
the property was still in place; that the sale could thus be held in limbo for up to
twelve months; that Amber Falcon’s position was therefore ‘rather precarious’, and
that, in consequence, he offered Rodel an amount in settlement which was
substantially less than that which was owing under the discounting agreements.
[6] Rodel’s immediate reaction to this message, which was plainly misleading –
to say the least – was to cancel the discounting agreements. It did so through its
attorneys by way of a letter dated 4 February 2011. To add to the difficulties that
subsequently arose, the letter was equivocal. According to the first paragraph ‘[o]ur
client hereby cancels the Agreement entered into between you and our client on 31
August 2010’ which seemed to confine the cancellation to the first discounting
agreement only. But in the second paragraph the attorney stated that ‘[w]e have
been instructed to demand from you, as we hereby do, payment of the sums of
R850 000 and R550 000 plus a discounting fee of 0,133% per day’. This only made
sense if the cancellation pertained to both discounting agreements.
[7] In response Amber Falcon, through Blumenthal, informed Rodel that it
accepted the cancellation of the ‘Agreement’ (singular) and that it had appointed
another firm of attorneys, Bieldermans Inc, to ‘dispose of the matter’. Further, on 21
February 2011, Amber Falcon instructed Stupel & Berman to withdraw any
undertakings provided to Rodel since the discounting agreements had been
cancelled. Also on 21 February 2011, Bieldermans, inter alia, wrote to Stupel &
Berman on behalf of Amber Falcon:
‘We enclose herewith a copy of our letter in response [to Rodel’s cancellation letter of 4
February 2011] in terms of which our client [Amber Falcon] has accepted the cancellation. In
the circumstances we hereby formally instruct you, on behalf of our client, not to proceed
any further with any undertakings given in favour of Rodel Financial Services (Pty) Ltd. You
are requested to immediately withdraw any and all undertakings given by you in terms of the
aforesaid Discounting Agreement.’
[8] In compliance with these instructions, Stupel & Berman wrote to Rodel on 24
February 2011. The relevant part of this letter reads as follows:
‘1.
As you are aware, we are attending to the above transfer of Erf . . . Norwood from
[Amber Falcon] to [Cross Atlantic].
2.
We attach hereto a copy of a fax dated 21 February 2011 from Bieldermans Inc.
Attorneys wherein they have instructed us to immediately withdraw any and all
undertakings given by us in terms of a Discounting Agreement concluded between
[Rodel] and [Amber Falcon].
3.
In the circumstance we are compelled to give effect to the mandate/instruction of
[Amber Falcon] and hereby withdraw from the undertakings given by us as
Conveyancers in the above transaction . . ..
4.
Please be advised accordingly.’
[9] Rodel did not react or respond in any way to Stupel & Berman having
withdrawn its undertakings. More particularly, no attempt was made until some five
months later, in July 2011, to contest the withdrawal. In the interim, registration of
transfer of the property was effected by Stupel & Berman on 17 March 2011 while
the net proceeds were subsequently paid by it to Amber Falcon on 30 March 2011.
In the meantime Rodel pursued its claim for repayment of the amounts advanced in
terms of the discounting agreements – on the basis that these agreements had been
cancelled – against Amber Falcon and Mr Julius Blumenthal, who had signed a
suretyship in favour of Rodel pursuant to these agreements. When this claim was
opposed by both Amber Falcon and Julius Blumenthal, Rodel applied for and
obtained summary judgment. Its attempts to execute on this judgment, however,
proved to be unsuccessful. Only then did Rodel look to Stupel & Berman in order to
recover the money advanced to Amber Falcon.
The undertaking
[10] The claim against Stupel & Berman was based on the undertaking which
formed part of the schedules to the discounting agreements. The undertaking
provided:
‘Undertaking by Conveyancer
1.
We are currently attending to the registration of the abovementioned property
transfer, arising out of the sale agreement entered into between the parties referred
to above.
2.
The sale agreement is valid and enforceable in law and there are, to our knowledge,
no attachments or interdicts registered against the Property.
3.
All suspensive conditions in respect of the above transfer have been fulfilled, and we
know of no further impediment or encumbrance that would delay or hinder the
registration of transfer of this transaction.
4.
The Client has entered into a discounting agreement with Rodel . . . whereby Rodel
has agreed to purchase the proceeds arising from the above transaction on
registration of transfer.
5.
The balance owing to the mortgagee is as set out above.
6.
No further undertakings have been/will be made or given which would reduce the
Proceeds on registration of transfer.
7.
We acknowledge that the Client has furnished us with an irrevocable instruction to
pay to Rodel, from the Proceeds, the full amount payable in terms of the said
discounting agreement . . . .
8.
We hereby undertake to pay to Rodel from the Proceeds the above amount within 72
hours of registration of transfer/receipt of funds, unless prevented by interdict or
operation of law.
9.
We undertake to inform Rodel forthwith if the Client lodges with us a request to uplift
his file, or terminates or attempts to terminate our mandate to act on its behalf, which
act we understand to be a breach of your agreement with the Client.
10.
In the event of a cancellation of the sale for whatsoever reason and where the funds
provided by Rodel have been utilised for the payment of transfer duty or rates and
taxes, we will pay to Rodel all and any monies received in respect of the refund of
transfer duty or rates and taxes paid . . .
11.
We undertake to keep you advised of all material and important developments in
regard to the transaction.
12.
. . . .’
Contentions for the parties
[11] The defences raised by Stupel & Berman were essentially threefold.
(a) First, it contended that the undertakings upon which Rodel’s claim rested had
been withdrawn by it on the instructions of Amber Falcon. It is not disputed that, as a
fact, that is so. Rodel’s response was, however, that although Stupel & Berman
purported to withdraw its undertakings, it was in law not entitled to do so. Or, stated
somewhat differently, that in law the undertakings were not revocable either on the
instructions of Amber Falcon or by Stupel & Berman on their own accord.
(b) The second defence raised by Stupel & Berman rested on the proposition that
the purported cession of the net proceeds of the sale in favour of Rodel amounted to
a partial cession of the purchase price, which was as such invalid in law (see eg Van
der Merwe v Nedcor Bank Bpk 2003 (1) SA 169 (SCA) para 6 and 8; Kruger v
Property Lawyer Services (Edms) Bpk 2011 JDR 0527 (SCA) para 9 fn 5). In
consequence, so the contention went, the undertaking relied upon had been given
pursuant to an invalid cession which rendered this undertaking likewise invalid and
unenforceable.
(c) Thirdly, Stupel & Berman contended that the undertaking was given as part and
parcel of discounting agreements that fell away when they were cancelled by Rodel.
This defence gave rise to a rather lengthy debate – arising from the ambiguous letter
of cancellation on behalf of Rodel dated 4 February 2011 – as to whether Rodel
cancelled the first discounting agreement only or whether both these agreements
had been cancelled. In my view the short answer to the debate is that Rodel’s clear
intent was to cancel both agreements and that Amber Falcon understood it in this
way. I say that because logic dictates that Rodel had no reason to cancel the one
and not the other. Contrary to the finding by the court a quo, I therefore find, as a
fact, that both discounting agreements had been cancelled by Rodel on 4 February
2011. My further consideration will proceed on the premise of that factual finding.
[12] Since the court a quo was left unpersuaded by any one of these three
defences it rejected them all. On appeal Stupel & Berman contended that it had
erred in doing so. In considering the merits of this contention, I propose to deal first
with the question whether Stupel & Berman were obliged to withdraw or revoke the
undertaking on the instructions of Amber Falcon.
Withdrawal of the undertaking
[13] In deciding that Stupel & Berman were neither compelled nor entitled to
withdraw the undertaking, which formed the basis of Rodel’s case, the court a quo
began from the premise that the undertaking constituted part of a tripartite
agreement between Amber Falcon, Rodel and Stupel & Berman. In terms of this
tripartite agreement, so the court’s reasoning went, Stupel & Berman was the debtor,
Amber Falcon was the creditor while Rodel was cast in the role described in Roman
law as that of an adjectus solutionis causa (adjectus). An adjectus, according to its
generally accepted definition, is an entity, other than the creditor, to whom, by
agreement between the debtor and the creditor, the debtor is entitled to pay what is
due to the creditor and so discharge its obligations (see eg Susan Scott The Law of
Cession 2 ed (1991) at 161).
[14] Based on the assumption that Rodel was an adjectus, the court a quo held
that, as a matter of law, Amber Falcon could not withdraw its instruction to Stupel &
Berman to pay Rodel. As authority for this thesis, the court referred to the following
statement by Pothier Obligations para 489, which was quoted with approval, inter
alia, in Norman Kennedy v Norman Kennedy Ltd; Judicial Managers, Norman
Kennedy Ltd NO v Reinforcing Steel Co Ltd & others 1947 (1) SA 790 (C) at 802:
‘A person to whom the creditor has indicated the payment to be made by the agreement
itself, is very different from one who has merely an authority from the creditor to receive. The
power of paying to a person having a simple authority ceases by revocation of the authority
notified to the debtor, which the creditor may make at pleasure . . . .
On the contrary, the right of paying to the person indicated by the agreement being founded
upon the agreement itself, of which it constitutes a part, and which cannot be derogated
from, but by mutual consent, the creditor cannot deprive the debtor of it, and the debtor,
notwithstanding any prohibition of the creditor, may according to the law of the agreement,
pay to the person indicated . . . .’
[15] I accept that, as a general rule, once an adjectus has been contractually
nominated, the creditor cannot unilaterally change its instructions to the debtor and
that the debtor can insist on paying the adjectus (see eg also Administrator, Natal v
Magill Grant & Nell 1969 (1) SA 660 (A) at 699H). But my problem with the court a
quo’s reasoning lies in its fundamental premise. As I see it, there are a number of
reasons why Rodel simply cannot be regarded as an adjectus. First of all, the
assumption that the undertaking relied upon by Rodel was part of a tripartite
agreement, is unfounded. Albeit that it formed part of a larger transaction governed
by a whole battery of agreements – including also the agreement of sale, the
discounting agreements and the agreement of mandate between Amber Falcon and
Stupel & Berman – the undertaking itself constituted a ‘stand-alone’ agreement
between Rodel, on the one hand, and Stupel & Berman, on the other from which
certain obligations arose for Stupel & Berman. The content of those obligations
depend on a construction of the stand-alone agreement. Second of all, and in any
event, Stupel & Berman was never in the position of a debtor. Nor was Amber
Falcon in the position of its creditor. In terms of the agreement of sale, Amber Falcon
was the creditor in respect of the purchase price while the debtor was the purchaser.
In terms of the agreement of mandate, Amber Falcon as principal appointed Stupel
& Berman as its agent to do two things: (a) to transfer the property to the purchaser
and (b) to pay the net proceeds of the purchase price to Rodel. In fact, if Rodel was
truly an adjectus, it would have no claim against Stupel & Berman at all. This
conclusion derives from the rather trite principle formulated thus in 2 Lawsa 2 ed
para 17:
‘The creditor may direct his or her debtor to render performance to a third party. The debtor
is under no compulsion to do so. But if the debtor does agree, performance to the third party
(the solutionis causa adjectus) absolves the debtor. Such an agreement is not cession. The
right does not pass. It remains with the creditor. The third party obtains no right of action to
enforce performance. Failure on the part of the debtor to perform to the third party would
accordingly not invest the third party with an action against the debtor . . . .’
[16] I now turn to the construction of the undertaking as a stand-alone agreement.
In terms of clause 8 Stupel & Berman plainly undertook to pay the net proceeds of
the sale to Rodel within 72 hours of registration of transfer and receipt of the
purchase price. But to me it is clear that it did not do so in its personal capacity (as
happened for example in Ridon v Van der Spuy & Partners (Wes-Kaap) Inc 2002 (2)
SA 121 (C) at 137I-138C), but in pursuance of its mandate as the agent of Amber
Falcon. I say this because the undertaking made it clear that it was given on the
instructions of Amber Falcon (clause 7) and that Stupel & Berman would let Rodel
know if Amber Falcon terminated or tried to terminate its mandate (clause 9). It
stands to reason that, if the undertakings to pay were personal, termination of the
mandate would be of no consequence to Rodel.
[17] Once it is accepted that Stupel & Berman gave the undertakings in the
capacity of an agent on the instructions of a principal, the law of agency provides
that, as a general rule, those instructions could be terminated. The fact that these
instructions are described as irrevocable in clause 7, does not detract from the
principle (see eg Consolidated Frame Cotton Corporation Ltd v Sithole 1985 (2) SA
18 (N) at 22H). Rodel’s argument, which found favour with the court a quo, was
however, that the undertaking fell within the ambit of what is considered to be one of
the recognised exceptions to the general rule, namely where the authority can be
categorised as ‘coupled with an interest’ (see Consolidated Frame Cotton supra 22J-
23B. Cf, however, Ward v Barrett NO & another 1962 (4) SA 732 (N) at 737D-E).
The first interest relied upon by Rodel in this regard is its own obvious stake in the
execution of the mandate. But the accepted principle, as I understand it, is that the
interest to be protected by irrevocability under this exception, must be that of the
agent as opposed to that of a third party (see Consolidated Frame Cotton supra
23C-D).
[18] The second interest upon which Rodel relied in support of this argument is
the interest of Stupel & Berman in executing transfer in order to claim its
conveyancing fees. But as I see it, there are at least two answers to this argument.
First, if this is the type of interest contemplated by the exception, it stands to reason
that this can only render the mandate irrevocable to the extent that revocation will
constitute a breach of the mandate contract, which will expose the principal to a
claim for damages by the agent. It cannot possibly afford the agent the right to insist
on specific performance in the execution of its mandate. Secondly, the argument
confuses Stupel & Berman’s mandate to pass transfer and receive the proceeds of
the sale, on the one hand, with its mandate to pay these proceeds to Rodel, on the
other. Once it had executed the first of these mandates, it was entitled to its
conveyancing fee. There is no indication that it would receive additional
compensation for executing the second part of its mandate, ie to pay the net
proceeds to Rodel. Thus understood, it would be of no consequence to Stupel &
Berman if the second part of the mandate were to be withdrawn. Any possible doubt
that these two parts of the mandate could be separated, is removed by what actually
happened in this case. Moreover, as I see it, the parties to the undertaking clearly
appreciated that in terms of the governing legal principles, Stupel & Berman’s
mandate could be terminated. That appears from the express provisions of clause 9,
the quotation of which I repeat for the sake of convenience. It provides:
‘We undertake to inform Rodel forthwith if the Client lodges with us a request to uplift this file
or terminates, or attempts to terminate our mandate to act on its behalf, which act we
understand to be a breach of your agreement with the Client.’
[19] What is more, the clause leaves no room for doubt that it was within the
contemplation of the parties that Amber Falcon could exercise its right to terminate
the mandate of its agent. In that event the clause imposed the obligation on the
agent, Stupel & Berman, to inform Rodel of that fact. The clause then proceeds to
record the reason for this obligation. It is because termination of the mandate would
constitute a breach of Amber Falcon’s agreement with Rodel. This, in turn, echoes
clause 5.14 of the discounting agreements which stipulated a commitment by Amber
Falcon not to terminate the mandate of Stupel & Berman. In this light the reason for
the notice obligation in clause 9 is not hard to find. It is to afford Rodel the
opportunity to prevent Amber Falcon from terminating the mandate, and/or to
prevent Stupel & Berman from acting on that termination. Rodel’s dilemma in this
case resulted from its own failure to heed Stupel & Berman’s warning that, while it
was proceeding with the transfer of the property to Cross Atlantic, its mandate to pay
the net proceeds of the purchase price to Rodel had been terminated. Rodel’s
obvious remedy was to seek an interdict against Amber Falcon – joining Stupel &
Berman as an interested party – to prevent the latter from giving effect to the
termination of the mandate by the former. Alternatively it could have enabled Stupel
& Berman to institute the interpleader proceedings provided for by Rule 58 of the
Uniform Rules of Court.
[20] Stupel & Berman’s further argument under the rubric that they were obliged to
withdraw its promise to pay was that, in any event, Rodel’s cancellation of the
discounting agreements left Amber Falcon free of its contractual undertaking in
terms of clause 5.14 not to terminate the mandate. Although there may be some
merit in this argument I find it unnecessary to decide whether this is so. Once I
conclude, as I do, that Amber Falcon was entitled to withdraw Stupel & Berman’s
mandate, the latter had no option but to act upon that termination. Or in the words of
clause 7 of the undertaking, it was prevented to pay Rodel ‘by operation of law’. That
is the end of the matter. Whether or not Amber Falcon was acting in breach of its
obligation in terms of the discounting agreements, to which Stupel & Berman was
not a party, is of no consequence. By the same token I find it unnecessary to embark
upon a consideration of the other defences raised by Stupel & Berman. Even if the
court a quo was correct in rejecting these defences, Rodel’s claim is destined to fail
which means that the appeal is bound to succeed.
[21] In the result:
1 The appeal is upheld with costs including the costs of two counsel.
2 Paragraphs (a) and (b) of the order of the high court are set aside and replaced
with the following:
‘The plaintiff’s claim against the first defendant is dismissed with costs, including the
costs consequent upon the employment of two counsel wherever applicable.’
________________
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
For the Appellant:
B Berridge SC and B Manentsa
Instructed by:
Webber Wentzel
Johannesburg
c/o Lovius Block, Bloemfontein
For the Respondent:
R Solomon SC and E Myhill
Instructed by:
Norman Berger & Partners Inc
Johannesburg
c/o McIntyre & Van der Post, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
27 February 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Stupel & Berman Incorporated v Rodel Financial Services (Pty) Ltd
(1075/2013) [2015] ZASCA 1 (27 February 2015).
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) furnished its reasons for upholding the appeal by the
appellant and setting aside an order of the South Gauteng High Court, Johannesburg.
The issue before the SCA was whether the appellant was obliged to withdraw or revoke the
undertaking upon which the respondent’s claim rested.
The respondent instituted action in the court a quo against the appellant, as first defendant and one of
its directors, Mr Berman, as second defendant, for payment of the amount of R1 763 489 together
with interest and costs. The respondent’s claim against the appellant was upheld in the court a quo
whilst the second defendant was absolved from the instance.
The appellant was appointed to act as conveyancer in the registration of transfer of an immovable
property in Norwood, Johannesburg. The property was sold at an auction by Amber Falcon Properties
3 (Pty) Ltd (Amber Falcon) to Cross Atlantic Properties 186 (Pty) Ltd (Cross Atlantic) for a purchase
price of R7.2 million. While awaiting that transfer, Amber Falcon obtained bridging finance loans from
the respondent in terms of two discounting agreements. Both these agreements consisted of two
parts: a schedule and a document entitled ‘Terms and Conditions’. Both schedules contained a
section entitled ‘Undertaking by Conveyancer’, which was signed on behalf of the appellant as
conveyancer. In terms of the undertaking the appellant undertook to pay the net proceeds of the sale
to the respondent upon transfer of the property. However, after Amber Falcon had received the
money it borrowed from the respondent in terms of the discounting agreement, it proceeded to
instruct the appellant to withdraw the undertakings provided to the respondent, which the appellant
then did.
The court a quo held that the appellant was in the position of an adjectus solitionus causa (adjectus)
in which capacity it could not withdraw the undertaking. By contrast, the SCA held, however, that the
appellant was not acting in the capacity of an adjectus, but as an agent.
The SCA held further that once it was accepted that the appellant gave the undertakings in the
capacity of an agent on the instructions of a principal, the law of agency provided that, as a general
rule, those instructions could be terminated. It held further that Amber Falcon could withdraw the
appellant’s mandate and therefore the latter had no option but to act upon those instructions.
|
3126
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No 125/06
Reportable
In the matter between:
CLIPSAL AUSTRALIA (PTY) LTD
1st Appellant
CLIPSAL SOUTH AFRICA (PTY) LTD
2nd Appellant
and
TRUST ELECTRICAL WHOLESALERS 1st Respondent
GAP DISTRIBUTOR
2nd Respondent
Coram:
HARMS ADP, STREICHER, CLOETE, LEWIS AND
CACHALIA JJA
Heard:
27 FEBRUARY 2007
Delivered: 23 MARCH 2007
Summary: Designs Act 195 of 1993 – novelty – originality – infringement.
Neutral Citation: Clipsal Australia (Pty) Ltd v Trust Electrical Wholesalers
[2007] SCA 24 (RSA).
HARMS ADP/
HARMS ADP:
[1] The proprietor of a registered design and the local exclusive licensee
(the appellants) sought relief against the respondents on the ground that they
are infringing their design registration. Blieden J, in the high court, dismissed
the application with costs on the ground that the design had not been validly
registered because it was not new or original; he also held that the design in
any event had not been infringed. He granted the necessary leave to appeal.
[2] The design (A 96/0687) was registered under the Designs Act 195 of
1993 as an aesthetic design in class 13, which covers equipment for the
production, distribution or transformation of electricity. The Act draws a
distinction between aesthetic and functional designs. The definition of the
former reads (s 1(1)):
‘“aesthetic design” means any design applied to any article, whether for the pattern or
the shape or the configuration or the ornamentation thereof, or for any two or more of
those purposes, and by whatever means it is applied, having features which appeal
to and are judged solely by the eye, irrespective of the aesthetic quality thereof.’
[3] The articles to which the design registration applies are ‘a set of
electrical accessory plates with surrounds’. According to the definitive
statement protection is claimed for ‘the features of shape and/or configuration
of a set of electrical accessory plates with surrounds as shown in the
accompanying drawings’. The drawings, which are an annexure to this
judgment, show two configurations, hence the reference to a ‘set’ in both the
title and the definitive statement. The one configuration is for what is normally
known as a cover plate for a single wall socket for a three-prong electric plug
with switch and the other is a cover plate for a double socket with two
switches. These cover plates are rectangular. They are both surrounded by a
square plate which has a slightly convex slope. Because of the relative shape
of the rectangular cover plate and the square surround only the opposite sides
of the surround are of the same width.
[4] The effect of the registration of a design is to grant to the registered
proprietor the right to exclude others from the making, importing, using or
disposing of any article included in the class in which the design is registered
and embodying the registered design or a design not substantially different
from the registered design (s 20(1)).
[5] The defendant in infringement proceedings may counterclaim for the
revocation of the design registration or, by way of defence, rely on any ground
on which the registration may be revoked (s 35(5)). In this case the
respondents chose the second option, namely to rely by way of defence on
the grounds that the design was neither new nor original as required by s
14(1)(a), which are grounds for revocation under s 31(1)(c). In addition they
denied infringement, alleging that their products do not embody either of the
two designs and differ substantially from them.
[6] The respondents are making and marketing electrical accessory plates
with surrounds under the name Lear G-2000 series single electrical socket
SYZ – 16 (100 x 100) and double electrical socket S2YZ2 – 16 (100 x 100).
These fall in the same class as the protected designs, which means that the
first issue to determine is the scope of the design registration, which in turn
requires a construction of the definitive statement and the drawings.1 The
purpose of the definitive statement, previously known as a statement of
novelty, is to set out the features of the design for which protection is claimed
and is used to interpret the scope of the protection afforded by the design
registration.2
[7] The definitive statement in this case is of the omnibus type because it
does not isolate any aspect of the design with the object of claiming novelty or
originality in respect of any particular feature. As Laddie J explained in Ocular
Sciences Ltd v. Aspect Vision Care Ltd [1997] RPC 289 at 422:
1 TD Burrell ‘Designs’ 8 Lawsa 2 ed para 257. Further references to Lawsa are to this edition
and volume.
2 Design Regulations GNR 844 of 2 July 1999 reg 15(1).
‘The proprietor can choose to assert design right in the whole or any part of his
product. If the right is said to reside in the design of a teapot, this can mean that it
resides in design of the whole pot, or in a part such as the spout, the handle or the
lid, or, indeed, in a part of the lid. This means that the proprietor can trim his design
right claim to most closely match what he believes the defendant to have taken.’
This means that the shape or configuration as a whole has to be considered,
not only for purposes of novelty and originality, but also in relation to
infringement.3
[8] Important aspects to consider when determining the scope of the
registered design protection flow from the definition of an ‘aesthetic design’,
namely that design features have to appeal to and be judged solely by the
eye. First, although the court is the ultimate arbiter, it must consider how the
design in question will appeal to and be judged visually by the likely
customer.4 Secondly, this visual criterion is used to determine whether a
design meets the requirements of the Act and in deciding questions of novelty
and infringement.5 And thirdly, one is concerned with those features of a
design that ‘will or may influence choice or selection’ and because they have
some ‘individual characteristic’ are ‘calculated to attract the attention of the
beholder.’6 To this may be added the statement by Lord Pearson that there
must be something ‘special, peculiar, distinctive, significant or striking’ about
the appearance that catches the eye and in this sense appeals to the eye.7
3 Schultz v Butt 1986 (3) SA 667 (A) at 686D-G per Nicholas AJA. Jones & Attwood Ltd v
National Radiator Co Ltd (1928) 45 RPC 71 at 83 line 5-12.
4 Homecraft Steel Industries (Pty) Ltd v SM Hare & Son (Pty) Ltd 1984 (3) SA 681 (A) at
692B-D per Corbett JA. I agree with these comments by Jacob J in Oren and Tiny Love Ltd v.
Red Box Toy Factory Ltd [1999] EWHC Patents 255: ‘I do not think, generally speaking, that
"expert" evidence of this opinion sort (i.e. as to what ordinary consumers would see) in cases
involving registered designs for consumer products is ever likely to be useful. There is a
feeling amongst lawyers that one must always have an expert, but this is not so. No-one
should feel that their case might be disadvantaged by not having an expert in an area when
expert evidence is unnecessary. Evidence of technical or factual matters, as opposed to
consumer "eye appeal" may, on the other hand, sometimes have a part to play - that would
be to give the court information or understanding which it could not provide itself.’
5 Homecraft at 692D.
6 Lord Morris of Borth-Y-Gest in Amp Inc v Utilux (Pty) Ltd 1972 RPC 103 (HL) at 112 quoted
with approval in Homecraft at 691D-F.
7 Amp Inc v Utilux (Pty) Ltd at 121 quoted with approval in Robinson v D Cooper Corporation
of SA (Pty) Ltd 1984 (3) SA 699 (A) at 704G per Corbett JA.
[9] The respondents sought to rely on the fact that a ‘set’ of articles was
registered by arguing that the relevant features to be considered in
determining the scope of the protection are those that are common to all
members of a set. A ‘set of articles’ is a number of articles of the same
general character which are ordinarily on sale together or intended to be used
together, and in respect of which the same design, or the same design with
modifications or variations not sufficient to alter the character of the articles or
substantially affect their identity, is applied to each separate article (s 1(3)).
Any question as to whether a number of articles constitute a set has to be
determined by the registrar (s 1(4)). The object of the provision is to enable an
applicant to obtain registration for the design of more than one article for the
price of one.8 If the Registrar has registered articles as a set when they in
truth do not form a set it is at best a matter for review but it cannot be raised
as a defence to infringement or be a ground for revocation.9 Can the
registration as a set then be a method of interpreting the scope of the
registration? I think not. This follows not only from the purpose of the provision
relating to sets but also from other definitions and especially s 1(2). A design
has to apply to an ‘article’ which includes any article of manufacture and a
reference to an article is deemed to be a reference to (a) a set of articles; (b)
each article which forms part of the set of articles; or (c) both a set of articles
and each article which forms part of that set. This can only mean that each
member of a set has its own individuality and must be assessed on its own
and that the exercise which we were asked to undertake is not permissible.
[10] Against that background I turn to determine those features of the two
designs that appeal to the eye and are to be judged solely by the eye. There
is no direct evidence about who the likely customers are (whether architects,
builders, electricians or homeowners) or how the likely customer would view
them but there is the evidence of the managing director of the exclusive
licensee, Mr Evans, and that of a director of the second respondent, Mr
8 Laddie, Prescott and Vitoria The Modern Law of Copyright and Designs 2 ed vol 1 para
30.40.
9 Cf Kimberly-Clark of SA (Pty) Ltd (formerly Carlton Paper of SA (Pty) Ltd) v Proctor &
Gamble SA (Pty) Ltd [1998] 3 All SA 77, 1998 (4) SA 1 (A). Also s 32: ‘Registration of a
design shall be granted for one design only, but no person may in any proceedings apply for
the revocation of such registration on the ground that it comprises more than one design.’
Botbol, who are both experienced in this field, and their evidence defined the
issues in the case (the affidavits performing in these proceedings the function
of pleadings and evidence).
[11] Mr Evans alleged that the dominant aesthetic feature of the design
resides in the shape and configuration of the ‘substantially square’ surround
and the rectangle contained therein, and the shape and configuration of the
socket holes and their associated switches, relative to the rectangle. He
added that the secondary and further aesthetic features are the slope of the
square surround at the top and bottom and on the left and right-hand sides
and the annular recesses surrounding the socket holes. Mr Botbol’s response
was not enlightening. He did not deny any of these allegations, especially not
those about the relative value of the different features. He added though that
curvature of the square surrounds is convex.
[12] As mentioned, the high court held that the design was not new. In
coming to this conclusion the court had regard to eight prior art documents,
each showing ‘that various elements of the registered socket (sic!) were all
previously part of the art.’ The court added that the registered ‘sockets’ show
nothing ‘novel or original’ and that they are no more than an ordinary trade
variant of similar products.
[13] Over the objection of the appellants the high court held that it was
entitled to mosaic different pieces of prior art. This is a surprising conclusion.
It is old law that one is not entitled to mosaic for purposes of novelty.10 This
principle is also well established in patent law and as Pollock B had said more
than a century ago, the Designs Act was intended to add to the Patent Act by
making that which was not patentable the subject of a design.11 There is
nothing in the Act to justify a departure from this principle especially since
obviousness is not a ground of invalidity of a design. A design is not novel if it
forms part of the prior art – meaning that it is to be found in the prior art – and
not if it can be patched together out of the prior art.
10 Jones & Attwood at 82 line 44-49.
11 Moody v Tree (1892) 9 RPC 333 at 335.
[14] This does not mean that absolute identity has to be shown; only
substantial identity is required. Immaterial additions or omissions are to be
disregarded, so, too, functional additions or omissions.12 That is why it is
usually said that an ordinary trade variant is not sufficient to impart novelty.
This principle is well illustrated by the facts in Schultz v Butt.13 The design in
issue related to a boat and differed from a previous design by the addition of
what was assumed to be a novel and original window structure. This addition
did not make the claimed design new. Basically its function was to protect the
occupants against spray and wind and since it was an ordinary trade variant
and since the design as a whole was not substantially novel, the design was
held to be invalid.14
[15] That brings me to the second finding of the high court, namely that the
design is merely a trade variant of similar products. The problem is, however,
that the court did not identify the similar products. The first document relied
upon by the respondents to destroy novelty shows a square cover plate for a
single socket with a rectangular hole for a switch. The second is also a square
cover plate but the switch has two press points. The third is similar to the first
except that a swivel switch is shown. The fourth is simply the double socket
variety of the first. The fifth consists of what the present registration certificate
calls a surround but it is rectangular, the sides are at a 90 degree angle and
they all have the same width. The next one is for a single switch assembly
with no socket holes and the form of the switch is the same as that shown in
the drawings, which is not unexpected in view of the fact that the applicant for
that registration is the present proprietor’s predecessor in title. There is also
one showing the same type of switch but as a double switch.
[16] In conclusion there is US Patent 327 212 which relates to an
ornamental design for a wall plate for an electric wiring device, in other words,
for a surround. It has two embodiments of which the second is material and is
reproduced as an annexure to this judgment. It shows a surround that is
substantially identical to the surround in the drawings because the outer
12 Le May v Welch (1884) 28 Ch D 24 at 35; Sebel’s Applications [1959] RPC 12 at 14.
13 Schultz v Butt 1986 (3) SA 667 (A).
14 Schultz v Butt at 686G-687G.
perimeter is square whereas the inner boundary (where a covering plate could
be placed) is rectangular and the sides are all convex, sloping from the inner
border to the outer border. The argument for the respondents is that this
document discloses the design in issue because it permits one to place any
socket design within the surround. Although attractive at first blush, the
argument has to fail because it means that the more general a prior disclosure
is, the easier it anticipates, whereas the opposite is true: the more general the
disclosure the less likely it renders the particular design identifiable.15 There is
another aspect and that is that the inner border of this surround has a clearly
defined frame, something lacking in the registered design which leads to the
consideration of another test: that which infringes if later, anticipates if
earlier.16 I find it difficult to envisage that this design could be said to be to be
an infringement of the registered design in issue.
[17] I therefore conclude that the high court erred in finding that the design
lacked novelty. But this exercise was nevertheless important for another
reason. The definitive statement and the drawings have to be assessed in the
light of the state of the art to determine the degree of novelty achieved. This is
so because where the measure of novelty of a design is small the ambit of the
‘monopoly’ is small.17 As Burrell suggests, to consider the definitive statement
without regard to the prior art would eviscerate its purpose.18
[18] The high court also held that the design was not original as required by
the Act. Originality, it held, requires that the design has to be substantially
different from what has gone before, so as to possess some individuality; it
has to be special, noticeable, and capture and appeal to the eye. For this the
court relied on Malleys Ltd v JW Tomlin (Pty) Ltd (1994) 180 CLR 120, a
judgment of the High Court of Australia. The judgment is not authority for the
proposition. The main issue was whether the design was altogether too vague
to qualify for registration. It was in this context that the court had regard to the
15 Cf Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) at 648E-G, a patent case
under the Patents, Designs, Trade Marks and Copyright Act 9 of 1916.
16 I am aware that this ‘rule’ is usually used in a different context but the underlying principle
appears to be applicable. Cincinnati Grinders Inc v BSA Tools Ltd (1931) 48 RPC 33 at 58.
17 Homecraft Steel Industries (Pty) Ltd v SM Hare & Son (Pty) Ltd 1984 (3) SA 681 (A) at
695F per Corbett JA.
18 Lawsa para 271.
factors mentioned, including the individuality of the design and it concluded on
the facts that ‘there is sufficient individuality of appearance to justify
registration if the design was new or original.’ Another aspect of the judgment
that should be noted is that the Australian Act required that a design had to be
‘new or original’ and not (as our Act now reads) that it has to be new and
original. Because the court had found that the design was new it did not find it
necessary to consider whether it was original (in whatever sense of the word).
[19] Because of the difference in wording and underlying structure of design
statutes older and foreign authorities must be read in context.19 The UK
Designs Act 1842 spoke of new and original but this was changed to new or
original in the UK Patents, Designs and Trade Marks Act 1883.20 It was this
latter usage that was taken over in our 1916 Act but what was new or original
had to be assessed against prior use, publication, registration, or patenting.21
Our Designs Act 57 of 1967 had a similar provision, which required that a
design had to be ‘new or original’ if tested against certain prior art.22 In a
similar statutory context Graham J held that the term was disjunctive and that
what ‘original’ added was merely that the design had to be substantially
novel.23
[20] The current Act of 1993 differs structurally from its antecedents. It
requires that a design must be new and original. Only novelty is tested against
the defined prior art (‘a design shall be deemed to be new if it is different from
19 Cf Landor & Hawa International Ltd v Azure Designs Ltd [2006] EWCA Civ 1285 para 39.
20 Aspro-Nicholas Ltd’s Design Application [1974] RPC 645 at 651.
21 Patents, Designs, Trade Marks and Copyright Act 9 of 1916 s 80(1).
22 Section 4(2): ‘For the purposes of this Act a design shall be deemed to be a new or original
design if, on or before the date of application for registration thereof, such design or a design
not substantially different therefrom, was not—
(a)
used in the Republic;
(b)
described in any publication in the Republic;
(c)
described in any printed publication anywhere;
(d)
registered in the Republic;
(e)
the subject of an application for the registration of a design in the Republic or
of an application in a convention country for the registration of a design which has
subsequently been registered in the Republic in accordance with section 18.’
23 Aspro-Nicholas Ltd’s Design Application at 653 lines 6-9.
or if it does not form part of the state of the art’).24 There is no measure
against which originality has to be tested. Before proceeding, it is necessary
to recall that this Court in Homecraft,25 following the House of Lords in Amp
Inc v Utilux, has held that a design must have, by virtue of the definition, some
‘individual characteristic’ ‘calculated to attract the attention of the beholder’26
and that there must be something ‘special, peculiar, distinctive, significant or
striking’ about the appearance that catches the eye and in this sense appeals
to the eye.27 These requirements have nothing to do with originality. In fact,
neither Amp Inc v Utilux nor Homecraft dealt with originality. It is furthermore
incorrect to equate (as the high court did) originality with not being
commonplace in the art although that is how the concept is defined in the UK
Copyright, Designs and Patents Act 1988. The reason is obvious. The 1993
Act requires that aesthetic designs must be new and original and that
functional designs must be new and not commonplace.28 Originality and being
‘not commonplace’, consequently, cannot mean the same. The only other
meaning ‘original’ can bear is one that is the same or akin to the meaning in
copyright law,29 something that is not farfetched if regard is had to the fact that
the 1916 Act spoke of design copyright. As was said by Mummery LJ in
Farmers Build v Carier [1999] RPC 461 at 482:30
‘The court must be satisfied that the design for which protection is claimed
has not simply been copied (e.g. like a photocopy) from the design of an earlier
article. It must not forget that, in the field of design of functional articles, one design
24 Section 14(2). The state of the art comprises principally all matter which has been made
available to the public (whether in the Republic or elsewhere) by written description, by use or
in any other way (s 14(3)).
25 Homecraft Steel Industries (Pty) Ltd v SM Hare & Son (Pty) Ltd 1984 (3) SA 681 (A).
26 Lord Morris of Borth-Y-Gest in Amp Inc v Utilux (Pty) Ltd 1972 RPC 103 (HL) at 112 quoted
with approval in Homecraft at 691D-F.
27 Amp Inc v Utilux (Pty) Ltd 1972 RPC 103 (HL) at 121 quoted with approval in Robinson v D
Cooper Corporation of SA (Pty) Ltd 1984 (3) SA 699 (A) at 704G per Corbett JA.
28 Section 14(1): ‘The proprietor of a design which—
(a)
in the case of an aesthetic design, is—
(i)
new; and
(ii)
original,
(b)
in the case of a functional design, is—
(i)
new; and
(ii)
not commonplace in the art in question,
may, in the prescribed manner and on payment of the prescribed fee, apply for the
registration of such design.’
29 Cf Christine Fellner Industrial Design law (1995) para 2.255 who points out that there may
be differences in application.
30 Quoted in Dyson Ltd v Qualtex (UK) Ltd [2006] EWCA Civ 166.
may be very similar to or even identical with another design and yet not be a copy: it
may be an original and independent shape and configuration coincidentally the same
or similar. If, however, the court is satisfied that it has been slavishly copied from an
earlier design, it is not an "original" design in the "copyright sense".’
[21] In the light of these considerations I conclude that the respondents’
case on lack of originality as adopted by the high court founders because it is
based on an incorrect premise. This then brings me to the question of
infringement which involves a determination of whether the respondents’
products embody the registered design or a design not substantially different
from the registered design. The search is not for differences but for substantial
ones.
[22] This test is not a trade mark infringement test and the issue is not
whether or not there is confusion or deception and it would therefore be wrong
to introduce concepts developed in a trade mark context such as imperfect
recollection into this part of the law. The designs test is closer to the patent
infringement test. This dictum from Incandescent Gas Light Co v de Mare etc
System31 in a patent infringement context is equally applicable to the present
context:
‘When, however, you come to make that comparison, how can you escape from
considering the relative magnitude and value of the things taken and of those left or
varied; it is seldom that the infringer does the thing, the whole thing, and nothing but
the thing claimed by the specification. He always varies, adds, omits and the only
protection the patentee has in such a case lies, as has often been pointed out by
every Court, from the House of Lords downward, in the good sense of the tribunal
which has to decide whether the substance of the invention has been pirated.’
[23] Both the single and double socket articles produced and sold by the
respondents have square surrounds with rectangular cover plates. Both
incorporate in general terms the registered designs, even down to the annular
recesses and the shapes and configuration of the switches. What are the
differences? As Mr Evans mentioned, the respondents’ surrounds have
31 13 RPC 301 at 330 and quoted more than once with approval by this Court. See Letraset
Ltd v Helios Ltd 1972 (3) SA 245 (A) at 275A-B.
stepped slopes on the right and left (the narrow) sides instead of the
substantially convex curvature of the registered design.32 Recognising this
difference, the next question is whether it is a substantial difference. Mr
Evans’s allegation that this particular feature is a secondary feature has not
been placed in issue. It is difficult to see how a difference in respect of a
secondary feature can be substantial.
[24] The other differences are these. The position of the respondents’
double socket switches is directly above the earth socket hole whereas that of
the design is closer to the upper corners of the rectangular plate. Mr Evans
said that this difference was not substantial and Mr Botbol did not deny his
evaluation. The same applies to the single socket article where the position of
the switch is closer to the earth socket hole. There is an additional feature in
the single socket design and that is the presence of what appears to be a
small hole above the switch. This may be for an indicator light but, in any
event, the respondents do not have it. No-one has suggested that its absence
makes a substantial difference and I do not think that anyone could have done
so seriously.
[25] My evaluation of the prior art shows that the level of novelty of this
design is not such that small differences are material. There is against this
background another way of determining whether there was infringement and
that is to ask whether, if the respondents’ article had been part of the prior art,
the design would have been new. The answer must be no because the move
of the position of the switches and the removal of the steps on the narrow
sides of the surrounds would have been regarded as trade variants. What
anticipates if earlier, in general terms, infringes if later, the converse of the
general rule mentioned earlier. It follows that the differences, which are per se
insubstantial, do not save the respondents from infringing.
[26] The appeal is upheld with costs and the order of the court below
replaced with an order –
32 The photographic exhibits do not show this and are of a too poor quality to reproduce. It is,
however, apparent from the physical exhibits.
1.
interdicting the respondents from infringing registered design A96/0687
by making, importing, using, or disposing of the Lear G-2000 series single
electrical socket SYZ – 16 (100 x 100) and double electrical socket S2YZ2 –
16 (100 x 100);
2.
directing the respondents to surrender all infringing articles in their
possession to the applicants;
3.
directing that an enquiry be held for the purposes of determining the
amount of any damages suffered by the applicants or for the determination of
a reasonable royalty as contemplated in s 35(3)(d) of the Designs Act 195 of
1993, and ordering payment of such damages found to have been suffered or
of such reasonable royalty;
4.
directing, in the event of the parties being unable to reach agreement
as to the future pleadings to be filed, discovery, inspection or other matters of
procedure relating to the enquiry, that any party is authorized to apply for
directions in regard thereto;
5.
directing the respondents to pay the applicants’ costs.
_________________________
L T C HARMS
ACTING DEPUTY PRESIDENT
AGREE:
HARMS ADP
STREICHER JA
CLOETE JA
LEWIS JA
CACHALIA JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 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
CITY OF JOHANNESBURG v RAND PROPERTIES (PTY) LTD 2007 SCA (RSA)
The Supreme Court of Appeal (Harms ADP, Scott, Farlam, Nugent and Cloete JJA) today
issued its judgment in this appeal. The appeal concerns in the main the right of a local authority to
order occupiers by notice to vacate a building because it is necessary for their safety or the safety of
others.
The SCA noted that the court below had found after an inspection that the condition of the
buildings concerned was appalling, abysmal and at times disgraceful; that the occupants were in an
emergency situation; and that there existed fire and health hazards. The occupants are mostly
desperately poor, had no formal employment and many had no income.
The central dispute was whether the City of Johannesburg is precluded from exercising its
powers to order persons to vacate unsafe buildings unless it first provides them (or at least tenders
to provide them) with adequate alternative housing. A subsidiary question that arose was whether
such alternative housing must be within the inner city itself.
The SCA found that the powers of the City to order the vacation of unsafe buildings are not
dependent upon its being able to offer alternative housing to the occupants. But the SCA also found
that the eviction of occupants triggers a constitutional obligation upon the City to provide at least
minimum shelter to those occupants who have no access to alternative housing. It further held that
the shelter that the City is obliged to provide need not necessarily be located within the inner city as
demanded by the respondents.
--ends--
|
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