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Data Science for Social Impact 36

2905

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT NOT REPORTABLE Case No: 169/14 In the matter between: CLIFTON DUNES INVESTMENT 100 LIMITED FIRST APPELLANT MIDNIGHT STORM INVESTMENTS 150 (PTY) SECOND APPELLANT LTD and CITY CAPITAL SA PROPERTY HOLDINGS LIMITED RESPONDENT Neutral citation: Clifton Dunes v City Capital (169/14) [2015] ZASCA 12 (16 March 2015) Coram: Lewis, Maya, Majiedt, Pillay and Zondi JJA Heard: 24 FEBRUARY 2015 Delivered: 16 MARCH 2015 Summary: Property syndication – how determination to be made in respect of loan amount due – high court‟s reliance on the appellants‟ audited financial statements in making such a determination correct – loan amount thus correctly determined – application by appellants to adduce further evidence on appeal – requirements not met. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Western Cape Division, High Court, Cape Town (Griesel J sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. ______________________________________________________________ JUDGMENT ______________________________________________________________ Majiedt JA ( Lewis, Maya, Pillay and Zondi JJA concurring) [1] Property syndication schemes have a chequered history in this country. Far too often they end up as civil or criminal cases in our courts. At issue in this appeal is the amount of a loan advanced by the first appellant, Clifton Dunes Investment 100 Limited (Clifton Dunes) to the second appellant, Midnight Storm Investments 150 (Pty) Ltd (Midnight Storm). This issue has a direct bearing on the amount due to the respondent, City Capital SA Property Holdings Limited (City Capital) as a minority shareholder in Midnight Storm. After hearing oral evidence, Griesel J in the Western Cape Division of the High Court, Cape Town, upheld the contentions advanced by City Capital (which was the applicant in the high court) and found the amount of the loan to be R20 321 248. This appeal is with the leave of the high court. [2] Clifton Dunes and Midnight Storm are companies in a property syndication scheme (the syndication). City Capital is a 15 per cent shareholder of Midnight Storm. Clifton Dunes holds the balance of the shares. The syndication is part of some 77 property syndications involving about 160 companies in the Dividend Investment group of companies. These syndication schemes were all similarly structured in the form of either an „Income Plan‟ or a „Capital Growth Plan‟. In the former instance investors in the syndication scheme would receive interest on their investment on a monthly basis, while in the „Capital Growth Plan‟ investors would not receive interest, but would share in the capital profit when the property invested in is eventually sold. The rental income from the property would be utilised to settle the mortgage bond as soon as possible in order to secure a potential capital profit when the property is sold (referred to in the industry as „gearing‟). The present syndication falls into this latter category. [3] The syndication was funded by investors who lent approximately R25 million to Clifton Dunes during 2005 to 2006. In return, investors acquired shares in Clifton Dunes from a company, Div-Vest (Pty) Ltd (Div-Vest) – which company was part of the Dividend Investment group – and the right to be repaid their investment plus any capital growth thereon. Clifton Dunes, as the holding company, then lent money to Midnight Storm, as the property-owning company, to purchase immovable property in Hatfield, Pretoria, known as the KPMG building (the property), during February 2005 in the sum of R34 305 748. The balance of the purchase price was financed through a Nedbank mortgage loan. Investors held 100 per cent of the shares in Clifton Dunes which, in return for its loan to Midnight Storm, acquired 85 per cent of the shares in the latter from Div-Vest, while Div-Vest Holdings (another company in the Dividend Investment group) held the remaining 15 per cent shareholding in Midnight Storm. City Capital later acquired this 15 per cent shareholding through a merger with the Dividend Investment group of companies. [4] Midnight Storm utilised an amount of R20 321 248 from the approximately R25 million raised from investors in Clifton Dunes as part payment on the purchase price of the property, which was registered in the name of Midnight Storm on 11 February 2005. On that same date, 85 shares in Midnight Storm were also transferred from Div-Vest to Clifton Dunes. The purchase consideration of these shares is one of the aspects which requires closer scrutiny since it impacts directly on the main issue. On 26 April 2012 the shareholders of Midnight Storm approved the sale of the property at a purchase price of R43.5 million and the deed of sale was concluded on 8 May 2012. This represented a return on investment of just over R9 million over a seven year period for Midnight Storm. It is common cause that subsequent to the sale of the property investors were repaid the sum of R30 million. [5] The present dispute arose because City Capital alleged that the amount of the loan from Clifton Dunes to Midnight Storm (the Clifton Dunes loan) was R20 321 248, whereas the appellants contended it to be R25 million. City Capital applied to the high court for a declaratory order that the Clifton Dunes loan was in the above amount of R20 321 248 and for an order directing Midnight Storm to pay to it the sum of R3 160 608 in respect of the net proceeds of the sale, together with accrued interest. If the appellants‟ contentions are correct that the Clifton Dunes loan actually amounted to R25 million, a lesser amount would be due to City Capital. By agreement between the parties, the amount claimed by City Capital, R3 160 608, is presently being held in an interest bearing trust account by a firm of attorneys (the erstwhile third respondent in the high court who did not participate at all in those proceedings) in terms of s 78 of the Attorneys Act 53 of 1979. [6] Due to the factual disputes on the papers, Smit AJ referred the following issues to oral evidence: (a) the amount (if any) of the loan repayable to Clifton Dunes by Midnight Storm on 6 December 2012 pursuant to the contractual relations between the parties dealt with in the founding affidavit; and (b) the amount (if any) payable by Midnight Storm to City Capital of the proceeds derived from Midnight Storm‟s sale of the property. After hearing oral evidence from both sides, Griesel J found for City Capital and granted the relief sought. [7] Before deliberating on the main issue, it is necessary to deal with a preliminary issue, namely the appellants‟ application for leave to adduce further evidence on appeal. We dismissed the application at the commencement of the hearing. These are the reasons for that order. The new evidence concerned City Capital‟s rights to claim what was in effect a dividend from Midnight Storm, based on its rights as a shareholder. The appellants contended that the new evidence suggests that City Capital was not a shareholder. The application was opposed broadly on the grounds that the new evidence could and should have been adduced at the trial, that it is neither material to nor dispositive of the issue on appeal and that there are no exceptional circumstances warranting its admission, nor do the interests of justice require its admission. The further evidence emanated from an enquiry held in terms of s 417, read with s 418 of the Companies Act 61 of 1973, during November 2014. The appellants claim that they were not aware of these new facts before they emerged at this enquiry. They say that the evidence at the enquiry shows that a „resolutive condition‟ in the sale of shares agreement between Div-Vest Holdings and City Capital was never fulfilled, that consequently the agreement is void from its inception and that City Capital therefore never became a shareholder of Midnight Storm. Some background facts are necessary to place this aspect in its proper contextual setting. [8] Div-Vest Holdings is part of the Dividend Investment group of companies. It was the holding company of all the property-owning companies in the group. On 28 September 2007 Div-Vest Holdings concluded a sale of shares agreement with City Capital in terms of which it sold all its shares in the property-owning companies (including Div-Vest) to City Capital for R32 169 751.76. The ‟resolutive condition‟ under discussion appears in clause 5 which reads as follows: „5. RESOLUTIVE CONDITION 5.1 This agreement is subject to the resolutive condition that a legally binding and valid agreement be entered into and be successfully and fully complied with between City Capital Investment Holdings (Proprietary) Limited (Registration No. 2005/028522/07) and all the Shareholders of Div-Vest Holdings (Proprietary) Limited (Registration No. 1969/001986/07) as on the Signature Date in terms whereof City Capital Investment Holdings (Proprietary) Limited (Registration No. 2005/028522/07) shall purchase the entire shareholding of all the Shareholders of Div-Vest Holdings (Proprietary) Limited (Registration No. 1969/001986/07) held in Div-Vest Holdings (Proprietary) Limited (Registration No. 1969/001986/07) on the Signature Date.‟ [9] In the high court, the litigation was conducted on the basis that this „resolutive condition‟ had been fulfilled. The agreement also contains the standard non-variation and non-waiver clauses. At the enquiry Mr Jacobus Carstens, director and CEO of City Capital, and Mr Chris Blaauw, a broker who assisted the Dividend Investment group to source properties for syndication schemes, testified. According to them no agreement had ever been entered into between City Capital Investment Holdings (Pty) Ltd and Div-Vest Holdings (Pty) Ltd. The upshot of this, say the appellants, is that City Capital acquired no rights as a shareholder in Midnight Storm and consequently had in fact lacked the requisite locus standi to have brought the application in the high court. [10] As is evident from clause 5.1 above, it was not the respondent company, but City Capital Investment Holdings (Pty) Ltd which had to conclude an agreement with all the shareholders of Div-Vest Holdings. I shall for the sake of clarity refer to this other company as „City Capital Holdings‟. The condition is described as „resolutive‟ in clause 5.1. The appellants say that this is a misnomer and that the condition is in fact suspensive in nature. In R H Christie and G B Bradfield Christie’s The Law of Contract in South Africa 6 ed (2011) at 145, the distinction is drawn between these two conditions as follows: „A condition precedent [ie a suspensive condition] suspends the operation of all or some of the obligations flowing from the contract until the occurrence of a future uncertain event, whereas a resolutive condition [sometimes referred to as a „condition subsequent‟] terminates all or some of the obligations flowing from the contract upon the occurrence of a future uncertain event.‟ As the learned authors correctly point out (at 145-146), when such a condition applies to only part of a contract, it is not easily classifiable. The determination of the type of condition is a matter of construction. A court will not restrict itself to the designation that the parties afford the particular clause and the use of the words „subject to‟ are usually (but not always) indicative of a suspensive condition – see Palm Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd 1978 (2) SA 872 (A) at 884E-G. A resolutive condition has the effect that upon the happening of a designated future event, the agreement itself is terminated. In terms of clause 5.1, if the agreement between City Capital Holdings and Div- Vest Holdings‟ shareholders came into being as envisaged, the entire sale agreement would terminate. On the common cause facts this agreement never came into existence. The agreement of sale thus never lapsed as contended by the appellants. [11] The condition is, on its plain language and in its contextual setting, clearly resolutive in nature. And the parties conducted themselves throughout on this basis and not as if the condition was suspensive. The appellants made reference to and placed reliance on the agreement in a letter to investors by their director, Dr David Ferreira, and in their answering affidavit in this matter (deposed to by Dr Ferreira). The appellants cannot in law after the fact avoid the consequences of a contractual term, the meaning of which they had agreed upon with the respondent, and acted upon accordingly by both parties (see: Aussenkehr Farms (Pty) Ltd v Trio Transport CC 2002 (4) SA 483 (SCA) para 25). The material prejudice to the respondent is self-evident – its locus standi is being subjected to attack at this late stage notwithstanding the plain meaning of the clause as a resolutive condition and despite the fact that both parties to the contract have acted throughout on this common understanding of what the clause entails. The application does not meet the well-established requirements for the adducing of new evidence on appeal. For these reasons we dismissed the application with costs, including the costs of two counsel. [12] Reverting to the main issue – a convenient place to start in finding the answer to the divergent contentions is the series of tripartite agreements entered into between the investors, Clifton Dunes and Div-Vest. These agreements form the genesis of the entire transaction. One such agreement, representative of all of the agreements signed by the investors, is an annexure to the appellants‟ answering affidavit. It is called a „Property Capital Growth Plan agreement‟ and it is between an investor, Ms Maria Johanna Grobler (the investor), Div-Vest (the principal) and Clifton Dunes (the company). I shall for the sake of convenience refer to it simply as „the tripartite agreement‟. Its preamble records that the investor and Clifton Dunes had agreed to enter into a loan agreement in terms of which the investor would advance money to Clifton Dunes „to enable it to purchase certain investments and make other investments in terms of paragraph 2‟. It is recorded further that in return Clifton Dunes would pay the investor interest as set out in the agreement. Clause 2 is of decisive importance in this case. It reads as follows: „2. DUTIES AND OBLIGATIONS OF THE PARTIES TO THIS AGREEMENT: 2.1 The Investor hereby undertakes to loan the Company upon signature of this agreement by all parties hereto the amount of R200,000. 2.2 The Company undertakes to: 2.2.1 Purchase immovable property described as Erf 748, Hatfield Township Registration Division J.R., Province of Gauteng; measuring 5 716 square metres and to nominate a newly formed unencumbered private Company as the purchaser thereof (hereinafter referred to as “the Property Company”) of which the Principal at its inception shall own all the issued share capital. 2.2.2 loan an amount to the Property Company to be utilized towards a portion of the purchase price of the immovable property referred to in paragraph 2.2.1 above. 2.2.3 To raise a bond with a financial institution to finance the balance of the purchase price. 2.2.4 to purchase 85% of the issued share capital of the Property Company from the Principal on date of registration of transfer of the immovable property in the name of the Property Company. 2.2.5 Credit the investor in the books of the Company with a loan account reflecting the full value of the loan to the Company and to repay such loan account first before any other payments are made in the event of the immovable property of the Property Company being sold. (my emphasis) [13] It is common cause that, save for clause 2.2.4 (which is the primary bone of contention), the parties have complied with their obligations set out in clause 2. The investors lent an amount of R25 million to Clifton Dunes (in terms of clause 2.1 of the various tripartite agreements), which utilized R20 321 248 thereof as a loan to Midnight Storm as part of the purchase price of the KPMG building (clauses 2.2.1 and 2.2.2). A loan, secured by a mortgage bond, was raised with Nedbank to pay the balance of the purchase price (clause 2.2.3). On the common cause facts the original loan amount was R23 million to make up for the shortfall in the investor contributions at the time of the acquisition of the property. These contributions increased from approximately R10.5 million at that time to the eventual total of R25 million. The Nedbank loan amount was then reduced to R14 million. It is lastly common cause that the investors were duly credited in Clifton Dunes‟ books with loan accounts reflecting the full value of their loans and that they were repaid a total of R30 million, ie an amount in excess of what they had initially invested, when the property was sold (clause 2.2.5). What remains then for consideration is the dispute concerning clause 2.2.4. [14] On the common cause facts the amount of R4 678 752 (the disputed amount) was transferred from the trust account of attorneys Minde Schapiro and Smith (MSS), who had received all the investors‟ contributions, to Div- Vest. The appellants contend that this payment was irregular since it constitutes a „syndication fee‟ or „gross profit‟ to Div-Vest which falls outside the parties‟ agreement. City Capital on the other hand, avers that this amount constitutes the purchase consideration in respect of the 85 per cent shareholding in Midnight Storm in terms of clause 2.2.4 above. That amount was paid over a period in different sums to Div-Vest. The papers and the oral evidence hold the key to this dispute. [15] City Capital placed strong reliance on the appellant companies‟ audited financial statements and the evidence of Mr Gerrit Nel, a director of Clifton Dunes, who had been centrally involved as in-house accountant in the preparation of the companies‟ books. The appellants relied primarily on the content of the share transfer form (the so-called „CM42 form‟) reflecting the transfer of 85 shares in Midnight Storm to Clifton Dunes at a consideration of nil Rand. This, so the appellants contend, together with the absence of any documentary proof that there has been payment for the shareholding or that the information contained in the audited financial statements is factually correct, support their case that the disputed amount constitutes an irregular payment. [16] The audited financial statements of Clifton Dunes for the 2007 financial year reflect the loan from Clifton Dunes to Midnight Storm as being R20 321 248. They record the „investment in subsidiary‟ as being R4 678 752 (ie the disputed amount). These entries are supported by the working papers prepared by Mr Nel for the auditors, Price Waterhouse Coopers (PWC). They were signed off by the companies‟ directors and they accord with the 2006 audited financial statements. In addition, in a letter to investors dated 23 March 2012, Dr Ferreira stated that the Clifton Dunes loan was in the same amount. [17] I turn to a brief recital of the evidence germane to the dispute. Mr Louis Meyer is an attorney and conveyancer from MSS who was instructed by Div- Vest to attend to the transfer of immovable properties to property-owning companies in some of the Dividend Investment syndications, including the present one. He only rendered conveyancing services and his firm received the investors‟ contributions into its trust account. Mr Meyer was not involved at all in the details of the various property syndications. In the present matter he was aware of the existence of Midnight Storm as the property-owning company in whose name the property was to be transferred. But he was understandably unaware of the existence of the holding company, Clifton Dunes. The appellants‟ criticism of this aspect of his evidence is misplaced. Why, one might ask, would a conveyancer in Mr Meyer‟s position on the present facts, have had to be aware of the existence of a company which played no role whatsoever in the conveyancing and registration of transfer of the property? Mr Meyer‟s evidence was largely unchallenged, understandably so, because he played a peripheral role insofar as the main issue is concerned. [18] Mr Nel gave direct evidence of how the property syndication was structured and how the contentious amounts reflected in the annual financial statements were arrived at. Div-Vest employed him as an accountant, responsible for attending to the investor contracts, liaison with MMS and the preparation of working papers for PWC in connection with all the property syndications. He was a director of Clifton Dunes. At the time when he gave evidence, Mr Nel was no longer in the employ of Div-Vest, or its successor, City Capital. He executed his tasks in the present matter by recording investors‟ investments in Clifton Dunes, he kept the accounts and financial records for its subsidiary, Midnight Storm, for the purposes of the audit and ensured that annual general meetings were held for both companies. He explained how the syndications were structured and implemented. In respect of what his duties entailed regarding the bookkeeping for Midnight Storm as the property owning company, Mr Nel testified as follows: „That would be the rental invoices that goes out on a monthly basis, any expenses that have been paid during the year, VAT returns, reconciling the sales and the VAT and then confirming the loan accounts between the companies.‟ And in respect of Clifton Dunes: „That would basically be the working paper file on all the shareholders or all the investors, what their loans are, how many shares they have in the company to make sure that that corresponds to the actual share register of the company and then to confirm the balance of the loan to the property company as well as any other investments the holding company would have.‟ [19] Mr Nel explained that in every Div-Vest property syndication, the holding company would buy 85 per cent from Div-Vest for the difference between the syndication value and the actual purchase price and in the Capital Growth Plan it would be the purchase price less the bond, which gives the net amount that investors had to put in and the difference between the net amount and the gross amount that they actually put in was the investment in shares. Transposed to the present instance, this means that the syndication value was R39 million (investors‟ contributions in the sum of R25 million plus the eventually reduced Nedbank loan of R14 million), the actual purchase price of the KPMG building was R34 305 748 and the net amount was R20 321 248. The difference between the gross amount that the investors contributed (R25 million) and the net amount (R20 321 248) is the actual investment of 85 per cent of the shareholding in the subsidiary (the disputed amount). [20] In this court the thrust of the appellants‟ attack was based on two main interrelated grounds: First, that the CM42 form does not, as is to be expected if Mr Nel‟s explanation was correct, reflect the disputed amount, but nil Rand. Second, that there is no independent documentary proof supporting the entries in the PWC financial statements. Mr Nel explained that the entry on the CM42 form was a mistake. He was extensively cross-examined on this aspect and several other similar entries in other similar property syndications were pointed out to him. These, he said, were all mistakes. Before us the appellants‟ counsel argued with considerable vigour that this explanation is untenable. Counsel‟s argument went that the CM42 form here, and in all the other instances, in fact correctly reflected the true position, namely that there was no consideration paid for the 85 per cent shareholding in Midnight Storm. Counsel submitted that the disputed amount was in fact misappropriated by Div-Vest as „syndication fees‟. When pressed, counsel expressly refrained from labelling Mr Nel a lying witness. But his evidence on these aspects (the purchase consideration for the 85 per cent shareholding, the CM42 form‟s contents and the information furnished to PWC for the audit in respect of the two disputed entries) falls to be rejected, so it was contended. [21] Mr Tertius Bruwer, a chartered accountant and director at PWC, took over the appellant companies‟ audit as supervising external auditor from 30 June 2007. He testified that PWC had previously prepared the financial statements and the audits for the Dividend Investment group of companies. From 30 June 2006, however, the financial statements were prepared in- house and PWC was responsible for the audits only. Mr Nel played a central role in assisting PWC with the audits, since he was the de facto financial manager in charge of the companies‟ finances. PWC performed the audits (including the present ones) by examining Mr Nel‟s working papers, the source documents (where necessary) and by gaining a clear understanding of the entries in previous financial years. PWC‟s assessment of the working papers entailed an exercise of their professional discretion after taking into account all the documents, their instructions, the parties‟ intention in respect of the contracts, the context, previous financial statements and the way the property syndication worked. In the present instance he was satisfied that the 2006 audited financial statements correctly reflected the companies‟ financial position and the intercompany transfers. On this basis he signed off the appellant companies‟ financial statements for the 2007 and 2008 financial years. Bruwer said he regarded CM42 forms as administrative documents which reflect the outcome of a share transaction only and which do not necessarily constitute conclusive proof thereof. According to him, auditors did not always retain the source documents inspected during the audit. [22] Dr Ferreira testified on behalf of the appellants. In his view, investors had been deliberately misled by Div-Vest regarding their potential returns on investments. In his letter to investors, his reference to the Clifton Dunes loan as being R20 321 248 was based in good faith upon the audited financial statements. When he became involved between 2011 and 2012 as a director of a number of companies in the property syndications, including Clifton Dunes and Midnight Storm, he did so out of concern for their investments and he investigated matters as fully as he could. He contested the accuracy of the financial statements and alluded to the fact that he and the other directors had instructed PWC to correct the 2007 financial statements in respect of the two disputed entries, something which had not been done at that stage. [23] There are a number of strongly persuasive factors which support City Capital‟s case. They are the audited financial statements, Dr Ferreira‟s letter to investors and the tripartite agreement itself. The only countervailing factor is the CM42 share transfer form. Can it be a genuine mistake, particularly in view of the similar entries in several other similar forms in respect of other similar transactions? For this court to find that it is not would, in my view, require us to find that Mr Nel lied under oath and that he was part of an elaborate scam to, in colloquial terms, „cook the books‟ to mislead investors. I have a number of grave difficulties in reaching such a drastic conclusion. [24] First and foremost, it is imperative to emphasize at the outset that this case is not about fraudulent misrepresentation or the non-disclosure of material facts. The issues to be decided are crisp, as outlined in the order of Smit AJ referring the matter for oral evidence (see para 6 above). This aspect appears to have been obfuscated by the appellants‟ case, both here and in the high court, an aspect commented on by Griesel J. Thus, for example, both Dr Ferreira and Prof Willem van der Walt, an accounting expert called by the appellants, primarily complained about investors having been deliberately misled. That is an aspect which must be investigated by the ongoing s 417 enquiry, referred to above. It is not for this court to determine. [25] Second, Mr Nel is highly unlikely to have been complicit in such an elaborate, epic scam. As stated, he was no longer in the employ of Div-Vest when he testified. He held no shares in the Dividend Investment group, which was run by the Carstens brothers and Mrs Angela Carstens (Mr Etienne Carstens‟ spouse). Mrs Carstens was a director of Clifton Dunes, together with Mr Nel. When asked why he was also appointed as a director, Mr Nel answered as follows: „It [Clifton Dunes] was a public company which required two directors and Mr [Etienne] and Mrs [Angela] Carstens asked me to be the other director‟. Mr Bruwer‟s evidence went largely unchallenged, correctly so. But the appellant‟s case is that PWC had drawn up the disputed financial statements on incorrect information from Mr Nel. An auditor, said Boshoff J in Tonkwane Sawmill Co Ltd v Filmalter 1975 (2) SA 453 (W) at 455C-D, is a watchdog, but not a bloodhound. In approving this dictum, Holmes JA described the duty of an auditor appointed under the Companies Act as follows in Lipschitz and another NNO v Wolpert and Abrahams 1977 (2) SA 732 (A) at 741G-H: „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.‟ In my view, Mr Bruwer and PWC had duly fulfilled their duties. It is evident from the papers that they queried numerous entries in the working papers with handwritten notes. And, where required, they issued modified audit reports. There is nothing untoward in the manner in which Mr Bruwer and PWC performed their functions. Of considerable importance is Mr Bruwer‟s evidence that a CM42 form is largely administrative proof of the result of a transaction and that it is not conclusive proof of the transaction itself. [26] The third aspect, which relates primarily to Mr Nel‟s evidence, but also to that of Mr Bruwer‟s, is the manner in which they were cross-examined. It was never put to Mr Bruwer in cross-examination on what basis it was alleged that the Clifton Dunes loan amounted to R25 million and not as reflected in the financial statements, nor why PWC should have recorded the loan amount thus. And, even more importantly, it was never put to Mr Nel that his evidence about the CM42 form contaminated his entire evidence and, in direct terms, that he was a liar and in what respects this was so. While the general tenor of the cross-examination was to the effect that the nil Rand entry on the form could not have been a mistake, this does not suffice. In the by now well- known dictum of the court in President of the RSA and others v South African Rugby Football Union and others 2000 (1) SA 1 (CC) at para 61, the duties of a cross-examiner were outlined as follows: „The institution of cross-examination not only constitutes a right, it also imposes certain obligations. As a general rule it is essential, when it is intended to suggest that a witness is not speaking the truth on a particular point, to direct the witness‟s attention to the fact by questions put in cross-examination showing that the imputation is intended to be made and to afford the witness an opportunity, while still in the witness-box, of giving any explanation open to the witness and of defending his or her character. If a point in dispute is left unchallenged in cross-examination, the party calling the witness is entitled to assume that the unchallenged witness‟s testimony is accepted as correct‟. Mr Nel was never afforded an opportunity to deal directly with the contentions now being advanced on appeal, namely that he was part of a grand and elaborate scam to fleece unsuspecting investors of their moneys. This the law does not countenance. In any event, while the mistake may at first blush appear to be somewhat startling, one must not lose sight of the fact that Mr Nel, on his uncontested evidence, had signed reams of documents at that time. The extent of the Dividend Investment group‟s involvement in property syndications is evident from para 2 above. [27] Mr Nel‟s evidence in general and his explanation of how the property syndication worked and how the figures are arrived at is consonant with the tripartite agreement, the structure of all the other property syndications and the audit papers. The tripartite agreement expressly stated in clause 2.2.4 that Clifton Dunes undertook to purchase 85 per cent of the issued share capital of Midnight Storm from Div-Vest on the date of registration of transfer of the KPMG building. It is beyond comprehension why Div-Vest would have been prepared to part with 85 per cent of the shares in Midnight Storm for no consideration whatsoever from the Clifton Dunes shareholders (the investors). This would amount to an unbusiness-like gratuitous donation. On a balance of probabilities, absent any proof by a party who alleges a donation, a court will be disinclined to presume that the other party would part with property for no consideration – see the general discussion in the title on „Donations‟, 8(1) LAWSA (2 ed) para 315 by P R Owens. [28] Much was made during argument by appellants‟ counsel of the fact that some of the disputed amount had been utilised by Div-Vest to pay sundry expenses such as broker commissions. The criticism is unfounded. As correctly pointed out by the learned judge in the high court during the course of Mr Nel‟s cross-examination, these funds were part of the proceeds of the sale by Div-Vest of the 85 per cent of Midnight Storm‟s shares to Clifton Dunes. Div-Vest was at liberty to do with those proceeds as it pleased. During the course of the exchange with Griesel J, appellant‟s counsel remarked that the appellant‟s difficulty was that Div-Vest „talk[s] about a syndication price but that money is not there‟. In this court argument for the appellants was presented much along the same line. But this is a misunderstanding of how the transaction worked. So too is the oft repeated submission before us that the money (ie the disputed amount) could only have been used once – it could not have been used as a syndication fee as well as the purchase consideration for the shares. The obfuscation arose as a result of counsel‟s constant reference, particularly during the Mr Nel‟s cross-examination, to the disputed amount as being Div-Vest‟s „syndication fee‟. That it may well have been in the end, but in strictly legal technical terms that disputed amount was simply the purchase consideration paid by Clifton Dunes to Div-Vest for the 85 per cent shareholding in Midnight Storm in terms of clause 2.2.4 of the tripartite agreement. And, in strictly accounting technical terms, it was as correctly reflected in the audited financial statements of Clifton Dunes, an „investment in the subsidiary‟. Upon the purchasing of the 85 per cent shareholding, Midnight Storm became a subsidiary of Clifton Dunes (ie the latter owned a majority of the share capital of Midnight Storm). In marketing documents the disputed amount was at times referred to as the „opportunity cost to the investor‟. This simply meant, as Mr Nel explained, that the investor was able, through the syndication, to buy into a top grade commercial property for as little as R100 000 (the minimum investment amount). [29] In summary and in conclusion: I am satisfied that the entry in the CM42 form relating to the present transaction was an honest mistake on the part of Mr Nel. The audited financial statements correctly reflect the Clifton Dunes loan as being R20 321 248. The disputed amount was similarly correctly reflected as an „investment in subsidiary‟. It follows that the high court was correct in its findings in favour of City Capital on the two issues which were referred for oral evidence. The appeal must therefore fail. [30] The following order is issued: The appeal is dismissed with costs, including the costs of two counsel. ________________________ S A Majiedt Judge of Appeal Appearances For the Appellants: F Joubert SC (with him J de Vries) Instructed by: Lombard & Kriek Attorneys, Parow Webbers Attorneys, Bloemfontein For Respondent: A C Oosthuizen SC (with him R J Howie) Instructed by: Werksmans Attorneys, Cape Town Rosendorff Reitz Barry Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 16 March 2015 STATUS: Immediate CLIFTON DUNES INVESTMENTS AND ANOTHER V CITY CAPITAL (169/13) 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, including those consequent upon the employment of two counsel, an appeal against a judgment of Griesel J in the Western Cape Division of the High Court. The SCA held that the high court was correct in holding that the loan amount from a holding company, Clifton Dunes Investment 100 limited (Clifton Dunes), to a property-owning company, Midnight Storm Investments 150 (Pty) Ltd (Midnight Storm), in a property syndication was the amount of R20 321 248, and not R25 million, as contended by the appellants. Consequently, the respondent, City Capital SA Property Holdings Limited (City Capital), was entitled to payment of the sum of R3 160 608, together with accrued interest. The SCA endorsed the high court’s approach in placing reliance on the appellant companies’ audited financial statements for its finding on the amount of the loan. The SCA reiterated the legal position on the duties of an auditor and on how disputed evidence is to be challenged in cross-examination so as to afford a witness a full and proper opportunity to meet the challenge. -- ends --

3284

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 71/2019 In the matter between: GLOBAL & LOCAL INVESTMENTS ADVISORS (PTY) LTD APPELLANT and NICKOLAUS LUDICK FOUCHÉ RESPONDENT Neutral citation: Global & Local Investments Advisors (Pty) Ltd v Nickolaus Ludick Fouché (71/2019) [2019] ZASCA 08 (18 March 2020) Coram: NAVSA, SALDULKER, MAKGOKA and NICHOLLS JJA and MOJAPELO AJA Heard: 24 February 2020 Delivered: 18 March 2020 Summary: Whether a financial services provider acted in breach of client’s mandate by releasing funds upon receiving fraudulent email instruction – applicability of section 13(3) of the Electronic Communications and Transactions Act 25 of 2002 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Vorster AJ sitting as court of first instance): The appeal is dismissed with costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Mojapelo AJA (Navsa, Saldulker, Makgoka and Nicholls JJA concurring) [1] The issue for determination is whether the appellant, Global & Local Investments Advisors (Pty) Ltd (Global), a financial services provider, breached a mandate in terms of which it was authorised to invest and manage money entrusted to it by the respondent, Mr Nickolaus Ludick Fouché, by releasing funds in response to fraudulent emails, ostensibly sent by the latter. The Gauteng Division of the High Court, Johannesburg (Vorster AJ) found that there had been a breach of the mandate and that consequently the appellant was liable to be reimbursed in the amount of R804 000. The high court ordered Global to pay Mr Fouché’s costs. It is against that conclusion and the resultant order that the present appeal is directed. The appeal is before us with the leave of the high court. [2] The facts are largely common cause. On 23 November 2015 Mr Fouché, a mining consultant, gave a written mandate to Global to act as his agent and invest money with Investec Bank on his behalf. The written mandate stipulated that ‘All instructions must be sent by fax to 011 486 2915 or by email to monique@globallocal.co.za with client’s signature.’ The money was to be invested in a Corporate Cash Manager (CCM) account in the name of Mr Fouché. Global opened the CCM accounts for its clients at Investec and then managed the accounts for a fee expressed as a percentage of the funds invested for the client in such accounts. [3] In August 2016 fraudsters hacked the gmail account of Mr Fouché and utilising his authentic email credentials, sent three emails to Global on 15, 18 and 24 August 2016. In the emails Global was instructed to transfer specified amounts to accounts of named third parties at First National Bank (FNB). Two of the three emails containing the instructions to transfer money, ended with the words: ‘Regards, Nick’ while the third ended with ‘Thanks, Nick’. None of them had attachments. In response, Global paid out a total of R804 000 from Mr Fouché’s CCM account to unknown third parties in three tranches as follows: R100 000 on 15 August 2016, R375 000 on 18 August 2016 and R329 000 on 24 August 2016. Subsequently, Mr Fouché became aware of this and notified Global that the emails had not been sent by him. Mr Fouché claimed payment of the amounts transferred to third party accounts on the basis that Global had paid out contrary to the written mandate. [4] Global’s main submission and defence to the claim is that it acted within the terms of the mandate, on instructions that emanated from the legitimate email address of Mr Fouché and that the typewritten name ‘Nick’ at the foot of the emails satisfied the signature requirement, when considered in the light of s 13(3) of the Electronic Communications and Transactions Act 25 of 2002 (the ECT Act). At its core, the submission is that the instructions should be regarded as valid by virtue of the ECT Act because of the word ‘Nick’, which Global argues, is his electronic signature as it is the manner in which Mr Fouché ‘ordinarily’ ended his emails. [5] Section 13(3) of the ECT Act reads as follows: ‘Where an electronic signature is required by the parties to an electronic transaction and the parties have not agreed on the type of electronic signature to be used, that requirement is met in relation to a data message if - (a) A method is used to identify the person as to indicate the person’s approval of the information communication; and (b) Having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.’ [6] Mr Fouché, on the other hand, submits that the instructions did not bear his signature, whether manuscript or electronic. It is common cause that the instructions did not bear the former. [7] As stated earlier the high court found in favour of Mr Fouché. Vorster AJ stated that the mandate ‘specifically required the signature of the plaintiff [Mr Fouché] for a valid instruction and not merely an email or fax message purporting to be sent. . .’ The court below stated that this is not a case where the parties agreed to accept an electronic signature as envisaged by s 13(3) of the ECT Act. It went on to say ‘it is a case where the parties required a signature. No more and no less.’ Vorster AJ continued and said the following: ‘Á simple mechanism to achieve that requirement would simply be to reduce the request to writing, to sign it and to forward it by e-mail or fax to the defendant as the recipient. That agreed mechanism is in my view in line with a purposive and practical interpretation of the provisions of the mandate in line with the probable common intention of the parties and aimed at avoiding precisely the unlawful activity which caused the damage to the plaintiff.’ [8] The court below held as follows: ‘It is common cause that no signed instruction has been given to the defendant empowering it to transfer the amounts totalling R804 000.00 from the plaintiff’s CCM account. Consequently, I find that such transfer was made unlawfully being in conflict with the terms of the mandate which required an instruction bearing the signature of the plaintiff. In the result the action of the plaintiff must succeed.’ [9] The appeal turns on a proper interpretation of the written mandate and whether Global acted in breach thereof. In construing the mandate, the context must be taken into account. In the commercial and legal world signatures serve established purposes. Signatures are used as a basis to determine authority and can be checked for authenticity. When money is paid out on a cheque it is done on the basis of an authorised signatory whose signature can be verified. [10] The Concise English Oxford Dictionary1 defines ‘signature’ as ‘a person’s name written in a distinctive way as a form of identification or authorization.’ Black’s Law Dictionary (5th ed 1239) gives the definition of ‘sign’ and ‘signature’, which read together bring us close to the legal meaning of signature. ‘To ‘sign’, it explains, is 'to affix one's name to a writing or instrument, for the purpose of authenticating or executing it, or to give it effect as one's act; To attach a name or cause it to be attached to a writing by any of the known methods of impressing a name on paper; To affix a signature to . . . To make any mark, as upon a document, in token of knowledge, approval, acceptance, or obligation'. ‘Signature’ is defined as ‘the act of putting one's name at the end of an instrument to attest its validity; the name thus written . . . And whatever mark, symbol or device one may choose to employ as representative of himself is sufficient.’ [11] Lord Denning stated the following in Goodman v J Eban Ltd [1954] 1 QB 550 (CA) at 561 where the question was whether a signature by means of a rubber stamp was a good signature: ‘In modern English usage, when a document is required to be "signed by" someone, that means that he must write his name with his own hand upon it. It is said that he can in law "sign" the document by using a rubber stamp with a facsimile signature. I do not think this is correct . . . [A facsimile] is the verisimilitude of his signature but it is not his signature in fact. If a man cannot write his own name, then he can "sign" the document by making his mark, which is usually the sign of a cross’. [12] In Van Vuuren v Van Vuuren (1854) 2 Searle 116 at 121, the court held that: To sign a document means to authenticate that which stands for or is intended to represent the name of the person who is to authenticate. If an illiterate person is to sign, he would put a cross. If a person cannot use his hands as normal due to some disability, it will suffice to put the initial, in capital letters, of his name and surname. 1 Concise English Oxford Dictionary 12 ed (2012) Oxford University Press. [13] In Da Silva v Janowsky 1982 (3) SA 205 (A) at 218F-219C [1982] All SA 43 (A) and Harpur NO v Givindamall and Another 1993 (4) SA 751 (A) at 756–759 this Court gave extensive and authoritative definitions of ‘signature’. In Da Silva, Diemont JA put it thus: ‘Mr Jacobs, placed great reliance on the fact that in his plea the defendant had, not once but twice, made a clear and unequivocal admission that he had signed the mandate. But that is not enough. A signature does not refer merely to the written characters appearing on a document; it refers to the fact of signature in relation to the contents of the document on which it appears. The words of ROPER J reported in Sonfred (Pty) Ltd v Papert 1962 (2) SA 140 (W) at 145 are apposite: ‘‘It is axiomatic that a person is not bound by the mere fact that his signature appears upon a document of debt. The chief significance of a signature to a document of obligation is that it is evidence of the fact of consent by the signatory, and in order that he may be bound it is necessary that he shall have affixed his signature with the intention of binding himself. When a defendant is sued upon a document, therefore, the cause of action is not his signature, but the acceptance of liability, of which the signature is evidence, and the cause of action must be proved by the plaintiff, as it is the foundation of the whole claim. When a man is called upon in a summons for provisional sentence to admit or deny his signature, therefore, there appears to be no reason in principle why he should be restricted to a denial that the written characters are his, and should not be entitled, while admitting that they are his, to deny that they were affixed to the particular document - why he should not say 'the signature is mine, but I never signed this document and never undertook the liability contained in it.’’’(Emphasis added.) [14] What is set out in the preceding paragraphs is especially pertinent in relation to instructions relating to transfers of money in the financial services sector. Turning to the mandate itself, it is significant that all instructions had to be sent by fax or by email to a specified fax number and email address but that there is no specified dispatching fax number or email that could serve as an authenticated source. The contention that the gmail dispatching address of Mr Fouché together with his name at the end of the email served an authentication purpose appears contrived. This is especially so since the mandate requires a ‘signature’ which in every day and commercial context serves an authentication and verification purpose. In order to be able to resort to s 13(3) of the ECT Act Global would have had to show that in terms of the mandate an electronic signature was required. The word ‘electronic’ is conspicuously absent from the mandate. The court below cannot be faulted for concluding that what was required was a signature in the ordinary course, namely in manuscript form, even if transmitted electronically, for purposes of authentication and verification. The instruction was not accompanied by such a signature and the court below correctly held that the funds were transferred without proper instructions and contrary to the mandate. [15] Global placed reliance on Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another 2015 (2) SA 118 (SCA. That case concerned the validity of the cancellation of agreements by way of exchange of emails. Each of the agreements in question contained a non-variation clause, which required consensual cancellation to be reduced to writing and signed by both parties. The real dispute between the parties in that case was whether or not the names of the parties at the bottom or foot of each email constituted the required consensual cancellation of the agreement. [16] Spring Forest is distinguishable for the following reasons: The authority of the persons who had actually written and sent the emails was not an issue in that case as it is in the present case. The issue in that case was whether an exchange of emails between the contracting parties could satisfy the requirement imposed by them in the contract that ‘consensual cancellation’ of their contract be ‘in writing and signed’ by the parties. There was no dispute regarding the reliability of the emails, accuracy of the information communicated or the identities of the persons who appended their names to the emails. In the present case the emails in issue were in fact fraudulent. They were not written nor sent by the person they purported to originate from. They are fraudulent as they were written and dispatched by person or persons without the authority to do so. They are not binding on Mr Fouché. [17] For the reasons set out above the appeal must fail. The following order is made: The appeal is dismissed with costs. ______________________ P MOJAPELO ACTING JUDGE OF APPEAL APPEARANCES For appellant: C Bester Instructed by: Andrew Miller & Associates, Bryanston Symington & De Kok, Bloemfontein For respondent: C T Picas Instructed by: Webber Wentzel, Johannesburg Noordman 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 18 March 2020 STATUS Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Global & Local Investments Advisors (Pty) Ltd v Nickolaus Ludick Fouché (71/2019) [2019] ZASCA 08 (18 March 2020) Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs from Gauteng Division of the High Court, Johannesburg (high court). The issue for determination on appeal was whether the appellant, Global & Local Investments Advisors (Pty) Ltd (Global), a financial services provider, breached a mandate in terms of which it was authorised to invest and manage money entrusted to it by the respondent, Mr Nickolaus Ludick Fouché, by releasing funds in response to fraudulent emails, ostensibly sent by the latter. A brief background of the matter is that, on 23 November 2015 Mr Fouché, a mining consultant, gave a written mandate to Global to act as his agent and invest money with Investec Bank on his behalf. The written mandate stipulated that ‘All instructions must be sent by fax to 011 486 2915 or by email to monique@globallocal.co.za with client’s signature.’ The money was to be invested in a Corporate Cash Manager (CCM) account in the name of Mr Fouché. Global opened the CCM accounts for its clients at Investec and then managed the accounts for a fee expressed as a percentage of the funds invested for the client in such accounts. In August 2016 fraudsters hacked the gmail account of Mr Fouché and utilising his authentic email credentials, sent three emails to Global on 15, 18 and 24 August 2016. In the emails Global was instructed to transfer specified amounts to accounts of named third parties at First National Bank (FNB). Two of the three emails containing the instructions to transfer money, ended with the words: ‘Regards, Nick’ while the third ended with ‘Thanks, Nick’. In response, Global paid out a total of R804 000 from Mr Fouché’s CCM account to unknown third parties in three tranches as follows: R100 000 on 15 August 2016, R375 000 on 18 August 2016 and R329 000 on 24 August 2016. Subsequently, Mr Fouché became aware of this and notified Global that the emails had not been sent by him. Mr Fouché claimed payment of the amounts transferred to third party accounts on the basis that Global had paid out contrary to the written mandate. The high court found in favour of Mr Fouché. The high court found that there had been a breach of the mandate and that consequently Global was liable In the Supreme Court of Appeal (SCA), Global’s main submission and defence to the claim was that it acted within the terms of the mandate, on instructions that emanated from the legitimate email address of Mr Fouché and that the typewritten name ‘Nick’ at the foot of the emails satisfied the signature requirement, when considered in the light of s 13(3) of the Electronic Communications and Transactions Act 25 of 2002 (the ECT Act). Mr Fouché, on the other hand, submitted that the instructions did not bear his signature, whether manuscript or electronic. It was common cause that the instructions did not bear his signature, whether manuscript or electronic. In the SCA, the appeal turned on the proper interpretation of the written mandate and whether Global acted in breach thereof. After considering the meaning of the word ‘signature’, the SCA held that ‘signature’ in every day and commercial context serves an authentication and verification purpose. The SCA held that the court below could not be faulted for concluding that what was required was a signature in the ordinary course, namely in manuscript form, even if transmitted electronically, for purposes of authentication and verification. The instruction was not accompanied by such a signature and the high court correctly held that the funds were transferred without proper instructions and contrary to the mandate. The SCA went on to conclude that in the present case the emails were in fact fraudulent. They were not written nor sent by the person they purported to originate from. They are fraudulent as they were written and dispatched by person or persons without the authority to do so. They cannot be binding on Mr Fouché. The appeal was dismissed with costs.

4117

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1025/2022 In the matter between: VUMANI OSCAR NTULI APPELLANT and THE STATE RESPONDENT Neutral citation: Vumani Oscar Ntuli v The State (1025/2022) [2023] ZASCA 150 (10 November 2023) Coram: GORVEN, HUGHES AND MATOJANE JJA AND KOEN AND MASIPA AJJA Heard: No oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: 10 November 2023. Summary: Appeal to the Supreme Court of Appeal against the refusal of the high court of a petition seeking leave to appeal against conviction and sentence imposed by a regional court – special leave granted by this court in terms of s 16(1) of the Superior Courts Act 10 of 2013 in respect of sentence only – conceded misdirection or misdirections – reasonable prospect of success on appeal against sentence. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mabesele J and Vorster AJ sitting as court of appeal): (a) The appeal succeeds. (b) The order of the court below to the extent that it refused the petition against the sentences imposed is set aside and replaced with the following: ‘The application for leave to appeal against the sentences imposed on the applicant succeeds and the applicant is granted leave to appeal against his sentences to the Gauteng Division of the High Court, Johannesburg.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Gorven, Matojane JJA and Koen and Masipa AJA concurring) [1] This is an appeal where special leave to appeal was granted by this Court in respect of sentence only, against the dismissal of a petition. The appellant was one of three accused. He was charged before the regional court, Lenasia, Gauteng (regional court) and was convicted on two counts of robbery with aggravating circumstances, one of unlawful possession of a firearm, and one of attempted murder. He was acquitted on a further count. [2] For each of the first three counts he was sentenced to 15 years’ imprisonment and was sentenced to ten years’ imprisonment for the attempted murder count. The sentence in the first count was ordered to run concurrently with that imposed for the second count. Ten years of the sentence for the third count was ordered to run concurrently with that imposed for the first. The cumulative effect was thus that the appellant was sentenced to an effective term of thirty years imprisonment. [3] In terms of s 309B of the Criminal Procedure Act 51 of 1977 (CPA) the appellant applied for leave to appeal against conviction and sentence which was refused by the magistrate in the regional court. He then petitioned the Gauteng Division of the High Court, Johannesburg in terms of s 309C(2) for leave against his convictions and sentences. Mabesele J and Vorster AJ dismissed the petition. The appellant applied for special leave to appeal from this Court in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013, which leave was duly granted only in respect of the sentences. [4] As the appeal does not concern the merits of the matter, I set out very briefly the background facts that culminated in the charges preferred. The appellant and his co-accused attacked and robbed the complainant, Ms Regina Siyabela, in Meadowlands, of about R14 000 at gunpoint. He was identified as the person who was in possession of the firearm. In addition, they robbed two Makro workers, of their personal belongings, whilst they were delivering goods at Ms Siyabela’s premises. The appellant fled the scene with his co-accused in a Toyota Tazz, the police gave chase and a shootout ensued between the appellant, his co-accused and the police. Ultimately, the appellant and his co-accused abandoned the vehicle and fled on foot. They were arrested shortly after the incident. [5] In sentencing the appellant, the magistrate imposed the minimum sentences prescribed in terms of the CPA for each count, having found that there were no substantial and compelling factors to deviate from them. The appellant submitted that his personal circumstances and, in particular the three and a half years that he was in custody awaiting trial, were not considered and that the cumulative effect of the sentences was too harsh. [6] This Court has held that ‘a petition for leave to appeal to the high court is, in effect, an appeal against the refusal of leave to appeal by the court of first instance’.1 1 Smith v S [2011] ZASCA 15; 2012 (1) SACR 567 (SCA) (Smith) para 2. This means that, in refusing such a petition, the high court decided a matter on appeal to it. Section 16(1)(b) of the Superior Courts Act provides that ‘an appeal against any decision of a Division on appeal to it, lies to the Supreme Court of Appeal upon special leave having been granted by the Supreme Court of Appeal’. ‘[T]he issue to be determined at this stage is “whether leave to appeal should have been granted by the High Court and not the appeal itself”. As a result the test to be applied “is simply whether there is a reasonable prospect of success in the envisaged appeal . . . rather than whether the appeal . . . ought to succeed or not”.’2 [7] The appellant contends, that indeed, reasonable prospects of success exist for this court to grant leave to appeal. He submitted that the three and a half years spent awaiting trial ought to have been taken into account when he was being sentenced, as this would have reduced his cumulative sentence. The respondent conceded that the magistrate should have considered the time spent by the appellant in custody while awaiting trial. In Radebe and Another v S,3 Lewis JA held: ‘A better approach, in my view, is that the period in detention pre-sentencing is but one of the factors that should be taken into account in determining whether the effective period of imprisonment to be imposed is justified: whether it is proportionate to the crime committed. Such an approach would take into account the conditions affecting the accused in detention and the reason for a prolonged period of detention. And accordingly, in determining, in respect of the charge of robbery with aggravating circumstances, whether substantial and compelling circumstances warrant a lesser sentence than that prescribed by the Criminal Law Amendment Act 105 of 1997 (15 years’ imprisonment for robbery), the test is not whether on its own that period of detention constitutes a substantial and compelling circumstance, but whether the effective sentence proposed is proportionate to the crime or crimes committed: whether the sentence in all the circumstances, including the period spent in detention prior to conviction and sentencing, is a just one.’4 [8] The failure of the magistrate to take into account the time spent by the appellant in custody while awaiting trial thus amounted to a misdirection on the part of the learned magistrate. In my view, had the magistrate engaged in that exercise, this could 2 Ibid para 3, citing S v Matshona [2008] ZASCA 58; [2008] 4 All SA 68 (SCA); 2013 (2) SACR 126 (SCA) (Matshona) para 8. 3 Radebe and Another v S [2013] ZASCA 31; 2013 (2) SACR 165 (SCA). 4 Ibid para 14. have had a bearing on the sentences imposed. This omission is apparent from the record and conceded by the respondent. As such there are reasonable prospects that the appellant could be successful on appeal against sentence.5 The high court erred in failing to grant the appellant that leave. [9] I accordingly make the order set out below. (a) The appeal succeeds. (b) The order of the court below to the extent that it refused the petition against the sentences imposed is set aside and replaced with the following: ‘The application for leave to appeal against the sentences imposed on the applicant succeeds and the applicant is granted leave to appeal against his sentences to the Gauteng Division of the High Court, Johannesburg.’ ___________________ W HUGHES JUDGE OF APPEAL 5 Smith paras 2-3; Matshona para 8. Appearances For the Appellant: Heads of argument prepared by EA Guarneri Instructed by: Johannesburg Justice Centre, Johannesburg Bloemfontein Justice Centre, Bloemfontein For the Respondent: Heads of argument prepared by EHF Le Roux Instructed by: The Director of Public Prosecutions, Johannesburg 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: 10 November 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Vumani Oscar Ntuli v The State (1025/2022) [2023] ZASCA 150 (10 November 2023) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the High Court, Johannesburg (high court). The order of the high court was set aside and replaced with one granting leave to appeal against sentence to the high court. The appeal revolved around an application for leave to appeal in respect of sentence only. The accused was convicted on two counts of robbery with aggravating circumstances, one of unlawful possession of a firearm and one of attempted murder, and was sentenced to an effective term of thirty years’ imprisonment. In terms of s 309B of the Criminal Procedure Act 51 of 1977 (CPA) the appellant applied for leave to appeal against conviction and sentence which was refused by the magistrate in the regional court. He then petitioned the high court in terms of s 309C(2) for leave to appeal, but the petition was dismissed. The appellant applied for special leave to appeal from this Court in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013, which leave was duly granted in respect of the sentence only. This Court held that a petition for leave to appeal to the high court amounted to an appeal against refusal of leave to appeal by a court of first instance, which meant that the high court decided a matter on appeal to it. Section 16 of the Superior Courts Act provided that a decision of a Division on appeal to it, lies to this Court once special leave to appeal had been granted by this Court. The issue that had to be determined was, therefore, whether leave to appeal should have been granted by the high court and not the appeal itself. Prior to sentencing, the appellant was in custody for a period of three and a half years awaiting trial and this Court found that the magistrate committed a misdirection when she failed to take into account the time spent in custody awaiting trial during sentencing. This could have had a bearing on whether the appellant would have had reasonable prospects of succeeding upon appeal. The high court erred when it failed to grant the appellant the necessary leave to appeal. In the result, the SCA upheld the appeal. The order of the high court was set aside and replaced with one granting leave to appeal against sentence to the high court. ~~~~ends~~~~

1564

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 224/2008 In the matter between: NHLANHLA WISEMAN MAVININI Appellant and THE STATE Respondent Neutral citation: State v Mavinini (224/2008) [2008] ZASCA 166 (1 December 2008) BEFORE: Cameron JA, Kgomo AJA and Mhlantla AJA HEARD: Thursday 20 November 2008 DELIVERED: Monday 1 December 2008 SUMMARY: Evidence – proof – beyond reasonable doubt – moral certainty of guilt – Sentence – maximum sentence imposed under Act 105 of 1997 – inappropriate ORDER On appeal from: High Court, Pietermaritzburg (Patel and Moleko JJ), sitting on appeal from the regional court at Newcastle. 1. The appeal against conviction is dismissed. 2. The appeal against sentence succeeds. 3. The sentence imposed by the magistrate is set aside. In its place there is substituted: ‘The accused is sentenced to fifteen (15) years’ imprisonment.’ JUDGMENT CAMERON JA (Kgomo AJA and Mhlantla AJA concurring) [1] When does a question about a witness’s evidence give rise to a doubt? And what makes a doubt become reasonable? And when does reasonable doubt point to acquittal? This case invites these reflections. The appellant was convicted of robbery in the Newcastle Regional Court (Mr TCL Colditz) and sentenced to twenty years’ imprisonment. His appeal to the High Court in Pietermaritzburg (Patel J, with whom Moleko J concurred) was dismissed, as was his application for leave to appeal to this court, which later, however, itself granted the necessary leave. [2] On Friday evening 25 August 2000, the Pritraj family was travelling from Gauteng to KwaZulu-Natal. As night fell they checked into the Amajuba Lodge in Newcastle with their fourteen month-old baby. Shortly after they took occupation of room 15, there was a knock at their door: ‘Room service’. But it was not. It was a robbery. When Mr Surjan Pritraj opened the door, three men burst in, two brandishing firearms. His wife and baby were made to lie on the bed. He was forced to the floor. A blow to the back of his head with one of the robber’s firearms later required medical stitching. And the robbers proceeded to take everything. The family was not just robbed, but ‘robbed clean’ – as the magistrate noted in passing sentence, they were left with just about only the clothes on their backs. The robbers took their luggage, clothes, shoes, watches, wedding rings, jewellery, mobile phones (complete with chargers) and cash. They even nabbed the hotel’s television set and telephone apparatus. Then they made off in the family’s 1996 green Audi A4 motor vehicle with registration number DRP 053GP. [3] The very next evening, the South African Police Service’s crime intelligence centre in Newcastle received information that led the police to house 2892 in Section 3 of Madadeni, Newcastle’s township. There they found two men sleeping in a room in which they also discovered much of the loot. The rest was elsewhere in the house. The two men were later arraigned with the appellant as accused 1 and 2. Accused 1 died in the course of the trial. Accused 2, who the arresting officer conceded was charged (like accused 1) only because he was found in the same room as the stolen property, was given the benefit of the doubt and acquitted. [4] The appellant though was convicted. During the same raid, his identity document, or a copy of it, as well as a logbook for a bakkie registered in his name were found. At the trial, one of the occupants of house 2892, Ms Ntombikababa Charity Tshabalala, testified that he had been staying there with his girlfriend. [5] But that is not why he was convicted. His conviction arose from the green 1996 Audi A4. Evidence was led at the trial that the appellant was seen driving a green Audi A4 (its front adorned with a false number plate, and the back bearing the number ‘DRV 053GP’) just outside house 2892, shortly before it was raided – but that when he saw the police he sped away, eluding pursuit. Ms Tshabalala testified that earlier that same evening a vehicle, whose make she could not identify, but green in colour, was at the house. Less than a week later, the complainant’s Audi was recovered in Springs, Gauteng. When he identified it to the police, it had false number plates. [6] The magistrate accepted that the appellant had been driving the complainant’s vehicle, and inferred from the proximity in time (less than 24 hours) that the appellant’s possession was so closely connected to the robbery itself that in the absence of other explanation he must have been one of the robbers. The appellant does not attack this part of the magistrate’s reasoning, for if he was indeed seen in the Audi so soon after the robbery, such recent possession, together with his elusive conduct, and the false front number plate, overwhelmingly suggests criminal involvement in the robbery. What he disputes is the preceding premise: that he was seen in the Audi at all. [7] This requires us to consider in detail the pivotal evidence leading to his conviction, that of Superintendent Mahash Singh Ragunanan. He testified that on the evening after the robbery an informer’s evidence led him to house 2892. Contrary to the information given, the stolen green Audi was not there, but after questioning a group of females standing opposite, he got back into his state vehicle and waited outside the house. While so seated, he noticed two vehicles approaching from the rear. The front vehicle slowed next to his, as if to turn into house 2892. Ragunanan alighted. He saw that it was a green Audi with front registration number Mthambo ZN (his informer had given him the names of the suspects connected with the stolen Audi as that of the appellant and one Thami Mthambo, whose name featured frequently during the trial as part of the accused’s version). He was one and a half metres away, and noticed the appellant was the driver. He shouted to him to stop, and drew his firearm – but could not fire because of the women opposite. The vehicle sped off. He observed its rear registration was DRV 053GP. He got back into his vehicle and set off in pursuit, but in vain. [8] Two questions arise from Ragunanan’s evidence. The first is whether the incident to which he deposed took place at all, or whether (as was argued at the trial, and again on appeal) it was a later fabrication. The second is whether, if the incident happened, his identification was reliable. These questions must be considered separately. Was Ragunanan’s identification of appellant fabricated? [9] Doubt arose about the authenticity of the incident for the following reasons. As mentioned earlier, the first two accused were arrested when house 2892 was raided on the night of 26/27 August, the day after the robbery. Accused 3 and 4 were arrested in Gauteng less than a week later in the events that lead to the recovery of the complainant’s Audi. But the appellant (accused 5) was arrested only in May of the following year. That was because Ragunanan made a formal statement for the docket only on 22 March 2001, seven months after the incident at house 2892 (the delay until the May arrest seems to have been because the appellant was in custody in Volksrust on other charges, which were later dropped). [10] Probed in cross-examination, Ragunanan stated that he told the officer in charge of the scene at house 2892, inspector Fouché, that very evening that he had spotted the appellant in the vehicle, but ‘unfortunately I left for special duties away from town, and only returned in March’. [11] Perhaps surprisingly, this statement was left hanging: Ragunanan was not cross-examined about it at all. The lawyer who elicited this answer (who had been representing three of the accused from the outset of the trial, and stepped in also for accused 5 when his predecessor left during the earlier cross-examination of Ragunanan) did not challenge the authenticity of the ‘special duties’. He did not ask what they were, where they had to be performed, when they started, when they ended, or what they entailed so as to inhibit making an earlier statement. [12] Before the high court and in this court, appellant’s counsel sought to impugn Ragunanan’s claim as inherently improbable. The obvious objection is that no basis was laid for this in cross-examination. The imputation is that Ragunanan was lying, that there was in truth no reason why he could not make a statement immediately, and that the seven-month delay pointed to fabrication. This is not only speculative; it is unfair. A cross-examiner who later suggests that a witness is lying on a particular point must generally confront the witness with the imputation.1 If a single question had been asked, Ragunanan might have been able to explain his ‘special duties’ in detail and with perfect conviction. [13] But this is not a civil trial between Ragunanan and the appellant, and it is not Ragunanan’s rights that are at issue here. It is the appellant’s. His right not to be wrongly convicted must trump Ragunanan’s right not to have his evidence unfairly impugned ex post facto. The general requirement that a witness must be confronted with damaging imputations2 is not a formal or technical rule. It is a precept of fairness. That means it must be applied with caution in a criminal trial: if, despite the absence of challenge, doubt arises about the plausibility of incriminating evidence, the accused should benefit. [14] One exception to the confrontation requirement is where a witness’s tale is so far-fetched and improbable that it can be rejected on its own standing without the need for cross-examination.3 That exception should clearly be applied with greater liberality in determining whether the state has proved its case against an accused beyond reasonable doubt. [15] But are there circumstances here to suggest that we should doubt Ragunanan’s unchallenged evidence that he was called away on special duties and that this was why he did not make a statement immediately? There should be at least some basis for rejecting the witness’s unchallenged evidence out of hand – whether it arises from some intrinsic feature of the evidence itself or from other evidence at the trial. Here there is no basis at all. It is not inherently implausible that a policeman is called away on special duties. Nor is it inherently implausible that this could delay his statement. 1 President of the Republic of South Africa v South African Rugby Football Union 2000 (1) SA 1 (CC) para 61. 2 President of the Republic of South Africa v South African Rugby Football Union 2000 (1) SA 1 (CC) para 64-65. 3 President of the Republic of South Africa v South African Rugby Football Union 2000 (1) SA 1 (CC) para 64. [16] Alert to possible doubt arising from Ragunanan’s evidence, the magistrate recalled both Fouché and Van Zyl (the investigating officer, to whom Fouché handed the case docket on the Monday). Fouché confirmed that Ragunanan had told him that he had seen the appellant driving the Audi.4 He affirmed that this was before he handed the docket over to Van Zyl, although he could not remember whether it was during the events at house 2892 itself or on the Sunday. His evidence thus corroborated that of Ragunanan. As the magistrate pointed out in his judgment, it was admissible and highly relevant to the imputation of recent fabrication. [17] Though his evidence was more equivocal, Van Zyl on being recalled likewise confirmed that after the incident Ragunanan told him that he had seen the appellant in the vehicle that evening. He also explained that he asked Ragunanan for a statement, but that as Ragunanan’s junior he could not insist on one.5 It further appeared that Van Zyl first wanted a sworn statement, so as to procure a warrant of arrest, before arresting the appellant: hence the delay. [18] One detail should be added to all of these. It transpired during the trial that the police officers were from differing units. Those who combed the scene and effected the arrests were from the dog unit. Fouché and Van Zyl were from the murder and robbery unit. Ragunanan was from the intelligence division. Because of the lack of cross-examination on the relevant point, the difficulties this may have created for coordination and communication were not explored. [19] In these circumstances the fabrication claim cannot in my view be sustained. The evidence as a whole, fairly considered, indicates that 4 ‘COURT Okay. So what did Ragunanan tell you? – He told me that when the vehicle had driven past he had seen who the driver was, and that he had recognised the person as accused 5. Was a statement taken from Ragunanan? – Not immediately then, he was asked for a statement, but I, due to something that only he can explain, the statement was only obtained at a later stage.’ 5 ‘Vir my as [‘n] junior offisier kan ek seker nie vir ‘n senior offisier dwing om – vir hom te sê wanneer om ‘n verklaring te maak nie. By my is hy verre my senior, ek kan nie vir hom sê … wanneer – daar is wel verskeie kere vir hom gevra vir ‘n verklaring, maar …’ Ragunanan went away on special duties, and that this triggered the delay in his statement. The magistrate, who was alert to the doubt, and saw all the witnesses, accepted the honesty and reliability of Ragunanan, Fouché and Van Zyl on this point. In my view, despite some attempt on the appellant’s behalf to suggest that the latter two conspired dishonestly to corroborate Raguanan’s evidence, he was correct to do so. [20] It should perhaps be added that there has been no complaint about the quality of the appellant’s legal representation.6 Indeed, while the cross- examination was not of Kentridgean stature, its deficiencies did not impair the appellant’s right to a fair trial.7 Was Ragunanan’s identification reliable? [21] The next question is whether the requisite degree of credence can be attached to Ragunanan’s identification of the appellant. As already indicated, Ragunanan caught no more than a quick night-time glimpse of the driver of the Audi A4. But it was at a close span (about 150cm), directly under a street- light; and he added when the magistrate questioned him that the interior light of the vehicle was on. This detail, too, was not challenged in Ragunanan’s cross-examination, and much was sought to be made of it on appeal, leading to speculative debate about reasons and likelihood;8 but in my view without challenge there is simply no warrant for subverting Raguanan’s evidence on this point. [22] More important to the reliability of his identification is the fact that Ragunanan testified that he had known the appellant for some five years before the incident. This detail was raised in cross-examination, though the challenge was ineffectual. The cross-examiner sought to probe by way of follow-up whether Ragunanan knew where the appellant lived. This 6 The Bill of Rights s 35(3) guarantees every accused person the right to choose and be represented by a lawyer. 7 See S v Tandwa 2008 (1) SACR 613 (SCA) para 7 (the right to legal representation is a right of substance, not form; it entails a right to competent representation – that is, of a quality and nature that ensures that the trial is in substance fair). 8 Patel J in the high court, for instance, thought it was not unlikely that a driver of a stolen car, unfamiliar with its instrumentation, would have the interior light on. boomeranged when Ragunanan proceeded to itemise knowledge of the appellant’s ‘various residences’, in sections 1 and 3 Madadeni, plus ‘unconfirmed information in Johannesburg as well’. Ragunanan also stated that on the night in question he had been to both the appellant’s Newcastle residences. His knowledge of the appellant and his likely whereabouts was therefore established. Indeed, it emerged from the evidence of other police officers that they too knew the appellant and had had dealings with him because of his involvement in other cases and charges (and that they had been to look for him on previous occasions at house 2892). [23] Against this background, despite the fleeting opportunity and night-time conditions, Ragunanan’s identification was not without inherent plausibility. It certainly called for an answer. Yet the appellant countered it with nothing. He chose not to testify. That was his right.9 Yet he must bear the consequences of exercising it. His choice to remain silent in the face of evidence clearly implicating him in criminal conduct suggests that he had no answer to it.10 For Ragunanan’s evidence was pre-eminently (as Heher JA put it in S v Chabalala)11 ‘capable of being neutralised by an honest rebuttal’. The rebuttal void clinches the impact of Ragunanan’s evidence. This leads to the inference that the appellant was driving the green Audi A4 on the night after the robbery, with false number plates, and that he fled when the police confronted him. That conduct, unexplained, together with the evidence linking the appellant with the place where the stolen goods were recovered, results in the overwhelming conclusion that he was himself involved in the robbery. [24] I should add that before us counsel for the appellant sought to make something of differing references in the record to the Audi’s registration number. The exhibit list, confirmed by the complainant, indicated that it was DRP 053GP. In Ragunanan’s evidence, the number is rendered as ‘DRV 053GP’. It is plain that this must have been either a slip of the tongue or a transcription error. This was however compounded when the magistrate in 9 Bill of Rights s 35(3)(h) – every accused person has the right to a fair trial, which includes the right ‘to remain silent, and not to testify during the proceedings’. 10 See S v Tandwa 2008 (1) SACR 613 (SCA) paras 53-56. 11 2003 (1) 134 (SCA) para 21. his judgment referred to the registration number as ‘VLV 053GP’. Before us, counsel sought to make capital of this, but was unable to offer any rational basis, other than mis-speaking or a transcription error, for where ‘VLV’ came from. It is clear that the magistrate intended to refer to the same vehicle, identically registered, as the one stolen from the complainant, which Ragunanan saw the night after, and which was recovered in Springs less than a week later. The error has no significance. [25] It follows that despite the somewhat curious features of the case the appellant’s conviction was correct. Especially having regard to the fact that he chose not to testify, the features raise doubt, but not reasonable doubt, about his guilt. [26] It is sometimes said that proof beyond reasonable doubt requires the decision-maker to have ‘moral certainty’ of the guilt of the accused. Though the notion of ‘moral certainty’ has been criticised as importing potential confusion in jury trials,12 it may be helpful in providing a contrast with mathematical or logical or ‘complete’ certainty. It comes down to this: even if there is some measure of doubt, the decision-maker must be prepared not only to take moral responsibility on the evidence and inferences for convicting the accused, but to vouch that the integrity of the system that has produced the conviction – in our case, the rules of evidence interpreted within the precepts of the Bill of Rights – remains intact. Differently put, subjective moral satisfaction of guilt is not enough: it must be subjective satisfaction attained through proper application of the rules of the system. [27] In my view that level of certainty exists about the appellant’s guilt. Sentence [28] The magistrate sentenced the appellant to twenty years’ imprisonment. This was the maximum sentence for robbery under the applicable 12 See the decision of the Supreme Court of the United States of America in Victor v Nebraksa (92-8894), 511 US 1 (1994), accessed on 27 November 2008 at http://www.law.cornell.edu/supct/html/92-8894.ZO.html. legislation.13 The magistrate was clearly right in considering that the minimum sentence provisions applied, since there were aggravating circumstances (firearms were used) and since a motor vehicle was taken.14 There has been no attack on his conclusion that there were no substantial and compelling circumstances justifying a lesser sentence than fifteen years. [29] In terms of the proviso to s 51(2) of Act 105 of 1997 (which applied when the appellant was sentenced on 15 March 2002),15 ‘the maximum sentence that a regional court may impose in terms of this subsection shall not be more than five years longer than the minimum sentence that it may impose in terms of this subsection’. The magistrate considered the maximum appropriate. He pointed out that the family had suffered the fright of intrusion and been robbed ‘clean’, and that the complainant had received a blow to the head. [30] These circumstances, while serious, do not justify the maximum sentence. They constitute reasons why the minimum sentence of fifteen years, and not a lesser sentence, was appropriate. The circumstances did not call for an exemplary sentence, which the maximum entails. That in my view would be disproportionate to the circumstances of the offence (see Vilakazi v The State [2008] 4 All SA 396 (SCA), (576/07) [2008] ZASCA 87 (2 September 2008)). [30] Recounting the circumstance of the robbery, the magistrate in referring to the appellant remarked that ‘‘People like that don’t deserve any mercy’. That was wrong. Although the appellant was not a first offender, his previous convictions (for theft in 1989 and 1992, when he was aged 20 and 23, both resulting in sentences of strokes with a light cane) were a decade and more old at the time of sentencing. He deserved a measure of mercy. That meant the minimum, and not the maximum, should have been imposed. 13 Criminal Law Amendment Act 105 of 1997. 14 Section 51 of Act 105 of 1997, read with Part II of Schedule 2. 15 See now the Criminal Law (Sentencing) Amendment Act, 38 of 2007. [29] In the result: 1. The appeal against conviction is dismissed. 2. The appeal against sentence succeeds. 3. The sentence imposed by the magistrate is set aside. In its place there is substituted: ‘The accused is sentenced to fifteen (15) years’ imprisonment.’ E CAMERON JUDGE OF APPEAL Appearances: For the appellant: Mr PJ Loubser Instructed by: Southey, Steyn & Mphela Attorneys, Newcastle Mphobole & Ishmail Attorneys, Bloemfontein For the respondent: Ms D Barnard Instructed by: Director of Public Prosecutions, Pietermaritzburg & 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: Monday 1 December 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 State v Mavinini (224/2008) [2008] ZASCA 166 (1 December 2008) In a judgment delivered today, the Supreme Court of Appeal has dismissed the appeal against conviction of Mr Nhlanhla Wiseman Mavinini, who was convicted of robbery in the Newcastle regional court. The SCA has however upheld Mr Mavinini’s appeal against sentence. The regional magistrate imposed the maximum sentence possible – twenty years. The SCA has reduced this to fifteen years. On conviction, the SCA held that despite a number of curious features, the evidence established the appellant’s guilt beyond reasonable doubt. Pivotal to this conclusion was the fact that the appellant chose not to testify in his own defence at his trial. That was his constitutional right – but he had to bear the consequences, including the fact that there was no answer to the state’s evidence. That evidence was that he had been seen driving the green Audi A4 taken in the robbery shortly after the crime was committed. The evidence had some measure of inherent plausibility – and in the absence of an honest rebuttal clinched the case against the appellant. The SCA, in a judgment by Cameron JA, in which Kgomo AJA and Mhlantla AJA concurred, held that despite some doubt, there was ‘moral certainty’ about Mr Mavinini’s guilt. Though the notion of ‘moral certainty’ has been criticised as importing potential confusion in jury trials, it is helpful in providing a contrast with ‘mathematical’ or ‘logical’ or ‘complete’ certainty. Those are not required in a criminal trial. It comes down to this: even if there is some measure of doubt, the court must be prepared not only to take moral responsibility on the evidence and inferences for convicting the accused, but to vouch that the integrity of the system that has produced the conviction – that is, the rules of evidence interpreted within the precepts of the Bill of Rights – remains intact. In other words, the court’s subjective moral satisfaction that the accused is guilty is not enough: it must be subjective satisfaction attained through proper application of the rules of the system. That existed here, and the appeal against conviction was therefore dismissed.

1803

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 412/10 In the matter between: THE STATE Appellant and STEPHEN ROMER Respondent Neutral citation: State v Romer (412/10) [2011] ZASCA 46 (30 March 2011) Coram: LEWIS, BOSIELO JJA and PETSE AJA Heard: 25 February 2011 Delivered: 30 March 2011 Summary: Sentence ─ Murder and attempted murder committed when respondent in a state of diminished responsibility ─ Sentence of ten years’ imprisonment wholly suspended, coupled with a sentence of correctional supervision ─ appeal by state. ___________________________________________________________ ORDER On appeal from: Eastern Cape High Court (Port Elizabeth) (Jansen J as court of first instance): Both the application for leave to lead further evidence by the respondent and the appeal against sentence by the State are dismissed. __________________________________________________________ JUDGMENT PETSE AJA (LEWIS and BOSIELO JJA concurring) [1] The respondent, Mr S Romer, was convicted by Jansen J in the Eastern Cape High Court, Port Elizabeth on one count of murder and two counts of attempted murder. The high court found, however, that Romer was in a state of diminished responsibility (though not acting as an automaton) at the time of the shootings. Romer was sentenced to ten years’ imprisonment wholly suspended for five years on the usual conditions. In addition he was sentenced to three years’ correctional supervision in terms of s 276(1)(h) of the Criminal Procedure Act 51 of 1977. An application for leave to appeal by the State in terms of s 316B of the Act was refused by the court a quo but was subsequently granted by this court. [2] The murder and attempted murder charges against Romer arose when Romer shot three people in Port Elizabeth on 17 October 2007. Mr G du Mordt was fatally wounded and Ms K Heuer and Mr E G Janse were seriously injured. The shooting incidents took place at three different locations and were witnessed by various witnesses, amongst whom were police officers who pursued Romer as he drove from one crime scene to the other. Romer was arrested and detained on the same day after having been cornered by the police. [3] The appeal before us is brought by the State which contends that the sentence imposed on Romer is disturbingly lenient given the serious consequences of his conduct, and thus warrants interference by this court. However, before I turn to consider this question there is a preliminary issue that requires to be addressed and it is this. Romer brought an application (opposed by the State) in terms of s 22(a) of the Supreme Court Act 59 of 1959 to adduce further evidence on appeal in relation to the sentence imposed. We refused the application, for the reasons that follow. [4] The further evidence is contained in two affidavits. The first one is that of Ms A Ferreira who is the social worker responsible for monitoring the correctional supervision and community service of Romer. The second is that of Dr Y Lucire who describes herself as a medical practitioner, specialising in forensic and medico-legal psychiatry, who formerly practised in the State of New South Wales, Australia. [5] Ferreira’s evidence pertains to facts which occurred after the imposition of sentence on Romer. The purpose of the affidavit is to demonstrate to this court that the conditions imposed by the court a quo have been complied with by Romer who has been fully integrated as a useful member of society. This is of no relevance to the appropriateness of the sentence at the time of its imposition. [6] The evidence of Lucire seeks to bolster Romer’s case that when he committed the crimes he was suffering from sane automatism. The same evidence was adduced when he sought leave from this court to appeal against his conviction. Leave was refused and the application to place Lucire’s evidence before the court was accordingly also refused. Its relevance to the question of sentence, as I understood Ms Crouse, counsel for Romer, was that the evidence was the basis of his opposition to the appeal: that at all material times he was acting under circumstances of severe diminished responsibility. [7] Section 22 of the Supreme Court Act provides: ‘The appellate division or a provincial division, or a local division having appeal jurisdiction, shall have power ─ (a) on the hearing of an appeal to receive further evidence, either orally or by deposition before a person appointed by such division, or to remit the case to the court of first instance, or the court whose judgment is the subject of the appeal, for further hearing, with such instructions as regards the taking of further evidence or otherwise as to the division concerned seems necessary; and (b) . . . .’ [8] It is trite that s 22 vests in the appeal court a wide discretion to receive further evidence in order to do justice between the parties. However the circumstances under which the appeal court will exercise such discretion are circumscribed and the factors to be borne in mind in the exercise of such discretion have crystallised over the years. This court almost a century ago (dealing with a similar provision contained in s 4 of the Appellate Division Further Jurisdiction Act 1 of 1911) held in Shein v Excess Insurance Company Ltd1 that the following are some of the factors to be borne in mind: (a) neither party should be placed at an unfair 1 Shein v Excess Insurance Company Ltd 1912 AD 418 at 428-429. advantage by the reception of further evidence; (b) special grounds should be fully set out substantiating the application; (c) the nature of the further evidence sought to be adduced must be set out, including its material relevance to the issue on appeal; (d) the appeal court should not lightly exercise its power in favour of granting the application more especially on points which have been contested and decided at the trial; and (e) there should be some reasonably sufficient explanation, based on allegations which may be true, why the evidence which is sought to be adduced was not led at the trial. [9] It is thus apparent that, ordinarily, the appeal court will receive further evidence on appeal only if special grounds underlying such request exist, such as that the evidence was either not available during the trial or could not have been obtained despite due diligence to procure it.2 [10] There are two fundamental objections to allowing Lucire’s evidence. First, it is not capable of being properly tested in this court. In In Re Certain Amicus Curiae Applications: Minister of Health & others v Treatment Action Campaign & others3 the Constitutional Court, in the context of an application to place further evidence before that court, said: ‘[H]owever, this is subject to the condition that such facts “are common cause or otherwise incontrovertible” or “are an official, scientific, technical or statistical nature, capable of easy verification”. This Rule has no application where the facts sought to be canvassed are disputed.’ Lucire’s evidence, on her own account, is controversial. Secondly, it is relevant only to Romer’s conviction, and that is not the subject of the appeal. There is no basis for its admissibility. And as indicated, Ferreira’s 2 Deintje v Gratus & Gratus 1929 AD 1 at 6-7. 3 In Re Certain Amicus Curiae Applications: Minister of Health & others v Treatment Action Campaign & others 2002 (5) SA 713 (CC) para 8. evidence is irrelevant to the imposition of sentence. [11] I turn then to the question of the appropriateness of the sentences imposed on Romer. As indicated earlier, Romer was charged with one count of murder and two counts of attempted murder. He pleaded not guilty and raised a defence of sane automatism substantiated by a comprehensive written plea explanation under s 115 of the Criminal Procedure Act. The State called several witnesses, one of whom was Professor Visser, a member of the panel that examined the accused at Fort England Hospital in Grahamstown, pursuant to an order made under s 79 of the Criminal Procedure Act. Romer testified in his defence and called three other witnesses: his son, Mr Derick Romer, Mr Ian Meyer who is a clinical psychologist practising in Port Elizabeth and Professor Daya who was the Head of the Pharmacology Department at Rhodes University, Grahamstown. [12] The evidence relating to the three shooting incidents in various streets of Port Elizabeth and the fact that the accused fired shots through the driver’s window, windscreen and front passenger window of his motor vehicle whilst occupying the driver’s seat was largely common cause and need not be traversed here. It was also not disputed that shortly before the shootings, Romer had visited a friend, drunk a beer and had agreed to return to the friend’s home later in the evening for a braai. The evidence of his friend that he had appeared normal at the time was also not contested. [13] The evidence of the three experts who testified at the trial was directed at establishing whether Romer, in firing such shots, was acting in a state of sane automatism at the time. Visser for the State was of the view that he was not, whereas both Meyer and Daya held the opposite view. [14] Romer’s bizarre conduct on the day when he shot three strangers, randomly and at different places, was attributed by his expert witnesses to an intake of anti-depressant medication that had been prescribed for him by various doctors including psychiatrists as well as over-the-counter medication. He had consulted doctors about his emotional upheaval triggered by the disintegration of his marriage. Romer’s depression had begun in December 2001 when he had caught his wife with her lover, and subsequently divorced her. [15] In December 2001 he was admitted to St Mark’s Clinic in East London where he was diagnosed by a psychiatrist as having an adjustment disorder. He was treated as an in-patient for two weeks and medication was given to him. He was thereafter on several occasions re- admitted to St Mark’s Clinic for treatment. His successful career as a car salesman in East London came to an abrupt end. [16] During 2007 Romer moved to Port Elizabeth where he stayed with his son, Derick, who testified that there had been a steady deterioration of Romer’s mental state from the end of 2000 which rendered him a shell of his former self. On occasions Romer would remain in bed for up to a week at a time, getting up only for short periods. Derick observed Romer experiencing frequent nightmares, accompanied by violent tremors. There came a point when Derick could no longer cope with living together with his father in his house and requested him to leave. Romer then went to live with a relative, Gary Romer, in Sardinia Bay in the Port Elizabeth district. [17] Meyer’s view was that when Romer fired shots at his victims he was not acting rationally: his acts were a consequence of the combined effects of depression aggravated by the intake of anti-depressants, and the taking of four sleeping pills the night before the shootings. This, testified Meyer and Daya, resulted in Romer’s automatism. [18] However, the high court found that although Romer had suffered from diminished responsibility he had not acted in a state of sane automatism when shooting. The court accepted the evidence of Visser that Romer had been able to direct his actions: he had driven some distance, in peak traffic, in unfamiliar areas and through traffic circles and lights. He had, for the most part, obeyed traffic rules. He had deliberately tried to evade police vehicles, driving at speed to escape them. Accordingly, he was not acting as an automaton when he shot his three victims. [19] But the court, in imposing sentence, did place great emphasis on Romer’s condition, induced by drugs. Of course Romer’s conduct and its consequences are horrific. They could be aptly described in the words of Marais JA in S v Roberts4 where he said that ‘[v]iewed objectively and in isolation’ the crimes were ‘horrific’. [20] In considering what a suitable sentence should be that would satisfy the objectives of punishment the court a quo took cognisance of the following factors: ‘(a) that Romer had committed the crimes under circumstances of severe diminished responsibility; (b) that he expressed genuine contrition; (c) that he took full responsibility for the hardship, misery and agony that he 4 S v Roberts 2000 (2) SACR 522 (SCA) para 5. caused to his victims and members of their families; (d) that when symptoms of his emotional disintegration precipitated by the irretrievable breakdown of his marriage caused by his wife’s infidelity manifested themselves he sought professional help; (e) that he was prescribed drugs by doctors which far from alleviating the state of his emotional upheavals aggravated it; (f) that the accused had over an extended period of time in his adult life lived a model and exemplary life; (g) that the accused was no longer taking drugs, abstained from alcohol, undergoing counselling and psychological therapy which all evinced a determination on his part to rehabilitate himself; (h) that the chances of him ever repeating what he did were extremely remote; and (i) that imposing direct imprisonment in order to deter others would serve no useful purpose but rather amount to sacrificing Romer on the altar of deterrence.’ This approach is, in my respectful view, unassailable. [21] By way of prelude I want to say that had I sat as the court of first instance I would in all probability have imposed a direct custodial sentence with a portion suspended on suitable conditions, given that Romer acted with diminished responsibility. But we are a court of appeal. [22] It has been held in a long line of cases that the imposition of sentence is pre-eminently within the discretion of the trial court. The appellate court will be entitled to interfere with the sentence imposed by the trial court only if one or more of the recognised grounds justifying interference on appeal has been shown to exist.5 Only then will the appellate court be justified in interfering. These grounds are that the sentence is ‘(a) disturbingly inappropriate; (b) so totally out of proportion to the magnitude of the offence; (c) sufficiently disparate; (d) vitiated by 5 See S v Mtungwa en ‘n ander 1990 (2) SACR 1 (A). misdirections showing that the trial court exercised its discretion unreasonably; and (e) is otherwise such that no reasonable court would have imposed it.’ See S v Giannoulis;6 S v Kibido;7 S v Salzwedel & others.8 [23] In S v Matlala9 it was held that in an appeal against sentence the fact that the sentence imposed by the trial court is wrong is not the test. The test is whether the trial court in imposing it exercised its discretion properly or not. Consequently, the circumstances in which an appellate court will interfere with the exercise of such discretion are circumscribed. In S v Sadler10 Marais JA, writing for a unanimous court, had occasion to re-state them when he said the following: ‘The approach to be adopted in an appeal such as this is reflected in the following passage in the judgment of Nicholas AJA in S v Shapiro 1994 (1) SACR 112 (A) at 119j-120c: “It may well be that this Court would have imposed on the accused a heavier sentence than that imposed by the trial Judge. But even if that be assumed to be the fact, that would not in itself justify interference with the sentence. The principle is clear: it is encapsulated in the statement by Holmes JA in S v Rabie 1975 (4) SA 855 (A) at 857D-F: “1. In every appeal against sentence, whether imposed by a magistrate or a Judge, the Court hearing the appeal ─ (a) should be guided by the principle that punishment is ‘pre-eminently a matter for the discretion of the trial Court’, and (b) should be careful not to erode such discretion: hence the further principle that the sentence should only be altered if the discretion has not been ‘judicially and properly exercised’. 2. The test under (b) is whether the sentence is vitiated by irregularity or 6 S v Giannoulis 1975 (4) SA 867 (A) at 873G-H. 7 S v Kibido 1998 (2) SACR 213 (SCA at 216 g-j. 8 S v Salzwedel & others 1999 (2) SACR 586 (SCA) para 10. 9 S v Matlala 2003 (1) SACR 80 (SCA) at 83d-e. 10 S v Sadler 2000 (1) SACR 331 (SCA) paras 6-9. misdirection or is disturbingly inappropriate”.’ Counsel for the State submitted that the trial court had misdirected itself in various material respects when imposing sentence. I do not find it necessary to reach any firm conclusion in that regard. I shall assume in favour of respondent that no such misdirections exist. The traditional formulation of the approach to appeals against sentence on the ground of excessive severity or excessive lenience where there has been no misdirection on the part of the court which imposed the sentence is easy enough to state. It is less easy to apply. Account must be taken of the admonition that the imposition of sentence is the prerogative of the trial court and that the exercise of its discretion in that regard is not to be interfered with merely because a appellate Court would have imposed a heavier or lighter sentence. At the same time it has to be recognised that the admonition cannot be taken too literally and requires substantial qualification. If it were taken too literally, it would deprive an appeal against sentence of much of the social utility it is intended to have. So it is said that where there exists a ‘striking’ or ‘startling’ or ‘disturbing’ disparity between the trial court’s sentence and that which the appellate Court would have imposed, interference is justified. In such situations the trial court’s discretion is regarded (fictionally, some might cynically say) as having been unreasonably exercised. The problem is to give practical content to these notions. The comparison involved in the exercise may sometimes be purely quantitative, say three years’ versus six years’ imprisonment or a fine of R50 000 versus a fine of R100 000, or it may be qualitative, say a custodial versus a non-custodial sentence. Where quantitative comparisons are involved there is the problem of deciding how great the disparity must be before it attracts the epithet ‘striking’ or ‘startling’ or ‘disturbing’. Where qualitative comparisons are involved one faces a similar problem. When compared with a sentence of wholly suspended imprisonment which an appellate Court considers would have been appropriate, a trial court’s decision to impose a substantial fine with an alternative of imprisonment may not be regarded as giving rise to a disparity of that character. As against that, the distinction which exists between a non- custodial and a custodial sentence, as those terms are commonly understood, is so generally recognised to be profound and fundamental that, save possibly in rare instances, the conclusion that a custodial sentence was called for where a non- custodial sentence has been imposed (or vice versa) will justify interference with the sentence imposed.’ [24] In imposing sentence the high court had regard, inter alia, to a probation officer’s report that had been prepared at its behest and took into account the recommendations of the probation officer. It is not necessary, for present purposes, to traverse the various grounds of appeal against sentence relied upon by the State. It suffices merely to record that the common thread running through all of them is that the trial court overemphasised the personal circumstances of Romer at the expense of the gravity of the crimes committed, the interests of society and the interests of the victims. [25] Mr Nel SC, who appeared for the State, sought to persuade us that it was manifest from the sentence imposed by the court a quo that the learned judge misdirected himself in several respects. He stressed that, given the gravity of the offences of which Romer was convicted, a long term of imprisonment was called for and that the court erred in suspending the sentence when in the nature of things a sentence of 15 years’ imprisonment would have been appropriate. [26] In my view there are at least two fundamental fallacies inherent in Mr Nel’s submission. First, this argument entirely ignores the fact that the term of ten years’ imprisonment, albeit wholly suspended, is in itself punishment. Second, in S v Shapiro11 this court had occasion to observe (remarks that I find apposite in this context) that: ‘[Counsel for the State’s] main argument was that although he did not dispute [the opinion of the psychologist called by the defence], this Court should not lose sight of the unchallenged evidence of independent by-standers, that Shapiro’s actions 11 S v Shapiro 1994 (1) SACR 112 (A) at 123c-f. appeared to be cool, calm and calculated. Outwardly he gave no sign of emotional confusion. Moreover, the provocation he experienced was limited. He brutally executed a man who was helpless and dying. He acted without compunction, and thereafter showed a callous indifference to what he had done. The assumption underlying this argument is that the conduct of a person who has been found to have diminished criminal responsibility is to be measured by the same yardstick as the conduct of a person with undiminished criminal responsibility. Such an assumption is fallacious, for a person who has diminished criminal responsibility is by definition a person with a diminished capacity to appreciate the wrongfulness of his act, or to act an accordance with an appreciation of its wrongfulness.’ (My emphasis.) The learned acting judge of appeal went on to say this:12 ‘I do not think that in the light of the finding of diminished responsibility this case is one which is clamant for retribution. It does not appear from the evidence that Shapiro is likely to again commit a violent crime. He has no previous convictions relevant to show propensity for violence. It does not seem that he is a danger to society which would call for his separation from the community for a long time. In regard to the deterrence of others, it does not seem to me that in the present case a long prison sentence is called for. The concatenation of circumstances was highly unusual and is unlikely to occur again.’ [27] I also understood Mr Nel to contend that the sentence of correctional supervision was not only a slap on the wrist but also had the effect of trivialising the gravity of the crimes committed by Romer with no deterrent effect on both Romer himself and other would-be offenders. To underscore his contention Mr Nel asked, somewhat indignantly, whether ‘picking up cigarette ends’ (what he termed stompies) at a police station was an appropriate punishment when, given the gravity of the crimes committed by Romer, the retribution element of punishment should have been brought to the fore. I do not agree. More than a decade 12 At 124b-d. ago this court recognised the utility of a sentence of correctional supervision. In S v R13 Kriegler AJA was at pains to point out that the statutory dispensation introduced by s 276(1)(h) of the Criminal Procedure Act (viz correctional supervision) was intended to distinguish between two types of offenders, namely those who ought to be removed from society and imprisoned and those who, although deserving of punishment, should not be removed from society. He exhorted judicial officers to take advantage of this statutory provision in appropriate cases. [28] There are two other pertinent decisions of this court that followed S v R. The first is S v Ingram14 where the accused was sentenced to eight years’ imprisonment for shooting and killing his wife. Smalberger JA had the following to say in relation to s 276(1)(h) of the Act at 8j-9c: ‘Murder, in any form, remains a serious crime which usually calls for severe punishment. Circumstances, however, vary and the punishment must ultimately fit the true nature and seriousness of the crime. The interests of society are not best served by too harsh a sentence; but equally so they are not properly served by one that is too lenient. One must always strive for a proper balance. In doing so due regard must be had to the objects of punishment. In this respect the trial Judge held, in my view correctly, that the deterrent aspect of punishment does not play a major role in the present instance. The appellant is not ever likely to repeat what he did. Deterrence is therefore only relevant in the context of the effect any sentence may have on prospective offenders. A suspended period of imprisonment is accordingly rendered largely superfluous.’ [29] The second is S v D15 in which Nicolas AJA expressed himself in these terms: ‘In its nature a sentence of correctional supervision is not denunciatory. It does not 13 S v R 1993 (1) SACR 209 (A) at 221g-i. 14 S v Ingram 1995 (1) SACR 1 (A). 15 S v D 1995 (1) SACR 259 (A) at 266c-d. follow, however, that such a sentence is necessarily inappropriate because the case is one which excites the moral indignation of the community. The question to be answered is a wider one: whether the particular offender should, having regard to his personal circumstances, the nature of his crime and the interests of society, be removed from the community.’ [30] Finally on this point there is also the minority judgment of Cloete JA in Director of Public Prosecutions, Transvaal v Venter16 where he said: ‘So far as the deterrence is concerned, the respondent is a first offender; there is no suggestion that he is a violent person ─ indeed the panel of psychiatrists found that his amnesia was in keeping with a suppression of events which were “out of character with his personality”; and it does not seem that the respondent is a danger to society at large, so his removal from the community for a long time is not necessary for that reason. In such circumstances, this court has repeatedly held that deterrence of a person who commits murder acting with diminished responsibility, is not an important factor when it comes to punishment: see, for example, S v Campher [1987 (1) SA 940 (A) at 964C-H and 967D-E]; S v Smith [1990 (1) SACR 130 (A) at 136b); S v Ingram [1995 (1) SACR 1 (A) at 96]; and S v Shapiro [1994 (1) SACR 112 (A) at 124c-d]. Deterrence of others is also not important in a case such as the present. This court held in S v Shapiro: “In regard to the deterrence of others, it does not seem to me that in the present case a long prison sentence is called for. The concatenation of circumstances was highly unusual and is unlikely to occur again.” The same applies here. I would merely add that to my mind there would seem to be little purpose in attempting to deter a person not in full control of his or her faculties.’ [31] I am thus not persuaded that the court a quo committed any misdirection in imposing the sentence it did or that such sentence is disturbingly inappropriate. I am satisfied after much anxious consideration that deterrence of Romer or others is not an overriding 16 Director of Public Prosecutions, Transvaal v Venter 2009 (1) SACR 165 (SCA) para 61. consideration, regard being had to ‘the concatenation of circumstances’ which were of a highly unusual, if not bizarre, nature and which are unlikely to recur. [32] In the result the following order is made: Both the application for leave to lead further evidence by the respondent and the appeal against sentence by the State are dismissed. ___________________ XM Petse Acting Judge of Appeal APPEARANCES APPELLANT: CDHO Nel SC Instructed by the Director of Public Prosecutions, Port Elizabeth; The Director of Public Prosecutions, Bloemfontein. RESPONDENT: (Ms) L Crouse Instructed by Legal Aid Board, Port Elizabeth; Legal Aid Board, 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 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. STATE V ROMER The Supreme Court of Appeal (SCA) today dismissed an appeal by the State against the sentence imposed on Mr Stephen Romer by the Eastern Cape High Court (Port Elizabeth) for one count of murder and two counts of attempted murder. The SCA had, on the day of the hearing of the appeal, dismissed an application by Mr Romer to lead further evidence on appeal. Romer had shot three people, one of whom was fatally wounded and the other two seriously injured. The high court found that he had suffered from diminished responsibility triggered by the disintegration of his marriage and the intake of anti-depressant medication prescribed by various doctors for his condition. However, it found that he had not acted in a state of sane automatism when he shot his victims. It sentenced him to ten years’ imprisonment wholly suspended for five years on certain conditions. In addition it sentenced him to three years’ correctional supervision. Romer applied for leave to lead the evidence of a social worker responsible for monitoring his correctional supervision and community service, and of a medical practitioner formerly specialising in forensic and medico-legal psychiatry. The evidence of the social worker was intended to demonstrate that he had complied with the conditions imposed upon him by the high court. And the medical evidence was intended to bolster his case that he had committed the crimes when he was suffering from sane automatism. The SCA held that the evidence of the social worker was of no relevance to the appropriateness of sentence at the time of its imposition. It further held that the medical evidence was, firstly, controversial and, secondly, it was relevant only to his conviction (his application for leave to appeal against his conviction had been dismissed by the SCA). There was, therefore, no basis for its admissibility. Mr Romer’s application to lead further evidence was therefore dismissed. The State argued that the high court had overemphasized the personal circumstances of Romer at the expense of the gravity of the crimes he had committed, the interests of society and the interests of the victims. It further argued that a long term of imprisonment (15 years) was called for and that the high court had erred in suspending the sentence it had imposed. The SCA held that the high court had not committed any misdirection in imposing the sentence it did and that the sentence was not disturbingly inappropriate given Romer’s diminished responsibility at the time. The deterrence of Romer, the SCA held, was not an overriding consideration. The appeal against sentence by the State was also dismissed.

3264

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable CASE NO:015/07 In the matter between HOS+MED MEDICAL AID SCHEME APPELLANT and THEBE YA BOPHELO HEALTHCARE MARKETING & CONSULTING (PTY) LTD 1ST RESPONDENT P J VAN DER WALT NO 2ND RESPONDENT K VAN DIJKHORST NO 3RD RESPONDENT I W B DE VILLIERS NO 4TH RESPONDENT CORAM: HOWIE P, CLOETE and LEWIS JJA, HURT and MHLANTLA AJJA HEARD: 9 NOVEMBER 2007 DELIVERED: 29 NOVEMBER 2007 SUMMARY: Order of High Court, Pretoria setting aside an arbitration appeal tribunal’s award confirmed on basis that tribunal had exceeded its powers. Dispute referred to new appeal tribunal in terms of s 33(4) of the Arbitration Act 42 of 1965. Neutral Citation: This judgment may be referred to as Hosmed Medical Aid Scheme v Thebe Ya Bophelo Healthcare [2007] SCA 163(RSA) LEWIS JA [1] This is an appeal against an order of the High Court, Pretoria (per Seriti J), setting aside an award made by an arbitration appeal tribunal. The appellant, Hos+Med Medical Aid Scheme (‘Hosmed’) is, as its name suggests, a medical aid scheme registered in terms of the Medical Schemes Act 131 of 1998. The first respondent, Thebe Ya Bophelo Health Care Marketing and Consulting (Pty) Ltd (‘Thebe’), is a company that acts as a broker to Hosmed, and is accredited under the Medical Schemes Act. A dispute between the parties as to fees payable by Hosmed to Thebe was referred to arbitration. [2] The arbitration agreement provides for an appeal against the award to an arbitration appeal tribunal. Hosmed appealed against the award of the arbitrator, who held that Hosmed was liable to pay the fees claimed. The quantum was to be determined subsequently, the issue of liability having been separated by agreement. Hosmed succeeded in its appeal. Thebe successfully brought an application to have the appeal award set aside. The members of the appeal tribunal, all retired judges, are cited as respondents, but none opposed the application to set aside the award, and they are not party to this appeal. The appeal is with the leave of the high court. [3] The only issue before the court below, and in this appeal, was whether the appeal tribunal exceeded its powers, or was guilty of gross misconduct, such that a court should set aside its award. There were two issues before the appeal tribunal itself, one of which was decided in favour of Thebe, and the other against it. Hosmed seeks to have the decision of the court below set aside in terms of s 33 of the Arbitration Act 42 of 1965, on the basis that the court erred in finding that the appeal tribunal’s award was vitiated, but only in respect of the second issue decided by it. Although the Arbitration Act does not specifically refer to an award of an appeal tribunal, its terms clearly enable an agreement to refer an arbitrator’s award to an appeal body, and the provisions of the Act must apply to an appeal tribunal, and its award, in the same way as they do to an arbitration and an arbitral award. [4] Some background is necessary, but I shall be brief since many of the issues are not relevant to this appeal. In order to facilitate the conduct of the medical aid scheme run by Hosmed, it uses the services of brokers and administrators. In November 1999 Hosmed entered into a contract with Thebe,1 part of the ‘Thebe Group of Companies’, engaging Thebe to introduce new members for the scheme, for which an introduction fee was payable, and requiring it to provide ongoing services to members of the scheme, for which another fee was payable. [5] Both types of fee were regulated by regulations promulgated in 1999 under the Medical Schemes Act and the contract between the parties complied with the regulations. However, in June 2000 the regulations were amended. The parties believed that as a result of the amendment it was no longer permissible for Thebe to charge fees for ongoing services. This was apparently a general perception among people working in the medical aid field. [6] As a result of that perception the parties concluded an agreement in March 2001 varying the 1999 agreement so as to delete the clause providing for the payment to Thebe for ongoing services. In August of the same year the parties concluded a second amending agreement, which retained much of the first agreement and of the amending agreement concluded in March, but also gave Thebe certain exclusive rights as a broker. [7] The regulations under the Medical Schemes Act were amended again with effect from 1 January 2003. The amended regulations made provision for brokers to charge fees for ongoing services. Accordingly, yet another agreement was concluded by the parties in August 2003, again making provision for Thebe to charge fees for ongoing services to Hosmed members. Between March 2001 and August 2003 Thebe claimed no fees for such services, presumably having forgone them in the 2001 amendments to their original agreement. 1 Thebe underwent several name changes, and changes of shareholders and directors over the years, but none is of any significance in this appeal. [8] In February 2003 Mr R D Laird became the chief executive officer of Thebe: he was unaware of the existence of the amending agreements of 2001, and, on discovering that no fees had been paid for ongoing services between 2001 and 2003, sent invoices to Hosmed claiming a substantial sum of money. Hosmed denied liability for payment and Thebe sued in the Johannesburg High Court. Hosmed pleaded that the agreement provided for the resolution of disputes by arbitration. The parties accordingly concluded a written arbitration agreement and appointed Mr R T van Schalkwyk as the arbitrator. The terms of the arbitration agreement are significant to the issue on appeal. [9] These are the most important: ‘4 The issues to be determined by the arbitrator are the issues contained in the pleadings referred to at clause 8 below.’ ‘7.1 The arbitration shall be conducted in accordance with the rules of the High Court, subject to any specific directions that the arbitrator may give in regard to the conduct of the arbitration; 7.2 The arbitrator shall have full powers in connection with the arbitration, and in particular, without limitation, the arbitrator: 7.2.1 Shall have the power set forth in the Arbitration Act, as amended, or any replacement Act; 7.2.2 May make such award or awards, whether interim, provisional or final, as he may consider appropriate.’ 8.1 The parties have agreed that the pleadings filed in the High Court action . . . will serve as the pleadings in this matter; . . .’ The clause then sets out, for the sake of clarity, which pleadings had been filed and what their status in the arbitration would be, and continued: ‘8.3 All further pleadings and notices may be exchanged between the parties on their due dates by E-mail (confirmed by telefax) or by telefax . . . .’ [10] In so far as the right of appeal is concerned, the agreement provides: ‘16 The award made by the arbitrator shall be final and binding on the parties, subject to the right of appeal contained at clause 17 below.’ ’17.1 The final award made by the arbitrator shall be subject to a right of appeal; . . . 17.4 Such appeal shall be heard by a panel as agreed to within ten court days [after notices of appeal and cross appeal had been lodged] failing which three arbitrators shall be nominated and appointed by the Arbitration Foundation of South Africa. . . .’ [11] The pleadings were indeed amended: the existence of the amending agreements of 2001 to the broking contract were introduced in an amendment to Hosmed’s plea, and Thebe responded, in a replication, by averring that these agreements were void because they were in contravention of s 228 of the Companies Act 61 of 1973. The basis of this defence was that the amending agreements, by which Thebe gave up its right to claim fees for ongoing services to Hosmed’s members, constituted a disposal of the greater part of Thebe’s assets, yet had not been approved by a general meeting of Thebe’s shareholders. [12] Section 228 provides that: ‘(1) Notwithstanding anything contained in its memorandum or articles, the directors of a company shall not have the power, save with the approval of a general meeting of the company, to dispose of – (a) the whole or substantially the whole of the undertaking of the company; or (b) the whole or the greater part of the assets of the company. (2) No resolution of the company approving any such disposal shall have effect unless it authorizes or ratifies in terms the specific transaction.’ [13] Hosmed’s rejoinder denied that s 228 had not been complied with, and relied in the alternative on estoppel or the Turquand rule. In essence, Hosmed alleged that Thebe had represented that its managing director, Mr Frank Bartlett, had authority to conclude the amending agreements, and that Hosmed had relied on such representations; and that, further, it had entered into the amending agreements in good faith and on the assumption that the internal requirements of Thebe had been complied with – the Turquand defence.2 2 The ‘rule’ takes its name from Royal British Bank v Turquand (1856) 6 E & B 327; 119 ER 886, and is to the effect that a person entering into a contract is not required to ascertain whether the company’s internal requirements have been met. [14] The parties agreed that the arbitrator should assume that Thebe’s agreement not to claim fees for ongoing services did constitute a disposal of the greater part of its assets. Thus, when the arbitration commenced, the disputes to be determined were whether the amendment to the regulations in 2001 precluded Thebe from claiming fees for ongoing services, and whether the amendments to the parties’ agreement in 2001 were in contravention of s 228 of the Companies Act. This entailed also a determination of the defences based on estoppel and the Turquand rule. It was agreed that the quantum of Thebe’s claim would be determined after these issues had been decided. [15] The evidence of two witnesses was led for Thebe at the arbitration hearing: Mr J Alderslade, the financial director of Thebe’s holding company, and Laird, the chief executive officer of Thebe, referred to earlier. A director of Thebe, Mr P McCulloch, who was involved in the negotiations with Hosmed, did not testify. Hosmed called the evidence of Mr M Brown. The evidence of Thebe’s witnesses was of limited value since they had not participated in the negotiations leading to any of the agreements. Indeed, Laird had joined Thebe only in 2003, two years after the broking agreement had been amended by the parties. [16] When the arbitration was adjourned for the arbitrator to consider his award, Thebe realized that it had not led evidence to substantiate its contention that the amending agreements had not been authorized as contemplated in s 228 of the Companies Act. It was granted leave to recall Laird. Laird testified that he could not find in Thebe’s documents any record of a resolution of the company’s members authorizing the disposal of a major part of its assets or undertaking. He was cross-examined by Hosmed’s counsel on the existence of such a document. The evidence adduced, according to Hosmed, was designed to show that Thebe’s sole shareholder, the Thebe Hosken Group (Pty) Ltd, of which McCulloch was a director, as well as being a director of Thebe, had agreed to the disposal of Thebe’s right to fees for ongoing services to Hosmed’s members. There was thus, it was argued before the appeal tribunal, unanimous assent to the disposal and no contravention of s 228. The principle of unanimous assent is that where all the shareholders of a company agree on a matter that ordinarily requires a resolution of a general meeting of the company, the need for the formal resolution falls away. [17] Much store is placed by Hosmed on Laird’s evidence when he was recalled. Counsel argued before us that his questioning was directed to the issue of unanimous assent, even though it had not been pleaded. The gist of Laird’s evidence on recall was that, despite a careful search, he could not find any resolution authorizing the amendments of the broking agreement and thus no evidence that the disposal was authorized under s 228. He testified that the Thebe Hosken Group was indeed the only shareholder in Thebe and confirmed that McCulloch had been a member of the boards of both Thebe and the Thebe Hosken Group. [18] In support of the contention that there was unanimous assent, and that this was raised as an issue in the arbitration, Hosmed points to the following passage: ‘Mr Swart [counsel for Hosmed]: . . . I put it to you the shareholder must have been aware of this [the disposal] through Mr McCulloch. Mr Laird: If Mr McCulloch disclosed it. But as I’ve said to you, I’ve looked through all of the minutes, etcetera, and I haven’t found anything in there that would say that this is what happened. Mr Swart: But we’ve already agreed that there was only one shareholder. It would be senseless to have a formal meeting with yourself. Not so? Mr Laird: Well, I think something as important as this I think it would have been important for it to have been documented and I found no documentation whatsoever. . . . . Mr Swart: . . . And I put it to you that on a reading of this the only inference to be drawn is that the shareholder, through McCulloch, was aware of this and consented to it.’ [19] No objection was made to these questions and submissions and Thebe did not re-examine Laird. Counsel for Hosmed contends both in his heads of argument and before this court that it was clear that he was placing before the arbitrator the issue of unanimous assent. He also asserts that he argued the point before the arbitrator, and there was no objection to his argument. Counsel for Hosmed have no recollection of this aspect of the argument before the arbitrator, and indeed it does not appear from the written heads of argument submitted to the arbitrator and which form part of the appeal record. The arbitrator did not deal with the issue of unanimous assent in making his award which was that portion of Thebe’s claim, plus interest, and costs was payable by Hosmed (the balance having prescribed). The arbitration was postponed sine die to deal with the quantification of the claim. [20] Hosmed appealed against the award to the appeal tribunal constituted in accordance with the arbitration agreement. The issues on appeal were whether Thebe could, despite the amendment to the regulation in 2000, claim for fees for ongoing services between 2001 and 2003 when the regulations were again amended; and whether Thebe had complied with s 228 of the Companies Act. The appeal tribunal found that Thebe was entitled to claim the fees in issue (there was in fact no legal impediment to doing so, despite the perception about the effect of the 2000 amendment), thus confirming the arbitrator’s award in this respect. But it also considered that the amendments to the original agreements, which had the effect (assumed for the purpose of the question of liability) of disposing of its business within the meaning of s 228 of the Companies Act, were valid. It held that there was unanimous assent to the disposal, and that the amending agreements were thus enforceable. Accordingly Thebe had disposed of its right to claim fees for ongoing services. [21] The application by Thebe for the setting aside of the award is based on the appeal tribunal’s finding on unanimous assent since, it argued, it had not been pleaded, nor canvassed in evidence. The arbitration appeal tribunal, Thebe contended, had thus both exceeded its powers and committed a gross irregularity in terms of s 33 of the Arbitration Act , in not observing the audi alteram partem rule . [22] The appeal tribunal accepted Hosmed’s argument that although unanimous assent had not been pleaded – despite the numerous amendments to the pleadings by both parties, including an amendment made during the course of the appeal proceedings – the ‘issues were . . . substantially broadened during the hearing before the arbitrator (cf Shill v Milner 1937 AD 101 at 105) to include a defence of unanimous assent.’ It analysed the evidence of Hosmed’s witness, Brown, to the effect that no payments had been made to Thebe for ongoing services after the amending agreements were concluded, and no claims had been made. The arbitrator had found that there was no evidence of an agreement, alleged by Hosmed, that this loss of income would be made up by increased administrative charges levied by Thebe. [23] The appeal tribunal adopted a different approach. It said: ‘In terms of s 228 the directors of a company have no power to dispose of the greater part of the assets of a company without the approval of a general meeting of the company. On a proper interpretation of s 228, it matters not whether the company is getting something in return for such disposal or not. Even if the company were to receive the market value of the assets disposed of in return for the disposal, the directors would not have the power to dispose of such assets without the approval of the general meeting of the company. In our view it is, therefore, irrelevant whether there was a “credible or enforceable contract” in terms of which the claimant was entitled to be remunerated for the ongoing services it was providing to the respondent. On the assumption that the claimant [Thebe] disposed of the greater part of its assets . . . [by virtue of the amending agreements] s 228 would in principle be applicable.’ [24] The appeal tribunal considered that the lack of a formal resolution was no bar to the disposal if there were unanimous assent, which could be inferred from the circumstances.3 The appeal tribunal had regard to a number of factors in concluding that it was a probable inference that ‘all the directors’ of the sole shareholder in Thebe, the Thebe Hosken Group, assented to the disposal of the right to claim fees for ongoing services. These included the 3 It referred in this regard, inter alia, to Gohlke & Schneider v Westies Minerale (Edms) Bpk 1970 (2) SA 685 (A) and De Villiers NO v BOE Bank Ltd 2004 (3) SA 1 SCA para 52. fact that prior to the amendments Thebe had claimed fees for ongoing services, and Hosmed had paid, whereas no claims were made or paid after the amendments; the view of the medical aid industry that such fees were contrary to the amended regulations; amendments to the original broking agreement had been discussed at a meeting of the board of trustees of Hosmed; and the directors of Thebe were aware of the new regulations and the problems that they apparently posed to claiming fees for ongoing services. Since there was only one shareholder in Thebe, the assent of the directors of the holding company would be the assent of the holding company itself and a formal meeting would be redundant. The disposal was thus with the unanimous assent of the shareholder in the company, and Thebe’s claim had to be dismissed. [25] I shall set out the award in full since, although setting aside the award, the court below substituted its own order for that of the appeal tribunal. ‘1 The appeal is upheld with costs and the award of the arbitrator is set aside. 2 The following award is substituted therefor: 2.1 The claimant’s first claim is dismissed. 2.2 The claimant is ordered to pay Hosmed’s costs pertaining to this part of the arbitration, which costs are to include the costs consequent upon the employment of two counsel. 2.3 The arbitration is postponed sine die in respect of the issue of quantification as set out in the separation order. 3 The costs referred to above include the costs of the arbitrator/appeal tribunal, the costs of two counsel, the recording and record, the venue, witnesses and all ancillary costs. In the absence of agreement between the parties these costs will be taxed on the High Court scale by the Taxing Master of the High Court, Johannesburg.’ [26] The Pretoria High Court, as I have said, set aside the appeal tribunal’s award in terms of s 33 of the Arbitration Act 42 of 1965, apparently on the basis that the tribunal exceeded its powers. I shall revert to the order made by the court. [27] Section 33 of the Arbitration Act provides for the setting aside of an arbitration award (and this applies also to an appeal tribunal’s award) – (1) Where- (a) any member of an arbitration tribunal has misconducted himself in relation to his duties as arbitrator or umpire; or (b) an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings or has exceeded his powers; or (c) an award has been improperly obtained, 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.’ [28] Thebe argues that the appeal tribunal both exceeded its powers and was guilty of a gross irregularity. The same conduct, however, was relied on as giving rise to both grounds for the setting aside of the award. The gravamen of the complaint is that the issues before the arbitrator, and thus before the appeal tribunal, were defined by the pleadings. The arbitration agreement said so expressly. The agreement also made provision for amendments, and both parties amended and added to their pleadings during the course of the proceedings. Hosmed even introduced an amendment at the stage of appeal. The arbitration appeal tribunal could not, it was argued, go beyond the pleadings and decide an issue not pleaded. Unlike a court, which has the inherent jurisdiction to decide a matter even where it has not been pleaded, an arbitrator has no such power. It was common cause that the issue of unanimous assent was not pleaded at any stage. [29] Hosmed, on the other hand, argues that the arbitration agreement expressly confers on the arbitrator, and therefore also on the appeal tribunal, the powers of a high court and of the Supreme Court of Appeal, respectively. Thebe’s response is that these are procedural powers and do not confer jurisdiction to determine matters on which the parties have not agreed. [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.4 4 See LAWSA 2 ed vol 1 para 607 and the authorities there cited. Thus the arbitrator, and therefore also the appeal tribunal, had no jurisdiction to decide a matter not pleaded.5 Hosmed’s rejoinder6 put in issue Thebe’s allegation that there had been compliance with s 228. Had Hosmed intended to rely on the principle of unanimous assent it would have had to plead it specifically because it amounts to a classic confession and avoidance. There is a fundamental difference between a denial (where allegations of the other party are put in issue) and a confession and avoidance where an allegation is accepted, but the other party makes an allegation which neutralises its effect – which is what the raising of unanimous assent would seek to achieve.7 It is of course possible for parties in an arbitration to amend the terms of the reference by agreement, even possibly by one concluded tacitly, or by conduct, but no such agreement that the pleadings were not the only basis of the submission can be found in the record in this case, and Thebe strenuously denied any agreement to depart from the pleadings. [31] The appeal tribunal held, however, that it was entitled to go beyond the pleadings where the issue had been traversed in evidence. It relied, as I have said, on Shill v Milner8 where De Villiers JA said: ‘The importance of pleadings should not be unduly magnified. “The object of pleading is to define the issues; and parties will be kept strictly to their pleas where any departure would cause prejudice or would prevent full inquiry. But within those limits the Court has wide discretion. For pleadings are made for the Court, not the Court for pleadings. Where a party has had every facility to place all the facts before the trial Court and the investigation into all the circumstances has been as thorough and as patient as in this instance, there is no justification for interference by an appellate tribunal merely because the pleading of the opponent has not been as explicit as it might have been.” Robinson v Randfontein Estates GM Co Ltd (1925 AD 198).’ Relying on these dicta in Shill v Milner and in Robinson v Randfontein Estates the appeal tribunal held, as mentiond in para 22, that the issues were 5 The arbitration agreement in Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA), on which Hosmed relied, was completely different in its ambit. 6 Referred to in para 13 above. 7 The Uniform Rules of Court make this plain: Rule 18(4) provides that ‘Every pleading shall contain a clear and concise statement of the material facts upon which the pleader relies for his claim, defence or answer to any pleading . . . with sufficient particularity to enable the opposite party to reply thereto’ (my emphasis). 8 1937 AD 101 at 105. ‘substantially broadened during the hearing before the arbitrator . . . to include a defence of unanimous assent’. [32] I have already said that the appeal tribunal was not entitled to take this approach: its powers were conferred by the arbitration agreement and it did not have the power to go beyond that. But even if, for the sake of argument, it were accepted that the appeal tribunal did have jurisdiction, it can hardly be contended that the question whether there was unanimous assent was properly canvassed before the arbitrator. Counsel for Hosmed said that that was the issue on his mind when he cross-examined Laird on recall. But he conceded that he did not communicate this expressly to the witness or to Thebe’s counsel. I have set out the relevant evidence above. It is far from clear that what counsel was attempting to elicit from Laird was whether the sole shareholder in Thebe had assented to the disposal of the right to claim fees for ongoing services. At its highest, Laird conceded that it would have been pointless for McCulloch to call a meeting with himself to pass a resolution. But Laird could not testify on what had in fact happened since he had not been part of Thebe when the amending agreements were concluded. [33] Hosmed contends that Thebe did not object to the questions asked of Laird. It is not clear why they should have done so: it was not obvious that a new issue was being raised, and even if counsel for Thebe had realized what was on Hosmed’s counsel’s mind, he was entitled to remain silent knowing that the issue had not been pleaded. But there is no point in examining this issue further. On any basis, the question whether there had been unanimous assent, obviating the need for a meeting and a special resolution, was not really, let alone fully, canvassed in the evidence. It was first raised in the oral argument before the arbitrator, and did not feature even in counsel’s heads of argument which form part of the record. [34] The facts on which the Shill v Milner principle can be applied, even if it had been open to the appeal tribunal to rely on it, were not traversed in evidence. There was thus no basis for the appeal tribunal to find that there was unanimous assent to the disposal of the right to claim fees for ongoing services. [35] In the circumstances the appeal tribunal exceeded its powers: it went beyond the terms of the arbitration agreement. This is a clear case where the arbitration appeal tribunal exercised a power that it did not have. This court recently referred with approval9 to the decision of the House of Lords in Lesotho Highlands Development Authority v Impreglio SpA10 where Lord Steyn distinguished between cases where a tribunal mistakenly exercises a power that it does have, and those where a tribunal exercises a power that it does not have. In the latter type of case the tribunal exceeds its power, and, under our Arbitration Act, that warrants the setting aside of the order. This is the position stated earlier in Dickenson & Brown v Fisher’s Executors11 applied by the court in Telcordia.12 The judgment of Harms JA in Telcordia embodies a comprehensive account of the bases on which an arbitrator’s award may be set aside and there is no need to repeat what is said in that case. [36] In view of the finding that I make that the appeal tribunal exceeded its powers, it is not necessary to consider whether its decision on unanimous assent constituted a gross irregularity. [37] The appeal against the decision of the court below to set aside the award in terms of s 33(1)(b) must accordingly be dismissed. It remains to determine what consequences follow. Hosmed has argued that the matter should be remitted to the appeal tribunal so that it can apply to reopen its case and amend its pleadings so as to include the issue of unanimous assent. Thebe’s response is, naturally, that it had had that opportunity when the appeal tribunal hearing commenced, and declined to take it. Seriti J in the court below refused to remit the matter on the basis that Hosmed should have sought to reopen its case when the appeal tribunal was convened. The 9 Telcordia Technologies Inc above para 52. 10 [2005] UKHL 43 para 24. 11 1915 AD 166. 12 Above paras 56ff. learned judge considered that he should substitute the court’s order for that of the appeal tribunal. [38] The order reads: ‘(1) The award or order of the arbitration appeal tribunal is set aside and is substituted by the following: “(a) The appeal is dismissed with costs and the award of the arbitrator [Mr] Van Schalkwyk is upheld. (b) Hosmed is ordered to pay the claimant’s costs pertaining to this part of the arbitration, which costs are to include the costs consequent upon the employment of two counsel in the appeal proceedings. (c) The costs referred to above include the costs of the arbitrator, appeal tribunal, the costs of two counsel, the recording and record, the venue, witnesses and all ancillary costs. In the absence of agreement between the parties these costs will be taxed on the High Court scale by the Taxing Master of the High Court, Johannesburg. (d) The arbitration is to continue before the arbitrator [Mr] Van Schalkwyk for arbitration of the issue of quantification as set out in the separation order agreed to between the parties in December 2005.” (2) The fourth respondent [Hosmed] is ordered to pay the costs of the applicant on a party and party scale, which costs will include costs consequent upon the employment of two counsel.’ [39] Hosmed contends that it was not open to the court to substitute its own order for that of the appeal tribunal. This court, it argues, should remit the dispute to an appeal tribunal to consider the matter having regard to this court’s finding, and to give Hosmed the opportunity to apply to reopen its case and to amend its pleadings. [40] Counsel for Thebe, on the other hand, argues that if the court has the power to remit a matter to an arbitrator it must also have the power to substitute its own order. But even if that is not the case, Thebe argues, the order of the arbitrator should stand, and that takes care of the costs and other orders made by the court below. There is no purpose served in remitting the matter to the appeal tribunal, it argues, since it could make no award other than to refuse or allow Hosmed to reopen its case and amend its pleadings. If an appeal tribunal refused Hosmed’s application, that in turn would require remittal by the appeal tribunal to the arbitrator to deal with the quantification of Thebe’s claim. If, on the other hand, Hosmed can show that there had been unanimous assent, then the arbitrator will have to determine whether the amending agreements did have the effect of disposing of Thebe’s assets as contemplated in s 228 of the Companies Act. Either way, Thebe contends, the arbitrator will be required to consider the dispute again: it should thus be remitted directly to the arbitrator if the appeal is not simply dismissed. [41] The difficulty with Thebe’s approach is that it is the award of the appeal tribunal, and not the arbitrator, that is to be set aside. What power does this court have to remit the matter directly to the arbitrator? If such a course were open to us it would no doubt obviate the time and expense entailed in referring the matter back to the appeal tribunal, when it is likely that it would have still to go back to the arbitrator irrespective of the appeal tribunal’s conclusion. It is important to note, however, that the award of the appeal tribunal is not a foregone conclusion. [42] It is not apparent that the court below was referred to s 33(4) of the Arbitration Act or that either party requested submission to a new appeal tribunal. In any event, in my view it is not possible to refer the matter directly to the arbitrator. It is the appeal tribunal’s award that has been set aside, and s 33(4) of the Arbitration Act requires that ‘If the award is set aside the dispute shall, at the request of either party, be submitted to a new arbitration tribunal constituted in the manner directed by the court’ (my emphasis). The section, which is peremptory, must refer also to an appeal tribunal’s award. [43] Where neither party requests that the matter be referred back to the arbitrator, or appeal tribunal, then an award made in excess of its powers should simply be set aside by the court in terms of s 33 of the Arbitration Act. And, presumably, if both parties wished to refer the matter back to the same arbitrator or appeal tribunal, the court would be entitled to make such an order.13 Hosmed submitted that it had no difficulty with a reference back to the same appeal tribunal. But Thebe asserted that it had lost confidence in the appeal tribunal. Irrespective of Hosmed’s views, however, the section is clear: if either party requests it the dispute must be referred to a new tribunal. The court is not, in my view, given a discretion in this regard.14 Equally, because of the peremptory wording of s 33(4), a court does not have the discretion to substitute its own order for that of the appeal tribunal. [44] I consider that the only order appropriate is to refer the matter to a new arbitration appeal tribunal, to be constituted in accordance with clause 17.4 of the arbitration agreement between the parties (cited above), save that the composition of the tribunal should be agreed within ten court days of the date of the handing down of this judgment, failing which a new tribunal should be constituted in terms of the arbitration agreement.15 [45] Thebe has been substantially successful in this appeal in having prevailed on the primary issue: that the appeal tribunal exceeded its powers, with the consequence that its order must be set aside. Hosmed, on the other hand, is successful in so far as the dispute has to be remitted, and the order of the court below set aside. Hosmed has not succeeded, however, in its request for the dispute to be referred back to the same appeal tribunal. And if the new appeal tribunal refuses Hosmed the opportunity to reopen its case and amend its pleadings, then its success in this court may turn out to be hollow. But it does gain the opportunity to canvas the merits in the new appeal tribunal, and that, in my view, also constitutes substantial success. In the circumstances I conclude that there should be no order as to costs. [46] (a) The appeal succeeds in part and fails in part. (b) The order of the court below is set aside. 13 Contrast s 32(2) of the Arbitration Act which permits a referral back within six weeks of the publication of the award only on ‘good cause shown’. 14 See Benjamin v Sobac South African Building & Construction (Pty) Ltd 1989 (4) SA 940 (C) at 961J-962B and Steeledale Cladding (Pty) Ltd v Parsons NO 2001 (2) SA 663 (D) at 674A. 15 The arbitration agreement remains binding on the parties unless they agree to terminate it or it is set aside by an order of court: s 3 of the Arbitration Act. (c) The order of the court below is replaced with: ‘1 The application succeeds with costs including those occasioned by the employment of two counsel. 2 The award of the arbitration appeal tribunal is set aside. 3 The dispute between the parties is referred to a new arbitration appeal tribunal to be constituted in terms of clause 17.4 of the arbitration agreement between the parties. 4 The appeal procedures shall be those prescribed in clause 17 of the agreement, save that the parties must agree the composition of the arbitration appeal tribunal within ten court days of this order, failing which they shall request the Arbitration Foundation of South Africa to nominate three arbitrators, as envisaged in terms of clause 17.4 of the arbitration agreement.’ (d) No order is made as to costs. _____________ C H Lewis Judge of Appeal Concur: Howie P Cloete JA Hurt AJA Mthlantla 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: 29 May 2007 Status: Immediate NOMTHANDAZO CHAGI & OTHERS v SINGISI FOREST PRODUCTS Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Today, the Supreme Court of Appeal (the SCA) has delivered judgment confirming the order issued by the Land Claims Court which dismissed an appeal brought by the appellants against a judgment of the magistrate at Harding, KwaZulu-Natal. The appellants had approached the magistrate’s court for an interdict restraining the respondent, their employer, from relocating them from one set of houses to another within the same registered land unit. They had claimed that the employer was bound to comply with the requirements of s 9 of the Extension of Security of Tenure Act 62 of 1997, before it could relocate them. The section requires, inter alia, that occupiers of land be given a two months’ notice to the effect that the landowner would apply to court for an eviction order and that a report by a probation officer be compiled, showing whether there was suitable alternative accommodation available for the evicted occupiers. The magistrate had ruled that since the appellants were being moved within one piece of land, the provisions of s 9 did not apply to their case. The SCA agreed that indeed the section does not apply and dismissed the appeal.

1338

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 235/09 In the matter between: THE SOUTH AFRICAN RESERVE BANK Appellant and MZILIKAZI GODFREY KHUMALO First Respondent MAWENZI RESOURCES AND FINANCE COMPANY (PTY) LTD Second Respondent Neutral citation: The South African Reserve Bank v M G Khumalo (235/09) [2010] ZASCA 53 (31 March 2010) Coram: HARMS DP, NUGENT, LEACH JJA, HURT and MAJIEDT AJJA Heard: 24 February 2010 Delivered: 31 March 2010 Summary: Exchange Control Regulations – Regulation 22C(1) is not invalid for failing to incorporate a time period not exceeding that laid down in s 9(2)(g) of the Currency and Exchanges Act 9 of 1933 ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: North Gauteng High Court (Pretoria) (B R Southwood, J R Murphy and T J Raulinga JJ sitting as a court of first instance). 1. The appeal succeeds with costs, including the costs of two counsel. 2. The order of the court a quo is set aside and is replaced by the following: ‘The application is dismissed with costs, including the costs of two counsel.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ LEACH JA (HARMS DP, NUGENT JA, HURT et MAJIEDT AJJA concurring): [1] This appeal concerns the validity of a notice of attachment issued by the appellant, the South African Reserve Bank, under r 22C(1) of the Exchange Control Regulations1 (‘the regulations’) promulgated under the Currency and Exchanges Act 9 of 1933 (‘the Act’). For purposes of this judgment it can be accepted that references to ‘the Treasury’ in both the Act and the regulations are to be construed as referring to the appellant. [2] The first respondent is a businessman and a director of various companies, including the second respondent. From August 2002, the appellant held discussions with the two respondents in regard to whether various transactions had contravened the regulations. On 12 August 2008 the appellant, unpersuaded that the transactions in question did not amount to contraventions, issued the disputed notice purporting to attach various assets of the respondents which it alleged were ‘moneys or goods’ contemplated by r 22C. 1 Promulgated under section 9 of the Currency and Exchanges Act 9 of 1933 in Government Notice R 1111 of 1961and amended up to Government Notice R 855 in Government Gazette no 20299 of 23 July 1999. [3] This led to the respondents seeking urgent interim relief, including orders declaring the notice to be invalid and interdicting the appellant from giving effect to the notice pending the outcome of a review application that was yet to be brought, in which additional relief would be sought. The application came before a full bench of the North Gauteng High Court (Southwood, Murphy and Raulinga JJ). One of the grounds upon which it was said by the respondents that the notice was invalid was that r 22C(1) under which the notice was issued was said itself to be invalid because it was not in conformity with the authorizing statute. In the course of argument in the court below counsel for both parties agreed that, if the court were to uphold the respondents’ contention in that respect, then a final order should be made that the notice was invalid. Having found in their favour the court below made an order accordingly and the prayer for interim relief became superfluous. With the leave of that court that appellant now appeals against that order. [4] An appeal lies against an order that is made by a court and not against its reasons for making the order. It follows that on appeal a respondent is entitled to support the order on any relevant ground and is not confined to supporting it only for the reasons given by the court below.2 In this court, the respondent did not seek to support the order on any ground than that given by the court below, which was that the regulation under which it was made did not conform with the authorising statute and was thus invalid, subject to one subsidiary issue that I will come to. This means that the principal issue on which the appeal turns is whether the full bench was correct in its conclusion on the invalidity of r 22(C)(1) for the reasons that it gave. If the respondent fails on that issue, and on the subsidiary issue that I referred to, then the order that it made falls to be set aside, and the challenge to the validity of the order falls to be dismissed. The remainder of the notice of motion did no more that foreshadow a review application that was yet to be brought and need not concern us. 2 Per Trollip JA in Sentrale Kunsmis Korporasie (Edms) Bpk v N.K.P. Kunsmisverspreiders (Edms) Bpk 1970 (3) SA 367 (A) at 395G-396A. [5] The regulations were made under the powers extended to the Governor- General (later the State President and now the President) by s 9 of the Act which inter alia provides: ‘(1) The (President) may make regulations in regard to any matter directly or indirectly relating to or affecting or having any bearing upon currency, banking or exchanges. (2)(a) Such regulations may provide that the (President) may apply any sanctions therein set forth which he thinks fit to impose, whether civil or criminal. (b) Any regulation contemplated in paragraph (a) may provide for- (i) the blocking, attachment and obtaining of interdicts for a period referred to in paragraph (g) by the Treasury and the forfeiture and disposal by the Treasury of any money or goods referred to or defined in the regulations or determined in terms of the regulations or any money or goods into which such money or goods have been transformed by any person, and- (aa) which are suspected by the Treasury on reasonable grounds to be involved in an offence or suspected offence against any regulation referred to in this section, or in respect of which such offence has been committed or so suspected to have been committed; (bb) which are in the possession of the offender, suspected offender or any other person or have been obtained by any such person or are due to any such person and which would not have been in such possession or so obtained or due if such offence or suspected offence had not been committed; or (cc) by which the offender, suspected offender or any other person has been benefited or enriched as a result of such offence or suspected offence - Provided that, in the case of any person other than the offender or suspected offender, no such money or goods shall be blocked, attached, interdicted, forfeited and disposed of if such money or goods were acquired by such person bona fide for reasonable consideration as a result of a transaction in the ordinary course of business and not in contravention of the regulations; and (ii) in general, any matter which the (President) deems necessary for the fulfilment of the objectives and purposes referred to in subparagraph (i), including the blocking, attachment, interdicting, forfeiture and disposal referred to in subparagraph (i) by the Treasury of any other money or goods belonging to the offender, suspected offender or any other person in order to recover an amount equal to the value of the money or goods, recoverable in terms of the regulations referred to in subparagraph (i), but which can for any reason not be so recovered. (c) . . . (d) Any regulation contemplated in paragraph (a) shall provide- (i) that any person who feels aggrieved by any decision made or action taken by any person in the exercise of his powers under a regulation referred to in paragraph (b) which has the effect of blocking, attaching or interdicting any money or goods, may lodge an application in a competent court for the revision of such decision or action or for any other relief . . . (ii) . . . (iii) that any person who feels aggrieved by any decision to forfeit and dispose of such money or goods may, within a period prescribed by the regulations, which shall not be less than 90 days after the date of the notice published in the Gazette and referred to in subparagraph (ii), institute legal proceedings in a competent court for the setting aside of such decision, and the court shall not set aside such decision unless it is satisfied- (aa) that the person who made such decision did not act in accordance with the relevant provisions of the regulation; or (bb) that such person did not have grounds to make such decision; or (cc) that the grounds for the making of such decision no longer exist. (e) . . . (f) . . . (g) The period referred to in paragraph (b) (i) shall be a period not exceeding 36 months or such longer period- (i) as ends 12 months after the final judgment (including on appeal, if any) in every prosecution for any contravention of the regulations or any other law in relation to the money or goods concerned or in which such money or goods are relevant to any aspect of such prosecution; or (ii) as may be determined by a competent court in relation to the money or goods concerned on good cause shown by the Treasury.’ [6] As appears from this, a distinction is drawn between money and goods involved or suspected of having been involved in any contravention of the regulations (sometimes referred to as ‘tainted’ money or goods) and other money and goods (which may be described as ‘untainted’). The President is empowered by s 9(2)(b)(i) to make regulations relating to the attachment, freezing and forfeiture of tainted money and goods for a period referred to in s 9(2)(g) and by s 9(2)(b)(ii) to make regulations in general in respect of any matter which he ‘deems necessary for fulfilment of the objectives and purposes referred to’ in s 9(2)(b)(i) including the attachment and freezing of untainted money and goods. Although no specific reference is made to 9(2)(g) in s 9(2)(b)(ii), the reference in that subparagraph to an attachment or freezing ‘referred to in subparagraph (i)’ leads to the reasonable conclusion that the legislature intended the prescribed time limit to also apply to the attachment and freezing of untainted money and goods. [7] Regulations 22A, 22B and 22C of the regulations made by the President provide for the blocking of accounts, the attachment of money and goods, and the forfeiture and disposal of money or goods as envisaged by s 9(2)(b). In South African Reserve Bank v Torwood Properties (Pty) Ltd3 Harms JA, after describing these regulations as being both ‘lengthy and convoluted’4 – a fitting description for s 9 as well – went on to explain their effect in broad terms as follows:5 ‘What is contemplated by the regulation, in very general terms, seems (by way of an example) to be this: A contravention of the regulations is committed. The amount involved is Rx. That amount may be recovered by the Treasury. It may recover by attaching and declaring forfeit, for example, the money “involved” in the contravention. If that Rx cannot be found, the shortfall may be recovered by the attachment of “other” (untainted) money or goods from the persons mentioned in subpara (i) to (iv) of reg 22C(1).’ [8] For present purposes it suffices to record the following in regard to the regulations:  Regulation r 22A deals with the tainted goods and money, with r 22A(1)(a) providing for the attachment of tainted money and goods and r 22A(1)(b) and (c) providing for the prohibition of withdrawals out of accounts into which tainted money is reasonably suspected of having been deposited and the prohibition of the use of tainted goods (this 3 1997(2) SA 169 (A). 4 At 176 C-D. 5 At 178C-D. A similar explanation is to be found in Francis George Hill Family Trust v South African Reserve Bank & others 1990 (3) SA 704 (T) at 711D-F. may loosely be described as the ‘freezing’ of such money and goods). Regulation 22A(3) provides that if attached tainted money and goods are not forfeited under r 22B within ‘the period referred to in paragraph (g) of section 9(2) of the Act’, they are to be returned.  Regulation 22C, on the other hand, deals with untainted money and goods, with r 22C(1) providing for the attachment of untainted money and goods and r 22C(2) providing for the issue of an order freezing untainted money and goods. Importantly, while r 22C(3)(b) provides for the provisions of 22A(3) to apply mutatis mutandis to a freezing order under r 22C(2), no specific provision is made for a similar time period to apply to attachments under r 22C(1).  Regulation 22B deals with the procedures necessary to obtain forfeiture of both tainted and untainted moneys and goods. [9] The President’s failure to provide a time limit on the duration of an attachment of untainted money and goods formed the cornerstone of the full bench’s finding that r 22C(1) is invalid. It found that s 9(2) rendered it mandatory for the President to stipulate a time period not exceeding that prescribed by s 9(2)(g) for the attachment of such assets. It also held that the omission of a reference to r 22C(1) in r 22C(3)(b) had to be regarded as intentional and excluded the operation of a time limit. It therefore concluded that an attachment for an unlimited period was intentionally envisaged by r 22C(1), a provision which is in conflict with the provisions of the Act and therefore invalid.6 [10] The first question to be considered is whether the legislature intended s 9(2) to prescribe the form in which the regulations were to be drawn (by directing that they had to state, or at least refer to, a period for which the attachment or freezing was to remain in force) or simply intended to prescribe a limit, as an objective matter of law, to the period for which such attachment or freezing could endure. In my view, all the indications in the section are in favour of the latter intention. 6 That r 22C(1) was invalid for this reason is also the view expressed by Prof A N Oelofse Suid-Afrikaanse Valutabeheer-wetgewing at 109 (quoted with the approval by the full bench.). [11] The provisions of s 9(2)(g) contemplate three different situations. The first is the basic situation where an attachment or freezing is to be effected ─ it may remain in force for a period of at most 36 months. The second is where there is a prosecution for an offence in which the affected assets have been involved or are owned by a person contemplated in ss 9(2)(b)(ii) ─ the attachment or freezing will be effective until the expiry of 12 months after a final judgment. The third contemplates an application to court for an extension of the period on good cause shown by the Treasury. In my view, if the legislature had intended that this comparatively complicated formulation had to be spelt out in the regulations, it would have said so. It follows that the more reasonable conclusion is that the intention behind s 9(2)(g) was to set a statutory time limit for the duration of an attachment or freezing of money or goods and was not intended to prescribe the content of the regulations and to require the President to determine a time limit in the regulations. All it means is that these orders may not last longer than the prescribed limit. [12] The next question is whether the regulation, by omitting any reference to a time limit, means that the President sought to give a power to the Treasury that is not limited in time. I think not. The regulations are not to be read in isolation. Where possible, they are to be construed consistently with the empowering Act under which they were made.7 No matter how clear and unequivocal regulations may appear to be, ‘their interpretation and validity are dependent upon the empowering provisions which authorise them.’8 The regulations must therefore be read in the light of the provisions of s 9(2) and its purpose and objectives ─ including that the attachment of money and goods may not be for a period longer than that prescribed in the Act. It therefore cannot be argued that merely because no mention of the time limitation contained in s 9(2)(g) is made in the regulations, it does not apply to an attachment made under the regulations. 7 Minister of Health v New Clicks SA (Pty) Ltd 2006 (2) SA 311 (CC) at para 211. 8 Per Smalberger J in Singapi & others v Maku & others 1982 (2) SA 515 (S) at 517C-D. [13] In my view, the full bench therefore erred in its conclusion that s 9 required the President to stipulate a time period in the regulations for the attachment and freezing of untainted money and goods. The plain meaning of s 9(2) is that while the President is empowered to make regulations under which money and goods may be attached and frozen, no such attachment or freezing is to last for longer than the prescribed period. The section does not require that period to be reiterated in the regulations. In addition, the fact that no such time limit is specified in the regulation does not mean that an attachment under r 22C(1) can last indefinitely. It can only endure as long as the maximum period prescribed by s 9(2)(g). The fact that the President unnecessarily referred to the period in s 9(2)(g) in certain other regulations does not mean that his failure to also do so in respect of attached untainted goods and money renders r 22C(1) invalid. [14] The subsidiary issue that next arises is whether the notice was invalid because it did not contain a time limit. In my view it was not required of Treasury to set a time limit in the notice. If it omits to do so, as it did in this case, the default position is regulated by statute and the notice lapses after three years. [15] The full bench consequently erred in concluding that r 22C(1) was invalid and in setting aside the warrants. The appeal must therefore succeed. The parties were correctly agreed that costs should follow the event and that the employment if two counsel was justified. [16] In the result I order as follows: 1. The appeal succeeds with costs, including the costs of two counsel; 2. The order of the full bench is set aside and is replaced with the following: ‘The application is dismissed with costs, including the costs of two counsel.’ _______________ L E LEACH JUDGE OF APPEAL APPEARANCES APPELLANT: P G Ginsburg SC (with him K W Lüderitz) Instructed by Newtons Inc, Pretoria Symington & De Kok, Bloemfontein RESPONDENTS: A Bhana SC Instructed by Cliffe Dekker Hofmeyr Inc, Sandown Matsepes Inc, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 March 2010 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal THE SOUTH AFRICAN RESERVE BANK versus M G KHUMALO & MAWENZI RESOURCES AND FINANCE COMPANY (PTY) LTD The South African Reserve Bank, the appellant, issued a notice under r 22C(1) of the Exchange Control Regulations promulgated under the Currency and Exchanges Act 9 of 1933 attaching certain assets of Mr M G Khumalo, the first respondent, and a company of which he is a director, the second respondent, whom it alleged had committed contraventions of the Exchange Control Regulations. The respondents applied to the North Gauteng High Court for an order setting aside the attachment. The high court ruled that the notice of attachment was invalid as r 22C(1) under which it had been issued was itself invalid as not being in conformity with the empowering statute. The South African Reserve Bank appealed to the Supreme Court of Appeal which today upheld the appeal. It concluded that r 22C(1) was not invalid and that, as the validity of that regulation was the sole issue upon which the appeal fell to be determined, the high court had erred in setting aside the notice of attachment. The appeal was therefore upheld and the order of the high court altered to one dismissing the respondent’s application with costs.

1415

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA Case No: 640/2009 In the matter between: BENJAMIN ROSSOUW First Appellant SANDRA WILSON-ROSSOUW Second Appellant and FIRST RAND BANK LIMITED t/a FNB HOMELOANS (formerly FIRST RAND BANK OF SOUTH AFRICA LTD) Respondent Neutral citation: Rossouw v First Rand Bank Ltd (640/09) [2010] ZASCA 130 (30 September 2010) Coram: MPATI P, NAVSA, CLOETE, MAYA JJA et EBRAHIM AJA Heard: 07 September 2010 Delivered: 30 September 2010 Summary: National Credit Act 34 of 2005 – summary judgment application – whether s 130(2) of the Act limits a credit provider‟s claim under a mortgage agreement to the proceeds realised upon execution of the mortgaged property – whether credit provider complied with the provisions of 129(1) read with s 130(1) of the Act. ORDER On appeal from: North Gauteng High Court, (Pretoria) (Ellis AJ sitting as court of first instance). 1. The appeal is upheld with costs that include the costs of two counsel. 2. The order of the court below is set aside and the following is substituted: „The application for summary judgment is dismissed with costs.‟ JUDGMENT MAYA JA (concurring Mpati P, Navsa, Cloete JJA and Ebrahim AJA) [1] This is an appeal, with the leave of the court below, against summary judgment granted by the Pretoria High Court (Ellis AJ) against the appellants in favour of the respondent (the bank) based on a loan agreement and mortgage bond. [2] The facts gleaned from the summons and summary judgment affidavits are the following. On 8 June 2006 the appellants, who are married to each other, concluded a loan agreement with the bank. The latter is a registered credit provider1 in terms of s 40 of the National Credit Act 34 of 1 Section 1 of the Act defines a credit provider, as follows: „“credit provider”, in respect of a credit agreement to which this Act applies, means – … (c) the party who extends credit under a credit facility; … (d) the mortgagee under a mortgage agreement; … (h) the party who advances money or credit to another under any other credit agreement‟. 2005 (the Act). In terms of this agreement the bank granted the appellants a loan in the sum of R1 030 000 repayable in monthly instalments of R9 003,88 which was secured by a mortgage bond of R1 800 000 over the appellants‟ immovable property (the mortgaged property). [3] Some of the material terms of the mortgage bond were: „16.1.1 If the mortgagor[s] fail to pay any amount due in terms of this bond … on due date … then, at the option of the bank, all amounts whatsoever owing to the bank by the mortgagor[s] shall forthwith be payable in full … and the bank may institute proceedings for the recovery thereof and for an order declaring the mortgaged property executable …; 17. A certificate purporting to be signed on behalf of the bank shall be proof until the contrary is proved of the balance owing and the fact that it is due and payable … and shall be valid as a liquid document for the purposes of obtaining … summary judgment; … 20. For the purposes of this bond and of any proceedings which may be instituted by virtue hereof, and of the service of any notice, domicilium citandi et executandi is hereby chosen by the mortgagor[s] at the mortgaged property; 21.1 Any notice given by the bank in terms of this bond may at the bank‟s option be addressed to the mortgagor[s] at the [chosen] domicilium … and may be served by registered post; 21.2 Notices so posted shall be deemed to be received by the mortgagor three days after posting; 21.3 A certificate signed on behalf of the bank, stating that a notice has been given, shall be sufficient and satisfactory proof thereof, and the authority of the signatory and validity of the signature need not be proved.‟ [4] About two years later, the appellants fell into arrears in respect of their monthly repayments. In September 2008 the bank sent them a notice in terms of s 129(1)(a) of the Act informing them of their default. As a result, the appellants attended debt counselling and subsequently made a debt restructuring proposal to the bank. On 7 October 2008 the bank countered the appellants‟ offer with its own revised payment plan to which the appellants agreed but inexplicably abandoned to pursue debt management. No payment appears to have been made by the appellants until 23 March 2009. The amount then paid was only a sum of R20 450. It is not clear how this amount was computed but it appears to be inadequate in terms of the requirements of both the agreement and the revised payment plan having regard to the considerable period during which no payment was made. [5] On 23 April 2009 the bank allegedly delivered a fresh notice in terms of s 129(1)(a) (the notice). On 22 May 2009 it issued a summons to which was attached a certificate of compliance dated 15 May 2009 stating that the bank had issued and delivered the requisite notice. The summons claimed payment of the sum of R1 117 180,65 from the appellants and ancillary relief, including an order declaring the mortgaged property executable. The basis of the claim was that the appellants had failed to maintain regular instalments and that the full outstanding amount had thus become due and payable in terms of the agreement. [6] The appellants entered an appearance to defend the action, prompting the bank to apply for summary judgment in terms of uniform rule 32. The appellants opposed the application on the bases that: (a) the summons was excipiable because s 130(2) of the Act precludes a credit provider from claiming a shortfall on a mortgage loan agreement as it is not among the types of agreements specified in the section and that the only order the court below could have granted was merely to declare the property executable; (b) they had not received the notice as envisaged in sections 129(1) and 130(1); and (c) the arrear amount claimed is incorrect as it ignores payment of sums amounting to R101 950 which reduced the arrears to R12 850 and the outstanding balance to R1 005 052. [7] None of these defences found favour with the court below. As regards (a), the court found that whilst it is so that s 130(2) applies only to the pledge and cession of movables and has no application to mortgage agreements, the bank‟s claim fell within the ambit of s 130(1) of the Act which is not limited by s 130(2) in so far as mortgage agreements are concerned. [8] In rejecting the appellants‟ second defence that they did not receive the notice, the court adopted the approach set out in Munien v BMW Financial Services (SA) (Pty) Ltd.2 On that basis the court held that in view of the legislature‟s omission to define „deliver‟ in the Act, delivery of the notice occurred when it was sent by registered post to an address chosen by the appellants in the agreement irrespective of whether it was actually received. This had to be so, the court reasoned, as this method is one of four possible methods of delivery prescribed (as contemplated in s 65(1)) by the Minister in the definition of „delivered‟ set out in s 1 of the National Credit Regulations (the regulations).3 The court also relied on the parties‟ agreement to a method of communicating set out in clauses 21.1 to 21.3 of their agreement, which provided for delivery of notices at the mortgagor‟s domicilium by registered post. [9] The court below found no substance in the defence that the appellants had paid a substantial sum towards liquidating the arrears and held that their affidavit failed to show that they purged their default thus entitling the bank 2 2010 (1) SA 549 (KZD). 3 Published in Government Notice R489 of 31 May 2006. to enforce its claim in full. Summary judgment was then granted against the appellants jointly and severally, the one paying the other to be absolved, as prayed. [10] The issues on appeal remain as they were in the court below, namely whether; (a) the court below could have granted summary judgment when a mortgage bond is not included in the instances referred to in s 130(2) of the Act, which entitles specified types of credit providers to approach a court for the enforcement of the consumer‟s remaining obligations; (b) the bank complied with s 129(1) read with s 130(1) of the Act by giving notice to the appellants; and (c) the appellants set out sufficient facts in the opposing affidavit to have constituted a defence against the application for summary judgment. [11] Another issue which arose, with which I deal directly as it courted no controversy, is an application to lead further evidence in the appeal proceedings launched by the bank on the eve of the hearing. Its basis was that the submission made in the appellants‟ heads of argument in the appeal, that the bank did not establish the method by which the notice was delivered, was not raised in the court below. It was contended on the bank‟s behalf that the appellants‟ defence at the summary judgment hearing was merely that the appellants did not receive the notice and that it was not disputed that the notice had been sent to them by registered mail as proof thereof was handed in without demur from their counsel. [12] The evidence sought to be admitted, which it was contended supported the bank‟s stance in this regard, was a transcript of the argument at that hearing during which the so-called proof was submitted to the court. The appellants did not oppose the application and the transcript was accordingly received in evidence. [13] I turn to deal with the main issues. WHAT MEANING TO ASCRIBE TO S 130(2) VIS-À-VIS MORTGAGE AGREEMENTS? [14] As mentioned above, the appellants took a point in limine that s 130(2) limits a credit provider‟s claim under a mortgage agreement to the proceeds of the sale of the mortgaged property and that the bank is precluded from claiming any shortfall if the full amount of the debt under the agreement is not realised after execution of such property. This contention was based on an application of the expressio unius est exclusio alterius principle in interpreting the section. [15] Section 130 provides: „130 Debt procedures in a Court (1) Subject to subsection (2), a credit provider may approach the court for an order to enforce a credit agreement only if, at that time, the consumer is in default and has been in default under the credit agreement for at least 20 business days and– (a) at least 10 business days have elapsed since the credit provider delivered a notice to the consumer as contemplated in section 86(9), or section 129(1), as the case may be; (b) in the case of a notice contemplated in section 129(1), the consumer has– (i) not responded to that notice; or (ii) responded to the notice by rejecting the credit provider‟s proposals; … (2) In addition to the circumstances contemplated in subsection (1), in the case of an instalment agreement, secured loan, or lease, a credit provider may approach the court for an order enforcing the remaining obligations of a consumer under a credit agreement at any time if– (a) all relevant property has been sold pursuant to– (i) an attachment order; (ii) surrender of property in terms of section 127; and (b) the net proceeds of sale were insufficient to discharge all the consumer‟s financial obligations under the agreement.‟ [16] The types of agreements referred to in subsection (2), namely an instalment sale agreement, a secured loan and a lease are defined in s 1 of the Act.4 They all involve a sale, pledge or cession of movable property. A mortgage agreement, on the other hand, is specifically defined as a „credit agreement that is secured by a pledge of immovable property‟. Quite clearly, as the court below found, s 130(2) has no application to mortgage agreements. The bank did not contend otherwise. The parties‟ point of departure relates only to the significance of the Legislature‟s exclusion of mortgage agreements from the classes of contract listed in these provisions. 4 The agreements are defined as follows: „“instalment agreement” means a sale of movable property in terms of which– (a) all or part of the price is deferred and is to be paid by periodic payments; (b) possession and use of the property is transferred to the consumer; (c) ownership of the property either– (i) passes to the consumer only when the agreement is fully complied with; or (ii) passes to the consumer immediately subject to a right of the credit provider to re-possess the property if the consumer fails to satisfy all of the consumer‟s financial obligations under the agreement; and (d) interest, fees or other charges are payable to the credit provider in respect of the agreement, or the amount that has been deferred; “lease” means an agreement in terms of which– (a) temporary possession of any movable property is delivered to or at the direction of the consumer, or the right to use any such property is granted to or at the direction of the consumer; (b) payment for the possession or use of that property is– (i) made on an agreed or determined periodic basis during the life of the agreement; or (ii) deferred in whole or in part for any period during the life of the agreement; (c) interest, fees or other charges are payable to the credit provider in respect of the agreement, or the amount that has been deferred; and (d) at the end of the term of the agreement, ownership of that property either– (i) passes to the consumer absolutely; or (ii) passes to the consumer upon satisfaction of specific conditions set out in the agreement; “secured loan” means an agreement, irrespective of its form but not including an instalment agreement, in terms of which a person– (a) advances money or grants credit to another; and (b) retains, or receives a pledge or cession of the title to any movable property or other thing of value as security for all amounts due under that agreement;‟ [17] As can be imagined and was properly acknowledged by counsel on behalf of the appellants, any number of inequities may result for credit providers from the interpretation for which the appellants contend. It needs to be considered that whilst the main object of the Act is to protect consumers,5 the interests of creditors must also be safeguarded and should not be overlooked.6 This is evidenced by s 3(d) which provides that equity in the credit market and industry – which the Act significantly acknowledges must be competitive, efficient and sustainable – entails, inter alia, balancing the respective rights and responsibilities of credit providers and consumers. 5 The purpose of the Act is set out in s 3 which reads: „The purposes of this Act are to promote and advance the social and economic welfare of South Africans, promote a fair transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers, by– (a) promoting the development of a credit market that is accessible to all South Africans, and in particular to those who have been unable to access credit under sustainable market conditions; (b) ensuring consistent treatment of different credit products and different credit providers; (a) promoting the development of a credit market that is accessible to all South Africans, and in particular to those who have historically been unable to access credit under sustainable market conditions; (b) ensuring consistent treatment of different credit products and different credit providers; (c) promoting responsibility in the credit market by– (i) encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by consumers; and (ii) discouraging reckless credit granting by credit providers and contractual default by consumers; (d) promoting equity in the credit market by balancing the respective rights and responsibilities of credit providers and consumers; (e) addressing and correcting imbalances in negotiating power between consumers and credit providers by– (i) providing consumers with education about credit and consumer rights; (ii) providing consumers with adequate disclosure of standardised information in order to make informed choices; and (iii) providing consumers with protection from deception, and from unfair or fraudulent conduct by credit providers and credit bureaux; (f) improving consumer credit information and reporting and regulation of credit bureaux; (g) addressing and preventing over-indebtedness of consumers, and providing mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all responsible financial obligations; (h) providing for a consistent and accessible system of consensual resolution of disputes arising from credit agreements; and (i) providing for a consistent and harmonised system of debt restructuring, enforcement and judgment, which places priority on the eventual satisfaction of all responsible consumer obligations under credit agreements.‟ 6 See Jaftha v Schoeman & others; Van Rooyen v Stoltz & others 2005 (2) SA 140 (CC) paras 42 and 51. [18] It is settled that a statute must explicitly state an intention to alter the common law or the inference from the statute must be such that it can only be concluded that that was the legislature‟s intention.7 There are instances in the Act where the legislature makes specific provision in the event that a party‟s rights under a credit agreement are tampered with. For example, in s 83 provision is made for the suspension of an agreement that has been found „reckless‟. In as many words, in s 83(2) the legislature grants a court a discretion to set aside all or part of a consumer‟s rights and obligations under an agreement as it deems just and reasonable in the circumstances. Section 83(3) makes provision for an agreement to be suspended where a consumer has been found over-indebted. [19] These provisions make it abundantly clear that the legislature recognised the need to express its intention where it sought to interfere with vested rights. Interestingly, s 90(2)(c) acknowledges the parties‟ common law rights and declares unlawful any provisions in a credit agreement which purport to waive such rights, as may be applicable to the agreement. I find it inconceivable, therefore, that the legislature would, in the same Act, indirectly do away with vested rights such as the mortgagee‟s right to claim the balance of the debt after execution against the mortgaged property. For these reasons, I am unable to make the inference advanced by the appellants. [20] As was contended on the bank‟s behalf, it seeks to enforce the entire agreement, which includes a lex commissoria, arising from the appellants‟ default. In my view, the plainly-worded, self-contained provisions of s 130(1) allow the bank to do exactly that. Section 130(2) bears no relevance and that, I think, is the end of the matter. 7 Casserley v Stubbs 1916 TPD 310 at 312. WERE THE APPELLANTS GIVEN NOTICE AS ENVISAGED IN SECTIONS 129(1) AND 130(1)? [21] At the heart of this issue is the precise method of delivery of the notice contemplated in s 129(1)(a) and whether it is necessary that it is actually received by the consumer. The relevant parts of s 129 read: „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 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) subject to section 130 (2), may not commence any legal proceedings to enforce the agreement before– (i) first providing notice to the consumer, as contemplated in paragraph (a), or in section 86 (10), as the case may be; and (ii) meeting any further requirements set out in section 130.‟ [22] Evidently, a credit provider may not commence legal proceedings to enforce its claim without complying with the injunction contained in s 129(1)(a). But the section does not state the manner in which a credit provider is to furnish a defaulting consumer with the written notification it demands. Section 130(1)8 is worded differently as it does not use the words „draw … to the notice‟. It entitles a credit provider to approach the court for an order to enforce a breached credit agreement where, inter alia, at least ten business days have elapsed since the credit provider „delivered a notice‟ to the consumer as contemplated in s 129(1) and the consumer has not responded thereto. But then, the term „delivered‟ is not defined in the Act. 8 The section is quoted in full at para 15 of this judgment. [23] Recourse must therefore be had, first, to s 65 of the Act which deals with the consumer‟s right to receive „documents‟ which I understand to include notices. The material provisions of the section read: „(1) Every document that is required to be delivered to a consumer in terms of this Act must be delivered in the prescribed manner, if any. (2) If no method has been prescribed for the delivery of a particular document to a consumer, the person required to deliver that document must– (a) make the document available to the consumer through one of the following mechanisms– (i) in person at the business premises of the credit provider, or at any location designated by the consumer but at the consumer‟s expense, or by ordinary mail; (ii) by fax; (iii) by e-mail; or (iv) by printable web-page; and (b) deliver it to the consumer in the manner chosen by the consumer from the options made available in terms of paragraph (a).‟ [24] The Act has defined the term „prescribed‟ used in subsection (1) as meaning „prescribed by regulation‟. The regulations do contain a definition of the term „delivered‟. However, bearing in mind that it is generally impermissible to use regulations created by a minister as an aid to interpret the intention of the legislature in an Act of parliament, notwithstanding that the Act may include the regulations,9 the question remains whether this definition is the „prescribed manner‟ envisaged by s 65(2). [25] Chapter I of the regulations deals with the „Interpretation and Application of [the] Act‟ and s 1 thereof reads: 9 Clinch v Lieb 1939 TPD 118 AT 125; Hamilton-Brown v Chief Registrar of Deeds 1968 (4) SA 735 (T) at 737 C-D; Moodley & others v Minister of Education and Culture, House of Delegates, & another 1989 (3) SA 221 (A) at 233E-F; National Lotteries Board v Bruss NO 2009 (4) SA 362 (SCA). „In these Regulations, any word or expression defined in the Act bears the same meaning as in the Act and– … “delivered” unless otherwise provided for, means sending a document by hand, by fax, by e-mail or registered mail to an address chosen in the agreement by the proposed recipient, if no such address is available, the recipient‟s registered address‟. [26] The use of the expression „[i]n these regulations‟, which to my mind strongly suggests that the definitions in regulation 1 are operative only for purposes of the regulations, poses a difficulty for me. This is especially so as the regulation makes no mention of s 65(1) or the word „prescribed‟ used in that subsection. It may be so that such a cross-reference may not be necessary where it is not required by the empowering statute,10 but that apart, there, clearly, is need for the definition in the regulations themselves as the terms „delivered‟, „deliver‟ or „delivery are interspersed throughout their body. [26] For example, (a) regulation 4(3) requires a person seeking to register in terms of s 45 to provide information requested by the National Credit Regulator within a certain period after the request is delivered to him; (b) in terms of regulation 34 a consumer is obliged to inform the credit provider of any changes to the location of the relevant goods by delivering a written notice; (c) regulation 38 requires delivery of a notice to a consumer of a charge or charges made against an account and (d) regulation 46 makes provision for charges relating to delivery of a letter of demand.11 For these reasons, contrary to the views of the court below, I do not think that any 10 Administrateur, Transvaal v Quid Pro Quo Eiendommaatskappy (Edms) Bpk 1977 (4) SA 829 (A); Howick District Land Owners Association v Umngeni Municipality 2007 (1) SA 206 (SCA) paras 19 and 20; Shaik v Standard Bank of SA Ltd 2008 (2) SA 622 (SCA) para 17. 11 See, also, regulation 6 which requires delivery of a notice for purposes of s 48(3); regulation 24(2) and (5) dealing with a notice to be delivered by debt counsellor to creditors and regulation 37 which prescribes delivery of a notice terminating an agreement to the credit provider. These particular regulations, however, specify the manner in which the contemplated delivery is to be effected but consonant with the definition. regard should be had to the definition of the word „delivered‟ in the regulations in interpreting sections 129(1)(a) and 130(1). As I see it, the definition does not purport to contain a „prescribed manner‟ for delivery and the answer must lie in the provisions of the Act itself. [27] This finding requires an examination of s 65(2). The section sets out six methods by which a document may be delivered. Thus, the document may be made available to a consumer, „in person‟, at the credit provider‟s premises or at any other location he chooses. In the latter instance, he bears the expenses of the exercise. The document may also be delivered by ordinary mail, fax, email or printable web-page. Notably, the manner of such delivery is chosen from these options by the consumer. [28] It appears to me that s 96 which deals with the address for delivery of legal notices – and a s 129(1)(a) notice by its very nature must fall in this category – is relevant for present purposes and must be read with s 65(2). It provides: „(1)Whenever a party to a credit agreement is required or wishes to give legal notice to the other party for any purpose contemplated in the agreement, this Act or any other law, the party giving notice must deliver that notice to the other party at– (a) the address of that party as set out in the agreement, unless paragraph (b) applies; or (b) the address most recently provided by the recipient in accordance with subsection (2). (2) A party to a credit agreement may change their address by delivering to the other party a written notice of the new address by hand, registered mail, or electronic mail, if that other party has provided an email address.‟ [29] As previously stated, the parties agreed in clause 21 of their agreement to a domicilium and mode of delivery of notices as envisaged by sections (65)(2) and 96. From the available options, which include personal delivery at their expense, the appellants chose delivery by post. In my view, that the method chosen was registered mail, which is not one of the options provided in s 65(2), does not offend the provisions of the section. The legislature has sanctioned postal delivery. Registered mail is, in any event, a more reliable means of postage and cannot harm either party‟s interests. [30] I am reinforced in this view by the catch-all provisions of s 168 of the Act dealing with service of documents, which in the legal context is synonymous to „delivery of documents‟. This section deems sending a document by registered mail to a person‟s last known address proper service, unless otherwise provided for in the Act. These provisions, I think, put it beyond doubt that the legislature was satisfied that sending a document by registered mail is proper delivery. And „send‟ according to The Shorter Oxford English Dictionary means „to despatch (a message, letter, telegram etc) by messenger, post etc.‟. It does not include „receipt‟ of the sent item. [31] It appears to me that the legislature‟s grant to the consumer of a right to choose the manner of delivery inexorably points to an intention to place the risk of non-receipt on the consumer‟s shoulders. With every choice lies a responsibility and it is after all within a consumer‟s sole knowledge which means of communication will reasonably ensure delivery to him. It is entirely fair in the circumstances to conclude from the legislature‟s express language in s 65(2) that it considered despatch of a notice in the manner chosen by the appellants in this matter sufficient for purposes of s 129(1)(a) and that actual receipt is the consumer‟s responsibility. [32] Does this finding conflict with the purposes of the Act which requires such purposes to be given effect to in the interpretation of its provisions? I think not. I understand the legislature to have basically meant to protect the consumer from exploitation by credit providers by, inter alia, preventing predatory lending practices; to ameliorate the financial harm which a consumer may suffer where unable to meet his obligations under a credit agreement and generally to achieve equity in the lending market by levelling the playing field between parties who do not have equal bargaining power. I do not see how the above interpretation of the relevant provisions of the Act detracts from this object. [33] Having established what section 129(1) required of the bank, it remains to determine whether or not the latter complied with the relevant provisions. No allegation was made either in the summons or the summary judgment affidavit regarding the method employed in delivering the notice. The bank merely stated cryptically in its summons that „[t]he plaintiff has … complied with section 129(1) and 130 of the said Act. Copies of the notices in terms of the aforementioned sections are annexed hereto as “A” and “B” respectively.‟ Annexures A and B were documents titled „NOTICE IN TERMS OF SECTION 129(1) OF THE NATIONAL CREDIT ACT‟ and „CERTIFICATE OF COMPLIANCE IN TERMS OF SECTION 129(1) OF THE NATIONAL CREDIT ACT‟, respectively. [34] It is only in Annexure B, signed by one of the bank‟s managers, that further mention of the notice was made. There, it was alleged that „[a] notice in terms of s 129(1) of the Act was issued to the [appellants] on 23 April 2009. At least ten business days have lapsed since the bank delivered the notice.‟ These allegations are obviously inadequate for purposes of establishing whether the notice was delivered in terms of the relevant provisions. And, no doubt, realising this material shortcoming in its papers, the bank sought to rely on the document handed in during the summary judgment hearing, which is referred to in the transcript of those proceedings, as proof that the notice had been delivered by registered mail. [35] However, there is an insurmountable hurdle. Uniform rule 32(4) limits a plaintiff‟s evidence in summary judgment proceedings to the affidavit supporting the notice of application. The document was not annexed to the summons. Thus, it matters not that it was handed in without complaint. It was simply inadmissible. [36] Even if this were not so, the document could not have assisted the bank‟s case. On its face, it lists the names and address of the appellants among the addressees to which registered letters are to be sent. But, it further requires confirmation of the number of letters to be posted, the signature of the client sending the letter or letters, the signature of the „accepting officer‟, presumably the post office official processing the transaction, and the date of the transaction. None of these entries were made. These omissions, which the bank did not explain, materially affect the document‟s reliability. As it stands, it does not confirm that a registered letter was actually sent to the appellants. Even if it did, without the date it is not possible to link it to the sending of the relevant notice particularly in view of the fact that an earlier one was previously sent in 2008. [37] In the circumstances, the bank did not prove that it delivered the notice. As pointed out earlier, sections 129(1)(b)(i) and 130(1)(b) make this a peremptory prerequisite for commencing legal proceedings under a credit agreement and a critical cog of a plaintiff‟s cause of action. Failure to comply must, of necessity, preclude a plaintiff from enforcing its claim; this despite the fact that in this matter it was not disputed that the appellants were in arrears and thus breached their contractual obligations. The bank, therefore, failed to make out a case for summary judgment and it ought to have been refused. It is unnecessary to consider the third issue in the light of this finding. [38] In the result the following order is made: 1. The appeal is upheld with costs that include the costs of two counsel. 2. The order of the court below is set aside and the following is substituted: „The application for summary judgment is dismissed with costs.‟ __________________ MML MAYA JUDGE OF APPEAL CLOETE JA (MPATI P, NAVSA and MAYA JJA and EBRAHIM AJA concurring): [39] I have had the benefit of reading the judgment of my colleague Maya JA. I agree with the order she proposes, and also her reasoning. I wish however to add further reasons in justification of her conclusion that s 130(2) of the Act does not have the meaning accorded to it by the appellants. I also wish to deal in greater detail with the contents of the summary judgment application, the proceedings in the court below and the handing up of documents to a court seized with such an application. Finally, I wish to deal with standard form documents and the effect of the stated purpose of the Act in cases such as the present. [40] I shall deal first with the s 130(2) argument advanced by the appellants. The argument was that s 130(2) limits the claim by a credit provider who is a mortgagee to the proceeds of the sale of the mortgage property, so that the credit provider is precluded from claiming any shortfall if the full amount of the debt is not realised after execution against the property mortgaged. [41] The argument is without substance. What the section means is that in the three types of credit agreement mentioned (ie an instalment agreement, a secured loan and a lease), if the further requirements of the section are satisfied (ie all relevant property has been sold, pursuant to an attachment order or the surrender of property in terms of s 127; and the net proceeds of sale were insufficient to discharge all the consumer's financial obligations under the agreement), then the credit provider is excused from complying with subsec (1) (ie the credit provider does not have to send a notice and wait for the days to elapse). The circumstances under which a credit provider in the three types of contract mentioned in subsec (2) may approach a court for the enforcement of a credit agreement, are in addition to the circumstances set out in subsec (1) ─ that is why subsec (2) commences with the very words 'in addition to the circumstances contemplated in subsec (1)'. [42] The omission of a credit provider who is a mortgagee in subsec (2) means that such a credit provider can only proceed under subsec (1). The rationale is clear: the consumer's property is at stake, and that will usually mean (for those fortunate enough to own property) his or her home and that of the family as well. The omission of a credit provider who is a mortgagee in subsec (2) cannot mean that to the extent that the debt is not satisfied by execution against the mortgaged property, that part of the debt is unenforceable. That would constitute a serious inroad upon the rights of the mortgagee which would probably be constitutionally unjustified and which certainly cannot be reconciled with the provisions of s 83(2)(a) which forms part of Part D: Over-indebtedness and reckless credit. Section 83 provides: '(1) Despite any provision of law or agreement to the contrary, in any court proceedings in which a credit agreement is being considered, the court may declare that the credit agreement is reckless, as determined in accordance with this Part. (2) If a court declares that a credit agreement is reckless in terms of s 80(1)(a) or 80(1)(b)(i), the court may make an order ─ (a) setting aside all or part of the consumer's rights and obligations under that agreement, as the court determines just and equitable in the circumstances . . .'. It cannot have been the intention of the legislature to provide in Part D of the Act for a mechanism for determining whether credit was recklessly granted and vest a discretion in a court to set aside all or part of a consumer's obligations, and then at the same time provide that to the extent that execution against property mortgaged does not cover the mortgage debt, there would be automatic forfeiture of the balance even where the incurring of credit under the bond was not reckless. [43] I therefore agree with my learned colleague, both for the reasons she has given and for the reasons set out above, that s 130(2) of the Act does not have the effect for which the appellants contend. [44] As my learned colleague has said, there was an application to admit evidence on appeal. I now propose dealing with that evidence. It comprised a transcript of the argument in the court a quo and a document handed up by the Bank's junior counsel during those proceedings. In the absence of opposition, the evidence was admitted. In retrospect, I consider that it would have been more appropriate to admit the evidence provisionally. Had that been done, the court would have been in a position to refuse to admit it, which I consider would have been the correct conclusion for the reasons which follow. [45] To the extent that the transcript was relied upon by the Bank as demonstrating that in the court a quo the appellants' junior counsel did not dispute that the notice in terms of s 130(1) read with s 129(1) of the Act was sent by registered post, it is irrelevant. Whatever happened in the court below, it remained open to the appellants to raise this point on appeal. [46] To the extent that the transcript was relied upon by the Bank as demonstrating that its junior counsel handed up to the court the document, entitled 'List of Registered Letters', without objection by the appellants' junior counsel, both it and the list are inadmissible. The list was handed in to the court a quo to prove that annexure A to the particulars of claim, the notice in terms of ss 130(1) and 129(1), had been sent by registered post. That was not permissible, whether the appellants' counsel objected or not; the provisions of uniform rule of court 32 are clear and peremptory: '(2) The plaintiff shall within 15 days after the date of delivery of notice of intention to defend, deliver notice of application for summary judgment, together with an affidavit made by himself or by any other person who can swear positively to the facts verifying the cause of action and the amount, if any, claimed and stating that in his opinion there is no bona fide defence to the action and that notice of intention to defend has been delivered solely for the purpose of delay. If the claim is founded on a liquid document a copy of the document shall be annexed to such affidavit and the notice of application for summary judgment shall state that the application will be set down for hearing on a stated day not being less than 10 days from the date of the delivery thereof. (4) No evidence may be adduced by the plaintiff otherwise than by the affidavit referred to in sub-rule (2), nor may either party cross-examine any person who gives evidence viva voce or on affidavit: Provided that the court may put to any person who gives oral evidence such questions as it considers may elucidate the matter.' (Emphasis supplied.) The fact that the list does not prove the fact it was submitted to the court a quo to prove is irrelevant. It was not permissible for the Bank's junior counsel to hand it up, it was correctly disregarded by the court a quo and it falls to be ignored on appeal. [47] The certificate of balance, also handed up to the court a quo, stands, however, on a different footing. The court a quo refused to have regard to the certificate. That approach was not correct. The certificate did not, as the court a quo considered, amount to new evidence which would be inadmissible under rule 32(4). To the extent that the certificate reflects the balance due as at the date of hearing, it is merely an arithmetical calculation based on the facts already before the court which the court would otherwise have to perform itself. Such calculations are better performed by a qualified person in the employ of a financial institution. And to the extent that such a certificate may reflect additional payments by the defendant after the issue of summons, or payments not taken into account when summons was issued, this constitutes an admission against interest by the Bank and the Bank is entitled to abandon part of the relief it seeks. Certificates of balance handed in at the hearing (whether a quo or on appeal) perform a useful function and are not hit by the provisions of rule 32(4). [48] Before turning to the facts of the appeal, it may be useful for me to point out that there are remedies available to defendants in the position of the present appellants who have not received notices allegedly delivered to them. They are entitled to invoke the provisions of rule 35(11) and, where applicable, rule 35(12), to obtain production of documents evidencing the credit provider's compliance with s 65(2), eg a slip reflecting proof of posting by registered post or a telefax transmission sheet. Those rules provide: '(11) The court may, during the course of any proceedings, order the production by any party thereto under oath of such documents or tape recordings in his power or control relating to any matter in question in such proceeding as the court may think meet, and the court may deal with such documents or tape recordings, when produced, as it thinks meet. (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.' If a document is produced which supports the plaintiff credit provider's case, it cannot be handed in or relied upon by the plaintiff for the reasons already discussed; but if no such document is forthcoming, or a document is produced which is defective (eg the address or telefax number is wrongly stated) the document or its absence can be relied upon by the defendant consumer as evidencing non-compliance with the notice provisions of the Act. [49] I now intend considering whether the Bank has proved that it complied with the notice provisions of s 130(1) read with s 129(1) of the Act. I am not satisfied that it has. The summons contains the following allegations: 'The plaintiff is a registered credit provider as defined in terms of s 40 of the National Credit Act, 34 of 2005 and has complied with s 129(1) and 130 of the said Act. Copies of the notices in terms of the aforementioned sections are annexure to as 'A' and 'B' respectively'. [50] Annexure A is dated 23 April 2009 and headed 'Notice in terms of s 129(1) of The National Credit Act, 34 of 2005'. The notice was addressed to the appellants at the address referred to in the summons. Had it been 'delivered' this would have constituted compliance with s 130(1) read with s 129(1) of the Act. [51] Annexure B is dated 15 May 2009 and headed 'Certificate of compliance in terms of s 129(1) of The National Credit Act, 34 of 2005 ("the Act")'. In this document the Manager ─ Foreclosure of the Bank has said inter alia: '4. A notice in terms of Section 129(1) of the Act was issued to the client/s on 23 April 2009. 5. At least 10 (TEN) business days have elapsed since the Bank delivered the notice.' [52] There is no allegation in the summons or the certificate of compliance, annexure B (which is not 'a notice in terms of s 130', as the summons describes it) that annexure A, the notice in terms of s 129, was sent by any of the methods prescribed in s 65(2) of the Act. The submission on behalf of the Bank was that the notice was sent by registered post. But that is nowhere averred in the summons or annexures thereto. [53] The summons alleges that the Bank has complied with sections 129(1) and 130 of the Act. That is a bald conclusion of fact (that something was done) and law (that what was done, complied with the statutory prescripts). The method of compliance ─ there are six in s 65(2) ─ has not been specified and the court cannot accordingly determine whether there has indeed been delivery in terms of the Act. It is true that annexure A, the notice in terms of s 129, is addressed to the appellants. But that is not to say that it was posted, or delivered in some other way as contemplated in s 65(2). [54] The statement in annexure B that 'a notice in terms of s 129(1) of the Act was issued to the client/s' neither amounts to an allegation that the notice was 'delivered' in terms of the Act nor does it say how this was allegedly done. As paragraph 5 of annexure B is concerned with the lapse of the prescribed period and not delivery of the notice, it does not cure the problem. The appellants and the court are left to speculate as to whether there was indeed compliance with the provisions of the Act. That is not sufficient. [55] Nor does clause 21.3 of the bond assist the appellant. That clause provides: '21.3 A certificate signed on behalf of the Bank, stating that a notice has been given, shall be sufficient and satisfactory proof thereof, and the authority of the signatory and validity of the signature need not be proved.' The clause suffices for the purposes of the contract; but (leaving aside the fact that an allegation that a notice has been 'given' would not amount to an allegation that the notice had been 'delivered in terms of the Act'), a court must still be satisfied that a credit receiver has received the protection afforded by the Act. If justifiable concern exists that this has not been done, the court should exercise its discretion in terms of rule 32(5) to refuse summary judgment as the Act provides, in terms, in s 130(3) that: '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 . . . .' [56] I wish to make two observations in regard to the choice of the method of delivery of documents in terms of s 65(2) of the Act. The first is that the bond provides in clause 21.1 that: 'Any notice given by the Bank in terms of this bond may at the Bank's option be addressed to the mortgagor at the domicilium referred to in clause 20 or to the mortgagor's last postal address recorded with the Bank and may be served by registered post.' One of the options a consumer may choose for delivery of a notice in terms of s 65(2) is ordinary post. But to be effective, the notice would have to comply both with the contract and with the Act. The notice would therefore have to be sent by registered post to comply with the contract. Section 65(2)(a)(i) of the Act only requires 'ordinary mail'. But the greater includes the lesser. As Wessels JA said in Maharaj v Tongaat Development Corporation (Pty) Ltd:12 'In prescribing a method whereby the seller is required to send a letter to the purchaser by registered post, the Legislature no doubt accepted that that method is almost invariably employed where important letters or other documents are sent to an addressee through the post. Whilst registered letters no doubt do go astray, there is, at least, a high degree of probability that most of them are delivered.' In the present matter, therefore, sending by registered post would be both necessary and sufficient. However, had the appellants chosen another method of delivery in terms of s 65(2), the Bank would have had to comply with that choice and send the notice by registered post as well. I emphasize that the Act in s 65(2)(b) obliges the Bank to deliver the notice in the manner chosen by the consumer from the options in paragraph (a) of that section. The Bank cannot reserve other options to itself. [57] The second observation is this. Section 3 of the Act states that one of its purposes is to protect consumers by: 12 1976 (4) SA 995 (A) at 1001A-B. '(e) Addressing and correcting imbalances in negotiating power between consumers and credit providers by ─ (i) providing consumers with education about credit and consumer rights; (ii) providing customers with adequate disclosure of standard information in order to make informed choices . . . .' Unless credit providers inform consumers of their options in terms of s 65(2), the benefits of that section are likely to remain illusory rather than real. A consumer could hardly complain if the method of delivery of a document chosen by him or her proves ineffective. But for so long as credit providers employ standard form contracts which make provision for one possibility only ─ in the present matter, a notice sent by registered post to an address (which, in the absence of an address specified, will be the address of the mortgaged property) ─ the argument loses sight of reality. Credit providers should accordingly not complain if courts require compliance to the letter with both the Act and the terms of credit agreements, or approach with a leery eye standard form certificates of compliance coupled with contractual provisions similar to clause 21.3 of the bond quoted above. [58] I therefore concur in the order proposed by my colleague Maya JA. _______________ T D CLOETE JUDGE OF APPEAL APPEARANCES: For appellants: MC Erasmus SC (with him DJ Van Heerden) Instructed by Lombards Attorneys , Pretoria Symington & De Kok, Bloemfontein For Respondent: C da Silva SC (with him AP Ellis) Instructed by Friedland Hart Solomon Nicholson, Pretoria Webber Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 September 2010 Status: 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 from the Pretoria High Court against the grant of summary judgment in favour of the First Rand Bank Limited based on a loan agreement and mortgage bond. Immovable property mortgaged against the loan and owned by the appellants, Mr and Mrs Rossouw, had been had been declared executable in the summary judgment proceedings. The issues in the appeal were whether (a) section 130(2) of the National Credit Act 34 of 2005 limits a credit provider’s claim under a mortgage agreement to the proceeds realised upon execution of the mortgaged property, and (b) the bank had complied with the provisions of sections 129(1) and 130(1) of the Act by giving the Rossouws, as mortgagors, notice of their failure to maintain their repayments under the loan agreement. The SCA rejected the Rossouw’s argument that section 130(2), by its exclusion of mortgage agreements from those it lists, limits a credit provider’s claim to the value of the mortgaged property. The SCA held that the scheme of the Act belies any implied or indirect intention by Parliament to tamper with parties’ vested common law rights, such as a mortgagee’s right to claim the balance of the debt after execution of the mortgaged property, under a credit agreement. The SCA concluded that section 130(2) has no application to mortgage agreements and that section 130(1) of the Act entitles a credit provider, the bank in this instance, to enforce the entire loan agreement. Regarding the second issue, the SCA found that as the Act did not prescribe the mode of delivery of a notice issued in terms of section 129(1)(a) as contemplated in section 65(1) of the Act, such method of delivery had to be effected in a manner chosen by the consumer from the six ways provided in section 65(2) of the Act, namely in person at the credit provider’s business premises or at any location chosen by the consumer at his expense, by ordinary mail, by fax, by e-mail or by printable web-page. The SCA held that the bank had not established the manner in which it alleged it had delivered the notice to the Rossouws and, for that reason, it had not satisfied that requirements for the grant of summary judgment. ---ends---

3454

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 52/2018 and 149/2018 In the matter between: NAZIER AHMED TIRY FIRST APPELLANT PATRICIA DUDU NONO SANGWENI SECOND APPELLANT SIPHO ABRAM TSHABALALA THIRD APPELLANT SANDILE ANTHONY NYAMUSA FOURTH APPELLANT MSOLENI GOODENOUGH MTHETHWA FIFTH APPELANT QHEKEKA ALFRED BUTHELEZI SIXTH APPELLANT VELI MAXWELL SITHOLE SEVENTH APPELLANT SOLOMON NKOSI EIGHTH APPELLANT JOSEPH MOISI NINTH APPELLANT and THE STATE RESPONDENT Neutral citation: Tiry and Others v The State (52/2018 and 149/2018) [2020] ZASCA 137 (29 October 2020) Coram: WALLIS, MAKGOKA and PLASKET JJA Heard: The matter was disposed of without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: This judgment was handed down electronically by circulation to the parties’ 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 29th day of October 2020. Summary: Prevention of Organised Crime Act 121 of 1998 (POCA) – sections (1)(e) and 2(1)(f) thereof – meaning of the phrase ‘conducts or participates in the conduct, directly or indirectly, of such enterprise’s affairs’ – conviction under both s 2(1)(e) and s 2(1)(f) – whether amounts to duplication of convictions. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Free State Division of the High Court, Bloemfontein (Moloi J sitting as court of first instance). The following appeals succeed and the convictions and sentences are set aside: (a) Appellants 1 and 2, Mr Tiry and Ms Sangweni, in respect of counts 4, 8,19, 20, 22, 23, 25, 30, 34, 35, 42, 43 and 45 in their entirety, and in respect of count 33 to the extent that the conviction of theft is altered to one of attempted theft; (b) Appellant 3, Mr Tshabalala, in respect of counts 2, 34 and 35; (c) Appellant 4, Mr Nyamusa, in respect of count 2; (d) Appellant 6, Mr Buthelezi, in respect of counts 2, 19 and 45; (e) Appellant 7, Mr Sithole, in respect of counts 22 and 35; (f) Appellant 9, Mr Moisi, in respect of count 2. All the other appeals against conviction are dismissed and the order of the high court is amended to reflect that Mr Nkosi, appellant 8, was convicted on counts 14, 31 and 32. Mr Tiry’s appeal against sentence succeeds to the extent reflected below: (a) The sentence of 30 years’ imprisonment imposed on count 1 is set aside and substituted with a sentence of 20 years imprisonment; (b) The sentence of 20 years imprisonment imposed on count 2 is set aside and replaced by a sentence of 15 years imprisonment to run concurrently with the sentence on count 1; (c) The sentence of 15 years imprisonment on count 33 is set aside and replaced by a sentence of 3 years imprisonment; (d) It is ordered that the sentence of 15 years’ imprisonment imposed in respect of each of counts 3, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21, 24, 26, 31, 32, 36, 39, 40 and 41, and the 3 years’ imprisonment on count 33, shall run concurrently with the sentence of 20 years imprisonment imposed on count 1. The effective sentence is 20 years’ imprisonment. Ms Sangweni’s appeal against sentence succeeds to the extent set out below: (a) The sentence of 18 years imprisonment imposed on count 2 is set aside and replaced by a sentence of 12 years imprisonment; (b) The sentence of 15 years imprisonment on count 33 is set aside and replaced by a sentence of 3 years imprisonment (c) It is ordered that the sentence of 15 years’ imprisonment imposed in respect of each of counts 1, 3, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21, 24, 26, 31, 32, 36, 39, 40 and 41, and the 3 years’ imprisonment on count 33, shall run concurrently. The effective sentence is 12 years imprisonment; The appeals against sentence by appellants 3, 4, 6, 7, 8 and 9 succeed. Their existing sentences on each count on which their convictions were upheld are set aside and replaced by sentences of 7 years imprisonment on each count, all such sentences to run concurrently. The effective sentence in each case is 7 years imprisonment. In terms of s 282 of the Criminal Procedure Act 51 of 1977 (the CPA) the substituted sentences are antedated to 13 October 2016, being the date on which the appellants were sentenced. ________________________________________________________________ JUDGMENT ________________________________________________________________ Wallis et Makgoka JJA (Plasket JA concurring): [1] The appellants’ convictions and sentences to lengthy terms of imprisonment arose from the operation of two tank farms for the receipt and storage of stolen petroleum products and the sale of the stolen product to the retail market and end users. The tank farms were established by the first appellant, Mr Tiry, who was the kingpin of the entire unlawful operation. Arising out of the operations of these two tank farms, he and his partner, the second appellant, Ms Sangweni, were both charged on count 1 with managing an enterprise conducted through a pattern of racketeering activities in terms of s 2(1)(f) of the Prevention of Crime Act 121 of 1998 (POCA). Together with the remaining appellants they were also charged on count 2 with conducting or participating in an enterprise conducted through a pattern of racketeering activities in terms of s 2(1)(e) of POCA. In addition, Mr Tiry and Ms Sangweni were charged with 43 separate counts of theft of petroleum products arising from their acquisition of the petroleum products. The remaining appellants were charged with theft in respect of those transactions with which they were involved. The appellants were convicted on various counts on 7 June 2016 and sentenced pursuant to those convictions by Moloi J in the Free State Division of the High Court, Bloemfontein. [2] The appellants appeal against both their convictions and their sentences. Moloi J having died after the trial, leave to appeal was granted by Rampai J. The following are the convictions and sentences that are the subject of the appeal: (a) Appellant 1, Mr Tiry, was convicted on count 1 and sentenced to 30 years imprisonment. Appellant 2, Ms Sangweni, was acquitted on count 1 but convicted on count 2 and sentenced to 18 years imprisonment. (b) Mr Tiry and appellants 3, 4, 5, 6, 7, 8 and 9 were convicted on count 2. Mr Tiry was sentenced to 20 years imprisonment and each of the others to 15 years imprisonment. In the case of Mr Tiry this was to be served concurrently with his sentence on count 1. (c) Appellants 1 and 2 were convicted of theft on counts 3 to 26 and 30 to 45 and sentenced to 15 years imprisonment on each count to run concurrently with their sentences on count 1 and 2 respectively. (d) Each of appellants 3, 4, 5, 6, 7, 8 and 9 was convicted of various counts of theft and sentenced to 15 years imprisonment on each count, to run concurrently with their sentences on count 2. [3] The effect of the sentences imposed was the following: in the case of Mr Tiry an effective sentence of 30 years imprisonment; in the case of Ms Sangweni an effective sentence of 18 years imprisonment; and in the case of each of the remaining appellants an effective sentence of 15 years imprisonment. [4] Some matters need to be clarified at the outset. Another accused, Mr Elliot Thembisiline Njalula, formerly accused 8, died during the trial. In the result Messrs Nkosi and Moisi, who are reflected in the record as accused 9 and 10 respectively, are appellants 8 and 9. Appellant 5, Mr Mthethwa, has died since the appeal was lodged. Accordingly, his appeal falls away. Appellant 8, Mr Nkosi, is reflected in the court order as having been convicted on counts 9, 31 and 34 and sentenced to an effective 15 years imprisonment. That was a patent typographical error by the registrar in regard to the relevant counts, as he was charged with counts 14, 31 and 32 and it is apparent from the judgment that it was on these counts that he was convicted. No point was made of this in argument and the count numbers can be corrected in this court’s order. Appellant 6, Mr Buthelezi, allowed his appeal to lapse, but brought an application to reinstate it, which was not opposed. His appeal was accordingly reinstated. [5] Due to the fact that the events giving rise to the various counts occurred in two different areas of jurisdiction, Free State and Limpopo, the Director of Public Prosecutions issued a directive in terms of s 111 of the Criminal Procedure Act 51 of 1977 authorising the trial court to deal with those counts which arose outside its jurisdiction. The factual background [6] The trial was protracted. The evidence was not led in any sequential manner due to a number of interruptions caused by, among others, the ill-health of former accused 8 and, on occasions, the judge; the unavailability of certain witnesses on certain dates; and objections by defence counsel to the leading of certain evidence by the State. However, the State’s case against the appellants can be summarised as follows. The principal complainants, Sasol and Engen, are producers of petroleum products. They use freight companies to transport their products with tankers to various central destinations around the country, in this case, the Sasol refinery at Secunda and the Engen depot in Mokopane. Two counts (25 and 26) involved another producer BP Southern Africa and the transport of fuel to its depot in Pretoria. [7] Mr Tiry and Ms Sangweni were lovers, and initially lived on Zutundu farm (Zutundu) in Mookgophong (formerly Naboomspruit) in Limpopo Province, where an unlawful tank farm was operated supplying petroleum products throughout the province as far as Musina. When this enterprise was discovered and Mr Tiry arrested, he and Ms Sangweni moved to Free State and a new unlawful tank farm operation was established on a farm, Quarry Hoek,1 near Warden. The evidence showed that Mr Tiry was the mastermind of, and ran, a criminal enterprise through which he stole petroleum products from Sasol and Engen, using the tank farms at both Zutundu and Quarry Hoek for this purpose. The farms were strategically situated in close proximity to the national roads used by the freight companies to transport Sasol and Engen’s petroleum products. Both farms were surrounded by high walls, and a number of bulk storage tanks and pipes had been erected, which were used to decant and store the products. Mr Tiry was said to have had contact with the tanker drivers (among others, appellants 3, 4, deceased appellant 5 and appellants 6 and 9), who would divert from their routes onto the farms and unlawfully decant petroleum products there. Mr Tiry would pay them for this and later on-sell the stolen products to fuel retailers and possibly others at a reduced price lower than the regulated price. These activities gave rise to counts 1 and 2 under the provisions of POCA. [8] The charges faced by the appellants were in two categories. Counts 3 to 11 (all predicated on counts 1 and 2) were allegedly committed at Zutundu. The stolen petroleum products were loaded from Sasol’s Secunda plant, and were destined to be delivered at the Engen depot in Mokopane, or in one instance at Rustenberg. The basis for the charges was that drivers of tankers carrying diesel or petrol consigned to the Engen depot would divert to Zutundu, discharge all or part of their cargo in return for payment of an agreed price and then Mr Tiry would dispose of the stolen product to various retail outlets and possibly others. The evidence showed that the drivers were aware that if they diverted in this way Mr Tiry would purchase the product they were carrying. It was not established how the drivers came to know this, although a list of drivers’ mobile phone numbers was found on a phone belonging to Mr Tiry and one witness, who 1 This name is an adaptation of Guarrihoek, the original name of one of the farms forming part of the property. testified in terms of s 204 of the CPA, said that he received a phone call from Mr Tiry. [9] The thefts in counts 12-26 and 30-41 (also all predicated on counts 1 and 2) were allegedly committed at Quarry Hoek. The stolen products were loaded at Island View Storage (IVS) in Durban and were destined for Sasol’s tank farm in Secunda. As with the other counts, the State alleged that the products did not reach their destination, but were decanted on Quarry Hoek. Appellants 3, 4, 6, 7, 8 and 9 are implicated in this regard. Appellants 3, 4, 6 and 9 were the drivers for various freight companies, whilst appellants 7 and 8 were employed by Sasol in Secunda as officials entrusted with receiving products from IVS delivered by appellants 3, 4, 6 and 9. They allegedly falsified documents to the effect that tankers were shown as arriving in Secunda and off-loading petroleum products, whereas, in fact, the tankers either never entered the tank farm, or arrived there with a tank containing water. [10] The State led evidence both of a factual and technical nature. The appellants did not testify in their own defence, but led the evidence of three technical witnesses. We do not intend burdening this judgment with the testimony of each witness. Where necessary, we will refer to the specific aspects of a particular witness’ evidence. Zutundu counts [11] In respect of the Zutundu counts, the trigger for their discovery was the events of 3 May 2006. A tanker belonging to Rand Forwarding and Freight was instructed by Mr Moolman of MBT Petroleum to collect a consignment of 42 000 litres of diesel from Total in Alrode and deliver it to Marikana near Rustenburg. The truck did not reach its destination, and was found abandoned in Naboomspruit on 4 May 2006. Its driver, Mr Victor Mabule, disappeared without a trace. This event led to an investigation, using information from the vehicle's satellite tracking equipment, which led the police, Mr Moolman and Mr van Eeden from Rand Forwarding and Freight to Zutundu farm. There, diesel was found in a tank erected on the farm. This diesel was compared with residual diesel in the pipes of the tanker and found to match it in both colour and appearance. On that basis it was reloaded for delivery, although there was a shortfall of some 3 000 litres. Mr Tiry was present while this happened. These facts formed the basis of count 3. [12] The discovery of the tank farm at Zutundu led to a further investigation, which revealed that between 13 December 2005 and February 2006, petroleum products loaded from Sasol, Secunda, and destined for the Engen depot in Mokopane did not reach their destination. Mr du Preez testified that, after measuring the supposed deliveries against sales and the quantities left in the storage tanks at the depot, over 200 000 litres of premium petrol and nearly 240 000 litres of diesel was not delivered. The vehicle satellite tracking reports for tankers making deliveries to the depot revealed that some tankers deviated to Zutundu, and in most instances remained there for long enough to discharge their cargo. Appellant 4 was the driver in counts 5, 7, 9 and 10. In counts 4, 6, 8, and 11 the drivers all disappeared without a trace. In count 4 the evidence was that the tanker was only stationary at Zutundu for 8 minutes and 50 seconds, while in count 8 no evidence was given of how long the tanker remained at Zutundu. [13] Evidence against Mr Tiry was given by an owner of a fuel retailer and the employee of another, who operated fourteen service stations in the vicinity of Mokopane, Naboomspruit and Polokwane. They testified that they used to buy petroleum products from Mr Tiry at below market value. One described the petrol as ‘hot’2, conveying that he knew it was stolen. All testified that Mr Tiry would 2 He testified in Afrikaans and used the word ‘warm’, meaning ‘hot’. insist on cash payment or cash cheque, and issued no receipts or invoices. It was common cause that Mr Tiry had no licence to deal in petroleum products. Considerable quantities of petroleum products were purchased from Mr Tiry. The evidence of the two witnesses was corroborated by a businessman and a friend of Mr Tiry's, Mr Jose dos Santos, who testified that he knew that he sold petroleum products. Quarry Hoek [14] The facts giving rise to the Quarry Hoek counts took place subsequent to Mr Tiry’s arrest and release on bail, following the exposure of his activities at Zutundu. In a deceptive violation of his bail conditions, in June 2006, Mr Tiry moved to Quarry Hoek with Ms Sangweni. There, he purchased the Quarry Hoek property through his friend and proxy, Mr dos Santos, and immediately set up a similar infrastructure to that he had previously utilised at Zutundu. A high wall was erected around the property; tanks, pumping equipment and appropriate pipe lines were installed, some inside a large shed and some outside; and a large dam was built on the property to hold the water that would replace the contents of the tankers once off-loaded. Two huge steel tanks and 53 JoJo plastic tanks of different sizes were also set up on the farm to keep the stolen petroleum products. [15] Quarry Hoek was situated north of Warden and slightly off the N3 national road that tankers would use when conveying petroleum and diesel products from Durban to the Sasol tank farm in Secunda. A large, prominent sign pointing to the farm was erected on the road, ostensibly to guide the drivers. The man who set up this infrastructure at the instance of Mr Tiry, Mr Willem Basson, testified about this. He also testified that Mr Tiry specifically told him that the intention of the infrastructure was to set up a fuel depot and that on behalf of Mr Tiry he solicited sales and made deliveries of fuel. After these activities were discovered by the police a considerable quantity of petroleum products was discovered in the tanks on the farm and shown after testing to belong to Sasol. [16] The main witness in respect of the Quarry Hoek counts was Mr Fredolines Peach, a forensic investigator, who had been engaged by Sasol to investigate the cause of its losses. Mr Peach testified from a spreadsheet he co-authored with the investigating officer, Warrant Officer Gert van der Merwe. The contents of the spread-sheet included particulars of vehicle tracking devices installed on the specific truck tankers, locations of those tankers at different times, and the Global Positioning System (GPS) co-ordinates. More about these later. [17] The following background, distilled from Mr Peach’s evidence, is necessary to appreciate the nature of the Quarry Hoek counts. At the time Sasol was importing petrol, described in the charge sheet as Ron65 petrol or Reformate petrol (the two are synonymous), and it was then transported by fuel tankers from IVS in Durban to its tank farm in Secunda, where it was further processed. The quantities imported were so great – more than 50 tankers a day – that they followed a different route into the tank farm in Secunda in accordance with the procedure described below. Four freight entities were used for that purpose, namely Lobtrans SA (Pty) Ltd (Lobtrans); Freight Dynamics (Pty) Ltd (Freight Dynamics); Wardens Cartage CC (Wardens) and 777 Logistics (Pty) Ltd (Logistics). Appellants 3, 4, 6, 8 and 9 were among the drivers of the tankers for these companies. [18] The following procedure had to be followed for the loading of the petroleum products from IVS Durban up to their off-loading in Secunda. The Oil Unit at Sasol’s headquarters in Rosebank would generate an order, prefixed with number 53. The various transport companies operating the tankers would be given the orders, which entitled those companies to uplift the product referred to in the order from IVS. The transport company would issue the driver with a delivery note with details of the driver and the registration numbers of the tanker and the trailer (if any). At IVS the driver would exhibit the documents in his possession, load and proceed to the weighbridge to weigh the load. [19] An independent company, Intertek Testing Services (South Africa) (Pty) Ltd (Intertek), inspected the vehicles as they arrived at IVS. After loading, the tanker would be inspected and sealed. The seals would have sequential numbers. Each driver would sign the weighbridge ticket, and an acknowledgment that they had received the product. These two documents would have to be handed in upon arrival at the Sasol tank farm in Secunda. The tanker would then be weighed to check that the weight corresponded with the weight shown on the IVS documents within a tolerance of 500kgs. Once so satisfied, the process controller at the weighbridge would generate a ‘non-commercial goods’ receipt and allow the tanker to proceed to off-loading. There the product would be tested for possible contamination and the off-loading official would generate an off-loading statement essentially certifying that the tanker had not been tampered with, was full of product and ready for off-loading. After the tanker had off-loaded the product the off-loading official would make a declaration of the time when off- loading was complete and that the tanker had been fully off-loaded. The tanker would then proceed outbound to the weighbridge where it would be weighed again and the ‘non-commercial goods’ receipt would be completed. It would then be allowed to leave the tank farm and its departure time would be logged by the security personnel at the exit gate. Thus, for theft of the product to occur under this procedure, the driver of the tanker, the weighbridge official, the off-loading official and the buyer of the stolen product, and possibly the security officer, all had to co-operate. [20] In respect of the specific counts relating to Quarry Hoek, the catalyst was the events of 14 December 2006, which form the basis of count 12. Appellant 3, Mr Tshabalala, was literally caught ‘red-handed’. On 13 December 2006 he loaded a Freight Dynamics tanker with reformate octane at IVS in Durban. When he arrived at the Secunda tank farm, it was discovered that the tanker was full of water. He could not provide any satisfactory explanation as to how this came about, and was arrested. An examination of the vehicle's satellite tracking report later revealed that the tanker, on its way from Durban, had entered Quarry Hoek at midnight on 14 December 2006 and left at 05h00. In this regard, Mr Marius Seaman testified that as a result of this incident, he used the tanker’s vehicle tracking reports to trace the movements of the tanker on its journey from Durban. This showed that the tanker stopped in Warden and spent about six hours there. As a result, he and the late Mr Peter Dafel travelled to Warden, where the GPS co-ordinates from the replay led them straight to Quarry Hoek. [21] The police later obtained a search and seizure warrant in respect of Quarry Hoek, which they visited on 15 December 2006. Mr Tiry was not present. Upon arrival, the police found fuel, reformate octane 95. Samples of it were lifted and sent for forensic analysis, which confirmed that this was the same product which Mr Tshabalala had loaded from IVS in Durban on 13 December 2006, destined for Secunda. By this time Mr Tiry and Ms Sangweni had abandoned the Quarry Hoek farm and fled. They were eventually arrested in Polokwane on 18 December 2006. [22] The investigation triggered by the event on 14 December 2006 revealed that between 19 August and 14 December 2006 tankers driven by appellant 3 (Mr Tshabalala), appellant 6 (Mr Buthelezi), and appellant 9 (Mr Moisi) and others loaded product from IVS in Durban. En route to Secunda, they deviated to Quarry Hoek, where the product was stolen. At the Secunda tank farm, all the security processes referred to above would be reflected as having been satisfied. This involved falsification of documents through the cooperation of the drivers, weighbridge and off-loading officials referred to above. In this regard, the weighbridge and off-loading officials who were charged were appellants 7 (Mr Sithole) and 8 (Mr Nkosi). In truth, however, the tanker either did not enter the Sasol tank farm or did so empty or filled wholly or partly with water. The satellite tracking reports revealed that the tankers had diverted to Quarry Hoek where they spent some time. Count 25 involved a different fuel retailer, BP Southern Africa (BP). As a result, the rest of the appellants were arrested. Grounds of appeal [23] The convictions were assailed on the grounds of violations of fair trial rights based on the following: (a) A denial of the opportunity to cross-examine witnesses and the limitation of an expert witness’ evidence; (b) Acceptance of hearsay evidence in the form of the satellite vehicle tracking reports; (c) The trial judge’s conduct; (d) Invalidity of the search and seizure warrant in respect of Quarry Hoek. The first two of these are closely connected and can conveniently be dealt with together. The satellite tracking reports [24] An important component of the State’s case against the appellants was the vehicle satellite tracking reports, which linked the drivers with the diversion of their tankers to Zutundu and Quarry Hoek in all but two instances, namely counts 25 and 26, where the vehicles were observed at Quarry Hoek. The vehicle tracking reports were highly contested, as the appellants attacked their reliability and contended that this evidence should have been excluded as hearsay. The State’s main witness in respect of the Quarry Hoek counts, Mr Peach, relied heavily on the tracking reports. [25] That evidence is summarised below. Experts from various companies whose tracking devices had been fitted on the tankers involved in each of the alleged thefts testified about the workings of the tracking systems. [26] The Wardens tankers were involved in counts 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23 and 24. They were fitted with tracking devices managed by Global Telematics. Mr Desmond Naidoo, its fleet manager, testified about the satellite tracking system, its workings and reliability. The GPS unit on the vehicle detects a locational signal3 from at least three satellites circling the earth and transmits this information to the tracking company via GMS.4 This enables the tracking company to identify the location of the vehicle at any time to an accuracy of 10 metres. Mr Naidoo testified that the extracted information in respect of the tankers’ movements related to these twelve counts showed that these tankers were indeed at the Quarry Hoek farm on the dates and times indicated in the reports. On each occasion they spent a few hours at Quarry Hoek before departing for Secunda. In four instances the extracted information showed that from Quarry Hoek farm, the tankers went to a truck stop in Secunda and never went to Sasol's tank farm. In one instance a tanker arrived at the weighbridge bay, but did not go to the off-loading bay and returned to the truck stop in Secunda. [27] Counts 12, 34, 35, 36, 40 and 41 involved tankers belonging to Freight Dynamics. Those tankers were fitted with Comtech5 tracking devices. Mr Joao Pedro Pedregal, an expert in satellite tracing of motor vehicles employed by 3 Consisting of a longitude and latitude. 4 Google Mobile Services. 5 Comtech was taken over by Altech Netstar in 2008 and Mr Pedregal then worked for that company. Altech Nestar, testified about how the satellite tracking of vehicles worked. The only difference between his description and that of Mr Naidoo was that the Comtech system required the GPS device on the vehicle to detect locational signals from four satellites instead of three. All the information received from the unit installed on a particular vehicle was sent to the client through a power track light software program. This enabled the client to view the vehicle movements in real time. The software also allowed the client to view trip replays so that all position data on any trip was available. In the event of the vehicle stopping, the program recorded the duration of the period before the next occasion the ignition was switched on. [28] Mr Pedregal testified that it was impossible for the client to manipulate any information sent by the tracking unit to the hub server and from the hub server to the client server. Mr Pedregal also attested to the reliability and accuracy of the system. Based on the above considerations, his conclusion was that the tankers in these counts were at Quarry Farm on the dates and at the times reflected in the extracts produced in respect of those tankers. [29] Counts 30, 31, 32 and 33 involved tankers belonging to Logistics. The tankers were fitted with tracking devices by C-Track Digital. Mr Eugene van Niekerk attested to the accuracy and reliability of the tracking system. He testified about movement reports in respect of the tankers involved in the counts referred to above, during the period 26 November to 6 December 2006. The extracted information showed that between 29 November and 4 December 2006 the four tankers involved in these counts entered Quarry Hoek at various times en route from IVS Durban and spent a few hours there before departing for Sasol Secunda tank farm. [30] In respect of the Zutundu counts, the investigating officer, Captain Schutte, obtained two compact discs from the tracking company for the vehicles involved in these counts and they were analysed by Constable Ravat. He had plotted the location of the four corners of the walled homestead area on Zutundu using a GPS device and his analysis showed that all the vehicles in question in relation to those counts had diverted to Zutundu from their intended route from Secunda to the Engen depot at Mokopane. [31] None of these witnesses were cross-examined, nor was their evidence challenged. As the appellants were represented through Legal Aid SA (Legal Aid), they had to obtain approval from Legal Aid to engage the services of satellite tracking expert. When the State’s expert witnesses testified, counsel had not identified a potential expert witness and that approval had not yet been given. Consequently, counsel for the appellants elected not to cross-examine those witnesses on the ground they needed an expert themselves in order to cross- examine effectively. [32] Eventually the State closed its case on 26 February 2015. The appellants’ application to recall the State’s witnesses for cross-examination was refused. Mr Shone, the appellants’ expert, testified from 26 to 27 March 2015, while the other expert, Mr Dormehl, delivered a report and testified on 17 and 18 February 2016. At the end of his evidence, a further application to recall the State’s expert witnesses was refused. In the circumstances, it is not correct that the appellants’ right to cross-examine the witnesses was denied. They elected not to do so, and allowed the State to close its case. [33] It is no answer for the appellants to argue that they were dependent on Legal Aid for funding. What they needed to do was identify a suitable expert and then ask Legal Aid to provide funds to obtain a report from that expert on the issues in the case. This they could have done immediately they received the contents of the docket, from which it would have been clear that the satellite tracking reports were to form the bedrock of the State’s case. They elected not to do this, and waited until towards the closure of the State’s case. And in the light of the evidence of their own expert witnesses, the trial court was correct in refusing the applications to recall the witnesses. [34] None of the appellants testified in their own defence. To counter the State’s tracking reports evidence, the appellants relied on the evidence of Mr Shone and Mr Dormehl. Mr Shone, a tachograph consultant, did not add any value to determining the issue of reliability of the tracking reports, as it was not his field of expertise. In response to a direct question on this aspect during cross- examination, he conceded that he was unable to testify on the reliability of the satellite tracking equipment. Furthermore, he was unable to testify as to how the satellite tracking system worked. All he did was compare some of the documents with a schedule prepared by Mr Peach and note some discrepancies. None of these was relied upon in argument. In light of the above, the court a quo was correct in attaching little value to his evidence. [35] Mr Dormehl’s evidence was tendered in support of an application to re- open the appellants’ cases, both to receive his evidence and to enable the witnesses who had given evidence regarding the tracking devices and reports to be recalled for further cross-examination. The trial court refused the application on the basis that the evidence did not take the matter any further. The upshot of Mr Dormehl’s evidence was that the tracking reports lacked credibility due to the unavailability of supporting documentation like monitoring software, installation certificates, etc; no records of regular maintenance of the devices; no proof of how data was stored for over a period of four years. As he expressed it in his report: ‘There is no proof that industry standards were complied with at the time of the alleged capturing of the data now sought to be introduced by the State’. He testified that the documents he referred to would only be called for by insurance companies if there was a dispute over the accuracy of information obtained from the device. [36] Mr Dormehl, while admittedly an expert, did not address the fundamental issue of whether these particular tracker readings accurately reflected the movement of the vehicles in question. He raised a number of potential issues, such as the certification of the tracking devices. He gave evidence in regard to the way in which they could go wrong. However, none of that evidence indicated that any of the devices in issue in this case had in fact gone wrong. Unless and until it was put to any witness on behalf of the State that the information they were deriving from the tracking devices was incorrect, and that the tankers in question had not diverted from their required routes, technical evidence of how such devices could go wrong was neither here nor there. In the absence of any proper challenge to the correctness of that evidence the issue was academic. [37] These substantial difficulties with Mr Dormehl’s evidence are best illustrated by his assertion that in the absence of certain documents there was no evidence that the GPS devices were even installed on the vehicles mentioned in the different counts. However, no basis existed for thinking that the evidence of tracking reports had been fabricated, which was the necessary corollary to his view. His approach depended on the absence of certain documents he regarded as necessary, but whose relevance he failed to demonstrate. [38] Even if taken at face value,6 we are of the view that objective facts were proved that served as sufficient safeguards to accept the reliability of the tracking reports. In this regard we consider the testimony of the two s 204 witness, Messrs Mofokeng and Mahosane, the truck drivers in respect of counts 30 and 33, to be useful. As would become clear later, the tracking reports located their presence at Quarry Hoek on the dates and times they testified to have been there. So the reports were accurate as far as these two drivers were concerned. Furthermore, Mr Seaman’s evidence is important. We have already mentioned how he was led to Quarry Hoek with precision by the co-ordinates obtained from the replay of the tanker movement involving appellant 3 on 14 December 2006. [39] Furthermore, Mr Deon Pienaar, a covert surveillance operator did a surveillance of Quarry Hoek over two days in August 2006 on behalf of Sasol. He observed two Lobtrans tankers entering Quarry Hoek and took photographs. Similarly, the lead to Zutundu was as a result of the satellite tracking reports. And the fact that stolen petroleum products which had been loaded in those tankers were found on both farms, underlines the reliability of the reports. [40] Most importantly, if the version of appellants 3, 4, 6 and 9 had been that they never diverted to Zutundu or Quarry Hoek, they could simply have instructed their counsel to put that to the witnesses during cross-examination. It would have been put that the tracking data must be incorrect because the instructions from the accused were to the effect that the tankers had not deviated as alleged. They never did. Furthermore, those appellants elected not to testify, which is their constitutional right. But it is not without consequences. As is trite, the fact that an accused person is under no obligation to testify does not mean that there are no consequences attaching to a decision to remain silent during the trial. If there is evidence calling for an answer, and an accused person chooses to remain silent in the face of such evidence, a court may well be entitled to conclude that the evidence is sufficient in the absence of an explanation to prove the guilt of the accused. Whether such a conclusion is justified will depend on the weight of the evidence. 7 Given all the above considerations, we conclude that the reliability of the satellite tracking reports was established. [41] There remains the contention that the contents of the tracking reports constitute hearsay evidence. We do not agree. The contents of the reports merely reflect the locational data that was transmitted from the GPS transmitter fitted to each vehicle. That data identifies the position of the vehicle from time to time during the journey in question. It is the product of a measuring device in the same way that a thermometer reflects body temperature or a barometer air pressure. The information it produces is not hearsay. It is a matter of fact and admissible as such. That is not to say that it must be accepted at face value. One can readily imagine circumstances in which any measuring device may be defective or provide inaccurate information, but once it has been shown on a prima facie basis to be doing its job properly, the absence of any basis for thinking that the information it provides is inaccurate may mean that the correctness of that information is established beyond reasonable doubt. [42] One related point raised in the heads of argument, but not developed, was that the trial judge failed to recognise that the contents of the tracking reports constituted ‘data messages in terms of the definition in s 1 of the Electronic Communications and Transactions Act 25 of 2002 (the ECTA). We say that this point was not developed because we were not told why this made any difference to their admissibility. In terms of s 15(1)(a) of the ECTA the rules of evidence must not be used to deny the admissibility of a data message on the mere grounds that it is constituted by a data message. In terms of s 15(2) it must be given due evidential weight and s 15(3) prescribes certain factors to which regard must be had in considering the message's evidential weight. We have already considered 7 Osman and Another v Attorney-General, Transvaal [1998] ZACC 14; 1998 (4) SA 1224 (CC); 1998(11) BCLR 1362 (CC); S v Boesak [2000] ZACC 25; 2001 (1) SA 912 (CC); 2001 (1) BCLR 36; para 25. the relevant factors and concluded that the tracking reports were reliable. Therefore, there is nothing in this point. For those reasons the first two grounds of appeal must fail. The trial judge’s conduct [43] It was submitted that the trial judge, in breach of the norms of permissible judicial conduct, violated the appellants’ fair trial rights by unjustifiably interrupting the appellants’ counsel throughout the trial, thus hindering their defence. The incidents relied upon in the heads of argument primarily involved attempts by counsel to persuade the judge that there should be a trial within a trial on undefined issues of admissibility. On other occasions the complaint was that their endeavours to obtain an expert witness were stultified by the judge. We have already dealt with that and the judge did not in fact prevent them from leading the expert evidence they procured. Their difficulties more probably stem from the absence of any respectable evidence to contradict that led on behalf of the State. Be that as it may, the judge was entitled, especially in view of the protracted nature of the proceedings, which had been going on for nearly six years, to be firm. [44] However, there are several incidents on record which show that on a few occasions the judge was impatient, sarcastic, overbearing, brash and downright rude towards counsel. This is especially so in respect of Mr Nkhahle. Throughout the record, it is evident that the judge did not think much of counsel’s abilities or experience. This conduct was unfortunate. To his credit, Mr Nkhahle showed remarkable resilience. Irrespective of the length of the trial, the irritations and the inevitable frustrations, it is important for a judge to maintain a dignified and detached disposition. Having said that, we do not think that the conduct of the judge was so gross as to render the appellants’ trial unfair. The appellants were afforded every opportunity to advance their defence over a protracted period. Witnesses were cross-examined at length without it being suggested at any stage that their evidence was erroneous, deliberately untruthful or inconsistent with a version to be advanced by any of the accused. Taking the record as a whole, the appellants had a fair trial. The search and seizure warrant [45] The warrant, in respect of Quarry Hoek, was issued by Colonel Tsatsa on 15 December 2006. It is common cause that the warrant was issued irregularly. It was issued to the investigating officer on his mere say so, without a statement on oath from a person who might have reported the matter to him. No specific crime, nor names of possible suspects, was mentioned in the warrant. What the trial court had to determine was whether, notwithstanding the irregularities, the evidence secured pursuant to the search fell to be excluded in terms of s 35(5) of the Constitution. That section 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. This is not an absolute exclusionary provision for evidence obtained in violation of an accused’s constitutional rights. [46] The next enquiry is whether the admission of the evidence would render the trial unfair or otherwise be detrimental to the administration of justice. In Dos Santos and Another v The State8 a warrant was defective as the regional magistrate who issued it was not a magistrate as defined for the purposes of s 21 of the CPA. It was concluded under the circumstances, that the evidence should not be excluded. Ponnan JA explained (at paras 23 and 24): ‘Here the investigating team did not act in flagrant disregard of the first appellant's constitutional rights. On the contrary, they sought judicial authority for their conduct. That 8 Dos Santos and Another v The State [2010] ZASCA 73; 2010 (2) SACR 382 (SCA); [2010] 4 All SA 132 (SCA). judicial imprimatur was an attempt to uphold the law in spirit and letter. None of those executing the warrant knew that it suffered a defect... In those circumstances it is plain that the task team was not attempting to garner any unfair advantage for themselves. Rather it plainly was an endeavour to protect the interests of the first appellant. For that they should be commended, not penalised by having the evidence that has been secured pursuant to that warrant excluded. To exclude the evidence in those circumstances would not conduce to a fair trial. Nor for that matter would it serve to advance the administration of justice. To exclude the evidence simply because the wrong magistrate had been inadvertently approached would run counter to the spirit and purport of the Constitution. In our view, on the facts of this case s 35(5) could hardly countenance the exclusion of the impugned evidence. Accordingly the conclusion reached by the trial court on this score cannot be faulted.’ [47] In S v Van Deventer and Another9 the validity of a warrant issued in terms of s 74D of Income Tax Act 58 of 1962 was attacked on the ground that it was issued in terms of the wrong statute. The court allowed the evidence seized pursuant thereto, after taking into consideration the following factors: that the documents seized constituted valuable evidence of the existence and extent of income tax evasions, and as such, the documents fell within the ambit of the warrant; that the evidence was obtained without any compelled participation by or conscription of appellants; that the violation of appellants’ right was technical and not flagrant; that the officers executing the warrant acted bona fide; and that if the evidence would in any event have been discovered by lawful means, the exclusion thereof would generally be detrimental to administration of justice. [48] Dos Santos and Deventer are illuminating, and the general principles distilled from them apply with equal force to the present case. It must be borne in mind that the search and seizure in this case yielded real and valuable evidence of a vast network of theft of petroleum products, as well as actual products stolen 9 S v Van Deventer and Another 2012 (2) SACR 263 (WCC). from Sasol. To exclude such evidence would be detrimental to the administration of justice. The farm itself had been abandoned by Mr Tiry and Ms Sangweni, who had decamped and gone into hiding. Thus, although the trial court admitted the evidence on an incorrect basis, the decision was ultimately correct. Despite the irregularity in issuing the warrant, the evidence obtained pursuant to its execution was correctly accepted. The individual charges [49] Challenges were raised to the conviction of Ms Sangweni on all charges; to the convictions on the theft counts of the two Sasol officials, Messrs Sithole (Appellant 7) and Nkosi (Appellant 8) and consequently their conviction on count 2 under POCA; to the conviction of Mr Nyamusa (Appellant 4) on counts 5, 7, 9 and 10 in relation to the Zutundu counts; and the other drivers (Appellants 3, 6 and 9) in respect of all the theft counts on which they were convicted and consequently their conviction on count 2 under POCA. Mr Tiry did not advance a challenge to his conviction on any specific count as opposed to the general challenges already disposed of. In preparing the appeal, however, it became apparent to the members of the court that there were certain counts to which no specific challenge had been raised where the convictions could not be upheld. We will deal with these, which may to some extent overlap with the individual cases raised in the heads of argument, before dealing with Ms Sangweni's arguments and some more general issues regarding the POCA counts. Count 4 [50] This was one of the Zutundu charges, the general modus operandi of which has been described. In all of them the basis for the convictions was the following. Mr Tiry was proved to have been operating an unlawful tank farm at Zutundu, by purchasing stolen petroleum products from tanker drivers and re-selling them at prices less than the regulated price. There was evidence that some at least of the stolen product had been destined for the Engen depot in Mokopane as demonstrated by the shortfall established to exist in the latter’s tanks. On counts 4 to 11 there was evidence that tankers carrying petroleum from Secunda to the Engen depot diverted from their prescribed route to Zutundu and remained there for significant periods of time. In the absence of any legitimate reason for them to do so the inference was that all or part of the contents of these tankers, was stolen and sold to Mr Tiry. This evidence raised a prima facie case and in the absence of any lawful explanation for the tankers going to Zutundu it was a proper inference that the drivers and Mr Tiry were parties to the theft of all or part of the contents of the tankers. And as already noted no innocent explanation was forthcoming. [51] The State’s problem in relation to count 4 is that according to Constable Ravat the tanker in this case was only on the farm at Zutundu for 8 minutes and 50 seconds. The evidence of Mr Peach was that this would not provide anything like sufficient time for the entire contents of the tanker, or even a substantial portion thereof, to be discharged. The driver is not identified and Mr Tiry’s silence in respect of this count alone is understandable. The possibility exists that the tanker went to Zutundu dishonestly, perhaps to discuss the possibility of stealing and selling a later consignment, but without any of its contents being stolen. According to Mr du Preez’s schedule, the driver was a regular driver on this route. In those circumstances, while the visit to Zutundu was highly suspicious the evidence was insufficient to establish theft. The convictions of Mr Tiry and Ms Sangweni on this count must be set aside. Count 8 [52] The problem with this count, which also relates to Zutundu, is that Constable Ravat gave no evidence in regard to it. While the tracking reports in the record show that the vehicle visited the tank farm at Zutundu, there was no evidence of how long it remained there. As with count 4, while the visit to Zutundu was highly suspicious the evidence was insufficient to establish theft. The convictions of Mr Tiry and Ms Sangweni on this count must be set aside. The Quarry Hoek counts [53] In respect of the Quarry Hoek counts, as already stated, the State relied on the evidence of Mr Peach. It is necessary to preface the analysis of his evidence with the following observation. His was not direct evidence, but involved an analysis of tracking records against the consignment documents and the drawing of conclusions from those documents. The drawing of those conclusions was a matter for the court, not Mr Peach.10 He started from a premise that any tanker driver who visited Quarry Hoek was a thief who stole the consignment of fuel they were transporting. In doing so he failed to have regard to any other possibilities. Also, in some respects his evidence was not supported by the documents to which he referred. [54] The key to Mr Peach’s conclusions was the tracking reports. Given the nature and modus operandi of Mr Tiry, where the tracking reports demonstrated that a fully-laden vehicle en route to Secunda diverted and went to Quarry Farm, it was a legitimate inference that it did so for the purpose of selling the cargo to Mr Tiry. That sufficed to call for an explanation for the diversion other than theft of the product and, in the absence of an innocent explanation, the prima facie inference might harden into proof beyond reasonable doubt. However, it was only 10 PriceWaterhouseCoopers Inc v National Potato Cooperative and Another [2015] ZASCA 2; [2015] 2 All SA 403 (SCA) paras 78-95. where the tracking reports provided the necessary support that this would be the case. For that reason, the evidence on counts 19, 20, 22, 23, 25, 30, 33, 34, 35 and 37 requires closer scrutiny. Count 19 [55] In count 19 the driver was Mr Buthelezi (Appellant 6). The State’s case was that on 13 October 2006, having uplifted petroleum product from IVS in Durban, and while en route to Secunda tank farm, he deviated to Quarry Hoek and decanted the product there, before proceeding. At Secunda documents were falsified to create an impression that the product was off-loaded there, whereas, this was not true. [56] According to the IVS weighbridge ticket, the tanker left IVS in Durban at 01h50 am on 13 October 2006. Mr Peach said that Sasol’s security documents showed that it arrived at the tank farm at Secunda at 19h36 on 13 October 2006 and according to the offloading statement had been fully offloaded by 20h00. However, the goods receipt reflected that the tanker left the tank farm at 21h05. According to Mr Peach, it was impossible for the tanker to have been fully off- loaded by 20h00 if it arrived at 19h36. In cross-examination it was suggested to Mr Peach that the offloading statement, which should have been completed at the beginning of the offloading operation and the declaration, which should have been completed at the end of the offloading operation, were frequently completed at the same time. Whilst he rejected the suggestion it does not strike us as implausible. [57] Apart from the off-loading statement the remaining documents were not inconsistent with delivery of the product at Secunda. The other entries were correct, including the seal numbers on the offloading statement, according to the IVS documents. The only exception was the discharge declaration reflecting that the off-loading took only less than half an hour. That was the high water mark of the State’s case. However, if one accepts the possibility that the tanker left the tank farm at 21h06, this would have given sufficient time to discharge the entire consignment. It is therefore plausible that the high-pressure official recorded the time incorrectly in the discharge declaration. Another consideration is that if there was theft of the product, Mr Peter Mbatha and the official who prepared the declaration, one Moses, would have been charged. They were not. Mr Peach’s evidence was that for theft of consignments to the Sasol Secunda tank farm to take place, the cooperation of the weigh-in and off-loading officials was necessary. [58] What is more, the allegation that the tanker driven by Mr Buthelelzi was at Quarry Hoek en route to Secunda, was not supported by the tracking records he relied on. They showed the tanker leaving Secunda at about midnight on 12 October 2006 and arriving at Quarry Hoek at 02h40. It remained there until 02h56, before travelling to a spot southwest of Warden on the R714. It was shown as leaving there at about 06h30 and the next relevant entry shows it at the IVS premises in Durban at 22h14 on Thursday 12 October 2006. That is consistent with the IVS loading documents for the vehicle's departure from Durban, but it had no relevance to that journey. [59] From the tracking reports, it is apparent that the trip Mr Peach relied on, was an in-bound trip from Secunda to Durban on Thursday 12 October and not a trip from Durban to Secunda on Friday 13 October 2006. The next document in the record related to another return journey from Secunda leaving there on the evening of 13 October 2006. Once again it tracked the return journey of the tanker travelling generally south and east from Standerton to Harrismith with a half an hour stop, possibly at Quarry Hoek, before continuing to Harrismith. This did not reflect the journey from Durban to Secunda and accordingly did not prove that the tanker entered Quarry Hoek on its way from Durban to Secunda. The tracking reports which formed the basis of Mr Peach’s testimony do not relate to the critical period, being from the early hours of the morning on 13 October until 14 October 2006. Mr Peach’s conclusion that the tracking reports showed that the tanker was on the farm Quarry Hoek en route Durban to Secunda cannot possibly be correct. Both visits to Quarry Hoek reflected on the tracking records were on return journeys from Secunda to Durban. [60] We have no idea why Mr Buthelezi went to Quarry Hoek on these occasions. All we know is that on 13 October he was shown as discharging product at Secunda. One can only speculate about the purpose of his stop-over at Quarry Hoek on his journeys back to Durban from Secunda. The charge of theft was not proved and both he and Mr Tiry and Ms Sangweni should have been acquitted on this count. Counts 20, 22 and 23 [61] In count 20 Mr Mthetwa, formerly appellant 5, loaded a consignment of unleaded petrol from IVS in Durban and set out on a journey to Sasol Secunda on 23 October 2006 at 04h04. The goods receipt completed by a dispatch controller mentioned that the tanker arrived at the tank farm on 24 October 2006 at 03h17 and departed at 04h49. The off-loading statement at Sasol tank farm stated that the product was off-loaded on 24 October 2006 at 03h40. A declaration was made that at 03h40 the tanker had been fully off-loaded and could leave the premises empty. [62] According to Mr Peach, the tanker visited Quarry Hoek on 23 and 24 October 2006. He based his conclusion on a tracking report. That report was not particularly helpful. It did not have particulars of the entire journey and did not identify any particular location. The entry that Mr Peach relied on showed that the tanker was stationary on 23 October 2006 from 21h54 and resumed its journey the following morning at 00h22. It is not clear on what basis Mr Peach concluded that the place where the tanker had stopped was Quarry Hoek. The report contained no co-ordinates that would identify the spot. He criticised the times shown on the off-loading report in Secunda saying that it was impossible to discharge a full cargo in the time available, but made no allowance for human error. In our view the evidence fell short of sustaining a conviction. [63] The same difficulties exist in regard to the tracking reports for count 22, which involved Mr Sithole (Appellant 7) and the original accused 8 who died in the course of the trial, and count 23, involving a driver and tank farm officials not charged, where similar set of facts obtained. Unless it could be shown that the tanker had been to Quarry Farm it could not be inferred that its cargo had been stolen there or that the documents prepared by Mr Sithole were designed to conceal the theft. Accordingly, on these three counts Mr Tiry and Ms Sangweni should have been acquitted, and on count 22 Mr Sithole should have been acquitted. Count 25 [64] Count 25 involved a Lobtrans tanker engaged by BP South Africa to transport low sulphur diesel from IVS Durban to its depot in Waltloo, Pretoria on 14 October 2006. The driver was Mr Joseph Ramogale, who was not charged. According to Mr Peach, the tanker left IVS in Durban and en route entered Quarry Farm at 17h37 and departed at 17h57. There are two difficulties with this count. First, it is doubtful that any theft of fuel could have been completed in just less than 20 minutes that the tanker had stopped there. In any event, there is no evidence that the tanker arrived without its cargo or with a contaminated product at Waltloo, Pretoria. In fact, there are no delivery documents at all and no evidence of documents being falsified upon arrival of the tanker at its destination. The prosecutor put it to Mr Peach that the documents were administrative and ‘would not implicate any of the accused before court’ and Mr Peach agreed. The court asked Mr Peach whether he knew of the procedures followed by Lobtrans. His answer was that he was not familiar with its procedures. For all these reasons the convictions of Mr Tiry and Ms Sangweni on this count are not sustainable, and should be set aside. Count 30 [65] In count 30 the driver was Mr Frans Mofokeng, a witness warned in terms of s 204 of the CPA. He loaded a 777 Logistics (Pty) Ltd tanker at IVS Durban and set out to Secunda on 28 November 2006. Mr Mofokeng testified that he had heard about Mr Tiry buying petroleum products from drivers. This, according to him, was common knowledge amongst the drivers. Someone had told him that R70 000 would be paid for the product in his tanker. He therefore diverted to Quarry Hoek on 28 November 2006 en route to Secunda, intending to sell his consignment to Mr Tiry. However, he found a significant queue, and was prevented from speaking to Mr Tiry in person. Anyway, he said, it would take too long to decant his load. As he could not wait that long, he left without doing so. Mr Mofokeng’s evidence of the tanker’s presence at Quarry Hoek is corroborated by the tracking reports, which show that the tanker arrived there at 23h42 on 28 November 2006 and made start stop movements at a very slow pace until 5h50 on 29 November 2006 when it left. [66] No inference that petrol was in fact stolen, can be drawn in this instance, as there is a plausible explanation by Mr Mofokeng as to why he eventually left without decanting his consignment. Given that the court a quo accepted his evidence, it must a fortiori be accepted that no petrol was stolen at Quarry Hoek. Accordingly, the convictions against Mr Tiry and Ms Sangweni must be set aside. Count 33 [67] This count also involved a witness warned in terms of s 204, Mr Eric Mahosane. He loaded a Logistics tanker with reformat at IVS in Durban on 4 December 2006. He diverted to Quarry Hoek with the intention of selling his consignment to Mr Tiry, whom he had never met before, but had spoken to telephonically. He testified that when he was about to discharge his tanker the pumps stop working. They could not be fixed, and a second pump would also not work. In the result no petrol was in fact stolen. The tracking report showed that the tanker entered Quarry Hoek on 4 December 2006 at 23h27 and left the following morning at 03h51.The State conceded that because there was no petrol stolen, the conviction on this count should be altered to one of attempted theft. Count 34 [68] The driver in count 34 was Mr Tshabalala (Appellant 3). Mr Peach testified that the tanker loaded product at IVS in Durban, proceeded to Sasol in Secunda and on its return entered the farm Quarry Hoek for a period of a little over one hour. The convictions are not supported by the documentation – the IVS weighbridge ticket and Sasol’s non-commercial goods receipt. The former shows that the tanker loaded reformate on 23 November 2006 at IVS and left at 12h38. Sasol’s goods receipt shows that the tanker arrived at the tank farm in Secunda at 09h00 on 24 November 2006 and left at 11h26 the same day. Although there are discrepancies in all the weights shown on that document, nothing really turns on this as they fell within the allowable 500-kilogram tolerance. The tanker’s movements described above are consistent with the tanker having been driven directly from Durban. [69] The tracking reports are of no assistance in this regard. The first one reflects the tanker at Secunda on 22 November 2006, the day before it left Durban on the journey in question. It appears to relate to a return trip from Secunda to Durban arriving at about 16h06 on that day. The second report, dated 24 November 2006, is also a return journey. It shows the tanker being stationary, or travelling a minimal distance, between 10h24 and 11h47 on that day, presumably in Secunda. It then travelled 180 kilometres, which corresponds with the distance between Secunda and Warden. The plot in the record shows it in the middle of Warden, presumably at the truck stop and then leaving the town and travelling northward. Eventually, it ended at Quarry Hoek at 20h00 and left an hour later. [70] The inference that the State asked the court to draw in respect of the Quarry Hoek counts should be borne in mind. It was that loaded tankers en route from Durban to Secunda, which diverted to Quarry Hoek before resuming their journeys to Secunda, must have decanted their loads into the tanks at Quarry Hoek and replaced them with water or some other substance to deceive the officials at Sasol. Indeed, where it was established that a tanker entered Quarry Hoek en route to Secunda from Durban, that inference could legitimately be drawn, calling for a rebuttal. However, a similar inference cannot legitimately be drawn in respect of a reverse trip, ie a diversion to Quarry Hoek on a trip from Secunda to Durban. [71] To draw a legitimate inference would require the tanker to enter and leave Sasol without offloading at all. The State’s case, it must be remembered, was that the drivers had developed a method to disguise the fact that the petroleum or diesel had been stolen on the way to Sasol. Given that fact, it is hard to think of a reason why a driver would depart from that practice, complete his journey, obtain fraudulent documents and then return to perpetrate the theft. For these reasons, the convictions of Mr Tiry, Ms Sangweni and Mr Tshabalala on this count must be set aside. Count 35 [72] Count 35 involved Mr Tshabalala (Appellant 3) as the driver and Mr Sithole (Appellant 7) as the Sasol official who signed a receipt for the goods. The IVS dispatch note shows that Mr Tshabalala left Durban on 25 November 2006 at 04h35. This was shortly after his return from the journey in relation to count 34. Mr Peach’s conclusion from the documentation was that the vehicle entered Quarry Hoek at about 20h00 on the evening of 25 November 2006 and left at approximately at 21h08. This was based on two tracking reports. However, those tracking reports are dated 24 November 2006, which is the previous day and a comparison with the similar reports in count 34 reveals them to be the same documents. The tracking report for 25 November 2006 does not show a significant stop in or around Warden at any time on 25 November 2006. In fact, those reports do not reflect the tanker going beyond Standerton. There are no offloading reports at Secunda, but the goods receipt reflects the tanker as having arrived at the Sasol tank farm at 6h00 on Sunday 26 November 2006 and left at 8h17 the same day. That would be consistent with the vehicle having spent some time in Standerton, before travelling on to Secunda. The court a quo’s conclusion that the tanker entered Quarry Hoek on 25 November 2006 and never entered the Sasol tank farm is not sustained by the evidence. The convictions of Mr Tiry, Ms Sangweni, Mr Tshabalala and Mr Sithole must similarly be set aside. Counts 42, 43 and 45 [73] Mr Tiry and Ms Sangweni were discharged on counts 27, 28 and 29 at the close of the State case in terms of s 174 of the Criminal Procedure Act 51 of 1977. On counts 42, and 43 the only evidence against them consisted of two unexplained documents that were presumably found when Mr Tiry’s premises were searched. No evidence was led to explain where they were found; what they were about; or why they were connected to Mr Tiry. On their face they referred to sales of petrol and paraffin, the latter a commodity in respect of which there was no evidence whatsoever of theft. The trial court did not mention them in its judgment or furnish any reasons for holding that they provided evidence of theft on the part of Mr Tiry and Ms Sangweni. They were also convicted on count 45 as was Mr Buthelezi (Appellant 6), but the State accepted that it led no evidence, on this count. The convictions on each of these counts must be set aside. Sasol: Counts 12, 13, 14, 15, 16, 17, 18, 21, 24, 26, 31, 32, 36, 37, 38, 39, 40, and 41 [74] Below is a summary of the evidence in respect of the rest of the counts. In each case it sufficed to establish a prima facie case of theft involving the driver and the relevant off-loading official at Secunda. In none was an innocent explanation forthcoming. Accordingly, the relevant accused were properly convicted. [75] Count 13 involved Mr Sithole (Appellant 7). A Wardens tanker driven by Mr Aubrey Mzimela loaded unleaded petrol at IVS Durban and left for Secunda on 18 August 2006 at 10h12. According to the goods receipt signed by Mr Ferguson Mbuthi as the dispatch officer, the tanker arrived at the tank farm at 01h41 on 19 August 2006. The off-loading statement completed by Mr Sithole did not reflect the time of the off-loading. However, he signed a declaration that the tanker had been fully off-loaded at 02h00 and could leave the premises empty. However, the tracking records showed that the tanker entered Quarry Hoek at 22h33 on 19 August 2006 and left the following morning, 19 August 2006 at 00h36 and arrived in Secunda at 04h06. The conclusion by Mr Peach was that the tanker was never at the off-loading bay, and must have come empty, as at the time reflected in the discharge documents as being when the tanker was at the Sasol tank farm, it was in fact at Quarry Hoek [76] Count 14 involved Mr Buthelezi (Appellant 6) as the driver for a Wardens tanker, and Mr Nkosi (Appellant 8) as the weighbridge official at Sasol tank farm in Secunda. According to the IVS document, the consignment was loaded on 20 August 2006 and left Durban at 07h50. According to the off-loading statement at Sasol tank farm, signed by Mr Nkosi, the tanker was off-loaded at 00h15 on 22 August 2006. Also at 00h15, he made a declaration to the effect that the consignment had been fully off-loaded at high pressure tank farm and was certified to leave the premises empty. However, the tracking report showed that the tanker entered Quarry Hoek farm at 18h56 on 21 August 2006 and left at 20h40. It arrived at Secunda at 23h13 but never entered the tank farm. Instead, it parked at a truck stop in town until 06h45 on 22 August 2006. The upshot was that the documents certifying the tanker to have entered the tank farm were falsified. [77] In count 15, a Wardens tanker driven by Mr Alpheus Mabaso loaded petrol at IVS Durban and left for Sasol Tank farm, Secunda at 20h43 on 22 August 2006. Mr Sithole was the off-loading official at Secunda. According to the goods receipt, completed by the former accused 8, now deceased, the tanker arrived at Secunda at 14h48 on 24 August 2006. The off-loading statement reflected no time of the off-loading, only the date of 24 August 2006. In his capacity as the high pressure official, Mr Sithole signed a declaration that the tanker had fully off-loaded the consignment and could leave the tank farm at 15h00 on 24 August 2006. This was merely 12 minutes after the stated arrival time of 14h48 stated above. [78] The tracking reports showed that the tanker had, on 21 August 2006, en route from Durban to Secunda, entered Quarry Hoek at 19h30 on 23 August 2006 and left at 21h35. It arrived in Secunda the next morning at 07h24 but went to the truck stop in town, and remained there until 19h02 when it undertook another trip to Durban. It never entered the Sasol Tank farm on its arrival in Secunda. [79] Count 16 involved a driver and security officials who were not charged. Mr Alpheus Mabaso, on 23 October 2006, drove a Wardens tanker from IVS Durban, loaded with unleaded petrol and set out to Secunda tank farm. The tracking reports showed that en route to Secunda from Durban, the tanker entered Quarry Hoek at 19h13 and remained there for over two hours until 21h20. The goods receipt at Secunda tank farm, signed by Mr Jack Manamela, reflected the arrival time at Secunda tank farm as 01h26 on 24 August 2006. The off-loading statement reflected the off-loading time as 02h10. A security officer, Mr Mofokeng, declared that at 02h10 the tanker had been fully off-loaded and could leave the premises empty. The goods receipt reflected that the tanker left the tank farm at 03h17 on 24 August 2006. [80] In count 17, a Wardens tanker driven by Mr William Ngqekethe loaded unleaded petrol at IVS in Durban. The IVS weighbridge ticket reflects that the tanker was sealed with seals numbered A047480 to A 047492 by Intertek. The tanker left for Secunda at 02h58 on 23 August 2006. The goods receipt at Sasol Secunda tank farm reflected that the tanker arrived there at 13h51 on 24 August 2006. Mr Sithole completed an off-loading statement in which he, among others, confirmed that the tanker seal numbers corresponded with the seal numbers as sealed by Intertek at IVS. In his capacity as the high pressure official, he also signed the declaration that the tanker had been fully off-loaded at 15h00 on 25 August 2006 and was ready to leave the premises empty. [81] The tracking reports showed that the tanker, en route from Durban, entered Quarry Hoek at 21h59 on 24 August 2006 and left the following morning, 25 August 2006, at 03h59. The report further showed that the tanker drove to Secunda, but never entered the tank farm. [82] On this count, Mr Peach also testified about a seal with number A047481 he discovered at Quarry Hoek on 27 November 2007. On that occasion he had accompanied the investigation officer to the farm to load product for testing. He concluded that the seal was part of the seals used by Intertek when the tanker left loaded at IVS in Durban. His conclusion was therefore that the off-loading statement that the tank number corresponded with the seal numbers as sealed by Intertek at IVS, could not be true and was falsified. [83] Count 18 also involved a driver and security officials who were not charged. Mr Branty Ntuli drove a Wardens tanker on 26 August 2006, loaded with unleaded petrol, from IVS in Durban and set out to Secunda tank farm at 18h40. The goods receipt completed by dispatch controller, Mr Peter Mbatha, showed that the tanker arrived at the tank farm at 10h52 on 27 August 2006. The off-loading statement completed by Mr TA Letebele reflected the off-loading time as 12h35. The same time is reflected as the time when the tanker was declared fully off-loaded and ready to leave the tank farm empty. The goods receipt reflected that the tanker left the tank farm at 14h24, without any explanation for it remaining there for two hours after discharge was complete. The tracking reports showed that the tanker entered Quarry Hoek on its way to Secunda at 03h24 and left at 04h04. From there it ended at Roberts Drift near Meyerville. It never entered the tank farm at Secunda. [84] Count 21 involved the deceased appellant 5 as the driver of a Wardens’ tanker which, on 25 October 2006 at 07h56 left IVS Durban after loading petrol, destined for Sasol Secunda tank farm. According to security documents completed at the tank farm, the tanker arrived on 26 October 2006 at 03h01 and was fully off-loaded by 03h30, which according to Mr Peach, was ‘impossible’. To fully off-load a tanker, he explained, normally took over an hour. The tracking report showed that the tanker entered Quarry Hoek en route to Secunda on 25 October 2006 at 21h21 and left at 00h09 the morning of 26 October 2006. [85] Count 31 involved Mr Nkosi (Appellant 8) and Mr Moisi (Appellant 9). The latter was a driver for Logistics. On 28 November 2006 he loaded reformate (octane 95) from IVS Durban. The goods receipt at Sasol tank farm in Secunda completed by the dispatch controller, showed that the tanker arrived at 06h40 on 29 November 2006. The off-loading statement was completed by Mr Nkosi, who to the effect that the truck was fully off-loaded at 06h50. A Mr Letebele declared that the tanker was cleared to leave the premises empty, at the same time, ie 06h50. The tracking reports showed that the tanker entered Quarry Hoek at 00h12 on 29 November 2006 and left at 03h50. Appellant 8 (Mr Nkosi) was the high pressure official. [86] Messrs Nkosi and Moisi was also involved in count 32. He loaded reformate octane from IVS in Durban on 30 November 2006 and left for Secunda tank farm at 14h38. The goods receipt reflected the tanker’s arrival time as 06h51 the following morning. The off-loading statement completed by Mr Nkosi reflected the off-loading time as 07h00 on 1 December 2006. The time on the declaration is reflected as ‘07h’, ie no indication as to how long after 07h00. The goods receipt reflected that the tanker left the tank farm at 08h18. The tracking report showed that en route to Secunda the tanker diverted to Quarry Hoek on 1 December 2006 at 00h21and left at 03h48. [87] Count 36 involved appellants 3 and 7. Mr Buthelezi loaded a Freight Dynamic tanker with reformate at IVS Durban on 3 December 2006. The bulk tank inspection was conducted by Intertek, which sealed the tanker with ten seals, with numbers from 089660 to 089669. The tanker left for Secunda at 23h55 on 3 November 2006. The goods receipt, signed by appellant 3 and a dispatch controller, reflected the arrival time at Secunda tank farm as 18h27 on 4 December 2006. The off-loading statement does not state the off-loading time. [88] However, among other things, Mr Sithole, as the off-loading officer, certified he had compared the tanker number and seal numbers with those recorded at IVS. A security officer declared that at 17h45 the tanker had been fully off-loaded and could leave the premises empty. The goods receipt reflected that the tanker left the tank farm at 18h27 on 4 December 2006. Mr Peach testified that he visited Quarry Hoek on 30 July 2007 when samples of petroleum products found there, were to be obtained for analysis. While there, he discovered an Intertek seal with number A089662. [89] Mr Peach concluded from this discovery that the tanker driven by Mr Buthelezi referred to earlier, was at Quarry Farm. According to Mr Peach, the statement by Mr Sithole that the seals were intact when the tanker was inspected on 4 December 2006, was false. Mr Peach further testified that no seals would ever have the same number. This was confirmed by Mr Eiston Naidoo, a coordinator at Intertek, who positively identified the seal as the one allocated by Intertek to the tanker. [90] In count 37 Mr Tshabalala was again the driver of a Freight Dynamic tanker, destined for Sasol tank farm, Secunda on 5 December 2006. The goods receipt at Sasol stated that the tanker arrived at 04h39 on 6 December 2006. The off-loading statement by Mr Sithole (Appellant 7) reflected no time, but the off-loading declaration recorded that the tanker had been fully off-loaded at 04h50, that is, 11 minutes later, which was impossible. The goods receipt reflected that the tanker left the weighbridge at 05h42, but so did the security gate checkout, which was two kilometres further away. However, the tracking report showed that the tanker was at Quarry Hoek at 23h10 on 5 December 2006 and left the following morning at 01h38. Mr Peach concluded from this that the documents had been falsified. The unexplained diversion for a significant period of time to Quarry Hoek, when taken in conjunction with the difficulties with the documents relating to the discharge process, was sufficient to make a prima facie case of theft of product and it being covered up by the falsification of documents. Yet neither appellant 3 nor appellant 7 gave evidence to provide an innocent explanation. [91] Although this count involved appellants 3 and 7, as driver and off-loading official respectively, for some reason, there is no verdict on this count in respect of appellant 3. This is despite the fact that the court a quo dealt with this count in its judgment. However, Mr Sithole, who would have falsified the official documentation at the Sasol Secunda tank farm, was convicted of the count. One can only attribute the omission to inadvertence on the part of the learned judge. That is perhaps fortunate for Mr Tshabalala, but it is not a reason to disturb the conviction of Mr Sithole, or those of Mr Tiry and Ms Sangweni. [92] In count 38 a tanker driven by Mr Tshabalala left IVS in Durban shortly before 09h00 on 7 December 2006. The tracking report showed that at approximately 20h00 on 7 December 2006 it passed Warden and continued on the road before doubling back to Quarry Hoek. There is no indication as to how long it remained there or what time it left. Despite Mr Peach baldly testifying that the tanker was on the farm for three hours, that was not supported by the documents. However, the tracking report for 8 December 2006 shows the vehicle underway shortly after midnight, having travelled 11 kilometres and slightly north of Warden. It then travelled 175.67 kms which is consistent with the distance between Warden and Secunda. It is shown on the security gate reports as arriving at 03h14 and leaving at 04h21. The off-loading certificate said that it was completely off-loaded by 03h37, which was impossible. There was sufficient evidence to raise a prima facie case calling for an answer, but none was forthcoming. [93] In count 39, a Freight Dynamics tanker driven by Mr Bongane Dlamini loaded reformate at IVS in Durban. The IVS weighbridge ticket reflects that Intertek sealed the tanker with seal numbers from 083448 to 083455 (bottom seals) and 083440 to 083447 (top seals). The tanker left for Secunda at 14h52 on 6 December 2006. The goods receipt at Sasol Secunda tank farm reflected that the tanker arrived there at 08h35 on 7 December 2006. [94] An off-loading statement completed by Mr RZ Maseko confirmed, among others, that the tanker’s seal number corresponded with the seal numbers as sealed by Intertek at IVS. Also, in his capacity as the high pressure official, Mr Maseko, signed the declaration that the tanker had been fully off-loaded at 08h55 on 7 December 2006 and was ready to leave the premises empty. [95] There were no tracking reports in this instance. However, Mr Peach testified that on 27 November 2007, among the seals he picked up at Quarry Hoek, was one with number 083446. His conclusion was that this seal was one of the seals utilized by Intertek to seal the tanker on 6 December 2006 as stated above. As in count 36, this was confirmed by Mr Eiston Naidoo. By parity of reasoning, Mr Peach concluded that the statement by Mr Maseko that he inspected the seal at the tank farm on 7 December 2006 could not be correct as the seal had clearly been broken and left at Quarry Hoek. The upshot of his evidence was that the tanker, en route from Durban to Secunda, entered Quarry Hoek where the consignment was stolen. [96] Count 40 involved Mr Sithole as the weighbridge official at the Secunda tank farm. A Freight Dynamics tanker, driven by the same Mr Dlamini as in count 39, loaded reformate at IVS in Durban and left for Secunda tank farm at 01h21 on 8 December 2006. The goods receipt reflected the tanker’s arrival time as 02h03 on 10 December 2006. The off-loading statement completed by appellant 7, reflected the off-loading date only (10 December 2006) but no time. The time on the declaration is reflected as 02h15. The tracking report showed that en route to Secunda the tanker entered Quarry Hoek on 9 December 2006 at 10h09 and left at 17h30. [97] Count 41 also involved appellant 3 as driver and appellant 7 as a weighbridge official at Secunda tank farm. Appellant 3 loaded a Freight Dynamics tanker with reformate at IVS in Durban on 9 December 2006. The goods receipt at Sasol tank farm in Secunda signed by appellant 3 and a dispatch controller, Mr Ferguson Mbuti, shows that the tanker arrived at 22h54 on 10 December 2006. In the off-loading statement, appellant 3 only recorded the date, but no time. He further completed the declaration that the truck was fully off-loaded and cleared to leave the premises empty, at 23h00 on 10 December 2006. The tracking reports showed that en route from Durban to Secunda, the tanker entered Quarry Hoek at 14h38 on 10 December 2006 and left at 19h00, after which it left for Secunda. [98] The upshot of this evidence is that on all these counts the State established that appellants 3, 6 and 9 diverted from their established route to Quarry Hoek. Given the proven activities of Mr Tiry and the evidence of losses and contaminated reformat arriving in Secunda this served to establish a very strong prima facie case of theft of product, which called for a rebuttal. In the absence of any rebuttal, the court a quo was correct to accept the State’s evidence. Zetundu: Counts 3, 5, 6, 7, 9, 10, 11 and 44 [99] The evidence in regard to these counts has been described in some detail in paragraphs 11 to 13 and it need not be repeated. Mr Tiry was operating an illegal tank farm on the farm Zetundu and in the case of all counts save count 44 there was evidence from vehicle tracking devices of vehicles diverting from their authorised routes to the Engen depot in Mokopane and visiting the Zetundu property for sufficient lengths of time to discharge their cargoes. This called for an answer but none was forthcoming. [100] Count 44 arose from the evidence of Mr du Plooy, at the time the co-owner of F M Marketing, who over the period from April 2005 to February 2006 purchased diesel from Mr Tiry for a little over R385 000. Taking into account the value of the diesel stolen from Engen that probably amounted to somewhere between 70 and 80 000 litres of diesel. Mr Tiry had no licence to trade as a wholesaler of diesel and no legitimate source of such diesel. The inference is that it was stolen and that was reinforced by Mr du Plooy’s evidence that he purchased it at below the regulated price. In the result there was sufficient evidence calling for an answer and not receiving one to justify the convictions on this count. Summary on theft counts [101] In sum, in respect of both Zutundu and Quarry Hoek counts, the evidence that Mr Tiry was operating an unlawful enterprise, purchasing petroleum products from tanker drivers, for resale at discounted rates using the two farms Zutundu and Quarry Hoek as his bases, was overwhelming. The evidence of losses of petroleum products by Engen and Sasol was likewise substantial. Given those factors, the drivers (appellant 4 in respect of Zutundu and appellants 3, 6 and 9 in respect of Quarry Hoek) needed to give an innocent explanation for the diversion from their established routes to the respective farms if an inference was not to be drawn that they went there and sold the whole or part of their loads. As far as appellants 7 and 8 are concerned, similarly they needed to explain the clearly falsified security documents at the Sasol tank farm in Secunda. In the case of Mr Tiry he needed to give an explanation for the tankers visiting the two farms. No such explanation was proffered in cross-examination and none of the appellants testified. The court a quo was thus correct to accept the State’s case. Ms Sangweni [102] As far as Ms Sangweni is concerned, it is so that there is no evidence of her direct involvement with the buying and selling of petroleum products or the physical operation of any of the two farms. However, her association with Mr Tiry’s activities was clearly established. They were apparently in an intimate relationship and lived together at Zutundu and Quarry Hoek. The nature of the business being carried on there would have been immediately apparent to her, surrounded as she was by a fully equipped tank farm in each place. She would have known that tankers would arrive at the properties at all times of day or night and discharge their cargoes. She cannot have believed that such clandestine activities were lawful. [103] As to her involvement, bank accounts used by the enterprise were opened in her name, or that of a close corporation, PDN Investments CC, of which she was the sole member. The motor vehicles were registered in the name of the close corporation. The keys to one of the vehicles, a Range Rover that had been abandoned at a shopping centre in Pretoria, were found in a briefcase in the room where she was arrested together with a large sum of money in cash. The municipal account at Zutundu was in her name, and so was the post box used at Quarry Hoek. Mr Dos Santos’ evidence was that on certain occasions she collected the monies for the sales in the Polokwane area. Both she and Mr Tiry deposited amounts in part payment for the acquisition of Quarry Hoek. When Mr Tiry fled from Quarry Hoek after his activities were exposed on 14 December 2006, she accompanied him to Monument Park in Pretoria. When Mr Tiry got wind that the police were closing in on him, Ms Sangweni fled with him and went into hiding in a village in Polokwane, where they were eventually arrested. When the police arrived and questioned her about Mr Tiry, she tried to conceal him, but he was found hiding on the same property. A search of the property revealed sixteen mobile phones with five batteries; deposit slips showing deposits of large sums of money into her accounts; a number of keys and documents. Her handbag had a substantial sum in cash in it. [104] On these considerations, she must have been aware of the nature of the business being conducted there. She could not explain the source of the money in her handbag and the large sums of money found around the house, as well as the multiple keys, telephones and other items. Overall there was sufficient evidence of her association with Mr Tiry in his criminal activities. In the absence of evidence from her explaining the extent of her knowledge and involvement it is a proper inference that she was his associate in the unlawful scheme and participated in it. The POCA charges [105] We turn now to the relevant provisions of POCA,11 namely ss 2(1)(e) and 2(1)(f), on which counts 1 and 2 are based. Section 2(1)(f), under which only appellants 1 and 2 were charged, provides: ‘Any person who manages the operation or activities of an enterprise12 and who knows or ought reasonably to have known that any person, whilst employed by or associated with that 11 The preamble to POCA states among its purposes as being ‘to introduce measures to combat organised crime, money laundering and criminal gang activities; and ‘to prohibit certain activities relating to racketeering activities.’ 12 In terms of the definitions in s 1 of POCA, ‘enterprise’ ‘includes any individual, partnership, corporation, association, or other juristic person or legal entity, and any union or group of individuals associated in fact, although not a juristic person or legal entity and ‘pattern of racketeering activity’ means ‘the planned, ongoing, continuous or repeated participation or involvement in any offence referred to in Schedule 1 and includes at least two offences referred to in Schedule 1, of which one of the offences occurred after the commencement of this Act and the last offence occurred within 10 years (excluding any enterprise, conducts or participates in the conduct, directly or indirectly, of such enterprise’s affairs through a pattern of racketeering activity, shall be guilty of an offence.’ Mr Tiry was convicted of count 1 but Ms Sangweni was acquitted. [106] In addition, Mr Tiry, Ms Sangweni and the remaining appellants were each charged with, and convicted of, an offence under s 2(1)(e), which reads: ‘Any person who, whilst managing or employed by or associated with any enterprise, conducts or participates in the conduct, directly or indirectly, of such enterprise’s affairs through a pattern of racketeering activity, within the Republic or elsewhere, shall be guilty of an offence.’ [107] The difference between s 2(1)(e) and s 2(1)(f) was explained as follows in S v Eyssen:13 ‘The essence of the offence in ss (e) is that the accused must conduct (or participate in the conduct) of an enterprise’s affairs. Actual participation is required (although it may be direct or indirect). In that respect the subsection differs from ss (f), the essence of which is the accused must know (or ought reasonably to have known) that another person did so. Knowledge, not participation, is required. On the other hand, ss (e) is wider than ss (f) in that ss (e) covers a person who was managing, or employed by, or associated with the enterprise, whereas ss (f) is limited to a person who managers the operations or activities of an enterprise . . .’ [108] As a general expression of the difference between the two sections, there can be no quarrel with the above statement. However, when taken together with the fact that count 1 under s 2(1)(f) was, in that case and in the present case, preferred against the principal perpetrator or mastermind of the criminal enterprise, whilst count 2 was levelled as a supplementary charge against both the mastermind and the other participants, it tends to obscure the fact that s 2(1)(f) is intended to supplement the provisions of s 2(1)(e) and to close a potential loophole in the latter. That loophole arises because s 2(1)(e) requires of a person managing an enterprise to conduct or participate in the conduct of such 13 S v Eyssen [2008] ZASCA 97; [2009] 1 All SA 32 (SCA); 2009 (1) SACR 406 (SCA) para 5. enterprise’s affairs and to do so through a pattern of racketeering activity. In terms of the definition in s 1(xii) of POCA the latter means ‘the planned, ongoing, continuous or repeated participation or involvement in any offence referred to in schedule 1’ of which theft is one. It must include two such offences. The word ‘planned’ qualifies all three of the other concepts, as explained at para 8 in Eyssen. It was further observed that ‘neither unrelated instances of proscribed behaviour nor an accidental coincidence between them constitute a “pattern” and the word “planned” makes this clear’. [109] There may be cases where a particular enterprise is conducted through a pattern of racketeering activity, but the manager does not conduct or participate in the conduct of such affairs by way of participation or involvement in the offences constituting the racketeering activities. However, they may know, or ought reasonably to know, that persons employed by or associated with the enterprise are conducting or participating in the conduct of the enterprise’s affairs through a pattern of racketeering activity. In other words, s 2(1)(f) is directed at bringing within the net of the criminal conduct constituted by s 2(1) the manager who removes themself from the actual conduct of the enterprise. An example of such a case, derived from the facts of this matter, would be the position of the owner of a number of service stations, who was unaware that the managers of the service stations were conspiring with someone like Mr Tiry to obtain stolen petrol for sale at the service stations. However, if as a result the sales of petrol generated unexpectedly high profits for the volumes involved, it might be said that the owner ought reasonably to have known of the employees’ criminal mode of conducting the enterprise. That would attract liability under s s 2(1)(f). [110] In simple terms, following the distinction identified in Eyssen, s 2(1)(e) catches the manager who is involved actively in the conduct of the enterprise through a pattern of racketeering activity, whilst s 2(1)(f) catches the manager whose hands are clean, but who knows or ought reasonably to have known that the enterprise was being conducted through a pattern of racketeering activity. Knowledge of what subordinates are doing, or ignorance, where there ought reasonably to be knowledge, suffices to attract liability. [111] Once that distinction is recognised, it appears that charging and convicting someone of both offences may well involve an impermissible splitting of charges, as held in the minority judgment in S v Prinsloo and Others.14 The fact that the State relied on precisely the same facts for both charges immediately suggests that there was an improper splitting of charges. What is more, Mr Tiry’s active involvement in the conduct of the enterprise brought him squarely within s 2(1)(e). There was no need to invoke s 2(1)(f). However, his counsel did not take this point, nor have we had argument on the question of splitting of charges.15 The majority in Prinsloo rejected a submission along these lines in paras 55 to 59 of their judgment. They said: ‘Apart from the above, we, in any event, see no reason why the legislature would have intended to restrict the prosecution of persons under s 2(1)(f) of POCA solely to those managers who have not dirtied their hands by personal acts of participation in the conduct of the affairs of the enterprise. Such a construction would lead to an absurdity, where the manager of a multi-billion rand racketeering enterprise who has had minimal personal active participation, would only be liable for the minimal participation role under s 2(1)(e) and not under s 2(1)(f) for the extensive managerial role played in a highly successful criminal enterprise.’ [112] With respect we have a difficulty with this reasoning. It seems to us that it is not a case of having to choose whether liability is confined to the one or other section, but a matter of selecting the charge that most appropriately covers the criminal conduct in question. If the manager has ‘dirtied their hands’ extensively 14 S v Prinsloo and Others [2015] ZASCA 207; 2016 (2) SACR 25 (SCA). 15 A question posed by the Bench as to whether convictions on both the POCA counts and the theft charges constituted an improper splitting of charges fell away once we were referred to Dos Santos v S [2010] ZASCA 731; 2010 (2) SACR 382 (SCA) and De Vries v S [2011] ZASCA 162; [2012] 1 All SA 13 (SCA). s 2(1)(e) may be more appropriate, while if their active involvement is more limited, but their oversight of the enterprise greater, s 2(1)(f) may fit the bill. However, we limit ourselves to expressing those reservations because it is not appropriate for a three-judge court to overrule a relatively recent decision by a similarly constituted court in circumstances where the issue was not raised or argued. Fortunately, in this case conviction on both charges affects only Mr Tiry and the sentence to be imposed will ameliorate the problem. [113] Apart from the submissions which we have already considered, no real argument was advanced on behalf of Mr Tiry against his conviction. With regard to Ms Sangweni, we have, in paragraphs 102 to 104, set out her involvement and proximity to Mr Tiry’s criminal activities. That would justify her conviction on the theft counts and on the contravention of s 2(1)(e) of POCA. [114] As regards appellants 7 and 8, the security officials at the Sasol tank farm, the inference that their participation must have been organised in advance, is ineluctable. That being so, even if they were not employed by Mr Tiry’s criminal enterprise, they were associated with it and participated directly in the conduct of the enterprise's affairs through a pattern of racketeering activity. Thus, appellants 7 and 8 were properly convicted on count 2. [115] The same cannot be said of appellants 3, 4, 6 and 9, the drivers. The evidence of the two s 204 witnesses was that there was a general awareness amongst drivers in the industry that Mr Tiry was willing to purchase petroleum products being transported by them from IVS to Secunda – presumably a similar word of mouth knowledge existed when he was operating at Zutundu. In the absence of evidence as to the precise nature of their role in appellant’s operations, it is difficult to accept the notion that the mere fact of their having stolen the product in their tankers and sold it to him means that they were associated with the enterprise and engaged indirectly in conducting its activities. It is so that the enterprise could not have been conducted unless Mr Tiry was able to find sources from which he could purchase stolen petrol. However, there is no evidence that he organised a network of dishonest drivers. The nearest to such evidence is an unidentified list of telephone numbers and a phone call to one of the s 204 witnesses. Random dishonesty by drivers does not, in our view, amount to association with appellant’s criminal enterprise. That accords with the observations in Eyssen (para 6) that: ‘Taking a group of individuals associated in fact, which is the relevant part of the definition for the purposes of this appeal, it seems to me that the association would at least have to be conscious; that there would have to be a common factor or purpose identifiable in the association; that the association would have to be ongoing; and that the members would have to function as a continuing unit.’ [116] There is no evidence that there was a conscious association between the drivers and Mr Tiry or that they functioned as part of a ‘continuing unit’. In order for them to be convicted they needed to be part of the enterprise operated by Mr Tiry. They were not, any more than those who purchased stolen diesel and petrol from appellant were part of his enterprise. Criminal liability under s 2(1)(e) flows from managing, being employed by or being associated with the enterprise. It is directed at those who are actively engaged in that enterprise on an ongoing basis. The drivers did not fall in that category. In the result the conviction of appellants 3, 4, 6 and 9 of count 2 should be set aside. Sentence [117] Finally, we turn to sentence. As stated in the introduction, Mr Tiry was sentenced to an effective period of 30 years’ imprisonment; Ms Sangweni to an effective 18 years’ imprisonment; and the rest of the appellants each to 15 years imprisonment. The theft counts carried a prescribed minimum sentence of 15 years’ imprisonment in terms of s 51(2) of the Criminal Law Amendment Act 105 of 1997 (the CLLA). It was submitted on behalf of the appellants that the sentences are excessive and unreasonably harsh. [118] A court of appeal is not at large to interfere with the sentence imposed by the trial court. It is only entitled to do so where there is an irregularity or material misdirection. If the complaint is that the sentence is too severe, an appeal court would only interfere if it considers that there is a striking disparity between the sentence passed and that which the court of appeal would have passed.16 [119] Only appellant 9 testified in mitigation of sentence. The rest elected to place their personal and mitigating circumstances on record from the bar. No useful purpose would be served by reciting those in any detail. In the light of the seriousness of the offences, and the substantial period of imprisonment prescribed by the law in respect of the theft counts, the absence of anything exceptional in their personal circumstances tends to render them largely immaterial in determining what period of imprisonment should be imposed.17 [120] Mr Tiry was sentenced to an effective 30 years’ imprisonment. The established practice is that such a sentence is usually imposed in very exceptional circumstances.18 Whilst sentence is always individualised and bound to the facts of a particular case, value can be gained by considering sentences imposed in comparable cases. In this regard Prinsloo comes to mind. It involved a multi-million rand, fraudulent Ponzi scheme, that impoverished many elderly people and people of limited means. The mastermind behind it was sentenced to an effective 25 years’ imprisonment. For Mr Tiry, whose conduct was neither so 16 S v Berliner 1967 (2) SA 193 (A) at 200G; S v Sadler 2000 (1) SACR 331 (SCA); [2000] 2 All SA 121 (SCA) para 8; S v Cwele and Another [2012] ZASCA 155; 2013 (1) SACR 478 (SCA); [2012] 4 All SA 497 (SCA) para 33. 17 S v Vilakazi [2008] 4 All SA 396 (SCA); 2009 (1) SACR 552 (SCA); 2012 (6) SA 353 (SCA) para 58. 18 See S v Tuhadeleni and Others 1969 (1) SA 153 (A) at 189H and S v Whitehead 1970 (4) SA 424 (A). widespread, nor so harmful in its consequences, we would have considered a sentence of 20 years’ imprisonment a heavy sentence as a trial court. The disparity between the sentence imposed by the trial court and that which we would have imposed is therefore so substantial as to justify interference. In all the circumstances, an effective sentence of 20 years’ imprisonment would be more appropriate. [121] As regards Ms Sangweni, in respect of count 2, the minimum sentence is 15 years’ imprisonment in terms of s 51(2) of the CLLA. The court a quo gave no reasons for going beyond that in imposing 18 years’ imprisonment. We are unable to think of any. Her involvement appears to have been limited notwithstanding her close relationship to the principal perpetrator. To our mind, that constitutes a substantial and compelling circumstance, justifying a lesser sentence. Again, comparing her sentence to the one imposed on her ‘counterpart’ in Prinsloo, a sentence of 12 years’ imprisonment would have been more appropriate. There is a startling disparity between that sentence and the one imposed by the trial court, which justifies interference, and we would reduce it accordingly. [122] We have already found that the conviction of appellants 3, 4, 6 and 9 on count 2 (racketeering) should be set aside. That must necessarily affect the sentence. They were sentenced to 15 years’ imprisonment because they were found to have acted in the furtherance of Mr Tiry’s criminal enterprise. Those convictions having been set aside, their convictions are for theft simpliciter. In all the circumstances, we consider a sentence of seven years imprisonment on each count to be appropriate, the sentences to run concurrently. [123] Even though the racketeering count stands, appellants 7 and 8’s contribution is similarly limited in the overall scheme of things. They stand in the same position as the drivers. However, as explained already, their conviction brings the sentencing within the purview of s 51(2) of the CLAA, which enjoins a sentencing court to impose 15 years’ imprisonment, unless substantial and compelling circumstances are found. The truth of the matter is that Messrs Sithole and Nkosi, like the drivers, were a ‘small fish’. They stand in stark contrast to even Ms Sangweni, who continuously and actively abetted Mr Tiry’s criminal enterprise in exchange for a lavish lifestyle. We have an unease about imposition of the prescribed minimum sentence in the circumstances of the case. [124] This court has set out the proper approach in such instances, in S v Malgas.19 At para 22 it was explained: ‘[T]he greater the sense of unease a court feels about the imposition of a prescribed sentence, the greater its anxiety will be that it may be perpetrating an injustice. Once a court reaches the point where unease has hardened into a conviction that an injustice will be done, that can only be because it is satisfied that the circumstances of the particular case render the prescribed sentence unjust or, as some might prefer to put it, disproportionate to the crime, the criminal and the legitimate needs of society. If that is the result of a consideration of the circumstances the court is entitled to characterise them as substantial and compelling and such as to justify the imposition of a lesser sentence.’ [125] And at para 25I: ‘If the sentencing court on consideration of the circumstances of the particular case is satisfied that they render the prescribed sentence unjust in that it would be disproportionate to the crime, the criminal and the needs of society, so that an injustice would be done by imposing that sentence, it is entitled to impose a lesser sentence.’ This approach was endorsed by the Constitutional Court in S v Dodo.20 19 S v Malgas 2001 (2) SA 1222 (SCA); 2001 (1) SACR 469 (SCA); [2001] 3 All SA 220 (SCA) para 20 S v Dodo [2001] ZACC 16; 2001 (3) SA 382 (CC); 2001 (5) BCLR 423 (CC) para 40. [126] It is with that approach in mind that we are of the view that the injustice which would occur with the imposition of the prescribed minimum sentence of 15 years on appellants 7 and 8, constitutes a substantial and compelling circumstance. This enables this court to impose a sentence which is deemed just and appropriate. Taking into account all the circumstances, we are of the view that seven years imprisonment on count 2 and each of the theft counts will serve the purpose of sentence, be fair to society and both Messrs Sithole and Nkosi. [127] Before we conclude, we feel constrained to record this concern. The tracking records show that some drivers were literally driving from Durban to Secunda, back again and almost immediately returning with a fresh load. This, without adequate rest and breaks. It is not at all clear how legally permissible that is. These are dangerous vehicles carrying dangerous cargoes. It is incumbent on the owners of the freight tankers to place systems in place to ensure that drivers take mandatory, adequate, rests and breaks before they set out on major journeys. [128] The following order is made: The following appeals succeed and the convictions and sentences are set aside: (a) Appellants 1 and 2, Mr Tiry and Ms Sangweni, in respect of counts 4, 8, 19, 20, 22, 23, 25, 30, 34, 35, 42, 43 and 45 in their entirety, and in respect of count 33 to the extent that the conviction of theft is altered to one of attempted theft; (b) Appellant 3, Mr Tshabalala, in respect of counts 2, 34 and 35; (c) Appellant 4, Mr Nyamusa, in respect of count 2; (d) Appellant 6, Mr Buthelezi, in respect of counts 2, 19 and 45; (e) Appellant 7, Mr Sithole, in respect of counts 22 and 35; (f) Appellant 9, Mr Moisi, in respect of count 2. 2 All the other appeals against conviction are dismissed and the judgment of the high court is amended to reflect that Mr Nkosi, appellant 8, was convicted on counts 14, 31 and 32. Mr Tiry’s appeal against sentence succeeds to the extent reflected below: (a) The sentence of 30 years’ imprisonment imposed on count 1 is set aside and substituted with a sentence of 20 years’ imprisonment; (b) The sentence of 20 years imprisonment on count 2 is set aside and replaced by a sentence of 15 years imprisonment to run concurrently with the sentence on count 1; (c) The sentence of 15 years imprisonment on count 33 is set aside and replaced by a sentence of 3 years imprisonment; (d) It is ordered that the sentence of 15 years imprisonment imposed in respect of each of counts 3, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21, 24, 26, 31, 32, 36, 39, 40 and 41, and the 3 years’ imprisonment on count 33, shall run concurrently with the sentence of 20 years’ imprisonment imposed on count 1. The effective sentence is 20 years’ imprisonment. Ms Sangweni’s appeal against sentence succeeds to the extent set out below: (a) The sentence of 18 years imprisonment imposed on count 2 is set aside and replaced by a sentence of 12 years imprisonment; (b) The sentence of 15 years imprisonment on count 33 is set aside and replaced by a sentence of 3 years imprisonment; (c) It is ordered that the sentence of 15 years’ imprisonment imposed in respect of each of counts 1, 3, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21, 24, 26, 31, 32, 36, 39, 40 and 41, and the 3 years’ imprisonment on count 33, shall run concurrently. The effective sentence is 15 years’ imprisonment; The appeals against sentence by appellants 3, 4, 6, 7, 8 and 9 succeed. Their existing sentences on each count on which their convictions were upheld are set aside and replaced by sentences of 7 years imprisonment on each count, all such sentences to run concurrently. The effective sentence in each case is 7 years imprisonment. In terms of s 282 of the Criminal Procedure Act 51 of 1977 the substituted sentences are antedated to 13 October 2016, being the date on which the appellants were sentenced. ____________________ M J D Wallis Judge of Appeal ____________________ T M Makgoka Judge of Appeal APPEARANCES: For First, Seventh and Eighth Appellants: C van Rooyen Instructed by: Mokhomo Attorneys, Bloemfontein For Third, Fourth and Ninth Appellants: R J Nkhahle (with him M Mazibuko) Instructed by: Mokhomo Attorneys, Bloemfontein For Respondent: J W Roothman Instructed by: Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY: JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM: The Registrar, Supreme Court of Appeal DATE: 29 October 2020 STATUS: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Tiry and Others v The State (52/2018 and 149/2018) [2020] ZASCA 137 (29 October 2020) Today, the Supreme Court of Appeal (the SCA) upheld in part appeals against convictions and sentences brought by the appellants, against a judgment of the Free State Division of the High Court, Bloemfontein. The appellants’ convictions and sentences to lengthy terms of imprisonment arose from the operation of two tank farms for the receipt and storage of stolen petroleum products and the sale of the stolen product to the retail market and end users. The tank farms were established by the first appellant, Mr Tiry, who was the kingpin of the entire unlawful operation. Arising out of the operations of these two tank farms, he and his partner, the second appellant, Ms Sangweni, were both charged on count 1 with managing an enterprise conducted through a pattern of racketeering activities in terms of s 2(1)(f) of the Prevention of Crime Act 121 of 1998 (POCA). Together with the remaining appellants they were also charged on count 2 with conducting or participating in an enterprise conducted through a pattern of racketeering activities in terms of s 2(1)(e) of POCA. In addition, Mr Tiry and Ms Sangweni were charged with 43 separate counts of theft of petroleum products arising from their acquisition of the petroleum products. The remaining appellants were charged with theft in respect of those transactions with which they were involved. Appellant 1, Mr Tiry, was convicted on count 1 and sentenced to 30 years imprisonment. Appellant 2, Ms Sangweni, was acquitted on count 1 but convicted on count 2 and sentenced to 18 years imprisonment. Mr Tiry and appellants 3, 4, 5, 6, 7, 8 and 9 were convicted on count 2. Mr Tiry was sentenced to 20 years imprisonment and each of the others to 15 years imprisonment. In the case of Mr Tiry this was to be served concurrently with his sentence on count 1. Appellants 1 and 2 were convicted of theft on counts 3 to 26 and 30 to 45 and sentenced to 15 years imprisonment on each count to run concurrently with their sentences on count 1 and 2 respectively. Each of appellants 3, 4, 5, 6, 7, 8 and 9 was convicted of various counts of theft and sentenced to 15 years imprisonment on each count, to run concurrently with their sentences on count 2. The effect of the sentences imposed was the following: in the case of Mr Tiry an effective sentence of 30 years imprisonment; in the case of Ms Sangweni an effective sentence of 18 years imprisonment; and in the case of each of the remaining appellants an effective sentence of 15 years imprisonment. The convictions were assailed on the grounds of violations of fair trial rights based on the following: a denial of the opportunity to cross-examine witnesses and the limitation of an expert witness’ evidence; acceptance of hearsay evidence in the form of the satellite vehicle tracking reports; the trial judge’s conduct; invalidity of the search and seizure warrant in respect of one of the farms. The SCA considered these complaints and dismissed each one of them. The court then considered the individual charges and found that in some of them, the trial court had erred in convicting the appellants as there was insufficient evidence. The court then considered the POCA charges in terms of sections 2(1)(e) and 2(1)(f), on which counts 1 and 2 are based. After a detailed analysis of the interface between the two sections, the court considered whether charging and convicting someone of both offences does not involve an impermissible splitting of charges. In this regard the court expressed doubt on the correctness of the majority decision in S v Prinsloo and Others [2015] ZASCA 207; 2016 (2) SACR 25 (SCA), and supported the approach of the minority decision in that case. With regard to sentence, the court reduced Mr Tiry’s effective sentence of 30 years’ imprisonment to 20 years, and Ms Sangweni’s 18 years’ imprisonment to 12 years. The rest of the appellants’ sentence were reduced to an effective seven years’ imprisonment. * END *

3869

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 405/2021 In the matter between: IMBUKO WINES (PTY) LTD APPELLANT and REFERENCE AUDIO CC RESPONDENT Neutral citation: Imbuko Wines (Pty) Ltd v Reference Audio CC (405/2021) [2022] ZASCA 110 (15 July 2022) Bench: DAMBUZA, MAKGOKA, NICHOLLS and CARELSE JJA and MUSI AJA Heard: 19 MAY 2022 Delivered: 15 July 2022. Summary: Cession – whether oral cession established – whether debtor aware of the cession. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Windell, Keightly and Siwendu JJ sitting as a court of appeal): The appeal is upheld with costs. The order of the full court is set aside and replaced with the following: ‘The appeal is dismissed with costs’. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Makgoka JA (Dambuza, Nicholls and Carelse JJA and Musi AJA concurring): [1] Pursuant to a trial, the Gauteng Division of the High Court, Johannesburg (the high court), ordered the respondent, Reference Audio CC (Reference Audio) to pay R602 866.22 to the appellant, Imbuko Wines (Pty) Ltd (Imbuko). Reference Audio appealed against that order to the full court, which, by majority, upheld the appeal. This is an appeal by Imbuko against the order of the full court, with the special leave of this Court. [2] The dispute between the parties concerned an alleged cession between Imbuko (as a cessionary) and a third party, Dipole CC (Dipole) (as a cedent). Dipole and Reference Audio, represented respectively by their sole members – Dr Lahl Batho Santa Singh (Dr Singh) and Mr Michael Hoffman (Mr Hoffman) – had concluded an oral agreement during 2012 in terms of which over a period of time, Dipole supplied certain audio equipment (the goods) to Reference Audio. In terms of the agreement, Reference Audio was obliged to pay Dipole within 30 days of receipt of the statement of account from Dipole in respect of each consignment of the goods. The relevant period for Imbuko’s claim against Reference Audio is January to April 2013. [3] In its combined summons, Imbuko alleged that during December 2012, Dipole had ceded to Imbuko its right to claim payment from Reference Audio for the goods supplied. Imbuko attached to its particulars of claim, nine tax invoices it had sent to Reference Audio during the period between January and April 2013. The invoices, on Imbuko’s letter-head, tabulated the goods sold and delivered by Dipole to Reference Audio, and certain payments, allegedly made by Reference Audio to Imbuko in response to some of the invoices. Also attached to the particulars of claim, was a statement of account by Imbuko to Reference Audio, dated 11 December 2013, setting out transactions for the period 9 January 2013 to 21 May 2013, between Dipole and Reference Audio. In essence, this was a summary of the sales invoices, the credit notes and payments Reference Audio had allegedly made to Imbuko. These invoices and the statement of account reflected Imbuko as the creditor and Reference Audio as the debtor. The balance reflected on the statement of account was R602 866.22, which is what Imbuko claimed from Reference Audio. [4] In its plea, Reference Audio denied the existence of the cession or any knowledge of it. It admitted that it had made two payments to Imbuko, but denied any indebtedness to Dipole, and averred that it had discharged its payment obligations to Dipole for goods supplied. Apart from this, Reference Audio’s plea largely constituted a denial of Imbuko’s averments. In a pre-trial minute, the parties agreed that the onus to prove the cession was on Imbuko, while Reference Audio bore the onus to prove the payments it allegedly made to Dipole. [5] During the trial, Mr Sudhir Manmohan Singh (Mr Singh), a director of Imbuko and its sole witness, gave the following factual background. Before the alleged cession occurred, there was an already existing business relationship between Imbuko, Reference Audio and Dipole. Imbuko sourced the goods from a supplier in the United States of America (USA). Dipole was initially the sole distributor of the goods. Later, Reference Audio replaced Dipole in this role. Dipole acquired the goods from Imbuko and was liable for whatever price Imbuko charged it. Dipole, in turn, supplied the goods to Reference Audio, as the sole supplier. Reference Audio thus became Dipole’s debtor. Dipole’s profit from that arrangement was the difference between what it paid to Imbuko for acquiring the goods, and the price at which it sold them to Reference Audio. [6] Dipole experienced difficulties in rendering effective and regular invoices to Reference Audio. As a result, the latter could not make regular and prompt payments to Dipole. This caused frustration for both entities. Mr Singh further testified that as a result of this, during December 2012, Dr Singh, the sole member of Dipole, and his uncle, decided to cede to Imbuko Dipole’s claims against Reference Audio. Mr Singh described his discussion with Dr Singh as follows: ‘In 2012 December I met with [Dr Singh] at Johannesburg. He picked me up from the airport and told me the problems he is having with invoicing the goods to Reference Audio. His son was not able to maintain it. His son was irritated by the time of running [around] for money … His son was quite irritated [by] running and collecting money that was never available to paying on, for terms of the invoices he supplied them and goods, and in turn he said to me, “you take over the invoice thing and we will be the warehouse and that we will arrange for Mike to pick the goods from there and you invoice the goods”. The sale was always done by Dipole. We were just to take over the invoicing side.’ [7] Mr Singh also testified that on 21 February 2013, Mr Hoffmann, on behalf of Reference Audio, wrote to him, and expressed frustration about not receiving invoices from Dipole, which, according to Mr Hoffmann, had been an issue since August 2012. Mr Hoffmann requested him to ‘treat [the problem about invoices] as a priority’. On 3 April 2013, Mr Hoffmann, on behalf of Reference Audio, requested him, on behalf of Imbuko, to ‘credit Dipole with the last couple of orders taken and invoice through Imbuko’ as he needed the invoices for VAT purposes. [8] Finally, Mr Singh testified about the transactions reflected in the invoices and the statement of account. He confirmed each of the sales, the amount thereof, and the payments reflected in those documents. With regard to the payments, there were nine of them, all of which appeared in the statement of account. They were reflected as being payments received by Imbuko from Reference Audio. Mr Singh testified that those were interim payments received from Reference Audio in response to some of Imbuko’s invoices. [9] On behalf of Reference Audio, Mr Hoffmann testified that two of those payments, made on 9 and 11 January 2013, respectively, were made to Dipole, and not to Imbuko. The remaining seven payments were indeed made to Imbuko. However, the last one, for R20 000 on 21 May 2013, Mr Hoffmann explained, was paid to Imbuko in error by his wife, as the payment was meant for Dipole. As to the reason why the admitted payments were made to Imbuko, Mr Hoffmann explained that this occurred at a time when Reference Audio needed to import goods from USA, but it could not get invoices from Dipole, as there was no one from Dipole to place the order. It was thus arranged between himself and Mr Singh, on behalf of Imbuko, that the latter would create the invoices, upon receipt of which Reference Audio would make payment to Imbuko. Imbuko and Dipole would later sort out the payment between themselves. [10] This arrangement, Mr Hoffmann testified, was made purely to avoid making payments to Dipole without the corresponding invoices, which could have adverse tax implications. Imbuko was ready and willing to provide such invoices, hence the payments to it. As a result, he placed the order through Imbuko, which then raised an invoice against Reference Audio, which the latter paid. Thereafter the two entities never had any further dealings with each other. He denied that the payments were made by Reference Audio pursuant to a cession. [11] Asked why he did not, on behalf of Reference Audio, object to the invoices from Imbuko between January to April 2013, Mr Hoffmann testified that at that stage, his relationship with Mr Singh had deteriorated to the point that he no longer wished to do any business with Imbuko. As a result, he simply discarded the invoices. [12] According to Mr Hoffmann, Reference Audio had paid all monies it owed to Dipole for the relevant period, and at the time summons was issued, Reference Audio owed only about R38 000 to Dipole. To buttress his assertion that Dipole never ceded its right to claim against Reference Audio to Imbuko, Mr Hoffmann pointed to the on- going business relationship between the Dipole and Reference Audio, in terms of which Reference Audio continued to make purchases from Dipole, and paid to Dipole directly. In this regard, Reference Audio relied on the testimony of Mr Wesley Beyers (Mr Beyers) of Dipole, who testified that there was no agreement of cession between Dipole and Imbuko. [13] The high court (Matojane J) concluded that Imbuko had discharged its onus to establish the cession, on a balance of probabilities. In respect of the payments by Reference Audio to Dipole, the high court found that Reference Audio had failed to prove any. The high court also made adverse credibility findings against Mr Hoffmann. It accordingly granted judgment in favour of Imbuko. As mentioned already, on appeal, the majority of the full court arrived at a different conclusion. On the existence of the cession, the majority (Siwendu J with Windell J concurring) concluded that the evidence did not sufficiently establish a cession, but at best, a tripartite arrangement. In this regard, the majority found that the failure to call Dr Singh to confirm the cession was fatal to Imbuko’s case. It also found that the cession (if established) was not brought to the knowledge of Reference Audio. Consequently, the majority reversed the order of the high court. The minority (Keightley J) would have dismissed the appeal. [14] As was the case before the high court and the full court, there are two issues for determination in this Court. First, the existence of a cession between Dipole and Imbuko. Second, whether Reference Audio had discharged its obligation to Dipole by paying what it owed. [15] With regard to the agreement of cession, Mr Singh’s testimony about his conversation with Dr Singh in December 2012, could not be gainsaid. The only issue was whether the conversation constituted cession of Dipole’s right to claim payment from Reference Audio, to Imbuko. To consider this question, the following broad principles about cession should be borne in mind. Cession is a bilateral juristic act whereby a right is transferred by mere agreement between a cedent and a cessionary.1 Whether the act of cession has been finalised is an issue of fact to be determined on proof of the intention of the parties,2 which is to be established on a balance of probabilities.3 Although it entails a triangle of parties, ie the cedent, cessionary and debtor, the cession takes place without the concurrence of the debtor.4 1 LTA Engineering Co Ltd v Seacat Investments (Pty) Ltd 1974 (1) SA 747 (A) at 762A. 2 Portion 1 of 46 Wadeville (Pty) Ltd v Unity Cutlery (Pty) Ltd and Others 1984 (1) SA 61 (A); Hippo Quarries (Tvl) (Pty) Ltd v Eardley 1992 (1) SA 867 (A) at 873; Roman Catholic Church (Klerksdorp Diocese) v Southern Life Association Ltd 1992 (2) SA 807 (A) at 816. 3 Jeffery v Pollak & Freemantle 1938 AD 1 at 25; Johnson v Incorporated General Insurances Ltd 1983 (1) SA 318 (A) at 331; Gaffoor and Another v Vangates Investments (Pty) Ltd 2012 (4) SA 281 (SCA). 4 2 Lawsa 2 ed para 6. [16] Mr Singh’s evidence should be considered in the context of the relationship between the parties at that stage, especially that between Dipole and Reference Audio. As mentioned already, both were frustrated with each other – Reference Audio was not receiving invoices for goods purchased, and Dipole was not receiving regular payments. Viewed in this light, it is clear that a cession would have been beneficial to both Dipole and Reference Audio. The interposition of Imbuko as the party to issue the invoices, and to whom payment was to be made, alleviated the problem which Dipole and Reference Audio had, vis-à-vis each other. [17] To my mind, the high court correctly accepted that Imbuko had established a valid cession on a balance of probabilities. The decision by the majority of the full court to non-suit Imbuko because Dr Singh was not called to confirm the cession on behalf of Dipole, cannot be supported, especially given that the threshold to establish cession is not stringent. An act of cession may be entered into orally or tacitly or by conduct.5 The conduct of Dipole and Imbuko after December 2012 points to a new arrangement in respect of invoices to Reference Audio. [18] It is common cause that during the relevant period, January to April 2013, Reference Audio purchased goods from Dipole. But there is no suggestion that Dipole ever raised invoices against, or demanded payment from, Reference Audio, for those goods. The only entity which claimed the moneys due by raising invoices in respect of the goods sold, was Imbuko as per agreement between itself and Dipole. This ineluctably points to a cession. In the light of these objective facts, the evidence of Mr Weyers that there was no cession cannot be correct. Besides, he was not part of the discussion between Mr Singh and Dr Singh in December 2012. He could therefore not, like Mr Hoffmann, gainsay that discussion. He provided no meaningful basis for his assertions. The high court was therefore correct to conclude that Imbuko had established cession on the balance of probabilities. [19] Lastly, on this issue, the fact that there was an on-going relationship between Dipole and Reference Audio after the relevant period, does not detract from the validity 5 Grobbelaar and Others v Shoprite Checkers Ltd [2011] ZASCA 11 para 18. of the cession for the period in respect of which invoices were raised by Imbuko against Reference Audio. As Keightly J correctly pointed out in her minority judgment, it was never Imbuko’s case that the cession was indefinite. [20] That brings me to the question whether Reference Audio had knowledge of the cession. This has no bearing on the validity of the cession, as notice to the debtor is not a prerequisite for the validity thereof. It is ‘but a precaution to pre-empt the debtor from dealing with the cedent to the detriment of the cessionary’.6 As explained in Lynn & Main Incorporated v Brits Community Sandworks CC [2008] ZASCA 100; [2009] 1 All SA 116 (SCA); 2009 (1) SA 308 (SCA) para 12, a cession of rights is ineffective as against a debtor until such time as he or she has knowledge of it and that payment by him or her to the cedent, without knowledge of the cession, renders the debtor immune to a claim by the cessionary. [21] I therefore consider the issue solely because Reference Audio claimed that, unaware of the cession, it made payments to Dipole. Actual knowledge may be proved in a number of different ways. It may be inferred from the facts proven: the facts and circumstances may be such that the only reasonable inference to be drawn is that the person whose conduct is in issue had actual knowledge of a matter – in this case, of the existence of the cession.7 [22] The high court had to consider this issue on the basis of the objective facts and the testimonies of Mr Singh and Mr Hoffman. I preface this discussion with the observation that Mr Hoffmann was a particularly poor witness. He was garrulous, argumentative, obtuse and evasive. He failed to provide straight-forward answers to simple questions. The high court’s adverse credibility finding against him was therefore justified. On the other hand, Mr Singh was lucid and candid in his testimony. [23] To consider whether, on a balance of probabilities, Reference Audio knew of the cession, it is necessary to refer to the terms of the cession, and determine whether the parties conducted themselves consistently with them. According to Mr Singh, the 6 Lawsa fn 4 above. 7 Stannic v Samib Underwriting Managers (Pty) Ltd [2003] ZASCA 61; [2003] 3 All SA 257 (SCA) para 17. terms of the cession were as follows. When Reference Audio ordered goods from Dipole, Reference Audio would make a list of such goods and furnish it to Imbuko. The latter would confirm with Dipole that the list was correct and that the goods had been collected from Dipole’s warehouse. Imbuko would then raise an invoice against Reference Audio, and credit Dipole with the same amount of the invoice. Reference Audio would pay the invoice amount to Imbuko, upon which Imbuko would pay to Dipole its profit margin. The same process would be followed where Reference Audio returned goods except that Imbuko would make a credit note in Reference Audio’s favour. [24] I now consider whether the parties conducted themselves along these terms after the date of cession, ie December 2012. Mr Singh confirmed that: (a) each of the tax invoices raised by Imbuko against Reference Audio for goods purchased and collected by Reference Audio for the period January – April 2013; (b) the tax invoices and the credit notes rendered to Reference Audio, were a result of the process agreed with Reference Audio and pursuant to the cession; (c) the amounts reflected in the tax invoices and the credit notes were furnished to him by Mr Hoffmann pursuant to the cession; and (d) each of the payments reflected on Imbuko’s statement dated 11 December 2013, had been made by Reference Audio to Imbuko, through the electronic funds transfer (EFT) method. [25] It is instructive that Imbuko sent the invoices to Reference Audio from January 2013, immediately after the cession came into existence in December 2012. Despite Mr Singh pertinently testifying that the information used to compile the invoices was provided to him by Mr Hoffmann, this was not disputed during cross-examination. As mentioned already, in those invoices, Imbuko clearly identified itself as a creditor and Reference Audio as a debtor, and demanded payment from Reference Audio. If Mr Hoffman indeed wanted nothing to do with Mr Singh and Imbuko at that stage, this was more the reason to repudiate the invoices, not to disregard them. But in any event, the assertion that he did not accept that the money was due to Imbuko, can simply not be true because, in addition to the ‘disputed’ payment of R20 000 on 21 May 2013, Reference Audio made another payment on 16 April 2013. [26] As mentioned already, a total of nine invoices were sent to Reference Audio between January and April 2013 reflecting Reference Audio as the debtor of Imbuko in respect of goods purchased from Dipole. Not once did Reference Audio dispute the contents, as would have been expected from a person who bore no knowledge of what was being asserted in the invoices. As trenchantly observed in McWilliams v First Consolidated Holdings (Pty) Ltd 1982 (2) SA 1 (A) at 10E-F: ‘…[I]n general, when according to ordinary commercial practice and human expectation firm repudiation of … an assertion would be the norm if it was not accepted as correct, such party’s silence and inaction, unless satisfactorily explained, may be taken to constitute an admission by him of the truth of the assertion, or at least will be an important factor telling against him in the assessment of the probabilities and in the final determination of the dispute.’ [27] In my view, from the objective factors, and the conduct of the parties, it can safely be concluded that Reference Audio was not only aware of the cession, but conducted itself consistently in terms thereof. It is inconceivable that Reference Audio would have made the interim payments it did, if it did not consider the moneys to be due to Imbuko. Reference Audio’s attempt to explain away its payment of R20 000 to Imbuko is unconvincing. If indeed this was payment in error, one would have expected Reference Audio to take steps to recover the money by means of the condictio indebiti. This did not happen, at least up to the time when the trial took place and there was no suggestion in Mr Hoffmann’s testimony that there were plans to recover this amount. The high court’s conclusion that Reference Audio had knowledge of the cession was therefore correct. [28] It remains to consider whether Reference Audio discharged its onus to prove payments to Dipole. It simply did not. Mr Hoffmann presented not an iota of evidence to the court to prove payments by Reference Audio to Dipole. Instead, he referred to a schedule of payments for the period 2014 to 2015. This was irrelevant, as the period in issue was for January to April 2013. [29] In all the circumstances, the appeal must succeed. [30] The following order is made: 1 The appeal is upheld with costs. 2 The order of the full court is set aside and replaced with the following: ‘The appeal is dismissed with costs’. ____________________ T MAKGOKA JUDGE OF APPEAL APPEARANCES: For appellant: M R Naidoo Instructed by: Kushen Sahadaw Attorneys, Durban Honey Attorneys, Bloemfontein. For respondent: M Joubert Instructed by: S Rogers Attorneys, Benoni Phatshoane Henney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY FROM: The Registrar, Supreme Court of Appeal DATE: 15 July 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. Imbuko Wines (Pty) Ltd v Reference Audio CC (405/2021) [2022] ZASCA 110 (15 July 2022) Today, the Supreme Court of Appeal, per Makgoka JA (Dambuza, Nicholls and Carelse JJA and Musi AJA concurring), handed down a judgment upholding an appeal by the appellant, Imbuko Wines (Pty) Ltd (Imbuko) against the order of the Gauteng Division of the High Court, Johannesburg, which, by majority, had upheld an appeal by the respondent, Reference Audio CC (Reference Audio) against a judgment of a single Judge of that division. The dispute between the parties concerned an alleged cession between Imbuko (as a cessionary) and a third party, Dipole CC (Dipole) (as a cedent). Dipole and Reference Audio, had an oral agreement in terms of which Dipole supplied certain audio equipment (the goods) to Reference Audio. Imbuko alleged that during December 2012, Dipole had ceded to it (Imbuko), its right to claim payment from Reference Audio for goods supplied. A director of Imbuko testified that the sole member of Dipole ceded the latter’s right to claim payment from Reference Audio because Dipole was experiencing difficulties in invoicing Reference Audio, and as a result, Reference Audio did not make payment to Dipole. From January 2013 to April 2013 Imbuko rendered invoices to Reference Audio. Reference Audio paid some of them. But it denied the cession. Its stance was that the payments made to Imbuko were for goods purchased directly from Imbuko, and not because of a cession. It also asserted that one of the payments was made in error. Furthermore, Reference Audio claimed that it had settled its accounts with Dipole, save for about R38 000. In terms of the pre-trial agreement, Imbuko bore the onus to prove the cession and Reference Audio, the onus to prove the payments it allegedly made to Dipole. As to whether Imbuko had established a valid cession, the Court had regard to the totality of the evidence. It considered the fact that the parties conducted themselves consistently with the terms of the cession as asserted by Imbuko. In particular, the Court considered the fact that Reference Audio received invoices from Imbuko for the relevant period (January – April 2013) without any objection, and paid some of them. It rejected Reference Audio’s assertion that one of the payments was made in error. Accordingly, the Court concluded that Imbuko had, on a balance of probabilities, established a valid cession. The Court also rejected Reference Audio’s assertion that it was not aware of the cession. Given that it conducted itself consistently with the cession, its claim could not be correct. The Court also found that Reference Audio had not discharged its onus to prove payments it alleged it had made to Dipole. Accordingly, the Court upheld the Imbuko’s appeal, and set aside the order of the full court and replaced it with an order dismissing Reference Audio’s appeal, thus reinstating the initial order of the court of first instance. ***END***

106

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 145/2017 In the matter between: PIENAAR VAN HEERDEN FIRST APPELLANT ANTHEA LYNETTE VAN HEERDEN SECOND APPELLANT and THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS FIRST RESPONDENT ANDRE CHARL VAN HEERDEN SECOND RESPONDENT BRITISH AMERICAN TOBACCO PLC THIRD RESPONDENT BRITISH AMERICAN TOBACCO RETIREMENT FUND FOURTH RESPONDENT Neutral Citation: Van Heerden & another v NDPP & others (145/2017) [2017] ZASCA 105 (11 September 2017) Coram: Navsa ADP, Bosielo JA, Lamont, Molemela and Fourie AJJA Heard: 15 August 2017 Delivered: 11 September 2017 Summary: Application for permanent stay of prosecution – extraordinary remedy – complaint that the right to have trial begin and conclude without reasonable delay infringed – many years of postponements and delays – material and substantial part of delays due to the State – dishonest conduct by the State – appropriate remedy for infringement of Constitutional right. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Weinkove AJ sitting as court of first instance): 1 The appeal is upheld and the first respondent is ordered to pay the appellants’ costs including the costs of two counsel. 2 The order of the court below is set aside and replaced with the following: ‘1 The prosecution against the first and second applicants instituted under the office of the Western Cape Director of Public Prosecutions with reference no. 9/2/17(1)- 139/12 and encompassing the dockets under or together with the police reference Milnerton CAS 820/02/2010 is permanently stayed. 2 All the restraint orders (under case no. 16910/2011) related to the applicants’ assets are set aside. 3 The second respondent is ordered to release to the applicants all the assets of the applicants in his control together with any interest accrued thereto. 4 The first respondent is ordered to pay the applicants’ costs including the costs of two counsel.’ __________________________________________________________________ JUDGMENT ___________________________________________________________________ Navsa ADP (Bosielo JA, Lamont, Molemela and Fourie AJJA concurring) [1] This appeal is directed against a judgment of the Western Cape Division of the High Court, dismissing with costs, an application by the appellants, Mr Pienaar Van Heerden and his wife Ms Anthea Lynette Van Heerden, for orders, inter alia, in the following terms: (a) setting aside earlier restraint orders granted against them by that court on 18 August 2011 and 5 October 2011,under The Prevention of Organised Crime Act 121 of 1998 (POCA ); (b) directing the second respondent, Mr Andre Charl Van Heerden, appointed as a curator bonis in terms of the provisions of POCA, to release all their assets under his control together with any interest accrued thereto; (c) permanently staying the prosecution against them, instituted under direction of the Office of the Western Cape Director of Public Prosecutions under case no 9/2/17(1)-139/12 and encompassing the dockets under or together with police reference Milnerton CAS 820/02/2010. [2] The primary question in this appeal, which is before us with the leave of the court below, is whether the appellants are entitled to what they themselves acknowledge is the ‘extraordinary relief of an order permanently staying a criminal prosecution’, instituted against them by the first respondent, the National Director of Public Prosecutions (the NDPP). The associated question relates to their assets as foreshadowed in the order set out in (a) and (b) above. [3] The detailed background against which the present appeal is to be adjudicated is set out hereafter. The timeline and the reasons for delays and postponements are of particular importance. [4] Until their dismissal in March 2010, the period relevant to the present appeal, the appellants were both employed by the third respondent, British American Tobacco South Africa (Pty) Ltd (BATSA), a company that manufactures and sells cigarettes. They were both initially employed during the 1980s by BATSA at its Paarl factory, with Mr Van Heerden working in the quality control section and Ms Van Heerden as a secretary. They were subsequently transferred to BATSA’s Heidelberg factory during 2007/8, which is where they were employed at the time of the events that are central to their prosecution. [5] In 2008 Mr Van Heerden was appointed as head of quality control at the company’s Heidelberg factory. His duties included, inter alia, dealing with and resolving market complaints, despatching cigarettes to be tested at the BATSA laboratory in Stellenbosch, the distribution and control of sampling runs of new cigarettes, including the forwarding of new branded products to the said laboratory. Ms Van Heerden worked in the Human Resources department. [6] After the appellants returned from holiday in January 2010, Mr Van Heerden was accused by BATSA of the theft of cigarettes. He was summarily suspended and subjected to disciplinary proceedings by BATSA after which his services were terminated. During March 2010 the second appellant’s services were also terminated. [7] On 18 August 2011 the NDPP, in anticipation of criminal charges to be preferred against the appellants, applied for and obtained a provisional restraint order in terms of the provisions of s 25(1)(b) of POCA.1 The provisional restraint order was made final on 5 October 2011. The restraint order prevented the appellants from dealing in any manner with virtually all their property. The property under attachment consisted of cash in an amount of R2 106 922.86 as at 11 May 2015. 1 Section 25(1)(b) provides that a high court may exercise the powers conferred on it by s 26(1) of POCA, namely, prohibiting a person specified in the order from dealing in any manner with any property to which the order relates. Such an order may be granted when the court is satisfied that a person is to be charged with an offence and it appears to the court that there are reasonable ground for believing that a confiscation order may be made against such person. [8] The appellants appeared in the Magistrates’ Court, Cape Town on 29 August 2011, where they were charged with the theft of hundreds of boxes of cigarettes which the State alleged were valued at R5 million. In its answering affidavit in the court below, the State had reduced that value to R3 470 000. On the same day the appellants applied for and obtained bail. Prior to obtaining bail, they had been incarcerated for three days. [9] In September 2011 five more accused were charged together with the appellants. On 25 November 2011, the magistrates’ court was informed that the investigation was incomplete and that the State required a postponement for three months. It appears from the brief notes made by the magistrate that the State intended to obtain an instruction from the NDPP.2 This was probably in relation to charges to be preferred in terms of the provisions of POCA, which would include the racketeering3 and money laundering4 charges which the appellants were ultimately presented with. The matter was postponed until 2 March 2012 with a note indicating that the postponement was ‘final’. [10] On 2 March 2012, six months after the appellants’ first appearance in court, the court noted that the matter had been postponed to enable a decision by the NDPP and to finalise investigations. The investigations had not been finalised and there was no decision by the NDPP in relation to the POCA charges, which the State 2 Section 2(4) of POCA states that a person shall only be charged with offences relating to racketeering charges as contemplated in subsection 2(1)(f) if such a prosecution is authorised by the National Director. 3 ‘Pattern of racketeering activity’ in terms of s 1 of POCA ‘means the planned, ongoing, continuous or repeated participation or involvement in any offence referred to in Schedule 1 and includes at least two offences referred to in Schedule 1, of which one of the offences occurred after the commencement of this Act and the last offence occurred within 10 years (excluding any period of imprisonment) after the commission of such prior offence referred to in Schedule 1’. Section 2 of POCA sets out offences relating to racketeering activities. It provides, amongst others, that any person who receives or retains any property derived, directly or indirectly from a pattern of racketeering activity, and knows or reasonably ought to have known that such property is so derived, shall be guilty of an offence. 4 Section 4 of POCA bears the title ‘Money laundering’. It provides, inter alia: ‘Any person who know or ought reasonably to have known that property is or forms part of the proceeds of unlawful activities and – (a) enters into any agreement or engages in any arrangement or transaction with anyone in connection with that property, whether such agreement, arrangement or transaction is legally enforceable or not; or (b) performs any other act in connection with such property, whether it is performed independently or in concert with any other person. . .’ intended to include in the charge sheet. The magistrate’s notes recorded the following: ‘it seems that the State did not do much more since the last appearance. . .’ The court recorded that it was an ‘unacceptable situation’. The magistrate’s handwritten notes state the following: ‘It is unheard of that the court must make an order . . . to compel [defence] to assist state in their investigation. Matter on roll finally for [further investigation] [and] NDPP decision. State is not finished with their investigation [and] no decision is available. Court is of opinion that State had enough time to finalize their investigation [and] [request] for remand is denied.’ The State required a further postponement. Shortly thereafter the prosecutor informed the court that the State was not in a position to complete the charge sheet and after enquiry he was instructed by his seniors to proceed only with the theft charge. He would not require the approval of the NDPP to proceed on the POCA charges and on that basis requested the matter to be transferred to the Khayelitsha Regional Court (Priority Court)5. Counsel for the accused noted no objection and all appeared to have been of the view that a charge sheet on the more restricted basis would be provided. The matter was transferred with the court stating the following: ‘State is instructed to provide defence with a charge sheet on or before the end of the court day (16h00) on 19/03/2012.’ [11] The appellants appeared for the first time on 23 March 2012 with their co- accused in the Khayelitsha Regional Court, to which the matter had been transferred, before magistrate Venter, ostensibly to enable the State to proceed with the prosecution on the theft charge as a matter of priority. On that day and immediately, the court was informed that the State intended to include racketeering charges in terms of s 2 of POCA. To that end the matter was postponed to 4 May 2012. The events and the State’s conduct referred to in this and the preceding paragraph are significant and are aspects to which I shall revert in due course. [12] On 4 May 2012 magistrate Venter recorded that the matter was being postponed to 6 July 2012 for racketeering charges to be added. On that day the magistrate was informed that authorisation had been obtained from the NDPP for the 5 Given the delays and the conduct that followed the reference to a ‘priority court’ is ironic. inclusion of racketeering charges. The matter was then postponed to 27 September 2012. One of the appellants’ co-accused (accused 4) had engaged a new legal representative who sought time to acquaint himself with the matter which required a postponement to 19 November 2012. [13] Accused 6’s legal representative informed the court on 19 November 2012 that he had made representations pertaining to a possible Plea and Sentence agreement and was awaiting the outcome. The matter was postponed by magistrate Venter to 8 and 9 April 2013. On the first of the scheduled trial dates, the prosecutor was indisposed and the trial could not proceed. The case was then postponed to 19 and 20 August 2013 for trial. On 19 August 2013 the matter did not proceed. No reason is indicated in the magistrate’s notes. A further postponement ensued until 11 September 2013. On that day the court was informed that accused 3 had switched legal practitioners. The matter was once again postponed for trial which was scheduled to run from 10 to 14 February 2014. [14] In the interim, on 6 February 2014, accused 6 concluded a Plea and Sentence agreement with the State, in terms of s 105A of the Criminal Procedure Act 51 of 1977 (CPA)6 in relation to a charge of a contravention of s 2(1)(e) of POCA, 21 counts in relation to s 4 of POCA and one count of theft and undertook to testify against his co-accused, including the appellants. [15] During February 2014, shortly before the trial was due to commence, the appellants served a lengthy and comprehensive document requesting further particulars and documentary evidence and gave written notice of an intention to object to the charge sheet, relying on a judgment delivered in the KwaZulu Natal Division of the High Court, Durban, namely, Savoi & others v National Director of Public Prosecutions & another (8006/12) [2013] ZAKZPHC 19; [2013] 3 All SA 548 (KZP). In the notice the appellant indicated that the judgment was on appeal to the Constitutional Court and that judgment by the Constitutional Court was pending. 6 Section 105A(1)(a)(i) reads as follows: ‘(1)(a) A prosecutor authorised thereto in writing by the National Director of Public Prosecutions and an accused who is legally represented may, before the accused pleads to the charge brought against him or her, negotiate and enter into an agreement in respect of – (i) A plea of guilty by the accused to the offence charged or to an offence of which he or she may be convicted on the charge. . .’ [16] It was thus inevitable that the trial would not commence as scheduled. On 10 February 2014 the matter was postponed to 14 April 2014, awaiting the judgment in the Constitutional Court. On 20 March 2014 the Constitutional Court delivered judgment in Savoi & others v National Director of Public Prosecutions & another 2014 (1) SACR 545 (CC), confirming the constitutionality of the provisions of s 2(1) of POCA. [17] The State responded to the appellants’ request for further particulars on 11 April 2014. On 14 April 2014 the appellants requested a postponement to consider the State’s reply to their request for particulars and documentation. The matter was postponed to 4 November 2014 with trial dates set during that month. On 17 October 2014, three weeks before the scheduled trial date, the appellants served a notice in terms of s 85 of the CPA7 objecting to the charges. [18] On the day on which the trial was scheduled to start, the appellants submitted written submissions concerning the State’s response to the request for further particulars, which it was alleged was wholly unsatisfactory and formed the basis for the contention that the charges against the appellants should be quashed. I pause to record that in the response to the appellant’s request for further particulars dated 11 April 2014, the following appears: ‘The State has requested BATSA to indicate if they are able to supply the defence with the documents requested. BATSA has provided the documentation as attached.’ It is common cause that no documentation was in fact attached to the response. Nothing appears to have come of the State’s request to BATSA to provide the required documentation. The State required a postponement in order to reply to the appellants’ written submissions. The matter was postponed to 17 November 2014. On that day the parties presented their arguments, with the State submitting that the objections were not valid and, in the alternative, that should the court hold to the contrary, the State should be afforded an opportunity in terms of s 84(2)(a) and/or s 87(1)(a) of the CPA to deal with identified defects in the charge sheet. 7 Section 85 of the CPA provides that an accused may, before pleading to charges, object to the charges on the grounds set out therein which includes that the charges do not comply with the provisions of the Act relating to the essentials of a charge, that they do not disclose offences and that they do not contain sufficient particulars. [19] Without adjudicating on the objection to the charge sheet and dealing with the respective submissions of the parties, magistrate Venter refused a ‘postponement’ and struck the matter from the roll without indicating why. At this stage, as is evident from what is set out above, magistrate Venter’s involvement in the matter had stretched beyond a period of two-and-a-half years, to which should be added a further period of seven months before the matter was transferred to the Khayelitsha Regional Court. [20] The appellants’ attorney addressed a letter to the State on 13 March 2015, seeking the release of their assets from the restraint order and wrongly declaring that the charges against them had been quashed. The State’s response was that the charges had not been quashed. Paragraphs 4-6 of the State’s letter dated 18 March 2015 bear repeating: ‘4. The prosecution team of the Organised Crime Unit regrets the delay in re-instituting the charges against your client and assures you that no malice is intended on their part. The prosecution team has advised that the charges are indeed going to be re-instituted. At present the charge sheet is being re-drafted, specifically as to who and what formed the enterprise in this particular matter. You will recall it was the issue of the formulation of who the enterprise was, namely BATSA, that magistrate Venter had a problem with on 17 November 2014. 5. The prosecution team has undertaken to have an amended charge sheet drafted and that your clients are brought before court for the absolute latest by, Friday 17 April 2015. 6. Advocate Q B Appels is now dealing with this matter and will inform you when the charge sheet is completed and forwarded to the National Director of Public Prosecutions office for authorisation. He has further advised that his offices are eager to finalise this matter.’ I pause to note that more than three and a half years after the arrest of the appellants the State was still attempting to finalise a charge sheet. Furthermore, a period of five months had by now elapsed since the matter was struck from the roll. That, however, was not the end of the State’s tardiness. [21] The deadline of 17 April 2015 was not met by the State. The authorisation by the NDPP to amend the charge sheet was only issued on 30 July 2015. This is close to four years from the time of the appellants’ first appearance in the Cape Town Magistrates’ Court. Advocate Appels, referred to in the letter set out above, arranged with the clerk of the court for a date on which the State would proceed with the prosecution, namely 4 September 2015. An ‘amended’ charge sheet was presented to the appellants before that date, to which they once again objected. According to the appellants the charge sheet was virtually the same as the one that had previously been objected to. It appears to be common cause that the changes were minimal. On 4 September 2015 magistrate Harmse was incorrectly informed on behalf of the appellants that the matter had been removed from the roll by magistrate Venter in terms of s 342A of the CPA and that the matter could only be re-enrolled with the authorisation of the NDPP in terms of s 342A(3)8 thereof. The State contended before magistrate Harmse that no enquiry in terms of s 342A of the CPA had been conducted. The magistrate disagreed and struck the matter from the roll. [22] I interpose to state that counsel on behalf of the appellants vigorously attempted to persuade us that what in fact had occurred before magistrate Venter, when he struck the matter from the roll, was an enquiry in terms of s 342A(3). That contention is utterly unsustainable. It is quite clear that argument was presented only on the objection to the charge sheet and that adjudication on that aspect was awaited. That did not materialise. The options provided for in s 342A(3) were not considered or dealt with in argument by the appellants or the State nor were they reflected in the order by the magistrate. There was no basis for what the defence 8 Section 342A(3) reads as follows: ‘If the court finds that the completing of the proceedings is being delayed unreasonably, the court may issue any such order as it deems fit in order to eliminate the delay and any prejudice arising from it or to prevent further delay or prejudice, including an order – (a) refusing further postponement of the proceedings; (b) granting a postponement subject to any such conditions as the court may determine; (c) where the accused has not yet pleaded to the charge, that the case be struck from the roll and the prosecution not be resumed or instituted de novo without the written instruction of the attorney- general; (d) where the accused has pleaded to the charge and the State or the defence, as the case may be, is unable to proceed with the case or refuses to do so, that the proceedings be continued and disposed of as if the case for the prosecution or the defence, as the case may be, has been closed; (e) that – (i) the State shall pay the accused concerned the wasted costs incurred by the accused as a result of an unreasonable delay caused by an officer employed by the State; (ii) the accused or his or her legal adviser, as the case may be, shall pay the State the wasted costs incurred by the State as a result of an unreasonable delay by the accused or his or her legal adviser, as the case may be; or (f) that the matter be referred to the appropriate authority for an administrative investigation and possible disciplinary action against any person responsible for the delay.’ (Date of commencement of subsection (e) not yet proclaimed.) submitted before magistrate Harmse. The contention is also belied by the letter of the appellants’ attorney to the State, referred to in para 20 above, indicating that magistrate Venter had quashed the charges, for which also there was no justification. The manner in which the defence was conducted on these aspects is unsettling. [23] Simply put, the order of magistrate Venter striking the matter from the roll is inexplicable. Magistrate Harmse, apparently under the misapprehension that there had been an enquiry in terms of s 342A(3), struck the matter from the roll a second time. Confusion worse confounded. By this time, more than four years had passed since the appellants first appeared in court. All the while their assets were under restraint. [24] During September 2015 and October 2015 correspondence was exchanged between the appellants’ legal representatives and the State concerning the constitutional validity of the restraint order. During that period advocate Appels, who had been tasked with the prosecution, was overburdened with other complex prosecutions and was unable to give his attention to the case involving the appellants. During argument before us, we were informed that this was due to severe prosecution understaffing. [25] In December 2015 the appellants launched the application which is the subject of this appeal in the Western Cape Division of the High Court, Cape Town. The matter was argued during March 2016 and judgment delivered on 16 March 2016. [26] From the limited documentation provided by the State and their assertions in the answering affidavits, the charges appear, at least in part, to be related to consignments of cigarettes delivered under the authority and/or directions of the appellants in co-operation with their co-accused. According to the affidavit attested to by accused 6, who, it will be recalled agreed to testify against his co-accused including the appellants, he worked with Mr Van Heerden when damaged or defective cigarettes were returned to BATSA by retail clients. According to accused 6, Mr Van Heerden who received the retuned cigarettes would then despatch twice the number being returned so that he and accused 6 could benefit from the surplus. Accused 6 also stated that cigarettes were sent to his home by Mr Van Heerden. This, of course, one can safely assume will be at least part of the State’s version of events. [27] At this stage it is necessary to consider, in some detail, the material parts of the appellants’ case gleaned from the founding affidavit. [28] At the outset the appellants contended that no ‘negligence or wrongful actions’ on their part led to the trial delays set out above. They allege that they requested further information as and when it became available. As an example they state that BATSA submitted an insurance claim in relation to the loss of the cigarettes in question and when they became aware of it they requested the information. They also assert that they had sought vital information from BATSA which was not forthcoming and that the State was unhelpful in that regard. The appellants were adamant that vital information had been withheld by the State which hampered them in their defence. The appellants insist that documentation on Mr Van Heerden’s work computer and the BATSA system was essential to their defence and that, far from engaging in unlawful activity, Mr van Heerden was merely acting on instructions contained in emails and that these documents were denied them. [29] It was contended on behalf of the appellants that magistrate Venter’s refusal of the State’s request for a postponement in November 2014, and the consequent striking from the roll implied that a fair trial was impossible. At the heart of the appellants’ case are the contentions that due to the very many delays and the paucity of information supplied by the State, including a defective charge sheet, they have in effect been denied a fair trial. In this regard, they rely on their constitutional right to a fair trial entrenched in s 35(3) of the Constitution, which includes the right to have their trial begin and conclude without unreasonable delay. [30] One of the complaints that the appellants raises is that the ‘criminal enterprise’,9 which according to the State, the appellants are accused of being 9 Enterprise is defined in s 1 of POCA as follows: engaged in as part of a pattern of racketeering activity, within the provisions of POCA, is alleged to be BATSA itself and that this is absurd. It appears from the limited information made available by the State, that its case in this regard is that the appellants and their co-accused used BATSA’s processes and premises to engage in the criminal conduct with which they were charged. They held out that they were acting as BATSA and that therefore the criminal enterprise that the appellants were engaged in was BATSA. [31] The NDPP, in resisting the application, denied that the State failed to ensure that the appellants will have a fair trial. In respect of count 4, namely the theft of 160 boxes of cigarettes, the State insisted that all the information in its possession had been provided. According to the NDPP the State’s case in relation to the theft charges is based on direct evidence, either oral or documentary and that the e-mail correspondence which Mr Van Heerden contends is vital does not form part of its evidentiary material. [32] The NDPP responded to Mr Van Heerden’s allegations that whilst at BATSA he worked on instructions that were delivered by e-mail and that the unlawful actions he was accused of were not so but were rather pursuant to instructions from BATSA via e-mail and that access to his emails, which he was being denied, was vital to his case. The response also encompassed his assertions that he was denied company registers or documents in relation to cigarettes that had been despatched from the factory that proved that no theft had occurred. Mr Van Heerden also referred to BATSA’s standard procedures in respect of damaged or defective cigarettes, which he insisted proved that they are then considered res nullius with the consequence that BATSA’s ownership had ceased and that there could thus be no theft. Mr Van Heerden was adamant that accounting and other records kept by BATSA, access to which he was denied, would prove his innocence. It was pointed out on behalf of the NDPP that Mr van Heerden’s work computer had been seized by BATSA and not by the police. The NDPP stated emphatically that the State supplied all of the information and documentation within its possession to the appellants. The following part of the NDPP’s answering affidavit bears repeating: ‘any individual, partnership, corporation, association, or other juristic person or legal entity, and any union or group of individuals associated in fact, although not a juristic person or legal entity.’ ‘The contents of this paragraph are denied. The respondent has supplied the applicants with all the information and documents which are in its possession and which it intends to use during the trial. The documents were supplied as they became available. It is submitted that the matters raised . . . are matters which can be raised during cross-examination of the relevant witnesses during the trial. It is submitted in addition that only the trial court will be in a proper position to consider whether the alleged lack of any documents or other information will have resulted in an unfair trial for the applicants or failure to prove the State’s case beyond responsible doubt.’ [33] In relation to the uplifting of the restraint order, the appellants explained that as a result of their loss of employment and the extended duration of the proceedings referred to above, they have been severely prejudiced and that their finances are in a parlous state. They were forced to leave Heidelberg and settle in Oudtshoorn where their attempt at running a business resulted in failure. Ms Van Heerden presently conducts a modest business of her own which supplies her with an income of approximately R5000 per month. They were also burdened with supporting an adult child presently incapable of caring for herself and have had the care of a granddaughter entrusted to them by an order of court. This, they say, places an intolerable financial burden on them due to their assets being placed beyond their reach in the hands of the curator referred to above. [34] Furthermore, the appellants complained that although the NDPP, in obtaining the restraint order, alleged that the known benefits derived from the crimes allegedly committed by them was R2,72 million, the subsequent charges properly analysed indicates that they benefited no more than an amount of R434 500. They contended that the restraint order is therefore disproportionate in the extreme. [35] The NDPP responded to the complaints concerning the restraint order and the appellants’ alleged parlous financial circumstances. The NDPP stated that the charge sheet contains specific charges of theft by the appellants, involving a total number of 347 boxes of cigarettes worth approximately R3 470 000 and that the amount involved in the money-laundering charges against them involve a value of R393 500. The NDPP asserts that the appellants are clearly in error in this regard. In relation to the appellants’ complaint that the restraint order has rendered them destitute, the NDPP’s response is that they did not provide monthly affidavits to the curator as required in respect of their financial position. The NDPP contended that the appellants have been economical with the truth. [36] The application in the court below was heard by Weinkove AJ who wrote a three-and-a-half page judgment, culminating in the order dismissing the application with costs. The court in deciding the matter referred to an earlier application by the appellants in that division for an order varying the restraint order, which it considered to be crucial. In that application the appellants had sought to be paid an amount of R23 579 per month for living expenses as well as R25 000 per month for legal expenses. The application for the release of funds, brought in terms of s 26(6) of POCA,10 was heard by Rogers J, who dismissed the application, essentially on the basis that it was clear that the appellants had not made full disclosure of all their assets. Rogers J noted that the appellants had also not provided, as required by the restraint order, monthly income and expenditure statements. Rogers J had regard to two prior release from restraint applications that had been brought by the appellants in which they had made sworn disclosures of their assets. He had regard to inconsistencies in relation to their version of how Ms Van Heerden funded her business initially when she set it up in partnership with someone else. He also questioned how the substantial loan accounts in that business had been repaid with the alleged meagre income. Rogers J considered how the business the appellants had set up, which failed, could have been set up with the capital required without the provision of suretyships, about which nothing was said by them. No financial accounts had been provided. He questioned the lack of explanation in the papers filed by the appellants in the initial restraint application concerning the proceeds of immovable property they had owned in Paarl and which had been sold by them. 10 Section 26(6) of POCA provides: ‘Without derogating from the generality of the powers conferred by subsection (1), a restraint order may make such provisions as the High Court may think fit – (a) for the reasonable living expenses of a person against whom the restraint order is being made and his or her family or household; and (b) for the reasonable legal expenses of such person in connection with any proceedings instituted against him or her in terms of this Chapter or any criminal proceedings to which such proceedings may relate, If the court is satisfied that the person whose expenses must be provided for has disclosed under oath all his or her interests in property subject to a restraint order and that the person cannot meet the expenses concerned out of his or her unrestrained property.’ Rogers J expressed surprise at how rapidly the appellants had paid off their bond on property they had purchased in Heidelberg. He held it against the appellants that they had failed to provide bank statements for a reasonable period prior to the application he was adjudicating. In the result Rogers J dismissed the application with costs. [37] In the view of Weinkove AJ the application before him, in the face of the refusal by Rogers J for a variation of the restraint order, was ‘ill-conceived and opportunistic’. He took the view that part of the delay in finalising the prosecution of the appellants was because it suited them to await the judgment of the Constitutional Court in Savoi. Weinkove AJ had regard to the fact that the authorisation by the NDPP in relation to the amendment of the charge sheet, referred to above, had now been granted by the NDPP and allowing the matter to be re-enrolled for finalisation. The following are the last three paragraphs of the judgment which includes the order referred to at the beginning of this judgment: ’14. In any event, granting a permanent stay of prosecution is a draconian step to take and should only be done under compelling circumstances. These circumstances have not been demonstrated. 15. I find that the applicants have failed to justify an order either rescinding the Restraint Order or granting a permanent stay of the prosecution in this matter. 16. In the result, the applications to rescind the Restraint Order and to permanently stay the prosecution of the applicants are dismissed with costs.’ [38] Before us the appellants contended that the court below had failed to consider relevant factors in relation to the application for a permanent stay of prosecution and treated it as if it was an application for the release of funds in terms of s 26(6) of POCA. They complained that a period of six years had elapsed since the opening of the police docket and a period of 5 and a half years after the arrest of the appellants and the seizure of all their property. This, as alluded to above, they submitted is in conflict with their rights to a trial within a reasonable time guaranteed in terms of s 35(3) of the Constitution. That section of the Constitution also entrenches the rights of arrested and accused persons to be informed with sufficient detail of charges so as to answer them. They contended that the restraint order ‘which has deprived the appellants of virtually all their assets (including the first appellant’s pension), has the effect of materially exacerbating the prejudice suffered by [them]’. They pointed to their advanced age, their difficulty in earning an income, their having to look after and support their grandchild and ‘the creeping delay that has eroded any money they may have possessed and forced them to take food hand-outs from the church’. The appellants contended that the inadequate information supplied by BATSA and the State offended against their right to a fair trial. In support of their contention that their constitutional rights have been infringed, the appellants relied on Sanderson v Attorney General Eastern Cape [1997] ZACC 18; 1998 (2) SA 38 (CC) [40] In granting leave to appeal Weinkove AJ candidly stated that he might have misunderstood the issues he had been called upon to adjudicate. The parties were in agreement that the judgement was unhelpful, with the State submitting that the order dismissing the application was nevertheless sound. [41] It is necessary to record that on 11 October 2016 the appellants applied to the high court (Gamble J) for an order for the release of living and legal expenses in order to prosecute the present appeal. The order was granted and the second respondent, the curator, was ordered to release a lump sum of R469 120.00 for legal expenses and a monthly amount of R20 000.00 from October 2016 for household and living expenses. This has to be seen against the second report of the curator dated 11 May 2015 confirming the assets under his control. I consider it necessary to reproduce it in full: ‘I, the undersigned, Andre Carl van Heerden, of Bedford Trust, confirm that I was appointed Curator Bonis in these proceedings in terms of an Order handed down by this Honourable Court on the 18th August 2011. The purpose of this report, which is to be read in conjunction with my first curator’s report dated the 20th September 2011, is to confirm the extent of the assets currently in my possession and/or under my control. 1. R270 000.00 IN TRUST – INVENTORY ITEM 001 These funds were receipted on the 23rd August 2011 and have been invested in a call deposit account. 2. BMW X3 – CG 6461 – INVENTORY ITEM 003 This motor vehicle was sold at public auction pursuant to the Court Order of 12 March 2012, which was granted by agreement between the parties, and the net proceeds in the amount of R142 954.82 have also been placed on fixed deposit. 3. CAPITEC BANK (DISCLOSED BY RESPONDENTS) The amounts of R114 934.00 and R426 55 were receipted from Capitec Bank on 16th February 2012, and these funds are likewise on fixed deposit. 4. SANLAM PRESNION FUND (DISCLOSED BY RESPONDENTS) An amount of R1 396 386.33 was receipted to the estate account on the 30th March 2012, in respect of the First Defendant’s pension, and placed on fixed deposit. 5. ACCRUED INTEREST & CURRENT NET POSITION Interest income to date amounts to R182 221.16 and there is thus a total of R2 106 922.86 currently under the control of the Curator Bonis.’ [42] We were informed by counsel during the hearing of the present appeal that an amount of approximately R400 000.00 is all that remains of the assets under the curator’s control. It should be borne in mind that in the ex parte application to obtain the provisional restraint order the benefit the appellants were said to have obtained as a result of their alleged criminal conduct was approximately R2 720 000 [43] In the present case the appellants explained how they paid off the bond on their house and said that they would have provided the explanation to Rogers J if they had been called upon to do so. It is uncontested, however, that the monthly reports were not supplied to the curator. [44] It is also necessary to record that from the charge sheet presented in the regional court it appears that the events on which the charges were based covered a period stretching back to January 2009, which means that a period of more than eight and half years has passed since the first offence is said to have been committed. For completeness I note from the affidavit supplied by accused 6 that he was convicted in terms of the Sentence and Plea agreement as follows: 1. One count of Racketeering 2. One count of theft 3. 21 counts of money laundering He was sentenced to various terms of imprisonment, conditionally wholly suspended and ordered to pay an amount of R750 000, being the benefit that accrued to him as a result of his admitted criminal conduct. He was also sentenced to correctional supervision in that he was required for two years to perform community service of no less than 24 hours per month, the conditions of which were to be determined by the Commissioner of Correctional Services. As can be seen, he was, in effect not required to serve any term of imprisonment. [45] I now turn to deal with whether the appellants are entitled to the preferred relief sought by them. In Wild & another v Hoffert NO & others [1998] ZACC 5; 1998 (2) SACR 1 (CC) the Constitutional Court described an application for a permanent stay of prosecution as an extraordinary remedy.11 That does not mean this relief cannot be granted in appropriate circumstances. The first step in considering whether a permanent stay of the prosecution is appropriate relief in terms of s 38 of the Constitution12, is to determine whether there has indeed been an infringement of the appellants’ right to a trial within the reasonable time provided for in s 35(3)(d) as a component of the right to a fair trial. [46] In Wild the Constitutional Court found that a considerable period of the delay complained of was due to the appellants themselves. It also had regard to the fact that no trial prejudice had been alleged and held that a stay of prosecution could not be granted in the absence of trial related prejudice or extraordinary circumstances.13 [47] In Sanderson, the Constitutional Court was faced with an accused person complaining about a breach of his constitutional right to a public trial within a reasonable time after having been charged. In that regard he relied on s 25(3)(a) of the interim Constitution. The Constitutional Court took care to consider why the right to a trial within a reasonable time was included in the Constitution and what kind of interests it intended to protect. In para 21 the Constitutional Court noted that the right to a trial within a reasonable time is expressly cast as an incident of the right to a fair trial.14 The court stated that the presumption of innocence is a relevant consideration 11 See para 11. 12 The material part of s 38 of the Constitution provides: ‘Anyone listed in this section has the right to approach a competent court, alleging that a right in the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief, including a declaration of rights.’ The list includes persons, like the appellants, acting in their own interest. 13 Paras 26 and 27. 14 The same applies to s 35(3)(d) of the Constitution which provides: ‘(3) Every accused person has a right to a fair trial, which includes the right – a. b. but that has to be seen against an accused person being subject to various forms of prejudice and penalty by virtue of being an accused. Socially, doubt is cast on an accused person’s integrity and conduct. Being subject to arrest and trial is disruptive and has an impact on one’s personal life. The invasion of liberty brought about by incarceration and bail conditions is a very real form of prejudice to which an accused person is susceptible. The prejudice referred to in this paragraph is non-trial related.15 [48] The court in Sanderson noted that the right to a trial within a reasonable time is fundamental to the fairness of a trial. It went on to consider how a determination is to be made of whether a particular lapse of time is reasonable. In arriving at a conclusion the court warned that regard should be had to the imperfections in the administration of criminal justice in our country, including those of law enforcement and correctional agencies. It acknowledged that they were all under severe stress. [49] In Sanderson it was stated that the amount of elapsed time was central to the enquiry. The following part of the judgment is important: ‘[T]ime has a pervasive significance that bears on all the factors and should not be considered at the threshold or, subsequently, in isolation.’16 [50] Kriegler J, in Sanderson, stated that the relevant considerations are not only conditioned by time, but that time is conditioned by them. He referred to the factors generally relied upon by the State to diminish the effect of elapsed time. Generally these are waiver of time periods, time requirements inherent in the case and systemic reasons for the delay. As to how courts should approach the lapse of time the following is said at para 30: ‘The courts will apply their experience of how the lapse of time generally affects the liberty, security and trial-related interests that concern us. Of the three forms of prejudice, the trial- related variety is possibly hardest to establish, and here as in the case of other forms of prejudice, trial courts will have to draw sensible inferences from the evidence. By and large, c. d. to have their right begin and conclude without unreasonable delay.’ 15 See Sanderson at para 23. 16 Para 28. it seems a fair although tentative generalisation that the lapse of time heightens the various kinds of prejudice that s 25(3)(a) seeks to diminish.’ [51] The court in Sanderson thought that the nature of the prejudice suffered by an accused is the first of the most important features bearing on the enquiry presently under discussion. This, said the court, would be considered on a continuum from incarceration through restrictive bail conditions and trial prejudice and mild forms of anxiety. In the balancing act the more serious the prejudice, the shorter the period within which the accused is to be tried. The following appears at para 31: ‘Those cases involving pre-trial incarceration, or serious occupational disruption or social stigma, or the likelihood of prejudice to the accused’s defence, or – in general – cases that are already delayed or involve serious prejudice, should be expedited by the State. If it fails to do this it runs the risk of infringing s 25(3)(a).’ [52] Kriegler J stated that if an accused has been the primary agent of delay he should not be able to rely on it in vindicating his rights to a trial within a reasonable time. An accused, so the court said, should not be allowed to complain about periods of time for which he has sought a postponement or delayed the prosecution in ways that are less formal.17 [53] The second factor, according to Sanderson, is the nature of the case. In that regard the following appears: ‘Judges must bring their own experiences to bear in determining whether a delay seems over-lengthy. This is not simply a matter of contrasting intrinsically simple and complex cases. Certainly, a case requiring the testimony of witnesses or experts, or requiring the detailed analysis of documents is likely to take longer than one which does not. But the prosecution should also be aware of these inherent delays and factor them into the decision of when to charge a suspect. If a person has been charged very early in a complex case that has been inadequately prepared, and there is no compelling reason for this, a court should not allow the complexity of the case to justify an over-lengthy delay.’18 [54] The third and final factor set out in Sanderson is ‘so-called systemic delay’. Under this heading the following was listed: 17 Para 33. 18 Para 34. ‘[R]esource limitations that hamper the effectiveness of police investigation or the prosecution of a case, and delay caused by court congestion.’19 The court also issued a warning in the following terms: ‘Systemic factors are probably more excusable than cases of individual dereliction of duty. Nevertheless, there must come a time when systemic cause can no longer be regarded as exculpatory.’ [55] We are instructed in Sanderson that reasonableness requires a value judgment. In making that judgment courts have to be mindful of the ‘profound social interest’ in bringing a person charged with a criminal offence to trial and resolving the liability of the accused, particularly when a permanent stay of prosecution is being considered. The question in each case, we are told, is ‘whether the burdens borne by the accused as a result of delay are unreasonable’.20 We are also told as judges to be mindful that it is not only the accused’s interests that we are concerned with, but that the public interest is also served by bringing litigation to finality.21 Of course in having regard to all of these factors and considering that the remedy sought by the appellants is extraordinary, what has to be borne in mind as well is the interest of society in bringing suspected criminals to book.22 [56] At this stage it is necessary to have regard to the lapse of time, the cause thereof and all the other factors referred to in the preceding paragraphs. As stated earlier, more than seven-and-a-half years have passed since the first of the events alleged by the State, to form part of the charges brought against the appellants. Close to five-and-a-half years have passed since the appellants first appeared in the Magistrates’ Court in Cape Town. It is true as appears from the detailed history set out in paras 8 to 25 above that delays were occasioned by what might rightly be termed as systemic delays and that periods of time were lost due to the needs of a number of the appellants’ co-accused, the request for further particulars, the State’s response thereto as well as the time that passed whilst the parties awaited the decision in Savoi (a period of slightly more than two-and-a-half months). A further 19 Para 35. 20 Para 36. 21 Para 37. 22 See para 14 of Sanderson and para 52 of Broome v Director of Public Prosecutions, Western Cape & others, Wiggins & another v Acting Regional Magistrate, Cape Town & others [2007] ZAWCHC 61; 2008 (1) SACR 178 (CPD). five months were lost when the matter was postponed to enable the appellants to respond to the further particulars supplied by the State. However, a careful consideration of that history also reveals that the State was irresponsibly lax in investigating the case, finalising the charge sheet and moving forward with the prosecution. It is clear that substantial and material parts of the delays were occasioned by the inertia and vacillation of the prosecutors involved on behalf of the NDPP. Three months after the appellants’ first appearance in the magistrates’ court, the State required a postponement on the basis that the investigation was incomplete and because authorisation was required from the NDPP for the inclusion of racketeering charges. On 2 March 2012, approximately six months after the appellants’ first appearance in court a further postponement was sought by the State, once again on the basis that the investigation was incomplete and the authorisation by the NDPP was not yet forthcoming. The magistrate rightly recorded that nothing appeared to have been done by the State in the interim. It also appeared as if the magistrate was displeased with what he considered to be the attitude of the State in seeking to invoke the assistance of the appellants with regard to their prosecution. At that stage the presiding magistrate was inclined to refuse the State a further postponement. The prosecutor then asked for the matter to be transferred to the Khayelitsha Regional Court for the matter to be proceeded with only on the theft charge. If regard is had to the affidavit of accused 6 and the State’s insistence that it had at its disposal witnesses to testify in that regard and did not require any documentation, particularly those documents that the appellants were calling for, the envisaged prosecution and trial held out no complexity and ought to have been dealt with expeditiously. In addition, the State had been instructed to provide a charge sheet to the appellants and their co-accused by the end of the day on which the matter had been transferred to the regional court. [57] Distressingly, the State was disingenuous. It had no intention to proceed on the restricted basis of the theft charge as indicated to the magistrate when it sought a transfer to the Khayelitsha court on a priority basis. It gave that assurance to the court to prevent the matter from being struck from the roll. This admittedly was done after discussion with the office of the DPP in the Province. I shall have more to say on this aspect later in this judgment. Furthermore, the charge sheet it had been instructed by the court to provide was not forthcoming. [58] No sooner had the matter been transferred to Khayelitsha when magistrate Venter was informed by the prosecutor, contrary to what the magistrate in Cape Town had been told, that the State intended to proceed to include racketeering charges against the appellants and required authorisation in that regard from the NDPP. This necessitated a further delay and a postponement to 4 May 2012. By that time the racketeering charges had not yet been finalised, which necessitated yet another postponement to 6 July 2012. Thereafter systemic delays intruded which included the needs of co-accused and the appellants own request for further particular, the wait for the Savoi judgment, the objection to the charge sheet and the rulings by magistrates Venter and Harmse. It will be recalled that they had each struck the matter from the roll. [59] More than four months after the matter was first struck off the roll charges had not yet been re-instituted. The blame was laid at the door of advocate Appels and his workload. A contemplated amended charge sheet was still not finalised. Given the State’s prior experience in this matter and the courts of the magistrates referred to above one would have expected greater urgency and care. During March 2015, as set out in para 20 above, a written undertaking was given by the State that the matter would proceed by not later than 17 April 2015 and that the appellants would be presented with an amended charge sheet. Yet again the State failed to meet a deadline. Authorisation by the NDPP for an amended charge sheet was now awaited. That was only forthcoming on 30 July 2015, almost four years after the appellants’ first appearance in court. The reinstitution of charges only proceeded on the 4 September 2015. On that day magistrate Harmse struck the matter from the roll a second time. [60] From that time until the launch of the application in the court below in December 2015, the State remained inert refusing to release the appellants’ property under restraint. [61] It is quite clear from what is set out above that inadequate consideration, if any, was given by the State to the appellants’ rights to a trial within a reasonable time and that a material and substantial part of the delay was due to the State’s tardiness and lack of application and concern. [62] I turn to deal with the prejudice occasioned to the appellants. It is true that they were incarcerated for only three days. However, in the present case their assets, including pension benefits have been under severe restraint since August 2011 until it was relaxed by Gamble J in 2016. The greater parts of the assets have now been dissipated. The remaining, though diminished parts of their assets, remain under restraint. The personal prejudice is set out earlier in this judgement. It is quite clear that their social standing has diminished and that their finances have been greatly reduced. At the time of the application in the court below they appear to have been living from hand-to-mouth, burdened with the care of their daughter and an infant granddaughter. The lapse of time also has to be considered in relation to their mature years.23 [63] Insofar as trial prejudice is concerned, it does not appear as if the State made any serious attempt to obtain the documents they had undertaken to request from BATSA. Having given the undertaking, they adopted a rigid position that their case was not founded on documentation and that whatever information was sought was in BATSA’s possession. If the State made no contemporaneous attempt or was unsuccessful in soliciting and obtaining documentation from BATSA, the passage of a considerable period of time will exacerbate rather than ameliorate the position in relation to the availability of the documentation. [64] It should also be borne in mind that the appellants, having waited for a long time for the charge sheet to be finalised, were at the very least entitled to have their objection to the charge sheet adjudicated upon. A decision in that regard would have ensured at least a degree of finality in relation to the validity of the charge sheet and would have either expedited the further conduct of the case or caused the State to consider its position afresh. 23 The charge sheet presented in the district court in Cape Town, which has a 2011 case number, which is the year during which the appellants first appeared in court, indicates that their age at that time was 53. In his founding affidavit signed during December 2015, Mr van Heerden states that he and his wife are 57 years old. Thus they appear presently to be approximately 60-years of age. [65] Furthermore, the State had sought a transfer to the regional court on the basis that it would proceed only on the charge of theft. On the strength of the NDPP’s answering affidavit in respect of the charge of theft and having regard to the eye witnesses it averred it had at its disposal an expeditious disposal of the case could rightly have been in contemplation. The undertaking to the court, in seeking and obtaining the transfer, that the State would proceed on the more restricted basis did not materialise. No sooner had the transfer occurred, when the State changed its position and sought a postponement to include the POCA charges. How, one might rightly ask, is an accused to deal with such vacillating conduct on the part of the State. The undertaking to the court, as will be discussed later, was dishonestly made. [66] The nature of the case, the second factor referred to in Sanderson, has already to some degree been set out above. Having regard to the version of the State in relation to at least a substantial part of the case, no complexity appears to have arisen. The State appears to have been set on proceeding under the provisions of POCA, perhaps because it was concerned to recover the proceeds of what it alleged was the unlawful conduct of the appellants. In simple terms, it appears that the State’s case was that the appellants and their co-accused had acted in concert in stealing cigarettes from BATSA. To prove this aspect of the case, they had eye witnesses available to them and do not appear to place any reliance on documentation which might necessitate complex analysis. It does appear that the many delays due to the State were because there had been inadequate preparation, particularly in relation to the POCA charges. The difficulty it appears to have encountered in relation to its description of the criminal enterprise, an aspect not calling for adjudication by us, seems to flow from the fact that the theft in question, on the State’s version of its case, does not fall classically within the provisions of POCA, even though technically it might. The charge sheets have undergone a mutation over time and appear recently to have undergone yet another change which is minimal and will no doubt be open to the same challenges as had been brought by the appellants in the past and on which there has as yet been no decision. One might rightly ask how many years are required by the State to finalise a charge sheet. [67] As appears from the detailed history, some of the delays were due to systemic failures. A number of years after the first appearance of the appellants in the Cape Town Magistrates’ Court, those systemic failures do not seem to have abated, including the staff pressures faced by the NDPP. [68] I return to an aspect foreshadowed above, namely, the conduct of the prosecutor and a senior in the DPP’s office in giving the undertaking to the court to proceed on the restricted basis of theft to forestall the matter being struck from the roll. Ms Booysen, who was one of the counsel representing the NDPP before us and who has been a prosecutor for almost four decades, commendably, as an officer of the court, agreed that such behaviour was unacceptable. She described this as a ruse and/or stratagem to avoid the matter being struck from the roll. When it was put to her that it was dishonest, she conceded that it was not the way in which she would have conducted herself. To her credit, she conceded that in the event that it was held to be a significant factor in deciding the matter in favour of the appellants, the NDPP could not justifiably be dissatisfied. [69] Having regard to the applicable factors on which Sanderson is instructive and considering the totality of the circumstances set out above, in my view, the passage of time in this case relative to its facts, was unreasonable. Importantly, the dishonest and unacceptable conduct of the State in facie curiae cannot go unnoticed and must be taken into account in favour of the appellants and against the NDPP, as rightly conceded by counsel. I have taken into account that the relief sought is an extraordinary remedy. In my view and for all the stated reasons, the conclusion is ineluctable that the appellants’ right to a trial to begin and conclude without unreasonable delay has been infringed and that the appropriate relief in terms of s 38 of the Constitution is the principal relief sought by them. That conclusion makes it unnecessary to deal with any of the other questions raised on behalf of the appellants and the necessary result is that the assets under restraint are released therefrom. [70] I cannot stress enough that decisions in matters of this kind are fact specific. It follows that this judgment should not be resorted to as a ready guide in determining the reasonableness or otherwise of delays in the finalisation of trials. Whether a breach of a right to an expeditious trial has occurred and relief is justified, is to be determined by a court after having been apprised of all of the facts on a case by case basis. [71] The following order is made: 1 The appeal is upheld and the first respondent is ordered to pay the appellants’ costs including the costs of two counsel. 2 The order of the court below is set aside and replaced with the following: ‘1 The prosecution against the first and second applicants instituted under the office of the Western Cape Director of Public Prosecutions with reference no. 9/2/17(1)- 139/12 and encompassing the dockets under or together with the police reference Milnerton CAS 820/02/2010 is permanently stayed. 2 All the restraint orders (under case no. 16910/2011) related to the applicants’ assets are set aside. 3 The second respondent is ordered to release to the applicants all the assets of the applicants in his control together with any interest accrued thereto. 4 The first respondent is ordered to pay the applicants’ costs including the costs of two counsel.’ ______________________ M S Navsa Acting Deputy President Appearances: Counsel for Appellant: W King SC (with him J Engelbrecht) Instructed by: Abrahams & Gross Inc., Cape Town Lovius Block Attorneys, Bloemfontein Counsel for Respondent: M Titus (with him H Booysen and Q Appels) Instructed by: The National Director of Public Prosecutions, Cape Town The National Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Van Heerden & another v NDPP & others (145/2017) [2017] ZASCA 105 (11 September 2017) From: The Registrar, Supreme Court of Appeal Date: 11 September 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) upheld an appeal brought by the appellants, Mr Pienaar Van Heerden and his wife Ms Anthea Lynette Van Heerden (the appellants), against a judgment of the Western Cape Division of the High Court, Cape Town (court below). The issue at the centre of this appeal concerned the question as to whether the appellants are entitled to what they themselves acknowledge is the ‘extraordinary relief of an order permanently staying a criminal prosecution’, instituted against them by the first respondent, the National Director of Public Prosecutions (the NDPP). The appeal stemmed from the following factual background. The appellants were both employed by the third respondent, British American Tobacco South Africa (Pty) Ltd (BATSA), a company that manufactures and sells cigarettes. After the appellants returned from holiday in January 2010, Mr Van Heerden was accused by BATSA of the theft of cigarettes. He was summarily suspended and subjected to disciplinary proceedings by BATSA after which his services were terminated. During March 2010 Ms Van Heerden’s services were also terminated. On 18 August 2011 the NDPP, in anticipation of criminal charges to be preferred against the appellants, applied for and obtained a provisional restraint order in terms of the provisions of s 25(1)(b) of the Prevention of Organised Crime Act 121 of 1998 (POCA) . The provisional restraint order was made final on 5 October 2011, which prevented the appellants from dealing in any manner with virtually all their property. The appellants appeared in the Magistrates Court, Cape Town on 29 August 2011, where they were charged with the theft of hundreds of boxes of cigarettes. On 25 November 2011, the magistrates’ court was informed that the investigation was incomplete and that the State required a postponement for three months. The matter was postponed until 2 March 2012 with a note indicating that the postponement was ‘final’. The court noted that the matter had been postponed to enable a decision by the NDPP and to finalise investigations. The investigations had not been finalised and there was no decision by the NDPP in relation to the POCA charges, which the State intended to include in the charge sheet. Shortly thereafter the prosecutor informed the court that the State was not in a position to complete the charge sheet and after enquiry he was instructed by his seniors to proceed only with the theft charge. He would not require the approval of the NDPP to proceed on the POCA charges and on that basis requested the matter to be transferred to the Khayelitsha Regional Court (Priority Court) The appellants appeared for the first time on 23 March 2012 in the Khayelitsha Regional Court before magistrate Venter, in order to enable the State to proceed with the prosecution on the theft charge as a matter of priority. On that day and immediately, the court was informed that the State intended to include racketeering charges in terms of s 2 of POCA. To that end the matter was postponed to 4 May 2012. On that day the magistrate was informed that authorisation had been obtained from the NDPP for the inclusion of racketeering charges. The matter was then postponed to 27 September 2012. The matter continued to be postponed on several occasions and during February 2014, shortly before the trial was due to commence, the appellants served a lengthy and comprehensive document requesting further particulars and documentary evidence and gave written notice of an intention to object to the charge sheet, relying on a judgment delivered in the KwaZulu-Natal Division of the High Court, Durban, namely, Savoi & others v National Director of Public Prosecutions & another [2013] ZAKZPHC 19; [2013] 3 All SA 548 (KZP). In the notice the appellant indicated that the judgment was on appeal to the Constitutional Court and that judgment by the Constitutional Court was pending. It was thus inevitable that the trial would not commence as scheduled. On 10 February 2014 the matter was postponed to 14 April 2014, awaiting the judgment in the Constitutional Court. On 20 March 2014 the Constitutional Court delivered judgment in Savoi & others v National Director of Public Prosecutions & another 2014 (1) SACR 545 (CC), confirming the constitutionality of the provisions of s 2(1) of POCA. The State responded to the appellant’s request for further particulars on 11 April 2014. On 14 April 2014 the appellants requested a postponement to consider the State’s reply to their request for particulars and documentation. On the day on which the trial was scheduled to start, the appellants presented written submissions concerning the State’s response to the request for further particulars, which it was alleged was wholly unsatisfactory and formed the basis for the contention that the charges against the appellants should be quashed. It is common cause that no documentation was in fact attached to the response. Nothing appears to have come of the State’s request to BATSA to provide the required documentation. The State required a postponement in order to reply to the appellants’ written submissions. The matter was postponed to 17 November 2014. Without adjudicating on the objection to the charge sheet and dealing with the respective submissions of the parties, magistrate Venter refused a ‘postponement’ and struck the matter from the roll without indicating why. The appellant’s attorney addressed a letter to the State on 13 March 2015, seeking the release of their assets from the restraint order and wrongly declaring that the charges against them had been quashed. The State’s response was that the charges had not been quashed and that the NDPP had undertaken to have the charge sheet amended and it would be submitted to the appellants on 17 April 2015. The deadline was not met by the State. The authorisation by the NDPP to amend the charge sheet was only issued on 30 July 2015. Advocate Appels, who appeared for the State, arranged with the clerk of the court for a date on which the State would proceed with the prosecution, namely 4 September 2015. An ‘amended’ charge sheet was presented to the appellants before that date, to which they once again objected on the basis that it was virtually the same as the one that been previously objected to. It appears to be common cause that the changes were minimal. On 4 September 2015 magistrate Harmse was incorrectly informed on behalf of the appellants that the matter had been removed from the roll by magistrate Venter in terms of s 342A of the Criminal Procedure Act 51 of 1977 and that the matter could only be re- enrolled with the authorisation of the DPP in terms of s 342A(3) thereof. The State contended before magistrate Harmse that no enquiry in terms of s 342A of the CPA had been conducted. The magistrate disagreed and struck the matter from the roll. In December 2015 the appellants launched the application, which is the subject of this appeal, in the Western Cape Division of the High Court, Cape Town. The matter was argued during March 2016 and judgment delivered on 16 March 2016, in terms of which the application was dismissed with costs. The court in deciding the matter referred to an earlier application by the appellants in that division; for an order varying the restraint order, which it considered to be crucial. In that application, Rogers J had dismissed the application for a variation of the restraint order, essentially on the basis that it was clear that the appellants had not made full disclosure of all their assets. On appeal, the appellants contended that the court below had failed to consider relevant factors in relation to the application for a permanent stay of prosecution and treated it as if it was an application for the release of funds in terms of s 26(6) of POCA. They complained that a period of six years had elapsed since the opening of the police docket and a period of five and a half years after the arrest of the appellants and the seizure of all their property. They further submitted that this is in conflict with their rights to a trial within a reasonable time guaranteed in terms of s 35(3) of the Constitution. That section of the Constitution also entrenches the rights of arrested and accused persons to be informed with sufficient detail of charges so as to answer them. They contended that the restraint order ‘which has deprived the appellants of virtually all their assets (including the first appellant’s pension), has the effect of materially exacerbating the prejudice suffered by them. In support of their contention that their constitutional rights have been infringed, the appellants relied on Sanderson v Attorney General Eastern Cape [1997] ZACC 18; 1998 (2) SA 38 (CC). The SCA noted that the right to a trial within a reasonable time is fundamental to the fairness of a trial. It went on to consider how a determination is to be made of whether a particular lapse of time is reasonable. In arriving at a conclusion the court warned that regard should be had to the imperfections in the administration of criminal justice in our country, including those of law enforcement and correctional agencies. It acknowledged that they were all under severe stress. The SCA also noted that it is clear that substantial and material parts of the delays were occasioned by the inertia and vacillation of the prosecutors involved on behalf of the NDPP. The court further noted that State was disingenuous. It had no intention to proceed on the restricted basis of the theft charge as indicated to the magistrate when it sought a transfer to the Khayelitsha Regional court on a priority basis. It gave that assurance to the court to prevent the matter from being struck from the roll. The SCA held that it is quite clear from what is set out above that inadequate consideration, if any, was given by the State to the appellants’ rights to a trail within a reasonable time and that a material substantial part of the delay was due to the State’s tardiness and lack of application and concern. The SCA further noted that it does not appear as if the State made any serious attempt to obtain the documents they had undertaken to request from BATSA. Having given the undertaking, they adopted a rigid position that their case was not founded on documentation and that whatever information was sought was in BATSA’s possession. The SCA also noted that the appellants’ assets, including pension benefits have been under severe restraint since August 2011 until it was relaxed by Gamble J in 2016 for purposes of funding the appeal. The greater parts of the assets have now been dissipated. The SCA further noted that the remaining though diminished parts of their assets, remain under restraint. At the time of the application in the court below they appear to have been living from hand-to-mouth, burdened with the care of their daughter and an infant granddaughter. The lapse of time also has to be considered in relation to their mature years. Consequently, having had regard to the applicable factors set out in Sanderson, the SCA held the appellants’ right to a trial to begin and conclude without unreasonable delay has been infringed and that the appropriate relief in terms of s 38 of the Constitution is the principal relief sought by them. The SCA emphasised that decisions in matters of this kind are fact specific. It follows that this judgment should not be resorted to as a ready guide in determining the reasonableness or otherwise of delays in the finalisation of trials. Whether a breach of a right to an expeditious trial has occurred and relief is justified, is to be determined by a court after having been apprised of all of the facts on a case by case basis. As a result, the appeal was accordingly upheld with costs and all the restraint orders related to the appellants’ assets were set aside.

1540

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case Number: 162 / 08 SURMON FISHING (PTY) LTD First Appellant SAM MONTSI Second Appellant FOODCORP (PTY) LTD Third Appellant and COMPASS TRAWLING (PTY) LTD First Respondent WAYNE LOUW Second Respondent SUNIL RANCHOD Third Respondent BARRIE KING Fourth Respondent LYNWETH BHANA Fifth Respondent BLUE CONTINENT PRODUCTS (PTY) LTD Sixth Respondent BHANA COASTAL FISHING (PTY) LTD Seventh Respondent ___________________________________________________________________ NEUTRAL CITATION: Surmon Fishing (Pty) Ltd v Compass Trawling (Pty) Ltd (162/2008) [2008] ZASCA 142 (27 November 2008) CORAM : HARMS ADP, SCOTT, PONNAN and COMBRINCK JJA and GRIESEL AJA HEARD: 6 November 2008 DELIVERED: 27 November 2008 SUMMARY: Company – exercise of powers of - by directors. ___________________________________________________________________ ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: The Cape High Court (Van Der Riet AJ sitting as court of first instance). The appeal is dismissed with costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN JA (Harms ADP, Scott and Combrinck JJA and Griesel AJA concurring): [1] The present appeal has its genesis in the grant by the Minister of Environmental Affairs and Tourism, in terms of s18 of the Marine Living Resources Act 18 of 1998 of certain long term hake fishing rights, which authorised the catching of hake by the deep sea trawl method for commercial purposes. Given the capital intensive nature of deep sea trawling as well as the fact that significant numbers of permit holders have been granted rights to relatively small tonnages of fish, the Directorate of Marine and Coastal Management of the Department of Environment and Tourism actively encouraged holders of rights in the fishing industry to pool their resources to foster economic viability. [2] Against that backdrop, during 1999, two of the holders of commercial fishing rights in the hake deep sea trawl fishery, Blue Continent Products (Pty) Ltd ('Blue Continent') (the sixth respondent) and Azanian Fishing (Pty) Ltd ('Azanian') concluded a joint venture agreement, which came to be known as the Compass Fishing Hake Joint Venture (‘the joint venture’), to facilitate exploitation of their pooled fishing rights. Over time, the fifth respondent, Lynweth Keith Bhana ('Bhana') and the first appellant, Surmon Fishing (Pty) Ltd ('Surmon'), elected to become participants in the joint venture in accordance with the general terms and conditions ('the GTC') applicable to it. [3] Whilst the joint venture employed vessels belonging to third parties at its inception, the common intention of the parties to the joint venture had always been to acquire a trawler to properly exploit their pooled fishing rights. To that end, in 2001, Blue Continent purchased a vessel that came to be known as the MFV Compass Challenge for approximately R 20.5m. After the vessel had been subjected to an extensive refit and reconfiguration, it was sold for approximately R 33.6m to the first respondent, Compass Trawling (Pty) Ltd ('Compass Trawling'), a company in which the participants in the joint venture held shares. At the same time funds were loaned by Blue Continent to Compass Trawling to facilitate the sale. All of this occurred in consultation and by agreement with the joint venture participants. [4] Initially, Compass Trawling and the joint venture operated as separate entities. During April 2003, however, a written Agreement of Assignment was concluded, in terms of which, as the agreement put it: ‘the parties agreed to transfer the rights and obligations of the joint venture to Compass Trawling with the consent of the participants and to allow the joint venture to remain extant but dormant until otherwise agreed by the parties’. To that end, once again in the words of the written agreement: ‘the joint venture assigned to Compass Trawling all of its rights and obligations … arising out of the JV [joint venture] Formation Agreement and the JV Participation Agreements read with the GTC’. Thereafter, Compass Trawling carried on the business activities relating to the exploitation of the pooled hake rights, which had previously been conducted by the joint venture. [5] On 13 August 2007, a written offer was made by the third appellant, Foodcorp (Pty) Ltd ('Foodcorp'), to Surmon to purchase its hake rights. It is common cause that an offer of that kind is subject to Clause 9.3 of the GTC, which reads: '9.3 Should a Participant ("the Willing Seller") at any time receive an offer for all or any of its assets ("the Offer") from a third party ("the Offeror”) which the Willing Seller wishes to accept, then the following provisions shall apply: 9.3.1 the Willing Seller shall forthwith and in writing furnish the Joint Venture with relevant details of the Offer; 9.3.2 within twenty [20] days of receipt of the said details in terms of sub-clause 9.3.1 above, the Joint Venture shall be entitled to purchase the assets referred to in the Offer at the same price and on the same terms and conditions mutatis mutandis contained in the Offer and in the event of the Joint Venture purchasing such assets, the provisions of sub-clause 9.2.11 above shall apply mutatis mutandis; 9.3.3 if the Joint Venture decides not to purchase the assets referred to in the Offer, then the Willing Seller shall be entitled to accept the Offer provided that in respect of any assets not disposed in terms of the Offer any future sale shall remain subject to the provisions of this sub-clause 9.3.'. On 27 August 2007 and acting in terms of Clause 9.3 of the GTC read together with the Agreement of Assignment, Surmon furnished Compass Trawling with details of the Foodcorp offer. Compass Trawling thus became entitled to purchase Surmon’s hake rights on the same terms and conditions as reflected in the Foodcorp offer. [6] On 12 September 2007, a duly constituted meeting of the directors of Compass Trawling was convened to consider and discuss the Foodcorp offer. At that meeting four out of the six directors present and voting, voted in favour of a resolution that Compass Trawling should purchase Surmon's hake rights at the same price and on the same terms and conditions as contained in the Foodcorp offer. After the meeting, Compass Trawling addressed correspondence to Surmon and Foodcorp, notifying them that it had resolved to purchase Surmon’s hake rights. On 13 September 2007, the second appellant, Sam Montsi (‘Montsi’), purported, in his capacity as a director of Compass Trawling, to call a meeting of the shareholders of Compass Trawling to discuss 'the acquisition by the Company of certain hake rights as decided by the Board of the Company at its meeting on 12 September 2007 ... and if necessary, to overrule such decision and commitment.' In response, on 21 September 2007, attorneys acting for Wayne Louw (the second respondent), Sunil Ranchod (the third respondent) and Barrie King (the fourth respondent), all directors of Compass Trawling, who together with Bhana had voted in favour of the resolution to purchase Surmon’s hake rights, addressed a letter to both Montsi and Surmon. This stated, inter alia, that a valid and binding contract for the purchase of the hake rights had come into existence and that Montsi's notice purporting to call a general meeting, was invalid and unauthorised. [7] That letter elicited a response from attorneys acting for Surmon, which formally withdrew Montsi's notice but contended that the decision of Compass Trawling to purchase Surmon’s hake rights lacked validity, inasmuch as the requirements of Clause 7.10 of the GTC had not been satisfied. Accordingly, so the letter proceeded, Surmon had accepted the offer from Foodcorp. [8] Impasse having been reached, an application was launched by Surmon, Montsi and Foodcorp as the first, second and third applicants, respectively, for declaratory relief, inter alia, that: ‘(a) At a meeting of the board of directors of the first respondent [Compass Trawling] held on 12 September 2007 a resolution in the following terms was not passed:- “that Compass Trawling buy the quota of Surmon Fishing on terms contained in their offer from Foodcorp”; (b) The decision of the board of directors of the first respondent at the aforesaid meeting was in effect a decision not to buy the first applicant's long term Hake Fishing Rights on the terms contained in the offer from the third respondent; (c) The first applicant's acceptance of the offer by the third applicant to purchase the first applicant's long term Hake Fishing Rights on the terms contained in the offer ("the offer") brought about a firm and binding agreement of sale on the terms and conditions contained in the offer.' The respondents opposed the relief sought and launched a counter-application. Van Riet AJ, who heard the matter in the Cape High Court, granted an order in the following terms: '1 That the application is dismissed with costs. That the counter application accordingly succeeds. 2.1 It is declared that, at the meeting of the Board of Directors of the First Respondent held on 12 September 2007, a resolution was validly passed in the following terms: "That Compass Trawling buys the quota of Surmon Fishing on terms as contained in their offer from Foodcorp". 2.2 It is further declared that a valid and enforceable agreement exists between the First Respondent and the First Applicant in terms whereof the First Respondent has purchased the long-term hake rights of the First Applicant at the same price and on the same terms and conditions, mutatis mutandis, as those contained [in] the offer of the Third Applicant dated 13 August 2007, …. 2.3 The First Applicant is directed to take all such steps as are necessary in order to transfer the long-term hake rights held by it to the First Respondent, including the signing of all necessary documentation in this regard, as well as making application for such transfer in terms of section 21 of the Marine Living Resources Act No 18 of 1998. 2.4 The Deputy Sheriff of this court is authorised and directed, in the event of the First Applicant failing to sign any such documents or to take any steps referred to in the preceding sub-paragraph within 5 (five) days of the order of this court, to sign such documents and to take such steps on the Applicant's behalf. 2.5 An interim interdict is granted, pending the transfer of the long-term hake rights, presently held by the First Applicant to the First Respondent: (i) Prohibiting the first applicant from transferring the long-term hake rights presently held by it to the Third Applicant; (ii) Directing the First Applicant to make the long-term hake rights presently held by it available to the First Respondent, on the terms set out in clause 9.1 of the General Terms and Conditions … and to, forthwith, take all steps and sign all documents necessary in order to give effect thereto. (iii) The Deputy Sheriff of this court is authorised and directed, in the event of the First Applicant failing to sign any such documents or to take any steps referred to in the preceding sub-paragraph within 5 (five) days of the order of this court, to sign such documents and to take such steps on the Applicant's behalf. 2.6 That the Applicants, are jointly and severally to pay the Respondents' costs of the counter application.' [9] Clause 7.10 of the GTC provides: 'Decisions of the Management Board and the Executive Committee shall be taken by a majority of the members thereof present and voting provided that any decision relating to all financial matters, whether of the Joint Venture itself or in relation to the Participants vis-à-vis the Joint Venture, to the rights and obligations of the Participants in relation to the Joint Venture and to matters arising in connection with the contracting of the Vessel to the Joint Venture, shall require the support of more than 66.6% (sixty six point six percent) of the Management Board or Executive Committee members, as the case may be, present and voting to be adopted.' [10] Two issues thus arose for determination in the court below: first, whether or not Clause 7.10 was indeed applicable; and, second, whether the requisite majority of more than 66.6% of those present and voting, had been attained. Van Riet AJ thought it unnecessary for him to enter into what he described as the ‘vexed question as to whether Clause 7.10 of the GTC applied to the decision of the Board of Directors of Compass Trawling’ as he was willing to ‘assume, without deciding, in the [appellants’] favour that it did indeed apply and that, therefore: “… the support of more than 66.6% …’’ of its Directors was required in order to validly pass the resolution’. The learned Acting Judge accordingly held that when four out of the six directors voted in favour of the resolution, the requisite majority of more than 66.6% envisaged in Clause 7.10 had been attained. That issue should perhaps first be disposed of in order to clear the way for a consideration of the main issue in this appeal. I will do so briefly. [11] On this aspect of the case, the thrust of the appellants’ contention is that 66.6% in the context of Clause 7.10 should be interpreted to mean two-thirds. Accordingly, so the contention proceeded, what the clause required is a majority of more than two-thirds of the directors present and voting. Van Riet AJ reasoned: ‘on its ordinary grammatical meaning, 66.66 (recurring)% [being the number that had voted in favour of the resolution] is more than 66.6%. That is a linguistic and mathematical fact. The fact that the difference is small does not, … detract from this fact. … The use of the words “more than” however, means that the parties could just as well have meant to say: “at least two-thirds”, through the use of the words: “more than 66.6%”.’ [12] In Fundstrust (Pty) Ltd (in Liquidation) v Van Deventer 1997 (1) SA 710 (A), Hefer JA stated (at 726H – 727A): 'Recourse to authoritative dictionaries is, of course, a permissible and often helpful method available to the Courts to ascertain the ordinary meaning of words (Association of Amusement and Novelty Machine Operators and Another v Minister of Justice and Another 1980 (2) SA 636 (A) at 660F-G). But judicial interpretation cannot be undertaken, as Schreiner JA observed in Jaga v Dönges NO and Another; Bhana v Dönges NO and Another 1950 (4) SA 653 (A) at 664H, by "excessive peering at the language to be interpreted without sufficient attention to the contextual scene". The task of the interpreter is, after all, to ascertain the meaning of a word or expression in the particular context of the statute in which it appears (Loryan (Pty) Ltd v Solarsh Tea and Coffee (Pty) Ltd 1984 (3) SA 834 (W) at 856G ad fin). As a rule every word or expression must be given its ordinary meaning and in this regard lexical research is useful and at times indispensable. Occasionally, however, it is not. The present appears to me to be such a case.' [13] Linguistically, Van Riet AJ may well be correct, but in ordinary parlance it would be most unusual to say that 66.6% means something other than two-thirds. In this instance, the narrow confines of a linguistic interpretation are clearly inapposite. As Conradie JA put it in Lloyds of London Underwriting Syndicates 969, 48, 1183 and 2183 v Skilya Property Investments (Pty) Ltd [2004] 1 All SA 386 (SCA) para 14: ‘Sophisticated semantic analysis is not the best way of arriving at an understanding of what the parties meant to achieve by [the relevant clause]. A better way is to look at what, from the point of view of commercial interest, they hoped to achieve by the … provision’. [14] One’s common understanding, particularly in this contextual scene, undoubtedly is that a resolution by 66.6% means a resolution by two-thirds of those present and voting. To interpret the clause so that a majority of two-thirds exactly and not a majority of more than two-thirds is required is unnatural and clearly emasculates the clause. Had three directors voted in favour of the resolution and three against it, the resolution would have failed. Four in fact voted in favour of the resolution. That, on the approach of the learned Acting Judge, constituted both a simple majority as well as the special majority envisaged in the clause. In my view, it could never have been contemplated that in a situation such as this - namely, where provision is made for a special voting regime - the voting of one extra director in favour of a resolution would at one and the same time constitute the swing vote for both a simple majority as well as for the special majority contemplated by Clause 7.10. It follows that the court below ought to have reached a contrary conclusion to that reached by it on this aspect of the case. I turn now to consider the principal issue in this appeal. [15] Compass Trawling is a company duly incorporated in terms of the Companies Act 61 of 1973 and as such its board of directors is charged with the management of the business of the company, subject of course to the provisions of the Act, its articles of association and the provisions of its shareholders agreement. Clause 68 (a) of Compass Trawling’s articles of association provides: 'The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the event of an equality of votes, the chairman shall have a second or casting vote. A director may at any time convene a meeting of the directors.' The shareholders agreement of Compass Trawling, which was concluded on 16 August 2001, contains fairly detailed provisions relating to its directors. Clause 6.4 reads: 'All resolutions put to the vote at meetings of directors, if not passed unanimously by the directors present, shall be deemed to have been rejected unless passed by majority vote of all such directors.' It is thus clear on either the articles of association or the shareholders agreement that a majority vote is all that was required for a valid decision of the board of directors of the company. [16] In terms of the assignment it was the rights and obligations of the joint venture – not its management - that came to be assigned to Compass Trawling. Nor, in fact, could the management be assigned. Clause 7.10 of the GTC appertains to the internal management of the joint venture. It prescribes the voting regime for valid decisions of its management board and executive committee. That voting regime cannot simply be imposed upon the board of directors of Compass Trawling, a separate and distinct juristic entity. When resolving to purchase Surmon’s hake rights, each of those present and voting at the meeting acted qua director of Compass Trawling. As such they had no inherent powers, for the powers that they exercised were in fact the powers of the company, which had been conferred upon them by the articles of association. They thus lacked the authority to place further restrictions on the powers of the company than those provided for in the articles of association. The board of directors owed their fealty to and were accordingly obliged to apply - rather than to defy - the articles of association of the company. [17] What, however, presents as an insuperable obstacle in the way of the appellants’ contention is Clause 8 of the agreement of assignment. Clause 8, headed ‘Conflict’, provides: 'In the event of any provision contained in the JV Formation Agreement and/or the JV Participation Agreements, read with the GTC conflictin[g] with any provision of the Compass Trawling Shareholders Agreement, the latter shall prevail.' In my view that clause is destructive of the appellants’ case, for it makes plain that the parties applied their minds to the possibility of a conflict between the GTC and the shareholders agreement and resolved unequivocally and expressly that, in the event of such conflict, the latter would prevail. It follows in those circumstances that the first issue and consequently the appeal falls to be decided against the appellants. [17] In the result the appeal is dismissed with costs. _________________ V PONNAN JUDGE OF APPEAL APPEARANCES: For Appellant: H M Scholtz SC R D E Gordon Instructed by: Cliffe Dekker Inc Cape Town Claud Reid Bloemfontein For Respondent: J Newdigate SC Instructed by: Webber Wentzel Bowens Cape Town Matsepe 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 27 November 2008 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Surmon Fishing (Pty) Ltd v Compass Trawling (Pty) (162/2008) [2008] ZASCA 142 ( 27 November 2008) Media Statement Today the Supreme Court of Appeal (SCA) dismissed an appeal by Surmon Fishing (Pty) Ltd (the first appellant), one of its directors – Sam Montsi (the second appellant) and Foodcorp (Pty) Ltd (the third appellant). The appeal had its genesis in the grant by the Minister of Environmental Affairs and Tourism, in terms of the Marine Living Resources Act 18 of 1998, of long term fishing rights, which authorised the catching of hake by deep sea trawling for commercial purposes. Given the capital intensive nature of deep sea trawling as well as the fact that significant numbers of permit holders had been granted rights to relatively small tonnages of fish, the Directorate of Marine and Coastal Management of the Department of Environment and Tourism actively encouraged holders of rights in the fishing industry to pool their resources to foster economic viability. To that end, during 1999, various holders of hake rights concluded a joint venture agreement. To facilitate exploitation of their pooled resources, one of the participants in the joint venture, Blue Continent Products (Pty) Ltd (the sixth respondent), purchased a vessel which it then sold to Compass Trawling (Pty) Ltd (the first respondent), a company in which the participants in the joint venture held shares. Initially, Compass Trawling and the Joint Venture operated as separate entities. During April 2003, however, a written agreement of assignment was concluded, in terms of which the rights and obligations of the Joint Venture was transferred to Compass Trawling with the consent of the participants of the Joint Venture. During August 2007, a written offer was made by Foodcorp to Surmon to purchase its hake rights. In terms of the agreement, Surmon was obliged to and did in fact furnish Compass Trawling with details of the offer, which the latter became entitled to purchase on the same terms and conditions as reflected in the Foodcorp offer. A duly constituted meeting of the directors of Compass Trawling resolved to purchase Surmon's hake rights at the same price and on the same terms and conditions as contained in the Foodcorp offer. The appellants launched an application in the Cape High Court contending that Compass Trawling's decision to purchase Surmon's hake rights lacked validity, inasmuch as the requirements of clause 7.10 of the General Terms and Conditions of the joint venture agreement had not been satisfied. Clause 7.10 provided that in relation to all financial matters, decisions of the management board and the executive committee of the Joint Venture required the support of more than 66.6% of those present and voting, for validity. Two issues thus arose for determination in the court below: first, whether or not clause 7.10 was indeed applicable and, second, whether the requisite majority of more than 66.6% had been attained. The High Court assumed without deciding that the clause did indeed apply. According to it, on its ordinary grammatical meaning and as a mathematical fact, 66.66% recurring - being the number that had voted in favour of the resolution - was more than 66.6%. The SCA reasoned that while the High Court may well be correct linguistically, in ordinary parlance it would be most unusual to say that 66.6% means something other than two-thirds. The SCA thus concluded that the narrow confines of a linguistic interpretation were clearly inapposite in this instance. On the main issue the SCA held that in terms of the assignment it was the rights and obligations of the Joint Venture – not its management – that came to be assigned to Compass Trawling. Clause 7.10, according to the SCA, appertained to the internal management of the Joint Venture. It followed that that voting regime could not simply be imposed upon the board of directors of Compass Trawling, a separate and distinct juristic entity. It followed that the appeal had to fail and it was dismissed with costs. --- ends ---

3490

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 632/20 In the matter between: GUARDRISK INSURANCE COMPANY LIMITED APPELLANT and CAFÉ CHAMELEON CC RESPONDENT Neutral citation: Guardrisk Insurance Company Limited v Café Chameleon CC (Case no 632/20) [2020] ZASCA 173 (17 December 2020) Coram: CACHALIA, SALDULKER and MBHA JJA and LEDWABA and EKSTEEN AJJA Heard: 23 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09:45 on 17 December 2020. Summary: Insurance law – contract providing cover for loss resulting in interruption of business for notifiable disease occurring within 50 km of business premises – whether Covid-19 pandemic contemplated – whether government response imposing national lockdown part of the insured peril – whether national lockdown causally linked to local occurrence of disease. _____________________________________________________________ ORDER _____________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Le Grange J, sitting as court of first instance): Paragraphs 2 and 3 of the order of the court a quo are set aside. Save as aforesaid, the appeal is dismissed with costs, including the costs of three counsel. _____________________________________________________________ JUDGMENT _____________________________________________________________ Cachalia JA (Saldulker and Mbha JJA and Ledwaba and Eksteen concurring) Introduction [1] The respondent, Café Chameleon CC (Café Chameleon), operates a restaurant in Cape Town. Its business, along with many other businesses, suffered a substantial, as yet unquantified, loss of income following the outbreak of the Covid-19 pandemic. The loss arose from the interruption of its business due to the government having instituted a national lockdown in response to the pandemic. Café Chameleon has an insurance policy underwritten by the appellant, Guardrisk Insurance Company Limited (Guardrisk). The policy indemnifies it against loss from business interruption due to notifiable diseases. Covid-19 is a notifiable disease as envisaged in the ‘Regulations relating to the Surveillance and Control of Notifiable Medical Conditions’ (the Surveillance Regulations)1 promulgated under the National Health Act 61 of 2003 (the Health Act). Café Chameleon says the policy gives it cover for the loss it sustained as a result of the lockdown. Guardrisk believes the indemnity does not extend to the circumstances of this case. [2] Café Chameleon thus sought a declaration in the Western Cape High Court that Guardrisk was liable to indemnify it for any loss since 27 March 2020, arising from the interruption of its business due to the lockdown. It also sought other incidental relief, including an order that Guardrisk make interim payments in respect of its losses calculated and quantified from time to time. The court a quo (Le Grange J) granted Café Chameleon all the relief it had initially asked for, but granted Guardrisk leave to appeal to this court.2 It appears that the learned judge inadvertently overlooked that Café Chameleon had abandoned the incidental relief during the hearing. The appeal thus concerns only the declaratory order. The Essential Dispute [3] It is helpful to describe the essential dispute between the parties before setting out the factual background and terms of the policy. The clause (the infectious diseases clause) that is the subject of this dispute indemnifies the insured for “loss . . . resulting in interruption (of) the business due to notifiable [disease] occurring within a radius of 50 km of the premises”. Under the ‘special provisions’ of the policy, a notifiable disease means “. . . 1 ‘Regulations relating to the Surveillance and Control of Notifiable Medical Conditions, GN 1434, GG 41330, 15 December 2017.’ 2 Café Chameleon v Guardrisk Insurance Company Ltd [2020] ZAWCHC 65; [2020] 4 All SA 41 (WCC). illness sustained by any person resulting from any human infectious or human contagious diseases, an outbreak of which the competent local authority has stipulated shall be notified to them . . .”. [4] Café Chameleon’s position is that once it is accepted that there were occurrences of Covid-19 in Cape Town, within 50 km of its business, the government’s response to it through the imposition of a national lockdown was part of the insured peril covered by the infectious diseases clause. Guardrisk maintains, on the other hand, that the government’s generalised response to the pandemic is not what is covered; what is covered is a public health response aimed only at local occurrences of the disease within 50 km of the business. I shall consider these contentions in more detail later in this judgment. The Factual Background [5] The first cases of Covid-19 were reported in KwaZulu-Natal, after a group travelling from Italy returned to South Africa, early in March 2020. By 11 March, there were a further six cases, all with recent travel histories. One of these was in Cape Town, announced by the Western Cape Provincial Government. Two more cases were announced in Cape Town, on 13 March. By 17 March, the number of South African cases had risen to 89, which included the first local transmissions. On 23 March 2020, the number had grown to 100 cases in the Western Cape, of which 85 were in Cape Town. At this stage Cape Town had 25 percent of the reported cases in the country, indicating an alarming, rapid spread of the disease. On 28 March, South Africa recorded its first death. By 30 April, the total number of infections was 2020, and four days later it had quickly reached 2 705. [6] The government embarked on an aggressive response to curb the spread of the disease. Under the Disaster Management Act 57 of 2002 (“the Disaster Act”) the responsible Minister declared a ‘State of National Disaster’ on 15 March 2020. That evening, the President announced this in a televised address to the nation. On 18 March, the Minister published regulations under the Disaster Act prohibiting gatherings of more than 100 people, closing schools and care facilities, and also limiting the sale and transportation of liquor.3 On 23 March, the President announced a nationwide lockdown, to commence on 23 March, and to continue until 16 April. New stringent regulations (the Lockdown Regulations) were thus issued on 25 and 26 March to give effect to the lockdown, requiring almost everyone to stay at home from midnight 26 March until midnight 16 April.4 [7] There were exemptions to allow people to leave their homes for limited purposes to perform essential services, obtain essential goods and services, and for medical emergencies. Restaurants, such as Café Chameleon, were forced to close and cease trading since 27 March 2020. The regulations were relaxed later, permitting take-away food. Café Chameleon has thus sustained devastating losses by the interruption of its business. It sought an indemnity for these losses from Guardrisk, which rejected the claim. Café Chameleon, therefore, approached the high court for relief. 3 ‘Regulations issued in terms of s 27(2) of the Disaster Management Act, 2002, GN 318, GG 43107, 18 March 2020.’ 4 ‘Disaster Management Act, 2002: Amendment of regulations issued in terms of s 27(2), GN 398, GG 43148, 25 March 2020 and GN 419, GG 43168, 26 March 2020.’ Regulation 11B(1)(b) provided that ‘[d]uring the lockdown, all businesses and other entities shall cease operations . . .’ It specifically included restaurants, which were not included in previously. [8] One of Guardrisk’s central averments in its answering papers, is that the regulations upon which Café Chameleon relies for its cause of action – reg 11B (1)(b) in particular, which applies to the closure of businesses – were not promulgated because of a notifiable disease within 50 km of its premises. Rather its purpose, as appeared from government announcements, was to prevent the spread of Covid-19, and, to allow the health system to create sufficient capacity to deal with the outbreak. Guardrisk submits that Café Chameleon did not dispute this, which is fatal to its case. [9] The fact is – and this is clear from the papers – when the Lockdown Regulations were promulgated, Cape Town accounted for a large proportion of Covid-19 infections. These infections were notifiable to the government in terms of the Surveillance Regulations. The government was therefore notified of the rapid spread of infections in Cape Town, and also in other parts of the country. It responded by instituting the lockdown throughout the country, including in Cape Town. Although Café Chameleon could have been clearer about drawing the link between the local outbreak and the imposition of the regulatory regime, it did so on any fair reading of the papers. The subtle distinction Guardrisk seeks to draw, between Café Chameleon’s pleaded case and Guardrisk’s denial as to what the purpose for the institution of the lockdown was, is therefore one without substance. The true question in this case is whether, properly interpreted, the infectious diseases clause covers Café Chameleon for its loss. This is primarily a legal question, and, not one of fact. The Policy [10] The policy provides cover for specified defined events. The ‘Defined Events’, described in the ‘Business Interruption Section’, typically require physical damage to property to be suffered for a successful claim. However, there are two types of extensions to the physical damage requirement. One is the damage extension to property that occurs in locations other than the insured’s premises. The other non-damage extension includes loss for events that do not cause damage to property, but occur within a specified radius of the insured premises. The insured peril is, therefore, a defined event that results in a business interruption. [11] The non-property damage extension with which we are concerned, including the infectious diseases clause (clause (e)), appears under the heading, ‘Extensions and Clauses’. It must be read with the ‘Special Provisions’ clause, which defines a ‘notifiable disease’. The non- property damage extension provides: ‘Infectious Diseases/Pollution/Shark and Animal Attack Extension Loss as insured by this Section resulting [from] interruption or interference with the Business due to: (a) murder or suicide occurring at the Premises (b) armed robbery, malicious and terrorist activities (whether actual or hoax) occurring at the Insured (c) food or drink poisoning at the Premises or attributable to food or drink supplied from the Premises (d) closure of the Premises due to defective sanitation, vermin or pests on the order of a competent local authority (e) notifiable Disease occurring within a radius of 50 kilometres of the Premises (f) summons to appear in court as a witness by the Insured or any of the Insured’s directors, partners of employees (g) chemical or oil pollution of beaches, rivers or waterways within a radius of 50 kilometres of the Premises (h) shark attack or attack by wild game including hippopotamus, rhinoceros, leopard, cheetah, crocodile, buffalo and elephant within a radius of 50 kilometres of the Premises Special Provisions (a) “Notifiable Disease” shall mean illness sustained by any person resulting from any human infectious or human contagious disease, an outbreak of which a competent local authority has stipulated shall be notified to them . . .’ (Emphasis added). Interpreting Insurance Contracts [12] This court recently restated the approach to interpreting insurance contracts in Centriq Insurance v Oosthuizen:5 ‘[I]nsurance contracts are contracts like any other and must be construed by having regard to their language, context and purpose in what is a unitary exercise. A commercially sensible meaning is to be adopted instead of one that is insensible or at odds with the purpose of the contract. The analysis is objective and is aimed at establishing what the parties must be taken to have intended, having regard to the words they used in the light of the document as a whole and of the factual matrix within which they concluded the contract.’ [13] In this analysis it must be borne in mind that insurance contracts are ‘contracts of indemnity’. They should therefore be interpreted ‘reasonably and fairly to this end’.6 In this regard it is instructive to recall Schreiner JA’s adoption of the following statement from the English authorities on insurance law:7 5 Centriq Insurance Company Ltd v Oosthuizen and Another [2019] ZASCA 11; 2019 (3) SA 387 (SCA) para 17. 6 Norwich Union Fire Insurance Society Ltd v South African Toilet Requisite Co Ltd 1924 (AD) 212 at 222. 7 May on Insurance (4 ed) at 174-175. Cited with approval in Kliptown Clothing Industries (Pty) Ltd v Marine and Trade Insurance Co of SA Ltd. 1961 (1) SA 103 (A) at 107A-B. However, the recent statement in Ma- Afrika Hotels and Another v Santam Limited [2020] ZAWCHC 160 para 74, does not accord with our law. It reads: ‘Insurance is intended to serve as a social safety net to cover financially devastating losses and ‘No rule, in the interpretation of a policy, is more firmly established, or more imperative and controlling, than that, in all cases, it must be liberally construed in favour of the insured, so as not to defeat without a plain necessity his claim to the indemnity, which in making the insurance, it was his object to secure. When the words are, without violence, susceptible of two interpretations, that which will sustain the claim and cover the loss, must in preference be adopted.’ Guardrisk’s case a quo [14] Before interpreting the infectious diseases clause, it is important to understand Guardrisk’s opposition to the claim in the court a quo, as outlined in its answering affidavit. It accepted that Covid-19 is a notifiable disease as defined, and, also that it had occurred within 50 km of Café Chameleon’s premises – both essential requirements of the insured peril. But it advanced four interrelated arguments as to why the policy did not cover Café Chameleon’s loss: First, no competent local authority had stipulated that the disease should be notified in accordance with the policy. Second, as a matter of construction, this requirement localises the scope, and the extent, of the cover to the 50 km radius; the cover did not extend to the consequences of events within a wider area, including countrywide or global events. Third, the policy did not cover loss following closure of the premises as a result of a government order. Finally, there was no causal link between the defined event (the Covid-19 outbreak within the 50 km radius) and the interruption of the business. This is because the interruption was a consequence of the national lockdown, and, not the local occurrence of the disease. compensate injured parties. This is precisely the safety net required as a result of the unprecedented Covid- 19 pandemic.’ [15] As to the contention that no competent local authority had stipulated the disease, the court a quo undertook a comprehensive analysis of the legislative framework governing notifiable diseases. This included an examination of both the Health and Disaster Acts, including the Surveillance Regulations and the Lockdown Regulations promulgated thereunder. The learned judge found that even though the City of Cape Town’s by-laws did not provide for the notification of human infectious or contagious diseases, national legislation imposed an obligation to report their occurrence to a local authority. He concluded that: ‘[T]he principal reason why the notification requirement was introduced to the Notifiable Diseases Extension, was to ensure that cover thereunder would be triggered by outbreaks of the most serious diseases, and not whether the source of that obligation to report the gravity of the threat was national legislation, rather than subordinate legislation enacted by a local authority.’8 [16] On this basis the learned judge rejected Guardrisk’s submission that the claim fell outside the scope of the clause, because no competent local authority had stipulated that the disease be notified to it. His criticism that the submission amounted to a ‘narrow peering of words’, which did not accord with the proper approach to the interpretation of insurance contracts outlined earlier, was well founded. Guardrisk, wisely, abandoned the argument in this court. [17] The court a quo also dismissed Guardrisk’s three other arguments. I shall consider these in due course. It is apposite to begin with the third point raised in the high court i.e., that the policy does not cover loss following 8 Café Chameleon CC v Guardrisk Insurance Company Ltd (fn 2) para 62. closure of the premises as a result of a government order. Although the high court did not deal with the submission explicitly, it implicitly rejected it. This is apparent from the learned judge’s conclusion. This issue lies at the heart of the interpretation question: whether the infectious disease clause covers the government’s response to Covid-19 in this case. Does the insured peril include a government response to Covid-19? [18] The trigger for coverage under the infectious diseases clause is that it is notifiable. Diseases are notifiable when the law requires it to be reported to government authorities.9 This is because they pose particular ‘public health risks’.10 They have ‘a potential for regional or international spread’,11 and may necessitate specific governmental action nationally, provincially and locally.12 The global response to Covid-19 exemplifies this. [19] That a notifiable disease usually requires a government response would have been appreciated by the contracting parties. They must therefore be taken to have understood and agreed that ‘business interruption’ referred to in the infectious diseases clause might result from a public health response to the occurrence of an infectious disease. [20] Counsel for Café Chameleon persuasively drew an analogy between harm caused by a government response to a notifiable disease and fire insurance, which covers incidental harm unavoidably caused by fire-fighters, in response to a fire at a premises. In both cases the response to a notifiable 9 Regulation 13 of the Regulations relating to the Surveillance and Control of Notifiable Medical Conditions. Fn 1 above. 10 Ibid Regulation 12(2)(a). 11 Ibid Regulation 12(2)(b). 12 Ibid Regulation 12(2)(c). disease by public health authorities and of fire-fighters to a fire is integral to the insured peril. That being so the only sensible interpretation of the clause is that it includes and contemplates harm that is attributable to a government response. It might be that the clause envisages only a lawful government response and not any response, but that is not an issue we need consider. [21] I, therefore, accept Café Chameleon’s core submission that a notifiable disease almost always carries the risk of a government response, making it part and parcel of the insured peril. As counsel for Café Chameleon put it: ‘because it is part of the insured peril, the government’s response is covered, not because it is caused by what was insured against; it is covered because it is what is insured against’. [22] It follows that Guardrisk’s contention in the court below that the policy did not indemnify business interruption due to closure following a government order, had to fail. In this court, Guardrisk’s stance underwent some mutation; it accepted, in response to questions from the court, that a local government’s response to Covid-19 would be part of the insured peril. But, it maintained, the national response did not fall within the ambit of the clause. This is the gravamen of Guardrisk’s complaint. Does the policy cover the Covid-19 pandemic? [23] I must first deal with the submission Guardrisk made at the outset, which is this. The infectious diseases clause, it argues, does not refer to, nor contemplate, cover for the Covid-19 pandemic. This is because, as it explains in its answering affidavit, the events brought about ‘went beyond the imagination of everyone, and every industry, including the insurance industry’. No one ever thought, Guardrisk asserts, ‘there would be a national, and global, lockdown where commercial activity would for all practical purposes cease to exist’. The consequence is that no insurance company would have underwritten a policy where the risk of such large scale and unimagined losses could materialise. [24] In a nutshell Guardrisk’s contention is that because the parties had not thought of the risk of a pandemic at the time they contracted (and the policy does not explicitly refer to a pandemic), Café Chameleon is not covered. This argument is premised on a fallacy that a court determines the intention of the parties by having regard to what the parties subjectively believed or thought when the policy was concluded. But as I have pointed out earlier, the interpretation of a contract requires an objective analysis, regard being had to language, context and purpose. The analysis is aimed at establishing what the parties must be taken to have intended, not what their unexpressed thoughts were, when they contracted. As a member of the court pointed out during the hearing, the fact that a policy may include cover for earthquakes does not mean that the parties realistically thought that the risk of an earthquake could materialise. There is thus no substance in this argument. Is the insured peril confined to a localised response to the infectious disease? [25] Although Guardrisk no longer persists with the argument that the policy requires a local authority to stipulate the notification of the disease, it contends, as a matter of construction, that this requirement supports its view that the policy localises the scope, and the extent, of the cover to the 50 km radius, and, excludes the consequences of events within a wider area, including countrywide or global events. Simply put, it says that the cover is expressly limited only to the particular consequences of a local occurrence of the notifiable disease. A generalised government response to a national occurrence of Covid-19, which is not aimed specifically at the local occurrence, and causes business interruption and resultant loss, is not covered. It is, therefore, impermissible, Guardrisk insists, to interpret the 50 km radius requirement, as Café Chameleon does, as a mere qualifying criteria unmoored from the causative link between the business interruption and the local occurrence of the disease. [26] Café Chameleon’s answer is that Guardrisk misconstrues the 50 km requirement as being confined to local occurrences of infectious disease. It submits that the infectious diseases clause has two threshold requirements for indemnification: (a) a notifiable disease occurring, and, (b) within a radius of 50 km of the business premises. Once the threshold is established, the remaining requirement is that the outbreak caused business interruption by deterring potential customers from patronising the business. It does not matter, the argument continues, that the interruption and consequent loss was the result of a national government response to occurrences also extending beyond the radius. [27] In my view, Guardrisk’s interpretation of the insured peril as being confined to local occurrences does not accord with a proper construction of the clause. In response to a question from the court as to whether Guardrisk accepted that Café Chameleon would have been covered if the local authority – the City of Cape Town in this case – had imposed the lockdown, instead of the government, Counsel for Guardrisk, quite properly, accepted that it would have. Why then, it might be asked rhetorically, should the insured be denied cover only because the government, rather than the local authority, took action against an infectious disease that occurred, not only within the 50 km radius, but also beyond it. [28] Properly construed, I think, the 50 km radius acts both as a threshold or qualifying requirement for liability under the clause, and, a break against liability for far-flung occurrences beyond it. An example would be where there is an outbreak of the disease on a tourist bus headed for Cape Town, from Johannesburg, and, as a consequence the tourists are quarantined at a hotel more than 50 km from Cape Town through government action. The tourists have reservations at a Cape Town restaurant, but are compelled to cancel the booking, which results in business interruption. It is evident that there would be no cover because there is no notifiable disease occurring within 50 km of the business premises. If, however, the discovery of the outbreak had occurred within this radius it would yield a different result. [29] Guardrisk sought to argue by reference to several other examples that Café Chameleon’s interpretation of the clause yields absurd results, because it grants cover for business interruption caused by an outbreak within 50 km of the premises, but denies cover where the notifiable disease is detected just outside the radius. It criticises this interpretation as having the effect that cover becomes a matter of ‘happenstance’, amounting to a ‘postcode lottery’. [30] Café Chameleon answers this criticism convincingly: Drawing lines in statutes or contracts, Mr Gauntlett argues on its behalf, often yields arbitrary results. Guardrisk could have drawn the line much tighter at 5 km from the premises, or chosen other distances arbitrarily – 30 km or 60 km. But it chose 50 km, apparently, without giving this much thought. Drawing lines in this way, without an objective basis, will inevitably result in hard cases at the margins, as in the tourist example given earlier, or when an insured who is 49 km from a reported occurrence of an infectious disease, qualifies for cover, but not the insured who is 51 km away. This is not a problem of interpretation, but arises unavoidably because Guardrisk itself drew these sharp lines. [31] This much is clear from the facts. When the President announced the lockdown on 23 March there were 100 reported cases of Covid-19 in the Western Cape, of which 85, were in Cape Town. At this stage Cape Town had 25 percent of the reported cases in the country. This represented the highest number in any area or region. It is, therefore, fair to say that the occurrence of the disease was predominantly in Cape Town. There was thus a rapidly spreading ‘notifiable disease occurring within a radius of 50 km of the premises’, which required an urgent government response. [32] Guardrisk submits that the lockdown was a response to several outbreaks in different parts of the country, and, not only Cape Town. This is so. But it is also undeniable that the rapid spread of the disease in Cape Town would have weighed with the public authorities in recommending that a national lockdown be implemented, including, and especially, in Cape Town. Despite this, Guardrisk would have us accept that the clause covers only a public health response to local occurrences, and, not to outbreaks in multiple areas, which includes a local outbreak. A proper reading of the clause does not support its stance. [33] The purpose of the clause, quite clearly, is to provide cover for business interruption due to occurrences of a notifiable disease within a 50 km radius of the premises. The language of the clause contains no indication that cover is provided only for a public health response that does not extend, nor have its genesis, beyond the radial boundary. The parties must have contemplated that the clause would provide cover for any public health response to any outbreak of a notifiable disease, whether or not it occurs in multiple localities, provided only that it also occurs within the 50 km radius. Guardrisk’s interpretation is therefore neither commercially sensible, nor does it reasonably or fairly accord with the purpose of the clause. [34] Once it is understood that a notifiable disease as envisaged in the infectious diseases clause entails a government response (national or local), it must follow that the insured peril includes both its occurrence within the radius, and, the government’s response to it. And where, as here, the response is aimed at curbing the spread of the disease in multiple locations, including the area that falls within the radius specified in the policy, it must also be covered by the policy. The government response to Covid-19, which resulted in the interruption of Café Chameleon’s business, and its consequent loss are, therefore, covered by the policy. This conclusion renders the question of causation, whether the insured peril ie, the presence of Covid-19 in Cape Town and the government’s response, was the cause of the business interruption, superfluous. I shall nevertheless, for the sake of fullness deal with it, not least because Guardrisk’s case is framed primarily as one of causation. Causation [35] The infectious diseases clause provides cover for loss resulting in business interruption due to notifiable disease occurring within 50 km of the business premises. Guardrisk, therefore, insists that there be a causal connection between the defined event (the occurrence of Covid-19 within 50 km) and the business interruption. Guardrisk contends that there is no causal link between the defined event, and, the interruption of the business. This is because the interruption was a consequence of the lockdown, and, not due to the local occurrence of the disease. Café Chameleon has, therefore, not shown that the lockdown was the factual or legal cause for the interruption. [36] The high court did not have the benefit of the argument made on Café Chameleon’s behalf in this court dealing with the proper interpretation of the clause. It thus also approached the problem primarily as one of causation. The learned judge found that there was a ‘clear nexus’ between the Covid-19 outbreak in Cape Town and the imposition of the national lockdown, and also that the harm to the business caused by the outbreak was not too remote. He thus held that factual and legal causation had been established.13 Causation in Insurance [37] The general approach to causation also applies to insurance law.14 Factual causation is the first enquiry. The diagnostic tool is the ‘but for’ test, which involves a ‘hypothetical enquiry as to what probably would have happened but for the wrongful conduct of the defendant’.15 The test is usually 13 Café Chameleon v Guardrisk Insurance Co Ltd (fn 2) paras 74 and 81. 14 Napier v Collett and Another 1995 (3) SA 140 (A) at 144C-G. 15 Lee v Minister of Correctional Services [2012] ZACC 30; 2013 (2) SA 144 (CC) para 40. applied in the law of delict. In the insurance context, the analysis is aimed at establishing what would have happened, but for the insured peril. [38] The courts have recognised that a rigid application of the test may sometimes yield unpalatable and unfair results, and, have thus cautioned against applying ‘rigid deductive logic’.16 In what is now an oft-quoted passage from this court, in Minister of Safety and Security v Van Duivenboden17 Nugent JA said: ‘ . . . A plaintiff is not required to establish the causal link with certainty, but only to establish that the wrongful conduct was a probable 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 course of ordinary human affairs rather than an exercise in metaphysics.’ [39] The common law test is thus applied flexibly, recognising that ‘common sense may have to prevail over strict logic’.18 In the contractual context it has long been accepted that causation rules should be applied ‘with good sense to give effect to, and not to defeat the intention of the contracting parties’.19 For insurance contracts the question always is: ‘[H]as the event, on which I put my premium, actually occurred?’20 [40] Of relevance in the instant case is that there may be more than one cause or multiple causes giving rise to a claim. In that case ‘the proximate or actual or effective cause (it matters not what term is used) must be ascertained . . .’21 16 Lee v Minister of Correctional Services [2012] ZACC 30; 2013 (2) SA 144 (CC) paras 44 and 47. 17 Minister of Safety and Security v Van Duivenboden NO 2002(6) SA 431 (SCA) para 25. 18 Lee (fn 15) para 44. 19 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350 at 365. 20 Becker Gray & Co v London Assurance Corp [1918] AC 101 at 118. 21 Incorporated General Insurances Ltd v Shooter t/a Shooter’s Fisheries 1987 (1) SA 842 (A) at 862C-D. Even if a loss is ‘not felt as the immediate result of the peril insured against, but occurs after a succession of other causes, the peril remains the proximate cause of the loss, as long as there is no break in the chain of causation’.22 A proximate cause should be identified as a matter of ‘reality, predominance [and] efficiency’.23 Put differently the real or dominant cause is ascertained by applying good business sense.24 [41] The enquiry into legal causation usually follows factual causation. It asks whether there is a sufficiently close relationship between the factual cause and the consequent loss to give rise to legal liability.25 Put differently, the question is whether the loss is too remote for the factual cause to also be the legal cause. If not, no legal liability may arise. [42] In delict, policy considerations are applied to guard against attaching ‘liability in an indeterminate amount for an indeterminate time to an indeterminate class’.26 In contract, though, these policy considerations ‘usually do not enter into the enquiry’.27 Instead, and in particular with insurance contracts, as Grosskopf JA observed in Napier v Collett: ‘[O]ne would have prime regard to the provisions of the insurance policy. Thus for example the policy may extend or limit the consequences covered by the policy, for example by laying down exceptions. But in addition to any specific provisions, matters such as the type 22 Mutual & Federal Insurance Company Ltd v SMD Telecommunications CC [2010] ZASCA 133; 2011 (1) SA 94 (SCA) at para 11. 23 Leyland Shipping (fn 19). 24 Global Process Systems Inc & Anor v Syarikat Takaful Malaysia Berhad (The Cendor Mopu) [2011] UKSC 5. 25 Napier (fn 14) at 144D-F. 26 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC 28; 2015 (1) SA 1 (CC) para 24 (citing Ultramares Corporation v Touche 174 NE 441(1931) at 444). 27 Napier (fn 14) at 143J (citing Concord Insurance Co Ltd v Oelofsen NO 1992 (4) SA 669 (A)). of policy, the nature of the risk insured against and the conditions of the policy may assist a court in deciding whether the factual cause should be regarded as the cause in law.’28 [43] Sometimes, complex legal questions may arise, ‘where several factors concurrently or successively contribute to a single result and it is necessary to decide whether any particular one of them is to be regarded legally as a cause’.29 Effect must then ‘be given to the parties’ own perception of causality lest a result be imposed upon them which they did not intend’.30 Was factual and legal causation established? [44] As mentioned, Guardrisk contends that there was no causal link between the defined event (the Covid-19 outbreak within the 50 km radius) and the interruption of the business. Café Chameleon has therefore not proved factual causation. Its argument is this. The application of the ‘but for’ test in an insurance case requires the correct identification of the counterfactual, with reference to the defined event. It involves a mental elimination of the defined event. The counterfactual posited is: but for the elimination of the occurrence what would have happened. Self-evidently, the answer to this question is, there would still have been business interruption because of the national lockdown. Ergo, the defined event was not the factual cause of the business interruption. [45] There is a seductive allure to the simplicity of the question posed by Guardrisk, and, the answer it inevitably yields. But, I have already found, as a matter of construction, that the defined event or insured peril is the 28 Napier (fn 14) at 144E-F. 29 Concord Insurance (fn 27) at 673I. 30 Ibid at 674A-B. occurrence of Covid-19 and the government’s response. So the proper question in applying the ‘but for’ test in this case is to ask whether, but for the defined event (properly understood as the occurrence of Covid-19 and the government response) would the business have been interrupted. [46] Guardrisk pushes back against this approach. It insists that even if the defined event includes a government response, it must be factually linked to the localised outbreak of the disease. On this basis it accepts that a lockdown imposed by a local authority in reaction to the outbreak would have been a factual cause of the business interruption. The national lockdown, which caused the business interruption was, however, aimed at curbing the spread of the disease throughout the country, rather than Cape Town, specifically. Therefore, contends Guardrisk, the outbreak of the disease in Cape Town did not cause the business interruption. [47] The difficulty Guardrisk cannot overcome is that its central premise is founded on an artificial separation between the occurrence of the local outbreak in Cape Town and government’s response to the national outbreak, which perforce included Cape Town, as I have pointed out earlier. As the high court put it, correctly I think, there was a ‘clear nexus’ between the local occurrence of Covid-19 and the lockdown. [48] Viewed slightly differently, because the lockdown was a response to a national outbreak, which included, predominantly, the Cape Town outbreak, Café Chameleon’s losses were due at the very least to concurrent causes. As a matter of ‘reality, predominance and efficiency’, therefore, the local outbreak and government response, was the real or proximate cause of the business interruption. This conclusion not only accords with reality but also makes good business and common sense. So, when Café Chameleon asked the question: ‘[H]as the event, on which I put my premium, actually occurred’, there could have been only one answer. [49] Having established that the local occurrence of Covid-19 and the government’s lockdown was the factual cause of Café Chameleon’s loss, the focus shifts to whether it was also the legal cause. In the court a quo, Guardrisk invoked the spectre of indeterminate liability and potential collapse of the insurance industry, should the insured’s interpretation of the clause be upheld. The court dismissed the argument on the ground that these gloomy predictions were speculative and that Guardrisk had provided no evidence regarding its own exposure. But even if this were so, it reasoned: ‘[I]t cannot be a defence for an insurer to say that it must be excused from honouring its contractual obligations because its business has unexpectedly incurred greater debt than had been expected.’31 [50] In this court Guardrisk abandoned this argument because, as is clear from Napier v Collett,32 policy considerations, such as indeterminate liability do not play a role in a contractual setting. Instead the focus is on the provisions of the insurance policy. Accepting this approach, Guardrisk thus contended that Café Chameleon had not proved that the local occurrence of Covid-19 was ‘sufficiently intimately connected with the imposition of the regulations’ to impose liability on it. 31 Café Chameleon v Guardrisk Insurance Company Ltd (fn 2) para 79. 32 Napier (fn 14) at 143J. [51] Once we accept, as I have, that the government response through the imposition of the lockdown, was both a proximate cause, or as the high court found, sufficiently closely connected to the business interruption and consequent loss, the conclusion that legal causation was proved, follows inevitably. The Financial Conduct Authorities Case [52] The parties drew our attention to a recent test case in the UK High Court involving several sample business interruption policy wordings from eight insurers.33 The case was brought by the Financial Conduct Authority (the FCA) representing the interests of insured businesses. As with the present case, the FCA sought declarations in respect of these wordings in respect of a set of agreed facts. [53] In this regard it is apparent that the United Kingdom’s regulatory response to Covid-19 was similar to South Africa’s. In the middle of March, the UK government directed people to stay at home and stop non-essential human contact and travel. On 20 March, it ordered restaurants to close, and, a few days later, it announced a national lockdown, including all non-essential businesses in its dragnet. [54] Argenta’s was one of the policies the court was asked to interpret. It had a remarkably similar infectious diseases clause to the one at issue in this appeal. It extended business interruption cover ‘for such interruption as a result of . . . any occurrence of a [notifiable human disease] within a radius of 25 miles of the [premises]. It also took care to limit its liability to £25 000, 33 Financial Conduct Authority v Arch Insurance (UK) Ltd and Others [2020] EWHC 2448 (Comm). which Guardrisk, doubtless must rue, has not done’.34 Argenta, nevertheless, sought to escape any liability by contending, as Guardrisk does here, that an insured must show that a business interruption was the ‘proximate cause’ by the occurrence of Covid-19 within the 25 mile radius. Unless it is able to do so, the argument continued, there is no cover for losses due to measures taken in response to occurrences outside the radius or of the public response to such measures.35 [55] The court found, as a matter of construction, that Argenta’s argument did not accord with the language of the policy. It reasoned that the text ‘is not expressly confined to cases where the interruption has resulted only from the instance(s) of a Notifiable Disease within the 25 mile radius as opposed to other instances elsewhere’.36 Instead, it continued, ‘the clause can and should properly be read as meaning that there is cover for business interruption consequences of a Notifiable Disease which has occurred, i.e. of which there has been at least one instance within a specified radius’.37 [56] Significantly, the court accepted, as I have, that the nature of a notifiable disease involves a government response. It explained that it is in ‘the nature of human infectious and contagious diseases that they may spread in highly complicated, often difficult to predict, and what may be described as “fluid” patterns’. The list of notifiable diseases ‘includes some which might attract a response from authorities which are not merely local authorities, and 34 Financial Conduct Authority v Arch Insurance (UK) Ltd and Others [2020] EWHC 2448 (Comm) para 150. 35 Ibid para 156. 36 Ibid para 102. Although this quote refers to another clause where the same argument was made on behalf of the insurer ie, in the RSA case, it is clear that the same reasoning was applied for this clause. 37 Ibid. which is not a purely local response’.38 I pause to mention that this observation echoes the requirement in South Africa, that a Category 1 notifiable medical condition, which includes respiratory disease caused by a novel respiratory pathogen referred to in Table of Annexure A of the Surveillance Regulations, which Covid-19 is, must be reported to the Department of Health within 24 hours. The court thus concluded that the parties to this kind of insurance ‘must have contemplated that there might be relevant actions of public authorities which affect a wide area’ and that ‘the authorities might take action in relation to the outbreak of a notifiable disease as a whole, and not to particular parts of an outbreak’.39 [57] The court also based its conclusion on its interpretation of the clauses, even though much of the insurers’ arguments were put in terms of causation. Put simply, it said that the case was about construction rather than causation.40 However, it accepted the FCA’s argument that given the nature of the cover that was provided ‘proximate causation’ would be satisfied: ‘[In] a case in which there is a national response to the widespread outbreak of a disease. In such a case we consider that the right way to analyse the matter is that a proximate cause of the business interruption is the Notifiable Disease of which the individual outbreaks form indivisible parts.’41 [58] I refer to this case with caution bearing in mind that it was decided on a set of agreed facts and that there were differences – in some instances important differences – in the language of the policies there in issue. We were 38 Financial Conduct Authority v Arch Insurance (UK) Ltd and Others [2020] EWHC 2448 (Comm) para 102. 39 Ibid. 40 Ibid para 164. 41 Ibid para 111. also informed from the bar that the UK Supreme Court is yet to deliver judgment in an appeal by both the FCA and the insurers in respect of some of these findings. This notwithstanding, I consider the court’s reasoning persuasive, at least in relation to the policies that bear a similar wording to the present one. [59] Guardrisk has three remaining arguments that require brief consideration. I deal with the Trends Clause first. The Trends Clause [60] As an afterthought, Guardrisk contends that the ‘trends’ clause or ‘other circumstances clause’ effectively denies Café Chameleon cover. The purpose of the clause in insurance contracts is to adjust the loss an insured has suffered as a consequence of the insured peril, so that the insured is put in the same trading position after the business interruption, as if it had not happened. The formula, according to which the loss is calculated, is adjusted to reflect the projected fate of the business, as if the business interruption had not occurred. Café Chameleon is not entitled to cover, it argues, because the Lockdown Regulations constituted an ‘other circumstance’ affecting the business, the effect of which is that it would have suffered a loss even if there was no local occurrence of Covid-19. [61] Guardrisk did not advance this argument in its answering papers, nor in the court a quo. On appeal Counsel merely stood by his written submissions, apparently without conviction. The short answer to this contention is that the trends clause is relevant to the quantification of loss, not liability, which is what we are here concerned with. [62] More fundamentally Guardrisk errs in construing the lockdown regulations as an ‘other circumstance’. The trends clause applies when an adjustment must be made, in its words, ‘to provide for the trend of the business and for variations or other circumstances affecting the business either before or after the Damage or which would have affected the business had the Damage not occurred’. An ‘other circumstance’ by definition, therefore, refers to an occurrence separate from or independent of the insured peril, not one that is intrinsic to it. The Lockdown Regulations, I have found, were part and parcel of the insured peril. They are not an ‘other circumstance’ as envisaged in the trends clause. If Guardrisk’s submission were correct it would have the extraordinary consequence that despite being part of the insured peril for which cover is provided, the Lockdown Regulations simultaneously operate as a circumstance to negate the cover. The Remaining submissions [63] Guardrisk persisted with two other submissions in its heads of argument, but not argued orally. The first is that the court a quo erred because the declaratory relief sought, and the order granted, did not mirror the language of the infectious diseases clause. The declaration sought was: ‘That it is declared that the respondent is obliged to indemnify the applicant in terms of the Business Interruption section of policy number HIC 0000-2950 for any loss suffered by the applicant, calculated and quantified as provided in that section, arising since 27 March 2020 from the interruption of the business as a result of the promulgation and enforcement of Regulations made by the Minister of Cooperative Government and Traditional Affairs under the Disaster Management Act 57 of 2002 in response to the Covid-19 pandemic in South Africa.’ And what was granted, but apparently not sought was: ‘That the Respondent is liable to indemnify the Applicant in terms of the Business Interruption Section of Policy number HIC 0000-02950 for any loss suffered since 27 March as a result of the Covid-19 outbreak in South Africa which resulted in the promulgation and Enforcement of Regulations made by the Minister of Co-operative Government and Traditional Affairs under the Disaster Management Act, 57 of 2002.’ [64] The infectious disease clause covers ‘loss as insured by this Section resulting in interruption or interference due to . . . notifiable Disease occurring within a radius of 50 kilometres of the Premises’. It is, therefore, contended that it was not competent for the court to grant relief that was not asked for or fell within the ambit of the clause. [65] It is apparent that, whatever the formulation of relief of the order sought or granted, the essential dispute between the parties was over whether the business interruption was due to the lockdown. That is essentially the relief that was sought and granted despite the minor differences in language. The argument is devoid of merit. [66] Finally, Guardrisk had one more technical argument, also meritless for its abject formalism. It contended that Café Chameleon relied on the wrong policy, which was the renewed policy that took effect on 1 April 2020 rather than the identical earlier policy. The lockdown commenced on 26 March, and, Café Chameleon claimed loss from 27 March. There is no dispute that both policies applied during the period for which the loss is claimed. In its replying affidavit, Café Chameleon asked the court to grant relief on whichever version of the policy it regarded appropriate. The Court a quo correctly did so. Conclusion [67] The central question in this appeal was whether the government’s imposition of a lockdown in response to multiple outbreaks of a ‘notifiable disease’ i.e. Covid-19, throughout the country, and predominantly in Cape Town, where Café Chameleon’s operates its business, was covered by the infectious diseases clause. The question was answered in favour of Café Chameleon, as was the question whether the outbreak of Covid-19 in Cape Town was the cause of its business interruption. In coming to this conclusion I am fortified by much of the reasoning in the FCA case42 and two recent judgments of the Western Cape High Court: Ma-Afrika Hotels and Another v Santam Limited43 and Interfax (Pty) Ltd and Another v Old Mutual.44 [68] In the result the following is made: ‘Paragraphs 2 and 3 of the order of the court a quo are set aside. Save as aforesaid, the appeal is dismissed with costs, including the costs of three counsel.’ __________________ A CACHALIA JUDGE OF APPEAL 42 Financial Conduct Authority (fn 33). 43 Ma-Afrika (fn 7). 44 Interfax (Pty) Ltd and Another v Old Mutual Insure Limited [2020] ZAWCHC 166. Appearances For appellant: I P Green SC (with him R Ismail and J Chanza) Instructed by: Clyde & Co Inc, Sandton Honey Attorneys, Bloemfontein For respondent: J J Gauntlett SC QC (with him S P Rosenberg SC, T Tyler, P Long and J Mitchell) Instructed by: Dunster Attorneys, Cape Town Phatshoane Henney Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL GUARDRISK INSURANCE COMPANY LTD v CAFÉ CHAMELEON CC (Case no 632/2020) [2020] ZASCA 173 (17 December 2020) From: The Registrar, Supreme Court of Appeal Date: 17 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 judgment of the Supreme Court of Appeal The Supreme Court of Appeal (SCA) today, in a unanimous judgment, dismissed an appeal by Guardrisk Insurance Company against a judgment of the Western Cape High Court upholding an insurance claim by Café Chameleon arising from the Covid-19 pandemic. It ordered Guardrisk to pay the costs of the appeal, including the costs of three counsel. Café Chameleon operates a restaurant business in Cape Town. On 27 March it was forced to close its business following the lockdown announced by the President. It suffered huge losses, as did many other businesses. It claimed these from Guardrisk, with whom it had an insurance policy. The policy covered Café Chameleon for ‘loss . . . resulting in interruption of the business due to notifiable disease occurring within 50 km of the premises’. It defined a notifiable disease as any ‘illness sustained by any person from any human infectious or human contagious disease, an outbreak of which the competent local authority has stipulated shall be notified to them’. When the lockdown was announced, Cape Town accounted for 25 percent of the reported cases nationwide and was thus predominant cause for the government’s imposition of the lockdown. Guardrisk argued that the Café Chameleon’s losses were not due to the occurrence of Covid-19 within 50 km of the business but because of the lockdown. And further that the purpose of the lockdown was to curb the spread of the disease throughout the country; it was not aimed specifically at dealing with the outbreak in Cape Town. The SCA, however dismissed the argument. It accepted Café Chameleon’s submission that its business interruption was caused by both the occurrence of the Covid-19 within the 50 km radius and the government lockdown. And also said that a fair reading of the policy provided cover for both the outbreak of the disease and the government’s national response, which included a lockdown in Cape Town.

1450

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 692/09 In the matter between: SONWABISO MAXWELL NDIMENI Appellant and MEEG BANK LIMITED (BANK OF TRANSKEI) Respondent Neutral citation: Sonwabiso Maxwell Ndimeni v Meeg Bank Limited (Bank of Transkei) (629/09) [2010] ZASCA 165 (01 December 2010) Coram: MPATI P, LEWIS, HEHER, SNYDERS and TSHIQI JJA Heard: 01 November 2010 Delivered: 01 December 2010 Summary: Recusal – On grounds of appearance of bias – acting judge, in capacity as attorney and conveyancer in private practice, having commercial relationship with one of the litigants – duty to disclose fact of commercial relationship – failure to make disclosure resulting in proceedings being a nullity. ____________________________________________________________________ ORDER ____________________________________________________________________ On appeal from: Labour Appeal Court (Davis, Jappie and Leeuw JJA sitting as court of appeal). The following order is made: 1. The application to lead further evidence is granted. 2. The appeal is upheld with costs. 3. The order of the court below is set aside and for it the following is substituted: ‘(a) The appeal is upheld with costs. (b) The order of the court below is set aside. (c) The matter is remitted to the Labour Court for trial de novo before another judge.’ _______________________________________________________________________ JUDGMENT ____________________________________________________________________ MPATI P (LEWIS, HEHER, SNYDERS and TSHIQI JJA ..........): [1] On 15 September 1998 the appellant was dismissed from his position as manager of the Lusikisiki branch of the respondent following a disciplinary enquiry. The chairman of the enquiry had found him to have acted irregularly and contrary to the standing bank procedures or practice in the execution of his duties as branch manager, particularly in respect of transactions relating to the account of Mr Y I Docrat, who owned a supermarket at Flagstaff (charge 1). There were three further charges in respect of which the appellant was found guilty and for which he was given a final written warning. It is not necessary to mention these charges for present purposes. [2] The appellant challenged the findings of the chairman of the disciplinary enquiry before the Labour Court (Zilwa AJ) on grounds of lack of procedural and substantive fairness. The Labour Court confirmed the findings of the chairman in respect of three of the charges and imposed a sanction of summary dismissal for the first charge and a final written warning for the second and third charges. The appellant subsequently gave notice of his intention to apply for leave to appeal against the order of the Labour Court, but later discovered that Zilwa AJ and ‘close members of his family’ each allegedly had some commercial relationship with the respondent. He promptly gave notice that ‘at the hearing of the application for leave to appeal on 16 November 2001’ he would apply to amend his grounds of appeal by adding the following ground: ‘Leave to appeal to the [LAC] is granted for the purpose of enabling the [appellant] to apply to the [LAC] for an order permitting the leading of oral evidence on why the trial judge should have recused himself.’ In his affidavit in support of the application to amend his grounds of appeal the appellant alleged that he believed Zilwa AJ ‘was biased in [his] case and had [he] been aware of the above facts at the time of the trial of this matter [he] would have instructed [his] representative to request him [Zilwa AJ] to recuse himself’. [3] However, for reasons that have not been disclosed, Zilwa AJ failed to hear the appellant’s application for leave to appeal, with the result that the appellant approached the Labour Appeal Court (LAC) for leave to appeal to it on the ground of constructive refusal of leave by the Labour Court. (I should mention that the application was set down for hearing on 12 November 2001, but was postponed to 16 November 2001 at the instance of the appellant. It was again postponed on that day sine die and never set down again despite the appellant’s endeavours, according to him.) The LAC granted the leave sought, but subsequently dismissed the appeal with costs. This appeal is before us with the special leave of this court. [4] At the commencement of his argument in this court counsel for the appellant sought leave, on behalf of the appellant, as was done in the LAC, to introduce the evidence upon which reliance was placed for the assertion that Zilwa AJ should not have presided at the trial but should have recused himself. It has been held that where a reasonable apprehension of bias is found to be present, the judicial officer is duty bound to recuse him or herself.1 This is so because the common-law right of each individual to a fair trial, which is now constitutionally entrenched, must be respected. The issue in this appeal, therefore, is whether the evidence sought to be introduced by the appellant satisfies the test of ‘reasonable apprehension of bias’ and, if so, whether the proceedings before the Labour Court were a nullity. [5] It is perhaps convenient, for a better understanding of the circumstances of the case, to set out a brief summary of the facts relating to the charge in respect of which the appellant was summarily dismissed. Mr Jacobus Daniel Marais, the collection manager of the respondent, testified that he discovered an activity by Docrat called ‘cross firing’ or ‘kite flying’2 on his account with the respondent, which resulted in the latter suffering a loss of approximately R9 million. In order to recoup some of its losses the respondent allowed Docrat to operate a trading account at its Lusikisiki branch, but he was not allowed an overdraft facility on it. It is not in dispute that Docrat’s loan account was managed by Marais at the respondent’s head office in Umthatha. The trading account was managed by the appellant. Although he had no overdraft facility in respect of the trading account Docrat was allowed an unofficial overdraft of R130 000. Marais testified, however, that the branch was required to report to head office as soon as the account went into overdraft. [6] In March 1998 the trading account was overdrawn by more than a million rand due to the deposit of a bad cheque for the sum of R727 190.16, which was returned three times but redeposited each time. In the meantime cheques drawn on the account were met against the uncleared positive balance reflected in it. The respondent reacted by sequestrating Docrat and closing his business. It took a loss of more than one million rand in the process. [7] The appellant, on the other hand, testified that all transactions on Docrat’s trading account were effected on the express instructions of Marais, who was responsible for the operation of the account, together with the managing director, Mr George Kaltenbrünn. He therefore contended that Marais was responsible for the loss suffered by the respondent. 1 Take and Save Trading CC & others v Standard Bank of SA Ltd 2004 (4) SA 1 (SCA) para 2. 2 This involved the depositing of cheques and drawing against uncleared effects in different accounts, in effect borrowing against non-existent funds. But Marais’s version was that he and the credit manager at head office, a certain Ms Ntuli, only monitored the overdraft part of the account, but that the administration of the account remained with the branch where it was operated. The appellant was thus to blame for the loss because he had failed to report to head office accurately and to follow established policies relating to drawing against uncleared effects. Mr Batembu Diko, the accountant at the Lusikisiki branch, testified that he acted as manager of the branch in the absence of the appellant. He said that he would report to the head office on Docrat’s account only when it was overdrawn and Docrat wished to draw on it. The authority to allow Docrat to withdraw money on his overdrawn account would thus be obtained from head office. The Labour Court disbelieved the appellant and found him guilty of misconduct as charged. [8] Although it made reference to the evidence relating to the claim of bias, the LAC did not consider this ground of appeal. Its reason for this appears from the following passage in the judgment:3 ‘Mr Pillemer, who appeared on behalf of appellant, accepted that, were this court to find, on the substance of the dispute, that the probabilities were clearly in favour of respondent after an analysis of the record, credibility questions would have no bearing on the decision, no purpose would be served by referring the case back to another judge. For this reason therefore, the critical issue turns on the evidence relating to the charge.’ The court thus proceeded to consider the evidence presented before Zilwa AJ and concluded that there was ‘simply no justification for referring this matter back for hearing before a different judge’; that the dispute ‘does not turn on the credibility findings of witnesses but on the plausibility of the evidence and an evaluation of the probabilities’, and that the competing versions ‘can be justified or rejected exclusively on the evidence placed before the [Labour Court] and which was available to this court’. The probabilities, so the court held, clearly supported the decision of the respondent to dismiss the appellant. 3 Per Davis JA (Jappie and Leeuw JJA concurring), para 7. [9] In this court Mr Pillemer, for the appellant, disputed the correctness of the LAC’s interpretation of his submission before it in this regard. And a reading of the transcript of the exchanges between the court and counsel reveals that the latter’s submission was indeed misinterpreted. The relevant part of the transcript reads as follows: ‘COURT: But if we have read this record and we are satisfied that there is absolutely no basis by which this appeal should succeed then? MR PILLEMER: It must still go back because this case turns critically on questions of credibility. COURT: So in other words with great respect if you have read a record and you read it from start to finish and there are no merits on the appeal what then it is not answering my question? Credibility is only relevant Mr Pillemer when you read a record and you are absolutely sure about it assuming one is totally sure. MR PILLEMER: If you are totally sure [that] even accepting everything the appellant says is true, he has got no case then there would be no point in sending it back I accept that. There would not be a failure of justice.’ What counsel thus conceded was that if, in spite of an acceptance of the appellant’s version, the court were still to find that the appellant has no case, there would have been no failure of justice and consequently there would be no need to refer the matter back to the Labour Court for a hearing de novo before a different judge. [10] As will become evident later in this judgment, I consider that the LAC erred in any event in failing to deal with the issue of the alleged bias. It is indeed so that the fact that an allegation of bias might be established does not necessarily mean that the entire proceedings will be vitiated.4 But where the issue is pertinently raised on appeal the appeal court should, in my view, deal with it, as failure to do so might detrimentally affect the public’s confidence in the courts. [11] Before us the appellant did not rely on the record of the proceedings at the trial for purposes of determination of the appeal. Nor was there any suggestion that Zilwa AJ exhibited actual bias ‘in the sense that he had approached the issues before him with a 4 Rondalia Versekeringskorporasie van SA Bpk v Lira 1971 (2) SA 586 (A) at 590H; President of the Republic of South Africa & others v South African Rugby Football Union & others 1999 (2) SA 14 (CC) para 42. mind which was in fact prejudiced or not open to conviction’.5 The appellant sought to have the judgment set aside and the matter referred back to the Labour Court for the trial to commence de novo before a different judge, on the grounds of an alleged commercial relationship between Zilwa AJ and the respondent, which engendered a fear that the learned acting judge would not be impartial in the case. It was submitted on behalf of the appellant that in the light of the alleged commercial relationship there had not been a fair trial. The appeal, so the argument continued, therefore turns on the question whether or not Zilwa AJ was disqualified from hearing the matter. [12] In our law the ground for the disqualification of a judicial officer is the existence of a reasonable apprehension that he or she will not decide the case impartially or without prejudice, and not that he or she will decide the case adversely to one party.6 And the question is ‘whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the Judge has not or will not bring an impartial mind to bear on the adjudication of a case, that is a mind open to persuasion by the evidence and the submissions of counsel’.7 In the same paragraph the Constitutional Court observed that ‘it must never be forgotten that an impartial Judge is a fundamental prerequisite for a fair trial and the judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reason, was not or will not be impartial’. [13] The facts upon which the appellant relied for his claim that Zilwa AJ should have recused himself are contained in an affidavit deposed to by Kaltenbrünn in answer to the appellant’s allegations in support of his application to amend his grounds of appeal. Those allegations were: ‘(a) Ms S V Zilwa, the judge’s wife is a shareholder in and director of [the respondent]; (b) . . . Ms S V Zilwa is a chartered accountant and in that capacity is sub-contracted by 5 BTR Industries South Africa (Pty) Ltd & others v Metal and Allied Workers’ Union & others 1992 (3) SA 673 (A) at 690A-B. 6 President of the Republic of South Africa & others v South African Rugby Football Union & others 1999 (4) SA 147 (CC) para 46 in which reference was made with approval to a passage in Re JRL : Ex parte CJL (1986) 161 CLR 342 (HCA) at 352. 7 President of the Republic of South Africa v South African Rugby Football Union, above n6, para 48; SA Commercial Catering and Allied Workers’ Union v Irvin & Johnson Ltd (Seafood Division Fish Processing) 2000 (3) SA 705 (CC) para 11; Sager v Smith 2001 (3) SA 1004 (SCA) para 15; Take and Save Trading CC v Standard Bank of SA Ltd, above n1 para 2. KPMG to audit the books of [the respondent]; (c) Bank of Transkei Insurance Brokers have been closed and all the work formerly done by this division is now done by Sikhona Financial Services. Ms S V Zilwa is the sole director of Sikhona Financial Services; (d) Advocate P H S Zilwa, the judge’s brother is a director of [the respondent]; (e) Mr D Z Nkonki, the judge’s brother-in-law, is an Executive Director of [the respondent]; (f) In his practice as an attorney, the judge handles commercial bonds of [the respondent] and is thus reliant on [the respondent] for a portion of his income.’ [14] As I have mentioned above, Zilwa AJ did not hear the appellant’s application for leave to appeal, which would have afforded him an opportunity to respond to these allegations in his judgment. But Kaltenbrünn responded as follows to the allegation that Zilwa AJ handles commercial bonds of the respondent: ‘The Honourable Acting Judge Zilwa is a qualified attorney in partnership with Mandela Makaula. The firm was appointed to the panel of attorneys for TNBS Mutual Bank. No work was ever done by the firm for Meeg Bank prior to 1 May 2001. Accordingly this allegation does not demonstrate any facts upon which an apprehension of bias may be founded.’ According to Kaltenbrünn the respondent merged with TNBS Mutual Bank during the beginning of 2001 although the effective date of the transaction which foreshadowed the actual merger was 1 April 2000. The two banks commenced functioning as one entity from 1 April 2001. [15] The appellant attached to his application to the LAC for leave to appeal copies of two mortgage bonds prepared by Zilwa AJ, which clearly contradict Kalternbrünn’s assertion that no work was ever done by the former’s firm of attorneys on behalf of the respondent prior to 1 May 2001. The first bond was executed at the office of the Registrar of Deeds, Umthatha, on 20 March 2000 and the second on 8 August 2000. Both bonds were passed in favour of the respondent. It is a well-known practice in this country that the mortgagee bank or financial institution takes responsibility for the registration of a bond. In the absence of any evidence to the contrary, it must be accepted that the instructions for the preparation and execution of the bonds by Zilwa AJ (as conveyancer) emanated from the respondent, as mortgagee. [16] In BTR Industries8 Hoexter JA said: ‘It is a hallowed maxim that if a judicial officer has any interest in the outcome of the matter before him (save an interest so trivial in nature as to be disregarded under the de minimis principle) he is disqualified, no matter how small the interest may be. . . The law does not seek, in such a case, to measure the amount of his interest. I venture to suggest that the matter stands no differently with regard to the apprehension of bias by a lay litigant. Provided the suspicion of partiality is one which might reasonably be entertained by a lay litigant a reviewing Court cannot, so I consider, be called upon to measure in a nice balance the precise extent of the apparent risk. If a suspicion is reasonably apprehended, then that is the end to the matter.’ That case involved a refusal by the presiding member of a three-member Industrial Court (IC), to recuse himself in a matter in which the IC was hearing an application for an unfair labour practice determination between BTR Industries (BTR) and the Metal and Allied Workers Union (union) of which BTR’s employees were members. The presiding member had attended and addressed a seminar during an adjournment in the trial, which had been organised by a certain firm of consultants and advisers on industrial and labour relations. He had been invited to the seminar by the firm of consultants upon which BTR had relied ‘very heavily’ for advice during the negotiations between it and the union on the dispute that was now before the IC. Three other speakers at the seminar, which had been advertised as ‘for management and senior legal practitioners’, were counsel representing BTR. In confirming the reviewing court’s (Didcott J) order setting aside the proceedings in the IC for the reason that the presiding member should have recused himself, this court reasoned that the facts of the matter were strong enough ‘to meet the less exacting requirements of the “reasonable suspicion of bias” test’.9 [17] The present is not a case where the judicial officer would have been automatically disqualified. The allegations against him are not that he had an interest or potential interest in the case in the sense of owning a substantial number of shares in the respondent, or that he had any other direct pecuniary interest in the outcome of the proceedings, in which event he would have been automatically disqualified.10 The rationale for this rule is that no one can be a judge in his or her own cause. But the rule (of 8 Above n5, at 694J – 695A. 9 At 696I – J. 10 See Dimes v Properties of Grand Junction Canal (1852) 3 HL 759; Re Ebner; Ebner v Official Trustee in Bankruptcy [1999] FCA 10 paras 41 – 43; Locabail (UK) Ltd v Bayfield Properties Ltd and another [2000] 1 All ER 65 (CA); Clenae Pty Ltd v Australia & New Zealand Banking Group Ltd [1999] VSA 35. automatic disqualification) does not apply only in instances where the judicial officer concerned has a pecuniary interest in the outcome of the proceedings. It also applies where a non-pecuniary interest to achieve a particular result exists. In R v Bow Street Metropolitan Stipendiary Magistrate and others, ex parte Pinochet Ugarte (No 2)11 Senator Pinochet, a former head of state of Chile, applied for an order setting aside an earlier order of the House of Lords in an appeal to it reinstating one of two warrants issued by a metropolitan stipendiary magistrate but later quashed by the Queen’s Bench Divisional Court. The warrants had authorised the arrest of Senator Pinochet so as to facilitate proceedings for his extradition to Spain to be tried there for crimes against humanity allegedly committed whilst he was head of state in Chile. The House of Lords had granted leave to Amnesty International (AI) to intervene in the appeal proceedings before it. The order of the House of Lords reinstating the warrant was by a majority of three Law Lords, among whom was Lord Hoffmann, to two. [18] Senator Pinochet’s application was based on information that came to light after the House of Lords had made its order. It transpired that Lord Hoffmann’s wife had been working at the international secretariat of AI since 1977 – the judgment of the House of Lords was given on 25 November 1998 – and that Lord Hoffmann was himself a Director and Chairperson of Amnesty International Charity Limited (the Charity), one of two registered companies that undertake work of the international headquarters of AI, and had helped, in 1997, in the organisation of a fundraising appeal for a new building for Amnesty International UK. He had also helped to organise the appeal to the House of Lords together with other senior legal figures. On the facts before it the House of Lords reasoned that AI shared with the government of Spain not a financial interest, but an interest to establish that there was no immunity for ex-heads of state in relation to crimes against humanity; and that the Charity, which has the same objects as the AI, one of which is ‘to procure the abolition of torture, extra-judicial execution and disappearance’, plainly had a non-pecuniary interest to establish that Senator Pinochet was not immune. [19] After a discussion on the rule relating to automatic disqualification due to pecuniary interest the court said: 11 [1999] 1 All ER 577 (HL). ‘But if, as in the present case, the matter at issue does not relate to money or economic advantage but is concerned with the promotion of the cause, the rationale disqualifying a judge applies just as much if the judge’s decision will lead to the promotion of a cause in which the judge is involved together with one of the parties.’12 The court thus concluded that Lord Hoffmann, being a member of AI, ‘would have been automatically disqualified because of his non-pecuniary interest in establishing that Senator Pinochet was not entitled to immunity’. It consequently set aside its order of 25 November 1998 reinstating the warrant. In the course of its judgment the House of Lords remarked that the mere fact of a judicial officer’s interest in the cause is sufficient to disqualify him ‘unless he has made sufficient disclosure’.13 As to the other factors, such as the connection between AI and Lady Hoffmann and Lord Hoffmann’s involvement in organizing the appeal to it, the House of Lords found that these factors might have been relevant if Senator Pinochet had been required to show ‘a real danger or reasonable apprehension of bias’.14 [20] I have indicated above that in the present matter the appellant did not allege that Zilwa AJ had a pecuniary interest in the outcome of the case, but that there is a commercial relationship between him and the respondent, which engendered in him (appellant) a reasonable apprehension that the learned acting judge would not be impartial. Zilwa AJ is an attorney who would have returned to his practice at the end of his acting appointment. Problems that arise when members of the legal profession, in particular members of the Bar and Side-Bar, act on the bench, were discussed in Locabail15 where the learned Lord Justices of the Court of Appeal said the following in respect of attorneys (solicitors): ‘But we think the problems can usually be overcome if, before embarking on the trial of any assigned civil case, the solicitor . . . conducts a careful conflict search within the firm of which he is a partner. . . While parties for and against whom the firm has acted, and parties closely associated, would (we hope) be identified, the possibility must exist that individuals involved in such parties, and parties more remotely associated, may not be identified. When in the course of a trial properly embarked upon some such association comes to light (as could equally happen with a barrister- 12 Per Lord Browne-Wilkinson at 588e – f. 13 At 586f. 14 At 588j – 589a. 15 Above, n10. judge), the association should be disclosed and addressed, bearing in mind the test laid down in R v Gough.’16 (The test laid down in R v Gough17 is whether ‘. . . in the circumstances of the case . . . it appears that there was a real likelihood, in the sense of a real possibility, of bias . . .’ on the part of the judicial officer, which is not the test in this country.) [21] It seems obvious, as the Court of Appeal observed in Locabail, that there can be no reasonable apprehension of bias if the judicial officer does not know of the facts that would be relied upon as giving rise to a conflict of interest. In the present matter Zilwa AJ executed the second bond on 8 August 2000. Only six days thereafter, on 14 August 2000, he commenced with the hearing of evidence in the trial of this matter. In my view, he must have known at the commencement of the trial, that six days before, and at least once before that, he had executed bonds on behalf of the respondent. The appellant’s application to the LAC for leave to appeal was opposed by the respondent. The opposing affidavit was deposed to by Mr Hendrik Stefanus Coetzee, a director of the respondent’s Johannesburg attorneys. He asserted, on the instructions of his client, that Zilwa AJ was not employed by the respondent ‘at the time that he heard this matter’ and denied that the respondent ‘was in any position to have exerted undue influence on the Judge’. He further denied that the two copies of the bond documents demonstrated that Zilwa AJ ‘was employed’ by the respondent. He continued by saying that whilst the documents seemed to suggest that Zilwa AJ was a conveyancing attorney who registered a bond in favour of the respondent, there was no indication that that was on the instructions of the respondent or that the respondent remunerated him for those services. [22] I have already held that it must be accepted, in the absence of evidence to the contrary, that the instructions to prepare and execute the bonds emanated from the respondent. In my view, it was open to the respondent and Zilwa AJ to rebut the prima facie evidence presented by the appellant that Zilwa AJ executed the bonds on behalf of the respondent. They failed to do so. It would have been quite easy for the respondent to state that the bonds were not executed on its instructions and that it never remunerated Zilwa AJ’s firm for them. It is true that in his affidavit in support of the respondent’s 16 Ibid at 76. 17 [1993] 2 All ER 724 (HL). opposition to the appellant’s application for leave to amend his grounds of appeal Kalternbrünn stated that no work was ever done by Zilwa AJ’s firm on behalf of the respondent. But after the appellant had produced copies of the bond documents one would have expected the respondent, or Zilwa AJ, to have stated pertinently that the bonds were not executed on behalf of the respondent, and that the latter never remunerated the firm for the services rendered. [23] It must be remembered that the case before Zilwa AJ concerned the fairness or otherwise of the appellant’s dismissal by the respondent. Two of the witnesses who testified at the trial on behalf of the respondent, namely Marais and Kalternbrünn, were senior members of the respondent’s management stationed at head office. The appellant was their subordinate. Their evidence, particularly Marais’s, was to be weighed against his because he was placing the blame for the respondent’s financial loss on Marais, while Marais was placing it on him. Moreover, the instructions given to the firm of which Zilwa AJ was a partner by the respondent for the preparation and execution of bonds were not a once-off occurrence – and I express no view as to whether a once-off occurrence would have made any difference. The firm is said to be on the respondent’s list of attorneys to whom such instructions are given. (It has not been disputed that the firm is on the respondent’s list, but merely that it ‘was appointed to the panel of attorneys for TNBS Mutual Bank’, which, we know, merged with the respondent.) In my view, the appellant would be entitled to believe, reasonably so, that Zilwa AJ would have expected to receive more instructions in the future from the respondent to prepare and execute bonds on its behalf. In these circumstances, I agree with the submission of counsel for the appellant that Zilwa AJ was obliged to disclose his relationship with the respondent, so that the appellant could decide whether to request him to recuse himself, or to waive his right to do so. In my view, the facts satisfy the requirements of the ‘reasonable apprehension of bias’ test. [24] Counsel for the respondent conceded that Zilwa AJ should have made disclosure of his relationship with the respondent, in the circumstances of this case, and that the logical conclusion from his failure to do so was that the proceedings before him would be a nullity. He contended, however, that the present being a labour matter which, in terms of the purpose for which the Labour and Labour Appeal Courts were created, should have been dealt with expeditiously, and in view of the fact that the appellant’s dismissal was confirmed almost ten years ago (Zilwa AJ delivered his judgment on 9 March 2001), this court should not set aside the proceedings of the trial court. He argued that this is a case where this court should consider the merits of the appeal as it can be disposed of on the probabilities. There is no reason, in my view, why the appellant or litigants in labour disputes generally, should be denied their right to a fair trial, to which everyone else is entitled. In cases where the judicial officer refuses to recuse himself or herself when he or she should in fact have done so, what occurs thereafter, ie the continuation of the proceedings, is a nullity.18 [25] In view of the conclusion I have reached it is unnecessary for me to consider the other factors raised by the appellant as giving rise to a reasonable apprehension of bias. In the result the following order is made: 1. The application to introduce further evidence is granted. 2. The appeal is upheld with costs. 3. The order of the court below is set aside and for it the following is substituted: ‘(a) The appeal is upheld with costs. (b) The order of the court below is set aside. (c) The matter is remitted to the Labour Court for trial de novo before another judge.’ ____________________ L Mpati President 18 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) at 8J – 9G and the cases there cited. APPEARANCES APPELLANTS: M Pillemer SC Instructed by Jafta Incorporated, Durban; Matsepes Inc., Bloemfontein RESPONDENT: F A Boda Instructed by Cliffe Dekker Hofmeyr Inc, Benmore; Naudés, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 01 December 2010 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. * * * SONWABISO MAXWELL NDIMENI v MEEG BANK LIMITED (BANK OF TRANSKEI) Mr Sonwabiso Ndimeni was dismissed from his position as manager of the Lusikisiki branch of Meeg Bank consequent upon the findings of a disciplinary enquiry that he had acted irregularly and contrary to the standing bank procedures and practice in the execution of his duties as branch manager. In respect of one of four misconduct charges against him it had been alleged that he had caused substantial financial loss to the bank, particularly in relation to the handling of the account of a certain client of the bank. The Labour Court upheld the findings of the chairman of the disciplinary enquiry and imposed a sanction of summary dismissal. However, before judgment was delivered, Mr Ndimeni discovered that the acting judge, an attorney, had some commercial relationship with the bank; the firm in which he was a partner was on the bank’s list of attorneys to whom the bank gave instructions to prepare and execute mortgage bonds. Mr Ndimeni then sought leave to introduce this evidence on appeal to the Labour Appeal Court, alleging that because of the commercial relationship between the acting judge and the bank, there was a reasonable apprehension that the judge would not be impartial in the case and that the acting judge should therefore not have presided in the matter. The Labour Appeal Court did not deal with this complaint on appeal but decided the matter on the probabilities and dismissed the appeal. On further appeal to it the Supreme Court of Appeal held, in a judgment delivered on 1 December 2010, that in the circumstances of the case the acting judge should have disclosed his relationship with the bank so that Mr Ndimeni could decide whether or not to apply for his recusal. He failed to do so. The court accordingly held that the facts of the case satisfied the ‘reasonable apprehension of bias’ test. It set aside the orders of the Labour Appeal Court and the Labour Court and remitted the matter to the Labour Court for trial de novo before another judge.

3574

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1212/19 In the matter between: THE MINISTER OF POLICE APPELLANT And UNDERWRITERS AT LLOYDS OF LONDON RESPONDENT Neutral citation: The Minister of Police v Underwriters at Lloyds of London (Case no 1212/19) [2021] ZASCA 72 (8 June 2021) Coram: WALLIS and MAKGOKA JJA and KGOELE, PHATSHOANE and GOOSEN AJJA Heard: 14 May 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 8 June 2021. Summary: Delict – claim against Minister by insurance underwriters on ceded claim – involvement of members of police in robbery of company providing security and cash management services to banks – employee of company conspiring with robbers – proposed amendment of plea to introduce defence based on principles of ex turpi causa non oritur actio and in pari delicto potior est conditio defenditis alternatively common law principle of illegality – availability of proposed defence – respondent alleged to be vicariously liable for conduct of employee – no basis to attribute fault to respondent to found participation in illegal conduct – proposed amendment rendering plea excipiable - position of concurrent and joint wrongdoers discussed––appeal dismissed. _ ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mavundla 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 Goosen AJA (Wallis and Makgoka JJA and Kgoele and Phatshoane AJJA concurring) [1] A dispute over a proposed amendment to the appellant's plea is the subject of this appeal. It arose in the following circumstances. On the night of 27 and 28 April 2014 a group of robbers gained entry to the premises of SBV Services (Pty) Ltd (SBV) in Witbank, accessed a secure vault and made off with approximately R100 million, which SBV was holding on behalf of several banks. Investigation of the robbery established that a number of persons, including two police officers, Warrant Officer Khubeka (Khubeka) and Detective Constable Lekola (Lekola) were involved in the planning and execution of the robbery. The investigation also established that an employee of SBV, Ms Gift Nkosi (Ms Nkosi), who was employed as a security compliance officer, had conspired with Khubeka and Lekola and had provided information to them to facilitate the commission of the offence. [2] The respondent, Underwriters at Lloyds of London (the Underwriters), had provided insurance cover to SBV against this type of event. This was in terms of a written contract of insurance rendering them liable to compensate SBV for losses that it might incur arising from the provision of the cash handling and storage services it offered to its clients. Under the terms of the written contracts concluded with its clients, Standard Bank, First Rand Bank, Absa Bank and Nedbank, SBV was said to be obliged to compensate them for any and all losses incurred as a result of the theft or destruction of cash held by it on behalf of its banking clients.1 They have done so and in turn the Underwriters paid SBV in terms of the insurance policy. [3] Thereafter the Underwriters took cession of the banks' claims against SBV and third parties, including the Minister, and cession of SBV’s claims arising from the robbery. It instituted a delictual claim against the Minister of Police in which it claimed damages in an amount in excess of R100 million. The cause of action was based on the allegation that the appellant’s employees, Khubeka and Lekola, had acted within the course and scope of their employment as police officers in failing in their legal duties to prevent the robbery and not to participate in criminal activity. It was alleged that this rendered the appellant, the Minister of Police (the Minister), vicariously liable for the losses incurred as a result of the robbery. [4] The Minister raised defences founded upon the terms of the contractual relationship between SBV and its clients which, it was alleged, limited the liability of SBV. It was accordingly pleaded that the Underwriters had not 1 There were some differences between the contracts concluded with the different banks but these did not affect the issues before us. incurred liability to compensate SBV and therefore had not suffered losses for which the Minister was liable. In relation to the element of vicarious liability, the Minister denied that it was so liable. A number of admissions had been made in relation to these defences at pre-trial conferences. Both the defences and the admissions remain extant and it is unnecessary for us to consider them further. [5] The trial was scheduled to commence in the high court on 7 October 2019. Shortly before the commencement of the trial the Minister gave notice of its intention to amend its plea. The trial court, Mavundla J, after hearing argument at the commencement of the trial, dismissed the application in an ex tempore judgment. On 9 October 2019 the trial court furnished reasons for the order in the light of an intention to appeal the order. It thereafter granted leave to appeal to this court. The trial was, inevitably, postponed. [6] The proposed amendment sought to delete paragraph 11 of the plea (which contained a blanket denial of facts pleaded in relation to the robbery at SBV’s premises) and replace it with the following averments: ‘11.1 Save for admitting that a robbery occurred at the place and date alleged, Defendant has no knowledge of the remainder of the allegations and accordingly deny same. 11.2 Defendant further pleads that Ms. S. G. Nkosi, who was during the relevant period employed by SBV Witbank (“SBV”) as security and compliance officer, wilfully and intentionally participated in the planning, preparation and execution of the robbery by inter alia; What followed were a number of subparagraphs that detailed conduct on the part of Ms Nkosi indicative of her collaboration and conspiracy with the co- perpetrators of the robbery. The pleading then proceeded: 11.3 Defendant denies, based on the principles of ex turpi causa non oritur actio and / or in par delicto and / or the common law principle that courts ought not to sanction or encourage illegal activity that the Plaintiff has a claim against Defendant for inter alia the following reasons: 11.3.1 SBV is vicariously liable for the conduct of Gift [Ms. Nkosi] as pleaded above; and 11.3.2 Gift intentionally participated in the robbery that allegedly caused the damages Plaintiff now claims from the Defendant in this action; and 11.3.3 SBV participated in the alleged illegal conduct and is a joint wrongdoer who intentionally planned and perpetrated the robbery which allegedly caused damages to SBV; and 11.3.4 SBV’s claim against Defendant was ceded to Plaintiff and / or Plaintiff claims on the basis of subrogation.’ [7] The Underwriters opposed the proposed amendment on the basis that the defence sought to be pleaded was bad in law; that it lacked averments necessary to sustain a cause of action; and, accordingly, that the amendment would render the plea excipiable. The trial court dismissed the application to amend the plea on two bases. It held that the vicarious liability of SBV for the unlawful conduct of Ms Nkosi cannot be used “as a shield to ward off” a claim directed against the Minister. As such the proposed amendment did not introduce a triable issue. The court also held that the belated introduction of the amendment, given that the facts supporting the amendment had been known to the Minister for some time, militated against granting the amendment. [8] Before this court it was argued that the trial court’s conclusion that the amendment did not introduce a triable issue, was wrong. The argument was based on what counsel contended was a generally applicable principle of the common law, that a court will not sanction illegality. On this basis, so it was argued, the maxims ex turpi causa non oritur actio and in pari delicto potior est conditio defenditis applied. The pleaded facts, so the argument went, established that SBV was a ‘co-perpetrator’ insofar as the robbery was concerned. Accordingly, it (and by extension the Underwriters) could not profit from its own wrongdoing by pursuing a claim against the other wrongdoer. It was submitted that, insofar as might be necessary, the common law ought to be developed to recognise the application of the principle of illegality in relation to a delictual cause of action. [9] Counsel for the Underwriters argued that the pleaded ‘defence’ was founded upon a misconception of the basis upon which SBV may be held liable for the conduct of its employee, Ms Nkosi. It was submitted that no basis existed to attribute Ms Nkosi’s intentional and unlawful conduct to SBV. SBV was accordingly not a party to any illegal conduct and no basis existed to non-suit it (and by extension the Underwriters) against those joint wrongdoers who conspired to cause SBV harm through their unlawful conduct. [10] The scope and operation of the maxims ex turpi causa and in pari delicto was definitively set out by this court in Jajbhay v Cassim.2 Watermeyer JA after tracing the condictio ob turpi vel iniustum causam and the exceptions thereto said the following:3 2 Jajbhay v Cassim 1939 AD 537. 3 Ibid at 550 – 551. ‘The principle underlying the general rule is that the Courts will discourage illegal transactions, but the exceptions show that where it is necessary to prevent injustice or to promote public policy, it will not rigidly enforce the general rule. The real difficulty lies in defining with any degree of certainty the exceptions to the general rule which it will recognise.’ [11] In a concurring judgment Stratford CJ identified the essential character of the maxims in the following terms:4 ‘We are concerned with the application of two legal maxims taken from Roman law by all modern civilised legal systems. The first is the maxim ex turpi causa non oritur actio and the second in pari delicto potior conditio defendentis. They have been called "cognate" doctrines, an expression, which I think, perhaps has served to confuse their essential distinctive character. In my view the first maxim prohibits the enforcement of immoral or illegal contracts and the second curtails the right of the delinquents to avoid the consequences of their performance or part performance of such contracts.’ (Emphasis added.) [12] Stratford CJ went on to explain that: ‘The moral principle which inspired the enunciation of those two maxims is obvious and has often been expounded. It is to discourage illegality and immorality and advance public policy.’ [13] The exposition of the law in Jajbhay v Cassim has been consistently followed by our courts since 1939. Reference need not be made to the many cases which have referred to and applied the principles it enunciated.5 4 Ibid at 540. 5 For a more recent treatment see Afrisure CC and Another v Watson NO and Another [2008] ZASCA 89; 2009 (2) SA 127 (SCA), [2009] 1 All SA 1 (SCA). [14] In debating the argument that the maxims ex turpi causa non oritur actio and in pari delicto potior conditio defenditis are to be applied in the context of a delictual claim, counsel on both sides referred us to a Canadian judgment and a number of English cases dealing with these principles. They could not, however, point to any South African authority which suggested that these maxims have found application outside the field of contract and restitution under the condictiones, on which our law of enrichment is based. Nor could I find any such authority. For reasons which will be set out more fully below it is not necessary to decide whether these maxims, as presently applied by our courts, find application in the context of a delictual claim and if so, whether a defence based upon such principles is sound in law. Nor is it necessary to traverse the foreign authorities to which reference was made or to consider the effect of the judgment in Patel v Mirza6 by which the English law on the maxims has been clarified in terms very similar to the law as laid down in Jajbhay v Cassim. [15] The reason for this lies in the manner in which the Minister has framed the proposed amendment of the plea. This court is not concerned with the merits of the plea. It is concerned with a far narrower determination, namely whether the pleading introduces a sustainable defence in the sense that it sets out averments which if established at trial would afford a defence or whether in its form it is excipiable. [16] In order to place the plea in a proper perspective it is necessary to examine the nature of the claim by the Underwriters. They advanced their 66 Patel v Mirza [2016] UKSC 42; [2017] AC 467; [2017] 1 All ER 191 (SC). claim on three distinct bases. First, they sued as cessionary of SBV's claim against the Minister. Secondly, they sued on the basis that they had been subrogated to SBV's claim in consequence of their obligation to indemnify SBV against its liability to the banks. Thirdly, they sued as cessionaries of the banks' claims against both SBV and the Minister. All three bases were advanced in delict on the basis of a breach by the two policemen of a 'statutory, constitutional and/or legal duty' owed to SBV to prevent the robbery and resultant loss and not to take part in such criminal activity. No separate legal duty was alleged in relation to the claims ceded to the Underwriters by the banks. Notwithstanding the absence of any such allegation, it was alleged that the Minister became vicariously liable to each of the banks and their retail customers for the loss each client sustained in the robbery.7 It is unclear on what basis the Underwriters contended that a breach of a duty owed to SBV gave rise to a claim by the banks against the Minister. [17] The first two bases pleaded by the Underwriters are based upon a legal duty owed by the South African Police Service to protect SBV against crime and to prevent the robbery. SBV possessed, but did not own, the money that was stolen and alleged various bases upon which it nonetheless claimed to have suffered loss as a result of its being stolen. The claim advanced by the Underwriters on the first two grounds was therefore SBV's claim. This leads to the first significant problem with the proposed amendment, namely that it involves an allegation that SBV is vicariously liable for a theft from 7 The respondent's heads of argument ignored the first of these bases and suggested that the Underwriters had a claim for the loss they had suffered due to the robbery in consequence of being liable to indemnify SBV. Such a claim was not pleaded, does not appear to be based on any legal duty owed by the Minister to the Underwriters and seems on the face of it to be entirely novel. As it was not pleaded it can be disregarded. itself. In this regard Absa Bank v Bond Equipment (Pretoria) Pty Ltd8 is instructive. [18] In that matter, Bond Equipment (the plaintiff) had instituted a claim for damages against the Bank (the defendant) based on the alleged negligence of the defendant’s employees. It was alleged that the plaintiff was the true owner of non-transferrable cheques which were delivered to its employee, one Steyn, who stole the cheques. The defendant collected the cheques for payment to Bond Equipment (Pretoria) (not the plaintiff) an account set up by Steyn. The defendant defended the action on the basis that it was absolved from liability for its negligence because the plaintiff was vicariously liable for Steyn’s conduct. [19] Harms JA, writing for the majority, said the following: ‘Two of the questions of law are interrelated and they are (a) whether the plaintiff is in law vicariously liable for the actions of Steyn (its employee who stole the cheques) and (b) whether the Bank is liable to the plaintiff for any negligent actions performed by its employees in view of Steyn’s conduct as described in the stated case. In order to answer these questions, it is necessary to understand the defence upon which the Bank wishes to rely. Its case is that Steyn, acting within the course and scope of his employment with the plaintiff, stole the cheques after they had come into his possession; since Steyn was so acting as employee, the plaintiff is vicariously “liable” for his intentional wrongful act; the Bank’s employees were merely negligent in collecting the cheques on Steyn’s behalf; a plaintiff who acts with dolus (albeit through an employee) cannot claim damages from a negligent defendant; therefore the Bank cannot be held liable for the plaintiff’s loss. 8 Absa Bank v Bond Equipment 2001 (1) SA 372 (SCA); [2001] 1 All SA 1 (A). In the court below Willis AJ had some difficulty with the formulation of question (a) and redrafted it by asking whether the plaintiff is in law vicariously liable to the defendant for the actions of Steyn (at 67I). Both the formulation and the original question tend to obscure the issue. A plaintiff can never be “liable” to another for a delict committed against him. The theft was not a delict vis-à-vis the Bank and vicarious liability on the part of the plaintiff can therefore not arise. The question which should have been posed is whether the plaintiff is answerable or responsible for the theft by Steyn, in other words, whether his (intentional) wrongdoing can be taken into account in reducing or expunging the liability of the concurrent wrongdoer (the Bank).’(Emphasis added) [20] The passage I have emphasised from Harms JA's judgment is applicable in the present case. Ms Nkosi's theft of the money in SBV's possession, in conjunction with the other robbers, was not a delict vis-à-vis the Minister. Accordingly, no question of vicarious liability on the part of SBV for her actions arises as alleged in para 11.3.1 of the amendment. It follows that SBV cannot have 'participated' in the robbery as alleged in para 11.3.3. The whole notion of someone participating in a robbery, where they are both the person robbed and at the same time liable in delict for the actions of the robber, is a contradiction in terms.9 The proper question, as Harms JA pointed out, is whether the conduct of Ms Nkosi can be taken into account in reducing or expunging the liability of the Minister. [21] In this case SBV might be vicariously liable to its clients, the banks, for harm they suffered in consequence of Ms Nkosi’s conduct, but it is not vicariously liable to itself. If, as a consequence of delictual conduct on the part of an employee, such as Ms Nkosi acting in concert with employees of the Minister, SBV had suffered harm, SBV was entitled to institute a delictual 9 There may be a liability in contract, as in this case, as between SBV and the banks. claim against the appellant and Ms Nkosi, or any other member of the gang of robbers. Ms Nkosi could hardly contend in her defence that, by virtue of the fact that her conduct would theoretically render SBV liable to another party, SBV had no claim against her because her fault was to be attributed to it. The delict was committed against SBV. For the same reason Ms Nkosi's conduct cannot be attributed to SBV in order to enable the Minister to resist the Underwriters' claim. [22] That takes me to the next problem with the draft amendment, namely, the allegation that the Minister and SBV were joint wrongdoers in relation to the robbery. The distinction between joint wrongdoers and concurrent wrongdoers was explained in Lloyd-Gray in the following terms:10 ‘At common law a distinction is drawn between joint wrongdoers and concurrent wrongdoers. … Joint wrongdoers are persons who, acting in concert or in furtherance of a common design, jointly commit a delict. They are jointly and severally liable. Concurrent wrongdoers, on the other hand, are persons whose independent or “several” delictual acts (or omissions) combine to produce the same damage … It was accepted by this Court in Union Government (Minister of Railways) v Lee 1927 AD 202 that, subject always to there being an intact chain of causation, one concurrent wrongdoer may be sued for the full amount of the plaintiff’s loss, ie that concurrent wrongdoers are liable in solidum … ….The distinction between joint and concurrent wrongdoers is of course now largely academic in view of the provisions of the Act which recognise and regulate a right of contribution between “joint wrongdoers” who are so defined as to include both joint and concurrent wrongdoers at common law. Joint wrongdoers are undoubtedly jointly and severally liable at common law. This has always been so even when the one paying was not entitled to recover a contribution from 10 Nedcor Bank t/a Nedbank v Lloyd-Gray Lithographers (Pty) Ltd 2000 (4) SA 915 (SCA). another. The absence of a right to a contribution inter partes has no effect on their joint and several liability to the plaintiff. In the case of concurrent wrongdoers a right to a contribution has generally been recognised …. But even if in a particular case such a right were not to be afforded, that would not affect the nature of their liability to the plaintiff. In any event, it is difficult to appreciate why a concurrent wrongdoer guilty of culpa who pays a plaintiff in full should be precluded from having recourse against a concurrent debtor guilty of dolus. At common law a defendant guilty of dolus could not raise a defence of contributory negligence on the part of the plaintiff (Pierce v Hau Mon 1944 AD 175 at 197–198) and this rule and the denial of a right of recourse against a joint wrongdoer were probably founded on the principle embodied in maxims such as ex dolo malo non oritur actio and ex turpi causa non oritur actio…. Joint wrongdoers, having committed the delict acting in concert or in furtherance of a common design, would usually have acted wilfully. But if a concurrent wrongdoer guilty of culpa has recourse against another concurrent wrongdoer similarly guilty of culpa it follows a fortiori that he would have such right against a concurrent wrongdoer whose fault took the form of dolus.’ [23] I accept that Ms Nkosi and the two policemen, together with other members of the gang,11 were joint wrongdoers in relation to SBV insofar as the robbery was concerned. But that does not mean that their respective employers are joint wrongdoers on the basis of vicarious liability for their actions. As already pointed out SBV cannot be liable to itself for the robbery. The only basis upon which it could be contended that SBV and the Minister are joint wrongdoers would be in relation to an un-particularised duty owed to the banks. But the pleaded basis for the Minister's alleged liability is a breach of the legal duty to prevent crime and safeguard the public against it.12 The liability of SBV to the banks is contractual not delictual.13 Given the 11 Thirteen individuals were subsequently convicted of various charges and significant evidence was given for the State by Ms Nkosi and another member of the gang. 12Minister of Safety and Security v Van Duivenboden [2002] 6 SA 431 (SCA) paras 21-22. 13 Trustees for the time being of Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd [2005] ZASCA 109; 2006 (3) SA 138 (SCA); [2007] 1 All SA 240 (SCA) paras 21-26. different legal bases for claims by the banks against both SBV and the Minister they cannot be joint wrongdoers under the common law as alleged in para 11.3.3.14 [24] The proposed plea, in my view, fundamentally misconstrues the concept of vicarious liability. ‘Vicarious liability’ is a form of liability which is imposed upon one person for the wrongful and unlawful conduct of another. It is, in essence, a strict liability, that is, liability which arises through no fault on the part of the person held liable. It is imposed by law on the basis of the nature of the relationship between the actual wrongdoer and the person held liable.15 Whether, in a particular case, the law requires that liability be imposed is a matter informed by legal and public policy and the values that underpin the operation of the law. In the present matter the application of the principles by which, and the test for vicarious liability need not concern us. What is at issue is the nature of the concept of vicarious liability itself, and what the consequence is of a pleading premised thereupon. [25] In Minister of Safety and Security v F16 Nugent JA said, ‘Vicarious liability has a long but uncertain pedigree. In essence, it may be described as the liability that one person incurs for a delict that is committed by another, by virtue of the relationship that exists between them. There are two features of vicarious liability in its traditional form that are trite but they bear repetition. The first is that vicarious liability arises by reason of a relationship between the parties and no more – it calls for no duty to be owed by the person who is sought to be held liable nor for fault on his part. The second 14 The expression 'joint wrongdoer in the Apportionment of Damages Act 34 of 1956 encompasses both joint and concurrent wrongdoers. 15 Minister of Safety and Security and Others v Van der Walt and Another [2014] ZASCA 174 (SCA), [2015] 1 All SA 658 (SCA) at par 23. 16 Minister of Safety and Security v F [2011] ZASCA 3; 2011 (3) SA 487 (SCA) at par 15. feature is that it is secondary liability – it arises only if there is a wrongdoer who is primarily liable for the particular act or omission.17 [26] Since vicarious liability is, insofar as the liable party is concerned, not fault based, the imposition of liability upon that person does not involve the attribution of fault. In simple terms this means that the intention to commit unlawful conduct on the part of the primary wrongdoer (in this instance Ms Nkosi) is not attributed to the party secondarily liable (in this instance SBV). Paragraph 11.3.3, as pleaded, is therefore, as a matter of law, in conflict with the concept of vicarious liability pleaded in paragraph 11.3.1 of the proposed amendment [27] The Underwriters claims, on the basis of having taken cession of the banks’ claims against wrongdoers who caused them harm consequent upon the robbery, are delictual claims which, at least notionally, may be pursued against several parties. The possibilities are that they lie against the Minister on the basis of its vicarious liability for the conduct of Khubeka and Lekola; against SBV on the basis of its vicarious liability for Nkosi’s conduct, and probably directly against Nkosi and other members of the gang. In each instance the basis upon which liability would need to be established would differ – a different set of duties would be involved and a different set of policy considerations would apply. In the case of the Minister and SBV, the actions for which they are said to be vicariously liable are independent of one another, but contributed to the same loss to the banks. They would be 17 Although the Constitutional Court reversed the judgment in Minister of Safety and Security v F (supra) (see F v Minister of Safety and Security 2012 (1) SA 536 (CC)), it did so upon the application of the test to establish vicarious liability on the part of the Minister and without comment upon the SCA’s exposition of the concept of vicarious liability. concurrent wrongdoers at common law. Their conduct vis-à-vis the primary wrongdoers who acted in concert would also be concurrent.18 Since the losses suffered by the banks would involve several concurrent wrongdoers, the position of the wrongdoers inter se, may be regulated by the Apportionment of Damages Act 1956 (the Apportionment Act). This is the point made by Harms JA in the passage quoted above.19 [28] The parties were requested by the court to address this question directly. Counsel for the Minister took the view that the Act does not apply on the basis that the Act seeks to deal with contributory negligence and that the term ‘fault’ as used in the Act does not contemplate intentional conduct. Counsel, however, suggested in supplementary heads of argument on this point that in the event that the trial court found that the maxims ex turpi causa and in pari delicto did not apply it would be open to it to determine the liability inter se on the basis of negligence. What was clear from their submissions was that reliance on the Apportionment Act raises a number of difficult issues that have not been fully debated before us and do not arise under the existing pleadings or the amendment.20 It is preferable therefore to say nothing further under this head. [29] The proposed pleading is, in its formulation, bad in law and will result in the pleading being excipiable for the reasons I have given. It follows that 18 See Nedcor Bank t/a Nedbank v Lloyd-Gray Lithographers (Pty) Ltd 2000 (4) SA 915 (SCA). 19 In any proceedings where this was raised attention might have to be given to the implications of the judgment in Thoroughbred Breeders’ Association of South Africa v Price Waterhouse 2001 (4) SA 551 (SCA); [2001] 4 All SA 161 (SCA). 20 We were referred under this head to Greater Johannesburg Metropolitan Council v Absa Bank t/s Volkskas Bank 1997 (2) SA 591 (W); Randbond Investments (Pty) Ltd v FSP (Northern Region) (Pty) Ltd 1992 (2) SA 608 (W); and Lloyd Gray Lithographers v Nedcor Bank Ltd t/a Nedbank 1998 (2) SA 667 (W). the trial court was correct to dismiss the application for leave to amend the plea. As I have stated, the trial court refused leave to amend also on the ground that the delay in seeking to amend was inadequately explained and would give rise to prejudice. That aspect of the case was rendered academic when the trial was postponed to allow the appeal to be prosecuted. [30] In the result I make the following order: The appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel. ________________________ G GOOSEN ACTING JUDGE OF APPEAL Appearances For appellant: M. M. W. Van Zyl SC, with him C.G.V.O. Sevenster Instructed by: State Attorney Bloemfontein For respondent: M. A. Kriegler SC, with him N. K Nxumalo Instructed by: Norton Rose Fulbright 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: 8 June 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. Minister of Police v Underwriters at Lloyds of London (Case No 1212/2019) [2021] ZASCA 72 (8 June 2021) The Supreme Court of Appeal (the SCA) today dismissed an appeal against an order of the Gauteng Division of the High Court, Pretoria (Mavundla J) (the high court) dismissing an application to amend a plea filed on behalf of the Minister of Police (the Minister)in an action brought by the Underwriters at Lloyds of London (the Underwriters). The action arose from a robbery carried out at the premises of SBV Services (Pty) Ltd (SBV) in Witbank in April 2014. Two members of the South African Police Services had conspired with, inter alia, en employee of SBV to carry out the robbery. An amount in excess of R100 million was stolen. SBV provided cash managing and depository services to several banks. The cash stolen was owned by these banks. The Underwriters provided insurance cover to SBV to insure it against an event such as occurred in the robbery. The Underwriters settled SBV’s insurance claim and took cession of its claims to recover its losses from the persons responsible. The Underwriters instituted a claim in delict against the Minister alleging that the Minister was vicariously liable for the unlawful conduct of the members of the Police Services who had participated in and carried out the robbery. When the trial commenced before the high court the Minister sought to amend its plea to introduce a defence based on the common law principle of illegality to the effect that a court will not countenance illegal activity and will not allow a party who acts illegally or unlawfully to profit from its own unlawful conduct. The proposed amendment asserted that since SBV is vicariously liable for the conduct of its employee who participated in the robbery, SBV was a party to the illegal and unlawful conduct giving rise to its loss. It was, for this reason, precluded from claiming damages against the Minister. The high court rejected the argument. It found that the proposed defence is bad in law and does not introduce a triable issue. Leave to appeal to the SCA was granted by the high court. The SCA found that the high court was correct to dismiss the application to amend. It held that the Minister had fundamentally misconstrued the concept of vicarious liability. Vicarious liability, it held, does not involve the attribution of the fault of the primary wrongdoer (the employee) to the employer. The Minister’s reliance on the ‘vicarious liability’ of SBV was misplaced since the delict was committed against SBV. SBV could not be ‘vicariously liable’ to itself. The SCA accordingly found that the proposed amendment would render the plea excipiable by introducing a plea that was bad in law. In the light of this finding it was not necessary to consider the Minister’s reliance upon the legal maxims giving expression to the principle of illegality nor to consider the position of SBV as a joint wrongdoer. The appeal was dismissed with costs.

1262

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case No: 462/07 In the matter between: NATIONAL COUNCIL OF SOCIETIES FOR THE PREVENTION OF CRUELTY TO ANIMALS APPELLANT and PETER OPENSHAW RESPONDENT CORAM: FARLAM JA, CAMERON JA, HEHER JA, HURT AJA and MHLANTLA AJA HEARD: 16 MAY 2008 DELIVERED: 30 MAY 2008 SUMMARY: Interim relief - refusal of – delay by appellant in instituting principal action – right to interim relief forfeited – reasonable apprehension of irreparable harm not established - Order in para [31]. NEUTRAL CITATION: This judgment may be referred to as NCSPCA v Openshaw (462/07) [2008] ZASCA 78 (RSA) MHLANTLA AJA MHLANTLA AJA: [1] The appellant appeals against a decision of Van der Merwe J (sitting in the Bloemfontein High Court) in which its application for an interim interdict restraining the respondent from presenting live prey to tigers in contravention of the Animal Protection Act 71 of 1962 (the Act) was dismissed with costs. The appeal is with leave of this court. [2] The issue is whether an inference can be drawn from a statement by the respondent in video footage, that he committed an offence in terms of section 2(1)(g) of the Act, and if so, whether one can infer that this would be an ongoing practice so as to constitute the apprehension of harm required for an interdict. [3] First, however, it is necessary to consider the respondent’s contention that the appeal has become moot. On 8 May 2008, a week before the hearing of the appeal, the respondent filed a notice of motion for the admission of his affidavit as evidence in the appeal. In this affidavit he informed the court that he had resigned as manager at the tiger sanctuary (which employed him at the time the interdict was sought against him) and had accepted a contract of employment at the Abu Dhabi Tourism Development and Investment Company from 14 May until 31 December 2008 with a prospect of being offered a further contract. He explained that his decision to seek other employment was based solely on financial considerations. He further stated that there was no prospect of him returning to the tiger sanctuary after 31 December because the job did not offer him the financial security he and his family required. [4] It is common cause that the respondent left the Republic of South Africa on 14 May 2008 to assume his duties in Abu Dhabi. It was contended on his behalf that the appeal was moot and that the court should accordingly dismiss the appeal in terms of section 21A of the Supreme Court Act 59 of 1959.1 [5] When the appeal was heard, submissions were advanced both on the question of mootness and the merits. In view of the fact that I have come to the firm conclusion that the appeal must fail on the merits, it is unnecessary for me to deal with the mootness argument. I am prepared to assume without deciding that, even if the matter is moot, this is not a case in which a court should exercise its discretion in terms of section 21A of the Supreme Court Act. 1 Section 21A reads: ' (1) When at the hearing of any civil appeal to the Appellate Division or any Provincial or Local Division of the Supreme Court the issues are of such a nature that the judgment or order sought will have no practical effect or result, the appeal may be dismissed on this ground alone. (2) (a) If at any time prior to the hearing of an appeal the Chief Justice or the Judge President, as the case may be, is prima facie of the view that it would be appropriate to dismiss the appeal on the grounds set out in subsection (1), he or she shall call for written representations from the respective parties as to why the appeal should not be so dismissed. (b) Upon receipt of the written representations or, failing which, at the expiry of the time determined for their lodging, the matter shall be referred by the Chief Justice or by the Judge President, as the case may be, to three judges of the Division concerned for their consideration. (c) The judges considering the matter may order that the question whether the appeal should be dismissed on the grounds set out in subsection (1) be argued before them at a place and time appointed, and may, whether or not they have so ordered- (i) order that the appeal be dismissed, with or without an order as to the costs incurred in any of the courts below or in respect of the costs of appeal, including the costs in respect of the preparation and lodging of the written representations; or (ii) order that the appeal proceed in the ordinary course. (3) Save under exceptional circumstances, the question whether the judgment or order would have no practical effect or result, is to be determined without reference to consideration of costs. (4) The provisions of subsections (2) and (3) shall apply with the necessary changes if a petition referred to in section 21 (3) is considered.' [6] I accordingly proceed to deal with the merits. The appellant is a statutory body established in terms of the Societies for the Prevention of Cruelty to Animals Act 169 of 1993. Its objects are set out in section 32. These inter alia, include the prevention of ill-treatment of animals by promoting their good treatment by man. The respondent was the manager of the Laohu Valley Reserve in the Philippolis district. He was employed on a conservation project of the Chinese Tigers South Africa Trust. The aim of the project is to save from extinction an endangered sub-species of tiger known as the South China Tiger or Chinese Tiger. [7] The respondent attempted to train captive-born Chinese Tiger cubs to function in the wild. The project planned to bring the tiger cubs born in China to South Africa and place them in a sanctuary, the Laohu Valley Reserve, where they would be taught to survive by hunting. These tigers would eventually be returned to a reserve to be created in China. At the time of the institution of the proceedings, three tigers, named Tiger Woods, Madonna and Cathay, were under the control of the respondent for the purposes of the project. [8] The appellant initially sought an order for a final interdict preventing the respondent from presenting live prey such as blesbok to 2 Section 3 reads: 'The objects of the Council are- (a) to determine, control and co-ordinate the policies and standards of societies, in order to promote uniformity; (b) to promote co-operation among societies; (c) to prevent the ill-treatment of animals by promoting their good treatment by man; (d to promote the interests of societies; (e) to take cognizance of the application of laws affecting animals and societies and to make representations in connection therewith to the appropriate authority; (f) to do all things reasonably necessary for or incidental to the achievement of the objects mentioned in paragraphs (a) to (e).' the tigers. The appellant founded its application on section 2(1)(g) of the Act which states the following: '(1) Any person who- (g) save for the purpose of training hounds maintained by a duly established and registered vermin club in the destruction of vermin, liberates any animal in such manner or place as to expose it to immediate attack or danger of attack by other animals or by wild animals, or baits or provokes any animal or incites any animal to attack another animal shall, subject to the provisions of this Act and any other law, be guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding twelve months or to such imprisonment without the option of a fine.' (Emphasis added.) [9] The application was launched after the appellant's officials were alerted to video footage of a documentary on a television programme called 50/50 which was broadcast on SABC 2.3 The footage depicted blesbok being caught in a net, followed immediately by a statement by the respondent. The appellant contended that the respondent had demonstrated an intention to contravene the provisions of s 2(1)(g) of the Act when he made the following statement: 'What we are going to do, we are going to present one of them live to Tiger Woods and Madonna and the others we will put into the enclosure that Cathay and Hope normally stay in.' [10] The respondent in his answering affidavit stated that the footage had been taken on different occasions over the period June to August 2005 and spliced together to give the appearance of a single episode. He 3 A recording of the programme as broadcast accompanied the founding papers and formed part of the record of this appeal. admitted making the statement but did not explain what he meant nor what happened to the blesbok. He elected to remain silent and not respond to what he termed conjecture on the appellant’s part. He further denied contravening s 2(1)(g) or any provisions of the Act. [11] The respondent thereafter set out the modus operandi of the programme since 2005. He stated that there are a series of different-sized enclosures fenced with appropriate predator-proof fencing as follows: (a) A small enclosure which serves as a quarantine camp for newly arrived cubs; (b) Enclosures of 4ha and 9ha respectively, in which the young cubs are exposed to the vegetation and terrain, and where they might encounter smaller prey such as guinea-fowl and rodents. This camp has sometimes, in the absence of tigers, been used to hold antelope before they were introduced to the larger enclosures. The respondent stated that he had no plans or intentions of allowing tigers and blesbok to be present simultaneously in future in the 9ha enclosure. (c) A 40ha enclosure, with a river running through it, in which sub- adult and adult tigers roam together with a limited number of antelope. According to the respondent, the river and the size of the camp make hunting very difficult and the prey are highly attuned to the behaviour of the tigers. He further stated that the best way to introduce the blesbok into this enclosure would be to first remove the tigers. This would allow the blesbok a period of time to acclimatise themselves to the area and consequently much harder to hunt when the tigers were eventually re- introduced to this enclosure. (d) A 600ha enclosure of which the predator-proof fencing was nearing completion. Large numbers of several species of prey, including blesbok, springbok, ostrich, mountain reedbuck and wildebeest were already situated in this enclosure. (e) A 6000ha enclosure in which larger numbers of prey referred to in (d) above were located. [12] The respondent thereafter proceeded to set out the current status and future plans of the re-wilding programme: (a) Tiger Woods and Madonna, both 2 ½ years old, were located in the 40ha camp. Thirteen blesbok had been introduced in August 2005. There were two adult blesbok remaining in August 2006 when he deposed to his answering affidavit. It has accordingly taken the tigers more than a year to hunt the herd of 13 blesbok down to two. More blesbok would be released into the camp once the remaining two had been hunted. The respondent stated that he would not do so in the immediate proximity of the tigers as this would be counter-productive to the aims of the project. He outlined the process to be adopted, ie, the tigers would first be removed to allow the blesbok time to acclimatise properly. This had to be done to ensure that the tigers were exposed to situations which were akin to those which the tigers would encounter in the wild. He indicated that the tigers were nearing the point in their development where they could fend entirely for themselves in the 600ha camp. (b) On 26 May 2006 Cathay was separated from the other tigers and kept in a 14ha camp, as a result of territorial and aggressive behaviour towards the other female. Apart from the guinea fowl and rodents which creep in through the fence, no live prey has been introduced in this camp. She has been sustained on carcasses which were provided by the respondent every five to seven days. (c) Once Tiger Woods and Madonna were released into the 600ha enclosure, Cathay would be released into the 40ha camp. She would however be kept in the 14ha camp when the blesbok were released into the 40ha camp. [13] The appellant in its replying affidavit did not challenge the respondent's averments in regard to the modus operandi and current status of the re-wilding project. It abandoned its claim for final relief on the papers and sought an interim interdict pending the determination of what it described as 'disputed' factual issues by means of a hearing of oral evidence. It sought interim relief pending the determination of an action to be instituted within 30 days of the grant of the interim order. [14] The court below found that the respondent had not furnished any specific explanation or interpretation of what he meant when he made the recorded statement. The learned judge stated that he was inclined to agree with the appellant that the recording provided prima facie evidence that s 2(1)(g) of the Act had been contravened in respect of the two tigers in the enclosure. He however stated that as the interdict was not a remedy for past invasion of rights: the appellant had a duty to show prima facie that there was a reasonable apprehension that, unless restrained by interdict, the respondent would continue or in future contravene s 2(1)(g) of the Act. The court below found that, as none of the averments by the respondent were disputed or contradicted, it had to accept that the respondent would not in the future expose prey such as blesbok to the tigers in contravention of s 2(1)(g). He accordingly dismissed the application with costs. [15] In this appeal the respondent’s counsel raised a preliminary objection that the appellant had by its delay in instituting the action envisaged forfeited any right to interim relief. Counsel for the appellant submitted that the action had not been instituted because the appellant was awaiting the outcome of the appeal on this issue and that it intended to utilise the judgment to prefer criminal charges against the employers of the respondent. [16] The argument on behalf of the appellant, in my view, has no merit. First, the judgment cannot be used against the employer who is not a party to these proceedings. Second, in regard to the long delays Van Wyk J stated the following in Juta & Co Ltd v Legal and Financial Publishing Co (Pty) Ltd4: 'If one bears in mind the long delays for which no explanation has been given, that as far back as December the applicant had numerous clear cases of copying in its possession, according to the letter written by the applicant, and that up to now no action has been instituted, it seems that the applicant has erred in selecting this method, namely, an application for an interdict pendente lite, but even if it was the appropriate procedure at the time the applicant has, by reason of the facts stated above, forfeited its rights to this temporary relief. Had it issued summons at the time when the notice of motion proceedings were instituted, the trial could already have taken place. There is such a thing as the tyranny of litigation, and a Court of law should not allow a party to drag out proceedings unduly. In this case we are considering an application for an interdict pendente lite, which, from its very nature, requires the maximum expedition on the part of an applicant.' [17] In my view these principles are applicable. The application for final relief was launched on 11 July 2006. The respondent filed his 4 1969 (4) SA 443 (C) at 445C-E. answering affidavit on 28 August 2006. The appellant filed its replying affidavit on 19 October 2006 wherein it abandoned the claim for final relief and sought interim relief pending the determination of an action to be instituted by it within 30 days. [18] It is now more than 19 months since the launch of the application and the appellant has still not instituted the action to which its claimed interim relief is ancillary. There is no doubt that if the appellant had acted promptly, the trial of this action would probably have preceded the determination of this appeal. Both parties would have had the opportunity to present their cases in court and all the issues would have been properly ventilated. In my view, the delays are highly prejudicial to the respondent. The appeal accordingly falls to be dismissed on account of the appellant's delay in instituting the principal action to which its claimed interdictory relief is ancillary. [19] In regard to the merits of the case, counsel for the appellant contended that the appellant had established a clear right in terms of the Act and as such it was not necessary to establish a reasonable apprehension of irreparable harm for an interdict to be granted. He further submitted that as the re-wilding of the tigers was an ongoing programme and as no explanation was furnished for the events contained in the video recording, the only reasonable inference that could be drawn was that s 2(1)(g) had been contravened and would be similarly contravened in future. He further contended that the respondent had not averred that this was an isolated event and had only provided explanations for current and not future practices. [20] An interdict is not a remedy for past invasion of rights but is concerned with present or future infringements. It is appropriate only when future injury is feared.5 Where a wrongful act giving rise to the injury has already occurred, it must be of a continuing nature or there must be a reasonable apprehension that it will be repeated. The requisites for the right to claim an interim interdict are:6 (a) A prima facie right. What is required is proof of facts that establish the existence of a right in terms of substantive law; (b) A well-grounded apprehension of irreparable harm if the interim relief is not granted and the ultimate relief is eventually granted; (c) The balance of convenience favours the granting of an interim interdict; (d) The applicant has no other satisfactory remedy [21] The test in regard to the second requirement is objective and the question is whether a reasonable man, confronted by the facts, would apprehend the probability of harm. The following explanation of the meaning of 'reasonable apprehension' was quoted with approval in Minister of Law and Order v Nordien:7 'A reasonable apprehension of injury has been held to be one which a reasonable man might entertain on being faced with certain facts. The applicant for an interdict is not required to establish that, on a balance of probabilities flowing from the undisputed facts, injury will follow: he has only to show that it is reasonable to apprehend that injury will result. However the test for apprehension is an objective one. This means 5 Phillip Morris Inc v Marlboro Trust Co SA 1991 (2) SA 720 (A) at 735B. 6 Eriksen Motors (Welkom) Ltd v Protea Motors Warrenton 1973 (3) SA 685 (A). 71987 (2) SA 894 (A) at 896. See also Janit v Motor Industry Fund Administrators (Pty) Ltd 1995 (4) SA 293 (A) at 304, End Conscription Campaign v Minister of Defence 1989 (2) SA 180 (C) at 208I- 209C that, on the basis of the facts presented to him, the Judge must decide whether there is any basis for the entertainment of a reasonable apprehension by the applicant.'8 [22] If the infringement complained of is one that prima facie appears to have occurred once and for all, and is finished and done with,9 then the applicant should allege facts justifying a reasonable apprehension that the harm is likely to be repeated. [23] Applied to the facts of this case and in so far as the statement by the respondent in the video footage is concerned, it does not reveal what actually happened to the blesbok, but only that the respondent expressed an intention to do something. Having regard to the facts, a fair inference can be drawn that the respondent would in August 2005 commit one offence in contravention of s 2(1)(g) of the Act. In my view, the court below correctly found the recording of the programme coupled with the respondent’s failure to explain his statement indicated only a single contravention of s 2(1)(g) of the Act. [24] The next issue is whether an inference can be drawn that this would be an ongoing practice. In this regard the argument on behalf of the appellant that it was unnecessary to show an apprehension of irreparable harm is ill-conceived. In my view, the appellant still had a duty to show objectively that, when faced with the facts a reasonable person would find an apprehension of harm, that the respondent is likely in future to contravene s 2(1)(g) of the Act by presenting live prey such as blesbok to tigers in circumstances which are prohibited by the section. 8 Nestor v Minister of Police 1984 (4) SA 230 (SWA) at 244. 9 Performing Right Society Ltd v Berman 1966 (2) SA 355 (R), Francis v Roberts 1973 (1) SA 507 (RA). [25] It is common cause that the application was launched in 2006, a year after the statement was made. In his answering affidavit the respondent gave a detailed description of his modus operandi and what he intended to do in future. This included his intention to release the tigers in a much bigger area where they will be totally dependent on hunting for themselves. The respondent furthermore made an expression of future intent not to release any live prey in the immediate proximity of the tigers. His intention was not put in issue by the appellant. There is also no evidence indicating anything to the contrary. Nothing has happened since August 2005. It is accordingly evident that this was an isolated incident. [26] It is so that the expression of future intent is not an express undertaking; however when regard is had to the facts of this matter, the respondent's intention is clear and unequivocal. In my view, his expression of intention is sufficient. There is no other evidence that has been placed before the court by the appellant that could objectively be viewed as showing a reasonable apprehension of harm. In the result, I cannot say that the more plausible inference to be drawn is a likelihood that the respondent will contravene s 2(1)(g) in the future. [27] Counsel for the appellant further contended that an interdict should, in any event, be granted as the respondent had mentioned that new cubs would be brought to the sanctuary and that this was a clear indication that the section will be contravened in future. In this regard he relied on the agreements between the Trust and the Chinese government to provide new tiger cubs for the reserve. He contended that there was a risk that live blesbok would be presented to the new cubs and that this would be in contravention of s 2(1)(g) of the Act. [28] There is no substance in this argument. This issue, as correctly pointed out by counsel for the respondent, was never raised in the founding papers or during the hearing in the court below. It was the respondent who in his answering affidavit raised the issue of the new cubs being supplied as and when they were born, but this was denied by the appellant. At no stage did the appellant, on the basis of the agreements or any evidence, seek to make out a case that new cubs would have to pass through a phase where it was necessary for the respondent to feed them live prey. This issue surfaced for the first time during the application for leave to appeal. This, in my view, is a new case that has been advanced on appeal and the respondent has not had an opportunity to address the issues raised by the appellant. [29] It is trite law that the applicant in motion proceedings must make out a proper case in the founding papers.10 Miller J in Shakot Investments (Pty) Ltd v Town Council of the Borough of Stanger,11 puts the matter thus: 'In proceedings by way of motion the party seeking relief ought in his founding affidavit to disclose such facts as would, if true, justify the relief sought and which would, at the same time, sufficiently inform the other party of the case he was required to meet.' [30] The applicant must set out the facts to justify the relief sought and also to inform the respondent of the case he is required to meet. The 10 Port Nolloth Municipality v Xhalisa; Ludwala v Port Nolloth Municipality 1991 (3) SA 98 (C) at 111E. 11 1976 (2) SA 70 (D) at 704G appellant is precluded from making a case on appeal that was not only not pleaded on the papers but was also disavowed by the appellant in reply. Accordingly the afterthought is impermissible. In the circumstances I am satisfied that the appeal must fail. [31] In the result, the following order is made: 'The appeal is dismissed with costs.' N Z MHLANTLA ACTING JUDGE OF APPEAL CONCUR FARLAM JA HEHER JA HURT AJA CAMERON JA: [32] I have had the benefit of reading the judgment of my colleague Mhlantla AJA but regret I cannot agree with her conclusion. In my view the respondent should have been interdicted from any future conduct in violation of s 2(g) of the Animal Protection Act 71 of 1962 (the Act), and ordered to pay the costs of the applicant (the Council). The divergence stems essentially from the fact that I differ from my colleague’s approach on two issues: (a) the status and role of the Council; (b) the fact that the respondent, Mr Openshaw, in the face of evidence clearly indicating that he had violated the Act, expressly declined to give any undertaking that he would not do so again. Mootness [33] Shortly before the appeal, Openshaw submitted evidence that he was leaving his employment (from which the Council said the circumstances requiring an interdict arose) and relocating to a position abroad. He said this rendered the appeal moot. I do not agree. Section 21A(1) of the Supreme Court Act 59 of 1959 (which my colleague sets out in footnote 1 to her judgment) confers a discretion on this court to dismiss an appeal on the ground that it ‘will have no practical effect or result’. In my respectful view, to exercise that discretion would not be appropriate in this case. The discretion exists to prevent appellants from presenting issues ‘that are wholly academic, … exciting no interest but an historical one’.12 In this case, even though the danger that Openshaw might in future violate the Act has largely (if not entirely) receded because of his job abroad, the issues that propelled the Council’s intervention remain live. [34] Societies for the Prevention of Cruelty to Animals (SPCAs) are registered under the Societies for the Prevention of Cruelty to Animals Act 169 of 1993 (the SPCA Act) (s 8). This statute sets out the objects of the Council and creates a board to achieve them (s 2). The objects the statute entrusts to the Council (s 3) include not only – 12 JT Publishing (Pty) Ltd v Minister of Safety and Security 1997 (3) SA 514 (CC) para 17, a case where the statutes challenged had already been repealed and where the court observed that ‘Neither of the applicants, nor for that matter anyone else, stands to gain the slightest advantage today from an order dealing with their moribund and futureless provisions’ (para 16). ‘(c) to prevent the ill-treatment of animals by promoting their good treatment by man’, but also – ‘(e) to take cognizance of the application of laws affecting animals and societies and to make representations in connection therewith to the appropriate authority’. [35] In recognising that the Council’s objects go beyond preventing ill- treatment, but include the wider responsibility of making representations about laws affecting animals, the legislature assigns the Council broader lobbying and advocacy functions. And since making representations on the application of laws entails commenting on their sufficiency (or insufficiency), the objects include also law revision and law reform. [36] The Council’s pursuit of an interdict in the High Court plainly involved ‘the application of laws affecting animals’. The court application concerned not only the prevention of cruel treatment, but the broader question of the adequacy (or inadequacy) of the laws preventing such treatment. The Council thus has a real and continuing interest in the proper disposal of the interdict application. This is particularly so if, as I respectfully consider, the interdict was wrongly refused in the court below. Should an interdict have been granted? [37] I turn now to why in my view the interdict should have been granted. And we must start by identifying the role of the Council in the proceedings. [38] The Act and the SPCA Act are both animal welfare legislation. Though not conferring rights on the animals they protect, the statutes are designed to promote their welfare.13 The statutes recognise that animals are sentient beings that are capable of suffering and of experiencing pain. And they recognise that, regrettably, humans are capable of inflicting suffering on animals and causing them pain. The statutes thus acknowledge the need for animals to be protected from human ill- treatment. [39] It is for this reason that the legislature created the Council, invested it with statutory status, and conferred on it powers and duties. Implicit in this is the legislature’s recognition that the Council has an important function. Though animals are capable of experiencing immense suffering, and though humans are capable of inflicting immense cruelty on them, the animals have no voice of their own. Like slaves under Roman law, they are the objects of the law, without being its subjects. [40] The statute thus constitutes the Council and its associated SPCAs as their guardian and their voice. The Council was thus rightly impelled to action when its representatives became aware of Openshaw’s claim in the documentary film that he proposed to ‘present one of [the captive 13 In R v Moato 1947 (1) 490 (O), Van den Heever J (Fischer JP concurring) stated that the object of the predecessor of the current Act, the Prevention of Cruelty to Animals Act 8 of 1914, ‘was not to elevate animals to legal subjects and this prohibition is not meant to confer protection on them. The object was plainly to prohibit one legal subject behaving so cruelly to animals that he offends the finer feelings and sensibilities of his fellow humans’ (my translation). This was endorsed in part by Miller J (Harcourt J concurring) in S v Edmunds 1968 (2) PH H398 (N), who said that the object of the Act ‘was not to elevate animals to the status of human beings but to prevent people from treating animals in a manner which would offend the finer sensibilities of society’, adding that ‘While it was not the purpose of the Protection of Animals Act to confer human status on animals it was assuredly part of its purpose to prevent degeneration of the finer human values in the sphere of treatment of animals’. The part Miller J left out was Van den Heever J’s erroneous statement that the ‘prohibition is not meant to confer protection’ on animals. OA Karstaedt ‘Vivisection and the Law’ (1982) 45 THRHR 349 at 351- 352 makes a convincing case that the Act’s purposes go beyond merely protecting the sensibilities of the community, an argument for which the approach of Miller J (‘part of its purpose’) leaves room. (Contrast Kevin Hopkins ‘Some New Thoughts on Protecting Animals Against Cruelty: A Human Rights Perspective’ 2003 Obiter 431, who appears to accept that ‘the animal anti-cruelty laws in South Africa are … not designed to protect animals – since animals are not entitled to the protection of the law’.) blesbok] live’ to the tigers in his care. That foretold a criminal infraction of s 2(1)(g) of the Act, which prohibits the liberation of ‘any animal in such manner or place as to expose it to immediate attack or danger of attack by other animals or by wild animals’. [41] The prohibition in s 2(1)(g) does not of course attempt to inhibit naturally predatory behaviour by animals in the wild. It proscribes cruel human interventions that supplant natural conditions with unnatural confinement and expose live prey to the danger of immediate attack with no recourse. In argument before us, Openshaw rightly did not dispute that feeding a live blesbok to a tiger in a confined space would constitute cruel maltreatment in violation of the section. [42] When efforts to get the police to initiate a prosecution in response to the broadcast failed, the Council eventually launched these proceedings. The founding affidavit simply and exclusively relied on what Openshaw said in the documentary film. Given its plain import, the form of the challenge lent great significance to Openshaw’s answering affidavit. But instead of dealing directly with the Council’s allegation that the ‘intention and execution’ of his statement as captured on film entailed an offence under the Act, his deposition – (i) set out at length the foundation, operation and future methodology of the tiger project (which he said entailed no intention to feed live prey to tigers, partly because this would be counter-productive); (ii) disputed the constitutionality of the Act; (iii) claimed that the video evidence was hearsay and inadmissible against him; (iv) admitted nonetheless that he is the person on the film who made the statement; (v) denied that he committed any offence under the Act; (vi) claimed that, because of his explanation of the project’s future methodology, ‘the events covered in the video, which was filmed a year ago, are irrelevant to the relief claimed by the applicant’; (vii) recorded that because of the Council’s aim to prosecute him, ‘and in view of the irrelevance of the contents of the video to the relief sought’, he had been advised ‘not to respond further’. [43] What is signally missing from this is (a) any account of what actually happened to the blesbok; and (b) any undertaking or assurance that what happened would not be repeated. [44] These two facts are in my view central to assessing the Council’s claim for relief. Their significance must be weighed together, and separately. It is the refusal to explain what happened to the blesbok that inclined Van der Merwe J in the High Court to agree with the Council that the film provided prima facie evidence of a contravention of the Act, and which leads my colleague Mhlantla AJA (rightly, in my respectful view) to infer that Openshaw committed an offence (para 23). [45] Counsel sought to explain Openshaw’s reticence on the basis that he wanted to avoid making admissions that might be used against him in a criminal prosecution. That may be so. But Openshaw must carry the consequences of his choice to remain silent, and to evade the plain implications of his conduct.14 In these proceedings for the enforcement of a statute, his reticence casts a shadow on his motives and conduct. [46] What is more, his failure to give any sort of undertaking against future violations not only lacks any explanation; in my view it lacks any justification. Counsel for Openshaw conceded during argument that his affidavit contained nothing that would prevent Openshaw in future, if so minded, from feeding live prey to tigers. The fear of incriminating admissions provides no inhibition here. Openshaw could have proffered an undertaking couched in a form that eluded any admission of past wrongdoing (‘To the extent that the Council claims or fears that I may have violated the Act, I hereby undertake …). [47] It is his express and deliberate omission to do this that in my view cried out for interdictory relief against him. I accept, of course, that an interdict is not a remedy for past wrongs. The matter is different, however, when the past wrong does not involve merely commercial issues or financial interests,15 but unacknowledged criminal conduct, where the perpetrator is impenitent. The interdict application involved a criminal prohibition aimed at preventing ill-treatment of voiceless beings, whose enforcement the legislature in important respects entrusts to the Council, a public body with wide and singular responsibilities in the field. [48] In my respectful view, since the evidence establishes that a criminal prohibition has been violated, it is wrong to accept a mere expression of future intention to abstain. The perpetrator’s deliberate 14 Compare Osman v Attorney-General, Transvaal 1998 (4) SA 1224 (CC) paras 22ff. 15 Performing Right Society Ltd v Berman 1966 (2) SA 355 (R), Juta & Co Ltd v Legal and Financial Publishing Co (Pty) Ltd 1969 (4) SA 443 (C) (copyright); Philip Morris Inc v Marlboro Shirt Co SA Ltd 1991 (2) SA 720 (A) (trade mark). refusal to impose any self-limiting undertaking not to do so itself creates the need for judicial intervention. It is then for the court to supply the omission by issuing an interdict. [49] The balance of convenience in my view clearly favoured the grant of an interdict. If no offence had been committed, and Openshaw honoured his expressed intention not to feed live prey to predators in future, the interdict would do no harm; on the other hand, given the glaring absence of any undertaking supplementing his professed intentions, the interests of the animals required the grant of an order. The analogy of interdict applications involving alleged personal assaults is by no means far-fetched: except that animals have less voice than most apprehensive assault victims. [50] These considerations to my mind overshadow the Council’s omission to institute action after the High Court’s refusal of an interim interdict, and in my respectful view the appeal should be allowed with costs, and the High Court’s refusal to grant an interim order reversed. E CAMERON JUDGE OF APPEAL

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL 30 May 2008 STATUS: Immediate NATIONAL COUNCIL OF SOCIETIES FOR THE PREVENTION OF CRUELTY TO ANIMALS v PETER OPENSHAW 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 (by a majority of four judges with one judge dissenting) today dismissed an appeal against a judgment of the Bloemfontein High Court brought by the National Council of Societies for the Prevention of Cruelty to Animals against Mr Peter Openshaw. The NCSPCA applied for an interim interdict in the Bloemfontein High Court prohibiting Mr Openshaw, as manager of the Laohu Valley Reserve, from presenting live blesbok to the tiger cubs on the reserve as part of the re- wilding programme. During a documentary on the television programme 50/50, Mr Openshaw made a statement to the effect that he would be presenting a live blesbok to two tiger cubs. In terms of the Animal Protection Act it is a criminal offence to liberate any animal in such a way as to expose it to immediate attack by other animals. The court below found that the NCSPCA had failed to establish reasonable apprehension of irreparable harm and accordingly dismissed the application. It is against this judgment that the appeal was brought. The SCA, in a judgment by Mhlantla AJA with Farlam JA, Heher JA and Hurt AJA concurring, held that a period 19 months had passed since the application had been launched and the appellant had failed to institute the principal action. It had accordingly forfeited its right to the interim relief sought. The court further held that as an interim interdict was a remedy against future infringements and was only appropriate when future injury was feared, the appellant had a duty to show a reasonable apprehension that harm, namely the presenting of live blesbok to tigers, would occur in the future. As the appellant had not been able to prove this, the appeal had to be dismissed. In a dissenting judgment, Cameron JA was of the view that the interdict should have been granted as the respondent had contravened the relevant section and had expressly declined to give any undertaking that he would not do so again.

3964

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 903/2021 In the matter between: SHOPRITE CHECKERS (PTY) LTD APPELLANT and CECIL TSHEPO MOKOPANE MAFATE RESPONDENT Neutral citation: Shoprite Checkers (Pty) Ltd v Mafate (903/2021) [2023] ZASCA 14 (17 February 2023) Coram: PETSE AP and MOCUMIE and CARELSE JJA and NHLANGULELA and CHETTY AJJA Heard: 08 November 2022 Delivered: 17 February 2023 Summary: Prescription – extinctive prescription – sections 12 and 13 of the Prescription Act 68 of 1969 (the Prescription Act) – whether sections 12 and 13 of the Prescription Act are mutually exclusive – whether curator appointed on behalf of person suffering from permanent mental incapacity precluded from invoking s 12 of the Prescription Act read with s 13 – whether the appointment of a curator ad litem for a person suffering from mental or intellectual disability, disorder or incapacity has the effect that the relevant impediment referred to in paragraph (a) of s 13(1) ceases to exist. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Maniom AJ, sitting as court of first instance): The appeal is dismissed with costs. JUDGMENT Petse AP (Mocumie and Carelse JJA and Nhlangulela and Chetty AJJAconcurring): Introduction [1] This appeal raises two crisp but vexed questions. First, whether the appointment of a curator ad litem to a person with a mental or intellectual disability, disorder or incapacity, who, because of his or her mental condition is bereft of legal capacity,1 has the effect that the relevant impediment referred to in paragraph (a) of s 13(1) of the Prescription Act 68 of 1969 (the Prescription Act) ceases to exist. Second, whether a curator appointed for a person with a mental or intellectual disability, disorder or incapacity is, apart from relying on s 13(1)(a), precluded from invoking s 12 of the Prescription Act in circumstances where he or she and the person under curatorship did not have knowledge of the identity of the debtor and the facts 1 An instruction by a person who lacks the necessary mental capacity to an attorney is invalid. See, for example, Vallaro v Road Accident Fund 2021 (4) SA 302 (GJ). It is, however, competent for a subsequently appointed curator ad litem to ratify the legal steps taken as a result of the instruction. See in this regard: Kotze NO v Santam Insurance Ltd 1994 (1) SA 237 (C); [1994] 3 All SA 257 (C), confirmed on appeal in Santam Insurance Ltd v Booi 1995 (3) SA 301 (AD); [1995] 2 All SA 537 (A); see also Road Accident Fund v Mdeyide (Minister of Transport, Intervening) 2008 (1) SA 535 (CC); 2007 (7) BCLR 805 (CC). from which the debt arose because the person under curatorship was severely injured and suffered mental incapacity as a result of the alleged negligence of an employee, whose employer is sought to be held vicariously liable for the ensuing damages. Background [2] These questions have arisen in this way. On 15 October 2014, Ms Nolunga Mkhwanazi (Ms Mkhwanazi), then employed as a packer with Smollan Sales & Marketing, which renders merchandising services to retail stores, was at work at the Checkers Hyper in Meadowdale Shopping Mall, Edenvale. Whilst on duty, she climbed into a cage coupled to a forklift to pack merchandise on shelves. The cage was lifted by the forklift some four metres from the shop floor. Unexpectedly, while still hoisted there, tragedy struck. The cage tilted and ejected Ms Mkhwanazi, causing her to fall to the floor. The cage itself, which was dislodged from the forklift, came tumbling down and struck Ms Mkhwanazi on the head. She was severely injured and rendered permanently mentally incapacitated. [3] Due to her permanent mental incapacity, she could not, in her mental condition, institute proceedings in her name. On 1 February 2017, the respondent, Mr Cecil Tshepo Mokopane Mafate (Mr Mafate) – a practicing attorney – was appointed as her curator ad litem (the curator). Following his appointment, the curator instituted proceedings for damages in his representative capacity against Shoprite Holdings Limited (Shoprite Holdings) in the Gauteng Division of the High Court, Johannesburg (the high court). The action was founded in delict and based on Shoprite Holdings’ alleged wrongful and negligent conduct, relying on various grounds. On 28 July 2017, Shoprite Holdings raised two special pleas one of misjoinder and the other non-joinder, asserting that it was not the owner of the store at the time and that instead Shoprite Checkers (Pty) Ltd (Shoprite Checkers) was. [4] Some 11 months later, on 28 June 2018, the curator withdrew the action against Shoprite Holdings. Curiously, it was only on 15 October 2018 when the curator instituted fresh proceedings (October 2018 summons) against Shoprite Checkers, which was served on the latter on 19 October 2018. Shoprite Checkers filed a special plea of prescription to the curator’s October 2018 summons, asserting that the claim had prescribed. [5] Shoprite Checkers’ special plea attracted a replication from the curator, which was subsequently amended on 25 September 2019. In its amended replication the curator inter alia averred that: ‘1.1 Nolunga suffered severe brain injuries and trauma in the incident of 15 October 2014 as described in the particulars of claim. 1.2 Because of her injuries Nolunga was prevented from obtaining knowledge of the identity of the defendant and of the facts from which the debt arose until the plaintiff was appointed as curator ad litem on or about 1 February 2017, and she was unable to acquire the requisite knowledge by the exercise of reasonable care. 1.3 In the premises the debt became due on or after 1 February 2017 within the meaning of section 12(3) of the Prescription Act 68 of 1969, alternatively and if it were to be found that Nolunga possessed the requisite information by 1 February 2017 or could have obtained same by the exercise of reasonable care, then and in that event the plaintiff pleads as follows: 1.3.1 Nolunga was prevented by her injuries from obtaining knowledge of the identity of the defendant and of the facts from which the debt arose during the period October 2014 to 20 June 2015 at the earliest and was unable to acquire the requisite knowledge by the exercise of reasonable care during this period; 1.3.2 In the premises the debt became due on or after, at the earliest, 20 October 2015. 1.4 When the plaintiff was appointed as curator ad litem on 1 February 2017 and despite exercising reasonable care the plaintiff acquired erroneous information which misled him to believe that the identity of the debtor was now known to him, and which caused him to refrain from any further inquiry.’ [6] The replication went on to allege that, believing that Shoprite Holdings was the employer, the curator mistakenly but reasonably, instituted action against Shoprite Holdings. And that it was only upon the filing of the special pleas of misjoinder and non-joinder on 28 July 2017 that the curator became aware of the true identity of the debtor. Accordingly, so it was asserted, prescription commenced to run only from 28 July 2017. And was therefore interrupted by the service of the summons on the true debtor, ie Shoprite Checkers. [7] In due course, the parties reached agreement on certain facts, which were recorded in a written statement in terms of rule 33(4)2 of the Uniform Rules of Court (the rules). It is convenient at this juncture to quote the statement of the agreed facts in full. It provides: ‘WHEREAS the parties have agreed that the defendant’s first special plea of prescription be separated from the remainder of the issues in terms of the provisions of rule 33(4) of the Uniform Rules of Court; AND WHEREAS the parties have agreed on a set of facts to be placed before court for purposes of argument of the special plea of prescription, NOW THEREFORE the parties agree as follows:- 2 Rule 33(4) reads: ‘If, in any pending action, it appears to the court mero motu that there is a question of law or fact which may conveniently be decided either before any evidence is led or separately from any other question, the court may make an order directing the disposal of such question in such manner as it may deem fit and may order that all further proceedings be stayed until such question has been disposed of, and the court shall on the application of any party make such order unless it appears that the questions cannot conveniently be decided separately.’ 1. On 15 October 2014 Nolunga Mkhwanazi was injured in an incident which happened at Checkers Hyper, Meadowdale Mall, Edenvale. 2. By virtue of the injuries sustained by Nolunga Mkhwanazi, she is mentally incapacitated, requiring a curator to administer her affairs. 3. The plaintiff was duly appointed as curator ad litem to Nolunga Mkhwanazi on 1 February 2017. A copy of the order so appointing the plaintiff is annexed hereto marked annexure “A”. 4. On 22 February 2017 the plaintiff caused summons to be issued against Shoprite Holdings Limited under case number 5851/17. A copy of the summons and particulars of claim is annexed hereto marked annexure “B”. 5. The defendant duly pleaded to the aforesaid particulars of claim under case number 5851/17 on 28 July 2017. A copy of the plea is annexed hereto marked annexure “C”. 6. On 28 June 2018 the plaintiff withdrew the action instituted under case number 5851/17. A copy of the notice of withdrawal is annexed hereto marked annexure “D”. 7. The summons commencing the proceedings under case number 38084/18 against the above- named defendant was issued on 15 October 2018 and the summons was served by the sheriff on 19 October 2018. A copy of the return of service is annexed hereto marked annexure “E”. 8. The defendant filed a plea (annexure “F”) and the plaintiff filed a replication, which replication was subsequently amended (annexure “G”), being the replication as amended. 9. It is defendant’s contention that the plaintiff’s claim has prescribed by reason thereof that a period of one year has expired after 1 February 2017 before summons was issued and served, alternatively that one year has expired after 28 July 2017, being the date when the plaintiff had full knowledge thereof that the wrong defendant had been cited under case number 5851/17 and that the defendant in the present proceedings is the correct defendant to be cited. 10. It is the plaintiff’s contention that – 10.1. Nolunga suffered severe brain injuries and trauma in the incident of 15 October 2014 as described in the particulars of claim. 10.2. Because of her injuries Nolunga was prevented from obtaining knowledge of the identity of the defendant and of the facts from which the debt arose until the plaintiff was appointed as curator ad litem on 1 February 2017, and she was unable to acquire the requisite knowledge by the exercise of reasonable care. 10.3. When the plaintiff was appointed as curator ad litem on 1 February 2017 and despite exercising reasonable care the plaintiff acquired erroneous information which misled him to believe that the identity of the debtor was now known to him, and which caused him to refrain from any further inquiry. 10.4. On this basis of this incorrect information the plaintiff identified Shoprite Holdings Ltd as the defendant, and summons citing Shoprite Holdings Limited was issued (under case number 17/5851 in the Gauteng Local Division) and served on 22 February 2017. 10.5. On or about 28 July 2017 Shoprite Holdings Ltd pleaded that its citation constituted a misjoinder, and the failure to cite the present defendant as a defendant constituted a non- joinder. 10.6. Because of the plea the plaintiff learned on or about 28 July 2017 that the owner of the store known as Checkers Hyper in Edenvale was in fact not Shoprite Holdings Ltd but rather its fully-owned subsidiary, the present defendant. 10.7. The action against Shoprite Holdings Ltd was withdrawn on 28 June 2018. 10.8. Prescription was interrupted in terms of section 15 of the Prescription Act by the service of process on 19 October 2018, and less than three years had elapsed since the debt became due within the meaning of section 12(3) of the Prescription Act – 10.8.1. on or after 1 February 2017, 10.8.2. alternatively, on or after 28 July 2017.’ [8] On 3 January 2020, the matter served before Maniom AJ who, on 27 January 2021, in a comprehensive judgment, dismissed the special plea of prescription with costs. In essence, the learned judge held that having regard to the general scheme of the Prescription Act, more particularly that ss 12 and 13, interpreted in light of their purpose and context, were not mutually exclusive. Therefore, the learned judge concluded, ‘. . . the two sections are not inconsistent. . . ’ and that ‘. . . any other interpretation would lead to injustice’. Further, he held that the interpretation favoured by him would promote access to courts as entrenched in s 34 of the Constitution. In this respect, the learned judge reasoned thus: ‘I find that a curator ad litem, notwithstanding the provisions of section 13(1)(a), may also rely on section 12(3). This conclusion is based on the fact that the two sections are not inconsistent, secondly any other interpretation would lead to an injustice and thirdly that this interpretation is the one more consistent with the constitutional right of access to courts guaranteed by section 34 of the Constitution which states: “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.”’ Subsequently, on 29 July 2021, the high court granted leave to appeal to this Court. Discussion [9] Before dealing with the contentions of counsel, it is necessary to make some preliminary observations in regard to the agreed statement of facts. First, it is common cause that the summons in issue here was issued on 15 October 2018 and served on 19 October 2018. Second, that the curator acquired knowledge of the true identity of the debtor, ie Shoprite Checkers, on 1 February 2017. Quite apart from the foregoing, it is, in addition, common cause that Ms Mkhwanazi had suffered mental or intellectual disability as a result of her injuries rendering her incapable of acquiring knowledge as to the identity of the true debtor. [10] Before us, the argument advanced on behalf of Shoprite Checkers was the following. First, s 12 of the Prescription Act is specifically designed to, inter alia, cater for instances where creditors do not suffer from any mental impairment and thus able to exercise due and reasonable care to establish the identity of the debtor, except where the debtor wilfully prevents the creditor from coming to know of the existence of the debt. Second, in contrast, s 13(1)(a) regulates situations where for any or some or all of the instances spelt out in paragraphs (a) to (h) of s 13(1) the creditor is not able to interrupt the running of prescription. Third, unlike in the past where under the common law prescription did not run against minors or persons suffering from any mental or intellectual disability or incapacity, s 13(1) instead explicitly provides that the commencement of prescription is not delayed due to mental incapacity or against a person under curatorship, but that its completion is delayed for a year after ‘the day on which the relevant impediment . . . has ceased to exist’. Fourth, that there is no intersectionality between s 12 on the one hand and s 13 on the other. Fifth, that Ms Mkhwanazi’s situation falls squarely within the purview of s 13 and the curator is therefore precluded from relying on s 12. Sixth, that as the curator was appointed as curator ad litem to Ms Mkhwanazi on 1 February 2017 in order to pursue her claim for damages, he had a year from 1 February 2017 within which to institute action and serve the summons – whereby the claim was instituted – on Shoprite Checkers. [11] In countering the argument advanced on behalf of Shoprite Checkers, counsel for the curator, inter alia, made the following submission. First, because of Ms Mkhwanazi’s mental incapacity, which is permanent, she did not know, nor could she know, of the identity of the debtor, in this instance Shoprite Checkers. It was only after the curator became aware of the identity of the true debtor – upon service of the special plea in the initial proceedings on 27 June 2017 – did prescription begin to run and not before. Statutory framework [12] It is now convenient to set out the relevant statutory framework that has a bearing on this dispute. The question in this case is, as alluded to above, whether the claim instituted on behalf of Ms Mkhwanazi against Shoprite Checkers is unenforceable by virtue of prescription under the Prescription Act. Section 3 of the Prescription Act makes provision, as its heading suggests, for postponement of completion of prescription in certain circumstances. It reads as follows: ‘(1) If – (a) the person against whom the prescription is running is a minor or is insane, or is a person under curatorship, or is prevented by superior force from interrupting the running of prescription as contemplated in section 4; or (b) . . . (c) the period of prescription would, but for the provisions of this subsection, be completed before or on, or within three years after, the day on which the relevant impediment referred to in paragraph (a) or (b) has ceased to exist, . . ..’ [13] Section 10, which is headed ‘Extinction of debts by prescription’ reads: ‘(1) 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. (2) By the prescription of a principal debt a subsidiary debt which arose from such principal debt shall also be extinguished by prescription. (3) Notwithstanding the provisions of subsections (1) and (2), payment by the debtor of a debt after it has been extinguished by prescription in terms of either of the said subsections, shall be regarded as a payment of a debt.’ [14] Section 11, as its heading indicates, provides for various periods of prescription of debts. It provides: ‘The periods of prescription of debts shall be the following: (a) thirty years in respect of – (i) any debt secured by mortgage bond; (ii) any judgment debt; (iii) any debt in respect of any taxation imposed or levied by or under any law; (iv) any debt owed to the State in respect of any share of the profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances; (b) fifteen years in respect of any debt owed to the State and arising out of an advance or loan of money or a sale or lease of land by the State to the debtor, unless a longer period applies in respect of the debt in question in terms of paragraph (a); (c) six years in respect of any debt arising from a bill of exchange or other negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of paragraph (a) or (b); (d) save where an Act of Parliament provides otherwise, three years in respect of any other debt.’ [15] Then follows s 12, which provides for when prescription begins to run. It reads: ‘(1) Subject to the provisions of subsections (2), (3) and (4), prescription shall commence to run as soon as the debt is due. (2) If the debtor wilfully prevents the creditor from coming to know the existence of the debt, prescription shall not commence to run until the creditor becomes aware of the existence of the debt. (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. (4) . . ..’ [16] Reference must also be made to s 13, which provides, as is apparent from its heading, that completion of prescription is delayed in certain circumstances. It reads: ‘(1) If– (a) the creditor is a minor or is a person with a mental or intellectual disability, disorder or incapacity, or is affected by any other factor that the court deems appropriate with regard to any offence referred to in section 12(4), or is a person under curatorship or is prevented by superior force including any law or any other of court from interrupting the running of prescription as contemplated in section 15(1); or . . . (i) the relevant period of prescription would, but for the provisions of this subsection, be completed before or on, or within one year after, the day on which the relevant impediment referred to in paragraph (a) . . . has ceased to exist, . . ..’ [17] Finally, there is s 16, which states that, subject to two exceptions, not germane to this appeal, the provisions of Chapter V of the Prescription Act shall apply to any debt arising after the commencement of the Prescription Act to the extent that it is not inconsistent with the provisions of any Act of Parliament, which prescribes different periods concerning prescription ‘or imposes conditions on the institution of an action for the recovery of a debt. . .’. Analysis [18] It should by now be obvious that the outcome of this appeal revolves around the proper interpretation of the various sections of the Prescription Act to which reference has been made in the preceding six paragraphs. The principles of statutory interpretation are well-settled. In Natal Joint Municipal Pension Fund v Endumeni Municipality (Endumeni), 3 this Court restated the proper approach to statutory interpretation. It explained that statutory interpretation is the objective process of attributing meaning to words used in legislation. It further emphasised that the process entails a simultaneous consideration of – (i) the language used in the light of the ordinary rules of grammar and syntax; 3 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) (Endumeni). (ii) the context in which the provision appears; and (iii) the apparent purpose to which it is directed.4 [19] In Makate v Vodacom (Pty) Ltd, the Constitutional Court said the following concerning s 39(2) of the Constitution:5 ‘Since the coming into force of the Constitution in February 1997, every court that interprets legislation is bound to read a legislative provision through the prism of the Constitution. In Fraser, Van der Westhuizen J explained the role of section 39(2) in these terms: “When interpreting legislation, a court must promote the spirit, purport and objects of the Bill of Rights in terms of section 39(2) of the Constitution. This Court has made clear that section 39(2) fashions a mandatory constitutional canon of statutory interpretation.”’6 [20] In Road Accident Fund and Another v Mdeyide,7 the Constitutional Court pointedly observed that the failure to meet a prescription deadline ‘could deny a plaintiff access to a court’.8 Almost ten years prior, in Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others, the Constitutional Court emphasised the constitutional imperative imposed by s 39(2) in these terms: ‘On the one hand, it is the duty of a judicial officer to interpret legislation in conformity with the Constitution so far as this is reasonably possible. On the other hand, the legislature is under a duty to pass legislation that is reasonably clear and precise, enabling citizens and officials to understand what is expected of them. A balance will often have to be struck as to how this tension is to be resolved when considering the constitutionality of legislation. There will be occasions when a 4 Ibid para 18. 5 Section 39(2) of the Constitution reads: ‘When interpreting any legislation, . . . every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.’ 6 Makate v Vodacom (Pty) Ltd [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC) para 87. 7 Road Accident Fund and Another v Mdeyide [2010] ZACC 18; 2011 (1) BCLR 1 (CC); 2011 (2) SA 26 (CC). 8 Ibid para 10. judicial officer will find that the legislation, though open to a meaning which would be unconstitutional, is reasonably capable of being read “in conformity with the Constitution”. Such an interpretation should not, however, be unduly strained.’9 [21] That the text, context and purpose of a statutory provision must always be considered at the same time when interpreting legislation has been affirmed in various judgments of the Constitutional Court and this Court.10 [22] What the Constitutional Court said most recently in regard to statutory interpretation in Minister of Police and Others v Fidelity Security Services (Pty) Limited11 is instructive. The Court there said: ‘(a) Words in a statute must be given their ordinary grammatical meaning unless to do so would result in an absurdity. (b) This general principle is subject to three interrelated riders: a statute must be interpreted purposively; the relevant provision must be properly contextualised; and the statute must be construed consistently with the Constitution, meaning in such a way as to preserve its constitutional validity. 9 Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2000 (10) BCLR 1079 (CC); 2001 (1) SA 545 (CC) para 24. 10 For examples see Bato Star Fishing (Pty) Lid v Minister of Environmental Affairs and Tourism and Others 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) para 90 |(the judgment of Ngcobo J) quoted with approval in Du Toit v Minister for Safety and Security and Another [2009] ZACC 22; 2010 (1) SACR 1 (CC); 2009 (12) BCLR 1171 (CC) para 38; Bertie Van Zyl (Pty) Ltd and Another v Minister for Safety and Security and Others [2009] ZACC 11; 2010 (2) SA 181 (CC); 2009 (10) BCLR 978 (CC) (Bertie Van Zyl) para 21; KwaZulu-Natal Joint Liaison Committee v MEC Department of Education, KwaZulu-Natal and Others [2013] ZACC 10; 2013 (4) SA 262 (CC); 2013 (6) BCLR 615 (CC) para 129; Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1; 2014 (3) SA 56 (CC); 2014 (4) BCLR 400 (CC) paras 77-8; Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) (Cool Ideas) para 28; Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18; 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); G4s Cash Solutions v Zandspruit Cash And Carry (Pty) Ltd and Another [2016] ZASCA 113; 2017 (2) SA 24 (SCA) para 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); 2022 (1) SA 100 (SCA) para 46. 11 Minister of Police and Others v Fidelity Security Services (Pty) Limited [2022] ZACC 16; 2022 (2) SACR 519 (CC) para 34. (c) Various propositions flow from this general principle and its riders. Among others, in the case of ambiguity, a meaning that frustrates the apparent purpose of the statute or leads to results which are not businesslike or sensible results should not be preferred where an interpretation which avoids these unfortunate consequences is reasonably possible. The qualification “reasonably possible” is a reminder that Judges must guard against the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. (d) If reasonably possible, a statute should be interpreted so as to avoid a lacuna (gap) in the legislative scheme.’ In parenthesis, I mention that the Prescription Act, like any other statutory instrument, must be interpreted in accordance with the dictates of s 39(2) of the Constitution. In addition, the meaning of the words used in a statute must be ascertained taking cognisance of their ordinary grammatical meaning in the light of their context, the subject matter of the statute under consideration and its apparent scope and purpose.12 [23] In this case, there is no dispute that only the Prescription Act finds application and no other. Accordingly, we are not confronted with the kind of situation like the one that arose in cases such as the Road Accident Fund v Smith NO13 and ABP 4x4 Motor Dealers (Pty) Ltd v IGI Insurance Co Ltd.14 Nor is the question as to when prescription begins to run contentious. It is accepted by the parties that prescription commences to run as soon as the debt is due as provided in s 12(1) of the Prescription Act. And, as this Court held in Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd, 15 a debt becomes due when it is 12 See, for example, Republican Press (Pty) Ltd v CEPPWAWU and Others [2007] ZASCA 121; 2008 (1) SA 404 (SCA); [2007] 11 BLLR 1001 (SCA) para 19; Jaga v Dönges NO and Another 1950 (4) SA 633 (A) at 662. 13 Road Accident Fund v Smith NO 1999 (1) SA 92 (SCA); [1998] 4 All SA 429 (A). 14 ABP 4x4 Motor Dealers (Pty) Ltd v IGI Insurance Co Ltd 1999 (3) SA 924 (SCA). 15 Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd [1991] 1 All SA 400 (A); 1991 (1) SA 525 (AD) at 532G. immediately claimable or recoverable. In the ordinary course, this will coincide with the date upon which the debt arose, although this is not necessarily always the case.16 [24] In Truter and Another v Deysel, this Court explained the import of s 12(1) thus: ‘. . . [T]he 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 claims.’17 (Footnotes omitted) [25] In terms of s 12(3), 18 a debt is deemed to be due when a creditor has knowledge of the identity of the debtor and of the facts from which the debt arose. And the creditor is, in turn, deemed to possess the requisite knowledge if he or she could have acquired it by exercising reasonable care. One further point can be made here, namely that the limitation of the right of access to court, to the extent that prescription could have that effect, has been found by the Constitutional Court to pass muster.19 [26] It bears noting that at its core the Prescription Act is designed to strike a fine balance between the rights of creditors to enforce their claims against their debtors on the one hand. Nevertheless, on the other hand, the need to safeguard the rights of 16 Section 12(1) of the Prescription Act quoted in para 15 above. 17 Truter and Another v Deysel 2006 (4) SA 168 (SCA) para 15. 18 Section 12(3) quoted in para 16 above. 19 See, for example, Mohlomi v Minister of Defence 1997 (1) SA 124; 1996 (12) BCLR 1559 para 11; Engelbrecht v Road Accident Fund and Another [2007] ZACC 1; 2007 (6) SA 96 (CC); 2007 (5) BCLR 457 (CC) para 29; Brümmer v Minister for Social Development and Others [2009] ZACC 21; 2009 (6) SA 323 (CC); 2009 (11) BCLR 1075 (CC) paras 64-67. creditors must be weighed against the prejudice that potential defendants would suffer if the law did not come to their aid by means of time bars beyond which creditors would lose their right to enforce their claims. The rationale for this balancing exercise was aptly captured in Mohlomi v Minister of Defence (Mohlomi), where Didcott J said the following: ‘Rules that limit the time during which litigation may be launched are common in our legal system as well as many others. Inordinate delays in litigating damage the interests of justice. They protract the disputes over the rights and obligations sought to be enforced, prolonging the uncertainty of all concerned about their affairs. Nor in the end is it always possible to adjudicate satisfactorily on cases that have gone stale. By then witnesses may no longer be available to testify. The memories of ones whose testimony can still be obtained may have faded and become unreliable. Documentary evidence may have disappeared. Such rules prevent procrastination and those harmful consequences of it. They thus serve a purpose to which no exception in principle can cogently be taken.’20 [27] Hot on the heels of Mohlomi, in Uitenhage Municipality v Molloy, Mahomed CJ put it thus: ‘One of the main purposes of the Prescription Act is to protect a debtor from old claims against which it cannot effectively defend itself because of loss of records or witnesses caused by the lapse of time. If creditors are allowed by their deliberate or negligent acts to delay the pursuit of their claims without incurring the consequences of prescription that purpose would be subverted.’21 [28] It is as well at this juncture to remember that the thrust of the case advanced by Shoprite Checkers is that as Mr Mafate was appointed as a curator ad litem to Ms Mkhwanazi on 1 February 2017, the impediment standing in the path of the latter ceased to exist on that date. Consequently, Mr Mafate should have instituted the 20 Mohlomi v Minister of Defence 1997 (1) SA 124 (CC); 1996 (12) BCLR 1559 (CC) (Mohlomi) para 11. 21 Uitenhage Municipality v Molloy 1998 (2) SA 735 (SCA) at 742I-743A. See also: Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (AD) at 578F-579G. action within one year after 1 February 2017. But he unquestionably failed to do so and, instead, instituted the action on 15 October 2018, and the summons was served on Shoprite Checkers on 19 October 2018. By then, asserted Shoprite Checkers, the claim had prescribed, having prescribed on 2 February 2018. Has Ms Mkhwanazi’s impediment ceased to exist? [29] Before I address the thrust of the argument advanced on behalf of Shoprite checkers, it is necessary to answer an anterior question namely: whether Ms Mkhwanazi’s impediment has ceased to exist as contemplated in paragraph (i) of s 13(1). The word ‘creditor’ located in s 13(1) has nowhere been defined in the Prescription Act. Accordingly, counsel for Shoprite Checkers argued that its ordinary meaning should prevail. In the context of the facts of this case, counsel stressed, the word ‘creditor’ must be understood to be a reference to the person in whom the right to enforce the claim vests, ie Ms Mkhwanazi and not the curator. This argument must, in the view I take of the matter, falter as it contains seeds of its own destruction. A simple example will illustrate this point. If Ms Mkhwanazi is the creditor – as is indeed the case – she would have one year after the impediment referred to in s 13(1)(a) ceases to exist within which to institute action in order to interrupt prescription. [30] This then raises the question as to whether the appointment of the curator resulted in the impediment confronting Ms Mkhwanazi, qua creditor, to cease to exist. I think not. On the text of s 13(1)(a) interpreted contextually and purposively, having regard to the general scheme of the Prescription Act, Ms Mkhwanazi’s mental or intellectual disability, disorder or incapacity persists to this very day. Indeed, counsel for Shoprite Checkers readily acknowledged that from the day that Ms Mkhwanazi suffered severe head injuries to date she lacks mental capacity, hence the appointment of a curator for her. [31] The impediment standing in the way of Ms Mkhwanazi is her mental or intellectual disability or incapacity. To my mind, the very fact that a curator was appointed to pursue her claim, reinforces the proposition that she could not do so on her own. Generally speaking, a person suffering from a mental or intellectual disability, disorder or incapacity is someone who is bereft of his or her senses and can neither grasp the consequences of his or her acts nor make rational decisions. In Pheasant v Warne,22 Innes CJ opined that the test was whether the person’s ‘mind was such that he or [she] could not understand and appreciate the transaction into which he or [she] purported to enter’. In Lange v Lange,23 this Court went further and held that a person is mentally ill not only if he or she cannot understand the nature of the transaction in question, but also if he or she does not understand the consequences of his or her juristic acts but is motivated or influenced (in concluding such juristic acts) by delusions caused by mental illness. [32] It bears emphasising that a curator ad litem is appointed for a person who is unable to manage his or her affairs. This is because such a person lacks the capacity to act or litigate. The curator, as a result, concludes transactions and sues on behalf of the mentally incapacitated person. In the context of the facts of this case, the appointment of the curator ad litem was the consequence of Ms Mkhwanazi’s mental or intellectual incapacity, disorder or disability following her freak accident whilst on duty in Shoprite Checkers shop floor. 22 Pheasant v Warne 1922 AD 481 at 488. 23 Lange v Lange 1945 AD 332. [33] Accordingly, if the creditor is for example a minor, the impediment will cease to exist only when the creditor attains majority and acquires full legal capacity. In the case of a creditor who is under curatorship, the impediment comes about once the curator takes office. Such an impediment will therefore cease to exist only when the curatorship comes to an end. How, then, one may ask, with respect to a creditor who is suffering from mental incapacity, disability or disorder – as is the case with Ms Mkhwanazi – can it be said that in his or her situation the impediment ceases to exist when the curator ad litem is appointed despite the fact that the creditor himself or herself – in this instance Ms Mkhwanazi – is still afflicted by mental incapacity or disability. Section 13(1)(a) could not be clearer. It explicitly provides that apart from mental or intellectual disability, disorder or incapacity, a creditor under curatorship falls within the category of creditors who are subject to the provisions of s 13(1), meaning that the completion of the relevant period of prescription would not occur before a year has elapsed after the date on which the impediment referred to in s 13(1)(i) ceases to exist. Simply put, the completion of the relevant period of prescription would not occur for as long as the impediment persists. For completeness, it bears emphasising that placing a person under curatorship is in itself an impediment and does not bring about a cessation of an impediment as Shoprite Checkers would have it. [34] It is common cause between the protagonists that Ms Mkhwanazi is still suffering from debilitating mental incapacity. And to all intents and purposes, she has lost all vital amenities of life for her to have any meaningful life. Also, the parties are agreed that the mental incapacity by which she is afflicted is of a permanent nature. Thus, there can be no doubt that if her claim is successfully prosecuted she would require a curator bonis to be appointed to look after the proceeds of her claim. Hence, on 1 February 2017, as previously mentioned, Mr Mafate was appointed as curator ad litem to institute a damages claim on her behalf against Shoprite Checkers. [35] Paragraph (i) of s 13(1) of the Prescription Act provides that the relevant period of prescription ‘would, but for the provisions of this subsection, be completed before or on, or within one year after, the day on which the relevant impediment referred to in paragraphs (a), (b), (c), (d), (e), (f), (g) or (h) has ceased to exist, and the period of prescription shall not be completed before a year has elapsed after the day referred to in paragraph (i)’. For the sake of completeness, it bears emphasising that in her situation, Ms Mkhwanazi’s impediment would cease to exist only when she recovers from her mental or intellectual disability, disorder or incapacity. [36] Finally, it was contended on behalf of Shoprite Checkers that resort to s 12(3) does not avail the curator. It was submitted that this was because the curator, in any event, failed to exercise due and proper care, for he had known since 28 July 2017, when the special plea of misjoinder in the initial proceedings was delivered, of the identity of the true debtor, ie Shoprite Checkers. Instead, emphasised Shoprite Checkers, he elected to remain supine for a period in excess of a year when he should and could have instituted action timeously to bring himself within the terms of s 13(1)(i) of the Prescription Act and, as a result interrupt the completion of prescription as would be expected of a prudent attorney in his position. [37] True, the curator inexplicably failed – at least from what is before us – to act with expedition and his inaction for more than a year remains unexplained. However, I do not find it necessary to delve into this aspect in light of the conclusion reached above as to the import of s 13(1)(i). Accordingly, the conclusion of the high court with respect to Shoprite Checkers’ special plea of prescription was correct. Thus, the appeal cannot succeed. [38] It is therefore, not necessary for present purposes, to make a definitive pronouncement in relation to the question whether the curator is precluded from invoking s 12 of the Prescription Act in the light of the conclusion reached with respect to s 13(1). Therefore, it is best to leave this question open for determination on another day when it is not only squarely raised but also necessary for the decision of the case.24 Order [39] In the result the following order is made: The appeal is dismissed with costs. X M PETSE ACTING PRESIDENT SUPREME COURT OF APPEAL 24 Compare: Western Cape Education Department and Another v George [1998] ZASCA 26; 1998 (3) SA 77 (SCA); [1998] 2 All SA 623 (A)at 84 E. Appearances: For appellant: R Stockwell SC Instructed by: Whalley & Van der Lith Inc, Randburg Alberts Attorneys Inc, Bloemfontein For respondent: R S Mtohibe Instructed by: E P Sefatsa Attorneys, Germiston L & V 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: 17 February 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Shoprite Checkers (Pty) Ltd v Mafate (903/2021) [2023] ZASCA 14 (17 February 2023) Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against a decision of the Gauteng Division of the High Court, Johannesburg (the high court). The issue before the SCA was whether the appointment of a curator ad litem for a person suffering from mental or intellectual disability, disorder or incapacity has the effect that the relevant impediment referred to in paragraph (a) of s 13(1) ceases to exist. On 15 October 2014, Ms Nolunga Mkhwanazi (Ms Mkhwanazi), then employed as a packer with Smollan Sales & Marketing, which renders merchandising services to retail stores, was at work at the Checkers Hyper in Meadowdale Shopping Mall, Edenvale. Whilst on duty, she climbed into a cage coupled to a forklift to pack merchandise on shelves. The cage was lifted by the forklift some four metres from the shop floor. Unexpectedly, while still hoisted there, tragedy struck. The cage tilted and ejected Ms Mkhwanazi, causing her to fall to the floor. The cage itself was dislodged from the forklift, toppled over and struck Ms Mkhwanazi on the head. She was severely injured and rendered permanently mentally incapacitated. Due to her permanent mental incapacity, she could not, in her mental condition, institute proceedings in her name. On 1 February 2017, the respondent, Mr Cecil Tshepo Mokopane Mafate (Mr Mafate) – a practicing attorney – was appointed as her curator ad litem (the curator). Following his appointment, the curator instituted proceedings for damages in his representative capacity against Shoprite Holdings Limited (Shoprite Holdings) in the high court. The action was founded in delict and based on Shoprite Holdings’ alleged wrongful and negligent conduct, relying on various grounds. On 28 July 2017, Shoprite Holdings raised two special pleas of misjoinder and non-joinder, asserting that it was not the owner of the store at the time and that instead Shoprite Checkers (Pty) Ltd (Shoprite Checkers) was. Some 11 months later, on 28 June 2018, the curator withdrew the action against Shoprite Holdings. Curiously, it was only on 15 October 2018 when the curator instituted fresh proceedings (October 2018 summons) against Shoprite Checkers, which was served on the latter on 19 October 2018. Shoprite Checkers filed a special plea of prescription to the curator’s October 2018 summons, asserting that the claim had prescribed. Shoprite Checkers argued that Ms Mkhwanazi’s situation fell squarely within the purview of s 13 and the curator was therefore precluded from relying on s 12. The thrust of the case advanced by Shoprite Checkers was that as Mr Mafate was appointed as a curator ad litem to Ms Mkhwanazi on 1 February 2017, the impediment standing in the path of the latter ceased to exist on that date. Consequently, Mr Mafate should have instituted the action within one year after 1 February 2017. But he failed to do so and, instead, instituted the action on 15 October 2018, and the summons was served on Shoprite Checkers on 19 October 2018. By then, asserted Shoprite Checkers, the claim had prescribed, having prescribed on 2 February 2018. The SCA held that the completion of the relevant period of prescription would not occur for as long as the impediment persists. It emphasised that placing a person under curatorship is in itself an impediment and does not bring about a cessation of an impediment. Therefore, in her situation, Ms Mkhwanazi’s impediment would cease to exist only when she recovers from her mental or intellectual disability, disorder or incapacity, hence the dismissal of the appeal. ~~~~ends~~~~

4099

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 707/2022 In the matter between: THE NATIONAL CREDIT REGULATOR APPELLANT and NATIONAL CONSUMER TRIBUNAL FIRST RESPONDENT ELAVATION TRADING CC t/a XCELSIOR FINANCIAL SERVICES SECOND RESPONDENT XCELSIOR FINANCIAL SERVICES (PTY) LTD THIRD RESPONDENT Neutral citation: The National Credit Regulator v National Consumer Tribunal and Others (707/2022) [2023] ZASCA 133 (17 October 2023) Coram: PONNAN, MBATHA, HUGHES and WEINER JJA and NHLANGULELA AJA Heard: 5 September 2023 Delivered: 17 October 2023 Summary: Review of National Consumer Tribunal’s (Tribunal) decision granting condonation for late filing of supplementary founding affidavit – whether Tribunal had such power. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Lukhaimane J sitting as court of first instance): The appeal is dismissed. __________________________________________________________________ JUDGMENT __________________________________________________________________ Weiner JA (Mbatha JA concurring) Introduction [1] This appeal is concerned with whether the first respondent, the National Consumer Tribunal (the Tribunal) has the power to condone the filing of a supplementary founding affidavit (the supplementary affidavit) by the appellant, the National Credit Regulator (the NCR) in proceedings before it. These proceedings concerned an application by the NCR to cancel the registration of the second and third respondents, Elevation Trading CC and Xcelsior Financial Services (Pty) Ltd as credit providers. [2] The NCR was established in terms of s 12 of the National Credit Act 34 of 2005 (the Act). The NCR is responsible for promoting and supporting the development of a fair, transparent, competitive, efficient and easily accessible credit market to serve the needs of historically disadvantaged, and low income persons and communities, in a manner consistent with the Act.1 [3] The National Consumer Tribunal (the Tribunal) was established in terms of s 26 of the Act. It is an independent adjudicative body, deriving its mandate from the Act. Its mandate is to hear and decide on cases involving, inter alia, consumers and credit providers. A decision of the Tribunal has the same status as one made by the high court. [4] The second and third respondents are registered credit providers under the Act. Elevation Trading CC is a close corporation registered under the Close Corporation Act 69 of 1984 and Xcelsior Financial Services (Pty) Ltd is a company registered under the Companies Act 71 of 2008. These respondents shall be referred to collectively as the respondents. [5] The Tribunal found that it had the power, in terms of the Act and the Rules for the Conduct of Matters before the National Consumer Tribunal (the rules), to condone the filing of the supplementary founding affidavit (the supplementary affidavit) on good cause shown. It granted condonation and permitted the respondents to file an answering affidavit in response to the supplementary affidavit 1 The preamble to the Act sets out the objectives: ‘To promote a fair and non-discriminatory market place for access to consumer credit and for that purpose to provide for the general regulation of consumer credit and improved standards of consumer information; to promote black economic empowerment and ownership within the consumer credit industry; to prohibit certain unfair credit and credit-marketing practices; to promote responsible credit granting and use and for that purpose to prohibit reckless credit granting; to provide for debt reorganisation in cases of over indebtedness; to regulate credit information; to provide for registration of credit bureaux, credit providers and debt counselling services; to establish national norms and standards relating to consumer credit; to promote a consistent enforcement framework relating to consumer credit; to establish the National Credit Regulator and the National Consumer Tribunal; to repeal the Usury Act, 1968, and the Credit Agreements Act, 1980; and to provide for related incidental matters.’ within 15 days, and made no order as to costs (the decision). The respondents brought a review to set aside the Tribunal’s decision, which succeeded in the Gauteng Division of the High Court, Pretoria (the high court). This appeal is with the leave of the high court. Background [6] Having received complaints from clients of the respondents, that they were engaged in various contraventions of the Act, the NCR instituted an investigation against the respondents. The complaints related to the respondents charging excessive loan initiation charges, failing to conduct affordability assessments, extending credit recklessly, charging storing fees and insurance illegally, and using the consumers’ motor vehicles as security for loans granted to its clients.2 [7] Upon conclusion of the investigation, a report was produced headed: ‘Investigations into the Activities of Xcelsior Financial Services (Pty) Ltd’ (the report). The NCR referred the matter to the Tribunal and filed an application in terms of s 57(1) of the Act,3 seeking the cancellation of the respondents’ registration as a credit provider. The respondents opposed the referral application and filed an answering affidavit. Thereafter, the NCR filed a replying affidavit.. The matter was postponed and re-enrolled for hearing on 15 July 2019. 2 The details of the contraventions are not pertinent to the issues in the appeal 3 Section 57(1) of the National Credit Act 34 of 2005 (the Act) states as follows: ‘(1) Subject to subsection (2), a registration in terms of this Act may be cancelled by the Tribunal on request by the National Credit Regulator, if the registrant repeatedly- (a) fails to comply with any condition of its registration; (b) fails to meet a commitment contemplated in section 48(1); or (c) contravenes this Act.’ [8] Shortly prior to the hearing, on 11 July 2019, the NCR delivered the supplementary affidavit together with an application for condonation. It applied to the Tribunal for an order to condone a departure from the rules and procedures as follows: ‘1. Authorising the Applicant to file a supplementary founding affidavit, (which supplementary founding affidavit is attached hereto); 2. Giving further directions with regard to the delivery of answering and replying affidavits pertaining to the supplementary founding affidavit; 3. Granting the Applicant leave to amend its Notice of motion Dated 4 July 2018, by the insertion in the Table in Part D thereof of the following additional rows.’ 27. CONTINUOUS Contravention of Section 106(5)(c) 28. CONTINUOUS Contravention of Section 106 (1)(b)(ii) 29. CONTINUOUS Contravention of Section 99(1)(b) (Alternative claim in the event that it is found that the respondents’ credit agreements constitute pawn transactions [9] In seeking this relief, the NCR explained that, in preparing for the hearing of the matter on 15 July 2019, it realised that there were some minor issues with the founding affidavit which needed to be addressed. Although it had made the necessary factual allegations in the founding affidavit regarding infringements of s 106(5)(c)4 and 106(1)(b)(ii),5 alternatively s 99(1)(b)6 of the Act, it had omitted to ask the Tribunal to declare that they were contraventions of the Act. The NCR sought to remedy this in the supplementary affidavit. The NCR also wished to supplement the founding affidavit by providing a more detailed explanation of the conclusion it had reached in the founding affidavit, that the agreements that the respondents had concluded with its customers were not ‘pawn transactions’7 but ‘secured loan agreements’.8 Such explanation was provided ex abundante cautela, as the NCR believed that it was a matter for legal argument. 4 Section 106(5)(c) of the Act states that: ‘(5) With respect to any policy of insurance arranged by a credit provider as contemplated in (4), the credit provider must – … (c) explain the terms and conditions of the insurance policy to the consumer and provide the consumer with a copy of that policy…’ 5 Section 106(1)(b)(ii) provides as follows: ‘(1) A credit provider may require a consumer to maintain during the term of their credit agreement – … (b) either – (i)…) … (ii) in any other case, insurance cover against damage or loss of any property other than property referred to in subparagraph (i), not exceeding, at any time during the life of the credit agreement, the total of the consumer's outstanding obligations to the credit provider in terms of their agreement. 6 Section 99. ((1)(b) states: ‘(1) A credit provider who enters into a pawn transaction with a consumer- … (b) must retain until the end of the credit agreement, and at the risk of the credit provider, any property of the consumer that is delivered to the credit provider as security under the credit agreement-. . . .’ 7 Definition as set out in section 1 of the Act – ‘“pawn transaction” means an agreement, irrespective of its form, in terms of which – (a) one party advances money or grants credit to another, and at the time of doing so, takes possession of goods as security for the money advanced or credit 20 granted; and (b) either- (i) the estimated resale value of the goods exceeds the value of the money provided or the credit granted, or (ii) a charge, fee or interest is imposed in respect of the agreement, or in 25 respect of the amount loaned or the credit granted; and (c) the party that advanced the money or granted the credit is entitled on expiry of a defined period to sell the goods and retain all the proceeds of the sale in settlement of the consumer’s obligations under the agreement;. . .’. 8 Definition as set out in section 1 of the Act – ‘“secured loan” means an agreement, irrespective of its form but not including an instalment agreement, in terms of which a person – (a) advances money or grants credit to another, and (b) retains, or receives a pledge or cession of the title to any movable property or other thing of value as security for all amounts due under that agreement;…’. The power of the Tribunal to grant condonation for the filing of the supplementary affidavit? [10] The NCR argued that it did. The respondents opposed the application on the basis that, as a creature of statute, the Tribunal did not have the power to allow the filing of the supplementary affidavit. [11] The procedures in the rules provide for the NCR to refer the matter to the Tribunal and file an application in terms of rules 69 and 710, with the requisite documents, including the founding affidavit. Rule 1311 provides for an answering affidavit to be filed, and, a replying affidavit can be filed in terms of rule 14.12 [12] Other procedures open to a party in the Tribunal include rule 15 which provides for the amendment of documents. It reads: ‘(1) An Applicant or Respondent may at any time prior to the conclusion of the hearing of the matter, apply by way of Form TI.r15 for an order authorising an amendment of documents filed in 9 Rule 6, which governs notification of parties and service of application documents, provides as follows: ‘(a) The Applicant must notify the persons mentioned in column g of Table 2 by serving on them the documents required under column h of that Table. (b) The application documents filed with the Tribunal must include a proof of service for every person requiring notification.’ 10 Rule 7, which deals with filing an application, states that: ‘(1) Once notification of an application has been served in terms of rule 6, the application must be filed with the Registrar. (2) An application is filed by delivery of the relevant Form and all the documents listed in column e of Table 2, if applicable, or as required elsewhere in these rules, to the Registrar. (5) The filing of an application must comply with the general rules for delivery of documents in terms of these rules.’ 11 Rule 13 (1), headed ‘Opposing an application or referralreferral’, provides that: (‘(1) Any Respondent to an application or referral to the Tribunal may oppose the application or referral by serving an answering affidavit Any Respondent to anon- (a) the Applicant; and (b) every other person on whom the application or referral to the Tribunalwas served.’ 12 Rule 14, dealing with the reply by the applicant provides that: ‘(1) The Applicant may within 10 business days of being served with an answering affidavit, lodge a replying affidavit to any new issues raised in the answering affidavit, other than a point of law.’ connection with the proceedings save that where all parties to the proceedings consent in writing to a proposed amendment, such amendment may be effected by merely delivering the amended documents to the Tribunal and to the parties. (2) A party affected by an amendment may respond within a time allowed by the Tribunal.’ [13] In regard to the powers of condonation, s 150(e) of the Act provides: ‘150. Orders of Tribunal In addition to its other powers in terms of this Act, the Tribunal may make an appropriate order in relation to prohibited conduct or required conduct in terms of this Act, or the Consumer Protection Act, 2008, including – … (e) condoning any non-compliance of its rules and procedures on good cause shown. . .’ [14] Rule 3 re-iterates, in part, s 150. It reads: ‘3. Powers of the Tribunal … (2) The Tribunal may- … (c) consider applications related to an adjudication process- … (iv) to condone non-compliance with the rules and proceedings of the Tribunal; … (vii) relating to other procedural matters.’ [15] Rule 3 deals with the powers of the Tribunal and gives effect to the provisions of s 145 of the Act, which provides for the Rules of procedure. It reads: ‘Subject to the rules of procedure of the Tribunal, the member of the Tribunal presiding at a hearing may determine any matter of procedure for that hearing, with due regard to the circumstances of the case and the requirements of the applicable sections of this Act.’ [16] Rule 34, in material parts, provides as follows: ‘34 (1) A party may apply to the tribunal in form TI r.34 for an order to: … (d) condone any other departure from the rules or procedures. (2) The Tribunal may grant the order on good cause shown.’ [17] The Tribunal regarded the filing of the supplementary affidavit as a departure from the its rules and procedures. It decided that it had therefore the power to grant the application in terms rule 34(1)(d), read with rule 3(2)(c)(iv) and (vii). It granted condonation, finding, in addition, that good cause had been shown. [18] The respondents launched review proceedings in the high court to set aside the Tribunal’s decision, submitting that the Tribunal did not have the power to grant the order that it did and, in any event, good cause was not shown for condonation to be granted. [19] The high court held that the filing of the supplementary affidavit was, in terms of rule 34(1)(d), a departure from the rules and procedures of the Tribunal and that ‘the only circumstance under which such action can be condoned is upon good cause shown.’ But it found that because of the lack of a detailed explanation relating to the delay, good cause had not been shown. It set aside the decision of the Tribunal and remitted it back to the Tribunal to decide whether or not to grant condonation to the NCR for the filing of the supplementary affidavit. Quite what that process would entail, is difficult to comprehend. [20] In this Court, there was no appearance on the respondents’ behalf at the hearing. It had, however, filed heads of argument in which it again submitted that the Tribunal, as a creature of statute, cannot determine its own procedures. It contended that the filing of a supplementary affidavit is not provided for under rule 34, and was not merely ‘a departure from the rules or procedures’, but a process involving the inclusion of additional evidence. It is therefore not covered by rule 3, but rather by rule 10, which provides that for matters not listed in rule 3, or otherwise provided for in the rules, an application to the high court for a declaratory order was required.13 Analysis [21] In Lewis Stores (Pty) Ltd v Summit Financial Partners (Pty) Ltd and Others (Lewis),14 this Court held that the Act provides for an ‘expeditious, informal and cost-effective complaints procedure’. Part D of chapter 7 of the Act relates to the consideration by the Tribunal of ‘complaints, applications and referrals’. Section 142 of the Act sets out the powers and obligations of the Tribunal in conducting a hearing. It states that the Tribunal is required to conduct hearings in public, in an inquisitorial manner, as expeditiously and informally as possible, and in accordance with the rules of natural justice.15 13 Rule 10 provides as follows: ‘Applications in respect of matters not provided for in the rules (1) A person wishing to bring before the Tribunal a matter which is not listed in rule 3, or otherwise provided for in these rules, must first apply to the High Court for a declaratory order confirming the Tribunal’s jurisdiction— (a) to deal with the matter; (b) to grant the order to be sought from the Tribunal.’ 14 Lewis Stores (Pty) Ltd v Summit Financial Partners (Pty) Ltd and Others [2021] ZASCA 91; 2022 (1) SA 377 (SCA) (Lewis) para 15; see also s 139(c) and 142(b) of the Act. 15 Section 142(a)-(d) of the Act. [22] The approach adopted by the Competition Tribunal in The Competition Commission v South African Airways was as follows:16 ‘The Tribunal is a creature of a particular statute that has as its principal objective the protection of the public from anti-competitive conduct. This reality accounts for certain of the powers given us by the legislature including our inquisitorial power and it animates our approach to a range of simple and complex matters including the status of pleadings before us. In short it ensures that we adopt, if anything, a more flexible approach to the pleadings before us than would the High Court in a civil matter. We are not refereeing a conflict between two private rivals; we are securing the objectives of the Competition Act. We are not refereeing a conflict between two private rivals; we are securing the objectives of the Competition Act.’17(Emphasis added.) [23] In my view, the informality of the process in the Tribunal similarly calls for a more flexible approach in relation to the pleadings filed. As with the Competition Tribunal, the Tribunal has an inquisitorial role to ensure that all relevant and material facts are considered and ventilated. It is the role of the NCR and the Tribunal to protect the public from unscrupulous conduct. The approach adopted in the second judgment, seeks to place a restriction on the powers of the Tribunal and adopts a strict approach, as one might do in civil proceedings. This approach flies in the face of the express provisions of the Act which require proceedings to be conducted informally. [24] The second judgment, in finding that the Tribunal did not have the power to condone the filing of the supplementeary affidavit, describes the allegations in the supplementary affidavit as ‘new information’ which was not included in the founding affidavit. It refers to the following excerpts in the supplementary affidavit, 16 The Competition Commission v South African Airways (Pty) Ltd [2001] ZACT 44 (SAA). 17 SAA at 5-6. which it states ‘makes plain, the NCR sought in some respects to advance a ‘new case’ in the supplementary founding affidavit: ‘4. I am deposing to this affidavit to include following, which was not included in the Applicant’s original founding affidavit: 4.1. That the Respondents repeatedly contravened Section 106(5)(c) and 106(1)(b)(ii) of the Act; 4.2. That the Respondents have repeatedly contravened section 99(1)(b), as an alternate contravention in the event that the Tribunal finds that the Respondents’ credit agreements are pawn transactions; 4.3. To include a more detailed explanation as to why the Applicant submits that the Respondents’ agreements are secured credit agreements, not pawn transactions.’ [25] However, as the deponent to the supplementary affidavit explains, the facts relating to each of the contraventions mentioned were contained in the founding affidavit and the report, but the conclusions and declarators that they amounted to contraventions of the Act, were erroneously omitted. Thus, in the notice of motion, to which the founding affidavit in the condonation application is attached, the NCR seeks relief that these practices be declared as contraventions of the Act. All three of the sections referred to deal with the insurance for which the respondents required consumers to pay. [26] In regard to the contravention of s106(5)(c) of the Act, the NCR had alleged in the founding affidavit that ‘it is a general business practice of the respondents to advise consumers that insurance is required in terms of the loan’, and ‘they are not given the opportunity or right to waive the proposed policy and substitute it for a policy of the consumer’s own choice. Further, the respondents do not provide consumers with a copy of the policy document’. These are clearly contraventions of s 106(5)(c) of the Act. [27] From the investigations referred to in the founding affidavit, in terms of s 106(1)(b)(iii) of the Act, the maximum of any loan to a consumer is fixed at the maximum of 50% of the market value of the consumers’ vehicles. All the credit agreements sampled during the NCR’s investigation make provision for consumers to pay insurance premiums for insurance which covers the full value of the vehicle. This amounts to a contravention of s 106(1)(b)(iii) of the Act. This section was expressly mentioned in the report, and is a precursor to s 106(2),18 which was cited as another section of the Act that was contravened. [28] The respondents contended that the agreements were not secured loan agreements, but pawn transactions. If this is so, the alternative contravention of s 99(1)(b) of the Act becomes applicable. Under that section, a credit provider under a pawn transaction is prohibited from requiring a consumer to take up or pay for insurance which covers the risk of loss or damage to the consumer’s vehicles during the period that the vehicles are held in pledge by the respondents as security for the consumers’ indebtedness to the respondents. As set out above, it is common cause that the respondents required their clients to pay for insurance. The NCR thus sought to include an order that, in the event that it is held that the respondents have 18 Section 106 (2) of the Act provides that: ‘Despite subsection (l), a credit provider must not offer or demand that the consumer purchase or maintain insurance that is- (a) unreasonable; or (b) at an unreasonable cost to the consumer, having regard to the actual risk and liabilities involved in the credit agreement.’ concluded pawn transactions as opposed to secured loan agreements, that they had contravened s 99(1)(b) of the Act. [29] The final issue which was sought to be introduced in the supplementary affidavit was an explanation as to why the NCR regarded the respondents’ agreements as secured loan agreements, rather than pawn transactions (as defined in the Act). This issue was dealt with in detail in the report. In NCR’s founding affidavit in support of the application for condonation, the NCR alleged that: ‘. . . [t]he issue regarding categorisation of the credit agreements according to the definitions under the National Credit Act is, I submit, central to the dispute between the parties. The Respondents complain that the Applicant’s founding papers do not explain the basis upon which the Applicant claims that the agreements are secured loans as opposed to pawn transactions. The Applicant submits that this was an issue of interpretation of the Act and thus would be addressed in legal argument at the hearing. and, therefore, it was not strictly necessary to set out this argument in its founding affidavit.’ [30] The NCR however, ex abundante cautela, in their supplementary affidavit, referred to three reasons for the distinction. They contended that: (a) The respondents were not entitled to retain all of the proceeds of the sale of the vehicle. If there was a surplus, as required in terms of paragraph (c) of the definition of ‘pawn transaction’; (b) Conversely, if there was a shortfall, the credit agreements do not provide that the proceeds from the sale of the vehicle will constitute full and final settlement of the consumer’s debt. And the respondents do not accept the proceeds of the sale as full and final settlement of the debt (also required in terms of paragraph (c) of the definition); (c) The agreements, on the other hand, meet all of the definitional requirements required to be considered ‘secured loan’ agreements. This explanation was based upon the facts set out in the report and the founding affidavit and are referred to in s 99 (1)(b). [31] It is thus clear that no new case is made out in the supplementary affidavit. It made references to the report, which was attached to the founding affidavit. All the facts relating to the contraventions were contained therein. The interpretation of the definitions and descriptions in the Act, of pawn transactions and secured loan agreements, is a matter for legal argument. No new evidence was produced in the supplementary affidavit, and none will be required at the hearing. [32] If one has regard to the nature of the allegations contained in the supplementary affidavit, they seek, in effect, to amend the notice of motion and founding affidavit, by adding the necessary declarators of the contraventions. The rules provide for three affidvaits to be filed, thus this application amounted to a departure from those rules and procedures. The description of the alternative contravention was already set out in the founding affidavit. The NCR could, equally, have sought an amendment to its notice of motion and founding papers to effect these insertions, in terms of rule 15. Whether an amendment to an affidavit would be permissible is not for this Court to decide, but NCR sought instead, to file a supplementary affidavit, a departure from the procedure set out in rules 6,7,13,14 and 15. In my view, the application clearly falls within the category of ‘any departure from the rules and procedures’. Rule 10 has no application because the condonation sought is listed in rule 3 and contrary to the submissions of the respondents, no further evidence will be required at the hearing. [33] If the appeal is refused on the basis that the Tribunal did not have the power to make the decision which it did, the NCR would be compelled to either bring an application for an amendment or one in terms of rule 10. This protracted procedure would have the same result as the condonation now sought, but it would be contrary to the express provisions of the rules for the proceedings to be conducted expeditiously and informally. [34] I am of the view that the Tribunal correctly exercised the general powers of condonation contained in rules 3, 34 and s 150 of the Act, in holding that the filing of the supplementary affidavit was a departure from its rules and procedures, which it could condone. Good Cause [35] It is trite that ‘good cause’ is a requirement for condonation and is expressly referred to in rule 34(2). This requires the exercise of a discretion, on an objective conspectus of all the facts.19 The Constitutional Court, in Competition Commission of South Africa v Pickfords Removals SA (Pty) Limited (Pickfords),20 repeated the principles laid down in much jurisprudence on this point. It stated that: ‘Courts are afforded a wide discretion in evaluating what constitutes “good cause”, so as to ensure that justice is done. Ultimately, the overriding consideration is the interests of justice’, which are ‘inter-related: they are not individually decisive’.21 The importance of the issue and the strong prospects of success may compensate for 19 Head of Department of Education Limpopo Province v Settlers Agricultural High School and Others [2003] ZACC 15; 2003 (11) BCLR 1212 (CC) para 11; Van Wyk v Unitas Hospital and Others [2007] ZACC 24; 2008 (2) SA 472 (CC); 2008 (4) BCLR 442 (CC) para 20. 20 Competition Commission of South Africa v Pickfords Removals SA (Pty) Limited [2020] ZACC 14; 2020 (10) BCLR 1204 (CC); 2021 (3) SA 1 (CC); [2020] 1 CPLR 1 (CC). 21 PAF v SCF [2022] ZASCA 101; 2022 (6) SA 162 (SCA) at para 15, citing Melane v Santam Insurance Company Ltd 1962 (4) SA 531 (A) at 532C-F. a long delay.22 The Tribunal took into account that the supplementary affidavit did not introduce new causes of action and no further evidence was required. Although the explanation for the delay provided by the NCR was lacking in detail, the prospects of success were good, and the matter was of importance as the contraventions impacted on consumers’ rights. The respondents were given an opportunity to file an answer to the supplementary affidavit, thus eliminating any prejudice which they may have suffered. It was therefore in the interests of justice that the NCR be granted condonation and be be permitted to supplement its founding affidavit. Discretion [36] In setting aside the decision of the Tribunal to grant condonation, the high court failed to appreciate that its power to substitute its own determination for that of the high court, is constrained. This much was stated as follows by Ponnan JA in Lieutenant Colonel KB O’Brien NO v The Minister of Defence and Military Veterans and Others (O’Brien):23 ‘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. 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 22 Ibid. 23 Lieutenant Colonel KB O'Brien NO v The Minister of Defence and Military Veterans and Others [2022] ZASCA 178; [2023] 1 All SA 341 (SCA) (O’Brien). may be curtailed by broader policy considerations. Therefore, whenever an appellate court interferes with a discretion in the loose sense, it must be guarded.’24 Ponnan JA, in O’Brien,25 referred to Florence v Government of the Republic of South Africa (Florence),26 where 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.’ (Emphasis added.) [37] It is clear that the discretion in this matter, is that referred to by Ponnan JA in the preceding paragraph in O’Brien. The high court was accordingly, not at large to interfere with discretion, which was not ‘at odds with the law’. [38] There are two further reasons why the high court erred. The decision of the Tribunal was clearly interlocutory. It had no final effect,27 and was therefore not reviewable. Secondly, if the Tribunal had the power to grant condonation, which I find it did, the respondents’ decision to review the Tribunal’s decision should not have succeeded for the reasons stated by this Court in Lewis: ‘The NCA provides for an expeditious, informal and cost-effective complaints procedure. The provisions of the NCA, as I have emphasized, requires a quick informal resolution of complaints. The notion of an appeal to the high court against a ruling by the Tribunal to allow a direct referral 24 Ibid para 29. 25 Ibid para 30. 26 Florence v Government of the Republic of South Africa [2014] ZACC 22; 2014 (6) SA 456 (CC); 2014 (10) BCLR 1137 (CC) para 113. 27 International Trade Administration Commission v SCAW South Africa (Pty) Ltd (CCT 59/09) [2010] ZACC 6; 2012 (4) SA 618 (CC); 2010 (5) BCLR 457 (CC) (9 March 2010)). of a complaint to it is contrary to the purpose of the NCA. The conclusion to which I have come in respect of the construction of the NCA accords with the approach of the courts to appeals generally, which militates against appeals which do not contribute to the expeditious and cost effective final determination of the main dispute between the parties.’28 [39] In the result I would have made the following order: The appeal is upheld with costs. The order of the high court is set aside and is substituted with the following: ‘The application is dismissed with costs.’ SE WEINER JUDGE OF APPEAL Ponnan JA (Hughes JA and Nhlangulela AJA concurring) [40] I have read the judgment of Weiner JA. For the reasons that follow, I find myself unable to agree with either the reasoning or conclusion reached by my learned Colleague. [41] The second respondent, Elevation Trading CC t/a Xcelsior Financial Services (Elevation) and the third respondent, Xcelsior Financial Services (Pty) Ltd (Xcelsior) (collectively referred to as the respondents), are registered credit providers under the National Credit Act 34 of 2005 (the Act). The appellant, the the NCR, received complaints against the respondents. It is not necessary to detail the 28 Lewis para 19. nature of the complaints; it suffices for the present to state that on the strength of them, the NCR initiated an investigation into the conduct of the respondents on 16 March 2017, leading it (the NCR) to the conclusion that the conduct of the respondents repeatedly contravened various provisions of the Act and the Regulations framed thereunder (the regulations).29 [42] On 4 July 2018, the NCR applied to the first respondent, the Tribunal for the cancellation of the registration of the respondents as credit providers with immediate effect; the imposition of an administrative fine on the respondents; and, an order that the respondents refund their consumers. The application was opposed by the respondents. On 18 September 2018, the respondents filed their answering affidavit together with an application for condonation, which was granted by the Tribunal on 22 October 2018. The NCR thereafter filed its replying affidavit on 5 November 2019. [43] On 10 July 2019, the NCR applied to the Tribunal for: ‘. . . an order to condone a departure from the rules or procedures as follows:- 1. Authorising the Applicant to file a supplementary founding affidavit, (which supplementary founding affidavit is attached hereto); 2. Giving further directions with regard to the delivery of answering and replying affidavits pertaining to the supplementary founding affidavit; 3. Granting the Applicant leave to amend its Notice of motion Dated 4 July 2018, by the insertion in the Table in Part D thereof of the following additional rows…’ [44] In support of the application, it was stated that ‘whilst preparing for the hearing of the matter [it] had come to realise that there were some issues with the 29 The National Credit Regulations 2006. current pleadings . . . which need to be addressed’. It was further asserted on behalf of the NCR: ‘11. I respectfully submit that it is in the interests of justice that condonation be granted and that Applicant be allowed to supplement its founding affidavit papers, for the following reasons:- 11.1 By allowing the Applicant to supplement its founding papers, all of the contraventions which arise from the facts at hand will be able to be fully ventilated and adjudicated; 11.2 It would not be fair or in the interests of justice that the Respondents be enabled to escape liability for contravening the Act, based purely on minor deficiencies in the founding papers. Such a result would be extremely prejudicial to consumers who were the victims of the Respondent’s unlawful conduct; 11.3 The issue regarding categorisation of the credit agreements according to the definitions under the National Credit Act is, I submit, central to the dispute between the parties. The Respondents complain that the Applicant’s founding papers do not explain the basis upon which the Applicant claims that the agreements are secured loans as opposed to pawn transactions. The Applicant submits that this is an issue of interpretation of the Act and thus is to be addressed by legal argument and, therefore, it was not strictly necessary to set out this argument in its founding affidavit. However, it is beneficial for the administration of justice that the Applicant be allowed to supplement its founding papers to deal with this issue which is central to the dispute between the parties – this will allow the primary dispute to be fully ventilated. 12. I respectfully submit that the prejudice suffered by the filing of the supplementary founding affidavit will be minimal, if any. In fact, the Applicant and the consumer protection functions which it carries out will be prejudiced if the Applicant is precluded from filing the supplementary papers.’ [45] In opposing the application, Mr Robert Ribeiro, a member of Elevation and a director of Xcelsior, asserted that: ‘The applicant seeks an order that is simply not provided for in the regulations (rules) governing the procedures before the tribunal. The regulations do not provide for the filing of supplementary founding affidavits (or any other supplementary affidavits).’ [46] The application succeeded before the Tribunal, which evidently took the view that the application fell to be considered in terms of rule 34(1)(d). It stated: ‘The Tribunal . . . has previously ruled that a supplementary affidavit can be considered as an application in terms of Rule 34(1)(d); to condone a departure from the Rules and procedures [Foschini Retail Group (Pty) Ltd v National Credit Regulator NCT/84881/2017/140(1) NCA – Rule 34].’ [47] On 22 January 2020, the respondents applied to the high court for an order in the following terms: ‘The order of the first respondent dated 12 September 2019, annexed to the Notice of Motion as annexure “X”, is reviewed and set aside and the decision whether or not to grant condonation to the second respondent for the filing of a supplementary founding affidavit is remitted to the first respondent to consider and decide afresh.’ [48] Although not very elegantly expressed, the thrust of the respondents’ contention before the high court - as I conceive it - was that: first, as a creature of statute, the powers of the Tribunal are those specifically assigned to it in terms of the Act and the regulations; and, second (and this is linked to the first), that the rules governing proceedings before the Tribunal do not make provision for the filing of a supplementary founding affidavit. Accordingly, so the contention proceeded, the Tribunal’s order permitting the NCR to file a supplementary founding affidavit constituted a nullity and was thus susceptible to review.30 30 Master of the High Court Northern Gauteng High Court, Pretoria v Motala NO and Others [2011] ZASCA 238; 2012 (3) SA 325 (SCA); Knoop and Another NNO v Gupta (No 1) [2020] ZASCA 149; [2021] 1 All SA 17; 2021 (3) SA 135 (SCA) para 33 and 34. [49] In my view, both the NCR and the Tribunal misconceived the enquiry. The NCR was not, in truth, seeking condonation for its failure to comply with one of the Rules for the Conduct of Matters before the Tribunal (the rules). It was not asking the Tribunal to alter a time limit prescribed by the rules or to condone its failure to comply with a rule. It was, properly construed, seeking the leave of the Tribunal to file a further affidavit. The application by the NCR was made on form TI.r34, in terms of which an applicant may apply to ‘condone non-compliance with a rule or procedure in terms of Tribunal rule 34’. [50] Rule 34, headed ‘Condonation of late filing and non-compliance with rules’, provides: ‘(1) A party may apply to the Tribunal in Form TI.r34 for an order to— (a) condone late filing of a document or application; (b) extend or reduce the time allowed for filing or serving; (c) condone the non-payment of a fee; or (d) condone any other departure from the rules or procedures. (2) The Tribunal may grant the order on good cause shown.’ [51] In this matter, reliance is sought to be placed on rule 34(1)(d). However, I cannot see how that rule can possibly apply to an application such as the present. Under the guise of a condonation application, the NCR was seeking the permission of the Tribunal to do something that may well have fallen outside the scope and ambit of the rules; namely, the admission of a further affidavit. It seems to me doubtful that the Tribunal was empowered to permit the filing of a supplementary founding affidavit. Notably, in the Magistrates Court, which is also a creature of statute, rule 55(1)(i) expressly provides that ‘the court may in its discretion permit the filing of further affidavits’. I could find no similar provision in the Tribunal’s rules. [52] Unlike the high court (as also this Court and the Constitutional Court), the Tribunal (like the Magistrates Court) has no inherent jurisdiction to regulate its own process in the interests of justice. The power of the high court in that regard, is derived from the common law and now entrenched in s 173 of the Constitution. In terms of this power, the high court, which has always been able to regulate its own proceedings for a number of reasons; including, catering for circumstances not adequately covered by the rules, as also, generally ensuring the efficient administration of a court’s judicial functions.31 It also has the power, unlike the Tribunal, in the exercise of its inherent jurisdiction to grant procedural relief where the rules of court make no provision for it.32 [53] As far the high court goes, it has come to be accepted that it is in the interests of the administration of justice that the well-known and well-established general rules regarding the number of set of affidavits and the proper sequence of affidavits should ordinarily be observed (James Brown & Hamer (Pty) Ltd v Simmons NO).33 As it was put in the last-mentioned case: ‘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 31 Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC) para 40. 32 Carmel Trading Company Ltd v Commissioner for the South African Revenue Services and Others [2007] ZASCA 160; [2007] SCA 160 (RSA); [2008] 2 All SA 125 (SCA); 2008 (2) SA 433 (SCA). 33 James Brown & Hamer (Pty) Ltd v Simmons NO 1963 (4) SA 656 (A) at 660E-H. 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 eg authorities collated in Zarug v Parvathie 1962 (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.’ [54] The principles distilled from the cases dealing with the high court practice offer guidance as to the manner in which the magistrates court should exercise its discretion under rule 55(1)(i). The relevant considerations are set out in Porterstraat 69 Eiendomme v PA Venter Worcester.34 [55] Thus, had this matter served before either the high court or the magistrates court, the NCR would not have been entitled as of right to file a further affidavit. Whether such permission would be granted in a given case is basically a question of fairness to both sides.35 Normally, the circumstances would have to be exceptional.36 It has been observed that ‘a litigant who seeks to serve an additional affidavit is under a duty to provide an explanation that negatives mala fides or culpable remissness as the cause of the facts and/or information not being put before the Court at an earlier stage’.37 There must furthermore be a proper and satisfactory explanation as to why the information contained in the affidavit was not put up earlier, and what is more, the Court must be satisfied that no prejudice is caused to the opposite party that cannot be remedied by an appropriate order as to costs.38 34 Porterstraat 69 Eiendomme v PA Venter Worcester 2000 (4) SA 598 (C) at 617B-F. 35 Bangtoo Bros. and Others v National Transport Commission 1973 (4) SA 667 (N) at 680A-B. 36 Ebrahim (Pty) Ltd v Mahomed and Others 1962 (1) SA 90 (D) at 92A-B. 37 Standard Bank of SA Ltd v Sewpersadh and Another 2005 (4) SA 148 (C) para 10 and the cases there cited. 38 Ibid. [56] The statements of the NCR in this matter, fall far short of a satisfactory explanation as to why it was unable to secure the information prior to deposing to the founding affidavit, the preparation of the original notice of motion, and the launching of the application for the deregistration of the respondents. By that stage, the investigation by the NCR into the conduct of the respondents had been completed. Still less do they furnish a satisfactory explanation as to why, at any rate, the ‘new’ information was not included in the replying affidavit. What is more, as the following excerpt makes plain, the NCR sought in some respects to advance a ‘new case’ in the supplementary founding affidavit: ‘4. I am deposing to this affidavit to include following, which was not included in the Applicant’s original founding affidavit: 4.1. That the Respondents repeatedly contravened Section 106(5)(c) and 106(1)(b)(ii) of the Act; 4.2. That the Respondents have repeatedly contravened section 99(1)(b), as an alternate contravention in the event that the Tribunal finds that the Respondents’ credit agreements are pawn transactions; 4.3. To include a more detailed explanation as to why the Applicant submits that the Respondents’ agreements are secured credit agreements, not pawn transactions.’ [57] The NCR accordingly sought orders, in addition to those in the initial notice of motion, that the respondents had repeatedly contravened ss 106(5)(c) and 106(1)(b)(ii) of the Act, and in the alternative, that the respondents repeatedly contravened s 99(1)(b). [58] Accordingly, had this matter served before the high court it is doubtful that the prospects of the admission of the supplementary founding affidavit would have necessarily led to a more expeditious resolution of the matter or that admitting it into evidence would not have been unduly prejudicial to the respondents. As the Tribunal misconceived the nature of the enquiry, it failed to consider whether: firstly, it had the power to permit the NCR to file a supplementary founding affidavit; secondly, the source, nature, extent and scope of such power; and, thirdly, assuming that it had such power, the relevant considerations that it had to have regard to in exercising that power. [59] In the circumstances, the order by the high court remitting the matter to the Tribunal, albeit for different reasons, must stand. Accordingly, the appeal must fail. As to costs: There was no appearance on behalf of the respondents at the hearing of the appeal. Moreover, as the parties had misconceived the issue, the point held to be decisive in the appeal had not been raised by them. Consequently, there should be no order as to costs in the appeal. [60] In the result, the appeal is dismissed. __________________ V M PONNAN JUDGE OF APPEAL Appearances For appellant: K Kollapen Instructed by: VDT Attorneys, Pretoria Phatshoane Henney Attorneys, Bloemfontein For second and third respondent: No appearance Instructed by: J I Van Niekerk Attorneys, Pretoria Van Wyk & Preller 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: 17 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 The National Credit Regulator v National Consumer Tribunal and Others (707/2022) [2023] ZASCA 133(17 October 2023) Today the Supreme Court of Appeal (SCA) dismissed an appeal by the appellant, against the order of the Gauteng Division of the High Court, Pretoria (the high court). It had upheld a review against the National Consumer Tribunal (the Tribunal), which had granted condonation to the appellant, the National Credit Regulator (the NCR) for the filing of a supplementary founding affidavit (the supplementary affidavit). The second respondent, Elevation Trading CC t/a Xcelsior Financial Services (Elevation) and the third respondent, Xcelsior Financial Services (Pty) Ltd (Xcelsior) (the respondents), are registered credit providers under the National Credit Act 34 of 2005 (the Act). The NCR received complaints against the respondents which related to various contraventions of the Act. The NCR instituted an investigation against the respondents. Upon conclusion of the investigation, the NCR produced a report and referred the matter to the Tribunal. It filed an application in terms of s 57(1) of the Act, seeking the cancellation of the respondent’s registration as a credit provider. The respondents opposed the referral application and filed an answering affidavit. The NCR filed a replying affidavit and the matter was postponed and re-enrolled for hearing on 15 July 2019. On 11 July 2019, the NCR delivered the supplementary affidavit together with an application for condonation. It applied to the Tribunal for an order to condone the filing of the supplementary affidavit. This application was opposed by the respondents who submitted that, as a creature of statute, the Tribunal did not have the power to allow the filing of the supplementary affidavit. The application succeeded before the Tribunal, which took the view that the Act and rule 34(1)(d) of the Rules (for the Conduct of Matters Before the National Consumer Tribunal), provided the Tribunal with the power to condone ‘any departure from its rules and procedures, on good cause shown. The respondents brought a review to set aside the Tribunal’s decision, which succeeded in the high court. The issue for determination before the SCA was whether the Tribunal had the power to grant condonation for the late filing of the supplementary founding affidavit. In the majority judgment penned by Ponnan JA (Hughes JA and Nhlangulela AJA concurring), the SCA held that rule 34(1)(d) does not apply to such an application because, even though it was under the guise of a condonation application, the NCR was seeking the permission of the Tribunal to do something that may well have fallen outside the scope and ambit of the rules; namely, the admission of a further affidavit. The majority held that, unlike the high court, the Tribunal has no inherent jurisdiction to regulate its own process. Additionally, the majority held that the Tribunal misconceived the nature of the enquiry as it failed to consider whether it had the power to permit the NCR to file a supplementary founding affidavit; it questioned the source, nature, extent and scope of such power and, assuming that it had such power, the relevant considerations that it had to have regard to in exercising that power. In the result, the majority judgment dismissed the appeal with no order as to costs. The minority judgement penned by Weiner JA (Mbatha JA concurring) reasoned that the proceedings in the Tribunal are required, in terms of the Act, to be expeditions and informal. Thus a more flexible approach should be required in relation to the pleadings filed. This judgment further held that the approach adopted in the majority judgment, seeks to place a restriction on the powers of the Tribunal and adopt a strict approach, as one might do in civil proceedings which flies in the face of the express provisions of the Act. It held that the supplementary founding affidavit did not contain any new information as the facts relating to each of the contraventions mentioned were contained in the founding affidavit. If the appeal was refused, the NCR would be compelled to either bring an application for an amendment or one in terms of rule 10 which would have the same result as the condonation sought, but would be contrary to the express provisions of the Act for the proceedings to be conducted expeditiously and informally. In the last instance, the minority judgment held that, although the explanation for the delay provided by the NCR was lacking in detail, the prospects of success were good, and the matter was of importance as the contraventions impacted on consumers’ rights. It was therefore in the interests of justice that the NCR be granted condonation and be permitted to supplement its founding affidavit. It held further that the Tribunal had exercised a discretion with which the high court was not at large to interfere. In addition, the Tribunal’s decision was interlocutory, not final in effect, and not reviewable. In the result, the minority judgment held that the Tribunal correctly exercised the general powers of condonation contained in the rules and the Act and it and would have upheld the appeal and set aside the order of the high court. --------oOo--------

3408

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 267/2020 In the matter between: COMPCARE WELLNESS MEDICAL SCHEME Appellant and REGISTRAR OF MEDICAL SCHEMES First Respondent COUNCIL FOR MEDICAL SCHEMES Second Respondent CHAIRPERSON OF THE APPEAL BOARD OF THE COUNCIL FOR MEDICAL SCHEMES Third Respondent UNIVERSAL HEALTHCARE ADMINISTRATORS (PTY) LTD Fourth Respondent Neutral citation: Compcare Wellness Medical Scheme v Registrar of Medical Schemes and Others (267/2020) [2020] ZASCA 91 (17 August 2020) Coram: Cachalia, Schippers and Plasket JJA and Ledwaba and Matojane AJJA Heard: No hearing. Decided without a hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 17 August 2020. Summary: Section 38(d) of the Constitution – organ of state acting in the public interest – reviewing its own decision – Promotion of Administrative Justice Act 3 of 2000 applies – Medical Schemes Act 131 of 1998 – Registrar of Council of Medical Schemes has no discretion to allow a medical scheme to change its name to a name that is likely to mislead the public – the Registrar has no power to impose allow a name-change subject to conditions. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Fabricius J as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT Plasket JA (Cachalia and Schippers JJA, Ledwaba and Matojane AJJA concurring) [1] The Medical Schemes Act 131 of 1998 (the Act) was enacted, inter alia, ‘to make provision for the registration and control of certain activities of medical schemes’.1 Section 3 of the Act created the Council for Medical Schemes (the Council). Its functions include protecting the interests of beneficiaries of medical schemes.2 In terms of s 18(1), the Minister is required to appoint a Registrar of Medical Schemes (the Registrar). This officer is the Council’s executive officer and has the function of managing the Council’s affairs.3 To this end, the Act vests in the Registrar a wide range of powers, one of which is relevant to this appeal. It is the power, in terms of s 23, to register or refuse to register a medical scheme’s name or a change to a medical scheme’s name. This section provides: ‘(1) The Registrar shall not register a medical scheme under a name, nor change the name of a medical scheme to a name- (a) which has already been registered; 1 Long title. 2 Section 7(a). 3 Section 18(2). (b) which so closely resembles the name of a medical scheme already registered that the one is likely to be mistaken for the other; or (c) which is likely to mislead the public. (2) A medical scheme shall not use or refer to itself by a name other than the name under which it is registered or a literal translation or an abbreviation thereof which has been approved by the Registrar. (3) A medical scheme may, with the consent of the Registrar, in conjunction with its registered name, use, or refer to itself by, the name of a medical scheme with which it has amalgamated or which it has absorbed or, in the case of a change of name, the name by which it was previously known. (4) A medical scheme shall not change its name without the prior written consent of the Registrar.’ [2] The appellant, Compcare Wellness Medical Scheme (Compcare), applied to the Registrar, the first respondent, for approval of a change of name. The Registrar refused approval because he was of the view that the new name was likely to mislead the public. His decision was upheld on appeal by an appeal committee of the Council.4 Compcare then appealed to the Appeal Board established by s 50 of the Act.5 The Appeal Board upheld Compcare’s appeal and ordered the Registrar to give effect to the name-change but attached conditions that Compcare was required to comply with. [3] The Registrar and the Council brought an application in the Gauteng Division of the High Court, Pretoria for the review and setting aside of the Appeal Board’s 4 Section 49 of the Act provides: ‘(1) Any person who is aggrieved by any decision of the Registrar under a power conferred or a duty imposed upon him or her by or under this Act, excluding a decision that has been made with the concurrence of the Council, may within 30 days after the date on which such decision was given, appeal against such decision to the Council and the Council may make such order on the appeal as it may deem just. (2) The operation of any decision which is the subject of an appeal under subsection (1) shall be suspended pending the decision of the Council on such appeal. (3) The Registrar or any other person who lodges an appeal in terms of subsection (1) may in person or through a representative appear before the Council and tender evidence or submit any argument or explanation to the Council in support of the decision which is the subject of the appeal.’ 5 In terms of s 50(1), the Appeal Board is made up of three persons appointed by the Minister. Section 50(3) provides that ‘[a]ny person aggrieved by a decision of the Registrar acting with the concurrence of the Council or by a decision of the Council under a power conferred or a duty imposed upon it by or under this Act, may within a period of 60 days after the date on which such decision was given and upon payment to the Registrar of the prescribed fee, appeal against such decision to the Appeal Board’. In terms of s 50(16), the Appeal Board has the power to ‘confirm, set aside or vary’ the decision appealed against or to ‘order that the decision be given effect to’. decision. Fabricius J granted that relief. He then granted Compcare leave to appeal to this court. Background [4] Compcare is a medical scheme that is registered in terms of the Act. When it submitted a number of rule changes and a name-change application, to the Registrar for his approval, the name-change application was somehow overlooked. It was dealt with later on its own. The proposed change of name was motivated in detailed written submissions addressed to the Registrar. [5] Compcare wished to change its name to Universal Medical Scheme. As its administrator was Universal Healthcare Administrators (Pty) Ltd, a part of the Universal group of companies, Compcare appeared to be alive to the fact that the proposed name had the potential, at the very least, to mislead the public. Indeed, its motivation for the change was to take advantage of the Universal brand, which it considered to be much stronger and attractive than its own Compcare brand. Because it foresaw that the public may be misled by the new name, it undertook in its submissions to take a number of steps to attempt to mitigate that possibility. [6] It informed the Registrar that if approval was granted, ‘the Universal group of companies . . . will grant a royalty free license to the Scheme to use the “Universal” name and brand, whereafter the Scheme will operate under the name “Universal Medical Scheme” and will use the Universal logo’. It then gave the first of its undertakings, namely that ‘all Scheme communication channels, platforms and materials will be branded as Universal Medical Scheme – clearly indicating that it is the Scheme as an entity that is being dealt with’ and that the ‘Scheme’s administrators will always be identified as “Universal Administrators” or “Universal Healthcare Administrators”’. [7] Later in the submissions, Compcare gave the following undertakings: ‘6.12 The independence and autonomy of the Scheme and its Board are of paramount importance. Thus under the shared “Universal” brand attributes, the Scheme and its administrator will have separate and distinct governance structures, which will include separate legal advisors, separate auditors and a clear communications policy to ensure that the respective roles and responsibilities of the Scheme and its administrator (and its managed health care organization) are clearly delineated and that there is no confusion created in the minds of members or the general public that Universal Administrators carries on the business of a medical scheme, and that members and the general public are not otherwise misled in any manner. 6.13 Independence will be ensured through the brand architecture and the Scheme will be branded as an independent entity. A brand is a name, symbol, design or mark that enhances the value of a product beyond its functional purposes. It is a complex entity as consumers do not just buy a product, but also the image and experience associated with a product. Brand architecture is the way in which a set of brands are managed, differentiated and applied in the market. . . 6.14 All Scheme communication channels, platforms and materials will be branded with the Universal Medical Scheme logo – clearly indicating that it is the Scheme as an entity that is being dealt with. “Universal Medical Scheme” will always be used when referring to the Scheme. The Scheme will also retain its own communications channels, including but not limited to brochures, a website, client service line and letterhead. The same principles will apply in respect of communications of Universal Administrators. 6.15 The Board will continue to use every reasonable step available to educate its members and to reinforce previous training in respect of the demarcation between the Scheme and its administrators.’ [8] It then said that, in its view, ‘there is no ascertainable harm or prejudice to members or to the general public if a medical scheme and its administrators share a common brand’. It thought that the contrary was true – that ‘to the extent that a shared, trusted brand helps to increase the growth and sustainability of small and medium open medical schemes, this promotes price and quality competition to the benefit of members and the general public’. [9] It is apparent from the Appeal Board’s reasons that it was of the view that the name that Compcare wanted to take was likely to mislead the public. With reference to the submissions, the Appeal Board said that Compcare had ‘tendered certain measures it would implement upon the application being granted to ensure that the public would not be misled by the proposed name’. Then, again in relation to the undertakings, the Appeal Board, in explaining why it intended to uphold the appeal, said: ‘The measures proposed by the appellant to ensure that the public is not likely to be misled are reasonable, and if diligently implemented as undertaken, are likely to go a long way towards averting the harm sought to be prevented by section 23(1)(c). The proposed measures weighed heavily with us in favour of the appellant. It would therefore be appropriate, in the Order we make, to ensure that the appellant lives up to its undertaking to implement them. This is because we believe that, absent these measures, it is, as the Act says, “likely” that the public will be misled; that much is recognized by the appellant itself. Surely, it must have been exactly as a result of that recognition that the appellant tendered the above measures in support of its application. Once the name change is approved, as we believe it should be, on the strength of those measures, the appellant cannot thereafter abandon them or fail to implement them as diligently as it has undertaken to.’ [10] The Appeal Board concluded its reasons as follows: ‘We are satisfied that the measures tendered by the appellant to ensure that the public would not be misled, are reasonable. We are therefore of the view that the decisions of the Registrar and the Appeal Committee should be set aside. The following Order is therefore made: 11.1 The appeal is upheld. 11.2 The decisions of the respondent and the Appeal Committee of the Council for Medical Schemes are set aside. 11.3 The Registrar of the Council for Medical Schemes is hereby directed to approve the applicant’s change of name from “CompCare Wellness Medical Scheme” to “Universal Medical Scheme” in terms of section 23 of the Medical Schemes Act, 131 of 1998. 11.4 The approval for the change of the name is subject to the following conditions: 11.4.1 The appellant shall fully and diligently at all times implement the measures set out in paragraphs 7.1, 7.2, 7.3 and 7.4 above. 11.4.2 The Registrar’s instrument of approval shall state that the approval is subject to the appellant fully and diligently at all times implementing the measures set out in paragraphs 7.1, 7.2, 7.3 and 7.4 above, which measures shall also be stipulated in the instrument of approval.’ [11] In the court below, Fabricius J held that the Appeal Board had misdirected itself by upholding the appeal and ordering the Registrar to approve the name-change subject to conditions. He thus granted the application brought by the Registrar and the Council to review and set aside the Appeal Board’s decision. He also dismissed a counter-application for the dismissal of the review application that Compcare brought. The issues [12] Two issues arise for decision. The first is jurisdictional. It is whether the Appeal Board’s decision is reviewable at the instance of the Registrar and the Council in terms of the Promotion of Administrative Justice Act 3 of 2000 (the PAJA), or in terms of the principle of legality that is part of the founding Constitutional value of the rule of law. The second issue is substantive. It is whether the ground of review relied upon by the Registrar and the Council has been established, as the court below found. Source of jurisdiction: the PAJA or the principle of legality [13] The two major ‘pathways’ to the review of administrative-type actions are s 6 of the PAJA and the principle of legality. The PAJA applies generally to the review of administrative action as that term is defined in it. The principle of legality applies when an exercise of public power does not fall within the PAJA’s definition of administrative action.6 It is necessary to determine which of these pathways to review applies because that decision determines the basis for the court’s review jurisdiction. That decision should not, generally speaking, be avoided.7 [14] In State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd8 the Constitutional Court held that when an organ of state, acting in its own interest, applies to set aside its own administrative action, the PAJA does not apply. The court’s reasoning, which has not been without trenchant criticism,9 was that s 33 of the 6 Hoexter Administrative Law in South Africa (2 ed) (2012) at 118 describes the PAJA as the ‘primary or default pathway to review’. At 121, she says of the principle of legality that it ‘provides a general justification for the review of exercises of public power and operates as a residual source of review jurisdiction’. See too National Director of Public Prosecutions and Others v Freedom Under Law [2014] ZASCA 58; 2014 (4) SA 298 (SCA) paras 28-29. 7 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2016] ZASCA 143; 2017 (2) SA 63 (SCA) paras 35-36. 8 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018 (2) SA 23 (CC); 2018 (2) BCLR 240 (CC). 9 See Boonzaier ‘A Decision to Undo’ (2018) 135 SALJ 642; De Beer ‘A New Role for the Principle of Legality in Administrative Law: State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd’ (2018) 135 SALJ 613. In Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (4) SA 331 (CC); 2019 (6) BCLR 661 (CC) para 112, Cameron and Froneman JJ acknowledged the criticism and conceded that the decision may have to be revisited in due course. Constitution – the fundamental right to just administrative action – that is given effect to by the PAJA, is for the exclusive benefit of private persons. Organs of state are not bearers of the fundamental right to just administrative action. When they wish to review their own decisions, they consequently must do so in terms of the principle of legality. [15] In this case, the Registrar and the Council claimed standing to review the Appeal Board’s decision on the basis of the public interest. Section 38 of the Constitution, which concerns who has standing to enforce fundamental rights, provides: ‘Anyone listed in this section has the right to approach a competent court, alleging that a right in the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief, including a declaration of rights. The persons who may approach a court are- (a) anyone acting in their own interest; (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.’ [16] In the founding affidavit, the Registrar stated that he and the Council ‘regulate medical schemes in the public interest’ and that they had brought the application ‘in the public interest, as envisaged by section 38(d) of the Constitution’. He then stated: ’16.1 As I indicate below, the decision of the Appeal Board directs the Registrar to perform conduct that is ultra vires. I respectfully submit that it is in the public interest that a decision requiring the Registrar to act unlawfully should be set aside on review. 16.2 Furthermore, the Registrar is acting in the interests of the public in light of the provisions of section 23(1)(c) of the Act which contemplates the possibility of a proposed name change causing harm to the public.’ [17] Compcare contented itself with a bare denial that the Registrar and the Council acted in the public interest or that the name-change would cause prejudice to the public. Fabricius J appears to have accepted that the Registrar and the Council had standing in terms of s 38(d) of the Constitution. In keeping with the generous approach to representative standing that the Constitutional Court in particular has mandated,10 and on the basis of the Registrar’s averments that I have quoted, I find that they indeed have standing to act in the public interest. [18] In the State Information Technology Agency case, the Constitutional Court was only concerned with an organ of state acting in its own interest and reviewing its own decision. It was not concerned 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’ or with ‘a situation where — in seeking a review of its own decision — an organ of state is purporting to act in the public interest in terms of s 38 of the Constitution’.11 [19] The second of these issues was dealt with in Hunter v Financial Sector Conduct Authority and Others.12 A natural person had claimed standing in terms of s 38(d) of the Constitution to challenge an exercise of power that the court found was administrative action. Khampepe J held, as to the consequence of acting in the public interest:13 ‘As a general rule, PAJA must therefore apply unless the review is brought by a public functionary in respect of its own unlawful decision. In this case, it is Ms Hunter (and not the FSCA itself) who seeks relief against the registrar's alleged unlawful decisions. Ms Hunter is not acting on behalf of the FSCA. She is acting in the public interest. Anybody who constitutes “the public” on whose behalf she has assumed the responsibility to act is entitled to challenge the fairness of the administrative action that has aggrieved her in terms of PAJA. She, having stepped straight into their shoes, enjoys all the rights and obligations they each would ordinarily have shouldered had they chosen to be litigants. PAJA must therefore apply to Ms Hunter's claim.’ [20] In this case, the decision of the Appeal Board is an administrative action as defined in the PAJA: it is a decision of an administrative nature, taken in the exercise 10 See for example, Albutt v Centre for the Study of Violence and Reconciliation and Others [2010] ZACC 4; 2010 (3) SA 293 (CC); 2010 (5) BCLR 391 (CC) paras 32-35. 11 Note 8 para 2. 12 Hunter v Financial Sector Conduct Authority and Others [2018] ZACC 31; 2018 (6) SA 348 (CC); 2018 (12) BCLR 1481 (CC). 13 Para 49. of a public power by an organ of state in terms of empowering legislation that has the potential to adversely affects rights, has a direct, external legal effect and is not excluded by any of sub-sections (aa) to (ii) of s 1 of the PAJA.14 When the Registrar and the Council brought their application in the public interest, they did so in order to safeguard the fundamental right of each member of the public to just administrative action. That being so, they stepped into the shoes of the members of the public on whose behalf they litigated and, in this sense were, despite being organs of state, bearers of fundamental rights to just administrative action. The PAJA consequently applies to the review of the Appeal Board’s decision. It ought to have been applied by the court below in relation to the argument that the Registrar and the Council had delayed unduly in launching their review – an issue that is not persisted with by Compcare – and in relation to the substance of the review. While a review in terms of the principle of legality produced the same result in this case, that may not always be so. For instance, the common law that applies to legality reviews differs from the PAJA in respect of the exhaustion of internal remedies and there are some differences between the common law delay rule and the PAJA’s delay rule. The substantive issue: the review of the Appeal Board’s decision [21] Baxter made the point that administrative law ‘rests upon the principle of legality’ with the consequence that where a person’s interests have been prejudiced by ‘administrative action or inaction not authorized by law’ he or she may be awarded a ‘suitable remedy’.15 He went on to explain the workings of this first principle:16 ‘Public authorities possess only so much power as is lawfully authorized, and every administrative act must be justified by reference to some lawful authority for that act. Moreover, on account of the institutional nature of law the public authority itself exists as an office or body 14 For the definition of administrative action, see the PAJA, s 1. See too Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; 2005 (6) SA 313 (SCA) paras 21-25. 15 Lawrence Baxter Administrative Law (1984) at 299. 16 At 384. See too De Villiers v Pretoria Municipality 1912 TPD 626, 645-646 in which Bristowe J set out the principle thus:’ This conclusion seems indeed to be a necessary corollary from the principle that a statutory corporation established for a particular purpose has no power qua corporation outside the sphere of activity especially or impliedly prescribed for it by the Legislature. Its acts outside those limits are therefore void, not so much because the Legislature has prohibited them, as because the powers which it has conferred upon the being which it has created, do not extend to them. For the purpose of such acts the corporate persona is in fact non-existent'. On the principle of legality being the first principle of both administrative law and the rule of law, see Hoexter (note 6) at 255-256. created by law. A valid exercise of administrative power requires both a lawful authorization for the act concerned and the exercise of that power by the proper or lawful authority.’ [22] Woolf, Jowell, Donnelly and Hare17 say of the first of a list of legal standards that public bodies are required to meet in order for their acts to be valid: ‘Public bodies must have legal authority for their actions. This may be derived from statute, the common law or (in the case of some central government functions) a prerogative power. Public bodies must act within the scope of that legal authority.’ [23] As the source of the principle of legality is the rule of law, which is a principle of the common law, was an implicit value of the interim Constitution and is an express value of the final Constitution, the same position that Baxter and Woolf, Jowell, Donnelly and Hare outlined continues to apply now. In Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others18 Chaskalson P, Goldstone and O’Regan JJ 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’.19 [24] Section 33(1) of the Constitution, a provision which gives effect to the founding value of the rule of law, guarantees for everyone the rights to lawful, reasonable and procedurally fair administrative action. Section 6(2)(a)(i) of the PAJA is one of a number of provisions that give effect to the right to lawful administrative action. It provides that a court may review and set aside an administrative action if it was taken by an administrator who ‘was not authorized to do so by the empowering provision’. This is the principal ground of review that is implicated in this case. [25] Before turning to whether the Appeal Board exceeded its lawful authority, it is necessary to deal briefly with one factual issue: whether the proposed new name for 17 Woolf, Jowell, Donnelly and Hare De Smith’s Judicial Review (8 ed) (2018) para 1-001. 18 Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others [1998] ZACC 17: 1999 (1) SA 374 (CC); 1998 (12) BCLR 1458 (CC). 19 Para 58. This dictum has since been approved by the Constitutional Court in numerous judgments. See for example President of the Republic of South Africa and Others v South African Rugby Football Union and Others [1999] ZACC 11: 2000 (1) SA 1 (CC); 1999 (10) BCLR 1059 (CC) para 148. Compcare was likely to mislead the public. In my view, the answer is in the affirmative. Compcare itself appeared to accept that this was so by giving mitigatory undertakings, and the Appeal Board accepted that too: its order is based on the premise that the new name was likely to mislead the public, and so required conditions to be added to minimize that consequence. [26] Both Compcare and the Appeal Board were correct. The very basis for the name-change, which was explicitly stated in Compcare’s submissions, was to enable Compcare to ride on the coat tails of the Universal group of companies and derive benefit from the Universal brand. Compcare, in other words, wanted to create in the minds of the public the impression that it was part of the Universal Group. All that a string of disclaimers was likely to achieve was greater confusion. In the result, the Registrar’s finding that the proposed new name was likely to mislead the public was rational and cannot be faulted. The same may be said of the Appeal Board’s finding to the same effect. [27] Two issues arise in relation to the empowerment of the Registrar to accept or reject a change of name in terms of s 23(1)(c) of the Act, and by extension, of the Appeal Board to order him to do so. They are whether the Registrar has a discretion to allow a name-change even though it is likely to mislead the public and, related to this, whether he has the power to approve a name-change subject to conditions. If the Act does not authorize one or both, the Appeal Board, in making its order, exceeded its powers – it would have taken administrative action that it was not authorized to take. [28] Section 23(4) provides that a medical scheme may not change its name without the consent of the Registrar. Section 23(1) then limits the power of the Registrar by stipulating what types of names he may not approve – those that have already been taken, those that resemble so closely names that have already been registered that confusion between them is likely and those that are likely to mislead the public. While in respect of the first category, the Registrar’s decision will no doubt be determined with reference to his records, decisions in respect of the second and third categories inevitably require a measure of judgment on his part. Once he has made a decision that a name proposed by a medical scheme is one contemplated by either a 23(1)(a), (b) or (c), however, the Act is clear: he may not register that name or allow a change to that name. [29] There is no room within the structure of s 23(1) for a discretion. There is no indication in the section that could lead one to conclude that a discretionary power to deviate from its express terms could have been intended, or that it is necessary to attain its purposes, or is incidental to the express provisions. To the contrary, the recognition of an implied discretion would create a conflict within the section: the Registrar would be expressly prohibited from registering names that he decided were prohibited by s 23(1), but then at the same time allowed to exercise a discretion to do so nonetheless. One only has to consider the case of an application to register a name that is already registered to highlight the absurd results that such an interpretation of the section could spawn. [30] The second issue that arises for decision is whether, despite a name being one, for instance, that is likely to mislead the public, conditions may be imposed to reduce the risk of that eventuating. Compcare’s argument is that the Registrar may impose conditions in these circumstances because the imposition of conditions is not precluded by s 23(1). This is not the correct approach. In Burghersdorp Municipality v Coney20 it was argued that a municipality had power to do anything it was not prohibited from doing. Davis J was of the view that this submission was ‘startling’, holding that it was in conflict with the ‘current of authority’.21 [31] In that conclusion, Davis J was undoubtedly correct. In Principal Immigration Officer v Medh,22 this court was required to decide on the validity of a decision of a minister to exempt the respondent from the status of a prohibited person subject to conditions. De Villiers JA approached the issue thus:23 20 Burghersdorp Municipality v Coney 1936 CPD 305. 21 At 308. See too Malherbe v South African Medical and Dental Council 1962 (1) SA 825 (N) at 829G- 830A. 22 Principal Immigration Officer v Medh 1928 AD 451. 23 At 457-458. ‘In dealing with the power of exemption the section is silent as to conditions to be imposed. But an exemption conditional upon maintaining his domicile can hardly be called an exemption. A person is either exempted from the class of prohibited immigrants or he is not. There is no intermediate position. The Minister is given the power to take a prohibited immigrant out of the class of prohibited immigrant or not, as he pleases. But if he decides in favour of the former course, he must take that person out of the class entirely and once and for all. It might be, however, said that power to grant exemption includes a power to attach whatever conditions the Minister might consider reasonable. But the argument begs the question. The powers of the Minister must be found within the section creating them, and according to that section the Minister only has power either to exempt or not: there is no third course. In the absence of specific provisions to that effect, such power cannot be construed as embracing the wider power of attaching conditions. If it had been the intention of the Legislature to confer upon the Minister the additional power of attaching conditions to the exemption, it should have said so, as it has done in the case of temporary permits as well as in sec. 31(2), Act 38 of 1927.’ [32] The starting point of the enquiry in this case is s 23(1). For a power to impose conditions to exist, it must be created by the Act. Section 23(1) does not expressly empower the Registrar to impose conditions, assuming for purposes of the argument that he has a discretion to register a name that offends s 23(1). I can see no possible basis for somehow implying it in the section. In much the same way as there was no ‘third course’ in Principal Immigration Officer v Medh, so too in this case: the Registrar’s choices are either to approve a name or to refuse to approve it. There is much to be said too for the argument that if the legislature had intended the Registrar to have the power to impose conditions, it would have said so, as it did in s 24(1) which deals with the registration of medical schemes. This section provides that the Registrar ‘shall, if he or she is satisfied that a person who carries on the business of a medical scheme which has lodged an application in terms of section 22, complies or will be able to comply with the provisions of this Act, register the medical scheme, with the concurrence of the Council, and impose such terms and conditions as he or she deems necessary’. [33] I conclude therefore that the Appeal Board’s decision cannot stand and that the court below was correct to set it aside because: (a) the Registrar had no lawful power to approve Compcare’s proposed change of name once he had concluded that it was a name that was likely to mislead the public; (b) he also had no lawful power to approve such a change of name subject to conditions; and (c), as a result, the Appeal Board exceeded its powers by purporting to order the Registrar to approve a name that was likely to mislead the public, subject to conditions. The order [34] 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: M Du Plessis SC and S Pudifin-Jones Instructed by: ENSafrica, Johannesburg Webbers, Bloemfontein For the first and second respondents: A Cockrell SC and A J Lapan Instructed by: Lawtons Inc, Johannesburg Symington & De Kok, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 17 August 2020 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Compcare Wellness Medical Scheme v Registrar of Medical Schemes & others (267/2020) [2020] ZASCA 91 (17 August 2020) MEDIA STATEMENT The Supreme Court of Appeal (SCA) today dismissed the appeal of Compcare Wellness Medical Scheme (Compcare) against the Registrar of Medical Schemes (the Registrar) and the Council of Medical Schemes (the Council). Compcare had applied to the Registrar for approval of a change of its name from Compcare to Universal Medical Scheme. It was administered by Universal Health Care Administrators, a part of the Universal group of companies, and wanted to take advantage of the Universal brand, which it considered to be stronger than its own brand. The Registrar, in terms of s 23(1)(c) of the Medical Schemes Act 31 of 1998 (the Act) refused the application because he considered the new name to be likely to mislead the public. Compcare appealed successfully to the Appeal Board created by s 50 of the Act. The Appeal Board found that the new name was indeed likely to mislead the public but imposed conditions proposed by Compcare to mitigate the misleading effect. It ordered the Registrar to give effect to the name-change subject to the conditions. The Registrar and the Council took this decision on review. Fabricius J, in the Gauteng Division of the High Court, Pretoria upheld their application and set aside the Appeal Board’s decision. In Compcare’s appeal against that decision two issues required resolution. The first was whether the court’s review jurisdiction arose from the principle of legality or the Promotion of Administrative Justice Act 3 of 2000 (the PAJA). The Constitutional Court has decided that the PAJA does not apply when an organ of state, acting in its own interest, reviews its own decision because an organ of state is not a bearer of administrative justice rights. In this case, however, the Registrar and the Council brought the application in the public interest (in terms of s 38(d) of the Constitution). In so doing they, in effect, stepped into the shoes of the members of the public who they represented and who were bearers of administrative justice rights. As a result, the PAJA applied. The second issue concerned the merits of the Appeal Board’s decision. That in turn, required an analysis of the Registrar’s powers in terms of s 23(1) of the Act. The section gave him no discretion to allow a change of name if it was likely to mislead the public. He was bound to refuse it. And the section did not empower him to impose conditions. That being so, because the Registrar had no power to approve Compcare’s change of name, the Appeal Board exceeded its powers by purporting to order the Registrar to do so.

3428

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1000/19 and GP Case no: 31514/2018 and 33401/2018 In the matter between: GOVERNMENT EMPLOYEES MEDICAL SCHEME FIRST APPELLANT GUNVANT GOOLAB SECOND APPELLANT MARTHINUS JOHANNES KRUGER THIRD APPELLANT and THE PUBLIC PROTECTOR OF THE REPUBLIC OF SOUTH AFRICA FIRST RESPONDENT JOEL MOAGL TUMELO BENEDICT NGWATO SECOND RESPONDENT THE REGISTRAR OF MEDICAL SCHEMES THIRD RESPONDENT THE COUNCIL FOR MEDICAL SCHEMES FOURTH RESPONDENT Neutral citation: Government Employees Medical Scheme and Others v The Public Protector of the Republic of South Africa and Others (1000/2019 and 31514/2018 and 33401/2018) [2020] ZASCA 111 (29 September 2020) Bench: PONNAN, MBHA and ZONDI JJA and GOOSEN and MABINDLA-BOQWANA AJJA Heard: 4 September 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10:00 am on 29 September 2020. Summary: Power of Public Protector to investigate complaint – constrained by sections 6(4) or (5) of the Public Protector Act 23 of 1994. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Kubushi J sitting as court of first instance): (a) The appeal is upheld with costs, including those of two counsel. (b) The order of the court below is set aside and replaced by: ‘(i) The application succeeds. (ii) It is declared that the first respondent is not empowered by sections 6(4) or (5) of the Public Protector Act 23 of 1994 to investigate the complaint lodged by the second respondent against the first applicant. (iii) The rule nisi dated 14 May 2018 issued under case number 33401/2018 is confirmed. (iv) The first respondent is ordered to pay the costs of the application, inclusive of the urgent application under case number 33401/2018. Such costs to include those consequent upon the employment of two counsel.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Ponnan JA (Mbha and Zondi JJA and Goosen and Mabindla-Boqwana AJJA concurring) [1] To be sure, the office of the Public Protector, which has been described as ‘an indispensable constitutional guarantee’,1 is afforded sweeping powers of investigation. But, those powers are not unconstrained. Prof Martin Krygier points out, the rule of law ‘requires that there be no privileged groups or institutions exempt from the scope of the law’.2 Indeed, as Prof Woolman observes, the rule of law doctrine, which is ‘juridical, political and foundational’, and its twin, ‘the principle of accountability, cannot function solely as constitutional values. They must form part of the daily lived experience of most citizens and public officials’. 3 [2] The rule of law and the principle of accountability require the Public Protector to act in accordance with the law and the Constitution. In terms of s 182(1) of the Constitution, the Public Protector has the power to: ‘(a) investigate any conduct in state affairs, or in the public administration in any sphere of government, that is alleged or suspected to be improper or to result in any impropriety or prejudice; (b) report on that conduct; and (c) take appropriate remedial action.’ 1 The Public Protector v Mail & Guardian Ltd [2011] ZASCA 108; 2011 (4) SA 420 (SCA) para 6. 2 Professor Martin Krygier is the Gordon Samuels Professor of Law and Social Theory and Co-Director of the Network for Interdisciplinary Studies of Law at the University of New South Wales. Cited by S Woolman: ‘A Politics of Accountability: How South Africa's Judicial Recognition of the Binding Legal Effect of the Public Protector’s Recommendations Had a Catalysing Effect that Brought Down a President’ (2016) 8 CCR 155 at 156. 3 S Woolman: ‘A Politics of Accountability: How South Africa's Judicial Recognition of the Binding Legal Effect of the Public Protector’s Recommendations Had a Catalysing Effect that Brought Down a President’ (2016) 8 CCR 155 at 156. According to s 182(2) of the Constitution, the Public Protector also has the additional powers and functions prescribed by national legislation. The Public Protector Act 23 of 1994 (the PPA) is the legislation contemplated by s 182(2) of the Constitution. It establishes the jurisdiction of the Public Protector with respect to categories of investigation as well as entities and conduct that may be investigated. The powers of the Public Protector are thus derived from the Constitution and buttressed by the detailed legal framework in the PPA. [3] In SABC v DA,4 this court emphasised that those who govern must be held as accountable to the law as the governed and that in that regard, the Public Protector plays a critical role in maintaining the rule of law. In EFF 1, the Constitutional Court confirmed the correctness of this court’s approach in SABC v DA, in holding that ‘the Public Protector’s remedial action might at times have a binding effect’.5 Since those judgments there have been several challenges to the exercise by the Public Protector of the powers conferred upon her and our courts have found that she has on occasion behaved irrationally, procedurally unfairly or ultra vires.6 [4] This is yet another such challenge. It arises for consideration against the following backdrop: The first appellant, is the Government Employees Medical Scheme (GEMS), a medical scheme registered as such under s 24(1) of the Medical Schemes Act 131 of 1998 (the MSA). During her lifetime, Ms Rakgahla 4 South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others [2015] ZASCA 156; 2016 (2) SA 522 (SCA). 5 Economic Freedom Fighters v Speaker of the National Assembly and Others; Democratic Alliance v Speaker of the National Assembly and Others [2016] ZACC 11; 2016 (3) SA 580 (CC) para 73. 6 See inter alia Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (6) SA 253 (CC); Economic Freedom Fighters v Gordhan and Others; Public Protector and Another v Gordhan and Others [2020] ZACC 10; Gordhan v Public Protector and Others [2019] ZAGPPHC 311; [2019] 3 All SA 743 (GP); Absa Bank Limited and Others v Public Protector and Others [2018] ZAGPPHC 2; [2018] 2 All SA 1 (GP); Institute for Accountability in Southern Africa v Public Protector and Others [2020] ZAGPPHC 64; [2020] 2 All SA 469 (GP) and President of the Republic of South Africa v Public Protector of the Republic of South Africa and Others [2019] ZAGPPHC 368. was a member of GEMS. Upon her death, the second respondent, Mr Ngwato, sought to be recognised as her ‘beneficiary’. GEMS took the view that Mr Ngwato did not qualify pursuant to GEMS’ Rules, made under Chapter 5 of the MSA (the Rules). [5] According to GEMS, Mr Ngwato was unable to produce a marriage certificate in proof of his marriage to Ms Rakgahla. Aggrieved by GEMS’ refusal to recognise him as a beneficiary, Mr Ngwato lodged a complaint in terms of s 47 of the MSA with the third respondent, the Registrar of Medical Schemes (the Registrar). In the meanwhile, following a policy change by GEMS regarding the status of life partners, the requirement of a marriage certificate had fallen away. Accordingly, on 7 December 2015 Mr Ngwato ‘was furnished with a membership certificate which confirmed that [his] benefit date . . . was 1 June 2013’. However, this did not entirely satisfy Mr Ngwato. What remained, so he seems to have contended, was his eligibility to qualify for a Government Pensions Administration Agency (GPAA) subsidy. On 19 January 2016 the Registrar ruled against Mr Ngwato, holding that: ‘You are entitled to membership with the scheme however do not qualify for the subsidy from GPAA, hence you will be liable for the full contribution to the scheme’. [6] Mr Ngwato appealed to the fourth respondent, the Council for Medical Schemes (the Council) in terms of s 48 of the MSA. On 27 October 2016 the Appeal Committee of the Council (per Advocate Ngalwana SC) ruled against Mr Ngwato. The Appeal Committee held: ‘3. In his written appeal, the appellant complains about “termination” of his benefits “on the 1st of June 2013” and his “exclusion” from the scheme not “based on the rules of the scheme”. This accords neither with the registrar’s ruling nor with the scheme’s submissions at the hearing of the appeal. Both make it clear that the appellant is, following the passing of his life partner who was a member of the scheme and pursuant to rule 6.8.1 of the scheme rules, “entitled to continued membership of the scheme without any restrictions, limitations or waiting periods”. 4. At the hearing of the appeal, the appellant’s case mutated to claiming a subsidy from the Government Pensioners Administration Agency. The scheme says this is not within its province. This was explained to the appellant at the hearing and he seems to have understood it. 5. After these issues had been explained to the appellant, he was asked whether he still requires a formal ruling to be made. He said yes; hence this ruling. 6. What remains for us is to confirm that the appellant is a continuing member of the scheme and is liable for payment of contributions in terms of the scheme rules in the ordinary course. Issues concerning subsidies by the GPAA must be taken up with the GPAA because this committee has no jurisdiction in that regard.’ [7] In terms of s 50 of the MSA, Mr Ngwato had the right of a further appeal to the Appeal Board of the Council. He did not exercise that right. Instead, he lodged a complaint with the Public Protector. In an affidavit deposed to on 19 February 2016 in support of his complaint to the Public Protector, Mr Ngwato stated: ‘5. I submit that it is very convenient and suspicious, if not arbitrary, that GEMS have now recently issued a certificate of membership dated 7th of December 2015 stating that my benefits were terminated on the 1st of June 2013. More than two years after the passing of my life partner, it is further a coincidental travesty that when I complain about my cover, GEMS then conveniently issues termination thereof. 6. I further submit that GEMS have not given any form of reasoning for my exclusion based on the rules of the scheme. I thus conclude that the exclusion by GEMS that I was a non-active member as baseless and without merit and proper reasoning. I further conclude that GEMS provided GPAA with misinformation regarding my membership, thus the negative response from GPAA. 7. I implore you to reconsider your advice and re-instate my benefits in terms of the rules of the medical scheme and on the basis of my submission above.’ [8] Some 16 months were to pass before GEMS received an email on 9 June 2017 from Mr Jeno Singh, snd Advocate and senior investigator in the office of the Public Protector. After drawing attention to the jurisdiction of the Public Protector, with reference to s 182 and 181(3) of the Constitution as well ss 7(4)(a) and (b) of the PPA, the email stated: ‘6. The Public Protector was in receipt of a complaint from Mr Benedict Ngwato (hereinafter referred to as the Complainant). The complainant made various allegations against GEMS and the GPAA. This office had forwarded an enquiry letter to GPAA and had received a response. Based on the GPAA response and evidence that was submitted by the Complainant, this office closed the file and found the complaint unsubstantiated. 7. The Complainant has now applied for a review of the decision by this office to close his matter. 8. In view of the above, this office requires you to attend a meeting at the office of the Public Protector. Some of the issues that we require clarity on are the following: 8.1 The basis for GEMS confirming that he was a member of the fund and later withdrawing the confirmation; 8.2 The process followed by GEMS to cancel/withdraw his confirmation of his membership; and 8.3 The 2012/2013 fund rule relied upon by GEMS to demand that he should have a valid marriage certificate in order to be registered as a dependent.’ [9] On 13 June 2017 the third appellant, Mr Marthinus Kruger, the legal advisor of GEMS responded as follows to Mr Singh: ‘3. At this stage, we wish to draw your attention to the following: i. GEMS is a registered medical scheme in terms of the Medical Schemes Act 131 of 1998 (“the Act”); ii. As such, GEMS is subject and/or regulated by the Act, the Council for Medical Schemes [which is a statutory body established by section 3 of the Act] as well as its own Scheme Rules [which is registered in terms of the Act]; iii. GEMS is neither an organ of state, nor a public entity, nor falling within any sphere of government; iv. GEMS does not perform a public function nor does it handle any public funds; and v. Although GEMS’ membership consists of government employees, it does not detract from the fact that it is a private body incorporated in terms of and regulated by the Act. 4. As a result of the aforementioned, we are advised that your office does not have the necessary jurisdiction, in terms of sections 6(4) of (5) of the Public Protector Act 23 of 1994, to entertain the current complaint which you are purportedly investigation as set out in your letter. We accordingly hold the view that any investigation into the complaint made to the Public Protector cannot proceed due to the Public Protector not having the necessary jurisdiction to do so. 5. Should you however hold an alternative view; we invite you to engage us on the question of jurisdiction. 6. Notwithstanding the aforesaid, and without any prejudice to GEMS’ rights, GEMS wishes to be transparent in its dealing with the Public Protector, in that respect, GEMS is prepared, without any prejudice to its rights, to provide the Public Protector with an overview of the subject matter of the current complaint, provided that should the Public Protector seek such disclosure in the absence of having the necessary jurisdiction as aforesaid, that such disclosures be treated as confidential. 7. We also wish to advise that Mr. Ngwato lodged a complaint stemming from the same facts/conduct with the Registrar for Medical Schemes in terms of section 47 of the Act under case number CMS55375, in which matter the Registrar ruled against Mr. Ngwato. Mr Ngwato subsequently appealed the decision in terms of section 48 of the MSA and the Council for Medical Schemes’ Appeal Committee dismissed his appeal and found that the Scheme acted correctly and in accordance with its own (registered) Scheme Rules. GEMS accordingly considers the matter closed, the statutory body with jurisdiction over the Scheme having made a final and binding finding in its favour.’ [10] On 21 June 2017 an informal meeting was held between Mr Singh and Mr Kruger. According to GEMS, the former refused to discuss whether the Public Protector had the requisite jurisdiction to investigate the complaint. Nothing was heard thereafter for approximately 10 months, until 24 April 2018, when two subpoenas purportedly issued under s 7(4)(a) of the PPA were served on Mr Kruger and the second appellant, Dr Gunvant Goolab, the Principal Officer of GEMS. [11] The subpoenas required Mr Kruger and Dr Goolab to appear in person before the Public Protector on 18 May 2018, as also, to produce a list of specified documents. Each subpoena further stated: ‘6.6 On 9 June 2017, an enquiry letter was forwarded to Mr Kruger of GEMS setting out the complaint and requested a response to questions posed. On 13 June 2017, Mr Kruger responded and inter alia stated that the PPSA does not have the necessary jurisdiction to investigate GEMS. Furthermore, GEMS felt that they considered the Complainant’s matter closed as the statutory body (CMS) with jurisdiction over the Scheme had made a final and binding finding in its favour. A meeting was thereafter requested with Mr Kruger to discuss the matter. 6.7 A meeting was held with Mr Kruger on 21 June 2017 and the PPSA investigative team. The case was discussed and documents were requested from GEMS. Mr Kruger once again mentioned the no-jurisdiction of the PPSA office to investigate the matter and advised that GEMS will not be handling any documents over to the PPSA investigation team. 6.8 On 10 April 2018, a legal opinion was obtained from Mr Ntsumbedzeni Nemasisi: Senior Manager Legal Services: PPSA which inter alia stated that the PPSA has the necessary jurisdiction to investigate any conduct of GEMS.’ [12] On 9 May 2018 GEMS applied to the Gauteng Division of the High Court, Pretoria for an order in the following terms (the main application): ‘1. Declaring that the First Respondent does not have the statutory authority and/or jurisdiction in terms of the Public Protector Act, No. 23 of 1994, or otherwise, to investigate and entertain the Second Respondent’s complaint lodged against the First Applicant under file reference number: 7/2-02447/16; 2. In the event of Prayer 1 being granted, setting aside any steps taken by First Respondent in pursuance of the purported investigation of the complaint referred to in paragraph 1 above, including the subpoenas issued by the First Respondent to the Second Applicant and the Third Applicant under file reference no: 7/2-024477/16.’ The Public Protector was cited as the first respondent. Mr Ngwato, the Registrar and Council were cited respectively as the second to fourth respondents. Only the Public Protector opposed the application. [13] At about the same time as the issuance and service of the main application, the attorney of record for GEMS addressed a letter to the Public Protector requesting an undertaking that the hearings scheduled for 15 May 2018 will be stayed pending finalisation of the main application, and that Mr Kruger and Dr Goolab be excused from attendance as required by the subpoenas. The response on 10 May 2018 from Mr Nemasisi was to assert that they viewed the main application ‘as an attempt to frustrate the investigation, in violation of s 181(4) of the Constitution’ and that ‘the subpoena hearing, scheduled for 15th May 2018, may only be suspended or stayed upon receipt of all the documents subpoenaed’. [14] The next day, GEMS’ attorney recorded in a letter to the Public Protector that: (i) the rejection of GEMS’ request that the subpoena hearings be postponed until finalisation of the main application is unreasonable; (ii) the complaint has in any event become moot as Mr Ngwato has since, due to regulatory changes, been recognised as a member, it was thus not clear why the office of the Public Protector persists with the investigation of the complaint; (iii) GEMS is of the view that it has just cause as contemplated in s 11(3) of the PPA, not to comply with the directions issued under ss 7(4)(a) and 7(5) until the jurisdiction of the Public Protector to investigate the complaint has been determined by the court in the main application; and, (iv) GEMS and any person subpoenaed to testify would for obvious reasons be manifestly prejudiced should they be compelled to participate in an investigation, which a court may determine the Public Protector lacks jurisdiction to investigate. It was thus stated that GEMS will not be delivering the documents sought or permitting Mr Kruger or Dr Goolab to attend on the office of the Public Protector for the purposes referred to in the subpoena. The Public Protector was once again requested to reconsider her position and consent to the postponement of the hearings scheduled for 15 May 2018. [15] That evening, at 6.19 pm, GEMS’ attorney received the following response from Mr Nemasisi: ‘5. We wish to place on record that the Public Protector has, in accordance with her statutory power (section 7(4)(a) of the Public Protector Act), subpoenaed the documents which has a bearing on the matter being investigated, which documents is in possession or under control of Dr Gunvant Golab and Mr Marnus Kruger. In terms of the aforesaid subpoenas, the documents listed therein must be produced to the Public Protector on 15th May 2018. Should Dr Gunvant Goolab and Mr Marnus Kruger refused and/or failed (sic) to comply with the above-mentioned directives (subpoenas), they shall be guilty of an offense [sic], in terms of section 11(3) of the Public Protector Act. 6. We further wish to place on record that production of documents by Dr Gunvant Goolab and Mr Marnus Kruger, which has a bearing on the matter being investigated has nothing to do with the jurisdictional challenge by your client. 7. In fact, Dr Gunvant Goolab and Mr Marnus Kruger are neither the Applicants nor the Respondents in the foresaid court application brought by GEMS. Accordingly, your client (GEMS) has no locus standi to challenge the subpoenas. As a result of the above, Dr Gunvant Goolab and Mr Marnus Kruger cannot rely on your client’s court application as a just cause to defy the lawful directives of the Public Protector. 8. Lastly, we wish to place on record that bringing an application to court challenging the jurisdiction of the Public Protector to investigate does not automatically suspend the investigation, which is a constitutional mandate of the Public Protector. Accordingly, Dr Gunvant Goolab and Mr Marnus Kruger have both constitutional and statutory obligations (in terms of section 181(4) of the constitutional and section 7(4)(a) of the Public Protector Act respectively), not to interfere with the functioning of the Public Protector and to comply with the Public Protector’s directives. 9. It is not clear, from your aforesaid letter, as to how the production of the documents will affect any of your client’s rights, as the matter is still under investigation. Instead, the complainant will suffer severe prejudice for undue delay of finalization of his complaint. 10. In light of the above, we wish to place on record that the subpoenas are directed to Dr Gunvant Goolab and Mr Marnus Kruger and therefore, the instruction from your client (GEMS) regarding the refusal to produce the documents is legally misplaced as you have no mandate to act on behalf of Dr Gunvant Goolab and Mr Marnus Kruger. 11. In paragraph 4 of your letter dated 10th May 2018, your requested an undertaking that Dr Gunvant Goolab and Mr Marnus Kruger will no longer be required to appear in person before the Public Protector on 15th May 2018. In our aforesaid letter, we indicated that Dr Gunvant Goolab and Mr Marnus Kruger may not have to appear before the Public Protector on 15th May 2018, only if the documents subpoenaed are delivered to the Public Protector. We therefore reiterate the contents of our letter dated 10th May 2018. 12. Should your client persist with its court interdict, as threatened, we reserve our rights to file an application for contempt of the Public Protector against Dr Gunvant Goolab and Mr Marnus Kruger.’ [16] Mr Kruger and Dr Goolab felt compelled to approach the high court as a matter of urgency at 2pm on 14 May 2018 (the urgent application) for an order in the following terms: ‘3. That leave be granted to the Applicants to intervene and be joined as Second and Third Applicants respectively, in the pending application under case number 31514/2018; 4. That the subpoenas issued by the First Respondent to the First and Second Applicants respectively, under file reference no: 7/2-024477/16, be suspended pending finalisation of the application under case number 31514/2018; 5. That the costs of this application be reserved for adjudication by the court in the application under case number: 31514/2018.’ The Public Protector filed a notice of intention to oppose the urgent application. But, by the time the matter came to be heard, failed to file an answering affidavit. The urgent application succeeded before Davis J. [17] Both the main and urgent applications eventually served before Kubushi J, who, on 27 June 2019: (a) dismissed the main application; (b) set aside the order suspending the subpoenas and (c) ordered the costs of both the main and urgent applications, inclusive of two counsel, to be paid by the appellants jointly and severally. On 3 September 2019, Kubushi J granted leave to GEMS, Dr Goolab and Mr Kruger (collectively referred to as the appellants) to appeal to this court. [18] In finding for the Public Protector, the high court observed ‘I do not think that a dispute exists between the parties as to whether GEMS is an entity that can be investigated by the Public Protector’. It reasoned ‘even though it is not a government or an organ of state, GEMS performs a public function in terms of national legislation and its functions are public in nature’. The high court took the view that: ‘[56] Although GEMS is a medical scheme, like other medical schemes . . . GEMS is unique. GEMS was established by government for government employees, using public funds and resources to undertake a responsibility of Government, as an employer, to public service employees. Government as employer contributes to the medical scheme. Government has a right to nominate 50% of the members of the Board of Trustees who control the scheme. GEMS, as such, is a public resourced entity and falls to be investigated by the Public Protector to ensure accountability.’ It accordingly concluded: ‘[57] . . . evidently, an investigation of the nature of Mr Ngwato’s complaint carries with it an element of public interest [and that his] removal equate[d] to the factors stated in section 6(4) and (5) of the [PPA].’ On the view that I take of the matter, the approach of the high court cannot be supported on appeal. [19] Section 6 of the PPA is headed: ‘Reporting matters to and additional powers of Public Protector’. Section 6(4)(a) provides that ‘the Public Protector shall be competent to investigate on her own initiative or on receipt of a complaint any alleged’: ‘(i) maladministration in connection with the affairs of government at any level; (ii) abuse or unjustifiable exercise of power or unfair, capricious, discourteous or other improper conduct or undue delay by a person performing a public function; (iii) improper or dishonest act, or omission or offences referred to in Part 1 to 4, or section 17, 20 or 21 (in so far as it relates to the aforementioned offences) of Chapter 2 of the Prevention and Combating of Corrupt Activities Act, 2004, with respect to public money; (iv) improper or unlawful enrichment, or receipt of any improper advantage, or promise of such enrichment or advantage, by a person as a result of an act or omission in the public administration or in connection with the affairs of government at any level or of a person performing a public function; or (v) act or omission by a person in the employ of government at any level, or a person performing a public function, which results in unlawful or improper prejudice to any other person.’ [20] GEMS has not been accused of maladministration, the unjustifiable exercise of power in the performance of a public function, improper or dishonest actions or improper or unlawful enrichment. Subsections (i), (iii) and (iv) of s 6(4)(a) accordingly need not detain us. The argument on appeal was confined to ss 6(4)(a)(ii), 6(4)(a)(v) and 6(5)(b) of the PPA, which so counsel submitted, empowered the Public Protector to investigate Mr Ngwato’s complaint. I shall accordingly restrict myself to the sweep of those provisions. [21] Common to both ss 6(4)(a)(ii) and (v) is the expression ‘performing a public function’. The debate thus centred on whether it can be said that GEMS performs a public function. ‘Medical scheme’ is defined in the MSA to mean any medical scheme registered under s 24(1). A medical scheme is a sui generis non- profit entity, which operates for the benefit of its members. According to the MSA, no person shall carry on the business of a medical scheme unless registered as such. The functions and powers of a medical scheme are limited by its registered rules and the MSA. [22] The business of a medical scheme does not appear to encompass the performance of a public or government function or the exercise of a public power. The relationship between members and the scheme is essentially one of a contractual nature. The rules of a medical scheme and any amendment thereof is binding on the medical scheme concerned, its members, officers and any person who claims any benefit under the rules or whose claim is derived from a person so claiming.7 GEMS is a restricted medical scheme and only employees qualifying to be registered as members and their dependants may be registered as beneficiaries of the scheme. The Rules are thus not of general application. They only apply to a restricted class of persons. It is so that membership of GEMS is restricted to government employees. But such membership is not compulsory. [23] GEMS does not itself provide a health service. Like other medical schemes, it operates rather in the nature of a health insurance. As Rule 5.1 makes plain, in exchange for the payment of a premium, GEMS ‘undertakes liability in respect of health and health-related expenses in respect of its members and their dependants’. 7 Section 32 of the Medical Schemes Act. Failure by a member to pay any amount due may result in the suspension or termination of membership as provided for in the Rules. Accordingly, complaints arising from the Rules do not concern the general public. They remain domestic in nature and cannot be described as the exercise of a public power. [24] Moreover, Chapter 10 of the MSA creates an array of complaint and appeal procedures for aggrieved members. These include the lodging of a complaint in terms of s 47 and the appeal procedures provided for in ss 48, 49 and 50. In terms of ss 42, 43, 45 and 46, far-reaching powers are given to the Registrar to inter alia conduct inspections into the affairs of medical schemes and to obtain information. GEMS is a medical scheme no different to other medical schemes and governed by the same regulatory framework. Like all other medical schemes, GEMS is subject to the MSA as well as its registered rules and it is regulated by the Council. [25] According to the high court, unlike other medical schemes, GEMS, may be investigated by the Public Protector. In that it has been singled out by the high court. Thus, solely in respect of GEMS, and not any other medical scheme, aggrieved members may lodge a complaint with the Public Protector, thereby rendering nugatory the complaints procedure prescribed by the MSA. It will be recalled that in this case, Mr Ngwato had yet a further appeal in terms of the MSA. He eschewed that in favour of a complaint to the Public Protector. The high court gave no attention to the fact that Mr Ngwato had failed to exhaust his internal remedies. Nor did it consider when precisely an aggrieved member may have recourse to the office of the Public Protector. It is thus unclear from the high court’s judgment, whether, as occurred here, an aggrieved member may in addition to a complaint to the Public Protector also avail him - or her - self of the complaints procedures envisaged in the MSA. Were that to be the case, it could lead to parallel investigation processes, with the potentiality for conflicting decisions. This clearly could not have been the intention of the legislature in enacting Chapter 10 of the MSA. [26] Turning to s 6(5)(b). Section 6(5) of the PPA provides: ‘In addition to the powers referred to in subsection (4), the Public Protector shall . . . be competent to investigate any alleged – (a) maladministration in connection with the affairs of any institution in which the State is the majority or controlling shareholder or of any public entity as defined in section 1 of the Public Finance Management Act . . . (b) abuse or unjustifiable exercise of power or unfair, capricious, discourteous or other improper conduct or undue delay by a person performing a function connected with his or her employment by an institution or entity contemplated in paragraph (a) . . . .’ Two issues occupied our attention in debate with counsel: first, whether GEMS conducted itself in a manner contemplated in subsection (b); and, second, whether it is an ‘institution in which the State is the majority or controlling shareholder’ as contemplated in subsection (a). As to the first: [27] In the answering affidavit filed on behalf of the Public Protector in the main application, Mr Singh stated: ‘40. The issue which stood-out, was the retention of membership hinged on the registration of customary marriage. It is this issue, amongst others, which attracted the attention of the Public Protector because non-registration of customary marriages has often been used in Public Administration as a basis of numerous decisions, which have since been pronounced by Courts as unlawful. 41. Thus, even upon being advised that the matter had since been partial resolved with [Mr Ngwato], the Public Protector exercised [her] discretion to continue with the investigation with the intention of understanding the decisions and the reasons proffered by GEMS. 42. The complaint . . . may very well be an isolated event, however the facts and information gathered thus far, illustrate a real likelihood that the decision could affect a broader society of the persons disadvantaged by the non-registration of their customary marriages.’ [28] There are several difficulties with the version advanced by Mr Singh. First, as best as one can discern, the Public Protector appears to have understood Mr Ngwato’s complaint as one relating to GEMS’ failure to recognise his customary marriage. But, that was not the subject of his complaint. His complaint was that GEMS had ‘not applied the scheme rules when deliberating on [his] matter’. The dispute between him and GEMS therefore turned on the interpretation of the rules, not any conduct of the kind specified in s 6(5)(b). [29] Second, Mr Singh states that it was the ‘customary marriage’ issue, amongst others, that attracted the attention of the Public Protector. But, that is simply not so, because no other issue had been alluded to by the Public Protector in any of the papers filed of record in this matter. And, so the only issue as conceived by the Public Protector that warranted investigation, would appear to have been GEMS’ refusal to recognise a customary marriage, which as I have already pointed out was not the complaint raised by Mr Ngwato. [30] Third, Mr Singh asserts that the ‘non-registration of customary marriages has often been used in Public Administration as a basis of numerous decisions, which have since been pronounced by Courts as unlawful’. However, no evidence is adduced in support of that claim. But, even if correct, it is unclear what that has to do with GEMS or why it was thought appropriate that the office of the Public Protector should investigate GEMS in that regard. It is doubtful that Mr Ngwato’s complaint could form the springboard for a wider investigation and if so, the scope and ambit of the envisaged investigation. An industry-wide investigation would surely be out of the question, because the Public Protector has never contended that she had the competence to investigate any other medical scheme, but GEMS. In any event, if our courts have already pronounced on the issue, as Mr Singh asserts, it is unclear what remains for investigation. [31] Fourth, it is asserted that the matter had been partially resolved. Once again, that is inaccurate. Certainly from the perspective of GEMS, the dispute relating to the interpretation of the scheme rules had been fully resolved. All that remained, related to the GPAA subsidy. That was also the view of the Registrar and Appeal Committee for the Council. Indeed, Advocate Ngalwana stated as much in his ruling on behalf of the Appeal Committee. That, as well, appears to have been the initial view of the Public Protector. When Mr Singh first wrote to Mr Kruger on 9 June 2017, he stated: ‘. . . The complainant made various allegations against GEMS and the GPAA. This office had forwarded an inquiry letter to GPAA and had received a response. Based on the GPAA response and evidence that was submitted by the complainant, this office closed the file and found the complaint unsubstantiated.’ [32] Fifth, it is claimed that the Public Protector exercised her discretion to continue with the investigation. To the extent that the Public Protector has a discretion, such discretion only arises to be exercised in circumstances where she has the requisite jurisdiction. She may in the exercise of her discretion decline to investigate a matter which falls within the scope and ambit of her jurisdiction, but she may not in the exercise of her discretion assume to herself a jurisdiction that the PPA does not give to her. Absent jurisdiction, she has no discretion. Jurisdiction is thus a necessary prerequisite for the exercise of any discretion. What is more, from the correspondence that had been exchanged, the Public Protector already well knew the ‘decisions and reasons’ proffered by GEMS. [33] Sixth, if this is indeed ‘an isolated incident’, as Mr Singh describes it, there would be no continuing public interest in the matter (which had in any event already been resolved between GEMS and Mr Ngwato) or warrant for the Public Protector continuing with the investigation. Mr Ngwato himself had no further interest in the matter. Certainly, as between him and GEMS the complaint had become moot. If, however, there is evidence of a broader societal interest, then such evidence should have been adduced. Had there been ‘facts and information’ of others having been ‘disadvantaged’, as Mr Singh claims, that would mean that this was not an isolated incident. In the absence of those facts or information, it is difficult to understand what these matters have to do with GEMS or what remedial action was being contemplated by the Public Protector that would extend beyond GEMS and the immediate complaint. Indeed, if the Public Protector had confined herself to the facts relating to Mr Ngwato’s complaint, it would not have had any implication for the general public. [34] Seventh, generally speaking, a complaint should not be entertained ‘unless it is reported to the Public Protector within two years from the occurrence of the incident or matter concerned’ (s 6(9)). The Public Protector does have a discretion, however, where special circumstances exist, to entertain complaints that are older than two years. Here, the incident giving rise to the complaint occurred in June 2013. It was only lodged sometime after February 2016. Despite the point having been pertinently raised by the appellants, no special circumstances as contemplated in s 6(9) of the PPA were raised by the Public Protector.8 [35] Thus, even on the Public Protector’s own showing, she simply failed to bring herself within the ambit of s 6(5)(b). It is manifest that the Public Protector’s stubborn and irrational insistence on continuing with her investigation could hold no benefit for the public at large, or for that matter even Mr Ngwato himself. In other words, it is not aimed at, nor is there any need to protect the public against the conduct which informed the complaint. As to the second: [36] GEMS is a body corporate.9 It is managed by a board of twelve trustees. It is so that 50% of the trustees are appointed by the Minister. But, the remaining 50% are elected by the members of the scheme. In terms of the rules: (i) ‘the Board is responsible for the proper and sound management of the Scheme’; (ii) the trustees are required to ‘act with due care, diligence, skill and in good faith and run the Scheme for the benefit of the Beneficiaries’; and, (iii) any trustee ‘found not to be a fit and proper person may be removed as such by the Board’. It thus follows that the mere fact that the Minister may appoint 50% of the trustees, does not mean that the government exercises control over the affairs of GEMS. In any event, although the right to appoint 50% of the trustees is given to the Minister by the internal rules of GEMS, those rules may be changed by the Board of Trustees, without reference to the Minister. 8 In Gordhan v The Public Protector and Others [2019] ZAGPPHC 311; [2019] 3 All SA 743 (GP) paras 14-20, the court found that it is incumbent upon the Public Protector to set out special circumstances why a complaint or matter is entertained by her when it is reported to her more than two years after the occurrence of the incident or matter concerned, as is contemplated in s 6(9) of the Public Protector Act. 9 Pennington v Friedgood 2002 (1) SA 251 (C) para 36. [37] In Calibre Clinical Consultants (Pty) Ltd v National Bargaining Council for the Road Freight Industry [2010] ZASCA 94; 2010 (5) SA 457 (SCA), this court doubted whether a body can be said to exercise public powers or perform a public function only because the public has an interest in the matter. The court held that when procuring services to manage its AIDS programme and ‘wellness fund’, the respondent Bargaining Council had been performing a ‘quintessentially domestic function’ rather than exercising a public power. Nugent JA stated (para 42): ‘ . . . When implementing such a project a bargaining council is not performing a function that is “woven into a system of governmental control” or “integrated into a system of statutory regulation”. Government does not “regulate, supervise and inspect the performance of the function”, the task is not one for which “the public has assumed responsibility”, it is not “linked to the functions and powers of government”, it is not “a privatisation of the business of government itself”, there is not “potentially a governmental interest in the decision-making power in question”, the council is not “taking the place of central government or local authorities”, and most important, it involves no public money. It is true that a government might itself undertake a similar project on behalf of the public at large – just as it might provide medical services generally and pensions and training schemes to the public at large – but the council is not substituting for government when it provides such services to employees with whom it is in a special relationship.’ [38] Accordingly, the nature of the complaint as well as the nature of the power exercised by GEMS, has the consequence that the jurisdictional preconditions for an investigation in terms of ss 6(4) and (5) have not been met. The Public Protector accordingly does not have the statutory power to investigate the complaint. It follows that the high court’s conclusion that ‘an investigation should be undertaken [by the Public Protector] to determine whether or not the exclusion was unlawful or improper prejudice to Mr Ngwato’, cannot be endorsed. In the result, GEMS’ main application ought to have succeeded before the high court. [39] The urgent application remains. In that regard, the high court recorded: ‘[15] The Public Protector’s argument, on the other hand, is that the issue of the subpoenas should depend on the outcome of the main application: if the investigation by the Public Protector is found to be lawful the subpoenas should stand; and, if the Public Protector is not authorised, the subpoenas cannot stand as the substratum shall have fallen off. The subpoenas, it was argued, could only stand as long as the investigation stands. [16] As regards the issue of cost, the Public Protector’s argument is that cost of the interlocutory application should be cost in the cause and the party who succeeds in the main application should be awarded those costs.’ The high court agreed with those submissions. It took the view, wrongly I suggest, that the challenge to the issuance of the subpoena had been subsumed under the main application. It thus did not enter into the substantive merits of the urgent application. [40] The Public Protector adopted the stance in the main application that GEMS did not have the necessary locus standi to seek to set aside the subpoenas. That obliged Dr Goolab and Mr Kruger to bring the urgent application to be joined as applicants in the main application and obtain interim relief for the suspension of the subpoenas pending finalisation of the main application. In support of the urgent application, Dr Goolab stated: ‘5.11 Since June 2017, the purported investigation . . . remained dormant and nothing was heard from the [Public Protector] who seemingly took no steps to advance the investigation. The interaction created the impression that [she] had accepted the fact that she does not have the necessary jurisdiction to entertain the complaint and pursue the investigation. 5.12 However, more than [10] months later, the [Public Protector], out of the blue and without any prior warning, caused two subpoenas . . . to be issued . . . 5.13. Ex facie . . . both the subpoenas, the [Public Protector], no doubt informed by her own uncertainty regarding her jurisdiction to entertain the complaint and pursue the investigation, obtained a legal opinion from one of her own employees i.e not independently, which employee concluded, for reasons not divulged . . . that [she] had the necessary jurisdiction to investigate any conduct of [GEMS]. 5.14 In other words, having been satisfied that the investigation does not require any urgent attention, the [Public Protector] leisurely dealt with the matter until 10 April 2018, whereafter she inexplicably decided that the complaint has become so urgent that it justified the issuing of subpoenas and the scheduling of hearings as a matter of urgency. . . . 5.16. Since clarity on the dispute is of material importance not only to the parties, but also to the medical schemes industry and its regulatory authority, [GEMS] issued the main application to settle their dispute. 5.17. A ruling on the main application will also be manifestly in the interest of the [Public Protector] and the public at large. Should [GEMS] be successful in the main application, the public purse will be spared the financial implications of fruitless expenses emanating from an illegal investigation. Likewise, the Applicants will be protected from being subjected to an illegal investigation and the financial and other ramifications, such as applications for contempt of court and possible imprisonment which they are probably already been threatened with.’ [41] The Public Protector did not file an answering affidavit in the urgent application. There was thus nothing to gainsay Dr Goolab’s version. In an uncommissioned statement filed on behalf of the Public Protector in the urgent application, Mr Singh stated: ‘44 . . . I thus submit that the Public Protector only has to show to jurisdictional facts, which are that: 44.1 There is a pending investigation, (whether or not such investigation is correct or incorrect in law is irrelevant), and 44.2 A particular individual . . . has, in his possession or control, documents relevant to the investigation. . . . 46. Thus on every manner of interpretation, the Applicants are obliged to comply with Section 7(4) of the Public Protector Act. The case advanced in the Applicant’s founding affidavit does not make out an exemption from complying with the obligation. 47. The Public Protector is a constitutional institution required to exercise its powers and perform its functions without fear, favour or prejudice. The Applicants are prohibited, in terms of section 181(4) of the Constitution, from interfering with the functioning of the Public Protector. 48. In the premises and in order to give effect to the constitutional and statutory obligations, the Applicants must comply with the subpoenas without any further delay.’ [42] I have referred to Mr Singh’s uncommissioned statement because it demonstrates the fallacy in the Public Protector’s approach. This was consistent as well with the view articulated earlier by Mr Nemasisi that the production of the documents sought by the Public Protector had nothing to do with the jurisdictional challenge, the subject of the main application and, that Dr Goolab and Mr Kruger had no choice but to comply with the subpoena. It is difficult to discern precisely what Mr Singh meant by ‘a pending investigation (whether or not such investigation is correct or incorrect in law is irrelevant)’. That assertion is alarming. Surely, it is not irrelevant whether or not a pending investigation accords with the law. Equally untenable is the assertion that ‘on every manner of interpretation, [they] are obliged to comply with section 7(4) of the Public Protector Act’. It goes without saying that the Public Protector cannot lawfully embark on an investigation which does not fall within her statutory remit. Such an investigation would be unlawful. And, if such an investigation would be unlawful, so too would the purported exercise of her powers of subpoena in pursuance of such an investigation. [43] The attitude of the officials in the office of the Public Protector appears to have been that their mere say-so that the Public Protector is empowered to investigate the complaint should carry the day. Such an attitude ignored the fact that there was a challenge pending before the high court to settle the jurisdiction of the Public Protector to investigate the complaint in question. Given the lengthy period of time that had already elapsed, and the fact that the complaint was no longer of any moment to Mr Ngwato, it is unclear why complying with the subpoena could not wait. What else, it must be asked, were the appellants to do? Unlike in the SABC v DA,10 the appellants did not sit idly by, but had moved the court for relief. But, that seemed to matter not to the Public Protector. Insisting on compliance with the subpoenas whilst the question of her jurisdiction remained to be determined by the high court, leaves one with the impression that the subpoenas were intended to cow the appellants into submission. Given the wide powers in her arsenal, including interrogations, contempt 11 and imprisonment,12 the Public Protector appeared not to appreciate the extent to which the appellants’ constitutional rights were being affected. For as long as what may have turned out to have been an unlawful investigation was allowed to continue, the insistence that the documents sought had nothing to do with the jurisdictional challenge and, that Dr Goolab and Mr Kruger could suffer no prejudice in complying with the subpoena, was misconceived. There is much to be said for the appellants’ argument that for so long as the jurisdiction of the Public Protector remained to be settled by the court in the main application, the coercive subpoena power was invoked in bad faith or with an ulterior purpose or in a manner that abuses the power to subpoena. But, it is perhaps not necessary to go that far. [44] Because subpoena powers are extraordinary coercive powers, they ‘are generally reserved for courts’.13 This means that where the power is granted to a body other than a court, the power should be interpreted restrictively. Subpoenas 10 South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others [2015] ZASCA 156; 2016 (2) SA 522 (SCA). 11 See ss 7 and 9 of the Public Protector Act 23 of 1994 (the PPA). 12 Section 11(4) of the PPA. 13 President of the Republic of South Africa and Others v South African Rugby Football Union and Others (CC) 2000 (1) SA 1 (CC) para 176. should accordingly only be used where ‘there is an appreciable risk, to be judged objectively’ that the evidence cannot be obtained by following a less invasive route.14 In Special Investigating Unit v Nadasen 2002(1) SA 605 (SCA) para 5, it was stated: ‘A unit such as the appellant is similar to a commission of inquiry. It is as well to be reminded, in the words of Corbett JA in S v Naude 1975 (1) SA 681 (A) 704 B-E, of the invasive nature of commissions, how they can easily make important inroads upon basic rights of individuals and that it is important that an exercise of powers by a non-judicial tribunal should be strictly in accordance with the statutory or other authority whereby they are created. The introductory part of s 4(1) of the Act emphasises the point. This accords with the approach of the Constitutional Court (South African Association of Personal Injury Lawyers v Heath and Others supra par 52). Appellant's reliance upon a "liberal" construction (meaning in the context of the argument "executive-minded”) is therefore misplaced. A tribunal under the Act, like a commission, has to stay within the boundaries set by the Act and its founding proclamation; it has no inherent jurisdiction and, since it trespasses on the field of the ordinary courts of the land, its jurisdiction should be interpreted strictly (cf Fey NO and Whiteford NO v Serfontein and Another 1993 (2) SA 605 (A) 613F-J).’ [45] Like the Special Investigating Unit in Nadasen’s case supra, the Public Protector also has no inherent jurisdiction and must exercise her powers within the confines of the PPA. Section 7(4)(a) of the PPA provides: ‘For the purposes of conducting an investigation the Public Protector may direct any person to submit an affidavit or affirmed declaration or to appear before him or her to give evidence or to produce any document in his or her possession or under his or her control which has a bearing on the matter being investigated, and may examine such person.’ Section 7(4)(a) must be read with s 7(5), which provides: ‘A direction referred to in subsection (4)(a) shall be by way of a subpoena containing particulars of the matter in connection with which the person subpoenaed is required to appear before the 14 Thint (Pty) Ltd v National Director of Public Prosecutions and Others, Zuma and Another v National Director of Public Prosecutions and Others (CC) [2008] ZACC 13; 2009 (1) SA 1 (CC) para 125. Public Protector and shall be signed by the Public Protector and served on the person subpoenaed either by a registered letter sent through the post or by delivery by a person authorised thereto by the Public Protector.’ [46] Counsel for the Public Protector suggested that the PPA confers wide and expansive powers of subpoena on the Public Protector. But, those powers are not unbounded. In terms of s 7 of the PPA, the Public Protector is granted the power, on her own initiative or on receipt of a complaint or an allegation or on the ground of information that has come to her knowledge and which points to conduct such as referred to in ss 6(4) or (5) to conduct a preliminary investigation for the purpose of determining the merits of the complaint, allegation or information and the manner in which the matter concerned should be dealt with. Having initiated an investigation, the Public Protector may decide that she possesses sufficient evidence to warrant further investigation. To that end, the Public Protector possesses the ability to subpoena any person to provide evidence or submit affidavits. It must be accepted that without this power her ability to conduct meaningful investigations could well be rendered illusory. [47] However, s 7(1)(a) expressly qualifies that the investigation must relate to conduct such as referred to in ss 6(4) or (5) of the PPA. The Public Protector’s power of subpoena is thus dependent upon the existence of a complaint, allegation and the like, which points to conduct referred to in ss 6(4) or (5) of the PPA. Until then, no licence exists for the resort to a subpoena. The power of subpoena is thus not an independent, self-standing power as appears to have been supposed on the part of officials in the office of the Public Protector. What is more, based on considerations of principle, Professor De Vos suggests that the provisions of the PPA are reasonably capable of an interpretation that safeguards the rights of those subpoenaed, by allowing for a subpoena as a last resort and only after a decision has been made by the Public Protector to conduct a full investigation. [48] In this regard Prof De Vos states: ‘. . . During a preliminary investigation no decision has been taken to investigate a matter. The preliminary investigation is exactly aimed at deciding whether there is a case to be answered and whether it should be pursued. During this phase it is not possible for the Public Protector to inform a person with any degree of precision (if at all) what is being investigated (as no decision has been taken to investigate anything). The person may well be left in the dark as to why she has been subpoenaed and this will be potentially extremely disadvantageous to the witness, who may expose herself to criminal prosecution for making false statements. The witness is also unlikely to be able to establish whether he or she runs the risk of incriminating themselves and whether there is “just cause” to refuse to honour the subpoena. There is a grave danger that subpoenas issued during a preliminary investigation will be over-broad (see Tulip Diamonds FZE v Minister for Justice and Constitutional Development and Others on over-broad subpoenas) as the Public Protector will not be in a position to tell the person subpoenaed what exactly is being investigated and what evidence this investigation is based on, and this will infringe on the rights of the individual protected in the Bill of Rights. A constitutionally compliant and purposive interpretation of the Act therefore requires us to read the Act contextually and as allowing a subpoena only to be issued as a last resort and only once a decision has been made that an actual investigation is to be conducted. In my view, the purpose of the subpoena power is to allow the Public Protector to force witnesses – especially those implicated in wrongdoing – to answer question once the Public Protector has decided that a full investigation should be conducted.’15 [49] It follows that like the main application and, more importantly, irrespective of the merits of the main application, the urgent application should have succeeded with costs in the high court. 15 Professor Pierre De Vos in a post on his Constitutionally Speaking Blog on 15 November 2018 entitled: ‘Response to the Legal Claims made by the Public Protector’s Office’. [50] Finally, as I have already pointed out, not only did the Public Protector misconceive her powers, but in many respects her approach is regrettable. The Constitutional Court has emphasised that the Public Protector is bound, in terms of s 195(1) of the Constitution, by the basic values and principles governing public administration, including, amongst others: (a) a high standard of professional ethics; (b) the constitutional imperative to use resources efficiently, economically and effectively; (c) accountability; and, (d) the constitutional imperative to foster transparency by providing the public with timely, accessible and accurate information.16 In that, it seems to me, the Public Protector has failed. [51] From the outset, GEMS evidently entertained grave concern as to the jurisdiction of the Public Protector to investigate Mr Ngwato’s complaint. Instead of seeking to assuage those concerns, the repeated refrain on the part of the officials in the office of the Public Protector was to regurgitate provisions of the PPA and to insist on compliance on pain of criminal sanction. They thus eschewed reason for coercion. That strikes one as the very antithesis of an office designed to resolve conflict between the citizenry of this country and those who control the levers of power. It ill-behoves officials to perceive GEMS’ challenge to jurisdiction as undermining the office of the Public Protector or its constitutional powers.17 Nor, was it fair to suggest that GEMS sought to immunise itself from the scrutiny of the Public Protector. After all a robust democracy must of necessity welcome challenges such as this. More so, one imagines, in respect of an office such as that of the Public Protector, which as the Constitutional Court has made plain, falls into the category of a public litigant, upon whom a higher duty is imposed to respect the law, fulfil procedural requirements and tread respectfully when dealing with rights.18 16 Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (6) SA 253 (CC) para 151. 17 Economic Freedom Fighters v Gordhan and Others; Public Protector and Another v Gordhan and Others [2020] ZACC 10 para 99. 18 Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (6) SA 253 (CC) para 155. [52] The further unfortunate consequence of the approach adopted is that it shifted the focus from the individual complaint to the overall authority of the Public Protector. That however served to enlarge the issues and obfuscate the true nature of the inquiry because, as I have attempted to show, the fact that the Public Protector may have had the necessary jurisdiction to investigate GEMS was not the end of the matter, it still remained to consider whether the particular complaint fell within her remit. [53] In the result: (a) The appeal is upheld with costs, including those of two counsel. (b) The order of the court below is set aside and replaced by: ‘(i) The application succeeds. (ii) It is declared that the first respondent is not empowered by sections 6(4) or (5) of the Public Protector Act 23 of 1994 to investigate the complaint lodged by the second respondent against the first applicant. (iii) The rule nisi dated 14 May 2018 issued under case number 33401/2018 is confirmed. (iv) The first respondent is ordered to pay the costs of the application, inclusive of the urgent application under case number 33401/2018. Such costs to include those consequent upon the employment of two counsel.’ _________________ V M Ponnan Judge of Appeal APPEARANCES: For Appellants: A Bava SC (with him J W Schabort) Instructed by: Gildenhuys Malatji Inc, Pretoria Honey Attorneys, Bloemfontein For Respondents: M Manala Instructed by: Dyason Inc, Pretoria Phatshoane Henney, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Government Employees Medical Scheme and Another v The Public Protector of the Republic of South Africa and Others (1000/2019 and 31514/2018 and 33401/2018) [2020] ZASCA 111 (29 September 2020) From: The Registrar, Supreme Court of Appeal Date: 29 August 2020 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Today, the Supreme Court of Appeal (SCA) upheld an appeal against an order of the Gauteng Division of the High Court, Pretoria (the high court) granted in favour of the respondent, the Public Protector of the Republic of South Africa. The appeal arose for consideration against the following backdrop: The first appellant, is the Government Employees Medical Scheme (GEMS), registered in terms of the Medical Schemes Act 131 of 1998 (the MSA). The second respondent is Mr Ngwato, who sought to be recognised by GEMS as a ‘beneficiary’ of his deceased spouse. GEMS took the view that Mr Ngwato did not qualify pursuant to GEMS’ Rules (the Rules). Aggrieved by GEMS’ refusal, Mr Ngwato lodged a complaint in terms of s 47 of the MSA with the Registrar of Medical Schemes (the Registrar). In the meanwhile, following a policy change by GEMS, the rule disqualifying Mr Ngwato had fallen away and Mr Ngwato was furnished with a membership certificate. However, he also contended that he was eligible for a Government Pensions Administration Agency (GPAA) subsidy. The Registrar of Medical Schemes ruled against him. Mr Ngwato then appealed to the Council for Medical Schemes (the Council) in terms of s 48 of the MSA. The Council dismissed his appeal. In terms of s 50 of the MSA, Mr Ngwato had the right of a further appeal to the Appeal Board of the Council. Instead, he lodged a complaint with the Public Protector. GEMS asserted that the Public Protector lacked jurisdiction to investigate Mr Ngwato’s complaint. The Public Protector took the view that she was empowered by the Constitution and the Public Protector Act (PPA) to investigate the complaint. GEMS applied to the high court for an order (the main application) declaring that the Public Protector did not have the statutory authority and/or jurisdiction to pursue the investigation. Whilst that application was pending, the Public Protector issued two subpoenas that were served on the third appellant, Mr Kruger, the legal advisor of GEMS and the second appellant, Dr Gunvant Goolab, the Principal Officer of GEMS. The subpoenas required them to appear in person before the Public Protector. The attorney of record for GEMS addressed a letter to the Public Protector seeking an undertaking that the hearings will be stayed pending finalisation of the main application. The response was to insist on compliance with the subpoena on pain of criminal sanction. Mr Kruger and Dr Goolab felt compelled to approach the high court as a matter of urgency (the urgent application) to be joined as parties to the litigation and for the subpoenas to be suspended pending finalisation of the main application. The Public Protector filed a notice of intention to oppose the urgent application, but failed to file an answering affidavit. The urgent application succeeded before Davis J. Both the main and urgent applications subsequently served before Kubushi J, who dismissed the main application, set aside the order suspending the subpoenas and ordered the costs of both the main and urgent applications to be paid by GEMS, Dr Goolab and Mr Kruger (collectively referred to as the appellants). The argument on appeal was confined to ss 6(4)(a)(ii), 6(4)(a)(v) and 6(5)(b) of the PPA, which, so it was contended, empowered the Public Protector to investigate Mr Ngwato’s complaint. The SCA was not persuaded by the reasons advanced on behalf of the Public Protector as to why it was thought necessary to investigate the complaint. The SCA held that it is manifest that the Public Protector’s stubborn and irrational insistence on continuing with her investigation could hold no benefit for the public at large, or for that matter even Mr Ngwato himself. The complaint, which was an isolated one, had in any event become moot. The SCA reasoned that the business of a medical scheme does not appear to encompass the performance of a public or government function or the exercise of a public power. The SCA held that the Public Protector did not have the statutory power to investigate the complaint and that the main application ought to have succeeded before the high court. The SCA emphasised that the Public Protector cannot lawfully embark on an investigation that does not fall within her statutory remit as such an investigation would be unlawful. The Public Protector appeared not to appreciate the extent to which the appellants’ constitutional rights were being affected. The SCA stated that where subpoena powers are granted to a body other than a court, the power should be interpreted restrictively and that the Public Protector’s power of subpoena is dependent upon the existence of a valid complaint as contemplated in sections 6(4) and (5) of the PPA. The SCA reasoned that the Public Protector had misconceived her powers in both investigating the complaint and issuing the subpoenas. It was considered by the SCA that the office of the Public Protector falls into the category of a public litigant, upon whom a higher duty is imposed to respect the law. The SCA stated that insisting on compliance with the subpoenas whilst the question of her jurisdiction remained to be determined by the high court, leaves one with the impression that the subpoenas were intended to cow the appellants into submission. And, that there is much to be said for the appellants’ argument that for so long as the jurisdiction of the Public Protector remained to be settled by the court in the main application, the coercive subpoena power was invoked in bad faith or with an ulterior purpose or in a manner that abuses the power to subpoena. In the result, the appeal was upheld. The order of the high court was set aside and replaced by an order: (i) declaring that the Public Protector is not empowered by sections 6(4) or (5) of the PPA to investigate Mr Ngwato’s complaint; and, (ii) confirming the interim order setting aside the subpoenas. The Public Protector was also ordered to pay costs of two counsel in both the high court and on appeal.

1367

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No 99/10 In the matter between: MLUNGISI MDLONGWA Appellant and THE STATE Respondent Neutral citation: Mdlongwa v The State (99/10) [2010] ZASCA 82 (31 May 2010) Coram: Mthiyane and Mhlantla JJA and Saldulker AJA Heard: 12 May 2010 Delivered: 31 May 2010 Summary: Robbery with aggravating circumstances ─ State relying on dock identification of appellant ─ facial comparison made by expert from photograph taken ex post facto and video footage of the bank recorded during the robbery. Identification of the appellant as one of the robbers sufficiently established. Appeal dismissed and conviction and sentence of twenty years’ imprisonment confirmed. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: KwaZulu-Natal High Court (Pietermaritzburg) (Swain J and Radebe AJ sitting as court of appeal): The appeal against the conviction and sentence is dismissed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ SALDULKER AJA ( MTHIYANE AND MHLANTLA JJA concurring) [1] The appellant, Mr Mlungisi Mdlongwa, and four other persons were charged in the Regional Court in Dundee, with robbery with aggravating circumstances, unlawful possession of firearms and ammunition. The appellant and accused five were convicted of robbery with aggravating circumstances and acquitted on the other charges. The appellant was sentenced to 20 years’ imprisonment. His appeal against both the conviction and sentence was dismissed by the KwaZulu–Natal High Court (Swain J and Radebe AJ concurring). The court granted him leave to appeal to this court, against both the conviction and sentence. [2] The charges arose from an incident on 11 February 2004, at about 09h30, when a bank robbery took place at the NBS Building Society (the bank), situated at the Pick n Pay centre, in Dundee, KwaZulu-Natal, as set out in the charge sheet. [3] The appellant pleaded not guilty to the charges and advanced an alibi defence. Through his counsel he denied that he was the person depicted in the photograph taken by a police witness Inspector Khoza and in the video footage of the robbery, both of which formed part of the evidence produced in court. The appellant did not testify in his defence at the trial. [4] The State relied on the dock identification of the robbers by Mr Sikhumbuzo Mbatha, a security officer employed by Roman Protection Solutions, stationed at the bank that morning, video footage of the bank robbery taken by digital close circuit television (CCTV) cameras which were in place at the bank at the time of the robbery (where both accused five and the appellant are seen participating in a bank robbery, and where the latter is seen wearing a blue t-shirt) and the evidence of Inspector Naude, a member of long standing with the South African Police Services, who was attached to the Facial Identification Unit for 18 years, and who made a facial comparison of the appellant and accused five, from photographs taken of them (exhibit K and exhibit L), by Inspector Khoza two weeks after the robbery and video stills (exhibit F29 and F30) taken from the video footage. It therefore followed that in order to secure a conviction the state had to lead a chain of evidence to link the appellant to the robbery. [5] The sole issue for determination on appeal is whether the appellant was properly identified as one of the robbers. The appellant challenged the State’s case on three legs. Firstly, it was submitted that Mbatha’s testimony was unsatisfactory and contradictory, that no reliance could be placed on his dock identification, more especially since no identification parade was held. Secondly, that the expert, Inspector Naude, called by the State as a facial comparison expert was no ‘expert’, as she lacked academic qualifications and that her findings were thus unacceptable because it was not of a generally accepted standard. Thirdly, that the video footage of the robbery was not the original and should not have been admitted in evidence. I turn to consider these challenges in the factual matrix. [6] I deal first with the evidence of Mbatha. He testified that he was on duty at the bank on the day in question. He stood at the entrance where he searched every person that entered the bank, using a metal detector. As he stood there, three persons appeared. He testified that he could only identify the two that approached and spoke to him. He described one as having a short hair cut and the other as wearing a blue Adidas skipper and an Adidas pants. The third person stood at a lotto machine which was situated at a restaurant opposite the bank. One of the two that approached him, asked ‘whether he had seen people robbing a bank’, to which he did not respond. He identified this person as the appellant, who was accused four at the trial. [7] This person, whom he identified as the appellant, then drew a firearm and pointed it to the ground and ordered him to allow the other two into the bank. At this stage, three robbers and Mbatha then entered the bank, passed two doors within a cubicle and walked into the banking hall. As they did so, two other robbers, followed, now numbering five. The first person to enter the bank pointed a firearm at Mr Mabaso who worked at the enquiries counter. The latter was then assaulted with a crowbar and ordered to open the door of the tellers’ section, which was opened by Ms Ayesha Ismail, one of the tellers. [8] The robbers then proceeded to take the money and grabbed Ismail as a hostage but then left her in the cubicle. Thereafter the robbers left the bank. Mbatha testified that the robber who assaulted Mabaso wore short pants and a blue t-shirt and in court identified him as accused five. [9] Mbatha’s evidence was criticised by counsel for the appellant especially with regard to the description of the clothing allegedly worn by the appellant. According to Mbatha’s testimony, accused five wore a blue t-shirt, and that the appellant stood next to him carrying a firearm. This was in stark contrast to what the appellant and accused five are seen wearing in the video stills. It is the appellant who is seen wearing a blue t-shirt. In my view Mbatha’s contradictory evidence in respect of the clothing worn by the appellant and accused five cannot be seen in isolation. If one examines Mbatha’s evidence, except for the description of the clothing worn by two of the robbers, whom he identified as the appellant and accused five, his testimony is completely in line with what is portrayed on the video footage and the stills as having taken place during the robbery. Mbatha’s evidence that one of the robbers wore a blue Adidas t-shirt was corroborated by Ms Botes, a branch manager at the NBS bank. She testified that she was seated in her office, when she was confronted by one of the robbers wearing a blue t-shirt with an inscription in white with a capital letter ‘A’, and who ordered her to open the safe. [10] Additionally, merely because Mbatha made a dock identification of the appellant and accused five, does not make his evidence less credible. Generally, a dock identification carries little weight, unless it is shown to be sourced in an independent preceding identification.1 But there is no rule of law that a dock identification must be discounted altogether, especially where it does not stand alone. Mbatha had ample opportunity at least to observe two of the robbers who participated in the robbery as is visible from the video footage and who were later identified as the appellant and accused five in the facial comparison made by inspector Naude, an aspect to which I shall return to later, thus supporting his dock identification of them. [11] As is apparent from the aforegoing, Mbatha’s testimony is not the sole testimony relied upon by the State. As already indicated, his description of how the robbery unfolded is corroborated by the video footage. Although there were contradictions in his testimony as to the clothing worn by the appellant and accused five and his statement to the police, when his evidence is assessed as a whole these contradictions are not material and pale into insignificance. He may have been innocently mistaken about the apparel of the robbers, which is understandable in the circumstances, given that a gun was pointed at him. As was stated by Nugent J in S v Van der Meyden,2 ‘A court does not look at the evidence implicating the accused in isolation in order to determine whether there is proof beyond reasonable doubt, and so too does it not look at the exculpatory evidence in isolation to determine whether it is reasonably possible that it might be true.’3 ‘A court does not base its conclusions, whether it be to convict or to acquit, on only part of the evidence:’4 ‘The proper test is that an accused is bound to be convicted if the evidence establishes his guilt beyond a reasonable doubt, and the logical corollary is that he must be acquitted if it is reasonably possible that he might be innocent. The process of reasoning which is 1 S v Tandwa 2008 (1) SACR 613 (SCA) at 617b-d. 2 1999 (2) SA 79 (W). 3 Van der Meyden at 81A-B. 4 At 82A. appropriate to the application of that test in any particular case will depend on the nature of the evidence which the court has before it. What must be borne in mind, however, is that the conclusion which is reached (whether it be to convict or to acquit) must account for all the evidence. Some of the evidence might be found to be false; some of it might be found to be unreliable; and some of it might be found to be only possibly false or unreliable; but none of it may simply be ignored.’5 [12] Mbatha had no reason to falsely implicate the appellant and accused five in the robbery. I am satisfied that Mbatha’s identification of the appellant as being involved in the NBS robbery taken together with the other evidence in this case, establishes the appellant’s participation in the robbery. [13] I turn to the evidence of Inspector Naude. But before doing so, it is necessary to refer briefly to the challenge levelled against the evidentiary material that she relied on in reaching her conclusion that the appellant was one of the robbers. VIDEO FOOTAGE [14] Inspector Naude analysed the still photographs of the video footage recorded at the bank during the robbery. Ms Botes testified that there were nine surveillance cameras strategically installed inside the bank, at the door and at the ATM machine. All nine cameras were connected to a video machine. On the morning of the robbery, the video footage and the video cassette remained under lock and key until it was handed over to Mr Henk Viljoen, the regional security manager for the Nedcor Group. [15] Viljoen confirmed that the digital CCTV recorders were installed at the NBS bank which recorded all footage on a hard drive and transmitted those onto a computer. This was stored in the treasury area of the bank. Each of the video cameras were hooked up to one system which recorded onto three separate hard drives. The hard drives were serviced and tested on a weekly basis to ensure that the cameras were recording and functioning properly. No member of staff had access to download any information or to tamper with information that was stored on the hard drive. 5 At 82C-D. [16] When Viljoen viewed the video footage, he downloaded the information, (which he was solely authorised to do) for the police to print video stills of what occurred in the bank robbery, and handed the footage over to Inspector Ahmed. He stated that although he did not have any computer qualification, the technicians and the manufacturers of the digital video recorder system had shown him how to operate it. PHOTOGRAPHS [17] I turn to the photographs. Photographs were taken by Inspector Khoza of the appellant and accused five, ex post facto, two weeks after the incident and handed over to Inspector Ahmed. The latter handed over the two photographs and the video footage to Inspector Naude to do a facial comparison. Inspector Naude found in her facial comparison analysis of both the appellant and accused five, that there were points of similarities, between the photograph of the appellant (exhibit K) and the person appearing in the video footage (exhibit F29) and the photograph of accused five (exhibit L) and the video footage (exhibit F30). Based on her findings of points of similarities, she concluded that the persons appearing in the video footage were the appellant and accused five. For the purposes of this judgement it is not necessary to refer to the details in regard to the facial comparison of accused 5, except to point out that the court below appears to have inadvertently confused exhibits L and F30 as being that of the appellant. The evidence of Inspector Khoza, that he took the photograph of the appellant was not seriously disputed. All that the appellant said was to deny through his legal representative that he was the person depicted in the photograph taken by Inspector Khoza. That denial however, took the matter nowhere because the appellant did not testify in his defence. In this regard Inspector Khoza’s evidence stood alone. [18] In this case there appears to be every reason to accept Inspector Naude as an expert. The merits of her findings were not seriously impugned. All that was argued was that she lacked academic qualifications. A lack of academic qualification may sometimes be regarded as indicative of a lack of sufficient training, but this is not the case here, if one has regard to the vast experience that Inspector Naude accumulated over a number of years. Inspector Naude testified that she was a police officer for 30 years. She has been stationed at the Pretoria Criminal Record Centre, in the Facial Identification Unit for 18 years. The work at the unit involved developing facial reconstruction from skulls, facial comparisons and facial compilations. Nationally she was involved in the training of all facial identification units. Although she did not have any academic qualifications, she had run three workshops at the University of Pretoria and was studying osteology at the University of Pretoria. She had done over five hundred facial comparisons and thousands of facial compilations. She had testified in court on a number of occasions and this was her twentieth case. In this regard the judgment of this court in S v Mlimo6 is in point. In that case Mthiyane JA said: ‘In my view a qualification is not a sine qua non for the evidence of a witness to qualify as an expert. All will depend on the facts of the particular case. The court may be satisfied that despite the lack of such a qualification the witness has sufficient qualification to express an expert opinion on the point in issue. It has been said: It is the function of the judge [including a magistrate] to decide whether the witness has sufficient qualifications to be able to give assistance. The court must be satisfied that the witness possesses sufficient skill, training or experience to assist it. His or her qualifications have to be measured against the evidence he or she has to give in order to determine whether they are sufficient to enable him or her to give relevant evidence. It is not always necessary that the witnesses’ skill or knowledge be acquired in the course of his or her profession it depends on the topic. Thus, in R v Silverlock it was said that a solicitor who had made a study of handwriting could give expert evidence on the subject even if he had not made any professional use of his accomplishments. (See DT Zeffert, AP Paizes & A St Q Skeen The South African Law of Evidence (2003) at 302; see also Lirieka Meintjies-Van der Walt, ‘Science fiction: The nature of expert evidence in general and scientific evidence in particular’ (2000) 117 SALJ 771 at 773-4.)’ [19] In this matter, inspector Naude had received two photographs, the photograph of the appellant (exhibit K) and the photograph of accused five (exhibit L) from Inspector Ahmed, as well as a copy of the video footage of the bank 6 2008 (2) SACR 48 (SCA) para 13. robbery. She was instructed to do a facial comparison of the individuals appearing in the photographs and the video footage. [20] The methods that she employed were in terms of the standards generally accepted in her department, and were based on her vast experience. She found 13 points of similarities between the facial features of the person in the video footage, (exhibit F29) and the photograph of the appellant (exhibit K). Thus she was able to establish the link that the person appearing in the video footage of the robbery was the appellant. The courts below were justified in accepting her conclusions in that regard. [21] Although Inspector Naude chose to do the facial comparison from only two photographs, this does not detract from the conclusions that she arrived at. There were other individuals appearing in the video footage. Her evidence was sufficient to establish a link that one of the individuals captured on the video footage during the robbery was the appellant. There is no reason to doubt the accuracy of her findings. The fact that she was unable to identify the appellant in court as the person appearing in the footage was irrelevant, and was not the purpose of her testimony. The results of her findings as reflected in the points of similarities established between the photograph taken by Inspector Khoza and the still photographs downloaded from the video footage, are sufficient to link the appellant to the robbery. [22] I turn to the third and final challenge, namely that the video footage was not the original. Viljoen testified that each branch had its own hard drive from which the video footage images in which the appellant and his co-accused were captured, were downloaded. There can therefore be no question that the video footage was original and therefore constituted real evidence. The submission by the appellant’s counsel to the contrary is therefore without substance. In S v Mpumlo & others7 it was stated that a video film, like a tape recording, ‘is real evidence, as distinct from documentary evidence, and, provided it is relevant, it may be produced as admissible evidence, subject of course to any dispute that may arise either as to its authenticity or the interpretation thereof’. 7 1986 (3) SA 485 (E) at 490H-I; Motata v Nair NO 2009 (2) SA 575 (T) para 21. [23] In S v Ramgobin & others8 it was held that for video tape recordings to be admissible in evidence it must be proved that the exhibits are original recordings and that there exists no reasonable possibility of ‘some interference’ with the recordings. In this case there can be no question that the aforesaid video evidence was admissible. Viljoen testified that he was solely authorised to download the video footage of the robbery from the bank’s digital CCTV cameras which were installed at the NBS bank. He handed these to Inspector Ahmed. Botes confirmed that they were instructed not to touch the video footage which remained under lock and key until it was retrieved by Viljoen. In my view no tampering took place with the video footage. Consequently, there appears to be no reason to reject the authenticity and the originality of the video footage downloaded by Viljoen from the surveillance cameras installed at the bank. [24] In any event, it need not be established that the original footage was used because the purpose of introducing the video footage into evidence was to identify the scene where the robbery took place, to enable the witness to identify the robbers and for Inspector Naude to make the facial comparisons. (See S v Ramgobin and others at 125E-H.) As I have already indicated the video footage of the robbery constitutes real evidence as it was taken from the surveillance cameras installed at the bank. The video footage provides corroboration for Mbatha’s testimony as to what occurred during the robbery. What emerged from the video stills is unmistakably the identification of the appellant and accused five being present at the NBS bank and participating in a bank robbery. [25] Having regard to the totality of the evidence, the appellant was properly identified as one of the robbers of the NBS bank. In the face of incriminating evidence that the appellant was involved in the bank robbery, he adduced no counterveilling evidence in his defence. Despite video footage recording his presence at the bank, the appellant chose not to testify. Where there is direct evidence implicating an accused in the commission of an offence, the prosecution case is ipso facto strengthened where such evidence is uncontroverted due to the 8 1986 (4) SA 117 (N). failure of the accused to testify.9 Furthermore the appellant’s bald denial that he was not the person depicted in the photograph taken by Inspector Khoza nor the one appearing in the video footage must be rejected as false. [26] An accused has the constitutional right to remain silent but this choice must be exercised decisively as ‘the choice to remain silent in the face of evidence suggestive of complicity must, in an appropriate case, lead to an inference of guilt’.10 [27] In my view all of the State’s evidence, cumulatively, established the identification of the appellant as one of the robbers in the NBS bank beyond a reasonable doubt. The appellant was correctly convicted. Accordingly, the appeal against the conviction must fail. [28] I turn to consider the appeal against the sentence. Counsel for the appellant contended that the court below did not properly exercise its discretion in sentencing the appellant to twenty years’ imprisonment, five more years than the minimum prescribed. In advancing these submissions, he stated that the appellant was a first offender, that he had been incarcerated for more than a year and that no one had been injured during the robbery. [29] It is trite that this court may only interfere if a misdirection has been committed by the sentencing court. In my view no such occurred. The aggravating features of this robbery far outweigh the mitigating. In my view the brazen conduct of the appellant and his co-accused in entering a bank, and robbing it with impunity in the presence of innocent members of the public and assaulting a staff member, is deserving of the sentence imposed. It is not a shocking sentence but a salutary one. In my view, their brazen conduct is deserving of the sentence imposed. It is neither excessively severe nor harsh that it must be interfered with. It follows therefore that the appeal against sentence also fails. [30] Accordingly the following order is made: The appeal against the conviction and sentence is dismissed. 9 Magmoed v Janse van Rengsburg and others 1993 (1) SACR 67 (A). 10 Tandwa at 615I-j; see footnote (1) above. ___________________________ H K Saldulker Acting Judge of Appeal APPEARANCES: APPELLANT/S: S B Mngadi Mlungisi Mdlongwa (In person) RESPONDENT/S: A A Watt Instructed by The director of Public Prosecutions, Pietermaritzburg The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 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. * * * MDLONGWA V THE STATE The Supreme Court of Appeal (SCA) today dismissed an appeal by the appellant against his conviction on a charge of robbery with aggravating circumstances and a sentence of 20 years’ imprisonment. The appellant was charged with a co-accused in a regional court with the robbery that occurred at the NBS bank, in Dundee. The State relied in proving its case on the dock identification of the robbers by a security officer who was stationed at the bank on the morning of the robbery; a video footage of the bank robbery, taken by digital close circuit television (CCTV) cameras which were in place at the bank at the time of the robbery; and the evidence of an expert witness who was a police inspector attached to the Facial Identification Unit in the South African Police Service for 18years. The appellant chose not to testify. The regional court found that the State had proved its case against the appellant beyond reasonable doubt. It convicted and sentenced him accordingly. The appellant appealed to the KwaZulu-Natal High Court (Pietermaritzburg) but his appeal to that court was dismissed. However, the high court granted him leave to appeal to the SCA against both conviction and sentence. The sole issue before the SCA was whether the appellant was properly identified as one of the robbers. The appellant challenged the State’s case on three legs. Firstly, that the security officer’s evidence was unsatisfactory and contradictory, and that no reliance could be placed on his dock identification, more especially since no identification parade was held. Secondly, that the expert witness was no ‘expert’ as she lacked academic qualifications and that her findings that there were 13 points of similarities in the facial comparison that she did from a photograph taken of the appellant and the individual appearing in the video footage, were thus unacceptable. And thirdly, that the video footage of the robbery was not the original and should not have been admitted in evidence. In dismissing the appeal, the SCA held in respect of the first leg of attack that the security officer’s evidence was corroborated by the video footage, that his dock identification of the appellant did not make his evidence less credible and that the alleged contradictions were not material. It held in respect of the second leg of attack that, although a lack of academic qualifications may sometimes be regarded as indicative of a lack of sufficient training, this was not so in this case having regard to the vast experience that the expert witness had accumulated over a certain number of years. There was no reason to doubt the accuracy of her findings, that one of the individuals captured on the video footage during the robbery was the appellant. In respect of the third leg of attack the SCA held that no tampering with the video footage took place and that there appeared no reason to reject its authenticity and originality. Therefore, its admissibility could not be questioned. The SCA held further that it need not be established that the original footage was used because the purpose of introducing the video footage into evidence was to identify the scene where the robbery took place, to enable the witness to identify the robbers and for the expert Inspector Naude to make the facial comparisons. The video footage of the robbery constituted real evidence and what emerged from it unmistakably was the identification of the appellant and accused five being present at the NBS bank and participating in a bank robbery. In the face of incriminating evidence that the appellant was involved in the bank robbery, the appellant chose not to testify, nor adduce any counterveilling evidence in his defence. Furthermore the appellant’s bald denial through his legal representative that he was not the person depicted in the photograph taken by a police witness, Inspector Khoza nor the one appearing in the video footage was rejected as false. The SCA held that the evidence cumulatively established the identification of the appellant as one of the robbers in the NBS bank beyond a reasonable doubt. The appellant was properly identified as one of the robbers and correctly convicted. As regards sentence, the SCA held that in view of the brazen conduct of the appellant and his co-accused in entering a bank and robbing it with impunity in the presence of innocent members of the public and assaulting a staff member is deserving of the sentence imposed. The sentence of 20years was not a shocking one but a salutary one. ---ends---

2432

non-electoral

2013

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 580/12 In the matter between: HUBBARD, ANNE CHRISTINE Appellant and COOL IDEAS 1186 CC Respondent Neutral citation: Hubbard v Cool Ideas 1186 CC (580/12) [2013] ZASCA 71 (28 May 2013) Coram: NAVSA, PONNAN and THERON JJA and WILLIS and MBHA AJA Heard: 10 MAY 2013 Delivered: 28 MAY 2013 Summary: Section of Housing Consumers Protection Measures Act 95 of 1998 prohibiting unregistered home builder from receiving any consideration for construction of home – arbitration award to that effect cannot be made an order of court. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: South Gauteng High Court (Johannesburg) (Victor 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 in its stead is substituted the following order: ‘The application is dismissed with costs.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN JA (NAVSA and THERON JJA and MBHA AJA concurring): [1] The purpose of the Housing Consumers Protection Measures Act 95 of 1998 (the Act), as its preamble proclaims, is to afford protection to housing consumers. It does so in various ways, including the establishment of a National Home Builders Registration Council (the Council) and the requirement that home builders be registered as such with it. Thus subsections (1) and (2) of s 10 of the Act provide: '10 Registration of home builders (1) No person shall – (a) carry on the business of a home builder; or (b) receive any consideration in terms of any agreement with a housing consumer in respect of the sale or construction of a home, unless that person is a registered home builder. (2) No home builder shall construct a home unless that home builder is a registered home builder.' [2] That registration, according to subsection (3), is dependent upon the Council being satisfied that the home builder: (a) meets the criteria prescribed by the Minister of Housing; (b) will meet its obligations in terms of the Act; and (c) has appropriate financial, technical, construction and management capacity in order to prevent housing consumers and the Council from being exposed to unnecessary risk. What consequence follows upon a home builder failing to register as such but who nonetheless undertakes a building project, is the question that confronts us in this appeal. It arises for determination against the following factual backdrop. [3] During February 2006 and pursuant to a written building contract the appellant, Ms Anne Christine Hubbard, appointed the respondent, Cool Ideas 1186 CC (Cool Ideas), to undertake certain building works for her, namely the construction of a residential dwelling unit, being unit number two of the Chesterfields in Bryanston for the contract sum of R2 695 600.00. Clause 14 of the building contract provided: ‘ARBITRATION 14.1 Any dispute arising between the parties out of and during the currency of the contract or upon termination thereof may be referred to arbitration. 14.2 The arbitrator shall be appointed at the request of either party by the president for the time being of the Master Builders Association having jurisdiction in the area or by the president of the Building Industries Federation (SA), whose decision will be final and binding on both parties.' [4] Disputes did indeed arise between the parties, which in terms of clause 14 of the building agreement were referred to arbitration by Ms Hubbard. Mr Charles D Cook an architect and valuer was appointed the arbitrator. Ms Hubbard, who complained about various aspects of the building works, claimed an amount of R1 231 300.50, which she asserted was the cost of the remedial works that had to be performed to her residential dwelling. Cool Ideas opposed that claim. In addition, it claimed payment of that portion of the contract sum that remained outstanding. The arbitration agreement concluded between the parties recorded, inter alia, that: 'A dispute has arisen between the parties in respect of The work executed, and Payment for such work. . . . . 4. The Arbitration will be held in terms of the Arbitration Act, No. 42 of 1965. 5. The Arbitrator's award shall be final and binding. There shall be no appeal against the Arbitrator's award.' [5] On 15 October 2010 the arbitrator made the following award: '32.1 The Claimant [Ms Hubbard] is to pay the Respondent [Cool Ideas] the sum of the R550,211.00 inclusive of VAT (five hundred and fifty thousand two hundred and eleven rand). 32.2 Interest to be paid by the Claimant on the sum of R1,101,333.36 (one million one hundred and one thousand three hundred and thirty three rand and thirty six cents) from 7th November 2007 to the date of payment at the rate of 2% greater than the minimum lending rate charged by the Claimant's bank to its clients, compounded monthly, the start date being 7th November 2007. 32.3 Costs are awarded in favour of the Respondent. The Claimant shall be responsible for all of the Arbitrator's fees. Any portion of the Arbitrator's fees paid by the Respondent must be reimbursed by the Claimant to the Respondent together with the amounts due in respect of paragraphs 32.1 and 32.2 above. The costs incurred in respect of the preparation of the Statements of Issues and responses thereto were not claimed by the parties and are excluded herefrom. 32.4 All amounts due in terms of this award shall be payable by the Claimant to the Respondent within seven days from the date of handing down this award. 32.5 Any amounts due and remaining unpaid by the due date as set out in paragraph 32.4 herein shall accrue interest as for a judgement debt at the rate of 15.5% per annum compounded monthly from the date due for payment.' [6] As Ms Hubbard failed to satisfy the arbitration award, Cool Ideas applied to the South Gauteng High Court in terms of s 31 of the Arbitration Act 42 of 1965 for the award of the arbitrator to be made an order of court. That application was opposed by Ms Hubbard, who in support of her opposition stated: '24. . . . [I]t was discovered . . . that the Applicant [Cool Ideas], whom I contracted to construct my home, was not registered as a home builder in terms of the Housing Consumer Protection Measures Act No. 95 of 1998. 25. The effect of the above, so I am advised, is that that Applicant is not entitled to carry on the business of a home builder, or to receive any consideration in terms of any agreement with a person, defined as a housing consumer in terms of the Housing Consumer Protection Measures Act No. 95 of 1998, in respect of the sale or construction of a home. . . . . 27. The result of the above is, so I am advised, that the Applicant was not entitled to claim any payment from me, let alone an amount totalling R1 228 522.09 (one million two hundred and twenty eight thousand five hundred and twenty two rand and nine cents) which consists of an amount of R1 064 746.00 (one million and sixty four thousand seven hundred and forty six rand) for "work done" and the remainder consisting of interest charged upon such an amount. . . . . 91. I confirm, as I have alluded to hereinbefore, that the award of the arbitrator effectively seeks to order the performance of a prohibited or criminal act, in that it purports to order me to make payment to an entity who carries on the business of a home builder, as defined in the Housing Consumer Protection Measures Act NO. 95 of 1998, in relation to an agreement in respect of the construction/sale of a home, while such an entity is not registered in terms of the Housing Consumer Protection Measures Act No. 95 of 1998 as required by such an Act. 92. I am advised, advice which I accept, that by applying to the above Honourable Court to have the said arbitration award made an order of court, the Applicant is requiring of the Honourable Court to make an order contrary to an express prohibition imposed by the Legislator and that a Court cannot be asked to order the performance of a prohibited or criminal act. 93. I am furthermore advised that the arbitrator acted ultra vires in making the above order, which resulted in the award being void ab initio and/or being a nullity and therefore the award is incapable of being made an order of this Honourable Court.' [7] The application came before Victor J who concluded: '1. In terms of Section 31 of the Arbitration Act 42 of 1965 the award of the Arbitrator Mr C D Cook dated 15 October 2010 is hereby made an order of court. 2. The costs of the application should be paid by the respondent. 3. The late filing of the replying affidavit and the costs of the condonation application should be paid by the applicant.' The appeal is with the leave of this court. [8] In arriving at that conclusion the high court reasoned: '[15] The respondent simply relies on the direct prohibition where it is pre-emptory that not only the project, but also that the builder be registered in terms of the said Housing Act. The respondent relies on Bekker v Schmidt Bou-Ontwikkelings CC And Others 2007 (1) SA 600 (C) 607 to 608) which holds that the registration in terms of S10 of the Act is absolute. It is on this basis that the respondent contends that the arbitration award is void. [16] One of the distinguishing features in this case is that by the time the applicant wished to make the arbitral award an order of this court it had registered as a home builder in terms so Act. "14A Late enrolment and non-declared late enrolment (1) Where a home builder – (a) in contravention of section 14 submits an application for the enrolment of a home to the Council after construction has started;" [17] The Act clearly envisions the situation where late registration is permissible after the building has commenced and therefore peremptory provisions of section 10 are to be read with section 14A of the act. "2) No home builder shall construct a home unless that home builder is a registered home builder". [18] This amendment was introduced in 2007. The further distinguishing feature in this case is that the work was done by Velvori Construction CC a registered home builder as required in terms of the Act. [19] To preclude the applicant from its clam at this stage is really to give effect to form over substance. The substance of the applicant's claim at this stage is that it is a registered builder and that at the time it executed the building work it did so in cooperation with the subcontractor Velvori Construction CC a properly registered entity as it was entitled to do.' [9] In this court neither counsel sought to support the reasoning of the high court. Nor, I daresay, could they. For, it seems to me that both pillars underpinning its conclusion are flawed. In respect of the first: Section 14 appertains to the enrolment of the home (the subject of the construction) with the Council. It prohibits a home builder from commencing the construction of that home unless the Council has issued a certificate of enrolment in respect of it. It is so that s 14A permits late enrolment, but that is only after certain fairly stringent requirements as prescribed by that section have been met. That in any event has to occur prior to the completion of the construction. By its very nature the protection afforded to a housing consumer by s 14 is in addition to that afforded by s 10. Any relaxation afforded by s 14A for the failure of the home builder to comply with s 14 plainly does not find application to s 10. Significantly, in respect of s 10 one finds no counterpart to s 14A. That is perhaps the clearest indicator that the legislature did not intend a relaxation of those prohibitions. The broad thrust of the Act is obviously to protect home consumers, the vast majority of whom will undoubtedly be poor and unsophisticated, against shoddy and unsafe houses at the hands of unskilled, unregistered and perhaps even unscrupulous home builders. In respect of the second: It matters not that the work may have been done by Velvori Construction CC (which in any event has not been admitted by Ms Hubbard), for in those circumstances, s 10(7) required both it and Cool Ideas to be registered as home builders. It thus hardly availed Cool Ideas that Velvori Construction CC may have been registered as a home builder. [10] One of the earliest cases that had to consider the consequence for the validity of an act that has taken place in conflict with a statutory prohibition was Schierhout v Minister of Justice1926 AD 99 at 109 in which 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.’ But as Nugent JA pointed out in Lupacchini NO v Minister of Safety and Security 2010 (6) SA 457 (SCA) para 8: '. . . [T]hat will not always be the case. Later cases have made it clear that whether that is so will depend upon the proper construction of the particular legislation. What has emerged from those cases was articulated by Corbett AJA in Swart v Smuts [1971 (1) SA 819 (A) at 829C-G]. "Die regsbeginsels wat van toepassing is by beoordeling van die geldigheid of nietigheid van ‘n transaksie wat aangegaan is, of ‘n handeling wat verrig is, in stryd met ‘n statutêre bepaling of met verontagsaming van ‘n statutêre vereiste, is welbekend en is alreeds dikwels deur hierdie Hof gekonstateer (sien Standard Bank v Estate Van Rhyn 1925 AD 266; Sutter v Scheepers 1932 AD 165; Leibbrandt v South African Railways 1941 AD 9; Messenger of the Magistrate’s Court, Durban v Pillay 1952 (3) SA 678 (AD); Pottie v Kotze 1954 (3) SA 719 (AD), Jefferies v Komgha Divisional Council 1958 (1) SA 233 (AD); Maharaj and Others v Rampersad 1964 (4) SA 638 (AD)). Dit blyk uit hierdie en ander tersaaklike gewysdes dat wanneer die onderhawige wetsbepaling self nie uitdruklik verklaar dat sodanige transaksie of handeling van nul en gener waarde is nie, die geldigheid daarvan uiteindelik van die bedoeling van die Wetgewer afhang. In die algemeen word ‘n handeling wat in stryd met ‘n statutêre bepaling verrig is, as ‘n nietigheid beskou, maar hierdie is nie ‘n vaste of onbuigsame reël nie. Deeglike oorweging van die bewoording van die statuut en van sy doel en strekking kan tot die gevolgtrekking lei dat die Wetgewer geen nietigheidsbedoeling gehad het nie."' [11] Sections 10(1) and (2) do not in terms invalidate the agreement between the home builder and the housing consumer. Quite the contrary – I think it is clear that, consistent with the overall purpose of the Act, the validity of that agreement is unaffected by an act of the home builder in breach of those sections. The prohibition in those sections is not directed at the validity of particular agreements but at the person who carries on the business of a home builder without a registration. They thus do no more than disentitle a home builder from receiving any consideration. That being so a home builder who claims consideration in conflict with those sections might expose himself or herself to criminal sanction (s 21) and will be prevented from enforcing his or her claim. [12] Counsel for Cool Ideas was constrained to accept that had it issued a summons against Ms Hubbard for payment of the consideration she could successfully have excepted to it (IS & GM Construction CC v Tunmer 2003 (5) SA 218 (W)). Here though, so it was contended, an arbitration intervened. That, so the contention proceeded, materially altered the situation. I cannot see how it does. For present purposes I shall assume, without deciding, that the arbitration award is a valid award. The purpose of the arbitration, as the arbitration agreement makes plain, was to determine the work that had been executed by Cool Ideas and the consideration to be paid by Ms Hubbard for such work. The arbitrator determined the consideration to be paid by Ms Hubbard to Cool Ideas and issued an award to that effect. It is that award that Cool Ideas seeks to have made an order of court. But that a court cannot do. For, as Innes CJ pointed out in Hoisain v Town Clerk, Wynberg 1916 AD 236 at 240 'It is sought to compel the Town Clerk to place the applicant's name upon the statutory list; he can only do that upon the grant of a certificate by the Council, which that body has definitely refused to give. Such a certificate is not in truth in existence. So that the Court is asked to compel the Town Clerk to do something which the Statute does not allow him to do; in other words we are asked to force him to commit an illegality. There can be no question of estoppel as far as he is concerned. His negligence cannot be a substitute for the Council's approval, nor can he by virtue of his mistake be compelled to bring about a position which he has no power in law to create by his own free will.' [13] The section makes it clear that a home builder may not act in that capacity at all without the requisite registration. If we were to find that notwithstanding a home builder having acted in conflict with the section he or she would nonetheless be entitled to payment of the consideration it seems to me that we would be giving legal sanction to the very situation that the legislature wished to prevent (Pottie v Kotze 1954 (3) SA 719 (A) at 726H). One of the objects of the Act is to protect members of the public who have to do business with home builders. The prohibitions in ss 10(1) and (2) and the penalties in s 21 are intended to make that protection effective. It accordingly matters not that an arbitration intervened. For, it seems to me, that even were Ms Hubbard not to have disputed Cool Ideas’ claim, the legislation operated to preclude a court from entering judgment in its favour. [14] Although not absolutely neccessary in the light of my approach to the matter, I nonetheless deem it prudent to briefly touch on some of the arguments advanced on behalf of Cool Ideas. First, much was sought to be made of the equities in this case. On a proper approach to the matter the equities hardly come into the reckoning because, simply put, the equities cannot be invoked with a view to in some way trumping an illegality. In S v Zuma & others 1995 (2) SA 642 (CC), Kentridge AJ stated (para 17): 'While we must always be conscious of the values underlying the Constitution, it is nonetheless our task to interpret a written instrument. I am well aware of the fallacy of supposing that general language must have a single "objective" meaning. Nor is it easy to avoid the influence of one's personal intellectual and moral preconceptions. But it cannot be too strongly stressed that the Constitution does not mean whatever we might wish it to mean. He added (para18): ‘. . . [i]f the language used by the lawgiver is ignored in favour of a general resort to "values" the result is not interpretation but divination.' Likewise, whilst it is always helpful to trawl through the old authorities and analogous cases for the general principles that they establish, those cannot be called in aid to do violence to the language of a statute by placing upon it a meaning of which it is not reasonably capable. It remains for the court considering the legislation to give effect to the object or purpose of the legislation (per Innes CJ, Dadoo v Krugersdorp Municipal Council 1920 AD 530 at 543). In all such instances where ss 10(1) or (2) finds application some building work would have been undertaken by the home builder. And although on the face of it, it may appear to work an injustice that a consumer should garner the benefit of those labours without having to compensate the home builder, that is the outcome that has been decreed by the legislature. It is one that is applicable to all home builders who have failed to register as such, not just those who may prove to be unscrupulous. It is thus wholly irrelevant that the work may have been undertaken with the necessary skill or that, as is the case here, the housing consumer happens to be a fairly sophisticated individual from one of the more affluent suburbs of Johannesburg rather than a historically disadvantaged resident from one of our poorer townships. I may add that whilst it is so that at first blush the equities appear to favour the home builder in this case, on more careful reflection that is not case. Cool Ideas undertook the construction of Ms Hubbard’s home without having been registered as a home builder. That it had not registered as such was information that was peculiarly within its knowledge. After disputes arose it proceeded to arbitration, with full knowledge that it suffered a legal impediment. It was only after the entire arbitration process had run its course and an award had issued that Ms Hubbard came to discover that Cool Ideas was not a registered home builder. Even then there was no pause for reflection on its part. Instead, it persisted, that revelation notwithstanding, in its endeavour to have the arbitration award made an order of court. It may thus be fairly said that Cool Ideas was very much the author of its own misfortune. In those circumstances I baulk at manifesting any sympathy for Cool Ideas, for to do so may well attract the epithet ‘maudlin’. [15] Second, it was argued that courts are obliged to show due deference to arbitration awards. But that is to mischaracterise the enquiry. It is important to recognise that we are not here dealing with whether an arbitrator’s award can and should be set aside. Rather the enquiry with which we are engaged is whether such an award can and therefore should be made an order of court, where to do so would admittedly fly in the face of a clear statutory prohibition. The legion of cases that distinguish between a court’s review as opposed to appeal power and emphasise the fairly limited grounds on which an arbitartion award can indeed be set aside, serve to obfuscate the present enquiry. That aside though, it seems to me, that it can hardly be expected of a court to show deference to an arbitration award in circumstances where for it to do so would result in it lending its imprimatur to an illegality. In those circumstances any such deference must necessarily yield to the deference that a court is obliged to show to the will of the legislature. It may well be that the arbitration is void ab initio. But I have specifically refrained from going that far. It suffices for present purposes to observe that had the point been taken before the arbitrator, I can hardly imagine that he could, simply in disregard of it, have proceeded to finalise the matter on the terms that he did. For, had he done so, it hardly seems likely that a court would have sat idly by were it to be called upon to review the award. I venture to suggest that it is the very antithesis of the rule of law for a court to simply disregard a clear legislative prohibition that neither party has sought to constitutionally impugn. Here the legislature has chosen, in its wisdom, not to vest the courts with a discretion as to whether or not to allow claims by home builders for consideration in circumstances where they have failed to register as such. All such claims, without exception, are hit by the prohibition. The language employed by the legislature could not have been clearer. And where the legislature, as here, has expressed itself in clear and unambiguous terms, a court cannot appropriate for itself a power that it does not have under the guise of ameliorating any perceived harshness that may result from the enforcement of that legislation. A court, no matter how well intentioned, is therefore not free simply on a whim to act in flagrant disregard of a statutory prohibition thereby rendering the will of the legislature nugatory. That, in my view, our Constitution does not countenance. [16] It follows that the appeal must succeed and it is accordingly upheld with costs. The order of the court below is set aside and in its stead is substituted the following: ‘The application is dismissed with costs.’ _________________ V PONNAN JUDGE OF APPEAL WILLIS AJA (dissenting): [17] I have had the benefit of reading the judgment of my brother Ponnan. I regret that we do not agree. After the appellant had filed her answering affidavit on 14 February 2011 in which she raised, for the first time, the issue of the respondent’s non- registration as a home builder, the respondent registered as such with effect from 11 March 2011. Mr Thihangwani Mudau, the provincial manager of the National Home Builders Registration Council, addressed co-operative letter to Mr Etienne Hayward of the appellant on 1 April 2011 in which he records that the appellant’s property had been re-enrolled with the council under the respondent’s name and that this had been necessary ‘in order to align the business model’ adopted by the respondent and Velvori Contruction CC with the requirements of section 10 of the Act. Mr Mudau added that: ‘This re-enrolment of the above stand has no impact on the protection afforded on home owners by the Act and though the membership of Velvori Construction expired on 14/11/2008 this has no bearing on the protection afforded to housing consumers’. There is nothing before us to indicate that the respondent had the requisite mens rea to conduct business unlawfully. [18] Lest it seem that my disagreement with my colleagues is unduly fractious or febrile, I should point out that the issue of what should be done when an act is prohibited by law has troubled even the ancients. An example of this is to found in Johannes Voet’s Commentarius Ad Pandectas1 where he says: 1 J Voet Commentarius Ad Pandectas (1723). ‘(i) Quorum omnium hanc rationem puto, quod in hisce aliisque similibus ipsam gestorum rescissionem majora sequerentur incommoda, majorque indecentia, quam ipsum actum contra leges gestum comitantur.’ 2 A little later, in the same section, Voet continues: ‘(ii) Hoc communis praxios fundamento niti putem, quod apud Groitium legitur, ita demum contra leges gesta ipso jure infirma esse, si id lex nominatim expresserit; vel ei, qui quid gessit aut fecit, gerendi facultatem & habiltatem denegaverit; vel denique id, quod gestum est, manifesta ac permanente turpitudine laboret.’3 Sir Percival Gane4 translated these passages as follows respectively: ‘(i) The reason for all these things is, I think, that in these and the like cases greater inconveniences and greater impropriety would follow on the actual rescission of the things done, than attend the actual thing done contrary to the laws. . . . (i) I should think that on this foundation of general practice rests what is found in Grotius, namely that things done against the law are only ipso jure invalid if the law has so expressed it in clear words; or has denied the capacity and ability of performance to him who has done or performed the thing; or finally if the act performed suffers from some obvious and ingrained disgrace.’ [19] In Standard Bank v Estate Van Rhyn,5 Solomon JA delivering the judgment of the court, referred to these passages to hold that care should be taken to ensure that ‘greater inconveniences and impropriety’ do not result than ‘would follow the act itself done contrary to the law’.6 When Solomon JA alluded to ‘inconveniences and impropriety’ he could just as well have said ‘injustices’. This case has been followed in innumerable cases since then, most recently, by this court, in Oilwell (Pty) Ltd v Protec International Ltd.7 2 At 1.3.16. 3 Ibid. 4 P Gane The Selective Voet being the Commentary on the Pandects vol 1 (1955) at 46-47. 5 Standard Bank v Estate Van Rhyn 1925 AD 266. 6 At 274. 7 Oilwell (Pty) Ltd v Protec International Ltd and others 2011 (4) SA 394 (SCA) para 19. [20] In The Effect of Illegality in South African Law, a Doctrinal and Comparative Study,8 Leon Trakman says: ‘Few areas of law reflect the problems inherent in the system of South African private law as readily as do the effects of illegality in contract. The law is essentially institutional, finding its basis in the ancient Roman law as interpreted by the glossators and commentators, as adopted into the Roman-Dutch law, and as finally reflected in the South African law. The system reflects the inevitable conflict between an attempt to remain as close as possible to the institutional writings upon which the substantive law is founded and the need to acknowledge the advent of changing circumstances. The court has to face situations not anticipated by the Roman and Roman-Dutch authorities, and advance the system accordingly in the interests of effectiveness, necessity, justice and expediency.’ The Roman and Roman-Dutch authorities could not have anticipated ‘modernity’. It is a term that eludes easy definition. Generally, it refers to the period (and the social conditions and processes) consequent upon the Enlightenment.9 It has been characterized by a belief that the world is capable of transformation through human intervention.10 The period is marked by the rise of capitalism, increasing complexity of economic institutions, industrial production, the market economy, large-scale social integration, the nation state and mass production.11 [21] If the old authorities could not have anticipated modernity, how much less so would they have had ‘postmodernism’ in mind? Postmodernism has ventured critiques of the rationalistic inheritance of the Enlightenment and the subsequent rise of modernism. It has been influenced by thinkers such as Thomas Altizer, Jean Baudrillard, Jacques Derrida, Michael Foucault, Jürgen Habermas, Søren Kierkegaard, Jean-François Lyotard, Robert Scharleman and Mark Taylor. Arising in response to the tragic history not only of the western world but also the failures of socialism in so much 8 L E Trakman ‘The effect of illegality in South African law – a doctrinal and comparative study’ (1977) 94 SALJ 327-341 and 468-482 at 327. 9 See for example, A Giddens Conversations with Anthony Giddens: Making Sense of Modernity (1998) at 94; R Leppert ‘The Social Discipline of Listening’ in J Drobnick (ed) Aural Cultures (2004) at 19-35; C Norris ‘Modernity’ in T Honderick (ed) The Oxford Companion to Philosophy (1995) at 583. 10 Ibid. 11 Ibid. of the world over the past century, postmodernism is characterised by cynicism, scepticism and an attack on the ‘complacencies’ of modernism. [22] All over the world, among the consequences of modernity, followed upon by ‘postmodern’ terms of reference, has been the regulation of our lives to an extent that would have been unimaginable a generation ago. Among the consequences of postmodernism is that formalism in law has come under scrutiny. The inaugural lecture of Christopher Forsyth, erstwhile professor of public law at the University of Cape Town and now of the University of Cambridge, provides a helpful understanding of the issue.12 [23] As Trakman points out in his article on the effect of illegality in contract, the root of the reluctance to give effect to contracts ‘tainted by illegality’ is to be found in the concept of certain contracts arising ex turpi causa (out of a wicked/evil purpose) and which are contra res publica (contrary to public policy) or contra bonos mores (contrary to good morals).13 For thousands of years, people have been building homes for others for ‘consideration’ without the benefit of section 10(1) of the Housing Consumers Protection Measures Act 95 of 1998 (the Act). Not only is there abundant evidence across the globe that, in general, builders have, in doing so, advanced the progress of the human race but also that most human beings have scant sense of ‘turpitude’ when houses are built by someone who is not registered as a ‘home builder’ in terms of the Act. [24] The long title of the Act provides that its purpose is, inter alia, ‘to make provision for the protection of housing consumers’. In plain English, the purpose of the Act is to protect from charlatans, carpetbaggers and confidence tricksters those who pay for homes to be built, either for themselves or for others. This is a purpose deserving of respect and support from the courts. To make this particular arbitration award an order of the court will not give impetus to the nefarious activities of any bogus builders. 12 C Forsyth ‘Showing the fly the way out of the flybottle: the value of formalism and conceptual reasoning in administrative law’ (2007) 66 Cambridge Law Journal 325. 13 Trakman supra at 328-329. See also Colonial Banking & Trust Co Ltd v Hill’s Trustee 1927 AD 488. [25] In Jajbhay v Cassim14 Watermeyer JA, who delivered the leading judgment of the court, gave a careful review of the old authorities as well as English law and concluded that, even in Roman law there were exceptions to the general rule that a court will not enforce an unlawful contract and that the need to prevent injustice was one of these exceptions.15 In that case Centlivres JA referred approvingly to a Scottish case in which the sale of potatoes had been illegal because it took place in contravention of a statute,16 Cuthbertson v Lowes17 and noted that the ‘pact [was] not so illicit that the Court could not look at it’. [26] In Sutter v Scheepers,18 Wessels JA, who delivered the judgment of the court, held that a court should consider the objects and scope of a statutory provision and if its terms were strictly carried out, this would lead to injustice, then that provision should be interpreted as being directory rather than peremptory.19 This case has been refered to with approval in innumerable cases and, in this court, most recently in Geue v Van der Lith.20 [27] Section 21 of the Act provides a criminal sanction for non-compliance with the section in contention. The principle of nulla poena sine lege (the principle of legality), to which the Constitutional Court referred with approval in S v Dodo,21 must apply. The word poena in Latin is difficult to translate into English. It means ‘punishment’ or ‘penalty’ but denotes, in general, a criminal sanction.22 In Scagell v Attorney-General, Western Cape,23 The Constitutional Court affirmed that it has long been recognised by our courts that, unless there are clear and convincing indications to the contrary in a statute, the prosecution will be required to prove the necessary mens rea on behalf of 14 Jajbhay v Cassim 1939 AD 537. 15 At 550-551. 16 At 558. 17 Cuthbertson v Lowes (1870) 7 Sc.L.R.706. 18 Sutter v Scheepers 1932 AD 165. 19 At 174. 20 Geue v Van der Lith 2004 (3) SA 333 (SCA) para 18. 21 S v Dodo 2001 (3) SA 382 (CC) para 13. 22 See, for example, the Oxford Latin Dictionary. 23 Scagell v Attorney-General, Western Cape 1997 (2) SA 368 (CC). the accused. 24The principle of legality suggests that, in the absence of mens rea court should be reluctant to visit a nullity upon a contravention of the provision. Jonathan Burchell, in both his South African Criminal Law and Procedure, General Principles of Criminal Law25 and his Principles of Criminal Law,26 renders the maxim as nullum crimen sine lege. Burchell refers to Pomorski’s American Common Law and the Principle Nullum Crimen Sine Lege.27 There is nothing in the record before us that shows that the respondent or its key actor, Etienne Hayward, had the requisite mens rea. This is a further factor that should be taken into account. [28] There are a number of cases taken from the law reports furnishing examples which suggest that, in the particular case before us, the appeal should be dismissed. In Pottie v Kotze28 Fagan JA, dealing with a Transvaal Ordinance which forbade the sale of a motor vehicle without a valid roadworthy certificate, referred to ‘serious inequities [that] might be caused, by the invalidation of the contract’29 and declined to vitiate the agreement in question. [29] In Swart v Smuts,30 Corbett JA, delivering the unanimous judgment of the court, referred to numerous cases before concluding: ‘Dit blyk uit hierdie en ander tersaaklike gewysdes dat wanneer die onderhawige wetsbepaling self nie uitdruklik verklaar dat sodanige transaksie of handeling van nul en gener waarde is nie, die geldigheid daarvan uiteindelik van die bedoeling van die Wetgewer afhang.’31 This may be translated as follows: It appears from these and other relevant authorities that the statutory provision in question does not even expressly provide that the intention of the legislature is that the validity of such a transaction is of null and void and of no force and effect. (My translation). 24 Para 33. 25 J Burchell South African Criminal Law and Procedure – General Principles of Criminal Law 4 ed (2011) at 34. 26 J Burchell Principles of Criminal Law 3 ed (2005) at 94. 27 S Pomorski The American Common Law and the Principle of Nullem Crimen Sine Lege 2 ed (1975). 28 Pottie v Kotze 1954 (3) SA 719 (A). 29 At 727B-C. 30 Swart v Smuts 1971 (1) SA 819 (A). 31 At 829E-F. The court confirmed that a deed of sale in conflict with the provisions of section 23(1)(b) of the Agricultural Credit Act 28 of 1966 was not invalid because it did not have a certificate that there was a reasonable prospect that the Land Bank would grant him credit. [30] In Noragent (Edms) Bpk v De Wet32 a full bench of the Transvaal Provincial Division consisting of Nestadt, O’Donovan and Van Niekerk JJ referred to Swart v Smuts to hold that an agreement between an estate agent and an owner of land was not invalid merely by reason of the fact that the estate agent had failed to comply with the provisions of section 26 of the Estate Agents Act 112 of 1976. [31] This decision was approved in Taljaard v TL Botha Properties33 where the court dealt with a similar matter. Nugent JA delivered the unanimous decision of the court in holding that ‘[i]t is well established that legislation is to be construed so as to interfere as little as possible with established rights’.34 [32] In the Oilwell v Protec case35 this court held that the failure to obtain prior consent from the treasury for an agreement falling under reg 10(1)(c) of the Exchange Control regulations36 promulgated under the Currency and Exchanges Act 9 of 1933 was, by reason of the principles set out in Standard Bank v Estate van Rhyn,37 not a nullity. Ponnan JA was a member of that court. [33] In Bekker v Schmidt Bou-Ontwikkelings CC,38 Yekiso J held of section 10 of the Housing Consumers Protection Measures Act that: ‘The Legislature could never have contemplated that failure or omission by the home builder, either deliberately or through ignorance, to comply with the provisions of the Act should result in 32 Noragent (Edms) Bpk v De Wet 1985 (1) SA 267 (T). 33 Taljaard v TL Botha Properties 2008 (6) SA 207 (SCA). 34 Para 8. 35 Supra. 36 Exchange Control Regulations, GN R1111, GG Extraordinary 123, 1 December 1961. 37 Supra. 38 Bekker v Schmidt Bou-Ontwikkelings CC and others 2007 (1) SA 600 (C). the invalidity of the agreement contemplated in s 13 of the Act and the prejudice of the housing consumer’.39 [34] One is mindful of the fact that Goldblatt J held in IS & GM Construction CC v Tunmer 2003 (5) SA 218 (W) that: ‘I am satisfied that the particulars of claim do not disclose a cause of action in that the plaintiff, in view of the facts pleaded, is obliged to allege that it is a registered home builder as defined in the Act, before it can receive any consideration.’40 If, by way of hypothetical example, the plaintiff had pleaded that it was not at the relevant time a registered home builder but had putatively been one, bona fide believing that it had been so registered, when it was not, owing to fraud and/or negligence in the registering office, would an exception still be upheld? In other words, non-registration as a home builder would not necessarily and in every instance result in a plaintiff not having a claim against its employer. The particular facts of any given case are always of the utmost importance. [35] There is a further consideration that militates against interfering with the order of the court a quo: the principle of judicial deference to arbitration awards. In Telcordia Technologies Inc v Telkom SA Ltd41 Harms JA delivering the judgment of this court affirmed the principle of party autonomy in arbitration proceedings and the need to minimise judicial intervention in arbitration proceedings.42 [36] In Boksburg Town Council v Joubert,43 which is particularly relevant , the court, in the context of an arbitration award, referred to both Doyle v Shenker & Co Ltd44 and Administrator, South West Africa v Jooste Lithium Myne (Eiendoms) Bpk45 to hold that a bona fide misinterpretation or an unintentional overlooking of a provision of a statute does not constitute a gross irregularity and affords no grounds for review. 39 Para 27. 40 At 220H-I. 41 Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA). 42 Para 4. 43 Boksburg Town Council v Joubert and others 1964 (4) SA 73 (T). 44 Doyle v Shenker & Co Ltd 1915 AD 233. 45 Administrator, South West Africa v Jooste Lithium Myne (Eiendoms) Bpk 1955 (1) SA 557 (A) at 569. [37] In Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews,46 the Constitutional Court affirmed the Telcordia judgment but emphasised the need for the courts to ensure that certain standards, including procedural fairness, had to be met to prevent injustice. Therein lies the control measure of application in undeserving cases where a builder was unregistered. The court had to consider a case where an application to have an order made an order of court in the High Court was granted. A counter application to review that decision was dismissed. This court dismissed the appeal. The majority supported the judgment of O’Regan J. Both she and Kroon AJ, supported the reasoning in the Telcordia case and affirmed the need for deference to arbitration awards. [38] Ever since Dickenson & Brown v Fisher’s Executors47 it has been our law that a mistake of law by an arbitrator does not permit interference by a court. This case has been affirmed in numerous cases: See, recently in this court: Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service48 and Total Support Management (Pty) Ltd v Diversified Health Systems (SA) (Pty) Ltd.49 [39] In Total Support Management, Smalberger ADP, delivering the unanimous judgment of this court affirmed that ‘even a gross mistake, unless it establishes mala fides or partiality, would be insufficient to warrant interference’.50 Smalberger ADP affirmed51 the correctness of decision of Mpati J in Patcor Quarries CC v Issroff52 to the effect that there was nothing to show the arbitrator’s mistake was gross and, accordingly, there could be no interference.53 46 Lufuno Mphaphuli & Associates (Pty) Limited v Andrews and another 2009 (4) SA 529 (CC). 47 Dickenson & Brown v Fisher’s Executors 1915 AD 166 at 174-176. 48 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (SCA) at 10E. 49 Total Support Management (Pty) Ltd and another v Diversified Health Systems (SA) (Pty) Ltd and another 2002 (4) SA 661 (SCA). 50 Para 17. 51 Para 25. 52Patcor Quarries CC v Issroff and others 1998 (4) SA 1069 (SE). 53 Mpati J’s judgment at 1079F-1082G. [40] In this case the mistake was unusual inasmuch as the same mistake was made not only by at least one of the parties but also by the arbitrator rather than concerning a rule of common law or a statutory provision that he was specifically called upon to decide. Elementary set theory in mathematics makes it plain that if three persons make the same mistake it remains as much a mistake as if it had been made by only one person or two. A mistake by an arbitrator does not become a non-mistake because the parties themselves made the same mistake. The mistake in question could conceivably have been made by any number of judges discharged from active service or senior counsel who act as arbitrators. [41] In Interciti Property Referrals CC v Sage Computing (Pty) Ltd,54 in a case concerning the making of an arbitrator’s award an order of Court, Zulman J referred to RPM Konstruksie (Edms) Bpk v Robinson55 and Hyperchemicals International (Pty) Ltd v Maybaker Agrichem (Pty) Ltd56 to hold that even if an arbitrator’s reasoning is flawed this is no reason not to make his award and order of court.57 [42] In Amalgamated Clothing and Textile Workers Union of South Africa v Veldspun (Pty) Ltd58 Goldstone JA said that the parties ‘abandon the right to litigate in courts of law and accept that they will be finally bound by the decision of the arbitrator.’59 [43] If one has regard to Natal Joint Municipal Pension Fund v Endumeni Municipality,60 recently decided in this court, it cannot be that the ‘purpose to which [the section] is directed’ is that in every instance the builder would be left empty handed. That could have unfortunate and unjust results. Not making the award an order of the court would be an unjust result in this particular case. The overall thrust of both the 54 Interciti Property Referrals CC v Sage Computing (Pty) Ltd and another 1995 (3) SA 723 (W). 55 RPM Konstruksie (Edms) Bpk v Robinson 1979 (3) SA 632 (C) at 636A-B. 56 Hyperchemicals International (Pty) Ltd and another v Maybaker Agrichem (Pty) Ltd and another 1992 (1) SA 89 (W). 57 At 727G-H. 58 Amalgamated Clothing and Textile Workers Union of South Africa v Veldspun (Pty) Ltd 1994 (1) SA 162 (A). 59 At 169F-G. 60 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) Para 18. majority and the minority judgments in National Credit Operator v Opperman and Others61 in favour of avoiding legislative sledgehammers provides me with final encouragement. [44] I should have dismissed the appeal with costs. _________________ N WILLIS ACTING JUDGE OF APPEAL 61 National Credit Operator and Others v Opperman 2013 (2) SA 1 (CC). APPEARANCES: For Appellant: A R G Mundell SC Instructed by: D J Greyling Incorporated Roodepoort Honey Attorneys Bloemfontein For Respondent: H H Cowley Instructed by: Chetty De Villiers Mafokoane Attorneys Roodepoort E G Cooper Majiedt Inc Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 28 May 2013 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Hubbard v Cool Ideas 1186 CC (580/12) [2012] ZASCA 71 (28 May 2013) Media Statement The Supreme Court of Appeal (SCA) handed down judgment today in an appeal from the South Gauteng High Court, Johannesburg. The matter involved a dispute between a housing consumer and a home builder that the former had contracted to undertake certain building works. In particular, the issue before the court was whether a court could make an arbitration award handed down in favour of the home-builder, which compelled the housing consumer to pay the home builder for the work that it had rendered, an order of court. As per the building contract between the parties, any dispute between the parties was to be referred to arbitration. The housing consumer, Ms Hubbard, complained about various aspects of the building work and claimed, what she asserted were the costs of the remedial work required to repair her house. Cool Ideas, the home builder, opposed that claim, and claimed payment of that portion of the contract sum that remained outstanding. The arbitrator found in favour of Cool Ideas and issued an award in its favour. Ms Hubbard failed to satisfy the arbitration award and as a consequence Cool Ideas applied to the South Gauteng High Court in terms of s 31 of the Arbitration Act 42 of 1965 for the award of the arbitrator to be made an order of court. That application was opposed by Ms Hubbard. The basis of her opposition was that Cool Ideas was not a registered home builder as it ought to have been in terms of the Housing Consumer Protection Measures Act 95 of 1998 (the Act), and was thus precluded by s 10 of that Act from, inter alia, receiving any consideration for such work from a housing consumer. In the High Court, Victor J granted Cool Ideas’ application and made the arbitration award an order of court. Leave to appeal that order was then obtained from the SCA by Ms Hubbard. The majority of the SCA (four judges) noted that sections 10(1) and (2) of the Act clearly disentitles an unregistered home builder from receiving any consideration for work done. The majority reasoned that to allow Cool Ideas’ claim would be in conflict with a clear statutory prohibition. Accordingly, so the judges held, to make the arbitrator’s award an order of court would mean that the court was placing its stamp of approval on an illegality, this is so regardless of where the equities may lie in that particular case. Put simply, according to the majority, where the legislature has ordained that certain conduct constitutes an illegality, a court is not empowered to simply disregard that. They accordingly upheld the appeal. --- ends ---

2683

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 499/2013 In the matter between: MONICA GEZINA COWIN NO FIRST APPELLANT ORIEL RAMPOLOKENG SEKATI NO SECOND APPELLANT SILVER TUNNEL INVESTMENTS 7 (PTY) LTD THIRD APPELLANT and KYALAMI ESTATE HOMEOWNERS ASSOCIATION FIRST RESPONDENT KYALAMI EQUESTRIAN CENTRE CC SECOND RESPONDENT THE MASTER OF THE HIGH COURT THIRD RESPONDENT THE REGISTRAR OF DEEDS, PRETORIA FOURTH RESPONDENT And ASSOCIATION OF RESIDENTIAL COMMUNITIES CC First Amicus Curiae NATIONAL ASSOCIATION OF MANAGING AGENTS Second Amicus Curiae Neutral citation: Cowin NO v Kyalami Estate Homeowners Association (499/2013) [2014] ZASCA 221 (12 December 2014) Coram: Maya, Theron, Saldulker JJA, Mocumie and Gorven AJJA Heard: 15 September 2014 Delivered: 12 December 2014 Summary: Land – a title condition in a deed of transfer which prohibits the transfer of immovable property without a clearance certificate or the consent of a homeowner’s association constitutes a real right – the title condition is thus binding on successors in title including the liquidators of the insolvent property owner – amounts owed by insolvent owner not ‘taxes’ as envisaged in s 89(5) of the Insolvency Act 24 of 1936. __________________________________________________________ ORDER ___________________________________________________________ On appeal from: South Gauteng High Court, Johannesburg (Mashile AJ sitting as a court of first instance): Save for the amendment of the order of the court below by the deletion of paragraph 36.1 thereof, the appeal is dismissed with costs including the costs of two counsel. ___________________________________________________________ JUDGMENT ___________________________________________________________ Maya JA: (Theron, Saldulker JJA, Mocumie and Gorven AJJA concurring): [1] This is an appeal against the judgment of the South Gauteng High Court, Johannesburg (Mashile AJ). The high court dismissed an application for an order declaring, inter alia, that a title condition contained in a deed of transfer prohibiting the transfer of immovable property registered in the name of the liquidated third appellant (the insolvent) without a clearance certificate from the first respondent (the association), confirming that all levies and penalties due to the latter had been paid, binds only the insolvent and the association and is not enforceable against the insolvent’s liquidators. [2] The first and second appellants are the insolvent’s joint liquidators. The insolvent, a company in liquidation, is the registered owner of Portion 2 of Erf 219, Kyalami Estates Extension 10 Township (the property) which it purchased before its liquidation. It is situated in a residential secured estate comprising 1106 residential units which was developed in accordance with the Township and Development Ordinance of the province. The estate is operated by the association. [3] In terms of the association’s constitution (constituted by its Memorandum and Articles of Association) its main business is ‘to promote, advance and protect the communal interest of the occupiers’ within the estate and in particular ‘to ensure acceptable aesthetic, architectural, environmental standards in the [estate], to promote security services and systems to ensure acceptable security standards within the [estate] and to maintain recreational facilities within the [estate]’.1 Its members consist of registered owners of all the dwelling units within the estate who automatically acquire such membership upon becoming owners.2 The members are bound to observe all rules made by the association’s trustees from time to time at a general meeting with regard to various matters of communal interest. These include restrictions on a member’s right to use his property as he pleases, the buildings, structures and installations which may erected on the property, levies imposed upon members for purposes of meeting all the expenses incurred or reasonably expected to be incurred by the association in the pursuit of its business, 1 Clause 2 of the Memorandum of Association. 2 Article 3.4 of the Articles of Association. fines imposed for non-compliance with the Articles and interest charged on any arrear levies.3 [4] The title deeds of each of the dwelling units, including the one in respect of the property,4 contain the following restrictive title conditions: ‘… [B2] Imposed by the KYALAMI EQUESTRIAN CENTRE CC [the second respondent] … for the benefit of [the association] and which are binding on the Transferee [the insolvent] and its Successors in title, namely: Every owner of the erf or any subdivision thereof or any interest therein or any unit thereon as defined in the Sectional Titles Act, shall automatically become and shall remain a Member of [the association] and be subject to its constitution until he ceases to be an owner as aforesaid. Neither the erf nor any subdivision thereof nor any interest therein nor any unit thereon shall be transferred to any person who has not bound himself to the satisfaction of such Association to become a Member of [the association]. The owner of the erf or any subdivision thereof or any interest therein or any unit thereon as defined in the Sectional Titles Act, shall not be entitled to transfer the erf or any subdivision thereof or any interest therein or any unit thereon without a clearance certificate from [the association] stating that the provisions of the Articles of Association of [the association] have been complied with.’ [5] The relevant provisions of the articles of association referred to in the title condition include: (i) clause 7.9 which provides that ‘No unit shall be capable of being transferred without a Certificate first being obtained from the Association confirming that all levies and interest have been paid up to date and including date of registration of transfer of a unit’; (ii) clause 7.8 which provides that ‘[a]ny amount due by a Member by way of fines, levy and / or interest shall be deemed to be a debt by him to 3 Articles 6.2, 7 and 8 of the Articles of Association. 4 Deed of Transfer No. T 165574/2004 dated 25 November 2004. the Association. The obligation of the Member to pay a levy and interest shall cease upon his ceasing to be a Member without prejudice to the Association’s rights to recover all arrear levies and interest. No fines, levies or interest paid by a Member shall under any circumstance be payable to the Association upon his ceasing to be a Member. A Member’s successor in title to a unit shall be liable from the date upon which he becomes a Member pursuant to the transfer of that unit, to pay the levy and interest thereon attributable to that unit’; (iii) clause 6 which provides that the ‘right and obligations of a Member shall not be transferrable …’; and (iv) clause 8.6 in terms of which any fine imposed upon any Member shall be deemed to be a debt due by the Member to the Association and shall be recoverable by ordinary civil process. [6] The insolvent registered three mortgage bonds over the property in favour of Absa Bank Ltd (Absa) in terms of which it declared ‘to bind specially … [the property] … subject to the conditions contained [in the deed of transfer] and especially to the reservation of rights to minerals and to the rights of [the association]’. After its liquidation on 8 June 2010, Absa obtained judgment against it and the property was also declared executable. Thereafter, the joint liquidators concluded an agreement of sale of the property with a third party, Oxter Construction Projects CC, for a purchase price of R2,25 million. The purchaser fulfilled its obligations under the agreement and the municipal rates clearance amounts were duly settled. However, the association refused to issue a clearance certificate to facilitate the transfer of the property before it had been paid a sum of R887 408,94 which comprised arrear levies. [7] The joint liquidators took the view that the association’s stance prejudiced the concursus creditorum, particularly the rights of Absa as the secured creditor over the property, and that any amounts due to the association could not supersede those of secured creditors who hold mortgage bonds over the immovable property. As far as they were concerned, the association was confined to proving its claim as a concurrent creditor in the insolvent estate. And they did not consider themselves at all bound by title condition B2 which they contended merely creates a personal relationship between parties to the agreement (the Articles of Association), ie the owner of the property and the association, and does not bind third parties upon liquidation. It is on that basis that they approached the high court, mainly for declaratory relief that would allow transfer of the property and its registration in a prospective purchaser’s name without the association’s consent. Among the relief sought was an order declaring that the amounts due by the insolvent do not constitute tax as defined in s 89(5) of the Insolvency Act 24 of 1936 (the Act). [8] The association and the amici curiae, which joined the fray as the only recognised representative bodies in the country for homeowners associations and managing agents, contended otherwise. They argued that the title condition, a convenient method to enable homeowners associations to maintain infrastructure and provide services to their members which does not offend public policy and enjoys longstanding and widespread registration and enforcement, constitutes a real right as it results in a subtraction from dominium of the property against which it is registered. It binds the owner of the property and his successors-in-title. Thus, in insolvency, it binds the liquidators of the insolvent estate, who in this case could not, in any event, extricate the insolvent from the restrictive condition or its contract with the association in respect of services pertaining to the property which could not be discontinued. The amounts due fell to be dealt with either as ‘costs of realisation’ in terms of s 89(1) of the Act read with ss 342 and 391 of the Companies Act 61 of 1973, or ‘costs of administration (liquidation)’in terms of s 197 of the Act read with ss 342 and 391 of the Companies Act or, otherwise, under the common law. The amici curiae also submitted that the interpretation of the title condition contended for by the joint liquidators would result in the arbitrary deprivation of the association’s property in the form of the real right in breach of s 25 of the Constitution. [9] This appeal, in which the issues remain the same as in the high court, was heard in this court together with Willow Waters Homeowners Association (Pty) Ltd & another v Koka NO & others,5 which is a matter similar to this one. The reasons given for upholding the appeal in that matter apply equally to this case. I do not, therefore, intend to repeat them here. Suffice it to say that I agree with the reasoning and conclusion of the high court except for the declaratory relief which it granted in respect of s 89(5) of the Act – that the moneys due to the association by the insolvent constitute ‘tax’ within the meaning of this section. Apart from the fact that the issue simply did not arise for determination as the association never contended that the amounts do constitute such tax, this court has expressly said that they do not in Barnard NO v Regspersoon van Aminie en ‘n ander.6 As for title condition B2, it does constitute a real right that is binding on the insolvent company and the joint 5 Willow Waters Homeowners Association (Pty) Ltd & another v Koka NO & others (768/13) [2014] ZASCA x (x 2014). 6 None of the parties contended that it does, correctly so in light of this court’s decision in Barnard NO v Regspersoon van Aminie en ‘n ander 2001 (3) SA 973 (SCA) paras 25-29. liquidators who stepped into its shoes consequent to its liquidation. For the same reasons stated in Willow Waters, it is not necessary to engage the constitutional argument. Accordingly, the appeal must fail with costs to follow the result. [10] In the result, the following order is made: Save for the amendment of the order of the court below by the deletion of paragraph 36.1 thereof, the appeal is dismissed with costs including the costs of two counsel. ________________________ MML MAYA JUDGE OF APPEAL APPEARANCES: For Appellants: FH Terblanche SC (JE Smith) Instructed by: Tim du Toit & Co Inc., Johannesburg Phatshoane Henney Attorneys, Bloemfontein For 1St Respondent: EA Limberis SC (A De Kok) Instructed by: Fluxmans Inc, Johannesburg Lovius-Block, Bloemfontein For Amicus Curiae: S Budlender Instructed by: Adams & Adams Attorneys, Pretoria Honey Inc, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 12 December 2014 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Cowin NO v Kyalami Estate Homeowners Association (499/2013) [2014] ZASCA 221 (12 December 2014) The Supreme Court of Appeal handed down judgment today in an appeal from the South Gauteng High Court, Johannesburg. The high court dismissed an application by the appellants (the liquidators of an insolvent company) for an order declaring, inter alia, that a title condition contained in a deed of transfer prohibiting the transfer of immovable property registered in the name of the liquidated third appellant (the insolvent) without a clearance certificate from the first respondent (the association) confirming that all levies and penalties due to the latter had been paid, binds only the insolvent and the association and is not enforceable against the insolvent’s liquidators. The insolvent company had purchased a property prior to its liquidation, which property is operated by the association. It had registered three mortgage bonds over the property in favour of Absa Bank Ltd (Absa), which were made subject to the conditions contained in the deed of transfer. After its liquidation, Absa obtained judgment against it and the property was also declared executable. Thereafter, the joint liquidators concluded an agreement of sale of the property with a third party. The purchaser fulfilled its obligations under the agreement and municipal rates clearance amounts were duly settled. However, the association refused to issue a clearance certificate to facilitate the transfer of the property before it had been paid a sum comprising arrear levies. The joint liquidators took the view that the association’s stance prejudiced the concursus creditorum, particularly the rights of Absa as the secured creditor over the property, and that any amounts due to the association could not supersede those of such secured creditors. The association was thus confined to proving its claim as a concurrent creditor in the insolvent estate. The liquidators further contended that the conditions in the title deed merely created a personal relationship between parties to the agreement (being the owner of the property and the association) and does not bind third parties upon liquidation. The liquidators then approached the high court, mainly for declaratory relief that would allow transfer of the property and its registration in a prospective purchaser’s name without the association’s consent. Among the relief sought was an order declaring that the amounts due by the insolvent do not constitute tax as defined in s 89(5) of the Insolvency Act 24 of 1936 (the Act). The association and the amici curiae (the only recognised representative bodies in the country for homeowners associations and managing agents) argued that the title condition constitutes a real right as it results in a subtraction from dominium of the property against which it is registered. It binds the owner of the property and his successors-in-title. Thus, in insolvency, it binds the liquidators of the insolvent estate. The amounts due fell to be dealt with either as ‘costs of realisation’ in terms of s 89(1) of the Act read with ss 342 and 391 of the Companies Act 61 of 1973, or ‘costs of administration (liquidation)’in terms of s 197 of the Act read with ss 342 and 391 of the Companies Act or, otherwise, under the common law. The amici curiae also contended that the interpretation of the title condition contended for by the joint liquidators would result in the arbitrary deprivation of the association’s property in the form of the real right in breach of s 25 of the Constitution. Before this Court, the appeal was heard together with the similar matter of Willow Waters Homeowners Association (Pty) Ltd & another v Koka NO & others. The reasons given for upholding the appeal in that matter apply equally to this case. In sum, this Court agreed with the reasoning and conclusion of the high court except for the declaratory relief which it granted in respect of s 89(5) of the Act – that the moneys due to the association by the insolvent constitute ‘tax’ within the meaning of this section. Apart from the fact that the issue simply did not arise for determination as the association never contended that the amounts do constitute such tax, this court has expressly said that they do not in Barnard NO v Regspersoon van Aminie en ‘n ander. As for the relevant title condition, it does constitute a real right that is binding on the insolvent company and the joint liquidators who stepped into its shoes consequent to its liquidation. For the same reasons stated in Willow Waters, it is not necessary to engage the constitutional argument. In the result, the appeal fails with costs to follow the result.

3779

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 969/2020 In the matter between: JOHANNES G COETZEE & SEUN FIRST APPELLANT DANIEL CORNELIUS COETZEE SECOND APPELLANT and PIETER PAUL LE ROUX FIRST RESPONDENT JOHANNA CATHARINA LE ROUX SECOND RESPONDENT Neutral citation: Johannes G Coetzee & Seun and Another v Le Roux and Another (969/2020) [2022] ZASCA 47 (8 April 2022) Coram: MOCUMIE, SCHIPPERS, DLODLO, CARELSE and HUGHES JJA Heard: 22 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 10h00 on 8 April 2022. Summary: Prescription – extinctive prescription – ‘facts from which the debt arises’ in terms of s 12(3) of the Prescription Act 68 of 1969 – knowledge of legal consequences not required by s 12(3) of the Prescription Act – Alienation of Land Act 68 of 1981 – failure to comply with s 2(1) of the Alienation of Land Act. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Northern Cape Division of the High Court, Kimberley (W J Coetzee AJ, sitting as court of first instance): The appeal is upheld with costs. The order of the high court is set aside and substituted with the following: ‘The special plea of prescription is upheld with costs and the plaintiffs’ action is dismissed with costs.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Mocumie JA (Schippers, Dlodlo, Carelse and Hughes JJA) [1] This appeal is about extinctive prescription, in particular whether the creditor must be aware of the full extent of its rights before prescription may start running against it. [2] The first and second respondents, Mr Pieter Paul le Roux and his wife, Ms Johanna Catharina le Roux, who were the plaintiffs in the Northern Cape Division of the High Court, Kimberley (the high court), instituted action against the first and second appellants, Johannes G Coetzee & Seun and Mr Daniel Cornelius Coetzee, who were the defendants therein, and which were the respondents’ erstwhile attorneys. The respondents sued the appellants for damages suffered as a result of a breach of a mandate. For convenience, hereafter the parties will be referred to as they were in the high court. [3] The plaintiffs alleged that the defendants were negligent in carrying out their mandate to exercise an option to purchase a farm in Calvinia, in the Northern Cape (the property), from the late Mr Jan Harmse Steyn (the deceased), who had concluded the option to purchase (the option) with the plaintiffs. Notwithstanding the existence of the option and unknown to the plaintiffs, on 8 July 2003, the deceased and his wife concluded a written deed of sale with Mr Paul Nel (Mr Nel) in terms of which the deceased sold the property to Mr Nel at a purchase price of R141 000. On 13 September 2003, the deceased passed away. On 16 September 2003, the property was transferred to Mr Nel. [4] On 14 October 2004, in an attempt to enforce the option, the plaintiffs issued summons against Mr Nel, as the first defendant therein, and Mr Alwyn Johannes Müller NO, the attorney of the deceased’s estate, as the second defendant therein, claiming transfer of the property and damages. Mr Nel pleaded to the summons admitting receipt of the second plaintiff’s letter purporting to exercise the option, but disputing the validity thereof. On 11 September 2009, Williams J (Northern Cape high court) dismissed the action with costs on the basis that the option was not executed in terms of the provisions of s 2(1) of the Alienation of Land Act 68 of 1981. The plaintiffs unsuccessfully appealed against the judgment of Williams J in this Court.1 Subsequently, on 29 September 2009, the plaintiffs issued summons against the defendants in the high court in respect of the matter which forms the subject of this appeal. In this action, the defendants delivered a special plea in terms of which they pleaded that the plaintiffs’ claim had prescribed. Thereafter, the parties agreed to submit a special case on prescription for adjudication, first, in terms of rule 33(4).2 [5] Before the high court, in their special plea of prescription, the defendants alleged that the plaintiffs’ claim had prescribed for the following reasons: more than three years had elapsed since the debt became due before summons was served; that the content of Mr Nel’s plea (para 4) in respect of the action before Williams J should have alerted the plaintiffs to the nature of the defendants’ breach and the fact that the option was not exercised in terms of the provisions of s 2(1) of the Alienation of Land Act; and that had their new attorneys, NME Nilssen & Associates, conducted themselves in the manner expected of reasonable attorneys, they would have become aware of the plaintiffs’ claim against the defendants. [6] In their replication, the plaintiffs alleged that they acquired knowledge of the identity of the debtor and the facts from which the debt arose only in early November 1 The judgment is reported as Le Roux and Another v Nel and Another [2013] ZASCA 109 (SCA). 2 Rule 33(4) of the Uniform Rules of Court entitles a court to try issues separately in appropriate circumstances. It is aimed at facilitating the convenient and expeditious disposal of litigation. 2007, during the cross-examination of the first plaintiff in the action against Mr Nel; alternatively, on 11 September 2009, when the judgment of Williams J was handed down. Accordingly, they alleged that prescription began to run only in early November 2007, or on 11 September 2009, and that the summons served in October 2009 interrupted prescription. [7] The high court (Coetzee AJ) found that the alleged ‘debt’ arose from a breach of an implied term of a mandatory contract;3 and that from the evidence of the first plaintiff, it was clear that the first plaintiff only came to know of the provisions of s 2(1) of the Alienation of Land Act during the trial in the action instituted by the plaintiffs against Mr Nel, being in early November 2007. Furthermore, the high court held4 that the non-compliance with the provisions of s 2(1) of the Alienation of Land Act is a fact of which the defendants had to have had knowledge, and not a legal conclusion. Therefore, the high court concluded that ‘[s]ave for relying on the submission that the plaintiffs should have been alerted to the breach by the contents of Nel’s plea, [of 23 December 2004], the defendant[s], bearing the onus, did not place anything before [Coetzee AJ] which justifies a conclusion that the plaintiffs did not act as expected of a reasonable [person]’. Notably, the high court considered the recent judgment of this Court, Fluxmans Incorporated v Levenson,5 and held that it is distinguishable on the facts. It thus dismissed, with costs, the defendants’ special plea of prescription. [8] Before this Court, the parties agreed to have their appeal resolved on the basis of a statement of agreed facts, as the original record was missing. The statement reads: ‘33. The Appellants contend that prescription in respect of the Respondents’ claim against them began to run as soon [as] the Option expired on 12 November 2003 when they lost their entitlement to acquire the Property at the purchase price stipulated in the Option, alternatively, within a reasonable time, being one month, of the appointment of Nilssens Attorneys as the Respondents’ attorneys. The Appellants contend that because the Respondents knew that Mr Coetzee purported to exercise the Option on their behalf and knew that he did not have their written authority to do so, prescription commenced to run from the very moment that the Option lapsed, alternatively, on 23 July 2005 being one month after the appointment of Attorneys 3 Also called a contract of mandate. 4 Para 31 of the high court judgment. 5 Fluxmans Incorporated v Levenson [2016] ZASCA 183; [2017] 1 All SA 313 (SCA); 2017 (2) SA 520 (SCA). Nilssens as the Respondents' attorneys. 34. The Appellants contend that the Respondents’ knowledge that Mr Coetzee purported to exercise the Option on their behalf and that he did so without their written authority constituted knowledge of the facts from which the debt arose as contemplated in section 12(3) of the Prescription Act 68 of 1969 ("the Prescription Act”) and that the commencement of the running of prescription was not delayed by the provisions of section 12(3). In other words, the Appellants contend that the Respondents’ lack of knowledge and/or appreciation that Mr Coetzee's lack of authority amounted to a failure to comply with section 2(1) of the Alienation Act and their Iack of knowledge and/or appreciation that such failure to comply with section 2(1) of the Alienation Act had the consequence that Mr Coetzee’s purported exercise of the Option on the Respondents' behalf was ineffectual, were not facts contemplated by section 12(3) of the Prescription Act and that the running of prescription would not be delayed until the Respondents became aware of them. They were the legal consequences of the facts which were within the knowledge of the Respondents and were not required to be known by the Respondents before the running of prescription could commence. 35. The Appellants’ alternative contention is that, even if it is found that the Respondents' lack of knowledge and/or appreciation that Mr Coetzee's lack of authority amounted to a failure to comply with section 2(1) of the Alienation Act and that it had the consequence that his purported exercise of the Option was invalid, the Respondents could have acquired knowledge thereof by exercising reasonable care on 22 June 2005 when Nilssens Attorneys were appointed as their attorneys, or within a reasonable period thereof, and would be deemed to have such knowledge by virtue of the proviso to section 12(3) of the Prescription Act.’ [9] To the contrary, the plaintiffs contend that: ‘36. [T]hey only became aware that Mr Coetzee had breached his mandate when the consequences of his failure to comply with the requirements of section 2(1) of the Alienation Act, and of the fact that Mr Coetzee's attempted exercise of the Option on their behalf was invalid, were for the first time drawn to the attention of the First Respondent during his cross examination early in November 2007. The Respondents furthermore contend that the failure to comply with section 2(1) and the resulting invalidity of the exercise of the Option are facts of which the Respondents were required to be aware in order for the running of prescription to commence in terms of section 12(3) of the Prescription Act. The Respondents therefore contend that prescription did not commence to run against them until November 2007. 37. The alternative contention is disputed on the basis that [the] Appellants seek to impute to the Respondents the knowledge and conduct of their agent (Nilssens Attorneys) for the purpose of the enquiry in terms of section 12(3) of the Prescription Act. The Respondents contend that this is not permissible. Additionally, the Appellants have failed to establish a factual foundation for their alternative contention.’ [10] This appeal, therefore, calls for an examination of s 12(3) of the Prescription Act 68 of 1969, which provides: ‘(1) Subject to the provisions of subsections (2), (3), and (4), prescription shall commence to run as soon as the debt is due. (2) If the debtor wilfully prevents the creditor from coming to know of the existence of the debt, prescription shall not commence to run until the creditor becomes aware of the existence of the debt. (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. (4) . . .’ [11] The words ‘debt’ and ‘the debt is due’ are not defined in the Prescription Act. Neither are the words ‘knowledge of . . . the facts from which the debt arises’. All of these terms, however, have been given meaning and defined in context by this Court and the Constitutional Court, and are followed by courts in general. In Mtokonya v Minister of Police,6 Zondo J states the following at para 36: ‘Section 12(3) does not require the creditor to have knowledge of any right to sue the debtor nor does it require him or her to have knowledge of legal conclusions that may be drawn from “the facts from which the debt arises”. Case law is to the effect that the facts from which the debt arises are the facts which a creditor would need to prove in order to establish the liability of the debtor.’7 [12] In Minister of Finance and Others v Gore NO,8 this Court said: ‘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 . . . .’9 (My emphasis.) 6 Mtokonya v Minister of Police [2017] ZACC 33; 2017 (11) BCLR 1443 (CC); 2018 (5) SA 22 (CC). 7 See also Links v Department of Health, Northern Province [2016] ZACC 10; 2016 (5) BCLR 656 (CC); 2016 (4) SA 414 (CC) paras 30-35; and Truter v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) paras 16-19. 8 Minister of Finance and Others v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA); 2007 (1) SA 111 (SCA). 9 Ibid para 17. [13] In Yellow Star Properties 1020 (Pty) Ltd v MEC: Department of Development Planning and Local Government, Gauteng,10 this Court, inter alia, said: ‘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’.11 [14] In Claasen v Bester,12 this Court had to consider the same issue. It referred to its previous decisions in Truter and Another v Deysel13 and Gore,14 and said that these cases: ‘[Made] it abundantly clear that knowledge of legal conclusions is not required before prescription begins to run. . .. The principles laid down have been applied in several cases in this court, including most recently Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning and Local Government, Gauteng [2009] 3 All SA 475 [2009 (3) SA 577 (SCA)] para 37 where Leach AJA said that if the applicant “had not appreciated the legal consequences which flowed from the facts” its failure to do so did not delay the running of prescription.’15 [15] In Fluxmans,16 this Court confirmed that s 12(3) of the Prescription Act does not require knowledge of legal conclusions on the part of a creditor before a debt can be said to be due. Both the majority and the minority judgments were agreed on this: that an agreement being invalid is not a fact, but a legal conclusion.17 That seems to be the same as to say that conduct that is wrongful and actionable is a legal conclusion and not a fact. [16] Recently, in MEC for Health, Western Cape v M C,18 this Court stated: ‘Prescription begins to run when the debt in question is due, that is, when it is owing and payable. . . . . . . [O]nly the requirement of knowledge of “the facts from which the debt arises” needs to be considered. These are the minimum essential facts that the plaintiff must prove in order to succeed with the claim. See Truter and Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 10 Yellow Star Properties 1020 (Pty) Ltd v MEC: Department of Development Planning and Local Government, Gauteng [2009] ZASCA 25; [2009] 3 All SA 475 (SCA); 2009 (3) SA 577 (SCA). 11 Ibid para 37. 12 Claasen v Bester [2011] ZASCA 197; 2012 (2) SA 404 (SCA). 13 Truter and Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA). 14 Footnote 10 above. 15 Ibid para 15. 16 Footnote 4 above. 17 Ibid paras 10, 32 and 40-44. 18 MEC for Health, Western Cape v M C [2020] ZASCA 165 (SCA) paras 6-7. (SCA) paras 16, 18, 19 and 22; Minister of Finance and Others v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA); 2007 (1) SA 111 (SCA) para 17 and the footnotes thereto; Mtokonya v Minister of Police [2017] ZACC 33; 2017 (11) BCLR 1443 (CC); 2018 (5) SA 22 (CC) para 48. Legal conclusions, such as the invalidity of a contract or that the delictual elements of negligence or wrongfulness have been established, are not facts. Neither is the evidence necessary to prove the essential facts. See Truter v Deysel paras 17 and 20 and Mtokonya paras 44-45 and 50-51.’ [17] More recently, in McMillan v Bate Chubb & Dickson Incorporated,19 this Court held: ‘The period of prescription begins to run against a creditor when the creditor has the minimum facts which are necessary to institute action. As this Court recently held in Fluxmans Incorporated v Levenson: “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)).”.’ (Original emphasis.) Most recently, similar views were expressed in Van Heerden & Brummer Inc v Bath.20 19 McMillan v Bate Chubb & Dickson Incorporated [2021] ZASCA 45 (SCA) paras 38-39. 20 Van Heerden & Brummer Inc v Bath [2021] ZASCA 80 (SCA). [18] In an application where a special plea of prescription is raised, there are two enquiries that must take place, as set out in MEC for Health, Western Cape.21 First, the determination of the primary facts, on one hand, and on the other hand, the knowledge or deemed knowledge thereof. This means that once the facts from which the debt arose (the primary facts) have been determined, the enquiry turns to the creditor’s knowledge of the primary facts. It is important to be cognisant of some overlap of facts between these two distinct enquires postulated in s 12(3) of the Prescription Act.22 [19] The case for the plaintiffs on the stated facts is that they only became aware of ‘the facts from which the debt arises’ when their attention was for the first time drawn to those facts during the cross-examination of the first plaintiff early in November 2007. Thus, prescription did not commence to run against them until November 2007. However, in the particulars of claim it is stated that the plaintiffs’ consulted the second defendant on 26 September 2003, after the deceased had passed away on 13 September 2003, to exercise the option on their behalf. And the second defendant had told them he would write to Mr Müller. This is later confirmed in the statements of agreed facts, at paras 9-10 where it is stated that ‘on or about 26 September 2003, the [plaintiffs] . . . mandated [Mr Coetzee] . . . to exercise the Option on their behalf. . . . and [Mr Coetzee] said that he would send a letter to [the attorney, Mr Muller]’. Furthermore, that before the plaintiffs left the second defendant’s office, Mrs le Roux had asked him whether it was necessary to sign anything, to which the second defendant responded that it was not. These are the primary facts within their specific knowledge. [20] To my mind, on the common cause facts gathered from the statement of agreed facts, the pleaded case as reflected in the particulars of claim and the founding affidavit, the plaintiffs had the required knowledge of the facts on or about 26 September 2003. This was when the plaintiffs mandated the second defendant to exercise the option on their behalf and he told them that he would send a letter to the attorney, Mr Müller, and they did not sign anything. Apart from this, they became aware 21 Footnote 20 above. 22 Ibid para 8. of the essential facts when they suffered damages when the option lapsed on 13 November 2003. Their cause of action against the defendants was thus complete on the latter date. Alternatively, the latest, objectively, that they should reasonably have had the requisite knowledge was when they terminated their mandate with the second defendant and instructed Mr Nilssen, their new attorney, in January 2005. This qualifies as deemed knowledge within the contemplation of s 12(3) of the Prescription Act. That the plaintiffs were unaware of the provisions of s 2(1) of the Alienation of Land Act until early November 2017, cannot be a fact from which their claim arose. But instead, it is a legal conclusion. On this basis, applying the principle extrapolated from the above precedents, the contention that the plaintiffs only became aware of the facts from which the debt arose during the cross-examination in early November 2007 cannot be correct. [21] In conclusion, on these facts, it is clear that the plaintiffs had the minimum facts from which they needed to institute their claim on 26 September 2003, or when the option expired on 13 November 2003. But even after that date, at the latest, by January 2005. It was not required of them to know more about the Alienation of Land Act and compliance with it. Only that they had mandated the defendants to act on their behalf, and they did not do so. This means that the plaintiffs’ claim prescribed before summons was served on 26 September 2009. [22] The plaintiffs’ remaining contention that prescription began to run on 13 September 2009 when the judgment by Williams J was handed down, can be dealt with briefly. The dictum by Moseneke J in Eskom v Bojanala Platinum District Municipality,23 applied most recently in Van Heerden & Brummer Inc,24 provides a complete answer, where it is stated that: ‘. . . [T]here is no merit in the contention advanced on behalf of the plaintiff that prescription began to run only on the date the judgment of the SCA was delivered. The essence of this submission is that a claim or debt does not become due when the facts from which it arose are known to the claimant, but only when such claimant has acquired certainty in regard to the law and attendant rights and obligations that might be applicable to such a debt. If such a construction were to be placed on the provisions of section 12(3) grave absurdity would arise. These provisions regulating prescription of claims would be rendered nugatory and ineffectual. 23 Eskom v Bojanala Platinum District Municipality and Another 2003 JDR 0498 (T) at 11-12. 24 Footnote 23 above para 17. Prescription periods would be rendered elastic, open ended and contingent upon the claimant’s subjective sense of legal certainty. On this contention, every claimant would be entitled to have legal certainty before the debt it seeks to enforce becomes or is deemed to be due. In my view, legal certainty does not constitute a fact from which a debt arises under s 12(3). A claimant cannot blissfully await authoritative, final and binding judicial pronouncements before its debt becomes due, or before it is deemed to have knowledge of the facts from which the debt arises.’ [23] These numerous authorities cited indicate that the exercise to determine and distinguish a question of fact from a question of law when determining whether prescription has started to run, is not an easy task that should be dealt with mechanically. It cannot simply be predetermined on the basis of previous cases. Zondo J appreciated this difficulty when he stated as follows in Mtokonya: ‘The distinction between a question of fact and a question of law is not always easy to make. How difficult it is will vary from case to case.’25 [24] In the light of the conclusion that I have reached, it is unnecessary to consider the alternative argument, ie whether the knowledge of their attorney, Mr Nilssen, should be imputed to the plaintiffs. [25] In the result, the following order is issued: The appeal is upheld with costs. The order of the high court is set aside and substituted with the following: ‘The special plea of prescription is upheld with costs and the plaintiffs’ action is dismissed with costs.’ _________________ B C MOCUMIE JUDGE OF APPEAL 25 Footnote 9 above para 38. APPEARANCES For the appellants: G F Porteous Instructed by: Savage Jooste & Adams, Pretoria Symington & De Kok Incorporated, Bloemfontein For the respondents: C Cutler Instructed by: NME Nilssen & Associates, Cape Town Mayet & 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 Johannes G Coetzee & Seun and Another v Le Roux and Another (969/2020) [2022] ZASCA 47 (8 April 2022) The Supreme Court of Appeal (SCA) today upheld an appeal with costs, and set aside the decision of the Northern Cape Division of the High Court, Kimberley (W J Coetzee AJ, sitting as court of first instance) (the high court). The first and second respondents, Mr Pieter Paul le Roux and his wife, Ms Johanna Catharina le Roux, who were the plaintiffs in the high court, instituted action against the first and second appellants, Johannes G Coetzee & Seun and Mr Daniel Cornelius Coetzee, who were the defendants therein, and which were the respondents’ erstwhile attorneys. The respondents sued the appellants for damages suffered as a result of a breach of a mandate. For convenience, the parties were referred to as they were in the high court. On 29 September 2009, the plaintiffs issued summons against the defendants in the high court whereby the plaintiffs alleged that the defendants were negligent in carrying out their mandate to exercise an option to purchase a farm in Calvinia, in the Northern Cape (the property), from the late Mr Jan Harmse Steyn (the deceased), who had concluded the option to purchase the property (the option) with the plaintiffs. In the action, the defendants delivered a special plea in terms of which they pleaded that the plaintiffs’ claim had prescribed. Thereafter, the parties agreed to submit a special case on prescription for adjudication, first, in terms of rule 33(4). The appeal was thus about extinctive prescription, in particular whether the creditor must have been aware of the full extent of its rights before prescription could have started to run against it. The SCA found that on the common cause facts gathered from the statement of agreed facts, the pleaded case as reflected in the particulars of claim, and the founding affidavit, the plaintiffs had the required knowledge of ‘the facts from which the debt arises’ on or about 26 September 2003. This was when the plaintiffs mandated the second defendant to exercise the option on their behalf and he told them that he would send a letter to the deceased’s attorney, Mr Müller, and they did not sign anything. Apart from this, they became aware of the essential facts when they suffered damages when the option lapsed on 13 November 2003. Their cause of action against the defendants was thus complete on the latter date. Alternatively, the latest, objectively, that they should reasonably have had the requisite knowledge was when they terminated their mandate with the second defendant and instructed Mr Nilssen, their new attorney, in January 2005. This qualified as deemed knowledge within the contemplation of s 12(3) of the Prescription Act 68 of 1969. The SCA found further that the fact that the plaintiffs were unaware of the provisions of s 2(1) of the Alienation of Land Act 68 of 1981 until early November 2017, could not have been a fact from which their claim arose. But instead, it was a legal conclusion. On this basis, applying the principle extrapolated from the considered precedents, the SCA found that the contention that the plaintiffs only became aware of the facts from which the debt arose during the cross-examination in early November 2007 could not have been correct. The SCA thus held that the plaintiffs’ claim prescribed before summons was served on 26 September 2009. Further, that it was not required of the plaintiffs to have known more about the Alienation of Land Act and compliance with it. Only that they had mandated the defendants to act on their behalf, and they had not done so. ~~~~ends~~~~

3150

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT REPORTABLE CASE NO 183/06 In the matter between THE JOINT MUNICIPAL PENSION FUND First Appellant THE MUNPEN RETIREMENT FUND Second Appellant and LJ GROBLER First Respondent THE PENSION FUNDS ADJUDICATOR Second Respondent THE REGISTRAR OF PENSION FUNDS Third Respondent J MAHLANGU NO Fourth Respondent C MÜLLER NO Fifth Respondent _____________________________________________________________________ CORAM: HOWIE P, NUGENT, HEHER, PONNAN JJA et MUSI AJA _____________________________________________________________________ Date Heard: 1 March 2007 Delivered: 30 March 2007 Summary: Pension fund- whether rules validly empower amendment depriving member of ‘established benefit’ – whether decision to amend and validity of amendment can be subject of ‘complaint’ under Pension Funds Act 24 of 1956 to Pension Funds Adjudicator – whether decision to amend reviewable by High Court in this case. Neutral Citation: This judgment may be referred to as The Joint Municipal Fund v LJ Grobler [2007] SCA 49 (RSA) _____________________________________________________________________ HOWIE P HOWIE P [1] Until his retrenchment the first respondent, Mr Lodewyk Jacobus Grobler, was in the employ of the first appellant, the Joint Municipal Pension Fund and a member of the second appellant, the Munpen Retirement Fund. I shall mostly refer to the appellants as ‘the JMPF’ and ‘Munpen’ respectively and I shall refer to the first respondent by his surname. [2] Just under 14 months before Grobler’s retrenchment Munpen’s trustees, at the request of the JMPF, amended Munpen’s rules and procured registration of the amendment by the registrar of Pension Funds under the Pension Funds Act 24 of 1956 (the Act). The rules provide for a retrenchment benefit. Crucial to the calculation of Grobler’s benefit was the rules’ definition of ‘pensionable service’. Before amendment the definition was such that all Grobler’s years in municipal service prior to employment with the JMPF fell to be included in determining his ‘pensionable service’. The effect of the amendment was that his pensionable service for purpose of calculating his retrenchment benefit was limited to the six and a half years of his employment with the JMPF. The result, needless to say, was that he was paid a very considerably reduced retrenchment benefit. [3] In terms of rule 49 of Munpen’s rules, amendments are permitted at any time provided, among other things, that ‘the value of an established benefit before such amendment shall not be decreased ...’ (There is a provision allowing for a decrease if the fund is in financial difficulties. It is irrelevant in this case.) [4] Aggrieved by this outcome, Grobler laid a series of complaints at various times before the Pension Funds Adjudicator, an official appointed under the Act to deal with complaints against a pension fund organisation. (Both appellants are pension fund organisations.) Essentially, Grobler was throughout concerned about the computation of his eventual benefit and that concern was inevitably coupled with the assertion or implication that his benefit had been invalidly reduced by a rule amendment in conflict with rule 49. [5] The Adjudicator decided that because the rule amendment had been registered he had no jurisdiction to consider Grobler’s complaint about the rule amendment and conveyed that decision to him. [6] Grobler thereafter applied successfully on review to the High Court at Pretoria (R Claassen J) for an order which was granted in terms that may be summarised as follows: 1. The Adjudicator’s decision was set aside. 2. Munpen’s trustees’ decision to amend the rules was set aside. 3. The Registrar was ordered to cancel registration of the amended rules. 4. It was declared that Grobler had ‘an established right regarding the acknowledgement of his years of pensionable service’ before employment with the JMPF and that right was ‘unlawfully ... reduced’. (the order repeated the notice of motion in the quoted respects.) 5. He was entitled to compensation for the full period of his ‘pensionable service’ within the meaning of the rules prior to amendment. 6. The JMPF was ordered to pay him R1 596 681 with interest. 7. Munpen was ordered to pay him certain interest. 8. The JMPF and Munpen were ordered to pay the costs. [7] Leave to appeal to this Court was granted by the Court below to the JMPF, Munpen and the Registrar. The grounds on which leave was granted were confined to those raised by the JMPF and Munpen. [8] Of the grounds advanced in the heads of argument for the JMPF and Munpen their senior counsel (who was not involved in drawing the heads) limited his submissions to the following. The first was to the effect that the amendment did not violate rule 49 because Grobler had, by the time of the amendment, not yet acquired an established benefit. Secondly, it was contended that the application before the High Court was a review of the Adjudicator and as the Adjudicator had no power in law to decide upon the validity of rule amendments, and therefore had no jurisdiction in that regard, the court equally had no jurisdiction. Thirdly, in the course of presenting the second submission counsel remarked that in so far as the application was a review of the JMPF and Munpen it had to have been brought under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and was outside the time limit laid down in that statute. [9] The argument that Grobler had no ‘established benefit’ was based essentially on those well known authorities and writings which deal with vested rights as opposed to conditional rights. (It was not suggested that if he had an established benefit it did not have a value nor that the amendment had not decreased its value.) [10] In the commonly encountered language of insurance contracts and pension or provident funds a benefit, generally speaking, can mean the actual financial payment which the insured or fund member will eventually receive on the occurrence of the future event in respect of which the benefit is payable. And accepting that it is only then that the beneficiary becomes entitled to payment, it is only then that a right to the payment can come into being. However, rule 49 does not speak of a right but a benefit. Moreover, a right, whether vested or conditional, implies an otherwise specific and unqualified entitlement. Conceptually a right does not permit of reduction. If one has a right to payment of a specific amount then it is a right to no more and no less. Again speaking generally, a right is in this context subject only to its being conditional or having vested. Accordingly, the principles of vesting of rights do not in my view provide the answer. I say so for the following reasons. [11] As I have indicated, what the rules of the fund provide for are called ‘benefits’. They become payable on the occurrence of specific events – retirement or death or physical incapacitation or retrenchment. In each case the benefit that becomes payable is calculated according to a formula. (I deal later with the formula for the calculation of the retrenchment benefit.) It suffices to say that in each case a benefit continually increases the longer the member remains a member of the fund. In some cases the benefit also increases in steps from time to time as the member ages or the member’s period of pensionable service increases (as in the case of the retrenchment benefit). [12] Naturally there can be no certainty which of those events – if any at all – will occur while the member belongs to the fund. The member might even resign before any of them occur. But in planning for the eventuality of retirement or death or medical disability or retrenchment a member will, when planning, naturally take account of the value of the benefits that by that time have accumulated and be payable should one of the events occur immediately. The important point is that a benefit is calculable not only when it becomes claimable on occurrence of the relevant event. Its accumulated value at an earlier time is also calculable. [13] Accordingly the reference in rule 49 to ‘established benefit’ is, in my opinion, a reference to the benefit that has accumulated at the time the amendment is made. It is not a reference to the right to claim a benefit that has finally matured. As indicated, that right might never arise. An interpretation of rule 49 according to which the trustees, on the eve of an event that would entitle a member to claim the benefits that have accumulated during his or her membership of the fund, are empowered to amend the rules so as to remove or reduce such benefits, is one which would permit an intolerable injustice. One can only conclude that the framers of the rule could never have intended it to have that meaning. What the rule means, I consider, is that the trustees may amend the rules in such a way that further benefits will not accumulate from the time the amendment is made (which will enable the member to make other arrangements to replace them) but that the member may not be deprived of benefits that have accumulated by the time the amendment is made. To find for the appellants in this regard would sanction an interpretation that would be in direct conflict with the purpose of a pension fund, which is, after all, to enable members to plan for the occurrence of the various events for which benefits are provided. [14] Grobler was employed by several municipalities. He entered municipal service in 1974 and left it when he became employed by the JMPF on 1 October 1996 as its Financial Manager. [15] In his time as a municipal employee he was a member of the JMPF. In 1993 the Commissioner ruled that because the JMPF was not a local authority its employees could not enjoy the tax benefits then available to members of municipal retirement funds. They therefore had to give up membership of the JMPF. The ruling, which gave rise to the establishment of Munpen, was later withdrawn subject to conditions. The upshot was that employee-members of the JMPF were permitted to switch membership to other funds and so retain what had been their tax benefits. One of the other funds was the Municipal Gratuity Fund (MGF). A window period was provided by the Commissioner for the switch. Although not yet an employee of the JMPF, Grobler took advantage of the opportunity to switch funds and retain the tax benefits. He became a member of the MGF. In terms of the respective rules of the JMPF and the MGF he had a transfer value in the JMPF which took into account his municipal pensionable service up to that time. Then, when he left municipal service he became entitled under the rules of the MGF to a withdrawal benefit equal to his funds credit in the MGF. On entering the employ of the JMPF he was obliged to become a member of Munpen but because Munpen benefits were taxable he did not transfer his MGF withdrawal benefit to Munpen but invested it privately. [16] It was on the basis that Grobler had already received the benefits referred to in the preceding paragraph in respect of his years of municipal service that the appellants sought to say in the papers that the rule as unamended served to advantage him unduly, which advantage was an unintended consequence. That attitude serves to strengthen the impression one gains from the record that the rule amendment was aimed specifically at Grobler. Be those considerations as they may, they do not conduce to solve the issues raised by the appeal. Any unintended consequence might be capable of correction in an appropriate way but not by an amendment in conflict with rule 49. [17] Rule 36 of Munpen’s rules is headed “DISCHARGE OWING TO RE-ORGANISATION’ and provides for two categories of retrenchment benefit. One is for a member with at least 10 years’ pensionable service and the other for a member with less than 10 years. For each category a detailed formula is provided by which to calculate the amount that will eventually be payable on maturation of the right to the benefit. But it is also possible to calculate the current value of the benefit at any prior stage, for example, on the supposition that retrenchment were to follow calculation virtually immediately. In either category the member will be entitled to his or her member’s share of the pension fund plus two specified amounts payable by the employer. In the case of a member with 10 or more years’ pensionable service one of those amounts is equal to three months’ pensionable emoluments. The other amount is the product of multiplying a x b x c where a is the member’s average annual pensionable emoluments over the last three years of pensionable service, b is the member’s pensionable service plus additional service (the latter is defined and need not be considered for present purposes), and c is a specified factor allocated to the member’s age (there is a factor for every age from 20 to 64). [18] In the case of a member with less than 10 years’ pensionable service there will be payable by the employer, firstly, an amount equal to (a x b)-c where a is 20 percent of the member’s annual pensionable emolument over the last three years’ of pensionable service, (or the full period if less than three), b equals the pensionable service, and c equals the member’s share. Secondly, the employer will pay six months’ pensionable emoluments. (There is a qualification in this latter regard which need not be considered.) [19] What the disputed amendment did, as I have indicated, was to limit Grobler’s pensionable service for purposes of rule 36 to the period from 1 October 1996 until his retrenchment took effect, which was on 1 June 2003. Before amendment his pensionable service included his years of municipal service. [20] Had this been a case where the benefit eventually payable in the event of retrenchment were not calculable until occurrence of that event it might not have been possible to calculate a present value. It would also not have been possible to say that any benefit was ‘established’ prior to such occurrence. However, that is clearly not the case here. As at the date of the amendment one could calculate the amount which Grobler would have been entitled to had he been retrenched on that date. The fact that he was not retrenched till later does not mean that there was as yet no benefit that was ‘established’. By simply applying the criteria applicable to the first category of retrenchment benefits it was possible to determine that whatever his eventual entitlement on retrenchment, he had at the least by the date of amendment notched up enough years of service to establish, as a minimum benefit value, the sum which those criteria yielded as on that date. [21] Of course, as I have said, he had to be retrenched to be entitled to be paid a benefit and the right to claim it might, seen as at the date of the amendment, never have accrued but that cannot save the amendment from invalidity. What is determinative is whether the benefit had become established, not whether the right to claim it had accrued. The question is: ‘Did the amendment decrease the value of an established retrenchment benefit?’ and to answer that question one has to assume that retrenchment would have ensued. Were it otherwise the fund’s trustees could, on the eve of retirement or retrenchment, withdraw accumulated benefits and simply shrug their shoulders the following day. The unfairness would be manifest. [22] I conclude, therefore, that the amendment was in conflict with rule 49 and consequently invalid. [23] Turning to the submission that the court had no jurisdiction because the Adjudicator had no power to rule on the validity of the amendment, his powers and functions are limited to what is provided for in the Act. His main object is to dispose of complaints in a procedurally fair, economical and expeditious manner.1 A complaint is defined.2 The definition reads: ‘complaint’ means a complaint of a complainant relating to the administration of a fund, the investment of its funds or the interpretation and application of its rules, and alleging – (a) that a decision of the fund or any person purportedly taken in terms of the rules was in excess of the powers of that fund or person, or an improper exercise of its powers; (b) that the complainant has sustained or may sustain prejudice in consequence of the maladministration of the fund by the fund or any person, whether by act or omission; (c) that a dispute of fact or law has arisen in relation to a fund between the fund or any person and the complainant; or (d) that an employer who participates in a fund has not fulfilled its duties in terms of the rules of the fund, ...’ 1 Section 30D. 2 Section 1. [24] In Meyer v Iscor Pension Fund 3 this court considered a complainant’s grievance professedly based on maladministration under para (b) of the definition. The complaint was that the fund’s rules were amended in breach of its fiduciary duty to members by discriminating against them and by frustrating certain alleged legitimate expectations. The fund’s answer was that this was not a complaint as defined because it did not amount to maladministration. Maladministration, it was argued, had to be confined to the administration of the fund contrary to its rules and did not include rule amendments. The judgment reads4 ‘Though I am inclined to agree with the meaning of the term “maladministration” contended for by the fund, I find it unnecessary to come to any final conclusion on this issue since Meyer’s objection falls within the ambit of para (a) of the definition of a “complaint”. Paragraph (a) of the definition contemplates an objection ‘that a decision of the fund ... purportedly taken in terms of the rules [of the fund] ... was an improper exercise of [the fund’s] powers”. That would, in my view, include Meyer’s objection that the way in which rule 6.2 was amended amounted to an improper exercise of the fund’s powers under rule 12.8.’ [25] With respect, although a decision to amend a fund’s rules would indeed be a decision ‘in terms of the rules’ if its rules did empower amendments, the question whether a complainant’s case is a complaint as defined is not limited to determining whether it fits any of the instances in paragraphs (a) to (d). To be a complaint as defined it has also to conform 3 2003 (2) SA 715 (SCA). 4 Para [23] at 730H-J. to what is stated in the preamble to the definition. It must, in other words, while alleging one or more matters described in paragraphs (a) to (d), nevertheless also concern one of the three subjects stated in the preamble: (i) administration of the fund, (ii) investment of its funds, or (iii) interpretation and application of its rules.5 None of those three subjects entails the making or validity of rule amendments. It follows that the Adjudicator had no power to consider Grobler’s complaint in so far as it involved the amendment or its validity. In taking the view that the Adjudicator had that power the Court below, with respect, erred. [26] Another regard in which the learned Judge erred, in my opinion, was in connection with the Adjudicator’s position vis à vis the Registrar. There could be no problem, once the court held the amendment invalid, in ordering the Registrar to cancel registration of the amended rule, as was ordered. However, in arriving at the conclusion that that was what had to be done the Court referred to the Adjudicatior’s power under s 30E(1)(a) of the Act to ‘make the order which any court of law may make’ and proceeded to say that ‘the Adjudicator was at liberty and should have instructed the registrar to cancel such registration’. [27] Plainly the Adjudicator can only ‘make the order which any court of law may make’ in respect of a matter within his competence. As I have said, a rule amendment and its validity are beyond that competence. So, 5 Shell and BP SA Petroleum Refineries v Murphy NO 2001 (3) SA 683(D) at 690D-E without any doubt, is an instruction by the Adjudicator to the Registrar to cancel a rule registration. Not surprisingly, the Registrar appeared by counsel before us to contest the view adopted by the learned Judge. Nevertheless what the registrar’s counsel did not object to was the cancellation order granted by the Court below on the basis that the amendment was invalid. [28] The Adjudicator’s lack of jurisdiction to consider the rule amendment would have been fatal to the High Court application had the latter been confined to reviewing the Adjudicator or had the other relief claimed been only in the alternative to reviewing the Adjudicator. The application was not so confined and the relief sought against the other parties cited was not claimed in the alternative. There are, it is true, passages in the founding affidavit consistent with the relief against the other parties having been sought on the footing that the decision of the Adjudicator was to be set aside. As against those, there are annexures, including letters from Grobler’s attorney to JMPF and Munpen, squarely raising the matter of the invalid amendment and its effect on his established retrenchment benefit. Even when addressing the Adjudicator the attorney made it clear that if the Adjudicator lacked jurisdiction an application would be made to the High Court for appropriate relief. There is also a paragraph in the founding affidavit stating that the purpose of the application was, inter alia, ‘to grant the relief in the Notice of Motion’. Finally, one finds in the notice of motion an unqualified prayer for an order reviewing and setting aside the decision of Munpen’s trustees relative to the disputed amendment. In the circumstances I consider that the application to the court below was sufficiently framed to include review relief such as is within the ambit of PAJA even though PAJA is not referred to. [29] I have mentioned that counsel for the appellants remarked that a review application under PAJA was out of time. In this respect there are detailed submissions in the appellants’ heads but they were not urged before us in argument. The Munpen decision sought to be reviewed was dated 13 February 2002. Quite patently Grobler and his attorney thought that a complaint to the Adjudicator had to be exhausted before all else, provided he had jurisdiction. In that regard matters dragged unduly, not least because the office of Adjudicator was not filled for some while. Initially they were advised that he did have jurisdiction and they awaited his decision. When the new Adjudicator took office his final response, dated 19 November 2004, was that he had no jurisdiction. This was received by Grobler’s attorney on 2 December 2004. The application to the court below was launched in January 2005. [30] PAJA requires a judicial review to be brought without unreasonable delay and in any case within 180 days after, inter alia, exhaustion of internal remedies. Despite the absence in law of the supposed internal remedy of recourse to the Adjudicator it seems to me that the interests of justice warranted the Court below’s decision to entertain the application. (See s 9 of PAJA.) [31] It follows that Grobler was entitled to an order setting aside the invalid amendment, as was indeed granted. Because the declaratory relief took the matter no further it should not have been granted. And the monetary relief was not appropriate to be dealt with on the affidavits filed, nor was it appropriate relief to grant on review. The order of the court below therefore requires amendment and the parties must be left to deal as they are advised with the issues which flow from the setting aside of the rule amendment. Finally, there was no justification for ordering, as part of the costs order, that the appellants pay the costs of proceedings before the Adjudicator. There was no attack on this aspect by them but they should not be penalised for Grobler’s misdirected efforts to secure relief before the Adjudicator. (Because the order of the court below, as issued, also contains clerical errors it will be re-drawn.) [32] Given the outcome of the appeal, the order against the Registrar must stand. Grobler rightly sought no costs order against him. [33] Despite the need to amend the order of the Court below the appellants’ essential object was to argue for the amendment’s validity and as they have failed they must bear the costs of appeal. [34] It remains to mention that the Registrar was out of time in filing his notice of appeal and his heads of argument. He was required to ask for condonation, the grant of which is appropriate in the circumstances. He must bear the costs, including the costs of Grobler’s opposition. [35] The following order is made: A. The order of the court below is amended to read as follows ‘1. An order is granted reviewing and setting aside: 1. The decision of the trustees of the third respondent as requested by the second respondent and taken on 13 February 2002. “... dat slegs pensioengewende diens by die laaste werkgewer in ag geneem word vir doeleindes van herorganisasie.” 2. The decision of the trustees of the third respondent of 13 February 2002 to amend the definition of pensionable service (“pensioengewende diens”) in the rules of the third respondent, as requested by the second respondent, to the effect that only pensionable service of the member of the third respondent with his last employer be regarded as pensionable service at the date of termination of the member’s service with his employer for purposes of Rule 36 of the rules of the third respondent (dismissal because of reorganisation), unless the employer and the member agrees otherwise.’ 2. The sixth respondent is ordered to cancel the registration of the amended rules of the third respondent registered by him on 6 May 2002. 3. The second and third respondents are ordered to pay the costs of this application jointly and severally the one paying the other to be absolved.’ B. Subject to the order in A, the appeal is dismissed with costs. C. The third respondent is granted condonation but ordered to pay the costs of the application for condonation as also the first respondent’s costs of opposition. _____________________ CT HOWIE PRESIDENT SUPREME COURT OF APPEAL CONCUR: NUGENT JA PONNAN JA MUSI AJA HEHER JA: [36] I have read the judgment of Howie P. I respectfully disagree with his conclusion that Mr Grobler possessed an ‘established benefit’ the value of which was decreased by the amendment to the rules. My reasons can be succinctly stated. [37] To understand the use of the word ‘established’ in relation to a benefit it is necessary to examine the rule which brings the benefit into operation. Thereby one will determine when and under what circumstances a potential benefit reaches that degree of certainty, security and permanence which is inherent in the meaning of the word.6 [38] The benefit of which Grobler was said to have been deprived was the benefit of a pension on retrenchment following on a re-organisation by his employer. The earliest date at which a member can qualify for a benefit under the re-organisation rule must set the outer limit of when such a benefit can properly be described as ‘established’. The relevant pension fund rule (rule 36(1)) provides as follows (omitting matters irrelevant to this judgment): ’36. DISCHARGE OWING TO RE-ORGANISATION (1) If a MEMBER’S service is terminated owing to a reduction in, or re- organisation of staff, or to the abolition of his post, or in order to effect 6 The Shorter OED sub nom ‘establish’: 1. To render stable or firm; 2. To fix, settle, institute or ordain permanently; 3. To set up on a secure basis; To set up or bring about permanently; 6. To place beyond dispute; to prove. improvements in efficiency or organization, or owing to retrenchments in general, he shall be entitled to his MEMBER’S SHARE on the date of his leaving service, plus the following amount payable by the EMPLOYER concerned: (a) in the case of a MEMBER who has at least ten years’ PENSIONABLE SERVICE, (i) an amount equal to . . .’ Subrule (b) goes on to provide in equivalent fashion for a member who has less than ten years’ pensionable service. [39] The rule makes it clear that in order for a potential beneficiary to qualify for a benefit on re-organization three factual requirements must be satisfied (once again I limit the analysis to what is relevant to Grobler’s case): (1) membership of the fund at the time of the termination of service; (2) retrenchment in consequence of a re-organisation; (3) the requisite minimum years of pensionable service. [40] The third factual element does not on its own qualify a beneficiary for the benefits of the rule. Unless and until the other two elements are present it is impossible to know which, if any, members will be adversely affected and who consequently surmounts the jurisdictional requirements of the rule. No matter how probable any of the three requirements may appear in advance it cannot be assumed in advance that any will be satisfied: the potential beneficiary may die or leave the service of his employer for many other reasons before that happens, or the rule may no longer set the same qualifying criteria as a result of further amendments in the interim. [41] In Grobler’s case the amendment to the rule was passed long before the re-organisation took place which resulted in his retrenchment. At that time he did not qualify for the benefits of rule 36(1) and no-one could say that the likelihood of his doing so was anything more than an uncertain future event. The corollary was, of course, that he could not validly have objected to the amendment because he could not at that time have proved that he was a qualified member. [42] The matter may also be approached from a different angle. The amendment changed the qualifying conditions (relating to ‘pensionable service’) for a benefit on re-organisation. But it did so before Grobler himself qualified for such a benefit. At the time he had accrued no right to have any future determination of his benefits on retrenchment decided according to the rules before the amendment. In this regard his case is in my view analogous to that of the attorney’s clerk who entered into articles on a particular statutory basis but found that during his articles the law was amended to change the qualifications for admission: Browne v Inc Law Society of Natal 1968 (3) SA 535 (N) at 539H-540H. See also Chairman, Board on Tariffs & Trade v Volkswagen of SA (Pty) Ltd 2001 (2) SA 372 (SCA) per Nienaber JA at 380D-F and per Harms JA at 387F- I. It is only in this sense that I think that vested rights have anything to contribute to the decision of this case. [43] For these reasons I find that the amendment did not reduce the value of any established benefit in favour of Grobler. The appeal should accordingly be upheld and judgment of the court a quo set aside. As this is a minority judgment it is unnecessary to be more specific in this regard. ___________________ J A HEHER JUDGE OF APPEAL

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL JOINT MUNICIPAL PENSION FUND AND ANTOHER v LJ GROBLER AND OTHERS FROM: The Registrar, Supreme Court of Appeal Date: 30 March 2007 Status: Immediate Little over a year before retrenchment of its Financial Manager, Mr LJ Grobler, JMPF (Joint Municipal Pension Fund) asked Munpen Retirement Fund, which all its employees belonged to, for an amendment of Munpen’s rules. The request was implemented. The rules provided for a retrenchment benefit. They also barred an amendment reducing the value of an ‘established benefit’. Crucial to the calculation of the value of Grobler’s retrenchment benefit was the definition in the rules of ‘pensionable service’. Before amendment the definition would have allowed inclusion of all Grobler’s 22 years in municipal service before he joined JMPF. The amendment’s effect was to limit his pensionable service for the purposes of calculating his benefit to the just more than 6 years of his time with JMPF. As a result his retrenchment benefit was vastly reduced. Grobler successfully applied to the High Court at Pretoria for an order setting aside the rule amendment as invalid because it reduced the established accumulated value of his benefit. JMPF and Munpen appealed to the SCA, arguing that Grobler had no established benefit when the rules were amended. The SCA confirmed that the amendment was invalid. It held that although at the time of the amendment Grobler did not yet have the right to claim the benefit, the rules did not speak of reducing an established right but an established benefit. According to the calculation formula contained in the rules he clearly had an accumulated and calculable benefit when the amendment was made. That benefit was invalidly reduced. Its effect was felt when he was retrenched. The SCA emphasised that when pension fund members plan their financial futures they take account of the benefits that have accumulated up to the time they do their planning. If the rules had to be interpreted so that on the eve of retirement accumulated benefits could be removed or reduced the result would be an intolerable injustice.

2236

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 479/08 GERHARD VAN DER WESTHUIZEN Appellant and THE STATE Respondent Neutral citation: Van der Westhuizen v The State (479/08) [2009] ZASCA 48 (22 MAY 2009) Coram: CLOETE, SNYDERS JJA and GRIESEL AJA Heard: 06 MAY 2009 Delivered: 22 MAY 2009 Summary: Condonation – failure to prosecute appeal in compliance with the rules – explanation for delay and prospects of success evaluated ORDER On appeal from: High Court, Pretoria (Claassen and Basson JJ sitting as court of appeal from a regional court): The appeal against the refusal of the application for condonation is dismissed. The order by the court a quo dismissing the appeal is set aside. JUDGMENT SNYDERS JA: (CLOETE JA and GRIESEL AJA concurring) [1] This is an appeal against the refusal of condonation by the High Court in Pretoria (Claassen and Basson JJ). The appellant applied for condonation as he had failed to comply with several rules of court in the prosecution of his appeal. The matter is before this court as the appellant exercised his automatic right of appeal that arises from s 21(1)1 of the Supreme Court Act 59 of 1959 (despite the provisions of s 20(4)2) as explained in S v Gopal 1993 (2) SACR 584 (A) at 585c-d:3 ‘. . . indien ‘n persoon in die landdroshof aan ‘n misdryf skuldig bevind en gevonnis word en sy appèl na die Provinsiale (of, indien van toepassing, die Plaaslike) Afdeling van die Hooggeregshof misluk, mag hy alleen met die nodige verlof na hierdie Hof appelleer. As hy egter sou nalaat om sy eerste appèl na behore voort te sit en dit nodig is om kondonasie te verkry (soos bv vir die laat aantekening van appèl) en dié aansoek misluk, het hy ‘n outomatiese reg van appèl teen die afwys van sy aansoek na hierdie Hof.’ [2] The appeal that the appellant sought to pursue in the court a quo was from the Special Commercial Crimes Court for the Regional Division of the Northern Transvaal in Pretoria, where he was convicted of fraud and 1 Section 21(1): ‘In addition to any jurisdiction conferred upon it by this Act or any other law, the appellate division shall, subject to the provisions of this section and any other law, have jurisdiction to hear and determine an appeal from any decision of the court of a provincial or local division.’ 2 Section 20(4): ‘No appeal shall lie against a judgment or order of the court of a provincial or local division in any civil proceedings or against any judgment or order of that court given on appeal to it except – (a) in the case of a judgment or order given in any civil proceedings by the full court of such a division on appeal to it in terms of subsection (3), with the special leave of the appellate division; (b) in any other case, with the leave of the court against whose judgment or order the appeal is to be made or, where such leave has been refused, with the leave of the appellate division.’ 3 See also S v Moosajee 2000 (1) SACR 615 (SCA) at 615i-j and 618d-h; S v Farmer 2001 (2) SACR 103 (SCA) at 104d-i. sentenced to five years’ imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act 51 of 1977 (CPA). The appellant appealed against his conviction and sentence. His appeal was enrolled in the court a quo on 30 January 2006. On that day it was struck off the roll due to the fact that no heads of argument were filed and there was no appearance by the appellant, or on his behalf. [3] On 14 June 2006 the appellant launched an application for condonation. In that application he sought the re-instatement and enrolment of his appeal, condonation for the failure to appear in his appeal on 30 January 2006 and condonation for the lateness of the application for condonation. This application was heard and dismissed on 13 August 2007. [4] When an application for condonation is considered the court has to exercise a judicial discretion upon a consideration of all the relevant facts. Factors such as the degree of non-compliance, the explanation for the delay, the prospects of success, the importance of the case, the nature of the relief, the interests in finality, the convenience of the court, the avoidance of unnecessary delay in the administration of justice and the degree of negligence of the persons responsible for non-compliance are taken into account. These factors are interrelated, for example, good prospects of success on appeal may compensate for a bad explanation for the delay.4 [5] This court is only entitled to interfere with the discretion exercised by the court a quo if it was done capriciously or upon a wrong principle, if it has not brought an unbiased judgment to bear on the question or has not acted for substantial reasons.5 [6] The appellant was obliged to file heads of argument in his appeal before the end of December 2005.6 He failed to do so. There was no 4 S v Mohlathe 2000 (2) SACR 530 (SCA) at 535g-536a; S v Leon 1995 (2) SACR 594 (C) at 595 e-h; Harms Civil Procedure in the Supreme Court at B-182. 5 S v Leon 1996 (1) SACR 671 (A) at 672j-673h. 6 One month prior to 30 January 2006 in terms of Transvaal Rule 8(1) read with rule 51(4) of the Uniform Rules of Court. appearance on his behalf on 30 January 2006. To have his appeal re-instated and re-enrolled those failures had to be condoned.7 He waited until 14 June 2006 to lodge an application for condonation. [7] The appellant explains that the reason for these failures is that there was ‘an innocent misunderstanding’ between him and his attorney which caused him not to contact his attorney, not to place his attorney in funds and caused his attorney to assume that he was not interested in prosecuting his appeal. [8] As a consequence of his appeal having been struck off the roll, the appellant was contacted during March 2006 and instructed to hand himself over in order to start serving his sentence. This prompted him to contact his attorney for the first time since his conviction and sentence in December 2002. He also suggests that he had been unable to make contact with a certain Erasmus, whose existence he claims to be vital to his appeal, until two months prior to the application for condonation when he ‘serendipitously’ came upon Erasmus’ business card, which enabled him to make contact. [9] In the appellant’s own words he explains the misunderstanding as follows: ’8 Immediately following my conviction, I discussed the matter with my attorney and instructed him regarding my appeal. As I recall, part of the reason for the appeal inter alia concerned the magistrate’s finding that a certain person whom I referred to in my evidence did not exist. This person is a Mr. Pieter Erasmus (“Mr. Erasmus”), who is more commonly known as Rassie Erasmus, and who is employed by the National Intelligence Service. It was necessary and of utmost and crucial importance for the purposes of my appeal that I furnish further instructions to my legal representatives regarding the existence of Mr. Erasmus. It has always been my contention that I was the victim of an elaborate “sting”, orchestrated by Boer Barnard during which I was convinced that I needed to open an account for the entity known as “Proliferation Intelligence Services”. At the time I verily believed that Proliferation Intelligence Services was a part of the South African Intelligence Services in the general sense. It was also my version before the court a quo that Mr. Erasmus was a member 7 Uniform Rules of Court, rule 27. of the National Intelligence Service and that I had first met him when approached to open the account. This was material in my recommendation to Dunlop to open the account against which the first accused perpetrated the fraud. When the presiding officer had found that Mr. Erasmus did not exist, he had done so on the basis of the evidence of an official of the National Intelligence Service who indicated that no such person was employed by the National Intelligence Service. I wish at this early juncture to humbly submit that this finding of the court a quo was, inter alia, a material misdirection. As such, an adverse (and I humbly submit wrong) finding in respect of my credibility had been made, and I submit that this had played a significant role in my conviction in the matter. I had advised my attorney that Mr. Erasmus does exist, contrary to the evidence of the official from the National Intelligence Service (and as will become apparent during the course of this affidavit, my attorney, Mr. Wayne Venter from Lindsay Keller & Partners, has indeed spoken to Mr. Erasmus). As such, it was necessary for me to consult with both my attorney and counsel regarding this issue and to amend the Notice of Appeal and acquire the necessary affidavits relating to the actual existence of Mr. Erasmus of the National Intelligence Service. The period during which these events transpired was shortly before Christmas, and I was scheduled to go on annual leave with my family. I did not believe that there was any necessity to consult with my legal representative over Christmas and New Year, when they in any event would not have been available, in particular Mr. Van der Sandt, who had been involved in the matter from the outset. I therefore advised my attorney that I would contact him, only in the event of it being necessary, at a stage subsequent to my return from holiday. Upon my return from holiday, and in the mistaken belief that the matter was being dealt with by my legal representatives, I did not deem it necessary to contact my attorney. My attorney was however labouring under the impression that I had specifically undertaken to contact him subsequent to my return from holiday. In the premises, and in the light of the facts as set forth hereinabove, it is my humble submission that, already at that early juncture, an innocent misunderstanding had prevailed between myself and my attorney, which ultimately led to the matter being struck off the roll.’ [10] The explanation carries the seeds of its own destruction. The appellant’s subjective belief that it was ‘necessary and of utmost and crucial importance’ that he furnish instructions to his attorney for the purpose of his appeal (para 10) belies his allegation that he did not deem it necessary to contact him (para 17). [11] From December 2002 until March 2006 the appellant, on his own version, did absolutely nothing to pursue his appeal: he did not contact his attorney, he did not place his attorney in funds, he did not attempt to find Erasmus and he did not enquire about the progress of his appeal. His attorney reasonably inferred that the appellant was no longer interested in pursuing his appeal and took no further action on his behalf. The inertia by the appellant ultimately led to the failure to file heads of argument and the failure to appear in the appeal. [12] The appellant alleges that the magistrate found that Erasmus does not exist and that he believed it crucial to his appeal to show that Erasmus does in fact exist. Yet he did nothing, from the time of his conviction on 2 December 2002 until two months before his application for condonation, April 2006, when he ‘serendipitously’ came upon Erasmus’ contact details. This is yet another example of the appellant’s inaction. [13] It was necessary for the appellant to explain not only why heads of argument were not filed and why there was no appearance, but also the delay in bringing an application for condonation.8 There is no attempt by the appellant to explain why it took him until 14 June 2006 to bring an application for condonation when he was alerted to all the problems surrounding his appeal during March 2006. [14] The appellant’s explanation for the non-compliance with the rules amounts to no explanation at all. In addition, there are no prospects of success on appeal. [15] On the merits of his appeal the appellant contends that he should not have been convicted, but that even if he was rightly convicted the magistrate should not have made a distinction between his sentence and that of his co- accused, Barnard, and given him (the appellant) a heavier sentence. 8 Darries v Sheriff, Magistrate’s Court, Wynberg 1998 (3) SA 34 (SCA) at 40I-41A. [16] The following common cause facts gave rise to the appellant’s conviction: He was the National Contracts Manager for Dunlop Tyres (Pty) Ltd (Dunlop) when he opened a so-called secret account with Dunlop for a secret customer, connected to the National Intelligence Service of South Africa (NI) for the sale of tyres to this customer at the usual 45% discount available to government departments. He specifically instructed the staff at Dunlop that queries on the account were not to be dealt with in the ordinary course but only by him. He instructed the Senior Clearance Clerk of Dunlop, Ms Scheepers, not to try and make contact with anybody in relation to the account by using the contact telephone number supplied by him. When she ultimately did try the contact number provided by the appellant, she discovered that it did not exist. He also instructed staff to ignore the usual procedures that require an official order form from government departments but to accept oral and informal orders by him and Barnard on this account. The appellant placed orders and furnished different delivery addresses for the orders. Numerous of the delivery addresses supplied by the appellant was the address of a private individual, Ms Kruger, also a state witness, who did business for her own account. She started buying tyres from Condor Enterprises, a business that Barnard, a buyer of tyres from Dunlop for the South African Police Services (SAPS), set up in order to do private business. Kruger placed her orders and made payments through an intermediary, Mulder. Invoices and delivery notes handed in at the trial corroborated Kruger’s evidence that purchases made by her were on this secret account and were delivered to her business address. At least one cheque payment for these purchases was handed by Mulder to Barnard in the presence of the appellant. The accused even assisted an employee of Dunlop, Mr Bali, to purchase tyres for his personal use from Kruger at a reduced price. [17] The facts summarised in the previous paragraph are common cause as the appellant’s legal representative at the trial did not challenge the state witnesses on their evidence during cross examination. The cross examination was of an exploratory nature and the appellant’s version was not put to the state witnesses. [18] During his evidence the appellant tried to meet the state’s version by explaining that he was approached by three men, Stefan Terblanche, Pieter Erasmus and an unknown black person, who identified themselves as employees of NI. They wanted to open an official account with Dunlop for the division of NI that they allegedly worked for. It was to be a highly secret account. The appellant took their details which included copies of their identity documents. A few days later they urgently wanted tyres which were then supplied on the instructions of the appellant on the account of another state department, delivered and paid. The appellant even visited their premises on their invitation to make an assessment of their likely need for tyres. He had no suspicion that they were not from NI, nor that the account that they opened were not for a government department. In terms of s 220 of the CPA the appellant ultimately admitted that the account was not opened for a department of NI. He received orders telephonically from Mulder and Barnard on this account, which he instructed members of Dunlop’s staff to process. He knew that Barnard made purchases on that account for his private business. He was aware that Barnard received cheques in payment for tyres ordered on that account from Kruger through Mulder. [19] Significantly, he did not testify that he ever received any orders on this account from any of the three men that initially approached him to open this account. He only went so far as to say that Terblanche asked him for a reference to a person with experience in the handling of a tyre account with Dunlop. He referred Terblance to Barnard. The appellant did not testify that Barnard was operating this account for the three men that opened the account, nor was any of this evidence put to Barnard. [20] This summary of the appellant’s evidence shows that he did not address the case against him. The only piece of evidence that has exculpatory potential is that he did not know that the three men did not in truth and reality represent a government institution. [21] The uncontested evidence of the state witnesses gives rise to only one reasonable inference: that the appellant opened this account with the intention to defraud Dunlop by allowing purchases on that account at the usual 45% discount to government departments, by persons and businesses that were not entitled to such discount from Dunlop. His attempt to hide behind the alleged secrecy of the account serves only to illustrate a false gullibility on his part and extraordinary improbabilities. It is simply unbelievable that as the National Contracts Manager of Dunlop he was so gullible that he believed that to open a highly secretive account for NI without any official documentation, to allow that account to be conducted informally and with the complete absence of any official documentation, and to allow individuals and businesses unconnected to NI - or to the individuals who opened the account - to make purchases on that account, did not amount to fraud. [22] Insofar as the appellant suggests in his application for condonation, for the first time, that his true defence is that he has been the victim of the deceit of Barnard, this was never put to Barnard and is contrary to his own evidence insofar as he allowed people to purchase on that account for their own benefit. [23] The appellant challenges the magistrate’s finding that the failure to put his version to the state witnesses indicates that his version was a recent fabrication. He explains that it would have been senseless to put his version to the state witnesses as they would have been unable to comment on it. This is desperate and unfounded speculation by the appellant. The answers of the state witnesses to the appellant’s version do not lie in the mouth of the appellant and, at the very least, a finding of recent fabrication would not have been possible if his version was put, even if it was not answered. [24] Another alleged material misdirection that the appellant relies upon in his application for condonation is that the magistrate found that Erasmus does not exist. He alleges that Erasmus does indeed exist, that he has managed to make contact with him again and that his attorney has spoken to Erasmus over the telephone (this latter fact is confirmed by the attorney). But the magistrate did not find that Erasmus does not exist. Insofar as the appellant understood that he did, he fails to say how proof of the mere existence of Erasmus would change the facts relied upon for conviction, or whether leave would be sought to introduce evidence that Erasmus did exist. In my view, the summary of the uncontested evidence above clearly shows that a finding of fact that Erasmus exists, would not change the inevitable conclusion that the appellant committed fraud. [25] In relation to sentence the appellant relies on three alleged misdirections by the magistrate: that his admission to the probation officer, that the account that was opened was fictitious, was taken out of context to be an admission of knowledge that he was committing fraud; that the disparity in the sentence imposed on him and that imposed on Barnard is unsubstantiated (Barnard was sentenced to three years’ imprisonment in terms of s 276(1)(h) of the CPA); and that the sentence imposed on him is shockingly inappropriate. (The latter alleged misdirection was not pursued in the heads of argument or during argument.) [26] The first misdirection was not material. The magistrate used the finding only to find that the appellant had no remorse – and that fact was established independently of the misdirection. [27] I turn to consider the argument based on the disparity of the sentences. The appellant defrauded his employer. The extent of Dunlop’s loss as a result of this fraud is uncertain. It is common cause that an amount of approximately R165 000 remained outstanding on the account and was ultimately written off. The total amount of sales on that account, at an unjustified discount of 45%, was put by Scheepers as having been more than R300 000. The nature of the fraud is serious and the potential loss to Dunlop was huge. [28] The magistrate distinguished between Barnard and the appellant because, unlike Barnard, the appellant defrauded his employer and made it possible for Barnard also to defraud Dunlop. The breach of a relationship of trust through the commission of fraud or theft is generally regarded as an aggravating factor, but a consideration of all other relevant factors still remains essential in arriving at an appropriate sentence.9 This the magistrate did. He individualised the sentences in express terms by taking the personal circumstances of the appellant and Barnard into account. (There was no intimation in this court that there was any failure by the magistrate to take the appellant’s personal circumstances into account.) [29] That the appellant perpetrated the fraud on his employer was not the only basis for the distinction drawn by the magistrate between Barnard and the appellant. Barnard’s personal circumstances were vastly different to the appellant’s: he had lost a young child; his financial circumstances were trying; he showed remorse; he was a soft hearted person who could easily be taken advantage of; and he suffered from depression which resulted from post traumatic stress disorder that arose from his active service in the South African Police Services. Similar mitigating factors are not evident from the appellant’s circumstances. The magistrate’s attempts to individualise the sentences, are sound and reflect that Barnard was given a lighter sentence rather than the appellant having been given a heavier sentence. [30] Considering a fraud of this nature, committed by a person in the circumstances of the appellant, the sentence imposed does not induce a sense of shock.10 [31] There are no prospects of success on appeal in relation to conviction or sentence. No other factors relevant to condonation were raised or argued by any of the parties. [32] Condonation was therefore rightly refused. The order dismissing the appeal that followed the order by the court a quo refusing condonation was 9 S v Kunene 2001 (1) SACR 199 (W) at 200d. 10 To compare sentences in different matters is not a reliable guide to sentencing, but provides only a broad and general perspective. For that purpose reference is made to S v Sindhi 1993 (2) SACR 371 (A); S v Howells 1999 (1) SACR 675 (C); S v Landau 2000 (2) SACR 673 (W); S v Kwatsha 2004 (2) SACR 564 (E). See also S v Blank 1995 (1) SACR 62 (A) at 70b-71g and 81e-h. however not a competent one as the appeal was not heard, and that order has to be set aside. [33] The following order is made: The appeal against the refusal of the application for condonation is dismissed. The order by the court a quo dismissing the appeal is set aside. _______________________ S SNYDERS Judge of Appeal APPEARANCES: For appellant: JLCJ van Vuuren SC G H Ferrar Instructed by: JDC Attorneys, Pretoria Correspondent: Symington & De Kok, Bloemfontein For respondent: FW van der Merwe Instructed by: Director of Public Prosecutions, Pretoria Correspondent: Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 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 refused an appellant the opportunity to pursue an appeal from the magistrate’s court in the high court. The appellant was convicted of fraud in the magistrate’s court. It was found that he defrauded his employer, Dunlop Tyres (Pty) Ltd. He allowed individuals and private businesses to make purchases on an unauthorised account with Dunlop at a 45% discount usually allowed government departments whilst they were not entitled to purchase directly from Dunlop at all. He was sentenced to five years’ imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act, which implies that he has to serve a minimum of 10 months’ imprisonment whereafter the Commissioner of Correctional Services may, in his discretion, place him under correctional supervision. Early in December 2002, just after his conviction and sentence, the appellant instructed his attorney to lodge an appeal on his behalf and undertook to contact his attorney in regard to the appeal after the holiday season. However, he did not do so. His attorney did file a notice of appeal on his behalf but thereafter received no further instructions and lost contact with the appellant. Because of the notice of appeal that was filed the appellant’s appeal was placed on the roll of the high court for hearing during January 2006. Because of the appellant’s failure to give his attorney instructions nothing was done to pursue the appeal and his appeal was struck off the roll. The appellant was then contacted during March 2006 to hand himself over in order to start serving his sentence. This jolted him to contact his attorney but he still took until June 2006 to bring an application to the high court to condone his earlier failures in relation to his appeal and to re-instate his appeal. The high court found that the appellant’s appeal was not to be re-instated primarily because of two reasons: his explanations for his failure to properly pursue his appeal and for the delay in bringing the application for condonation was very poor; and his prospects of success on appeal in relation to his conviction and sentence were equally poor. In his appeal to the Supreme Court of Appeal it was found that the high court was not wrong in its conclusion. Hence the appellant was refused the opportunity to pursue his appeal.

3509

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1077/2019 In the matter between: MTN SERVICE PROVIDER (PTY) LTD Appellant and BELET INDUSTRIES CC t/a BELET CELLULAR Respondent Neutral citation: MTN Service Provider (Pty) Ltd v Belet Industries CC t/a Belet Cellular (Case no 1077/2019) [2020] ZASCA 07 (15 January 2021) Coram: ZONDI, SCHIPPERS and NICHOLLS JJA and WEINER and GOOSEN AJJA Heard: 9 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email. It has been published on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 10h00 on 15 January 2021. Summary: Interpretation of contract – between cell phone service provider and dealer of cell phone products – repudiation – dealer alleged to possess goods not supplied by service provider – not proved – indemnity clause – dealer not precluded from recovering damages resulting from repudiation of agreement by service provider – whether dealer precluded by non-variation clause from including new store under the agreement – permissible as agreement contains procedure for an amendment due to changed circumstances – followed by service provider – appeal dismissed. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Local Division of the High Court, Johannesburg (Kathree-Setiloane J) sitting as court of first instance: (a) The appeal is dismissed with costs; (b) The appellant is ordered to pay 30 percent of the costs incurred in the preparation, perusal and copying of the record on an attorney and client scale. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Zondi JA (Schippers and Nicholls JJA and Weiner and Goosen AJJA concurring) [1] On 14 October 2010, the appellant, MTN Service Provider (Pty) Ltd (MTN) and the respondent, Belet Industries CC t/a Belet Cellular (Belet) concluded a dealer agreement (the agreement) in terms of which MTN appointed Belet to market, promote and facilitate distribution by MTN of network services and stock in the territory. The ‘territory’ is defined in the agreement to mean the Republic of South Africa. The agreement was to continue ‘for an indefinite period unless terminated earlier in accordance with the provisions of this agreement.’ The agreement replaced the previous agreement concluded by the parties on 4 April 2003 (the 2003 agreement). In return for its services Belet was to receive payment by way of commissions and discounts for pre-paid stock. [2] During the currency of the 2003 agreement, Belet had traded from different stores but at the time of the conclusion of the agreement, it traded from two stores; one at the Central City Shopping Mall in Mabopane (the Mabopane store) and the other at the Temba City Mall in Temba (the Temba City store). During April 2011 Belet closed the Temba City store and on 27 April 2011 it opened a further store within the nearby Jubilee Mall (the Jubilee Mall store). [3] In consequence of a contractual dispute between the parties, the full details of which will be dealt with later in the judgment, MTN on 4 November 2011 terminated the agreement with effect from 5 November 2011. MTN dispossessed Belet of its business by placing guards outside both stores and refusing Belet access to the stores, taking back all stock, terminating the electronic access to the systems needed to trade and refusing to supply further stock. On 7 and 8 November 2011 MTN notified the landlords of the respective premises from which the two stores operated, of the termination of Belet’s agreement and sought to be substituted as a lessee of the two stores until replacement dealers were appointed. In due course MTN installed different dealers in these stores. [4] On 2 December 2011, Belet instituted action against MTN in the Gauteng Local Division of the High Court, Johannesburg (high court) in which it claimed payment of R13 120 933, alternatively the amount of no less than R3 629 615.50, as damages. The essential basis of the claim was that MTN’s termination of the agreement constituted a breach, alternatively a repudiation of the agreement, resulting in Belet suffering damages. [5] MTN defended the action. It denied the breach, alternatively repudiation, of the agreement or that Belet had suffered damages. It averred that it terminated the agreement because Belet had repudiated the agreement. In the alternative, MTN contended that Belet’s claims had become prescribed. This latter defence was raised following amendment by Belet of its particulars of claim on 25 October 2016. [6] The matter came before Kathree-Setiloane J, who after hearing the evidence, dismissed MTN’s defences, upheld Belet’s claim and granted the following order: ‘1. The special plea is dismissed. 2. Judgment is granted in favour of the Plaintiff for: 2.1 Payment of the amount of R5 849 789.00 together with interest on this amount at the rate of 10.25% per annum from 1 March 2016 to date of payment; 2.2 Payment of the amount of R5 581 937.00 together with interest on this amount at the rate of 10.25% per annum from date of judgment to date of payment; 2.3 Costs of suit on the scale as between attorney and client which shall include all costs previously reserved and the qualifying fees of Ms Wood.’ [7] MTN appeals against the judgment and orders with leave of the court a quo. There is no appeal against the dismissal of the special plea of prescription. Background [8] The facts which gave rise to the termination of the agreement between MTN and Belet are briefly the following. The agreement allowed MTN to conduct a general audit of Belet’s stores at any time. In terms of the agreement, on 26 August 2011 MTN informed Belet that it intended to conduct an internal audit of the Mabopane store on 2 September 2011. Mr Sulaiman, the auditor arrived just before the store opened. In preparation for the audit, Mrs Letebele, the General Manager instructed the shop assistants to place obsolete items, which she considered unnecessary for the audit, into black bags. There was no space for the bags in the store and she asked the assistants to place them in a shopping trolley and keep it outside the store until the audit was completed. The assistant removed the trolley in front of Mr Sulaiman. The trolley was left with a parking assistant where Mr Sulaiman saw it. [9] MTN claimed that 15 items in the trolley constituted grey goods, ie goods not supplied to Belet by MTN, and ‘were held in violation’ of the terms of the agreement. It contended further that Belet had hidden these goods from the auditor and in doing so obstructed the auditing process. As a result, MTN summarily cancelled the agreement by letter dated 27 September 2011(the termination letter). On 4 November 2011, it confirmed the cancellation in a letter. Belet accepted the repudiation and cancelled the agreement. [10] On 2 December 2011, Belet instituted action against MTN in the high court, seeking damages based on a breach, alternatively, a repudiation and cancellation of the agreement. It contended that, but for the repudiation, it would have continued trading for at least a further ten years and it claimed the income it would have earned, less expenses. Belet contended that the damages flow generally and naturally from MTN’s breach and/ or repudiation of the agreement. [11] Belet alleged that MTN terminated the agreement prematurely without lawful grounds and contrary to its terms. In the alternative, Belet contended that the conduct of MTN in terminating the agreement prematurely constituted a repudiation which, Belet contended, it accepted and elected to cancel the agreement. [12] In the further alternative, Belet contended that MTN breached the material terms of the agreement in that, contrary to the provisions of clause 39.1 of the agreement, MTN failed to give proper notice to Belet to remedy the breach, and denied Belet the opportunity to dispute the issue of the ‘grey goods.’ [13] MTN admitted that it terminated the agreement for reasons set out in the termination letter, and that Belet disputed its right to terminate the agreement but it denied that the agreement was prematurely cancelled and without lawful grounds. [14] In amplification of its denial, MTN averred that in terms of the agreement, Belet was obliged to use MTN’s Online Management System known as OMS 1 to which Belet had been given access and furnished with its operating procedures and directions. MTN averred further that it had notified Belet to use MTN’s Point of Sales operating system (POS) for the purpose of recording, inter alia, all stock supplied and received from MTN. [15] MTN further alleged that, in and during July 2011 and in particular prior to the audit which occurred on 2 September 2011, it instructed Belet to migrate its OMS1 system to MTN’s new Online System known as OMS2. It contended that, as a result of the instruction, Belet – by the time of the audit in September 2011 – was not entitled to use OMS1 and all stock reflected on its OMS1 ought to have been transferred to OMS2. MTN alleged that the purpose of the audit it performed at Belet’s Mabopane store on 2 September 2011 was to ensure that Belet was utilising the OMS2. It averred that during the audit it discovered several transgressions. These were that Belet did not record 15 items in a trolley on OMS2; Belet used an unknown POS system and failed to explain its conduct when asked to do so. MTN contended that Belet’s conduct indicated an intention on the part of Belet to be dishonest and not to comply with its obligations in terms of the agreement; and/or to mislead MTN. [16] MTN contended further that as a result of Belet’s conduct, the trust between the parties was lost, could not be restored and the breach by Belet was irremediable and amounted to a repudiation of the agreement entitling MTN to cancel the agreement. [17] MTN denied that Belet suffered damages. It contended that the damages allegedly suffered by Belet are precluded from being claimed in terms of clause 40.1 as read with clause 39.4 of the agreement. In the alternative, MTN alleged that in terms of clause 39.1 of the agreement, MTN has a right to terminate the agreement by giving 90 days written notice of termination of the agreement to Belet. MTN contended that: ‘14.3.2. in terms of the special circumstances of the matter, by the Defendant terminating the Dealer Agreement on the basis of a breach of trust, the Defendant expressly alternatively impliedly notified the Plaintiff that it did not wish to have any contractual relationship with the Defendant and as a consequence, the Plaintiff ought to have known that had the Defendant terminated the said Agreement on the basis set out in clause 39.1, the Plaintiff would only have been able to earn an income for 90 days thereafter and nothing more. 14.3.3. In the circumstances, should it be found that the Defendant is liable to the Plaintiff for damages (which is denied) the Defendant pleads that such damages should be limited to a period of 90 days from date of termination based on the loss of trust between the parties in respect of the Dealer Agreement.’ [18] The appeal therefore raises three issues: first, whether MTN’s cancellation of the agreement constituted a repudiation of the agreement, or whether MTN was entitled to terminate it at the time and in the manner in which it did; second, whether Belet is precluded from recovering the damages suffered by it because of clause 40.1 and/or clause 39.2 of the agreement and third, whether Belet is precluded from recovering any damages suffered as a result of the closure of its Jubilee Mall store because this store did not fall within the ambit of the agreement. Did Belet repudiate the dealer agreement? [19] Belet alleged that the cancellation by MTN of the agreement was unlawful and amounted to a repudiation entitling it to cancel the agreement while MTN asserted that the cancellation was valid. The court a quo found that Belet did not repudiate the agreement and that MTN was not entitled to cancel it. It held accordingly that MTN’s cancellation constituted a repudiation entitling Belet to cancel the agreement. [20] MTN challenged the conclusions of the court a quo. It contended that the court a quo failed to appreciate that in and during July 2011 and prior to the audit, MTN had instructed Belet to migrate its OMS1 system to MTN’s OMS2 system. OMS2 was required to be used by Belet for everything. It alleged that the purpose of the inspection it undertook on 2 September 2011 was to ensure that Belet was utilising OMS2. [21] MTN argued that given the express terms of the agreement and the surrounding circumstances, it was a tacit term of the agreement that Belet would at all times act in a trustworthy manner, honestly and with integrity in its dealings with MTN. It contended that honesty and trust had always been an integral part of the relationship between the parties. [22] MTN alleged that it found (a) Belet hiding goods from the auditor in a trolley and obstructing the auditing process which affected the trust element of the parties’ relationship and (b) that there were numerous problems with Belet’s OMS2, in particular stock relating to the Mabopane store that was supposed to be recorded on OMS2 was not recorded thereon and stock recorded on OMS2 was not found in the store. Moreover, the goods hidden in the trolley were not recorded on Belet’s OMS2. [23] On the basis of these facts MTN inferred an intention on the part of Belet to be dishonest and not to comply with its obligations in terms of the agreement and to mislead it. It contended that in the letters it addressed to Belet after the inspection it relied on these facts as a basis for its decision to cancel the agreement. MTN pointed out that in the termination letter dated 27 September 2011, it inter alia, conveyed the following to Belet: ‘7. Your conduct in hiding these goods from the auditor and thereby obstructing the auditing process amounts to a fraudulent misrepresentation and is a breach of the dealer agreement which cannot be remedied.’ [24] In the letter dated 6 October 2011 MTN stated: ‘4. …The trust with which MTN SP views [Belet] has been irreparably broken. 5. Accordingly, MTN SP has no alternative other than to terminate the Dealer relationship. 6. …[Belet] is hereby given a calendar month’s notice of termination that is, closure of the stores will take place on 5 November 2011.’ [25] And finally in the letter dated 4 November 2011, MTN informed Belet, inter alia that: ‘2. As the trust element of our relationship has been broken down irretrievably our position is not changed and the dealer agreement between MTN SP and Belet Industries CC t/a trading as Belet Cellular. 3. (sic) has been terminated in terms of our letter dated 27 September 2011.’ [26] Belet’s conduct, argued MTN, constituted a repudiation of the agreement entitling it to cancel the agreement which it did. [27] MTN has not been consistent in the manner in which it pleaded its defence. In its letter of cancellation of 27 September 2011, it sought to justify its cancellation on the basis that some of the goods that were found in a trolley were not supplied by it to Belet. They were grey goods and were held in violation of the agreement. MTN asserted that Belet’s conduct in hiding these goods from the auditor amounted to a fraudulent misrepresentation as it obstructed the auditing process and was in breach of the agreement which could not be remedied. [28] As I have pointed out, in subsequent correspondence MTN accused Belet of failing to ‘acknowledge and recognise that such an act is irremediable.’ Despite requests by Belet to meet with Mr Forrester, MTN’s National Franchise Manager to sort out the issue, this was refused. On 4 November 2011 MTN wrote to Belet’s erstwhile attorneys to confirm that the agreement ‘has been terminated in terms of our letter dated 27 September 2011’. [29] In the original plea MTN alleged that 15 items in the trolley were ‘grey goods’ and that Belet’s representative told the auditor that he had been advised ‘to hide the said products until the audit was completed.’ It then alleged that this breach was irremediable and amounted to a repudiation of the agreement entitling it to cancel same. The original plea contained no reference to the OMS2 system, being the POS system which MTN required Belet to use as from July 2011. In MTN’s amended plea, a different justification for the cancellation was pleaded. MTN abandoned the allegation of possession of ‘grey goods’ and sought to justify its cancellation on the basis that Belet’s conduct constituted a breach of trust and amounted to repudiation of the agreement. [30] The court a quo correctly found that there was no evidence that the goods in the trolley had to be recorded on OMS2, and that there was no obligation that they had to be kept in the store. It was also common cause at the trial that MTN had never asked Belet for an explanation for the goods in the trolley. The allegation of an unknown POS being used was entirely refuted and effectively abandoned at the trial. In this regard, the court a quo held that since MTN did not, during argument persist with its pleaded case that Belet breached the dealer agreement by using an unknown POS, it saw no need to deal with that allegation. These factual findings are not challenged in MTN’s notice of application for leave to appeal or in its heads of argument. [31] In its heads of argument on appeal, MTN advanced yet another version to justify its summary cancellation. It submitted that the ‘hiding of the goods by Belet in the trolley’ and Belet’s failure to comply with the OMS2 system indicated an intention on the part of Belet, first, to be dishonest and not to comply with its obligations in terms of the agreement; and second, to mislead MTN and obstruct the auditing process, was in breach of trust, and constituted a repudiation of the agreement by Belet. It has never been MTN’s case that it cancelled the agreement because Belet failed to generally comply with the OMS2 system. Unsurprisingly, this allegation was never raised in the letters of cancellation of 27 September and 4 November 2011. [32] The court a quo correctly concluded that there was no evidential basis on which to find that by placing the 15 items in black plastic bags, and removing them from the store, Belet was in breach of the agreement. This conclusion was based on the finding that the agreement is silent as to where stock must be kept and that MTN did not lead evidence indicating that written instructions were given or Standard Operating Procedures published as envisaged in the agreement. Both Mr and Mrs Letebele testified that all of these 15 items had previously been paid for by Belet. They were either obsolete or defective. They stated that there was no reason to hide these goods. The court a quo accepted Mrs Letebele’s evidence that the goods in the trolley were all paid for, and that she could therefore keep them wherever she wished. This was confirmed by Mr Sulaiman, who testified that once stock had gone beyond the 60 days for returns and had been paid for, the dealer could do with it what it liked. [33] MTN contended further that Belet’s breach of the agreement was material and could not be remedied by the payment of money. This is so, MTN argued, because it resulted in a breach of the trust relationship between the parties. MTN submitted that it was accordingly not required to give Belet a notice to remedy the breach. The court a quo rejected MTN’s contention. It reasoned that clause 37.1 makes it clear that even in the case where the breach appears irremediable by the payment of money, MTN is still required to give Belet notice to remedy its breach before it cancels the agreement. I cannot find fault with the court a quo’s finding. If MTN was dissatisfied with the manner in which Belet was implementing the OMS2 system or considered it to be in breach of a contractual term, it should and ought to have notified Belet of this breach. Such a breach would have been remediable and would fall squarely within the provisions of clause 37. [34] In these circumstances the court a quo was correct in finding that Belet did not repudiate the agreement, that MTN was not entitled to cancel it and that MTN’s cancellation constituted a repudiation of the agreement. Whether the liability of MTN is limited / excluded by clause 40.1 read with clause [35] Clause 39 deals with termination of the agreement and its consequences. Sub- clause 39.4 in its relevant terms provides as follows: ‘Upon termination of this Agreement due to any reason whatsoever the following shall apply: 39.4.1. the termination shall be without prejudice to any other claims or remedies accrued by either party immediately prior to the date of termination; . . . 39.4.3. the Dealer shall immediately discontinue any allocation of Stock to Customers or potential Customers; 39.4.4. the Dealer shall immediately cease to use or display any mark or logo, whether registered or unregistered, which is proprietary to the Service Provider or the Operator and shall make or cause to be made such changes to its advertising in all media, vehicles, shop frontage, the interior of its premises, stationery and the like, so as to distinguish its business, to the satisfaction of the Service Provider, from one that is being carried on in association with the Service Provider; . . . 39.4.8. the Dealer shall, cease forthwith to qualify for any discounts, commissions and any other amounts to which it would otherwise have been entitled.’ Like clause 40.1, clause 39 survives the termination of the agreement. [36] MTN argued that Belet is not entitled to claim damages arising from inability to earn commissions and income from the sale of network services and stock, because in terms of clauses 39 and 40 of the agreement the parties specifically agreed that, upon termination of the agreement, Belet would not have any stock and would not be entitled to earn any commission or other amount. In support of this contention, MTN relied on the evidence of Mr Letebele and Ms Wood, who testified that their understanding was that once there had been a cancellation of the agreement Belet would not get an allocation of stock from MTN and would therefore not earn any commission or income. [37] MTN’s reliance on clause 39 and in particular sub-clause 39.4.8 is misplaced for two reasons. First, properly read in its context clause 39 has nothing to do with the limitation or exclusion of liability in the event of repudiation of the agreement. Belet is not claiming specific performance. It claims damages. It alleges that, but for MTN’s repudiation, the agreement would not have terminated, clause 39.4 would never have come into operation, and it would have operated its two stores for another ten years. It claims to be put into the position that it would have been in, had the contract been properly performed. Second, questions of interpretation of documents are matters of law and are the exclusive preserve of the court.1 The court is therefore not bound by the subjective interpretation that either Mr Letebele or Ms Wood placed on clause 39.4. The court a quo, therefore, correctly found that clause 39.4 does not preclude Belet’s claim. [38] MTN’s further argument is that clause 40.1 limits the liability of the parties to each other, that this limitation applies equally to either a breach or cancellation of the agreement. This is so, MTN argued, because in terms of clause 40.4 the provisions of clause 40.1 survive any termination of the agreement for any reason. MTN contended that Belet’s claim for damages is precluded by clause 40.1 as the second sentence defines what is meant by ‘direct damages and in doing so excludes financial loss, loss of business, profit, savings, revenue, or goodwill suffered or sustained by the Dealer howsoever arising.’ [39] MTN’s contention is based on the wording of clause 40.1 which has two parts. It provides as follows: ‘Liability and indemnity Except for consequential damages which arise as a result of the Dealer not complying with the provisions of clause 31, the liability of the parties to each other under this Agreement will be limited to direct damages. For the avoidance of doubt, this excludes financial loss, loss of business, profit, savings, revenue, or goodwill suffered or sustained by the Dealer howsoever arising.’ [40] MTN argued that the reference to ‘consequential damages’ in the first part of the first sentence relates to damages it may suffer as a result of Belet’s failure to comply with clause 31 of the agreement. Stated differently, its argument was that claims for ‘consequential damages’ can only accrue to MTN. It further argued that in the second part of the first sentence, both parties are treated equally and it specifically provides that the liability of the parties to each other under the agreement would be limited to ‘direct damages’. 1 International Business Machines South Africa (Pty) Ltd v Commissioner for Customs and Excise [1985] 2 ALL SA 596 (A) at 609. [41] Based on this construction, MTN submitted that the liability of Belet to MTN is limited on a dual basis. Firstly, for ‘consequential damages’ relating to a failure to comply with clause 31. Secondly, its liability for ‘direct damages’ is further limited by the second sentence of clause 40.1. [42] MTN contended that the second sentence in clause 40.1 precludes Belet from claiming damages for financial loss, loss of business, profit, savings, revenue, or goodwill suffered or sustained by Belet, howsoever arising. In developing this argument MTN, argued that the second sentence caters for and is no different to the consequences that arise as a result of a cancellation of the agreement in terms of clauses 39.4.3 and 39.4.8. These clauses preclude Belet from claiming financial loss, loss of business, profit, savings and revenue it sustained due to any reason whatsoever. [43] Belet contended, on the contrary, that the purpose of clause 40.1 is to exclude consequential damages and must for that reason be interpreted to mean that liability is limited to direct damages. The second sentence serves to illustrate what types of claims may constitute consequential damages, and thus are not claimable. Belet, however, argued that since the question of whether damages are direct or consequential is a factual one, one cannot predetermine that a certain type of damages is either one or the other.2 [44] Clause 40.1 is not a model of clarity. A similar argument was initially raised by MTN by way of an exception to Belet’s particulars of claim before the amendment. The exception was upheld by the high court, but its judgment was subsequently overturned by this Court.3 It held that the clause was ambiguous and could bear the meaning contended for by Belet. [45] The issue between the parties turns on the interpretation of clause 40.1 and in particular, whether the types of loss referred to in the second sentence of the limitation clause are examples of ‘consequential damages’ or the ‘direct damages’ the recovery 2 Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 22. 3 Belet Industries CC t/a Belet Cellular v MTN Service Provider (Pty) Ltd [2014] ZASCA 181; para 10- 12. of which is excluded. The recent cases of this Court have made it clear that in interpreting any document, while the starting point is inevitably the language of the document, ‘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 apparent purpose to which the document is directed and the material known to those responsible for its production.4 [46] There are two fundamental problems with the construction contended for by MTN. First, in general under the common law, an innocent party to a contract is entitled to be placed in the position it would have occupied had the contract been performed, so far as that can be done by the payment of money, and without undue hardship to the defaulting party. Such damages only are awarded as flow naturally from the breach, or as may reasonably be supposed to have been in the contemplation of the contracting parties as likely to result therefrom. The parties are taken to have intended their legal rights and obligations to be governed by the common law unless they have plainly and unambiguously indicated the contrary. Where one of the parties wishes to be absolved either wholly or partially from an obligation or liability which would or could arise at common law from a contract of the kind which the parties intend to conclude, it is for that party to ensure that the extent to which it is to be absolved is plainly spelled out.5 There is no evidence that this was intended to be the case in the present matter. [47] Secondly, on MTN’s construction, it would mean that clause 40.1 suffers from internal inconsistency in that, in the first sentence it recognises a claim for direct damages while in the second sentence it excludes the same claim. To avoid an internal conflict and to render clause 40.1 meaningful, one would have to ignore the first part of the first sentence which reads: ‘the liability of the parties to each other under this Agreement will be limited direct damages.’ This is not a sensible meaning, because it renders clause 37 - which recognises that in the event of a breach of the agreement 4 Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014 (2) SA 494 (SCA) para 12; KPMG Chartered Accountants (SA) v Securefin Ltd and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA) para 29-40; Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18; and Norvatis v Maphil [2015] ZASCA 111; 2016 (1) SA 518 (SCA) para 27. 5 First National Bank of Southern Africa Ltd v Rosenblum [2001] 4 All SA 355 (A) para 6. an aggrieved party is entitled to sue for damages – nugatory. MTN’s construction ignores the context in which clause 40.1 appears in relation to how the parties’ liability to each other would be limited. As correctly pointed out by Belet, the purpose of the first sentence is to limit the parties’ liability to each other – except in relation to damages flowing from a breach of clause 31 - to direct damages. [48] Belet’s claim is for the loss of net income which flows naturally from the repudiation of the agreement. It is this loss which Belet alleged it had suffered as a result of the repudiation of the agreement. It was conceded by MTN that the loss claimed by Belet constitutes direct damages. The conclusion of the high court that clause 40.1 of the agreement does not absolve MTN of liability for Belet’s claimed loss of income can, therefore, not be faulted. Whether the Jubilee Mall store is also subject to the agreement. [49] It is common cause that during April 2011, Belet closed the Temba City Store and opened its store in the Jubilee Mall with the knowledge and concurrence of MTN. MTN approved the relocation of the store, determined the design of the Jubilee Mall store and appointed the contractors and subcontractors who fitted out the store, paid them for the work done and appointed its own supervisor to the project. Thereafter MTN claimed a fitting out allowance from the landlord and it provided Belet with promotional material for the opening of the store. Once the store was set up, MTN supplied stock to the store, linked it to the OMS and paid commissions to Belet for sales made by the store. As in the case of the Mabopane store MTN also subjected the Jubilee Mall store to an internal audit. [50] However, despite these objective facts MTN argued that the Jubilee Mall store should not be taken into account in computing Belet’s damages for the reasons that the Jubilee Mall store is not reflected in annexure ‘A’ to the agreement; the agreement contains a non-variation clause; Belet is unable to produce an amended annexure ‘A’ reflecting the Jubilee Mall store and countersigned by MTN and that Belet cannot prove which part of the loss of income is attributable to the Mabopane store and which to the Jubilee Mall store. The court a quo rejected MTN’s contentions and concluded that the Jubilee Mall store formed part of the agreement. [51] MTN attacked the court a quo’s conclusion and argued that on the pleadings, the facts and the law, its finding was incorrect. As regards the pleadings it contended that in the original particulars of claim, the application for leave to appeal against the upholding of the exception, and in Belet’s reply to MTN’s request for trial particulars, there was no reference to the Jubilee Mall store. Additionally, continued MTN’s argument, in Belet’s application to amend its particulars of claim, Mr Letebele stated under oath that clause 35.2 was not applicable and that it had not applied for an additional store, nor had it been required to close any store. MTN contended that it defended the claim on the basis that Belet was relying on a relocation as opposed to the removal or addition of a new store and as a result, only clause 45 of the agreement was applicable. It argued that Belet should not have been allowed to rely on clause 35.2 to support an argument that the agreement had been lawfully varied. This was inappropriate, so it was argued, as Belet was bound by the concessions made by its counsel. MTN argued that Belet should not have presented an argument in conflict with the parties’ common understanding as to what exactly the issues were in the trial and in support of this proposition, relied on Filta-Matrix (Pty) Ltd v Freudenberg and Others 1998 (1) SA 606 (SCA) at 614B-C. In Filta-Matrix this Court held that ‘to allow a party, without special circumstances, to resile from an agreement deliberately reached at a pre-trial conference would be to negate the object of Rule 37, which is to limit issues and to curtail the scope of the litigation (cf Price NO v Allied-JBS Building Society 1980 (3) SA 874 (A) at 882D-H). If a party elects to limit the ambit of his case, the election is usually binding.’ [52] The court a quo considered and rejected MTN’s contentions in these terms: ‘[93] Properly construed, clause 35.2 applied to the situation where a dealer has successfully applied for an additional dealer store or has been required to close a Dealer Store. In these instances, the Dealer will be required to complete a new set of annexure documents in order to incorporate or remove as the case may be, the dealer stores in question from the Dealer Agreement. On the evidence, once Belet applied to relocate the Temba City store to Jubilee Mall, the Temba City store was required to close down and, in terms of clause 35.2, a new set of annexures was required to remove it from the Dealer Agreement and replace it with the Jubilee Mall store. Thus, whether the opening of the Jubilee Mall is regarded as a relocation or an additional store, clause 35.2 would have application. Accordingly, I am unable to agree with MTN that Belet is disallowed from relying on clause 35.2 of the Dealer Agreement because it did not originally rely upon it.’ [53] I agree with the reasoning of the court a quo. Clause 35.2 provides: ‘Where the Dealer has successfully applied for an additional Dealer Store or has been required to close a Dealer Store, the Dealer will be required to complete a new set of Annexure documents in order to incorporate or remove as the case may be, the Dealer Stores in question from this Dealer Agreement.’ [54] Clause 45 provides: ‘Alterations No alterations, consensual cancellation, variation of, or addition hereto shall be of any force or effect unless reduced to writing and signed by the duly authorised representatives of both parties and attached to this Agreement. Notwithstanding the above, the Service Provider reserves the right to amend the provisions of the Annexures “E1”, “E2”, “B” and “F” by furnishing the Dealer with a sixty (60) day written notice to that effect.’ [55] It is not a variation, as envisaged in clause 45, where the agreement makes specific provision (and prescribes its own procedures) for an amendment by virtue of a change of circumstances. It appears from clause 35.2 that the parties foresaw that, during the currency of the agreement, dealer stores could be removed from, or added to, the ambit of the agreement. They chose to make specific provision for the procedure that would be followed in such a case. Belet would then be required to sign a new set of annexures, but there was no requirement that MTN would have to countersign the annexures. If the addition or removal of a store fell within clause 45, it would have been entirely superfluous to require, in clause 35.2, that Belet would be required to sign new annexures. [56] Annexure ‘B’ to the agreement, headed Performance Management, sets out the targets which the dealer must meet in respect of material targets (relating to the number of connections) and so-called immaterial targets relating to accounts and service. Clause 1.1 of Annexure ‘B’ provides that “[U]pon the addition or removal of any Store from the Dealer, the targets and thus this Annexure “B” will be adjusted accordingly.” This is exactly what happened in this case. Together with the amended annexure “A”, Ms Allers of MTN sent Mr Letebele a new annexure “B” which reflected new targets for the Jubilee Mall store. [57] Clause 35.2 presupposes that MTN would have already approved the additional store. All that would then be required to avoid disputes is that Belet signified its assent by way of the amended annexures, which were to be prepared by MTN (and it would not have prepared these documents if it had not in fact agreed to the removal/addition). [58] MTN’s argument that Belet should not be allowed to rely on clause 35.2 because its counsel had, in interlocutory proceedings, disavowed any reliance on it, should fail for the simple reason that a submission by counsel, or a witness, as to the meaning of a contractual clause does not bind the party, or the court. The interpretation of the agreement is a matter of law and not evidence.6 A party is bound by its pleadings. Belet in its amended particulars alleged that MTN had agreed that Belet would close the Temba City store and open the Jubilee Mall store in its place. [59] The court a quo upheld Belet’s contention that in terms of general contractual principles, a party is not allowed to approbate and reprobate and that MTN is precluded from now asserting that the Jubilee Mall store did not form part of the agreement.7 MTN contended that the court a quo erred in this regard. It argued that at no time during the trial was any evidence led that showed that MTN insisted that the Jubilee Mall store was subject to the agreement and none of the witnesses for Belet gave evidence that the parties had any verbal discussions or communications regarding a written variation of the agreement. [60] On the undisputed facts the court a quo was correct in finding that MTN, having relied on the Jubilee Mall store being subject to the agreement, could not now, when sued, contend that it was not. MTN conducted two audits of this store. It would, but for the provisions of the agreement, have had no right to do so. It set performance targets for this store. But for the provisions of the agreement it would have had no right to do so. After purportedly terminating the agreement it insisted that it was entitled to debar 6 KPMG Chartered Accountants (SA) v Securefin Ltd [2009] ZASCA 7; 2009 (4) SA 399 (SCA) para 39- 40. 7 Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA) para 12. Belet from access to the premises of the Jubilee Mall store (leased by Belet), to take back all stock in the premises, to substitute itself as lessee and to offer the store to a different dealer. But for the provisions of the agreement, it would have had no right to do so. I agree with Belet’s contention that having so insisted that the Jubilee Mall store was subject to the agreement, notwithstanding that the agreement may not have been properly varied, it is not open to MTN to now assert that there has been non- compliance with the non-variation clause. MTN’s contention should therefore fail. [61] In any event, even if clause 45 was applicable, in my view there was a proper written variation. Clause 45, in its terms, does not specifically require that an amendment to the ‘approved Dealer Stores’ must happen by way of a new annexure ‘A’ to the agreement being drafted and signed by the parties. Any written document, signed by both parties, would therefore suffice. As was held by this Court in Spring Forest Trading CC,8 a name appended to an email would constitute a signature. [62] It is common cause that Belet applied in writing during September 2010 for permission to relocate the Temba City store to one at the Jubilee Mall. On 1 November 2010, Belet accepted an offer to lease from the landlord of the Jubilee Mall subject to its approval by MTN by 30 November 2010. On 10 November 2010 Mr Govender, the Account Manager of MTN wrote to Mr Kevin Reichert of MTN’s Site Procurement and Storebuild referencing Belet’s discussion with him and Ms Eleanor Mitrovich, and requesting confirmation that: • ‘Store relocation has been approved from Temba to Jubilee Mall • Confirm store build schedule for Q1 occupation on 1 May 2011.’ Mr Reichert responded on 11 November 2010 stating: ‘we have the motivation and El [Mitrovich] has signed off the feasibility for this relocation.’ [63] Mr Letebele responded seeking confirmation that ‘this would be planned for beneficial occupation on 1st April, and trading by 1st May please’. Mr Govender forwarded this email to Mr Reichert and Mr Kapp of MTN. On 17 November 2010 Mr Govender sent an email to Mr Letebele stating ‘please see attachment for Jubilee Mall approval letter. As per discussion with Kevin [Reichert] yesterday, dates have been 8 Spring Forest Trading CC v Wilberry [2014] ZASCA 178; 2015 (2) SA 118 (SCA) paras 18 and 25-27. confirmed 1st April 2011.’ The attachment consisting of a letter addressed to ‘To whom it may concern’, is headed ‘Re: Belet Industries Application for a store in the upcoming new Jubilee Mall in 2011’. It stated that: ‘MTN SP (Pty) Limited hereby confirms Beni Letebele of Belet Industries as the preferred dealer for an application of a dealership store in the upcoming Jubilee Market in 2011. This would be a relocation of Temba City store to new store in Jubilee Mall.’ It is signed by Mr Govender and Mr Anton Kapp of MTN. [64] I agree with counsel for Belet’s submission that these emails, in context, constitute an agreement in writing that the Temba City store would be replaced by the Jubilee Mall store and therefore, to the extent that clause 45 applies, Belet’s application for permission and MTN’s emails of 10 November 2010 and 17 November 2010 constitute a variation in writing, substituting the Temba City store with the Jubilee Mall store. Quantum of Belet’s claim [65] The court a quo, relying on the uncontested evidence of Ms Wood, Belet’s expert, found that Belet had suffered damages and granted an order for the amount of R5 849 789 and the second amount of R5 581 937 plus costs plus interest at the applicable rate. It also found that MTN adduced no evidence that, but for its repudiation of the agreement, it would have exercised its rights in terms of clause 39.1 and when it would have done so. The court a quo held that clause 39.1 was therefore inapplicable. [66] MTN argued that since Belet was unable to prove its variation as pleaded and inasmuch as the evidence relating to quantum could only relate to the Mabopane Store, Belet’s claim should fail. In addition, it argued that the court a quo failed to take into account material aspects of Belet’s claim and the evidence of Ms Wood. MTN alleged that Ms Wood had determined the value of Belet’s business in 2015 in terms of clause 33.2.3 of the agreement. It argued that it is entirely inapposite to use the provisions of clause 33.2.3 to determine the damages suffered by Belet as they only apply to determine the purchase price of the business in the event of its disposal. In view of the findings I have made in relation to whether the Jubilee Mall store was subject of the agreement, it is unnecessary to deal with MTN’s argument. In any event, the quantum of Belet’s claim was agreed during the course of the trial between Ms Wood, Belet’s expert and Prof Wainer, MTN’s expert. Costs [67] The court a quo upheld Belet’s claim and imposed a punitive costs order on MTN. The scale of the costs order made by the court a quo is not placed in issue by MTN and since the determination of costs involves the exercise of discretion by the trial court there is no basis for this Court to interfere with it in the absence of evidence of misdirection. [68] With regard to the costs of appeal it was submitted by Belet that MTN should be ordered to pay the costs, on an attorney and client scale, necessitated by the inclusion in the appeal record, documents which were unnecessary for the determination of the appeal. In this appeal the Court was furnished with a record comprising 13 volumes running into some 2500 pages and an additional supplementary volume. In consequence this Court directed the Registrar to send a note to the parties’ legal representatives informing them that at the hearing of the appeal, they would be expected to furnish reasons why they should not be penalised in so far as the recovery of their fees is concerned for non-compliance with the Rules of this Court regarding the record of the appeal and a core bundle. Their attention was drawn to the judgment of this Court in Van Aardt v Galway [2011] ZASCA 201; 2012 (2) SA 312 (SCA); [2012] 2 All SA 78 (SCA). This Court held at para 36: ‘[36] The practice note requires a statement of counsel’s view, in the form of a list, of those parts of the record that need to be considered in order to decide the case. The fact that his or her opponent may disagree is neither here nor there. That will emerge from the opponent’s practice note. In addition the list is to be confined to those parts of the record that are ‘necessary’ for that purpose. Documents and evidence are not to be included in the list on the off chance that someone might wish to refer to them. The list should include only those parts of the record that counsel is likely to refer to either in support for the argument, or for rebuttal, or to highlight flaws in the judgment appealed against. It is inappropriate to include material on the basis that if a particular question is asked, or explanation is sought, it may be necessary to refer to it. What is required is a list setting out the portions of the pleadings, the documents and the particular passages in the record of evidence that counsel believes are necessary to determine the case. The list must identify by reference to volumes and pages where those parts of the record are to be found. Lastly, it would be a salutary practice for counsel to prepare the list in positive terms, identifying the parts of the record necessary for the determination of the appeal, rather than, as seems frequently to be the case, identifying portions that need not be read. The list is supposed to assist the judges in identifying what needs to be read. It should not be treated as the commencement of a process of elimination of unnecessary material.’ [69] MTN ignored the rules of this Court, relating to ‘the preparation of the records by attorneys and the practice directive relating to the filing of a practice note by counsel specifying the portions of record that counsel regards as necessary to be read.’ The list in MTN’s practice note does not identify by reference to volumes and pages where those parts of the record are to be found. The explanation proffered by MTN is that the parties were unable to agree on the documents to be included in the core bundle. [70] Belet alleged that it had repeatedly drawn to MTN’s attention that a number of documents included in the record should be excluded as they were not necessary for the determination of the appeal and that MTN ignored the suggestion. In its practice note Belet identified those portions of the record that were needed in order to decide the appeal. Belet accordingly submitted that MTN should be ordered to pay the costs, on an attorney and client scale, necessitated by the inclusion in the appeal record of these unnecessary documents. [71] It is clear from the practice note prepared by Belet that it was unnecessary for this Court to read approximately 30 percent of the record. In my view, MTN should be ordered to pay the costs, on an attorney and client scale, occasioned by the inclusion in the appeal record of 30 percent of the record. [72] The following order is made: (a) The appeal is dismissed with costs; (b) The appellant is ordered to pay 30 percent of the costs incurred in the preparation, perusal and copying of the record on an attorney and client scale. _____________ D H Zondi Judge of Appeal Appearances: For appellant: T Motau SC (with him B Maselle) Instructed by: Macrobert Attorneys, Pretoria Phatshoane Henney Attorneys, Bloemfontein For respondent: A de Kok SC Instructed by: Cheadle Thompson & Haysom 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: 15 January 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 MTN Service Provider (Pty) Ltd v Belet Industries CC t/a Belet Cellular (Case no 1077/2019) [2020] ZASCA 07 Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the appeal against an order of the Gauteng Division of the High Court, Johannesburg; and ordered the appellant to pay 30 percent of the costs incurred in the preparation, perusal and copying of the record on an attorney and client scale. The issues before the SCA were first, whether MTN’s cancellation of the agreement constituted a repudiation of the agreement, or whether MTN was entitled to terminate it at the time and in the manner in which it did; second, whether Belet was precluded from recovering the damages suffered by it because of clause 40.1 and/or clause 39.2 of the agreement and third, whether Belet was precluded from recovering any damages suffered as a result of the closure of its Jubilee Mall store because this store did not fall within the ambit of the agreement. On 14 October 2010, the appellant, MTN Service Provider (Pty) Ltd (MTN) and the respondent, Belet Industries CC t/a Belet Cellular (Belet) concluded a dealer agreement (the agreement) in terms of which MTN appointed Belet to market, promote and facilitate distribution by MTN of network services and stock in the territory. The agreement was to continue ‘for an indefinite period unless terminated earlier in accordance with the provisions of this agreement’. The agreement replaced the previous agreement concluded by the parties on 4 April 2003 (the 2003 agreement). In return for its services Belet was to receive payment by way of commissions and discounts for pre-paid stock. During the currency of the 2003 agreement, Belet had traded from different stores but at the time of the conclusion of the agreement, it traded from two stores; one at the Central City Shopping Mall in Mabopane (the Mabopane store) and the other at the Temba City Mall in Temba (the Temba City store). During April 2011 Belet closed the Temba City store and on 27 April 2011 it opened a further store within the nearby Jubilee Mall (the Jubilee Mall store). It was common cause that Belet applied in writing during September 2010 for permission to relocate the Temba City store to one at the Jubilee Mall. The agreement allowed MTN to conduct a general audit of Belet’s stores at any time. In terms of the agreement, MTN informed Belet that it intended to conduct an internal audit of the Mabopane store on 2 September 2011. The auditor arrived just before the store opened. In preparation for the audit, the General Manager instructed the shop assistants to place obsolete items, which she considered unnecessary for the audit, into black bags. There was no space for the bags in the store and she asked the assistants to place them in a shopping trolley and keep it outside the store until the audit was completed. The assistant removed the trolley in front of the auditor. The trolley was left with a parking assistant where the auditor saw it. In consequence MTN claimed that 15 items in the trolley constituted grey goods, ie goods not supplied to Belet by MTN, and ‘were held in violation’ of the terms of the agreement. It contended further that Belet had hidden these goods from the auditor and in doing so obstructed the auditing process. As a result, MTN summarily cancelled the agreement by letter dated 27 September 2011. It confirmed the cancellation in a letter. Belet accepted the repudiation and cancelled the agreement. In consequence of the contractual dispute between the parties, MTN terminated the agreement. MTN dispossessed Belet of its business by placing guards outside both stores and refusing Belet access to the stores, taking back all stock, terminating the electronic access to the systems needed to trade and refusing to supply further stock. Thereafter Belet instituted action against MTN in the court a quo in which it claimed payment of R13 120 933, alternatively the amount of no less than R3 629 615.50, as damages. The essential basis of the claim was that MTN’s termination of the agreement constituted a breach, alternatively a repudiation of the agreement, resulting in Belet suffering damages. MTN defended the action. It denied the breach, alternatively repudiation, of the agreement or that Belet had suffered damages. It averred that it terminated the agreement because Belet had repudiated the agreement. The SCA held on the first issue that the court a quo correctly found that there was no evidence that the goods in the trolley had to be recorded and that there was no obligation that they had to be kept in the store. The SCA held further that it was also common cause at the trial that MTN had never asked Belet for an explanation for the goods in the trolley. In these circumstances the court a quo was correct in finding that Belet did not repudiate the agreement, that MTN was not entitled to cancel it and that MTN’s cancellation constituted a repudiation of the agreement. As to the second issue the SCA found that the conclusion by the high court that clause 40.1 of the agreement did not absolve MTN of liability for Belet’s claimed loss of income, could not be faulted. The SCA concluded - with regard to the third issue - that Belet’s submission that the emails, in context, created an agreement in writing that the Temba City store would be replaced by the Jubilee Mall store in essence constituted a variation in writing, in effect substituting the Temba City store with the Jubilee Mall store. ~~~~ends~~~~

132

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1222/2016 In the matter between: JOHANNES UYS N.O FIRST APPELLANT DIRK CORNELIUS UYS N.O SECOND APPELLANT and MSINDO PHILLEMON MSIZA FIRST RESPONDENT DIRECTOR GENERAL FOR THE DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM SECOND RESPONDENT MINISTER FOR THE DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM THIRD RESPONDENT Neutral citation: Uys & another v Msiza & others (1222/2016) [2017] ZASCA 130 (29 September 2017) Coram: Navsa ADP, Cachalia and Seriti JJA and Tsoka and Lamont AJJA Heard: 1 September 2017 Delivered: 29 September 2017 Summary: Land – Land Reform – calculation of just and equitable compensation to owner for land awarded to labour tenant – proper evaluation of factors including market value – owner aware of labour tenant’s claim when land purchased for development – claim a pre-existing impediment affecting development potential -Pointe Gourde principle not of application. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: the Land Claims Court of South Africa, Johannesburg (Ngcukaitobi AJ and Canca AJ sitting as court of first instance), judgment reported sub nom as Msiza v Director General for the Department of Rural Development and Land Reform & others 2016 (5) SA 513 (LCC) (5 July 2016): 1 The appeal is upheld with costs. 2 The third respondent is to pay the first respondent’s costs and 70% of the appellant’s costs, such costs are to include the costs of two counsel. 3 The order of the Land Claims Court is amended as follows: The figures ‘R1 500 000 (one million five hundred thousand rand)’ are deleted and substituted with the figures ‘R1 800 000 (one million eight hundred thousand rand)’ where they appear in paragraphs one and two. Paragraph 5 is deleted and substituted with ‘5. The second respondent is to pay the costs of the applicant and the Dee Cee Trust, including the costs of two counsel’. ______________________________________________________________ JUDGMENT ______________________________________________________________ Lamont AJA (Navsa ADP, Cachalia and Seriti JJA and Tsoka AJA concurring): [1] This is an appeal from the Land Claims Court (the LCC) (Ngcukaitobi AJ and Canca AJ) against the amount of compensation it determined was due to the owner of a portion of a property expropriated pursuant to successful claim by labour tenant under s 23 (1) of Land Reform (Labour Tenants) Act 3 of 1996. The owner of the property is the Dee Cee Trust (the Trust) and the labour tenant, who was awarded the property, is Mr Msindo Phillemon Msiza (Mr Msiza). The Trust’s complaint is that the LCC determined the compensation on the basis that the property was zoned for agricultural use instead of having regard to its developmental potential. And it then compounded the error by arbitrarily reducing the market value of the property because it was awarded to a labour tenant. The judgment of the LCC is reported as Msiza v Director General for the Department of Rural Development and Land Reform and Others.1 This court granted the Trust leave to appeal against the decision. Agri SA sought and was granted leave to make submissions to this court as amicus curiae regarding the proper consideration of market value in the assessment of just and equitable compensation as contemplated in s 25 of the Constitution. [2] The first and second appellants are the trustees of the Trust which owns the property that is the subject of this dispute. It measures approximately 352 hectares in extent and is known as Remainder of Portion 4 (a portion of Portion 2) of the farm Rondebosch 403 JS. It is situated in the district of Middelburg, Mpumalanga Province (Rondebosch). The extent of the land awarded to Mr Msiza by the LCC was a portion of Rondebosch, 45.8522 hectares in extent (the land). [3] The Msiza family has continuously occupied the land since at least 1936. Mr Msiza’s grandfather was recognised as a tenant who had the right to grow crops, graze cattle and reside on the land in consideration for labour. The arrangement was set out in a contract concluded under s 4(1) of The Native Service Contract Act 24 of 1932. The family exercised those rights on the land. [4] On 5 November 1996 Mr Msiza’s father lodged a claim for an area of land situated on Rondebosch to be awarded to him as a labour tenant in terms of Chapter 3 of the Act. On 21 November 1996 receipt of the claim was acknowledged by the second respondent, the Director General of the Department of Rural Development and Land Reform (the Director General). On 2 December 1996 the Director General notified Mr Jooste, who owned 1 Msiza v Director General, Department of Rural Development and Land Reform and Others 2016 (5) SA 513 (LCC) (5 July 2016). Rondebosch at the time, of the claim. Notice of the claim was published in the Government Gazette on 3 January 1997. [5] The trust became the owner of Rondebosch on 9 May 2000 pursuant to an agreement for the purchase thereof concluded on 17 December 1999. The purchase price was R400 000. It is common cause that the Trust was aware of the claim and the presence of the Msizas when it acquired the property. [6] Subsequent to the award of the land to Mr Msiza by the LCC on 16 November 2004, the parties attempted to reach agreement over the amount of compensation to be paid to the Trust. Offers of R408 000 and later R550 000 were made by the Minister to the Trust which it found unacceptable. The negotiations also involved an offer that the Msizas accept other land in lieu of the land awarded. That suggestion too was rejected. Unable to resolve their differences the matter stalled. On 21 August 2012, Mr Msiza launched an application in the LCC for a determination in terms of s 23(2) of the Act. The LCC determined the amount payable by the Director General and the Minister as R1,5 million. That order is the subject of this appeal. [7] An owner’s right to compensation for the loss of rights in land is dealt with in s 23(1) of the Act in the following terms: ‘The owner of affected land or any other person whose rights are affected shall be entitled to just and equitable compensation as prescribed by the Constitution for the acquisition by the applicant of land or a right in land.’ [8] When a court considers the nature of the order it makes, it must have regard to s 22(5) of the Act,2 which echoes the relevant provisions of the Constitution. 2 ‘In determining the nature of the order which is to be made the Court shall have regard to- (a) the desirability of assisting labour tenants to establish themselves on farms on a viable and sustainable basis; (b) the achievement of the goals of this Act; (c) the requirements of equity and justice; (d) the willingness of the owner of affected land and the applicant to make a contribution, which is reasonable and within their respective capacities, to the settlement of the application in question; and (e) the report and any determination made by an arbitrator appointed in terms of section [9] The provisions of the Constitution that deal with just and equitable compensation for the expropriation of property are s 25(2) and (3) which provide that land may: ‘(2) …be expropriated only in terms of law of general application- (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court. (3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including - (a) the current use of the property; (b) the history of the acquisition and use of the property; (c) the market value of the property; (d) the extent of direct State investment and subsidy in the acquisition and beneficial capital improvement of the property; and (e) the purpose of the expropriation.’ [10] These provisions were considered in Du Toit v Minister of Transport:3 The court held at para 28 that: ‘[s]ection 25(2) of the Constitution requires property to be expropriated only in terms of a law of general application and subject to compensation. The amount of compensation must then be agreed upon between the affected parties. Alternatively, it may be decided or approved by a court of law. However, the amount of compensation agreed or decided upon must adhere to the standards of justice and equity. It must also reflect an equitable balance between the interests of the public and of those affected by the expropriation. These standards, provided for in s 25(3) of the Constitution, are peremptory and every amount of compensation agreed to or decided upon by a court of law must comply with them. To determine that the amount is just and equitable, s 25(3) provides an open-ended list of relevant circumstances to be taken into account, including the market value of the property. In contrast, the Act does not specifically require that the amount of compensation meet the peremptory standards of the Constitution. Section 12(1) of the Act confines the compensation amount to either actual financial loss, when what is expropriated is a right, or to the 19 (1) (a).’ 3 Du Toit V Minister of Transport 2006 (1) SA 297 (CC). aggregate of market value and financial loss when the subject of the expropriation is tangible property. Section 25 of the Constitution, on the other hand, does not draw that distinction. There are clearly differences between the Act and the Constitution which may affect the fairness of the amount of compensation.’ [11] Du Toit dealt with valuation in the context of expropriation of land under the Expropriation Act 63 of 1975 (the Expropriation Act). The approach and the principles that were dealt with in Du Toit apply, as s 23(1) of the Act set out in paragraph 7 above invokes s 25(2) and (3) of the Constitution. Du Toit’s case at para 26 (footnotes omitted) sets out in relation to the Expropriation Act that: ‘It is therefore now the Constitution, and not the Act, which provides the principles and values and sets the standards to be applied whenever property, which in turn is now also constitutionally protected, is expropriated. Every act of expropriation, including the compensation payable following expropriation, must comply with the Constitution, including its spirit, purport and objects generally and s 25 in particular.’ [12] Section 25(3) sets out a number of factors to be considered. Because it is usually the one factor capable of objective determination, market value is the convenient starting point for the assessment of what constitutes just and equitable compensation in any case, and then the other factors are considered to arrive at a final determination.4 This approach, known as the two-stage approach is set out in Du Toit at para 37(footnotes omitted) as follows: ‘Section 25(3) indeed does not give market value a central role. Viewed in the context of our social and political history, questions of expropriation and compensation are matters of acute socio-economic concern and could not have been left to be determined solely by market forces. The approach of beginning with the consideration of market value (or actual financial loss for that matter) and thereafter deciding whether the amounts are just and equitable is not novel. It was adopted by Gildenhuys J in Ex parte Former Highland Residents: In re Ash and Others v Department of Land Affairs. The Court in that matter did not deal with the interpretation and application of s 12(1) of the Act but rather with s 2 of the Restitution of Land Rights Act in the context of monetary compensation for dispossession of land. Nevertheless, the Judge pointed out that the market value of the expropriated property could become the starting point in the application of s 25(3) of the Constitution since it is one of the few factors in the section which is readily quantifiable. Thereafter, an 4 Msiza para 38. amount may be added or subtracted as the relevant circumstances in s 25(3) may require. Actual loss may play a similar role depending on the circumstances of the case. For this reason, the approach adopted here which applies the Act as a starting point and proceeds to apply s 25(3) of the Constitution may not be suitable in all cases. It is, however, the most practicable one in the circumstances of this case where there is no challenge to the constitutionality of the Act.’ [13] This approach, the court emphasised, must be applied with care to ensure that all the factors set out in s 25(3) are given equal weight. The factors set out in s 25(3) makes justice and equity paramount in the calculation of compensation;5 market value on its own is but a component of the set. [14] In the present matter the primary issue between the parties regarding the market value was whether the property had residential development potential. It was agreed between the parties, on the basis of expert evidence, that if the property had residential development potential, its market value was R4,36 million. On the other hand, if it was considered in its present state, namely as agricultural land then the market value was R1,8 million. The disparate valuations must of course be considered in relation to the history and circumstances of the present case and against constitutional and relevant statutory provisions. [15] The report of the expert called on behalf of the State is significant. In reaching his valuation of R1,8 million he considered the physical features attaching to the land as also its present and historical use by the Msiza family. He stated as follows ‘taking cognisance of the historic and current use, the characteristics of the subject property, the lawful use, and the judgment on the subject property in terms of Chapter lll of the Land Reform (Labour Tenants) Act, we considered agricultural use is the highest and best use for the subject property and will be valued accordingly.’ Simply put, the valuation of R1.8 million took account of the Msiza claim in the valuation of the property. 5 See Du Toit para 84. [16] Having regard to the aforesaid and applying the principles set out in the cases referred to above, the conclusion of that expert in relation to the compensation to be paid cannot be faulted. But, contends the appellant, the application of the Pointe Gourde principle requires the impediment to residential development constituted by the Msiza land claim to be ignored in determining the value. The true market value of the land would then be R4,36 million reflecting its developmental potential. [17] The Pointe Gourde principle usually applies in expropriation matters. It found its way onto the statute books in section 12(5)(f) of the Expropriation Act in the following terms: ‛In determining the amount of compensation to be paid in terms of this Act, the following rules shall apply, namely -….. (f) any enhancement or depreciation, before or after the date of notice, in the value of the property in question, which may be due to the purpose for which or in connection with which the property is being expropriated or is to be used, or which is a consequence of any work or act which the State may carry out or perform or already has carried out or performed or intends to carry out or perform in connection with such purpose, shall not be taken into account.’ [18] The section has its origin in the Pointe Gourde6 judgment of the Privy Council, where Lord MacDermott said that it ‘is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition’. The purpose of the principle is set out in Helderberg,7 referring to Australian authority8 as follows: ‘(T)o ensure that a resuming [expropriating] authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption [expropriation] on the basis that the destroyed potential had never existed. . . . The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a 6 Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 (P.C). 7 City of Cape Town v Helderberg Park Development (Pty) Ltd (429/05) [2006] ZASCA 91; [2007] 1 All SA 517 (SCA); 2007 (1) SA 1 (SCA) para 28. 8 Queensland v Murphy (1990) 95 ALR 493 (HC) at 496. feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption. . . .’ [19] In the present matter, the Constitution and the Act set the legal and policy parameters for the restoration of land rights to labour tenants. As mentioned at the outset the relevant steps sanctioned by the legislation to enforce Mr Msiza’s rights were in place and known before the Trust purchased the land. In other words there was a known impediment to the property’s development potential when the property was purchased which had a direct bearing on the price that a willing buyer in the Trust’s position would have been prepared to pay for the property. [20] The application of the Pointe Gourde principle, where the purchaser of land has knowledge of the facts which constitute the impediment to development at the time of the purchase, was considered in Port Edward v Kay.9 In that matter, which dealt with an expropriation, the existence of an impediment to development of the land was known. The impediment was constituted by a policy known as the ‘green wedge scheme’ which prevented the type of development for which the land was otherwise suitable. For that reason the permissions required to develop the land would probably not have been obtained. The development potential was accordingly remote. It was held in Kay’s case that if the purchaser had knowledge of the impediment at the time of the sale to him, that knowledge would have been reflected in the price paid at the time of purchase. Hence the ‘purchaser … had the benefit of that depreciation; to disregard the depreciation in his capacity as seller would be to benefit him in a manner clearly not intended by the section.’10 The section referred to is s 12(5)(f) of the Expropriation Act more fully set out above. Kay is accordingly authority that the Pointe Gourde principle does not apply where the owner, who bought knowing of the impediment, is subsequently expropriated. 9 Port Edward Town Board v Kay 1996 (3) SA 664 (A) 678 B-C; Kerksay Investments (Pty) Ltd v Randburg Town Council 1997 (1) SA 511 (t) 524 F-H. 10 Kay supra 681 [21] The Pointe Gourde principle therefore does not apply to the present case as the Trust bought the land knowing of the Msiza claim and the presence of the Msiza family on the land. On this basis the market value of the land is therefore R1,8 million, and not R4,36 million, which would have been the market value of the land with its developmental potential. [22] The LCC was hesitant to apply the two-stage approach11 but did so and accepted the market value of R1,8 million. It then proceeded to consider compensation which would be just and equitable. It determined that an amount of R300 000 should be deducted from the market value. [23] The reasons for making the deduction12 were listed as being: that there was a ‘disproportionate chasm’ between the amount paid by the trust and the market value it sought to claim; that the trust made no significant investment in the land; that the use of the land had not changed since it was acquired; that when the land was acquired there was a land claim and the Msiza family were residing on the land; that the land had been awarded to the Msiza family in 2004 and had not been transferred; that as the object of the compensation is land reform the fiscus should not be saddled with extravagant claims for financial compensation when the object of expropriating the land is to address the pressing public concern for such reform; that the Msiza family had lived and worked on the farm since 1936 as Labour tenants and should receive compensation. The LCC also found that there has been no direct State investment or beneficial capital improvement of the land. [24] In my view, there was no ‘disproportionate chasm’ between the price paid by the Trust when it bought the land and the market value at the time of the determination. Over the period of Trust ownership the value of land increased. This does not result in a disproportionate chasm but rather in a reflection of the escalation of the value of land. 11 Msiza para 38. 12 Msiza para 80. [25] The failure of the Trust to make any significant investments in the land since acquisition; the unchanged use of the land; the Trust’s knowledge of the impediment to development; the success of the determination, the fact that the Msiza family have been labour tenants and have worked the land since 1936 have all been taken into account in considering market value. The LCC accepted that the expert had considered these factors as against market value.13 [26] There was therefore no justification for stigmatising the Trust’s claim as ‘extravagant’. Nor was there any evidence that the fiscus is unable to pay R1,8 million for the land. In fact it accepted that the valuation was appropriate. There is similarly no evidence that the State is unable to meet claims of this nature. On the contrary it is the amount the State was willing to pay. [27] There were thus no facts justifying the deduction of the amount of R300 000. The LCC arbitrarily decided on this amount with no rational foundation. The computation was accordingly unfounded and cannot stand. [28] A just and equitable determination for the land is R1,8 million. [29] The LCC made no order as to costs which is the usual order made in the LCC where no exceptional circumstances exist. This approach to costs has been recognised in this court.14 In my view exceptional circumstances do exist in the present matter. Mr Msiza was obliged to bring the application as the matter was not moving forward. The negotiations between the Trust and the Minister had stalled. Shortly prior to the commencement of the proceedings, the Minister accepted that R1,8 million was an appropriate determination, yet did not tender that amount. The Trust was therefore compelled to go to trial to get any determination in its favour at all. The extreme dilatory conduct of the Minister coupled with his failure to make an appropriate tender constitute exceptional circumstances and justify an award of costs against him in favour of the Trust as well as in favour of Mr Msiza. Each achieved substantial 13 Msiza para 76. 14 Abrams v Allie N O & others 2004 (9) BCLR 914 (SCA) para 29. success. The position on appeal is different. The Trust was unsuccessful in its main attack. It succeeded on the issue of the deduction and should be awarded costs on that basis. Counsel were agreed that an appropriate order was that the Minister pay 70% of the Trust’s costs and all of the first respondent’s costs. [30] It remains to thank the amicus curiae for the assistance which it gave this court. [31] In the result the following order is made: 1 The appeal is upheld with costs. 2 The third respondent is to pay the first respondent’s costs and 70% of the appellant’s costs, such costs are to include the costs of two counsel. 3 The order of the Land Claims Court is amended as follows: The figures ‘R1 500 000 (one million five hundred thousand rand)’ are deleted and substituted with the figures ‘R1 800 000 (one million eight hundred thousand rand)’ where they appear in paragraphs one and two. Paragraph 5 is deleted and substituted with ‘5. The second respondent is to pay the costs of the applicant and the Dee Cee Trust, including the costs of two counsel’. ______________________ C G Lamont Acting Judge of Appeal APPEARANCES: For the Appellants: G J Scheepers Instructed by: Karien Schutte Attorneys, Middelburg Schoeman Maree Inc., Bloemfontein For the 1st Respondent: A A Gabriel SC (with M Bishop) Instructed by: Legal Recources Centre, Johannesburg Matsepes Inc., Bloemfontein For the 2nd and 3rd Respondents: N H Maenetje SC (with P Nonyane) Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For the Amicus Curiae: G M Goedhart Instructed by: Macroberts Attorneys, Pretoria Claude Reid Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM : The Registrar, Supreme Court of Appeal DATE 29 September 2017 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Uys & another v Msiza & others (1222/2016) [2017] ZASCA 130 (29 September 2017) MEDIA STATEMENT The Supreme Court of Appeal (SCA) today upheld an appeal against a determination by the Land Claims Court of South Africa, Johannesburg in which it awarded compensation to the Trust, in which the appellants are the Trustees, for property awarded to the first respondent, Msindo Philemon Msiza, and his family. The primary issue between the parties in the matter related to the market value of the land in question and whether such land had residential development potential or whether it was agricultural land as the respective valuations differed substantially in worth. After weighing up all the prevailing circumstances and factors relating to the land, the SCA held that the Constitution set the factors constituting the just and equitable compensation to the landowner for land. Dealing with the Land Claims Court’s decision to deduct R300 000 from the market value it had determined on that basis of what it termed a ‘disproportionate chasm’ between the amount paid by the Trust and the market value it sought to claim, the SCA held that there was in fact no disproportionality in this regard as the value of the land had escalated over time. Finally, after careful examination of the Pointe Gourde principle, the court held that the principle did not apply to the present case as the landowner had purchased the land and taken transfer of it after the labour tenants had lodged a land claim in respect of it and as then had possessed the land for many years. As such, the land was agricultural land. A just and equitable compensation should be determined on that basis.

3037

non-electoral

2015

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 233/2015 In the matter between: DDP Valuers (Pty) Ltd Appellant and Madibeng Local Municipality First Respondent Dijalo Property Valuers Second Respondent Neutral citation: DDP Valuers (Pty) Ltd v Madibeng Local Municipality (233/2015) [2015] ZASCA 146 (1 October 2015). Coram: Mpati P, Lewis, Mhlantla, Bosielo and Swain JJA Heard: 15 September 2015 Delivered: 1 October 2015 Summary: Administrative Law – review of municipal tender – interpretation and application of section 7(2) of the Promotion of Administrative Justice Act 3 of 2000 – duty to exhaust internal remedies prior to instituting judicial review proceedings – the dispute resolution mechanism created by regulation 50 of the Municipal Supply Chain Management Regulations does not constitute an internal remedy as contemplated by section 7(2) of the PAJA. ___ ORDER ___ On appeal from: Gauteng Division of the High Court, Pretoria (Makgoba J sitting as court of first instance). 1 The appeal is upheld with costs. 2 The first and second respondents are ordered to pay the costs of the appeal jointly and severally, the one paying the other to be absolved. 3 The order of the court a quo is set aside and replaced with the following order: ‗The point in limine is dismissed with costs.‘ 4 The matter is remitted to the court a quo for a decision on the merits. ___ JUDGMENT ___ Mhlantla JA (Mpati P, Lewis, Mhlantla, Bosielo and Swain JJA concurring): [1] This appeal with leave of the court a quo turns on whether the dispute resolution mechanism created by reg 50 of the Municipal Supply Chain Management Regulations, GN 868, GG 27636 of 30 May 2005 (the regulations) constitutes an ‗internal remedy‘ contemplated in s 7(2) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The litigation in this matter arose after the Madibeng Local Municipality (the Municipality) awarded a municipal contract to Dijalo Property Valuers (the second respondent) one of several entities that had tendered for a contract to perform services for it. [2] The facts are uncomplicated. On 10 May 2013 the Municipality issued an invitation to tender for the compilation of a new General and Supplementary Valuation Roll for the period 2014 to 2018. Fifteen bidders submitted tenders. DDP Valuers (Pty) Ltd (the appellant), which had been the municipal valuer for the Municipality in the period preceding September 2013, and the second respondent were shortlisted. [3] The second respondent was successful in its bid and was appointed to perform the services listed in the agreement with effect from 9 September 2013 until 30 June 2018 in terms of the Service Level Agreement concluded between it and the Municipality. Upon being advised of the award of the tender to the second respondent, the appellant lodged an objection in terms of reg 49 of the regulations on the basis that the second respondent‘s tender was out of proportion and far exceeded the appellant‘s bid which was the second lowest. Reg 49 provides the following: ‗49. Objections and complaints.—The supply chain management policy of a municipality or municipal entity must allow persons aggrieved by decisions or actions taken by the municipality or municipal entity in the implementation of its supply chain management system, to lodge within 14 days of the decision or action a written objection or complaint to the municipality or municipal entity against the decision or action.‘ [4] On 1 October 2013 the appellant directed its letter of objection to the Municipality requesting the latter to provide it with certain information relating to the winning bidder and the evaluation process. The appellant also requested the Municipality in terms of reg 50 of the regulations, to appoint a competent and qualified person to assist in resolving the dispute. The suspension of the operation of the new contract with the second respondent was sought until the dispute with the appellant had been resolved. [5] The Municipality replied on the same day by email stating that in view of the fact that the appellant had instituted action against it for payment of outstanding invoices, it would be unethical for the appellant to continue communicating with the Municipality and its staff. [6] The appellant‘s reply to the email from the official was that its objection was a separate issue which had nothing to do with the summons issued against the Municipality. The appellant concluded by stating: ‗Should we not receive the information requested, we will also take legal action on this matter against your municipality.‘ The Municipality did not respond to the appellant‘s letter and its request in terms of reg 50 of the regulations. [7] The appellant proceeded to launch an application in the Gauteng Division of the High Court, Pretoria for the review and setting aside of the Municipality‘s award of the tender to the second respondent on a number of grounds including, inter alia: (a) That the tender Bid Evaluation Committee (BEC) had evaluated the tender on criteria in respect of functionality that differed from what was stated in the tender specifications set out in the Request for Proposals (RFP). (b) That the BEC evaluated the tender based on responsiveness instead of the preference points system prescribed in regs 5 and 6 of the Preferential Procurement Regulations1 and contrary to reg 4(5) thereof. [8] The Municipality and second respondent opposed the application. 1 Preferential Procurement Policy Framework Act, 2000: Preferential Procurement Regulations, GN R502, Government Gazette 34350 of 8 June 2011. In their answering affidavits, the respondents raised a point in limine that the appellant had not exhausted internal remedies in terms of s 7(2) of the PAJA, and in particular reg 50 of the regulations, prior to launching the judicial review proceedings. It was argued that upholding the point in limine would be dispositive of the case. [9] The matter came before Makgoba J. The learned judge was asked to determine the point in limine before considering the merits. He held that reg 50 of the regulations constituted an internal remedy and that the appellant either had to exhaust that remedy or approach the court for exemption as contemplated in s 7(2) of the PAJA. Since the appellant had done neither, the court a quo upheld the point in limine and dismissed the application with costs. [10] The issue to be determined is whether the dispute resolution mechanism created by reg 50 constitutes an internal remedy as contemplated in s 7(2) of the PAJA. The Municipality abides the decision of this court and accordingly did not make any submissions in respect of the merits of the appeal. The second respondent, whilst abiding the decision of the court, submitted written heads of argument to address the issue of costs of the appeal in the event the appeal is upheld. [11] Central to the issues is reg 50 of the regulations, which provides the following: ‗50. Resolution of disputes, objections, complaints and queries.— (1) The supply chain management policy of a municipality or municipal entity must provide for the appointment by the accounting officer of an independent and impartial person not directly involved in the supply chain management processes of the municipality or municipal entity — (a) to assist in the resolution of disputes between the municipality or municipal entity and other persons regarding — (i) any decisions or actions taken by the municipality or municipal entity in the implementation of its supply chain management system; or (ii) any matter arising from a contract awarded in the course of its supply chain management system; or (b) to deal with objections, complaints or queries regarding any such decisions or actions or any matters arising from such contract. (2) A parent municipality and a municipal entity under its sole or shared control may for purposes of subregulation (1) appoint the same person. (3) The accounting officer, or another official designated by the accounting officer, is responsible for assisting the appointed person to perform his or her functions effectively. (4) The person appointed must — (a) strive to resolve promptly all disputes, objections, complaints or queries received; and (b) submit monthly reports to the accounting officer on all disputes, objections, complaints or queries received, attended to or resolved. (5) A dispute, objection, complaint or query may be referred to the relevant provincial treasury if — (a) the dispute, objection, complaint or query is not resolved within 60 days; or (b) no response is received from the municipality or municipal entity within 60 days. (6) If the provincial treasury does not or cannot resolve the matter, the dispute, objection, complaint or query may be referred to the National Treasury for resolution. (7) This regulation must not be read as affecting a person‘s rights to approach a court at any time.‘ [12] The overarching statutory provision, s 7(2) of the PAJA, provides the following: ‗(2)(a) Subject to paragraph (c), no court or tribunal shall review an administrative action in terms of this Act unless any internal remedy provided for in any other law has first been exhausted. (b) Subject to paragraph (c), a court or tribunal must, if it is not satisfied that any internal remedy referred to in paragraph (a) has been exhausted, direct that the person concerned must first exhaust such remedy before instituting proceedings in a court or tribunal for judicial review in terms of this Act. (c) A court or tribunal may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust any internal remedy if the court or tribunal deems it in the interest of justice.‘ [13] In Reed and others v The Master of the High Court and others,2 Plasket J defined the term ‗internal remedy‘ when used in administrative law as follows: ‗[T]he composite term ―internal remedy‖ . . . is used to connote an administrative appeal – an appeal, usually on the merits, to an official or tribunal within the same administrative hierarchy as the initial decision-maker – or, less common, an internal review. Often the appellate body will be more senior than the initial decision-maker, either administratively or politically, or possess greater expertise. Inevitably, the appellate body is given the power to confirm, substitute or vary the decision of the initial decision-maker on the merits. In South Africa there is no system of administrative appeals. Instead internal appeal tribunals are created by statute on an ad hoc basis.‘ (Footnotes omitted.) [14] Generally, the duty to exhaust internal remedies is not in and of itself absolute3 nor is it automatic.4 That much is clear from the latitude given to courts in s 7(2)(c) of the PAJA, to exempt applicants, in exceptional circumstances and upon application made by the person concerned, from exhausting internal remedies if deemed by the court to be in the interest of justice. Furthermore, ‗a court will condone a failure to 2 Reed v Master of the High Court of SA [2005] ZAECHC 5; [2005] 2 All SA 429 (E) para 25. 3 Koyabe v Minister of Home Affairs (Lawyers for Human Rights as Amicus Curiae) [2009] ZACC 23; 2010 (4) SA 327 (CC) para 38. 4 Lawrence Baxter Administrative Law (1984) at 720. See also Cora Hoexter Administrative Law in South Africa 2 ed (2012) at 539. pursue an available remedy where the remedy is illusory or inadequate, or because it is tainted by the alleged illegality.‘5 Under the common law, the two ‗paramount considerations‘ are (a) whether the domestic remedies are capable of providing effective redress, and (b) whether the alleged unlawfulness undermines the internal remedies themselves.6 [15] Section 7(2) of the PAJA was considered by Mokgoro J in Koyabe v Minister of Home Affairs (Lawyers for Human Rights as Amicus Curiae),7 where it was held that an aggrieved party must take reasonable steps to exhaust internal remedies in view of the rationale of internal remedies as ‗a valuable and necessary requirement in our law‘.8 However, it was also held that this requirement should not be rigidly imposed, nor should it be used by administrators to ‗frustrate the efforts of an aggrieved person or to shield the administrative process from judicial scrutiny‘.9 The court held that internal remedies are necessary because they are designed to provide more readily available, immediate and cost- effective relief.10 They defer to the executive administrative autonomy and afford the relevant ‗higher administrative body‘ an opportunity to rectify its own irregularities before resorting to litigation.11 They also enable the administrators, where applicable, to apply specialised knowledge which may be of a technical or practical nature,12 including fact-intensive cases, where administrators have easier access to the relevant facts and information, which benefits courts in judicial review proceedings having the full record of an internal adjudication.13 5 Hoexter (note 4 above) at 539. (Footnotes omitted.) 6 Baxter (note 4 above) at 721. 7 Koyabe (note 3 above) para 34-49. 8 Paragraph 38. 9 Paragraph 38. 10 Paragraph 35. 11 Paragraph 36. 12 Paragraphs 36-37. 13 Paragraph 37. [16] In this court, counsel for the appellant submitted that reg 50 of the regulations does not provide an internal remedy in that the tribunal does not have the powers to declare the award of the tender invalid and set it aside. I agree. The heading of reg 50 merely refers to the ‗resolution of disputes, objections, complaints and queries‘. What is envisaged by subregulation (1) is that the procedure be contained in a municipality‘s Supply Chain Management policy (the SCM policy). This seems to suggest that the SCM policy must itself set out the procedure. [17] The functions of the independent and impartial person are twofold. He or she must: (a) assist in the resolution of disputes between the municipality or municipal entity and other persons regarding any decisions or actions taken by the municipality or municipal entity in the implementation of its supply chain management system or any matter arising from a contract awarded in the course of its supply chain management system; or (b) deal with objections, complaints or queries regarding any such decisions or actions or any matters arising from such contract. Such appointed person must (i) strive to resolve promptly all disputes, objections, complaints or queries received; and must (ii) submit monthly reports to the accounting officer on all disputes, objections, complaints or queries received, attended to or resolved. Having regard to the words used in reg 50, in the context of the regulations as a whole and the apparent purpose to which they are directed,14 reg 50 is not an internal remedy as envisaged in s 7(2) of the PAJA. [18] In addition, reg 50 does not set out the manner in which these 14 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. complaints, queries or objections will be dealt with and what documents will be considered in the process of dealing with them. The grounds upon which the decisions may be challenged are not specified. The appointed person is required to ‗submit monthly reports to the accounting officer‘. The independent and impartial person is not directly involved in the supply chain management processes, evincing the lack of the hierarchy and specialised knowledge requirements mentioned in Koyabe. There appears to be no indication that the report(s) will be communicated to the aggrieved person. Importantly, the powers of the independent and impartial person are not set out in reg 50, but they clearly do not include powers to correct or set aside the decision of the Municipality complained of. It is clear that this person has no decision-making powers. This too falls short of what an internal remedy would constitute. [19] Where the dispute remains unresolved within a period of 60 days, or no response is received from the municipality within that period, the aggrieved party may refer the dispute to the relevant provincial treasury, failing which it may be escalated to the national treasury. No procedure is provided on how these objections and complaints would be resolved save to state that if the impartial person is unable to resolve the dispute, the aggrieved party may refer the dispute to the provincial treasury. Similarly, if the latter cannot resolve the dispute, the complaint or objection must be referred to the national treasury. The regulation is silent as to how and by whom the dispute would be resolved at these levels and on further action if the national treasury has not resolved the dispute. [20] Finally, subreg (7) provides that the ‗regulation must not be read as affecting a person‘s rights to approach a court at any time‘. A person is therefore given a choice either to lodge a dispute in terms of reg 50 of the regulations or launch an application in court. As has been pointed out by Professor Phoebe Bolton,15 on a reading of the regulations, there is no intention on the part of the legislature for the independent and impartial person to have remedial powers. He or she is simply required to resolve or settle complaints and objections. On the wording of the regulations, a municipality or municipal entity is under an obligation to provide for the filing of objections and complaints without prescribing remedial outcomes. The regulations do not provide an internal remedy in terms of s 7(2) of the PAJA. Consequently, the regulations do not constitute an internal remedy. [21] In my view the decision of Plasket J in ESDA Properties (Pty) Ltd v Amathole District Municipality16 is correct. In that case, the learned judge was faced with provisions similar to those of reg 50, ie ss 108 and 109 of Amathole District Municipality Supply Chain Management Policy, 2012.17 The learned judge held as follows in paras 10-11: ‗In my view it was, for two reasons, not obligatory for ESDA to have first utilised this mechanism before applying for the review of the award of the tender. The first is that ss 108 and 109 do not create an internal appeal or review in which the decision-maker has the power to confirm, substitute or vary the decision complained of. Instead, it creates a dispute resolution mechanism in which a person, with no decision-making powers, is appointed to assist the parties to resolve their dispute, acting, it would appear, as a mediator or conciliator. This is not an internal remedy contemplated by s 7(2) of the PAJA. The second reason is that s 109(6) provides in express terms that a party has a choice of either using the dispute resolution mechanism or approaching a court. In other words, it does not operate to prevent a party from approaching a court ―at any time‖.‘ 15 Phoebe Bolton ‗Municipal tender awards and internal appeals by unsuccessful bidders‘ Potchefstroom Electronic LJ 2010 (13) 3 at 80, available at http://www.nwu.ac.za/p-per/index.html. 16 ESDA Properties (Pty) Ltd v Amathole District Municipality & others [2014] ZAECGHC 76; 2014 JDR 1878 (ECG). 17 The policy adopted by the Amathole District Municipality is very similar to reg 50 of the regulations. [22] In the result, since reg 50 of the regulations did not provide an internal remedy, there was no obligation on the appellant to utilise its provision or apply for an exemption in terms of s 7(2)(c) of the PAJA. Therefore, the court a quo erred when it concluded that even though a purported internal remedy would not be effective and its pursuit would be futile, it was still incumbent upon the appellant to approach the court for exemption from the obligation to exhaust internal remedies. The court a quo erred in upholding the point in limine. [23] In my view, the only other provision that could have been applicable is s 62 of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act),18 which is a general appeal provision for municipalities and does constitute an internal remedy contemplated in s 7(2) of the PAJA. Unlike reg 50 of the regulations, in that section, the appeal authority is empowered after considering the appeal to confirm, vary or set the decision aside, provided such variation will not adversely affect the rights that have already accrued to the preferred bidder. In the majority judgment of City of Cape Town v Reader and others,19 Lewis JA considered the meaning of s 62 of the Systems Act to be that a decision can only be appealed against in terms of that section, if the outcome of the appeal does not detract from the rights of the successful applicant. 18 Section 62 subsecs (1), (2) and (3) of the Local Government: Municipal Systems Act 32 of 2000 provide: ‗(1) A person whose rights are affected by a decision taken by a political structure, political office- bearer, councillor or staff member of a municipality in terms of a power or duty delegated or sub- delegated by a delegating authority to the political structure, political office bearer, councillor or staff member, may appeal against that decision by giving written notice of the appeal and reasons to the municipal manager within 21 days of the date of the notification of the decision. (2) The municipal manager must promptly submit the appeal to the appropriate appeal authority mentioned in subsection (4). (3) The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.‘ 19 City of Cape Town v Reader & others [2008] ZASCA 130; 2009 (1) SA 555 (SCA) para 32. [24] In Groenewald NO and Others v M5 Developments (Cape)(Pty) Ltd,20 it was held that unsuccessful tenderers were entitled to appeal under s 62 of the Systems Act. Leach JA held: ‗Section 62(1) allows a person to appeal by giving ―written notice of the appeal and reasons‖ to the municipal manager who, under s 62(2) has then to submit ‗the appeal‘ – obviously the notice of appeal and the reasons lodged therewith under s 62(1) – to the appeal authority for it to consider ‗the appeal‘ under s 62(3). Although in terms of this latter subsection the appeal authority is empowered to ―confirm, vary or revoke the decision‖, it exercises that power in the context of hearing ―the appeal‖, viz the appeal and the reasons lodged by the aggrieved person under s 62(1).‘ [25] In this case, the appellant as an unsuccessful tenderer would have been entitled to appeal under s 62. However, the Municipality had already awarded the contract to the second respondent and the parties had already signed an agreement to that effect resulting in the rights accruing to the second respondent. It follows that the appellant could not resort to that procedure in order to comply with s 7(2) of the PAJA. [26] In the result, the only recourse available for the appellant as an unsuccessful bidder was to apply for the judicial review of the tender award and the conclusion of the contract, which it did. The appeal must therefore succeed. [27] What remains is the question of costs. The second respondent in its written heads of argument submitted that it should not be ordered to pay the costs of appeal. It submitted that it would not be fair or equitable to mulct it with these costs as it did not oppose the appeal and it gave all the parties notice of its non-opposition, three and a half months before the 20 Groenewald NO & others v M5 Developments (Cape)(Pty) Ltd [2010] ZASCA 47; 2010 (5) SA 82 (SCA) para 24. hearing of the appeal. In the alternative, it submitted that it should only be liable for the appellant‘s costs until 9 June 2015 when it filed its notice to abide. [28] The basic rule is that all costs are in the discretion of the court. It is true that the second respondent filed a notice to abide the decision of the court. This obviously does not have the effect of setting aside the order of the court a quo. The appellant still had to proceed with the appeal to have that order set aside so that the review process could proceed. The appellant therefore had no choice but to carry on with the appeal. [29] The general rule on appeal is that a substantially successful party is entitled to the costs of the appeal. There is no reason to depart from the general rule on the facts of this case. Accordingly, the appellant is entitled to its costs of appeal which shall be paid by both respondents jointly and severally. [30] In the result, I make the following order: 1 The appeal is upheld with costs. 2 The first and second respondents are ordered to pay the costs of the appeal jointly and severally, the one paying the other to be absolved. 3 The order of the court a quo is set aside and replaced with the following order: ‗The point in limine is dismissed with costs.‘ 4 The matter is remitted to the court a quo for a decision on the merits. __________________ N Z MHLANTLA JUDGE OF APPEAL APPEARANCES: For Appellant: B C Stoop SC Instructed by: Coetzer and Partners, Pretoria Honey Attorneys, Bloemfontein For Respondents: No appearance

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 October 2015 STATUS Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. DDP Valuers (Pty) Ltd v Madibeng Local Municipality (233/2014) [2015] ZASCA 146 (1 October 2015). The Supreme Court of Appeal (SCA) today upheld an appeal against a judgment of the Gauteng Division of the High Court, Pretoria. The appeal related to the question whether a regulation of the municipality constituted an internal remedy as contemplated in section 7(2) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). DDP Valuers (Pty) Ltd (appellant) and Dijalo Property Valuers (second respondent) and several other entities tendered for a contract to perform services for the first respondent, the Madibeng Local Municipality (Municipality). The appellant and the second respondent were shortlisted. The tender was awarded to the second respondent. Pursuant thereto a Service Level Agreement was concluded between the Municipality and the second respondent. Upon learning of the Municipality’s award of the tender to the second respondent, the appellant lodged an objection in terms of reg 49 of the Municipal Supply Chain Management Regulations (the regulations). There was no response to the objection. The appellant proceeded to launch an application for the review and setting aside of the tender award in the Gauteng Division of the High Court, Pretoria (Makgoba J) on a number of grounds including that the tender was incorrectly evaluated. The Municipality and second respondent opposed the application raising a preliminary point of law that the appellant had failed to first exhaust internal remedies of the Municipality in terms of s 7(2) PAJA which requires prior exhaustion of internal administrative remedies before approaching a court for judicial review. The Municipality and second respondent contended that regulation 50 was such internal remedy which the appellant had to exhaust before approaching the court. The court a quo was asked to determine the preliminary point before considering the merits. It held that regulation 50 constituted an internal remedy and dismissed the application with costs. The court granted the appellant leave to appeal to this court. The issue on appeal was whether regulation 50 constituted an internal remedy which the appellant had to exhaust before approaching a court on review. The SCA found that regulation 50 fell short of the legal requirements of an administrative internal remedy envisaged in s 7(2) of PAJA in that an administrative decision was not capable of being appealed in terms of the regulations, ie to confirm, substitute or vary the decision. Regulation 50 was instead a non-binding mere dispute resolution mechanism. The SCA accordingly held that regulation 50 did not constitute an internal remedy and that the court a quo erred in upholding the preliminary point raised by the Municipality and second respondent. The SCA found that s 62 of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) would have been an internal remedy envisaged in s 7(2) of PAJA, however that it was limited to cases where rights had not yet accrued. Section 62 of the Systems Act was not applicable in this appeal as the Municipality and second respondent had concluded a Service Level Agreement in respect of which rights had accrued. The court found that the appellant, as an unsuccessful tender bidder, could approach the court on review. The SCA accordingly upheld the appeal and replaced the order of the court a quo with an order dismissing the preliminary point with costs against the Municipality and second respondent jointly and severally. It remitted the matter to the court a quo for the determination of the merits of the case. --- ends ---

3246

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Rapporteerbaar Saaknr: 36/07 In die saak tussen: PGB BOERDERY BELEGGINGS (EDMS BPK Eerste Appellant SB BOERDERY BELEGGINGS (EDMS) BPK Tweede Appellant en SOMERVILLE 62 (EDMS) BPK Eerste Respondent TOUCHSTONE CATTLE RANCH (EDMS) BPK Tweede Respondent Coram: HARMS Wnde AP, FARLAM, NAVSA, COMBRINCK ARR en MALAN Wnde AR Verhoor: 15 NOVEMBER 2007 Gelewer: 26 NOVEMBER 2007 Summary: Neighbour law – nuisance – right to introduce blue wildebeest on game farm in spite of risk of bovine malignant catarrhal fever Neutral Citation: PGB Boerdery Beleggings (Edms) Bpk v Somerville 62 (Edms) Bpk [2007] SCA 145 (RSA) U I T S P R A A K HARMS Wnde AP/ HARMS Wnde AP [1] Blouwildebeeste is draers van ‘n virussiekte met die onverkwiklike maar beskrywende naam van ‘snotsiekte’. Die Engels is meer elegant: ‘bovine malignant catarrhal fever’. Die siekte is aansteeklik en beeste is vatbaar vir besmetting. Besmette beeste vrek gewoonlik. Maar beeste kan die siekte ook opdoen indien hulle in kontak met skape of swartwildebeeste kom. Hoewel die siekte vroeër ‘n beheerde siekte was (wat beteken het dat veeartsenykundige permitte vir die aanhou en vervoer van blouwildebeeste benodig is) is die posisie tans dat die siekte nie deur die relevante owerhede as ‘n bedreiging vir die beesboerdery-bedryf beskou word nie aangesien dit nie meer beheer word nie. Die beskikbare statistieke verduidelik waarom. Met die uitbreek van die siekte word gewoonlik nie meer as twee of drie beeste besmet nie wat dan vrek. Daar is enkele uitsonderings waar groter getalle gevrek het. Nogtans, gedurende 2004 het 125 en gedurende 2005 het 108 beeste landswyd aan die siekte gevrek, ‘n onbeduidende getal as die grootte van die land se veekudde in ag geneem word. Of al die vrektes aan die teenwoordigheid van blouwildebeeste te wyte is, is onbekend en ook of alle gevalle noodwendig gerapporteer is. Die siekte is ook grotendeels seisoenaal in die sin dat gedurende ongeveer die helfte van die jaar die kans vir besmetting negeerbaar is. [2] Teen hierdie agtergrond moet die burereg-dispuut tussen die partye opgelos word. (Dis onnodig om die partye naderby te identifiseer. Aan beide kante is telkens twee boerderymaatskappye maar omdat dit eenmansmaatskappye is, word vir doeleindes van die uitspraak die twee appellante en die twee respondente respektiewelik as een party en natuurlike persoon behandel.) Die appellant wou keer dat die respondent ‘n trop van 500 blouwildebeeste op sy plaas vestig. Die respondent is naamlik besig om op ‘n gebied van ongeveer 9 000 hektaar ‘n wildplaas te skep met insluiting van ‘n hotelkompleks vir 1 370 gaste. Die plaas word volledig wildwerend omhein en as die bedryf eers gevestig is, behoort dit werksgeleenthede aan 2 500 persone te verskaf. [3] Die appellant boer op groot skaal met sowat 1 300 beeste op ‘n aantal eiendomme wat gesamentlik 7 500 hektaar groot is. Hierdie eiendomme is nie in een blok nie. Slegs een eiendom, ‘n deel van die plaas Boovensteoog, grens aan die respondent se eiendom. ‘n Ander stuk word deur ‘n provinsiale pad van die respondent se eiendom geskei. Die gedeelte wat inderdaad direk grens, is maar sowat 300 hektaar groot maar minder as die helfte van die grens tussen hierdie gedeelte en die respondent se eiendom word geraak omdat die respondent ‘n aparte wildkamp vir sg. eksotiese diere (die respondent bedoel eintlik skaars antilope) daar wil skep en waar blouwildebeeste nie sal kom nie. Die appellant boer op wetenskaplike wyse met ‘n kommersiële kudde. Dit beteken dat hy wisselweiding toepas wat op sy beurt beteken dat hy nie die aangrensende kampe op ‘n deurlopende basis benodig nie maar dat hy sy vee elders kan laat wei as die siekte op sy aansteeklikste is. [4] Die respondent het sy bure in kennis van die voorgenome vestiging van die blouwildebeeste gestel en het in die lig van besware onderneem om vir enige veevrektes as gevolg van snotsiekte te betaal. Dit was nie vir die appellant aanvaarbaar nie. Toevallig het hy self blouwildebeeste aangehou wat hy toevallig enkele dae voor die loods van die aansoek van sy eiendom laat verwyder het. Toevallig skei hy ook nie sy skape van sy beeste nie en dit ten spyte van die feit dat skape, soos gemeld, ook draers van die siekte is. Meer toevallig is die feit dat hy sowat ‘n maand voor die aansoek ‘n natuurbewaringspermit (wat iets anders as ‘n veeartsenykundige permit is) vir die aanhou van o.a. blouwildebeeste op sy plaas bekom het. [5] Hoe dit ook al sy, die applikant het op dringende wyse aansoek om ‘n bevel gedoen wat die respondent moes verbied om hoegenaamd blouwildebeeste op sy plaas te bring of met hulle te boer – en dit ten spyte van die feit dat die appellant o.a geweet het (maar nie in sy funderende verklaring gemeld het nie) dat die moontlikheid van besmetting uitgeskakel kan word as die blouwildebeeste vir ‘n afstand van ‘n kilometer weggehou word van beeste. Hierdie kennis is waarskynlik die rede vir die alternatiewe bede – wat geen feitegrondslag in die funderende verklaring het nie – dat die respondent gelas moet word om ‘n wildwerende heining tussen die twee eiendomme te span een kilometer ver van die grensheining. (Hoekom nou juis een kilometer en nie minder nie word nie verduidelik nie.) Die effek hiervan sou op die beskikbare inligting wees om ongeveer 300 hektaar grond van die respondent se plaas onbenutbaar te maak. [6] Die aansoek is deur Ledwaba R in die Hooggeregshof van die hand gewys. Omdat hy egter ‘n fout gemaak het in sy uitspraak (hy het gedink dat die respondent die permit waarna verwys is, gekry het) het hy verlof tot appèl verleen. Die fout help egter nie die appellant nie omdat die feit dat die appellant die permit gekry het iets is wat eerder teen die appellant en in die guns van die respondent tel. Daar is egter ‘n moontlike tweede fout, dié keer ‘n vergissing, in sy uitspraak. Die aansoek was om ‘n finale interdik maar die belese regter het aan die einde van sy uitspraak die oorwig van gerief (‘balance of convenience’) oorweeg en tot die gevolgtrekking gekom dat dit die respondent begunstig. Die oorwig van gerief is egter nie iets wat ter sprake kom by die oorweging of ‘n finale interdik toegestaan of geweier moet word nie. Maar indien mens die uitspraak onbevange lees, is dit m.i. duidelik dat wat die hof met die opweging van gerief bedoel het, was inderdaad ‘n opweging van die botsende belange van die partye – die bure – en nie om ‘n beginsel wat by tussentydse interdikte geld, by permanente interdikte in te sleep nie. [7] Die appellant het veral op die uitspraak van Pickering R in Wright v Cockin 2004 (4) SA 207 (E) staatgemaak. In daardie geval het die hof die eienaar van ‘n wildboerdery gelas om sy blouwildebeeste van die buurman se beeste op ‘n afstand van een kilometer weg te hou, ook vanweë die gevaar van snotsiekte. Die respondent het egter betoog dat die hof die reg verkeerd verstaan het en het veral na die gedeelte van die uitspraak verwys waar die hof, nadat die toets vir onregmatigheid aangehaal is, die volgende gesê het (op 217G-I): ‘In my view, however, the issue is a straightforward one. This is not, in my view, dealing as we are with an alleged nuisance emanating from respondents' property, the type of case where the Court is required to render a value judgment as to what society's notion of justice demands. A landowner has an intrinsic right to the reasonable enjoyment of his land. If his neighbour through his positive actions unjustifiably interferes with that right thereby causing him physical or patrimonial harm then his actions are wrongful. In the present matter therefore if applicants can establish that they have a reasonable apprehension that the snotsiekte virus will be transmitted to their cattle by respondents' blue wildebeest running adjacent to their boundary then, in my view, they will have satisfied the first two requirements for the granting of a final interdict.’ [8] Die appellant se advokaat het nie gepoog om die benadering te regverdig of te onderskryf nie. Die eerste vereiste vir die toestaan van ‘n interdik is die bestaan van ‘n duidelike reg en die tweede, in die woorde van Van der Linden se Koopmans Handboek 3 4 7, ‘een gepleegde feitelijheid’, d.w.s. ‘n onregmatige daad, hetsy reeds gepleeg of dreigend. [9] Die eienaar van grond is geregtig om sy grond op ‘n normale en redelike wyse te gebruik (Malherbe v Ceres Municipality 1951 (4) SA 510 (A)). Dit kan nie betoog word dat die gebruik van grond vir die skep van ‘n wildreservaat op abnormale en onredelike gebruik neerkom nie, veral nie in die huidige omstandighede nie. Die vraag is dan of die aanhou van blouwildebeeste as deel van die wild op ‘n onredelike en abnormale gebruik van grond neerkom, oftewel of die ‘respondent sy eiendomsbevoegdhede oorskry het en derhalwe onregmatig teenoor die applikant opgetree het’? (Spoelstra Wnde R in Gien v Gien 1979 (2) SA 1113 (T) 1121D-E.) Dis ‘n vraag wat (anders as wat Pickering R se benadering was) aan die hand van die objektiewe redelikheidskriterium beantwoord moet word.1 Met ander woorde, is dit redelik om die respondent se eiendomsreg op die voorgestelde wyse in te perk? Vgl. Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) par. 11-12. Soos die skrywer JRL Milton dit met verwysing na gesag gestel het: ‘An interference with the property rights of another is not actionable as a nuisance unless it is unreasonable. An interference will be unreasonable when it ceases to be a “to-be- expected-in-the-circumstances” interference and is of a type which does not have to be tolerated under the principle of “give and take, live and let live”. 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 is not that of the reasonable man but rather 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 1 Die juistheid van Pickering R se resultaat is natuurlik nie ter oorweging nie. interference or whether the perpetrator ought to be compelled to terminate the activities giving rise to the harm. This is achieved, in essence, by comparing the gravity of the harm caused with the utility of the conduct which has caused the harm.’ (19 Lawsa (1e hersiening) par. 189. Die kursief gedrukte dele is ongelukkig deur Church en Church met die bewerking van die tweede uitgawe van Lawsa par. 173 weggelaat.) [10] Dit kan alleen die geval wees as die respondent ‘n onredelike gevaar vir sy buurman se boerdery-bedrywighede skep. Die blote kans van skade is onvoldoende want, soos Miller R tereg opgemerk het, ‘the “interference” with the neighbours right of enjoyment must be material or substantial, for it goes without saying that, especially in contemporary conditions, some inconvenience or annoyance emanating from the use of neighbouring property must needs be endured.’ (De Charmoy v Day Star Hatchery (Pty) Ltd 1967 (4) SA 188 (D) 192A-B.) Hierdie stelling is besonderlik van toepassing waar mens met ekstensiewe boerdery te doen het. Wildboerdery kan denkbaar die bosluispopulasie verhoog omdat die diere nie gedip word nie. Moet dit dan verbied word omdat die bosluise die buurman se beeste meer as normaal kan affekteer? ‘n Uitbreek van veesiektes op die applikant se eiendom kan goed denkbaar die wild op die respondent se plaas raak. Moet die applikant gevolglik verbied word om met beeste te boer? [11] Volgens my oordeel het die appellant nie daarin geslaag om aan te toon dat die respondent se invoer van blouwildebeeste op sy regte as eienaar inbreuk sal maak nie veral in die lig van die buitensporige aard van die aangevraagde regshulp, die lae insidensie van die siekte, die respondent se aanbod om vir enige vrektes te betaal, die feit dat die appellant deur ‘n eenvoudige aanpassing aan sy weidingsprogram die risiko van besmetting byna geheel en al kan uitskakel, en die feit dat die appellant nie aangetoon het dat sy voorgestelde heining sinvol en koste-effektief sal wees en nie die respondent se eiendomreg op onredelike wyse sal inperk nie. Sien Regal v African Superslate 1963 (1) SA 102 (A). [12] Die appèl word gevolglik met koste van die hand gewys. ______________________ L T C HARMS Wnde AP STEM SAAM: Farlam AR Navsa AR Combrinck AR Malan Wnde 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: 26 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 PGB BOERDERY BELEGGINGS (EDMS) BPK v SOMERVILLE 62 (EDMS) BPK The SCA today dismissed an appeal from the high court. The question was whether the respondents have the right to introduce blue wildebeest on their game farm in spite of the risk of bovine malignant catarrhal fever (snotsiekte). Blue wildebeest are carriers of the disease, which is infectuous and potentially dangerous for cattle. The appellants, who are neighbours, objected to the introduction of a herd of 500 blue wildebeest on the respondents’ farms. The SCA held that the respondents will not, by introducing the animals, abuse their rights of ownership because the risk of infection was sufficiently low and the appellants could, by simple grazing management procedures reduce the risk even more. ---ends---

1422

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 491/09 In the matter between: DORMELL PROPERTIES 282 CC Appellant and RENASA INSURANCE COMPANY LIMITED First Respondent STEPHEN MALCOLM GORE NO, TREVOR PHILIP GLAUM NO AND MOGAMAT IGSHAAN HIGGINS NO (In their capacities as the joint liquidators of SYNTHESIS PROJECTS CAPE (PTY) TD) (in liquidation) Second Respondents Neutral citation: Dormell v Renasa (491/09) [2010] ZASCA 137 (1 October 2010) Coram: Mpati P, Cloete, Cachalia, Mhlantla JJA and Bertelsmann AJA Heard: 13 SEPTEMBER 2010 Delivered: 1 OCTOBER 2010 Summary: Building guarantee – rectification of in absence of antecedent agreement – expiry date – whether civil method of computation applicable to date determined in guarantee – whether payment of guarantee issued to employer to provide cash fund to complete building project in case the building contract is cancelled because of contractor's default, can be enforced against insurer who issued guarantee by employer after the latter has been held in arbitration proceedings against contractor to have repudiated the building contract – contract validly cancelled by contractor – whether order enforcing guarantee would be academic. ____________________________________________________________________ ORDER ________________________________________________________________ On appeal from: South Gauteng High Court (Johannesburg) (Gildenhuys J sitting as court of first instance). 1. The appeal is dismissed. 2. The respondents' application to place new evidence relating to the arbitration award before the court is granted. 3. The appellant is to pay the respondents’ costs, including the costs of two counsel, incurred in respect of the appeal from 16 October 2009. 4. The respondents are to pay the appellant’s costs, jointly and severally, the one paying the other to be absolved, of the appeal until 15 October 2009. 5. The order of the court a quo is set aside and substituted with the following: ‘The respondents are to pay the applicant’s costs, jointly and severally, the one paying the other to be absolved, including the costs of two counsel.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ BERTELSMANN AJA INTRODUCTION [1] The appeal, leave having been granted on petition by this court, concerns the validity, the terms and the enforceability of a building guarantee described in the papers as a ‘JBCC Construction Guarantee for use with the JBCC Principal Building Agreement’. [2] The appellant, or its predecessor, embarked upon a development project known as the Cobble Walk Retail Development Regional Shopping Centre. The second respondent (‘Synthesis’) was engaged as building contractor to construct and complete the project. The guarantee was issued by the first respondent (Renasa), an insurance company, in favour of a company that was converted into the appellant close corporation ('Dormell'). [3] The guarantee was intended to provide the employer with a ready cash fund for the completion of the development project in the event of the building contract having to be cancelled by the employer prior to its finalisation by Synthesis. Synthesis was liquidated prior to the launching of the appeal, but was represented by its joint liquidators. [4] Dormell applied for the rectification of the guarantee so as to reflect it as the employer, but the court below refused this relief. It also held that the guarantee had expired when the appellant attempted to enforce it. Because of these findings, the court below did not have to deal with the terms of the guarantee, its enforceability or with any dispute relating to the cancellation of the building contract. THE GUARANTEE [5] The guarantee, printed on Renasa’s letterhead, is couched in the standard terminology of a JBCC Series 2000 contractor’s guarantee.1 The clauses relevant to this judgment read as follows: 'GUARANTOR DETAILS AND DEFINITIONS Guarantor means Renasa Insurance Company Limited Employer means Messrs Dormell Properties 282 (Pty) Ltd Contractor means Synthesis Projects (Cape) (Pty) Ltd Principal Agent means André Van Der Merwe Associates cc Works means Cobble Walk Retail Development Regional Shopping Centre Site means ERF 15330, Durbanville Agreement means The JBCC Series 2000 Principal Building Agreement 1 The Joint Building Contracts Committee Inc. is composed of representatives of the Association of Construction Project Managers, the Association of South African Quantity Surveyors, the Building Industries Federation South Africa, the South African Association of Consulting Engineers, the South African Institute of Architects, the South African Property Owners Association and the Specialist Engineering Contracts Committee. It prepares and updates standardised contracts for the building industry. Contract Sum means The accepted amount inclusive of tax of R89 221,957.08 Guaranteed Sum means The maximum aggregate amount of R6 691,646.78 Amount in words Six Million, Six Hundred and Ninety One Thousand, Six Hundred and Forty Six Rand and Seventy Eight Cents Construction Guarantee (insert Variable or Fixed) Fixed (insert expiry date) 28/02/08 ___________________________________________________________________ AGREEMENT DETAILS Sections: Total Sections (No or n/a) N/A Last section (no/identification or n/a) N/A Principal Agent issues: Interim payment certificates, Final payment certificate, Practical completion certificate/s ___________________________________________________________________ 2. FIXED CONSTRUCTION GUARANTEE 2.1 Where a fixed Construction Guarantee in terms of the Agreement has been selected in this 2 with 3 to 13 shall apply. The Guarantor's liability shall be limited to the amount of the Guaranteed Sum as follows: GUARANTOR'S LIABILITY Maximum Guaranteed Sum (not exceeding 7.5% of the contract sum) in the amount of: PERIOD OF LIABILITY From and including the date of issue of this Construction Guarantee and up to and including the date of the only practical completion certificate or the last practical completion certificate where there are sections, upon which this Construction Guarantee shall expire. R6,691,646.78 Amount in words: Six Million, Six Hundred and Ninety One Thousand, Six Hundred and Forty Six Rand and Seventy Eight Cents ___________________________________________________________________ 3. The Guarantor hereby acknowledges that: 3.1 Any reference in this guarantee to the Agreement is made for the purpose of convenience and shall not be construed as any intention whatsoever to create an accessory obligation or any intention whatsoever to create a suretyship. 3.2 Its obligation under this Guarantee is restricted to the payment of money. 4. Subject to the Guarantor's maximum liability referred to in 1 or 2, the Guarantor hereby undertakes to pay the Employer the sum certified upon receipt of the documents identified in 4.1 to 4.3: 4.1 A copy of a first written demand issued by the Employer to the Contractor stating that payment of a sum certified by the Principal Agent in an interim of final payment certificate has not been made in terms of the Agreement and failing such payment within seven (7) calendar days, the Employer intends to call upon the Guarantor to make payment in terms of 4.2. 4.2 A first written demand issued by the Employer to the guarantor at the Guarantor's physical address with a copy to the Contractor stating that a period of seven (7) calendar days has elapsed since the first written demand in terms of 4.1 and that the sum certified has still not been paid therefore the Employer calls up this Construction Guarantee and demands payment of the sum certified from the Guarantor. 4.3 A copy of the said payment certificate which entitles the Employer to receive payment in terms of the Agreement of the sum certified in 4. 5. Subject to the Guarantor's maximum liability referred to in 1 or 2, the Guarantor undertakes to pay the Employer the Guaranteed Sum or the full outstanding balance upon receipt of a first written demand from the Employer to the Guarantor at the Guarantor's physical address calling up on this Construction Guarantee stating that: 5.1 The Agreement has been cancelled due to the Contractor's default and that the Construction Guarantee is called up in terms of 5. The demand shall enclose a copy of the notice of cancellation; or 5.2 A provisional sequestration or liquidation court order has been granted against the Contractor and that the Construction guarantee is called up in terms of 5. The demand shall enclose a copy of the court order. 6. It is recorded that the aggregate amount of payments required to be made by the Guarantor in terms of 4 and 5 shall not exceed the Guarantor's maximum liability in terms of 1 or 2. 7. Where the Guarantor is a registered insurer and has made payment in terms of 5, the Employer shall upon the date of issue of the final payment certificate submit an expense account to the Guarantor showing how all monies received in terms of the Construction guarantee have been expended and shall refund to the Guarantor any resulting surplus. All monies refunded to the Guarantor in terms of this Construction Guarantee shall bear interest and (sic) the prime overdraft rate of the Employer's bank compounded monthly and calculated from the date payment was made the Guarantor to the Employer until the date of refund (sic). 8. Payment by the Guarantor in terms of 4 and 5 shall be made within seven (7) calendar days upon receipt of the first written demand to the Guarantor. 9. The Employer shall have the absolute right to arrange his affairs with the Contractor in any manner which the Employer deems fit and the Guarantor shall not have the right to claim his release from this Construction Guarantee on account of any conduct alleged to be prejudicial to the Guarantor. 10. The Guarantor chooses the physical address as stated above for all purposes in connection herewith. 11. The Construction Guarantee is neither negotiable nor transferable and shall expire in terms of either 1.1.4 or 2.1 of payment in full of the Guaranteed Sum or on the Guarantee expiry date, whichever is the earlier, where after (sic) no claims will be considered by the Guarantor. The original of this Construction Guarantee shall be returned to the Guarantor after it has expired. 12. This construction Guarantee, with the required demand notices in terms of 4 or 5, shall be regarded as a liquid document for the purpose of obtaining a court order. Signed at Johannesburg on this 5th day of December 2007.' THE RELEVANT FACTS [6] On 14 February 2007, a JBCC 2000 Series Principal Building Agreement was signed by Mr Efstathiou, ostensibly acting for a company Dormell Properties 282 (Pty) Ltd (‘the company'). In this contract, the contractor undertook to construct a shopping centre development known as Cobble Walk in Durbanville. The signing of this agreement was preceded by the acceptance of Synthesis' tender by the employer’s principal agent. Synthesis’ representative, Mr Reid, signed the JBCC contract on 16 December 2006, while Mr Efstathiou did so on the later date. The capacity in which he signed was indicated as 'director'. [7] The planning of the shopping centre development had been undertaken by the company. This entity was still in existence when Synthesis' tender was accepted. The company was converted to Dormell on 26 January 2007. [8] Notice was given by Dormell of this conversion to interested parties in writing on 13 February 2007. Dormell alleges that Renasa was included in the list of recipients to whom this information was disseminated, but Renasa denies any knowledge thereof. Synthesis was informed of the change of identity of the employer. [9] On 23 January 2007 Renasa received an application form for a JBCC 2000 guarantee to be issued in favour of the company. Renasa did not then, or at any later stage, have sight of the building contract. It issued a guarantee on 24 January 2007, sufficient securities having been provided by Synthesis for that purpose. [10] On 27 March 2007, this guarantee was replaced with a new guarantee because the first had incorrectly described the company and Synthesis as contractor and sub-contractor respectively rather than as employer and contractor. The guarantee issued on 27 March 2007 expired on 25 October 2007 and the guarantee in dispute, quoted above, was issued at Dormell’s request on the 5 December 2007. Each of these guarantees indicated the company as being the employer. [11] The construction of the shopping centre did not go according to plan and considerable delays occurred in the building process. The completion date envisaged by the building contract had to be extended. At the beginning of 2008, Synthesis informed the appellant that practical completion of the project would not be attained before 13 March 2008. [12] Dormell thereupon demanded, through its attorneys, an extension of the guarantee until 15 April 2008. Synthesis refused to provide further security. [13] On 11 February 2008 the principal agent sent a written demand to Synthesis, threatening on behalf of Dormell to cancel the agreement if the former failed to provide an extended guarantee. The contractor was formally placed on terms by another letter dated 13 February 2008, demanding an extended guarantee on or before 27 February 2008 if cancellation of the contract and calling up of the guarantee was to be avoided. [14] Synthesis’ attorneys reacted by letter disputing the existence of any obligation to extend the guarantee, whereupon the appellant through its principal agent cancelled the agreement on 28 February 2008. On the same day, Dormell demanded payment of the sum secured by the construction guarantee from Renasa by delivering a letter to its offices, informing the guarantor of the cancellation of the building contract and of its consequent obligation to honour its undertaking. Renasa rejected the demand on the same day, its attorneys denying any obligation to pay as, according to their view, the guarantee had already expired when demand was made. [15] Synthesis regarded the purported cancellation of the building agreement as repudiation thereof which it accepted on 29 February 2008 and cancelled the contract in turn. [16] Dormell launched an application in the court below for a declaratory order that the guarantee was valid for the full day of 28 February 2008, that payment was demanded timeously and that Renasa was obliged to honour the guarantee. Renasa raised two defences: That the guarantee had expired on midnight of 27 February 2008; and that Dormell was not entitled to claim under the guarantee as it had been issued in favour of the company and not of Dormell. Synthesis, having been joined because of its interest in the proceedings, denied that the close corporation was the beneficiary of the guarantee and disputed any allegation that it had been in breach of the building contract. [17] Dormell, as I have mentioned, countered with an application for the rectification of the guarantee on the basis that all three parties always intended to procure and issue a guarantee in favour of the employer. The identity of the employer was not material to Renasa once Synthesis provided sufficient securities to protect the former’s position. The parties’ true intention would be honoured by reflecting the appellant as the beneficiary of the guarantee. Renasa and Synthesis disputed these assertions. [18] The court below concluded that no case for the rectification of the guarantee had been established and that it had in any event expired at midnight on 27 February 2008. It dismissed the application on these grounds. Leave to appeal was refused on 19 June 2009, but was granted on petition to this court on 27 August 2009. [19] In the meantime Dormell and Synthesis referred the dispute concerning the cancellation of the building contract to arbitration. Synthesis was liquidated before the arbitration was concluded, but was represented by its liquidators thereafter. [20] The arbitrator held that Synthesis had not been in breach of any term of the building contract and that Dormell had repudiated the agreement by its purported cancellation, which repudiation was validly accepted by Synthesis which thereafter cancelled the contract as it was entitled to do. The arbitrator’s award is not subject to appeal and has not been reviewed. NEW EVIDENCE ON APPEAL [21] A court of appeal may admit new evidence, which power is given to it by s 22(a) of the Supreme Court Act 59 of 1959. This power should be exercised sparingly and only if the further evidence is reliable, ‘weighty and material and presumably to be believed’ (per Wessels CJ in Colman v Dunbar 1933 AD 141 at 162). In addition, there must be an acceptable explanation for the fact that the evidence was not adduced in the trial court. [22] Renasa applied for leave to introduce the arbitrator’s award as evidence on appeal. This request was not opposed by Dormell, although the latter adopted the stance that events that occurred after the date of the judgment appealed against were irrelevant to the outcome of the appeal. [23] In the unusual circumstances of this case it is clear that evidence of the arbitration and its outcome did not exist at the time the judgment of the court below was given. The award's authenticity and reliability are not in issue. The arbitration award was indeed common cause. The application to present further evidence relating to the arbitration award on appeal was granted. Its effect upon the appeal is dealt with below. THE APPEAL [24] Dormell attacks the judgment of the court below on the grounds that the court erred in holding that the guarantee expired at midnight on 27 February 2008 and also erred in refusing the prayer for its rectification. It insists that it is entitled to enforce the guarantee. [25] Renasa and Synthesis support the judgment appealed against. In addition, they rely on the arbitration award for the submission that the guarantee is no longer enforceable as a competent tribunal has found that the employer was in breach of the building contract and Synthesis was entitled to cancel the same. Dormell is therefore no longer bona fide when it insists on payment of the guarantee. Any entitlement to call for payment has fallen away, they submit. THE GUARANTEE’S EXPIRY DATE [26] The guarantee is a written agreement. There is no suggestion of any ambiguity of any of its provisions. The words used by the parties must be given their ordinary meaning. The expiry date is determined as 28 February 2008. It may expire earlier at the happening of a specified event. The court below concluded that the civil method of calculation had to be applied to determine the expiry date and found this to be at midnight of 27 February 2008. The terms of the contract are the decisive criterion by which any potential expiry of a deadline has to be determined: ‘These passages show, I think, that where time has to be computed under a contract, we must look primarily at the terms of the contract, in order if possible, to discover from them what the parties intended, and that it is only, when the contract is not decisive upon the point, that it is admissible to introduce the rules of law with regard to computation of time.’ Per Solomon JA in Joubert v Enslin 1910 AD 6 at 46. [27] In Roman Law, which our law has retained in this respect, the expiry of a period of time could be calculated either by the natural or the civil method. The natural method calculates ‘de momento in momentum’, from the exact moment of the first day upon which the period to be calculated commences to the exactly corresponding moment of the last day. The civil method of computation includes the first day of the period to be calculated and excludes the last day, see: Cock v Cape of Good Hope Marine Assurance Company 3 Searle 114 C, in which a marine insurance policy that was taken out for the period or one year from 14 August 1857 to 14 August 1858, was held to have expired at midnight of 13 August 1858. Compare: Windscheid, Pandects, 4th ed 1875 para 103(1). Gane, The Selective Voet, Book XLV, Title 1, Section 19. Lee and Honoré The South African Law of Obligations, 2nd ed p49 state: '141 Calculation of Period If a contract provides that something shall be done within a stated number of days from the date of its conclusion or from any other event, in the absence of expression to the contrary, in calculating the number of days the day on which the contract was concluded or the event took place is understood to be the first day of the period and the last day is excluded. The same applies if the period is reckoned, not by days, but by months or years.'2 2 (An illustrative example of such a calculation is Kleynhans v Yorkshire Insurance Co. Ltd 1957 (3) 544 (A), where Schreiner ACJ said at 550A-B:‘Coming back to the words "upon the expiration of a period of two years" or "na verloop van 'n tydperk van twee jaar", the reason why I cannot draw from them an inference that the ordinary civil rule is to be excluded is that they seem to mean nothing more than that the period of prescription is to be two years from the date when the claim arose. Different expressions having identical meanings would be "at the end of a period of two years" or "after a period of two years" or "after two years" or even [28] With respect to the learned Judge a quo, it is difficult to discern why the expiry date of the guarantee, which appears clearly from the guarantee itself should have to be determined by a method designed to calculate a period of days. [29] The guarantee does not contain a term calling for such a calculation. The printed form makes provision for a variable and for a fixed construction guarantee. Synthesis chose a fixed construction guarantee. Different clauses of the guarantee apply to each of the two alternatives, and clauses 3 to 13 thereof apply to both. In respect of the period of liability that applies to the fixed guarantee, clause 2 provides that it should run '[f]rom and including the date of issue of the Construction Guarantee and up to and including the date of the only practical completion certificate or the last practical completion certificate where there are sections, upon which this Construction Guarantee shall expire.’ The only other clause dealing with the expiry date of the guarantee is clause 11, which says: 'The Construction Guarantee . . . shall expire in terms of either 1.1.4 or 2.1, or payment in full of the Guaranteed Sum or on the Guarantee expiry date, whichever is the earlier, where after (sic) no claims will be considered by the Guarantor. . . .' [30] Clause 1.1.4 deals with the variable variety of the guarantee and is therefore not relevant to the interpretation of the document under discussion. In clause 11 of the guarantee the parties thereto did not agree upon a period of days or weeks that has to be calculated in order to establish the last date upon which the guarantee could be called up. The date of inception is clearly the date of issue as set out in clause 2 quoted above. The expiry date is not dependant upon the effluxion of a particular number of days or weeks, but upon the happening of a particular event: the issue of a certificate of practical completion; or the last certificate of partial completion as set out in clause 2.1; or, as clause 11 reflects, the payment in full of the guarantee or the arrival of the guarantee expiry date reflected on the face of the document. simply "two years". Similarly in the Afrikaans, the unsigned, text equivalent expressions would be "na 'n tydperk van twee jaar" or "na twee jaar" or simply "twee jaar"). [31] The expiry date is 28 February 2008 as agreed upon by the parties. The court below erred in applying the civil method of computation to this contract. RECTIFICATION [32] The court below dismissed Dormell’s prayer for rectification of the guarantee to reflect it as the employer on the ground that Dormell was unable to show that there was either a common intention or an antecedent agreement between the parties that was not correctly reduced to writing as a result of a common error. Reference was made to Levin v Zoutendijk 1979 (3) SA 1145 (W) at 1148A and to Spiller & others v Lawrence 1976 (1) SA 307 (N), where Didcott J (as he then was) said at 307 H: ‘When a written contract does not reflect the true intention of the parties to it, but has been executed by them in the mistaken belief that it does, it may be rectified judicially so that the terms which it was always meant to contain are attributed in fact to it. That, as a general principle, is well recognised by both South African and English law.’ [33] It is correct that the appellant and the first respondent did not agree upon the identity of the employer prior to the signing of any of the three guarantees. Renasa was informed by a broker of the particulars of the party in whose favour the guarantee had to be issued. These instructions reflected the company’s particulars. The insurer remained unaware of Dormell’s existence until the building contract was cancelled. [34] Dormell argued that it and Renasa had certainly intended to benefit the employer by the issuing of the guarantee in order to enable the employer to finalise the building project if the contract between it and the contractor were to be cancelled before the work was completed. Renasa disputed that there was ever a consensus in respect of the employer, either before or at the time the guarantee was signed, which, so the argument ran, precluded any possibility of rectification. [35] The court below was apparently not referred to Meyer v Merchant’s Trust 1942 AD 244. In that matter a guarantee was issued for the payment of certain liabilities, without the parties having entered into a prior agreement. The guarantee did not reflect the parties’ intention to limit the guarantor’s liability to a specific amount, regardless of the actual sum of the secured debts. A claim for rectification was resisted on the ground that no antecedent agreement had come into existence. At 253 De Wet CJ. said the following: ‘It is therefore open to the Court to consider the question whether, in the absence of proof of an antecedent agreement, it is competent to order the rectification of a written contract in those cases in which it is proved that both parties had a common intention which they intended to express in the written contract but which through a mistake they failed to express. It is difficult to understand why this question should not be answered in the affirmative. Proof of an antecedent agreement may be the best proof of the common intention which the parties intended to express in their written contract, and in many cases would be the only proof available, but there is no reason in principle why that common intention should not be proved in some other manner, provided such proof is clear and convincing.’ [36] This judgment was followed in Soil Fumigation Services Lowveld CC v Chemfit Technical Products (Pty) Ltd 2004 (6) SA 29 (SCA) at para 21. The absence of an antecedent agreement does not in itself preclude rectification of a written agreement that does not correctly reflect the parties’ intention. [37] The facts of this matter clearly demonstrate that Renasa was more concerned with obtaining sufficient security from Synthesis to back up the guarantee than with the terms of the building contract or the exact description of the employer. There is merit in Dormell’s argument that all three parties, and in particular Renasa and Dormell, intended to secure the employer’s position. The guarantee should therefore have been rectified to reflect that intention. THE GUARANTEE’S ENFORCEABILITY [38] A guarantee couched in the exact terms as the one under discussion, a JBCC series 2000 pre-printed guarantee, and the circumstances under which a claim could be made on it, was described by this court in Lombard Insurance Co Ltd v Landmark Holdings (Pty) Ltd & others 2010 (2) SA 86 (SCA) para 20 Navsa JA said: ‘The guarantee by Lombard is not unlike irrevocable letters of credit issued by banks and used in international trade, the essential feature of which is the establishment of a contractual obligation on the part of a bank to pay the beneficiary (seller). This obligation is wholly independent of the underlying contract of sale and assures the seller of payment of the purchase price before he or she parts with the goods being sold. Whatever disputes may subsequently arise between buyer and seller is of no moment insofar as the bank's obligation is concerned. The bank's liability to the seller is to honour the credit. The bank undertakes to pay provided only that the conditions specified in the credit are met. The only basis upon which the bank can escape liability is proof of fraud on the part of the beneficiary. This exception falls within a narrow compass and applies where the seller, for the purpose of drawing on the credit, fraudulently presents to the bank documents that to the seller's knowledge misrepresent the material facts. ‘In the present case Lombard undertook to pay the Academy upon Landmark being placed in liquidation. Lombard, it is accepted, did not collude in the fraud. There was no obligation on it to investigate the propriety of the claim. The trigger event in respect of which it granted the guarantee had occurred and demand was properly made.’ In Loomcraft Fabrics CC v Nedbank Ltd & another 1996 (1) SA 812 (A) on 815G-J Scott AJA said: ‘The system of irrevocable documentary credits is widely used for international trade both in this country and abroad. Its essential feature is the establishment of a contractual obligation on the part of a bank to pay the beneficiary under the credit (the seller) which is wholly independent of the underlying contract of sale between the buyer and the seller and which assures the seller of payment of the purchase price before he parts with the goods forming the subject-matter of the sale. The unique value of a documentary credit, therefore, is that whatever disputes may subsequently arise between the issuing bank's customer (the buyer) and the beneficiary under the credit (the seller) in relation to the performance or, for that matter, even the existence of the underlying contract, by issuing or confirming the credit, the bank undertakes to pay the beneficiary provided only that the conditions specified in the credit are met. The liability of the bank to the beneficiary to honour the credit arises upon presentment to the bank of the documents specified in the credit, including typically a set of bills of lading, which on their face conform strictly to the requirements of the credit. In the event of the documents specified in the credit being so presented, the bank will escape liability only upon proof of fraud on the part of the beneficiary.’ See further Petric Construction CC t/a AB Construction v Toasty Trading t/a Furstenburg Property Development & others 2009 (5) SA 550 (ECG) para 27. [39] In principle therefore, the guarantee must be honoured as soon as the employer makes a proper claim against it upon the happening of a specified event. In the present case there is no suggestion that Dormell did not properly demand payment of the guaranteed sum. In the normal course of events payment should have been effected within seven days of demand. [40] However, the facts of this matter are unusual because the arbitration of the dispute between Dormell and Synthesis resulted in the finding that the appellant was not entitled to cancel the building contract. The arbitration is final, not subject to appeal and has not been taken on review. A second leg of the arbitration dealing with outstanding claims arising from the building contract was also decided in Synthesis’ favour. The question must thus be answered whether Dormell is entitled to persist in claiming payment of the guarantee notwithstanding the fact that it has been held to have repudiated the contract which was lawfully cancelled by the second respondent. [41] There is no longer any dispute about the cancellation of the underlying agreement that still has to be resolved. The arbitration has established that Dormell is in the wrong. Its repudiation of the building contract was held to have been unlawful. As a consequence, Dormell has lost the right to enforce the guarantee. There remains no legitimate purpose to which the guaranteed sum could be applied. [42] If it were to be ordered to honour the guarantee, Renasa or Synthesis would be entitled to repayment of the full amount guaranteed. Hudson’s Building and Engineering Contracts 11th ed para 17.078, quoted in Cargill International SA & another v Bangladesh Sugar and Food Industries Corp [1966] 4 All ER 563 QBD (Commercial Court) at 570b-c states: ‘It is generally assumed, and there is no real reason to doubt, that the Courts will provide a remedy by way of repayment to the other contracting party if a beneficiary who has been paid under an unconditional bond is ultimately shown to have called on it without justification . . . In cases where there has been no default at all on the part of the contractor, there would additionally be a total failure of consideration for the payment.’ See further: General Surety & Guarantee Co Ltd v Francis Parker Ltd 6 BLR 18 QBD Commercial List at 20. FURTHER WRITTEN ARGUMENT AFTER THE HEARING [43] In the light of the above considerations, the court requested the parties to present further written argument on the question whether, if the appellant were to succeed, the resultant judgment would have any practical effect or not, as any payment made by Renasa would have to be repaid by Dormell. Reference was made to clause 7 of the Guarantee in this regard. Counsel for Synthesis pointed out that Renasa's or Synthesis' claim to repayment does not arise from this clause, but from the fact that Dormell is no longer entitled to payment. The court is indebted to counsel for their further heads of argument. [44] Dormell submits that the guaranteed sum could and should be devoted to the payment of claims that might be found to exist once a final certificate is prepared, regardless of the question whether the enforcement of the guarantee was indeed justified by a breach on the part of the contractor or not. Reference was made to a number of clauses in the construction contract in this regard. The short answer to this submission is that the guarantee is intended to enable the employer to complete the contract in case of default by the contractor. Claims arising after a breach by the employer are matters for arbitration. The guarantee is not intended to provide a source of funds for the payment of any outstanding amounts that might be due by the contractor to the employer – of which there is no evidence in any event, apart from an oblique reference to potential future claims by the employer against the contractor in correspondence. [45] It would amount to an academic exercise without practical effect if Dormell were to be granted the order it seeks. It would immediately have to repay the full amount to Renasa or Synthesis. Such an order would, at best, cause additional cost and inconvenience to the parties without any practical effect. In terms of section 21A of the Supreme Court Act 59 of 1959 the court must exercise its discretion against Dormell: Port Elizabeth Municipality v Smit 2002 (4) SA 241 (SCA). [46] Appellant is entitled to succeed with the appeal against the judgment in the court below in as much as that court's order must be set aside. Dormell is entitled to the costs of those proceedings and to all costs incurred in the prosecution of this appeal until the date of the arbitration award, 15 October 2009. In the particular circumstances of this case it is however, not entitled to an order that the guarantee should be enforced. [47] The following order is made: 1. The appeal is dismissed. 2. The respondents' application to place further evidence relating to the arbitration award before the court is granted. 3. The appellant is to pay the respondents’ costs, including the costs of two counsel, incurred in respect of the appeal from 16 October 2009. 4. The respondents are to pay the appellant’s costs, jointly and severally, the one paying the other to be absolved, of the appeal until 15 October 2009. 5. The order of the court a quo is set aside and substituted with the following: ‘The respondents are to pay the applicant’s costs, jointly and severally, the one paying the other to be absolved, including the costs of two counsel.’ _________________ E BERTELSMANN ACTING JUDGE OF APPEAL CLOETE JA (MPATI P concurring): Introduction [48] I have had the advantage of reading the judgment of my colleague Bertelsmann AJA. I would allow the appeal, for the following reasons. I shall first set out a summary of the facts relevant to this judgment. [49] (a) On 16 December 2006 a letter of intent was issued by Dormell Properties 282 (Pty) Limited (the 'Dormell Company') to appoint the second respondent as contractor for the construction of the Cobble Walk Retail Shopping Centre. (b) On 23 January 2007 the first respondent received an application in writing from the second respondent to issue a 'JBCC Construction Guarantee' in favour of the Dormell Company. In response to this application the first respondent the next day issued a guarantee in favour of the Dormell Company. (c) On 26 January 2007 the Dormell Company was converted, in terms of s 27 of the Close Corporation Act, 1984, from a private company to a close corporation with the name Dormell Properties 282 CC. The close corporation was the applicant in the court a quo and is the appellant in these proceedings. (d) On 14 February 2007 the second respondent, as contractor, and the Dormell Company, as employer, concluded a building contract in the form of the JBCC standard agreement. The 'employer' was expressly defined in the contract as being the Dormell Company ─ not the applicant. (e) On 15 February 2007 the applicant notified various persons, but not the first respondent, that the Dormell Company had been converted to a close corporation. It is not in dispute that the first respondent was never informed at any material time of the conversion, and remained unaware of it. (f) On 5 December 2007 the first respondent issued a new construction guarantee in favour of the Dormell Company. The guarantee provided that it would expire at the end of the period of liability (defined as up to and including the date of practical completion), or upon payment in full of the guaranteed sum, or on the guarantee expiry date, whichever would be the earlier. The guarantee expiry date was 28 February 2008. This guarantee is the subject of the present proceedings. (g) On 28 February 2008, ie on the stated expiry date of the construction guarantee, the appellant purported to cancel the building contract with the second respondent and demanded payment of the guaranteed sum, an amount of R6 691 646,78, from the first respondent. The first respondent refused to pay. [50] There are three issues on appeal: (a) Whether the appellant is entitled to rectification of the guarantee to reflect itself and not the Dormell Company as the employer and therefore the beneficiary under the guarantee; (b) whether demand for payment under the guarantee was made timeously; and (c) whether the award by an arbitrator, given in proceedings between the appellant and the first respondent, which became known after the matter had been heard in the court a quo and in terms of which the arbitrator found that the appellant was not entitled to cancel the agreement between itself and the first respondent, would either (i) mean that this appeal would have no practical effect or result as contemplated in s 21A of the Supreme Court Act, or (ii) would preclude the appellant from enforcing payment of the guarantee against the first respondent because to do so would be contrary to the dictates of good faith. Rectification [51] The court a quo non-suited the appellant on the basis that it was not entitled to rectification of the construction guarantee to reflect that it and not the Dormell Company was the employer. The court a quo reasoned that the first respondent was unaware of the existence of the appellant and that there could accordingly have been no antecedent agreement between them. Furthermore, so the court a quo reasoned, there can be no question of a common intention because the parties' intention must be gleaned from the building agreement, which requires that a guarantee be issued in favour of the employer; and the 'employer' was defined as the Dormell Company. [52] The fallacy in the court a quo's approach is this. The common continuing intention of the appellant, the beneficiary under the guarantee, the second respondent, that procured the guarantee, and the first respondent, that gave the guarantee, was quite obviously that the guarantee should be issued in favour of whoever was the employer in terms of the building contract ─ not who was defined as the employer, but who was in fact the employer. The mistake that the first respondent made was that, contrary to its belief, the Dormell Company was not the employer as (unbeknown to the first respondent) the Dormell Company had been converted to a close corporation, the appellant. The mistake made by the appellant and the second respondent was that they thought that the appellant's conversion into a close corporation was irrelevant. But all parties concerned intended that the guarantee should be in favour of the employer under the building contract; and the appellant was in fact the employer. That suffices for rectification: Meyer v Merchant's Trust.3 Expiry of the guarantee [53] The guarantee contained the following provisions in regard to the period of liability: '2.1 The Guarantor's liability shall be limited . . . as follows: . . . From and including the date of issue of this Construction Guarantee and up to and including the date of the only practical completion certificate . . . upon which this Construction Guarantee shall expire.' '11. The Construction Guarantee . . . shall expire in terms of . . . 2.1, or payment in full of the Guaranteed Sum or on the Guarantee expiry date, whichever is the earlier, where after no claims will be considered by the Guarantor.' No practical completion certificate was issued before the guarantee expiry date. As I have said, the guarantee was issued on 5 December 2007 and the 'guarantee expiry date' was specified as '28 February 2008.' 3 1942 AD 244 at 253 and 258. [54] The court a quo held that the guarantee had expired when the claim was lodged for payment by the appellant with the first respondent on 28 February 2008. The court formulated the question to be decided as follows: 'At issue is exactly when on 28 February 2008 was the guarantee intended to expire.'4 The court a quo went on to consider 'cases in which it was held that, for purposes of determining from when to when a period expressed in days runs, the ordinary civilian method of computation must be followed'. The court then referred to submissions made by counsel for the first respondent that 'in terms of clause 11 of the construction guarantee it would expire either in terms of² clause 2.1 or on² the expiry date'; that 'the period of liability in terms of clause 2.1 runs from and including² the date of issue of the guarantee up to and including² the date of the practical completion certificate'; and accepted the submission of counsel that 'where the parties to the guarantee intended to include the whole of² a specific day into its operative period, they did so expressly;' and that 'they did not expressly include the day of 28 February 2008'. Consequently, held the court a quo, it was not the intention of the parties that the appellant be given the whole day of 28 February 2008 and the agreement therefore expired immediately after midnight on 27 February 2008. [55] The approach of the court a quo is fundamentally wrong. It is based on the fiction contained in the civilian method of computation of a period of time in accordance with which the first day of the period is initially excluded and the last day determined; but because the last day is deemed to have concluded immediately it began (ultimus dies coeptus pro completa habetur) the last day is excluded and so, to give the full period, the first day is included. But here, no period of time requires computation. The civilian and all other methods of computation for a period of time are accordingly not applicable. The relevant contractual provision states that the guarantee 'shall expire . . . on the guarantee expiry date' ie 28 February 2008. To state the obvious, the guarantee accordingly expired on that date. The present matter may be contrasted with Cock v Cape of Good Hope Marine Insurance Co.5 In that case the insurance cover was for a period of 12 calendar months from 4 Emphasis in the original judgment. 5 3 Searle 114, approved in Joubert v Enslin 1910 AD 6. January 14th 1857 to January 14th 1858. There, a calculation of the period of time was required and the court, in applying the civilian method for computation of time, held that the twelve months expired at midnight on 13 January 1858. Here, no period of time has to be calculated and the guarantee expired on 28 February 2008. Once that is so, there is ancient and modern authority in support of the proposition that the guarantee could be called up at any time, or at least during business hours, on 28 February 2008. [56] Paul is quoted as follows in the Digest:6 'By Roman custom, a day begins at midnight and ends in the middle of the succeeding night. And so whatever is done in these twenty-four hours, that is, in two half nights with the intervening daylight, is done just as if it were done at any hour of the daylight.' The Institutes7 contain the following proposition: 'As an instance of a stipulation "in diem", as it is called where a future day is fixed for payment, we may take the following: "Do you promise to give ten aurei on the first of March?" In such a stipulation as this, an immediate debt is created, but it cannot be sued upon until the arrival of the day fixed for payment: and even on that very day an action cannot be brought, because the debtor ought to have the whole of it allowed to him for payment; for otherwise, unless the whole day on which payment was promised is passed [sic], it cannot be certain that default has been made.' [57] These principles were received into the Roman-Dutch Law. Grotius8 says: 'Where something is promised to be fulfilled at a certain time, the right vests at once, but cannot be enforced before the time arrives; nay, the year, month or day mentioned in the promise must have ended before the demand is made.' Voet9 says: 'But if they [stipulations] are framed against a day, the vesting day indeed of the obligation arrives at once so that what was promised starts to be due, but the due day has not arrived. Thus no suit can be brought thereon unless the day has come round, and unless also the whole day has elapsed since the whole of that day ought 6 2.12.8. Translation taken from The Digest of Justinian, Mommsen, Krueger and Watson, eds; vol 1 p 58. 7 3.15.2; Moyle's translation 5th ed p 133. 8 Introduction to Dutch Jurisprudence 3.3.50, Maasdorp's translation (1888) (2nd ed) p 219. 9 Commentary on the Pandects 45.1.19 Gane's translation vol 6 p 647. to be allowed at the discretion of the payor [sic]. In like manner one who has stipulated for something to be given "this year" or "this month" does not correctly claim unless all parts of this year or month have gone past.' [58] In the modern South African law Maasdorp JP in a concurring judgment in this court said in National Bank of SA Ltd v Leon Levson Studios Ltd:10 'The rent was due on 1 December, and could have been paid at any time during that day and the tenant was not in arrear till after the close of that day.' Lansdown JP held in Davies v Lawlor:11 'Ordinarily a debtor required to pay on a certain day has the whole of that day for payment ─ Voet 45.1.19.' Because the question does not arise in the present appeal, it is not necessary to consider the immediately following statement by Lansdown JP: 'But the time up to which payment may be made on that day may be limited by the hours of business of the place at which the payment is to be made. Where, for instance, the office of a professional man or the house of a mercantile business is appointed as the place of payment, the parties must be held to contemplate that payment shall be made within the hours during which in accordance with practice business is transacted there.'12 [59] I therefore hold the proposition to be self-evident and backed by centuries of authority that where a contract does not require a period of time to be calculated, but provides that the entitlement to exercise a right or the obligation to perform a duty ends on a specific day ─ as in the present case, where the guarantee provides that it will expire on 28 February 2008 ─ the right may be exercised, or the obligation performed, on that day. The appellant in fact called up the guarantee on 28 February 2008 and the court a quo was wrong in non-suiting it on the basis that the guarantee had expired at midnight on the previous day. 10 1913 AD 213 at 220. 11 1941 EDL 128 at 132; see also Whittaker v Kiessling 1979 (2) SA 578 (SWA) at 582A-E. 12 See in this regard the three judgments in the National Bank of SA Ltd v Leon Levson Studios Ltd above, n 7, and Davis v Pretorius 1909 TS 868 at 871-2. Relevance of the arbitrator's award [60] Then finally, there is the question whether the appellant should now be allowed to enforce payment under the guarantee in view of the award by the arbitrator (contained in evidence which the respondents sought to adduce on appeal) that it was not entitled to cancel the building contract, that its attempt to do so constituted a repudiation and that the building contract was cancelled by the second respondent. There are two arguments in this regard: (a) that an award on appeal would have no practical force or effect as contemplated in s 21A of the Supreme Court Act; and (b) that the appellant's attempt to enforce the guarantee constitutes fraud in the sense of bad faith. It is here that I part ways with my learned colleague Bertelsmann AJA. [61] It is important to bear in mind that in cases such as the present there are three separate legal relationships: (a) one between the employer and the contractor, usually termed a building contract, pursuant to which the contractor undertakes to perform building works for the employer; (b) one between the employer and a financial institution which the employer requires the contractor to procure to protect the employer against possible default by the contractor under the building contract, which is variously called a performance guarantee, a performance bond or a construction guarantee, and in terms of which the financial institution undertakes to the employer that it will make payment to the employer on the happening of a specified event; and (c) one between the contractor and the financial institution for the provision by the latter of a guarantee to the employer. The construction guarantee which the appellant seeks to enforce in the present appeal is an example of the second type of contract. [62] In terms of clause 5 of the guarantee, the first respondent undertook to pay to the appellant the guaranteed sum 'upon receipt of a first written demand' from the appellant to the first respondent at the latter's physical address 'calling up on this Construction Guarantee stating that . . . The Agreement [between the appellant and the second respondent] has been cancelled due to the Contractor's default and that the Construction Guarantee is called up in terms of 5'. The clause further provided that 'The demand shall enclose a copy of the notice of cancellation.' [63] The appellant complied with the provisions of clause 5. It was not necessary for the appellant to allege that it had validly cancelled the building contract due to the second respondent's default. Whatever disputes there were or might have been between the appellant and the second respondent were irrelevant to the first respondent's obligation to perform in terms of the construction guarantee. That is clear from the passages quoted by my learned colleague in para 38 of his judgment from Lombard Insurance Co Ltd v Landmark Holdings (Pty) Ltd and Loomcraft Fabrics CC v Nedbank Ltd, and also from the following passage in the judgment of Lord Denning MR in Edward Owen v Barclays Bank International:13 'A bank which gives a performance guarantee must honour that guarantee according to its terms. It is not concerned in the least with the relations between the supplier and the customer; nor with the question whether the supplier has performed his contracted obligation or not; nor with the question whether the supplier is in default or not. The bank must pay according to its guarantee, on demand if so stipulated, without proof or conditions. The only exception is when there is a clear fraud of which the bank has notice.' My learned colleague reasons that a valid demand on the construction guarantee is subject to a bona fide claim that an event has occurred that is envisaged in the guarantee as triggering the guarantor's obligation to pay. Put more accurately, a valid demand on the construction guarantee can only be defeated by proof of fraud. In the present matter there was a valid demand. There was no suggestion of fraud. [64] Once the appellant had complied with clause 5 of the guarantee, the first respondent had no defence to a claim under the guarantee. It still has no defence. The fact that an arbitrator has determined that the appellant was not entitled to cancel the contract, binds the appellant ─ but only vis-à-vis the 13 [1978] 1 All ER 976 (CA) at 983b-d. second respondent. It is res inter alios acta so far as the first respondent is concerned. As the cases to which I have referred above make abundantly clear, the appellant did not have to prove that it was entitled to cancel the building contract with the second respondent as a precondition to enforcement of the guarantee given to it by the first respondent. Nor does it have to do so now. [65] For these reasons, it is not in my view bad faith for an employer, who has made a proper demand in terms of a construction guarantee, to continue to insist on payment of the proceeds of the guarantee, when the basis upon which the guarantee was called up has subsequently been found in arbitration proceedings between the building owner and the contractor to have been unjustified. I would add that the fact that the arbitrator's award is final as between the appellant and the second respondent does not mean that it is correct, or that the appellant would have to set it aside before calling up the guarantee, much less that the appellant is acting in bad faith in seeking to enforce payment under the guarantee against the first respondent. [66] I turn to consider the question whether the order sought by the appellant on appeal would have no practical effect or result as contemplated in s 21A of the Supreme Court Act. My learned colleague states in para 42 of his judgment that if the first respondent were to honour the guarantee, it or the second respondent would be entitled to repayment of the full amount. In support of this conclusion, my learned colleague refers to parts of para 17.078 in the 11th edition of Hudson's Building and Engineering Contracts. It is important to note that Hudson in that particular paragraph is dealing with the rights of the contractor. It would be convenient to quote the paragraph in full as in my respectful view nothing in the paragraph supports the proposition for which my learned colleague cites it: 'It is generally assumed, and there is no real reason to doubt, that the Courts will provide a remedy by way of repayment to the other contracting party [ie the contractor] if a beneficiary who has been paid under an unconditional bond is ultimately shown to have called on it without justification: "I do not doubt that in such an event the money would be repayable, but it is not so certain it would be repayable with interest". (General Surety and Guarantee Co Ltd v Francis Parker Ltd (1977) 6 BLR 16, 21, per Donaldson J.) In cases where an owner or buyer is claiming damages against the seller or contractor which exceed the amount of the bond there is little difficulty in holding that he must give credit for the "cash in hand" received by him if he has made a call under any unconditional guarantee arrangements. Where, however, there is no defence or counterclaim to the contractor's claim for moneys due, other than sufficient payment in full, or where the sum already received from the bank or guarantor exceeds the set-off or damages ultimately awarded, the contractor's or seller's claim for repayment of the whole or any balance of the sums called and paid can be put, it is submitted, in two ways. First, the payment by the bank or guarantor, being required in most cases under the principal construction contract itself, or sometimes by a side- contract, must be regarded as being made by the bank as agent for the contractor and subject, it is submitted, to an implied term for repayment if not in fact due. Secondly, it has been seen that in the case of a conditional bond, equity would not permit recovery of a sum in excess of the true debt or damages, as being a penalty, so that by analogy in a case where the payment under the bond was obligatory and unavoidable, and indeed brought about by the owner's own act in making the call, it would be only logical to order repayment for the same reasons. Such a claim could also be based in quasi-contract on wider principles of unjust enrichment and unconscionability, it is submitted. In cases where there has been no default at all on the part of the contractor, there would additionally be a total failure of consideration for the payment.14 Questions of interest and costs pose considerable difficulties, however.' Hudson therefore suggests that where, in the case of an unconditional guarantee, the contractor, after the adjustments at the end of the building contract, claims repayment of the whole or any balance of the sums called by the employer and paid by the bank under the guarantee, the payment must be regarded as a payment by the bank as agent for the contractor subject to what in South Africa would be called a tacit term for repayment if not in fact due. There is no suggestion in the paragraph quoted from Hudson that the bank or guarantor can recover anything. Nor is there any suggestion that the contractor can, as a matter of course, recover the full amount of the guarantee 14 The reliance by my learned colleague on this sentence is, with respect, misplaced as it has been clear since Conradie v Rossouw 1919 AD 279 that the English law of consideration forms no part of the law of South Africa. from the owner where the latter is ultimately shown to have called upon it without justification. [67] I agree with the submission on behalf of the appellant that the guaranteed sum could and should be devoted to the payment of claims that might be found to exist once a final certificate is prepared, regardless of the question whether the enforcement of the guarantee was indeed justified by a breach on the part of the contractor or not. My learned colleague counters in para 44 of his judgment that the construction guarantee is to enable the contractor to complete the contract in case of default by the contractor, and that the guarantee is not intended to provide a source of funds for the payment of any outstanding amounts that might be due by the contractor to the employer. But if this was so, then an employer who has validly cancelled the building contract could never use the proceeds of a performance guarantee to satisfy amounts owing to it by the contractor prior to and as at cancellation, and would be left with a claim against the contractor. That is simply not what happens in practice. The proceeds of a construction guarantee are not ring-fenced in this way. [68] What would have to be found, as a positive conclusion of fact, in order to support a conclusion that an order on appeal in favour of the appellant would have no practical effect or result, is that there is nothing on which the guarantee could operate if it were paid out now. That finding simply cannot be made on the papers before this court. The appellant's attorneys wrote a letter to the respondents' attorneys dated 24 August 2010 in which they said inter alia: 'Subsequent to the issuing of the final arbitration award, correspondence ensued between the appellant's attorneys and the second respondent's attorneys in which it was conveyed that the appellant . . . intends referring to a fresh arbitration it claims in respect of amounts paid by it direct to sub-contractors, and which the arbitrator found was not a dispute capable of adjudication by him in the arbitration. The appellant's claim in this regard amounts to R1 417 940.00 (VAT inclusive).' That is hardly 'an oblique reference to potential future claims by the employer against the contractor in correspondence' as my learned colleague would have it in para 44 of his judgment. The point is, however, that it cannot be said with certainty that there is nothing on which the construction guarantee could operate, as this question was not properly ventilated in the application to lead further evidence on appeal and it was obviously not even touched upon in the original application papers. [69] Finally, it is necessary for me to say something about the application by the respondents to place further evidence before this court on appeal, which was met with a response by the appellants. It is a requirement for the admission of evidence on appeal that the evidence should be materially relevant. The law in this regard has recently been reviewed by this court in a criminal context in Britz v S,15 but the principle applies equally in a civil context. In my view, the finding by the arbitrator is entirely irrelevant and I would accordingly disallow the respondents' application to place evidence of this fact before the court and order the respondents to pay the costs occasioned by the application, which would include the reply thereto by the appellant. [70] For these reasons I would allow the appeal; dismiss the respondents' application to place further evidence before this court; rectify the construction guarantee to reflect the appellant as the employer; order the first respondent to pay the guarantee amount of R6 691 646,78 to the appellant together with mora interest; and order the respondents jointly and severally to pay the appellant's costs of the proceedings in this court and in the court a quo, in both cases including the costs of two counsel. ______________ T D CLOETE JUDGE OF APPEAL 15 (613/09) [2010] ZASCA 71 (21 May 2010). CACHALIA JA (MHLANTLA JA concurring): [71] I concur in the judgment of Bertelsmann AJA and the order made by him, and also in paragraphs 48 to 59 of the judgment of Cloete JA. ________________ A CACHALIA JUDGE OF APPEAL APPEARANCES: For appellant: H M Scholtz SC Instructed by: Cliffe Dekker Hofmeyr Inc, Cape Town Claude Reid Inc, Bloemfontein For respondent: 1st C E Puckrin SC C J McAslin 2nd C W Jordaan SC G D Doubell Instructed by: Frese, Moll & Partners, Johannesburg Webbers, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME COURT OF APPEAL FROM: The Registrar, Supreme Court of Appeal DATE: 1 OCTOBER 2010 STATUS: Immediate The Supreme Appeal of Appeal (SCA) today dismissed an appeal against the high court's refusal to enforce payment of a building guarantee. The employer constructing a regional shopping centre cancelled the building agreement with the contractor and called upon the guarantor to pay in terms of the contractor's building guarantee. Payment under the guarantee was dependent upon a proper claim being made by the employer on the grounds that the building contract had been cancelled due to the contractor's breach. The guarantor refused to honour the guarantee on the grounds that it had expired before the claim was made and that it had not been issued in the name of the employer. The high court upheld the guarantor's defences. While the appeal was pending the building contractor and the employer engaged in an arbitration to resolve the disputes relating to the cancellation of the building contract. The arbitrator ruled, prior to the appeal being heard, that the employer had repudiated the building contract and that the contractor had validly cancelled that agreement. The award was final, not subject to appeal and was not reviewed evidence of the arbitration award was allowed to be introduced on appeal. The Appeal Court was unanimous that the high court had erred in refusing to enforce the guarantee. The majority held, however, that once the arbitration determined that the employer was at fault regarding the cancellation of the building contract, the contractor's guarantee could no longer be validly enforced. If the guarantor were to be ordered to effect payment of the guaranteed sum, the employer would have to repay the same immediately. The issue had therefore, in the view of the majority, become academic. The appeal was dismissed on this ground, while the order of the high court was set aside.

481

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 581/2015 In the matter between: LEIGH WILLIAM ROERING NO First Appellant MABATHO SHIRLEY MOTIMELE NO Second Appellant and QEDANI MAHLANGU First Respondent THE MASTER OF THE SOUTH GAUTENG HIGH COURT Second Respondent COMMISSIONER ADVOCATE CHARLES SCOTT STEWART Third Respondent Neutral citation: Roering and Another NNO v Mahlangu (581/2015) [2016] ZASCA 79 (30 May 2016) Coram: WALLIS, WILLIS, SALDULKER and ZONDI JJA and TSOKA AJA Heard: 20 May 2016 Delivered: 30 May 2016 Summary: Company law – Enquiry in terms of ss 417 and 418 of the Companies Act 61 of 1973 – summons to attend – application to set aside summons – abuse of process – what constitutes – fact that the issues canvassed may overlap with issues in pending or contemplated civil litigation not as such a ground for inferring abuse. ORDER On appeal from: Gauteng Local Division, Johannesburg of the High Court (Mosikatsana AJ sitting as court of first instance): The appeal is upheld with costs. The order of the High Court is altered to read as follows: „The application is dismissed with costs.‟ JUDGMENT Wallis JA (Willis, Saldulker and Zondi JJA and Tsoka AJA concurring) Introduction [1] In June 2007 the Department of Health, Gauteng (the Department) concluded a service level agreement with 3P Consulting (Pty) Ltd (3P Consulting) in terms of which 3P Consulting was obliged to establish a Project Management Unit for the Department. On 23 March 2009 the agreement was extended for a further three years. After the April 2009 general election, the first respondent, Ms Qedani Mahlangu, was appointed as the member of the executive council (MEC) for health in Gauteng. Shortly thereafter a review of projects occurred and on 1 July 2009 the Department wrote a letter to 3P Consulting stating that it would no longer perform in terms of the extended agreement. According to Ms Mahlangu‟s affidavit this was „due to serious allegations of impropriety as well as irregularities in the award as well as the extension of the agreement‟. [2] After that there was extensive litigation between the parties. On 18 February 2010 the South Gauteng High Court (Lamont J) granted a declaration that the services agreement between 3P Consulting and the Department was validly concluded and extended. However, he refused to grant judgment for payment of certain invoices that 3P Consulting alleged were due, owing and payable and remained unpaid. He held that it was disputed that these amounts were in fact payable. However, he made it clear that this was no more than a finding of absolution from the instance, leaving 3P Consulting free to pursue the claim in other proceedings. [3] The Department‟s appeal to this court against that decision failed1 and on 7 February 2011 the Constitutional Court refused leave for a further appeal. On 13 October 2011, 3P Consulting instituted application proceedings against the Department claiming payment of some R99 million. It is not apparent from the notice of motion whether this related only to amounts allegedly due to it prior to 1 July 2009, or whether it included amounts said to have become due thereafter. Counsel was not in a position to enlighten us in that regard. If they were the same claims as had been advanced before Lamont J, it was unclear on what basis proceedings were again pursued by way of application instead of action. Be that as it may, the Department defended the application. According to Ms Mahlangu, its grounds for doing so were that „it received no value, the contract documents and other related documents are irregular and that the entire action is tainted by fraud‟. Not surprisingly in the circumstances the application was referred to trial, but, before the trial could proceed, 3P Consulting was placed in provisional 1 MEC for Health, Gauteng v 3P Consulting (Pty) Ltd [2010] ZASCA 156; 2012 (2) SA 542 (SCA). and then final liquidation. The present appellants are its duly appointed liquidators. [4] The only significant asset of 3P Consulting was its claim against the Department. The liquidators obviously had no personal knowledge of that claim or of the grounds for its defence. They accordingly sought and obtained leave from the Master of the South Gauteng High Court2 for an enquiry to be convened pursuant to the provisions of ss 417 and 418 of the Companies Act 61 of 1973 (the Act).3 Their purpose in doing so was to gather information and make an informed decision on whether or not to continue the litigation. After hearing the evidence of a number of witnesses the liquidators formed the view that Ms Mahlangu would be able to provide important information relating to 3P Consulting‟s dealings with the Department. They accordingly asked the commissioner4 to authorise and issue a summons for Ms Mahlangu to appear before the commissioner and give evidence as part of the enquiry. [5] The present litigation arises from the commissioner‟s decision to accede to that request. I will deal with Ms Mahlangu‟s response to the summons in greater detail later in this judgment. It suffices for present purposes to record that she applied to the Gauteng Local Division, Johannesburg of the High Court for an order setting it aside as an abuse of process. That application was granted by Mosikatsana AJ. This appeal is with his leave. 2 The Master is the Second Respondent in this appeal but has played no part in the proceedings either here or in the High Court. 3 Although this Act was repealed by the Companies Act 71 of 2008 the provisions of Chapter 14 of the old Act, which includes ss 417 and 418, remain in force by virtue of Item 9(10 of Schedule 5 to the new Act. 4 The Commissioner is the third respondent in this appeal but, like the Master, has played no role in the proceedings in either this court or the High Court. Proceedings at the commission [6] An odd feature of this case is that, when she was initially summoned to give evidence to the commission, Ms Mahlangu did not regard the summons as an abuse and indicated that she wished to be as helpful as possible. She appeared on 29 July 2013, together with Mr Lekabe, the State Attorney, South Gauteng, and asked for a brief postponement in order to enable her to be properly prepared. She explained that she had moved on from the Department of Health and had filled two other offices as a member of the executive council in the Gauteng administration since then, including her current position as the MEC for Infrastructural Development. Accordingly, she was not in possession of any files from her former department and wanted the opportunity to refresh her memory before testifying. Mr Lekabe explained that it „would make no sense for her to come here and sit here and keep on saying: “I can‟t remember. I can‟t remember.” It will defeat the purpose of the enquiry.‟ [7] At one stage in the proceedings Ms Mahlangu herself intervened to plead for a postponement. She asked the commissioner to give her the benefit of the doubt that she came before him „with good intentions‟. She explained her position as follows: „So all I‟m simply asking for is to let me just go through all the necessary things that will help me to remember what would have happened in the meetings that I would have presided over. As in all the management meetings I‟ve had, and on the basis of that and any other thing that I would remember, so that I come here prepared and I will be able to answer you diligently and honestly.‟ She asked for a few days so that she could go back and prepare. Mr Lekabe chimed in and told the commissioner that: „Ms Mahlangu wants to come here and assist this enquiry. That is what she wants to do, but provided she is prepared to do so.‟ [8] In response to these pleas the enquiry was adjourned to 27 August 2013. On that day Ms Mahlangu did not appear and a medical certificate was tendered on her behalf. But five people appeared to represent her. Two were officials, one a legal adviser in the Department of Infrastructure Development and the other a legal adviser in the Department of Health. Two were from the firm of attorneys that represented her in this appeal and one was an advocate. Two other people were present from the anti-corruption task team although their role was obscure. On this occasion the enquiry was adjourned to 15 October 2013. Although the merits of the summons were not discussed, it was indicated that it was unnecessary to issue a fresh summons. There was no suggestion that summoning Ms Mahlangu was an abuse. [9] In the circumstances, it must have come as something of a surprise to the commissioner and the liquidators when, shortly before 15 October 2013, they were confronted with an urgent application for an order that Ms Mahlangu be excused from attending the enquiry pending an application to set aside the summons as an abuse, joined with an application for a penal costs order against anyone opposing the application. An interim order was granted on 15 October 2013 and, as noted above, a final order setting aside the summons was made on 26 January 2015. [10] There is nothing in the papers to indicate what caused this change of heart on the part of Ms Mahlangu. Counsel endeavoured to explain it from the bar on the basis that between the first and the second sessions of the enquiry she changed legal advisers. There are two obstacles to accepting that contention. The first is that it nowhere appears in the affidavits where one would have expected to find an explanation. While there is reference to her changing legal advisers, she does not say that the advice she obtained from her new advisers was different from that of her original legal team. The second is that the new legal team gave no indication to the commissioner and the liquidators that there was any problem with or objection to the summons. As matters stand it is unexplained. That does not mean that she cannot contend that the issue of the summons was an abuse. But, in the light of her original co-operative attitude, it does indicate that her allegations of abuse must be scrutinised with care, as they may have been raised purely in an endeavour to avoid being examined and not because the allegations of abuse are genuine. The claim of abuse [11] Ms Mahlangu claimed in her founding affidavit that the liquidators wished to use the enquiry proceedings „to obtain information from me to bolster its case against the Gauteng Province‟. She went on to contend that it was „unfair, prejudicial and detrimental to fair play in any litigation process‟ to permit one of the parties to use the mechanism of an enquiry under the Act „to gather information from a representative of the other party (and against the wishes of the other party) to build or better its case in civil litigation‟. This she characterised as an abuse. [12] Although at points in the affidavits there are hints that Ms Mahlangu did not possess any information relevant to the dealings between the department and 3P Consulting, these hints were belied by statements from her own mouth. One cannot gather information from someone who does not possess information. Indeed, had that been the case one cannot see why she would have been reluctant to testify. When asked she could simply have told the commissioner that she had no information regarding the issues under investigation. No doubt she might have been able to point to relevant officials who might have had knowledge, but beyond that the whole matter could have been disposed of relatively quickly and painlessly. [13] In fact that was not the position. It emerged that she was concerned that the information she had, or her lack of information on important issues, might bolster the liquidators‟ case. The statements in her affidavits quoted earlier in paragraphs 1 and 3, dealing with the reasons for the Department attempting to avoid the contract and the defence to the monetary claims, supported the conclusion that she had knowledge of these matters. So did her statements when she first appeared before the enquiry. In her capacity as MEC she chaired the meetings at which these matters were discussed and decisions were taken. Counsel accepted that she had knowledge of matters relevant to the Department‟s dealings with 3P Consulting in regard to this contract and this claim. He went so far as to say that she was a central witness for the Department‟s case. [14] In regard to the liquidators‟ purpose in asking for Ms Mahlangu to be summoned to the enquiry, Mr Leigh Roering, the first appellant, deposed to the affidavit on behalf of the liquidators. He explained that the reason for 3P Consulting going into liquidation was its non-receipt of the money claimed in the pending litigation, which resulted in it being unable to pay its creditors. In the light of the evidence of the witnesses who had testified thus far in the commission, he said that the liquidators had obtained insight into the affairs of 3P Consulting, which had led them to the conclusion that Ms Mahlangu could give them important information in regard to its relationship with the Department. While the nature of that information was not specified, the commissioner filed a report in which he said that he was at all times of the opinion that Ms Mahlangu was a person capable of giving information concerning the trade, dealings, affairs and property of the company in liquidation. That information must have related to the company‟s dealings with the Department. [15] In her replying affidavit Ms Mahlangu did not challenge these statements by Mr Roering and the commissioner. She complained of the failure to include a copy of the application made to the Master before the commission was established, although, as her challenge was to the summons addressed to her and not the decision of the Master to establish the commission in the first place, that was hardly relevant. She said that the application was necessary in order to determine whether the commissioner was justified in issuing the summons, but failed to explain why this was so. She said that there was no evidence that the former directors of 3P Consulting were unwilling to assist the liquidators. But that did not meet the point that the liquidators and the commissioner had formed the view that she was in possession of relevant information. As regards the commissioner‟s report she complained that it did not take the form of an affidavit. That ignored the well-established practice of functionaries such as the Master or the Registrar of Deeds, or persons conducting enquiries, such as commissioners or arbitrators, placing information before a court by way of a report rather than an affidavit. It is only if the contents of the report become controversial that an affidavit is called for. Had Ms Mahlangu brought review proceedings, a matter with which I deal at the conclusion of this judgment, the commissioner might have been obliged to act differently. [16] On the face of it the liquidators had every reason to think that Ms Mahlangu was in a position to give information to the commissioner about the alleged irregularities in the award and extension of the contract that led to the attempt to cancel it. She would be able to say on what factual basis the Department claimed that it received no value in respect of the invoices that are the subject of the claim in the application that has been referred to trial. As the political head of the Department at that time she would be best placed to given an overview of the information on the basis of which the relevant decisions were taken. These were obviously relevant to the liquidators‟ task. They needed to know the foundation for the contention that the documents were irregular and the claim tainted by fraud before they advised creditors whether to proceed with the trial and incur the expense of doing so. [17] Essentially, Ms Mahlangu contended that obtaining information on those matters was an abuse of process in the light of the application claiming the sum of R99 million from the Department. In argument both of her counsel repeatedly returned to the proposition that, because there was pending litigation in which she would be a central witness for the Department, it was an abuse of process to require her to give evidence at the enquiry. They claimed that it would confer an improper advantage on the liquidators in pursuing the litigation. This argument was advanced without any reference to the facts or any evidence that, in the particular circumstances of this case, requiring Ms Mahlangu to give evidence would cause any special or particular harm to her or to the Department in the conduct of its case, assuming that the litigation proceeds. There was no evidence to show that the liquidators were already in possession of the information they wished to obtain from her, or that this could be obtained from the former officers of 3P Consulting. We were told that there was evidence available to the liquidators in the form of the affidavits filed in the application, but those were not placed before us to illustrate the proposition that summoning her to the enquiry was an abuse. [18] Stripped of the emotive language in which the argument was couched, it amounted to no more than this: In any situation where litigation by the liquidators is underway or contemplated it would be an abuse for a potential witness for the other party to that litigation to be summoned to an enquiry in terms of ss 417 and 418 of the Act to be questioned about matters bearing upon that litigation. The proposition is extreme. It would mean that in any situation where liquidators were considering whether to pursue a claim instituted by the company before its liquidation, whether they came on the scene after litigation had commenced or whether they were contemplating instituting such litigation, it would constitute an abuse were they to seek to examine a potential witness for the other party at an enquiry under the Act. [19] If correct, the ramifications of this would be significant for the task of liquidators of companies and trustees of insolvents. If it were an abuse in this instance to summon Ms Mahlangu and examine her, merely because she was a potential witness in the pending litigation, then, by parity of reasoning, it would be an abuse in any other similar case. There is no reason to distinguish Ms Mahlangu‟s position and this litigation from any other possible witness and any other litigation. And it is not apparent that the position would be altered if the litigation were not actual but merely potential. Once the spectre of future litigation arose it would be an abuse to seek to bring a potential party or a witness for the other side to an enquiry and examine them in regard to issues bearing upon that litigation. Against that background I turn to consider the law on this topic. The law [20] The necessity in bankruptcy proceedings for a means whereby liquidators or trustees can investigate the financial position of the insolvent or insolvent company has long been recognised. It can be traced back to s 117 of the Bankrupt Law Consolidation Act 1849 (12 & 13 Vict c 106), which provided that a bankrupt could be examined by the court: „touching all matters relating to his trade, dealings, or estate or which may tend to disclose any secret grant, conveyance or concealment of his lads, tenements, goods, money or debts …‟ Such enquiries were made available in the case of companies in 1862 and were first imported into South African legislation in 1868. They have remained part of our law ever since.5 The Constitutional Court has affirmed the constitutional legitimacy of such provisions.6 [21] Section 418, read with s 417, of the Act provides that, where a company in liquidation is unable to pay its debts, an application may be made to the Master for an examination or enquiry relating to the affairs of the company. Section 417(1) sets out the permissible scope of the enquiry. Any person who is known or suspected to have in their possession any property of the company, or is believed to be indebted to the company, or any person deemed capable of giving information concerning the trade, dealings, affairs, or property of the company may be summoned to give evidence or produce documents. The potential scope of such an enquiry is extremely wide. In the present case it would encompass all the issues surrounding the claim by 3P Consulting against 5 The history is traced in Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others [1995] ZACC 13; 1996 (1) SA 984 (CC) (Ferreira) paras 115 to 119. It is possible that the first enactment of such provisions was even earlier than the Victorian era. See Re Excel Finance Corporation Ltd John Frederick Worthley v Richard Anthony Fountayne England [1994] FCA 1251; (1994) 124 ALR 281, para 27 (Excel Finance). 6 Bernstein and Others v Bester and Others NNO [1996] ZACC 2; 1996 (2) SA 751 (CC) (Bernstein). the Department. After all, that claim was the main, if not the sole, asset of the company and an enquiry into it would be one related to the dealings, affairs and property of the company. An initial submission that the validity of the claim did not come within the permissible scope of an enquiry in terms of s 417(1) was abandoned when counsel accepted that the claim was an asset of 3P Consulting and that it was therefore legitimate to enquire into its validity. [22] The Master is entitled to appoint a commissioner to conduct the enquiry. That is what the Master did in this case when he appointed Mr Stewart as the commissioner. Once appointed the commissioner may summon witnesses and require the production of documents. The liquidators, creditors, members and contributories may be present and represented at the enquiry and are entitled to interrogate any witness, provided the scope of the interrogation is restricted to matters falling within s 417(1). It would be impermissible, for example, for a member to examine a witness with a view to establishing that they had a claim for defamation against that witness. A person summoned to an enquiry is entitled to legal representation and to be furnished with a copy of their evidence. A witness is obliged to answer any question put to them, but incriminating answers are not admissible in evidence against them in later criminal proceedings.7 [23] In Ferreira Justice Ackermann spelt out the purposes of an enquiry.8 One of those purposes is to investigate the validity of claims by 7 See para 1 of the order in Ferreira para 157. The section has since been amended. See s 417(2)(c) of the Act. It excludes the use in criminal, but not civil, proceedings of incriminating answers and incriminating derivative evidence obtained in consequence of those answers. 8 Ferreira paras 122 to 124. See also the summary in Bernstein para 16. the company and to determine whether they should be pursued. It is „obviously in the interest of creditors that doubtful claims which the company may have against outsiders be properly investigated before being pursued‟.9 The enquiry is the mechanism by which liquidators can properly investigate „doubtful claims against outsiders before pursuing them‟.10 Importantly: „It is permissible for the interrogation to be directed exclusively at the general credibility of an examinee, where the testing of such person's veracity is necessary in order to decide whether to embark on a trial to obtain what is due to the company being wound up.‟11 [24] Had it not been for the form the argument took, the statement of principle set out above would have sufficed for the purposes of this case. But counsel seized upon a passage from an English case in the Court of Appeal in regard to the purpose of an enquiry and deployed it in support of an argument that the ambit of the enquiry is more limited than that which might be indicated by these statements of principle. The passage comes from the judgment of Browne-Wilkinson V-C in Cloverbay,12 and reads as follows: „(T)he reason for the inquisitorial jurisdiction contained in s 236 is that a liquidator or administrator comes into the company with no previous knowledge and frequently finds that the company's records are missing or defective. The purpose of s 236 is to enable him to get sufficient information to reconstitute the state of knowledge that the company should possess.‟ (Emphasis added.) 9 Moolman v Builders & Developers (Pty) Ltd (in Provisional Liquidation): Jooste Intervening 1990 (1) SA 954 (A) at 960G-I quoted with approval in Ferreira para 123. 10 Bernstein para 16(e)(ii). 11 Bernstein para 16(f). 12 Cloverbay Ltd (Joint Administrators) v Bank of Credit and Commerce International SA [1991] Ch 90 (CA) at 102; [1991] 1 All ER 894 at 900, para 58. [25] In referring to that passage in Bernstein,13 in the context of the decision to convene an enquiry, Justice Ackermann said the following: „The first consideration is that the purpose of the provisions is to enable the liquidator to reconstitute the state of knowledge of the company in order to make informed decisions. The purpose is not to place the company in a stronger position in civil litigation than it would have enjoyed in the absence of liquidation.‟ Using this as his foundation, counsel contended that the information that might be obtained by examining Ms Mahlangu would go beyond reconstituting the state of knowledge of the company as at the date of liquidation, and would place the company in a stronger position in the pending litigation than would otherwise be the case. That was the basis for his contention that summoning Ms Mahlangu to the hearing would be an abuse. He relied on the judgment in Kebble14 in support of this, although he overlooked the fact that in that case the court declined to set aside a summons. [26] There is a twofold fallacy in this argument. The first is that it treats Browne-Wilkinson V-C‟s statement of the statutory purpose as if it reflected the only purpose for an enquiry. The second is that it treats the obtaining of an advantage in civil litigation as a bar to the issue of a summons. Neither is correct as a survey of authorities from various jurisdictions reveals. [27] As to the first of these propositions counsel found himself in good company in that Hoffmann J (later Lord Hoffmann) had construed the same passage in Cloverbay as imposing a constraint on the purposes for 13 Bernstein para 20. 14 Kebble v Gainsford and Others NNO 2010 (1) SA 561 (GSJ) paras 57 and 58. which an enquiry could be ordered in England.15 He held that its effect was to limit the purposes of an enquiry to obtaining the information „to which the company was entitled from its officers and servants, past or present, as a matter of contract or fiduciary duty.‟ But that view was held to be incorrect by the House of Lords in Spicer & Oppenheim.16 Speaking for the House, Lord Slynn of Hadley said:17 „I do not think that reading the judgment overall such a limitation to “reconstituting the company‟s knowledge” was intended to be laid down in the Cloverbay case. In any event for my part I do not think that such a limitation exists.‟ [28] That conclusion was justified when regard was had to the history of provisions of this ilk and the construction they have been given down the years by the courts. In Re Gold Co18 it was said: „‟(T)he whole object of the section is to … enable assignees, who are now called trustees, in bankruptcy to find out facts before they brought an action, so as to avoid incurring the expense of some hundreds of pounds in bringing an unsuccessful action, when they might, by examining a witness or two, have discovered at a trifling expense that an action could not succeed.‟ Buckley J (as he then was), said in Re Rolls Razor Ltd:19 „It is, therefore, appropriate for the liquidator, when he thinks that he may be under a duty to try to recover something from some officer or employee of a company, or some other person who is, in some way, concerned with the company's affairs, to be able to discover, with as little expense as possible and with as much ease as possible, the facts surrounding any such possible claim.‟ 15 British and Commonwealth Holdings plc (joint administrators) v Spicer & Oppenheim (a firm) [1992] BCLC 314 at 320. 16 British and Commonwealth Holdings plc (joint administrators) v Spicer & Oppenheim (a firm) [1992] 4 All ER 876 (HL)(Spicer & Oppenheim). 17 At 876a-b. 18 Re Gold Co (1879) 12 ChD 77 at 82. Quoted with approval in Bernstein para 22. 19 Re Rolls Razor Ltd [1968] 3 All ER 698 (Ch) at 700 approved in In Re Esal (Commodities) Ltd [1989] BCLC 59 (CA) at 64 and cited with approval in Spicer & Oppenheim 883c-884d and Ferreira para 124. [29] A similar approach to the purpose for which the section may be used is to be found in other jurisdictions having similar legislation flowing from the same legislative history. In Hong Kong it has been said:20 „… it is now settled that while one of the purposes … is to enable the company‟s knowledge to be reconstituted, it is not the sole purpose of the provision … The provision may be used to discover facts and documents relating to specific claims against specific persons which the applicant has in contemplation and it is in itself no bar that the applicant may have commenced or may be about to commence proceedings against the proposed witness or someone connected with him …‟ (Emphasis added.) [30] The position in New Zealand is the same. In Carrow Holdings,21 Heath J said: „Generally speaking, a liquidator will not be prevented by the Court from convening an examination simply because a firm decision to issue proceedings against the proposed examinee has been made or, indeed, in circumstances where the proceedings have, in fact, been issued.‟ In Re Smith (A Bankrupt)22 the New Zealand Court of Appeal dismissed an application by the wife of the bankrupt to set aside a summons where the purpose of the enquiry was to determine whether there was a claim against her personally. It held that the purpose was to determine whether to continue with existing proceedings against the wife with the same knowledge that the wife had.23 20 The Joint and Several Liquidators of the New China Hong Kong Group Ltd and Others v Ernst & Young & Others 2003] HKCFI 903; [2003] 3 HKLRD 799; [2003] 3 HKC 252 para 23. See also The Joint Liquidators of Chark Fung Securities Co Ltd and Others v Chan Kwong Hung [2001] 2 HKC 335 at 339B. 21 Carrow Holdings Limited (in liquidation) v Sadiq HC [2008] NZHC 825 para 27 22 Re Smith (A Bankrupt) [1992] NZFLR 241 (CA) at 244-245. 23 Re Ex Ced Foods (formerly Cedenco Foods)(in liquidation) and Cedenco Ohakune (in liquidation) [2012] NZHC 3037, para 66. [31] In Australia the problem of a liquidator using an enquiry to ascertain information about actual or potential litigation was dealt with by Street J in the following terms: 24 „A liquidator needs information concerning his company just as much in connection with current or contemplated litigation as in connection with other aspects of its affairs. In using the statutory machinery of private examination he will in many cases be gathering evidence as an ordinary and legitimate use of this procedure. ... In my judgment it is immaterial in basic substance whether the private examination is sought to be used by a liquidator to gather information in connection with proceedings he believes he might be able to bring, proceedings he contemplates bringing, proceedings he has decided to bring, and proceedings he has already brought. There is no presently relevant distinction in substance between gathering information referable to commencing proceedings and gathering information referable to continuing proceedings.’ [32] The same approach to similar powers of enquiry is adopted in Singapore. In W & P Piling25 Rajah V-C said: „Section 285 is couched in extremely generous terms. It should not therefore be interpreted in a constricted manner by reference to any apocryphal purposes. It clearly cannot be used for any collateral purpose that affords no benefit to the company. Other than that, it may be invoked for any proper purpose that can benefit the company and which is within the statutory powers of the liquidator and the scheme of the companies legislation. … Furthermore, a liquidator has no mandate to commence litigation which has no real prospect of succeeding.‟ The learned judge went on to say that: „Information may be sought and facts and documents discovered in relation to a specific claim that the liquidator contemplates against the examinee or a related 24 Re Hugh J Roberts Pty Limited (In Liquidation) (1970) 2 NSWR 582 at 585, in a passage quoted with approval by the Court of Appeal in Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 518 (Hong Kong Bank) and by Mason CJ in Hamilton v Oades [1989] HCA 21; (1988- 89) 166 CLR 486 at 497. 25 Liquidator of W & P Piling Pte Ltd v Chew Yin What and Others [2004] 3 SLR 164; [2004] SGHC 108 para 27. See also Pricewaterhousecoopers LLP and Others v Celestial Nutrifoods Ltd (in compulsory liquidation) [2015] SGCA 20 paras 42 and 57. entity. There is no rule that precludes the ordering of information against a proposed witness or someone connected with him …‟ [33] I have no doubt that this approach correctly reflects the law in South Africa. In Ferreira,26 Justice Ackermann cited Lord Slynn‟s conclusion in Spicer & Oppenheim with approval. In Bernstein,27 he specifically rejected the narrow understanding of Cloverbay that the purpose of an enquiry was limited to reconstituting the state of knowledge that the company should possess. It would be a work of supererogation on my part to cite the countless cases in South Africa, of which Bernstein was one, where the clear purpose of an enquiry was to determine whether the company in liquidation had a sound claim against a third party. The proposition by counsel that the purpose of the enquiry must be so limited must be rejected. [34] The second aspect of counsel‟s proposition is more directly connected to the issue of abuse. There is no doubt that courts have the power, and indeed the obligation, to restrain the use of the power of enquiry where it would constitute an abuse. The more difficult issue lies in determining what constitutes an abuse. Counsel‟s argument was that it is an abuse when the person sought to be examined is a potential witness in future proceedings and as a result of the examination of that witness the liquidators acquire insight into what the witness may say if called at the trial. Unspoken, but lurking behind this submission, was a fear of the potential risk that interrogation might extract valuable admissions from the witness, or the witness might be shown to be flawed or unreliable. 26 Ferreira para 125. 27 Bernstein para 21. [35] While the Constitutional Court in both Ferreira and Bernstein said that our courts must be astute to prevent enquiries in terms of ss 417 and 418 from being used as an instrument of abuse, it did not seek to expand on the meaning of that expression. But it did refer to Australian cases as a helpful guide to the approach to be adopted by South African courts. Thus it quoted with approval the following statement by Gleason CJ in Hong Kong Bank:28 „(w)hile the Court would not permit a liquidator, or other eligible person, to abuse its process by using an examination solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures, such as discovery or inspection, on the other hand, the possibility that a forensic advantage will be gained does not mean that the making of an order will not advance a purpose intended to be secured by the legislation.‟ Immediately after this Justice Ackermann added the following far- reaching comment: „The liquidator is entitled to obtain information, not only to ascertain whether she/he has a cause of action, but also in order to assess whether the case is sufficiently strong to justify spending the creditors' money in pursuit of it, and, conversely, whether there is an adequate defence to a claim against the company.‟29 [36] What constitutes an improper forensic advantage will depend upon the circumstances of each case. Summoning a witness in order to benefit a third party, such as a creditor, in pursuing proceedings against that witness or an entity that they represent, would be such a case. In Hong Kong Bank the example was given of an attempt to summon a witness with a view to destroying their credit as a witness or to „enable a dress rehearsal of the cross-examination‟. Another example mentioned in Excel 28 Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 519. 29 Bernstein para 33. Finance30 was of a summons directed at obtaining pre-trial discovery when a discovery order had been refused in proceedings already on foot. In Re Sasea Finance31 the court refused to consent to an enquiry where its sole purpose was to extract „damaging admissions and unconvincing justifications‟ for the purpose of a possible negligence claim against auditors. Engineering an enquiry shortly before a trial in which the liquidator is the plaintiff in order to obtain ammunition to attack the defendant in the trial has been described as „a classic example of harassment‟.32 [37] Where the evidential material is available to the liquidators from an alternative source, or it can be obtained simply and expeditiously without resort to the process of an enquiry, that will tend to show that the liquidators have an ulterior motive in seeking to examine the witness and that the commissioner should not have acceded to the request to summon that witness. But the fundamental issue in determining whether there is abuse is whether the enquiry is being used for a purpose not contemplated by the Act. As it was put in Excel Finance:33 „Whether there will be, in a particular case, a use of the process or an abuse of it will depend upon purpose rather than result. The consequence of an examination may well be that the examiner has conducted a “dress rehearsal” of cross-examination which may take place at a subsequent trial. The fact that the trial has commenced, or is contemplated, may throw light upon the purpose. But merely because other proceedings had been commenced, or are contemplated, would not involve, of itself, an abuse of process.‟ 30 Excel Finance para 76. 31 Re Sasea Finance Ltd [1998] 1 BCLC 559. 32 Botha v Strydom and Others 1992 (2) SA 155 (N) at 160C-E. 33 Excel Finance para 77. [38] Once it is accepted that a permissible purpose in causing a witness to be summoned to an enquiry is to enable the liquidator to make an informed assessment of the merits of a potential claim or defence to a claim, it must follow that the fact that the individual concerned is a potential witness in other civil litigation, actual or contemplated, is neutral in determining whether the summons is an abuse. Something more must be identified as constituting the abuse. It is inherent in the process of such an enquiry that there is a possibility that the examination of the witness will be advantageous in future litigation. It may generate information that proves valuable in that litigation or helpful lines of enquiry. It may demonstrate that a witness is a poor witness who is unlikely to withstand cross-examination. Admissions may be made that are of assistance. The inability of a witness to provide a credible explanation for a transaction may be extremely helpful. As any experienced practitioner knows, often what is important is not what the witness can say, but what they are unable to say. Provided the underlying purpose remains the proper one of assessing the merits of a claim or a defence on an informed basis, if these advantages accrue to the liquidator along the way they are not illegitimate. [39] Before leaving this topic there are two other factors that I should mention as bearing upon an investigation into whether an enquiry, or a summons to attend an enquiry, is an abuse. Hoffmann J (as he then was), pointed out in Re J T Rhodes Ltd34 that the cases that describe the powers of examination as redolent of the Inquisition or Star Chamber were drawn from an era where the notion of personal privacy in regard to business 34 Re J T Rhodes Ltd [1987] BCLC 77 at 80. In Botha v Strydom supra at 159G-I they were described as „Draconian‟. See also Jeeva and Others v Receiver of Revenue, Port Elizabeth and Others 1995 (2) SA 433 (SE) at 443A-D. dealings was more stringent than it is today and the powers of inspection and examination that we now regard as normal in our modern highly regulated commercial environment would have been regarded as anathema. By contrast, our society is deeply concerned at the public level with the consequences of corporate collapses, especially where that has a broad social impact on employees and vulnerable investors.35 The general public has a legitimate interest in knowing that, when companies are liquidated, those who have warranted the reliability of financial reports and those who promoted these public ventures will have to explain why things went wrong. That suggests that courts should not too readily infer that a summons to attend an enquiry is an abuse. [40] The second factor is that the evidence obtained from a witness at an enquiry will, in many instances, be inadmissible in later civil proceedings. That will not necessarily be so where those proceedings are brought against the witness personally, as may be the case in a claim against a former director, but where those proceedings are brought against an entity such as a company, a close corporation or a trust the evidence given at an enquiry will usually be inadmissible against them.36 That is a considerable safeguard against abuse where the use to which the evidence may be put is limited to assisting the liquidator to form a picture of what occurred and investigating a possible claim. Was the summons addressed to Ms Mahlangu an abuse? [41] I have already summarised the contentions advanced on Ms Mahlangu‟s behalf. They were unsupported by any evidence at all that 35 Bernstein para 23. 36 Simmons NO v Gilbert Hamer & Co Ltd 1963 (1) SA 897 (N) and O’ Shea NO v Van Zyl and Others NNO [2011] ZASCA 156; 2012 (1) SA 90 (SCA) paras 19 to 25. pointed to the summons being an abuse. At the outset she and the State Attorney, South Gauteng, did not regard it as an abuse. She did not indicate, even in broad terms, what evidence she was capable of giving in regard to the dealings between 3P Consulting and the Department. It was contended that the nature of that evidence emerged from the affidavits filed by the Department in opposing the claim for judgment, but as those affidavits were not placed before the court in these proceedings we do not even know whether Ms Mahlangu was one of the deponents. Nor can we know whether the areas that she can traverse in her testimony could be adequately or better dealt with by others.37 [42] It was also suggested that this material would emerge in the course of the trial, but that misses the point. The liquidators were seeking to explore the matter, in order to determine what advice they should give the creditors in regard to continuing the present litigation. They could not do that properly, expeditiously or inexpensively by following the often laborious processes of preparing for trial. Additionally, they did not have the benefit, as they would in many other jurisdictions, of witness statements furnished in advance of trial. Lastly, there was no guarantee that Ms Mahlangu would testify at the trial, in which event the liquidators would be compelled to litigate without knowing what light she could cast on the dispute. 37 In argument there were suggestions that evidence might be better forthcoming from people such as the Director-General of the Department, but no foundation was laid for this. There was a complaint in the affidavit against a „senior representative of the other party to the litigation‟ being required to give evidence. Enquiries as to whether it was permissible for „junior representatives‟ to do so and whether Ms Mahlangu was standing upon her dignity attracted a hasty withdrawal. For a public representative to adopt the stance that they were too important, or too busy, to attend at an enquiry, would be to deny the legacy of our first president, the late President Mandela, who gave evidence and submitted to cross- examination in the SARFU case, even though the decision to require him to do so was unfounded. President of the Republic of South Africa and Others v South African Rugby Football Union and Others 2000 (1) SA 1 (CC) paras 20-22 and 240-245. [43] The suggested prejudice to the Department was not established. Ms Mahlangu‟s evidence at the enquiry would, for the reasons dealt with above, not be admissible against the Department. If, as she said, the purpose was to obtain information from her to bolster the case against the Department, she neither indicated what that information might be nor gave any good reason why it should not be disclosed to the liquidators. She said that she did not wish the liquidators „to gain inside knowledge I have of my employer‟s business‟. Her perception that she is a mere employee is curious. She is in fact an elected public representative, appointed by the Premier of the province to hold the office of an MEC in the province. That aside, she has not taken the court into her confidence in regard to the nature of her knowledge, or why it may affect the outcome of the litigation, or why it should remain confidential. [44] In short, there was no evidence at all to support Ms Mahlangu‟s allegations that the summons addressed to her constituted an abuse. Her contention that this was so was based on an erroneous understanding of the circumstances in which a person may be summoned to attend and give evidence at an enquiry under ss 417 and 418 of the Act. The liquidators had clear and justifiable reasons for seeking her testimony. The commissioner properly summoned her to attend. No abuse was involved. [45] The court below was asked by Ms Mahlangu to approach the matter on the basis that the liquidators had already decided to press ahead with the litigation against the Department; that all the information it could obtain from Ms Mahlangu was already to be found in the affidavits delivered in those proceedings and that the purpose of summoning Ms Mahlangu to the enquiry was to use it as a „trial run or “pre-hearing” of the evidence to be led‟ in that litigation. Somewhat contradictorily, it was also argued that she could not state definitively whether the work contracted for had been performed and that she could not advance the Department‟s case in regard to other irregularities. No finding was made in regard to these submissions but none of them had any support in the application papers before the court. What was before the court and undisputed was the evidence of the liquidators that they had still to take a decision on whether to proceed with the litigation and that the enquiry, including calling Ms Mahlangu as a witness, was directed at giving informed advice to creditors in this regard. [46] Notwithstanding this the judge in the high court said that Ms Mahlangu‟s relationship with 3P Consulting was at arm‟s length and inherently adversarial. She accordingly „hardly qualifies as a person who can shed light on the operations of 3P Consulting‟. Needless to say that was factually incorrect and involved the wrong approach to the issue of abuse. Equally incorrect was the view that „the enquiry may be abused to gain pre-trial forensic advantages not permitted by rules of court to elicit information that may be used to uncover the inherent strengths and weaknesses in 3P Consulting‟s civil lawsuit against the Department‟. It was not the potential for abuse, which should in any event be prevented by the commissioner, but the existence of actual abuse that was relevant. [47] As far as can be ascertained from the judgment the reason the judge upheld Ms Mahlangu‟s application was his view that if the enquiry proceeded „it will provide them with a pre-trial forensic tool not provided by the rules of court such as discovery and inspection to weigh their chances of success at trial‟. That involved a fundamental misunderstanding of the purpose of an enquiry under ss 417 and 418. It was not a proper basis for a finding of abuse. It follows that the appeal must succeed, but before finishing this judgment it is appropriate for me to make some remarks about the form of the proceedings in this case. Form of proceedings [48] Ms Mahlangu claimed an interdict preventing the commissioner from compelling her to give evidence and an order setting aside the summons. Her case was then argued on the basis that it was a straightforward application in which, provided she established the abuse of which she complained, she was entitled to relief. The position of the Master and the commissioner was disregarded. I am not satisfied that this approach was correct. While courts have a power to intervene in such proceedings and prevent them from being abused, that power cannot be divorced from the provisions of the statute or the principles of our law that apply to challenging decisions made in the exercise of statutory powers. [49] Ms Mahlangu‟s legal advisers may have been misled by the reliance that has been placed on foreign cases, especially those from England, in our own jurisprudence relating to such enquiries. As Justice Kriegler warned in Bernstein38 too facile a reading of foreign legal material is to be eschewed, because, when removed from their own environment, they may mislead. In England and in several of the other jurisdictions to which I have referred an enquiry of this type can only be convened by order of court, as was formerly the position in this country. As a result, the English cases, of which Cloverbay is a prime example, are concerned with the question of when such an enquiry should be convened. They are not dealing with the circumstances in which the court 38 Bernstein para 133. should overturn a decision to convene an enquiry on the grounds that it is an abuse. In South Africa the Master is empowered by s 417(1) to conduct such an enquiry or to appoint, in terms of s 418(1)(b), a commissioner to conduct an enquiry. Experience teaches us that this is now the normal way in which such enquiries are convened.39 The conduct of the enquiry is then delegated to the commissioner who exercises the statutory powers set out in s 418 of which one is the power to summon witnesses to the enquiry and another of which is to regulate the questioning of witnesses.40 [50] In the light of these provisions, where the Master has exercised the power to convene an enquiry and appoint a commissioner to conduct it, the position may be that such a decision can only be challenged by way of judicial review.41 In any event, it is not simply a matter of the court substituting its decision for that of the Master. As the cases demonstrate some weight is to be attached to the decision of the Master and it may not be overturned simply because the court disagrees with it. It can only be set aside on limited grounds of which the one most likely to be relevant here would be that it was unreasonable in the sense of being a decision that a reasonable decision-maker could not reach.42 In this case the Master‟s decision is not challenged. It must be taken therefore that the convening of an enquiry into the affairs of 3P Consulting and the appointment of Mr Stewart to act as commissioner was entirely justified. There was nothing in the record to gainsay that conclusion. 39 Meskin Henochsberg on the Companies Act (5 ed, 1994, looseleaf, current ed Kunst, Delport and Vorster) Vol 1, p 888 (Service Issue 32). 40 Section 418(1)(c) of the Act. 41 Leech and Others v Farber NO and Others 2000 (2) SA 444 (W) at 448F-H. The position appears to be the same in Australia where a Commissioner of the Australian Securities Commission and not a court that makes orders for the convening of an enquiry. See Excel Finance. 42 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490 (CC) para 44. [51] The attack was instead directed at the decision by the commissioner to summon Ms Mahlangu to attend and give evidence. But that was not directly addressed in the papers. Instead it was attacked obliquely on the basis that the motives of the liquidators in seeking to have her summoned to the enquiry were improper. This is not a permissible approach, because it is the commissioner who decides that a witness is to be summoned, not the liquidators, although they may ask the commissioner to do so. The position of the commissioner must be distinguished from that of the liquidators and their motives. As Harms JA pointed out in Jeeva:43 „The Commissioner, against whom no complaint has been laid, is the person who conducts the inquiry. It is he who has to act in a quasi-judicial capacity. He has the main duty to examine the witnesses. He has to regulate and control the interrogation. Should he fail in his duty to apply the procedural fairness appropriate to this forum, an aggrieved party may approach the Court for suitable relief … … [t]he position of the liquidator is quite different. He, in this context, acts in neither an administrative nor quasi-judicial capacity. He is not in a position of authority vis-à-vis the witness. He does not determine or affect any of his rights. He simply represents the company in liquidation at the inquiry. He is, or may be, an adversary of the witness. As adversary he can have no higher duty towards his opponent than any other litigant has.‟ Where there is no foundation for the commissioner to issue a summons compelling a witness to attend an enquiry the commissioner‟s decision may be challenged. 43 Receiver of Revenue, Port Elizabeth v Jeeva and Others; Klerck and Others NNO v Jeeva and Others [1996] ZASCA 5; 1996 (2) SA 573 (A) at 579H–580B. [52] An enquiry under these sections of the Act has been said to be a „complex administrative proceeding‟.44 Whether that is a correct description is debatable.45 If there is to be a challenge to the conduct of an enquiry that must either be a review falling under PAJA46 or a residual category of review derived from the common law. In either event, the proper way in which to challenge the summoning of a witness is by way of review proceedings and the decision that falls to be attacked is that of the commissioner not the liquidators.47 Any attack on the commissioner‟s decision to summon a witness must give weight to the considered view of the commissioner as to the necessity for that particular individual to be summoned.48 [53] Furthermore when an allegation is made, as was made here, that the examination by the liquidators would involve an improper „fishing expedition‟ the primary issue is whether the commissioner would permit that. Here there was no suggestion that, had Ms Mahlangu given evidence, the commissioner would not have exercised his powers to prevent any abuse by the liquidators. Of course, instances may arise where liquidators interrogating a witness at an enquiry may overstep the permissible bounds of the enquiry and abuse their statutory rights. But an aggrieved person, who is entitled to be legally represented, is entitled to 44 Schulte v Van der Berg and Others NNO 1991 (3) SA 717 (C) at 721A-B. 45 In Bernstein Ackermann J said that there was difficulty in seeing how such an enquiry can be characterized as administrative action, (paras 96-98) although ultimately the question was left open (para 99). The judgments of Kriegler J (para 131) and O‟Regan J (para 155) specifically refrained from endorsing those doubts. There can be little doubt that the Master and the commissioner are exercising public powers, but the debate is whether they are engaged in making decisions of an administrative nature. See also Mitchell and Another v Hodes and Others NNO 2003 (3) SA 176 (C) at 185E-189C. 46 The Promotion of Administrative Justice Act 3 of 2000. 47 Without directly referring to the problem the judgments in both Gumede and Others v Subel SC, Arnold and Others [2006] 3 All SA 411 (SCA) and Miller and Others v Nafcoc Investment Holdigs Company Ltd and Others [2010] 4 All SA 44 (SCA) proceed as if the court was concerned with a review of the Master‟s decision or the commissioner‟s decision. 48 See Bato Star supra paras 46 – 48. Leech v Farber NO supra at 448I-449C. complain and it is then for the commissioner to prevent any abuse. If the witness is dissatisfied with the commissioner‟s approach that may be the subject of a review, but one cannot start from the perspective that the commissioner will not discharge their duties properly and prevent abuse from occurring. [54] Although, therefore, I have proceeded in this judgment to deal with the issues raised on the footing that they fell exclusively within the court‟s domain and that no weight should be given to the commissioner‟s views, I do not think that this is a correct approach. As it is the one most favourable to Ms Mahlangu it does not affect the result. Conclusion [55] In the result the appeal is upheld with costs and the order of the High Court is altered to read: „The application is dismissed with costs.‟ Justice M J D Wallis Judge of Appeal Appearances For appellant: G D Wickins Instructed by: Brooks & Braadvedt Inc, Johannesburg, E G Cooper Majiedt Inc, Bloemfontein For first respondent: E M Masombuka (with him M H Mhambi) Instructed by: Ngcebetsha Madlanga Inc, Sandton. Matsepes Inc, Attorneys, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 May 2016 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Roering and Another NNO v Qedani Mahlangu Ms Qedani Mahlangu is the MEC for Infrastructural Development in Gauteng. After the general election in 2009 she was appointed as the MEC for Health in that province. Soon after her appointment, a contract between the provincial Department of Health and 3P Consulting (Pty) Ltd was suspended and in July 2009 the Department advised 3P Consulting that it would no longer perform in terms of that contract. This was challenged in the courts and the validity of the contract was upheld. Thereafter 3P Consulting sued the Department for an amount of some R99 million. The proceedings were defended and referred for trial. Before the trial 3P Consulting was placed in liquidation. Its claim against the Department was its sole substantial asset. The liquidators applied for the appointment of a commissioner in terms of sections 417 and 418 of the Companies Act 61 of 1973 to investigate the company’s affairs and to determine whether it should continue with the litigation against the Department to recover the claim. After hearing a considerable body of evidence the commissioner issued a summons for Ms Mahlangu to attend the enquiry and give evidence of the matters within her knowledge concerning the relationship between the Department and 3P Consulting. Initially Ms Mahlangu co-operated with the enquiry and asked for time to refresh her memory of events before giving evidence. But she then launched proceedings in which she alleged that the summons was an abuse as it was directed at obtaining information from her about the merits of the claim and the Department’s defence to it. This contention was upheld by the High Court and the summons was set aside. The SCA today unanimously set aside the High Court’s decision. It pointed to the importance in the public interest of an enquiry into the affairs of a company that has failed. Such enquiries are essential to ascertain what went wrong and who was responsible for it. The fact that civil litigation may flow from the enquiry, or be contemplated, or have been instituted by the liquidators, does not provide grounds for regarding the enquiry, or the summoning of a witness, as an abuse. There were plainly grounds for the liquidators and the commissioner to believe that Ms Mahlangu could give relevant evidence about the dealings between 3P Consulting and the Department. This was confirmed by her lawyers, who described her as a key witness in the case. In the result the summons stands and Ms Mahlangu will be obliged to give evidence in terms of it at the enquiry.

2260

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case no: 165/08 THE DIRECTOR OF PUBLIC PROSECUTIONS Appellant KWAZULU-NATAL and WELCOME SIYABONGA NGCOBO First Respondent HAMILTON MONDLI ZACA Second Respondent LINDELANI LANDSLORD MAPHANGA Third Respondent ______________________________________________________________ Neutral citation: Director of Public Prosecutions, Kwazulu-Natal v Ngcobo and two others (165/08) [2009] ZASCA 72 (1 June 2009) CORAM: NAVSA, VAN HEERDEN and MHLANTLA JJA HEARD: 26 May 2009 DELIVERED: 1 June 2009 CORRECTED: SUMMARY: Minimum sentence regime ─ principles to be applied ─ absence of substantial and compelling circumstances ─ imposition of minimum sentences justified. ______________________________________________________________ ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: High Court, Pietermaritzburg (Gcabashe AJ sitting as court of first instance). In the result the appeal is upheld. The sentences imposed by the court below are set aside and substituted as follows: ‘1. In respect of the murder charge, each of the three accused is sentenced to life imprisonment. 2. In respect of the charge of robbery with aggravating circumstances, each of the three accused is sentenced to 15 years’ imprisonment.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ NAVSA JA (VAN HEERDEN and MHLANTLA JJA concurring): [1] During the morning of Tuesday 26 November 2002, three young men, each in possession of a knife, entered the home of Mr Andrew Scott Ferguson at Rushmore Road, Hayfields, Pietermaritzburg. They stabbed Mr Ferguson at least 24 times in his chest and abdomen, causing his death. One of the young men was employed by Mr Ferguson (the deceased) as a gardener once a week. [2] The walls of the deceased’s home were blood-spattered. He sustained bruises and scratches on his left shin, extensive bruising and abrasions on his face and hands and had a knife wound on his third knuckle. The deceased also suffered a fractured sternum, multiple fractures of his right ribs anteriorly and multiple perforations of his lung, heart and liver. The post-mortem examination revealed that the ribs on the deceased’s right side were all fractured, resulting in what was described as a ‘flail chest’. According to the doctor who performed the post-mortem examination, the flail chest could have been caused by someone jumping on it with considerable force. Because of the flail chest the deceased would have been unable to breathe on the right side. Photographs of the body of the deceased show his face and clothes covered in blood. The clothes of the three young men were stained with the deceased’s blood. All of this indicates a fierce struggle for life by the deceased who was a 55-year old man who had taken early retirement from Telkom, a telecommunications company. His body was found later that day by his friend and neighbour, Mr John Wilson. The body was lying on its back in a passage in the house with something stuck in the mouth. [3] After murdering the deceased, the three men took his cell phone as well as one left there the previous night by Mr Wilson. A video machine and compact discs containing financial information relating to a social club of which the deceased was the treasurer were also taken. The three men drove away in the deceased’s Toyota motor vehicle which they left in the bush a short while after they murdered the deceased. [4] The three murderers unashamedly walked through a residential area in a rural setting with their bloodstained clothes telling two acquaintances about their misdeeds. They used the cell phones they had taken to make telephone calls and allowed others to do so as well. [5] The three men were eventually arrested and were indicted in the Pietermaritzburg High Court, charged with murder and robbery with aggravating circumstances. On 28 July 2005 they were each convicted on these charges (Gcabashe AJ). On 29 July 2005 they were each sentenced to 18 years’ imprisonment on the murder charge and 12 years’ imprisonment on the charge of robbery with aggravating circumstances. The court below ordered the sentences to run concurrently. [6] Aggrieved by sentences regarded as too lenient, the appellant, the Director of Public Prosecutions, Kwazulu-Natal, applied for leave to appeal against them. Leave was erroneously granted to the Full Bench of the High Court. In terms of s 316B of the Criminal Procedure Act 51 of 1977, an appeal by the Director of Public Prosecutions against a sentence imposed by a high court lies directly to this court. When the matter came before the Full Bench of the High Court, the error was detected and corrected. The appeal by the appellant against sentence is now properly before this court. [7] The three men who perpetrated the offences referred to above are Messrs Welcome Ngcobo, Hamilton Zaca and Lindelani Maphanga, the three respondents in this matter. [8] In passing sentence, Gcabashe AJ had regard to the material provisions of the Criminal Law Amendment Act 105 of 1997 (the CLA), in terms of which the legislature saw fit to prescribe minimum sentences for serious offences, unless a court is satisfied that there are substantial and compelling circumstances justifying the imposition of a lesser sentence. The minimum sentence for a murder that was (a) planned or premeditated, or (b) was caused by the accused in committing or attempting to commit or after having committed a robbery with aggravating circumstances, or (c) where the murder was committed by a group of persons acting in the execution or furtherance of a common purpose, is a life sentence.1 The minimum sentence prescribed for a robbery with aggravating circumstances is 15 years.2 [9] In considering the appropriate sentences to be imposed, the court below stated that it had considered this court’s judgment in State v Malgas 2001 (1) SACR 469 (SCA), which sets out how a court is to approach the minimum sentence regime, and in particular, how the enquiry into ‘substantial and compelling circumstances’ is to be conducted. [10] The learned judge in the trial court took into account, in favour of the respondents, their youthfulness at the time that the offences were committed, that they were first offenders and that ‘there had not been any proof of premeditated plans to kill the deceased or rob him’. Furthermore, the court considered, once again in favour of the respondents, ‘the difficulties of remaining a motivated and focused young person in today’s very materialistic world, and the possibilities for rehabilitation if the accused make something of 1 See s 51(1) of the CLA read with Part I of Schedule 2. 2 See s 51(2) of the CLA read with Part II of Schedule 2. themselves whilst in prison’. In respect of the first respondent, Mr Ngcobo, the court considered in his favour that, during his arrest, he cooperated fully with the police. [11] The court below considered all the factors referred to in the preceding paragraph as constituting substantial and compelling circumstances, justifying a departure from the prescribed minimum. In counter-balance the court expressed the following: ‘I have also considered the viciousness of the crime and the fact that others who are of like- mind should be deterred, and very firmly so.’ It went on to impose the sentences referred to in para 5 above. [12] Malgas is not only a good starting point but the principles stated therein are enduring and uncomplicated. In Malgas, this court, whilst recording judicial hostility to legislative intrusions upon sentencing, rightly nevertheless stated that a court was now required to approach sentencing conscious of the fact that the legislature has ordained life imprisonment or a particular prescribed period of imprisonment as the sentence which should ‘ordinarily’ be imposed for the commission of the listed crime in the specified circumstances.3 This court noted the statutory requirement that, in the event of a finding of substantial and compelling circumstances, such circumstances should be entered on the record of proceedings. The following passage is of importance: ‘The specified sentences were not to be departed from lightly and for flimsy reasons which could not withstand scrutiny. Speculative hypotheses favourable to the offender, maudlin sympathy, aversion to imprisoning first offenders, personal doubts as the efficacy of the policy implicit in the amending legislation, and like considerations were equally obviously not intended to qualify as substantial and compelling circumstances.’4 [13] The following passage is equally deserving of consideration: ‘But for the rest I can see no warrant for deducing that the legislature intended a court to exclude from consideration, ante omnia as it were, any or all of the many factors traditionally and rightly taken into account by courts when sentencing offenders.’5 3 Paras 1 to 3 at 472b-473b and para 8 at 476g-h. 4 Para 9 at 477d-e. 5 Para 9 at 477e-g. [14] In Rammoko v Director of Public Prosecutions 2003 (1) SACR 200 (SCA), a later judgment of this court, it was thought fit to re-emphasise what was stated in Malgas, namely, that a departure from the prescribed minimum sentence is justified if, in imposing it, an injustice would result. The imposition of a prescribed sentence need not amount to ‘a shocking injustice’.6 If imposing the minimum sentence would be an injustice it should be departed from. [15] It is necessary, at this stage, to record the ages of the three respondents as they were at the time of the commission of the offences in 2002, and to note their respective personal circumstances. The first respondent, Mr Ngcobo, was 20 years old at the time. When he was arrested he lived with his mother at Inadi, a rural area in Kwazulu-Natal. He is unmarried but has one child who was three years old at the time of the trial. He had passed Grade 11 at school and did part-time jobs (including working as a gardener for the deceased) up until the time of his arrest. The second respondent, Mr Zaca, was also 20 years old. When he was arrested he was unemployed and living with his parents. He has no children. The third respondent, Mr Maphanga, was almost 22 years old at the time of the commission of the offence. He has no children. When he was arrested he was pursuing his high school studies. All of the respondents were first offenders. [16] The court below misdirected itself in a number of respects. First, it is clear that the murder and the robbery were premeditated. The first respondent, Mr Ngcobo, had worked for the deceased one day per week for approximately a year before the latter was murdered. He must have used his position of trust to gain entry to the deceased’s house. The first respondent’s co-perpetrators did not just spontaneously appear on the fateful day and with him decide on the spur of the moment to rob the deceased. Furthermore, Mr Ngcobo was known to the deceased and the former was therefore at risk. Hence it would have been necessary, from the perspective of the three 6 See Malgas para 23 at 481d-e and Rammoko para 4 at 202h-j. perpetrators, to murder him. The respondents’ legal representative, from the Legal Aid Board, to whom we are indebted for rendering them representation at short notice, was rightly unable to argue the contrary. [17] Second, the court below appears to have justified the departure from the prescribed minimum sentence on the basis of the difficulty that young people have in resisting the temptations of a materialistic world. These are exactly the kind of values that detract from those set out in the Constitution and which we as a nation should be discouraging. Put simply, the value of life should not be degraded by the lure of materialism. It is also at odds with the stated deterrent effect the court below thought the sentence it imposed might have. [18] Third, the court below took into account the youthfulness of the offenders. None of the respondents demonstrated immaturity, nor was it evident that any one of them was subjected to peer or undue pressure by one or both of the others. On the contrary, the manner in which entry was gained to the deceased’s house, the brutal nature of the murder, the brazen manner in which they walked through a residential area, and the callousness displayed after the murder, as well as the fact that they each maintained their innocence right up to the end showed a complete lack of remorse, and are all indicative of a calculated bloody-mindedness, belying their relative youthfulness. [19] Fourth, although it is true that Mr Ngcobo gave his consent to a police search, he maintained his innocence throughout and the detection of the perpetrators was as a result of police work and not his co-operation. [20] The court below had regard to the prospect of the rehabilitation of the respondents. None testified in mitigation of sentence and each was content to have their personal circumstances stated by their legal representatives from the bar. None expressed remorse. [21] In a White Paper on Corrections in South Africa (2005) at para 424 the following is stated: ‘[R]ehabilitation is best facilitated through a holistic sentence planning process that engages the offenders at all levels ─ social, moral, spiritual, physical, work, educational/intellectual and mental. It is premised on the approach that every human being is capable of change and transformation if offered the opportunity and resources.’ The White Paper also states that rehabilitation is a result of a process taken by prison authorities to model the offender’s life during his time in prison so that, when he is released, he has been reformed to such an extent that he is not likely to commit offences in the future. Section 37 of the Correctional Services Act 111 of 1998 requires sentenced prisoners to participate in various programmes and activities. It is a notorious fact that our prisons are overcrowded, often subjecting our prison population to undignified conditions of detention. It is optimistic in the extreme to assume that there are always effective rehabilitation programmes in place.7 [22] Traditional objectives of sentencing include retribution, deterrence and rehabilitation. It does not necessarily follow that a shorter sentence will always have a greater rehabilitative effect. Furthermore, the rehabilitation of the offender is but one of the considerations when sentence is being imposed. Surely, the nature of the offence related to the personality of the offender, the justifiable expectations of the community and the effect of a sentence on both the offender and society are all part of the equation? Pre and post Malgas the essential question is whether the sentence imposed is in all the circumstances, just.8 7 See also in this regard an article entitled ‘The prospect of rehabilitation as a “substantial and compelling” circumstance to avoid imposing life imprisonment in South Africa: A comment on S v Nkomo 2007 (2) SACR 198 (SCA) by Jamil Ddamulira Mujuzi 2008 South African Criminal Justice pp 1-21. The learned author states at pp 14 et seq that rehabilitation is influenced largely by speculation that the offender, after undergoing the various training programmes and attending the relevant courses in prison, will lead a crime free life. He states further that in the years preceding his article the Department of Correctional Services has failed to meet its rehabilitation targets and concludes that the prospect of rehabilitation in South Africa remains a speculative hypothesis. 8 Of course, post Malgas a court imposing a sentence must have regard to the prescribed minimum sentences and consider whether, in the circumstances, it is just to impose the prescribed minimum sentence. [23] Having regard to the misdirections referred to above, this court is at large to consider the question of sentence afresh. [24] The legal representative for the respondents submitted that the period of two and a half years that they spent in custody awaiting the finalisation of the trial should count in their favour. The proceedings in the court below appear to have been conducted in fits and starts from November 2004 to July 2005. It should be borne in mind that the respondents maintained their innocence throughout the trial and sentencing proceedings. The State was required to present forensic evidence related to DNA testing and was put through the tribulations of a lengthy trial with many witnesses testifying. [25] The murder was brutal and savage. Not only was the sanctity of the deceased’s home breached and his trust betrayed, but he was also subjected to what appears to be a most painful and undignified death. It is the brazen manner and the brutality of the acts by the respondents that remain in the memory. The legal representative for the second respondent, without demur from his colleagues representing the other two respondents, conceded during the sentencing proceedings that offences of the kind currently under consideration are committed mostly by youthful persons such as the respondents. [26] Courts are expected to dispense justice. This kind of brutality is regrettably too regularly a part of life in South Africa. Courts are expected to send out clear messages that such behaviour will be met with the full force and effect of the law. The legislature is concerned and so too should we be. [27] There were no substantial and compelling circumstances justifying a departure from the statutory norm. An injustice would ensue only if there was a departure from the prescribed minimum. Had there been no statutory prescription in relation to sentences I have no doubt that any court having regard to the totality of circumstances would have regarded sentences equal to those statutorily prescribed as being just. In my view, even having regard to the time spent in custody pending finalisation of the trial, the prescribed minimum sentences are, in the totality of the circumstances described above, compellingly the only manner that justice can be dispensed. [28] In the result the appeal is upheld. The sentences imposed by the court below are set aside and substituted as follows: ‘1. In respect of the murder charge, each of the three accused is sentenced to life imprisonment. 2. In respect of the charge of robbery with aggravating circumstances each of the three accused is sentenced to 15 years’ imprisonment.’ _________________ M S NAVSA JUDGE OF APPEAL APPEARANCES: For Appellant: Me A Janse van Vuuren Instructed by The Director of Public Prosecutions Pietermaritzburg Department of Justice Supreme Court of Appeal Bloemfontein For Respondent: Me M A Oosthuizen (Attorney) Instructed by PMB Justice Centre Pietermaritzburg 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: 1 June 2009 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal On 1 June 2009 the Supreme Court of Appeal handed down judgment in The Director of Public Prosecutions, Kwazulu-Natal v W S Ngcobo and two others and upheld an appeal by the Director of Public Prosecutions, Kwazulu-Natal against a sentence imposed by the Pietermaritzburg High Court. During the morning of Tuesday 26 November 2002, three young men, entered the home of Mr Andrew Scott Ferguson at 42 Rushmore Road, Hayfields, Pietermaritzburg and stabbed him at least 24 times in his chest and abdomen, causing his death. One of the young men was employed by Mr Ferguson (the deceased) as a gardener once a week. The walls of the deceased’s home were blood-spattered. He sustained bruises and scratches on his left shin, extensive bruising and abrasions on his face and hands and had a knife wound on his third knuckle. The deceased also suffered a fractured sternum, multiple fractures of his right ribs anteriorly and multiple perforations of his lung, heart and liver. The post-mortem examination revealed that the ribs on the deceased’s right side were all fractured, resulting in what was described as a ‘flail chest’. According to the doctor who performed the post-mortem examination, the flail chest could have been caused by someone jumping on it with considerable force. Because of the flail chest the deceased would have been unable to breathe on the right side. Photographs of the body of the deceased show his face and clothes covered in blood. The clothes of the three young men were stained with the deceased’s blood. All of this indicates a fierce struggle for life by the deceased who was a 55-year old man who had taken early retirement from Telkom, a telecommunications company. His body was found later that day by his friend and neighbour, Mr John Wilson. The body was lying on its back in a passage in the house with something stuck in the mouth. After murdering the deceased, the three young men departed with two cell phones, a video machine and compact discs containing information relating to a social club of which he was treasurer. They also took his motor vehicle which they later left in the bush. They unashamedly walked through a residential are in bloodstained clothes and told two acquaintances about what they had done. These three men, the respondents in the appeal, were later charged with murder and robbery with aggravating circumstances. The Pietermaritzburg High Court convicted them on these charges and sentenced them to 18 years’ imprisonment on the murder charge and 12 years’ imprisonment on the charge of robbery with aggravating circumstances. The court ordered the sentences to run concurrently. The Director of Public Prosecutions, aggrieved by sentences regarded as too lenient appealed to the SCA. The SCA held that the High Court had erred by concluding that the offences were not premeditated and further by placing undue emphasis on the respondents’ relative youthfulness. The first two respondents were 20 years old at the time of the commission of the offence and the third respondent was almost 22 years old. The SCA considered that the High Court had, in addition, wrongly justified a departure from the prescribed minimum sentences on the basis that it was difficult for young people to resist the temptations of a materialistic world. The SCA described the murder as brutal and savage. It considered that not only was the sanctity of the deceased’s home breached and his trust betrayed, but that he had been subjected to a painful and undignified death. The SCA stated that this kind of brutality has regrettably become too regular a feature of life in South Africa. The SCA emphasised that courts are expected to send out clear messages that such behaviour will be met with the full force and effect of the law. It held that there were no substantial and compelling circumstances justifying a departure from the statutory norm. The SCA upheld the appeal, setting aside the sentences imposed by the High Court and replacing it with the following: ‘1. In respect of the murder charge, each of the three accused is sentenced to life imprisonment. 2. In respect of the charge of robbery with aggravating circumstances each of the three accused is sentenced to 15 years’ imprisonment.’

3391

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 201/19 In the matter between: NAMASTHETHU ELECTRICAL (PTY) LTD APPELLANT and CITY OF CAPE TOWN FIRST RESPONDENT JAMES ROBERT GARNER NO SECOND RESPONDENT Neutral Citation: Namasthethu Electrical (Pty) Ltd v City of Cape Town and Another (Case no 201/19) [2020] ZASCA 74 (29 June 2020) Coram: NAVSA, MBHA, MOLEMELA, PLASKET and NICHOLLS JJA Heard: 13 May 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 29 June 2020 Summary: Contract- Application for declaration that contract pursuant to tender vitiated by fraud validly terminated – arbitration clause in a contract does not survive termination of contract induced by fraudulent misrepresentation – determination by arbitrator following adjudication process in terms of arbitration clause consequently liable to be set aside. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: The Western Cape Division of the High Court, Cape Town (Boqwana J sitting as court of first instance): judgment reported sub nom City of Cape Town v Namasthethu Electrical (Pty) Ltd and Another [2018] ZAWCHC 150; [2019] 1 All SA 634 (WCC) The appeal is dismissed with costs on the scale as between attorney and client, such costs to include the costs attendant upon the employment of two counsel. ______________________________________________________________ JUDGMENT ______________________________________________________________ Mbha JA (Navsa, Molemela, Plasket and Nicholls JJA concurring): [1] This appeal turns on the question whether a dispute resolution clause in a contract survives the termination of that contract on the ground of fraudulent misrepresentations made during a tender process. More specifically, it raises the following issue: Does the clause in the contract in question requiring the parties to submit any dispute between them to arbitration or other adjudication process, bind the aggrieved party in an instance where the contract has been induced by fraud? The Western Cape Division of the High Court, Cape Town (Boqwana J, sitting as court of first instance), having found that the contract had been induced by fraudulent misrepresentations by the appellant, held that a dispute resolution clause in a contract did not survive the termination of the contract for fraud. Thus, the High Court also set aside a determination made by the second respondent, Mr James Garner (Garner), following an adjudication process in terms of the dispute resolution clause in the contract. The appellant, Namasthethu Electrical (Pty) Ltd (Namasthethu), appeals against these findings with leave of the court a quo. The background is set out hereafter. [2] On 7 March 2014 the first respondent, the City of Cape Town (the City), advertised a tender for the supply, retrofit and installation of energy efficient luminaries at the Cape Town Civic Centre. On 25 August 2014, the City awarded the tender to Namasthethu. The tender had an estimated value of R29 263 401.75, excluding VAT, and its execution was contemplated to take 18 months. During November 2014 a written agreement following on the tender was concluded between the City and Namasthethu. That agreement is the contract at the centre of this appeal. [3] On 17 September 2014 an unsuccessful bidder, Citrine Construction (Pty) Ltd (Citrine), a competitor in the tender process, sought to appeal the award of the tender to Namasthethu and called on the City to set aside the award of the tender. Citrine complained that Namasthethu and its directors had been convicted of fraud and corruption on 13 August 2013, arising from a complaint by the Construction Industry Development Board (the CIDB). The City was informed that Namasthethu and its directors were consequently sentenced to a fine of R200 000 coupled with a wholly suspended sentence of 5 years’ imprisonment. This was the basis of the appeal. [4] The significance of the complaint located in the appeal in relation to the present dispute lay in the fact that in its tender submission, Namasthethu had completed an official tender document declaring that neither it, nor any of its directors, had in the past five years been convicted of fraud by a court of law. If the allegations by Citrine were true, it would mean that Namasthethu was guilty of a fraudulent misrepresentation. In terms of clause 36.1.3 of the contract, the City was entitled to terminate it where Namasthethu had committed a corrupt or fraudulent act during the procurement process, or in the execution of the agreement. [5] Citrine's complaint, however, was admittedly submitted outside of the time permitted for appeals in terms of s 62 of the Local Government: Municipal Systems Act 32 of 2000.1 The City therefore did not regard it as a valid appeal. But it could not ignore the complaint. [6] On 25 November 2014, the City sent a letter to the appellant, stating that it had come to its attention that Namasthethu Electrical (Pty) Ltd t/a Nationwide Electrical and/or its directors during August 2013 had been found guilty on charges relating to fraud and corruption. Namasthethu was required to respond. [7] Namasthethu responded by letter dated 27 November 2014, written by one S Chetty, indicated to be the chief executor officer of Namasthethu, stating that neither it nor its sole director, S Chetty, had been convicted of fraud and corruption during August 2013. The letter also confirmed that Namasthethu was cited as a respondent in civil proceedings that had since been finalised, but that no order had been made against it. [8] The City replied to Namasthethu on 3 December 2014, stating that it had now received information from the CIDB which indicated that Namasthethu and/or its directors had on 13 August 2013 been found guilty, in terms of a plea and sentence agreement, entered into under s 105A of the Criminal Procedure Act 51 of 1977, on various charges of fraud and corruption. The information indicated further that Namasthethu and/or its directors were sentenced to a fine of R200 000 plus five years' imprisonment, the latter of which was suspended on certain conditions. Namasthethu was notified that the matter would be referred to the City's Forensics, Ethics and Integrity Department (FEID) for further investigation and it was requested to furnish a response within seven days. The FEID was formally instructed by the City on 9 December 2014 to investigate the allegations against Namasthethu. 1 Section 62(1) provides: 'A person whose rights are affected by a decision taken by a political structure . . . of a municipality in terms of a power or duty delegated or sub-delegated by a delegating authority to the political structure . . . may appeal against that decision by giving written notice of the appeal and reasons to the municipal manager within 21 days of the notification of the decision.' [9] Namasthethu responded to the City's letter on 12 December 2014, stating that the sole director of Namasthethu at the time of the tender was Mrs Shamla Chetty. Reference was also made to an attached letter, ostensibly written by one Colonel K Naidoo of the South African Police Service (SAPS) Anti-Corruption Task Team, which recorded that no criminal conviction was obtained against Namasthethu or Chetty under criminal matter PMB CAS 611/5/2012 or case number 41/66/2013, as well as that 'Shamla Chetty was not an accused at the finalisation of the criminal matter . . .'. [10] FEID's forensic investigation into Namasthethu took a long time and was completed around the beginning of 2016. In its report to the City Manager, dated 26 February 2016, FEID confirmed that there had been a number of false misrepresentations and other fraudulent conduct on the part of Namasthethu. It was inter alia stated in FEID's report that: ‘… Namasthethu and its directors (S Chetty and R Chetty) were criminally charged with fraud and corruption [while] Namasthethu, under the trading name of Nationwide Electrical and R Chetty, who at all relevant times acted as a director, were convicted in the Commercial Crimes Court in Pietermaritzburg on 7 November 2013, less than [a] year prior to the date of the tender application on 240Q/2013/2014. … Shamla Chetty [the wife of R Chetty] made a prima facie misrepresentation to the City when she stated in the negative on the tender declaration to the question whether any of the directors or the company/entity has been convicted by a court of law for fraud or corruption during the past five years. This amounts to fraud. … S Chetty in her tender submission provided the City with a local business address for Namasthethu as 7 15th Avenue, Kensington, which was discovered to be false. Furthermore it was established that the service provider operates from three containers located at the Civic Centre parking area on Hertzog Boulevard, Cape Town.’ As a result of these findings, the FEID recommended the termination of the contract. It also recommended the lodgement of a criminal case of fraud with the SAPS against S Chetty, R Chetty and Namasthethu for the misrepresentations relating to information contained in the tender submission. [11] On 15 March 2016, the City wrote to Namasthethu informing it that the contract was being cancelled with immediate effect because Namasthethu had committed fraudulent acts during the tender process, which had resulted in the tender being awarded to it. The City specifically referred to Namasthethu's failure to disclose the conviction for fraud and corruption in November 2013 in the Pietermaritzburg Commercial Crimes Court and the fact that it had provided a local business address which was fictitious. [12] Namasthethu disputed the cancellation in correspondence which it sent to the City without, however, addressing or challenging the specific fraud allegations against it, and thus the City's reasons for cancellation of the contract. Its focus was to insist that the dispute surrounding the City's cancellation of the contract be adjudicated in accordance with the dispute resolution procedure specified in the contract. It is necessary, at this stage, to have regard to the relevant clauses: ‘40.1 Should any disagreement arise between the employer or his principal agent or agents, and the contractor arising out of or concerning this agreement or its termination either party may give to the other to resolve such disagreement. 40.2 Where such disagreement is not resolved within ten(10) working days of receipt of such notice it shall be deemed to be a dispute and shall be referred by the party giving such notice to either, 40.2.1 Adjudication where adjudication shall be conducted in terms of the JBCC Rules from Adjudication current at the time when the dispute was declared. Or 40.2.2 Litigation…’ [13] In keeping with its stance that the dispute surrounding the cancellation of the contract, which in its view was purely a legal matter, be adjudicated in accordance with the dispute adjudication clause, Namasthethu suggested as potential adjudicators three senior counsel at the Cape Society of Advocates. The City, however, persisted in contending that the contract was validly cancelled on 15 March 2016, and that Namasthethu's insistence on referring the matter to adjudication, in the face of its fraudulent conduct, was inappropriate. Thereafter Namasthethu approached the Association of Arbitrators Southern Africa, which then appointed Garner, a construction consultant and surveyor, as adjudicator. [14] The dispute which Namasthethu purported to refer to adjudication, and in respect of which the Association of Arbitrators was asked to appoint an adjudicator, concerned the validity of the City's cancellation of the contract. However, this dispute did not feature as a self-standing issue in Namasthethu's Statement of Claim. Neither did it feature as a prayer for relief. It was instead couched as a component of Namasthethu's claim for damages in relation to a contract which it claimed to have cancelled lawfully in the face of the City's alleged repudiation. [15] Garner prepared a determination on the basis of the Statement of Claim, and the documents sent to him by Namasthethu, but without hearing evidence. In that determination, the second respondent upheld various claims by Namasthethu and found the City liable to Namasthethu for damages in the amount of R516 671.04, R1 483 210 and R499 559.40, including VAT. [16] The principal issue to be determined in this appeal is, as stated above, whether the adjudication clause in the contract survived the termination of that contract by the City on the basis of fraud. [17] An ancillary issue is whether the City should be held to have waived its right to rescind the contract with Namasthethu, alternatively, whether the City should be regarded as having elected not to do so, in both instances by virtue of the time taken by it in investigating the allegations of fraud against Namasthethu. [18] The appellant's challenge against the High Court's findings can be summarised as follows. It was contended that, on a proper construction of the contract, the parties contemplated that the disputes regarding the cancellation of the contract, including those involving allegations of fraud during the tender process, were subject to the dispute resolution process agreed to by the parties. It was submitted that the dispute resolution clause set out above is widely worded so as to encompass disputes of whatever nature. All the more so, it was argued on behalf of Namasthethu, if regard is had to clause 36, which deals, inter alia with termination, after failure by the contractor to comply with certain contractual obligations and on failure to cure the default, after being put on terms. Clause 36 also permits, as stated earlier, the City to terminate the agreement on the basis of corrupt or fraudulent acts by the contractor. This, so it was submitted on behalf of Namasthetu, supported its view that disputes of any kind were to be referred for adjudication in terms of the dispute resolution clause. [19] It was also submitted on behalf of Namasthetu that there was no contractual or other basis cognisable in law for the judicial review of the second respondent's determination, whose determination was in any event not manifestly unjust. [20] Furthermore, it was contended that the City had waived its entitlement to terminate the contract and/or elected not to do so because of the considerable amount of time taken by it in investigating the allegations of fraud against the appellant and making a decision in relation thereto. [21] Finally, as far as the allegations of fraud against it were concerned, the appellant argued that there was a material dispute of fact in respect of the merits of these allegations and that its version should not have been rejected by the court a quo. In effect, the appellant disputed that it was ever charged and convicted as an accused for fraud and corruption. [22] The City, on the other hand, submitted that the contract was void, alternatively voidable, as a result of specified fraudulent misrepresentations and non-disclosures by the appellant. Upon being satisfied that there had in fact been fraud on the part of the appellant, on the strength of a comprehensive forensic investigation, so it was contended, the City elected to terminate or rescind the contract and validly did so. The one issue that was not in contestation, so it was argued, was the conviction of Ravan Chetty, who was a director of Namasthethu, within the five year period preceding the advertisement of the tender. Fraud, so it was contended, unravelled all. [23] It is common cause that when Ms Shamla Chetty, a director of the appellant, completed and submitted the tender documentation on behalf of the appellant on 1 April 2004, she expressly wrote 'NO' in the specified column of para 1.3 of the declaration in schedule 4 of the documentation. This was in response to the question specifically asked therein, namely, 'Was the tenderer or any of its directors convicted by a court of law (including a court of law outside of the Republic of South Africa) for fraud or corruption during the past five years?' [24] The appellant had denied the alleged criminal convictions for fraud and corruption. However, it conceded that criminal charges of fraud and corruption were indeed laid against Ms Shamla Chetty (accused number 1), Mr Ravan Chetty (accused number 2) and Namasthethu Electrical (Pty) Ltd (accused number 3) and that the charges against Ms Chetty were later withdrawn. It then contended that Mr Ravan Chetty had pleaded guilty on charges of fraud and corruption in his personal capacity, as well as on behalf of 'Nationwide Electrical', a sole proprietorship, as opposed to Namasthethu trading as Nationwide Electrical. Furthermore, as Namasthethu was only incorporated as a company at a later stage, certain of the charges in respect of which there was a guilty plea pre-dated the incorporation of Namasthethu as a company. The appellant then submitted that, notionally, it was possible for the sole proprietorship to have continued to trade even after Namasthethu had been incorporated, whereas it was not possible for Namasthethu to have traded before it was incorporated. [25] In November 2013, the appellant’s director, Ravan Chetty, was criminally convicted of fraud and corruption. That was a relevant and undisputed fact. It is not necessary to interrogate the name change of the company and whether it was an expedient measure. Nor is it necessary to investigate any further the suggestion on behalf of the City that the relevant charge sheet appears to have been suspiciously altered. The City and other state entities are entitled to be concerned about the integrity of company directors with whom they envisage doing business. It was entitled to know whether persons who were corrupt or fraudulent had been directors during the relevant window period. It is for that reason that the tender documents required answers to questions about convictions related to fraud and corrupt activities. Ravan Chetty’s conviction, which ultimately is common cause, is the crucial element in this appeal. It is worth noting that Mr Ravan Chetty, who purportedly resigned as a director of Namasthethu with effect from 12 May 2011, was however still involved with Namasthethu and the tender, as on 11 April 2014 he met with one Mr Wayne Thomas to discuss awarding 25 per cent of the tender to the latter’s company as a local sub-contractor. [26] There was no denial that the appellant had in its tender given a fictitious business address as 7 15th Avenue, Kensington, Maitland, Cape Town. As a result, the unavoidable inference is that this was done to give the impression that the appellant had a local office. The explanation given in the answering affidavit, that the premises were identified by an unspecified project manager, whose confirmation affidavit is glaringly missing, and that the appellant never took up those premises because the City provided space for the premises in containers located at the site, is contrived and nonsensical and was correctly rejected by the court a quo. Clearly, the appellant must have known that a Cape Town business address was required, for otherwise it would not have pretended that it had one and filled in a false address. There is no gainsaying the fact that in a tender adjudication process, points get awarded in respect of locality.2 [27] In the end, having considered the conduct of the appellant during and after the tendering process, the court a quo was satisfied that all the requirements of fraudulent misrepresentation had been met, which rendered the contract voidable at the instance of the City, which it then validly and 2 Esorfranki Pipelines (Pty) Ltd and Another v Mopani District Municipality and Others [2014] ZASCA 2; [2014] 2 All SA 493 (SCA) para 11. effectively elected to rescind.3 I am unable to fault the court a quo in arriving at this conclusion. [28] The question that must now be answered is whether, in the light of the fraudulent and corrupt conduct of which the appellant was undoubtedly guilty, the City, after validly cancelling the contract, can be compelled to submit to an arbitration process in accordance with the dispute resolution clause in the contract, an issue to which I now turn. [29] It is trite law that fraud is conduct which vitiates every transaction known to the law. In affirming this principle, this court, in Esorfranki Pipelines (Pty) Ltd,4 referred with approval to Lord Denning's dicta in Lazarus Estates Ltd v Beasley,5 when he said: 'No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved it vitiates judgments, contracts and all transactions whatsoever . . .'. [30] As regards an arbitration or similar adjudication clause contained in an agreement which was found to have been induced by fraud, this court has emphatically ruled that once the agreement had been rescinded by an aggrieved party, the said arbitration clause cannot stand. The reason, this court stated per Cameron JA in North West Provincial Government and Another v Tswaing Consulting CC and Others,6 was because '. . . the arbitration clause was embedded in a fraud-tainted agreement the province elected to rescind' and 'cannot survive the rescission', for 'to enforce the 3 See Bowditch v Peel and Magill 1921 AD 561 at 572: 'A person who has been induced to contract by the material and fraudulent misrepresentations of the other party may either stand by the contract or claim a rescission.' 4 Op cit fn 4 para 25. 5 Lazarus Estates Ltd v Beasley [1956] 1 QB (CA) at 712. 6 North West Provincial Government and Another v Tswaing Consulting CC and Others [2006] ZASCA 108; 2007 (4) SA 452 (SCA) para 13. See too Wayland v Everite Group Ltd 1993 (3) SA 946 (W); and Absa Bank Limited v Moore and Another [2016] ZACC 34; 2017 (1) SA 255 (CC) para 39, where Cameron J warned that the maxim 'fraud unravels all' was '... not a flame-thrower, withering all within reach'. He continued: ‘Fraud unravels all directly within its compass, but only between victim and perpetrator, at the instance of the victim. Whether fraud unravels a contract depends on its victim, not the fraudster or third parties'. arbitration agreement, the tainted product of [the guilty contractor’s] fraud, would be offensive to justice'. [31] In North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd7 this court had occasion to again consider the question of fraud in relation to an arbitration clause and reiterated that the effect of fraud that induces a contract is, in general, that the contract is regarded as voidable. This means that the aggrieved party may elect whether to abide by the contract and possibly claim damages, or to resile from it and regard the contract as void from inception. The court held that the arbitration clause could not survive in the face of allegations of fraud by one party, even though it expressly included the phrase 'any question as to the enforceability of this contract'.8 Thus, disputes regarding the validity or enforceability of contracts induced by fraudulent misrepresentation and non-disclosures were not generally intended to be arbitrable.9 [32] Relying on what was held in Heyman v Darwins Ltd,10 the court stated that the position might only change if the parties specifically made provision in the contract for such a dispute being referred to arbitration. In Heyman, Lord Peter expressed this as follows: '… I see no reason why, if at the time when [the contracting parties] purport to make the contract they foresee the possibility of such a dispute arising, they should not provide in the contract itself for the submission to arbitration of a dispute as to whether the contract ever bound them or continues to do so. They might, for instance, stipulate that, if a dispute should arise as to whether there had been such a fraud, misrepresentation or concealment in the negotiations between them as to make a purported contract voidable, that dispute should be submitted to arbitration’.11 7 North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013] ZASCA 76; 2013 (5) SA 1 (SCA). 8 Ibid para 26. 9 Ibid para 30. 10 Heyman v Darwins Ltd [1942] 1 All ER 337 (HL) at 357B-D. 11 Ibid. But even then, as the House of Lords stated in Heyman, it may require very clear language to effect this result.12 [33] In the present case, the question that must be answered is whether there is clear and unequivocal language in the contract or even the arbitration clause itself, providing for this kind of dispute to be addressed by arbitration or adjudication. Alternatively, can it be inferred that the parties foresaw a possible dispute regarding whether the agreement was induced by fraud, in which event the City would be required to participate in certain dispute resolution procedures? Needless to say, this must be determined in line with the generally accepted approach to the interpretation of contracts, viz. by having regard to the context in which the agreement was concluded.13 In addition, the contract must be interpreted so as to give it a commercially sensible meaning.14 [34] A simple reading of the arbitration clause 40.1 reveals that it merely provides that one party may give notice to the other to resolve a disagreement in the event of there being a disagreement 'arising out of or concerning this agreement or its termination'. Clearly, this clause contemplates a dispute arising out of the agreement when it was accepted to be valid from the outset. There is no suggestion that it covers fraud, nor that it involves an exception to the general rule enunciated above. Indeed, clause 40.7 provides that recording of a dispute under clause 40.1 'shall not relieve the parties from liability for the due and timeous performance of their obligations', thereby indicating that the rest of the agreement is considered to be valid. In any event, even the giving of 'notice' as stipulated in clause 40.1 would clearly not apply to a situation of a contract which the aggrieved party has already validly terminated or cancelled as a result of fraud. 12 See also Gutsche Family Investments (Pty) Ltd and Others v Mettle Equity Group (Pty) Ltd and Others [2007] ZASCA 45; 2007 (5) SA 491 (SCA) para 14, where this court held that where there is a dispute between contracting parties as to an arbitrator's jurisdiction, an arbitrator may only finally determine his (or her) own jurisdiction if this is 'provided for specifically, and in the clearest terms'. 13 See Natal Joint Municipal Pension Fund op cit at fn 3. 14 Ibid para 18. [35] Clause 36 is of no assistance to Namasthetu. It deals with termination for failure to meet contractual obligations, different from termination based on fraud or corrupt activity. Notice of default has to be given in respect of breach of contractual obligations before termination can take place. Fraud is provided as a separate and distinct basis for termination. One can hardly be expected to give notice to cure fraud or corrupt conduct. Disputes that arise for adjudication in terms of an arbitration clause usually relate to a failure to comply with contractual obligations and the consequences that follow. [36] Clause 40 does not expressly, or by any necessary implication, provide that an adjudication under that clause can determine the validity or enforceability of the agreement when the City claims that it has been vitiated by fraud. In other words, it does not enable an adjudicator to determine whether the agreement was induced by fraud and void, or voidable, as a result. Moreover, as pointed out above there can in any event not be any dispute about Ravan Chetty’s conviction. [37] As this court emphasised in North East Finance (Pty) Ltd,15 in order for the validity of a contract terminated for fraud to be determined by reference to adjudication, the contract must specifically say so, or otherwise clearly indicate as much. In this case, the contract unquestionably does not. [38] In the light of the conclusions reached above, it follows that the referral of the dispute to the second respondent for adjudication was invalid and unlawful and that the court a quo was correct in setting aside his determination following on an unlawful adjudication process. Clearly, the second respondent was not clothed with any authority to adjudicate the dispute. [39] There can be no question of waiver on the part of the City. It might have acted with greater urgency but it appears to have been intent on obtaining verified and accurate information. 15 Op cit at fn 9. [40] The court below considered that the appellant’s conduct justified a punitive costs order. I can see no fault with that conclusion. Our courts have repeatedly recognised the widespread nature of fraud and corruption and its corrosive effect on society. I am in agreement with counsel for the first respondent that a punitive costs order on appeal is equally justified. [41] The following order is made: The appeal is dismissed with costs on the scale as between attorney and client, such costs to include the costs attendant upon the employment of two counsel. ________________ B H Mbha Judge of Appeal APPEARANCES: For appellant: S Rosenberg SC Instructed by: Anand-Nepaul Attorneys, Durban Honey Attorneys, Bloemfontein For respondent: P Farlam SC Instructed by: WJ Da Grass Attorneys, Athlone Holmes Attorneys, Cape Town

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Namasthethu Electrical (Pty) Ltd v City of Cape Town and Another (Case no 201/2019) [2020] ZASCA 74 (29 June 2020) From: The Registrar, Supreme Court of Appeal Date: 29 June 2020 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgment of the Supreme Court of Appeal Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against an order of the Western Cape Division of the High Court, Cape Town (Boqwana J, sitting as court of first instance). The appeal was dismissed with costs. The matter concerned the validity of a contract concluded between the first respondent, the City of Cape Town (the City), and the appellant, Namasthethu Electrical (Pty) Ltd (Namasthethu), following on the City’s award of a tender to it in 2014. In issue was whether the City was within its rights to terminate the agreement and in fact validly did so, or whether, as the appellant contended, the disagreement between the parties was a dispute which fell to be decided in the manner provided for in the contract. The City had advertised a tender in March 2014 for the supply, retrofit and installation of energy efficient luminaries at the Cape Town Civic Centre. Namasthethu was the successful bidder and was awarded the tender in August of that year. A contract was subsequently concluded between the City and Namasthethu during November 2014. The contract included, amongst other things, a clause regulating the settlement of disputes. It provided that any ‘disagreement’, arising out of or concerning the tender agreement or its termination, if not resolved between the parties within ten days after either party having given the other party notice thereof, was to be regarded as a ‘dispute’ and then referred to either adjudication or litigation, in both alternatives at the instance of the party giving such notice. The contract also made provision for the circumstances in which the contracting parties could lawfully terminate the agreement. One such instance was the City’s right to cancel in the event of Namasthethu having committed a corrupt or fraudulent act, either during the procurement process or in the execution of the contract. Less than a month after awarding the tender to Namasthethu, the City’s decision was challenged by one of the unsuccessful bidders through an internal appeal. Therein it claimed that Namasthethu and its erstwhile directors, Mr Ravan Chetty (R Chetty) and his wife, Ms Shamla Chetty (S Chetty), had been convicted of fraud and corruption in 2013. The City subsequently instructed the Forensics, Ethics and Integrity Department (FEID) to investigate the allegations against Namasthethu. The City regarded this as serious for, if it were true, it meant that Namasthethu had been guilty of a fraudulent misrepresentation. In the declaration of past supply chain management practices it was explicitly required of each tenderer to indicate whether it, or any of its directors, had been convicted by a court of law for fraud or corruption during the past five years. Namasthethu answered that question in the negative. It also confirmed this choice by marking as ‘not applicable’ the space provided for the details of any such convictions. The City informed Namasthethu of the information that had come its attention and requested a response on the accuracy of the allegations made against it. S Chetty, who was indicated to be the chief executive officer of Namasthethu, replied by stating that neither her nor Namasthethu had been convicted of fraud or corruption in August 2013, nor of any other charge during any other period. However, the City was provided with further information from the Construction Industry Development Board (CIDB) which also indicated that Namasthethu and/or its directors had been found guilty and sentenced. Namasthethu responded with a letter, ostensibly from Colonel K Naidoo of the South African Police Service (SAPS) Anti-Corruption Task Team, confirming that no conviction was obtained against Namasthethu or Chetty under the relevant case numbers. The allegations were however ultimately confirmed by the findings of the FEID. S Chetty had thus been guilty of three separate misrepresentations during the precontractual phase of the tender process: First, when she falsely stated that neither the company nor any of its directors had been convicted by a court of law for fraud or corruption during the past five years; secondly, when she included Namasthethu’s CIDB certificate in the tender application while knowing that her husband, R Chetty, admittedly obtained it through corrupt and fraudulent means; and, thirdly, when she indicated in the tender bid that the local business address of Namasthethu was 7 15th Avenue, Kensington, Maitland, which was later discovered to be false. As a result of its findings, the FEID recommended amongst other things that the City terminate the contract with Namasthethu. Thus, on 15 March 2016 the City wrote to Namasthethu informing it that the contract was being cancelled with immediate effect due to the fraudulent acts committed during the tender process, which had resulted in the tender being awarded to it. Namasthethu disputed the City’s right to cancel the contract. It insisted that the dispute be adjudicated in accordance with the dispute resolution procedure provided in the contract. It approached the Association of Arbitrators Southern Africa who then appointed Mr James Garner, the second respondent, a construction consultant and surveyor, as adjudicator. Mr Garner decided the issue on the papers and other documents supplied to it by Namasthethu, but without hearing evidence. Various claims of were upheld against the City. The principle issue for determination by the SCA was thus whether the dispute resolution clause of the contract survived the termination of that contract by the City for fraud. An ancillary issue was whether the City should be held to have waived its right to rescind the contract with Namasthethu, alternatively, whether the City should be regarded as having elected not to do so, in both instances by virtue of the time taken by it in investigating the allegations of fraud against Namasthethu. Namasthethu contended that the dispute resolution clause was widely worded so as to encompass disputes of whatever nature. According to it the City had, in any event, waived its entitlement to terminate the contract and/or elected not to do so because of the considerable amount of time taken by it in investigating the allegations of fraud against Namasthethu and making a decision in relation thereto. The City’s view was that the contract was void, alternatively voidable, as a result of the specified fraudulent misrepresentations and non-disclosures by Namasthethu. When it was satisfied that there had in fact been fraud on the part of Namasthethu, on the strength of a comprehensive forensic investigation, it elected to terminate and validly did so. The SCA held that the City and other state entities were entitled to be concerned about the integrity of company directors with whom they envisaged doing business. It found this to be the reason that the tender documents required answers to questions about convictions relating to fraud and corrupt activities. It agreed with the finding of the high court that all of the requirements of a fraudulent misrepresentation had been met. This had rendered the contract voidable at the instance of the City, which it then legitimately elected to terminate. On whether the City could be compelled to submit to an arbitration process in accordance with the dispute resolution clause in the contract, the SCA began by reiterating the principle that fraud vitiated every transaction known to the law. It held that an arbitration or similar adjudication clause could not stand once an agreement that was found to be induced by fraud had been rescinded by the aggrieved party. In general, disputes regarding the validity or enforceability of contracts induced by fraudulent misrepresentation and non-disclosures were not intended to be arbitrable. Only where specific provision was made, using very particular language, could contracting parties be said to have made provision for the submission to arbitration of a dispute as to whether the contract ever bound them or continues to do so. Having regard to the wording of the dispute resolution clause in issue and taking into account the context in which the agreement was concluded, the SCA held that the dispute resolution clause clearly contemplated a dispute arising out of an agreement that was accepted to be valid from the outset. It found that there was no suggestion that the clause covered fraud or that it involved an exception to the general rule as stated above. The SCA distinguished the situation of fraud or corrupt activity from other instances of breach for the failure to perform a contractual obligation. While the right to terminate the contract for breach of a contractual obligation necessitated a prior notice of default, this was held not to be case in respect of fraud, which was a separate and distinct basis for termination. The SCA found that an innocent contracting party cannot be expected to give notice to the fraudulent counterpart to cure the fraudulent or corrupt conduct. The dispute resolution clause did not enable an adjudicator to determine whether the contract was induced by fraud and, if so, whether it was void or voidable as a result. The SCA held that the referral of the dispute to Garner was invalid and unlawful and that the court a quo was correct in setting aside his determination. It found that the City had not waived its entitlement to terminate the contract due to the considerable amount of time taken to investigate the allegations against Namasthethu; it was merely intent on obtaining accurate information before making a final decision. The SCA noted the widespread nature of fraud and corruption, and its corrosive effect on society, and found that a punitive costs order on appeal was justified. In the result, the appeal was dismissed with costs on the scale as between attorney and client, such costs to include the costs attendant upon the employment of two counsel.

2819

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case no: 660/2011 In the matter between: AGRI WIRE (PTY) LTD First Appellant AGRI WIRE UPINGTON (PTY) LTD Second Appellant and THE COMMISSIONER OF THE COMPETITION COMMISSION First Respondent MINISTER OF TRADE AND INDUSTRY Second Respondent CONSOLIDATED WIRE INDUSTRIES (PTY) LTD Third Respondent CAPE GATE (PTY) LTD Fourth Respondent ALLENS MESHCO (PTY) LTD Fifth Respondent HENDOK (PTY) LTD Sixth Respondent WIRE FORCE (PTY) LTD Seventh Respondent AGRI WIRE NORTH (PTY) LTD Eighth Respondent CAPE WIRE (PTY) LTD Ninth Respondent FOREST WIRE (PTY) LTD Tenth Respondent INDEPENDENT GALVANISING (PTY) LTD Eleventh Respondent ASSOCIATED WIRE INDUSTRIES (PTY) LTD t/a MESHRITE Twelfth Respondent THE COMPETITION TRIBUNAL Thirteenth Respondent Neutral citation: Agri Wire (Pty) Ltd v The Competition Commissioner [2012] ZASCA 134 (660/2011)(27 September 2012) Coram: NUGENT, LEACH, TSHIQI, WALLIS et PILLAY JJA. Heard: 30 AUGUST 2012 Delivered: 27 SEPTEMBER 2012 Summary: Cartel – reference to Competition Tribunal in terms of s 4(1) of the Competition Act 89 of 1998 – reference arising from evidence obtained by the Competition Commission under its corporate leniency policy – application to set aside reference on the basis that the Competition Act provides no lawful basis for the adoption of the corporate leniency policy – claim that evidence obtained by means of the corporate leniency policy obtained unlawfully – claim that this rendered reference unlawful. ORDER On appeal from: North Gauteng High Court (Zondo J sitting as court of first instance): The appeal is dismissed with costs, such costs to include the costs of two counsel where two counsel were employed. JUDGMENT WALLIS and PILLAY JJA (NUGENT, LEACH and TSHIQI JJA concurring) [1] Cartel conduct, where ostensible competitors collude to set prices, or terms of trade, or divide markets, fix tenders or engage in similar conduct, is one of the most difficult types of anti-competitive behaviour to identify, prove and bring to an end. This is because a successful cartel is conducted secretly and its continued success depends on its members not breaking ranks to disclose their unlawful behaviour to the competition authorities. In a number of jurisdictions, the response of the competition authorities has been to introduce policies that offer either complete or partial leniency to cartel participants, who break ranks and disclose the existence and nature of the cartel, and provide evidence that enables the authorities to pursue and break the cartel, by bringing it before the appropriate tribunal. [2] The Competition Commission (the Commission), which, in the form of the Competition Commissioner, is the first respondent in this appeal, has adopted such a policy. This is the Corporate Leniency Policy (CLP) that is in issue in this appeal. The appellants, to whom we shall refer as Agri Wire, challenge the legal basis of the CLP. They contend that evidence obtained by the Commission from the third respondent, Consolidated Wire Industries (Pty) Ltd (CWI), in terms of the policy was unlawfully obtained. They say that this, in turn, tainted the Commission’s referral of a complaint of alleged cartel behaviour in the wire and wire related products sector of the South African market to the Competition Tribunal in terms of s 51 of the Competition Act 89 of 1998 (the Act). Agri Wire accordingly sought to review and set aside the referral, together with certain ancillary relief, in proceedings before the North Gauteng High Court, which dismissed the application, but granted leave to appeal to this court. The referral [3] CWI is a member of a larger group of companies operating generally in the steel industry. Its parent company was the subject of an investigation by the Commission. A decision was taken at group level to undertake an internal audit aimed at identifying all anti-competitive conduct by the parent company or any other company in the group. Pursuant to this audit CWI indicated that it had been involved in a cartel, and identified the other members as being Agri Wire and the fourth to twelfth respondents, none of which have played any part in this litigation. CWI accordingly approached the Commission under the CLP and disclosed the existence of the alleged cartel and the information it had relating to the operation of the cartel. In consequence of that disclosure the Commission granted it leniency on a conditional basis in terms of the CLP, conducted an investigation and referred the allegations concerning the cartel to the Competition Tribunal (the Tribunal). [4] In its referral to the Tribunal, the Commission cited Agri Wire and the fourth to twelfth respondents. It claimed an order declaring that they had contravened s 4(1)(b)(i), (ii) and (iii) of the Act; an order directing them to refrain from engaging in the conduct constituting those alleged contraventions and the imposition of an administrative penalty of ten per cent of the annual turnover of each participant in the 2008 financial year. CWI was also cited as a respondent but no relief was sought against it. The Commission explained that this was because it had sought and been granted conditional leniency in terms of what it described as the ‘Applicant’s corporate leniency policy’. In those circumstances it had been cited ‘purely for the interest it may have in these proceedings’. Agri Wire’s complaints [5] In attacking the grant by the Commission of conditional leniency to CWI, Agri Wire sought an order declaring that the grant was ‘not authorised by any law and unlawful’. It also sought an order that the evidence obtained from CWI pursuant to the grant of conditional immunity was unlawfully obtained, and an order declaring that the complaint referral to the Tribunal was unlawful and should be set aside. In the founding affidavit it described the main issue as being: ‘… whether or not it was competent for the [Commission] to make promises of conditional immunity to [CWI] to obtain evidence and, if it was not competent for it to do so, whether such evidence is inadmissible in subsequent proceedings.’ The argument was developed on the basis that the Commission is a creature of statute and has only those powers conferred upon it under the Act. It was said that the Act does not permit the Commission to be selective in deciding which participants in a cartel it investigates and makes the subject of a reference to the Tribunal, nor does it authorise the Commission to grant immunity from a referral and a possible adverse adjudication, including the imposition of an administrative penalty, in consideration for the furnishing of information under the CLP. If it refers a complaint concerning participation in a cartel to the Tribunal, it is obliged, so the argument went, to refer the complaint in respect of all participants and to seek relief against all of them. The most that it can do to ameliorate the position of a ‘whistleblower’ is to ask the Tribunal to take its co-operation into account in assessing the amount of any administrative penalty, as it is entitled to do under s 59(3)(f) of the Act. The Corporate Leniency Policy (CLP) [6] It is convenient at this stage, in order to understand the arguments on behalf of Agri Wire, to deal briefly with the contents of the CLP. The policy is embodied in a document that has been published for information in the Government Gazette.1 It records that it is difficult to detect or prove the existence of a cartel and that the CLP has been developed to encourage participants to break ranks and disclose information that enables the Commission to tackle cartel behaviour. This information is furnished ‘in return for immunity from prosecution’, the latter being the term used in the policy for a reference to the Tribunal and adjudication on a complaint of cartel activity, in which an administrative penalty is sought. Clause 3.1 says that the CLP outlines the process through which ‘the Commission will grant a self-confessing cartel member … immunity for its participation in cartel activity’. That immunity is granted in return for full disclosure and full co-operation in pursuing the other cartel members before the Tribunal. For the avoidance of doubt, clause 4.2 1 GN 195 GG 25963 of 6 February 2004 and GN 628 GG 31064 of 23 May 2008. states that immunity refers to immunity from prosecution before the Tribunal in relation to the alleged cartel that is the subject of the application for immunity. [7] A conspicuous feature of the CLP is that, wherever it refers to immunity being granted, it identifies the Commission as the party that grants immunity. Thus, in clause 5.3 it says, in regard to cartel activity outside South Africa, that immunity granted by another competition authority would not ‘automatically qualify the applicant for immunity by the Commission’. In clause 5.6 it is said that parties to cartels, who ‘come clean’ after the initial disclosure, do not qualify for immunity but the Commission will explore with them the possibility of them receiving a reduced fine.2 Clause 6.4 warns those to whom ‘the Commission has granted immunity’ that a grant of immunity does not prevent third parties from seeking civil or criminal remedies against them. In dealing with the immunity process, clause 9.1 states that at the initial stage ‘conditional immunity is given to an applicant … to create a good atmosphere and trust between the applicant and the Commission’. As conditional immunity is granted prior to any reference to the Tribunal, only the Commission can grant conditional immunity. Clause 9.1.1.2 is important. It provides that: ‘Conditional immunity therefore precedes total immunity or no immunity. The Commission will give the applicant total immunity after it has completed its investigation and referred the matter to the Tribunal and once a final determination has been made by the Tribunal or the Appeal Court, as the case may be, provided the applicant has met the conditions and requirements set out in the CLP on a continuous basis throughout the proceedings.’ Clause 9.1.1.3 warns that, at any stage until total immunity is granted, the Commission reserves the right to revoke the grant of conditional 2 This can only be a reference to s 59(3)(f) of the Act. immunity for lack of co-operation and pursue a prosecution before the Tribunal. That signals quite clearly that a party that has been afforded conditional immunity, is not before the Tribunal for the purposes of the latter making a determination against it, including the imposition of an administrative penalty. It will only be referred to the Tribunal for the purpose of an adverse determination and the imposition of an administrative penalty if the Commission revokes its conditional immunity. [8] Quite extraordinarily, in the face of these explicit provisions, both the Commission and CWI sought to argue that under the CLP all that the Commission undertook to do was not to seek relief against CWI in the referral proceedings before the Tribunal. It was submitted that in the end result, after taking account of the Commission’s stance, the Tribunal would take the final decision whether to grant relief against CWI. Reference was made to clause 3.3 of the CLP, which reads: ‘Immunity in this context means that the Commission would not subject the successful applicant to adjudication before the Tribunal for its involvement in the cartel activity, which is part of the application under consideration. Furthermore the Commission would not propose to have any fines imposed to that successful applicant.’ Although this appears to leave the grant of immunity in the hands of the Commission, we were referred to a footnote explaining (in extremely fine print) that: ‘Adjudication means a referral of a contravention of chapter 2 to the Tribunal by the Commission with a view to getting a prescribed fine imposed on the wrongdoer. Prosecution has a similar import to adjudication herein.’ It was argued that this footnote clarified that the Commission was only promising not to seek an adjudication involving the imposition of administrative penalties against the person receiving conditional immunity, but that this did not preclude the Tribunal from imposing such a penalty. [9] There is no merit in this argument. It flies in the face of the provisions of the CLP that state expressly that it is the Commission that grants immunity. Nowhere does it suggest that the entitlement to total immunity is dependent on the Tribunal, acting within its own unfettered discretion, not imposing a penalty on the applicant for immunity. The distinction drawn between conditional immunity and total immunity makes no sense if the Tribunal is entitled to ignore the Commission’s grant of conditional immunity and impose administrative penalties upon the party to whom such immunity had been granted. On the suggested construction the following absurd situation could arise. Conditional immunity has been granted and the recipient has co-operated fully in the investigation and the Tribunal proceedings, thereby qualifying for total immunity under clause 9.1.1.2. Nonetheless it is compelled to pay administrative penalties imposed by the Tribunal. What meaning is to be given to the concept of total immunity in that situation? It would be small comfort to the recipient to know that it had received total immunity if it had nonetheless been ordered to pay ten per cent of its annual turnover during the years of the cartel’s existence as an administrative penalty. We venture to suggest that the CLP would be far less effective, if not entirely useless, if it contained a disclaimer to the effect that the Commission would not seek an order against the party seeking leniency, but that the Tribunal would be free to impose such administrative penalty as the Act permitted against them. Hard-headed businessmen, contemplating baring their souls to the competition authorities, will generally want a more secure undertaking of a tangible benefit, before furnishing the co- operation that the Commission seeks from them. [10] The case must therefore be approached on the basis of Agri Wire’s contention, namely, that the Commission has granted CWI conditional immunity under the CLP and that it is not pursuing CWI before the Tribunal. As explained in the Commissioner’s affidavit, CWI has been joined in the light of the Commission’s view, on the correctness of which we express no opinion, that such joinder is necessary to preserve the right of third parties to bring civil proceedings against it if they see fit to do so. That argument is based on a construction of ss 65 and 67 of the Act, but it is unnecessary for the purposes of this case to deal with it. [11] We thus arrive at the central issue in this case, namely, whether the CLP is lawful and whether the Act permits the Commission to refer a complaint to the Tribunal in respect of cartel behaviour, without citing and seeking relief against all the members of the cartel. However, before dealing with that question it is necessary to divert to deal with a challenge raised by both the Commission and CWI to the jurisdiction of the high court, and hence this court on appeal from it, to deal with and determine these issues. That challenge was upheld in the court below but on a basis that ultimately was not pursued in this appeal. It must be dealt with at this stage because any question of jurisdiction is logically anterior to a consideration of the merits.3 Jurisdiction [12] In the Commissioner’s affidavit the objection to the jurisdiction of the high court was based on s 27(1)(c) of the Act. This section provides that the Competition Tribunal may: 3 Makhanya v University of Zululand 2010 (1) SA 62 (SCA) para 29. ‘hear appeals from, or review any decision of, the Competition Commission that may in terms of this Act be referred to it.’ In its heads of argument the Commission contended that this section conferred on the Tribunal a general power to review any decision of the Commission taken in terms of the Act that falls within its jurisdiction. The weakness of that argument is illustrated by the facts of this case. Agri Wire wishes to review and set aside the referral to the Tribunal. There is no need for the Act to confer on the Tribunal the power to review a decision to refer a matter to it. If the referral is improper for any reason, the Tribunal can dismiss it on that ground. If it is thought desirable to do that at an early stage of the proceedings, before substantial costs are incurred, the Tribunal can adjudicate the point before it holds a hearing into the merits. That is consistent with the powers given to the Tribunal by s 55(1) of the Act to adopt a procedure that it deems appropriate with due regard to the circumstances of the case. This places ‘an emphasis on speed, informality and a non-technical approach to its task’.4 Accordingly, had Agri Wire approached the Tribunal to determine whether the referral to it was lawful, the Tribunal could have determined that question in the exercise of its functions in dealing with referrals under Part D of Chapter 5 of the Act. There was no need for it to have resort to s 27(1)(c) for that purpose. [13] The Commission’s purpose in invoking s 27(1)(c) was not to identify the source of the Tribunal’s power to deal with Agri Wire’s complaints, but to advance an argument that the high court’s jurisdiction is excluded. In our view that is not the effect of the section. Its language refers to appeals against and reviews of decisions by the Competition 4 Competition Commission of South Africa v Senwes Ltd [2012] ZACC 6; 2012 (7) BCLR 667 (CC) at para 69. Commission. In determining the scope of this provision it is best to start with those provisions of the Act that, in terms, provide for the Commission to take decisions. These are s 10(2), under which the Commission grants exemptions; s 13(5)(b) dealing with the approval or prohibition of small mergers; s 14(1)(b) dealing with the approval or prohibition of intermediate mergers; and s 15 dealing with the revocation of merger approval.5 In the absence of a provision such as s 27(1)(c) any challenge to these decisions would have to be brought before the high court and not the Tribunal or the Competition Appeal Court. That is an unsatisfactory situation as it departs from the hierarchy of decision- making under the Act and removes matters that are appropriate for decision by those bodies from their purview. To make those decisions subject to appeal to, or review by, the Tribunal is therefore consistent with the general scheme of the Act. [14] It was suggested by CWI that, in referring to decisions ‘that may in terms of this Act be referred to it’, s 27(1)(c) is referring to decisions that must be referred to the Tribunal in terms of the Act. But, as it pointed out, there are no such decisions. This led CWI to proffer a construction of the section that ignores these words. However, that is not a permissible approach to statutory interpretation, save in rare and extreme situations. There is no need for it in this instance. Whilst the section is clumsily worded, if one accepts that it is referring to decisions that the Act provides must be taken by the Commission, the reference to decisions that may in terms of the Act ‘be referred to it’ is a reference to those decisions, which are referred to the Commission for it to make in terms of the Act. In other words the ‘it’ in the section is the Commission not the 5 No other decisions in this sense were identified by counsel in response to questions from the Bench. If there are other decisions of the Commission under the Act of a similar type, that does not affect the matter. Tribunal.6 That is consistent with the powers of the Commission as set out in ss 21(1)(d) and (e) of the Act. [15] On this approach the procedural provisions of rule 42 of the rules of the Tribunal are irrelevant in order to give meaning to s 27(1)(c). However, it is necessary to say that the approach of the high court, that it is permissible to look to the rules in order to ascertain the scope of s 27(1)(c), is not correct. Whilst, for definition purposes, ‘the Act’ is defined as including the rules made under the Act, that cannot mean that the Tribunal can, by promulgating rules, confer a jurisdiction on itself that is not to be found in the Act itself. It is appropriate to recall that a definition section is always to be read in context and applies unless that context otherwise indicates.7 The jurisdiction of the various statutory bodies set up under the Act is defined in the Act. It is not for them to determine their own jurisdiction by way of the rules under which they perform their statutory functions. That would be entirely inconsistent with the rule of law and the principle of legality that underpins our Constitution. [16] In any event it was insufficient for the Commission’s purpose for s 27(1)(c) to confer appellate and review jurisdiction on the Tribunal. It was also necessary for it to show that any such jurisdiction was exclusive. It sought to do this by relying on s 62 of the Act, which provides that; ‘(1) The Competition Tribunal and the Competition Appeal Court share exclusive jurisdiction in respect of the following matters: 6 There is a dictum in Competition Commission of South Africa v Telkom SA Ltd & another [2010] 2 All SA 433 (SCA) para 38 that may suggest a wider meaning of s 27(1)(c), but the point was not argued in that case and it was unnecessary for the actual decision. Similarly the two cases in the Competition Appeal Court to which counsel referred us in support of the argument about the Tribunal’s review jurisdiction (AC Whitcher (Pty) Ltd v The Competition Commission of SA & another [2009] 2 CPLR 291 (CAC) paras 16-17 and Africa Media Entertainment Ltd v Lewis NO & others [2008] 1 CPLR 1 (CAC)) do not support the argument. 7 Town Council of Springs v Moosa & another 1929 AD 401 at 416-417. (a) Interpretation and application of Chapters 2, 3 and 5, other than – (i) a question or matter referred to in subsection (2); or (ii) … (b) the functions referred to in section 21(1), 27(1) and 37, other than a question or matter referred to in subsection(2). (2) In addition to any other jurisdiction granted in this Act to the Competition Appeal Court, the Court has jurisdiction over – (a) the question whether an action taken or proposed to be taken by the Competition Commission or the Competition Tribunal is within their respective jurisdictions in terms of this Act…’ Section 62(3)(b) provides that the jurisdiction of the Competition Appeal Court in respect of matters set out in s 62(2) of the Act ‘is neither exclusive nor final’. [17] Whilst there would be no difficulty in recognising an exclusive jurisdiction vested in the Tribunal and the Competition Appeal Court if s 27(1)(c) is confined to the situations referred to in paragraph 13, supra, it becomes problematic when it is extended to a challenge to the validity of a referral, because that is a question whether the referral is an action within the jurisdiction of the Commission. Unlawful actions are not within its jurisdiction and an unlawful referral would accordingly not be within its jurisdiction. But, whether an act by the Commission is within its jurisdiction is a matter within s 62(2)(a) of the Act and is therefore not within the exclusive jurisdiction conferred by s 62(1)(b) of the Act. [18] Those considerations led counsel for the Commission to abandon the argument based on s 27(1)(c) in favour of one based on s 62(1)(a) of the Act. However that argument foundered on two points. The first was that the section confers exclusive jurisdiction only in respect of matters arising under Chapters 2, 3 and 5 of the Act. Agri Wire’s objections were advanced on the basis that the Commission’s powers are set out in Chapter 4 of the Act and, properly construed, those provisions do not permit the Commission to adopt the CLP in its present form. The second was that in any event the challenge was one under s 62(2)(a) of the Act where there is no exclusive jurisdiction. [19] The argument that the high court’s jurisdiction was excluded in favour of an exclusive jurisdiction conferred on the Tribunal under the Act was therefore incorrect. Counsel then submitted that nonetheless the high court should defer to the Tribunal and allow the challenge to be dealt with by that body. For this they relied upon two passages in the judgment of this court in Competition Commission of South Africa v Telkom SA Ltd & another.8 The first, in which it was observed that the legislature had established the competition authorities as the primary regulator in competition matters, is disposed of quite easily. The court there dealt with the concurrent jurisdiction of different regulatory agencies and not with concurrent jurisdiction between the Tribunal and the high court. The second merely indicates that, where the legislature has created specialist structures to resolve particular disputes effectively and speedily, it is best to use those structures. The court went on to hold, on the facts of that case, that the court before which the review proceedings were brought should have exercised its discretion to decline to grant relief by way of review and left the issues in the case to be dealt with by the Tribunal in the course of the referral. That is a different matter from the court declining to exercise the jurisdiction with which it is vested by law. Save in admiralty matters, our law does not recognise the doctrine of forum 8 Competition Commission of South Africa v Telkom SA Ltd & another, supra, paras 27 and 36. non conveniens, and our courts are not entitled to decline to hear cases properly brought before them in the exercise of their jurisdiction.9 [20] For those reasons the challenge to the high court’s jurisdiction was misconceived and should have been rejected. We turn therefore to deal with the merits of Agri Wire’s case. Authority to issue the CLP [21] In the high court the argument was accepted that, in providing for conditional immunity to whistleblowers, the CLP does no more than embody an undertaking by the Commission that it will not seek an order from the Tribunal imposing an administrative penalty on the party afforded immunity. The court held that notwithstanding the grant of such immunity the Tribunal was not precluded from making such an order. This was erroneous for the reasons set out in paras 6 to 9, supra. The question is whether the Act vested the power in the Commission to formulate the CLP in terms that involved it in granting first conditional, and then final, immunity to whistleblowers in cartel cases? [22] Although this was the central issue in the case, and in the heads of argument it was said that the Act did not empower the Commission to adopt the CLP, there was no real debate that, apart from one argument, the Act does, in general terms empower the Commission to adopt a CLP in these terms. In our view there can be no doubt that this is so. The purpose of the Act, as set out in s 2 thereof, is to promote competition in South Africa. To that end the Commission is empowered to promote 9 Makhanya v University of Zululand, supra, paras 33 and 34; Longman Distillers Ltd v Drop Inn Group of Liquor Supermarkets (Pty) Ltd 1990 (2) SA 906 (A) at 914E-G; Standard Credit Corporation Ltd v Bester & others 1987 (1) SA 812 (T) at 815E-F and 819D-E; Marth NO v Collier & others [1996] 3 All SA 506 (C) at 508e-f. market transparency (s 21(1)(a)) and to investigate and evaluate alleged contraventions of Chapter 2 of the Act, under which cartels fall (s 21(1)(c)). Breaking up cartels serves to promote market transparency, as cartel behaviour is the antithesis of transparency in the market place. Investigating contraventions of the Act must entitle the Commission to put in place measures that will enable it to perform this function. That is the whole purpose of the CLP. Accordingly, and subject only to the argument that follows, the Commission was empowered under the Act to adopt and implement the CLP by giving conditional and total immunity to parties who make disclosure and provide evidence that enables it to pursue cartels and bring them to an end. [23] Agri Wire contended that, whilst the adoption of the CLP may have been permissible in general terms, it was impermissible for it to provide that immunity would be granted by the Commission. That according to it is the prerogative of the Tribunal when exercising its powers in determining an appropriate penalty under s 59 of the Act. It relied for this argument on two propositions. First it said that when the Commission refers a complaint to the Tribunal under s 51 of the Act it is obliged to refer the entire complaint and that means, in the context of cartel behaviour, that it is obliged to refer all members of the cartel to the Tribunal for the latter to adjudicate upon their conduct and determine what order should be made and what penalty imposed. It complained that otherwise the playing fields were not level and the party that obtained leniency would be unfairly advantaged. Second it said that the provisions of s 59(3)(f) require the Tribunal to take into account the degree to which a participant in a cartel has co-operated with the Commission and the Tribunal and that this indicates that it is the Tribunal, and not the Commission, that must determine whether any immunity should be granted. [24] Counsel was unable to point to anything in the Act itself, beyond the general words providing that the Commission refers a complaint to the Tribunal, to support this argument. He submitted that a complaint involving a cartel must necessarily involve all the members of the cartel. Otherwise, so he submitted, the complaint would not have been referred as required by the Act. There is no merit in these submissions. A complaint is initiated under s 49B, either by the Commissioner or by a third party. The complaint is then investigated. If, at the conclusion of the investigation, the Commissioner decides to refer the complaint to the Tribunal, the Act specifically provides that the Commissioner may refer all or some of the particulars of the complaint and may add particulars to the complaint submitted by the complainant. One of the central particulars in respect of cartel conduct is the identity of the members of the cartel. If the complaint is that A and B and C have engaged in cartel behaviour the Commissioner may decide to refer only A and B. In that way the Commissioner exercises the express statutory power to exclude certain particulars, namely C, from the referral. Equally, when the Commissioner decides to add D as a participant in the cartel, that is in accordance with the express provisions of the statute. [25] That is also a sensible construction of the Act. It is easy to envisage situations in which it will be impossible, say because one of the participants has been liquidated, or merged into another entity, to refer all the participants to the Tribunal. It is also easy to conceive of situations where it would be undesirable to do so, as for example where a small participant might go into liquidation if a penalty was imposed upon it or where the costs of pursuing a particular participant were out of proportion to the advantages to be gained from doing so. [26] As to s 59(3), the fact that the Tribunal can take a party’s co- operation into account in determining an administrative penalty does not have as a corollary that the Commission may not grant immunity. Accordingly the challenges to the CLP; the grant of conditional immunity to CWI; the admissibility of the evidence obtained from CWI by way of the grant of conditional immunity and the validity of the referral were all without merit. The application was correctly dismissed, albeit for reasons other than those of the court below, and the appeal must likewise be dismissed. [27] The appeal is dismissed with costs, such costs to include the costs of two counsel, where two counsel were employed. M J D WALLIS JUDGE OF APPEAL R PILLAY JUDGE OF APPEAL Appearances For appellant: S J du Plessis SC (with him Kevin Hopkins) Instructed by: Roestoff and Kruse, Menlo Park, Pretoria Symington & De Kok, Bloemfontein For first and second respondent: Gilbert Marcus SC (with him Isabel Goodman) State Attorney, Pretoria and Bloemfontein. For third respondent: Wim Trengove SC (with him J Wilson and M M le Roux) Instructed by: Nortons Incorporated, Johannesburg 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: 27 September 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Agri Wire (Pty) Ltd v The Competition Commissioner The SCA delivered judgment today in a case involving the validity of the Competition Commission’s Corporate Leniency Policy. The policy is a key element in the Commission’s fight against cartel behaviour. It was challenged in the context of a referral to the Competition Tribunal of an alleged cartel in the wire products industry. Consolidated Wire Industries (Pty) Ltd had reported to the Commission the existence of an alleged cartel in that industry and ought, and obtained, conditional immunity under the policy. Agri Wire, one of the parties to the alleged cartel, challenged the reference to the Tribunal on the grounds that the policy in its present form, which permits the Commission to grant immunity is not sanctioned by the Competition Act. It accordingly contended that the evidence obtained from Consolidated Wire had been unlawfully obtained and that the referral to the Tribunal was accordingly irregular and should be set aside. The SCA first rejected a challenge to its jurisdiction by the Commission, which contended that exclusive powers of appeal and review had been vested in the Tribunal. It also rejected the Commission’s argument that the Corporate Leniency Policy did not vest the power to grant immunity in the Commission, but in the Tribunal. This argument was contrary to the terms of the policy. The court considered the contention that the policy was unlawful and rejected it. It held that one of the functions of the Commission is to promote transparency in markets and that the investigation and termination of cartels enhances transparency. In addition the Commission is obliged to investigate all anti-competitive behaviour identified in the Competition Act and the Corporate Leniency Policy is a useful tool in this process. Accordingly the grant of conditional immunity to Consolidated Wire was lawful as was the referral to the Tribunal. The appeal was accordingly dismissed.

1769

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 163/10 In the matter between: TRANSNET LIMITED t/a NATIONAL PORTS AUTHORITY Appellant and THE MV CLEOPATRA DREAM First Respondent THE CARGO LADEN ON BOARD Second Respondent Neutral citation: Transnet v The MV Cleopatra Dream (163/10) [2011] ZASCA 12 (11 March 2011) Coram: BRAND, LEWIS, HEHER, MALAN and SERITI JJA Heard: 22 February 2011 Delivered: 11 March 2011 Updated: Summary: Merchant Shipping – maritime law – salvage – by public authority within limits of its own port – whether acting under statutory and common law duties – claim for reward under Salvage Convention – interpretation of arts 5 and 17 of Convention. ___________________________________________________________________________________ _ ORDER On appeal from: Western Cape High Court (Cape Town) (Bozalek J sitting as court of first instance): The appeal is dismissed with costs. _______________________________________________________________________ JUDGMENT _____________________________________________________________________ HEHER JA (BRAND, LEWIS, MALAN AND SERITI JJA concurring): [1] This is an appeal against the whole of the judgment and order delivered by Bozalek J in the Western Cape High Court, Cape Town in the exercise of its admiralty jurisdiction. The learned judge answered two stated questions in favour of the present respondents and dismissed the appellant’s claim with costs.1 [2] The appellant instituted an action in which it claimed a salvage reward from the first respondent (the vessel) and the second respondent (the cargo), arising from a salvage operation carried out by tugs belonging to the appellant on 2 April 2004 in the port of Saldanha Bay in which it is the statutory authority. The claim was defended. [3] Pursuant to an agreed order in terms of Rule 33(4), the following questions of law and fact were to be decided prior to and separately from the other matters in issue in the action: Whether the salvage operation carried out by the appellant in connection with the respondents was rendered voluntarily and not in the performance of a statutory and/or common law duty. In the event of it being found that the salvage operation was carried out in performance of a statutory and/or common law duty, and accordingly, not voluntarily, as averred by the respondents in sub-paragraph 18.2.6 of the plea, whether the appellant was nonetheless entitled to a salvage reward by reason of the provisions of the Salvage 1 The judgment is reported as Transnet Ltd t/a National Ports Authority v MV Cleopatra Dream [2010] 3 All SA 110 (WCC). Convention2 and item 4.3 of the Tariff Book.3 [4] As regards the first issue, Bozalek J held that: ‘the [appellant] rendered the relevant services to the vessel pursuant to, and within, both a statutory and common law duty and thus not voluntarily as that term is understood in the law of salvage.’ [5] With respect to the second issue, the learned judge held that: ‘[A]rticle 5 of the Convention does not recognise the entitlement of a public authority to a salvage award irrespective of the existence of any duty, whether statutory or otherwise, pursuant to which the services were rendered but rather stipulates that, in considering whether a public authority is entitled to a salvage award, regard must be had to the existing national law (and) applying that law to the facts of the matter the [appellant] has no entitlement to a salvage award.’ [6] In stating the question for decision the parties agreed that the issues would be determined by reference only to the facts set out in a Statement of Agreed Facts, the documents referred to in it and to those facts not in issue in the pleadings. It is from these sources that I derive the summary which follows in paras 7 to 19. [7] The appellant, a company with legal standing by virtue of s 3 of the Legal Succession to the South African Transport Services Act 9 of 1989, administers the port of Saldanha. The appellant is a public authority as contemplated by art 5 of the Convention. [8] The vessel is the MV Cleopatra Dream, a bulk carrier of 75801 GRT having an overall length of 269 metres. The cargo consisted of 146 670 MT of iron ore that was loaded on board the vessel in the port during the period 31 March to 2 April 2004. [9] All of the events described below giving rise to the appellant’s claims against the respondents occurred within the limits of the port. The area in which the appellant has jurisdiction in the port is described in the preamble to the Harbour Regulations published 2 The International Convention on Salvage, 1989 which is contained in the Schedule to the Wreck and Salvage Act 94 of 1996 and has, subject to the provisions of the Act, force of law and application in the Republic (s 2(1) of the Act). 3 National Ports Authority of South Africa: Port Tariffs, 4ed, 1 April 2004. on 18 April 1982 and which continue to be in force. A chart depicting the appellant’s area of jurisdiction in the port was placed before the court at the hearing and a copy was made available to us. It shows inter alia the limits of the appellant’s jurisdiction, the layout of the harbour, the approach channel and the position of sandbanks and islands, the largest of which, to the south of the channel and inside the harbour entry line (stretching from North Head to South Head) is Jutten Island. [10] The appellant exercises control over the port and earns revenue from the services provided by it pursuant to the charges set out in the Tariff Book. Among the charges listed in Section 4 ‘Marine Services’ are charges ‘payable for tugs/craft assisting and/or attending ships, within the confines of the port’ (item 2), ‘miscellaneous tug/craft services’ (item 3) and ‘berthing services’ (item 4). Included in the ‘miscellaneous services’ is this sub-item: ‘Craft involved in salvage: Special conditions apply when services rendered constitute salvage. Transnet reserves the right to claim a reward for salvage if the services rendered to a ship in distress constitute salvage.’ [11] The appellant is the sole public authority that lawfully operates tugs within the port. Moreover the port of Saldanha is a compulsory pilotage harbour as described in s 10(1) of Schedule 1 to the Legal Succession Act,4 with the result that every ship entering, leaving or moving in the harbour is required to be navigated by a pilot who is an employee of the appellant, with the exception of ships that are exempt by statute or regulation. (The vessel 4 Section 10 provides as follows: ‘(1) The harbours of the Company are compulsory pilotage harbours with the result that every ship entering, leaving or moving in such a harbour shall be navigated by a pilot who is an employee of the Company, with the exception of ships that are exempt by statute or regulation. (2) It shall be the pilot’s function to navigate a ship in the harbour, to direct its movements and to determine and control the movements of the tugs assisting the ship under pilotage. (3) The pilot shall determine the number of tugs required for pilotage in consultation with the Port Captain, whose decision shall be final. (4) A master shall at all times remain in command of his ship and neither he nor any person under his command may, while the ship is under pilotage, in any way interfere with the navigation or movement of the ship or prevent the pilot from carrying out his duties except in the case of an emergency, where the master may intervene to preserve the safety of his ship, cargo or crew and take whatever action he deems necessary to avert the danger. (5) Where a master intervenes, he shall immediately inform the pilot thereof and, after having restored the situation, he shall permit the pilot to proceed with the execution of his duties. (6) The master shall ensure that the officers and crew are at their posts, that a proper look-out is kept and that the pilot is given every assistance in the execution of his duties. (7) The Company and the pilot shall be exempt from liability for loss or damage caused by a negligent act or omission on the part of the pilot. (8) For the purpose of this item, ‘pilot’ shall mean any person duly licensed by the Company to act as a pilot at was not so exempt.) [12] Regulation 22 of the Harbour Regulations5 provides: ‘The Transport Services will, on application or when necessary, and subject to the discretion of the port captain and to any conditions which he may impose in the interests of safe, orderly and efficient harbour working, undertake work and provide all towage, tugs or other floating craft services at harbours under the Transport Services’ jurisdiction where such craft are maintained and are available.’ [13] The vessel arrived in the port on 31 March 2004 and was berthed and loaded at the Saldanha side bulk ore loading terminal. [14] The vessel completed loading the cargo at about 02h50 on 2 April 2004 and a sailing pilot was requested for 04h00. At approximately 03h54 pilot De Kock, an employee of the appellant acting in the course and scope of his employment, boarded the vessel. [15] In accordance with s 10 of Schedule 1: It was the function of the pilot to navigate the vessel in the harbour, to direct its movements and to determine and control the movements of the tugs assisting the vessel while it was under pilotage. It was the responsibility of the pilot to determine the number of tugs required for pilotage in consultation with the port captain. [16] At about 4h00 the vessel commenced casting off the last of her mooring lines. The appellant’s tug Jutten made fast to the starboard bow of the vessel. At about 4h20 the tug cast off from the vessel before she had reached the channel for departing ships. [17] At 4h40, within the limits of the port, the vessel experienced a catastrophic power failure which resulted in the stoppage of her main engines and prevented her from dropping anchor. When that happened the pilot requested tug assistance from the port authority. a particular harbour.’ 5 Promulgated or in force in terms of s 21 of the Legal Succession Act. [18] The vessel drifted without power in a south-westerly direction towards shallow water and Jutten Island. [19] At about 6h18 the tug Jutten again came alongside and commenced pushing the vessel’s port bow. Twenty minutes later a second pilot, Captain Ahmed, boarded the vessel. Within the next half hour a second tug operated by the appellant, the Meeuw, also came alongside and was made fast to the vessel, which was then towed to a place of safety within the port. [20] On the same day the appellant caused the Cleopatra Dream and her cargo to be arrested in terms of the provisions of the Admiralty Jurisdiction Regulation Act 105 of 1983, thereby instituting an action in rem for payment of a total of R10 million. The claim was in respect of salvage services rendered to ship and cargo in the port of Saldanha. [21] Security was furnished for the appellant’s claims and the vessel and her cargo were released from arrest. The arrests were, however, deemed to continue in terms of s 3(10)(a)(i) of the last-mentioned Act. [22] The appellant duly delivered its particulars of claim and the respondents pleaded. They admitted that the services rendered by the appellant constituted a ‘salvage operation’ as described in art 1(a) to the Convention and that the vessel and cargo were in distress and in danger of grounding at the time the services were rendered. They denied that the appellant was entitled to a salvage reward because the services performed by the appellant were rendered in the performance of a statutory or common law duty and were not voluntary. [23] In its replication the appellant, having denied that its services were rendered in the performance of a duty and, therefore, not voluntary, averred that, should the court hold otherwise, it was nevertheless entitled to a salvage reward by virtue of the provisions of the Convention, and, in particular, articles 56 and 177 thereof. 6 Art 5 Salvage operations controlled by public authorities, provides: ‘(1) This Convention shall not affect any provisions of national law or any international convention relating to [24] In addition, the appellant replicated that, as the entity that exercised control over the port of Saldanha, it earned revenue for the services provided by it according to the charges set out in its Tariff Book. It referred specifically to the terms of item 4.3.8 The law to be applied [25] Immediately before the commencement of the Admiralty Jurisdiction Regulation Act on 1 November 1983 the South African courts of admiralty had jurisdiction to entertain a claim for salvage. In terms of s 6(1) of that Act the applicable law in the action brought by the appellant was the English law of admiralty at that date ‘in so far as that law can be applied’. That provision does not however derogate from the provisions of any law of the Republic applicable to a claim for salvage (s 6(2)). The Wreck and Salvage Act together with the Convention is such a law. In the event of a conflict between English law and the Act or Convention, the latter must prevail.9 [26] In interpreting the Convention the court may consider the preparatory texts to the Convention, decisions of foreign courts and any publication.10 [27] The Convention came into force on 14 July 1996. Its essential purpose was to bring the traditional rules of salvage which had been codified in the Convention for Unification of Certain Rules of Law relating to Salvage and Sea, adopted in Brussels in 1910, up to salvage operations by or under the control of public authorities. (2) Nevertheless, salvors carrying out such salvage operations shall be entitled to avail themselves of the rights and remedies provided for in this Convention in respect of salvage operations. (3) The extent to which a public authority under a duty to perform salvage operations may avail itself of the rights and remedies provided for in this Convention shall be determined by the law of the State where such authority is situated.’ 7 Art 17, Services rendered under existing contracts, provides: ‘No payment is due under the provisions of this Convention unless the services rendered exceed what can reasonably considered as due performance of a contract entered into before the danger arose.’ 8 Item 4.3 is quoted in para 10 above. 9 MV Roxana Bank: Swire Pacific Offshore Services (Pty) Ltd v MV Roxana Bank 2005 (2) SA 65 (SCA) para 8. 10 Section 2(5) of the Wreck and Salvage Act. date with modern practice and jurisdictional principles, and to take account of mounting international concerns relating to the protection of the marine environment.11 [28] To achieve that object the Inter-governmental Maritime Consultative Organisation (now the International Maritime Organisation or IMO) invited the CMI to prepare a draft Convention to replace the 1910 Convention. The 1989 Convention was introduced in draft form in Montreal in 1981 and settled in final form at a diplomatic conference in London in April 1989. The convention came into force on 14 January 1996 when the requisite number of States consented to be bound.12 [29] It has been suggested that five categories of preparatory text for the Convention may be identified in the following, descending, order of importance: The proceedings of the 1989 diplomatic conference at which the text was finalised. The proceedings of the Legal Committee of the IMO during the period 1983-88 discussing the draft Convention formulated in 1981. The proceedings of the CMI leading up to the 1981 draft. The Brussels Salvage Convention of 1910. The travaux preparatoires of the Brussels Convention, 1910.13 Voluntariness as a requirement for a salvage reward. [30] As Bozalek J held, subject to the effect of Art 5 of the Convention, it is an essential element of a salvor’s right to recover salvage that the services to the property in peril are rendered voluntarily, without any pre-existing contractual or other legal duty. The duty is a legally recognised duty towards the salved property or its owners and not a mere sense of moral obligation. A right to salvage only arises when the contribution is voluntary.14 [31] The rationale for not allowing a salvage reward to a salvor acting under a pre- 11 The Travaux Preparatoires of the Convention on Salvage, 1989 (2003), publication of the Comite Maritime International, (the CMI): foreword. 12 Ibid p ix. 13 F D Rose Kennedy & Rose Law of Salvage 7 ed (2010) at para 1.097. See also R Shaw The 1989 Salvage Convention and English Law 1996 Lloyd’s Maritime and Commercial Law Quarterly 202. 14 See for example Brice, Maritime Law of Salvage 3 ed 1-01, 1-206; Kennedy & Rose 8.001; The MV Mbashi; Transnet Ltd v MV Mbashi 2002 (3) SA 217 (D) 224B-C; J Reeder, Brice on Maritime Law of Salvage 4 ed (2003) 1-184; Halsbury’s Laws of England, Vol 94, 5 ed (2008) para 932 fn 2; W A Joubert (ed) Law of South Africa, Vol 25 (2) (2006) first re-issue, para 45. existing duty to render assistance, whether the duty arises from a contract or otherwise, is that such a person should not be encouraged to neglect his duty and, by doing so, cause or contribute to the danger necessitating salvage. Nor should the (prospective) salvor be tempted to refuse to render services falling within his duty in order to obtain a salvage reward.15 [32] If a service is rendered under a pre-existing obligation to work for the benefit of property and life at risk, then it is prima facie not a salvage service. Even in the absence of a duty, where the services performed are ordinarily to be expected of the claimant in the capacity in which he performs them he will usually be barred from recovering salvage.16 [33] The principle of voluntariness has been applied to various classes of persons who are or may be under an existing duty to the owner of the vessel assisted by them, including port authorities, and salvage has been allowed only in respect of services going beyond their duties.17 In The Gregerso,18 Brandon J said: ‘It is, in my view, significant that there is, so far as I know, no reported case where a port authority has claimed salvage for removing a vessel which was an obstruction in its port. This is not, of course, decisive against the validity of such a claim; but it does to my mind suggest that no port authority has in the past felt optimistic about the chances of putting such a claim forward successfully.’ My researches have failed to uncover such a success in the past forty years.19 The question which must now be considered is whether the appellant has shown that this is such a case. Services rendered voluntarily or under a duty? [34] The respondents relied on three alleged duties in support of their contention that the services rendered by the port authority at Saldanha were not voluntary but rendered in 15 Kennedy & Rose 8.009. 16 For example, the master and members of the crew from the owner of the cargo: The Sava Star [1995] 2 Lloyd’s Rep 134 (QB) (AdmCt) at 142, or a passenger, ibid at 143, or the cargo owner himself, ibid at 143; Kennedy & Rose 8.006; Reeder 1.206. 17 See particularly Bostonian (Owners, Master and Crew) and Patterson v The Gregerso (Owners) [1971] 1 Lloyd’s Rep 220 at 225-7 and the references therein to The Citos (1925) 22 Lloyd’s Rep 275 and The Mars and Other Barges (1948) 81 Lloyd’s Rep 452. 18 At 227. 19 In The Mbashi supra the Durban port authorities assisted a ship in distress some three miles beyond the performance of a duty. These were: Duties flowing from reg 22 of the Harbour Regulations.20 A duty to users of the port (including the respondents) to make the port reasonably safe for navigation. A duty to users of the port (including the respondents) to ensure that tugs are available in the event of an emergency occurring within the confines of the port. [35] In interpreting reg 22 the intention behind the provision should be sought having regard to its context, object and purpose.21 The context is the proper and orderly management of South African harbours in so far as the carrying out of work and the provision of floating craft services is concerned and, with that aim in mind, the role of the port authority. The purpose of reg 22 is equally clear: it ensures that, within the ports operated by it, the appellant shall be the first resort for all work required in the harbour and the provision of such services. To this end the regulation stipulates that work or services will only be undertaken (i) if application is made, or (ii) if the appellant, mero motu, considers such to be necessary. In either case, the port captain is given an overriding discretion (which he must of course exercise with due consideration of all the relevant circumstances) to refuse to undertake the work or provide the services. Absent an exercise of the discretion the clear intention is that the appellant will (and is therefore obliged to22) undertake the work or carry out the services (albeit subject to conditions which the port captain may impose in the interests of the safe, orderly and efficient working of his harbour). [36] In the present instance the port captain did not, on the agreed facts, exercise a discretion against providing the services of the appellant’s tugs and their crews. As no application was made to him and the only communication emanated from the pilot who called for the assistance of the tugs, it must be inferred that the appellant (through its employees such as the pilot and the, undisclosed, persons to whom the call was transmitted) considered the provision of assistance to be necessary. harbour limits and were rewarded. 20 Quoted in para 12 above. 21 Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School 2008 (5) SA 1 (SCA) paras 16 to 19. 22 Sutter v Scheepers 1932 AD 165 at 173-4; Minister of Environmental Affairs and Tourism v Pepper Bay [37] The peremptory nature of the provision is borne out by the language and the following considerations: Reg 22 relates to all floating craft services at the harbour. Such services are not limited to routine or everyday occurrences but embrace exigencies which may be regarded as unusual or extraordinary within the harbour. Just as it is applicable to all users of South African ports, so it applies to users who experience mishap or require assistance. If there were no duty do provide emergency services (including salvage) users of the ports would be subjected to uncertainty and confusion and the hazard of emergencies would be increased by delay and the availability of suitable alternative services, especially in smaller ports. It was common cause that at ports under its jurisdiction the appellant exercises the sole public authority and that Saldanha (as indeed all such ports) are compulsory pilotage harbours with the consequence that every ship entering, leaving or moving in the harbour is required to be navigated by a pilot with the functions and powers that have been identified earlier in this judgment.23 The appellant has an effective monopoly over the provision of tug services and its implied duties must be determined with that as a starting point. [38] Argument was addressed to us on the nature and breadth of the discretion conferred on the port captain in reg 22. But that is of no relevance once the port captain does not exercise the discretion. The peremptory terms of the regulation remain unaffected (because not made subject to its exercise). [39] Appellant’s counsel submitted that a salvage operation is inherently dangerous not only to the ship, its crew and its cargo but also to the property and personnel of the salvor. Therefore the regulations should not be interpreted so as to compel the appellant to face the hazard. That may frequently be so, but the port captain is empowered to refuse to undertake services or to impose conditions appropriate to the circumstances in so doing. The degree of danger and the complexity of the task and the extent of resources available to him are no doubt factors which he may properly consider in the exercise of his discretion or the imposition of conditions. The extent of deviation from the normal duties of the port Fishing (Pty) Ltd 2004 (1) SA 308 (SCA) para 32. 23 Section 10(1), (2) and (3) to the Schedule, quoted in para 12 above. authority in the harbour area may also be regarded as an influence on his decision. In addition, to the extent that the dangers and complications facing the salvor exceed the call of duty, the possibility of salvage reward is not wholly excluded as I have pointed out. In so far as they do not the appellant may claim the compensation provided for in its Tariff Book. [40] I conclude therefore that the trial judge correctly found that Harbour Regulation 22, read within its context, imposed a general statutory obligation to furnish tug and towage services to users of the port within its confines. [41] A further consideration which supports the conclusion that a statutory duty prevailed throughout the course of the salvage in this case flows from the facts: At the time that the ship’s engines failed the appellant’s pilot, De Kock, was carrying out his duties as pilot on it. Although, strictly-speaking, once the ship began to drift it became incapable of further pilotage, the pilot immediately called for assistance from the tugs. That was done and responded to in the context of s 10(2) of the Schedule: the tugs were under a duty to answer the pilot’s summons. There is no agreed fact which supports an inference that their arrival was voluntary in any respect. The same can be said of their subsequent actions. The salvage operation effectively commenced when the tug Jutten came alongside. What she did then was designed to move the ship from a position of potential danger in the harbour to safe anchorage and can only have taken place in accordance with the pilot’s instructions. He was exercising his statutory obligation (s 10(1) of the Schedule) to navigate a ship moving in the harbour and, to that end, ‘to direct its movements and to determine and control the movements of the tugs assisting the ship under pilotage’ (s 10(2)), and persisted in so doing until the vessel was drawn into a safe anchorage. So construed the whole substance of the salvage operation was carried out pursuant to the statutory duties of a pilot navigating a ship under compulsory pilotage. A common law duty [42] The parties agreed that the appellant has a common law duty to make the port of Saldanha reasonably safe for navigation.24 Counsel for the appellant submitted that that duty extended only to the physical aspects of the port such as the positioning of lights and 24 In re SS Winton; Avenue Shipping Co Ltd (in liquidation) v South African Railways and Harbours 1938 CPD the provision of safe berths. Further, he said, a distinction should be drawn between making the port safe and making ships safe to navigate: the appellant’s common law obligation does not extend to assisting ships to be safe. [43] I agree with counsel for the respondents that both distinctions are artificial. If it is necessary to take a ship without power under tow in order to prevent it from drifting within the port limits or from becoming stranded in the port or from constituting a danger or obstruction to other users of the port, then, in my view, such an action will constitute performance of the appellant’s duty to make the port reasonably safe for navigation. A sandbank or a ship drifting out of control are equally inimical to the safe working of the port and both are within the means and competence of a port authority to deal with. [44] But, so appellant’s counsel contended, the duty owed to users of the port, to make it safe for navigation, is not a duty owed to the owners of the salved ship or cargo. It seems to me, however, that this is to take too narrow a view. A fully laden bulk carrier drifting in a harbour in the early hours of the morning presents a danger to itself, its crew and its cargo as well as to shipping generally using the harbour, let alone to the environment. In The Citos25 Lord Blackburn was concerned with an admitted general statutory duty to remove a drifting ship in the fairway from danger to other shipping, but a denial of such a duty towards the owners of the vessel itself. The learned judge noted that the contention was not well-founded: the principal object of the powers might be to protect other shipping from the risks of collision with the abandoned vessel, but it was undoubtedly an advantage to the owners of an abandoned vessel to have their vessel removed from the danger of such collision, and, accordingly, it could not be said that they had no interest in the performance of the statutory duty. In The Gregerso26 Brandon J, dealing with a ship grounded substantially athwart the channel in the River Witham leading to the port of Boston (in Lincolnshire, not the United States). In that position she obstructed all entry to and exit from the port. The learned judge said: ‘In this situation it was, in my view, the duty of the Boston Corporation, as the port authority, to exercise, as a matter of urgency, the powers of removal conferred on it by the various statutes to which I referred earlier. The duty was owed by the corporation to all users of the port, including the 247 at 264. 25 Supra fn 18. owners of the Kungsö herself.’ Despite the obvious factual and legal differences between these cases and the substance of the present appeal it seems to me that there is a common thread which renders them subject to a similar analysis. In the present context it is that where a legal duty rests on an port or similar authority to look to the safety of shipping and that duty extends to all users of the harbour, then any user in distress is entitled to invoke the duty in order to procure assistance for himself.27 [45] The conclusion that the court a quo was correct in finding that the appellant acted pursuant to both statutory and common law duties leaves the possibility of an argument based simply on action undertaken which exceeded the normal scope of such duties. But that was not the appellant’s case and the agreed facts do not bear out such a hypothesis. Although the ship was drifting towards a situation of peril it had not reached that point; there is no suggestion that the salvage was rendered dangerous or difficult by reason of sea or weather conditions or that any of the crew of the tugs was placed at risk by the exigencies; apparently the ship’s crew remained with the ship and there was no need for the salvor’s men to board it. In short it appears that the whole affair required neither out of the ordinary skill nor courage. Salvage reward irrespective of duty? [46] The second issue for determination is whether the appellant, despite not being a volunteer, was nonelessness entitled to a salvage reward by reason of the provisions of the Convention and item 4.3 of the Tariff Book. [47] The appellant does not contend that item 4.3 of itself entitles it to such a reward. Indeed, although that item confers a right to claim a reward, it does not presume that the requirements for such a claim are satisfied. Nor does it exclude proof of voluntary action as an element of such a claim. [48] It was common cause that: The Cleopatra Dream was a ‘vessel’ for the purposes of the Convention. 26 Supra fn 18. 27 See also Kennedy & Rose op cit 1.185 and 1.186. For the period from approximately 4h40 until the Jutten made fast, the vessel was in distress, drifting without power in the direction of Jutten Island, unable to drop either of her anchors, and in danger of grounding. In so far as the vessel and her cargo were concerned, the services rendered by the appellant constituted a salvage operation as defined in art 1(a) of the Convention ie an act undertaken to assist a vessel in danger in navigable waters. As a result of the services of the appellant’s tugs, the vessel, her bunkers and cargo were saved without harm or damage or loss to the respondents. It is not in issue that this constitutes a ‘useful result’ as contemplated by art 12(1) of the Convention that ‘gives right to a reward’. [49] It is the appellant’s contention that the facts enumerated in the preceding paragraph are, under the Convention, determinative of its right to a salvage reward. Counsel submitted that, ex facie art 12(1), the principle of voluntariness is not a consideration. Nor does such a requirement fit easily with the definition in art 1(a) of a ‘salvage operation’ which means ‘any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or any other waters whatsoever’. [50] So, counsel for the appellant submitted, in so far as voluntariness remains an essential element of a salvage operation, art 17 of the Convention restricts this requirement to circumstances where such an operation is performed in terms of an existing contract (which is not the case here). Article 17 provides: ‘No payment is due under the provisions of this Convention unless the services rendered exceed what can be reasonably considered as due performance of a contract entered into before the danger arose.’ [51] As Prof Hare points out,28 although art 17 reinforces the voluntariness principle as far as contractual duties are concerned (eg towage), it does not deal with the actions of potential salvors who act in terms of a duty whether under statute or at common law. From this he concludes that the Convention ‘would allow the non-voluntary salvor who performs a salvage operation, and complies with the other requirements of the Convention, to claim salvage notwithstanding the existence of a pre- 28 John Hare Shipping Law and Admiralty Jurisdiction in South Africa 2 ed (2009) 414. existing duty.’ [52] In his judgment Bozalek J found that the view expressed by Prof Hare was not supported by any other authority or writer and was contrary to arts 5(1) and (3) of the Convention. In addition, the learned judge was of the view that if the drafters of the Convention had intended to do away with the requirement of voluntariness in regard to salvage services rendered by public authorities, it would have done so in express terms. Counsel submits that this conclusion is flawed for the reasons which follow. [53] First, it is not so that Prof Hare’s view does not find support elsewhere. Counsel refers in this regard to Martin Davies ‘Whatever happened to the Salvage Convention’29: ‘According to one view, art 17 is the only restriction on who can claim salvage reward, with the result that the Salvage Convention 1989 applies to any person performing a “salvage operation” that goes beyond the scope of an existing contract.’ Second, as there would appear not to be any reported judgments on this issue, there is, in the circumstances, no authority one way or the other. Third, counsel submits, Bozalek J has assumed, wrongly, that the salvage law of all parties to the Convention required public authorities to act voluntarily before being entitled to a reward. Law in the Federal Republic of Germany, a signatory to the Convention,30 in December 1987 (ie shortly before the Convention) was to the effect that ‘even a public duty to render rescue services does not exclude the right to equitable remuneration, unless the rescuer is obliged to act without compensation’.31 Fourth, counsel drew attention to the Roman law principles of negotiorum gestio on which, certain writers32 have suggested, the law of salvage is based: ‘It is not only the man who has involved himself and administered another’s affairs of his own free will and under no compulsion who is liable to this action but also the man who has administered them because for some reason he had to or thought he had to.’ 29 39 Journal of Maritime Law and Commerce 463 at 486. 30 Nicholas JJ Gaskell ‘The 1989 Salvage Convention and the Lloyd’s Open Form (LOF) Salvage’ 16 Tulane Maritime Law Journal 1 at 8. Also, the Chairman of the Committee of the Whole who managed the drafting process, Prof Dr Norbert Trotz was German (ibid). 31 World Shipping Laws ed by David C Jackson and Debra Morris (June 1992) Binder 2 ‘IIIA – Salvage Germany, Federal Republic’. 32 J P van Niekerk ‘Salvage and Negotiorum Gestio: Exploratory reflections on the Jurisprudential Foundation and Classification of the South African Law of Salvage’ Acta Juridica 1992 148; Ina H Wildeboer The Brussels Salvage Convention (1965) 40 ff. See also Sir C Robinson in The Calypso (1828) 2 Hagg 209 at 217 and Gaskell (fn 29 above) at 27. Counsel conceded, however, that there is authority to suggest that the derivation from negotiotum gestio is, at least in English law, doubtful.33 Fifth, there was no requirement of voluntariness in the 1910 Convention. The English delegation to that convention proposed that the requirement be inserted in art 2 but the proposal was not adopted.34 Hence, counsel submitted that if a general requirement of voluntariness, over and above what is articulated in art 17, had been intended, the Convention would have said so in express terms. [54] Counsel further submitted that Prof Hare’s construction of art 17 operates independently of the provisions of art 5, a submission, he said, not appreciated by the court a quo. As it was common cause that art 17 does not apply in this matter, and as it contains the only requirement of voluntariness in the Convention, the appellant should, in the submission, be entitled to a salvage reward irrespective of whether the salvage operation was carried out in performance of a statutory or common law duty. [55] If Prof Hare’s conclusion (quoted in para 51 above) means only that a salvor who acts under a statutory duty, but exceeds that duty in the breadth or degree of his actions, may nevertheless qualify for a salvage reward under the Convention, then I agree with him. That is the common law and the Convention does not derogate from it. If, however, he intends to say (and I do not think that such was his intention) that the implication of art 17 is that under the Convention salvors who act strictly within the scope of a duty to the salved property may nevertheless qualify for a salvage reward, I can find no such indication in that article. In any event the entitlement of a public authority, including one acting under a duty, is expressly regulated by art 5 of the Convention. [56] As pointed out earlier the travaux preparatoires to the 1989 Convention (to which as an interpretative aid s 2(5) of the Wreck and Salvage Act directs us) include the Report of the CMI to the IMO that was approved by the XXXII International Conference of the IMO held in Montreal in May 1981 on the draft International Convention on Salvage. In the section of the Report headed Special Comments the following is said (in para 1.-1.1) about the definition of ‘salvage operations’: 33 Reeder, Brice on Maritime Law of Salvage 4 ed (2003) 6 fn 28 and the authorities there cited. 34 Wildeboer (op cit fn 31) 65. ‘It is generally felt to be an important element of salvage that it must be voluntary, but this term may be ambiguous, and therefore, it has not been included in the definition itself. The cases where salvage operations are carried out on the basis of a pre-existing duty are dealt with in Art 1-3 which contains provisions for salvage operations controlled by public authorities and in Art 3-6, in which it is made clear that services which are rendered in due performance of a contract entered into before the danger arose shall not be compensated under the rules of the Convention.’ [57] Concerning ‘Service rendered under existing contracts’ (Art 3-6, which became art 17 in the Convention) the same Report contains the following comment: ‘This is a general restatement of the principle in the 1910 Convention, Art 4. As mentioned above, the rule forms part of the important principle under which a salvage service must be voluntary to give right to the remedies of the Convention.’ [58] As to Art 1-3 ‘Salvage operations controlled by Public Authorities’, which became art 5 of the Convention, the commentary of the CMI is the following: ‘The draft convention does not deal directly with questions related to salvage operations by or under the control of public authorities, nor does it deal with the rights of salvors to payment in such cases from the authority concerned. This is in accordance with the system of the 1910 Convention, and Art. 1-3.1. In this provision it is now made clear that the fact that a salvor has performed salvage operations under the control of a public authority shall not prevent him from exercising any right or remedy provided for by the Convention against the private interests to which salvage services are being rendered by him. Whether the salvor is entitled to recovery from such private interests depends upon whether, according to the facts, the conditions for recovery set out in the provision of the Convention have been met. The present law varies from State to State as to whether for instance the coast guard or the fire service may recover in salvage. It is intended that this position should be preserved.’ [59] Furthermore one must in reading and interpreting the Convention bear in mind that ‘the draft convention is not intended to set out the law of salvage in any exhaustive manner’ (General Comments to the 1981 CMI Report). [60] Informed by these comments certain specific conclusions regarding voluntariness in the context of the Convention can be drawn: The importance of voluntariness as a principle underlying the right to claim a salvage reward was not intended to be restricted whether by its omission from the definition of ‘salvage operations’ or by anything contained in the draft of what would become Arts 5 and 17. Art 3-6 (afterwards 17) was directed not at restricting the category of cases regarded as ‘voluntary’ to the contractual situations therein addressed but to confirming that a ‘salvor’ carrying out operations under a contract entered into before the danger arose does not become entitled to a salvage reward unless his services exceed due performance under that contract, ie because his services do not become ‘voluntary’ until they exceed his contractual obligation. So understood, I think the appellant’s construction of art 17 is misdirected. Art 1-3 (afterwards 5) addressed two specific situations (i) the preservation of national laws and international conventions relating to salvage operations by or under the control of public authorities, and (ii) confirmed that salvors carrying out such operations are entitled to avail themselves of the rights and remedies provided for in the Convention, ie organisation and intervention by public authorities cannot be used as a reason to deprive the private salvor of his right to salvage. [61] Counsel for the appellant relied, independently of art 17, upon art 5 of the Convention. That article provides: ‘(1) This Convention shall not affect any provisions of national law or any international convention relating to salvage operations by or under the control of public authorities. (2) Nevertheless, salvors carrying out such salvage operations shall be entitled to avail themselves of the rights and remedies provided for in this Convention in respect of salvage operations. (3) The extent to which a public authority under a duty to perform salvage operations may avail itself of the rights and remedies provided for in this Convention shall be determined by the law of the State where such authority is situated.’ His submissions in this regard were: In art 5 the entitlement of a port (public) authority to a salvage reward is expressly recognised, irrespective of the existence of any duty, whether statutory or otherwise even in cases where the salvage operation is carried out by or under control of a public authority. Art 5(2) reverses any pre-Convention common law rule, so that public authorities under a duty to perform salvage operations would only be disentitled from claiming salvage by reason of art 5(3) if a new rule to that effect were introduced by legislation, something which has not happened in South Africa. The intention to change the pre-Convention position is evident, counsel submits, from the use of the word ‘nevertheless’ at the beginning of art 5(2). Because s 2(1) of the Wreck and Salvage Act confers the force of law on the Convention, ‘the law of the State’, as that phrase is used in art 5(3) of the Convention, means the Convention itself. [62] I do not accept counsel’s interpretation of art 5. It seems to me that the article is divisible by reference to its sub-articles. Sub-article 1 recognises that national laws and international conventions may exist relating to salvage operations by or under the control of public authorities; it excludes any effect of the Convention on the provisions of those laws and conventions. Sub-article 2 allows salvors carrying out such operations to avail themselves of the rights and remedies provided for in the Convention. Such salvors would include both private salvors which the public authority may be using in its operations and the public authority itself. Sub-article 3 regulates the extent to which a public authority under a duty to perform salvage operations may avail itself of the Convention rights and remedies according to the law of the State where the public authority is situated. The extent to which a private salvor may avail itself is not so regulated. If the local law limits the public authority to reward only if it exceeds its statutory duty, that is the qualification the authority must satisfy. [63] The introductory word ‘Nevertheless’ (in subart (2)) is problematic. But, consistent with what appears to be the structure of the three subarticles, it simply indicates that despite the provisions of the unaffected laws and conventions, all salvors referred to in sub-art (1) have a right to avail themselves of Convention rights and remedies to the extent that the local law does not curtail such rights and remedies. [64] It follows that I disagree that Art 5 recognises the entitlement of a public authority to a salvage reward. Each case involving a claim by a public authority for salvage in consequence of operations carried out by itself or under its control must therefore begin within a determination of how the domestic law regulates a claim by it for salvage. Once that is determined one will also know the limitations, if any, on its entitlement to a salvage reward under the Convention. That exercise has already been undertaken in the first leg of this judgment: the conclusion was that the appellant has no right in the circumstances to a salvage reward because the whole scope of its operations was carried out subject to and within the normal limits of its duty and not voluntarily. It follows that the appellant has no entitlement to avail itself of the rights provided by art 12 of the Convention. [65] Counsel’s third submission set out above is not correct. Art 5(1) expressly provides that the Convention shall not affect any provisions of national law relating to salvage operations by or under the control of public authorities. Such national law includes the common law of South Africa. The law of the State referred to in art 5(3) according to which the extent of a public authority’s right to avail itself of the rights and remedies provided by the convention must be determined, is the common law unaffected by the Convention. [66] Counsel for the appellant submitted that consideration must be given, in interpreting Art 5, to the purpose of the Convention as expressed in the introductory recordals viz to ‘ensure that adequate incentives are available to persons who undertake salvage operations’. He submitted that the drafters of the Convention no doubt wished to encourage public authorities to perform salvage operations by ensuring that they too enjoyed adequate incentives. In so far as the attempt to satisfy the general intention to encourage salvage operations is concerned, the Convention does not, in my view, indicate any such purpose in relation to salvage by public authorities. It is clear, I think, that they were intended to share in the increased benefits provided for salvors generally in those instances where their national laws permitted them to avail themselves of the rights and remedies of the Convention. [67] In the result I conclude that Bozalek J was correct in finding that the Convention evidences no intention to exclude voluntariness in respect of salvage operations performed by a public authority acting under a duty. Nor is the effect of art 5 read with s 2(1) of the Wreck and Salvage Act to amend or supersede the common law. [68] Both issues argued in the appeal having been decided against the appellant, the appeal is dismissed with costs. ____________________ J A Heher Judge of Appeal APPEARANCES APPELLANT: M J Fitzgerald SC (with him D J Cooke) Webber Wentzel, Cape Town McIntyre & van der Post, Bloemfontein RESPONDENTS: M Wragge SC Bowman Gilfillan Inc, Cape Town Matsepes, Bloemfontein

Supreme Court of Appeal of South Africa MEDIA STATEMENT From: The Registrar, Supreme Court of Appeal Date: 11 March 2011 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. On 11 March 2007 the SCA delivered judgment in Transnet v The MV Cleopatra Dream (Case no 163/10). The vessel had suffered a catastrophic power failure while preparing to leave Saldanha Bay carrying a cargo of iron ore. She drifted out of control towards shallow water. The pilot, who had not yet left the vessel called for assistance and tugs were dispatched by the port authorities. The vessel was then taken in tow and brought safely to an anchorage. Transnet caused the ship and her cargo to be arrested as security for a claim for R10 million as a salvage reward. The claim was dismissed in the Western Cape Court. The judge found that Transnet’s services were not rendered voluntarily but under a statutory duty to provide towage, tugs and related services within the port and under a common law duty to keep the harbour safe. On appeal the SCA agreed with those findings. It rejected a submission that public authorities were entitled to claim a salvage reward in terms of the Salvage Convention in despite of domestic law. In terms of South African common law a public authority is only entitled to claim a reward if its conduct exceeds what is normally required in order to carry out its duties. As the salvage fell within the ordinary scope of Transnet’s duties as port authority and required neither out of the ordinary skill nor courage the claim had rightly been dismissed and the appeal failed. --ends--

2693

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 231/2011 Not Reportable In the matter between: CHRISTODOULOUS DEMETRIADES APPELLANT and IOANNIS DEMETRIOS PERIVOLIOTIS RESPONDENT Neutral citation: Demetriades v Perivoliotis (231/2011) [2012] ZASCA 8 (14 March 2012) Coram: Mthiyane DP, Brand, Cloete, Mhlantla JJA and Boruchowitz AJA Heard: 17 February 2012 Delivered: 14 March 2012 Summary: Interpretation of an agreement of sale of shares ─ whether it created reciprocity of obligations ─ party seeking to argue new case on appeal. _____________________________________________________________________ ORDER On appeal from: North Gauteng High Court, Pretoria (Legodi, Makgoka JJ and Ebersohn AJ sitting as court of appeal): The appeal is upheld with costs, such costs to include the costs of two counsel. The order of the court a quo is set aside and replaced with the following: ‘The appeal is dismissed with costs, including the costs of two counsel.’ ___________________________________________________________ JUDGMENT MTHIYANE DP (BRAND, CLOETE, MHLANTLA JJA and BORUCHOWITZ AJA CONCURRING) [1] The appeal with leave from this court is concerned with the interpretation of a written agreement of sale of shares in a company registered in Tanzania. In terms of the agreement the respondent (the plaintiff) sold two hundred fully paid-up shares to the appellant (the defendant) for R3.5million. A dispute arose between the parties concerning payment of the purchase price and the initial question that fell to be determined in the high court and later by the full court was whether the agreement is one to which the principle of reciprocity applies. [2] In an action in the North Gauteng High Court (Seriti J) the question was answered in the affirmative but on appeal to the full court with this court’s leave, Legodi J with Makgoba JJ and Ebersohn AJ concurring, held that on a proper construction of the agreement reciprocal obligations were not created between the parties, dismissed the exceptio non adimpleti contractus raised by the defendant and found that the appellant was obliged to pay the balance of the purchase price in terms of the contract. [3] The appellant now appeals that decision with leave from this court. It is convenient to refer to the parties as they were in the high court. It bears mention however that in the appeal before us the plaintiff abandoned his earlier arguments on whether the agreement created reciprocal obligations ─ in fact he now concedes that it did ─ and disavows any reliance on the judgment of the full court, which he no longer supports. Notwithstanding his concession ─ which as will appear later in the judgment was well made ─ counsel considers that he has found a way around it. He submits that because the plaintiff tendered performance and the defendant refused to accept the tender, the plaintiff is entitled to succeed on appeal. He says that although the plaintiff’s case was not pleaded in these terms, the defendant has no cause to complain because the so-called new case is capable of being raised on the papers as they stand and the issue now raised was sufficiently traversed in the court below. [4] The convenient starting point is the agreement itself. On 17 September 2003 the plaintiff sold to the defendant 200 fully paid up shares in Thinamy Entertainment Ltd, a company registered in Tanzania, comprising 20 percent of the subscribed share capital of the company. As I have already indicated the purchase price of the shares was R3.5million. [5] In terms of clause 8.2 of the agreement the balance of the purchase price of R2,5million was payable in twelve equal monthly instalments of R208 333,33, on or before the 7th of each month, the first instalment being payable on or before 7 October 2003. [6] In terms of clause 9 the plaintiff undertook to ─ on or before 30 September 2003 ─ cause to be delivered to the defendant or his nominee: ‘9.1 The share certificates together with share transfer form signed by the Seller; 9.2 Cession by the Seller in favour of the Purchaser for the said loan account; 9.3 The resignation of the Seller as director of the company; 9.4 A resolution approving of the transfer of the shares from the Seller to the Purchaser; 9.5 All books, documents and records in the Seller’s possession relating to the company or the business.’ [7] In the particulars of claim the plaintiff alleges that the defendant breached the terms of agreement as follows: (a) he only paid R55 000 towards the first instalment, being payable on or before 7 October 2003 as already indicated above, leaving an unpaid balance, on the first instalment, of R153 333,33; (b) he failed to make any further payments; (c) he is indebted to the plaintiff in the sum of R1 819 999,00 plus interest at the rate of 15,5 percent per annum a tempore morae. [8] In his plea the defendant admitted: (a) that he paid R55 000 towards the first instalment on or before 7 October 2003 as required under clause 8.2 of the agreement; and (b) that he had not made any further payments. The defendant denied further that he was obliged to pay because the plaintiff had failed to perform his part of the agreement by not delivering the required documentation as required in clause 9 of the agreement. Such failure amounted to a repudiation of the agreement, which he accepted. The defendant pleaded that as a consequence he had cancelled the agreement. [9] The defendant also filed a counter-claim for the repayment of the R55 000 he paid towards the first instalment of the purchase price. In the counter-claim he further alleged that: (a) the plaintiff had breached the terms of the agreement by failing to comply with clause 9 of the agreement; (b) the plaintiff repudiated the agreement, which repudiation he had accepted; and (c) if it was found that he had not repudiated the agreement, the plaintiff would in any event not be able to comply with clause 9 of the agreement. [10] In his plea to the counter-claim the plaintiff disputed the defendant’s entitlement to the repayment of R55 000 alleging that the payment of the purchase price was not dependant upon the plaintiff fulfilling any obligations in terms of the agreement. The plaintiff further averred that he had never had the intention to repudiate the agreement. The plea to the counter-claim in effect averred that the agreement did not create reciprocal obligations and that the defendant was not entitled to succeed in his defence based on the exceptio non adimpleti contractus. As already indicated the plaintiff has abandoned this position and correctly so. [11] For reciprocity to exist there must be such a relationship between the obligations to be performed by the one party and that due by the other party as to indicate that one was undertaken in exchange for the performance of the other (see eg Mörsner v Len).1 On a proper construction of the agreement between the plaintiff and the defendant, especially if regard is had to the paragraphs dealing with the plaintiff- seller’s obligation to deliver the share certificate and other documents on or before 30 September 2003 (clause 9) and dealing with the defendant- buyers’ obligation to pay on or before 7 October 2003 (clause 8.2), it is clear that the intention was to create reciprocal obligations. The relevant cases on the topic have emphasized that the overriding consideration is the intention of the parties as evident from the agreement in conjunction with the relevant background circumstances. See Man Truck & Bus (SA) v Dorbyl Ltd t/a Dorbyl Transport Products and Busaf.2 On that approach there can be no question that the plaintiff had to deliver the documents by 30 September 2003 and the defendant thereafter pay by 7 October 2003, in exchange for the documents so delivered. It cannot be any clearer than that. Accordingly the finding of Seriti J that the agreement gave rise to reciprocal obligations was correct. It must therefore follow that the full court erred in its conclusion that the agreement did not create reciprocal obligations. [12] One would have thought that once reciprocity was conceded and the plaintiff accepted that it had not delivered the share certificate and the other documents as required by clause 9, that would have put paid to all the issues in the case. This because the defendant in his pleadings had accepted the plaintiff’s repudiation of the agreement, consisting in the plaintiff’s refusal to perform an important term of the agreement. Whether the plaintiff subjectively intended no longer to be bound by the 1 Mörsner v Len 1992 (3) SA 626 (A) at 634A. 2 Man Truck & Bus (SA) (Pty) Ltd v Dorbyl Ltd t/a Dorbyl Transport Products and Busaf 2004 (5) SA 226 (SCA) para 12. agreement, or whether he was actuated by a mistake of law in thinking he was entitled to enforce the agreement as he sought to do, is irrelevant: Van Rooyen v Minister van Openbare Werke.3 [13] Despite conceding reciprocity that would suggest that the end of the road had been reached in this litigation, counsel for the plaintiff submitted that he was entitled to argue a point that was not specifically pleaded. Relying on the principle laid down in Shill v Milner,4 he argued that a court was on appeal entitled to permit a party to go beyond the pleadings where the issue had been traversed in evidence in the court below. [14] The issue raised in this new point is the following. The defendant is liable to pay the amount claimed because the plaintiff tendered performance and the defendant refused to accept the tender. Furthermore the defendant failed to attend a meeting at his (the defendant’s) attorney’s offices in 2004 where the defendant would have been given the documents. The plaintiff is to date in possession of the share certificate and is still willing to deliver it to the defendant. [15] As I see it there are two insurmountable hurdles that the plaintiff has to overcome. The first is that the agreement came to an end upon the acceptance by the defendant of the plaintiff’s repudiation. The second is that the tender was withdrawn by the plaintiff in his amended particulars of claim where all reference to the tender was deleted. It is not now possible for the plaintiff to place reliance on a tender that was withdrawn 3 Van Rooyen v Minister van Openbare Werke 1978 (2) SA 835 (A) at 844H-846A. 4 Shill v Milner 1937 AD 101 at 105. or to seek to put the clock back prior to the cancellation of the agreement. Accordingly the new point is without merit and falls to be rejected. [16] Accordingly the appeal must succeed and the following order is made: The appeal is upheld with costs, including the costs of two counsel. The order of the court a quo is set aside and replaced with the following: ‘The appeal is dismissed with costs, including the costs of two counsel.’ ______________________ K K MTHIYANE DEPUTY PRESIDENT APPEARANCES For Appellant: AB Rossouw SC (with him MS Janse van Rensburg) Instructed by: Grobler Levin Soonius Inc, Pretoria Naudes, Bloemfontein For Respondent: EA Limberis SC (with him BW Maselle) Instructed by: Kobus Burger Attorneys c/o Phillip Venter Attorneys, Pretoria Lovius Block Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 14 March 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. DEMETRIADES v PERIVOLIOTIS The Supreme Court of Appeal (SCA) today upheld an appeal by Mr Demetriades (the appellant) against an order of the full court of the North Gauteng High Court, Pretoria dismissing the exceptio non adimpleti contractus raised by the appellant and finding that the appellant was obliged to pay the balance of the purchase price for the shares in a company which Mr Perivoliotis (the respondent) had sold to the appellant The respondent had instituted proceedings against the appellant before Seriti J claiming payment of the balance of the purchase price for the shares. In his plea the appellant denied that he was obliged to pay because the respondent had failed to perform his part of the agreement by not delivering certain documents to the appellant or his nominee as required by the agreement. Such failure, the appellant said, amounted to a repudiation of the agreement, which he had accepted. The appellant pleaded that as a consequence he had cancelled the agreement. The issue before Seriti J was whether the agreement was one to which the principle of reciprocity applied. Seriti J answered the question in the affirmative and dismissed the respondent’s claim. On appeal to it by the respondent the full court held that reciprocal obligations were not created between the parties. It upheld the appeal. The appellant then appealed to the SCA. Before the SCA the respondent conceded that the agreement created reciprocal obligations between the parties. Despite this concession, counsel for the respondent raised a new point. He argued that the appellant was liable to pay the amount claimed because the respondent had tendered performance and the appellant had refused to accept the tender, and that the appellant had failed to attend a meeting at the respondent’s attorney’s office where the appellant would have been given the documents. The SCA held that the new point was without merit and fell to be rejected. It stated that the agreement came to an end upon the acceptance by the appellant of the respondent’s repudiation, and that the tender was withdrawn by the respondent in his amended particulars of claim where all reference to the tender was deleted. It stated further that it was not possible for the respondent to place reliance on a tender that was withdrawn or to seek to put the clock back prior to the cancellation of the agreement. The SCA upheld the appeal with costs, including the costs of two counsel.

3952

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 886/2021 In the matter between: SNOWY OWL PROPERTIES 284 (PTY) LTD Appellant and MZIKI SHARE BLOCK LIMITED Respondent Neutral citation: Snowy Owl Properties 284 (Pty) Ltd v Mziki Share Block Limited (Case no 886/2021) [2023] ZASCA 2 (19 January 2023) Coram: ZONDI and MOTHLE JJA and KGOELE, MAKAULA and WINDELL AJJA Heard: 2 September 2022 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 11:00am on 19 January 2023. Summary: Arbitration award – application to make it an order of court – s 31(1) of the Arbitration Act 42 of 1965 – the award not sanctioning illegal activities – not vague and imprecise – award enforceable. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Radebe J sitting as court of first instance): The application in terms of s 19(b) of the Superior Courts Act 10 of 2013 is dismissed. The appeal is dismissed with costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Kgoele AJA (Zondi and Mothle JJA and Makaula and Windell AJJA concurring) [1] A long-running dispute regarding a registered notarial agreement of servitude No. K1287/1990S (the servitude agreement) between the appellant, Snowy Owl Properties 284 (Pty) Ltd, and the respondent, Mziki Share Block Limited, sparked a plethora of arbitration awards that were made in terms of Clause 4.3 (the arbitration clause) of that agreement. The latest one (the award), which is a subject of this appeal, was made by Advocate Dodson SC (the arbitrator) on 2 April 2020. The appellant was, in terms of the award, directed to reopen certain roads closed by it in 2017 and further ordered to maintain others. The respondent applied to the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court), to make the award an order of court in terms of s 31(1) of the Arbitration Act 42 of 1965 (the Arbitration Act). The appellant opposed the relief sought on the basis that the award was unenforceable. [2] The high court made the award an order of court. Aggrieved by the order, the appellant sought and was granted leave to appeal to this Court, mainly on the basis that the award was incapable of enforcement. The appellant also seeks leave to admit further evidence in terms of s 19(b) of the Superior Courts Act 10 of 2013 (Superior Courts Act). The Background [3] The appellant and the respondent own farms that border each other. The appellant’s farm falls within the boundary of the Mun-Ya-Wana Conservancy (the Conservancy), which was declared a protected area on 5 December 2019, in terms of the National Environmental Management Protected Areas Act 57 of 2003 (NEMPAA). On 27 August 1990, the appellant’s and respondent’s predecessors in title concluded a servitude agreement that reciprocally allows each of these owners to traverse over all of the lands of the other, solely for game viewing. The relevant provisions are clauses 3 and 4.1. Clause 4.2.2 requires each party to take all steps necessary to maintain ‘existing roads’ on their respective properties (road maintenance) whereas Clause 4.2.6 imposes an obligation on the parties to prevent veld fires and soil erosion on their respective properties. [4] As already indicated above, after that outwardly optimistic start, the relationship between the parties deteriorated some ten years later and sparked a series of disputes and arbitration awards. With regard to the current dispute, the respondent instituted arbitration proceedings against the appellant for the reinstatement, re-opening, and repair of servitude roads used by it and its members for game viewing purposes in terms of the servitude rights it holds over the appellant’s servient properties. The arbitration proceedings were triggered by the ripping up of roads by the appellant in July 2017, which commenced with Plover Drive, which used to be a boundary road between the appellant’s farms and a farm known as Little Zuka, also subject to the servitude agreement. When the appellant’s farm manager, Mr Anton Louw (Louw), was approached to explain this breach of the servitude agreement, he informed the Chairperson of the Board of Directors of the respondent, Mr Norman Celliers (Celliers), that the ripping up of Plover Drive formed part of a new road rehabilitation plan, a step that had been taken for environmental reasons. Celliers, in turn, expressed his concern about the failure of the appellant to consult with the respondent before any of the steps were taken. [5] Shortly thereafter, Plover Drive, Boundary Road, and several linking roads in the Plains (an open grassland area) referred to as ‘the Links Road’, which intersected with Plover Drive, were also ripped up and branches were placed across the entrances to prevent access by the respondent to the appellant’s property. An exchange of WhatsApp messages between Louw and Celliers revealed that the closures were made on the basis that it was a ‘project to rehabilitate the old boundary lines; roads subject to excessive erosion and roads running through “wetlands” and “marsh areas”’. Further WhatsApp exchanges and telephone calls culminated in a meeting between Celliers and Louw on 27 July 2017. At this meeting, Louw claimed that the steps were taken following an environmental management plan, which had been developed for the entire Mun-Ya-Wana Game Reserve, of which the appellant’s farm forms part. According to Louw, the appellant was legally obliged to destroy those roads, in compliance with the national environmental laws, as these roads were in low-lying or wetland areas. Celliers was not happy with the explanation and once more, expressed a further complaint about the appellant not having, at the least, attempted to engage the respondent beforehand. He demanded that the roads be repaired and re-opened and further that, the various documents to which Louw referred, be given to him. [6] An exchange of correspondence, this time between the attorneys of both parties, ensued when the requested documents were not furnished. The correspondence did not yield an amicable solution. Instead, it fuelled the fire that was already burning between the parties, resulting in the appellant addressing a notice to the respondent and other parties traversing its farm on 29 September 2017 announcing the permanent closure of the areas: River Road, River Loop, and River Link (the ‘Three River’ roads). This notice was followed by the erection of chains with ‘no entry’ signs on them which were also hung between planted wooden poles at the entry points to the roads in question. The respondent retaliated by removing the chains and pole barriers of River Road and resuming the use of the road. As the pot on the fire was brewing at this time, the parties agreed to the activation of arbitration proceedings in terms of the arbitration clause. The arbitration award [7] The dispute before the arbitrator pertained not only to the road closures which were occasioned by the appellant, but also to the alleged failure to maintain the roads in their form. Whilst the respondent pleaded a breach of the servitude agreement by the appellant during the arbitration proceedings, the appellant pleaded that the servitude agreement, properly interpreted, does not prohibit the parties from closing existing roads or making new roads. Alternatively, that it contains a tacit term to the effect that parties can close existing roads should it be necessary for ecological and or legislative reasons. Concerning road maintenance, the appellant denied any breach of the duty to maintain. [8] At the conclusion of the arbitration, the arbitrator dismissed all of the appellant’s defences. He found that the respondent had succeeded in making a case concerning its road maintenance claim. As regards the roads closure claim, the arbitrator found that none of the statutory instruments referred to by the appellant sanctioned the closure of roads nor did they preclude the reinstatement of existing roads that had been closed and destroyed. The arbitrator stated further that if authorisation was required by any provisions whatsoever, the appellant could make such an application and pursue it with the necessary vigor. [9] In the result the arbitrator rendered the following award: ‘234. I accordingly make the following award: 1. Subject to paragraphs 2 to 4 below, the respondent is ordered: 1.1 to complete the repair and maintenance of, and to reopen, River Road within 30 days of the termination of the lockdown imposed in terms of Chapter 2 of the regulations in Government Notice 318 of 18 March 2020, as amended,1 or any extension of the lockdown that applies to the area in which the respondent’s farms are situated (“the lockdown termination date”); 1.2 to reinstate and reopen River Loop within two months of the lockdown termination date; 1.3 to reinstate and reopen by no later than nine months from the expiry of the time period referred to in paragraph 2, the following roads on respondent’s properties as highlighted in black on annexure “C” to the statement of claim; 1.3.1 River Link; 1.3.2 Plover Drive; 1.3.3 The westerly group of three Links Roads that cross the Plains area, up to the point where, having converged, they intersect with Plover Drive, including the section where three of the Links Roads converge into a single road; 1 GN 318 of 18 March 2020 issued in terms of section 27 (2) of the Disaster Management Act No. 57 of 2002 and contained in Government Gazette No. 43107, as amended by Government Notice R.398 in Government Gazette No. 43148 of 25 March 2020 and Government Gazette Notice R.419 contained in Government Gazette No. 43168 dated 26 March 2020. 1.3.4 The most easterly of the Links Roads that cross the Plains area up to the point where it intersects with Plover Drive, but excluding Boundary Road, and subject to the following: (a) The reinstated roads must be no wider than is reasonably necessary for traverse by game-viewing vehicles and must in any event be no wider than 4 metres; (b) Any watercourse of wetland crossing must be designed for the minimal impact reasonably possible on the natural functioning of such watercourse or wetland; and (c) Upon completion of the reinstatement of any road, it must immediately be reopened, notwithstanding such completion having taken place prior to the expiry of the nine-month period provided for compliance with this paragraph; 1.4 Within 6 months of the lockdown termination date, to have taken and completed all steps necessary to adequately repair and maintain, the sections of the following roads identified in the minute of the site inspection of 12 and 13 October 2019, read with the annexures to it, as being in an unreasonable, unmaintained, undermaintained, eroded or otherwise unacceptable condition; 1.4.1 Valley View Road; 1.4.2 Brides Bush Road; 1.4.3 Nkulukulu Loop; 1.4.4 Lamara Loop; 1.4.5 Nsumo Drive (excluding the rocky ascending portion described in paragraph 45 of the site inspection minute); 1.4.6 Boma Road; 1.4.7 Sidestripe Road; 1.4.8 Amatchemthlope Drive. 1.5 to carry out the actions in subparagraphs 1.1 to 1.4 above in such a way as to minimise any negative impact upon the claimant’s rights under the servitude; and 1.6 to pay 70 percent of the party and party cost of these proceedings, including the costs of the arbitrator, the recording services and senior counsel. 2. The duty to commence compliance with subparagraph 1.3 only, is suspended for a period of three months from the lockdown termination date to enable the parties to meet and attempt to reach agreement regarding- 2.1 the manner in which the reinstatement of any parts of the roads referred to in subparagraphs 1.3.2 to 1.3.4 that cross watercourses or wetlands, is to be dealt with, including any deviation from the original path of the road; 2.2 the manner in which River Link is to be reinstated, if at all; and; 2.3 such further matters as the parties may elect to reach an agreement on. 3. The parties may vary subparagraph 1.3 of this award or the time period in paragraph 2 of this award, by written agreement signed on behalf of each party by a duly authorised representative. 4. Failing agreement within the period referred to in paragraph 2 on the matters contemplated in paragraphs 2 and 3, subparagraph 1.3 shall become effective on the terms set out in that subparagraph. 5. Either party may seek an amendment of this award insofar as it pertains to the lockdown, by way of a short, written submission emailed within 5 court days of the date of the award, the other party having 2 court days to respond.’ Litigation history [10] Subsequent to the grant of the award and during October 2020, the appellant seemingly continued to rip up and destroy roads on the servient property. This led to an interim interdict being granted in favour of the respondent on 20 October 2020.2 Around the same time, the respondent brought an application to make the award an order of court.3 On 4 December 2020, both matters served before the high court (Radebe J) and by agreement between the parties, the high court only proceeded with the latter application and postponed the interdict application for later determination. As already stated, the appellant opposed the application to have the award made an order of court. The basis for the opposition was that the terms of the award were at odds with some of the basic features of a court order and were thus unenforceable. On 18 February 2021, the high court granted the application with costs and made the award an order of court. Leave to appeal was granted to this Court on 27 July 2021. The issues [11] The primary question in this appeal is whether the high court was correct in making the award an order of court for the purposes of enforcement. The appellant raised three grounds in support of its contention that the award is unenforceable. The first complaint was that para 1.3 of the award cannot be enforced as the reinstatement, reopening, and maintenance of the relevant roads contemplated in para 1.3.2, 1.3.3, and 1.3.4 will require the appellant to perpetuate unlawful acts. The second was that para 1.4 of the award is vague and imprecise and cannot be made an order of the 2 Application under case number 7003/2020P. 3 Application under case number 4444/2020P, as aforesaid. court. The last relates to the ‘Three River’ roads. The contention is that paras 1.1, 1.2, and 1.3 conflict with the provisions of para 11.10 of the Maintenance Management Plan (MMP) and will invite the appellant to conduct illegal activities. The law [12] Our law has long recognised that any act performed contrary to a direct and express provision of the law is void and has no force and effect.4 In general, it will be contrary to public policy for a court to enforce an arbitral award that is at odds with a statutory prohibition. However, this is not always the case. As recognised by the Constitutional Court in Cool Ideas 1186 CC v Hubbard and Another (Cool Ideas), the force of the prohibition must be weighed against the important goals of private arbitration.5 This is because a court’s refusal to enforce an arbitration award will also erode, to some extent, the utility of the arbitration process. But converting an award into a court order does not follow as a matter of course. A court is entitled to refuse to make an award an order of court if the award is defective or sanctions illegalities.6 [13] It is trite that a servitude is a limited real right often registered in favour of the dominant property which amounts to a detachment from ordinary property rights in respect of the servient property and a concomitant attachment thereof to the proprietary rights of the dominant property. To that extent, the servient property owner is neither empowered nor competent to negotiate those rights away without the consent of the dominant owner. The relationship between the parties as dominant and servient owners is governed by the principle of reasonableness.7 [14] Another principle relied upon by our courts to calibrate the relationship between two reciprocal servitude holders is the civiliter modo principle. It regulates the reasonable exercise of servitudal rights between the servient owner and the servitude holder. This concept was recently explained by this Court in Morganambal Mannaru 4 Schierhout v Minister of Justice 1926 AD 99 at 109. 5 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC) para 136. 6 Ibid paras 53-62. 7 A J Van Der Walt and G J Pienaar Introduction to the Law of Property 4 ed, (2004) at 274. and Another v Robert MacLennan-Smith and Others.8 In Gardens Estate Ltd v Lewis9 it was held that the owner of a servient property that is subject to a specified servitude of right of way cannot subsequently insist on changing the location or route of the servitude road unilaterally.10 In Linvestment CC v Hammersley and Another,11 this Court pronounced that the civiliter principle cannot be relied on to justify unilateral relocation of a specified right of way to a route that suits the servient owner better. However, the Court also found it justified to develop the common law to make unilateral relocation of a specified right of way by a court order (in favour of the servient owner) possible under certain circumscribed conditions.12 In this regard, I echo the remarks by Van der Walt that ‘This decision does not have a direct bearing on the civiliter principle because the order for unilateral relocation of the road was granted on application by the servient owner, but the decision confirms that consensual specified right of way cannot be amended unilaterally with an appeal to the civiliter principle’.13 The illegality opposition [15] With this background I turn to deal with the appellant’s contention that the order sought would require it to perform an unlawful act and thus, cannot be made an order 8 Morganambal Mannaru and Another v Robert MacLennan-Smith and Others [2022] ZASCA 137 para 13: ‘Often the relationship arising from the exercise of a servitude is fraught with tensions that sometimes develop into disputes, for the most part, between the user rights of the dominant owner and the rights of the servient owner. The approach adopted by our courts in resolving such disputes is reliance on the principle of civiliter modo. Relying on J Scott, it has been pointed out that: “the principle of civiliter…is a particular expression of the principle of reasonableness...” And at 242-243 “in modern South African servitude law the Latin phrase civiliter modo is consistently read as a set of adverbs that both qualify the conduct of a servitude holder, so that a servitude holder who acts reasonably is said to be acting in a civilised (civiliter) manner (modo).” In modern South African servitude law the Latin phrase civiliter modo is consistently read as a set of adverbs that qualify the conduct of the servitude holder, so that a servitude holder who acts reasonably is said to be acting in a civilised (civiliter) manner (modo).’ 9 Gardens Estate v Lewis 1920 AD 144. See also C G van der Merwe Sakereg 2 ed (1989) at 467, where this decision is still discussed as the current law. 10 See ch 4.7 on amendment of existing servitudes. In the case of a specified consensual servitude of right of way, the parties not only agreed upon the creation of the right to use a road but also on the location or route of the road. Both are bound to that route and it can in principle only be changed by consensus. In the case of a general (simpliciter) consensual servitude of right of way, the parties agree on the creation of the servitude but not on the route, in which case the servitude holder can select a route, subject to the principle that it must impose the least possible burden on the servient owner. Thereafter the servitude holder is bound to the selected route, but the servient owner can change the route unilaterally if her continued reasonable use of the servient land demands it, provided the change does not infringe upon effective use of the servitude. 11 Linvestment CC v Hammersley [2008] ZASCA 1: 2008 (3) SA 283 (SCA) para 20. See also LAWSA 2 ed para 544 fn 4. See also para 559 discussing this decision. 12 24 LAWSA 2 ed para 25. 13 A J Van der Walt The Law of Servitudes (2018) at 259. of court. Paragraph 1.3 of the award obliges the appellant to reinstate and reopen River Link, Plover Drive, and large parts of the Links Roads. The appellant claimed, initially during the arbitration proceedings, that these roads were closed because of the adverse ecological impact they had as they were situated within a wetland area. Before the high court, the appellant further attempted to rely on the expert evidence of Mr David Rudolph, an environmental assessment practitioner (the EAP), Mr Jacques Du Plessis, a civil engineer, and Mr Jeanrick Janse van Rensburg, an ecologist, to the effect that para 1.3 of the award cannot be enforced because the permanently closed roads implicated in paras 1.3.2, 1.3.3 and 1.3.4 of the award are all within a wetland and the scope of works identified in the award cannot be carried out without obtaining prior environmental authorisation. The appellant argued that the high court’s order required it to perform unlawful acts which may not be performed without prior authorisation in terms of: (a) Section 24 of the Constitution of the Republic of South Africa; (b) The National Environmental Management Act 107 of 1998 (NEMA); (c) The National Water Act 36 of 1998 (NWA); (d) NEMPAA; (e) The relevant Environmental Impact Assessment Regulations (EIA regulations) published under ss 24(2), 24(5), 24D and read with s 47A(1)(b)(i) of NEMA promulgated and amended on 7 April 2017 in the Government Notice Regulations (GNR) Nos 324, 326 and 327. [16] The appellant submitted that in terms of the NEMA, certain activities with potentially detrimental impacts on the environment may not be undertaken without prior authorisation. According to the appellant, the environmental authorisation required for all the works to be done in terms of para 1.3 of the award has been confirmed by the EAP who indicated in his report that at least four listed activities are triggered by the works required to be done in terms of the award. As a consequence of the above, the appellant would have to obtain environmental authorisation from the competent authority, the KwaZulu-Natal Department of Economic Development, Tourism, and Environmental Affairs before it undertakes the scope of works described by the civil engineer, to comply with para 1.3 of the award concerning the roads in paras 1.3.2, 1.3.3 and 1.3.4. If it were to proceed to perform in terms of the award, the appellant submitted, its performance will be illegal because a person who conducts a listed activity without authorisation commits an offence in terms of s 49A(1) of NEMA read in conjunction with s 24F(1). [17] A similar argument was raised in respect of the two additional listed activities identified by the EAP in terms of the NWA. The appellant contended in this regard that the fact that the roads will impede or divert the flow of water in a watercourse and alter the beds, banks, course, or characteristics of a watercourse, will require a water use license in terms of section 21 of the NWA. Without such a licence, the appellant submitted, it will be committing an offence. Lastly, the appellant also contended that para 1.3 is in conflict with the provision of the MMP. The appellant relied heavily on the principle outlined in Cool Ideas to support the contention that the award cannot be enforced as it sanctions illegal conduct. [18] In relation to para 203 of the award, in which the arbitrator urged the appellant to pursue the authorisation with vigor in case one is needed, the appellant argued that the arbitrator overlooked these statutory provisions referred to above. The appellant argued that the high court’s order falls short of being immediately capable of execution because statutory authorisation is required before it could be enforced. It contended that it will be unable to successfully apply for environmental authorisation as, if it were to do so, it would not have any support from an independent and objective EAP for the re-opening of the roads, as there is a viable alternative route. [19] Firstly, to debate what an EAP may or may not recommend if the appellant applies for authorisation is both irrelevant and unhelpful. But more importantly, the appellant’s contentions must be rejected for the simple reason that the justification for the closure of the roads concerned was raised before the arbitrator and he rejected it after considering the factual and expert evidence presented to him. The arbitrator found that there were no legislative reasons for the closure nor was there any provision in the servitude agreement that mandated the closure of any of the existing roads. The evidence in the affidavit of the EAP seems to be another version of the evidence already presented by the witnesses of the appellant, including, an environmental expert, Mr Neary, before the arbitrator. This is not an appeal against the factual finding of the arbitrator. It is therefore not permissible, nor appropriate for the appellant to engage in a factual debate on matters already considered in the arbitration proceedings and decided upon by the arbitrator. As a result, the high court cannot be faulted for equating the evidence in the affidavit of the EAP as the introduction of ‘new evidence’ which will amount to an appeal against the award. [20] Secondly, the appellant sought to further justify its actions by relying on the MMP. This justification, too, cannot salvage the appellant’s case. First, there was no decision by a Mun-Ya-Wana Conservancy Warden to close any of the roads including the three “River Roads”. In fact, from the report of the EAP, it would appear that no recommendation could have been made to the competent authority. Moreover, the evidence presented at the arbitration indicated that River Road was closed for maintenance purposes while River Link was closed because it went straight up the side of a very steep hill. [21] Lastly, the record of the arbitration proceedings reveals that the arbitrator also dealt with the argument relied upon by the appellant which was based on this plethora of environmental legislative instruments to the effect that the relief sought by the respondent compelling the appellant to reinstate the roads amounted to the creation of ‘new’ roads. The arbitrator, after a thorough analysis of the servitude agreement, found that the issues in this matter relate to ‘existing roads’ and therefore, ‘none of the statutory instruments relied upon by the appellant preclude the reinstatement of existing roads which have been closed and destroyed. Nor do any of them sanction the original closure by Snowy Owl [the appellant] of the roads’. Mr Neary, the legal expert of the appellant, had also, prior to this finding, accepted the fact that existing roads in the servitude were thus not affected by the legal requirements in relation to environmental impact assessments. [22] Reliance on the Cool Ideas authority to support the introduction of the new ‘expert evidence’ before the high court, was also in my view, correctly rejected by the high court as the facts thereof are distinguishable from this matter. Unlike in the Cool Ideas matter, the award that was made an order of court in this matter does not infringe any law. The arbitrator made a definitive conclusion that none of the legislative instruments referred to by the appellant during the arbitration hearing precludes the maintenance or reinstatement of existing roads that had been closed or destroyed, nor do any of them sanction the original closure or the ripping up of these roads. In addition to this, I find the remarks made by the Constitutional Court in Cool Ideas that ‘. . . If a court refuses to freely enforce an arbitration award, thereby rendering it largely ineffectual, because of a defence that was raised only after the arbitrator gave judgment, that self-evidently erodes the utility of arbitration as an expeditious, out–of– court means of finally resolving the dispute,’ apposite in this matter. The vagueness opposition [23] The second ground of attack on the award is that it is vague and thus incapable of enforcement. It is contended by the appellant that para 1.4 of the award orders it, within six months of the lockdown termination date, to have taken and completed all steps necessary to adequately repair and maintain the sections of the various roads listed in this paragraph and identified in the minute of the site inspection of 12 and 13 October, read with the annexures to it. The complaint is that the order made by the high court does not identify the minute of the site inspection and the annexures, nor are these documents attached to the order. Further, it is contended that the order does not identify the roads referred to in para 1.3 of the award which are ‘. . . highlighted in black on annexure “C” to the statement of claim.’ To substantiate this contention, the appellant listed a host of examples in an attempt to demonstrate that it is impossible to interpret the award without reference to these documents. According to the appellant, this renders the order of the high court vague and incapable of enforcement. [24] This complaint is ill-conceived. The record of the arbitration proceeding reveals that the minute of the inspection in loco was dictated by the arbitrator in the presence and concurrence of the representatives of all the parties during the inspection. It is simply not open to the appellant to now claim a lack of understanding of the roads in question, including the contents of this minute, when its representative was present during the inspection in loco and is fully aware of which roads and parts thereof the arbitrator referred to in the award. Secondly, the record of the proceedings reveals that the minute and annexures were placed before it and the high court referred to them. In my view, the appellant would be able to ascertain which roads are affected by the award by having regard to this documentation. [25] The second leg relied upon by the appellant to substantiate this complaint is the ‘changed circumstances’. The argument is that the state of the roads observed by the arbitrator in October 2019, bore little or no resemblance to the state of the roads three months later because of the torrential rains that fell in January 2020. As a result of these significant changes, the argument continued, the appellant does not know where the parts of the roads that are to be repaired are situated; the award is subject to uncertainty which can result in further litigation, and the dispute between the parties cannot be resolved by the award because road maintenance and repair is a never- ending cycle. To bolster these arguments, the appellant submitted that the constant state of flux within the Conservancy causes the conditions of defects to change in form. Fixing a position to a specific date and expecting that snap-shot to remain unaltered and require remediation, is according to the appellant not competent on the facts. Once one problem is addressed, others arise due to rain, erosion, or poor driving skills. Therefore, according to the appellant, para 1.4 of the award cannot be made an order of court. [26] The ‘changed circumstances’ arguments cannot salvage the appellant’s case. Firstly, in para 52 of their answering affidavit, the appellant alleged that an application to have the evidence of the torrential rains and flooding to be admitted was refused by the arbitrator before he made his award on 2 April 2020. Therefore, with the risk of repetition, the appellant cannot, before the high court and us, as already indicated above, re-argue factual matters that were already dealt with by the arbitrator. [27] Secondly, the appellant’s duty to maintain the roads is a servitudal obligation that takes into account the reserve's conditions, including rainfall. As a result, the submission that the award will not resolve the issues between the parties cannot assist the appellant’s case. Maintenance, in various forms, forms part of the duties of any owner, and such is the nature of the beast, more particularly so in this matter as this duty is specifically entrenched in the servitude agreement of the parties. Therefore, maintenance hardships cannot be used to the detriment of another owner. If the duties imposed become unbearable, avenues provided for by the arbitrator in the award itself which replicate the principles governing reciprocal servitudes as espoused in the previous paragraphs ought to be explored whereby the two parties can find a mutually beneficial solution. There is therefore nothing vague or imprecise about the award contained in para 1.4 as to what the appellant is required to do, and the torrential rains cannot make the award unenforceable either. The ‘Three Rivers’ roads opposition [28] The argument before the high court related to paras 1.1, 1.2, and once again,1.3 of the award in terms of which the appellant was directed to repair, maintain and reinstate River Link, River Loop, and River Road within the stipulated period. The argument advanced is that the closure of these roads was done as the appellant wanted to reinstate the ecological attributes and systems to prevent further environmental degradation and to ensure compliance with para 11.10 of the MMP, which was approved by the MEC: Environmental Affairs in KwaZulu-Natal. Paragraph 11.10 provides that in the event that the Mun-Ya-Wana Conservancy Warden, in conjunction with the relevant landowner, decides certain roads need to be closed for ecological reasons, this will also fall under maintenance. The appellant contends that to comply with the provisions of the MMP, the closure of the ‘Three Rivers’ roads was imperative. The granting of the orders in paras 1.1, 1.2, and 1.3 are thus, argues the appellant, in conflict with the provisions of the MMP. [29] This argument is once more raised before us but in a reformulated manner. As an example and to lay this argument to rest, the Mun-Ya-Wana Conservancy was declared a Protected Area on 5 September 2019 in terms of s 23 of NEMPAA. The arbitration hearing took place on 15 March 2020 and the MMP was approved on 5 March 2020. The latter date pre-dates the hearing of the arbitration and the resultant award which was made on 2 April 2020. Therefore, the conclusion I reached regarding the MMP in the previous paragraphs equally applies here. Much reliance was also placed on the Mun-Ya-Wana Conservancy or its Warden, but we are also not told what its/his attitude is to the debates raised by the appellant including the authorisations bemoaned about. Another important consideration to make in this regard is that the respondent is not a member of the Mun-Ya-Wana Conservancy. The respondent was never consulted before the MMP, heavily relied upon by the appellant, was prepared and allegedly approved as required by s 39(1) of NEMPAA. This section is peremptory and provides that when a management plan for a protected area is being prepared, all the affected parties who have an interest must be consulted. [30] It is important to add that the arbitrator was alive to the principles that govern the rights of the parties under a reciprocal servitude agreement as set out in the previous paragraphs. This is the reason why he made a finding that there is a servitude over the land and any road closure had to be made jointly with the dominant landowner, which did not happen. Also, the other difficulty with the appellant’s argument stems from the fact that the arbitrator, in refusing the defence raised by the appellant that the servitude was subject to a tacit term, remarked: ‘. . . it is highly improbable that, in a contract based on reciprocity, the one party would have allowed the other to act unilaterally and on the basis of its exclusive assessment of what sustainable environmental management required, in closing the roads.’ Therefore, the arguments in this regard cannot salvage the appellant’s case at all. The ‘wetland’ argument raised on this issue was also analysed above and needs no repetition here. Application in terms of s 19(b) of the Superior Courts Act [31] The application relates to the admission of the affidavit of the appellant’s attorney to introduce a notarial deed which was registered on 18 June 2021. The appellant contends that it could not file this document as it was not available at the time of the hearing before the high court. The importance thereof, according to the appellant, is to bring to this Court’s attention that a real right has been registered; that it is the final step in the process of declaring the Conservancy as a Nature Reserve, and that the consequence of this registration is that the appellant is obliged henceforth, to protect the environment for the benefit of present and future generations by complying with the provisions of the Constitution, NEMPA, the Protected Area Management Plan (PAMP) and the MMP, failure of which will invite the appellant to perpetrate unlawful acts. The application falls to be summarily dismissed because the registration is irrelevant, does not affect, and did not alter the tenor of the issues that were raised in this appeal including the resultant findings. [32] The conclusion I reach is that the award meets the requirements of an order that is capable of being enforced. [33] Consequently, the following order is made: The application in terms of s 19(b) of the Superior Courts Act 10 of 2013 is dismissed. The appeal is dismissed with costs. ______________ A M KGOELE ACTING JUDGE OF APPEAL APPEARANCES: For the appellant: R S Shepstone Instructed by: Errol Goss Attorneys, Johannesburg Eugene Attorneys, Bloemfontein For the respondent: S Burger SC Instructed by: Cliffe Dekker Hofmeyr Inc, Cape Town Claude Reid Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 19 January 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 Snowy Owl Properties 284 (Pty) Ltd v Mziki Share Block Limited (Case no 886/2021) [2023] ZASCA 2 (19 January 2023) Today, the Supreme Court of Appeal (SCA) dismissed an appeal against an order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court). The appellant and the respondent own farms that border each other. This appeal revolved around a long-running dispute regarding a reciprocal servitude agreement (the agreement) that was concluded some years ago by their predecessors in title. The agreement reciprocally allows the appellant and the respondent to traverse the property of the other for game viewing. Each party is also responsible for ensuring that the roads in question are properly maintained. The respondent instituted arbitration proceedings as the appellant had ripped up certain roads and blocked access to others, claiming that it was legally obliged to do so in compliance with national environmental laws. The dispute also included the failure by the appellant to maintain the roads in terms of the agreement. An arbitration award (the award) was made in favour of the respondent who subsequently approached the high court to have the award made an order of court. The application was opposed by the appellant. The high court dismissed all the grounds relied upon by the appellant in support of its contention that the award was unenforceable. The primary question in this appeal was whether the high court was correct in making the award an order of the court. The appellant had, before the high court and the SCA, sought to introduce ‘new expert evidence’ from a report of an ecologist and an environmental assessment practitioner (EAP) to support its contention that para 1.3 of the award cannot be enforced, as it requires it to perpetuate unlawful acts prohibited by various environmental legislation, including the Maintenance Management Plan (MMP). Secondly, the appellant contended that para 1.4 of the award was vague and imprecise, as the appellant was unsure which sections of roads were subject to the award. The last complaint was that paras 1.1, 1.2 and 1.3 conflict with the provisions of para 11.10 of the MMP and cannot be enforced. The appellant also sought leave to admit further evidence in terms of s 19(b) of the Superior Courts Act 10 of 2013. In dismissing the appeal the SCA held that; the award met the requirements of an order that is capable of being enforced; the high court correctly rejected the introduction of the ‘new expert evidence’ in the affidavit of the EAP; the contention that the award will require the appellant to conduct illegal activities did not have merit because the award did not infringe any law; there was nothing vague and imprecise about what the appellant was required to do in terms of the award; any defence rooted on ‘changed circumstances’ could not make the award unenforceable, as the appellant’s duty to maintain the roads was a servitudal obligation that takes into account the reserve’s conditions, including rainfall. The SCA emphasised that the appellant was under an obligation to respect the terms of the agreement and the legal principles that govern the rights of the parties under it, which do not permit the appellant to make unilateral changes to the agreement. As a result, the last complaint suffered the same fate. Lastly, the application in terms of s 19(b) of the Superior Courts Act was also dismissed, as the deed of registration documents sought to be introduced were found to be irrelevant to the tenor of the issues before the Court. In the result, the appeal was dismissed. --------oOo--------

4141

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no. 1056/2022 In the matter between: KOUGA LOCAL MUNICIPALITY Appellant and ST FRANCIS BAY (WARD 12) CONCERNED RESIDENTS’ ASSOCIATION First Respondent ST FRANCIS BAY PROPERTY OWNERS ASSOCIATION Second Respondent ST FRANCIS BAY PROPERTY OWNERS NPC Third Respondent Neutral Citation: Kouga Local Municipality v St Francis Bay (Ward 12) Concerned Residents’ Association and Others (Case no. 1056/2022) [2023] ZASCA 168 (1 December 2023) Coram: NICHOLLS and MABINDLA-BOQWANA JJA and BINNS- WARD, MASIPA and UNTERHALTER AJJA Heard: 13 November 2023 Delivered: 1 December 2023 Summary: Local government – section 22 of the Local Government: Municipal Property Rates Act 6 of 2004 (PRA) – establishment by municipalities of special rating area (SRAs) – attack on legal validity of the appellant’s rates policy and by-law concerning the establishment of SRAs on grounds of alleged inconsistency with s 22 of the PRA and allegation that the appellant unlawfully abrogated its powers and functions by delegating same to applicant ratepayers’ organisation and non-profit company (NPC) established to be management body of proposed SRA. Civil practice and procedure – evidence and argument not cognisably related to relief sought in notice of motion, irrelevant – argument on grounds not properly founded in the papers disregarded for the purposes of determination of appeal. ________________________________________________________________ ORDER On appeal from: Eastern Cape Division of the High Court, Port Elizabeth (Mjali J, sitting as a court of first instance): 1. The appeal is upheld. 2. The order of the court a quo is set aside and substituted with the following: ‘The application is dismissed with no order as to costs.’ JUDGMENT BINNS-WARD AJA (NICHOLLS and MABINDLA-BOQWANA JJA and MASIPA and UNTERHALTER AJJA concurring): [1] It is notorious that most local authorities in South Africa struggle to deliver municipal services at anything approaching optimal levels. The phenomenon is by no means unique to this country. A way of alleviating the problem that has been adopted in many countries around the world is the creation of improvement districts within local government areas.1 The owners or occupiers in such areas bind themselves to pay a premium on their property taxes. The extra tax is ring-fenced in the local authority’s accounts, and the revenue is expended on providing enhanced municipal services in the district in accordance with a contractual arrangement between the ratepayers, or an entity representing them, 1 The nomenclature for such improvement districts varies country by country. In the United Kingdom, for example, one encounters ‘business improvement districts’ and in parts of the United States ‘community improvement districts’. The establishment of business improvement districts in Britain is regulated by part 4 of chapter 2 of the Local Government Act 2003 (cap.26). and the local authority. In South Africa these are called ‘special rating areas’ (SRAs), although the term ‘city improvement district’ is also often used. [2] The appellant is the Kouga Local Municipality, which has its seat in Jeffreys Bay, Eastern Cape. The appeal concerns the legality of the establishment by the appellant, of an SRA in St Francis Bay. The area demarcated for the SRA is in part of Ward 12 of the appellant’s municipal area. [3] The establishment of SRAs is regulated by s 22 of the Local Government: Municipal Property Rates Act 6 of 2004 (the PRA). This appeal turns on the import of s 22, properly construed. The text provides as follows: ‘Special rating areas (1) A municipality may by resolution of its council- (a) determine an area within that municipality as a special rating area; (b) levy an additional rate on property in that area for the purpose of raising funds for improving or upgrading that area; and (c) differentiate between categories of properties when levying an additional rate referred to in paragraph (b). (2) Before determining a special rating area, a municipality must- (a) consult the local community, including on the following matters; (i) the proposed boundaries of the area; and (ii) the proposed improvement or upgrading of the area; and (b) obtain the consent of the majority of the members of the local community in the proposed special rating area who will be liable for paying the additional rate. (3) When a municipality determines a special rating area, the municipality- (a) must determine the boundaries of the area; (b) must indicate how the area is to be improved or upgraded by funds derived from the additional rate; (c) must establish separate accounting and other record-keeping systems regarding- (i) the revenue generated by the additional rate; and (ii) the improvement and upgrading of the area; and (d) may establish a committee composed of persons representing the community in the area to act as a consultative and advisory forum for the municipality on the improvement and upgrading of the area, provided representivity, including gender representivity, is taken into account when such a committee is established. Such a committee must be a subcommittee of the ward committee or committees in the area, if the municipality has a ward committee or committees in the area. (4) This section may not be used to reinforce existing inequities in the development of the municipality, and any determination of a special rating area must be consistent with the objectives of the municipality's integrated development plan. (5) This section must be read with section 85 of the Municipal Systems Act if this section is applied to provide funding for an internal municipal service district established in terms of that section of the Municipal Systems Act.’ [4] Section 22 falls to be construed with due regard to its context in the constitutional scheme for local government. A municipality derives its power to levy rates on property from s 229(1) of the Constitution, which makes that power subject to regulation by national legislation, the PRA. Section 2(3) of the PRA obliges municipalities to exercise their rating powers subject to the Act and the rates policy that every municipality is obliged by s 3 of the Act to adopt. A municipality is required by s 6(1) of the PRA to adopt and publish by-laws, in the manner prescribed by ss 12 and 13 of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act), to give effect to its rates policy. Section 22 should also be understood with reference to the pertinent provisions of Chapter 7 of the Constitution, especially ss 1522 and 1533 concerning the objects of local government and the developmental duties of municipalities. [5] On 19 December 2017, the appellant’s municipal council adopted an amendment to its rates policy and passed a new by-law to give effect to it. The amendment to the policy introduced, in paragraph 23, a provision that Part A of the policy would ‘apply to Special Rating Areas as envisaged in Section 22 of the [PRA]’. The new by-law was gazetted on 29 December 2017. [6] The declared object of Part A of the rates policy is ‘to provide a framework and procedure under which owners of properties within the jurisdiction of the Municipality can initiate the establishment of [an] SRA and undertake the improvement or upgrading of the SRA funded by additional rates to be levied on the SRA Properties by the Municipality, subject to an acceptable agreement being concluded between the Municipality and a management body to be established by the owners of the SRA Properties’. ‘Management Body’ is specially defined to mean ‘the management body of [an] SRA which shall only be a Non-Profit Company established in terms of the Companies Act 71 of 2008’. [7] The St Francis Property Owners Association, which is the second respondent in the appeal, submitted an application to the appellant on 23 February 2 Section 152 of the Constitution provides: ‘Objects of local government (1) The objects of local government are (a) to provide democratic and accountable government for local communities; (b) to ensure the provision of services to communities in a sustainable manner; (c) to promote social and economic development; (d) to promote a safe and healthy environment; and (e) to encourage the involvement of communities and community organisations in the matters of local government. (2) A municipality must strive, within its financial and administrative capacity, to achieve the objects set out in subsection (1).’ 3 Section 153 of the Constitution provides: ‘Developmental duties of municipalities A municipality must- (a) structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community; and (b) participate in national and provincial development programmes.’ 2018 for the establishment of an SRA in a demarcated area of St Francis Bay.4 The application was supported by a majority of the affected ratepayers. The demarcated area, which includes a system of artificially created canals between the properties, is protected from the erosive and potentially flooding effects of the adjoining Indian Ocean by a spit of beach sand. The spit had, for several years, been diminishing in extent due to the forces of nature. Many property owners in the area were concerned that the spit’s likely eventual disappearance would expose their properties to flooding and other damage. The municipality acknowledged the problem but was constrained to confess that it lacked the financial wherewithal to undertake effective measures to protect and restore the spit and the adjoining beach. [8] The second respondent’s primary object in seeking to have an SRA established by the municipality was to raise the necessary funding to address the perceived danger and create the mechanism through which that might be achieved. The other objects of the intended SRA were the improved maintenance of the municipal road network and the installation and maintenance of a CCTV security camera network in the demarcated area. [9] The third respondent is St Francis Property Owners NPC, a non-profit company established in terms of the Companies Act, 2008. The company was set up at the instance of the second respondent during 2016, when it was initially sought to establish an SRA in the area, as the management body of the proposed SRA. The initial endeavour was frustrated because it became apparent that majority support from the owners in the larger area of Ward would not be obtainable and that the appellant’s rates policy did not make provision for SRAs. 4 It appears that the application was formally submitted in the name of the third respondent, a non-profit company established at the instance of the second respondent. That was probably done by reason of the effect of the definition of ‘Applicant’ in paragraph 1 of Part A of the appellant’s rates policy: ‘“Applicant” means any Owner who makes an application for the establishment of a SRA in accordance with the provisions of this Part, or when a Management Body is established in terms hereof, any reference to the “Applicant” means the said “Management Body”’. I shall give a fuller description of the second respondent later in this judgment. The third respondent was again utilised as the proposed management body for the purpose of the application submitted by the second respondent to the municipality in February 2018. The insertion of Part A into the appellant’s rates policy appears to have been precipitated by the appreciation that a framework was required for the municipality to be able to process and determine the second respondent’s application. [10] After the completion of a process, which the appellant’s municipal council was satisfied complied with the prescribed requirements in Part A of the rates policy, the council acceded to the application for the establishment of the SRA, with the third respondent being confirmed as the area’s management body. The council decision to approve the establishment of the SRA was made at a special sitting on 23 May 2018, convened so that the establishment of the SRA could be accommodated in the municipality’s budget for the financial year commencing on 1 July 2018. As a result of the decision, a special rate amounting to a surcharge of 25 percent on the normal rate has been levied by the appellant on the owners of property in the demarcated area with effect from 1 July 2018. [11] On 26 September 2018, a newly constituted body called the St Francis Bay (Ward 12) Concerned Residents’ Association5 (the first respondent) instituted an application in the High Court to set aside the decision by the appellant’s municipal council to establish the SRA. Ward 12 extends well beyond the predominantly affluent area demarcated for the SRA. The first respondent’s papers did not disclose what proportion of its membership is comprised of owners or residents within that part of Ward 12 demarcated for the SRA, as distinct from those owning property or living in the parts of the ward outside the SRA. 5 An unsigned copy of the body’s constitution was annexed to the founding affidavit. The unsigned document provided for signature thereof to be effected on an unspecified date in 2018. [12] The first respondent sought the following substantive relief from the court: 1. An order that Part A of the municipality’s rates policy be declared ‘unconstitutional as being in conflict with section 22 of the [PRA]’. (Emphasis supplied.) 2. An order that the decision of the municipal manager or other municipal officials to permit the second and/or third respondents to conduct and manage the process in respect of which the decision to declare the special rating area was made be reviewed and set aside; alternatively, that the failure of the municipality’s officials to conduct and manage the process be reviewed and set aside. 3. An order that the decision of the municipal council on 23 May 2018 to declare the special rates area be reviewed and set aside, alternatively be declared to have been unlawful and void.6 The appellant opposed the application. The matter was argued before Mjali J, who granted an order against the municipality in the terms sought in the notice of motion. The appeal comes to this Court with leave granted by the court a quo. [13] The conceptual premise upon which the relief was sought by the first respondent was what it contends to be the import of s 22 of the PRA, properly interpreted. The first respondent contended that as s 22 of the PRA empowered the municipality to establish special rating areas, it was therefore only the municipality, and nobody else, that could initiate and run the process leading up to the establishment of such areas. [14] If the argument were sound, it would have to follow that Part A of the appellant’s rates policy was void by reason of its inconsistency with the enabling provision. Any decision of the municipal council following upon the process 6 Just as the appellant’s counsel did in argument, I have rearranged the order in which the relief sought is described to create a more logical sequence than the arrangement in which it was set out in the notice of motion. conducted by the second respondent in accordance with the framework provided by Part A would then fall to be vitiated because it was taken in terms of a legally invalid policy. The municipality would be unable to lawfully levy special rates, if that were done in terms of a rates policy that was void in relevant part. Were the first respondent to have made out a case that Part A was void, the second and third of the aforementioned heads of relief would accordingly fall to be granted consequentially; aliter, if it had not. [15] Ironically, the first respondent adduced evidence in its replying papers attacking the council’s decision to establish the SRA on the basis that the process had not been compliant with Part A of the appellant’s rates policy and that the public consultation process in that connection had fallen short of the relevant prescripts in the Systems Act.7 That evidence was irrelevant, however. It is trite that in motion proceedings the papers stand as the pleadings and evidence do in action proceedings. The relevance of the evidence offered is dependent on its cogent connection with the relief being sought which, in an application, is defined in the notice of motion. [16] In their argument in this Court, the first respondent’s counsel attacked the municipal council’s decision on a number of grounds unrelated to the case made out in the founding papers, including the alleged failure by the council and the second respondent to comply with the impugned part of the rates policy. The appellant’s counsel, understandably, objected to those arguments being entertained because they were unrelated to the proper interpretation of s 22 of the PRA and the legal validity of Part A of the rates policy. [17] Insofar as the first respondent’s counsel sought to rely on CUSA v Tao Ying Metal Industries and Others,8 to argue issues outside the papers, this was 7 Notwithstanding an averment by the deponent to its replying papers that ‘the Applicant’s [ie first respondent’s] case is focussed on the content of the By-Law and the manner in which the SRA came into existence, not the public participation phase thereof’. 8 CUSA v Tao Ying Metal Industries and Others [2008] ZACC 15 (18 September 2008); 2009 (2) SA 204 (CC); 2009 (1) BCLR 1 (CC) ; [2009] 1 BLLR 1 (CC) ; (2008) 29 ILJ 2461 (CC) para 68. misplaced. In CUSA it was held that ‘where a point of law is apparent on the papers but the common approach of the parties proceeds on a wrong perception of what the law is, a court is not only entitled, but is in fact also obliged, mero motu, to raise the point of law and require the parties to deal therewith.’ That was not the position here. In the current matter, the extraneous legal issues that the respondent’s counsel sought to argue were dependent on fact-based determinations for which a case had not been made out in the founding papers. [18] The appeal will therefore be determined strictly with reference to the case advanced by the first respondent in its founding papers. The essence of it was the contention that the appellant had unlawfully delegated its role in terms of s 22 of the PRA to the second and third respondents. It argued that Part A of the appellant’s rates policy was unconstitutional because its provisions were directed at facilitating or enabling the allegedly unlawful delegation of the appellant’s governmental functions and responsibilities to persons or bodies outside government. [19] I turn then to examine Part A of the appellant’s rates policy. It provides that any owner of rateable property or a non-profit company established for the purpose of administering an SRA may apply to the municipal council for the establishment of an SRA. The requirements with which such an application must comply are set forth in paragraphs 4 – 6 of Part A. In summary: 1. The application must be in writing in such form as the municipality might prescribe. 2. It must be submitted within nine months after the date of the holding of a public meeting that the applicant is required to convene to consider the proposal. 3. The applicant is required (i) to publish notice of the forementioned meeting in at least two daily newspapers circulating in the area of the proposed SRA, prominently place posters within the area of the SRA advertising the meeting and (ii) give written notice of it individually to all of the owners of rateable property within the proposed SRA. 4. The forementioned notice must state the purpose of the meeting and provide details of the place, date and time of the meeting, it must also state where _ (i) the proposed 5-year SRA business plan, (ii) the memorandum (or draft memorandum) of incorporation of the proposed management body, and (iii) the motivational report compiled in compliance with paragraph 4.3.6 will be available for inspection. It must also identify the municipal offices at which objections to the SRA business plan may be lodged, and state by when that must be done. 5. The proposed SRA business plan is required to address the following matters: 5.1 the services to be provided to improve or upgrade the SRA; 5.2 the manner in which the proposed improvements or upgrades will be implemented; 5.3 the timescale for achievement of the improvements or upgrades; 5.4 ‘an implementation program’ setting out ‘the implementation milestones, dates and responsibilities’; 5.5 ‘the aggregate SRA rates that are proposed to be levied by the municipality’; 5.6 payment of any administration fee that the municipality may from time to time determine’. 6. The memorandum of incorporation of the proposed management body must provide – 6.1 that only owners of property within the proposed SRA may be members of the company, and 6.2 that each owner of each rateable property within the proposed SRA shall have one vote. (If an application is approved, the municipality is entitled, in terms of paragraph 11 of Part A, to nominate a political representative to attend and participate, but not vote, at meetings of the management body.) 7. The prescribed motivation report is required to contain: 7.1 a list of all rateable properties in the proposed SRA, differentiated by category in accordance with s 8(2) of the PRA, with particulars of their owners and municipal valuation roll values; 7.2 a diagram clearly indicating the boundaries of the proposed SRA; 7.3 an executive summary of the improvement or upgrade proposed for the SRA as set out in the SRA business plan; 7.4 an explanation of how the proposed improvement or upgrade is linked to the geographical area of the SRA; 7.5 an explanation of why the proposed SRA will not reinforce existing inequities in the development of the municipal area; and 7.6 an explanation of how the SRA, if it were established, would be consistent with the municipality’s integrated development plan. 8. The advertised meeting must be held, ‘chaired by a suitably qualified and experienced person’ and attended by a representative of the municipality. Minutes must be kept of the proceedings which must be available for inspection by members of the local community. [20] An application to the appellant’s municipal council for the establishment of an SRA must evidence that all of the forementioned requirements have been complied with. It must also be accompanied by copies of the draft agreements (if any) that the applicant considers necessary for the proposed management body and the municipality to enter into in order for the submitted SRA business plan to be successfully implemented. The applicant is required to provide proof, to the satisfaction of the municipality, that a majority of owners of rateable property within the proposed SRA have approved the proposed business plan and consented to the establishment of the proposed SRA. [21] Part A of the appellant’s rates policy further provides that any owner of property within the proposed SRA and any member of the ‘local community’9 may submit written objections to the establishment of the SRA and provides for a four-week window of opportunity after the application has been lodged in which they can do so. [22] It is clear that all of the forementioned requirements of the appellant’s rates policy were directed at achieving compliance with the prescripts of s 22 of the PRA. [23] Section 22 does not contain any prescription concerning the initiation of the process to establish an SRA. All that it does is prescribe, in broad terms, the nature of consultation that must precede any decision by a municipal council to 9 ‘Local community’ bears the meaning defined in s 1 of the PRA, viz. ‘(a) … that body of persons comprising (i) the residents of the municipality; (ii) the ratepayers of the municipality; (iii) any civic organisations and non- governmental, private sector or labour organisations or bodies which are involved in local affairs within the municipality; and (iv) visitors and other people residing outside the municipality who, because of their presence in the municipality, make use of services or facilities provided by the municipality; and (b) includes, more specifically, the poor and other disadvantaged sections of such body of persons’. establish an SRA10 and the considerations that a council must weigh in making the decision.11 [24] The provision, in relevant part, is conceptually, rather than procedurally, prescriptive. It gives municipalities a relatively free hand in how to go about establishing SRAs. Obviously, municipalities are obliged, in relation to s 22(2)(a), to comply with the Systems Act concerning public participation and notice. The detail of what is required in this regard in given cases will necessarily vary depending on the circumstances. [25] Part A of the appellant’s rates policy plainly contemplates that the initiating steps for the establishment of an SRA would ordinarily be undertaken by the affected ratepayers, culminating in an application by those ratepayers to the municipality. It does nevertheless also record that its provisions do not detract from the entitlement of the municipality itself to initiate the establishment of such a rating area. [26] It is evident from s 22(2)(b) of the PRA that, irrespective of the identity of the initiating party, an SRA can only be established with the support of more than half of the ratepayers who will be liable to pay the additional rate.12 This highlights that the establishment of an SRA will always entail a cooperative effort between the legislative and executive branches of a municipality, of the one part, and the affected ratepayers, of the other. A municipality is not empowered to unilaterally foist an SRA on a community of ratepayers, the majority of whom are opposed to its establishment. [27] The construction of s 22 for which the first respondent contends is fundamentally dependent on giving the word ‘municipality’ wherever it appears 10 See s 22(2) of the PRA. 11 See s 22(3) and (4) of the PRA. 12 Section 22(2)(b). It may be gleaned from the rates policies of certain other municipalities that the measure of required support from affected ratepayers is sometimes fixed even higher than a simple majority. The rates policies of other municipalities are published online as contemplated by s 21B of the Systems Act. in the provision a limited meaning, restricted only to the legislative and executive manifestations of the concept. The word, however, has a wider import; not only in ordinary English, but also in the specially defined language used in the suite of local government legislation enacted between the years 1998 and 2004, of which the PRA is an integral component. The suite comprises the Local Government: Municipal Structures Act 117 of 1998, the Systems Act, the Local Government: Municipal Finance Management Act 56 of 2003 (the MFMA) and the PRA. [28] This Court held in South African Property Owners Association v Council of the City of Johannesburg Metropolitan Municipality and Others,13 that ‘[t]he three Acts [the judgment omitted Act 117 of 1998] must be read together as they form part of the suite of legislation that gives effect to the new system of local government’.14 [29] Section 2(b) of the Systems Act provides that a municipality consists of (i) the political structures and administration of the municipality; and (ii) the community of the municipality. The conceptualisation of ‘municipality’ in the Systems Act is consistent with the import of the word in ordinary English usage. The primary definition of ‘municipality’ given in The Shorter Oxford English Dictionary 3ed is ‘A town, city, or district possessed of privileges of local self- government, also applied to its inhabitants collectively’. [30] The definition of ‘municipality’ originally contained in s 1 of the PRA applied the definition in s 2 of the Systems Act. It was deleted by s 1(g) of the Local Government: Municipal Property Rates Amendment Act 29 of 2014, without substitution. Bearing in mind the integral relationship of the respective 13 South African Property Owners Association v Council of the City of Johannesburg Metropolitan Municipality and Others [2012] ZASCA 157; 2013 (1) SA 420 (SCA); 2013 (1) BCLR 87 (SCA); [2013] 1 All SA 151 (SCA) para 8. 14 The judgment took the term ‘suite of legislation’ from the preamble to the Systems Act, which describes that statute as ‘an integral part of a suite of legislation that gives effect to the new system of local government’. See also Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd 2017 (4) SA 272 (SCA) para 1. statutes, there is every reason to interpret the language used in them consistently unless the context requires otherwise. [31] Section 22 of the PRA contains nothing that would prevent the legislative or executive organs of a municipality of their own initiative establishing an SRA. In the ordinary case, however, it would only be ratepayers dissatisfied with the level of municipal services being delivered, and willing to pay a premium on their rates to improve the position, who would agitate for the creation of an SRA in their local area. Those ratepayers, collectively, would be the obvious persons to (i) decide how their interests would be best served by the establishment of an SRA, (ii) identify the issues it should address and (iii) devise a business plan directed at achieving the desired improvements within a budget that they were willing to finance. Giving the potentially affected ratepayers an initiating role in the process of establishing SRAs would therefore not only be pragmatic, it would also be a way of fulfilling a municipality’s obligation, in terms of s 152(2) of the Constitution, to strive to achieve one of the important objects of local government, viz ‘to encourage the involvement of communities and community organisations in the matters of local government’.15 [32] In contrast, construing s 22 in the manner contended for by the first respondent would be to place already resource-challenged local authorities under an additional administrative burden of having to identify areas that might benefit from the establishment of an SRA, canvassing the potentially affected ratepayers and running some form of electoral process to determine whether the statutorily required level of support for its establishment could be achieved. The exercise, which _ as the initial attempt at establishing an SRA in a larger area in this case illustrated _ could be abortive, and it would inevitably come at a cost to the general body of ratepayers and members of the local community, most of whom 15 Section 152(1)(e) of the Constitution. would have little interest in the establishment of SRAs where their properties were not situated. [33] The respondent appears not to have considered that the administrative burden that its construction of s 22 would place on municipalities would come at a cost, which municipalities that are finding it impossible to deliver services at the desired levels are unlikely to be able to afford. It is a construction that would thwart the objective that the legislature clearly had in mind and, would be antagonistic to the purposive approach enjoined by modern principles of statutory construction.16 [34] The appellant’s rates policy on the establishment of SRAs does not abrogate the municipality’s function. It provides for the municipality to play a participatory and supervisory role at every step of the way. [35] In its founding papers, the first respondent also attacked the decision by the appellant’s municipal council to establish the SRA because it was made subject to certain amendments to the business plan that was submitted in support of the application. It contended that the municipality’s determination should, in the circumstances, have been deferred to enable further public consultation in terms of s 22(2) of the PRA. [36] There is no merit in the point. Firstly, it assumes the validity of Part A of the appellant’s rates policy and is consequently at odds with the essence of the first respondent’s case, which was predicated on a contention to the contrary. Secondly, and in any event, the amendments were not material. They did not affect the amount of the extra levy that the affected ratepayers would have to pay, or the nature of the upliftment projects that the SRA was established to tackle. As pointed out by this Court in Kouga Municipality v Bellingan and Others,17 16 Cf Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 29. 17 Kouga Municipality v Bellingan and Others [2011] ZASCA 222; 2012 (2) SA 95 (SCA); [2012] 2 All SA 391 (SCA) para 9. ‘… not every change has to be advertised otherwise the legislative process would become difficult to implement’. [37] Finally, the first respondent attacked the legality of the provisions in the appellant’s rates policy providing for the establishment of a management body for an SRA, and the municipality’s contractual relationship with it. Its primary contentions were that the concept of a management body was irreconcilable with s 22(3)(d) of the PRA which provides that a municipality may establish a consultative and advisory forum for the improvement and upgrading of an area that has been established as an SRA. However, a municipality is under no obligation to do so. A management body functions as an implementation agency of the municipality in respect of the business plan approved by the council for the purposes of satisfying the requirements of s 22(3)(b) and (c) of the PRA. It is not a consultative and advisory body of the character contemplated by s 22(3)(d). [38] Secondly, it was argued that the financial agreement between the municipality, represented by its accounting officer, and the management body _ an arrangement of the sort contemplated by paragraph 13 of Part A of the appellant’s rates policy _ was at odds with the MFMA, which made no provision for the ‘delegation of the accounting officer’s functions to a private body such as the SRA Management Body’. In other words, the payment by the municipality of the special rates to the management body for use in terms of the approved business plan constituted an impermissible delegation of the appellant’s accounting officer’s powers and functions. [39] The responsibilities of the accounting officer of a municipality are regulated by Chapter 8 (ss 60-79) of the MFMA. They include revenue management,18 expenditure management19 and budget implementation.20 An accounting officer is not, however, precluded by the definition of his or her 18 Section 64 of the MFMA. 19 Section 65 of the MFMA. 20 Section 69 of the MFMA. responsibilities, or the limitations on his powers of delegation,21 from transferring funds to organisations and bodies outside government for municipal purposes. The transfer of funds by the appellant’s accounting officer to the management body of the SRA is permitted by s 67 of the MFMA, subject to the prescripts of that provision.22 [40] It follows that the first respondent failed to make a case for the relief that it sought in the court below, and the judge at first instance therefore erred by granting it. The appeal will accordingly be upheld. The parties accepted that in that event there should be no order as to costs.23 [41] An order will issue in the following terms: 1. The appeal is upheld. 21 Section 79 of the MFMA. 22 Section 67 provides: ‘Funds transferred to organisations and bodies outside government (1) Before transferring funds of the municipality to an organisation or body outside any sphere of government otherwise than in compliance with a commercial or other business transaction, the accounting officer must be satisfied that the organisation or body- (a) has the capacity and has agreed- (i) to comply with any agreement with the municipality; (ii) for the period of the agreement to comply with all reporting, financial management and auditing requirements as may be stipulated in the agreement; (iii) to report at least monthly to the accounting officer on actual expenditure against such transfer; and (iv) to submit its audited financial statements for its financial year to the accounting officer promptly; (b) implements effective, efficient and transparent financial management and internal control systems to guard against fraud, theft and financial mismanagement; and (c) has in respect of previous similar transfers complied with all the requirements of this section. (2) If there has been a failure by an organisation or body to comply with the requirements of subsection (1) in respect of a previous transfer, the municipality may despite subsection (1) (c) make a further transfer to that organisation or body provided that- (a) subsection (1) (a) and (b) is complied with; and (b) the relevant provincial treasury has approved the transfer. (3) The accounting officer must through contractual and other appropriate mechanisms enforce compliance with subsection (1). (4) Subsection (1) (a) does not apply to an organisation or body serving the poor or used by government as an agency to serve the poor, provided- (a) that the transfer does not exceed a prescribed limit; and (b) that the accounting officer- (i) takes all reasonable steps to ensure that the targeted beneficiaries receive the benefit of the transferred funds; and (ii) certifies to the Auditor-General that compliance by that organisation or body with subsection (1) (a) is uneconomical or unreasonable.’ 23 Cf. Biowatch Trust v Registrar, Genetic Resources, and Others [2009] ZACC 14; 2009 (6) SA 232 (CC) ; 2009 (10) BCLR 1014 (CC) para 21-25. 2. The order of the court a quo is set aside and substituted with the following: ‘The application is dismissed with no order as to costs’. ___________________ A G BINNS-WARD ACTING JUDGE OF APPEAL Appearances: Appellant’s counsel: A Byleveld SC and T Rossi Instructed by: McWilliams & Elliot Inc Gqeberha Webbers Bloemfontein First Respondent’s counsel: N J Mullins SC and G. Joubert Instructed by: Richardt van Rensburg Inc Graaff Reinet Honey 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 December 2023 Status: Immediate 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 Kouga Local Municipality v St Francis Bay (Ward 12) Concerned Residents’ Association and Others (Case no. 1056/2022) [2023] ZASCA 168 (1 December 2023) ___________________________________________________________________________ On 23 May 2018, the Kouga Local Municipality resolved to approve an application for the establishment of a special rating area (SRA) in part of St Francis Bay. The application was submitted by the St Francis Bay Property Owners’ Association (the second respondent) and the St Francis Bay Property Owners NPC (the third respondent) in the manner contemplated by the provisions of Part A of the Municipality’s rates policy. The St Francis Bay (Ward 12) Concerned Residents’ Association (the first respondent) thereafter applied in the Eastern Cape Division (Gqeberha) of the High Court for orders (i) declaring that part A of the Municipality’s rates policy was ‘unconstitutional as being in conflict with section 22 of the Local Government: Municipal Property Rates Act 6 of 2004’, (ii) reviewing and setting aside the decision of the municipal manager or other municipal officials to permit the second and/or third respondents to conduct and manage the process leading up to the municipal council’s decision to establish the SRA and (iii) reviewing and setting aside the municipal council’s decision to establish the SRA. The essence of the first respondent’s case was that the Municipality had unlawfully abrogated its statutory responsibilities and functions by delegating them to the second and/or third respondents. The High Court upheld the first respondent’s application and made the orders sought by the first respondent in its notice of motion. The High Court granted the Municipality leave to appeal from its judgment to the Supreme Court of Appeal (SCA). Today the SCA upheld the appeal and made an order setting aside the orders of the High Court and replacing them with an order dismissing the application by the first respondent, with no order as to costs. The SCA held that there was no merit in the first respondent’s contention that Part A of the Municipality’s rates policy was inconsistent with section 22 of the PRA. The first respondent’s construction of the provision was held to be premised on too narrow an interpretation of the word ‘municipality’. The SCA held that Part A of the Municipality’s rates policy effectively facilitated compliance with section 22 of the PRA. The Court rejected the first respondent’s contention that the Municipality had abrogated its statutory functions and responsibilities. On the contrary, the Municipality played a participatory and supervisory role at every stage of the process preceding the establishment of the SRA. The financial agreement concluded between the Municipality and the third respondent in respect of the management of the SRA was compliant with s 67 of the Local Government: Municipal Finance Management Act 56 of 2003. The SCA declined to entertain argument by the first respondent’s counsel on issues for which a proper foundation had not been laid in the first respondent’s founding papers. --ends--

1877

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 426/10 In the matter between: RUDZANI NETSHITUKA Appellant and JOYCE MUNYADIZWA NETSHITUKA First Respondent MASTER OF THE HIGH COURT Second Respondent ESTATE OF MASEWA JOSEPH NETSHITUKA Third Respondent MUTHUFELA NETSHITUKA Fourth Respondent DIANA NETSHITUKA Fifth Respondent MINISTER OF THE DEPARTMENT OF HOME AFFAIRS Sixth Respondent Neutral citation: Netshituka v Netshituka (426/10) [2011] ZASCA 120 (20 July 2011) Coram: MPATI P, BOSIELO, TSHIQI, SERITI JJA and PETSE AJA Heard: 10 May 2011 Delivered: 20 July 2011 Summary: Customary Law ─ whether a civil marriage contracted between a partner to a customary union and another man or woman during the subsistence of that union is valid. Succession ─ validity of will ─ whether last will and testament of testator valid. _____________________________________________________________________ ORDER On appeal from: Limpopo High Court (Thohoyandou) (Hetisani J sitting as court of first instance.): 1. The appeal is upheld in part. 2. That part of the order of the court below dismissing the application to declare invalid the marriage between the deceased and the first respondent is set aside and substituted with the following: „The marriage contracted between the first respondent and the deceased on 17 January 1997 is declared null and void.‟ 3. The costs order made by the court below is set aside. 4. The costs of the appeal and the costs of the proceedings in the court below are to be paid by the third respondent. 5. The appeal is otherwise dismissed. ___________________________________________________________ JUDGMENT PETSE AJA (MPATI P, BOSIELO, TSHIQI and SERITI JJA concurring) [1] The appellant (as third applicant in the court a quo), together with two other persons who do not feature in this appeal, instituted proceedings against the respondents in which they sought, in the main, an order declaring: (a) the marriage between the first respondent and the late Mr Masewa Joseph Netshituka, contracted on 17 January 1997, null and void ab initio, and (b) the last will and testament of the late Masewa Joseph Netshituka, executed on 20 November 2007, invalid. The late Masewa Netshituka (the deceased) died on 4 January 2008. [2] The proceedings were opposed by the first and third respondents only. The court a quo (Hetisani J) dismissed the application with costs. This appeal is with its leave. I shall, for the sake of convenience, refer to the first and third respondents simply as the respondents. [3] A brief factual background giving rise to the proceedings in the court a quo is necessary. Tshinakaho Netshituka, who was the first applicant before the court a quo but has since died, averred in her founding affidavit that she was married to the deceased by customary rites on 1 December 1956. This marriage was not registered with the Department of Home Affairs. I shall, for convenience, refer to her as „Tshinakaho‟. [4] According to Tshinakaho the deceased was also married by customary rites to three other women, namely Masindi, Martha and Diana Netshituka, whose marriages were likewise not registered. A number of children were born of these customary marriages, the appellant being one of them. She was born of the union between the deceased and Masindi. The first respondent was also married to the deceased by civil rites, the marriage having been contracted on 17 January 1997. [5] Following the death of the deceased the appellant and her erstwhile co-applicants learnt from the first respondent that the deceased had executed a will and that the first respondent had been appointed executrix of his estate. Upon obtaining a copy of the will they took a decision, on legal advice, to contest the validity of both the will and the deceased‟s marriage to the first respondent. [6] The validity of the marriage was contested on the grounds that it fell foul of the provisions of s 22(1) of the Black Administration Act 38 of 1927 (the Act), read with s 1(a) of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988 regard being had to the fact that Tshinakaho‟s customary marriage and those of the other three customary law wives to the deceased, respectively, were recognised in terms of ss 2(1) and (3) of the Recognition of Customary Marriages Act 120 of 1998. The validity of the will was contested on account of the deceased‟s chronic state of ill-health and alleged incapacity to manage his own affairs at the time the will was executed. It was contended that this state of affairs was borne out by the fact that the deceased had (i) purported to bequeath property of which he was not the owner; (ii) purported to dispose of only a half-share of what he believed was his and the first respondent‟s joint estate; and (iii) the alleged vagueness of some of the provisions of the will. The validity of the marriage [7] The first respondent averred, in her answering affidavit, that she married the deceased by civil rites on 17 January 1997 in community of property, at a time when there was no impediment to her contracting a lawful marriage with him. She responded as follows to the allegation that Tshinakaho and three other women were married to the deceased by custom: „I deny the existence of the customary marriage and more specifically that it existed at the time when the deceased and I got married. The deceased was married to Martha Mosele Netshituka (born Lebona) and got divorced from her on 5 July 1984.‟1 It was accordingly contended, on her behalf, that when she married the deceased on 17 January 1997 the latter was not a partner „to a valid existing customary union‟ in that any customary union to which the deceased may previously have been a partner „was terminated by force of law in accordance with section 22 of the Act when he married Martha by civil rites‟. It was submitted further that s22(2) of the Act, which provided that no person who was a partner in a customary union „shall be competent to contract a marriage [with another woman] during the subsistence of that union‟, had no application to the first respondent‟s marriage to the deceased. This was because whatever customary union may have subsisted was rendered invalid when the deceased married Martha Mosele Netshituka (Martha) by civil rites. [8] For these submissions counsel for the respondents relied on the decision of this court in Nkambula v Linda2 where it was held that: „[a] man who is a partner to a customary union and subsequently contracts a civil marriage with another woman during the subsistence of the customary union must be regarded by this act as having deserted his wife, and under these circumstances the woman to the customary union is justified in leaving her husband without rendering her guardian liable for a refund of the lobola [dowry].‟3 Earlier in the judgment this court held that the Act „does not contemplate the existence side by side of a civil marriage and a customary union‟.4 1 A copy of the decree of divorce was annexed to the answering affidavit. It is not clear from the papers whether Martha Mosele Netshituka is the same person to whom Tshinakaho referred in the founding affidavit as one of the deceased‟s customary law wives. 2 Nkambula v Linda 1951 (1) SA 377(A). 3 At 384 C-D. 4 At 382 G. [9] At the time the deceased would have married Martha by civil rites s 22(1) of the Act read thus: „No male [African] shall, during the subsistence of any customary union between him and any woman, contract a marriage with any other woman unless he has first declared upon oath, before the magistrate or native commissioner of the district in which he is domiciled, the name of every such first-mentioned woman; the name of every child of any such customary union; the nature and amount of the movable property (if any) allotted by him to each such woman or house under native custom; and such other information relating to any such union as the said official may require.‟ The subsection thus permitted a man who was a partner in a customary union to contract a civil marriage with another woman provided he complied with its provisions. [10] A number of academic writers and commentators hold the view that the effect of Nkambula was that where one partner in a customary union contracted a civil marriage with someone other than his or her partner in the union the civil marriage automatically terminated the customary union.5 In Nkambula the respondent‟s customary law wife, Lena, left him after he had entered into a civil marriage with another woman. The respondent claimed that Lena had, by leaving him, dissolved the customary union, thereby entitling him to a refund of the lobola he had paid for her. The Commissioner‟s Court upheld his claim and ordered Lena to return to him, failing which her father (the appellant) was to 5 I P Maithufi „the recognition of Customary Marriages Act of 1998: A Commentary‟ (2000) 63 THRHR 509; I P Maithufi & G B M Moloi „The Need for the Protection of Rights of Partners to Invalid Relationships: A Revisit of the “Discarded Spouse” Debate‟ (2005) 38 De Jure 144; R M Jansen „Multiple marriages, burial rights and the role of lobola at the dissolution of the marriage‟ (2003) 28(1) Journal for Juridical Science RG; A West „Black Marriages‟: The Past and the Present (2005) 7 South African Deeds Journal 10. return the lobola as prayed, with costs. On appeal to it the Native Appeal Court dismissed the appeal and ordered further that upon failure of Lena to return to her husband within one month „the customary union is dissolved‟. The President of the appeal court, however, viewing the matter as one of importance, referred the following question for this court‟s consideration: „Whether or not a man who is a partner to a customary union and subsequently contracts a civil marriage with another woman during the subsistence of the customary union can be regarded as having deserted his customary union wife, and whether under these circumstances the woman to the customary union is justified in leaving her husband without her guardian becoming liable for a refund of the lobola.‟ The question was answered in the affirmative (see the excerpt from this court‟s judgment in paragraph 8 above). [11] It appears to have been common cause before the court below that in the instant matter the customary law wives of the deceased never left him after he had married Martha by civil rites, but continued with their roles as his customary law wives. The question to be answered in these circumstances is: What was the status of the relationship between the deceased and his „deserted‟ customary law wives after his civil marriage to Martha was terminated by divorce? [12] In customary law, where a husband has deserted his wife his offence is not irreparable and does not give her the right to refuse to return to him when he comes to phuthuma6 her. It was held in Bobotyane 6 The husband is obliged to „phuthuma‟ (fetch) his wife who has left him, whether through his fault or hers, unless he intends to abandon her. (See Bekker Seymour’s Customary Law in Southern Africa 5 ed (1989) p181–195.) v Jack 1944 NAC (C & O) 97 that customary law „does not recognise a dissolution of the union by mere desertion of the wife or husband, by abandonment, or even by bare repudiation, for these are all eventualities provided for by the lobola cattle; the husband can always “putuma” his wife after any length of absence; the wife can always return to her husband‟s kraal and resume her former status‟.8 But on the authority of Nkambula a customary law wife who has left her husband as a result of his having contracted a civil marriage with another woman would be entitled to refuse to return to him when he goes to phuthuma her. She would be entitled to assert that he had terminated the union between them. It seems to me, however, that nothing would prevent her from returning to him if she was prepared to do so. No fresh lobola negotiations would have to be undertaken because customary law „does not recognize a dissolution of the union by mere desertion‟.9 The husband might be called upon by her guardian to pay a beast or more as a penalty for his „misdeed‟.10 [13] In the present matter the deceased did not have to phuthuma his customary law wives because they never left him after he had married Martha. His continued cohabitation with them after the divorce was clear evidence of a husband who had reconciled with his „previously deserted‟ wives. And in his last will and testament, the validity of which I shall consider presently, the deceased refers to Tshinakaho, Diana and the first respondent as his first, second and third wives respectively. What is 7 Bobotyane v Jack 1944 NAC (C&O) 9. 8 At p11. 9 Bobotyane v Jack, supra. 10 Bekker Seymour’s Customary Law in Southern Africa, fn 6 above, at p191. See also T W Bennett A Sourcebook of African Customary Law for Southern Africa (1991) 261–262. According to Bennett the term „phuthuma‟ is used by the Southern Nguni people, but it was not suggested in this court that the convention is not practiced by the nation/s of which the deceased and his customary law wives were members. important, in my view, is the intention of the parties, which can be inferred from their conduct of simply continuing with their relationships and roles as partners in customary unions with the deceased after the divorce. Their conduct clearly indicated that to the extent that the deceased‟s civil marriage to Martha may have terminated his unions with his customary law wives, those unions were revived after the divorce. [14] The next question is whether it was competent for the deceased to contract a civil marriage with the first respondent during the subsistence of the customary unions with Tshinakaho and Diana Netshituka. Section 22 of the Act was amended by the Marriage and Matrimonial Property Law Amendment Act11, which came into operation on 2 December 1988. After the amendment subsections (1) and (2) provided: „(1) A man and a woman between whom a customary union subsists are competent to contract a marriage with each other if the man is not also a partner in a subsisting customary union with another woman. (2) Subject to subsection (1), no person who is a partner in a customary union shall be competent to contract a marriage during the subsistence of that union.‟ Subsection (3) barred a marriage officer from solemnizing the marriage of an African „unless he has first taken from him a declaration to the effect that he is not a partner in a customary union with any woman other than the one he intends marrying‟. And in terms of the amended subsection (5) a man who made a false declaration with regard to the existence or otherwise of a customary union between him and any woman made himself guilty of an offence. A marriage officer could thus not solemnize a marriage where a man intended to marry a woman other than the one with whom he was a partner in an existing customary union. That, 11 3 of 1988. in my view, was the clear intention of the Legislature when it amended s 22 of the Act. [15] Subsections (1) to (5) of s 22 of the Act, as amended, were in force as at the date on which the civil marriage between the deceased and the first respondent was contracted. (The subsections were repealed by the Recognition of Customary Marriages Act,12 which came into operation on 15 November 2000). In Thembisile v Thembisile13 Bertelsmann J held that a civil marriage contracted while the man was a partner in an existing customary union with another woman was a nullity.14 It was not argued in this court that Thembisile was wrongly decided. It follows that the civil marriage between the deceased and the first respondent, having been contracted while the deceased was a partner in existing customary unions with Tshinakaho and Diana, was a nullity. The validity of the will [16] I turn now to the question whether the appellant and her erstwhile co-applicants discharged the onus that rested on them to establish on a balance of probabilities that the deceased was not in a sound mental state when he attested to his last will and testament on 20 November 2007. In support of the contention that the deceased was not in a sound mental state, Tshinakaho attached to her founding affidavit a copy of a medical report from Dr Chitate, a specialist physician attached to the Limpopo Mediclinic, and a memorandum from the Siloam Hospital. It is apparent from the medical report and memorandum that the deceased was chronically ill when he underwent treatment at the two institutions. There is, however, no indication that his mental capacity was in any way 12 120 of 1998. 13 Thembisile & another v Thembisile & another 2002 (2) SA 209(T). 14 Para 32. impaired. On the contrary, Dr Chitate‟s report states explicitly that „despite being chronically physically ill‟ the deceased was „mentally normal and fully conscious, aware of his surroundings‟ and „oriented in time, place and person‟. [17] In his report Dr Chitate states, however, that „episodes of hypoglycaemia had occurred and, if these recurred after discharge, could have led to a deterioration in [the deceased‟s] mental function‟. According to the report Dr Chitate examined and treated the deceased from 12 to 16 November 2007. The memorandum from the Siloam Hospital covers the period 30 November 2007, the date of his admission, to 4 January 2008 when he passed away. No mention is made of the deceased‟s alleged mental incapacity in the memorandum. There is thus no evidence that when he attested to his last will and testament on 20 November 2007 the deceased was mentally incapacitated. The contention that he was, therefore, has no basis. [18] As to the allegation that the deceased purported to bequeath property of which he was not the owner and that therefore his will was invalid, counsel for the appellant conceded that even accepting this to be so it would not render the will invalid. Nor would it necessarily point to the deceased being mentally incapacitated. The same applies to the allegation of vagueness in respect of certain of the provisions of the will. We were in any event not referred to any provision which could be said to be vague. [19] There remains the issue of costs. Counsel for the appellant submitted that if the appeal succeeds the first respondent should pay the costs. On the other hand counsel for the respondents argued that it would be fair and equitable that any costs incurred in this matter be paid out of the deceased estate. I am satisfied that the argument on behalf of the respondents should prevail, for two principal reasons. First, the appellant has been partially successful. Second, the respondents were to my mind neither unreasonable nor frivolous in opposing the relief sought. [20] The following order is made: 1. The appeal is upheld in part. 2. That part of the order of the court below dismissing the application to declare invalid the marriage between the deceased and the first respondent is set aside and substituted with the following: „The marriage contracted between the first respondent and the deceased on 17 January 1997 is declared null and void.‟ 3. The costs order made by the court below is set aside. 4. The costs of the appeal and the costs of the proceedings in the court below are to be paid by the third respondent. 5. The appeal is otherwise dismissed. ____________________ XM Petse Acting Judge of Appeal APPEARANCES APPELLANT: PM van Ryneveld Instructed by Danie van Ryneveld Attorneys, Thohoyandou Symington & De Kok, Bloemfontein. RESPONDENTS: 1, 3, 4 and 5th GJ Scheepers Instructed by Booyens Du Preez & Boshoff Inc., Thohoyandou 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 20 July 2011 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Netshituka v Netshituka (426/2010) [2011] ZASCA 120 (20 July 2011) The Supreme Court of Appeal (SCA) upheld an appeal in part against an order of the Limpopo High Court, Thohoyandou. The appellant, Ms. Rudzani Netshituka, sought an order declaring (a) the marriage between the first respondent and the late Mr Masewa Joseph Netshituka (the deceased), null and void ab initio, and (b) the last will and testament of the deceased, in which he appointed the first respondent as executrix of his estate, invalid. The high court dismissed the application with costs. At the time of his death the deceased was married to three different women by customary rites. He was also married to the first respondent by civil rights which marriage was contracted on 17 January 1997. Following the death of the deceased, the appellant and her erstwhile co-applicants, decided to contest the validity of both the will and the deceased’s marriage to the first respondent. In resisting the appellant’s application the first respondent contended that the customary marriages between the deceased and the appellant’s erstwhile co- applicants were rendered invalid when the deceased married Martha Mosele Netshituka by civil rights which marriage was subsequently dissolved by divorce on 5 July 1984. Following such dissolution the deceased ‘resumed’ his customary marriage relationships with his customary law wives which were subsisting when he married Martha Mosele Netshituka by civil rights and consequently such unions were revived after the divorce. The question before the court was whether the deceased was competent to contract a civil marriage with the first respondent during the subsistence of the aforesaid customary unions. The court held that a civil marriage contracted while the man was a partner in an existing customary union with another woman was a nullity. Another question before the court was whether the appellant was able to prove on a balance of probabilities that the deceased was not of a sound mental state when he attested to his last will and testament. The appellant could not produce any medical report that supported these allegations. On the contrary, a medical report placed before the court stated that ‘despite being chronically physically ill’ the deceased was ‘mentally normal and fully conscious, aware of his surroundings’ and ‘oriented in time, place and person’. Therefore, the court held that there is no evidence that the deceased was mentally incapacitated when he attested to his last will and testament. For the reasons stated above the SCA upheld the appeal in part declaring the marriage between the first respondent and the deceased null and void.

3842

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 751/21 In the matter between: COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE FIRST APPELLANT MINISTER FOR TRADE, INDUSTRY AND COMPETITION SECOND APPELLANT SOUTH AFRICAN APPAREL ASSOCIATION THIRD APPELLANT APPAREL AND TEXTILE ASSOCIATION OF SOUTH AFRICA FOURTH APPELLANT SOUTHERN AFRICAN CLOTHING AND TEXTILE WORKERS UNION FIFTH APPELLANT and DRAGON FREIGHT (PTY) LTD FIRST RESPONDENT TIAN LE TRADING ENTERPRISE CC SECOND RESPONDENT NEW FEELING FASHION DESIGN (PTY) LTD THIRD RESPONDENT TINGTING SECRET BEAUTY (PTY) LTD FOURTH RESPONDENT HIQ PACIFIC TRADING CC FIFTH RESPONDENT FFB IMPORT-EXPORT CC SIXTH RESPONDENT CALLA TRADING (PTY) LTD SEVENTH RESPONDENT Neutral citation: The Commissioner for the South African Revenue Service and Others v Dragon Freight (Pty) Ltd and Others (case no 751/21) [2022] ZASCA 84 (7 June 2022) Coram: SCHIPPERS, PLASKET and HUGHES JJA and TSOKA and SALIE-HLOPHE AJJA Heard: 24 May 2022 Delivered: 7 June 2022 Summary: Administrative Law – review of decision to seize goods under s 88(1)(c) of the Customs and Excise Act 91 of 1964 (the Act) – transaction value of goods under-declared – decision lawful, reasonable and procedurally fair – interpretation of s 96(1)(a) of the Act – notice of legal proceedings – requirements peremptory – cause of action must be set out – notice in anticipation of decision not yet taken invalid. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Baqwa J sitting as court of first instance): The application for intervention by the Southern African Textile and Clothing Workers’ Union is struck from the roll with costs. Such costs shall include the costs of only one junior counsel. The appeal is upheld with costs, including the costs of two counsel where so employed. Such costs shall be paid by the respondents jointly and severally, the one paying the others to be absolved. The order of the high court is set aside and replaced by the following: ‘The application is dismissed. The applicants are directed to pay the costs of the application, including the costs of two counsel where so employed, jointly and severally, the one paying the others to be absolved.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Schippers JA (Plasket and Hughes JJA and Tsoka and Salie-Hlophe AJJA concurring) [1] The main issue in this appeal concerns the lawfulness of a decision taken by the first appellant, the Commissioner for the South African Revenue Service (the Commissioner, or SARS), to seize 19 containers of clothing (the goods), in terms of section 88(1)(c) of the Customs and Excise Act 91 of 1964 (the Act).1 The goods were seized on the basis that the respondents had under-declared their transaction value – the price actually paid for the goods when sold for export to this country – which enabled the respondents to pay less customs duty than they were lawfully required to pay. A related issue is whether the respondents complied with s 96(1) of the Act which proscribes the institution of legal proceedings against the Commissioner, unless the litigant delivers a written notice setting out its cause of action at least one month before instituting those proceedings. The appeal is before us with the leave of this Court. [2] The second appellant, the Minister of Trade, Industry and Competition (the Minister), intervened in an application by the respondents to review and set aside the decision by SARS on 13 August 2020, to seize the goods in terms of s 88(1)(c) of the Act (the impugned decision). The basic ground for the Minister’s intervention is that customs fraud, particularly in relation to clothing imported from China, is a systemic problem in South Africa. This problem is illustrated in the Minister’s affidavit: in 2018 the value of the exports of textiles and clothing goods from China to South Africa, as reported by the General Administration of 1 Section 88(1)(c) states that if goods are liable to forfeiture under the Act, the Commissioner may seize those goods. Customs of the People’s Republic of China (GACC) to the United Nations, was US$ 2.4 billion, whereas the value of the imports of textiles and clothing goods into South Africa from China, as reported by SARS to the United Nations, was US$1.5 billion – a difference of US$900 million, even though the two values should be substantially the same. Customs fraud has significantly contributed to the displacement of locally manufactured goods which has resulted in the loss of domestic production, market share, sales, profits and jobs. [3] The third appellant, the South African Apparel Association (SAAA), and the fourth appellant, the Apparel and Textile Association of South Africa (ATASA), are employers’ organisations registered under the Labour Relations Act 66 of 1995. They represent the labour interests of a large number of employers in South Africa in the clothing and textiles industry. They opposed the review application on the ground that the values or prices of the goods declared by the respondents on importation – some 1000% less than the prices of similar clothing declared to the GACC in a previous consignment imported by the respondents from the same suppliers – are unrealistic and unattainable. [4] The first respondent, Dragon Freight (Pty) Ltd (Dragon Freight), is a clearing agent. The second to seventh respondents imported the goods from China. Where appropriate, they are collectively referred to as ‘the respondents’. [5] The impugned decision was reviewed and set aside by Baqwa J in the Gauteng Division of the High Court, Pretoria (the high court). The court directed SARS to immediately release the goods upon payment of the applicable customs duties and fees, calculated in accordance with the respondents’ declared transaction values to SARS. The appellants were ordered to pay the costs of the application, jointly and severally. The factual background [6] This litigation has its origin in an earlier application which the respondents launched in the high court in November 2019, in which they successfully reviewed and set aside SARS’ decision to seize 11 containers of clothing (the first application). In that application, which was decided by Tuchten J, the respondents pre-emptively sought an order to review and set aside a decision by SARS to seize the goods, in the event of that decision being taken. However, they did not persist in seeking that order because it concerned, as they put it, ‘future importations and the containers were still on the water’. [7] It is not in dispute that the contents of the containers in the first application were the same as the contents of the 19 containers in the present case, namely clothing and textile goods imported from China, and that both consignments involved the same exporters and importers. The answering papers in the first application stated that SARS had approached the Chinese customs authorities for assistance concerning the clothing exported in that application. Tuchten J recorded in his judgment that when the first application was decided, the Chinese export authorities had not responded to the request for information, and that SARS might still be able to produce evidence to contradict the respondents’ version. [8] In order to counter customs fraud and other illegal activities, SARS uses a customs electronic system with built-in risk and identification analysis capabilities. This system utilises information furnished in, amongst others, customs declarations to identify potential risks. For example, the system compares the declared value of a product with the international price of the yarn used to produce the constituent materials of that product. A declared customs value lower than the risk price will automatically flag the consignment on the SARS system for further investigation. The 19 containers were so flagged and consequently detained under s 88(1)(a) of the Act, between 4 November and 20 December 2019. [9] The goods were detained by SARS because it suspected that the respondents had under-declared their value. SARS proceeded to investigate and engage with the respondents in order to determine whether the goods were liable to seizure. They were requested to complete SARS’ standard Trader Questionnaire – a request for information in terms of s 4 of the Act. The respondents were asked to furnish the following information: ‘8. How did the importer source this foreign supplier and establish a trading relationship? 9. Trips abroad to negotiate trade must be substantiated with a copy of the importers/buyers passport showing all his trips overseas to meet with the suppliers. Copies of all correspondence with the foreign supplier in terms of negotiating the price, quality and terms and conditions of sale must be presented.’ [10] The respondents did not answer questions 8 and 9. They simply replied that the importer acquired suppliers during his trips abroad and that they were unable to obtain a copy of passport evidence at the time. This failure to respond must be seen in the light of further allegations in the founding papers that employees of the importers obtained clothing at reduced prices from factories in China which were closing down and trying to get rid of stock; that they bought ‘old’ stock (clothing out of season); and that they also bought clothing, at substantially reduced prices, from manufacturers and sellers whose orders had been cancelled at the last minute. [11] The respondents never provided any passport evidence of the trips to China to purchase the goods. When questioned on this issue, they conceded that the goods were sourced from only three suppliers that were named in the sale agreements. This concession contradicted the respondents’ initial explanation that their employees had bought the goods at various markets in China at very low prices. [12] On 21 January 2020 and in terms of a customs mutual assistance agreement, the GACC, provided SARS with the Chinese export declarations submitted to the GACC in relation to eight of the 11 containers in the first application (the export declarations). These declarations showed that the invoice prices furnished by the respondents to SARS were impossibly low – the prices stated in the export declarations were 1000% more than the prices declared to SARS. It was not disputed that the export declarations relate to eight containers that formed the subject matter of the first application. [13] On 24 February 2020 the respondents launched an application in the high court to review and set aside SARS’ decision to detain the 19 containers, and that it be ordered to release the goods. They also sought an order that the one-month period specified in s 96(1)(a)(i) of the Act be reduced so as to render the application compliant with that provision, alternatively that non-compliance with the time period be condoned. [14] On 6 March 2020 the export declarations were furnished to the respondents as attachments to notices of intent in relation to the containers in the first application. The respondents were informed that SARS intended to hold them liable for underpaid customs duty and VAT, to declare the goods liable to forfeiture under s 87 of the Act, and to impose an amount in lieu of forfeiture in terms of s 88(2) of the Act. They were given an opportunity to submit evidence and make submissions concerning the intended action. Their attention was drawn to the reverse onus provisions in s 102(4) of the Act, namely that in any dispute as to whether the proper duty has been paid, it shall be presumed that such duty has not been paid, unless the contrary is proved.2 [15] On 13 March 2020 SARS received a report by Dr Jaywant Irkhede, an expert in textile technology. He was instructed to examine and compare samples of clothing taken from each of the 19 containers with samples previously taken from eight containers in the first application, to determine whether they were similar, and to assess their value. Dr Irkhede concluded that the samples of the two consignments were similar, and that the values which he had determined were similar to or in the same range as the prices or values declared in the Chinese export declarations. Dr Irkhede’s valuation was prepared independently of the export declarations. [16] On 16 March 2020 the respondents were issued with a second notice of intent concerning the 19 containers. They were informed of SARS intention to seize the goods in terms of s 88(1)(c) of the Act. As with the first notice of intent, the respondents were given an opportunity to present evidence, make written submissions, and referred to s 102(4) of the Act. [17] On 30 March 2020 the respondents’ attorney made written representations in respect of both notices of intent. Statements and affidavits by the Chinese suppliers were attached to the representations. It was clear from these affidavits that the Chinese suppliers were willing to assist the respondents, and the agreements allegedly concluded between the suppliers and the importers were 2 Section 102(4) of the Act states: ‘If in any prosecution under this Act or in any dispute in which the State, the Minister or the Commissioner or an officer is a party, the question arises whether the proper duty has been paid or whether any goods or plant have been lawfully used, imported, exported, manufactured, removed or otherwise dealt with or in, or whether any books, accounts, documents, forms or invoices required by rule to be completed and kept, exist or have been duly completed and kept or have been furnished to any officer, it shall be presumed that such duty has not been paid or that such goods or plant have not been lawfully used, imported, exported, manufactured, removed or otherwise dealt with or in, or that such books, accounts, documents, forms or invoices do not exist or have not been duly completed and kept or have not been so furnished, as the case may be, unless the contrary is proved.’ furnished to SARS. The suppliers alleged that the importers did not pay the higher values in the export declarations. In their representations the respondents contended that the export declarations were ‘demonstrably false’ and ‘inadmissible and irrelevant’ for various reasons. [18] The reason given by the respondents for the vast difference between the Chinese export values and the values declared to SARS, was this: ‘SARS knows, or should know, for it is a notorious fact, that many Chinese export agents inflate the pricing of exported goods when declaring to the General Administration of Customs of the People’s Republic of China. The purpose of inflating the price on the export declarations is for applying for loans from the banks as well as receiving national export tax rebates from the Chinese government, calculated at 16% of the declared export price on the export declarations. In consequence, SARS should have been alerted to the prospect of this kind of fraud before jumping to the conclusions it did before issuing its letters of intent.’ The respondents went on to say: ‘The Importers are aware of the 16% export tax rebate and they are aware that export agents sometimes inflate the value on the export documents in order to obtain larger rebates. We enclose hereto an affidavit of a Chinese/South African importer and exporter – Mr Li Xinzhu and wherein he describes in detail the inflation of the value on exports from China in order for export agents to obtain export tax rebates from the Chinese government.’ [19] In support of these assertions all three Chinese exporters involved made affidavits in which they said: ‘The Chinese export agent industry often “inflate[s]” the actual price of the commercial invoices for the purposes of applying for loans from banks as well as receiving export tax rebates from our Chinese government.’ (Emphasis in the original.) The exporters gave general and similar explanations for the low selling prices. These were that at the end of a season, unsold clothing stock is sold at reduced prices; overruns and order cancellations are also sold cheaply; and ‘dead stock’ is often sold at prices well below the cost of production. [20] The difficulty with the respondents’ new explanation for the low prices of the goods – fraud by Chinese export agents – was immediately apparent. Any export tax rebate would accrue to Chinese exporters, not their agents. That much is clear from Mr Xinzhu’s affidavit. He said that in China, exported goods are subject to a zero tax rate and that VAT paid to the State by upstream enterprises during the domestic circulation of export goods must be refunded to the export enterprise at the export stage. Further, it is unlikely that by committing fraud, export agents would be able to obtain loans from banks. [21] SARS therefore, on 29 May 2020, requested further particulars and documents from the respondents, which included the following: an explanation for the identical format, font and terms of the written agreements in respect of both consignments (the eight containers relating to the export declarations and the 19 containers) concluded between three different suppliers and the importers; the originals or copies of each of the three agreements; the particulars of the individuals who signed each agreement on behalf of the Chinese supplier and the importer, and their identity and passport numbers; and details of the invoices issued by the suppliers in respect of each of the consignments and how they were rendered to the importers. [22] In their reply dated 12 June 2020, the respondents contended that the request for further particulars was ‘unlawful’. They refused to provide an explanation for the identical format, font and terms of the written agreements, the particulars of the sellers and buyers who signed them, and any details regarding the invoices issued by the suppliers. [23] Upon receipt of the three agreements furnished by the respondents, SARS engaged the services of Mr Jannie Bester, a forensic document examiner, to ascertain whether the signatures on the agreements had been appended individually. Mr Bester identified identical handwriting similarities in the signatures of the buyer and seller, and concluded that the agreements originated from the same source document, because they contain the same spelling and spacing errors. Mr Bester’s reports were given to the respondents on 19 June 2020. [24] On 10 July 2020 the respondents provided SARS with an affidavit by their own document examiner, Mr Ludwig Du Toit. He considered Mr Bester’s reports and concluded that the identical signature of the buyer and seller, which appeared on each of the agreements of the different importers, was an electronic signature. Mr Du Toit however did not challenge Mr Bester’s conclusion that all three agreements originated from the same source document. [25] On 13 August 2020 SARS informed Dragon Freight of the impugned decision. The reason given was that SARS had considered the evidence and submissions by the respondents and was satisfied that the goods had not been entered as required by ss 38(1), 39(1), 40(1) and (2) read with ss 65(1) and 66 of the Act. Consequently, the goods and the containers in which they were imported were liable to forfeiture as contemplated in s 87(1) and (2) of the Act. Dragon Freight was also informed that it was entitled to written reasons for the impugned decision. The respondents however did not request written reasons for the decision. [26] On 10 September 2020 the respondents delivered a supplementary affidavit in support of the relief foreshadowed in paragraph 4 of the notice of motion, namely that the decision to seize any of the containers referred to in the founding papers, where applicable, be reviewed and set aside, and that SARS be ordered to immediately release the 19 containers and the goods contained therein. As stated earlier, the high court granted these orders, together with costs. The appellants contend that the orders are incompetent because the respondents failed to comply with the peremptory provisions of s 96(1) of the Act. Section 96(1) of the Act [27] Section 96(1) of the Act, so far as is relevant, provides: ‘(1)(a)(i) No process by which any legal proceedings are instituted against the State, the Minister, the Commissioner or an officer for anything done in pursuance of this Act may be served before the expiry of the period of one month after delivery of a notice in writing setting forth clearly and explicitly the cause of action, the name and place of abode of the person who is to institute such proceedings (in this section referred to as the “litigant”) and the name and address of his or her attorney or agent if any. . . . (iii) No such notice shall be valid unless it complies with the requirements prescribed in the section . . .’. . . . (c)(i) The State, the Minister, the Commissioner an officer may on good cause shown reduce the period specified in paragraph (a) . . . (ii) If the State, the Minister, the Commissioner or an officer refuses to reduce any period as contemplated in subparagraph (i), a High Court having jurisdiction may upon application of the litigant, reduce or extend any such period where the interests of justice so requires.’ [28] The respondents did not deliver a s 96(1) notice of their intention to review the impugned decision. Instead, they relied on a notice by Dragon Freight to SARS dated 17 February 2020, of its intention to bring legal proceedings against SARS (the February notice). It read: ‘In the event of the detained containers having been seized by SARS or at any stage hereafter, the Applicants claim that such seizure(s) be reviewed and set aside and that it be ordered that the goods overseas be released immediately by the Respondent.’ [29] In the notice of motion, the respondents asked for an order that the one- month period in s 96(1)(a)(i) be reduced; alternatively, that their failure to comply with the requirements of the section be condoned. The high court granted this relief. It made an order that the one-month notice period, ‘be reduced to such an extent that this application is then construed as being compliant with section 96 of the Act; alternatively, that non-compliance with the time period specified in section 96(1)(a)(i) be condoned’. [30] The starting point for an understanding of the meaning and effect of s 96(1) is the language of the provision, in the light of its context and purpose.3 In this regard the dictum of Unterhalter AJA in Capitec Bank Holdings Limited,4 bears repetition: ‘The much-cited passages from Natal Joint Municipal Pension Fund v Endumeni Municipality (“Endumeni”) offer guidance as to how to approach the interpretation of the words used in a document. It is the language used, understood in the context in which it is used, and having regard to the purpose of the provision that constitutes the unitary exercise of interpretation. I would only add that the triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concepts expressed by those words and the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitutes the enterprise by recourse to which a coherent and salient interpretation is determined. As Endumeni emphasised, citing well-known cases, “[t]he inevitable point of departure is the language of the provision itself”.’ [31] Section 96(1)(a)(i), on its plain language, proscribes the institution of any proceedings unless one-month’s written notice, ‘setting forth clearly and explicitly the cause of action’, is given to the Commissioner. That is made clear by the introductory words that no process by which legal proceedings are instituted, may be served before the expiry of the one-month notice period. It is reinforced by s 96(1)(a)(iii), which states that a notice that does not comply with the requirements of the section, is invalid. 3 Natal Joint Municipality Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 para 18, affirmed by the Constitutional Court in Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC 33; 2019 (5) SA 1 (CC) para 29. 4 Capitec Bank Holdings Limited v Coral Lagoon Investments 194 (Pty) Ltd [2021] 3 All SA 647 para 25, footnotes omitted. [32] In Evins v Shield Insurance,5 Corbett JA defined a cause of action as the ‘material facts which must be proved in order to enable the plaintiff to sue’. Applied to the present case, it means that when a notice under s 96(1) is delivered to SARS, the litigant must be able to make out a cause of action: it must assert facts which it would be necessary to prove, if traversed, to support its right to the judgment of the court. The respondents however had no cause of action when they delivered the February notice. That this is a prerequisite is underscored by the phrase ‘anything done in pursuance of this Act’ in s 96(1)(a)(i) – it clearly envisages action already taken. [33] The purpose of s 96(1) is self-evident: to allow SARS, the organ of state charged with the administration of the Act, to investigate or review the merits of the intended legal proceedings and decide what position to adopt in relation thereto. It may, for example, in an appropriate case decide to resolve the dispute before the institution of legal proceedings, so as to avoid unnecessary and costly litigation at public expense.6 [34] SARS is a large and complex institution with extensive administrative responsibilities and high workloads. Its functions are not confined to the levying of customs and excise duties under the Act, but include the recovery of taxes under the Income Tax Act 58 of 1962 and the administration of the Value-Added Tax Act 89 of 1991. The s 96(1) notice enables SARS to ensure that a matter is brought timeously to the attention of the appropriate official for investigation or review. In my opinion, s 96(1)(a) of the Act promotes the efficient and economic 5 Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838H-839A. 6 See Mohlomi v Minister of Defence [1996] ZACC 20; 1997 (1) SA 124 (CC) para 9, regarding the purpose of a notice of intended legal proceedings under the Defence Act 44 of 1957. use of resources, in accordance with the basic values and principles governing public administration set out in s 195 of the Constitution.7 [35] The impugned decision had not been taken when the February notice was delivered to SARS. It was thus impossible for the respondents to set out any cause of action in that notice: there was none. Section 96(1)(a)(i) of the Act does not permit a notice in anticipation of a decision not yet taken, by the functionaries referred to in that provision. Such a construction would nullify its purpose and render the sanction of invalidity in s 96(1)(a)(iii), nugatory. [36] What is more, when the February notice was delivered, no ‘administrative action’ as defined in the Promotion of Administrative Justice Act 3 of 2000 (PAJA), had been taken. That definition includes a decision taken by an organ of state when 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 legal effect’. This merely reinforces the absence of any cause of action when the February notice was delivered. [37] In SARS v Prudence Forwarding,8 the facts were essentially the same as those in the present case. The Commissioner detained a container of blankets imported from China on the basis that the transaction value of the goods had been under-declared. The importers delivered a written notice in terms of s 96(1) of the Act, of their intention to apply to the high court for an interim order directing SARS to release the goods against payment of a provisional amount of customs duty. The importers launched that application in November 2013. Subsequently, the Commissioner made a decision to seize the goods. The importers then 7 Section 195(1)(b) of the Constitution provides that public administration must be governed by democratic values and principles enshrined in the Constitution, including the promotion of efficient, economic and effective use of resources. 8 The Commissioner for the South African Revenue Service v Prudence Forwarding (Pty) Ltd 2015 JDR 2545 (GP). amended their notice of motion and sought an order reviewing and setting aside the seizure decision, without delivering a s 96(1) notice in relation to that decision. The high court reviewed and set aside the seizure decision and ordered the release of the goods against payment of a provisional amount of customs duty. The Commissioner appealed this order. [38] A full bench of the high court upheld the appeal. The full court, correctly in my view, held as follows: ‘It was therefore incumbent upon [the respondents] to serve the relevant notice and to obtain the agreement of the Commissioner or the sanction of the court to reduce the one-month period in respect of the new cause of action involving a review of the seizure decision. This was not done. The respondents could not rely on the notice they served to obtain the release of the goods from detention. Section 96(1)(a)(i) of the Act makes it plain that the notice must relate to a specific cause of action, which is required to be set forth “clearly and explicitly” in the written notice. And section 96(1)(a)(iii) provides that no notice shall be valid unless it complies with the requirements prescribed in the section. Thus, since no notice was delivered in respect of the review, and neither the Commissioner or the court agreed to a reduced period, the jurisdictional conditions precedent were not fulfilled, and the court accordingly lacked jurisdiction to grant the final relief it granted, in the form of an order setting aside the seizure of the goods. For that reason alone, the appeal must succeed.’9 [39] The high court however distinguished Prudence Forwarding on the basis that the February notice and the notice of motion provided for the review of both the decisions to detain and seize the containers. However, the February notice did not comply with s 96(1)(a)(i) of the Act, in that it did not, and could not, explicitly set out a cause of action because the impugned decision had not been taken. For the same reason, the relief sought in the notice of motion that the court reduce the one-month period specified in s 96(1)(a)(i) in relation to the impugned decision, 9 Ibid para 28. was incompetent. And there is no power in the Act to condone non-compliance with this provision. [40] In the notice advising the respondents of the impugned decision, they were specifically informed of the peremptory notice to SARS in s 96(1) of the Act. They chose to ignore it. The high court erred in its interpretation and application of s 96(1) of the Act and on this basis alone, the appeal must be upheld. The decision to detain the goods [41] The high court reviewed and set aside SARS’ decision not to release the 19 containers and ordered SARS to immediately release those containers and the goods held in them. This order should not have been granted because the decision to detain the goods had been overtaken by the impugned decision. [42] SARS’ powers of detention and its powers of seizure are set out under different provisions of the Act. Section 88(1)(a) provides: ‘An officer, magistrate or member of the police force may detain any ship, vehicle, plant, material or goods at any place for the purpose of establishing whether that ship, vehicle, plant, material or goods are liable to forfeiture under this Act.’ (Emphasis added.) [43] By contrast, s 88(1)(c) reads: ‘If such ship, vehicle, plant, material or goods are liable to forfeiture under this Act the Commissioner may seize that ship, vehicle, plant, material or goods.’ (Emphasis added.) [44] The power to detain and the power to seize are discrete administrative acts, which require two separate decisions. Detention is a temporary assertion of control over the goods, which does not necessarily result in any seizure with a view to ultimate forfeiture. The stated purpose of the power to detain in s 88(1)(a) of the Act, is to establish whether the goods are liable to forfeiture. The provision thus enables SARS to examine or secure the goods, pending an investigation to establish whether they are liable to forfeiture, as happened in this case. It is only once it has subsequently been established that the goods in question are liable to forfeiture, that SARS may then seize the goods. Put differently, seizure flows from detention if liability for forfeiture is established. The decision to detain the goods is then overtaken by a new decision to seize. [45] In prayer 3 of the notice of motion the respondents sought an order that the decision not to release the 19 containers (the detention of the goods under s 88(1)(a)), be reviewed and set aside. In prayer 4 they sought an order reviewing and setting aside the decision to seize any of the containers, ‘where applicable’. Until there was a decision to seize the goods, prayer 3 remained operative, as long as the goods were detained for a reasonable period of time in order to establish whether they were liable to forfeiture.10 [46] The high court conflated the decision to detain the goods with the subsequent impugned decision. In so doing the court failed to appreciate that once the impugned decision had been taken, the separate issue of detention was rendered moot.11 The fate of the goods then had to be decided with reference to s 88(1)(c) of the Act and not s 88(1)(a). [47] The only relevance of the detention relief concerns the question of costs, but in the present case there is no basis for a separate costs award in relation to that relief. The costs pertaining thereto should follow the result of the appeal. The review [48] In the founding papers the respondents alleged that the decision to detain the goods was reviewable on ‘any and all the grounds’ in s 6(2) of the PAJA, 10 Commissioner, South African Revenue Service v Trend Finance (Pty) Ltd and Another 2007 (6) SA 117 (SCA) para 29. 11 Commissioner: South African Revenue Service and Another v Alves [2020] ZAFSHC 123 para 11. which tend to overlap. These grounds include bias, ulterior purpose, procedural unfairness, arbitrariness, unreasonableness, and that the impugned decision was otherwise unconstitutional and unlawful. However, the challenge to the impugned decision on the grounds that the Commissioner was biased or that the decision was taken for an ulterior purpose, has no basis in the evidence. [49] The respondents’ case in the supplementary founding affidavit was essentially that the impugned decision fell to be set aside on the ground of procedural unfairness, irrationality and unreasonableness. It should be noted that when these grounds were formulated, the respondents did not have the reasons for the decision. They chose not to ask for the reasons, despite being informed of their right to do so. [50] The attack on the ground of procedural unfairness can be dealt with briefly. It has no merit. Throughout the course of the complex administrative process that led to the seizure, the respondents were given adequate notice of the administrative action that SARS was considering taking and a reasonable opportunity to make representations before any decision was taken. [51] The supplementary founding affidavit states that the respondents were ‘left totally uninformed as to why SARS made the decision to seize the containers’, and that there ‘has been no fairness, accountability and transparency’. In the supplementary replying affidavit, the following allegation is made: ‘SARS admits that it has taken an administrative decision and has failed to provide the Applicants with any reasons therefor. The decision to seize the 19 containers is therefore unlawful and ought to be set aside on review.’ [52] These allegations are false. Detailed reasons for the impugned decision are recorded in SARS’ supplementary answering affidavit. The reasons, in sum, are these. The Commissioner considered all the evidence and the respondents’ failure to respond to requests for information, and concluded that the written agreements submitted by the respondents could not be relied upon as proof of the prices actually paid for the goods. The evidence demonstrated that the agreements were false and that the values of the goods had been under-declared. The evidence supporting these reasons is dealt with below. [53] The respondents, in their supplementary replying affidavit and heads of argument, submitted that it was insufficient that the seizure notice informed them of their right to request written reasons, ‘as both PAJA as well as the Constitution require SARS to give reasons when taking an administrative decision’, and that if there were no reasons when the decision was taken, then the decision is unlawful since ‘[i]t is not permissible to retrofit reasons after the event’. It was further submitted, in reliance on s 5(3) of the PAJA, that ‘on account of SARS’ admitted failure to provide reasons and in the absence of proof to the contrary’, it should be presumed that the impugned decision was taken without reason.12 [54] These submissions are baseless. Section 5(1) and (2) of the PAJA make it clear that the reasons for an administrative decision need not be given simultaneously with the notice of that decision to the affected party.13 And there is not a shred of evidence to show that when the impugned decision was taken, there were no reasons for it. In these circumstances, the respondents’ so-called retrofit argument is startling. 12 Section 5(3) of the PAJA reads: ‘If an administrator fails to furnish adequate reasons for an administrative action it must, subject to subsection (4) and in the absence of proof to the contrary, be presumed in any proceedings for judicial review that the administrative action was taken without good reason.’ 13 Section 5 of the PAJA, in relevant part, provides: ‘(1) Any person whose rights have been materially and adversely affected by administrative action and who has not been given reasons for the action may, within 90 days after the date on which that person became aware of the action or might reasonably have been expected to have become aware of the action, request that the administrator concerned furnish written reasons for the action. (2) The administrator to whom the request is made must, within 90 days after receiving the request, give that person adequate reasons in writing for the administrative action. [55] The respondents’ challenge of irrationality is based on s 6(2)(f)(ii) of the PAJA, namely that the impugned decision is not rationally connected to the purpose for which it was taken; the purpose of empowering provision; the information before the decision-maker; and the reasons given for it.14 The supplementary founding affidavit states that in the notices of intent, the request for further particulars and the expert reports, SARS relied on two new issues, namely the export declarations and an expert’s opinion that the signatures on the agreements were forgeries. [56] The basic grounds for the irrationality challenge may be summarised as follows. The export declarations are ‘inadmissible and irrelevant’, illegible and ‘demonstrably false’. SARS’ request for further particulars is not authorised by the Act and unlawful. Had SARS in fact considered all the evidence presented by the respondents, it would have concluded that the respondents’ evidence was a rebuttal of SARS’ prima facie findings in the notice of intent (that the respondents dealt with the goods irregularly, thereby rendering them liable to forfeiture). [57] The notice of seizure states that the impugned decision was taken in terms of s 88(1)(c) of the Act. In Saleem15 this Court held that an officer seizing goods in terms of s 88(1)(c) is required to hold a suspicion on reasonable grounds that such goods are imported goods; that they have been imported without compliance with the provisions of the Act; and that they are liable to forfeiture. The notice further states that the goods are liable to forfeiture as envisaged in s 87(1) and (2) of the Act, since respondents failed to establish that the goods were imported in accordance with the provisions of the Act. Section 87(1) of the Act provides that any goods imported or otherwise dealt with contrary to the provisions of the Act, are liable to forfeiture. In short, goods brought into the country without declaring 14 C Hoexter and G Penfold: Administrative Law in South Africa (3 ed 2021) at 464-465 and 497. 15. Commissioner, South African Revenue Service v Saleem 2008 (3) SA 655 (SCA) para 9. them or paying the necessary customs duty are liable to forfeiture.16 Section 87(2) renders any ship, vehicle, container or other transport equipment used in the carriage of goods, liable to forfeiture.17 [58] The Constitutional Court has held that where a decision is challenged on the grounds of rationality, ‘the decision must be rationally related to the purpose for which power was conferred’, otherwise the exercise of the power would be arbitrary.18 The question then, simply put, is whether the impugned decision is justified, having regard to the purpose of s 88(1)(c) of the Act, the information before the Commissioner and the reasons given for it.19 [59] The impugned decision was taken because the agreements submitted by the respondents and consequently, the transaction values of the goods declared, are false. In the result, the respondents failed to comply with ss 38(1), 39(1), 40(1) and (2) read with ss 65(1) and 66 of the Act. This conduct also constitutes an offence in terms of s 84 of the Act. It provides that any person who makes a false statement in connection with any matter dealt with in the Act, or makes use of a declaration or document containing any such statement for the purposes of the Act, shall be guilty of an offence.20 16 CSARS v Saleem fn 14 para 9. 17 Section 87(2) reads: ‘(2) Any— (a) ship, vehicle, container or other transport equipment used in removal or carriage of any goods liable to forfeiture under this Act or constructed, adapted, altered or fitted in any manner for the purpose of concealing goods; (b) goods conveyed, mixed, packed, or found with any goods liable to forfeiture under this Act on or in any such ship, vehicle, container or other transport equipment; and (c) ship, vehicle, machine, machinery, plant, equipment or apparatus classifiable under any heading or subheading of Chapters 84 to 87 and 89 of Part 1 of Schedule No. 1 in which goods liable to forfeiture under this Act are used as fuel or in any other manner, shall be liable to forfeiture wheresoever and in possession of whomsoever found.’ 18 Democratic Alliance v President of the Republic of South Africa [2012] ZACC 24; 2013 (1) SA 248 (CC) paras 27 and 29-32 (Democratic Alliance); Albutt v Centre for the Study of Violence and Reconciliation and Others [2010] ZACC 4; 2010 (3) SA 293 (CC) para 51; Minister of Defence and Military Veterans v Motau [2014] ZACC 18; 2014 (5) SA 69 (CC) para 69 (Motau). 19 Democratic Alliance fn 18 paras 29 and 32; Motau 2014 (5) SA 69 (CC) fn 18 para 69. 20 Section 84(1) of the Act provides: ‘Any person who makes a false statement in connection with any matter dealt with in this Act, or makes use for the purposes of this Act of a declaration or document containing any such statement shall, unless he proves that he was ignorant of the falsity of such statement and that such ignorance was not due to negligence on his part, be guilty of an offence and liable on conviction to a fine not exceeding R40 000 or treble the value of the goods to which such statement, declaration or document relates, whichever is the greater, or to imprisonment for a period not exceeding ten years, or to both such fine and such imprisonment, and the goods in respect of which such false statement was made or such false declaration or document was used shall be liable to forfeiture.’ [60] As to the purpose of the empowering provision, s 65(1) of the Act states that ‘the value for customs duty purposes of any imported goods shall, at the time of entry for home consumption, be the transaction value thereof, within the meaning of section 66’. Section 66(1) provides that ‘the transaction value of any imported goods shall be the price actually paid or payable for the goods when sold for export to the Republic’. [61] Section 74A(1) of the Act provides that the interpretation of ss 65, 66 and 67 of the Act shall be subject to the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (the Customs Valuation Agreement), the interpretive notes thereto, the advisory opinions, commentaries and explanatory notes, case studies and studies issued under the Customs Valuation Agreement. [62] Generally, the actual price paid or payable for imported goods should be reflected on the invoices issued, which are held by the importers. Thus, the transaction value method is largely dependent on the information that importers provide. However, importers have an obvious commercial incentive to manipulate the transaction value. The possibility of customs fraud is therefore an inherent risk in a system of self-accounting and self-assessment upon which the Act is based.21 [63] Article 17 of the Customs Valuation Agreement is designed to address this risk. It provides that ‘[n]othing in this Agreement shall be construed as restricting or calling into question the right of customs administrations to satisfy themselves as to the truth or accuracy of any statement, document or declaration presented for customs valuation purposes’. It is precisely this right that SARS has exercised 21 First National Bank of South Africa t/a Wesbank v Commissioner South African Revenue Service and Another [2002] ZACC 5; 2002 (4) SA 768 (CC) para 15. in this case. There is nothing in the Act or the Customs Valuation Agreement that precludes SARS from taking robust enforcement measures against customs fraud. [64] That brings me to the reasons for the impugned decision. In summary, they are the following. There was no credible explanation for the unbelievably low prices charged by the suppliers of the goods. The initial explanation that an employee of the importers bought the goods at very low prices at various markets in China is false. So too, the importers’ assertions that the low prices were obtained because they were able to exploit the ‘trade war’ between the United States and China; that the goods comprised old or ‘dead’ stock, or clothing not in demand in China; and that the goods could be purchased at ridiculously low prices on the Alibaba website. The evidence of the expert, Dr Irkhede, and that of SAAA and ATASA, makes it clear that the prices declared by the importers were unrealistic and unattainable. [65] The goods were allegedly bought from only three separate Chinese suppliers, which contradicted the importers’ initial explanation. No explanation was furnished for the identical prices charged by the three suppliers. The importers’ claim that they are not related in any way was not borne out by the evidence. Their modus operandi to source and buy clothing was the same. They obtained their stock from the same Chinese suppliers. The agreements allegedly concluded with different Chinese suppliers are identical. The declared prices of clothing are in the same price bracket. They used the same agents in China and the same clearing agent in this country. All of this cast serious doubt on the declared prices of the goods. [66] The format, font and terms of the agreements are identical. All the sale agreements record the payment terms as 90 days after receipt of the goods by the importer. This is illogical since no exporter would render payment subject to conditions over which it had no control, in another country. The respondents refused to provide information concerning the conclusion of the sale agreements: who signed them, and when and where they were signed. When confronted with the expert’s report on the agreements (by Mr Bester), they said that the purchaser’s signature on the agreements was electronically effected by Chinese agents who represented them ‘from time to time’. They never mentioned Chinese agents before. And if the agreements were electronically concluded, there was no reason why they could not have been concluded directly between the suppliers and the importers. The ineluctable inference is that the agreements were created by the importers to support the entries, and the explanation regarding the signatures, is false. [67] There is no evidence to support the respondents’ claim that Chinese export agents inflated prices on commercial invoices. The importers refused to identify the Chinese export agency which prepared and submitted the declarations to the Chinese customs authorities, or to furnish the export documentation given by the suppliers to the export agents. The Chinese suppliers were prepared to assist the respondents, who were in a position to provide objective evidence to support their assertion that the export declarations concerning the first application, were false. They failed to provide this evidence. [68] And, of course, the true transaction values of the goods could have been placed beyond question by simply producing the export declarations relating to the 19 containers, submitted to the Chinese customs authorities by the three exporters. The respondents failed to produce this evidence, despite being called upon to do so. [69] For all these reasons, the Commissioner was satisfied that the respondents failed to prove that the goods were entered as prescribed by the provisions of the Act, as they were required to do under s 102(4). Consequently, the goods and the containers in which they were imported, were liable to forfeiture. Before us, counsel for the respondents conceded, correctly, that s 102(4) applied in the instant case. [70] In the circumstances, can it be said that having regard to the purpose of s 88(1)(c) of the Act, the information before the Commissioner and the reasons given, the impugned decision is unjustified? I think not. It follows that the decision was not arbitrary. The high court’s finding that ‘it was common cause that SARS had been presented with the requisite documents by the applicants in terms of the Act’, is incorrect. This was not common cause but specifically disputed. SARS’ reasons for disputing the documents presented by the respondents were amply explained. The high court erred in disregarding not only the evidence showing that the agreements were false, but also the reasons for the impugned decision, despite quoting those reasons verbatim in its judgment. [71] The findings that the export declarations ‘were of poor quality and illegible’; that ‘they had nothing to do with the 19 containers’; and that ‘SARS was wrong . . . to rely on the Export Declarations in order to reach the seizure decisions’, are unsustainable on the evidence. The high court ignored the fact that the respondents were provided with legible, translated versions of the export declarations. Further, it dismissed the respondents’ application to strike out the export declarations on the basis that they were inadmissible. In so doing, the court confirmed that the translator had been enrolled as a sworn translator from Chinese into English and vice versa, and consequently, that the declarations were understandable. [72] The export declarations relating to eight containers in the first application, were highly relevant to the decision to seize the goods. SARS was entitled to take those declarations into account in arriving at its decision, and as a specialist administrator, to decide what weight should be given to them, for the following reasons. The clothing covered by the export declarations was materially similar to the clothing in the 19 containers. It was not disputed that the export declarations reflect the export values stated therein – more than 1000% of the values declared on importation into this country by the same exporters and importers in relation to similar goods. The respondents’ explanation for this – fraud by Chinese export agents – is false. What is more, the respondents’ own import documentation corroborates the export declarations. The Minister explained the reasons for this in his supplementary answering affidavit, to which was attached a schedule containing a detailed analysis for each of the eight containers. The respondents did not deal with the Minister’s evidence in reply. [73] The high court’s conclusion that the respondents provided the relevant information prior to requests by SARS, and that they ‘responded copiously’ to requests for information which SARS ‘chose to ignore . . . as inadequate’, is likewise incorrect. This conclusion is based on a landscape table furnished by the respondents and reproduced in the judgment. However, a comparison between this table and SARS’ request for particulars and documentation, and the respondents’ replies (which form part of the reasons for the impugned decision), shows that the respondents declined to answer or provide satisfactory answers to a number of pertinent questions posed by SARS. [74] Given that the impugned decision was not arbitrary, the respondents’ remaining challenge based on unreasonableness in terms of s 6(2)(h) of the PAJA, must fail. The decision is not one that a reasonable decision-maker could not reach.22 22 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others [2004] ZACC 15; 2004 (4) SA 490 (CC) para 44. [75] Moreover, SARS made the impugned decision in its capacity as a specialist administrator with specific expertise in the levying of customs duties. It is a settled principle that the distinction between appeals and reviews remains significant and that courts should be careful not to usurp the functions of administrative agencies.23 In Bato Star O’ Regan J described judicial deference as follows:24 ‘[A] judicial willingness to appreciate the legitimate and constitutionally-ordained province of administrative agencies; to admit the expertise of those agencies in policy laden or polycentric issues, to accord the interpretations of fact and law due respect; and to be sensitive in general to the interests legitimately pursued by administrative bodies and the practical and financial constraints under which they operate. This type of deference is perfectly consistent with a concern for individual rights and a refusal to tolerate corruption and maladministration. It ought to be shaped . . . by a careful weighing up of the need for – and the consequences of – judicial intervention. Above all, it ought to be shaped by a conscious determination not to usurp the functions of administrative agencies; not to cross over from review to appeal.’ [76] For the reasons set out above, the high court erred in holding that the impugned decision was unlawful and thus reviewable. It follows that the appeal must succeed. The intervention application [77] At the hearing of this appeal, an application filed in this Court in August 2021 by the Southern African Clothing and Textile Workers Union (SACTWU), for leave to intervene as an appellant in these proceedings, was refused with costs. SACTWU was advised that the reasons for that order would be given in this judgment. These are the reasons. [78] SACTWU’s intervention application is in effect a disguised application to this Court for leave to appeal. It was a party in the review application in the high 23 Bato Star para 45. 24 Bato Star para 46. court. However, it failed to file an application for leave to appeal that court’s order. Its explanation for this failure was that it needed to assess its financial position as a result of the effects of Covid-19 on its resources. This explanation however is superficial and unconvincing. More fundamentally, the refusal of an application for leave to appeal under s 17(2)(a) of the Superior Courts Act 10 of 2013, is a jurisdictional fact for an appeal to this Court.25 In terms of s 17(2)(b) of that Act, this Court’s jurisdiction to grant leave itself is dependent on the court below having refused leave to appeal.26 Thus, s 17(2)(b) not only prescribes the proper procedure, but also defines the jurisdiction of this Court to entertain an application for leave to appeal. [79] Apart from this, SACTWU has not shown that it has a legal interest in the subject matter of the appeal which may be affected by the decision of this Court.27 This appeal is against the high court’s order reviewing and setting aside the impugned decision. Any order that this Court might make will have no effect on SACTWU or its avowed interest of protecting the local clothing and textile industries. For these reasons, SACTWU’s intervention application could not be entertained and was thus refused with costs. The order [80] In the result the following order is issued: 25 National Union of Metalworkers of South Africa v Jumbo Products CC [1996] ZASCA 87; 1996 (4) SA 735 (A) at 740A-D; Pharmaceutical Society of South Africa and Others v Tshabalala-Msimang and Another NNO; New Clicks South Africa (Pty) Ltd v Minister of Health and Another [2004] ZASCA 122; 2005 (3) SA 238 (SCA) para 22. 26 Section 17(2) of the Superior Courts Act provides: ‘(a) Leave to appeal may be granted by the judge or judges against whose decision an appeal is to be made or, if not readily available, by any other judge or judges of the same court or Division. (b) If leave to appeal in terms of paragraph (a) is refused, it may be granted by the Supreme Court of Appeal on application filed with the registrar of that court within one month after such refusal, or such longer period as may on good cause be allowed, and the Supreme Court of Appeal may vary any order as to costs made by the judge or judges concerned in refusing leave.’ 27 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 659, affirmed Pheko and Others v Ekurhuleni Municipality (No 2) [2015] ZACC 10; 2015 (5) SA 600 (CC) para 56. The application for intervention by the Southern African Textile and Clothing Workers’ Union is struck from the roll with costs. Such costs shall include the costs of only one junior counsel. The appeal is upheld with costs, including the costs of two counsel where so employed. Such costs shall be paid by the respondents jointly and severally, the one paying the others to be absolved. The order of the high court is set aside and replaced by the following: ‘The application is dismissed. The applicants are directed to pay the costs of the application, including the costs of two counsel where so employed, jointly and severally, the one paying the others to be absolved.’ ___________________ A SCHIPPERS JUDGE OF APPEAL Appearances: For first appellant: B H Swart SC (with him J A Meyer SC) Instructed by: Klagsbrun Edelstein Bosman & Du Plessis Attorneys, Pretoria Symington De Kok Attorneys, Bloemfontein For second appellant: A Cockrell SC (with him M Stubbs) Instructed by: Webber Wentzel, Pretoria Symington De Kok Attorneys, Bloemfontein For third and fourth appellants: E Webber Instructed by: Norton Rose Fulbright, Pretoria Lovius Block, Bloemfontein For first to seventh respondents: A P Joubert SC (with him L F Laughland) Instructed by: Richard Meaden & Associates, Pretoria Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 7 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 Commissioner for the South African Revenue Service and Others v Dragon Freight (Pty) Ltd and Others [2022] ZASCA 84 The Supreme Court of Appeal (SCA) today upheld an appeal against an order by the Gauteng Division of the High Court, Pretoria (high court), in terms of which it reviewed and set aside a decision by the first appellant, the Commissioner for the South African Revenue Service (SARS), to seize 19 containers of clothing imported from China (the goods), in terms of s 88(1)(c) of the Customs and Excise Act 91 of 1964 (the Act). SARS had taken this decision because the value of the goods had been under-declared by the respondents, which allowed them to pay a lesser amount of customs duty. The high court ordered SARS to release the containers to the respondents. The SCA held that the respondents had not complied with s 96(1) of the Act, which proscribes the institution of legal proceedings against SARS, unless a litigant delivers a written notice to SARS, setting out its cause of action clearly and explicitly, at least one month before instituting those proceedings. On this ground alone, the appeal was upheld. The SCA further held that SARS’ decision to seize the goods was lawful, reasonable and procedurally fair. The agreements in terms of which the goods were allegedly bought in China, were false. Export declarations which SARS had obtained from the General Administration of Customs of the People’s Republic of China (GACC), showed that the prices declared to the GACC of similar goods which the respondents had bought from the same suppliers in a previous shipment, involving the same clearing agent, were 1000% higher than the prices of the goods declared to SARS in the 19 containers. The respondents’ explanation for the unbelievably low prices, which included fraud by Chinese export agents, was not credible. They provided different explanations as to how the goods were sourced and bought at such low prices, which were false. A textile expert engaged by SARS determined that the prices declared by the respondents were unrealistic and unattainable. They refused to provide information and documents concerning the conclusion of the sale agreements, and the inference drawn by SARS that the agreements were created by the importers to support the entries on importation, was justified. For these reasons, the high court’s findings that SARS had been presented with the requisite documents by the respondents in terms of the Act; that the export declarations obtained from the GACC had nothing to do with the 19 containers; and that the respondents had responded copiously to SARS’ requests for information and documents, was incorrect. The respondents had not proved that the goods were imported as prescribed by the provisions of the Act, as they were required to do under s 102(4). SARS’ decision to seize the 19 containers was thus lawful and reasonable. The SCA accordingly upheld the appeal. The high court’s order was set aside. It was replaced with an order dismissing the respondents’ application to review and set aside the decision to seize the 19 containers, with costs, including the costs of two counsel where so employed. --------oOo--------

3481

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 642/2019 In the matter between: K2012076290 SA (PTY) LTD APPELLANT and OUDE CHARDONNAY RUSOORD (PTY) LTD FIRST RESPONDENT (IN LIQUIDATION) REGISTRAR OF DEEDS, CAPE TOWN SECOND RESPONDENT Neutral citation: K2012076290 (Pty) Ltd v Oude Chardonnay Rusoord (Pty) Ltd and Another (Case no 642/2019) [2020] ZASCA 164 (10 December 2020) Coram: NAVSA, ZONDI and MOCUMIE JJA and EKSTEEN and MABINDLA- BOQWANA AJJA Heard: 19 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email. It has been published on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 10h00 on 10 December2020. Summary: Mortgage bond – whether property to be mortgaged identifiable- court raising issues not raised by either party - issues identified by court and on which case decided without any merit - agreement for property to be mortgaged established- property clearly identifiable- defence of fraudulent misrepresentation unfounded. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Vos AJ) sitting as court of first instance: 1 The appeal succeeds with costs, including the costs of two counsel. 2 The order of the court a quo is set aside and is replaced by the following order: ‘(a) It is declared that as at 5 December 2015 the appellant is entitled to the relief sought in paras 2.1, 2.3 and 3 of the notice of motion. (b) The first respondent is ordered to pay the applicant’s costs.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Zondi JA: (Navsa and Mocumie JJA and Eksteen and Mabindla-Boqwana AJJA concurring) [1] This unopposed appeal1, with the leave of this Court, is against an order and judgment of the Western Cape Division of the High Court, Cape Town (high court) (Vos AJ), discharging a rule nisi granted by Saldanha J on 24 July 2018 and dismissing the appellant’s claim with costs. The rule nisi called upon Oude Chardonnay Rusoord (Pty) Ltd (OCR), prior to its voluntary liquidation, to show cause why, inter alia, it should not be compelled to do all things reasonably required to cause a first continuing mortgage bond for an amount of R2.4 million to be registered over Erf 39937 Paarl, in favour of the appellant, as security for the due and proper fulfilment of its present and future obligations towards the appellant. The appellants had also sought an order interdicting the second respondent, the Registrar of Deeds, from passing or effecting registration of transfer of Erf 4788 Paarl, or any property forming part of or resulting from any subdivision thereof into the names of any other persons or entities, pending the return day, and in the event that the rule be made final, until the contemplated mortgage bond was registered. 1 The liquidators filed a notice to abide. [2] Vos AJ discharged the rule nisi on the ground that the mortgage bond was incapable of registration as the property, over which the first mortgage bond was sought to be registered, was not sufficiently described in the relevant deed of sale and that the parties were not in agreement concerning the identity of the property sought to be mortgaged. Furthermore, the court a quo had regard to regulation 28 (2) of the Registration of Deeds Regulations, which provides that there shall be no reference in a deed conferring title to land or an interest therein, or in a mortgage bond to any building or other property movable or immovable, which may be on or attached to the land. The court a quo held that in the present case there was such a reference and that a bond could thus not be registered. [3] The facts giving rise to this appeal are briefly the following. During or about 2012 the appellant, a property developer, purchased Erf 4788, Paarl (the property) from the liquidator of Aslo Holdings (Pty) Ltd (in liquidation) which, prior to its liquidation, had partially developed the property in terms of the approved plans (original plans). The original plans entailed the proposed development consisting of the restoration of the original house and construction of a further 42 flats. The appellant intended to complete the proposed development that Aslo had commenced with, prior to its liquidation. [4] The appellant had, upon enquiry, been advised verbally by the local authority that a developer’s contribution or Bulk Infrastructure Contribution Levies were not payable in respect of the development initially proposed. [5] On 20 October 2016 the appellant sold the property to OCR for R6 million excluding VAT. The sale agreement was subject to the following suspensive conditions: ‘CONDITION PRECEDENT 2.1 This Agreement is subject to the fulfilment of the following Condition Precedent that by no later than 17h00 on 31 July 2017, the proposed Development has been approved by the Local Authority. 2.2 The Parties shall use their reasonable endeavours and will co-operate in good faith to procure the fulfilment of the Condition Precedent as soon as reasonably possible after the Signature Date. 2.3 The Purchaser will be responsible for all costs to obtain approval of the proposed Development as contemplated in clause 2.1 and the Purchaser accordingly indemnifies the Seller in respect of any such costs. 2.4 The Condition Precedent in clause 2.1 has been inserted for the benefit of the Purchaser, who will be entitled to waive fulfilment of such Condition Precedent prior to the expiry of the time period set out in that clause. 2.5 In the event of the Condition Precedent not being fulfilled or (where applicable) waived by the date referred to in clause 2.1, or by such extended date as may be agreed in writing between the Parties, this Agreement shall be deemed to be void ab initio and the Parties shall be restored to the status quo ante.’ [6] In terms of clause 3.3.2 of the agreement the purchase price had to be paid in the following manner: ‘3.3.2.1 The Purchaser shall pay to the Seller the Purchase Price plus VAT against Transfer, subject to the simultaneous cancellation of all existing mortgage bonds registered against the Property. 3.3.2.2 The Purchaser shall furnish the Conveyancers with an irrevocable, unconditional bank guarantee or bank guarantees, acceptable to the Seller, for the due payment of the Purchase Price within 14 (fourteen) days after being requested to do so which request will only be made after fulfilment or waiver, as the case may be, of the condition precedent contemplated in clause 2.1.’ [7] The property was defined to mean: ‘1.1.10.1 Section No.1 as shown and more fully described on Sectional Plan No. SS 41/2015 on the scheme known as THE VINES in respect of the land and building or buildings situate at PAARL, IN THE DRAKENSTEIN MUNICIPALITY, of which section the floor area, according to the said sectional plan is 69 (Sixty Nine) square metres in extent; Together with an undivided share in the common property in the scheme apportioned to the said section in accordance with the participation quota as endorsed on the said sectional plan; 1.1.10.2 Section No. 2 as shown and more fully described on Sectional Plan No. SS 41/2015 in the scheme known as THE VINES in respect of the land and building or buildings situate at PAARL, IN THE DRAKENSTEIN MUNICIPALITY, of which section the floor area, according to the said sectional plan is 69 (Sixty Nine) square metres in extent; together with an undivided share in the common property in the scheme apportioned to the said section in accordance with the participation quota as endorsed on the said sectional plan; previously known as Erf 4788, Paarl, more fully depicted on sheet 1 – 4 of SG Diagram no 348/2013, attached hereto.’ [8] On 4 November 2016 OCR submitted a Site Development Plan to the local authority for approval. It differed substantially from the original plans and now proposed the subdivision of Erf 4788 into nine erven, in addition to the existing dwelling. On 28 July 2017 the local authority approved the development subject to various conditions laid down by its Civil Engineering Services department. The relevant part of the communication received by OCR when it was informed of the approval of its development on 28 July 2017 reads as follows: ‘Based on the information provided in the application the Development Contribution payable by the developer is R 1 012 060,00 (Vat incl) as per attached calculation. The value is only valid until 30th June 2017 whereafter a new calculation is required.’ [9] As a result of this communication and with knowledge of the development contribution, which would have to be paid it requested that the parties sign an addendum, which in the words of OCR ‘would provide [OCR] with a month’s leeway to ensure compliance with the letter and to obtain the requisite information regarding the payment of the BICLs and/or the DCs.’ As a result, on 31 July 2017 the parties amended the agreement by way of an addendum (the first addendum). [10] The terms of the first addendum were the following: ‘2 AMENDMENTS With the effect of 28 July 2017 the aforementioned Sale of Property Agreement is amended as follows: 2.1 that clause 1.1.10 is amended by deleting the words “Property means” and to replace it with “Property’ means Erf 4788 Paarl measuring approximately 2312 square meters, which as at the Date of Signature fall within the sectional title register known as “The Vines’”. 2.2 the date referred to in clause 2.1 is amended to 17h00 on 31 August 2017.’ [11] In the first addendum the parties replaced clause 3.3.2 of the original agreement with the following: ‘3.3.2 Payment of the Purchase Price 3.3.2.1 The Purchaser shall pay to the Seller the Purchase Price plus VAT, subject to the simultaneous cancellation of all existing mortgage bonds registered against the Property, as follows: 3.3.2.1.1 against Transfer the amount of R4 840 000,00 (which includes the provision for VAT calculated on the Purchase Price); 3.3.2.1.2 on or before 30 April 2018, the balance of the Purchase Price in the amount of R2 000 000,00. 3.3.2.2 The Purchaser shall furnish the Conveyancers with an undertaking from the Purchaser’s attorneys, De Klerk & Van Gend Inc, acceptable to the Seller or the Conveyancers, for the due payment of the amount referred to in clause 3.3.2.1.1 within 14 (fourteen) days after being requested to do so which request will only be made after fulfilment or waiver, as the case may be, or the condition precedent contemplated in clause 2.1. 3.3.2.3 The Purchaser shall furnish the Conveyancers with an undertaking from De Klerk & Van Gend Inc, acceptable to the Seller or the Conveyancers, for the due payment of the amount referred to in clause 3.3.2.1.2 by no later than the Date of Transfer.” 2.4 that clause 4.1 be deleted in its entirety and replaced with the following: “4.1 Transfer of the Property shall be given and taken as soon as possible after the fulfilment or waiver, as the case may be, of the condition precedent contemplated in clause 2.1, on condition that the Parties shall have complied with all the terms and conditions of this Agreement. The Parties agree further that Transfer shall be simultaneously with the transfer of the 8 duplex units in the Development to third party purchasers, which units have been sold. The Purchaser shall provide the Seller with documentary proof of such sales on request by the Conveyancers.” 2.5 that the following provisions be added to clause 4.2: “The Purchaser’s attorneys will attend to cancellation of the existing sectional title scheme known as “The Vines” (SS41/2015) simultaneously with Transfer of the Property at the Purchaser’s cost.” 2.6 that the following new clause 4.6 be inserted: “The parties agree that the Purchaser’s attorneys will attend to the registration of a general plan” in respect of the Property simultaneously with Transfer of the Property at the Purchaser’s cost so as to create 10 (ten) new erven.’ [12] The property was registered into the name of OCR on 30 January 2018 and OCR paid the sum of R4 840 000-00 towards the purchase price. OCR thereafter became concerned that it would not be able to pay the balance of the purchase price amounting to R2 million by 30 April 2018, in terms of the deadline imposed by the first addendum. It requested that the agreement be further amended by extending, inter alia, the due date for payment of the balance, or the furnishing of a guarantee for the payment, from 30 April 2018 to 30 June 2018. This was achieved by way of second addendum which the parties signed on 28 January 2018. [13] The material terms of the second addendum were, inter alia, the following: ‘2 AMENDMENTS With the effect from of signature of this Second Addendum by the Party doing so last in time the aforementioned Sale of Property Agreement is amended as follows: 2.1 that clause 3.3.2.1.2 be deleted in its entirety and replaced with the following new clause 3.3.2.1.2- “3.3.2.1.2 on or before 30 June 2018, the balance of the Purchase Price in the amount of R2 000 000,00 (Two Million Rand).” 2.2 that clause 3.3.2.3 be deleted in its entirety and replaced with the following new clause 3.3.2.3─ “3.3.2.3 The Purchaser shall furnish the Conveyancers with an undertaking from De Klerk & Van Gend Inc, acceptable to the Seller or the Conveyancers, for the payment of the amount referred to in clause 3.3.2.1.2 by no later than 31 March 2018.” 2.3 that the following new clause 3.3.2.4 be inserted─ “3.3.2.4 The Purchaser will be liable to pay to the Seller interest on the balance of the Purchase Price as contemplated in clause 3.3.2.1.2 at the Prime Rate per annum from 1 May 2018 to date of payment of the balance Purchase Price, both days inclusive.”’ [14] In terms of clause 2.4 of the second addendum, which gave rise to these proceedings, the following new clause 3.3.2.5 was inserted into the agreement: “3.3.2.5 The Parties agree that, as security for the due and proper fulfilment by the Purchaser of its present and future obligations and liabilities in respect of the balance of the Purchase Price as contemplated in clause 3.3.2.1.2 and those of any other nature in terms of the aforesaid Sale of Property Agreement, the Purchaser shall as soon as possible after the Transfer Date register a first continuing covering mortgage bond for an amount equal to the said balance of the Purchase Price and an additional amount of R400 000,00 (Four Hundred Thousand Rand) to cover costs and expenses over that portion of Erf 4788 Paarl on which the old house is currently situated (the former Sections 1 and 2 The Vines) in favour of the Seller.”. . . ’ [15] At this stage OCR had not paid the local authority the development contribution of R1 012 060, which was payable upon the approval of the plans to subdivide and develop the property. [16] Pursuant to the terms of the second addendum, OCR’s attorneys, on 28 March 2018, furnished the appellant’s conveyancers with an ‘undertaking’, the terms of which were the following: ‘We herewith undertake to pay to yourselves the amount of R2 000 000,00 against registration of transfer of the sectional title Units in The Vines development. Our undertaking is subject to the following instances in respect of which we reserve the right to withdraw or revoke this undertaking upon notice to yourselves: 1. Should the registration of the above transaction(s) be unreasonably delayed or not be proceeded with; or 2. We cease to control the funds in the transaction; or 3. We are by the operation of law prevented from doing so; or 4. Should it appear that the transaction(s) and the proceeds there from are subject to any preferent claim by the Commissioner in terms of Section 99 of the Income Tax Act No.58 of 1962 as amended. This undertaking is neither negotiable nor transferable.’ [17] The appellant’s conveyancers rejected the undertaking. In response thereto OCR’s conveyancers, on 7 May 2018 wrote a further letter to the appellant’s conveyancers informing the appellant that OCR had received an offer of about R1.9 million on Erf 39937, Paarl. OCR offered to pay this amount to the appellant in full and final settlement of the balance of R2 million of the purchase price, but required the appellant to pay the Bulk Infrastructure Contribution Levies. [18] Thereafter on 17 May 2018 and out of the blue, Johan Victor Attorneys on behalf of OCR, wrote to the appellant’s conveyancers informing them that the appellant was in breach of the agreement and further that OCR would not cause a mortgage bond to be registered over ‘that portion of Erf 4788’ or furnish any undertaking for the due payment of the balance of the purchase price whilst the appellant was in breach of the agreement. The alleged breach was said to be the appellant’s misrepresentation to OCR prior to the conclusion of any of the addendums that Bulk Infrastructure Contribution Levies were not payable to the local authority or that they had been paid because of the earlier application for approval of its development by the appellant. This formed the basis of OCR’s defence of fraudulent representation and its claim for the reduction of the balance of the purchase price by the amount which it contended, constituted damages it had suffered as a result of the alleged misrepresentation. [19] The appellant’s attorneys on 30 May 2018 addressed a letter to OCR’s attorneys calling upon OCR to provide them with the title deed relating to the property by Friday, 1 June 2018 so as to register a mortgage bond over the property pursuant to the sale agreement. OCR ignored the demand and the appellant accordingly launched the application in the court a quo seeking, inter alia, the orders described in para 1 above. [20] OCR opposed the application. As I have pointed out OCR sought to justify its refusal to cause a mortgage bond to be registered over Erf 39937 Paarl by asserting that the appellant had allegedly misrepresented the fact that no Bulk Infrastructure Contribution Levies were payable to the local authority in respect of the anticipated development of Erf 4788 Paarl. OCR contended that it had suffered damages amounting to R 1 699 011.93 as a result of the alleged misrepresentation and claimed a compatible reduction of the R2 million outstanding balance of the purchase price payable by it to the appellant. The effect of OCR’s defence was that on its own version, it remained indebted to the appellant for the payment of the sum of R300 988.07. [21] The court a quo discharged the rule nisi and dismissed the application on the ground that the mortgage bond was incapable of registration as the property, over which the appellant sought to register a first mortgage bond, differs to the property described in the second addendum. It found that ‘neither the deed of sale, nor the two addendums to the deed of sale, refer to Erf 39937 Paarl. The second addendum dated 28 January 2018, only refers to ‘that portion of Erf 4788 Paarl on which the old house is currently situated (the former sections 1 and 2 The Vines)…’ In addition, as stated earlier, the court a quo also relied on the Deeds Registration regulations. [22] The appeal therefore raises two issues: first, whether the property over which the mortgage bond was to be registered was sufficiently described in the sale agreement as amended; and second, whether the court a quo was entitled to find that the appellant misrepresented to OCR that no development contribution levies were payable to the local authority or had in fact been paid. [23] The court a quo misdirected itself by deciding and dismissing the matter on the basis of points that had not been raised by any of the parties.2 Moreover, those points, as I shall demonstrate, are entirely without merit. The inadequacy of the description of the property in the mortgage agreement was never advanced by OCR as a basis for its refusal to have a mortgage bond passed over the property. OCR’s opposition to the relief sought by the appellant was based on the assertion that the appellant had allegedly misrepresented the fact that no Bulk Infrastructure Contribution Levies were payable to the local council in respect of the proposed development of Erf 4788 Paarl. It did not, however, seek to resile from the agreement but instead sought a reduction of the R2 million outstanding balance of the purchase price by an amount of R1 699 011.93 which it contended it had suffered as a result of the alleged misrepresentation.3 [24] Simply put, the appellant’s claim in the court a quo was for an order compelling OCR to cause a mortgage bond to be registered over Erf 39937 Paarl, as agreed. The question whether the property to be mortgaged is sufficiently described depends on the interpretation of clause 3.3.2.5 of the agreement as amended by clause 2.4 of the second addendum providing for a mortgage bond and in the light of the correspondence between the parties. The recent cases of this Court make it clear that in interpreting any document ‘the starting point is inevitably the language of the document but it falls to be construed in the light of its context, the apparent purpose to which it is directed and the material known to those responsible for its production.’4 Words have to be interpreted sensibly so as to avoid unbusinesslike results. 2 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA). 3 R H Christie The Law of Contract in South Africa 7 ed (2016) at 619. 4 KPMG Chartered Accountants (SA) v Securefin Ltd and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA) paras 29-40; Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18; Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014 (2) SA 494 (SCA) para 12; and Norvatis v Maphil [2015] ZASCA 111; 2016 (1) SA 518 (SCA) para 27. [25] The provisions of clause 2.4 of the second addendum which amended 3.3.2.5 of the agreement are set out in para [14] of this judgment. As regards the context and purpose of the agreement the following evidence relating to the identity of the property is relevant. [26] Prior to the amendment the agreement defined the property forming the subject matter of the sale as Section No 1 and Section No 2 as described on Sectional Plan No SS41/2015 in the scheme known as The Vines in respect of the land and building or buildings situated at Paarl, in the Drakenstein Municipality, which was previously known as Erf 4788 Paarl. [27] The parties subsequently amended the sale agreement by way of a first addendum in terms of which the description of the property was changed to mean: ‘Erf 4788 Paarl measuring approximately 2312 square meters, which as at the Date of signature fell within the sectional title register known as “The Vines”.’ In the agreement the development to be effected on the property was described with reference to the Surveyor-General Plan No D348/2013 approved on 23 December 2013 to mean: ‘8 (eight) duplex unit residential development . . .”.’ [28] That OCR knew full well what the nature and extent of the property to be developed was, is apparent from the Site Development Plan it submitted to the local authority for approval on 4 November 2016. The application that was submitted was for the subdivision of Erf 4788 Paarl ‘into 10 portions of plus Remainder Erf 4788 …’ [29] On 28 November 2017, the local authority approved the Building Plans for erven 39928 to 39936 and Remainder of Erf 39937. On the Site Development Plan Erf 39937 is depicted as the Remainder of Erf 4788. [30] It is apparent from this analysis of the evidence of the context and the purpose of a mortgage agreement that the parties were under no illusion as to the nature of the property that was sought to be hypothecated. The parties intended that OCR would, after subdivision and transfer of the property into OCR’s name, register a first mortgage bond for R2 million (balance of the purchase price) and an additional amount of R400 000 over Erf 39937, being a portion of Erf 4788 after its subdivision. [31] It must be remembered that the property was registered into OCR’s name on 30 January 2018 before the balance of R2 million of the purchase price was paid. In terms of the agreement the balance of the purchase price was payable on or before 30 June 2018 in respect of which OCR was required to furnish the appellant’s conveyancers with an undertaking for its due payment by no later than 31 March 2018. The purpose of the mortgage bond was to secure the payment of the balance of the purchase price. The construction of the relevant clause of the agreement by the court a quo and its other findings, results in the appellant being permanently deprived of its security for its claim for the balance of a purchase price and leaves the appellant with no security, in the event of OCR being liquidated, as happened in this case. [32] I now turn to consider OCR’s assertion of fraudulent representation by the appellant. The court a quo purported to apply the Plascon Evans principle5, which essentially entails that an application can only be granted if the facts set out by a respondent that postulate a defence can be rejected on the papers. Otherwise, it should fail. The court a quo stated that OCR’s allegation concerning fraud on the part of the appellant cannot be said to be far- fetched and thus capable of rejection on the papers. Then, inexplicably, after acknowledging a dispute of fact the court a quo went on to hold positively that the defence of fraud had been established and that the balance of the purchase price ‘is no more than R300 988-10’. This is the result of deducting the amount for the Bulk Contribution levy. But because of its findings in relation to the registrability of the bond, even in relation to the reduced amount, the court a quo held that the application should fail. [33] The court a quo failed to take into account that on OCR’s own version it knew before any of the two addendums were concluded that the local authority required payment of the contribution levy. By the time of the second addendum it was crystal clear that the payment was due and that it had not been paid. All that had been communicated, much earlier by the appellant, was that there had been an earlier verbal communication by the local authority, in respect of the prior development, that it would not be required. That oral undertaking was not sustained. There was now a new development proposed and the developer, OCR, was in terms of the agreement 5 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A). required to bear the costs, which would have included the bulk contribution levy. By the time the first addendum was concluded it was clear that it had not been paid and that payment was required. In this case the defence of fraud raised by OCR was clearly contrived and fell to be rejected on the papers. [34] The immovable property to be mortgaged was, without more, clearly identifiable. The parties understood it to be so. The agreement between the parties clearly indicated an intention to mortgage the identified property. As between the parties the agreement was valid and enforceable.6 In the present circumstances the regulations relied on by the court below have no application. The court a quo ought to have confirmed paras 2.1, 2.3 and 3 of the rule nisi. It follows therefore that its order should be set aside. [35] Subsequent to the discharge of the rule nisi on 5 December 2018, two important developments occurred. First, on 5 February 2019 OCR sold Erf 39937 Paarl to a third party for R1 million. This was after an application for leave to appeal had been lodged by the appellant on 20 December 2018. The property was transferred and registered into the name of a purchaser on 17 April 2019. Second, after the appellant was granted leave to appeal to this Court on 30 May 2019, OCR was placed in voluntary liquidation by resolution dated 21 November 2019 and registered with the Companies and Intellectual Property Commission on 27 November 2019. [36] The question therefore is whether it is still competent, in light of these developments, to grant the relief sought in paras 2.1, 2.3 and 3 of the notice of motion, more so, in view of the fact that the property in respect of which the relief is sought is no longer registered in the name of OCR. The appellant’s purpose with this appeal was to preserve its security, namely, the mortgage bond, to which it was entitled at the time of the approach to the court a quo and to ensure its position in respect of the liquidation. Counsel for the appellant proposed that if we were minded to set aside the order by the court a quo, that it be replaced with a declarator valid as at the date of the judgment, to the effect that it was at that date, entitled to the orders sought. The 6 G Wille, T J Scott and S Scott Wille’s Law of Mortgage and Pledge in South Africa 3 ed (1987); 17 Lawsa 2 ed para 328 and 345. liquidators have indicated that they would be willing to abide such an order in adjudicating the appellant’s claims. I agree with that proposal, which will be reflected in the order that follows. [37] In the result I make the following order: 1 The appeal succeeds with costs, including the costs of two counsel. 2 The order of the court a quo is set aside and is replaced by the following order: ‘(a) It is declared that as at 5 December 2015 the appellant is entitled to the relief sought in paras 2.1, 2.3 and 3 of the notice of motion. (b) The first respondent is ordered to pay the applicant’s costs.’ _________________ Zondi JA Judge of Appeal Appearances: For appellant: R S van Riet SC (with him A Newton) Instructed by: Lombard Kriek Attorneys, Tyger Valley Honey and Partners Inc, Bloemfontein For respondents: ─

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 10 December 2020 STATUS Immediate K2012076290 (Pty) Ltd v Oude Chardonnay Rusoord (Pty) Ltd and Another (Case no 642/2019) [2020] ZASCA 164 (10 December 2020) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. The Supreme Court of Appeal (the SCA) today upheld the appeal by the appellant and set aside the order of the Western Cape Division of the High Court (the high court). The appeal was against an order and judgment of the Western Cape Division of the High Court, Cape Town (high court) (Vos AJ), discharging a rule nisi granted by Saldanha J on 24 July 2018 and dismissed the appellant’s claim with costs. The rule nisi called upon Oude Chardonnay Rusoord (Pty) Ltd (OCR), the first respondent, prior to its voluntary liquidation, to show cause why, inter alia, it should not be compelled to do all things reasonably required to cause a first continuing mortgage bond for an amount of R2.4 million to be registered over Erf 39937 Paarl, in favour of the appellant, as security for the due and proper fulfilment of its present and future obligations towards the appellant. The high court discharged the rule nisi on the ground that the mortgage bond was incapable of registration as the property, over which the first mortgage bond was sought to be registered, was not sufficiently described in the relevant deed of sale and that the parties were not in agreement concerning the identity of the property sought to be mortgaged. During or about 2012 the appellant, a property developer, purchased Erf 4788, Paarl (the property) from the liquidator of Aslo Holdings (Pty) Ltd (in liquidation) which, prior to its liquidation, had partially developed the property in terms of the approved plans (original plans). The original plans entailed the proposed development consisting of the restoration of the original house and construction of a further 42 flats. The appellant had, upon enquiry, been advised verbally by the local authority that a developer’s contribution or Bulk Infrastructure Contribution Levies were not payable in respect of the development initially proposed. In 2016 the appellant sold the property to OCR for R6 million excluding VAT. The sale agreement was subject to suspensive conditions. The property was registered into the name of OCR on 30 January 2018 and OCR paid the sum of R4 840 000 towards the purchase price. OCR thereafter became concerned that it would not be able to pay the balance of the purchase price amounting to R2 million by the due date of 30 April 2018. It requested that the agreement be further amended by extending, inter alia, the due date for payment of the balance, or the furnishing of a guarantee for the payment, from 30 April 2018 to 30 June 2018. This was achieved by way of second addendum which the parties signed on 28 January 2018. At this stage OCR had not paid the local authority the development contribution of R1 012 060, which was payable upon the approval of the plans to subdivide and develop the property. Thereafter on 17 May 2018 and out of the blue, Johan Victor Attorneys on behalf of OCR, wrote to the appellant’s conveyancers informing them that the appellant was in breach of the agreement and further that OCR would not cause a mortgage bond to be registered over that portion of Erf 4788 or furnish any undertaking for the due payment of the balance of the purchase price whilst the appellant was in breach of the agreement. OCR’s attorneys alleged that the appellant had fraudulently represented that the development contribution was not payable to the local authority. This allegation formed the basis of OCR’s defence of fraudulent representation and its claim for the reduction of a balance of a purchase price. The issue before the SCA was whether the property over which the mortgage bond was to be registered was sufficiently described in the sale agreement and whether the court a quo was entitled to find that the appellant misrepresented to OCR that no development contribution levies were payable to the local authority or had in fact been paid. The SCA held that the court a quo misdirected itself by deciding and dismissing the matter on the basis of points that had not been raised by any of the parties. Moreover, those points were entirely without merit. The SCA stated that the inadequacy of the description of the property in the mortgage agreement was never advanced by OCR as a basis for its refusal to have a mortgage bond passed over the property. OCR’s opposition to the relief sought by the appellant was based on the assertion that the appellant had allegedly misrepresented the fact that no Bulk Infrastructure Contribution Levies were payable to the local council in respect of the proposed development of Erf 4788 Paarl. The SCA held further that the question whether the property to be mortgaged was sufficiently described depended on the interpretation of clause 3.3.2.5 of the agreement as amended by clause 2.4 of the second addendum providing for a mortgage bond and in the light of the correspondence between the parties. That OCR knew full well what the nature and extent of the property to be developed was, was apparent from the Site Development Plan it submitted to the local authority for approval. The SCA found thereafter that the high court failed to take into account that on OCR’s own version it knew before any of the two addendums were concluded that the local authority required payment of the contribution levy. The SCA concluded that the immovable property to be mortgaged was, without more, clearly identifiable. The parties understood it to be so. The agreement between the parties clearly indicated an intention to mortgage the identified property. As between the parties the agreement was valid and enforceable.

1772

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No 475/10 In the matter between: BAREND STEPHANUS SMITH APPELLANT and THE STATE RESPONDENT Neutral citation: Smith v S (475/10) [2011] ZASCA 15 (15 March 2011) Coram: CLOETE, MAYA JJA and PLASKET AJA Heard: 3 March 2011 Delivered: 15 March 2011 Summary: Criminal Procedure – Appeal against a refusal to grant leave to appeal on petition – Issue to be decided is whether the appellant has reasonable prospects of success on appeal, and not the merits of the appeal – Reasonable prospects of success present if a sound, rational basis exists for the conclusion that the appellant has prospects of success on appeal. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Eastern Cape High Court (Grahamstown) (Jansen and Pickering JJ) (sitting as a court of appeal). 1. The appeal is upheld and the order of the court below is set aside. 2. The order of the court below is replaced with the following order: ‘The appellant is granted leave to appeal against his convictions to the Eastern Cape High Court, Grahamstown.’ JUDGMENT PLASKET AJA (CLOETE and MAYA JJA concurring): [1] The appellant was convicted, in the Regional Court, East London, of indecent assault and kidnapping. He was sentenced to seven years’ imprisonment, both counts being taken together for purposes of sentence. He applied to the trial magistrate for leave to appeal against both conviction and sentence. He was granted leave to appeal against sentence only. He then applied, by way of petition to the Judge President of the Eastern Cape High Court, Grahamstown in terms of s 309 of the Criminal Procedure Act 51 of 1977, for leave to appeal against his conviction. His petition was dismissed. With the leave of the judges who refused the petition (Jansen and Pickering JJ) he now appeals to this court against the dismissal of the petition. [2] This court held in S v Khoasasa1 that a refusal of leave to appeal on petition to two judges of a high court is a ‘judgment or order’ or a ‘ruling’ as contemplated by s 20(1) and s 21(1) of the Supreme Court Act 59 of 1959; that a petition for leave to appeal to the high court is, in effect, an appeal against the refusal of leave to appeal by the court of first instance; and that a 1 2003 (1) SACR 123 (SCA) paras 14 and 19-22. refusal of leave to appeal by the high court is appealable to this court with the leave of the high court. [3] In Matshona v S2 this court endorsed the reasoning in Khoasasa, describing it as ‘unassailable’. The court proceeded to emphasise that the issue to be determined at this stage is ‘whether leave to appeal should have been granted by the High Court and not the appeal itself’.3 As a result, the test to be applied ‘is simply whether there is a reasonable prospect of success in the envisaged appeal . . . rather than whether the appeal . . . ought to succeed or not’.4 [4] It was argued by counsel for the appellant that the test of reasonable prospects of success means – and I quote from his heads of argument – that leave should only be refused ‘where there is absolutely no chance of success or where the court is certain beyond reasonable doubt that such an appeal will fail’. In argument he articulated the test as being that if there was a possibility of success on appeal, leave must be granted. [5] Both of these submissions are incorrect and neither is supported by the cases cited by counsel. The first, R v Ngubane & others,5 is to the opposite effect. In that case, the court said the following:6 ‘It was for the applicants to satisfy the Court that there was a reasonable prospect of success on appeal if leave were granted. When in Rex v Nxumalo (1939 AD 580 at p588), the present Chief Justice stated that there was “no probability of the applicant succeeding”, that did not mean, of course, that he had merely failed to show that there was a balance of probabilities in his favour. That test would obviously place too heavy a burden upon the applicant. Equally clearly, when Lord De Villiers CJ, in Rex v Gannon (1911 AD 269 at p270), spoke of the appeal as “hopeless”, or Innes CJ, in Rex v Mahomed (1924 AD 237 at p238), referred to “the possibility of success”, they did not mean that leave will only be refused where the appeal is hopeless or where the Court is certain beyond all reasonable doubt that the appeal would fail. In all the cases, no matter what form of words was used, the same thing was, in my opinion, 2 [2008] 4 All SA 69 (SCA) para 4. 3 Para 5. 4 Para 8. 5 1945 AD 185. 6 At 186-7. intended to be conveyed, namely, that it is for the applicant for special leave to satisfy the Court that, if that leave be granted, he has a reasonable prospect of success on appeal.’ [6] In S v Ackerman & 'n ander,7 cited in support of the second proposition set out above, the sentence of the English headnote from which counsel quoted, if taken out of its proper context, does not reflect correctly what was held in the body of the judgment. The Afrikaans headnote is similarly misleading. The court quoted with approval8 what had been held in S v Shabalala9 to be the correct approach to the granting of leave to appeal, namely:10 ‘Omstandigheidsgetuienis kan sterker wees as 'n onbetroubare ooggetuie, en die “moontlikheid” dat die Hof van Appèl 'n “moontlike” fout in die beredenering sou kon vind en “miskien” tot die konklusie kon kom dat die verhaal van die beskuldigde waar kan wees, is so 'n anemiese toets dat 'n aansoek vir verlof in enige saak daarop sou kon slaag. Alleen dan wanneer die Verhoorregter tot 'n weloorwoë konklusie kom dat daar gronde is waarop die Hof van Appèl tot 'n ander afleiding van die feite kan kom as wat hy gekom het, en daar dus 'n redelike moontlikheid van sukses vir die applikant bestaan, behoort verlof toegestaan te word. Bestaan daardie moontlikheid, behoort verlof ook toegestaan te word sonder huiwering of teësin.’ [7] What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that a court of appeal could reasonably arrive at a conclusion different to that of the trial court.11 In order to succeed, therefore, the appellant must convince this court on proper grounds that he has prospects of success on appeal and that those prospects are not remote but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success, that the case is arguable on appeal or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal. 7 1973 (1) SA 765 (A). 8 At 768D-E. 9 1966 (2) SA 297 (A). 10 At 299C-D. 11 S v Mabena & another 2007 (1) SACR 482 (SCA) para 22. [8] The appellant’s argument is that there are indeed reasonable prospects of success on appeal because the magistrate misdirected himself in various ways. In broad terms, the following are the major misdirections alleged to have been committed by the magistrate: first, even though the magistrate stated that the complainant’s evidence had to be approached with caution, his evaluation of the evidence showed that he did not do so because the corroboration that he relied on was insufficient and the complainant could not be said to have been a satisfactory witness; secondly, he failed to take into account, when evaluating the evidence of the complainant, that during the events giving rise to the charge against the appellant, she had lied on a number of occasions, and that her explanations for doing so, with one possible exception, had not been considered; thirdly, a number of contradictory answers given by the complainant on various issues were not taken into account and properly evaluated by the magistrate; and fourthly, the magistrate had convicted the appellant purely on the probabilities and had made no credibility findings of any sort against him that could have justified a conclusion that his evidence was not reasonably possibly true. In addition, the magistrate’s finding that the report made by the complainant to her boyfriend and his father, on her arrival at their house, ‘is strong confirmation of her version that she had been indecently assaulted’ is a misdirection, although the magistrate’s reliance on her distressed state is not.12 On the other hand, however, there are without question facts and probabilities that point to the appellant’s guilt. [9] In my view, and without wishing to comment on the merits in any detail, the alleged misdirections that have been listed above can be said to be sufficiently weighty to justify a conclusion that, if leave to appeal is granted, the appellant’s prospects of success are reasonable. In the result, the appeal must succeed. 12 See S v Hammond 2004 (2) SACR 303 (SCA). [10] The following order is issued: 1. The appeal is upheld and the order of the court below is set aside. 2. The order of the court below is replaced with the following order: ‘The appellant is granted leave to appeal against his convictions to the Eastern Cape High Court, Grahamstown.’ _____________________ C. PLASKET ACTING JUDGE OF APPEAL APPEARANCES APPELLANT: T N Price instructed by Changfoot and Van Breda, East London and Symington De Kock, Bloemfontein RESPONDENT Z Mdolomba of the office of the Director of Public Prosecutions, Grahamstown

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 15 March 2011 STATUS: Immediate BAREND STEPHANUS SMITH V THE STATE (475/10) 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 an appeal against a refusal to grant leave to appeal on petition. The appellant was convicted in the Regional Court, East London, of indecent assault and kidnapping. He was sentenced to seven years’ imprisonment. He applied to the trial magistrate for leave to appeal against both conviction and sentence. He was granted leave to appeal against sentence only. He then applied, by way of petition to the Judge President of the Eastern Cape High Court, Grahamstown, in terms of s 309 of the Criminal Procedure Act 51 of 1977, for leave to appeal against conviction. His petition was dismissed. With the leave of the judges who refused the petition, he appealed to the SCA against the dismissal of the petition. The issue before the SCA was whether the appellant has reasonable prospects of success on appeal, and not the merits of the appeal. The court held that what the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that the court hearing the appeal could reasonably arrive at a conclusion different to that of the trial court. The court held that that there must be a sound, rational basis for the conclusion that there are prospects of success on appeal. The appellant’s argument was that there were reasonable prospects of success on appeal because the magistrate had misdirected himself in various ways. The SCA held, without commenting on the merits in any detail, that the alleged misdirections could be said to be sufficiently weighty to justify a conclusion that if leave to appeal was granted the appellant’s prospects of success were reasonable.

1837

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 420/2010 In the matter between: FRANS JACOBUS KRUGER h/a KRUGER ATTORNEYS Appellant and PROPERTY LAWYER SERVICES (EDMS) BPK Respondent Neutral citation: Kruger v Property Lawyer (420/2010) [2011] ZASCA 80 (27 May 2011) Coram: Mpati P, Brand, Lewis, Malan and Tshiqi JJA Heard: 4 May 2011 Delivered: 27 May 2011 Summary: Bridging finance – undertaking by transferring attorney to pay against registration of transfer – construction of undertaking – undertaking to pay from proceeds of sale. ___________________________________________________________________ ORDER On appeal from the North Gauteng High Court, Pretoria (Murphy J sitting as court of first instance): (a) The appeal is upheld with costs including the costs of two counsel; (b) The order of the court below is set aside and replaced by the following: ‘The application against the first respondent is dismissed with costs.’ ___________________________________________________________________ JUDGMENT MALAN JA (Brand, Lewis, Maya and Tshiqi concurring) [1] The appellant appeals against the whole of the judgment and order of Murphy J in the North Gauteng High Court, Pretoria in terms of which the appellant was directed to pay to the respondent an amount of R271 244,90 together with interest and costs. This appeal is with leave of the court below. [2] The appellant, a firm of practising attorneys, furnished a written letter of undertaking to the respondent, a provider of bridging finance to sellers of immovable property and their agents, mainly attorneys. The bridging loan was to be made pending transfer of certain properties in which the appellant was engaged, albeit not as the conveyancer, as attorney on behalf of the sellers. The undertaking of the appellant is addressed to the respondent and commences with a reference to the properties to be transferred and who the transferors and transferee were. The material part reads as follows: ‘Ons onderneem hiermee onherroeplik om die bedrag van R500 000,00 (Vyfhonderd Duisend Rand) tesame met 20% (twintig persent) en 10% (“raising fee”) in die volgende rekening in te betaal op datum van registrasie van die bogemelde eiendomme in die Aktekantoor te Pretoria: Proplaw Bridging Absa, Brooklyn Branch: 632 005 Account Number: 4071652511 tensy ons van regsweë verhoed word of aangestel word as agente namens die Suid Afrikaanse Inkomste Diens ooreenkomstig Art 99 van die Wet op Inkomstebelasting No. 58/1962 soos gewysig.’ [3] The seller of six of the properties referred to in the undertaking, Bell Investments (Pty) Ltd (the company), was liquidated and its liquidators claimed the proceeds arising from the sales. The seller of the seventh property was Mr I M Bell. All the properties were sold to the same purchaser, Philadelphia Game Ranch (Pty) Ltd. [4] The respondent, when considering an application for finance, requires certain documentation including a request for bridging finance and mandate to pay signed by the client, an identity document, a copy of the sales agreement and also a letter of undertaking from the conveyancer or attorney that the amount of the bridging finance will be repaid by the conveyancer against registration of transfer of the sale property. The ‘Bridging Request and Mandate to Pay’ in this case, signed by Mr Bell for himself and also on behalf of the Bell Ontwikkkelings Trust (the client), refers to the properties involved and the particulars of their transfer. It was submitted to the respondent by the appellant (referred to as the ‘law firm’) on behalf of the client. The borrowers were Mr Bell and the Trust and the sellera of six of the properties was the company and Mr Bell the seller of the seventh. Apparently both the company and the Trust were controlled by Mr Bell. The bridging request contains a request by the client for payment of an amount of R500 000 (the amount of the loan) and continues: ‘And whereas [the respondent] requires that the client in return cedes in their [favour] his right, title and interest to the proceeds in the above transaction in the amount of (requested amount plus 20 % as well as a raising fee of 10 %) R100 000,00 (Een Honderd Duisend Rand) plus die “raising fee” van 10% R50 000.00 (Vyftig Duisend Rand) Now therefore the [appellant] is hereby irrevocably instructed to issue a Bank Guarantee / Letter of Undertaking, in the last mentioned amount in favour of [the respondent] payable on registration of the above transaction. Should the transaction for whatever reason be cancelled or not registered within six (6) months from signature then the amount will immediately become due and payable to [the respondent].’ [5] At the end of the bridging request there is a ‘Confirmation by Registering Attorney’ in the following terms signed by the appellant (or the law firm): ‘I, the undersigned Marthinus Jacobus Pretorius on behalf of the law firm hereby confirm that: 1. We have been instructed to attend to the registration of the above matter. 2. That all conditions precedent, or otherwise, to the said transaction as well as linked transactions (if applicable) have been met, all registration documents have been signed, costs have been paid or provision for the payment thereof have been made and that no reason exists why registration triggering the payment of the guarantee/undertaking should not take place on the said expected date. 3. Approval hereof relies materially upon the above request and confirmation.’ [6] The appellant furnished both the letter of undertaking and the bridging request to the respondent. Registration of transfer of the properties did not take place within the six month period envisaged in the bridging request but only thereafter. After liquidation of the company the liquidators elected to abide by the sales and the properties were duly transferred. An amount was available from the proceeds of the sale of the seventh property (by Mr Bell) which was paid to the respondent leaving the balance claimed. [7] Two issues were raised on appeal: first, the proper construction of the letter of undertaking, particularly whether it constitutes an undertaking independent of the underlying transaction, that is the bridging loan to Mr Bell and the Trust; and, secondly, if the letter of undertaking is not an independent undertaking, whether it is enforceable since the bridging finance loan does not comply with the provisions of the National Credit Act 34 of 2005 (NCA). In this regard, the appellant submitted that the letter of undertaking, in any event, constitutes a ‘credit guarantee’ as defined in the NCA. In the court below Murphy J found in favour of the respondent on all these issues. Relying on Lombard Insurance Co Ltd v Landmark Holdings (Pty) Ltd & others 2010 (2) SA 86 (SCA) he found that the letter of undertaking gave rise to an independent obligation and was not of an accessory nature, nor was it unenforceable due to non-compliance with the provisions of the NCA. He gave judgment in favour of the respondent. For the reasons that will appear from this judgment it is not necessary to consider the applicability of the NCA. [8] The letter of undertaking was issued pursuant to the bridging loan made by the respondent to Mr Bell and the Trust. It must be construed in that context, the factual matrix in which the parties operated,1 so as to give it a commercially sensible meaning.2 It is clear from the wording of the undertaking that the appellant undertook to pay the amounts stipulated against registration of transfer of the properties. It is also clear that the appellant did this on the instructions of the client: it uses the word ‘onherroeplik’ implying that the mandate to the appellant could not be revoked by its principal, the client. The fact that the appellant acted as the agent of the borrowers in giving the undertaking does not mean, of course, that it could not have incurred a personal liability in terms of the letter of undertaking.3 The word used is ‘onderneem’ leaving no doubt that a personal obligation was envisaged. The real question, however, is not whether the appellant undertook to pay but what the content of this undertaking was. [9] The purpose of the undertaking was that the appellant, as the attorney involved in the transfer of the properties, would make payment to the respondent of the money lent and other charges from the proceeds received from the sale of the seven properties by the company and Mr Bell.4 This is clear from the terms of the bridging request. It recites that all the conditions precedent to the sales have been fulfilled and that registration was expected to take place not later than the end of August 2008. It records that the client, that is Mr Bell and the Trust, requested payment of the amount borrowed and that the respondent requested the client ‘in return’ to cede ‘his right, title and interest to the proceeds in the above transaction in the amount of “(requested amount plus 20% as well as a raising fee of 10%)”’ to the respondent. As security for the bridging loan the client therefore ceded part of its 1 See KPMG Chartered Accountants (SA) v Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39; Swart & ‘n ander v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A) at 202C-D. 2 Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement Fund (457/2008) ZASCA 154 [2009] [27 November 2009]; 2010 (2) SA 498 (SCA); [2010] 2 All SA 195 (SCA) para 13; Masstores (Pty) Ltd v Murray & Roberts Construction (Pty) Ltd & another 2008 (6) SA 654 (SCA) para 7. 3 Cf Ridon v Van der Spuy and Partners (Wes-Kaap) Inc 2002 (2) SA 121 (C) at 137I-138B. 4 Venter & others v Credit Guarantee Insurance Corporation of Africa Ltd & another 1996 (3) SA 966 (A) at 973D-E. right to the sale proceeds to the respondent.5 Because payment was expected by no later than the end of August 2008 the appellant was instructed to issue the letter of undertaking. The appellant’s confirmation at the end of the bridging request in so many words confirms that, because all the conditions for registration and payment of the costs have been met, ‘no reason exists why registration triggering the payment of the guarantee/undertaking should not take place on the said expected date’. It is only by virtue of his control over the proceeds of the sales that effect to the entire transaction could have been given. [10] The undertaking is not to pay ‘regardless’ but to effect payment from the receipt of the proceeds of the sales. Nor was it envisaged that the proceeds would vest in the appellant: by virtue of the ‘cession’ the proceeds in the agreed amount had to be paid to the respondent. It would have been absurd for the appellant to have given an unconditional, independent undertaking in these circumstances. The letter of undertaking itself contains a reference to the bridging finance provided to Mr Bell and the Trust, recites the properties to be transferred and links payment of the undertaking to registration of transfer. Seen in this context, the undertaking amounts to no more than an undertaking to make payment from the proceeds of the sales.6 It is common cause that the sales of the company’s properties left a deficit. The proceeds of the sale of the seventh property by Mr Bell left a net balance which was paid to the respondent. It follows that the respondent is not entitled to any further payment from the appellant. 5 The fact that a partial, and hence an invalid, cession was involved is not relevant for the purposes of this matter: apparently, all the parties regarded it as valid. 6 See also The Minister of Transport and Public Works: Provincial Government of the Western Cape and The Head of the Department of Transport and Public Works: Provincial Government of the Western Cape v Zanbuild Construction (Pty) ltd and Absa Bank Limited (68/2010) [2011 ZASCA 10 (11 March 2011) paras 14 ff on the importance of interpreting the terms of the particular undertaking or guarantee under consideration. [11] The following order is made: (a) The appeal is upheld with costs including the costs of two counsel; (b) The order of the court below is set aside and replaced by the following: ‘The application against the first respondent is dismissed with costs.’ _________________ F R MALAN JUDGE OF APPEAL APPEARANCES: For Appellant: A Subel SC J Pretorius Instructed by: Eversheds Attorneys Johannesburg Webbers Bloemfontein For Respondent: D B du Preez SC Instructed by: Strydom & Bredenkamp Inc Brooklyn E G Cooper & Majiedt Inc Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 27 May 2011 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. KRUGER v PROPERTY LAWYER The Supreme Court of Appeal today upheld an appeal by a firm of practising attorneys, who had furnished a written letter of undertaking to the respondent, a provider of bridging finance to sellers of immovable property. Bridging finance was made available to the appellant’s clients pending transfer of certain properties in which the appellant was engaged, albeit not as the conveyancer, as attorney on behalf of the vendors. The undertaking of the appellant is addressed to the respondent and contains an irrevocable undertaking to pay an amount of R 500 000 on registration of the properties sold in the name of the purchaser. The Supreme Court of Appeal held that the undertaking had to be interpreted in the context of the bridging loan made to the appellant’s clients. The purpose of the undertaking was that the appellant would make payment to the respondent of the money lent and other charges from the proceeds received from the sale of the properties. This was clear from the terms of the bridging request. The appellant’s confirmation at the end of the bridging request in so many words reads that, because all the conditions for registration and payment of the costs have been met, ‘no reason exists why registration triggering the payment of the guarantee/undertaking should not take place on the said expected date’. It is only by virtue of his control over the proceeds of the sales that effect to the entire transaction could have been given. The seller in respect of some of the properties was liquidated and only a portion of the price of the other property was received by the appellant. The latter amount, less than the amount stipulated in the undertaking, was paid over to the respondent. The Supreme Court of Appeal held that the appellant had discharged its obligations under the undertaking and found that the respondent was not entitled to claim the balance from the appellant. The appeal from the North Gauteng High Court (Pretoria) was therefore upheld with costs.

2298

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 74/2009 No precedential significance HARRY NKWANE RIBA Appellant and THE STATE Respondent Neutral citation: Riba v State (74/2009)[2009] ZASCA 111 (23 September 2009) Coram: Mthiyane, Mhlantla JJA and Wallis AJA Heard: 11 September 2009 Delivered: 23 September 2009 Summary: Theft ─ a policeman and his colleague allegedly retained suspected stolen goods ─ failed to enter them in SAP 13 register and to keep in a store ─ goods entered in the register two days later after complaint by suspect ─ whether intention to steal established. Appeal against sentence dismissed but years imprisonment imposed by High Court antedated to 1 November 2008, to take into account the appellant’s earlier incarceration of ten and a half months prior to hearing of appeal before High Court. ___________________________________________________________ ORDER On appeal from: Transvaal Provincial Division (Du Plessis J & Davel AJ sitting as court of appeal.) The appeal against conviction and sentence is dismissed. The sentence of 4 years imprisonment is antedated to 1 November 2008. ___________________________________________________________ JUDGMENT MTHIYANE JA (MHLANTLA JA and WALLIS AJA concurring): [1] The appellant, a police inspector and his colleague, a reserve constable, were arraigned in a regional court in Mamelodi on charges of corruption, in contravention of s 1(b)(ii) of the now repealed Corruption Act 94 of 1992, and theft. They were convicted as charged and sentenced to 15 years’ imprisonment, both counts taken as one for purposes of sentence. [2] Their appeal to the High Court (Du Plessis J and Davel AJ concurring) succeeded in part. Consequently the conviction and sentence on the charge of corruption was set aside but the conviction for the theft was confirmed and a sentence of 4 years’ imprisonment was imposed on both the appellant and his colleague. The appellant, was granted leave by the High Court (Botha J and Du Plessis J) to appeal to this court against both conviction and sentence. No appeal was lodged by the appellant’s co-accused. [3] The facts relevant to the theft charge are the following. On 8 September 2001 the appellant and his colleague were on patrol duty in Mamelodi. In the course of that morning they went to the residence of the complainant, Mr Johannes Mapoba, who was renting a room in Mamelodi. After the complainant had given them permission to do so, they searched his room and found a mini hi-fi set and 80 CD’s (compact audio discs). The police asked the complainant for receipts for the above goods but he was unable to produce them. The CD’s did not belong to him but to a Mr Neville Shirinda and receipts for the hi-fi set, which was the only item that belonged to him, had been lost as he had bought it a long time ago. [4] The goods were then seized by the police allegedly on the suspicion that they had been stolen and the complainant was asked to accompany them. His evidence was that he understood that he was being arrested, but the evidence of the appellant and his co-accused was that they found a firearm in his possession and no licence was produced so that they decided to arrest him for possession of an unlicenced firearm. Be that as it may the complainant produced his firearm licence whilst in the police van so any detention for that reason fell away. What happened immediately thereafter is relevant to the charge of corruption and is referred to herein solely for the sake of completeness. While the complainant was in the police van an amount of R400 was allegedly demanded from him. He testified that he had no money on him but indicated that his uncle, Mr Frank Maleka, might be able to help. He was then taken to his uncle in Groenkloof who provided the required cash. Upon their return the police dropped him off at a certain suburb in Pretoria, without being charged. The evidence of the appellant and his co- accused was that they took the complainant with them because he said that he would take them to his uncle who owned the goods, but the uncle was not at the place where they were taken so they left the complainant there and gave the person they found there their contact details with a message for the uncle to contact them. The goods seized from the complainant were then taken to a satellite police station in Mamelodi where the appellant and his colleague handed them over to Inspector Tlobatla, who kept them in a locker where police officers kept their personal belongings. [5] On the following day, 9 September 2001, the complainant went to Mamelodi police station to lay a complaint concerning the seized items. A docket was duly opened and the case was assigned to Captain Nwamati Phillenion Morudi (then an Inspector). His first port of call was the appellant and his colleague, as his initial investigation revealed that they were the officers who had taken the complainant’s goods and they had failed to enter them in the SAP 13 register and keep them in the store. Goods seized from suspects were, as a standard police procedure, entered in the SAP 13 register and kept in a store at the main police station in Mamelodi. The satellite station did not keep an SAP 13 register and had no store for that purpose. [6] On the morning of 10 September Captain Morudi tried to contact the appellant and his colleague, but found that they were doing night duty. Morudi then left a message at the station that he was looking for them. They received the captain’s message at 20h00 and went to his house at 22h00. After they left his house and in the early hours of 11 September they fetched the goods from the satellite station and took them to the main station in Mamelodi. They handed them to Inspector Nkombi who was in charge of the SAP 13 register and the store. Nkombi entered the goods in the register and recorded that they had been found abandoned in the street. Thereafter, according to Nkombi, the appellant appended his signature to the note in two places separated by Nkombi’s own notes. It bears mention, however, that while the entry in the Occurrence Book (OB) shows that the goods were booked in the early hours (04h50) on 11 September the entry in the SAP 13 register reflects the date as 10 September. This apparent conflict does not, however, detract from the fact that the goods were only booked two days after they were taken from the complainant. [7] The issue for decision in this appeal is whether the appellant (and his colleague) intended to steal the goods in question. The answer to that question depends upon the assessment of the evidence as a whole, the drawing of inferences from the proven facts and the subsequent conduct of the appellant and his colleague and, more importantly, what was said by the appellant and his colleague to Inspector Tlobatla, Captain Morudi and Inspector Nkombi at the relevant times. [8] There are strong indications in the evidence, which point irrefutably to the conclusion that when the appellant and his colleague took the complainant’s goods to the satellite station and left them there, they intended to appropriate them. [9] First, there is a complete absence of any convincing explanation why the goods were taken to the satellite station and not to the Mamelodi Police Station, where they would have been entered in the SAP 13 register and kept in a store with the other exhibits and goods seized from suspects. The appellant and his colleague, who were both experienced members of the police, must have known that no SAP 13 register was kept at the satellite station and that there was no store there to keep such goods. When they left them at the satellite station they knew they had not been booked or placed in an authorised store. [10] Second, when the goods were handed to Inspector Tlobatla he was told by the appellant and his colleague that they belonged to them. No mention was made of the fact that the goods were seized from a suspect. In his evidence Tlobatla was adamant that if he had known that the goods had been seized from a suspect he would not have agreed to keep them, but would have asked the appellant and his colleague to take them to the main station in Mamelodi. There, they would have been entered in the SAP 13 register and kept in a store, normally reserved for exhibits and goods seized from suspects. It is significant the Tlobatla was called as a witness for the defence and yet when he said this no attempt was made to challenge the evidence or his recollection. [11] The explanation given by the appellant and his colleague for not taking the goods to Mamelodi Police station is far from convincing, as I have already indicated. They advance two reasons for their failure to take the goods to the main police station. The first is that they were extremely busy on both the 8th and the 9th and could not find time to have the goods entered in the SAP 13. As they were in a hurry to attend to another complaint they dropped the goods off at the satellite station. Their intention throughout was to fetch the goods subsequently and to have them properly entered into the SAP 13 register. This sudden spate of complaints, which the appellant and his colleague found themselves embroiled in, is not backed up by any proof. The bald allegation not supported by any note of such complaints in the occurrence book carries very little weight, if any. The appellant and his colleague were using a police van on that day. There is no reason why they could not have driven quickly to the police station to drop off the goods at the main station. The second excuse, that they were looking for the owner of the goods whom they failed to trace at Waterkloof, where the complainant had directed them, is a weak point. It is not surprising that it was not pressed by counsel during argument. [12] The appellant said that when they received Captain Morudi’s message on 10 September they were not told why they had to contact him. They went to his home but he did not tell them why he was looking for them. Instead, Morudi asked them to meet him at the office the next morning. The appellant said it is only after they had seen Morudi that they, for the first time, found time to fetch the goods from the satellite station and to take them to the main station. Again, while they were there, the appellant and his colleague received an urgent complaint and could not wait for Nkombi to complete the SAP 13 register. Accordingly, the appellant says he signed the register in blank and left it to Nkombi to complete the entry. The appellant and his colleague said that they told Nkombi that they had seized the goods and were waiting for the owner to identify them. [13] The appellant and his colleague’s version raises more questions than answers. It is not clear why Nkombi would not record on the SAP 13 where or from whom the goods were seized, if he had been told this. There is also no explanation why he would record that the goods had been found abandoned in the street if he was told otherwise and given the name of the person from whom they had been seized. Nkombi was adamant that what he recorded is what he was told by the appellant and his colleague. [14] Third, and finally, there is the question of the night visit to Captain Morudi’s house. Morudi testified that he left a message that he was looking for the appellant and his colleague in connection with the goods they had seized. So, when they came to his home during the night of 10 September they knew why he was looking for them and Morudi further said they told him that they had registered the goods in the SAP 13 register and that the goods were in the store. [15] Having regard to the above salient facts it is difficult to come to any conclusion other than that the appellant and his colleague had not intended to enter the goods in the SAP 13 register. The reason why the goods were ultimately booked in and registered in the SAP 13, is probably because the word had spread to the appellant and his colleague that Captain Morudi was now investigating the matter. The game was up. The goods were eventually booked some two days later to cover up their failed attempt to appropriate them. When their scheme went awry they resorted to concocting a story that the goods had been found abandoned in the street. The appellant endeavoured to explain away the entry and to refute Nkombi’s version by saying that he had left a piece of paper with Nkombi in which he gave him the name and address of the complainant. This was an equally poor effort to sustain an inherently improbable tale. [16] There is, however, one further aspect the appellant is not able to explain. How did his signature come to be appended in the SAP 13 register below a note to the effect that the goods were found abandoned in the street? The appellant tried to meet this hurdle by saying that he had signed the SAP 13 in blank and left it to Nkombi to complete. This, coming from a policeman of many years standing has only to be stated to be rejected. He was in other words giving Nkombi a carte blanche to write whatever he liked. In addition he was unable to explain how he managed to sign his name twice and leave exactly the right amount of space between the two for Nkombi to insert whatever he was going to invent for that purpose. This story, to my mind, is so bereft of any truth that it can safely be rejected as false beyond reasonable doubt. [17] In my view the conclusion is inescapable that Nkombi recorded what he was told by the appellant and his colleague, namely that the goods were found abandoned on the side of the road. That story is undoubtedly false and inconsistent with the appellant and his co-accused acting honestly in relation to these goods. [18] The above factors taken together point unavoidably to one conclusion, namely that the appellant and his colleague intended to appropriate the goods and that they left them at the satellite police station with the intention permanently to deprive the complainant of his rights therein. This court has held that: ‘[t]heft, in substance, consists of the unlawful and intentional appropriation of the property of another (S v Visagie 1991 (1) SA 177 (A) at 181I). The intent to steal (animus furandi) is present where a person (1) intentionally effects an appropriation (2) intending to deprive the owner permanently of his property or control over his property, (3) knowing that the property is capable of being stolen, (4) knowing that he is acting unlawfully in taking it (Milton South African Criminal Law and Procedure vol II 3rd ed at 616).’ (S v Boesak 2000 (1) SACR 633 (SCA) at para 97.) Having regard to the above principles, I am satisfied that on the evidence, when the appellant and his colleague heard that Morudi was looking for them in connection with the goods they had seized, they attempted to cover their tracks by entering them in the SAP 13 at the main police station and furnishing Nkombi with a false explanation for the possession of the goods. Accordingly the intention to steal was clearly established and the appellant was correctly convicted of the theft of the goods seized from the complainant. [19] The appeal against sentence is without merit. The only point advanced in argument in this regard is that the court below misdirected itself by failing to have regard to the fact that the appellant would lose his job if a custodial sentence were imposed. The argument is misconceived. This aspect was fully considered by Du Plessis J. In the course of his judgment the learned judge says: ‘He [referring to the appellant] had served in the police force for a substantial period and it is important to have regard thereto that, if he is sentenced to direct imprisonment he will probably lose his job.’ It surely cannot be clearer than that. [20] It is however proper to have regard to the fact that this matter has been outstanding for a long time and that the appellant was at some point in custody for some ten and a half months (30/11/06 ─ 19/10/07) before he was released on bail pending the appeal in the High Court. Through its sentencing discretion a court is empowered to ameliorate any possible sentencing anomalies that may arise in the imposition of punishment. On appeal this court is empowered under s 282 of the Criminal Procedure Act 51 of 1977, to ameliorate the negative effect of the delay in finalising the matter and the severity of the ultimate punishment which might occur, if the appellant’s earlier incarceration of ten and a half months prior to his appeal in the High Court, were not taken into account. [21] Having regard to all of the above factors a sentence of 4 years imprisonment antedated to 1 November 2008 would, in my view, be appropriate. [22] In the result the following order is made. 1. The appeal against conviction and sentence is dismissed. 2. The sentence of 4 years imprisonment is antedated to 1 November 2008. ________________________ KK MTHIYANE JUDGE OF APPEAL Appearances: For Appellant: L Kok Instructed by: Chiloane & Associates Pretoria Symington & De Kok Bloemfontein For Respondent: CAC Geyser Instructed by: Director of Public Prosecutions Pretoria Director of Public Prosecutions Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL 23 September 2009 STATUS: Immediate HN Riba v The State (74/2009)[2009] ZASCA 111 (23 September 2009) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The SCA today dismissed an appeal by a Mamelodi Police Inspector, Mr Riba, against the decision of the High Court in Pretoria, in which he was sentenced to 4 years imprisonment for the theft of certain goods which he and a police reservist had seized from a suspect but failed to record in the SAP 13 register and keep in a police store in the Mamelodi main police station, timeously as was the standard police procedure. The goods had been left at a satellite station in Mamelodi on 8 September 2007 and were kept in a locker where police kept their personal belongings. They were only taken to the main station and recorded in the SAP 13 after two days. This was done after the suspect, who had been released without being charged, had laid a complaint with the police and the matter of the goods was being investigated by a police captain. The SCA rejected the appellant’s submission that he and his colleague, who was charged with him for the theft of the goods, had throughout intended to enter them in the SAP 13 register and keep them in the store at the main station. The SCA held that the appellant and his colleague had intended to appropriate the goods and found the charge of theft against them to have been proved. A sentence of imprisonment for 4 years was imposed. Because the appellant had already been in custody for ten and a half months prior to the hearing of the appeal before the High Court, the sentence was antedated to 1 November 2008.

3745

non-electoral

2022

` THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 438/20 In the matter between: MAWANDA MAKHALA FIRST APPELLANT VELILE WAXA SECOND APPELLANT and THE STATE RESPONDENT Neutral citation: Makhala & Another v The State (438/2020) [2021] ZASCA 19 (18 February 2022). Coram: MOCUMIE, MAKGOKA and MOTHLE JJA and MEYER and UNTERHALTER AJJA Heard: 2 November 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 12h00 on 18 February 2022. Summary: Criminal Procedure – State witness recanting prior inconsistent statements – the constitutional rights of witness – hearsay evidence – admissibility of statements – section 3(1) of the Law of Evidence Amendment Act 45 of 1988 – admissibility at common law – declaration of a witness as hostile – accomplice evidence – cautionary rule – corroborative evidence – burden of proof. ORDER On appeal from: The High Court, Western Cape Division, Eastern Circuit Local Division (Henney J, sitting as the court of first instance): The appeal is dismissed. JUDGMENT Unterhalter AJA Introduction [1] The first and second appellants were convicted by Henney J in the high court on one count of murder, one count of possession of an unlicensed firearm and one count of the unlawful possession of ammunition. The appellants were each sentenced to life imprisonment for the murder and five years of imprisonment on the remaining counts, which were ordered to run concurrently with the life sentences. The appellants were granted leave to appeal to this Court. [2] On 23 July 2018, Mr Molosi attended a school governing body meeting at Concordia High School. He was the chair of the governing body. He was also a councillor of the Knysna Municipal Council. After the meeting, he was given a lift and dropped off near his home. While walking home, he was shot and killed. [3] A team of police officers was appointed to investigate the murder. The police received information that the first appellant, Mr Mawanda Makhala, was seen in the Pop Inn Tavern in Concordia on the weekend before the murder, with two other persons, one of whom was his brother, Mr Luzuko Makhala. On 1 August 2018, Sergeant Wilson traced Luzuko Makhala who confirmed that he was in the area during the weekend of the murder. Luzuko Makhala said that he had given a lift to an unknown man in the Eastern Cape and then drove to Knysna over the weekend in question. Sergeant Wilson, however, viewed camera footage of the N2 highway, which showed that Luzuko Makhala’s vehicle was travelling from Cape Town to Knysna on 22 July 2018. [4] Confronted with this evidence, according to Sergeant Wilson, Luzuko Makhala indicated that he wished to recount his part in the murder of Mr Molosi. His rights were explained to him. Luzuko Makhala was informed that he would be treated as a witness under s 204 of the Criminal Procedure Act 51 of 1977 (CPA). Section 204 permits a witness to give incriminating evidence for the prosecution. Upon testifying frankly and honestly, such a witness may be discharged from prosecution by the court. [5] Luzuko Makhala gave first statement to Colonel Ngxaki on 13 August 2018. Colonel Ngxaki, a policeman of some 25 years’ experience, gave evidence at the trial. He testified that Luzuko Makhala was informed of his constitutional rights: his right to legal representation, his right to remain silent and not to incriminate himself. Section 204 of the CPA was also explained to him. Freely and voluntarily, according to Colonel Ngxaki’s testimony, Luzuko Makhala made a detailed statement that Colonel Ngxaki wrote down. I shall refer to this statement as the first statement. [6] The following was recorded in the first statement. The second appellant, Mr Velile Waxa, was an independent councillor of the Knysna Municipal Council. Mr Waxa sought the services of a hitman to kill Mr Molosi, a councillor representing the African National Congress (ANC). Mawanda Makhala (first appellant) asked whether his brother, Luzuko Makhala, knew of such a person. Luzuko Makhala did. The person he procured was the third accused in the trial, Mr Vela Dumile. Luzuko Makhala introduced Mr Dumile to Mr Waxa. He brought Mr Dumile from Cape Town to Knysna to kill Mr Molosi. In addition, he facilitated the killing by ensuring that Makhala pointed out the home of Mr Molosi to Mr Dumile prior to the shooting and after that, Mr Dumile shot Mr Molosi. Thereafter, Luzuko Makhala transported Mr Dumile back to Cape Town. [7] Luzuko Makhala gave a second statement to Sergeant Mdokwana. Sergeant Mdokwana was transporting Luzuko Makhala from Knysna back to Cape Town. Luzuko Makhala recounted that on 18 July 2018, he had received a call from Mr Waxa, who said that he would be sending him R1000 to purchase petrol to transport Mr Dumile to Knysna. On 20 July 2018, Luzuko Makhala drew the money, and Mr Waxa called him to confirm whether he had received the money. Sergeant Mdokwana asked Luzuko Makhala whether he would confirm this in a statement. He agreed, and this was done. I shall refer to this as the second statement. Luzuko Makhala also handed over his Nokia cell phone. [8] The first and second statements incriminated Mawanda Makhala, Mr Waxa, Mr Dumile and Luzuko Makhala in the murder of Mr Molosi. The trial court admitted the first and second statements into evidence and relied upon these statements to convict the accused of murder and the related counts. The central question in this appeal is whether the trial court was correct to do so. It is common ground in this appeal that without recourse to this evidence, the appellants' convictions cannot stand. The trial court’s judgment [9] The State called Luzuko Makhala to give evidence. Without forewarning to the prosecution, Luzuko Makhala recanted the contents of his first and second statements that incriminated himself and the accused in the murder. The prosecution sought to have Luzuko Makhala declared a hostile witness. The trial court did so. Luzuko Makhala testified that the incriminating portions of the statements were fabrications that the police forced him to record in the statements. He claimed that he was intimidated by the police and threatened with assault and as a result, made statements that he thought the police wanted from him. [10] The trial court's judgment, quite properly, devoted considerable attention to the first and second statements and whether the State could place reliance upon them, in the light of Luzuko Makhala’s recantation in the witness box of the incriminating portions of the statements. [11] First, the trial court considered whether Luzuko Makhala was forced to make the statements by the police and did not do so freely and voluntarily. The trial court found that the evidence of Colonel Ngxaki and Sergeant Mdokwana, who took down the statements, was ‘overwhelmingly convincing’ and corroborated by Sergeant Wilson. Luzuko Makhala was found to be the author, originator and principal source of the two statements. [12] Second, the trial court considered whether the first and second statements should be admitted into evidence in terms of s 3(1) of the Law of Evidence Amendment Act 45 of 1988 (the Hearsay Act). Upon a consideration of the factors listed in s 3(1)(c), the trial court admitted the two statements into evidence. Among the factors considered were the probative value of the evidence and the caution that was warranted before admitting the statements, given Luzuko Makhala’s participation in the commission of the crimes. The trial court considered the risk of falsity to be minimal. Furthermore, the content of the statements included information otherwise unknown to the police. Aspects of the statements were also confirmed by independent and objective evidence, principally the identification of the third accused, Mr Dumile, by Dumisani Molosi and Mrs Molosi (the son and wife of the deceased). They identified Mr Dumile as the person who had come to the Molosi’s house to inquire as to the whereabouts of Mr Molosi before the murder. This, the trial court found, supported the probative value of the statements. [13] Third, the trial court assessed the evidence given by the accused at trial and the witness who testified on behalf of the third accused. The evidence of the accused was found not to be reasonably possibly true and was rejected as false. [14] The trial court concluded that the accused were guilty on all three counts. The admission of the first and second statements into evidence by the trial court was central to this holding by the trial court. The issues on appeal [15] The appellants challenged the trial court’s admission and use of the first and second statements. If these statements should not have been admitted into evidence or the use of this evidence was otherwise excluded, then, given the decisive centrality of the statements, the appellants' convictions are unsound. This was common ground between the parties, and this position is not to be doubted. [16] Though overlapping in certain respects, the appellants' challenges may broadly be understood as follows. First, the statements must have been lawfully given. If the statements were not given freely and voluntarily, or were extracted in violation of the rights of Luzuko Makhala, or were induced by false assurances, or were otherwise compromising of the standards that render a trial fair, then no reliance should have been placed upon the statements, and the trial court was in error in doing so. If evidence is illegally obtained, it stands to be excluded. I shall refer to this challenge as the legality challenge. [17] Second, the appellants contended that the trial court should not have admitted the statements into evidence. The admissibility of the statements is not simply a question of the application of s 3(1)(c) of the Hearsay Act, more is required. Here too, questions of voluntariness, reliability, accuracy and an appreciation of the circumstances under which the statements were given must be considered. The appellants’ submitted that the statements do not measure up to what is required of a trial court for it to place reliance upon the statements. In addition, the appellants’ contended, the trial court should have considered whether justice is served by reliance upon hearsay evidence, as the key evidence by recourse to which the trial court convicted the appellants. The trial court did not do so. For these reasons also, the convictions cannot, therefore, stand. I shall refer to this as the hearsay challenge. [18] Third, the trial court admitted the statements consequent upon its declaration that Luzuko Makhala was a hostile witness. The appellants submitted that the trial court erred in this declaration because it failed properly to appreciate what it is to be a hostile witness. Luzuko Makhala was not a hostile witness, and hence his prior statements ought not to have been admitted into evidence. I shall refer to this as the hostile witness challenge. [19] Fourth, the statements were made by an accomplice. The dangers of such evidence are well known. Although the trial court referenced the cautionary rule of application to the statements of an accomplice, the trial court failed properly to assess the risks inherent in the statements. Had the trial court done so, it would not have placed the reliance that it did upon the statements. For this reason also, the convictions are, therefore, unsound. I shall refer to this as the cautionary challenge. [20] Lastly, even if the statements are admitted or relied upon, and given that Luzuko Makhala was plainly a liar and dishonest, more was required by way of corroboration for the State to prove its case beyond reasonable doubt. Such corroborative evidence, as there was, did not discharge the State’s burden of proof. Hence, the convictions cannot stand. I will refer to this as the onus challenge. [21] I shall consider these challenges in turn. The legality challenge [22] At common law, the general rule was that relevant evidence was admissible, notwithstanding the want of legality in its production.1 This rule was subject to the recognition that the courts enjoyed a discretion to exclude evidence, otherwise admissible, that operated unfairly against the accused.2 The common law’s residual regulation of illegally obtained evidence has been changed by s 35(5) of the Constitution. This provision reads as follows, ‘[e]vidence 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’. As S v Tandwa3 explained, s 35(5) allows that the admission of evidence that violates a right in the Bill of Rights will not always render the trial unfair, but the evidence must be excluded if it does so. So too, such evidence may not render the trial unfair but may nevertheless be detrimental to the administration of justice. If that is so, then the evidence must also be excluded. 1 S v Pillay 2004 (2) SACR 419 (SCA) para 6. 2 See S v Mushimba 1977 (2) SA 829 (A) citing Kuruma Son of Kaniu v Reginam (1955) 1 All E.R. 236 op bl. 239. 3 S v Tandwa and Others [2007] ZASCA 34, 2008 (1) SACR 613 paras 117-120. [23] The framing of s 35(5) is distinctive in the scheme of s 35 because it is not specifically formulated to regulate the rights of arrested, detained or accused persons, as is the case in ss 35(1)–(3). In S v Mthembu,4 this court observed that s 35(5) requires the exclusion of evidence improperly obtained from any person, not only from an accused. This must be so because the provision is concerned to ensure that the trial is fair and to secure the administration of justice from any detriment. While much of a trial’s fairness is concerned with the rights of the accused, the administration of justice has a wider remit that seeks to uphold the integrity of our institutions of justice. It follows that if evidence is procured from a person, whether or not that person is an accused, in a manner that violates the Bill of Rights, then s 35(5) is engaged to determine whether such evidence should be excluded. Thus, s 35(5) will be of application to the two statements procured from Luzuko Makhala if the statements were obtained in a manner that violated his rights in the Bill of Rights. I turn to consider this question. [24] The appellants contended that the two statements were procured from Luzuko Makhala in violation of his rights. Those rights are claimed to have been violated because the statements were not made voluntarily, that is, of his own free will. Rather, they were induced by false promises that he spoke under indemnity from prosecution. Luzuko Makhala was also not given his right to consult a lawyer, nor was he informed of his right against self-incrimination. 4 S v Mthembu [2008] ZASCA 51; [2008] 3 All SA 159 (SCA); [2008] 4 All SA 517 (SCA); 2008 (2) SACR 407 (SCA) para 27. [25] These contentions must surmount a threshold issue: was Luzuko Makhala a detained, arrested or accused person, and if not, what rights of his in the Bill of Rights were violated? This issue arises because ss 35(1)- (3) confer rights upon everyone who is arrested (ss (1)), everyone who is detained (ss (2)), and to every accused person (ss (3)). The evidence of the policemen who engaged with Luzuko Makhala, which the trial court accepted, does not show that he was arrested, detained or became an accused person. On the contrary, as I have recounted, Sergeant Wilson took up his enquiries with Luzuko Makhala to ascertain his whereabouts over the weekend of 22-23 July 2018. Luzuko Makhala was not even a suspect at that stage. Rather, Sergeant Wilson questioned him again because the account he had given did not tally with the camera footage seen by Sergeant Wilson. It was then that Luzuko Makhala chose to cooperate with the police and make the statements that he did. [26] Clearly, upon indicating his willingness to make a statement of his complicity in the murder, Luzuko Makhala was an accomplice. However, at no point, as evidenced by the facts, was he detained or arrested; he proceeded to make the first and second statements willingly. The clear understanding of the prosecution was that he was to testify for the State at the trial and was called as a witness to do so. His surprise recantation in the witness box of his prior statements took the prosecution by surprise and resulted in him being declared a hostile witness. This sequence of events demonstrates that Luzuko Makhala was never an arrested, detained or accused person, even under the most extended meanings of these concepts. [27] It follows that Luzuko Makhala had no rights under s 35 that could have been violated. Bearing this in mind, what other rights in the Bill of Rights might Luzuko Makhala have enjoyed? None were suggested to us by counsel. [28] Counsel for the appellants did, however, submit that the right to a legal practitioner, the right to remain silent and the right to make a statement voluntarily were rights enjoyed by a suspect and that Luzuko Makhala was, or at least became, a suspect when he indicated that he would make a statement to the police concerning his participation in the murder. [29] Our case law has not taken a consistent position as to whether the rights recognised in s 35, that are of application to arrested or detained persons, are also enjoyed by persons suspected by the police of committing a crime, who have not been arrested or detained. The different positions are well summarised in S v Orrie.5 In what measure suspects enjoy, some of the rights extended to detained and arrested person is not settled. However, once a person is a suspect, what they say that is incriminating is likely to have consequences. They may be arrested, detained and ultimately accused of the crime, or they may seek to assist the prosecution as a witness. Either outcome carries significant legal entailments. This provides the justification for recognising that a suspect should be informed of their right to remain silent, the consequences of not doing so, and their right to secure the services of a legal practitioner. 5 S v Orrie and Another [2005] 2 All SA 212 (C); 2005 (1) SACR 63 (C). [30] However, any such rights of a suspect cannot derive from s 35. Section 35 is concerned with the rights of arrested, detained and accused persons. To be a suspect will ordinarily be the basis for a person to be arrested, detained or accused. However, being a suspect does not, without more, make a person one who is arrested, detained or accused. Hence, the rights of a suspect are not recognised in s 35. It may be that these rights could fall within the scope of the right to security of the person (s 12 of the Constitution), or more tenuously, the right to the protection of dignity (s 10 of the Constitution) or as an incident of the protections provided under the Judges’ Rules to suspects,6 when deciding whether evidence of what they have said may be used in evidence at a trial. [31] I will assume, without deciding, that a suspect is entitled, before taking a step that may have significant implications, to be informed of their right to silence and their right to consult a legal practitioner. I will also assume, without deciding, that quite apart from s 35(5) of the Constitution, the common law rule that excludes illegally obtained evidence continues to have application in circumstances where s 35(5) is not of application because the right infringed is not a right in the Bill of Rights. [32] On these assumptions, does any basis exist to conclude that Luzuko Makhala had his rights as a suspect infringed, and if so, that the appellants’ trial would be rendered unfair by admitting into evidence the two statements, or would there be detriment to the administration of justice? 6 See S v Mthethwa 2004 (1) SACR 449 (E). [33] The appellants relied on the form that was used to take down the first statement upon which the following was recorded: only the Director of Public Prosecutions (DPP) can make a decision as to whether Luzuko Makhala would be utilized as a witness in terms of s 204 of the CPA; should the DPP decline to do so his statement will not be tendered by the State in evidence against him; Luzuko Makhala was warned that he is under no obligation to make any statement or admit anything that may incriminate him; he may first consult an attorney and obtain legal advice before making a statement; and that he makes the statement voluntarily. The appellants contend that the first statement does not record how Luzuko Makhala responded to the warnings and information given in the statement, nor whether the information given to him was properly understood. [34] There are a number of obstacles that the appellants would have to surmount to make out a basis for excluding the two statements on the basis that Luzuko Makhala’s rights were violated. [35] First, if Luzuko Makhala enjoyed rights as a suspect, when did he become a suspect? When Sergeant Wilson presented him with evidence that he was driving from Cape Town to Knysna, and not from the Eastern Cape, Sergeant Wilson’s testimony was that LuzukoMakhala was apologetic, and at that stage, wished to tell the police what had happened. Luzuko Makhala was not a suspect when confronted by Sergeant Wilson with the evidence that his prior account of his movements was untruthful. His decision to make a statement to the police was not as a suspect, but according to Sergeant’s Wilson testimony, a freely made response, having been caught in an obvious falsehood. Whatever Luzuko Makhala’s reasons, he decided to co-operate with the police and make a statement before he was a suspect, and without any coercion. Once that is so, the police were under no duty, at that stage, to warn him of his rights to remain silent and to consult a legal practitioner. He had no such rights because he was not a suspect. He was simply a person assisting the police with their investigation and chose to tell the police what he knew. It may be that once Luzuko Makhala had conveyed his decision to Sergeant Wilson that he wished to come clean that he became a suspect. However, by then, the die was cast, his choice was made, and it is hard to imagine why he could then claim the right to remain silent and the right to consult a legal practitioner. [36] Second, even if Luzuko Makhala was a suspect, on the evidence of Sergeant Wilson, Colonel Ngxaki, and Sergeant Mdokwana, which evidence was all accepted by the trial court, there was no indication that any of his rights were violated. Colonel Ngxaki informed Luzuko Makhala of his right to silence, his right not to incriminate himself and his right to consult with a legal practitioner. There was no indication that Luzuko Makhala did not understand what was being said to him or that he wished to have time to consider his position and procure the services of an attorney. Luzuko Makhala had chosen to assist the police. His position as a potential witness for the prosecution was explained to him. The use to which his statement could be put was also made clear. He was making the statement voluntarily. Luzuko Makhala’s testimony that his statements were coerced by the police and fabricated to do their bidding was rejected by the trial court, and rightly so. There is no reason to revise that assessment of this evidence by the trial court. On the facts found by the trial court, based not simply on the form used to capture the statements but the testimony of the policemen who attended upon Luzuko Makhala when he made the statements, there was no violation of his rights. [37] The appellants also contend that the form used by Colonel Ngxaki, when taking down the first statement, contained the misleading undertaking that Luzuko Makhala’s incriminating statement would not be used against him if he was not accepted as a state witness. This, it was submitted, is not the position because s 204(4)(a) of the CPA protects a State witness who testifies at trial but is not discharged from prosecution. The provision does not protect the prior statements of a witness who may never become a state witness at all. Whether the prior statement of a witness may be admitted into evidence is a matter to which I will come. On this aspect of the case, however, it suffices to observe that there was no showing that the undertaking was in any way operative in bringing about Luzuko Makhala’s willingness to give the statements that he did. As I have explained, that came about at an earlier point in his engagement with the police and for reasons unconnected to any prudential assessment of what his statement could be used for. [38] Third, s 35(5) of the Constitution excludes evidence obtained in a manner that violates any right in the Bill of Rights if the admission of that evidence would render the trial unfair or otherwise be detrimental to the administration of justice. As I have observed, Mthembu held that s 35(5) of the Constitution requires evidence of any person, not only the evidence of the accused, to be excluded if obtained in violation of that person’s rights in the Bill of Rights. Even if the appellants could substantiate their contention that some right of Luzuko Makhala was violated, how does that render their trial unfair or give rise to detriment to administration of justice? That case was not made out by the appellants. Luzuko Makhala gave evidence at the trial. He was available to be cross-examined on every aspect of the two statements and the circumstances in which they were made. Indeed, upon his recantation in the witness box, Luzuko Makhala did everything he could to assist the appellants’ case. In these circumstances, it is hard to discern how the trial was rendered unfair. There was no unfairness visited on the appellants. Just as the trial court accepted the evidence of the policemen who testified as to how the statements came to be made by Luzuko Makhala, I similarly conclude: there was no coercion; he acted voluntarily, out of some combination of apology and self-interest. No detriment to the administration of justice is apparent. [39] In summation, then, whether under s 35(5) of the Constitution or at common law, the two statements were not obtained in violation of Luzuko Makhala’s rights. The trial was not rendered unfair by the admission of the statements, nor was there anything done in securing the statements that constituted any material detriment to the administration of justice. The legality challenge must therefore fail. The hearsay challenge [40] The hearsay challenge gives rise to a number of issues. It will be recalled that the hearsay challenge proposes that the extra-curial statements made by a witness who is an accomplice should not be admitted into evidence as against the accused, or should not be admitted without careful consideration of the dangers of doing so, in order to preserve the fairness of the trial. Among the matters that will warrant consideration are the following. Were the statements made voluntarily? Is there reason to think the statements are truthful? What of the dangers inherent in an accomplice’s evidence? Finally, what of the risks associated with the admission of hearsay evidence? [41] Our courts have offered different approaches as to how to treat the admissibility of the extra-curial statements of a witness. Sometimes the witness is an accused whose extra-curial statements are sought to be admitted into evidence against their co-accused. Sometimes, as in the present matter, the extra-curial statements are those of a witness who is an accomplice. In other cases, the witness may be neither an accused nor an accomplice. One approach is to consider the extra-curial statement hearsay evidence and apply the regime of the Hearsay Act to determine whether the extra-curial statements should be admitted into evidence. This position was adopted in S v Ndhlovu.7 A second approach is to treat the dangers inherent in evidence of this kind as too great and exclude its admission against the accused. That was done in Litako and Others v S,8 where the extra-curial statements of one accused were not admitted into evidence as against the other accused. A third approach is to consider the common law rule that a prior inconsistent statement of a witness is admissible to impeach the credibility of the witness who made the statement, but it cannot be tendered as proof of the contents of the statement. I shall refer to this as the rule against prior inconsistency. In S v Mathonsi,9 the court revisited the rule against prior inconsistency and allowed the prior extra- 7 S v Ndhlovu and Others [2002] 3 All SA 760 (SCA). 8 Litako and Others v S [2014] ZASCA 54; [2014] 3 All SA 138 (SCA); 2014 (2) SACR 431 (SCA); 2015 (3) SA 287 (SCA). 9 Mathonsi v S [2011] ZAKZPHC 33; 2012 (1) SACR 335 (KZP). curial statement of a witness to be admitted as probative evidence of the contents of the statement, but only on the basis that the statement would be admissible if given in court, that it was voluntarily made, under circumstances where the maker was likely to be telling the truth, and that the statement was accurately transcribed (if in writing). [42] These rulings are unified in their recognition that the admission into evidence of the extra-curial statements of a witness carries dangers that may impact upon the fairness of the trial. However, the different approaches have led to some difficulty and inconsistency, as well as critical academic commentary. I turn then to consider under what rule the admission into evidence of the extra-curial statements of a witness, who is an accomplice, should be determined. [43] I commence with the question as to whether the two statements of Luzuko Makhala constitute hearsay evidence under the definition of hearsay in the Hearsay Act. Section 3 (4) of the Hearsay Act defines hearsay evidence as ‘evidence, whether oral or in writing, the probative value of which depends upon the credibility of any person other than the person giving such evidence’. This definition focuses upon the declarant to determine whether the evidence is hearsay. In the present case, does the probative value of the two statements depend upon the credibility of anyone other than Luzuko Makhala? [44] The simplicity of the definition of hearsay has nevertheless occasioned some difficulty. The difficulty was encapsulated in Ndhlovu.10 10 Ibid fn 7 Ndhlovu para 29. What if the person who made the extra-curial statement does not testify; or testifies but denies making the statement; or testifies and admits making the statement but denies its correctness, or testifies but cannot recall whether or not they made the statement, or testifies and confirms making the statement and its correctness. Ndhlovu reasons that the definition of hearsay in the Hearsay Act does not make an extra-curial statement admissible simply because the person who is said to have made the statement is called to give evidence as a witness at the trial. Rather, the extra-curial statement of the witness will be admitted upon the court having regard to the matters listed in s 3(1)(c)(i)-(vii) and being of the opinion that the evidence should be admitted in the interests of justice. [45] The holding in Ndhlovu that the extra-curial statements of two accused, incriminating of their co-accused, when disavowed by them at trial, were not admissible simply because the extra-curial declarants testify at trial was reasoned in the following way. To admit the extra-curial statements, when the witness disavows making them, or cannot recall doing so, would not permit of the safeguard of cross-examination if the statement was admitted into evidence. The evidence would, without more, be untrustworthy. Hence, other safeguards are required, and that is what s 3(1)(c) secures. Furthermore, the probative value of the extra-curial statements does not depend upon the credibility of the declarant at the time they give evidence at trial but at the time that the extra-curial statement is made. The admissibility of the extra-curial statements thus required the trial court to make a ruling under s 3(1)(c) of the Hearsay Act, that is to say, on the basis of what the interests of justice required. It was found that the extra-curial statements of the two accused in S v Ndhlovu were admissible upon an application of s 3(1)(c), as against their co-accused. [46] The holding in Ndhlovu that the extra-curial admissions of two accused, amounting to the incrimination of the co-accused and then being admissible against the co-accused, was reconsidered in Litako. In Litako, this court referenced the English common law position and our common law that an accused’s confession or admission is admissible in evidence only against the declarant and not their co-accused. The use of the Hearsay Act to have the informal admissions of an accused admitted in evidence against a co-accused gives rise to dangers pertaining to the fairness of the trial that the common law prohibition guards against. This Court referenced the introductory words of s 3(1) of the Hearsay Act, which renders its provisions ‘subject to any other law’. That law includes the common law. There was no warrant to think that the protections of the common law that exclude the admissibility of the admissions or confession of one accused against another had been abrogated by the Hearsay Act. The Court held that the extra-curial admission of one accused does not constitute evidence against a co-accused and is therefore not admissible against such co- accused.11 [47] Therefore, where Ndhlovu considered that the protections contained in s 3(1)(c) of the Hearsay Act provided sufficient protections to permit the admission of the extra-curial statements of one accused against their co- accused in certain warranted cases, Litako holds that this is impermissible, notwithstanding the provisions of the Hearsay Act. 11 Litako at 307G. [48] In Mathonsi, a witness, Mr Cele, provided a written statement to the police in which he implicated the accused in a murder. When Mr Cele gave evidence at trial, he gave a version at odds with his statement, which he claimed had been exacted under duress. Mr Cele was declared a hostile witness and was cross-examined by both the prosecution and the defence. The trial court admitted the written statement into evidence and considered it when convicting the accused. The accused appealed and contended that the trial court should not have admitted the contents of Mr Cele’s written statement into evidence. [49] In the high court, Madondo J examined the common law rule pertaining to the admissibility of prior inconsistent statements: such statements are admissible to discredit the witness, but not as evidence of the facts contained in the statements. After an analysis of the position in a number of common law jurisdictions, the high court adopted the ruling of the Canadian Supreme Court in R v B (K.G.).12 Following R v B (KG), a prior inconsistent statement was admissible as proof of its contents if five conditions are met: ‘(1) the evidence contained in the prior statement is such it would be admissible if given in a court; (2) the statement has been made voluntarily by the witness and is not the result of any undue pressure, threats or inducements; (3) the statement was made in circumstances, which viewed objectively would bring home to the witness the importance of telling the truth; (4) that the statement is reliable in that it has been fully and accurately transcribed or recorded; and (5) the statement was made in circumstances that the witness would be liable to criminal prosecution for giving a deliberately false statement.’13 12 R v B (K.G.) [1993] 1 S.C.R 740. 13 Ibid at 746. To these conditions, Madondo J added a sixth condition: the accused must be afforded the opportunity to cross-examine the person who made the statement. This new rule was required in recognition of what Lamer CJ in R v B (K.G.) characterised as ‘the changed means and methods of proof in modern society’.14 [50] In Rathumbu v S,15 this Court also had occasion to consider the sworn statement of the appellant’s sister that incriminated the appellant. Ms Rathumbu also recanted the contents of her statement when called to give evidence. She was declared a hostile witness and cross-examined on her sworn statement. The trial court relied upon the contents of the sworn statement and convicted the appellant. On appeal, this Court did not address the common law rule as to the limited purpose for which a prior inconsistent statement could be used at trial. Rather, it considered whether the sworn statement was correctly admitted into evidence, in compliance with s 3(1)(c) of the Hearsay Act, relying upon Ndhlovu. [51] How then to determine the hearsay challenge in light of this body of case law? It seems logical to commence with the Hearsay Act. The legislature has provided a statutory regime that requires that hearsay evidence shall not be admitted into evidence in criminal proceedings, save under stated conditions. If the two statements of Luzuko Makhala constitute hearsay evidence, then their admissibility is to be decided, in the first place, in compliance with the Hearsay Act. 14 Ibid at 741. 15 Rathumbu v S [2012] ZASCA 51; 2012 (2) SACR 219 (SCA). [52] At common law, an extra-curial statement was hearsay if it was made by a declarant who was not called to give evidence and was hence not subject to cross-examination. Unless one of the exceptions to the hearsay rule was of application, the extra-curial statement was excluded. The rationale for the exclusion was that if the declarant could not be tested under cross-examination as to the truth of the statement, the trial court might rely upon it, when such reliance was not warranted. That would be prejudicial to the accused. [53] As I have observed, the Hearsay Act defines hearsay evidence to mean evidence, ‘the probative value of which depends upon the credibility of any person other than the person giving such evidence’. Ndhlovu ruled that the prior incriminating extra-curial statement of an accused could not be admitted into evidence against his co-accused simply because the declarant was called to give evidence. To admit the evidence, the requirements of s 3(1)(c) must be met, and the court must be of the opinion that the evidence should be admitted in the interests of justice. [54] It will be recalled that this Court in Ndhlovu had two principal reasons for its interpretation of the Hearsay Act. First, if the witness who made the extra-curial statement disavows the statement, or cannot recall making it, or is unable to affirm some aspect of the statement that is: ‘not in substance materially different from when the declarant does not testify at all . . .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.’16 16 Ndhlovu para 30. Second, the probative value of the extra-curial statement does not depend upon credibility of the declarant when they give evidence at trial but at the time when the statement was made. The court put the matter thus,‘[a]nd the admissibility of those statements depended not on the happenstance of whether they chose to testify but on the interests of justice.’17 [55] The different circumstances postulated in Ndhlovu pose different issues. If the person who made the extra-curial statement is not called to testify, the statement is hearsay under the definition because the probative value of the statement does depend upon the credibility of a person who is not called to give evidence at trial. The extra-curial statement will be excluded unless the court is satisfied that the requirements of s 3(1)(c) are met. This outcome is consistent with the common law rationale that the extra-curial statement of a person not called to testify is excluded because there is no opportunity given to cross-examine and test the probative value of the statement. [56] If the person who made the statement is called to testify but denies making the statement, a different question arises: does the evidence to be admitted exist at all, and if so, is it attributable to the witness? That is a prior question that is settled not upon an application of the Hearsay Act, which is predicated upon the evidence that is to be admitted, existing and being evidence attributable to a particular person. The court must first decide this question. In the face of a denial by the witness that they made the statement, other evidence will usually be required to settle the matter. If the court determines that a particular person made the extra-curial 17 Ibid para 33. statement, it can then decide whether its probative value depends upon the credibility of the person giving evidence. In the present case, once the trial court was satisfied that the two statements were made by Luzuko Makhala, then their probative value depended upon his credibility as a witness called to give evidence at trial. [57] Where the witness cannot recall whether they made the statement, the trial court is confronted with the same issue that arises when a witness denies making the statement. There is no affirmative evidence from the witness that the statement exists or, if it does, whether the statement is attributable to the witness. Here too, the court must decide this preliminary question before determining upon whose credibility the probative value of the statement depends. [58] Where the witness confirms making the extra-curial statement, but denies its truthfulness, the witness is available to be cross-examined so as to test that denial. Here the probative value of the statement does depend upon the witness called to give evidence. The court may then attribute to the statement the evidential value it warrants after the witness who made the statement has been tested under cross-examination. So too, where the witness confirms making the extra-curial statement and its correctness, there seems little reason to exclude the statement if the evidence can then be tested under cross-examination. [59] On this analysis, where a witness denies making a prior extra-curial statement or has no recollection of doing so, there will have to be evidence before the trial court permitting it to rule that such a statement was made by the witness who has been called to testify. If it is not clear that the extra- curial statement was made at all, then it will not be possible to determine upon whose credibility the probative value of the evidence depends. The very existence of the evidence is not established, and this ends the question of its admissibility. If it is clear that an extra-curial statement was made, but it is not shown that it was made by the witness called to testify at trial, then the statement is clearly hearsay because its probative value depends either upon the credibility of a person not called as a witness or it cannot be ascertained upon whose credibility the statement depends. Once, then, the extra-curial statement is hearsay, its admission depends upon an application of s 3(1)(c). [60] If, however, the witness called to testify acknowledges that he or she made the statement, then its probative value does depend upon the person giving such evidence. The evidence is not hearsay under the statutory definition. Is s 3(1)(c) nevertheless of application? In Ndhlovu the court thought so because it apprehended the danger that the witness may not be able to recall everything that the statement contains, and the probative value of the statement depends upon the credibility of the witness at the time that the statement was made and not when the witness gives evidence in court. Once that is so, the ability to cross-examine the witness effectively is compromised, and absent the safeguards of s 3(1)(c), the admission of the evidence would not be consistent with the imperative that the trial must be fair. [61] I am doubtful that this reasoning holds good. Once it is clear that the extra-curial statement was made by the person called to give evidence, the fact that this witness does not recall some or indeed all of what is contained in the statement, or denies the contents of the statement altogether, does not mean that the accused’s right to challenge the statement by cross- examining the witness has been compromised. The witness’ recollection will be tested under cross-examination. If the witness is believed, the extra- curial statement will have probative value only to the extent of the witness’s recollection. If the witness is disbelieved, the trial court will then have to consider what weight, if any, to attach to the statement. There is no bar to the witness’ credibility being tested under cross-examination by the accused, placing the court in a position to decide upon the evidential value of the statement. If the evidence is not hearsay, it may be admitted without risk to the accused’s rights to cross-examine. [62] To this, following Ndhlovu, it might be said that the witness who recants or cannot recall the contents of his or her extra-curial statement is akin to a witness not called to give evidence at all. That is not so. An eye- witness may not be able to recall all they have seen or may recall nothing at all of a material issue in the trial. We do not say that this is akin to the witness not being called at all and the right to cross-examine being compromised. Rather, the cross-examination will assist to determine how far the testimony of the witness may be relied upon. The trial court’s task is then to determine what value if any, the evidence has. It is hard to see why an extra-curial statement made by the witness testifying before the court should be treated differently or why the right to cross-examine upon the statement has been vacated. The danger of hearsay evidence, long recognised at common law, does not arise when the declarant who made the statement is called as a witness at trial and is subjected to cross- examination. It is then for the trial court to decide upon the testimonial value of the extra-curial statement. [63] Nor, upon reflection, is it availing to exclude the extra-curial statement made by the witness who is called to testify because the statement depends upon the credibility of the witness at the time of making the statement rather than when testifying in court. First, the fact that the witness disavows his or her earlier statement does not mean the court cannot give credence to either version of what the witness has said. Contradiction in the evidence of a witness, whether arising from their oral testimony in court or by reference to a prior statement, requires the trial court again to consider what evidence it should accept and what weight it enjoys. There is no reason to exclude the extra-curial statement on the grounds of contradiction. Second, when the witness gives oral testimony in court, the very question as to why the extra-curial statement was made and what opportunity the witness had at the time to observe what the statement records are the very matters that may be taken up in cross- examination. It is true that the trial court does not have the benefit of observing the demeanour of the witness at the time the statement was made, and, in some instances, the statement will not have been given under oath. However, here too, in my view, cross-examination of the witness will ordinarily bring to light the circumstances in which the statement was made and its reliability. Cross-examination is the forensic means by which the evidential value of the statement may be ascertained. Admitting the extra- curial statement does not curtail cross-examination or blunt its value. It is then for the trial court to ascertain the evidential value of the statement made by the witness. [64] In my view, the correct interpretation of the Hearsay Act is that once a court has determined that an extra-curial statement was made by a witness called to testify, the extra-curial statement is not hearsay, and it may be admitted without determining whether it is in the interests of justice to do so by recourse to s 3(1)(c). Admitting the extra-curial evidence does not render the right to cross-examine nugatory. On the contrary, cross- examination of the witness must be given full rein to permit the trial court to determine whether the extra-curial statement has any value at all and, if so, what weight should be attached to it. [65] This, however, does not end the analysis of the hearsay challenge because, as my review of the case law indicates, s 3(1) of the Hearsay Act commences with the words ‘Subject to the provisions of any other law…’. Litako observed that in the interpretation of the Hearsay Act, the position at common law must be considered. The court in Litako held that notwithstanding the provisions of s 3(1) of the Hearsay Act, the extra-curial admissions of one accused does not constitute evidence against a co- accused and is therefore not admissible against such co-accused.18 [66] Litako traced the rule of the English law, as received into our common law, that the admission or confession of one accused, if admissible, is evidence only against the maker of the statement and not against the co-accused, unless they act pursuant to a common design. The rule excluding the use of the extra-curial statements made by one accused against another was in part based upon concerns as to hearsay evidence. But the rule also reflected the caution that should attach to the propensity 18 Litako para 67. of one accused to shift blame to another. The decision further references the following difficulty: if an admission or confession of one accused is ruled as admissible, that does not compel the maker of the admission or confession to testify at trial. They have every right not to do so. Where then does that leave the rights of the co-accused to cross-examine the maker of the admission or confession if they were to be admissible against the co- accused? Litako makes it plain that, in this situation, the rights of the co- accused to cross-examine are rendered nugatory. That would render the trial unfair. Hence, the bar upon the use of admissions and confessions by one accused against another. [67] The present matter does not concern the admissions or confession of an accused. We are concerned with the extra-curial statements of a witness who is an accomplice, not an accused, who is called to testify at trial. This distinction is important. In Litako, one of the accused had made a statement to a magistrate, exculpating himself and implicating his co-accused in a murder. Although this accused testified at the trial within a trial to determine the admissibility of the statement, he did not testify in his defence on the merits. His co-accused, who did testify, were convicted, principally on the basis of the statement. The trial court ruled the statement made by the one accused admissible against his co-accused upon an application of s 3(1)(c) of the Hearsay Act. [68] Litako was concerned with the extra-curial statement of an accused who does not testify at trial on the merits. The probative value of the statement depended upon the credibility of its declarant, who chose not to testify. The statement was thus hearsay. This Court in Litako was not willing to allow the statement to be admitted into evidence as against the co-accused, notwithstanding the protections in s 3(1)(c), the observance of which might nevertheless allow for the evidence to be admitted. The Court considered the dangers attaching to hearsay evidence, the doubtful value of such evidence and the serious erosion of the rights of the co-accused to cross-examine the maker of the statement as to the truth of its contents warranted the reaffirmation of the common-law rule that the extra-curial statement of one accused is not admissible against his co-accused. [69] Where, as in the present matter, the maker of the extra-curial statement is a witness who does give evidence at trial, then, as I have sought to explain, the statement is not hearsay under the Hearsay Act, and the accused has full enjoyment of the right to cross-examine the witness. The reasoning in Litako is not of application to the position of a witness who made an extra-curial statement that incriminates the accused. The maker of the statement is a witness before the trial court. The statement is open to challenge by the accused on every aspect of the statement that incriminates them. I recall that the warnings as to the dangers of hearsay evidence, framed fully in S v Ramavhale,19 are not present when the extra- curial statement of a witness called to testify at trial is under consideration. The witness testifies under oath and is subject to cross-examination by the parties against whom he is called. Accordingly, ‘[h]is powers of perception, his opportunities for observation, his attentiveness in observing, the strength of his recollection, and his disposition to speak the 19 S v Ramavhale 1996 (1) SACR 639 (SCA). truth’20 may all be tested. What value the trial court then attributes to the statement is quite another matter. [70] It follows that the reasoning in Litako that precludes the admission or confession of one accused being admitted into evidence against his or her co-accused is not of application where a witness called to give evidence made a prior extra-curial statement that is sought to be admitted into evidence as against the accused. The extra-curial statement is not hearsay, the rights of the accused to cross-examine may be fully exercised, and there is no a priori reason to suppose the extra-curial statement is of doubtful value. [71] I turn to consider the treatment of a prior inconsistent statement made by a witness and the refashioning of the common law rule that a witness’ prior sworn statement may be used to impeach the credit of the witness but may not be admitted into evidence for the truth of its contents. As I have referenced above, in Mathonsi, the high court adopted the five- part test enunciated in the Canadian Supreme Court in R v B (K.G.). Under this reformulation of the common law rule, a witness’ prior inconsistent statement is admissible as to the truth of its contents if the conditions stipulated under the five-part test are met to the satisfaction of the trial court, to which the high court in Mathonsi added the further stipulation that the accused must be able to cross-examine the witness who made the statement as to its contents. 20 Cited in Litako para 66 quoting John Pitt Taylor Treatise on the Law of Evidence 12th ed (1931) para 567. [72] The adoption by the high court in Mathonsi of the majority judgment in R v B (K.G.) requires careful reflection. R v B (K.G.) was considered again by the Canadian Supreme Court in R v U (F.J.).21 The following emerges from these cases. First, the reconsideration of the common law rule as to the use of prior inconsistent statement formed part of the wider recasting of the common law in Canada regarding the treatment of hearsay evidence. Hearsay was not treated under the inflexible approach to hearsay and its exceptions that once marked the common law. Rather, hearsay was to be admitted and used for the truth of its contents when it was shown to be reliable and necessary. Second, the prior inconsistent statement of a witness was admissible for the truth of its contents if it met the required standards of reliability and necessity. Third, in R v U (F.J.), the court again considered what would be required to make out these standards and made it clear that flexibility should be shown in assessing the reliability risks associated with admitting the prior statement. [73] These authorities are of much assistance, but as always, their wholesale adoption should be carefully considered, not least because, unlike the position in Canadian law, we have a statute that regulates the use of hearsay evidence. R v B (K.B.) and R v U (F.J.) developed the common law. We must apply the Hearsay Act, unless some aspect of the common law may be taken to continue to govern the question at issue, as occurred in Litako, or some aspect of the common law survives the passage of the Hearsay Act and compliments that enactment. 21 R v U (F.J.) [1995] 3 SCR 764. [74] I recognise the paramount importance of the constitutional requirement that the appellants before us must have enjoyed a fair trial. The question is whether the admission into evidence of the two statements of Luzuko Makhala, under the provisions of the Hearsay Act, visited any unfairness on the appellants? I have set out above, in my analysis of the application of the Hearsay Act to the two statements, why it is that the ability of the appellants to cross-examine Luzuko Makhala provides considerable safeguards for the appellants as to the use to which the statements may be put. [75] Are further safeguards required beyond the right to cross-examine Luzuko Makhala. R v U (F.J.) makes it plain that the availability of the witness who made the prior statements to be cross-examined goes a very long way to ensure that prior statements may be admitted into evidence for the truth of their contents to permit the trier of fact to assess the evidential value of these statements. The court quotes the following from the leading work of J W Strong McCormick on Evidence 4 ed (1992), with approval: ‘The witness who has told one story aforetime and another today has opened the gates to all the vistas of truth which the common law practice of cross-examination and re- examination was invented to explore. The reasons for the change of face, whether forgetfulness, carelessness, pity, terror, or greed, may be explored by the two questioners in the presence of the trier of fact, under oath, casting light on which is the true story and which the false. It is hard to escape the view that evidence of a prior inconsistent statement, when declarant is on the stand to explain it if he can, has in high degree the safeguards of examined testimony . . ..’22 22 Ibid at para 38. [76] What then remained of concern to the court in R v U (F.J.), given its recognition that cross-examination goes a substantial part of the way to ensure that the reliability of the prior inconsistent statement can adequately be assessed by the trier of fact, was the following: the prior inconsistent statement may be subject to reliability risks because it depends upon the credibility of the witness at the time the statements were made. This may deprive the court of the benefit of the witness being subject to cross- examination at the time that he or she makes the prior statement, the statement may not be given under oath, and the demeanour of the witness in making the statement is not observed by the trier of fact. For this reason, the court considered that it would be desirable that the prior statement be taken under oath and video-taped. This would alleviate at least two of the three concerns raised. The court observed that a prior inconsistent statement may be admitted even without these safeguards, if there are sufficient guarantees of the reliability of the prior statement.23 [77] There is an important distinction to be drawn between the stipulation of reliability requirements in order to admit a prior inconsistent statement and the consideration of the reliability of the evidence in determining its value to the trier of fact. Once the witness who made the prior inconsistent statement is available for cross-examination, then, in my view, the threshold requirement for admitting the statement is met, subject to two further requirements that I will set out below. [78] This is so because the accused at trial will be able, fully, to exercise their right of cross-examination, and to contest every aspect of the 23 Ibid at para 39. statement’s reliability. Where the prior statement is not made under oath, the trial court will weigh this matter when deciding the evidential value of the statement. Obviously, the circumstances under which the statement was given will be relevant to an assessment as to whether it is likely that the declarant was telling the truth when making the statement. Making a statement under oath is part of that assessment. However, in a secular age, the value of an oath is often exaggerated and should not be raised to a threshold requirement to admit the prior statement. [79] So too, the use of video to record the declarant making the statement is helpful, but not necessary, to admit the prior statement. The trial court will instead take account of the fact that it was not in a position to observe the demeanour of the witness at the time the statement was made. As the court noted in Standard Bank of South Africa Limited v Sibanda,24 the value of demeanour evidence should not be exaggerated. The Court will consider the evidence that is given and the circumstances in which the statement was made. This will determine the weight the trial court attaches to the prior statements. [80] While there are disadvantages that attach to the fact that the credibility of the declarant is not tested at the time the statement is made, they are not of an order of magnitude to warrant the exclusion of the prior statement. The trial court will take these disadvantages into account when assessing the evidential value of the prior statement, to the extent that they 24 Standard Bank of South Africa Limited v Sibanda [2019] ZAGPJHC 481; 2021 (5) SA 276 (GJ) paras 5 -10 are not mitigated by the taking of an oath and the recording of the statement. [81] The further requirement, to be found in Mathonsi, that the prior statement must have been fully and accurately transcribed is not a threshold requirement of reliability. As I have endeavoured to explain, the application of the Hearsay Act always requires the trial court to determine what statement was made, so as to know what evidence is sought to be admitted. That must be done; it determines not whether a statement is reliable, but whether it exists. [82] Two further requirements must be met to render prior statements admissible, in addition to the availability of the declarant to give evidence at trial and face cross-examination. First, the evidence contained in the prior statement must be admissible, as if it had been given in court. That is to say, there must not be some other basis for exclusion outside the application of the Hearsay Act. Second, the prior statement must have been made voluntarily. This requirement is an entailment, explored fully in Litako, of the common law’s concern that there should be no taint that evidence was procured at the instance of the police or any other agency through coercion, undue influence or improper inducement. Although it fosters reliability, this requirement is rooted in the disciplining of power that may otherwise be improperly used to procure evidence. These two requirements flow from the overriding inherent supervisory power of a trial court in a criminal trial to ensure that the trial is fair. Nothing in the Hearsay Act derogates from the exercise by the trial court of this supervisory competence. [83] In sum, I am not in agreement with the holding in Mathonsi that the threshold requirements derived from R v B (K.G.) must be met in order to admit into evidence, for the truth of its contents, the prior inconsistent statement of a witness at a criminal trial. It suffices that the witness who made the statement is available for cross-examination by the accused. The prior statement must otherwise be admissible by asking whether it would have been admissible if it had formed part of the testimony given by the witness at trial. This consideration is important because the trial court will have to consider whether the prior statement is relevant. In part, the common law rule excluding the admission of a prior inconsistent statement for the truth of its contents was predicated upon its presumptive irrelevance. Finally, the prior statement must have been voluntarily made. [84] Turning then to the two statements that were admitted into evidence by the trial court upon an application of the Hearsay Act, I can find no fault with that decision. Luzuko Makhala was called as a witness and was available to the appellants for cross-examination. The reliability of the two statements was thus fully open to scrutiny. Luzuko Makhala recanted his prior statements in the witness box. There was every need then to consider his testimony in the light of his prior statements. For the reasons already traversed when I considered the legality challenge, the evidence of the policemen who testified was accepted by the trial court. That evidence established that Luzuko Makhala made the two statements voluntarily. As I have indicated in respect of the legality challenge, there is also no basis to contend that Luzuko Makhala made the statements as a result of improper inducements. Had the prior statements formed part of the testimony given by Luzuko Makhala in court, there was no other rule of evidence that would have excluded the statements. [85] Indeed, the trial court in deciding to admit the two statements, went further than I have found the law requires. The trial court applied s 3(1)(c) of the Hearsay Act and concluded that the evidence should be admitted in the interests of justice. I have found that the two statements are not hearsay as defined in the Hearsay Act. But this matters not. To have gone beyond what I have found to be required does not render the hearsay challenge any more compelling. That challenge, for the reasons given, must fail. The hostile witness challenge [86] The appellants contend that the trial court declared Luzuko Makhala to be a hostile witness, when, on a proper appreciation of the test to make such a declaration, he should not have been so declared. [87] The appellants contend, relying upon S v Steyn,25 that the test is not an objective one, but the hostile witness must have an intention to prejudice the case of the litigant who called him. Luzuko Makhala had no such intention. [88] The mere fact that a witness gives evidence that is unfavourable to the party calling the witness does not render the witness hostile. However, the need to show an intention to prejudice, as reflected in Steyn, does not appear to be the position in English law on 13th May 1961, as required by 25 S v Steyn en Andere 1987 (1) SA 353 (W); [1987] 3 All SA 19 (W) at 355. s 190(1) of the CPA. The test was stated in Meyer’s Trustee v Malan26 to be as follows: the court must decide whether the witness is adverse from his demeanour, his relationship to the party calling him, and the general circumstances of the case. This test is not predicated on proof of a subjective intent to prejudice. [89] Ultimately, it is unnecessary to determine this difference. The trial court was in a position to assess what occurred to cause Luzuko Makhala to give evidence at variance with the evidence the prosecution was under the impression he would provide. Luzuko Makhala made an assiduous effort in his evidence in chief to exclude from his two statements those passages that incriminated the appellants and himself. He sought to put up a contradictory, exculpatory version. The trial court rejected his explanation as to how he came to make the two statements. The first appellant’s former counsel approached him to withdraw his cooperation from the prosecution. In these circumstances, even if the test is predicated upon an intent to prejudice the State’s case, it is an entirely proper inference to draw from LuzukoMakhala’s conduct. Accordingly, there is no basis to interfere with the exercise by the trial court of its discretion in making the declaration that it did. [90] Counsel for the appellants submitted that Luzuko Makhala should have been given legal representation when the State sought to declare him a hostile witness. Worse still, it is contended that the trial court failed to extend to Luzuko Makhala his right to legal representation when he requested to be allowed an attorney. 26 Meyer’s Trustee v Malan 1911 TPD 559 at 561. [91] What the record shows is that Luzuko Makhala enquired as to whether he was allowed to have an attorney for the purpose of the trial court deciding whether to declare him a hostile witness. The trial court did not preclude him from securing the services of an attorney. What Luzuko Makhala went on to raise with the trial court was whether he was entitled to an attorney, in the sense of having one provided to him. The trial court indicated that he was not an arrested, detained or accused person as contemplated under the Constitution and had no such entitlement. [92] The Constitution distinguishes different rights to legal representation. In terms of s 35(2)(b), a detainee has the right to choose and consult with a legal practitioner, and to be informed of that right. In terms of s 35(3)(f), an accused also has the right to choose a legal representative and be represented by one. Section 35(3)(g) affords the right to an accused to have a legal practitioner assigned, at State expense, if substantial injustice would otherwise result. Thus, the Constitution clearly distinguishes the right to choose a legal representative and the right, at state expense, to be provided with a legal representative. Section 35 makes no provision for a witness to be provided with a legal practitioner. [93] Doubtless, a court is invested with the inherent power to conduct its proceedings fairly, and that may entail, in a particular case, that the court should give consideration to a legal practitioner being assigned to assist a witness. However, that cannot be done on the basis of a test less rigorous than that of application to an accused, whose potential detriment is plainly pressing. The constitutional test for an accused is that, absent the assignment of a legal practitioner, a substantial injustice would result. [94] No such showing was ever made by Luzuko Makhala to the trial court. He was never denied a right to choose to be represented by an attorney, and he never made a case as to the substantial injustice he would suffer if an attorney was not provided for him at state expense. Once that is so, he suffered no infringement of his rights. [95] The appellants’ hostile witness challenge must therefore fail. The cautionary challenge [96] Luzuko Makhala was an accomplice. The trial court recognised the cautionary rule applicable to the evidence of an accomplice. The appellants submit that the trial court failed properly to apply the rule to treat the statements of Luzuko Makhala with the caution they deserved. [97] I find no basis in the judgment of the trial judge to support this criticism. The trial judge took the position, on the evidence of the policemen, which he accepted, that Luzuko Makhala had sought to cooperate with the police and had volunteered the information known to him. He recanted in the witness box, under pressure that appears to have come about due to the consultation with the first appellant’s erstwhile counsel. Whatever the reason for his recantation, the trial judge found that his prior, voluntary co-operation was not consistent with an accomplice seeking to implicate others to seek favour with the police or falsely implicate others. The police learnt information from the statements that they did not otherwise know, which advanced their investigation and was incriminating of the appellants. Finally, the trial judge found there was material evidence that corroborated the two statements. On this basis, the trial judge found that although the cautionary rule was applicable to the evidence of Luzuko Makhala, this did not prevent the court from relying upon the probative value of the two statements. The reasoning of the trial judge cannot be faulted. [98] The cautionary challenge accordingly also fails. The onus challenge [99] Finally, the appellants submitted that even if the two statements were properly received in evidence, there was insufficient corroborative evidence to convict the appellants. Luzuko Makhala was a liar. His oral testimony was at variance with his two statements which required the State to provide sufficient evidence to corroborate the contents of the two statements. The State failed to do so and thereby failed to discharge its onus of proof. The trial court was in error to find otherwise. [100] The judgment of the trial judge made a careful assessment of the corroborative evidence. There was evidence that the first appellant was making preparations to flee when he was told by Luzuko Makhala, his brother, that he had told the police everything. The first statement indicated that the first appellant had taken Mr Dumile, the third accused, to point out where Mr Molosi was residing. Mr Molosi’s son, Dumisani, gave evidence that Mr Dumile had come to the house to enquire as to the whereabouts of Mr Molosi on 22 July 2018. Mrs Molosi also identified Mr Dumile as having come to the house on 23 July 2018 with a similar question, shortly before Mr Molosi was shot and killed. The first statement of Luzuko Makhala stated that Mr Dumile had gone to the house of Mr Molosi to find out the whereabouts of the deceased and that Mr Dumile returned and said that Mr Molosi was not at his home but attending a meeting. This evidence, the trial judge found, was corroborative of the first statement. [101] The appellants do not contend there was no corroborative evidence but rather that it was insufficient. Here too, I can find no fault with the conclusion to which the trial judge came. The first statement was corroborated in material respects. The corroboration most certainly placed the first appellant, Mr Dumile and Luzuko Makhala at the heart of the conspiracy to murder Mr Molosi. That sufficed to permit the trial court to rely upon the probative value of the two statements. The two statements, taken together with the circumstances in which the statements came to be made, the recantation by Luzuko Makhala under obvious pressure and the fact that evidence of the appellants could not be believed, sufficed to discharge the burden of proof resting upon the State. [102] The onus challenge must, accordingly, also fail. Conclusion [103] I have found that each of the challenges brought by the appellants fails. The two statements made by Luzuko Makhala to the police were not unlawfully obtained, and the two statements were correctly admitted into evidence. That evidence afforded proof of the appellants’ complicity in the murder of Mr Molosi and the further charges associated with his murder. There was no failing on the part of the trial judge in cautioning himself against the frailties of the evidence of Luzuko Makhala as an accomplice, nor in his declaration of Luzuko Makhala as a hostile witness. The trial judge correctly found that there was sufficient evidence to corroborate the statements of Luzuko Makhala and that, upon consideration of all the evidence, the State had discharged its burden of proof. [104] In the result, the following order is made: The appeal is dismissed. DAVID UNTERHALTER ACTING JUDGE OF APPEAL Meyer AJA (Mocumie, Makgoka and Mothle JJA concurring) [105] I have had the benefit of reading the judgment of our colleague Unterhalter AJA (the first judgment). I agree with its summation of the pertinent facts and issues on appeal and with the reasoning and conclusions reached that the two statements in question were not obtained in violation of Luzuko Makhala’s rights; the trial was not rendered unfair by the admission of the statements; nor was there anything done in securing the statements that constituted any material detriment to the administration of justice; that the trial court correctly declared Luzuko Makhala to be a hostile witness; that he was not denied a right to choose to be represented by an attorney and he did not make a case as to the substantial injustice he would suffer if an attorney was not provided for him at state expense before he was declared hostile; that the trial court properly applied the cautionary rule applicable to the evidence of an accomplice; and that there was sufficient corroborative evidence to convict the appellants. [106] I further agree that the trial court applied s 3(1)(c) of the Law of Evidence Amendment Act 45 of 1988 (the Hearsay Act) and concluded that the two statements should be admitted in the interests of justice and with the ultimate conclusion that: ‘[t]he two statements made by Luzuko Makhala to the police were not unlawfully obtained and the two statements were correctly admitted into evidence. That evidence afforded proof of the appellants’ complicity in the murder of Mr Molosi and the further charges associated with his murder. There was no failing on the part of the trial judge in cautioning himself against the frailties of the evidence of Luzuko Makhala as an accomplice, nor in his declaration of Luzuko Makhala as a hostile witness. The trial court correctly found that there was sufficient evidence to corroborate the statements of Luzuko Makhala and that, upon a consideration of all the evidence, the State had discharged its burden of proof.’ I, therefore, agree with the order proposed in the first judgment that the appeal be dismissed. [107] However, I am respectfully unable to agree with the conclusion in the first judgment that s 3(1)(c) of the Hearsay Act finds no application to the admission into evidence of extra-curial statements made by a s 204 state witness,27 who, when testifying, recants such statements that incriminate him or herself and the accused in the commission of the offence or offences 27 Section 204 of the Criminal Procedure Act 51 of 1977. That is a witness who is called on behalf of the prosecution at criminal proceedings and who is required by the prosecution to answer questions which may incriminate such witness regarding an offence specified by the prosecutor, and who may be discharged from prosecution in respect of the offence in question if he or she ‘in the opinion of the court, answers frankly and honestly all questions put to him’ or her. in question, and the reasoning in reaching that conclusion (the s 3(1)(c) conclusion). These are my reasons. [108] The common law definition of hearsay evidence is ‘any statement other than one made by a person while giving oral evidence in the proceedings, and presented as evidence of any fact or opinion stated’.28 With effect from 3 October, 1988 the Hearsay Act redefines hearsay and allows for a more flexible discretionary approach to the admissibility of hearsay evidence. Section 3 of the Hearsay Act reads thus: ‘(1) Subject to the provisions of any other law, hearsay evidence shall not be admitted as evidence at criminal or civil proceedings, unless- (a) each party against whom the evidence is to be adduced agrees to the admission thereof as evidence at such proceedings; (b) the person upon whose credibility the probative value of such evidence depends, himself testifies at such proceedings; or (c) the court, having regard to- (i) the nature of the proceedings; (ii) the nature of the evidence; (iii) the purpose for which the evidence is tendered; (iv) the probative value of the evidence; (v) the reason why the evidence is not given by the person upon whose credibility the probative value of such evidence depends; (vi) any prejudice to a party which the admission of such evidence might entail; and (vii) any other factor which should in the opinion of the court be taken into account, is of the opinion that such evidence should be admitted in the interests of justice. (2) The provisions of subsection (1) shall not render admissible any evidence which is inadmissible on any ground other than that such evidence is hearsay evidence. 28 P J Schwikkard and S E Van der Merwe Principles of Evidence (2009) 285. (3) Hearsay evidence may be provisionally admitted in terms of subsection (1)(b) if the court is informed that the person upon whose credibility the probative value of such evidence depends, will himself testify in such proceedings: Provided that if such person does not later testify in such proceedings, the hearsay evidence shall be left out of account unless the hearsay evidence is admitted in terms of paragraph (a) of subsection (1) or is admitted by the court in terms of paragraph (c) of that subsection. (4) For the purposes of this section- “hearsay evidence” means evidence, whether oral or in writing, the probative value of which depends upon the credibility of any person other than the person giving such evidence; “party” means the accused or party against whom hearsay evidence is to be adduced, including the prosecution.’ [109] The first judgment is to the effect that the prior decisions of this Court in S v Rathumbu29 and in S v Mamushe30 are clearly wrong. In those judgments, the safeguards provided for in s 3(1)(c) of the Hearsay Act were applied to the admission into evidence of a prior inconsistent extra-curial statement made by a s 204 state witness who, when testifying, recants such statement that incriminates him or herself and the accused in the commission of the offence or offences in question. As I will demonstrate, the application of s 3(1)(c) to such inconsistent extra-curial statements of a s 204 state witness is sound, and this Court, in my view, should not depart from those previous decisions. [110] We are not dealing in the present case with the admissibility of extra- curial hearsay admissions against co-accused persons in criminal cases. This Court, in Ndhlovu and Others v S ,31 in principle decided in favour of 29 S v Rathumbu [2012] ZASCA 5; 2012 (2) SACR 219 (SCA). 30 S v Mamushe [2007] ZASCA 58; [2007] SCA 58 (RSA); [2007] 4 All SA 972 (SCA). 31 Ndhlovu and Others v S 2002 (2) SACR 325 (SCA); 2002 (6) SA 305 (SCA); [2002] 3 All SA 760 (SCA). the admission of this category of evidence on a discretionary basis in terms of s 3(1)(c) of the Hearsay Act. Thereafter, this Court started to question the wisdom of this approach32 and held that an extra-curial admission could under no circumstances be admissible against a co-accused. Instead, we are dealing with the situation where a prosecutor calls a s 204 witness to testify on the strength of the state witness’s extra-curial statement, and the state witness performs an about-turn in the witness box and testifies in favour of the defence or develops a sudden case of amnesia. The question then arises whether the trial court has a discretion in terms of s 3(1)(c) of the Hearsay Act to admit the evidence if it is of the opinion that it is in the interests of justice to do so, having regard to the various factors enumerated in the section and ‘any other factor which should in the opinion of the court be taken into account’. [111] It is a long-standing rule of our common law, derived from English law that in such cases, the state witness’ extra-curial statement may be used solely for the purposes of impeaching him or her and may not be tendered into court as proof for the facts contained therein. Bellengère and Walker33 searched for the rationale of the common law rule in our jurisprudence and that of other jurisdictions and concluded that ‘as far as South African law is concerned, the rule rested on a dual foundation; namely: (1) the traditional objections to hearsay evidence; and (2) the notion that no probative value can be attached to contradictory evidence’.34 32 See S v Balkwell and Another [2007] 3 All SA 465 (SCA); Libazi v S [2010] ZASCA 91; 2010 (2) SACR 233 (SCA); [2011] 1 All SA 246 (SCA) and Litako and Others v S [2014] ZASCA 54; [2014] 3 All SA 138 (SCA); 2014 (2) SACR 431 (SCA); 2015 (3) SA 287 (SCA). 33 Adrian Bellengère and Shelley Walker ‘When the truth lies elsewhere: A comment on the admissibility of prior inconsistent statements in light of S v Mathonsi 2012 (1) SACR 335 (KZP) and S v Rathumbu 2012 (2) SACR 219 (SCA)’ (2013) 26 SACJ 175. 34 At 175-177. [112] The learned commentators point out that the rationale behind the admission of hearsay evidence is based on the common law conception and rendered redundant in 1988 when our law concerning hearsay was amended by the Hearsay Act.35 Insofar as the contradiction rationale is concerned, the learned commentators state:36 ‘The objection that, faced with a contradiction between a witness’s viva voce evidence and what he said on an earlier occasion, the court cannot give credence to either version, is equally groundless. The old maxims “falsus in uno, falsus in omnibus” (false in one thing, false in everything) and “semel mentitus, semper mentitur” (once a liar, always a liar) are not part of the South African law of evidence (R v Gumede 1949 (3) SA 749 (A) at 576A). Certainly a witness’s contradictions may cast doubt on his credibility (and commonly do), but this is a matter for the court to determine, in light of all the available evidence. Thus, the mere fact that a witness has contradicted himself is no reason to disregard or exclude his evidence in entirety. This applies irrespective of whether the witness has contradicted himself in his viva voce evidence, or on some other occasion (S v Mathonsi 2012 (1) SACR 335 (KZP) at paras [34] to [37] and further authorities cited therein).’ [113] The learned commentators continue to state:37 ‘It would be evident from the above that there is no longer any valid reason for the retention of the rule. On the contrary, its only contribution in most cases has been to exclude relevant evidence, which would have assisted the court in determining the truth. In the circumstances, it is hardly surprising that the rule has been abolished, not only in England and Wales (s 119 and 120 of the Criminal Justice Act 2003), but also in Australia (s 60 of the Evidence Act 2 of 1995), Canada (R v B (supra) [R v B (K.G.) [1993] 1 SCR 740]), American federal law (s 801(d)(1) of the Federal Rules of Evidence 1975) and a number of individual American states, such as Alaska, Arizona, California, Indiana, Kentucky, North Dakota, West Virginia and Wisconsin (SM Terrell 35 Ibid at 177-178. 36 Ibid at 178. 37 Ibid at 178-179. “Prior Statements as Substantive Evidence in Indiana” Indiana LR (1979) 12(2) 495, 502-517); jurisdictions whose law of evidence, like that of South Africa, was originally derived from English law. In light of the two recent cases referred to above [Mathonsi and Rathumbu], it appears that South Africa is at last following suit’. [114] I subscribe to the views expressed by the learned commentators, Bellengère and Walker. It may be argued, which argument found favour with the first judgment, that the contents of a 204 state witness’ prior inconsistent statement are not hearsay evidence, since their probative value depends on the state witness' credibility, who, him or herself, is testifying.38 However, although a s 204 state witness is compelled to give his or her evidence under the sanction of an oath, or its equivalent, a solemn affirmation, and be subject to cross-examination by the accused person or persons against whom he or she is called to testify and who had access to all evidence in possession of the state prior to the trial, there seems to be a compelling rationale for our courts to treat the disavowed prior inconsistent statement as hearsay evidence within the meaning of s 3(4) of the Hearsay Act. Treating such statement as hearsay enables the trial court to subject such evidence to the preconditions required in s 3(1)(c) of the Hearsay Act and to admit such evidence only if the court ‘is of the opinion that such evidence should be admitted in the interests of justice’. Such interpretation of ‘hearsay evidence’ as defined in s 3(4) of the Hearsay Act promotes ‘the spirit, purport and objects of the Bill of Rights’ contained in chapter 2 of the Constitution of South Africa,39 and particularly an accused person’s fundamental constitutional ‘right to a fair trial’, enshrined in s 35(3) of the 38 See BC Naude ‘The substantive use of a prior inconsistent statement’ (2013) 26 SACJ 55 at 59-61. 39 Section 39(2) of the Constitution enjoins a court to ‘promote the spirit, purport and objects of the Bill of Rights’ when ‘interpreting any legislation’. Bill of Rights, because the effectiveness of the cross-examination of a state witness who denies having made the prior inconsistent statement or cannot remember having made it, may in a given case be compromised.40 [115] In Rathumbu, this Court held that a disavowed prior written statement of a state witness is essentially hearsay evidence, that the probative value of the statement depends on the credibility of the witness at the time of making the statement, and that the central question is whether the interests of justice require that the prior statement be admitted despite the witness’s later disavowal thereof. In Mamushe, this Court held that the extra-curial statement by a state witness is not admissible in evidence against an accused person under s 3(1)(b) of the Hearsay Act unless the prior statement is confirmed by its maker in court. This Court declined to admit the state witness’ prior statement, which she disavowed in court, under s 3(1)(c) of the Hearsay Act, inter alia because ‘the identification evidence deposed to by Ms Martin in her statements appears to be of the most unreliable kind’. The doctrine of precedent also binds courts of final jurisdiction to their own decisions unless the court is satisfied that a previous decision of its own is clearly wrong, which is not so in this case.41 40 Ibid BC Naude fn 38 at 61-63. 41 Camps Bay Ratepayers’ Association & Another v Harrison & Another 2011 (2) BCLR 121 (CC); [2010] ZACC 19 (CC); 2011 (4) SA 42 (CC) paras 28-30. See also Head of Department, Department of Education, Free State Province v Welkom High School and Another; Head of Department, Department of Education, Free State Province v Harmony High School and Another [2013] ZACC 25; 2013 (9) BCLR 989 (CC); 2014 (2) SA 228 (CC); Firstrand Bank Limited v Kona and Another [2015] ZASCA 11; 2015 (5) SA 237 (SCA); BSB International Link CC v Readam South Africa (Pty) Ltd [2016] ZASCA 58; [2016] 2 All SA 633 (SCA); 2016 (4) SA 83; Standard Bank of South Africa Limited v Hendricks and Another; Standard Bank of South Africa Limited v Sampson and Another; Standard Bank of South Africa Limited v Kamfer; Standard Bank of South Africa Limited v Adams and Another; Standard Bank of South Africa Limited v Botha NO; Absa Bank Limited v Louw [2018] ZAWCHC 175; [2019] 1 All SA 839 (WCC); 2019 (2) SA 620 (WCC); Firstrand Bank Ltd t/a First National Bank v Moonsamy t/a Synka Liquors [2020] ZAGPJHC 105; 2021 (1) SA 225 (GJ) and Investec Bank Limited v Fraser NO and Another [2020] ZAGPJHC 107; 2020 (6) SA 211 (GJ). Like the courts of foreign jurisdictions, this court has laid down its own safeguards before admitting the conflicting extra-curial statement of a state witness who performs an about-turn in the witness box and testifies in favour of the defence or develops a sudden case of amnesia. [116] Finally, in Mathonsi42, the high court held that the common law rule that a witness’ prior inconsistent statement may be used solely to impeach him or her and may not be tendered into court as proof for the facts contained therein must be replaced by a new rule recognising the changed means and methods of proof in modern society. Madondo J then approved and applied the decision of the Supreme Court of Canada in R v B (KG) [1993] 1 SCR 740, and held that the prior inconsistent statement of a hostile state witness may be used as evidence of the truth of the matter stated in the statement if the trial court is satisfied beyond reasonable doubt that the conditions referred to in para 49 of the first judgment are fulfilled as well as the sixth condition which he added. [117] However, the common law principle that a state witness’ extra-curial inconsistent statement may be used solely for the purposes of impeaching him or her and may not be tendered into court as proof of the facts contained therein no longer finds application in our law. In this country, we have our definition of hearsay evidence and legislative instrument prescribing the factors or safeguards that the court must consider in deciding whether the extra-curial inconsistent hearsay statement of a state witness should be admitted as evidence in the interests of justice. Our courts, therefore, are not permitted to substitute our statutory prescripts 42 S v Mathonsi 2012 (1) SACR 335 (KZP). with common law principles or statutory provisions of foreign jurisdictions in deciding whether such hearsay should be admitted as evidence. Therefore, the decision in Mathonsi is wrong. [118] I have mentioned that our Hearsay Act allows for a more flexible discretionary approach to the admissibility of hearsay evidence than the common law did. In deciding whether hearsay should be admitted in the interests of justice, the court is not limited to the factors listed in s (3)(1)(c)(i) to (vi) but empowered in terms of s 3(1)(c)(vii) to have regard to ‘any other factor which should in the opinion of the court be taken into account’. If in deciding whether hearsay should be admitted in the interests of justice in terms of s 3(1)(c) of the Hearsay Act in a given case, the trial court is of the opinion that a factor taken into account in another jurisdiction when admitting hearsay into evidence should additionally be taken into account, it is by virtue of s 3(1)(c)(vii) empowered to do so. [119] It is within this limited ambit that I support the order of the first judgment dismissing the appeal. PA MEYER ACTING JUDGE OF APPEAL Appearances: For appellants: J. Van der Berg Instructed by: Dercksens Inc., Cape Town Symington & De Kok, Bloemfontein For respondent: M. Meningo Instructed by: Director of Public Prosecutions, Cape Town Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 18 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 Mawanda Makhala & Another v The State (438/2020) [2021] ZASCA 19 (18 February 2022) Today the Supreme Court of Appeal (SCA) dismissed an appeal from the Western Cape Division of the High Court, Cape Town (high court). The first and second appellants were convicted by Henney J in the high court on one count of murder, one count of possession of an unlicenced firearm and one count of unlawful possession of ammunition. The appellants were each sentenced to life imprisonment for murder and five years’ imprisonment on the remaining counts. On 23 July 2018, Mr Molosi was attending a school governing body meeting at Concordia High School as chairman after which he was shot and killed on his way home. Upon investigation, the brother of one of the appellants, one Luzuko Makhala (Luzuko) indicated that he wished to recount his part in the murder and be treated as a witness under section 204 of the Criminal Procedure Act 51 of 1977. This section allows a witness to provide evidence for the prosecution which incriminates a witness. If the testimony is frank and honest, the witness may be discharged from prosecution. Accordingly, Luzuko provided the police with two separate statements incriminating the appellants in the murder of Mr Molosi. The high court admitted the statements into evidence and convicted the appellants. However, when Lukuzo was called upon to give evidence, he recanted the contents of his statements. He testified that the incriminating portions of the statements were, in fact, fabrications forced upon him by the police. In light hereof, the appeal is grounded on the question whether the trial court was correct in convicting the appellants in light of the recanted statements. This Court considered the statements made in light of the principle of legality and found that they were not obtained in violation of Luzuko’s rights as there was nothing done to obtain the statements which would have constituted any material detriment to the administration of justice. Luzuko tried to rely on other defences, namely that the statements were hearsay, that he was denied his right to legal representation and that the high court failed to properly apply the cautionary rule applicable to evidence. Lastly, Luzuko sought to indicate, notwithstanding the aforementioned defences, that there was insufficient corroborative evidence to convict the appellants. This Court found each defence lacking and each failed. In the result, this Court found the statements made by Luzuko were not unlawfully obtained and were correctly submitted into evidence. The high court judge correctly found that there was sufficient evidence to corroborate the statements; the State had discharged its burden of proof. Accordingly, the appeal was dismissed. In a separate concurring judgment, the Court agreed with the reasoning and conclusions reached by the majority save for the conclusion that s 3(1)(c) of the Law of Evidence Amendment Act 45 of 1988 found no application to the admissin of extra-curial statements made by a s 204 state witness. The Law of Evidence Amendment Act allowed for a more flexible discretionary approach to the admissibility of hearsay evidence than what the common law provided for. In deciding whether hearsay should be admitted in the interests of justice, the court was not limited to the factors listed in s (3)(1)(c)(i) to (vi) but empowered in terms of s 3(1)(c)(vii) to have regard to ‘any other factor which should in the opinion of the court be taken into account’. In deciding whether hearsay should have been admitted in the interests of justice in terms of s 3(1)(c) of the Law of Evidence Amendment Act, the court was at liberty to seek guidance from the jurisprudence of other jurisdictions, and in a given case could also have taken into account factors that would have been taken into account in such other jurisdictions. --------oOo--------

1416

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 441/09 In the matter between: ACKERMANS LIMITED Appellant and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE Respondent In the matter between PEP STORES (SA) LIMITED Appellant and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE Respondent Neutral citation: Ackermans v CSARS (441/09) [2010] ZASCA 131 (1 October 2010). Coram: NAVSA, CLOETE, CACHALIA, MHLANTLA and BOSIELO JJA Heard: 20 September 2010 Delivered: 1 October 2010 Summary: Income Tax Act 58 of 1962; meaning of 'expenditure' in s 11(a). ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: South Gauteng Tax Court (Johannesburg) (Willis J presiding): The appeals are dismissed, with costs, including the costs of two counsel. ______________________________________________________________ JUDGMENT ______________________________________________________________ CLOETE JA (NAVSA, CACHALIA, MHLANTLA and BOSIELO JJA concurring): [1] There are two appeals before the court: one by Ackermans Ltd and one by Pep Stores (SA) Ltd. On 1 March 2004 Ackermans sold its retail business as a going concern to Pepkor Ltd. At issue in the appeal is whether by virtue of the sale agreement Ackermans is entitled to a deduction, in terms of s 11(a) of The Income Tax Act 58 of 1962, of the sum of R17 174 777 in respect of its 2004 year of assessment. Save for the specific nature and amount of the contingent liabilities on which the disputed deductions sought by Pep Stores were based, the facts of the Pep Stores appeal are identical to the Ackermans appeal. The outcome of the Ackermans appeal will accordingly determine the fate of the Pep Stores appeal. The South Gauteng Tax Court sitting in Johannesburg (presided over by Willis J) found against the appellants and confirmed the assessments of the Commissioner. The appellants' application for leave to appeal to this court in terms of s 86A of the Act was subsequently granted. [2] In terms of the sale agreement Ackermans sold the 'business' to Pepkor as a going concern. The 'business' was defined as Ackermans' retail clothing business, including the 'business assets', the 'liabilities' and the 'contracts' as at the effective date (1 March 2004). The 'liabilities' were defined as meaning 'all the liabilities arising in connection with the business, in respect of any period prior to the effective date, known to [Ackermans] as at the effective date'. The liabilities were in fact R329 440 402. They included three amounts, to which I shall for convenience refer as 'the three contingent liabilities', namely: (a) R9 880 666, being a contingent liability in respect of Ackermans' contractual obligation to fund post-retirement medical aid benefits for its employees; (b) R6 394 111, being a contingent liability in respect of Ackermans' obligations to employees under a long-term bonus scheme; and (c) R900 000, being a contingent liability in respect of repair obligations undertaken by Ackermans under property leases. It is these three contingent liabilities, which total R17 174 777, around which this appeal revolves. [3] The 'purchase price' was defined as 'the amount equal to the sum of R800m and the rand amount of the liabilities' ─ ie R800m plus R329 440 402, totalling R1 129 440 402. The purchase price was to be discharged as follows: (a) as consideration for inter-company and other loans owed to Ackermans, by an assumption by Pepkor of an equivalent amount of the 'accounts payable' ie amounts due by Ackermans to trade creditors as at and in respect of the period prior to 1 March 2004; (b) as consideration for the remaining business assets sold, (i) the assumption by Pepkor of the remainder of the liabilities and (ii) the creation of an R800m loan account owed by Pepkor to Ackermans. [4] In terms of the sale agreement therefore, Pepkor assumed all of Ackermans' liabilities, including the three contingent liabilities. The appellants' counsel submitted, and the submission is not contentious, that had Ackermans retained its business and continued to trade, the three contingent liabilities would have been deductable in its hands as and when they became unconditional because: (a) salary and employee benefits paid by a taxpayer are incurred in the production of income and are of a revenue nature. Post-retirement medical aid subsidies and long-term bonuses are designed to attract and retain high quality staff and to incentivize them to render good service, all for the benefit of the business; and (b) similarly, rental and related property expenditure (eg maintenance, repair and restoration) incurred by a taxpayer for the use of the premises from which it trades are revenue expenses incurred in the production of income. [5] Ackermans does not claim an entitlement to deduct the three contingent liabilities. This would not have been competent since they were still conditional at the effective date when Pepkor assumed them. Rather, a deduction is claimed on the basis that under the sale agreement Ackermans incurred expenditure (in the sense envisaged in s 11(a) of the Act) in an amount equal to the contingent liabilities. The submission was that Ackermans did so by foregoing a portion of the asset purchase price (to which it would otherwise have been entitled) equal to the value of the contingent liabilities. The economic effect of the sale agreement in respect of Ackermans' liabilities, including the three contingent liabilities, it was contended, was that Ackermans received, for assets sold at R1 129 440 402, only R800m; and that the position is the same as if Ackermans had received R1 129 440 402 from Pepkor and paid R329 440 402 back to Pepkor for the latter to assume the liabilities as at the effective date. The appellants' counsel submitted, with reference to South African,1 English2 and Australian3 authorities, that when lump sum expenditure is incurred by a taxpayer to free itself from anticipated or contingent revenue expenses, such expenditure is generally itself of a revenue nature, and that this applies to Ackermans' expenditure in the present case. It will not be necessary to consider the correctness of this submission. 1 SIR v John Cullum Construction Co (Pty) Ltd 1965 (4) SA 697 (A). 2 Hancock v General Reversionary & Investment Co Ltd [1919] 1 KB 25; Rowntree & Co Ltd v Curtis [1925] 1 KB 328 (CA); British Insulated & Helsby Cables Ltd v Atherton [1926] AC 205 (HL); Anglo-Persian Oil Co Ltd v Dale [1932] 1 KB 124 (CA);Heather v P-E Consulting Group Ltd [1973] 1 All ER 8 (CA) and Vodafone Cellular Ltd v G Shaw (HM's Inspector of Taxes) [1997] EWCA Civ 1297. 3 Spotlight Stores (Pty) Ltd v CoT [2004] FCA 650 and (on appeal) Pridecraft Pty Ltd v CoT; CoT v Spotlight Stores Pty Ltd [2004] FCAFC 339. [6] It was contended on behalf of the Commissioner that the deduction claimed: (a) did not constitute 'expenditure' or 'expenditure actually incurred'; (b) was not incurred in the production of income; (c) was of a capital nature; (d) was not incurred for the purposes of Ackermans' trade as required by s 23(g) of the Act; (e) was precluded from deduction by operation of s 23(e) of the Act (which refers to 'income carried to any reserve fund or capitalised in any way'); and (f) was precluded from deduction by operation of s 23(f) of the Act (which refers to 'expenses incurred in respect of any amounts received or accrued which do not constitute income as defined in section one'). It will be necessary to deal only with the first issue raised by the Commissioner. [7] The Commissioner submitted that Ackermans did not have any obligation to make a payment to Pepkor in terms of the sale agreement, and that the manner in which the purchase price was discharged did not involve any expenditure being incurred by Ackermans. To this the appellant replied that deductable 'losses', as comprehended in the phrase in s 11(a) 'expenditure and losses actually incurred', can exist independently of a legal liability (eg where trade stock is destroyed in a fire or money is stolen from the business); and that being so, there is no reason why 'expenditure' must necessarily have its source in a legal liability owed by a taxpayer to a third party. The economic consequences of a transaction should thus be examined to ascertain whether it has resulted in an actual diminution of, or has had a prejudicial effect on, the taxpayer's patrimony. Therefore (I quote from counsel's heads of argument): 'Whether the contract created an actual liability on Ackermans' part to pay R329 440 402 to Pepkor (a liability which would be settled through set-off) is, we submit, irrelevant. From the perspective of Ackermans' patrimony, the commercial effect is precisely the same as if such a liability had been created.' [8] I cannot accept this argument. To my mind, 'expenditure incurred' means the undertaking of an obligation to pay or (which amounts to the same thing) the actual incurring of a liability. No liability was incurred by Ackermans to Pepkor in terms of the sale agreement. The manner in which the purchase price was discharged by Pepkor did not result in the discharge of any obligation owed by Ackermans to Pepkor. Ackermans owed Pepkor nothing in terms of the sale agreement and one looks in vain for a clause in that agreement that has this effect. It is for this very reason that the appellant in its oral submissions abandoned any reliance on set-off, which would have been the inevitable effect if there had been these reciprocal obligations. At the outset, in the initial letter of objection to the assessment by SARS, written by auditors acting on behalf of the appellants, there was reliance on set-off in the following terms: '13.8.1 The purchaser undertook to buy Ackermans' business for R1 129 440 402. The purchaser thus owed this amount to Ackermans. 13.8.2 Ackermans undertook to pay the purchaser R329 440 402 to take over its existing and future liabilities. Ackermans thus owed this amount to the purchaser. 13.8.3 It is the two aforementioned mutual but opposing debts which were set off against each other, namely the R1 129 440 402 owed to Ackermans by the purchaser, and the R329 440 402 owed to the purchaser by Ackermans, which underscores clause 6.1.2.4 13.8.4 In other words, in stead of the purchaser physically paying Ackermans R1 129 440 402, and Ackermans physically paying the purchaser R329 440 402, the parties allowed for set-off to operate, which meant that the amount of R329 440 402 was set-off against R1 120 440 402, resulting in a figure of R800 000 000 owed by the purchaser to Ackermans. There is nothing sinister about such a contractual arrangement, it occurs in overabundance in commercial life. 13.9 The payment of R23 017 959 so incurred by Ackermans on 1 March 2004 as part of the set-off arrangement was unconditional, as it was actually paid to the 4 Clause 6.1.2 of the sale agreement, paraphrased in para 3 above, provides: '6.1 The Purchase Price shall be discharged as follows by the Purchaser: . . . 6.1.2 as consideration for the remaining Business Assets: 6.1.2.1 the Purchaser will assume the remainder of the Liabilities, and 6.1.2.2 the Purchaser will with effect from the Effective Date owe the Seller R800 000 000,00 (eight hundred million rand) as a loan and which will be reflected as a loan account in the books of the Seller.' purchaser through set-off on the day (1 March 2004) that the obligation arose to pay this amount.' The argument is untenable. It is trite that set-off comes into operation when two parties are mutually indebted to each other, and both debts are liquidated and fully due. That is not what happened here and the argument based on set-off was correctly abandoned. [9] It was submitted on behalf of the respondent that unless the three contingent liabilities were allowed as a deduction in the hands of Ackermans, an anomaly would arise as they would never be deductible. The argument is without foundation. There would be no bar to Pepkor deducting the liabilities as and when they became unconditional, as counsel representing the Commissioner rightly conceded. [10] It is clear that what occurred, as is usually the case in transactions of this nature, is that the nett asset value of the business ─ the assets less the liabilities ─ was calculated and that this valuation dictated the purchase price. In the ordinary course of purchasing the business as a going concern on this basis it would follow that the liabilities would be discharged by the purchaser. The journal entries relied on by the appellants do not equate to expenditure actually incurred. On the contrary, the mechanism employed in the agreement of sale resulting in the journal entries was to facilitate the sale. [11] The fact that Ackermans rid itself of liabilities by accepting a lesser purchase price than it would have received had it retained the liabilities, does not mean in fact or in law that it incurred expenditure to the extent that the purchase price was reduced by the liabilities. At the effective date no expenditure was actually incurred by Ackermans. [12] The appellants accordingly fail at the first hurdle. The appeals are dismissed, with costs, including the costs of two counsel. _______________ T D CLOETE JUDGE OF APPEAL APPEARANCES: APPELLANTS: O L Rogers SC (with him M W Janisch) Instructed by Werksmans, Tyger Valley McIntyre & Van der Post, Bloemfontein RESPONDENTS: A Rafik Bhana SC (with him Ms J T Boltar) Instructed by The Registrar, Tax Court, Pretoria The Commissioner for The South African Revenue Service, Pretoria

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 October 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 ACKERMANS LTD v THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE 1. In 2004 Ackermans Ltd sold its retail business as a going concern to Pepkor Ltd. Ackermans claimed a deduction under the Income Tax Act of R17m in respect of three liabilities which Pepkor had assumed under the sale agreement. The Commissioner of the SA Revenue Service disallowed the deduction. The SCA held that Ackermans had incurred no expenditure in respect of the three liabilities and was accordingly not entitled to any deduction. 2. An appeal by Pep Stores (SA) Ltd for similar relief was dismissed for the same reason. --ends--

3446

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1159/2019 In the matter between: TRANSNET NATIONAL PORTS AUTHORITY APPELLANT and REIT INVESTMENTS (PTY) LIMITED FIRST RESPONDENT M C SEOTA NO SECOND RESPONDENT Neutral citation: Transnet National Ports Authority v Reit Investments (Pty) Limited and Another (Case no 1159/2019) [2020] ZASCA 129 (13 October 2020) Coram: PETSE DP, SALDULKER, PLASKET and DLODLO JJA and MATOJANE AJA Heard: 3 September 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by e-mail, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09H45 on 13 October 2020 Summary: Notarial deeds of lease – determination of rental payable by umpire appointed jointly by lessor and lessee – umpire executing mandate in accordance with its terms – no legal basis established for reviewing and setting aside determination. Contract – interpretation of – s 67 of National Ports Act 12 of 2005 – applicability of. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Moshidi J sitting as court of first instance): 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the court below is set aside and in its place is substituted the following: ‘The application for review is dismissed with costs, including the costs occasioned by the employment of two counsel.’ JUDGMENT Petse DP (Saldulker, Plasket and Dlodlo JJA and Matojane AJA concurring) [1] This appeal raises two interrelated issues. The first issue concerns the circumstances in which the determination made by an expert valuer or umpire jointly appointed by two parties to a contract is susceptible to being reviewed and set aside by a court. In a broader context, the subject of the appeal is the correct basis upon which valuations of immovable property, situated in Maydon Wharf in the port of Durban, should be made for purposes of determining rentals payable in respect of those properties. The second issue raises the question whether the agreements concluded between the parties in 2009 and described as ‘Declaration of Rental’ had the effect of varying the basis upon which rental would be determined for the remaining period of the long-term leases terminating by effluxion of time on 30 September 2029. [2] The appellant, Transnet National Ports Authority (Transnet), is one of the trading entities under the auspices of Transnet Limited, which is a public company incorporated in terms of the Legal Succession to the South African Transport Services Act 9 of 1989 as read with the Companies Act 71 of 2008. Transnet operates, amongst other things, the port of Durban. The first respondent is Reit Investments (Pty) Ltd (Reit) which is a private company incorporated in South Africa. Its principal place of business is in Johannesburg. The second respondent is Mr Matsobane Charles Seota, (Mr Seota), who was cited in his official capacity as the registrar of the South African Council for the Property Valuers Profession (SACPVP). Although Mr Seota’s valuation took the centre stage in the review proceedings in the High Court, no substantive relief was sought against him personally. Not surprisingly therefore, he took no part in the proceedings in the court below and has not participated in this appeal. [3] Mr Seota’s valuation was impugned on the narrow basis that he ‘did not determine the market value of the land when attempting to resolve the deadlock between the appraisers appointed’ by Transnet and Reit. It was asserted by Reit that ‘instead of determining the market value of the land, to which had to be applied the contractually stipulated fixed percentage to establish the annual rental’, Mr Seota ‘determined (contrary to the terms of the contract) the market-related rental in respect of the properties’. The reference to ‘the contract’ is patently a reference to the long-term notarial leases. [4] The dispute between the parties had its genesis in five long-term notarial agreements of lease concluded between Transnet’s predecessor-in-title called the South African Railways & Harbours, as lessor, and Reit’s predecessor-in-title, named B & C Properties South Africa (Pty) Ltd, as lessee during June, August and September 1960. Save for minor differences relating to the percentages that were to be used in determining the rental payable in respect of each agreement of lease, the five notarial leases were otherwise in identical terms. [5] Reit had initially sought an order reviewing and setting aside Mr Seota’s determination coupled with an order directing Transnet to procure, within the period determined by the court, a fresh valuation of the land in accordance with the principles identified in the judgment of the court below. However, it so happened that long after Transnet had delivered its answering affidavit, Reit changed tack some few months before the hearing. It then sought declaratory orders to the effect that Mr Seota was appointed to value the land (excluding improvements thereon) in terms of the agreements of lease but failed to do so. I shall revert to this later. [6] Despite opposition by Transnet, the High Court (Moshidi J) held that Reit had made out a case for the relief sought. Accordingly, it granted relief substantially in the terms sought by Reit in its amended notice of motion. Although more will be said about the conclusions of the High Court later, it suffices, for now, to briefly set out its principal conclusions. It said (paras 14 and 15): ‘At the commencement of argument, it was common cause that the second respondent, when making the rental determination, as he did, was not acting as an arbitrator, but in fact, as an expert valuer. After all is said and done, the historical exposition described above, the crisp issue for determination is therefore the question: whether Mr M C Seota NO (“the second respondent”), in making the rental determination, failed to discharge his mandate in terms of the notarial deeds of leases, to determine the value of the land, excluding the improvements constructed thereon, and by determining a market- related rental for the premises contrary to the express terms of the notarial leases and if the second respondent was incorrect, as contended by the applicant, whether his determination is susceptible to review and setting aside by the Court. The first respondent, in also relying on the provisions of section 67 of the National Ports Act 12 of 2005 (“the Ports Act”), advanced the submission in its heads of argument, that the parties amended the notarial leases pursuant to the conclusion of the 2009 Declarations to provide that the valuer would determine a market-related rental for the leased premises, instead of determining the market value of the land, excluding improvements. In the process, the first respondent also invoked the principle of res judicata in support of its argument that the applicant is not entitled to challenge the second respondent’s valuation. It is to these competing submissions, and related ones, I must now turn, having in mind some legal principles, applicable.’ [7] The Court then continued (paras 33 and 34): ‘On the other hand, and on this aspect, the applicant, as observed above, presented entirely different arguments. I have already discredited the second respondent’s rental determination. . . . It is so, in my view, and as argued by the applicant that, the parties never amended the notarial leases pursuant to the conclusion of the 2009 Declarations to provide that the valuer (the second respondent) would determine a market-related rental for the leased premises instead of determining the market value of the premises, excluding improvements. Neither was there any evidence, in whatever form, to suggest so. I must therefore find that Transnet’s assertion that the notarial deeds of leases were amended in the manner suggested, as entirely unsustainable in the circumstances of this case. On a proper construction, the terms of the 2009 Declarations concluded on 17 August 2009, do not show that an amendment to the notarial leases in the terms as alleged by the first respondent. If this was so then the parties would have been obliged to follow the procedure as set out in the Deeds of Leases. For starters, the Declarations signed by the applicant in 2009, were conditional. . . .’ [8] As already indicated, the High Court proceeded to grant relief to Reit substantially in terms of its amended notice of motion. This appeal is against that order and comes before us with the leave of this Court after the High Court had refused leave. In order to promote a better understanding of the nature and ambit of the issues in this appeal, the facts giving rise thereto, which are largely common cause, require to be canvassed in some detail. [9] As previously mentioned, the parties concluded five long-term notarial leases in respect of properties located in the Durban Port precinct at what by all accounts were nominal rentals based on an agreed percentage of the market value of the land excluding improvements thereon.1 As the various leases were to endure for periods in excess of 60 years, the rental payable was to be fixed for five-year periods only at any given time. It bears mentioning that although the five long-term leases were to terminate by effluxion of time at different times, (some in 2025 and others in 2029) Transnet and Reit agreed, four years after signing the 2009 declarations of rental, to vary the termination dates of the leases so that they would all terminate on 30 September 2029. [10] Clause 5 of the various agreements, which is central to the dispute between the parties, bears special mention. It provides, to the extent relevant for present purposes, that: 1 Clause 4 of the leases provides: ‘In determining the market value of the land for the purposes of clause 3 hereof, account shall not be taken of the value of any buildings or other structures on the said land, but the fact that railway siding facilities have been or can be provided, shall be taken into account.’ ‘(a) The Administration may, and if called upon by the Lessee shall, at any time within three (3) months prior to the commencement of any period of five (5) years contemplated in clause 3 hereof, but excluding the initial period referred to in paragraph (a) of that clause, determine the market value of the land and notify the Lessee of the value so determined and of the rent which will consequently be payable in respect of the full period of five (5) years with reference to which such determination was made. (b) If the Lessee is not prepared to accept the Administration’s determination of the market value, it shall forthwith notify the Administration accordingly, whereupon the value shall be determined by sworn appraisement as hereinafter provided. (c) Such appraisement shall be undertaken by a sworn appraiser to be selected by the parties jointly. If the parties cannot agree on one sworn appraiser, each party shall appoint one sworn appraiser to undertake the valuation jointly with the one appointed by the other party, and if these two appraisers cannot agree on their valuation, they shall jointly select a third as umpire, whose valuation shall be final and binding on the parties. The cost of all appraisements shall be borne by the parties in equal shares. (d) If the Administration does not notify the Lessee of any change in its determination of the market value and the Lessee does not request such determination both within the three (3) months aforesaid, it shall be deemed that there has been no change in land values to justify a revision of the rental and in that case the rental for the then current period of five (5) years shall, except where a higher percentage rate on market value becomes applicable in terms of clause (3), be the same as that which was applicable during the immediately preceding period.’ [11] It is also necessary to make reference to clause 18 that provides: ‘It is specifically understood that no amendment or variation of the terms and conditions of this lease in any form or manner whatsoever will be recognised by or be binding upon the Administration, unless and until such amendment or variation has been embodied in a formal written agreement duly executed by the Administration and by the Lessee.’ [12] It is apposite at this juncture to make reference to the National Ports Act, 12 of 2005 (the NPA) which came into operation on 26 November 2006. The objects of the NPA are set out in s 2 which reads: ‘The objects of this Act are to– (a) promote the development of an effective and productive South African ports industry that is capable of contributing to the economic growth and development of our country; (b) establish appropriate institutional arrangements to support the governance of 45 ports; (c) promote and improve efficiency and performance in the management and operation of ports; (d) enhance transparency in the management of ports; (e) strengthen the State’s capacity to– (i) separate operations from the landlord function within ports; (ii) encourage employee participation, in order to motivate management and workers; (iii) facilitate the development of technology, information systems and managerial expertise through private sector involvement and participation; and (f) promote the development of an integrated regional production and distribution system in support of government’s policies.’ [13] Section 67, which is headed ‘Restructuring and reform of ports’, provides in subsec (1)(b) thereof that: ‘If, in any area within a port– (b) the terms of a long-term lease which existed immediately before this section took effect are substantially prejudicial to the operation of a port, including terms providing for unreasonable low rentals or containing no restrictions on sub-letting or no provision confining the use of the property to a use relating to the relevant port, the Authority may in writing addressed to the lessee direct that the applicable terms be renegotiated in order to remove the prejudice.’ [14] It is manifest even on a cursory reading of s 67(1)(b) that Transnet is empowered, in circumstances where the terms of a long-term lease concluded before this section took effect are thought to be substantially prejudicial to the operation of a port, because they, amongst other things, provide for unreasonably low rentals, to address a letter to the lessee concerned and direct that the applicable terms be renegotiated in order to remove the prejudice. It, therefore, comes as no surprise that on 28 October 2008 Transnet caused a letter to be addressed to Reit in which it pointed out that Reit’s leases ‘have been identified as falling under review in the port of Durban.’ [15] Transnet’s letter just mentioned in the preceding paragraph calls for closer scrutiny. And because of its great import, it is necessary to quote it in full. It was penned by a Ms Linda Nodada who is designated as ‘Manager – Real Estate, Transnet National Ports Authority.’ It is headed: ‘RE – AGREEMENTS OF LEASE BETWEEN EMERGENT INVESTMENTS (PTY) LTD AND THE TRANSNET NATIONAL PORTS AUTHORITY – MAYDON WHARF – PORT OF DURBAN’. It reads: ‘We refer to the abovementioned subject, duly authorized. The Transnet National Ports Authority (TNPA) has embarked on a process of reviewing all our Agreements of Lease, with various tenants – to align the contractual arrangements with our designated functions as provided for in the National Ports Act. The objectives of the lease review include, inter alia:  The commercialization of lease terms and conditions to standardize our leases.  Review of onerous lease terms, terms heavily in favour of the tenant and grossly prejudicial to the TNPA and other tenants on the port.  Alignment of our leases with normal market practices in the commercial real estate environment.  Assessing leases that have no direct or no port related use – historically occupying our land.  Licensing of certain tenants in line with the provisos in the Act. Your leases have been identified as falling under this review in the Port of Durban. To this end, the TNPA has commissioned a valuation of the property leased to yourselves and the table below outlines the leased areas and the applicable rates: TENANT EXTENT CURRENT RATE/M2 CURRENT MONTHLY RENTAL NEW RATE /M2 NEW MONTHLY RENTAL EMERGENT INVESTMENTS 4121 1.80 R 7 404.86 R 15.00 R 61 815.00 EMERGENT INVESTMENTS 5216 1.87 R 9 743.25 R 15.00 R 78 240.00 EMERGENT INVESTMENTS 10632 1.03 R 10 901.14 R 15.00 R 159 480.00 EMERGENT INVESTMENTS 6407 2.04 R 13 102.31 R 15.00 R 96 105.00 EMERGENT INVESTMENTS 3966 2.04 R 8 110.47 R 15.00 R 59 490.00 The rentals will escalate annually by 10% for the next five years, whereafter the rentals will be reviewed by both parties to align with the prevailing market rate at the time. The leases will be reviewed every five years thereafter until the date of expiry. We are adamant that the discrepancy between the existing rental rates currently charged and the prevailing market rate for the leased properties, be addressed. We invite you for a meeting between the TNPA and your representatives on Thursday, 27 November 2008. Kindly contact Colleen Rampono on (031) 361 8909 to confirm or arrange an alternative date for the meeting. The new rental rates and all other statutory conditions required for these kinds of leases would be tabled via Declaration of rentals and or Addenda to the existing Agreements of Lease, which would ultimately be signed by both parties through appropriate authorization. This correspondence is sent to you without prejudice to Transnet National Ports Authority. We look forward to your positive response.’ As can be observed from the illustration contained in the table showing comparative figures, the increases proposed by Transnet clearly show that there was a substantial difference between the then current rental of approximately R 49 260 per month and the proposed increased rental which would push the rental to an astronomical figure of some R 455 130 per month. [16] The meeting requested by Transnet in its letter dated 28 October 2008 was held between representatives of Transnet and Reit on 27 November 2008. Following this meeting, Transnet advised Reit that its proposed rental rate was R 15 per square metre per month, exclusive of rates and taxes. Further discussions between the parties ensued and after much to-ing and fro-ing the parties’ negotiations ultimately resulted in the conclusion of five ‘declaration of rental’ agreements which, save for differences in respect of the rental amount payable for each property, were in identical terms. [17] The material terms of the declarations of rental read thus: ‘WHEREAS in terms of NOTARIAL DEED OF LEASE NO 62/1960L dated 4 June 1960 and supplementary documents, the LESSEE hires from the LESSOR Lease 28 on Portion 66 of Erf 10004, Durban, being portion of the LESSOR’s land at Maydon Wharf abutting on the Bay of Durban, Province of KwaZulu-Natal. AND WHEREAS the rental payable by the LESSEE to the LESSOR has been reviewed in terms of the conditions of lease. AND WHEREAS the rental payable by the LESSEE to the LESSOR has been reviewed in terms of Sec 67.1(b) of the National Ports Act, Act 12 of 2005. NOW, THEREFORE, THE PARTIES HEREBY DECLARE THAT: In respect of the period 1 June 2009 to 31 May 2014 the annual rental shall be the amount of Four Hundred and Twenty Five Thousand Nine Hundred and Twenty Rand Only (R45 920,00), (excluding V.A.T) escalating at 10% (ten percent) per annum compounded.’ It bears emphasising that the new increased rentals were intended to take effect from 1 June 2009 to 31 May 2014 subject to a compound 10 per cent annual escalation. [18] On 1 June 2009 Transnet caused a further letter to be addressed to Reit in which it advised, amongst other things, that other than the terms reviewed and agreed to in terms of the declarations of rental, it had no intention of varying the other terms of the leases. On 24 July 2009 Reit’s attorneys advised Transnet that Reit had agreed, on a without prejudice basis, to sign the declarations of rental subject to the following conditions: ‘1. Our clients agreement to increase the rental in accordance with the declarations of rental and our client’s signature thereof does not constitute an acceptance by our client of Transnet’s entitlement to rely of Section 67 of the National Ports Act, No 12 of 2005 to review the rental and/or lease agreements and our client has agreed to the review process on a without prejudice basis and without waiving or novating any of its rights in this regard; and 2. Transnet shall not in future and for the duration of the remainder of the lease periods attempt to again rely on Section 67 of the National Ports Act, No 12 of 2005 to enforce increased rentals or any cancellation of the lease agreements; and 3. The increased rental amounts shall be paid by our client to Transnet quarterly in arrears, in the same cycles as it has prior to the signature of the declarations of rental; and 4. All of the remaining terms and conditions as contained in the various registered lease agreements will remain unchanged, unless otherwise agreed to in writing between the parties.’ I pause here to observe that the contents of paragraph 4 of this letter are revealing. Their implication is that Reit unequivocally accepted that there had been a variation of the various leases in the respects set out in the declarations and that other than the agreed changes ‘all of the remaining terms and conditions as contained in the various registered lease agreements will remain unchanged unless otherwise agreed to in writing between the parties.’ (My emphasis.) Reit also contested Transnet’s entitlement to invoke s 67(1)(b) of the NPA. [19] Having signed the declarations of rental on 16 July 2009, Reit dutifully paid the increased rental as contemplated therein. Some few weeks before the period covered by the 2009 declarations of rental came to an end, Transnet instructed Mr Humphrey Moyo, a professional valuer, to prepare a fresh valuation of the properties leased by Reit pursuant to clause 5(a)2 of the notarial leases based, not on a percentage of bare land value, but on the market-related rental with a view to determining the rental which would be payable in respect of the period of five years commencing on 1 June 2014 and ending on 31 May 2019. Pursuant to this valuation, Transnet prepared new 2 For convenience clause 5(a) is quoted again and reads: ‘The Administration may, and if called upon by the Lessee shall, at any time within three (3) months prior to the commencement of any period of five (5) years contemplated in clause 3 hereof, but excluding the initial period referred to in paragraph (a) of that clause, determine the market value of the land and notify the Lessee of the value so determined and of the rent which will consequently be payable in respect of the full period of five (5) years with reference to which such determination was made.’ declarations of rental which it forwarded to Reit for signature in terms of which the new rental would be R 17 per square metre per month. [20] On 23 July 2014 Reit responded and advised that it objected to the proposed rental and that it would instead appoint its own valuer to prepare its own valuation. To this end, Reit likewise instructed JVR Valuations (Pty) Ltd (JVR) to prepare a valuation on its behalf based on a market-related rental of bare land. In the interim, Transnet confirmed that Reit was at liberty to obtain its own valuation ‘if the lease agreement allows you to obtain your own valuation’ and also reiterated that Mr Moyo’s valuation was based on ‘the rental for land, excluding the buildings . . . based on a comparison of rentals achieved for other leases in the Maydon Wharf precinct’. [21] On 12 August 2014 Transnet wrote to Reit advising the latter that its rental account was in arrears and imploring Reit to pay the invoiced amount in the interim ‘until the issue of valuation has been sorted’. On the same day, Reit responded and reiterated that it had not agreed to the latest valuation proposed for the five-year period from 1 June 2014 to 31 May 2019. After noting that it was being invoiced on the basis of the declarations of rental that expired on 31 May 2014, Reit confirmed that, pending the resolution of the dispute, it would continue to pay the invoiced amount ‘provided that if [they] have overpaid from 1 June 2014 onwards . . . Transnet [would] refund or credit our account [with the] said overpayment’. [22] In due course Reit obtained its own valuation from JVR and on 9 September 2014 representatives of the parties met with JVR’s representatives with a view to resolving the impasse. Subsequently, Reit offered to pay R 11 per square metre per month (i.e. R 1 more than what JVR had recommended in its valuation). Still, these efforts did not bear fruit. It bears mentioning that the fact that Mr Moyo’s valuation and that of JVR were far apart does not necessarily render either of the valuations questionable. Radically divergent views as to the value of a thing are all too common. For as Scott JA said in Abrams v Allie NO and Others 2004 (4) SA 534 (SCA) para 25: ‘. . . This Court has in the past frequently commented on the nature of the inquiry and hence the approximate nature of its result. In South African Railways v New Silverton Estate Ltd 1946 AD 830 at 838 Tindall JA stressed the importance of bearing in mind that a valuation “is to a material extent a matter of conjecture”. Ogilvie Thompson JA in Estate Marks v Pretoria City Council 1969 (3) SA 227 (A) at 253A described a valuation as “essentially a matter which is in the realm of estimate”. Botha JA in Bestuursraad van Sebokeng v M & K Trust & Finansiële Maatskappy (Edms) Bpk 1973 (3) SA 376 (A) at 391E similarly described it as “noodwending ‘n kwessie van skatting in die lig van al die omstandighede”. Nothing, I think, demonstrates this more than the regularity with which good and honest valuers arrive at relatively widely different conclusions.’ [23] As the parties’ respective positions became entrenched the negotiations floundered. It came to pass that on 17 October 2014 Reit suggested to Transnet that in view of the impasse it would be best to invoke the dispute-resolution mechanism of the notarial leases. The relevant clause that provides for deadlock-breaking mechanisms in relation to the determination of the rental by Transnet is clause 5(b) and (c). For convenience its provisions are repeated here. It reads: ‘If the Lessee is not prepared to accept the Administration’s determination of the market value, it shall forthwith notify the Administration accordingly, whereupon the value shall be determined by sworn appraisement as hereinafter provided. Such appraisement shall be undertaken by a sworn appraiser to be selected by the parties jointly. If the parties cannot agree on the sworn appraiser, each party shall appoint one sworn appraiser to undertake the valuation jointly with the one appointed by the other party, and if these two appraisers cannot agree on their valuation, they shall jointly select a third as umpire, whose valuation shall be final and binding on the parties. The cost of all appraisements shall be borne by the parties in equal shares. . . .’ [24] Relying on this clause, Reit proposed to Transnet that the parties jointly appoint a sworn appraiser to determine the market-related value of the land. In response, Transnet instead counter-proposed that as each party had already independently obtained separate valuations from their respective valuers it would be sensible that they agree to submit the two disparate valuations to the council of the SACPVP to be reviewed by an umpire appointed by the council to determine which one between the valuations of JVR and that of Mr Moyo ‘was the most appropriate’ and for the costs expended therefor to be shared equally between Transnet and Reit. Reit agreed to Transnet’s counter- proposal without any reservations. The council in turn appointed Mr Seota pursuant to the parties’ agreement who, after considering the conflicting valuations, concluded that the rental determination contained in Mr Moyo’s valuation ‘is fair and reasonable’. Notwithstanding the ruling of the umpire, several months passed without Reit signing the declarations of rental for the five-year period under consideration despite undertaking that this was being attended to. [25] The respective positions taken by the parties had by now become hardened with Transnet contending that unless Reit took Mr Seota’s valuation as the umpire on judicial review it was final and binding as provided for in clause 5(c) of the notarial leases. For its part, Reit persisted in its stance that it stood by its earlier tender of R 11 per square metre per month. [26] When the parties’ best endeavours failed to break the logjam, Reit instituted review proceedings in the Gauteng Division of the High Court, Johannesburg on 24 October 2017 for the following relief: ‘1. . . . 2. The award of the second respondent . . . dated 4 May 2015 – in which he determined the rental to be paid by the applicant to the first respondent . . . in respect of premises leased by the applicant from the first respondent at the Durban Port known as Maydon Wharf (“the premises”) at R17m2 per month – is reviewed and set aside. 3. The first respondent . . . is hereby ordered to procure, within twenty-one (21) court days of this Court’s order, a fresh valuation of the land on which the premises are situated, in accordance with the principles identified in the judgment of this court. 4. . . .’ [27] On 9 May 2018 Reit amended its notice of motion and sought an order in the following terms: ‘1. Declaring that the second respondent was appointed to act as an expert valuator (and not an arbitrator) to value the land (“the land”) (excluding any improvements constructed thereon) leased by the applicant from the first respondent in terms of – 1.1 Notarial Deed of Lease K47/1960 concluded in 1960, annexed to the founding affidavit marked “FA3”; 1.2 Notarial Deed of Lease K62/1960 dated 29 August 1960, annexed to the founding affidavit marked “FA4”; and 1.3 Notarial Deed of Lease K63/1960 also dated 29 August 1960, annexed to the founding affidavit marked “FA5”, (collectively “the notarial leases”) 2. Declaring that the second respondent failed to execute his mandate in terms of the notarial leases to value the land, excluding any improvements constructed thereon; 3. Declaring that the second respondent was not entitled in terms of the notarial leases to determine a reasonable commercial rental payable in terms thereof by the applicant; 4. Setting aside the second respondent’s valuation report dated 4 May 2015 (“the valuation report”) in terms of which the second respondent determined a reasonable rental payable by the applicant in terms of the notarial leases instead of the value of the land; 5. Directing the first respondent to procure, within 21 days of this Court’s order, a fresh valuation of the land, in accordance with the principles identified in the judgment of this Court. 6. In the alternative to prayers 1 to 5 above and should it be found that the second respondent was acting as an arbitrator and not an expert valuator in terms of the notarial leases, the applicant seeks the following relief – 6.1 granting the applicant condonation for the late filing of its review application; 6.2 reviewing and setting aside the valuation report in which the second respondent determined the rental to be paid by the applicant to the first respondent in respect of land; 6.3 directing the first respondent to procure, within 21 days of this Court’s order, a fresh valuation of the land on which the premises are situated, in accordance with the principles identified in the judgment of this Court. 7. The first respondent is ordered to pay the applicant’s costs.’ [28] The review application came before Moshidi J, who was persuaded that Reit had made out a case for the relief sought. The learned Judge held that (para 14): ‘. . .the crisp issue for determination is therefore the question: whether Mr M C Seota NO (“the second respondent”), in making the rental determination, failed to discharge his mandate in terms of the notarial deeds of leases, to determine the value of the land, excluding the improvements constructed thereon, and by determining a market-related rental for the premises contrary to the express terms of the notarial leases and if the second respondent was incorrect, as contended by the applicant, whether his determination is susceptible to review and setting aside by the Court.’ [29] He held further that Mr Seota, who it was common cause between the parties, did not act as an arbitrator but as an expert valuer, ‘made a manifestly incorrect rental determination; he failed to discharge his mandate in terms of the notarial leases; . . . He, instead, determined a market-related rental for the premises . . . He had no authority and/or mandate to do so, regardless of what was submitted to him’. In the event the learned Judge concluded that Mr Seota’s ‘determination . . ., was a nullity and of no force and effect’. [30] Apropos s 67 of the NPA, he held that this section did not avail Transnet for at no stage were the notarial leases amended ‘in the terms alleged’ by Transnet. Nor could the 2009 declarations of rental assist Transnet because these were subject to the conditions that Reit had stipulated in the letter of 24 July 2009, addressed on its behalf by its attorneys to Transnet. He therefore concluded that this was quite apart from the fact that Transnet had, in any event, not complied with the dictates of s 67 upon which it relied. [31] Having concluded that the review application ought to succeed, he granted an order that: ‘1. . . . 2. The award of the second respondent (M C Seota NO) made on 4 May 2015 in which he determined the rental to be paid by the applicant to the first respondent (Transnet) in respect of premises leased by the applicant from the first respondent at the Durban Port and known as Maydon Warf (“the premises”) at R17 m2 per month, is hereby reviewed and set aside. 3. The first respondent (Transnet), is hereby ordered to procure, within twenty-one (21) court days of this order, a fresh valuation of the land on which the premises are situated, and in accordance with the principles identified in this judgment. 4. . . .’ The correctness or otherwise of this order is what confronts us in this appeal. [32] Before the contentions of the parties are considered, it is appropriate to say something about Mr Seota’s role as umpire. It is common cause between the disputants that Mr Seota was an expert valuer and not an arbitrator. The fundamental significance of this distinction lies in this. Our law has for over a century now always drawn a clear distinction between an arbitrator and a valuer. Thus, in Estate Milne v Donohoe Investments (Pty) Ltd and Others 1967 (2) SA 359(A) at 373H-374C, Ogilvie Thompson JA said the following: ‘This argument assumes something in the nature of an appeal to the arbitrator against the decision of the auditor. That is, however, not the position. In making his valuation, the auditor hears neither party. His is not a quasi-judicial function. He reaches his decision independently on his knowledge of the company's affairs. His function is essentially that of a valuer (arbitrator, aestimator), as distinct from that of an arbitrator (arbiter), properly so called, who acts in a quasi-judicial capacity. The distinction between arbitri and arbitratores was well known to our writers (see e.g. Voet, Bk. 4, 8, 2; Wassenaer, Praktijk Judicieel, Ch. 26, sec. 17; Huber, Bk. 4, chap. 21, secs. 1 and 2, and other authorities listed by Gane at p. 93 of vol. 2 of his translation of that work). See also Sachs v Gillibrand and Others, 1959 (2) SA 233 (T) at A p. 236, and Divisional Council of Caledon v Divisional Council of Bredasdorp, 4 S.C. 445. Voet, in the above-mentioned passage, distinguishes between the respective functions of an arbitrator (arbiter) and a valuer or referee (arbitrator) and, in relation to the latter, uses the phrase in quibus viri boni arbitrio opus erat. This phrase is rendered by Sampson (p. 110) as “requiring the arbitrament of an impartial person”, but by Gane (vol. 1, p. 738) as: “in which there is need of the discretion of a good man”. Although the use of the word “discretion” may perhaps be open to criticism, Gane’s translation appears to me to reflect Voet’s meaning more correctly. The arbitrator or aestimator need not necessarily be an entirely impartial person. In discharging his function he is of course required to exercise an honest judgment, the arbitrium boni viri; but a measure of personal interest is not necessarily incompatible with the exercise of such a judgment (see Dharumpal Transport (Pty.) Ltd., v Dharumpal, 1956 (1) SA 700 (AD) at p. 707).’ [33] This distinction serves an important purpose in review proceedings because, as Ponnan JA put it in Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another [2007] ZASCA 143; 2008 (2) SA 448 (SCA) para 22: ‘. . . A finding that Andrews was a valuer would not assist Lufuno and does not require a decision. Unlike an arbitrator, a valuer does not perform a quasi-judicial function but reaches his decision based on his own knowledge, independently or supplemented if he thinks fit by material (which need not conform to the rules of evidence) placed before him by either party. Whenever two parties agree to refer a matter to a third for decision, and further agree that his decision is to be final and binding on them, then, so long as he arrives at his decision honestly and in good faith, the two parties are bound by it. . . .’ [34] Accordingly, the power of the courts to interfere with an expert’s decision in review proceedings is severely circumscribed. The juridical ambit of this power was described by this Court in Wright v Wright [2014] ZASCA 126; 2015 (1) SA 262 (SCA) para 10 as follows: ‘The position of a referee under s 19b is, as the high court correctly found, similar to that of an expert valuator who only makes factual findings but dissimilar to that of an arbitrator who fulfils a quasi-judicial function within the parameters of the Arbitration Act 42 of 1965. In this regard, the dictum of Boruchowitz J in Perdikis v Jamieson is apposite: “It was held in Bekker v RSA Factors 1983 (4) SA 568 (T) that a valuation can be rectified on equitable grounds where the valuer does not exercise the judgment of a reasonable man, that is, his judgment is exercised unreasonably, irregularly or wrongly so as to lead to a patently inequitable result.” This is also the position in respect of the referee’s report – it can only be impugned on these narrow grounds.’3 3 See also: Civair Helicopters CC v Executive Turbine CC and Another 2003 (3) SA 475 (W) para 34 and the authorities therein cited. [35] I revert to the crux of the appeal. The foundation upon which the edifice of the High Court’s reasoning rested was, as alluded to above, predicated on at least four principal findings. These were: (i) Mr Seota’s mandate derived from the notarial leases as they stood in 1960; (ii) the terms of the mandate given to him by Transnet and Reit jointly which were not consonant with the terms of the leases were irrelevant (I interpose here to remark that the implication of this finding is that Mr Seota should have ignored his mandate and followed the notarial leases of which he was not aware); (iii) because Mr Seota was an expert valuer and not an arbitrator his determination was not final and binding, meaning that Reit was not precluded from impugning it; and (iv) there had been no variation of the 1960 leases for the 2009 declarations of rental were incapable of effecting variations as they were signed by Reit conditionally. [36] The principal findings of the High Court bring to the fore the two broad issues mentioned in para 1 above, which are what requires determination in this appeal. I pause to observe that the difficulty I have with the reasoning of the High Court relates to its fundamental premise. It mischaracterised the nature of the dispute between the parties. The crux of the dispute, as I see it, was essentially whether Mr Seota had acted in accordance with his mandate from the parties and, if so, whether his determination was otherwise manifestly unjust. On this score, Reit never even came out of the starting blocks. Nowhere in its affidavits did Reit allege, still less establish, that Mr Seota had strayed outside the terms of his mandate. Nor did Reit establish that Mr Seota acted in bad faith, dishonestly or in any other improper manner. Where no case was made out to establish how and where Mr Seota went wrong the High Court should have been slow to interfere. (See in this regard: S A Breweries Ltd v Shoprite Holdings Ltd [2007] ZASCA 103; 2008 (1) SA 203 (SCA) para 41 (S A Breweries). [37] It is necessary to emphasise that in the context of the facts of this appeal, Transnet’s case is even stronger than what obtained in S A Breweries. Here, Mr Seota’s determination was not assailed on any of the recognised grounds. Reit, instead, was content to confine its case to the assertions that the determination was not consonant with clauses 3 and 4 of the notarial leases. In Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA) para 51, Harms JA made the following pointed remarks: ‘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. . . .’ Although these remarks were made in the context of a review of an arbitral award, they apply with equal force to the facts of this case. It is as well to remember that Mr Seota was at no stage instructed by the parties to determine rental in terms of clause 3 of the notarial leases. On the contrary, the parties’ clear and unambiguous mandate to him was to compare two valuations provided to him by the parties and then determine which one ‘was the most appropriate’. Having considered the valuations placed at his disposal by the parties, Mr Seota came to the conclusion that: ‘The rental determination as contained in the report by Humphrey Moyo is fair and reasonable.’ [38] Thus, it was not open to him to disregard the parties’ explicit instructions and, on a frolic of his own, have regard to the provisions of clause 3 of the lease (of which incidentally he was unaware as neither party had alerted him to them). In reaching its conclusion to the contrary, the High Court failed to see the wood for the trees and consequently committed a fundamental error. Mr Seota’s source of authority was not the notarial leases but the joint mandate of the parties from which he was not at liberty to depart. In a comparable but different situation this Court said the following in Hos+Med Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing & Consulting (Pty) Ltd and Others [2007] ZASCA 163; 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. . . .’ [39] It bears emphasising that in agreeing to a slight deviation from the terms of the notarial leases, Reit was obviously aware of the provisions of clause 5(c) because this was the very clause that it must have had in mind when it initially proposed to Transnet that the mechanism contained therein must be applied. But when Transnet proposed a different method, Reit readily agreed. Thus, the mandate given to Mr Seota was consonant with what both Transnet and Reit had ultimately agreed to in the course of their negotiations. It can therefore hardly now lie in Reit’s mouth to complain about or question the methodology consensually adopted to break the deadlock between the parties. In truth, at no stage was the dispute between Transnet and Reit ever about the formula that JVR and Mr Moyo had adopted in determining the rental payable for the five-year period between 1 June 2014 and 31 May 2019, namely, the market-related rental based on the value of the land, excluding buildings. [40] On the authorities discussed above, it is now well established that an expert’s bona fide determination or award will not be lightly interfered with by the courts. For as observed by Ponnan JA in Lufuno:4 ‘. . . Whenever two parties agree to refer a matter to a third for decision, and further agree that his decision is to be final and binding on them, then, so long as he arrives at his decision honestly and in good faith, the two parties are bound by it. . . .’ As already mentioned, in early May 2014 Mr Moyo was instructed by Transnet to prepare a fresh valuation based on a market-related rental in respect of the five-year period commencing from 1 June 2014 to 31 May 2019. And it was on this basis that the parties negotiated the issue of rental related to this period. Indeed, Reit itself instructed JVR to prepare a valuation on the same basis. All of this is not disputed by Reit. On the contrary it is accepted, if not explicitly, at the very least tacitly. [41] But in pursuit of its review application, Reit contended that all of this was irrelevant simply because what Mr Seota did was at variance with the express provisions of the leases. No thought was given to how it came about that Mr Seota came into the picture as explained above. It therefore did not pertinently engage Transnet’s case which was that the basis for determining rental had changed once s 67 of the NPA was invoked by Transnet, culminating in the 2009 declarations of rental. In response to a question from a member of the Bench, counsel for Reit was constrained to accept that in 2009 a change occurred. He nevertheless argued that this admitted change was limited to the 2009 – 2014 five-year period. Beyond that, argued counsel for Reit, the parties would revert to the initial formula provided for in the notarial leases in terms of which it is the percentage of the value of bare land that 4 Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another [2007] ZASCA 143; 2008 (2) SA 448 (SCA) para 22. mattered. I do not agree. Were this to be the case, this would have the effect of putting the rental revision exercise that Transnet embarked upon in October 2008 to nought, meaning that s 67 of the NPA would, as a result, be rendered nugatory. I can think of no possible reason why parties would engage in such an irrational and unbusinesslike exercise. [42] The aforegoing conclusion would, in the normal course of events, have been the end of the matter as it is dispositive of the appeal. But taking one’s cue from the decision of the Constitutional Court in S v Jordan and Others (Sex Workers Education and Advocacy Task Force and Others as Amici-Curiae) 2002 (6) SA 642 (CC),5 it is necessary to consider the second leg of the argument advanced by Transnet. It is this. Transnet contended that the various notarial leases were validly amended to provide for the determination of rental on a market-related basis, albeit still limited to the market value of the bare land. [43] From Reit’s perspective, as its counsel urged upon us at the outset of his address, the crux of the dispute between the parties concerns the question whether the notarial leases had at any stage been varied. Accordingly, counsel for Reit implored us to determine this issue for failure to do so would, as he put it, result in endless disputes between the protagonists. It is to that aspect that I now turn. [44] As already indicated, in setting aside the umpire’s determination the High Court held that a determination of the rental payable under the notarial 5 See para 21. Although in Jordan the Constitutional Court was dealing with a constitutional challenge on a number of grounds where the High Court upheld one ground and held that it was unnecessary to deal with the remaining grounds, the principle remains the same for all cases. leases could only be properly done on the basis of the notarial leases themselves, which provide that the rental is calculated on the basis of a set percentage of the market value of the bare land, rather than simply a market-related rental. Reit embraced this finding as its springboard to argue that absent a finding that the notarial leases were validly amended to provide for a market-related rental the reasoning of the High Court is unassailable. This contention therefore entails that the question whether the notarial leases concerned were validly amended must be confronted head-on. [45] The amendment or variation of the notarial leases at issue here is governed by clause 18 thereof. This clause is not couched in the language of a typical non-variation clause. It says that ‘no amendment or variation of the terms and conditions of this lease in any form or manner whatsoever will be recognised by or be binding upon the Administration6 unless it has been embodied in a formal written agreement duly executed by the Administration and by the Lessee’. (My emphasis.) [46] It is now well established that a stipulation or condition in a written contract that provides that any variation or amendment of its terms by the parties shall have no force or effect unless it is reduced to writing is binding on the parties and cannot be altered verbally. (See in this regard: S A Sentrale Ko-Op Graanmaatskappy Bpk v Shifren and Another 1964 (4) SA 760 (A) at 766D-H.)7 Nevertheless, our law recognises that as a non-variation clause curtails the common law freedom to contract it must be restrictively 6 A reference to Transnet. 7 Shifren has been consistently followed in a series of judgments of this Court such as Brisley v Drotsky 2002 (4) SA 1 (SCA) and Tsaperas and Others v Boland Bank Ltd 1996 (1) SA 719 (A) at 725 B-C. interpreted. (See: Randcoal Services Ltd and Others v Randgold and Exploration Co Ltd 1998 (4) SA 825 (A) at 841E-842D.) [47] It is necessary to say something about the words ‘will be recognised by or be binding upon the Administration’ contained in clause 18 of the leases already quoted in para 11 above. As a general rule, clause 18, being a non-variation clause, must be construed restrictively. This is, however, not to say that if its language is clear effect must not be given to it or that it must be interpreted otherwise than sensibly.8 [48] In its heads of argument, Transnet submitted that the requirements of clause 18 were complied with when the 2009 declarations of rental were signed by the parties. It further argued that in any event clause 18, particularly the words put in inverted commas in para 47 above are indicative of the fact that clause 18 was inserted for the benefit of Transnet and not Reit. Thus, so proceeded the argument, ‘There can be no issue at all if Transnet chooses not to assert its rights in terms of the clause’. [49] I do not agree. To my mind the object of the clause is clear. It offers Transnet an election to wave its rights flowing from the notarial leases if it chooses to do so. But it does not follow that where the variation, as contended for by Transnet in this case, which imposes what, by all accounts, is an onerous financial obligation on Reit is asserted clause 18 should not be accorded its full effect. Here the variation upon which Transnet relies has far-reaching implications for Reit in that it has the effect of increasing the 8 See for example: Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) paras 18 and 23. rental payable by a substantial amount. A clause such as this, for example, would only assist Transnet in circumstances where a lessee asserts that it has been released from its obligations under the leases. If the release relied upon by the lessee is not in writing and signed by the parties, Transnet would not be bound but would be at liberty to recognise the claimed release if it so chooses. There can be no doubt that the object of a clause such as this is to protect Transnet and enable it to determine its rights vis-à-vis its several lessees by reference to documents in its possession. It seeks to protect Transnet against spurious defences by lessees who might want to assert that they were released from one or some of the obligations undertaken in terms of the lease. (Compare: Tsaperas and Others v Boland Bank Ltd 1996 (1) SA 719 (A) at 724D-E.) This is all the more so considering that Transnet is a large entity comprising different divisions with a large number of employees. [50] Did the 2009 declarations of rental about which there is no dispute between the parties have the effect of varying the basis for determining rental? More particularly, is their effect that Transnet is now entitled to determine rental with reference to a market-related rental, as opposed to a percentage of the market value of the leased land, at the date of commencement of each succeeding five-year period? Unsurprisingly, the protagonists answer this question differently. Transnet says Yes, whilst Reit says No. The High Court agreed with Reit and went on to hold that s 67 of the NPA found no application to the dispute. [51] Whether the High Court was correct in taking this view of the matter is the second leg of what confronts us in this appeal. As I see it, the answer to this question depends, first and foremost: (i) on the interpretation to be ascribed to the section; (ii) the evaluation of the factual narrative recounted above; and (iii) the interpretation of the 2009 declarations of rental, of course, subject to the conditions stipulated on Reit’s behalf. Section 67 opens with subsec (1)(a) which deals with change of use of the leased property found necessary in order to improve the safety, security, efficiency and effectiveness of the operations of the port. It is not relevant for present purposes. It has no bearing on the issue at hand whatsoever. [52] Subsection 1(b) which is central to the appeal has already been quoted above. Its object is clear from the text. It seeks to remove prejudice to Transnet associated with the terms of a long-term lease concluded before it came into operation – as has happened in this case – providing for, crucially in the context of this appeal, unreasonably low rentals. It goes on to state that the Ports Authority (ie Transnet) may in writing direct the lessee to renegotiate the rental in order to remove the prejudice. The subsection employs permissive language by using the word ‘may’. But the reason for doing so is not far to seek because its invocation is dependent upon it being found, firstly that the rental payable is ‘unreasonable low’ and, secondly, that such unreasonable low rental is prejudicial to Transnet. Both factors entail a factual inquiry and determination. Subsections 1(c); (2); (3) and (4) also find no application in this appeal. Although subsec (2) is not germane to this case, the High Court appears to have given Transnet’s argument based on s 67 short shrift because, in its view, Transnet had not followed its requirements to the letter before invoking them and was therefore precluded from relying on them until it had fully complied with its prescripts. In this regard the High Court erred. So far as subsec (3) is concerned, it too finds no application because here, when Transnet invoked subsec 1(b) on 28 October 2008 and the parties commenced negotiations, they were able to reach an agreement. Hence the 2009 declarations of rental about which there is no dispute. [53] However, what is in serious contention between the parties is the question whether these declarations had the effect of changing the rental- determination basis for each of the successive five-year periods beyond 31 May 2014. On this score, diametrically opposed contentions have been advanced by the parties. In the view I take of the matter this aspect of the case lies in a narrow compass. [54] The logical starting point in this exercise is the 2009 declarations of rental and the proper construction to be ascribed to them, read together with the letter of 24 July 2009 from Reit’s attorneys. The contents of the 2009 declarations of rental have already been quoted in para 17 above and will not be repeated here. The relevant part of the letter of 24 July 2009 reads: ‘Having regard to our latest e-mail of the 30th of June 2009, and in order to bring this matter to a head, our client has instructed us to advise you that it will sign the declarations of rental in respect of the above leases in the format presented by yourselves, however, the signature thereof are strictly subject to and conditional upon the following:- 1. Our clients agreement to increase the rental in accordance with the declarations of rental and our client's signature thereof does not constitute an acceptance by our client of Transnet’s entitlement to rely on Section 67 of the National Ports Act, No 12 of 2005 to review the rental and/or lease agreements and our client has agreed to the review process on a without prejudice basis and without waiving or novating any of its rights in this regard; and 2. Transnet shall not in future and for the duration of the remainder of the lease periods attempt to again rely on Section 67 of the National Ports Act, No 12 of 2005 to enforce increased rentals or any cancellation of the lease agreements; and 3. The increased rental amounts shall be paid by our client to Transnet quarterly in arrears, in the same cycles as it has prior to the signature of the declarations of rental; and 4. All of the remaining terms and conditions a-; contained in the various registered lease agreements will remain unchanged, unless otherwise agreed to in writing between the parties. Subject to the aforesaid conditions, we attach hereto the signed declarations of rental in respect of the various lease agreements.’ [55] As already indicated, the declarations of rental were a culmination of protracted negotiations between the parties over several months which were triggered by the letter of 28 October 2008 addressed to Reit by Transnet. It bears repeating that in its letter of 28 October 2008, Transnet made plain that it had embarked on a process of reviewing all of its agreements of lease with various lessees with a view to aligning ‘the contractual arrangements’ with the NPA. In particular, it spelt out the current rental that Reit was hitherto paying in respect of its leases and the rental that Transnet proposed to charge with effect from 1 June 2009 which was a substantial increase. There is no dispute between the parties about all of this and the fact that, properly construed, the 2009 declarations of rental had the effect of changing the basis upon which rentals payable under the notarial leases from market value of bare land to a market-related rental basis. Nevertheless, the parties part ways on the question of whether the admitted change was limited to the five-year period between 1 June 2009 and 31 May 2009. [56] The rivalling contentions of the parties require that something, by way of prelude, be said about the proper approach to the interpretation of documents, be it contracts, statutes or any other kind of document.9 The approach to the interpretation of documents is well settled. It was admirably explained by this Court in Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18 thus: ‘. . . The present state of the law can be expressed as follows. Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. 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.’ [57] Nearly two and a half years earlier, Lewis JA had occasion to restate the principles of interpretation in Ekurhuleni Municipality v Germiston Municipal Retirement Fund [2009] ZASCA 154; 2010 (2) SA 498 (SCA) (Ekurhuleni Municipality) as follows (para 13): 9 See for example: Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School [2008] ZASCA 70; 2008 (5) SA 1 (SCA). ‘The principle that a provision in a contract must be interpreted not only in the context of the contract as a whole, but also to give it a commercially sensible meaning, is now clear. . . The principle requires a court to construe a contract in context – within the factual matrix in which the parties operated. . . .’ [58] In conclusion on this topic, reference may be made to yet another decision of this Court in Bothma-Batho Transport (Edms) Bpk v S Bothma and Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014 (2) SA 494 (SCA) where the following was stated (para 12): ‘. . . Whilst the starting point remains the words of the document . . . the process of interpretation does not stop at a perceived literal meaning of those words, but considers them in the light of the relevant and admissible context, including the circumstances in which the document came into being. . . Interpretation is no longer a process that occurs in stages but is “essentially one unitary exercise” . . . .’ [59] The contentions advanced on behalf of Reit on this aspect of the appeal rest, in essence, on two pillars. First, it was contended that the various notarial leases were never varied in line with the requirements of clause 18 thereof. Secondly, it was further submitted that absent a valid variation of the leases, Reit is not obliged to pay the amount required of it by Transnet because its obligation to pay rental arises, not from the determination, nor the instructions given to Mr Seota but, from the terms of the notarial leases. Relying on the reasoning in the judgment of the High Court, counsel for Reit argued that s 67 of the NPA only contemplates that there must be a renegotiation of the terms of leases concluded before it came into operation and that if renegotiations fail, a declaration of invalidity. Without a successful renegotiation of the terms of the various leases or failing that a declaration of invalidity, so went the argument, the terms of pre-existing leases remain unaffected. [60] In counter, counsel for Transnet contended that one need only look at the language, context and purpose of the 2009 declarations of rental to determine the purport of the declarations having regard to the factual matrix in which the parties operated since October 2008. And that if this is done, the absurdity of the interpretation for which Reit contends will be revealed. As to the factual matrix in which the parties operated, it is necessary to briefly deal with the preliminary objection raised by Reit in relation to the parties’ renegotiations preceding the conclusion of their agreement as recorded in the 2009 declarations. It was argued that the content of the exchanges between the parties is inadmissible because they relate to negotiations that were conducted on a without prejudice basis. This issue can easily be disposed of. [61] It is true that some of the letters which were exchanged between the parties from the time when Transnet asserted its statutory rights under s 67(1)(a) of the NPA and the general tenor of the discussions at various meetings – some of which were confirmed in subsequent correspondence between the parties – were written and the discussions conducted on a without prejudice basis. Thus, ‘as a general rule negotiations between parties that are undertaken with a view to settling a dispute between them are protected from disclosure’. (See: Absa Bank Ltd v Hammerle Group [2015] ZASCA 43; 2015 (5) SA 215 (SCA) para 13.) The rationale for this rule is rooted in public policy. Parties to disputes are encouraged to avoid litigation by resolving their differences amicably through full and frank discussions in the knowledge that, should the negotiations fail to bear fruit, any admissions made by them during their negotiations will be protected from disclosure in the event of litigation ensuing. (See in this regard: Naidoo v Marine and Trade Insurance Co Ltd 1978 (3) SA 666 (A) at 677B-D; KLD Residential CC v Empire Earth Investments 17 [2017] ZASCA 98; 2017 (6) SA 55 (SCA) para 20.) [62] However, it bears emphasising that the rule is contingent upon the failure of the negotiations. Where the settlement negotiations succeeded and ultimately culminated in the conclusion of an agreement – as has happened in this case – the content of the settlement negotiations can be disclosed in court and admitted as evidence. This is premised on the fact that the basis for non- disclosure has fallen away. (See, for example, Gcabashe v Nene 1975 (3) SA 912 (D) at 914; Adkins and Hunter v M J Crosbie and F W Crosbie and M M Crosbie’s Executors 1916 EDL 357 at 361.) In this case the parties’ settlement negotiations, as already indicated, culminated in an agreement that led to the production and signing of the 2009 rental declarations. Consequently, Reit’s reliance on the privilege relating to the parties’ negotiations preceding the production of the 2009 rental declarations is misplaced. [63] I now revert to the crux of the matter. As in Ekurhuleni Municipality, the considerations discussed above raise the question as to what, then, was the commercially sensible, businesslike and reasonable interpretation of the 2009 declarations read with the letter of 24 July 2009, regard also being had to their underlying purpose and the relevant background factual matrix? It is a fact that brooks no argument to the contrary that the various long-term notarial leases were concluded in 1960. And that they will terminate by effluxion of time only in 2029. Thus, if they run their full course they will have endured for almost 70 years. The inference is therefore irresistible that this was one of the considerations that led to the enactment of the provisions of s 67(1)(b) that took effect on 26 November 2006. Pursuant thereto, Transnet addressed a letter to Reit proposing that the terms of the five notarial leases be renegotiated in relation to the rental payable which was considered to be unreasonably low. The basis of Transnet’s proposed increase in the rental was, to Reit’s knowledge, a market-related rental. It is common cause that the renegotiations succeeded in bearing fruit. Hence the signed 2009 declarations of rental coupled with the letter of 24 July 2009 from Reit’s attorneys. [64] The High Court moved from the premise that s 67 of the NPA found no application because Transnet had not complied with its prescripts. It then proceeded to hold that any oral amendment of the notarial leases would be ineffective as the leases ‘contain express non-variation clauses’. For this conclusion, it relied on Shifren stating that ‘the principles thereof are still good law’. Finally, it held that the 2009 declarations of rental did not avail Transnet because they do not constitute amendments of the leases. I cannot agree. [65] A careful reading of the 2009 declarations read in conjunction with the relevant letter leaves no room for any doubt as to their purpose. After the description of the parties, the preambles of the five declarations all made reference to the notarial leases. They proceeded to proclaim that the rental payable by the lessee to the lessor (these being references to Reit and Transnet respectively) has been reviewed in terms of s 67(1)(b) of the NPA and the conditions (presumably terms) of the leases. They then concluded by stipulating the annual rental payable in respect of the period 1 June 2009 to 31 May 2014, subject to a ten per centum annual escalation. [66] Reit seized upon the fact that the annual rental stipulated in the declarations relates only to the five-year period from 1 June 2009 to 31 May 2014 to contend that the rental revision in terms of s 67(1)(b) was specifically for that period and no other. That cannot be for several reasons. First, to sustain Reit’s contention would entail disregarding the background facts that gave rise to the production of the rental declarations and the purpose to which they were directed. Second, Reit’s construction would undermine the legislative purpose of s 67(1)(b) of the NPA. Third, one would have to entirely ignore the material known to those responsible for the production of the rental declarations such as s 67(1)(b) itself; the mischief it sought to address which would, as a result, be perpetuated and the like. The fact that Transnet would be precluded from invoking s 67(1)(b) again,10 meaning that from 1 June 2014 until 2029 it would only be entitled to about a third of the annual rental that it had enjoyed during the five-year period immediately preceding 1 June 2014. And, lastly, the fact that Reit’s preferred interpretation would not be reasonable, sensible or businesslike. [67] Indeed, condition 4 of the conditions stipulated by Reit’s attorneys in their letter of 24 July 2009 is telling and bears repeating. It reads: ‘All of the remaining terms and conditions as contained in the various registered lease agreements will remain unchanged, unless otherwise agreed to in writing between the parties.’ On a reasonable, sensible and businesslike reading of the wording of this particular condition, it becomes manifest that Reit itself had accepted that the basis of calculating the annual rental provided for in clause 3(b) was 10 This was expressly agreed to between the parties in the correspondence exchanged between them because Transnet was understandably of the opinion that it could invoke s 67(1)(b) to regulate the remaining period of the notarial leases only once. consensually varied in writing to a market-related rental whilst the unaffected terms of the leases would remain unchanged ‘unless otherwise agreed to in writing between the parties’. Any other interpretation of the rental declarations coupled with the letter, as Reit would have it, would not be commercially sensible. [68] In sum, that the 2009 rental declarations in their operative clause expressly provided that the rental amount stated therein (subject to a ten per centum escalation) was in respect of the period from 1 June 2009 to 31 May 2014 can easily be explained. Clause 3 of the long-term leases provides that rental is to be determined periodically for a five-year period, hence the five-year period in this instance was from 1 June 2009 to 31 May 2014. However, by no means does this detract from the overarching objective of the parties initiated by Transnet in October 2008 that the unreasonably low rentals hitherto payable in terms of the 1960 leases needed to be renegotiated. Renegotiations then ensued and a resolution was found. And the fact that in early May 2014 Transnet, in keeping with the terms of the leases which it understood to have been varied in respect of the rental-determination basis in 2009 already, proposed a revised rate of R 17 per square metre per month for the succeeding five-year period from 1 June 2014 to 31 May 2019 reinforces this point. [69] Moreover, to interpret the 2009 declarations of rental in the way for which Reit contended, would not be sensible or businesslike. It would, in addition, not make economic and commercial sense which is how contracts ought to be construed. The absurdity of Reit’s interpretation becomes stark when regard is had to the fact that the rental payable would, in the result, be drastically reduced from some R 450 000 per month to a measly R 45 000 per month. [70] Accordingly, I am satisfied that the appeal must succeed with costs, including the costs occasioned by the employment of two counsel. [71] In the result the following order is made: 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the court below is set aside and in its place is substituted the following: ‘The application for review is dismissed with costs, including the costs occasioned by the employment of two counsel.’ ________________________ X M PETSE DEPUTY PRESIDENT Appearances For appellant: A M Annandale SC (with her J Thobela-Mkhulisi) Instructed by: Hughes-Madondo Inc., Durban McIntyre van der Post, Bloemfontein For Respondent: J J Brett SC (with him D Mahon) Instructed by: Vining Camerer Inc., Sandton Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Transnet National Ports Authority v Reit Investments (Pty) Limited and Another (Case no 1159/2019) [2020] ZASCA 129 (13 October 2020) From: The Registrar, Supreme Court of Appeal Date: 13 October 2020 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Today the Supreme Court of Appeal (SCA) handed down its judgment in terms of which it upheld the appeal by the appellant with costs including the costs of two counsel and set aside the order of the court a quo. The appellant in this case is Transnet National Ports Authority (Transnet) which is a public company incorporated in terms of the Legal Succession to the South African Transport Services Act 9 of 1989 as read/ with the Companies Act 71 of 2008. The first respondent is Reit Investments (Pty) Ltd (Reit) which is a private company incorporated in South Africa. The second respondent is Mr Matsobane Charles Seota, (Mr Seota), who was cited in his official capacity as the registrar of the South African Council for the Property Valuers Profession (SACPVP). This appeal raises two interrelated issues, firstly, the correct basis upon which valuations of immovable property, situated in Maydon Wharf in the port of Durban, should be made for purposes of determining rentals payable in respect of those properties. Secondly, whether the agreements concluded between the parties in 2009 and described as ‘Declaration of Rental’ had the effect of varying the basis upon which rental would be determined for the remaining period of the long-term leases terminating by effluxion of time on 30 September 2029. Mr Seota took no part in the proceedings in the court below and has not participated in this appeal. Reit’s case was that ‘instead of determining the market value of the land, to which he had to apply the contractually stipulated fixed percentage to establish the annual rental’, Mr Seota ‘determined (contrary to the terms of the contract) the market-related rental in respect of the properties’. The parties’ dispute was based on five long-term notarial agreements of lease. Reit had initially sought an order reviewing and setting aside Mr Seota’s determination coupled with an order directing Transnet to procure, within the period determined by the court, a fresh valuation of the land in accordance with the principles identified in the judgment of the court below. Reit later sought declaratory orders to the effect that Mr Seota was appointed to value the land (excluding improvements thereon) in terms of the agreements of lease but failed to do so. Despite opposition by Transnet, the High Court held that Reit had made out a case for the relief sought. Accordingly, it granted relief substantially in the terms sought by Reit in its amended notice of motion. This appeal was against that order and came before the SCA with its leave after the High Court had refused leave. Clause 5 of the various agreements was central to the dispute between the parties. Transnet was empowered in terms of section 67 of the National Port Act 12 of 2005, in circumstances where the terms of a long-term lease concluded were thought to be substantially prejudicial to the operation of a port, to address a letter to the lessee concerned and direct that the applicable terms be renegotiated in order to remove the prejudice. Two letters were sent to this effect and it was stipulated that other than the terms reviewed and agreed to in terms of the declarations of rental, Transnet had no intention of varying the other terms of the leases. Reit’s attorneys advised Transnet that Reit had agreed, on a without prejudice basis, to sign the declarations of rental. Transnet’s case was that Reit unequivocally accepted that there had been a variation of the various leases whereas Reit contended that the variation related only to the five-year period from 1 June 2009 to 31 May 2014. Both parties later appointed valuers to determine the rentals for the succeeding five-year period. However they did not reach an agreement on the rentals. Reit confirmed that, pending the resolution of the dispute, it would continue to pay the invoiced amount provided that if they had overpaid Transnet would refund or credit their account. Reit suggested to Transnet that in view of the impasse it would be best to invoke the dispute-resolution mechanism of the notarial leases. The parties agreed to submit the two disparate valuations to the council of the South African Council for the Property Valuers Profession (SACPVP) to be reviewed by an umpire appointed by the council to determine the most appropriate valuation. Transnet’s valuation was considered to be fair and reasonable. Reit did not sign the declarations and they later successfully instituted review proceedings in the High Court. Transnet’s rental determination and the correctness or otherwise of the high court order is what was before the SCA on appeal The incorrect rental determination and the correctness or otherwise of that order is what confronted the SCA on appeal. The SCA noted that the High Court mischaracterised the nature of the dispute between the parties. The SCA did not agree with Reit’s contention that the parties would revert to the initial formula provided for in the notarial leases in terms of which the percentage of the value of bare land was what mattered. However, the SCA held that Reit’s preferred interpretation was not commercially sensible. The SCA further noted the necessity to consider the argument advanced by Transnet where it contended that the various notarial leases were validly amended to provide for the determination of rental on a market-related basis. The SCA emphasised that to interpret the 2009 declarations of rental in the way for which Reit contended, would not be sensible or businesslike. It would, in addition, not make economic and commercial sense which is how contracts ought to be construed. Accordingly, the Court was satisfied that the appeal must succeed with costs, including the costs occasioned by the employment of two counsel

3941

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 512/2021 In the matter between: CONSTANTIA INSURANCE COMPANY LIMITED APPELLANT and THE MASTER OF THE HIGH COURT, JOHANNESBURG FIRST RESPONDENT VAN DEN HEEVER, WILHELM THEODORE N O SECOND RESPONDENT KOKA, JERRY SEKETE N O THIRD RESPONDENT THE MINISTER OF TRADE AND INDUSTRY FOURTH RESPONDENT Neutral citation: Constantia Insurance Company Limited v The Master of the High Court, Johannesburg and Others (512/2021) [2022] ZASCA 179 (13 December 2022) Coram: VAN DER MERWE and PLASKET JJA and BASSON AJA Heard: 4 November 2022 Delivered: 13 December 2022 Summary: Insolvency – test for expungement of claim by Master under s 45(3) of Insolvency Act 24 of 1936 – sufficient ground required. Company law – definition of ‘financial assistance’ in s 45(1) of Companies Act 71 of 2008 (Companies Act) exhaustive – indirect financial assistance provided by indemnifying guarantor of related company – requirements that board of company must adopt resolution to provide financial assistance after having satisfied itself of matters mentioned in s 45(3)(b) – substantive requirements for validity – not formal or procedural requirements in terms of s 20(7) of Companies Act – no case made to declare s 45(6) unconstitutional – financial assistance under indemnity void. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Mngqibisa-Thusi J, sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT Van der Merwe JA (Plasket JA and Basson AJA concurring): [1] The appellant, Constantia Insurance Company Limited (Constantia), proved three claims (the claims) at the second meeting of creditors of Protech Khuthele Property Investments (Pty) Ltd (in liquidation) (Protech Investments). At the instance of the second and third respondents, the joint liquidators of Protech Investments (the liquidators), however, the first respondent, the Master of the High Court, Johannesburg (the Master), expunged the claims. Constantia consequently approached the Gauteng Division of the High Court, Johannesburg (the high court) for an order reviewing and setting aside the Master’s decision. The high court (Mngqibisa-Thusi J) dismissed the application with costs, but granted leave to Constantia to appeal to this court. Only the liquidators opposed the application in the high court and the appeal. Background [2] Protech Investments was a property-owing company. It formed part of a group of eight companies (the group). Protech Khuthele Holdings Limited (Protech Holdings) was the sole shareholder of Protech Investments. The remaining six companies in the group, all of which were operating companies, were also subsidiaries of Protech Holdings. One of them was Protech Khuthele (Pty) Ltd (Protech Khuthele). At all relevant times, Mr Antony Page was the chief executive officer of the group. [3] On 16 September 2014, the high court placed Protech Investments in winding- up, on the ground that it was unable to pay its debts. All the other companies in the group are also being wound up. At the hearing of the appeal we were informed that Constantia, too, had been placed in liquidation. Both counsel, however, confirmed that its liquidator had been properly authorised to prosecute the appeal. [4] Constantia’s business included the provision of performance guarantees. The group approached Constantia to provide performance guarantees in respect of the contractual obligations of the operating companies in the group towards third parties. Constantia agreed to do so, in return for a premium per guarantee and an indemnity in its favour by each of the companies in the group. [5] Pursuant hereto, on 25 January 2013, Mr Page signed a document entitled ‘Deed of Indemnity and Counter Indemnity’ (the indemnity). It was also signed on behalf of Constantia and evidenced its agreement with Protech Holdings and the latter’s ‘Associated Companies’. This expression encompassed the subsidiaries of Protech Holdings. In terms of the indemnity: ‘Indemnitors’ meant Protech Holdings and its subsidiaries; ‘Insurance Company’ referred to Constantia; and ‘Bond’ included any guarantee executed by Constantia ‘. . . for securing the due performance and discharge of the obligations of any one or more of the Indemnitors’, irrespective of whether the guarantee was executed before or after the date of the indemnity. [6] Clause 2 of the indemnity provided: ‘In consideration of the INSURANCE COMPANY executing or procuring the execution of any Bond, the INDEMNITORS hereby indemnify and keep indemnified, the INSURANCE COMPANY and holds it harmless from and against all demands, claims, payments, liabilities, costs, expenses, damage and/or losses (including loss of premium or interest) of whatsoever nature sustained or incurred by the INSURANCE COMPANY under or by reason or in consequence of having executed or hereafter executing any such Bond, or in relation to any application by it for the discharge or vacation of the same.’ In terms of clause 3: ‘The INDEMNITORS undertake and agree to pay to the INSURANCE COMPANY on first written demand, any sum/s of money which the INSURANCE COMPANY may be called upon to pay under any Bond whether or not the INSURANCE COMPANY at such date shall have made such payment and whether or not any of the INDEMNITORS admit or deny the validity of such claim against the INSURANCE COMPANY under such Bond. . .’ The effect of all of this was that each company in the group undertook an independent obligation to indemnify Constantia in respect of any demand on it or payment by it under any guarantee issued to third parties in respect of the obligations of any company in the group. [7] The claims amounted to some R182 million and related to the various guarantees that Constantia had issued to third parties to secure the obligations of Protech Khuthele. Constantia claimed the demands that had been made on it in terms of these guarantees from Protech Investments under the indemnity. Constantia duly proved these claims on oath to the satisfaction of the officer presiding at the relevant meeting. [8] The liquidators nevertheless disputed the claims. Consequently, they submitted a report to the Master in terms of s 45(3) of the Insolvency Act 24 of 1936 (the Insolvency Act), stating that fact and the reasons therefor. In essence, they contended that the indemnity constituted financial assistance by Protech Investments to Protech Khuthele, within the meaning of s 45 of the Companies Act 71 of 2008 (the Companies Act). The liquidators reported that they had been unable to find a resolution of the board of Protech Investments authorising Mr Page to bind it to the indemnity or indicating compliance with the requirements of s 45 of the Companies Act. The report concluded with the submission that the indemnity by Protech Investments in respect of the obligations of Protech Khuthele was void under s 45(6) of the Companies Act and that the claims ought to be expunged. [9] At the invitation of the Master, Constantia submitted a written response, with supporting documentation, aimed at substantiating the claims. I shall in due course deal with the relevant matters that Constantia raised. The Master’s determination concluded as follows: ‘The Master find it not necessary to deliberate on the several other issues raised, as the Master has formed the opinion that compliance with section 45 of the New Companies Act must be objectively established. The question is not whether there could have been compliance but rather whether there was in fact compliance. At the time of this decision, the Master had not been provided with satisfactory documentary proof of compliance and cannot assume that there had been compliance and therefore the Master has reasonable grounds for suspicion that claims no 2, 3 and 4 are invalid as provided for under section 45(6) of the New Companies Act.’ [10] In the application to review the Master’s decision, the issues between the parties crystallised to the following, namely whether: (a) The indemnity constituted financial assistance by Protech Investments to Protech Khuthele as contemplated in s 45 of the Companies Act; (b) Protech Investments in any event complied with the requirements of s 45 for the provision of financial assistance; (c) Section 20(7) of the Companies Act assisted Constantia’s case in the event of such non-compliance; and (d) Section 45(6) of the Companies Act was unconstitutional. In dismissing Constantia’s application, the high court found for the liquidators on all these issues. Expungement decision and review [11] By virtue of Item 9 of Schedule 5 to the Companies Act, Chapter 14 of the repealed Companies Act 71 of 1963 continues to apply to insolvent companies, until a date to be determined. Section 339 forms part of Chapter 14. It makes the provisions of the law of insolvency mutatis mutandis applicable to the winding-up of a company unable to pay its debts. [12] Section 44 of the Insolvency Act deals with proof of liquidated claims against an insolvent estate. In essence, it provides that such a claim shall be proved on affidavit to the satisfaction of the officer presiding at the meeting. In terms of s 45(1), the officer who presided at a meeting is obliged to deliver the claims proved against the estate at that meeting to the trustee or liquidator. [13] Sections 45(2) and 45(3) of the Insolvency Act read: ‘(2) The trustee shall examine all available books and documents relating to the insolvent estate for the purpose of ascertaining whether the estate in fact owes the claimant the amount claimed. (3) 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, or he may, after having afforded the claimant an opportunity to substantiate his claim, reduce or disallow the claim, and if he had 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.’ [14] As I have demonstrated, the Master expunged the claims on the ground that there were reasonable grounds for suspecting that they were invalid. Before us, the liquidator contended that the Master was called upon to determine whether the liquidators had a reasonable belief based upon facts ascertained by them, not speculation, that Protech Investments was not in fact indebted to Constantia. For this proposition the liquidators relied upon the decision in Caldeira v The Master and Another 1996 (1) SA 868 (N) (Caldeira). For the reasons that follow, neither the test applied by the Master nor that proposed by the liquidators are sustainable. [15] Section 45(2) of the Insolvency Act obliges a trustee or liquidator to examine all available books and records relating to the insolvent estate ‘for the purpose of ascertaining whether the estate in fact owes’ a proved claim. If the claim is disputed, the trustee or liquidator has to act in terms of s 45(3). It was in respect of these duties that Levinsohn J said in Caldeira at 874D-E: ‘It seems to me that if a trustee disputes the claim he must have a reasonable belief based on facts ascertained by him that the insolvent estate is not in fact indebted to the creditor concerned. Mere suspicion about the claim would not be sufficient.’ [16] This dictum was not about the test to be applied by the Master under s 45(3). This is evidenced, inter alia, by what the court said at 875J-876A in concluding that the claim ought not to have been expunged: ‘It follows then that the Master, objectively viewing what was placed before him by the liquidator, ought not to have been satisfied with the mere statement that the applicant had not substantiated the claims by providing documentation. This did not constitute sufficient grounds to expunge the claim.’ [17] The starting point in relation to the test to be applied under s 45(3) of the Insolvency Act, is that the Master is afforded the power to confirm, reduce or disallow a claim that was proved under oath to the satisfaction of the officer presiding at the relevant meeting. The reduction or disallowance of a claim under s 45(3) does not preclude the subsequent enforcement of the claim by ‘action at law’. If the power to expunge or reduce a claim is exercised for insufficient reason, however, a creditor may suffer unnecessary delay and expense. That would be detrimental to the administration of justice. [18] When the reduction or expungement of a claim is contemplated, the Master would generally have before him or her not only the report of the trustee/liquidator, but also the material submitted to substantiate the claim. The Master is enjoined to apply his or her mind objectively to all the relevant material thus placed before him or her. Whilst the Master is not required to determine whether the insolvent estate is in fact not indebted (or indebted) to the claimant, he or she should not reduce or expunge a claim unless there is a sufficient ground for doing so. To the extent that the decision in Chappell v The Master and Others 1928 CPD 289 differs from this approach, it should not be followed. [19] It follows that the Master misdirected herself by applying the wrong test. But it did not follow that the review of the Master’s decision had to succeed. The review was brought in terms of s 151 of the Insolvency Act. In Nel and Another NNO v The Master (ABSA Bank Ltd and Others intervening) [2004] ZASCA 26; 2005 (1) SA 276 (SCA) para 22-23, this court confirmed that in a review of this kind, a court enters into and decides the whole matter afresh. For this purpose it has powers of both appeal and review and may receive new evidence. In a review under s 151 of the Insolvency Act, a party may therefore raise an issue that was not placed before the Master. Whether an issue was properly raised in the review application must, of course, be determined on the ordinary principles applicable to motion proceedings. [20] Albeit for a different reason than the one mentioned above, the high court concluded that the Master’s decision could not stand. It therefore correctly proceeded to determine afresh, on the issues raised before it, whether the claims should be expunged. The question on appeal is whether the high court correctly determined these issues against Constantia. Financial assistance [21] The first issue is whether the indemnity constituted financial assistance by Protech Investments to Protech Khuthele. In this regard it is necessary to reproduce s 45 of the Companies Act. It provides: ‘Loans or other financial assistance to directors (1) In this section, “financial assistance”– (a) includes lending money, guaranteeing a loan or other obligation, and securing any debt or obligation; but (b) does not include– (i) lending money in the ordinary course of business by a company whose primary business is the lending of money; (ii) an accountable advance to meet– (aa) legal expenses in relation to a matter concerning the company; or (bb) anticipated expenses to be incurred by the person on behalf of the company; or (iii) an amount to defray the person’s expenses for removal at the company’s request. (2) Except to the extent that the Memorandum of Incorporation of a company provides otherwise, the board may authorise the company to provide direct or indirect financial assistance to a director or prescribed officer of the company or of a related or inter-related company, or to a related or inter-related company or corporation, or to a member of a related or inter-related corporation, or to a person related to any such company, corporation, director, prescribed officer or member, subject to subsections (3) and (4). (3) Despite any provision of a company’s Memorandum of Incorporation to the contrary, the board may not authorise any financial assistance contemplated in subsection (2), unless– (a) the particular provision of financial assistance is– (i) pursuant to an employee share scheme that satisfies the requirements of section 97; or (ii) pursuant to a special resolution of the shareholders, adopted within the previous two years, which approved such assistance either for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that category; and (b) the board is satisfied that– (i) immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test; and (ii) the terms under which the financial assistance is proposed to be given are fair and reasonable to the company. (4) In addition to satisfying the requirements of subsection (3), the board must ensure that any conditions or restrictions respecting the granting of financial assistance set out in the company’s Memorandum of Incorporation have been satisfied. (5) If the board of a company adopts a resolution to do anything contemplated in subsection (2), the company must provide written notice of that resolution to all shareholders, unless every shareholder is also a director of the company, and to any trade union representing its employees– (a) within 10 business days after the board adopts the resolution, if the total value of all loans, debts, obligations or assistance contemplated in that resolution, together with any previous such resolution during the financial year, exceeds one-tenth of 1% of the company’s net worth at the time of the resolution; or (b) within 30 business days after the end of the financial year, in any other case. (6) A resolution by the board of a company to provide financial assistance contemplated in subsection (2), or an agreement with respect to the provision of any such assistance, is void to the extent that the provision of that assistance would be inconsistent with– (a) this section; or (b) a prohibition, condition or requirement contemplated in subsection (4). (7) If a resolution or an agreement is void in terms of subsection (6) a director of the company is liable to the extent set out in section 77(3)(e)(v) if the director – (a) was present at the meeting when the board approved the resolution or agreement, or participated in the making of such a decision in terms of section 74; and (b) failed to vote against the resolution of agreement, despite knowing that the provision of financial assistance was inconsistent with this section or a prohibition, condition or requirement contemplated in subsection (4).’ [22] When used in a definition, the word ‘includes’ generally denotes a term of extension. That would be the case where the primary meaning of the term that is defined is well-known and the word ‘includes’ introduces a meaning or meanings that go beyond that primary meaning. In such a case, the definition would encompass the primary well-known meaning as well as that which the definition declares that it should include. See Land and Agricultural Bank of South Africa v The Minister of Rural Development and Land Reform and Others [2022] ZASCA 133 para 26 and authorities cited there. [23] This does not appear to be applicable to s 45(1). All the matters included by s 45(1)(a) (and excluded by s 45(1)(b)), fall within the primary meaning of financial assistance. In R v Debele 1956 (4) SA 570 (A) at 575H-576A, Fagan JA referred to a situation where all the matters listed as included in the definition fell within the primary meaning of the defined term. He said that that indicated an intention to determine the ambit of the term with certainty and that the listed matters were exhaustive of the term. See also Stauffer Chemical Co and Another v Safsan Marketing and Distribution Co (Pty) Ltd and Others 1987 (2) SA 331 (A) at 350J-351A. [24] As I have said, this applies to s 45(1)(a). In my view, the intention to provide a precise definition is even clearer where, as in this case, the excluded matters would also fall within the primary meaning of the term. I therefore conclude that the matters mentioned in s 45(1)(a) are exhaustive of the meaning of ‘financial assistance’ and disagree with the high court’s contrary finding. In terms of s 45(2), however, s 45 applies to direct and indirect financial assistance. [25] In terms of s 2(1) and 2(2) of the Companies Act read with the definitions in s 1, a juristic person is related to another juristic person if, inter alia, they are subsidiaries of the same company. As I have said, both Protech Investments and Protech Khuthele were subsidiaries of Protech Holdings. Constantia therefore rightly accepted that Protech Khuthele was a company related to Protech Investments. [26] What essentially transpired here was that Constantia guaranteed the contractual obligations of Protech Khuthele towards third parties, in return, inter alia, for the undertaking by Protech Investments to indemnify Constantia in respect of any claims under these guarantees. In terms of its contracts with the third parties, Protech Khuthele was obliged to furnish performance guarantees. It obtained those guarantees, inter alia, because Protech Investments indemnified the guarantor. As such, Protech Investments put its property at risk to ensure that Constantia provided the guarantees that Protech Khuthele required. To my mind, Protech Investments thus indirectly secured the obligations of Protech Khuthele within the meaning of s 45(1)(a). Compliance with s 45 [27] Section 66(1) of the Companies Act reads: ‘The business and affairs of a company must be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company, except to the extent that this Act or the company’s Memorandum of Incorporation provides otherwise.’ In the context of s 66(1) and of the use of the word ‘resolution’ in s 45(5), 45(6) and 45(7), the expression ‘the board may authorise’ means that the board of a company must adopt a resolution to provide financial assistance to a company or person mentioned in s 45(2). [28] The board may not take such a resolution unless it satisfied itself of the two matters set out in s 45(3)(b). The first is that immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test (see s 4 of the Companies Act). The high court erred in finding that actual performance of the solvency and liquidity test was required. The second is that the terms under which the financial assistance is proposed to be given are fair and reasonable to the company. The board could only be satisfied of these matters if it applied its mind to them. [29] There was no evidence on record that the board of Protech Investments had adopted a resolution to enter into the indemnity. The only resolution that was put forward in this regard, was one by Protech Holdings. In terms thereof Mr Page had been authorised to execute the indemnity on behalf of Protech Holdings and its ‘Associated Companies’. This may have amounted to compliance with the requirement of a special resolution of shareholders in terms of s 45(3)(a)(ii), but self-evidently was not a resolution of the board of Protech Investments. [30] The indemnity stated that it was executed on behalf of the ‘Indemnitors’ by Mr Page, who had been authorised thereto ‘. . . by virtue of a Resolution of Directors dated 14 December 2012’. The liquidators could not find such a resolution in the records of Protech Investments. It was common cause on the papers that on 14 December 2012 and on 25 January 2013 (when the indemnity was executed), Mr Christopher Porter and Mr Julian Dovey had been directors of Protech Investments. Whether Mr Page had then also been a director of the company was in dispute. This dispute was not material, because Constantia placed the affidavits of both Mr Porter and Mr Dovey before the high court. It suffices to say that in their affidavits they studiously refrained from saying that the board had resolved to bind Protech Investments to the indemnity. [31] In the circumstances it is not surprising that there was no evidence whatsoever that the board of Protech Investments had considered the matters mentioned in s 45(3)(b) in respect of entering into the indemnity. Constantia argued that this requirement had been met because the solvency and liquidity of the members of the group had regularly been considered at group level by the audit and risk committee of the group. This clearly did not meet the requirement, in accordance with the purpose of s 45, that the board of Protech Investments had to satisfy itself in terms of s 45(3)(b) that it was appropriate to place its assets at risk in terms of the indemnity. In the result, Protech Investments provided financial assistance to Protech Khuthele in terms of the indemnity that in material respects did not comply with the requirements of s 45. In terms of s 45(6), the indemnity is void to this extent. Section 20(7) [32] The next question is whether the provisions of s 20(7) of the Companies Act could come to Constantia’s assistance. It provides: ‘A person dealing with the a company in good faith, other than a director, prescribed officer or shareholder of the company, is entitled to presume that the company, in making any decision in the exercise of its powers, has complied with all of the formal and procedural requirements in terms of this Act, its Memorandum of Incorporation and any rules of the company unless, in the circumstances, the person knew or reasonably ought to have known of any failure by the company to comply with any such requirement.’ [33] There has been some academic debate about the import and scope of s 20(7). See P Delport Henochsberg on the Companies Act 71 of 2008 (5 ed) at 106(3) to 106(5). Save for the matters referred to below, it is not necessary to enter into that debate. The provision that the person dealing with a company in good faith is ‘entitled to presume’ that the company has complied with all applicable formal and procedural requirements, could not be read as a true presumption. In my view, it means that when s 20(7) finds application, a company may not rely on its own non-compliance with formal and procedural requirements. [34] Formal and procedural requirements must be distinguished from substantive requirements for the validity of a resolution or agreement. See N Locke ‘The Legislative Framework Determining Capacity and Representation of a Company in South African Law and its Implication for the Structuring of Special Purpose Companies’ (2016) 133 SALJ 160 at 171. The requirements that the board of a company must resolve to provide financial assistance under s 45 and that it must be satisfied of the matters mentioned in s 45(3)(b), are substantive requirements. It follows that s 20(7) does not avail Constantia. Constitutionality of s 45(6) [35] It remains to consider Constantia’s contention that s 45(6) of the Companies Act permits arbitrary deprivation of property and therefore infringes s 25(1) of the Constitution. The first step in the enquiry is to determine the ambit of s 45(6). At first blush, the expression ‘this section’ in s 45(6)(a) appears problematic. However, the context indicates that it must be read as referring to those provisions of s 45 that set requirements for providing financial assistance. Providing financial assistance could only be inconsistent with those provisions. It follows, for instance, that non-compliance with the ex post facto notices contemplated by s 45(5) would not result in the voidness of a resolution or an agreement to provide financial assistance. [36] I am prepared to accept, without deciding, that s 45(6) may amount to the deprivation of property. A deprivation of property is arbitrary if the law in question does not provide sufficient reason for the deprivation. See First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Services and Another [2002] ZACC 5; 2002 (4) SA 768 (CC); 2002 (7) BCLR 702 (CC) para 100, where Ackermann J also carefully set out how sufficient reason is to be established. That, in the main, requires an evaluation of the relationships between the deprivation and the purpose of the law in question, as well as between the purpose of the deprivation and the person affected, on the one hand, and the nature of the property, on the other. Constantia thus had to show along these lines that there was insufficient reason for s 45(6). [37] In the founding affidavit the issue of arbitrary deprivation of property was raised in a single sentence, in the context of the proper interpretation of s 45(5) in respect of notice to shareholders. And in its Rule 16A notice, filed after the replying affidavit, Constantia in this regard only stated that s 45 of the Companies Act had been enacted to protect shareholders from improper conduct of a company’s directors and not to punish a bona fide party contracting at arm’s length. In my view, it would not be unfair to say that Constantia did not come close to making a case that s 45(6) should be declared unconstitutional. [38] The appeal is dismissed with costs, including the costs of two counsel. ________________________ C H G VAN DER MERWE JUDGE OF APPEAL Appearances For appellant: A W Pullinger (with T Mlambo) Instructed by: Ryan D Lewis Inc., Sandton Lovius Block Attorneys, Bloemfontein For second and third respondents: E Theron SC (with B M Gilbert) Instructed by: De Vries Incorporated, Sandton 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: 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 Constantia Insurance Company Limited v The Master of the High Court, Johannesburg and Others (512/2021) [2022] ZASCA 179 (13 December 2022) Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against a decision of the Gauteng Division of the High Court, Johannesburg (the high court). The appellant, Constantia Insurance Company Limited (Constantia), proved three claims (the claims) at the second meeting of creditors of Protech Khuthele Property Investments (Pty) Ltd (in liquidation) (Protech Investments). At the instance of the second and third respondents, the joint liquidators of Protech Investments (the liquidators), the first respondent, the Master of the High Court, Johannesburg (the Master), expunged the claims. Protech Investments was a property-owning company. It formed part of a group of eight companies (the group). Protech Khuthele Holdings Limited (Protech Holdings) was the sole shareholder of Protech Investments. The remaining six companies in the group, all of which were operating companies, were also subsidiaries of Protech Holdings. One of them was Protech Khuthele (Pty) Ltd (Protech Khuthele). At all relevant times, Mr Antony Page was the chief executive officer of the group. On 16 September 2014, the high court placed Protech Investments in winding-up, on the ground that it was unable to pay its debts. Constantia’s business included the provision of performance guarantees. The group approached Constantia to provide performance guarantees in respect of the contractual obligations of the operating companies in the group towards third parties. Constantia agreed to do so, in return for a premium per guarantee and an indemnity in its favour by each of the companies in the group. On 25 January 2013, Mr Page signed a document entitled ‘Deed of Indemnity and Counter Indemnity’ (the indemnity). It was also signed on behalf of Constantia and evidenced its agreement with Protech Holdings and the latter’s ‘Associated Companies’. This expression encompassed the subsidiaries of Protech Holdings. The effect of the indemnity was that each company in the group undertook an independent obligation to indemnify Constantia in respect of any demand on it or payment by it under any guarantee issued to third parties in respect of the obligations of any company in the group. The claims amounted to some R182 million and related to the various guarantees that Constantia had issued to third parties to secure the obligations of Protech Khuthele. Constantia claimed the demands that had been made on it in terms of these guarantees from Protech Investments under the indemnity. Constantia duly proved these claims on oath to the satisfaction of the officer presiding at the relevant meeting. The liquidators nevertheless disputed the claims. Consequently, they submitted a report to the Master in terms of s 45(3) of the Insolvency Act 24 of 1936 (the Insolvency Act), stating that fact and the reasons therefor. In essence, they contended that the indemnity constituted financial assistance by Protech Investments to Protech Khuthele, within the meaning of s 45 of the Companies Act. The liquidators reported that they had been unable to find a resolution of the board of Protech Investments authorising Mr Page to bind it to the indemnity or indicating compliance with the requirements of s 45 of the Companies. The issues before the SCA were whether: (a) the indemnity constituted financial assistance by Protech Investments to Protech Khuthele as contemplated in s 45 of the Companies Act; (b) Protech Investments in any event complied with the requirements of s 45 for the provision of financial assistance; (c) Section 20(7) of the Companies Act assisted Constantia’s case in the event of such non-compliance; and (d) Section 45(6) of the Companies Act was unconstitutional. As to (a) The SCA held that the matters included in s 45(1)(a) are exhaustive of the meaning of ‘financial assistance’. In terms of s 45(2), however, s 45 applies to direct and indirect financial assistance. The SCA found that Protech Investments indirectly secured the obligations of Protech Khuthele within the meaning of s 45(1)(a). As to (b) The SCA held that in the context of s 66(1) and of the use of the word ‘resolution’ in s 45(5), 45(6) and 45(7), the expression ‘the board may authorise’ means that the board of a company must adopt a resolution to provide financial assistance to a company or person mentioned in s 45(2). It found that there was no evidence on record that the board of Protech Investments had adopted a resolution to enter into the indemnity. It also held that there was no evidence that the board applied its mind to the matters mentioned in s 45(3)(b). In the result, Protech Investments provided financial assistance to Protech Khuthele in terms of the indemnity that in material respects did not comply with the requirements of s 45. As to (c) The SCA held that the provision that the person dealing with a company in good faith is ‘entitled to presume’ that the company has complied with all applicable formal and procedural requirements, could not be read as a true presumption. It held that formal and procedural requirements must be distinguished from substantive requirements for the validity of a resolution or agreement. The requirements that the board of a company must resolve to provide financial assistance under s 45 and that it must be satisfied of the matters mentioned in s 45(3)(b), are substantive requirements. It followed that s 20(7) did not avail Constantia. As to (d) The SCA held that Constantia did not come close to making a case that s 45(6) should be declared unconstitutional. ~~~~ends~~~~

3741

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 847/2020 In the matter between: DELTAMUNE (PTY) LTD FIRST APPELLANT RED MEAT INDUSTRY FORUM SECOND APPELLANT THE ASSOCIATION OF MEAT IMPORTERS THIRD APPELLANT & EXPORTERS FEDERATED MEATS (PTY) LTD FOURTH APPELLANT CURLY WEE BOERDERY (PTY) LTD FIFTH APPELLANT IBIS PIGGERY (PTY) LTD SIXTH APPELLANT KOO KOO ROO CHICKENS CC SEVENTH APPELLANT t/a MARIOS MEAT MOLARE INVESTMENTS (PTY) LTD EIGHTH APPELLANT NEW STYLE PORK (PTY) LTD NINTH APPELLANT t/a LYNCA MEATS WINELANDS PORK (PTY) LTD TENTH APPELLANT FAMOUS BRANDS MANAGEMENT ELEVENTH APPELLANT COMPANY (PTY) LTD NATIONAL HEALTH LABORATORY TWELFTH APPELLANT SERVICE JASOMAY PILLAY THIRTEENTH APPELLANT ASPIRATA AUDITING TESTING & FOURTEENTH APPELLANT CERTIFICATION (PTY) LTD and TIGER BRANDS LIMITED FIRST RESPONDENT ENTERPRISE FOODS (PTY) LIMITED SECOND RESPONDENT TIGER CONSUMER BRANDS LIMITED THIRD RESPONDENT Neutral citation: Deltamune (Pty) Ltd and Others v Tiger Brands Limited and Others (Case no 847/2020) [2022] ZASCA 15 (4 February 2022) Coram: ZONDI, MAKGOKA, MOKGOHLOA and GORVEN JJA and MEYER AJA Heard: 4 NOVEMBER 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The time and date for hand down is deemed to be 10h00 on the 4th day of February 2022. Summary: Subpoenas duces tecum – whether the subpoenas issued against third parties relevant to underlying class action – whether ambit of subpoenas too wide. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Lamont J sitting as court of first instance): In the Deltamune and Aspirata appeal 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 Each of the applications by the first, second and third applicants against the second respondent and the fourth respondent respectively, is dismissed. 2 The counter-application by the fourth respondent against the first, second and third applicants to set aside the subpoena served on it on 13 May 2019 succeeds. 3 The subpoenas served on the second and fourth respondents on 13 May 2019 and 15 May 2019, respectively, are set aside. 4 The first, second and third applicants are ordered to pay the costs in respect of the main application and the counter-application, including the costs of two counsel where so employed. In the Federated Meats appeal 1 The appeal is upheld with costs, including the costs of two counsel, save to the extent set out in paragraph 2 below. 2 The order of the high court is altered to read as follows: ‘1 The application succeeds save to the extent set out in paragraph 2 below. 2 The subpoenas served on each of the first to sixth applicants are set aside, except the portion which requires the first to sixth applicants to furnish: “(a) All records of protocols applicable during the period 1 January 2016 to 3 September 2018 regarding any aspect of the control or testing methodology for the presence, enumeration and/or sequence type of microbial hazards including Listeria monocytogenes involving but not limited to your: (i) Hazard Analysis and Critical Control Points (HACCP); (ii) Method descriptions; and (iii) Sample handling processes”, which documents shall be furnished within one month of the service of the subpoenas on the first to sixth applicants. 3 The first, second and third respondents are ordered to pay the costs, including the costs of two counsel.’ In the National Institute for Communicable Diseases appeal The appeal is upheld with costs, including the costs of two counsel. The order of the high court is set aside and replaced with the following order: ‘1 The application succeeds. 2 The subpoena issued by the first, second and third respondents dated 23 May 2019 against the applicant is set aside. 3 The first, second and third respondents are ordered to pay the costs, including the costs of two counsel.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Makgoka JA (Zondi, Mokgohloa and Gorven JJA and Meyer AJA concurring): [1] The appellants appeal against an order of the Gauteng Division of the High Court, Johannesburg (the high court), upholding the validity and enforceability of subpoenas to produce documents issued by the respondents, Tiger Brands Limited and its two operating subsidiaries, Enterprise Foods (Pty) Limited and Tiger Consumer Brands Limited (collectively ‘Tiger Brands’). The appeal is with the leave of the high court. [2] Tiger Brands faces a class action in the high court as a result of the outbreak of listeriosis in South Africa between January 2017 and 3 September 2018. A number of people across the country contracted an infection of the bacterium Listeria monocytogenes (L. mono)1 as a result of consuming contaminated ready-to-eat meat products produced by Tiger Brands. The subpoenas were issued pursuant to that class action. None of the appellants are party to the class action. [3] The factual background is this. Tiger Brands produces and markets ready-to-eat processed meat products including vienna sausages and polonies. It owned and operated a meat processing facility in Polokwane (the Polokwane facility) where it produced and packaged its products for distribution. The products were marketed and distributed to various wholesale and retail outlets for sale to the public. In respect of the listeriosis outbreak, the National Institute for Communicable Diseases (the NICD)2 determined that the ready-to-eat meat 1 Listeria monocytogenes is the species of pathogenic bacteria that causes the infection listeriosis. 2 The National Institute for Communicable Diseases (the NICD) is a national public health institute, providing reference to microbiology, virology, epidemiology, surveillance and public health research to support the government's response to communicable disease threats. products processed at the Polokwane facility were the source of the contamination, and the outbreak. [4] On 3 December 2018 the high court authorised a class action by 18 individuals against Tiger Brands for damages allegedly suffered as a result of the L. mono infection. In its order, the high court certified four classes of plaintiffs. The first class consists of those who contracted listeriosis as a result of eating the contaminated food products. The second class comprises those who contracted listeriosis while in utero, as a result of their mothers eating the contaminated food. The third class comprises the dependents of those who died from contracting listeriosis as a result of eating the contaminated food products. The fourth class is made up of those who maintained other persons who contracted listeriosis, as a result of eating contaminated food products; or his or her mother eating such products while carrying that person in utero. [5] Common to all four classes is the alleged link between a person contracting listeriosis as a result of eating (or somebody else having eaten) contaminated food that originated from, or passed through, the Polokwane facility during the relevant time period being between 23 October 2016 and 3 September 2018, and who sustained damages as a result. [6] Pursuant to the certification order, the class action representative plaintiffs instituted action against Tiger Brands, seeking declaratory orders that: (a) during the period 23 October 2016 to 4 March 2018 Tiger Brands supplied L. mono contaminated ready-to-eat processed meat products; and (b) Tiger Brands, as producer, distributor or retailer, is strictly liable in terms of s 61 of the Consumer Protection Act 68 of 2008 to the class action members for harm resulting from its production of the contaminated products. Tiger Brands defended the action and delivered a plea, denying liability on any of the bases alleged by the class action plaintiffs. [7] Tiger Brands subsequently issued the impugned subpoenas, which required the recipients thereof to produce swathes of documents, items and things, mainly in respect of test results conducted for the L. mono. The subpoenas were issued against the following parties: the first appellant, Deltamune (Pty) Ltd (Deltamune); the fourth appellant, Federated Meats (Pty) Ltd and fifth to tenth appellants (the Federated Meats appellants); the twelfth appellant, the National Health Laboratory Services (the NHLS),3 as well as against the fourteenth appellant, Aspirata (Pty) Ltd (Aspirata).4 The subpoenas were issued in terms of s 35(1) of the Superior Courts Act 10 of 2013,5 read with rule 38 of the Uniform Rules of Court (the Uniform Rules) which regulates the procedure for the procurement of evidence by subpoena.6 [8] No subpoenas were issued against the second appellant, the Red Meat Industry Forum (the Meat Forum), the third appellant, the Association of Meat Importers and Exporters (the Meat Association) and eleventh appellant, Famous Brands Management Company (Pty) Ltd (Famous Brands). Their involvement in the matter is purely to the extent their interests could be affected by the subpoenas. 3The NHLS is a juristic person established as such in terms of s 3 of the National Health Laboratory Service Act 37 of 2000. One of its statutory functions is to promote co-operation between South Africa and other countries with regard to the epidemiological surveillance and management of diseases through the monitoring of laboratory test results. 4 The thirteenth appellant is the laboratory manager of Aspirata and the subpoena against Aspirata was served on her in her capacity as such. 5 Section 35(1) of the Superior Courts Act 10 of 2013 provides that: ‘A party to proceedings before any Superior Court in which the attendance of witnesses or the production of any document or thing is required, may procure the attendance of any witness or the production of any document or thing in the manner provided for in the rules of that court.’ 6 Rule 38(1)(b)(ii) of the Uniform Rules of Court reads: ‘Within 10 days of receipt of a subpoena requiring the production of any document, any person who has been required to produce a document at the trial shall lodge it with the registrar, unless such a person claims privilege.’ [9] It is necessary to briefly describe the recipients of the subpoenas. Deltamune and Aspirata are commercial pathology laboratories (the laboratories). They are accredited by the South African National Accreditation System (SANAS) and their laboratories are accredited in terms of a national standard which sets requirements for the competence of testing and calibration laboratories. They test, among others, for the presence and/or amount of any species of the bacterium Listeria, including L. mono. [10] Federated Meats, as well as the fifth to tenth appellants, all supply meat products to Tiger Brands. Except for the ninth appellant, which supplies and distributes processed meats to Tiger Brands, the rest of the suppliers only supply raw meat products to Tiger. The twelfth appellant, the NHLS is a statutory body established in terms of s 3 of the National Health Laboratory Service Act 37 of 2000. One of its statutory functions is to promote the epidemiological surveillance and management of diseases through the monitoring of laboratory test results. [11] The service of the subpoenas triggered the launching of four applications in the high court, to which this appeal is a sequel. In no particular order, one was brought by Tiger Brands against the laboratories to compel compliance with the subpoenas it had issued against them (the compel application). The other three applications were aimed at setting aside the subpoenas, brought respectively by Deltamune; the Federated Meats appellants; and the NHLS (the set aside applications). In both Tiger Brands’ application to compel, and Deltamune’s application to set aside, the Meat Forum and the Meat Association were cited as respondents, they being interested meat industry entities. They filed an answering affidavit in each application, supporting the laboratories’ objection to producing the documents. [12] Famous Brands was granted leave to intervene in Tiger Brands’ application to compel against the laboratories, and in Deltamune’s application to set aside the subpoenas. It, and its related companies, are clients of both laboratories. Its interest in the matter is that the subpoenas served on the laboratories include within their scope documents relating to it concerning testing for L. mono. Famous Brands supported the laboratories’ objection to produce the documents. [13] Broadly, the objections to the subpoenas were premised on the grounds that: (a) the documents are not relevant to the issues arising in the class action; (b) the breadth of the requests constituted an abuse of the court process; (c) the subpoenas amounted to a ‘fishing expedition’; (d) the information in the requested documents was confidential and private. [14] The four applications were consolidated, and came before the high court (Lamont J), during which Tiger Brands conceded that its subpoenas had been too widely framed and that it had sought more than it was entitled to obtain. Pursuant to that concession, Tiger Brands amended the subpoenas by reducing the ambit of documents requested. This notwithstanding, the appellants persisted with their objections and sought to set aside the subpoenas in their entirety. [15] The high court did not specifically consider any of the bases of objections referred to earlier. Instead, it considered that given the wide-ranging factual allegations made by the class action plaintiffs in the particulars of claim, every conceivably relevant document should be produced, upon which issues of relevance would be determined. The amended subpoenas found favour with the high court. It observed that the facts pleaded by the class action plaintiffs depended on evidence from different sources as well as opinions obtained from different persons, both in the formulation of the claim and in the evidence which would be led at the trial. The court reasoned as follows: ‘. . . There is evidence before me which expresses the opinion that all the documents sought by Tiger are relevant to establish what the facts were; which facts are correct, and which facts are relevant to form an opinion. The opinion that all the documents are required may, in due course, be found to be mistaken once all the facts are known. At present, it cannot with precision be determined to what extent the documents are required. It will only be possible to establish what the extent of the enquiry should have been once the documents have been considered. On the face of it, the evidence sought is germane to establish facts, to found an opinion; to controvert the rationality of the opinion expressed in the particulars of claim; and to cross examine witnesses and so on. From a factual point of view, the documents are relevant.’ [16] The high court further remarked that s 35 of the Superior Courts Act deals with the right to obtain production of the document as opposed to the right to view the contents of the document. In terms of that section, continued the high court, documents can be obtained for production in court. The fact that the document is produced does not entitle anyone to access its contents. The court emphasised that the right to see the contents will be determined once the documents have been produced. It further said that the purpose of s 35 was to permit the Registrar to hold the documents pending future rulings to be made by a court in respect of claims of privilege, privacy and the terms of disclosure before the date of the trial. The question of what controls and restrictions should be imposed on the access of the contents of the documents was left for future determination either by the Registrar or by a different court prior to the hearing. [17] Pursuant to that approach, the high court: (a) granted Tiger Brands’ application to compel against the laboratories and (b) dismissed the respective set aside applications by Deltamune; the Federated Meats appellants; and NHLS. However, in line with Tiger Brands’ concession referred to in para 15 above, the court reduced the ambit of the subpoenas in terms of the number of documents. In each of the applications the high court ordered the recipients of the subpoenas to deliver the requested documents to the Registrar within one month of the service of the order on them, but held that the production of the documents did not automatically entitle Tiger Brands to access their contents. The order, in each case, was subject to, among others, the following conditions: ‘7. At the time of delivery of the documents to the Registrar, [the recipients of the subpoenas]: 7.1 shall identify those documents in respect of which privilege is claimed and stating the nature and extent of the privilege and; 7.2 those documents in respect of which there is an objection to any person having access to the contents including the reasons for the objection; 7.3 those documents in respect of which there is no objection to the production and inspection. 8. The registrar shall comply with the obligations imposed upon him by the Rules and shall make such rulings as he may deem appropriate. 9. The registrar’s powers shall include the right to refer any issue upon which he is called to make a ruling to Court…’ [18] The high court effectively entrusted and deferred the determination of whether there should be disclosure to the Registrar or another court. Its approach would lead to piece-meal litigation, against which courts have repeatedly cautioned.7 The result would be additional costs and possible delays in the finalisation of the disputes concerning the subpoenas. Inevitably, this would have a delaying effect on the finalisation of the class action. This certainly would not be in the interests of justice. The high court should have considered the merits of the various applications and determined what could or should not be disclosed, and the terms, if any, upon which that disclosure had to take place. [19] It now falls on this Court to embark on that exercise. On appeal, the appellants contend that the subpoenas should have been set aside in their entirety. They contend that, despite their amended form, the subpoenas are not relevant to 7 See for example, South African Transport and Allied Workers Union v Garvis and Others [2011] ZASCA 152 2011 (6) SA 382 (SCA) para 46; De Lange v Presiding Bishop of the Methodist Church Southern Africa for the time being and Another [2015] ZACC 35; 2016 (1) BCLR 1 (CC);2016 (2) SA 1 (CC) para 58. the class action, remain too wide in their ambit, and lack specificity. I propose to consider the issue of relevance first. [20] In Helen Suzman Foundation v Judicial Service Commission [2018] ZACC 8; 2018 (4) SA 1 (CC) para 26, relevance was considered in the context of rule 53 of the Uniform Rules, which provides for furnishing the record. The court contrasted the process in that rule to that in rule 35, which provides for discovery of documents. It pointed out that ‘. . . [u]nder rule 35 documents are discoverable if relevant, and relevance is determined with reference to the pleadings’. It remarked that, ‘. . . under the rule 35 discovery process, asking for information not relevant to the pleaded case would be a fishing expedition’. [21] I see no reason why, in principle, this should not apply in the context of a subpoena duces tecum, although a different threshold might apply. In terms of rule 35(3) of the Uniform Rules, discovery may be requested in respect of documents ‘which may be relevant’, whereas in terms of s 36(5)(a) of the Superior Courts Act, documents may be subpoenaed which ‘would be relevant’ which suggests a higher bar than that envisaged in s 35(3). [22] There are compelling reasons why a higher threshold would apply in respect of subpoenas, including the fact that whereas the discovery process is applicable only between the parties to the litigation, the process of subpoena provided for in s 36(5) of the Superior Courts Act read with rule 38 of the Uniform Rules of Court, third parties may be subpoenaed to attend court and produce documents. Third parties ought not to be required to do so unless it is absolutely necessary and there is some certainty that such documents are relevant to the issues in the underlying action. Viewed in this light, a higher watermark for relevance in respect of a subpoena duces tecum is not only necessary, but appropriate. [23] It is with that in mind that I consider the issue of relevance with reference to the pleadings in the present matter. The particulars of claim are not a model of the clarity and brevity envisaged by rule 18(4) of the Uniform Rules of Court, which reads: ‘Every pleading shall contain a clear and concise statement of the material facts upon which the pleader relies for his claim, defence or answer to any pleading, as the case may be, with sufficient particularity to enable the opposite party to reply thereto.’ [24] The class action plaintiffs’ particulars of claim, contrary to the dictates of this rule, contain a substantial body of what would constitute evidence at the trial, and a lot of verbiage. The high court correctly described the particulars of claim as containing ‘wide-ranging sets of facts and allegations’. It went on to consider the effect of those as follows: ‘. . . [I]t seems clear that the trial will traverse those matters and that the documents contained in the lists of documents are germane to Tiger’s preparation for the trial and the evidence which will be led at it. All of those who received subpoenas are involved in the industry and are persons who could and who probably did furnish information, opinion and factual data to the NICD. The nature and extent of the information furnished, the nature and extent of information not furnished and the accuracy of the information are relevant to test whether or not the allegations made by the claimants are sustainable and necessary to run the trial. Hence, the wide-ranging set of information sought in the subpoenas is relevant to the action.’ [25] It is important to consider rule 18(4) in a proper perspective. The particularity required in that rule relates only to the material facts of the party’s case. Thus, the pleader is only required to set out the material facts – with due regard to the distinction that should be maintained between the facts which must be proved in order to disclose the cause of action (facta probanda) and the facts or evidence which prove the facta probanda (facta probantia). The latter should not be pleaded at all, whereas the former must be pleaded together with the necessary particularity. [26] It is not necessary for a pleader to plead every piece of evidence which is necessary to prove each fact. As was explained in McKenzie v Farmer’s Cooperative Meat Industries Ltd 1922 AD 16 at 23, a cause of action is constituted by ‘… every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to judgment of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved’. [27] In the context of a class action, there is an added consideration: the certification order sets the parameters within which the issues in the pleadings should be considered. What this suggests is that even where facta probantia are pleaded, as is the case here, a court is enjoined to distill the real issues between the parties, within the confines of the certification order. This it can only do if it ignores the unnecessarily pleaded pieces of evidence and focuses on the facta probanda of the case before it. [28] In the present matter, the class action plaintiffs assert three substantive causes of action. The first is based upon strict liability in terms of the Consumer Protection Act, which in s 61, provides for strict liability of producers, distributors and retailers of unsafe, defective or hazardous goods. The plaintiffs allege that Tiger Brands is a producer, distributor and retailer as contemplated in s 61; that the products were contaminated as contemplated in s 1 of the Consumer Protection Act; and that the members of the classes suffered loss of the nature contemplated in s 61(5) of the Consumer Protection Act. The products in question are alleged to have been produced, marketed and manufactured by Tiger Brands between 23 October 2016 and 4 March 2018, at the Polokwane facility. [29] The second cause of action is delictual. The plaintiffs allege that the individuals who contracted L. mono did so as a result of consuming contaminated food products originating from or having passed through the Polokwane facility; that Tiger Brands could and should reasonably have known that its products were inherently susceptible to contamination by listeriosis; that it was in control of production, packaging and distribution of dangerous ready-to-eat meat products; that Tiger Brands was aware or should reasonably have been aware of methods to detect the presence of listeriosis in their products; and that it enjoyed a special relationship with class action members as consumers of its products; hence had a duty to take all reasonable measures to ensure that its products were safe. [30] The third cause of action is a claim for constitutional (exemplary) damages, it being alleged that Tiger Brands’ conduct violated the constitutional rights of the class action members. The class action members alleged that this remedy was justified because: Tiger Brands’ conduct was gross, and amounted to wilful or reckless breach of the special ‘duty of care’ that they owed the class members, and that common law remedies were inadequate. [31] In its defence to the strict liability claim, Tiger Brands denied the allegation that products from its Polokwane facility caused the alleged harm, as contemplated by s 61(5) of the Consumer Protection Act. It relied upon the qualifications in ss 61(1)(a), (b) and (c), to deny that the alleged harm was as a consequence of: ‘supplying any unsafe goods’, ‘a product failure, defect or hazard in any goods’, or ‘inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from or associated with the use of any goods’. Tiger Brands furthermore, relied upon the exception to strict liability recognised in s 61(4)(b)(ii), which deals with a person’s ‘compliance . . . with instructions provided by the person who supplied the goods to that person’. [32] The defence to the delictual claim is that the ‘production, packaging, distribution and sale of the ready-to-eat meat products were in compliance with the [relevant] rules and standards’, and in particular that ‘all reasonable steps [were taken] to ensure that the ready-to-eat meat products at the Polokwane facility were acceptable in accordance with [the prescribed standards]. With regard to the claim for constitutional damages, Tiger Brands pleads that ‘[t]his is not an appropriate case for the development of the common law to provide for an award of exemplary or punitive or constitutional damages’. It lists several reasons why, in the circumstances, there is no basis to award such damages. [33] Central to Tiger Brands’ case on relevance is its assertion that the class action will focus on establishing whether Tiger Brands was the sole cause of the listeriosis outbreak. It bases this on two paragraphs in the particulars of claim in the class action. In paragraph 67, the class action plaintiffs alluded to a likelihood of cross-contamination of some products that were not manufactured at the Polokwane facility when they came into contact with the products contaminated with L. mono from that facility. In paragraph 107 it is alleged that Tiger Brands had failed to take reasonable steps to minimise the potential for cross contamination. [34] Tiger Brands’ submissions in this regard are as follows. Because the class plaintiffs alleged that Tiger Brands was a source of the listeriosis outbreak through its Polokwane facility, this necessitates an enquiry whether it was the sole source of the outbreak. If it was the sole source of the outbreak, then it was responsible for the harm suffered by all the victims of the outbreak. The individual class members would merely have to prove that they were victims of the outbreak to prove that Tiger Brands was responsible for the harm they suffered. This is best encapsulated in Tiger Brands’ compelling application against the laboratories: ‘[Tiger Brands is] now attempting under subpoena from the relevant laboratories (among several other entities) to collate and examine a reasonably comprehensive body of epidemiological evidence that was or may have been available to the NICD’s finding. That evidence is at least potentially relevant to the outbreak investigation as a whole, of which the test results (and related data) for listeria monocytogenes, including test results to determine the presence (or absence), enumeration, lineage, or sequence type and the relatedness of the sequence type of listeria monocytogenes are manifestly relevant and possibly even decisive in one or more questions(s) in the class action.’ [35] To consider Tiger Brands’ submissions, the terms of the certification order must be borne in mind. In terms thereof, the class action would proceed in two stages. The first stage only concerns declaratory relief in respect of Tiger Brands’ liability to the four certified classes. During that stage, members of the classes who do not wish to be bound by the outcome of the first stage are required to opt out of the class action in a prescribed manner. The second stage applies only to those classes in respect of which Tiger Brands’ liability would have been established in the first stage. [36] Therefore, the key question to be answered in the first stage is whether Tiger Brands should be held liable to the classes for any provable damages arising as a result of the consumption of contaminated food products that originated from, or passed through, the Polokwane facility during the relevant time period. So, if any class was not successful in the first stage of the class action, then all members of the unsuccessful class who did not opt out in accordance with the procedure would be bound by the judgment given at the conclusion of the first stage. [37] If any class was successful in the first stage, then the class action in respect of all such successful classes would proceed to the second stage. During that stage, individual class members would pursue their claims against Tiger Brands by proving the causal link between their damages and the eating of contaminated food products linked to the Polokwane facility. The proof of damages actually suffered by each individual class member is thus to be established in the second stage of the class action. [38] The defining and common feature of the certification order in respect of all the four classes is therefore, that the cause of harm must have been the consumption of contaminated food products ‘originating from, having passed through, [Tiger Brands’] meat processing facility at Polokwane…’. To show that he or she is a member of any of the four classes as defined in the certification order, an individual claimant will have to establish the causal link between a listeriosis infection on the one hand, and the consumption of Tiger Brands’ contaminated food products from its Polokwane facility, on the other. If this link cannot be proved, an individual claimant would have no case against Tiger Brands, irrespective of what would have been established regarding Tiger Brands’ liability to the class, in the first stage. In that event, the quantum of the claimant’s damages would become irrelevant. In this way, the certification order ensured that Tiger Brands’ liability is suitably limited. [39] The focus of the class action is therefore only on those whose damages result from consuming those products. It is therefore irrelevant for purposes of the class action, whether other persons may have been harmed by the consumption of products manufactured by anyone other than Tiger Brands through its Polokwane facility. [40] Once this is appreciated, and if one has regard to the essence of the class action plaintiffs’ pleaded case and the terms of the certification order, it is clear that the reference to possible cross-contamination in the particulars of claim, is extraneous to the certified class action. It does not expand the ambit of the class action against Tiger Brands, the parameters of which are clearly delineated in the certification order. The classes of plaintiffs are those whose harm can be linked to the ingestion of the contaminated food connected to the Polokwane facility. Such persons do not have to allege or prove that Tiger Brands was the only source of the listeriosis outbreak. [41] Accordingly, Tiger Brands would not have to refute that allegation to successfully defend the class action. It would only be required to refute the allegation that any particular person, potentially falling within one of the four categories of plaintiffs, was infected by the consumption of a contaminated product produced or having passed through the Polokwane facility. [42] I therefore conclude that Tiger Brands’ ‘sole source’ argument has no relevance in the class action. Its demand for production of documents in this regard is entirely speculative. It seems to hope that in the midst of all the test results it requires, it would find a basis on which to pin co-liability on another party. This is not the purpose of a subpoena duces tecum. [43] Viewed in this light, the high court’s analysis of the pleadings was flawed, given the class action plaintiffs’ pleaded case, and the parameters of the certification order. It failed to distinguish between facta probanda necessary to sustain the class action plaintiffs’ cause of action, and the ‘wide-ranging sets of facts and opinions’, that ought to be considered in determining the factual and legal relevance of the documents sought in the subpoenas. It erroneously elevated the ‘sole cause issue’ to some cause of action which the class action plaintiffs needed to establish. As I have endeavoured to point out, that issue, to the extent it has been pleaded, has no bearing on any of the issues for determination in the class action. For the purpose of determining relevance on the pleadings, those allegations should have been ignored as mere surplusage. [44] The high court also erred in its view that ‘… it seems reasonable that … the entire industry was the subject of investigation’. According to the experts in this matter, ‘listeria’ is a genus of bacteria of which there are 18 recognised species, only two of which are human pathogens. Of those is L. Mono, which is the only species that causes listeriosis. L. Mono may in turn be grouped into one of various ‘strains’. The ST6 strain was determined by the NICD to be responsible for the listeriosis outbreak. That is the only material about which there is relevance in the class action. The other species contain bacteria which is common in fresh vegetables, water, milk and the fruits on supermarket shelves, which is harmless. [45] While the NICD’s initial investigation was indeed broad, it was ultimately narrowed to the ST6 strain, following the finding that DNA ‘fingerprints’ lifted in clinical tests matched precisely those found at the Polokwane facility. This led to a determination by the NICD on 4 March 2018 that the Polokwane facility was the source of the outbreak. Shortly thereafter, Tiger Brands closed the facility and recalled its processed meat products from the market. Towards the end of April 2018 Tiger Brands announced that it had received independent laboratory tests which confirmed the presence of ST6 strain in samples of ready-to-eat meat products from its Polokwane facility. This fact was subsequently admitted by Tiger Brands in its plea. This means that further ‘extensive epidemiological investigation’ envisaged by Tiger Brands is unnecessary. [46] Below I briefly discuss the contents of the amended subpoenas against their respective recipients. [47] In respect of the laboratories, the amended subpoenas required each of them to provide copies of documents, referred to as ‘all requests received from any person or entity’; and ‘all data obtained and test results produced for detection testing and for enumeration testing, for any L. mono for the period 1 July 2017 to the date of the subpoena. In addition, the laboratories were required to provide copies of ‘[a]ny and all reports, memoranda, notes, analyses or correspondence. . . prepared or compiled in relation to any of the requests for testing’ referred to above. Finally, the laboratories were required to produce: ‘Any and all correspondence, and other written communication (including emails, SMS texts and memoranda) exchanged during the period 1 July 2016 to the present concerning the 2017/2018 Listeriosis Outbreak or Listeria during the period 1 July 2016 to the present, with any person, entity or authority…’ [48] Evidently, Tiger Brands’ subpoenas against the laboratories call for communication concerning listeria in general ie material relating to these bacterial species falling under the broadly inclusive genus of listeria, almost all of which are not known to cause any illness in humans. Therefore, the disclosure of material relating to these species is irrelevant to the class action. [49] I also discuss briefly the position of Famous Brands. Although no subpoena was served upon it, Famous Brands is directly affected by the subpoenas served on the laboratories. In its answering affidavit in the Tiger Brands’ application to compel against the laboratories, Famous Brands sought to explain why its test results (which are in possession of the laboratories) are irrelevant for the purposes of the class action. It explained the steps it takes to ensure that the meat it serves does not contain L. Mono, as follows: collectively, the restaurants in its stable, which include Wimpy, Steers and Debonairs Pizza, sell two types of menu items that may contain meat, menu items such as open sandwiches which contain uncooked ready-to-eat meat products and menu items such as hamburgers containing cooked meat. [50] Those restaurants in the Famous Brands stable that serve meals containing cooked ready-to eat products rely on external suppliers who manufacture such products. The only test results that Famous Brands obtains from the laboratories concerns samples of raw meat that is served in the restaurants in the Famous Brands stable. Such meat is cooked at such high temperatures and for such extended periods of time before being eaten by consumers, that any L. Mono that might be present in the meat before the cooking is destroyed during the cooking process. [51] Accordingly, contends Famous Brands, the test results of raw meat cooked before serving are wholly irrelevant for purposes of the class action. The meals that contain cooked ready-to-meat products served in some of the restaurants in its stable, are produced by an external supplier. Famous Brands and its related companies do not submit samples of cooked ready-to-eat meat products for testing by the laboratories. Also, Famous Brands averred that neither it nor any of the restaurants in its stable buy or use any of Tiger Brands’ ready-to-eat meat products. [52] Tiger Brands did not dispute Famous Brands’ averments. Despite this, the high court did not consider the undisputed evidence put up by Famous Brands. It erred in this regard, as these averments are pertinent to the relevance of the subpoenas issued against the laboratories, and by extension, to Famous Brands. As already mentioned, the focus of the class action is the liability resulting from the consumption of Tiger Brands’ ready-to-eat meat products that were contaminated with L. mono, and produced in, or passed through, the Polokwane facility. In the light of Famous Brands’ undisputed averments, any information pertaining to it held by the laboratories would not be relevant to any issue in the class action. [53] In respect of Federated Meats appellants, the recipients of the amended subpoenas were ordered to provide: ‘1. All test results for the presence of Listeria monocytogenes including but not limited to detection, testing, enumeration testing, or phenotypic testing on each environmental, food and product sample or swab collected at each of your facilities during the period 1 January 2016 to 3 September 2018. 2. All records of protocols applicable during the period 1 January 2016 to 3 September 2018 regarding any aspect of the control or testing methodology for the presence, enumeration and/or sequence type of microbial hazards including Listeria monocytogenes involving but not limited to your: (i) Hazard Analysis and Critical Control Points (HACCP); (ii) Method descriptions; and (iii) Sample handling processes; 3. All records of riboprinting, serotyping and whole genome sequencing undertaken by you or on your behalf of Listeria monocytogenes samples (environmental or food) collected from each of your facilities before, during and after the Listeriosis outbreak between 2016 and 2018; and 4. Any correspondence or other written communication, notice, instruction or demand concerning Listeriosis that was exchanged with, received from or sent to any person or entity during the period 1 January 2016 to the present including but not limited to the following entities: (i) The Department of Health (DoH); (ii) The Environmental Health and Port Health Services of the DoH; (iii) The National Institute for Communicable Diseases (NICD); (iv) The Core Sequencing Unit of the NICD (CSU); (v) The Centre for Enteric Diseases of the NICD (CED); (vi) The National Health Laboratory Services (NHLS); (vii) The Department of Trade and Industry (DTI); (viii) The Department of Agriculture, Forests and Fisheries (DAFF); and (ix) The World Health Organisation (WHO).’ [54] Before us, counsel for the Federated Meat appellants conceded that the documents listed in paragraph 2 of the amended subpoena, referred to above, could well be relevant to the issue of negligence, as the documents relate to industry safety norms. Save for this, the Federated Meats appellants persisted in their quest to set aside the amended subpoena served on it. [55] Tiger Brands’ stance in this regard seems to be that the Federated Meats appellants’ test results may be relevant by proving that it had received contaminated meat from them. The difficulty for Tiger Brands is the common cause fact that heating raw meat products to a temperature of 75 degrees Celsius destroys any listeriosis risk. The Federated Meats appellants largely supply raw meat products, which are not consumed without being cooked or heated. This must be considered together with the fact that Tiger Brands specifically denies in its plea that it failed to ensure that the meat was heated as described above. This negates the hypotheses that L. Mono contamination of Tiger Brands’ products was ‘passed through’ from infected meat products sourced from its suppliers, including the Federated Meat appellants. The test results of these suppliers are plainly irrelevant to the issues in the class action. [56] All of the above considerations apply equally in respect of the amended subpoena against the NICD. Only the following needs further mention in respect of the NICD. The high court held that the documents sought by Tiger Brands are germane to test, among other things, the rationality of the NICD’s determination that the ST6 strain detected in processed meat products from the Polokwane facility was the source of the outbreak. Tiger Brands has never sought to challenge NICD’s determination. What is more, its own expert, Professor den Bakker confirmed that the methods used by the NICD in the investigation and reporting of the outbreak are consistent with the widely accepted outbreak investigation methods. In the circumstances, the NICD’s report should be accepted until reviewed and set aside by a competent court. It is instructive that Tiger Brands has not sought to set it aside. [57] In addition to the issue of relevance, the NICD also impugns the amended subpoena on the ground that it lacks specificity envisaged in rule 38(1)(a)(iii). That rule, in peremptory terms, requires a subpoena duces tecum to specify the document or thing which a witness is required to produce. It reads: ‘If any witness is in possession or control of any deed, document, book, writing, tape recording or electronic recording (hereinafter referred to as “document”) or thing which the party requiring the attendance of such witness desires to be produced in evidence, the subpoena shall specify such document or thing and require such witness to produce it to the court at the trial.’ The rule must be read together with s 36(4) of the Superior Courts Act, which specifically provides that ‘[n]o person is bound to produce any document or thing not specified or otherwise sufficiently described in the subpoena unless he or she has it in court’. [58] The amended subpoena on NHLS spans four pages with 24 paragraphs demanding non-specific, generic information. It would serve no purpose to set out all of the paragraphs. The first four and the last one would suffice. They read as follows: ‘1. All data collected or test results for the period 1 July 2016 to the present for detection testing of Listeria monocytogenes in samples taken or obtained from any of [Tiger Brands’] manufacturing plants situated at: . . . 1.2 28 21st Street, Industria, Polokwane; 1.3 553 Linton Jones Street, South Germiston, Germiston and . . . 2. Any and all reports (including microbiological or epidemiological reports), memoranda, notes, analyses or correspondence (including internal emails or other internal correspondence) prepared, compiled or exchanged in relation to any of the data collected or test results referred to in paragraph 1 above. 3. All data collected or test results for the period 1 July 2016 to the present, for the enumeration testing of Listeria monocytogenes detected in samples taken or obtained from any of the plants referred to in paragraphs 1.1 and 1.3 above. 4. Any and all reports (including microbiological or epidemiological reports), memoranda, notes, analyses or correspondence (including internal emails or other internal correspondence) … prepared, compiled or exchanged in relation to any of the data collected or test results referred to in paragraph 3. . . . 24. All written or electronic records relating to any person (including deceased persons) who suffered or were suspected to have suffered from Listeriosis during the period 1 September 2015 to the present including but not limited to records of any investigations conducted, tests performed and correspondence (including internal correspondence) exchanged.’ [59] Commenting on a similarly worded subpoena in Beinash v Wixley 1997 (3) SA 721 (SCA), this Court said the following at 735C-F: ‘[T]he language used is of the widest possible amplitude, including within its sweep every conceivable document of whatever kind, however remote or tenuous be its connection to any of the issues which require determination in the main proceedings. The possible permutations are multiplied with undisciplined abandon by a liberal and prolific recourse to the phrase “and/or”. Its potential reach is arbitrarily expanded by the demand that the documentation must be produced whether it be “directly or indirectly” of any relevance to a large category of open-ended “matters”. Not the slightest basis is suggested to support the belief that any of these documents exist at all or that, if they do, they can be of any assistance in the determination of any relevant issue which might impact on the relief sought in the main proceedings. No attempt is made to have regard to the specific requirement of Rule 38(1) of the Uniform Rules, which expressly requires that a subpoena duces tecum shall “specify” the document or thing which the witness concerned is required to produce. The demand in the impugned subpoena includes the production of documentation which is said to arise from or “in relation to the conduct or the activities” of the first and second defendant “in or about the affairs or winding up” of conglomerates of companies. . . ’ In Re Excel Finance Corporation (Receiver and Manager Appointed); Worthley v Australian Securities Commission [1993] FCA 108; (1993) 41 FCR 346; (1993) 113 ALR 543; (1993) 10 ACSR 255; (1993) 11 ACLC 330, a subpoena was critisised on the basis that the breadth of its language ‘unreasonably requires the persons to whom they are directed to form judgments about the documents that are covered by the subpoenas’ (at para 49). [60] I am of the view that the remarks expressed in both Beinash and Re Excel Finance apply with equal force to the amended subpoena against the NICD. The language used is overly vague and generalised, and in some respects, manifestly uncertain. To borrow from Re Excel Finance, the language used leaves it up to the NICD to make its own judgment as to what document should be produced and whether or not they are relevant to a generic description of documents required in relation to listeriosis. Tiger Brands has not sought to lay a basis as to (a) the relevance of the documents to the issues in the class action, or (b) whether the NICD has in its possession or control the requested documents. I therefore conclude that the amended subpoena against the NICD lacks the necessary specificity. [61] In sum, there is no merit in Tiger Brands’ assertion that there is a need to obtain evidence to establish whether there are alternative sources of contamination. As pointed out in Meyers v Marcus and Another 2004 (5) SA 315 (C) para 67, ‘the search for the truth … must, in the context of litigation and in the interests of justice, be confined to evidence that is relevant to the issues in any particular case’. Therefore, test results from a number of alternate sources in the country are irrelevant to the issues in the class action. [62] Section 36(5)(a) of the Superior Courts Act provides for the cancellation of a subpoena if its recipient ‘. . . is unable to give any evidence or to produce any book, paper or document which would be relevant to any issue in such proceedings. In Sher and Others v Sadowitz 1970 (1) SA 193 (C) at 195D-E it was held that ‘... in the exercise of its general [inherent] power, [a court may] set aside a subpoena where it is satisfied as a matter of certainty that the witness who has been subpoenaed will be totally unable to be of any assistance to the Court in the determination of the issues raised at the trial…’. [63] In the present case, for all the reasons stated above, the third parties against whom subpoenas were issued, will be unable to be of any assistance to the court in the determination of the issues raised in the class action. Subject to the concession in respect of the Federated Meats appeal, the appeals should succeed, and the subpoenas in all the circumstances ought to be set aside. Costs should follow the event in each instance. All parties employed more than one counsel, which is warranted given the importance of the issues raised in the appeal. [64] The following order is made: In the Deltamune and Aspirata appeal 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 Each of the applications by the first, second and third applicants against the second respondent and the fourth respondent respectively, is dismissed. 2 The counter-application by the fourth respondent against the first, second and third applicants to set aside the subpoena served on it on 13 May 2019 succeeds. 3 The subpoenas served on the second and fourth respondents on 13 May 2019 and 15 May 2019, respectively, are set aside. 4 The first, second and third applicants are ordered to pay the costs in respect of the main application and the counter-application, including the costs of two counsel where so employed.’ In the Federated Meats appeal 1 The appeal is upheld with costs, including the costs of two counsel, save to the extent set out in paragraph 2 below. 2 The order of the high court is altered to read as follows: ‘1 The application succeeds save to the extent set out in paragraph 2 below. 2 The subpoenas served on each of the first to sixth applicants are set aside, except the portion which requires the first to sixth applicants to furnish: “(a) All records of protocols applicable during the period 1 January 2016 to 3 September 2018 regarding any aspect of the control or testing methodology for the presence, enumeration and/or sequence type of microbial hazards including Listeria monocytogenes involving but not limited to your: (i) Hazard Analysis and Critical Control Points (HACCP); (ii) Method descriptions; and (iii) Sample handling processes”, which documents shall be furnished within one month of the service of the subpoenas on the first to sixth applicants. 3 The first, second and third respondents are ordered to pay the costs, including the costs of two counsel.’ In the National Institute for Communicable Diseases appeal The appeal is upheld with costs, including the costs of two counsel. The order of the high court is set aside and replaced with the following order: ‘1 The application succeeds. 2 The subpoena issued by the first, second and third respondents dated 23 May 2019 against the applicant is set aside. 3 The first, second and third respondents are ordered to pay the costs, including the costs of two counsel.’ ____________________ T Makgoka Judge of Appeal APPEARANCES: For first, thirteenth and fourteenth appellants: A R G Mundell SC (with him S van Aswegen) Instructed by: VDMA Attorneys, Johannesburg Symington De Kok, Bloemfontein For second to tenth appellants: H Epstein SC (with him M Osborne) Instructed by: Fairbridges Wertheim Becker Attorneys, Johannesburg Phatshoane Henny Attorneys, Bloemfontein. For eleventh appellant: D Berger SC (with him J Berger) Instructed by: RHK Attorneys, Johannesburg Symington De Kok, Bloemfontein. For twelfth appellant: P G Seleka SC (with him F Karachi) (Heads of Argument having been prepared by P G Seleka SC, F Karachi and S Mabunda) Instructed by: Lawtons Africa Inc., Johannesburg Symington De Kok, Bloemfontein. For respondents: W Trengove SC (with him M Kriegler SC; K Hofmeyr SC; R Ismail) Instructed by: Clyde and Co. Attorneys, Johannesburg McIntyre Van der Post 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: 4 February 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. Deltamune (Pty) Ltd and Others v Tiger Brands Limited and Others (Case no 847/2020) [2022] ZASCA 15 (4 February 2022). Today, the Supreme Court of Appeal (the Court) upheld an appeal against an order of the Gauteng Division of the High Court, Johannesburg (the high court), which had upheld the validity and enforceability of subpoenas to produce documents issued by the respondents, Tiger Brands Limited and its two operating subsidiaries, Enterprise Foods (Pty) Limited and Tiger Consumer Brands Limited (collectively referred to as ‘Tiger Brands’). Tiger Brands faces a certified class action in the high court as a result of the outbreak of listeriosis in South Africa between January 2017 and 3 September 2018. A number of people across the country contracted an infection of the bacterium Listeria monocytogenes (L. mono) as a result of consuming contaminated ready-to-eat meat products produced by Tiger Brands at its Polokwane facility. The subpoenas were issued pursuant to the class action, and required the recipients to produce swathes of documents, items and things, mainly in respect of test results conducted for the L. mono. The recipients of the subpoenas were the following: the first appellant, Deltamune (Pty) Ltd (Deltamune); the fourth appellant, Federated Meats (Pty) Ltd and fifth to tenth appellants (the Federated Meats appellants); the twelfth appellant, the National Health Laboratory Services (the NHLS), as well as the fourteenth appellant, Aspirata (Pty) Ltd (Aspirata). The subpoenas were issued in terms of s 35(1) of the Superior Courts Act 10 of 2013, read with rule 38 of the Uniform Rules of Court which regulates the procedure for the procurement of evidence by subpoena. No subpoenas were issued against the second appellant, the Red Meat Industry Forum (the Meat Forum), the third appellant, the Association of Meat Importers and Exporters (the Meat Association) and eleventh appellant, Famous Brands Management Company (Pty) Ltd (Famous Brands). Their involvement in the matter was purely to the extent that their interests could be affected by the subpoenas. None of the appellants were party to the class action. The Court considered two issues in respect of the subpoenas, namely relevance and specificity. The latter was only in respect of NICD. Central to Tiger Brands’ case on relevance was its assertion that the class action would focus on establishing whether it was the sole cause of the listeriosis outbreak. Tiger Brands’ submissions in this regard were as follows: because the class plaintiffs alleged that Tiger Brands was a source of the listeriosis outbreak through its Polokwane facility, this necessitated an enquiry whether it was the sole source of the outbreak. Tiger Brands contended that, if it was the sole source of the outbreak, then it was responsible for the harm suffered by all the victims of the outbreak. The individual class members would merely have to prove that they were victims of the outbreak to prove that Tiger Brands was responsible for the harm they had suffered. The Court considered the terms of the certification order, in terms of which the class action would proceed in two stages. The first stage only concerned declaratory relief in respect of Tiger Brands’ liability to the four certified classes. The second stage applied only to those classes in respect of which Tiger Brands’ liability would have been established in the first stage, namely, whether Tiger Brands should be held liable to the classes for any provable damages arising as a result of the consumption of contaminated food products that originated from, or passed through, the Polokwane facility during the relevant time period. The Court concluded that the focus of the class action was only on those whose damages resulted from consuming those products. It was therefore irrelevant for purposes of the class action, whether other persons were harmed by the consumption of products manufactured by anyone other than Tiger Brands through its Polokwane facility. Therefore, the Court concluded that Tiger Brands’ ‘sole source’ argument had no relevance in the class action. With regard to specificity, the Court considered that the language of the subpoenas was overbroad, and concluded that the amended subpoena against the NICD lacks the necessary specificity. Accordingly, the Court, per Makgoka JA (with Zondi, Mokgohloa, Gorven JJA and Meyer AJA concurring), upheld the appeals with costs, including costs of two counsel where so employed. --END--

3971

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1293/2021 In the matter between: SOUTH AFRICAN FORESTRY COMPANY SOC LTD APPELLANT and COLLINS SEBOLA FINANCIAL SERVICES (PTY) LTD FIRST RESPONDENT TSEPO MONAHENG SECOND RESPONDENT CLEMENT NHUVUNGA THIRD RESPONDENT CHAIRPERSON OF THE BID SPECIFICATION COMMITTEE OF THE APPELLANT FOURTH RESPONDENT CHAIRPERSON OF THE BID EVALUATION COMMITTEE OF THE APPELLANT FIFTH RESPONDENT CHAIRPERSON OF THE BID ADJUDICATION COMMITTEE OF THE APPELLANT SIXTH RESPONDENT PHEPHA MV SECURITY SERVICE SEVENTH RESPONDENT CHAIRPERSON OF THE AUDIT COMMITTEE OF THE APPELLANT EIGHTH RESPONDENT CHAIRPERSON OF THE FINANCIAL COMMITTEE OF THE APPELLANT NINTH RESPONDENT PHUTHADICHABA TRADING ENTERPRISE CC TENTH RESPONDENT Neutral citation: South African Forestry Company SOC Ltd v Collins Sebola Financial Services (Pty) Ltd and Others (Case no 1293/2021) [2023] ZASCA 18 (24 February 2023) Coram: PONNAN ADP, GORVEN, MOTHLE, WEINER and GOOSEN JJA Heard: 20 February 2023 Delivered: 24 February 2023 Summary: Section 16(1)(a)(i) of the Superior Courts Act 10 of 2013 – contracts pursuant to award of tenders to expire before an order on appeal can be enforced – no practical effect of decision – appeal dismissed. __________________________________________________________________ ORDER ______________________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Basson J), sitting as court of first instance: The appeal is dismissed with costs. __________________________________________________________________ JUDGMENT __________________________________________________________________ Gorven JA (Ponnan ADP, Mothle, Weiner and Goosen JJA concurring) [1] This appeal arose from the award of a tender put out by the South African Forestry Company SOC Ltd (SAFCOL), the appellant. It is a State Owned Company and the third largest forestry company in South Africa. The appeal was opposed by only Collins Sebola Financial Services (Pty) Ltd (Collins Sebola), the first respondent. The tender, RFB 011/2019, was for security services, including forest guards, required in the regions in which SAFCOL conducts its forestry operations and for its business units. Each region comprises a number of plantations. [2] Three bids were regarded as compliant, that of Collins Sebola, that of Phepha MV Security Services (Phepha), the seventh respondent, and that of Puthadichaba Trading Enterprise CC, the tenth respondent. The outcome was that, instead of awarding a contract for all of the required security services to a single service provider, two contracts were awarded. The bid of Collins Sebola succeeded for certain plantations, forest guards and business units, while the bid of Phepha succeeded for the balance of the services required. Pursuant to this, contracts were concluded with both Collins Sebola and Phepha for provision of the services for which their bids succeeded. That of Collins Sebola was worth R18 285 386.27 and that of Phepha R62 193 884.32. Those contracts, for a three year period, were put into effect and remain extant. The contract periods will expire by effluxion of time on 31 March 2023. [3] Aggrieved at the failure of SAFCOL to award it the entire tender, Collins Sebola approached the Gauteng Division of the High Court, Pretoria (the high court), to review and set aside the award to Phepha. Collins Sebola also sought an order awarding to it those parts of the tender awarded to Phepha. [4] The high court, per Basson J, granted the relief sought by Collins Sebola and refused an application by SAFCOL for leave to appeal. The appeal came before us with the leave of this Court. [5] When the matter was called, enquiries were made of each counsel as to whether the provisions of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013 applied to the appeal in view of the contracts expiring on 31 March 2023. Section 16(1)(a)(i) provides: ‘When at the hearing of an appeal the issues are of such a nature that the decision sought will have no practical effect or result, the appeal may be dismissed on this ground alone.’ Both counsel candidly conceded that the appeal fell squarely within the provisions of s 16(2)(a)(i). If the appeal succeeded, the status quo concerning the continued implementation of the contracts would obtain. On the other hand, if the appeal was dismissed, it would not be feasible for Collins Sebola to take over and render the services currently rendered by Phepha within the contract period. Not only that, but Collins Sebola undertook not to attempt to do so. [6] In those circumstances, and on that basis, both counsel acknowledged that the appeal should be dismissed. Costs must follow the result and SAFCOL did not contend otherwise. [7] In the result, the appeal is dismissed with costs. ____________________ T R GORVEN JUDGE OF APPEAL Appearances For appellant: V Maleka SC Instructed by: AT Mpungose & Dlamini Incorporated, Pietermaritzburg Matsepes Incorporated, Bloemfontein For respondent: Q Pelser SC Instructed by: Tambani Matumba Attorneys, Makhanda Hendre Conradie 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: 24 February 2023 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. South African Forestry Company SOC Ltd v Collins Sebola Financial Services (Pty) Ltd and Others [2023] ZASCA 18 Today the Supreme Court of Appeal dismissed with costs an appeal from a judgment of Basson J in the Gauteng Division of the High Court, Pretoria (the high court). The appeal arose from the award of a tender for security services put out by the South African Forestry Company SOC Ltd (SAFCOL). Instead of awarding the tender to a single bidder, various forestry plantations and entities were divided between Collins Sebola Financial Services (Pty) Ltd (Collins Sebola) and Phepha MV Security Services (Phepha). Collins Sebola was aggrieved at the failure of SAFCOL to award to it all of the plantations and approached the high court to review and set aside that decision and for an order in terms of which it was awarded the entire tender. The high court reviewed and set aside the tenders awarded to Phepha and ordered that Collins Sebola be awarded the contracts concerning those tenders. Basson J refused leave to appeal which was granted by the Supreme Court of Appeal. Contracts with Collins Sebola and Phepha respectively were concluded pursuant to the awards for a three-year term. The contracts are to expire by 31 March 2023. As such, when the matter was argued in the Supreme Court of Appeal, enquiries were made of counsel as to whether any decision made on appeal would have any practical effect or result. In terms of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013, if not, the appeal should be dismissed. Both counsel conceded that no practical effect would result since it would not be possible for Collins Sebola to take up the contracts in which Phepha was rendering services and to itself render services before the contracts expired. For that reason, and in terms of the provisions of s 16(2)(a)(i) of the Superior Courts Act, the Supreme Court of Appeal dismissed the appeal with costs.

2512

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 253/2013 Reportable In the matter between JOHAN IZAK FREDERICK PISTORIUS APPELLANT and THE STATE RESPONDENT Neutral citation: Pistorius v The State (253/13) [2014] ZASCA 47 (01 April 2014) Coram: Bosielo, Shongwe and Leach JJA Heard: 13 March 2014 Delivered: 01 April 2014 Summary: Criminal appeal – conviction – the appellant convicted of assault with intent to cause grievous bodily harm and crimen injuria – trial court relied on the evidence of a single witness – proper judicial approach – whether the court treated the evidence with caution – whether the court below erred in finding that the guilt of the appellant was proved beyond reasonable doubt. ___________________________________________________________ ORDER ___________________________________________________________ On appeal from: The North Gauteng High Court, Pretoria (Erasmus and Rauling JJ sitting as a court of appeal): The appeal is dismissed. ___________________________________________________________ JUDGMENT ___________________________________________________________ Bosielo JA (Shongwe and Leach JJA concurring): [1] In the afternoon of 26 December 2006, the appellant met with the complainant on his farm. The appellant confronted the complainant and asked him what he was doing on the farm whereupon the complainant answered that he was a security officer. He then demanded his identification documents and when the complainant failed to produce these, he ordered him to leave the farm. The complainant exited the farm but later the same day laid a complaint against the appellant with the police at Vaal Police Station. [2] Arising from these facts, the appellant was tried and convicted in the magistrates’ court, Standerton, on charges of assault with intent to do grievous bodily harm and crimen injuria. The two counts were taken together for the purpose of sentencing and appellant was sentenced to a fine of R5000.00 or twelve months’ imprisonment, half of which was suspended on suitable conditions. An appeal followed by an application for leave to appeal to this court failed in the court below. This appeal is with special leave of this court. The appeal is against conviction only. [3] The following facts appear to be common cause, or at least not in dispute. The appellant was accompanied by two of his friends, Cronje and Strydom, driving on his farm on the day in question. Two of Strydom’s children were sitting at the back of his vehicle. As it was the holiday period, he did not expect the complainant or any other person to be on the farm. On seeing the complainant, he stopped his vehicle and interrogated him as to the reason for his presence on his farm. The complainant explained that he was a security officer. He did not believe the complainant as the construction company that was working on his farm had closed for the holidays. He demanded his identification and when the complainant failed to produce it, he ordered him to leave. [4] The State called two witnesses, the complainant and Dr Nyembe, who treated him on 27 December 2007. [5] The appellant testified that he was employed by a security company called Vaal Rand Security, which was contracted by Murray & Roberts to undertake security work on the appellant’s farm where they were laying a large pipeline. On this day, he had just arrived on the farm where he relieved his colleague, one Godfrey. One of his duties was to patrol the farm as he had to secure machinery belonging to Murray & Roberts. Whilst walking on the farm he met with the appellant who confronted him and asked him what he was doing there as the contractors had closed for the holidays. When he explained to him that he was executing some security duties, the appellant remarked that ‘die kaffer praat kak’. On being asked how he felt about these words, the complainant replied that he felt that the appellant did not regard him as a human being. [6] At this stage, the appellant then alighted from his vehicle and started to hit him with the butt of a rifle on his back. When he realised that he was being assaulted, he fled. The appellant chased after him with his vehicle and bumped him several times, causing him to fall to the ground. When he reached the gate, he pressed him with his vehicle against the gate with his vehicle. He managed to jump over the gate when the appellant reversed his vehicle. As he fled, he lost his bag, which, amongst other belongings, contained his mobile phone. [7] The complainant went to report the incident to the police at the Vaal Police Station the same day. He subsequently consulted with Dr Nyembe. He testified that he was injured on his back and left arm. Furthermore, he explained that he was swollen and had open wounds for which he was sutured and given some medication. He confirmed that he received a J88 form from the police, which he handed over to the police officer after the doctor had completed it as well as a sick note which he gave to his employers. He did not know what the police had done with the J88. He explained that he lost a copy of the doctor’s sick note in a fire when his house burnt down. [8] The complainant was subjected to a very lengthy and robust cross- examination. Suffice it to say that except for a few instances (which I will deal with later) he remained consistent and unshaken. [9] The state then called Dr Nyembe, the medical doctor who treated the complainant. I hasten to state that his evidence was left unchallenged. Essentially, Dr Nyembe confirmed that he is a qualified medical doctor with three degrees and that he examined the complainant on 27 December 2007. He described the injuries he observed on the complainant as huge haematomas with severe or gross oedema at several and multiple locations on the back. These locations were at the level of the scapula of the right hand. Furthermore, he described a haematoma – a large collection of blood – at the site of the injury. [10] Dr Nyembe testified further that he observed weals on the complainant’s upper back at almost the level of the shoulder but more medial. He described a weal as similar to when a person has been dragged with his face or his naked flesh on the ground, leaving areas slightly open, others dark with blood, others completely closed and swollen with the interstitial fluid. Importantly, he elaborated further that contusions are areas where a person has been struck by some blunt force as opposed to a sharp object like a knife. [11] Commenting on the possible weapons which could have caused the injuries on the appellant, Dr Nyembe opined that it could be a knobkerrie or sjambok or a pipe or anything which will not perforate or cause the skin to open. Although he was unable to state with precision what object was used to assault the complainant, he opined that it was a blunt and not a sharp object. [12] Dr Nyembe remained firm and unshaken under cross-examination. However, he conceded that it was difficult to determine the age of the injuries but insisted that a blunt object had been used. He stated that from a medical point of view, these injuries were serious because a person who has sustained internal injuries of the nature similar to these may suffer kidney failure, stroke or a mini stroke. He conceded that he did not make any note of open wounds in his clinical notes. When asked pertinently if the complainant had any open wounds on his left arm, he stated that he never treated the complainant’s arms. However, he qualified his response by stating that he cannot remember seeing wounds on the complainant’s arm. He explained that this incident occurred almost two years previously. However, he conceded that if he had sutured the complainant’s arms, he would have noted this on his clinical notes. [13] The appellant and his two witnesses testified. They told a different story to that of the complainant. As the versions of the appellant and those of his witnesses are similar, I will give a general tenor of their evidence. Although admitting that they met the complainant on the appellant’s farm in the afternoon of 26 December 2007 and that the appellant asked the complainant what he wanted on his farm, the appellant denied that he uttered the alleged words or assaulted him in any manner whatsoever. The appellant testified that his conversation with the appellant was friendly. He only requested him to leave his farm when he failed to produce proof that he is a security officer as he doubted his explanation. This is because he was not dressed in uniform and because he did not know the complainant. However, he knew about the people working for the contractors on his farm although he did not know them personally. He knew that the contractors had closed for the holidays and that all the workers had left for that reason. He did not expect to see the complainant on his farm. He was never told that there would be people on his farm to guard the property of the contractors. He never made any independent enquiries to establish whether the complainant was a security officer. He maintained that he never saw any property belonging to the contractors on his farm. [14] Importantly, he denied bumping the complainant with his vehicle. His version is that the complainant left the farm on his own. When he reached the gate, he jumped over it of his own volition. Whilst on the other side of the gate, he was surprised to see the complainant dropping his bag and running away. Out of curiosity, Strydom went and opened the bag to see what it contained. He could find neither a security uniform nor an identification card. [15] In cross-examination, the appellant maintained that as it was the 26th December, he did not expect to see any person on his farm. He confronted the complainant to verify why he was on his farm because normally at time of the year (Christmas) they experience instances of stock theft. Out of caution they chase people whom they do not know off the farm. This is the reason why they chased the complainant away. The appellant conceded that he never made any enquiries to verify if the complainant was in truth a security officer. [16] Both Strydom and Cronje testified as defence witnesses. As I indicated earlier, except for admitting that the rifle in the vehicle was his, Strydom’s evidence is the same as that of the appellant. The same holds true for Cronje except that he stated that when they met the complainant he did not see any injuries on him. They both denied any alleged utterances of the words attributed to the appellant and any assault on the complainant. [17] The appellant’s counsel launched a two-pronged attack against the judgment of the magistrate. The first leg is that the evidence of the complainant being a single witness, ought to be approached with caution, particularly as he had contradicted himself, and further that his evidence is contradicted by Dr Nyembe. The magistrate erred in not doing so, or so it was contended. Secondly, that the magistrate erred in rejecting the appellant’s version which was fully corroborated by his two witnesses and in circumstances where it was never criticised. The contention was that, absent any criticism the regional magistrate had no reason to reject it. [18] The appellant’s counsel made much of the fact that the complainant testified that he had open wounds on his arm which were sutured by Dr Nyembe, whilst Dr Nyembe testified to the contrary. It was argued further that the complainant lied when he said that he reported the incident to the police the same day (26 December 2006) as the copy of the charge-sheet reflected the CAS/CR/MAS/MR No as 01/01/07, the suggestion being that this is the official date on which this case was registered by the police for the first time. A rather tentative attack was made against the complainant based on the fact that although he testified that he handed his J88 to the police, it was never produced in court including a doctor’s note which Dr Nyembe had given him for his employers. Based on this it was submitted that the state’s version fell far short of the required standard of proof beyond reasonable doubt on the count of assault with intent to cause grievous bodily harm and that the appellant should have been acquitted. [19] Regarding the count of crimen injuria, counsel argued in the main that the appellant’s denial should be accepted, more so that the complainant had proved himself not to be reliable as a single witness. In the alternative, counsel submitted that even if it can be found that the appellant uttered the words complained of, the magistrate was wrong to find that they amounted to crimen injuria as the words on their own are not injurious and further that the complainant never stated explicitly that he felt that his dignity was impaired, this being an essential element of the charge. [20] Although conceding that there were some inconsistencies in the complainant’s version, read together with that of Dr Nyembe, counsel for the state contended that these are not so material as to affect the probative value of the complainant’s evidence; more so, if we take into account that the complainant testified four years after the incident. Furthermore, counsel submitted that the complainant’s version was amply corroborated by Dr Nyembe, whose evidence proved that the injuries he observed on the complainant were consistent with the manner of attack as described to him by the complainant. In conclusion, he contended that, even if the magistrate did not criticise the appellant and his witnesses, the inherent probabilities of this case are over-whelming in favour of accepting the State’s version over that of the appellant. [21] On the count of crimen injuria, counsel contended that the words allegedly uttered by the appellant are notoriously known and accepted, given the painful history of this country, to be hurtful and injurious. He submitted that the response by the complainant, that these words made him feel as if he is not human, articulate the deep hurt and humiliation felt by the complainant. [22] Undeniably, the two versions contradict each other. It is trite that the state bears the onus to prove the guilt of the appellant beyond reasonable doubt and that there is no duty on the appellant to convince the court of the truthfulness of any explanation which he gives. S v V 2000 (1) SACR 453 (SCA) at 455b. [23] After having carefully evaluated the evidence as a whole, including the inherent probabilities, the magistrates delivered a clear and well- reasoned judgment. It is clear from the judgment that the magistrate was alive to the important fact that the complainant was a single witness and importantly, that there is a contradiction between his evidence and that of Dr Nyembe regarding the injuries to his left arm. However, the magistrate remarked, correctly so, that the complainant could not be disbelieved solely due to this. On the contrary, the magistrate found that it would be unfair to criticise the complainant on this as he was never confronted with Dr Nyembe’s report so that he could have had an opportunity to reply thereto or even explain it. [24] The Constitutional Court stated the following about the importance of cross-examination in President of the Republic of South Africa & others v South African Rugby Football Union & others 2000 (1) SA 1 (CC) at para 61: ‘The institution of cross-examination not only constitutes a right, it also imposes certain obligations. As a general rule it is essential, when it is intended to suggest that a witness is not speaking the truth on a particular point, to direct the witness’s attention to the fact by questions put in cross-examination showing that the imputation is intended to be made and to afford the witness an opportunity, while still in the witness-box, of giving any explanation open to the witness and of defending his or her character. If a point in dispute is left unchallenged in cross-examination, the party calling the witness is entitled to assume that the unchallenged witness’s testimony is accepted as correct. This rule was enunciated by the House of Lords in Brown v Dunn (1893) 6 R 67 (HL) and has been adopted and consistently followed by our courts. … The rule in Browne v Dunn is not merely one of professional practice but ‘is essential to fair play and fair dealing with witnesses’. [See the speech of Lord Hershell in Browne v Dunn above]… The precise nature of the imputation should be made clear to the witness so that it can be met and destroyed… particularly where the imputation relies upon inferences to be drawn from other evidence in the proceedings. It should be made clear not only that the evidence is to be challenged but also how it is to be challenged. This is so because the witness must be given an opportunity to deny the challenge, to call corroborative evidence, to qualify the evidence given by the witness or others and to explain contradictions on which reliance is to be placed.’ [25] Based on the salutary approach enunciated in and Sarfu’s case, I agree with the regional magistrate. [26] It is important to consider this fact against Dr Nyembe’s evidence to the effect that he could not remember seeing the wounds on the complainant’s arm as he testified two years after the event, implying that he might have forgotten. Given the known fact that doctors are generally busy, it is possible that Dr Nyembe saw many patients during those two intervening years. It is therefore understandable that he might not remember this incident particularly in the absence of the J88, which would have contained the photographs which could possibly have shed some light on the appellant’s injuries. To my mind, the fact that Dr Nyembe cannot recall the open wounds on the complainant’s left arm does not necessarily mean that the complainant is mendacious. [27] In any event it is trite that contradictions per se do not necessarily lead to the rejection of a witness’ evidence. It is essential that proper weight be accorded to the number, nature, importance and their bearing on the other evidence. We are confronted here with a single incident. In the light of the totality of the evidence and Dr Nyembe’s explanation, which I find to be eminently reasonable, I do not regard this inconsistency as so serious as to detract from the veracity and reliability of the complainant’s version. S v Mkohle 1990 (1) SACR 95 (A) at 98E- H. [28] Importantly, the magistrate made positive credibility findings in favour of the complainant despite the fact that he was a single witness. It is clear from his well-reasoned judgment that he was aware of this fact. He evaluated his evidence cognisant of the warning expressed in S v Sauls & another 1981 (3) SA 172 (A) at p180C-H where Diemont JA expounded the salutary approach to the evidence of a single witness as follows: ‘In R v T 1958 (2) SA 676 (A) at 678 Ogilvie Thompson AJA said that the cautionary remarks made in the 1932 case were equally applicable to s 256 of the 1955 Criminal Procedure Code, but that these remarks must not be elevated to an absolute rule of law. Section 256 has now been replaced by s 208 of the Criminal Procedure Act 51 of 1977. This section no longer refers to “the single evidence of any competent and credible witness”; it provides merely that “an accused may be convicted on the single evidence of any competent witness”. The absence of the word “credible” is of no significance; the single witness must still be credible, but there are, as Wigmore points out, “indefinite degrees in this character we call credibility”. (Wigmore on Evidence vol III para 2034 at 262.) There is no rule of thumb, test or formula to apply when it comes to a consideration of the credibility of the single witness (see the remarks of Rumpff JA in S v Webber 1971 (3) SA 754 (A) at 758). The trial judge will weigh his evidence, will consider its merits and demerits and, having done so, will decide whether it is trustworthy and whether, despite the fact that there are shortcomings or defects or contradictions in the testimony, he is satisfied that the truth has been told. The cautionary rule referred to by De Villiers JP in 1932 may be a guide to a right decision but it does not mean “that the appeal must succeed if any criticism, however slender, of the witnesses’ evidence were well founded” (per Schreiner JA in R v Nhlapo (AD 10 November 1952) quoted in R v Bellingham 1955 (2) SA 566 (A) at 569). It has been said more than once that the exercise of caution must not be allowed to displace the exercise of common sense. The question then is not whether there were flaws in Lennox’s evidence – it would be remarkable if there were not in a witness of this kind. The question is what weight, if any, must be given to the many criticisms that were voiced by counsel in argument.’ [29] On the contrary, the magistrate found that the ‘accused version and that of his witnesses is a made up story and is not reasonably possibly true…’. [30] It is a time-honoured principle that once a trial court has made credibility findings, an appeal court should be deferential and slow to interfere therewith unless it is convinced on a conspectus of the evidence that the trial court was clearly wrong. R v Dhlumayo & another 1948 (2) SA 677 (A) at 706; Kebana v S 2010 (1) All SA 310 (SCA) para 12. It can hardly be disputed that the magistrate had advantages which we, as an appeal court, do not have of having seen, observed and heard the witnesses testifying in his presence in court. As the saying goes he was steeped in the atmosphere of the trial. Absent any positive finding that he was wrong, this court is not at liberty to interfere with his finding. [31] It is true that the magistrate did not specifically point to any contradictions in the defence version. However, it is clear that the magistrate, in analysing and evaluating the evidence, considered the inherent probabilities of the case. The magistrate found it highly improbable that the complainant, after being confronted about his unwelcome presence on the farm and being ordered to leave which he did peacefully and without any altercation or fight, would, some few hours thereafter, report at Vaal Police Station to lay a charge against the appellant. Moreover, at the time when he had serious injuries to which Dr Nyembe testified. This is inherently improbable, in my view. [32] On the appellant’s version the only explanation for this would be that another person had injured the complainant who then falsely decided to blame the appellant who had done no wrong to him. And it becomes even more improbable if not plainly preposterous, in the light of the appellant’s version that he spoke with the complainant in a pleasant and friendly manner that afternoon. [33] Another unanswered question is: if the appellant did not assault the complainant, why did the complainant run even after he had jumped over the gate? The probabilities are strong that he had been assaulted by the appellant and he still feared that this unlawful assault would continue hence he had to run for his own safety. It is settled law that it is permissible for a court, in determining whether the accused’s version is reasonably possibly true, to look at the probabilities. S v V above. [34] It is correct that the appellant was corroborated by both Cronje and Strydom. However, sight should not be lost of the fact that both of them are the appellant’s friends and they were having fun together that day. In the circumstances, they can hardly claim or be seen to be impartial and unbiased witnesses. [35] Having had the benefit of reading the record, I cannot find any fault with the reasoning and conclusion of the magistrate. The probabilities are consistent with the finding that when the appellant and his friend accidentally and unexpectedly came across the complainant on his farm, they suspected him to be on the farm for some criminal activities, became angry, confronted, insulted and assaulted him in the manner described by the complainant. This is so because, according to the appellant, the complainant was not supposed to be on the farm. This is bolstered further by the fact that it appears that during this time of the year, the appellant normally has problems with stock theft on his farm. This suspicion must have weighed heavily with the appellant and his two friends. [36] Regarding the charge of crimen injuria, given the above facts, I have no doubt that the appellant uttered the words complained of. In direct response to a question about how he felt when this word was used, the complainant retorted: ‘I felt as if I am not a human being’. This is exactly what the appellant intended to do, namely to dehumanise, denigrate and humiliate the complainant. I find that the magistrate was correct to convict the appellant on this count as well. [37] It is a well-known fact that these words formed part of the apartheid-era lexicon. They were used during the apartheid years as derogatory terms to insult, denigrate and degrade the African people of this country. Similarly words like ‘boer’, ‘coolie’ and ‘bantu’, the word is both offensive and demeaning. Its use during apartheid times brought untold pain and suffering to the majority of the people of this country. Suffice to say that post-1994, we, as a nation, wounded and scarred by apartheid, embarked on an ambitious project to heal the wounds of the past and create an egalitarian society where all, irrespective of race, colour, sex or creed would have their rights to equality and dignity protected and promoted. Our Constitution demands this. Undoubtedly, utterances like these will have the effect of re-opening old wounds and fanning racial tension and hostility. [38] It is most unfortunate and regrettable that the appellant’s counsel attempted to defend the use of such a vile word. It needs to be stressed that in line with its ambitious and laudable national project of national reconciliation, the government has taken bold steps to eradicate these obdurate vestiges of the odius apartheid past. One of these steps is the promulgation of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000, which seeks, amongst other things, to prevent and prohibit hate speech. This resolve to deal with this problem effectively is bolstered by the creation of specialised Equality Courts. [39] Suffice to say that, given the enormous efforts we have taken as a nation over the past 20 years to reconcile with one another, such utterances have no place in the new South Africa with its vision of a non- sexist and non-racist society founded on human dignity, equality and advancements of human rights and freedoms for all (s 1 of the Constitution). Such utterances should be visited with severe sentences. [40] It follows that this appeal is devoid of any merits, and is therefore dismissed. _________________ L.O. BOSIELO JUDGE OF APPEAL Appearances: For Appellant : P A Van Wyk SC Instructed by: Van Heerden Schoeman Attorneys; Standerton Symington & De Kok, Bloemfontein For Respondent : J J Kotze Instructed by: Director Public Prosecutions; Pretoria Director Public Prosecutions, 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 01 April 2014 STATUS Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Pistorius v The State (253/13) [2014] ZASCA 47 (01 April 2014) 1. The SCA today dismissed the appeal by the appellant against his convictions and sentence imposed by the court below. 2. The appellant had been convicted of assault with intent to do grievous bodily harm and crimen injuria. The state’s case is that the appellant whist driving in his bakkie on his farm met the complainant who was walking on foot. As he suspected the complainant, he confronted him and demanded to know why he was on his farm at that time. This happened on 26 December 2006. When the complainant explained that he was security doing patrol duties, the appellant remarked to his two passengers that ‘die kaffer praat kak’. He then ordered him off his farm. He then alighted from his bakkie and hit him several times with the butt of a firearm. 3. In order to ensure that the complainant left his farm, he chased after him in his vehicle, and bumped him several times, causing him to fall to the ground causing him some serious injuries. At the gate, he pressed him against the gate with his vehicle. 4. The SCA found that the trial court was correct in finding the appellant guilty on both counts. Furthermore, it found no misdirection regarding the sentence. The conviction and sentence were confirmed. 5. The SCA has expressed grave concern about people who, 20 years into our nascent democracy which is underpinned by a Bill of Rights still make such racist and derogatory. The SCA remarked that in order to safeguard and protect the gains which we have made so far in fostering racial reconciliation and harmony, such utterances should be visited with severe sentences. 6. The appeal against conviction and sentence are dismissed.

1288

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 560/08 In the matter between: THE CAMPS BAY RATEPAYERS’ AND RESIDENTS’ ASSOCIATION First Appellant PS BOOKSELLERS (PTY) LIMITED Second Appellant and GERDA YVONNE ADA HARRISON First Respondent THE MUNICIPALITY OF THE CITY OF CAPE TOWN Second Respondent Neutral citation: Camps Bay Ratepayers’ & Residents’ Association v Harrison (560/08) [2010] ZASCA 3 (17 February 2010) Coram: NAVSA, NUGENT, VAN HEERDEN, MLAMBO and MAYA JJA Heard: 25 AUGUST 2009 Delivered: 17 February 2010 Summary: Local authority ─ National Building Regulations and Building Standards Act 103 of 1977 ─ application to review and set aside approval of building plan ─ whether plan complies with the relevant statutory requirements. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Cape High Court (HJ Erasmus J sitting as court of first instance): The appeal is dismissed with costs including the costs of two counsel. ______________________________________________________________ JUDGMENT ______________________________________________________________ MAYA JA (NAVSA, NUGENT, VAN HEERDEN and MLAMBO JJA concurring) Introduction [1] This is an appeal, with the leave of the court below, against its refusal of an application for the review and setting aside of a decision of the second respondent (the municipality) approving the first respondent’s building plans relating to the proposed development of Erf 590 Brighton Estate Extension No. 2 Township Camps Bay (the property), under s 7 of the National Building Regulations and Building Standards Act 103 of 1977 (the Building Standards Act). [2] The litigation between the parties has a long history dating back to 2005 and a few orders have been made at various stages of their legal skirmishes. This makes it necessary to set out the relevant background facts in some detail and, in so far as they may be disputed, I will apply the test laid down in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd.1 1 1984 (3) SA 623 (A) at 634-635C. [3] The main protagonists are the second appellant, PS Booksellers, and the first respondent, Harrison, who are neighbours. PS Booksellers is the registered owner of Erf 594, which is its principal place of business situate diagonally opposite the property. Harrison is a property developer and the registered owner of the property which she acquired in September 2004 for development and resale. The litigation arose from the appellants’ objections to building operations she commenced on the property, which allegedly contravened the applicable municipal zoning scheme and restrictive title deed conditions (which are discussed later in the judgment) in respect of building set-back and height requirements. [4] On 24 January 2005, the municipality approved Harrison’s building plans under Plan No. 480217 (the original plan) which depicts a three-storey residential dwelling with a swimming pool on a plot measuring 427m2 in extent. The storeys are designated ‘Upper Ground Floor’, ‘First Floor’ and ‘Second Floor’. According to this plan the property is situated at the corner of Geneva Drive and Blinkwater Road. Its topography slopes from Blinkwater Road down towards Geneva Drive. It has an open parking area with access from Blinkwater Road. There is another open parking area and a basement garage on the side of Geneva Drive designated ‘Lower Ground floor’ which, because of the steeply sloping nature of the property, are at a significantly lower level than the parking facilities off Blinkwater Road. [5] Building operations commenced in March, shortly after the original plan’s approval. However, the appellants objected to the construction. After the objections were raised, a chain of correspondence flowed between the appellants and Harrison in an attempt to reach a compromise. In consequence, Harrison submitted a substantially revised plan which the municipality approved under Plan No. 485042 (the September 2005 plan). The appellants were nonetheless not satisfied that their concerns had been addressed. In November 2005, they instituted an application to interdict any further building operations on the property and its sale, transfer or alienation pending (a) an appeal to be launched in terms of s 62 of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act)2 against the approval of the September 2005 plan, (b) an application for the demolition of any construction which contravenes the title deed conditions and (c) certain review proceedings.3 [6] The principal issue in the application (as in the s 62 appeal which followed) concerned a wall which included a large planter and a swimming pool water reticulation system constructed along the western side of the property on the Geneva Drive boundary which continues on the eastern side of the property on the Blinkwater Road street boundary to which portion of the dwelling abuts on. The appellants complained that it was not merely a boundary wall but was designed to support not only the swimming pool and the planter but also to retain a substantial amount of fill material deposited and compacted behind it to its full height. This, they contended, contravened clause D(d) of a reciprocal restrictive title deed condition registered in favour of every owner of an erf in Camps Bay under the provisions of s 18(3) of Ordinance 33 of 1934 (the Ordinance), which is applicable to the parties’ respective properties. The clause prohibits the erection of a ‘building or structure or any portion thereof, except boundary walls and fences ... nearer than 3.15 metres to the street line which forms a boundary’ of an erf. [7] The appellants also argued that the ‘finished’ ground level abutting the dwelling from which the dwelling’s height was to be measured had been achieved by unlawful manipulation. This was so, they contended, because the retaining wall impermissibly altered the finished ground level adjacent to the facades of the dwelling, which was artificially raised by some 3,5 metres, and disguised the height of such facades thus enabling Harrison to construct a dwelling to a height in excess of the restriction of 10 metres prescribed by the 2 Section 62(1) of the Systems Act entitles ‘[a] person whose rights are affected by a decision taken by a political structure, political office bearer, councillor or staff member of a municipality in terms of a power or duty delegated or sub-delegated by a delegating authority to the political structure, political office bearer, councillor or staff member, [to] appeal against that decision by giving written notice of the appeal and reasons to the municipal manager within 21 days of the date of the notification of the decision’. 3 The review proceedings which would have targeted the September 2005 plan approval never got off the ground as the intended result was achieved in the s 62 appeal proceedings. applicable provisions of s 98(2) of the Zoning Scheme Regulations (the Zoning Scheme).4 [8] In April 2006, the appellants obtained the interdict which remains in operation.5 This relief was granted on the basis that the retaining walls reflected in the September 2005 plan indeed contravened clause D(d) and that, prima facie, they artificially raised the finished ground level by retaining fill material compacted behind them and reconfigured the original steep slope in the property to an almost horizontal platform thus concealing an infringement of the relevant height restriction. [9] The s 62 appeal which the appellants duly lodged thereafter was also decided in their favour on the same basis as the interdict proceedings. The September 2005 plan was accordingly set aside. The appellants went further and instituted an application for the demolition of the dwelling, a shell of a three-storey structure built in accordance with the original plan. That application currently stands over by the parties’ agreement pending the finalisation of the review proceedings which are the subject of this appeal. [10] Prior to the finalisation of the s 62 appeal, Harrison had meanwhile submitted for the municipality’s approval a further plan as a rider to the original plan. (As to which plan this document was meant to be a rider is a point of hot dispute as the appellants contend that it was intended to be a rider to the defunct September 2005 plan but I deal with this aspect later.) This plan was also met with written objections from the appellants but after further revisions, on 6 September 2007, it was approved by the municipality’s Development Co-ordinator, Mr Holden, on the written recommendation of Mr Moir, the municipality’s Building Control Officer, under plan 506011 (the plan). This is the impugned decision which the appellants seek to have reviewed and set aside. 4 The Regulations were promulgated in terms of s 9(2) of the Land Use Planning Ordinance 15 of 1985 published in Provincial Gazette 4684 of 1 March 1991. 5 The judgment is reported as PS Booksellers (Pty) Ltd v Harrison 2008 (3) SA 633 (C) per Meer J. [11] In the plan’s final version the swimming pool is in a different, uncontentious position. The planter and other garden landscaping features and structures erected to provide access to the parking space and the front door have been omitted altogether. The walls along the northern and western boundaries of the property previously retaining the swimming pool and the planter thus no longer serve a retaining function to those structures. The ‘sandbag wall’ running from the corner of the garage to the Geneva Drive boundary and intersecting the main boundary wall which retained some soil has been removed. Fill material between the boundary wall and the facade of the dwelling has also been removed. The plan shows contours in this area which, according to Moir, is an indication of a ‘fall’ and the absence of fill material thus leaving nothing to be retained by the remaining wall. The appellants confirm the removal of these objects but persist that the exposure of the facades by the removal of fill material has served to reveal an infringement of the 10 metre height restriction and that the remaining boundary walls still retain compacted fill material. The plan further shows an embankment along the northern side and the boundary wall measuring a compliant height of 2,1 metres. [12] The appellants’ grounds of review in their founding papers were framed as follows: ‘[1] The buildings as contemplated by the plans approved by the [municipality] in plan no. 506011, will contravene both the title deed conditions applicable to the property and also the provisions of the zoning scheme applicable to the area in which the property is situated; [2] The [municipality], when considering the application for plan approval, failed to give due consideration to the objections lodged by the [appellants] against the approval of such plans; [3] The [municipality] and its officials committed material errors of law and misdirected themselves as to the true nature of elements of the proposed building, when considering the plan for approval; 28.4 The [municipality]’s officials had regard to irrelevant considerations and failed to have due regard to relevant considerations – more particularly the facts, information and objections before them – when considering the plan for approval.’ [13] These grounds, as developed in the appellants’ affidavits, turned on the legality of the plan, ie the alleged infringement of the height restriction imposed by the Zoning Scheme and the set-back requirements set out in the title deed; the competence of the delegated authority to the decision-maker who approved the original plan (this ground was not pursued on appeal) and the procedural fairness or otherwise of the decision to approve the plan in relation to the manner in which the application was scrutinised, particularly the municipality’s alleged failure to identify unlawful features and consider the appellants’ objections. The appellants subsequently added further grounds in their replying affidavits, namely that (a) the plan also contravened s 47(1) of the Zoning Scheme and (b) the approval of the plan as a rider to a previously approved plan was incompetent. [14] The court below refused to entertain the challenge relating to s 47(1) of the Zoning Scheme mainly on the basis that it had been raised late (in reply) and was as a result not adequately canvassed in the papers. The court then dismissed all the other grounds of review and found, inter alia, that even if the approval process was not fair because Moir’s memorandum did not adequately reflect the appellants’ objections, it would not be just and equitable to set the plan approval aside solely for that reason. In its view, the municipality had correctly decided that the plan complies with all the relevant legal provisions and no purpose would be served by remitting the matter for fresh consideration. [15] Before us, the appellants contested the decision of the court below on the same grounds but added more: that (a) the municipality did not pay due regard to the objections raised by interested parties on the basis of derogation in value of their properties under s 7(1)(a) and (1)(b)(ii) of the Building Standards Act when it considered the plan; (b) the municipality failed to furnish the decision-maker, Holden, with a building control officer’s recommendation and (c) the court below wrongly exercised its discretion in refusing the review having regard, inter alia, to the fact that the municipality and the court itself did not consider a number of issues relating to whether the application complied with relevant law, bearing in mind that the doctrine of legality does not countenance invalid administrative acts. [16] It is convenient to set out the legal framework within which the matter falls to be decided before I deal with the parties’ contentions. The relevant and principal statutory provisions are provided by the Building Standards Act the objective of which is to promote uniformity in the law relating to the erection of buildings within local authorities. Section 4(1) requires the local authority’s written approval of a landowner’s application comprising of building plans and specifications prior to the construction of a building. Section 5 enjoins every local authority to appoint a building control officer. This is a key official without whom a local authority may not function,6 who must be skilled and specialized7 and is vested with wide-ranging powers in the exercise of building approval and development within a local authority which are set out in s 6. Section 6(1)(a) obliges him or her to ‘make recommendations to the local authority in question, regarding any plans, specifications, documents and information submitted to such local authority in accordance with s 4(3)’.8 [17] Section 7 regulates the approval of building plans. Its provisions empower a local authority to grant an application if satisfied that the application complies with the requirements of the Building Standards Act and stipulates the circumstances in which an application will be refused. The material provisions are couched in s 7(1) which reads: ‘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 – 6 See Paola v Jeeva NO 2004 (1) SA 396 (SCA) paras 14-16; Walele v City of Cape Town 2008 (6) SA 129 (CC). 7 See Part A16 of the Regulations under the Building Standards Act, GN R2378 RG4565, 12 October 1990 (the Building Regulations) which stipulates the tertiary educational qualifications which must be vetted by the Human Sciences Research Council that a building control officer must possess to qualify for the position. 8 Section 4(3) sets out the nature of the particulars which the application envisaged in the section should contain. (aa) is to be erected in such manner or will be 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; Provided that the local authority shall grant or refuse, as the case may be, its approval in respect of any application where the architectural area of the building to which the application relates is less than 500 square metres, within a period of 30 days after receipt of the application and, where the architectural area of such building is 500 square metres or larger, within a period of 60 days after receipt of the application.’ [18] I turn to deal with each of the grounds of review. The alleged failure by the decision-maker (Holden) to consider the appellants’ objections under s 7(1)(a) and (1)(b)(ii) of the Building Standards Act [19] It was contended for the appellants that they duly lodged an objection that the proposed building would derogate from the value of neighbouring properties, including Erf 594, which both Moir and Holden were obliged to consider; that Moir failed to inform Holden of the objection by furnishing him with a copy of the document in which it was embodied or a fair and accurate summary thereof, as he was obliged, and that such failure – to place statutorily relevant information before the decision-maker – nullified Holden’s approval of the plan. The objection was purportedly embodied in two letters dated 27 October 20069 and 15 January 2007,10 respectively, and an affidavit 9 The material part of this letter reads: filed in support of the appellants’ founding papers which was deposed to on the latter date by Mr van der Spuy, a sworn valuer. Van Der Spuy’s brief affidavit, one of a number of documents attached to the founding affidavits, merely stated without proffering any supporting facts that the basis for determining Erf 594’s market value was the arm’s length price which he estimated a willing buyer would pay a willing seller in an open market situation and that the dwelling, described as ‘imposing and somewhat overbearing’, would substantially derogate from the market value of Erf 594 if permitted to stand. [20] The appellants’ submissions in this regard may, in my view, be disposed of shortly. The issue of derogation of value was not pertinently raised as a ground of review in the court below. The passing reference to the issue in the letters of objection and Van Der Spuy’s affidavit to which no weight can be accorded remained merely that, and no more, as the allegations were not adopted in the founding affidavit to found a ground of review on which the appellants relied. The respondents, who could well have raised a solid defence, were therefore not required to address these documents and rightly did not address the issue in their opposing affidavits. Notably, the ground was not mentioned at all in the comprehensive judgment of the court below which scrupulously listed those argued before it. The appellants’ counsel was also constrained to concede, albeit reluctantly, that the ground was rather canvassed in the demolition application which was not ‘The approval of these building plans with their reliance on a fictitious and unattainable finished level of the ground abutting the façade of the building would permit the retention of the currently illegal building when the height of the façade would exceed the 10m limitation (by some 2m) … [t]hat is, the unlawfully constructed three storey building achieves, and would retain, a physical height of one storey higher than the legitimate expectations of the owners of adjoining and neighbouring properties. We accordingly submit that the building in question … “is to be erected” … in such a manner that it will be … undesirable and will … derogate from the value of adjoining and neighbouring properties, and that the Council is therefore compelled to reject the building plan application by virtue of the provisions of s 7(1)(b) of the [Building Standards Act].’ 10 In this letter the relevant objection was recorded as follows: ‘Quite apart from all the aforegoing objections, our clients object to the revised plans now submitted on the basis that in terms of s 7(1)(b)(ii)(aa)(ccc) the structure will in fact derogate from the value of adjoining or neighbouring properties. In support of our clients’ aforementioned objections, we annex hereto … an affidavit deposed to on the 15th January 2007 by Mr John Phillip van der Spuy, a Sworn Valuer, which must be treated as if inserted herein’. before us and was not ‘dealt with as a separate and distinct ground’ in these proceedings. [21] The appellants therefore seek, at appeal stage, to rely on a ground that they not only failed to establish in their founding papers but was not canvassed at all in the court below. This is impermissible. As Cloete JA pointed out in Minister of Land Affairs and Agriculture v D & F Wevell Trust:11 ‘It is not proper for a party in motion proceedings to base an argument on passages in documents which have been annexed to the papers when the conclusions sought to be drawn from such passages have not been canvassed in the affidavits. The reason is manifest – the other party may well be prejudiced because evidence may have been available to it to refute the new case on the facts. The position is worse where the arguments are advanced for the first time on appeal. In motion proceedings, the affidavits constitute both the pleadings and the evidence: ... and the issues and averments in support of the parties’ cases should appear clearly therefrom. A party cannot be expected to trawl through lengthy annexures to the opponent’s affidavit and to speculate on the possible relevance of facts therein contained. Trial by ambush cannot be permitted.’ This review ground must, therefore, fail. The alleged failure by the municipality to provide the decision-maker with a recommendation from the Building Control Officer as contemplated by sections 6 and 7 of the Building Standards Act [22] The appellants’ attack in this regard was based on the ground that the memorandum Moir submitted to Holden was not a recommendation as envisaged by sections 6 and 7 of the Building Standards Act because it, inter alia, (a) did not fairly or accurately summarise their objections to the plan and was in certain respects factually incorrect, (b) did not inform Holden, even in summary, of all their objections particularly those relating to the infringement 11 2008 (2) SA 184 (SCA) para 43. See also National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) para 47; Van Zyl v Government of the Republic of South Africa 2008 (3) SA 294 (SCA) para 40; Swissborough Diamond Mines (Pty) Ltd v Government of the Republic of South Africa 1999 (2) SA 279 (T) at 324F-G. of the height restrictions and derogation of value of neighbouring properties, (c) contained insufficient information such as would enable Holden to independently make a rational decision on the application before him and (e) showed that Moir himself failed to appreciate the nature of the objections or left out information he thought had no merit thus arrogating himself a discretion he did not have. Reliance for this proposition was placed on the Walele12 decision which we were advised was delivered after the matter was argued before the court below but before judgment was given. [23] As with the derogation of value argument dealt with above, the contention that Moir’s memorandum was not a proper recommendation was not one of the review grounds in the appellants’ affidavits; it was raised for the first time in their heads of argument in this court. I am not inclined to lend it any credence for the same reason that I refused to entertain the derogation of value point. As I have said, it would be prejudicial to the municipality if the appellants were allowed to advance a new issue on appeal which was not raised in their founding affidavits and which the municipality did not have an opportunity to deal with in its opposing affidavit. But I will consider the question whether or not the municipality gave due regard to relevant considerations and the appellants’ objections as that is what was canvassed in the affidavits. [24] That Holden’s decision constituted administrative action as defined by the Promotion of Administrative Justice Act 3 of 2000 (PAJA), which is constitutionally required to be lawful, reasonable and procedurally fair,13 was not in dispute. As pointed out, the appellants’ main complaint in their papers was that the municipality’s officials did not have due regard to their objections which the municipality denied. Although there was no statutory obligation on the municipality to afford the appellants an opportunity to make representations about the impact the proposed building might have on their 12 Op cit n6. 13 Section 3(1) of PAJA requires that ‘[a]dministrative action which materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair.’ properties,14 it nevertheless commendably invited PS Booksellers’ input. Once it did so, it was enjoined to consider the appellants’ representations. A determination of whether such representations were properly considered requires an examination of the procedure followed in the approval process. [25] Undisputed evidence is that the exercise, which was undertaken by various departments within the municipality, took the following sequence. On 2 June 2006 the Land Information Property Management Department granted the necessary clearance after verifying and confirming cadastral boundary measurements, title deed information, servitude and road widening information. On 17 August 2006 Messrs Napoli (a Principal Plans Examiner) and September (the Section Head) of the municipality’s Land Use Management Department granted clearance after verifying and confirming that the plan was consistent with the Zoning Scheme Regulations, including height restrictions and building lines. These officials had sight of and considered the actual letters of objection before endorsing the plan. Structural engineering acceptance indicating that structural certification was in order had been granted by the Plans Examiner who, after assessing that the application complied with the Building Standards Act and other relevant laws, submitted it to Moir. [26] Moir then requested Harrison and her experts to address him on the merits of those objections. He subsequently requested further information from her in response to which the municipality received correspondence from Messrs Lewis (a land surveyor) and Labrum (a structural engineer). After considering these responses Moir referred the plans to Mr Henshall-Howard, the municipality’s Building Development Management Head, on 5 June 2007, and thereafter, on 17 August 2007, he passed them on to September to consider the certificate from Labrum for further verification and clearance. According to Moir, he did not only consider the objections and all the information placed before him but also inspected the property before compiling his memorandum which included a summary of the objections. It is 14 Walele at para 71. that memorandum and the approval document which made reference to the different departmental clearances that Holden relied on in granting the approval. [27] In his affidavit, Holden stated that in reaching his decision he relied on the facts, opinions and advice provided to him by Moir and the other in-house experts who scrutinised the application. He said that he considered the information furnished by Moir adequate and was satisfied that the appellants’ objections – the memorandum recorded that the objections included that the proposed building contravened the title deed conditions; that the levels furnished by the land surveyor were incorrect and that the embankment around the dwelling would become unstable – which were ‘clearly and properly conveyed’ (as confirmed by a later, thorough perusal of the original letters of objection) had no merit and that the plan met the statutory requirements. He reached this conclusion after giving particular attention to the fact that the application had been revised to comply with the title deed conditions and the Zoning Scheme; Labrum’s advice that the building was founded at undisturbed ground level and did not rely on any fill against the boundary for support; that the walls encroaching the title deed requirements could be removed and responsible landscaping would not affect the structure; the opinion of the experienced and reputable Lewis that the levels were correct and no point of the building would exceed the prescribed 10 metre height level above the finished ground level and Moir’s advice that none of the statutory requirements would be infringed. (These were the very issues at the heart of the appellants’ case which essentially concerns the height levels and building lines of the proposed building.) [28] There is, generally, nothing improper about such conduct, as a decision-maker may rely on the expertise and advice of officials within his or her institution as long as he or she is fully apprised of the interested parties’ representations – an accurate summary containing a fair synopsis of the relevant evidence and such representations will generally suffice – and does not abdicate the responsibility of independently assessing the application and making the ultimate decision.15 [29] It appears to me on this evidence that all the necessary protocols were scrupulously observed by the relevant officials and due regard paid to the appellants’ concerns in the approval process. I cannot conceive what more could have been done to render the process fair. As I see it, Holden was entitled to rely on Moir’s memorandum and the accompanying document in the manner he did. This must be so, bearing in mind that the building control officer’s recommendation is intended to be the decision-maker’s primary source of information which forms the basis of his or her opinion.16 As the court put it in the Walele decision ‘[t]he discretion conferred on the decision- maker is highly circumscribed because the decision taken is reliant upon the antecedent opinion reached ... upon a consideration of the [building control officer’s] recommendation.’17 [30] The question whether the action complained of causes prejudice is important in deciding whether or not to grant the relief sought. None seems to have been occasioned here by reason of the procedure followed. Bearing in mind that what constitutes a fair administrative procedure depends on the circumstances of each case,18 I am unable to find that such procedure is so flawed as to vitiate the decision to approve the plan. The alleged unlawfulness of the approval of the plan as a rider plan [31] The appellants persisted with their argument in the court below that the Building Standards Act makes no provision for the concept of a rider plan and that the municipality therefore impermissibly approved the plan as a rider plan 15 Earthlife Africa (Cape Town) v Director-General: Department of Environmental Affairs and Tourism 2005 (3) SA 156 (C) para 76; Minister of Environmental Affairs and Tourism v Scenematic Fourteen (Pty) Ltd 2005 (6) SA 182 (SCA) para 20; Jeffs v New Zealand Dairy Production and Marketing Board [1996] 3 All ER 863 (PC) at 870F-G; Walele para 69. 16 Walele paras 68 and 70. 17 At para 67. 18 See s 3(2)(a) of PAJA; Premier, Province of Mpumalanga v Executive Committee, Association of State-Aided Schools, Eastern Transvaal 1999 (2) SA 91 (CC) para 39. to a previously approved plan. They contended further that the plan was in any event approved as an amended version of and a rider to the defunct September 2005 plan, a fact which alone rendered its approval incompetent. [32] I deal first with the latter submission. The plan expressly states on its face that it was approved as a rider to the original plan. The Moir memorandum referred to it as such as did the parties themselves in the founding and opposing affidavits. As pointed out by the appellants in their replying papers, Holden’s approval document referred to it as a rider to the September 2005 plan, perhaps because the latter plan was the most recently approved plan and still subsisted when the plan was approved on 2 June 2006. But, whatever the reason for this obvious error was, I do not think that it can detract from the patent fact that the municipality approved the plan as a rider to the original plan. [33] Concerning the first contention, it is so that the Building Standards Act makes no mention of a rider plan. However, s 17(1) empowers the Minister to make regulations regarding, inter alia, ‘the preparation, submission and approval of plans and specifications of buildings, including the approval of amendments or alterations to plans and specifications of buildings during the erection thereof’. In consequence, Regulation A25(5) criminalizes deviation from an approved plan building ‘except where such deviation has been approved’. Regulation A25(6) then empowers a local authority to stop the erection of a building where there is an unauthorized deviation from approved plans during the course of construction, except where it is found that the deviation is necessary, in which case construction may be allowed to continue subject to the submission of an amended plan for approval. [34] These provisions undoubtedly contemplate a deviation from an approved plan and the submission and approval of an amended plan, drawing or particulars to cater for such a deviation where necessary. At a practical level, according to Moir’s uncontested allegations, the municipality routinely receives and processes applications for the approval of additional or supplementary plans (commonly referred to as rider plans) amending or qualifying a previously approved plan whenever a deviation from such approved plan becomes necessary during the construction of a building. [35] I am inclined to agree with the court below that the Legislature would hardly have vested the Minister with the authority to make provisions of this nature if local authorities did not have the implied power to approve amendments or alterations to approved plans in terms of the governing provisions contained in s 7 of the Building Standards Act. It seems to me that to give effect to the Legislature’s clear intention, the plans, specifications and documents required to accompany an application in respect of the erection of a building by s 4 of this Act (the wording appears to envisage the possibility of a plurality of plans per application) must necessarily include amended or rider plans. In the circumstances, I find that the plan was a rider to the original plan and that its approval was not ultra vires the provisions of the Building Standards Act. The alleged contravention of title deed conditions [36] As indicated above, the appellants’ other complaint is that the plan impermissibly allows retaining walls which encroach on the 3,15 metre setback to the street line and form a boundary to the property in contravention of clause D(d) of the applicable restrictive title deed conditions. Although this issue does not appear to have been pursued with any vigour or at all in argument in the court below the appellants insist that the infringing walls remain in the original plan and are depicted on the plan. According to Moir, the walls along the northern and western boundaries of the property no longer serve a retaining purpose but mark the boundary walls of the property. Only the wall abutting Blinkwater Road serves a retaining function. But, he says that this wall supports only a municipal public footway incidentally and this, the municipality contends, does not infringe the relevant requirements but places it in line with clause D(g) of the title deed provisions imposing favourable conditions in the municipality’s favour against property owners.19 [37] It must be considered that the main objective of the title deed conditions, which were introduced in the absence of comprehensive town planning legislation, was to regulate development and usage of land between developers and the purchasers and owners of individual erven and their successors-in-title. The purpose of this particular setback restriction must obviously have been to prevent property owners from building too close to the street lines. That does not seem to have happened here. No building or structure encroaches on the 3,15m setback as the wall in issue does not retain any ground or structure on the property itself. It merely performs a boundary function as it encloses an open space,20 which is permitted by the restriction, and benefits the municipality on a portion of the latter’s land external to the property. It seems inconceivable that this was the contemplated target of the restriction and I can find no transgression of the provisions of clause D(d). The alleged contravention of s 98 of the Zoning Scheme in respect of the 10 metre height restriction [38] In support of this ground, the appellants contended that Harrison artificially raised the ground level on the property to evade the height restriction by using fictitious ground levels in the plan as evidenced by the differences between the levels shown in the survey and the architect’s drawings in the plan. [39] Section 98 of the Zoning Scheme provides: ‘Camps Bay and Bakoven 19 Clause D(g) reads: ‘As being in favour of the Council of the Municipality of Cape Town:- That the owner of this erf shall be obliged to receive material to give a proper slope to the bank, if this erf is below the level of the adjoining erf, and if this erf is above the level of the adjoining erf, he shall [in] like manner permit a safe slope to the bank, unless in either case he shall elect to build retaining walls to the satisfaction of the City Engineer and within a period to be determined by the Municipality of Cape Town.’ 20 BEF (Pty) Ltd v Cape Town Municipality 1983 (2) SA 387 (C) at 396D-G. (1) No building within the area of Camps Bay and Bakoven bounded by the municipal boundary to the South and Kloof Road to the North shall exceed three storeys in height. (2) No point on the façade of any building within such area shall be more than 10m above the level of the ground abutting such façade immediately below such point. (3) For the purpose of subsection (2) “façade’ means a main containing wall of a building, other than a wall of an internal courtyard.’ [40] Lewis deposed to an affidavit recording his findings. He prepared a survey map in September 2004 on which he subsequently superimposed the plan. In his view, the heights of the contour lines in the plan were accurate as they accorded with his earlier survey and corresponded with those reflected in the original plan. These findings were supported by another land surveyor, Mr Abrahamse, who undertook an independent survey at Harrison’s instance. Abrahamse confirmed that a survey of the finished ground level surrounding and immediately adjoining the dwelling revealed that no point of the façade of the dwelling was more than 10 metres above the level of the ground. Another expert, Mr Lowden, a civil engineer specializing in structural engineering engaged by the municipality, found amongst other things that ‘the foundations of the dwelling are founded at an appropriate level and that the building structure is not dependent on the construction of any retaining walls to provide stability to the foundations’. [41] The appellants’ response to these experts’ allegations in their replying papers was that their objection was ‘never that the height from the top to the bottom of the parapet [of the dwelling] to the ground immediately abutting the façade as currently shown on the plan exceeds 10 metres’ but that ‘the true height of the façade, absent the illegal structures and the fill retained thereby, will and does exceed 10 metres’. [42] It is clear from these allegations that the appellants accept that the dwelling reflected in the plan falls within the permissible height restriction and that their complaint concerns rather the dwelling that has actually been constructed. In that case the appellants cannot challenge the approval of the plan on the basis they have advanced namely; that the municipality approved a plan that permits a dwelling that infringes the 10 metre height restriction imposed by s 98 of the Zoning Scheme. It did not. That, I think, puts paid to this review ground. [43] It is not necessary in the light of this finding to determine whether or not the height of the actual dwelling is compliant, an exercise I suspect may prove unwinnable for the appellants on the available evidence. The Building Standards Act does provide for a situation where a building has been built contrary to approved plans but that enquiry (which is probably the subject of the pending demolition application) falls outside the purview of these proceedings. The alleged contravention of s 47 of the Zoning Scheme in respect of setback requirements [44] The court below declined to consider this ground of review on the grounds that it was raised too late in the proceedings and that the required interpretation of s 47 was highly controversial as it involved the measurement of the average depth of the site and the scrutiny of the relationship, if any, between the relevant regulation and the title deed conditions; issues which, in its view, had not been properly canvassed in the papers. [45] I am of the respectful view that the court’s refusal to entertain the matter was wrong. This, however, is an appeal against the exercise of another court’s discretion in the strict or narrow sense which involves a choice between permissible options. The approach to be followed by this court, therefore, is not to consider whether the decision of the court was correct or not and substitute its decision simply because it would have reached a different conclusion: it may interfere only where it is shown that the discretion was not exercised judicially or was exercised based on a wrong appreciation of principles of law or a misdirection on the facts or reached a decision that could not reasonably have been made on the relevant facts and principles.21 [46] In my view, the basis on which the court’s decision was premised indicates a misapprehension of both the relevant principles and the facts and that the court may even have misconceived the very nature of the enquiry. First, the matter was raised purely as a law point. The dispute raised was not fact-based (the relevant boundaries of the site, setbacks and measurements represented on the plans which seem to have caused the court below some anxiety were common cause) but concerned only the interpretation and application of statutory provisions. It did not alter the legal basis upon which the appellants relied or the ambit of the relief sought. Furthermore, the appellants alleged no prejudice – the foremost consideration in a court’s exercise of its discretion as to whether or not to entertain a belated point22 – and were in fact able to deal with the issues fully in their supplementary papers and argument as indicated by the court itself in its judgment. I think that these reasons alone were sufficient to persuade the court below to entertain the review ground. This court is thus at large to interfere. [47] Section 47 of the Zoning Scheme prescribes specific building lines for buildings and reads: ‘(1) Except as provided in subsection (2), no building which is a Dwelling House, Double Dwelling House, Group of Dwelling Houses or an Outbuilding to any of the foregoing shall be erected nearer than 4,5m to any street boundary of the site of such building provided that: (a) where a lesser building line is prescribed for the street concerned in Schedule 4 of Appendix A, the distance prescribed in terms of Schedule 4 shall apply; (b) the above prohibition shall not apply to the boundary between a site and a street or portion thereof adjacent to such site which street or portion cannot in the opinion of the Council be constructed or is in the form of a service lane, pedestrian way or steps, and such boundary shall, for the purpose of Chapter VII, be deemed to be a common boundary. 21 Knox D’Arcy Ltd v Jamieson 1996 (4) SA 348 (A) at 361H; Naylor v Jansen 2007 (1) SA 16 (SCA) para14; Giddey NO v JC Barnard and Partners 2007 (5) SA 525 (CC) para 19. 22 Anglo Operations Ltd v Sandhurst Estates (Pty) Ltd 2007 (2) SA 363 (SCA) para 32. (2) Where the average depth of the site of any building referred to in subsection (1) measured at right angles to a street boundary of such site does not exceed 20m, such building may be erected nearer than 4,5m but not nearer than 3m to the street boundary concerned. (3) Where the boundaries of a site are so irregular that doubt or uncertainty exists as to the correct value of the average depth of the site, the Council shall define such average depth in accordance with the intent of this section.’ [48] The plan reflects that the dwelling is set back 3,233 metres from the north eastern street boundary. It therefore infringes the provisions of s 47(1) unless covered by the exceptions created by subsections (2) and (3). The appellants contend that the municipality was obliged to refuse plan approval in the face of this patent contravention of the 4,5 metre setback restriction. [49] Harrison contended that the average depth of the site is less than 20 metres with the result that the exception in s 47(2) applies. In addition, it was argued on her behalf that even if there was an illegality the appellants had unduly delayed raising their challenge which is in any event improper as the original plan and the source of the contravention is not impeached. [50] The municipality went further and argued that the boundaries of the site are so irregular that doubt or uncertainty exists as to the correct value of the average depth of the site, which entitles the municipality to then define such average depth, as provided for in s 47(3). It is difficult to see how the boundaries of the site can be said to be irregular as contemplated by that section when the boundaries are made up of a series of straight lines. But that apart there is no suggestion in the papers that the municipality was pertinently aware at the time it approved the plan that the building encroached over the building line, least of all that it applied the provisions of that section when determining whether to approve the plan. Its reliance upon that provision thus seems to me to be an afterthought. [51] The manner in which the ‘average depth’ of a site is to be calculated for purposes of s 47(2) is in dispute but, on the view that I take of the matter, it is not necessary to resolve that dispute and I have assumed for present purposes that the building indeed encroaches over the building line on its north eastern boundary by 1,267 metres as alleged by the appellants. The question that then arises is whether the appellants are entitled to have the plan set aside on that ground. [52] The infringement that is now complained of appeared on the original plan that was approved in February 2005. Yet the challenge was raised for the first time by the appellants more than three years later in the replying affidavits that were filed in May 2008. The appellants had by then dragged the respondents through a whole gamut of internal processes and litigation. Significantly, the appellants have from inception been aided by a battery of experts. The appellants’ explanation for failing to raise this challenge until the last moment is that they became aware of the issue only in the course of preparing their replying affidavits when it was drawn to their attention by their town planning advisor who had previously relied on handwritten notes and visual memory as he was prevented from copying the submitted plan. I think it is quite clear from that explanation that the real concern of the appellants was unrelated to the distance that the building was to be constructed from the street boundary. [53] In terms of s 7(1) of PAJA: ‘Any proceedings for judicial review in terms of section 6(1) must be instituted without unreasonable delay and not later than 180 days after the date – (a) . . . on which any proceedings instituted in terms of internal remedies as contemplated in subsection (2)(a) have been concluded; or (b) where no such remedies exist, on which the person concerned was informed of the administrative action, became aware of the action and the reasons for it or might reasonably have been expected to have become aware of the action and the reasons.’ [54] The appellants ‘might reasonably have been expected to have become aware’ of the infringement when they first inspected the original plan and proceedings for review on that ground ought ordinarily have been commenced within 180 days of that date. Section 9(2) however allows the extension of these time frames where ‘the interests of justice so require’. And the question whether the interests of justice require the grant of such extension depends on the facts and circumstances of each case: the party seeking it must furnish a full and reasonable explanation for the delay which covers the entire duration thereof and relevant factors include the nature of the relief sought, the extent and cause of the delay, its effect on the administration of justice and other litigants, the importance of the issue to be raised in the intended proceedings and the prospects of success.23 [55] Here, it seems to me that had the appellants indeed been concerned about the distance that the building was to be constructed from the street, there is simply no acceptable explanation for why the infringement was not detected by their advisers at the outset. In my view, this lapse which as I have indicated shows that this infraction was not their primary concern, does not favour the appellants’ application on this ground. [56] But there is further reason why the challenge should not be entertained at this late stage. As pointed out by this court in Oudekraal Estates (Pty) Ltd v City of Cape Town:24 ‘[A] court that is asked to set aside an invalid administrative act in proceedings for judicial review has a discretion whether to grant or to withhold the remedy. It is that discretion that accords to judicial review its essential and pivotal role in administrative law, for it constitutes the indispensable moderating tool for avoiding or minimising injustice when legality and certainty collide.’ [57] Even before the advent of PAJA it was recognised that there may be circumstances in which delay might justify the refusal of relief, thereby effectively giving legal effect to an otherwise unlawful act. In Harnaker v 23 Brummer v Gorfil Brothers Investments (Pty) Ltd 2000 (2) SA 837 (CC) para 3; Van Wyk v Unitas Hospital 2008 (2) SA 472 (CC) paras 20 and 22. 24 2004 (6) SA 222 (SCA) para 36. Minister of the Interior,25 which concerned a challenge to a legislative act, the court said the following:26 ‘[I]f the affected members of the public, having locus standi to apply to Court for an order declaring the legislative act null and void, delay unreasonably in taking such action and this causes prejudice, I do not see why they should not all be precluded from obtaining relief. . . . I can see no inequity arising from the application of the delay rule in this way. Accordingly . . . unreasonable delay by the plaintiff in instituting action, coupled with resultant prejudice to defendant, is a valid defence, or objection, to the action.’ [58] In Wolgroeiers Afslaers v Munisipaliteit van Kaapstad27 this Court, after an extensive discussion of Harnaker and other cases, set out the parameters of a court’s discretion in relation to delay:28 ‘What has indeed been prescribed by our Courts is that proceedings should be instituted within a reasonable time and, as I have already mentioned, the Court is at liberty, depending on the circumstances and in the exercise of its discretion, to condone unreasonable delay in appropriate cases. l cannot possibly accept that in the formulation of the requirement that proceedings should be instituted within a reasonable time, it was intended to fetter the Court’s discretion to such an extent that even where a litigant disregards the Court’s directive by unnecessary and excessive delay in bringing proceedings, the Court does not have the right to refuse the application merely because it is not proved or cannot be proved that the respondent was not materially prejudiced, even though there were, on a review of all the circumstances, other well- founded reasons for the exercise of its discretion against the applicant. I accept that prejudice to the respondent and the degree thereof are relevant factors in the consideration of whether unreasonable delay ought to be overlooked, and that they can sometimes be the decisive factor, especially in cases of comparatively trivial delays . . . Whilst, as I have already indicated, the question whether there was an unreasonable delay requires a factual finding, the answer to the question whether an unreasonable delay ought to be overlooked rests in the discretion of the Court, exercised by taking into consideration all the relevant circumstances and factors.’ (my emphasis.) 25 1965 (1) SA 372 (C); see also Kalil and another NNO v Minister of Interior 1962 (4) SA 755 (T) at 758A-759D; Hassan & Co v Potchefstroom Municipality 1928 TPD 827; Oudekraal Estates (Pty) Ltd v City of Cape Town 2004 (6) SA 222 (SCA). 26 At 381D-G. 27 1978 (1) SA 13 (A) at 42A-D. 28 Original Afrikaans text translated into English. [59] In Oudekraal,29 this court, dealing with the necessity for a review to be properly brought by a party seeking to set aside an alleged invalid administrative act, referred to the Wolgroeiers dictum set out in the preceding paragraph and remarked as follows: ‘No doubt a court that might be called upon to exercise its discretion will take account of the long period that has elapsed since the approval was granted, but the lapse of time in itself will not necessarily be decisive: Much will depend upon a balancing of all the relevant circumstances, including the need for finality, but also the consequences for the public at large and indeed for future generations, of allowing the invalid decision to stand. In weighing the question whether the lapse of time should preclude a court from setting aside the invalid administrative act in question an important – perhaps even decisive – consideration is the extent to which the appellant or third parties might have acted in reliance upon it.’ [60] A review application to the Cape High Court followed on this court’s decision in Oudekraal, which once again resulted in an appeal to this court. In the second appeal – Oudekraal Estates (Pty) Ltd v City of Cape Town30 (I shall refer to the second appeal as Oudekraal 2) – this court, in applying Wolgroeiers,31 had regard to the following dictum from that case:32 ‘If it is alleged that an applicant did not institute the proceedings within a reasonable time, the Court must decide (a) whether the proceedings were in fact only launched after a reasonable time had elapsed and (b) if so, whether the unreasonable delay should be condoned. Again, as it appears to me, with reference to (b), the Court exercises a judicial discretion while taking into consideration all the relevant circumstances.’ [61] In Setsokosane Busdiens (Edms) Bpk v Voorsitter, Nasionale Vervoerkommissie,33 with reference to the aforesaid passage from Wolgroeiers, the following was stated: 29 Above n24, para 46. 30 2010 (1) SA 333 (SCA). 31 At 39C-D; original Afrikaans text translated into English. 32 Para 50. 33 1986 (2) SA 57 (A) at 86D–E. ‘The investigation, as far as (a) is concerned, has nothing to do with the Court’s discretion; it is simply an examination of the facts of the case in order to determine whether the period which has elapsed, in the light of all the relevant circumstances, was reasonable or unreasonable. (Wolgroeiers Afslaers at 42C-D; Schoultz v Voorsitter, Personeel-Advieskomitee van die Munisipale Raad van George, en ’n ander 1983 (4) SA 689 (C) at 697-8.) Naturally, the finding which is made in that regard implies that the Court makes a value judgment in the sense of the Court’s view of the reasonableness of the period which has elapsed in the circumstances of the case. Equating such a value judgment with a discretion is, however, legally and logically indefensible.’34 [62] In the present case the lapse of three years before the appellants acted was undoubtedly inordinate, particularly if regard is had to the promptitude with which people might ordinarily be expected to act and build in accordance with approved building plans. Proceeding to the next step of the enquiry, namely whether the delay should nevertheless be condoned, it is necessary to step back and consider the totality of circumstances. There is no suggestion that Harrison consciously flouted the building line restriction. Acting in reliance upon the approval of the plan she has built a substantial structure. Besides the substantial cost that would be necessitated by adapting the building, Harrison has sustained considerable cost in defending litigation that was quite unrelated to the encroachment over the building line. Moreover, the infraction is relatively minimal, so much so that it went unnoticed even by the array of experts employed by the appellants until the litigation was well advanced. The local authority supports Harrison and there is not the slightest prospect that the infraction will impact in any meaningful way on the aesthetics or future development of Camps Bay. Throughout this saga Harrison has attempted to the best of her ability to deal with the appellants’ concerns. They, on the other hand, have been intractable. For all these reasons I conclude that the delay in raising this issue should not be condoned and the application to review and set aside the plans on that ground should not succeed. 34 Original Afrikaans text translated into English; See also Oudekraal 2 at para 51. [63] For these reasons the appeal should fail. It is accordingly dismissed with costs including the costs of two counsel. ______________________ MML MAYA Judge of Appeal APPEARANCES: APPELLANTS: DF Irish SC with IC Bremridge Instructed by Abe Swersky & Associates, Cape Town Lovius-Block, Bloemfontein FIRST RESPONDENT: HP Viljoen SC with JC Marais Instructed by Kritzinger & Co, Cape Town Matsepes Inc, Bloemfontein SECOND RESPONDENT: G Budlender SC with K Pillay Instructed by Abraham & Gross, Cape Town EG Cooper & Majiedt Inc, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 17 February 2010 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal THE CAMPS BAY RATEPAYERS’ AND RESIDENTS’ ASSOCIATION and ANOTHER versus GERDA YVONNE ADA HARRISON and ANOTHER The Supreme Court of Appeal today dismissed an appeal against the decision of the Cape High Court refusing an application for the review and setting aside of the Cape Municipality’s approval of building plans for a proposed development of residential property situate in Camps Bay. The SCA found that the plans generally complied with the provisions of section 7 of the National Building Regulations and Building Standards Act 103 of 1977 and the relevant Zoning Scheme Regulations except in respect of setback requirements prescribed in section 47 of the Zoning Scheme which prohibits the erection of a building nearer than 4,5 metres to the street boundary. The SCA however held that the appellants’ failure to timeously object to the encroachment, which it found trivial as the appellants themselves and their experts had overlooked it for years and would not significantly impact on the aesthetics and future development of Camps Bay, precluded them from relying on it in their review application. In reaching this conclusion, the SCA took into account, amongst other factors, the length of the appellants’ delay, a three-year period, in raising the objection and the prejudice that the respondent, Mrs Harrison, who, in apparent oblivion to the encroachment, had built a substantial dwelling in reliance upon the approval of the plan and sustained considerable legal costs defending proceedings unrelated to the encroachment, would suffer.

2987

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20738/2014 Reportable In the matter between SIMON MODIGA APPELLANT and THE STATE RESPONDENT Neutral citation: Modiga v The State (20738/14) [2015] ZASCA 94 (01 June 2015) Coram: Bosielo and Saldulker JJA and Van der Merwe AJA Heard: 13 May 2015 Delivered: 01 June 2015 Summary: Criminal appeal against convictions and sentences – appellant convicted on multiple counts – whether the appellant was a member of the gang of robbers – evidence by a single witness – circumstantial evidence – adequacy of the evidence. ___________________________________________________________ ORDER ___________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Claasen, Pretorius and Makgoka JJ sitting as a court of appeal): The appeal succeeds partially as follows: 1 The appeal against the convictions in respect of counts 1, 2, 6 and 7 is dismissed. The convictions and the sentences imposed are confirmed. 2 The appeal against the convictions in respect of counts 3 and 4 is upheld. The convictions and the sentences in respect of counts 3 and 4 are set aside. ___________________________________________________________ JUDGMENT ___________________________________________________________ Bosielo JA (Saldulker JA and Van der Merwe AJA concurring): [1] At approximately 12h30 on 17 December 2007, a cash-in-transit heist took place on the Visgat Road near Vereeniging. A vehicle belonging to Fidelity Cash Management Services (Fidelity Guards) was on its way to its depot in Vanderbijlpark having collected money from Rand Water Board when a group of men waylaid and forced it out of the road. A number of men descended onto it and snatched the money containers. Two stolen vehicles, a Mercedes-Benz and a Mazda Drifter were used in the robbery. Reacting to a radio report, Sergeant Robert Henry Deere (Deere) who was doing patrol duties in the area drove to the scene. Whilst en route to the crime scene he observed a Mazda Drifter and a Toyota Cressida driving away from the Fidelity Guards‟ motor vehicle which was parked alongside the road. As these vehicles passed him, some passengers at the back of the Mazda Drifter shot at him. He made a U-turn and chased them. A wild chase concomitant with some shooting ensued. Later that day, four males including the appellant were arrested by police officers in an area called Drie Rieviere. [2] Subsequently, all the five men were charged in the Vereeniging Regional Court, with multiple offences which included two counts of robbery with aggravating circumstances in that firearms were used; two counts of theft of motor vehicles (the Mercedes-Benz and the Mazda Drifter); attempted murder of Deere; unlawful possession of a machine- gun (AK47); unlawful possession of ammunition for a machine-gun; unlawful possession of firearms and unlawful possession of ammunition. The appellant was convicted on two counts of robbery, two counts of a contravention of s 37(1) of the General Law Amendment Act 62 of 1955 (involving the Mercedes Benz and Mazda Drifter), unlawful possession of a machine-gun (AK47) and unlawful possession of ammunition for a machine-gun. He was sentenced to a cumulative sentence of imprisonment for 45 years. [3] Aggrieved by his convictions and sentence, the appellant appealed to the North Gauteng High Court, Pretoria. His appeal succeeded partially in that, although his convictions were confirmed, his effective sentence was reduced to imprisonment for 22 years. The court a quo having granted him partial leave to appeal against counts of theft of motor vehicles, this appeal is with the leave of this Court. [4] I interpose to state that a series of formal admissions were made in terms of s 220 of the Criminal Procedure Act 51 of 1977 (CPA) in terms whereof all the averments regarding the robberies, theft of motor vehicles, possession of firearms and ammunition were admitted. The only issue placed in dispute was the involvement of the appellant in these offences. As a result, this appeal falls to be decided on a narrow compass namely the identity of the appellant as a member of the gang of robbers which robbed the Fidelity Guards that day. [5] Although the respondent called a number of witnesses, who included police officers, a security officer and the owners of the stolen vehicles and, importantly, the owner of the house where the appellant was eventually arrested by the police, only two witnesses implicated the appellant. These were Deere, the police officer who arrived first at the crime scene and Mr Saul Nxuma (Nxuma), the owner of the house where the appellant was arrested. [6] I interpose to state that the trial court found the evidence of Deere unreliable as he had contradicted himself on material aspects of the case and therefore his evidence was rejected. It suffices to state that this finding is fully borne out by the record. As a result, I cannot quibble with it. Self-evidently there is no need to refer to his evidence. This resulted in Nxuma being a single witness regarding the appellant‟s involvement in the crimes. Undoubtedly, as the evidence of Nxuma was pivotal to the conviction of the appellant, it called for a cautious approach and serious consideration. [7] The general tenor of Nxuma‟s evidence is as follows: that he is the owner of house number 22 Wallnut Street, Drie Riviere; on 17 December 2007, he was at his home with his four year old boy; whilst relaxing in his bedroom, he heard a commotion and screeching of tyres of a vehicle outside his home in the street; instinctively he peeped through his window to see what was happening; he saw a cream white bakkie with a green stripe on the side at the intersection; there were some males on the back of the bakkie who had fire-arms; the bakkie then made a U-turn and he lost sight of it. On the evidence as a whole this was the Mazda Drifter. [8] Thereafter he heard footsteps inside his house; he moved down to the ground floor from the upper floor to see what was happening; he was met by an unknown male who had a plastic bag and a long fire-arm in his hand; this unknown man pointed the firearm at him and bellowed „hamba-hamba‟ (walk, walk); shortly thereafter a second unknown male emerged into the passage and bumped against the two of them; Nxuma lost his balance and fell; he then stood up and fled to the outside through his sitting room door where he found a number of police officers. [9] He told the police officers that he had left his son inside the house and that there were unknown people inside. He then re-entered his house with one policeman to fetch his four year old son; they found the appellant on the kitchen floor holding the child; he took the child from the appellant and went outside with him; the police then arrested and hand-cuffed the appellant; they then took him to their vehicle. [10] It is clear from the record the main purpose of Nxuma‟s cross- examination by the appellant‟s counsel was to discredit him by showing, contrary to his denial, that he and the appellant were acquaintances before this incident, and further that Nxuma was part of the gang of robbers. However, Nxuma persistently denied all suggestions by the appellant‟s counsel during cross-examination that he knew the appellant and that they were acquaintances; he also denied that the appellant had visited him on the morning of the robbery to fetch R3 000 to pay for motor vehicle parts which he had sold to him; he furthermore denied suggestions by the appellant that he was involved in the robbery. [11] The appellant testified in his own defence. Although he admitted that he was arrested by the police inside Nxuma‟s house, he denied that he was part of the gang of robbers; he explained that he came to Nxuma‟s home at his request. His version was that he was a friend of Nxuma as they were both taxi drivers and from time to time they sold motor vehicle parts to each other. They had known each other for approximately 10 months before this date. On this day, Nxuma came to his home in Pimville, Soweto to fetch certain motor vehicle parts. As Nxuma did not have money to pay him, he requested him to accompany him to his home to fetch the money as apparently one of Nxuma‟s drivers would bring him money during the day. He explained further that he had been to Nxuma‟s home before and even went to the house of Spokes, the younger brother to Nxuma. [12] In an attempt to show that he knew Nxuma and that they were acquaintances, he recounted intimate knowledge to the effect that he knew his brother called Spokes, who was also a taxi driver as well as his son Jomo, who drove a taxi for Spokes, and Nkosana. He also testified that he knew that Nxuma had had marital problems with his wife whom he later shot and further that after this tragic incident, he tried to commit suicide. [13] As indicated above, when confronted with this information during cross-examination, Nxuma steadfastly denied knowing the appellant. On being pressed by the appellant‟s counsel, he stated speculatively that possibly the appellant learnt all his personal information from his younger brother Spokes with whom he did not have a good relationship. [14] In contradistinction, the appellant testified that Nxuma was part of the gang of robbers; that he saw him in the house talking to two men, one of whom had a bag and, further that when he went down from the upper floor, he saw Nxuma in possession of that bag and, that he appeared nervous. [15] As already indicated the appellant admitted that he was arrested inside Nxuma‟s home by the police and that money was found in plastic bags bearing the name Fidelity Guards inside a larger plastic bag and further that a long firearm was also found. According to the evidence this firearm was an AK 47. [16] It is clear from the record that the appellant had serious difficulties to explain why, if he suspected that Nxuma was part of the gang of robbers he did not tell that to the police when they arrested him instead of arresting Nxuma. His response is that he did not want to get Nxuma into trouble. It also came to light during cross-examination that even after he had voluntarily elected to make a warning statement, he still failed to disclose this crucial information, as well as the fact that he had seen Nxuma talking to the robbers and further that Nxuma had been holding the bag which contained money belonging to Fidelity Guards. His response was that he was advised by his lawyer, Mr Pienaar not to disclose too many details. Furthermore, the appellant could not give any reasonable explanation why when Nxuma denied that they were acquaintances at his home during the arrest, he did not controvert that. [17] In evaluating all the evidence, the trial court made positive findings regarding Nxuma‟s credibility and the reliability of his evidence. Conversely, it found that the appellant‟s evidence was riddled with material contradictions and improbabilities. In particular, the trial court found the following to be inherently improbable; that faced with the grim reality of an arrest on such a serious charge, the appellant failed to tell the police that Nxuma was the person involved with the robbers; he failed to disclose this to the police at the critical moment when he was arrested for a crime which he did not commit; that he did not tell the police because he did not want to get Nxuma into trouble, that even when the police told him that Nxuma denied that he knew him, he did not tell them how he knew him; that he only disclosed this crucial information much later during his bail application; even in his warning statement which he admitted that he made freely and voluntarily, he never informed the police officer that Nxuma was involved in the robbery and that he saw him in possession of the bag wherein money belonging to Fidelity Guards was found; that he did this because his lawyer, Mr Pienaar had advised him not to say a lot in his statement. [18] Before us, the appellant‟s counsel unleashed a three-pronged attack against the judgment of the trial court. Firstly, he submitted that the trial court erred in relying on the evidence of Nxuma, who was a single witness, without applying the cautionary rule. It was contended that Nxuma did not pass the litmus test for a single witness as laid down in R v Mokoena 1956 (3) SA 81 (A) as he contradicted himself on material aspects of the case. However the appellant‟s counsel conceded, correctly in my view, that the Mokoena judgement has been qualified by S v Sauls and Others 1981 (3) SA 172 (A). Secondly, it was contended that Nxuma‟s demeanour left much to be desired as his eyes were shifty whilst testifying; that he was long-winded and evasive with his responses. [19] Thirdly, relying on S v Texiera 1980 (3) SA 755 (A) the appellant‟s counsel criticised the state for having failed to call essential witnesses namely Nxuma‟s wife, his brother Spokes or his son, Jomo to corroborate Nxuma. He urged us to draw an adverse inference against the respondent for such inexplicable failure. In conclusion, the appellant‟s counsel submitted that, absent any rebutting evidence from the state, the appellant‟s version should have been accepted as being reasonably possibly true and that he should have been acquitted [20] Regarding counts 3 and 4, the appellant‟s counsel submitted that the trial court erred in finding the appellant guilty for being in unlawful possession of stolen property without reasonable cause in terms of s 37 of the General Law Amendment Act 62 of 1955 as there was no evidence that the appellant was found in possession of the two vehicles involved in the robbery. It was contended that the admissions made in terms of s 220 of the CPA to the effect that the two vehicles which were used in the robbery where the appellant was involved were stolen was not sufficient to justify the conclusion that he possessed them. In short, the appellant‟s counsel submitted that the legal elements of detentio and animus possidendi were not proved. [21] On the other hand, concerning the two counts of robbery, the main submission by the respondent‟s counsel was that, as no misdirection had been shown on the part of the trial court, this Court was precluded by the authority of R v Dhlumayo & another 1948 (2) SA 677 (A) from interfering with its factual and credibility findings. It was contended further that, although Nxuma was a single witness, he gave his evidence in a clear, logical and satisfactory manner. It was submitted further that the presence of the Mazda Drifter in Nxuma‟s garage, the bag containing money identified as belonging to Fidelity Guards as well as the AK47 created overwhelming circumstantial evidence which justified, as being the only reasonable inference against the appellant that he was part of the gang of robbers. The respondent‟s counsel concluded that the appellant‟s version was so interspersed with serious contradictions and inherent improbabilities that it could not be reasonably possibly true. [22] Regarding the contravention of s 37(1) of Act 62 of 1955, the respondent‟s counsel contended that the s 220 admissions by the appellant to the effect that the two motor vehicles in issue were stolen and further that they were used in the robbery where the appellant was involved, constitute sufficient proof of possession by the appellant. He contended further that it makes little or no difference that, having rejected the evidence of Deere, there is no evidence that the appellant was the driver of any of the two vehicles. It is sufficient that he was part of the robbery where the two vehicles were used to facilitate the robbery, so the contention went. [23] It is trite that as a court of appeal we have to show deference to the factual and credibility findings made by the trial court. This is so as the trial court has had the advantage which an appeal court never has of hearing and observing the witnesses as they testify and under cross- examination. As it was stated in R v Dhlumayo (supra) at 705 „the trial court is steeped in the atmosphere of the trial‟. A court of appeal may only interfere where it is satisfied that the trial court misdirected itself or where it is convinced that the trial court was wrong. R v Dhlumayo (supra) at 705-706; S v Artman & another 1968 (3) SA 339 (A) at 341E- H; S v Hadebe & others 1998 (1) SACR 422; [1997] ZASCA 86 (SCA) at 426a-f. [24] Confronted with a similar argument in Hadebe (supra) this Court enunciated the correct approach to resolving such a problem as follows at 426e-I, with reference to Moshesi & others v R (1980-1984) LAC 57 at 59F-H: „The question for determination is whether, in the light of all the evidence adduced at the trial, the guilt of the Appellants was established beyond reasonable doubt. The breaking down of a body of evidence into its component parts is obviously a useful aid to a proper understanding and evaluation of it. But, in doing so, one must guard against a tendency to focus too intently upon the separate and individual parts of what is, after all, a mosaic of proof. Doubts about one aspect of the evidence led in a trial may arise when that aspect is viewed in isolation. Those doubts may be set at rest when it is evaluated again together with all the other available evidence. That is not to say that a broad and indulgent approach is appropriate when evaluating evidence. Far from it. There is no substitute for a detailed and critical examination of each and every component in a body of evidence. But, once that has been done, it is necessary to step back a pace and consider the mosaic as a whole. If that is not done, one may fail to see the wood for the trees.‟ It should be clear from the above cases that the powers of this Court, sitting as a court of appeal are clearly circumscribed. It does not have carte blanche to interfere with the factual and credibility findings properly made by the trial court. [25] It is indeed correct, as the appellant‟s counsel pointed out that there are aspects of the state‟s case which are unsatisfactory. It is furthermore correct that there were instances where Nxuma was argumentative, gave long explanations and sometimes declined to answer questions during cross examination. I agree that he can be criticised for this. However, the trial court was alive to these aspects and dealt with them in its judgment. Having had the benefit of hearing and observing Nxuma testify which we do not have as a court of appeal, the trial court found that Nxuma‟s demeanour did not detract from his credibility or the truthfulness and cogency of his testimony. It found such instances to be peripheral to the real issue. [26] I pause to observe that the record shows clearly that Nxuma was subjected to a lengthy, robust and at times hostile cross-examination from the appellant‟s counsel. It is clear from the record that the only time when Nxuma became agitated was when the appellant‟s counsel repeated some questions. Undoubtedly this irritated Nxum, as one can discern from the following responses: „Ek is `n persoon en die gebeure het by my huis plaasgevind en die polisie het daar gekom en hulle het toe hulle werk gedoen en ek is nie daarop geregtig om instruksies aan die polisie te gee wat om te doen nie‟. This was at time when the appellant‟s counsel demanded an explanation from Nxuma as to why the police officers did not take certain steps. Much clearer proof of Nxuma‟s agitation being caused by the manner in which the appellant‟s counsel cross-examined him is captured in the following response: „En `n ander versoek wat ek wil rig is dat as u vrae aan my gestel het, dan u moet my `n geleentheid gee om die vrae te beantword en u moet nie woorde in my mond sit nie‟. This occurred at a time when Nxuma, correctly or wrongly thought that the appellant‟s counsel was badgering him. [27] Having read the record, these responses by Nxuma appeared to me to be eminently reasonable. When read out of context these responses may appear impolite if not plainly arrogant, but they were direct responses to questions posed. To my mind, they do not cast any shadow on Nxuma‟s demeanor and candour. As those experienced in trials know that „demeanour can be a tricky horse to ride‟. It is clear to me that Nxuma was naively venting his frustrations at what he thought were unfair questions by the appellant‟s counsel. [28] In order to avoid falling into the trap of failing to see the wood for the trees as per the warning expressed in Hadebe (supra), I propose to take a step back and consider the entire evidence as a mosaic, consider the strength and weaknesses in the evidence and consider the merits, demerits and the probabilities. See also S v Trainor 2003 (1) SACR 35; [2002] ZASCA 125 (SCA) para 9 and S v Chabalala 2003 (1) SACR 134 (SCA) para 15. [29] I am alive to the fact that the state bore the onus to prove the guilt of the appellant beyond a reasonable doubt and that there is no onus on the appellant to proof the truthfulness of any explanation which he gives nor to convince the court that he is innocent. Any reasonable doubt regarding his guilt must redound to the appellant‟s benefit. S v Jochems 1991 (1) SACR 208; [1990] ZASCA 146 (A); S v V 2000 (1) SACR 453 (SCA). [30] However, as it was stated in S v Ntsele 1998 (2) SACR 178; [1998] ZASCA 49 (SCA) at 182a-g „Die bewyslas wat in `n strafsaak om die Staat rus is om die skuld van die aangeklaagde bo redelike twyfel te benys – nie bo elke sweempie van twyfel nie. Ons reg vereis insgelyks nie dat die hof slegs op absolute sekerheid sal handel nie, maar wel op geregverdigde en redelike oortuigings – niks meer en niks minder nie (S v Reddy and others 1996 (2) SACR 1 (A) op 9d-e). Voorts, wanneer `n hof met onstandigheidsgetuienis werk, soos in die onderhawige geval, moet die hof nie elke brokkie getuienis afsonderlik betrag om te besluit hoeveel gewig daarvan geheg moet word nie. Dit is die kumulatiewe indruk wat al die brokkies tersame het wat oorweeg moet word om te besluit of die aangeklagde se skuld bo redelike twyfel bewys is (R v De Villiers 1944 AD 493 at 508-9).‟ See also S v Phallo & others 1999 (2) SACR 558; [1999] ZASCA 84 (SCA) paras 10-11. [31] The trial court was aware that Nxuma was a single witness and that his evidence had to be treated with caution. However, it found strong corroboration of his evidence in the undisputed evidence that soon after the robbery, the appellant was found inside Nxuma‟s home where items which were indisputably involved in the robbery in the form of the Mazda Drifter, the bag containing money positively identified as Fidelity Guard‟s property and an AK47 with ammunition, were found. Furthermore, the trial court found that this evidence together with the appellant‟s patently mendacious version justifies the inference as the only reasonable inference from the proven facts, that the appellant was part of the gang of robbers. [32] I am mindful of the salutary warning expressed in S v Snyman 1968 (2) SA 582 (A) at 585G that even when dealing with the evidence of a single witness, courts should never allow the exercise of caution to displace the exercise of common sense. Equally important is what this Court stated in S v Sauls (supra) at 180C-H that: „In R v T 1958 (2) SA 676 (A) at 678 OGILVIE THOMPSON AJA said that the cautionary remarks made in the 1932 case were equally applicable to s 256 of the 1955 Criminal Procedure Code, but that these remarks must not be elevated to an absolute rule of law. Section 256 has now been replaced by s 208 of the Criminal Procedure Act 51 of 1977. This section no longer refers to “the single evidence of any competent and credible witness”; it provides merely that “an accused may be convicted on the single evidence of any competent witness”. The absence of the word “credible” is of no significance; the single witness must still be credible, but there are, as Wigmore points put, “indefinite degrees in this character we call credibility”. (Wigmore on Evidence vol III para 2034 at 262.) There is no rule of thumb test or formula to apply when it comes to a consideration of the credibility of the single witness (see the remarks of Rumpff JA in S v Webber 1971 (3) SA 754 (A) at 758). The trial Judge will weigh his evidence, will consider its merits and demerits and, having done so, will decide whether it is trustworthy and whether, despite the fact that there are shortcomings or defects or contradictions in the testimony, he is satisfied that the truth has been told. The cautionary rule referred to by De Villiers JP in 1932 may be a guide to a right decision but it does not mean “that the appeal must succeed if any criticism, however slender, of the witnesses‟ evidence were well founded” (per Schreiner JA in R v Nhlapo (AD 10 November 1952) quoted in R v Bellingham 1955 (2) SA 566 (A) at 569). It has been said more than once that the exercise of caution must not be allowed to displace the exercise of common sense. The question then is not whether there were flaws in Lennox‟s evidence – it would be remarkable if there were not in a witness of this kind. The question is what weight, if any, must be given to the many criticisms that were voiced by counsel in argument.‟ [33] This is how the trial court approached and assessed Nxuma‟s evidence. Based on this, I am unable to say that the trial court erred in its accepting Nxuma‟s evidence as truthful and reliable as it was corroborated by the damning circumstantial evidence. As this Court held in S v Reddy (supra) at 8h with reference to Best on Evidence 10th ed § 297 at 261: „The elements, or links, which compose a chain of presumptive proof, are certain moral and physical coincidences, which individually indicate the principal fact; and the probative force of the whole depends on the number, weight, independence, and consistency of those elementary circumstances. A number of circumstances, each individually very slight, may so tally with and confirm each other as to leave no room for doubt of the fact which they tend to establish…. Not to speak of greater numbers, even two articles of circumstantial evidence, though each taken by itself weigh but as a feather, join them together, you will find them pressing on a delinquent with the weight of a mill-stone….‟ I am satisfied that the evidence of Nxuma together with the circumstantial evidence regarding the appellant‟s arrest at Nxuma‟s home constituted proof of his complicity in the robbery beyond reasonable doubt. Accordingly, I can find no fault with his conviction on the two counts of robbery. It follows that this Court sitting as a court of appeal cannot interfere with the findings by the trial judge. [34] However, the appeal in respect of the appellant‟s conviction for contravention of s 37(1) of Act 62 of 1955 regarding counts 3 and 4 which are competent verdicts on the charges of theft of the motor vehicles is on a different footing. There is no evidence that the appellant was ever in possession of any of the two stolen motor vehicles which were used in the robbery at any given moment. Furthermore, no witness testified that the appellant either drove or was inside any of the two vehicles. It follows that the essential elements of these two offences have not been proved. Absent such proof, it cannot be said that the State had proved his guilt. See S v Mbuli 2003 (1) SACR 97; [2002] ZASCA 78 (SCA); S v Manamela & Another (Director-General of Justice Intervening) 2000 (1) SACR 414 (CC) 438 para 59 (2). It follows that these convictions cannot stand. [35] In the result, the following order is made: The appeal succeeds partially as follows: 1 The appeal against the convictions in respect of counts 1, 2, 6 and 7 is dismissed. The convictions and the sentences imposed are confirmed. 2 The appeal against the convictions in respect of counts 3 and 4 is upheld. The convictions and the sentences in respect of counts 3 and 4 are set aside. _________________ L.O. Bosielo Judge of Appeal Appearances: For Appellant : A B Booysen Instructed by: Legal Aid SA, Pretoria Legal Aid SA, Bloemfontein For Respondent : C L Burke Instructed by: Director Public Prosecutions, Pretoria Director Public Prosecutions, 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 01 June 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. Modiga v The State (20738/14) [2015] ZASCA 94 (01 June 2015) [1] The SCA today upheld the appellant’s appeal in respect of two counts of being in possession of stolen property without being able to give a reasonable and/or acceptable explanation for such possession but confirmed his conviction and sentences of two counts of robbery with aggravating circumstances. [2] The appellant was charged with five other men on multiple counts. This case emanated from a cash-in-transit robbery where money and other property belonging to Fidelity Guards were stolen. Two stolen vehicles were used in the robbery. The state led the evidence of a number of witnesses including some police officers. Central to the state’s case against the appellant was the evidence of Sergeant Robin Henry Deere (Deere) and one Mr Saul Nxuma (Nxuma). The evidence of Deere was rejected as being untruthful and unreliable. The appellant was convicted on the evidence of Nxuma, who was a single witness. [3] Although Nxuma was a single witness, the SCA found that the trial court was correct in finding his evidence to have been truthful, reliable and credible. This is so as his evidence was corroborated by independent evidence in the form of the appellant’s arrest soon after the robbery inside Nxuma’s house where the police discovered and impounded a Mazda Drifter which was used in the robbery earlier that day as well as a bag containing money identified as belonging to Fidelity Guards and an AK47. [4] The SCA found that the combined effect of Nxuma’s evidence and the circumstantial evidence regarding the appellant’s arrest were sufficient proof of his complicity in the robbery. [5] Regarding the contravention of s 37(1) of the General Law Amendment Act, the SCA found that there was no evidence that the appellant was found in possession of the two vehicles involved in the robbery. In other words the SCA found that the state had failed to proof detentio. [6] In the result, the SCA upheld the appeal in respect of counts 3 and 4, but dismissed it in respect of the two counts of robbery. The convictions and sentences imposed by the court below were confirmed.

1916

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 687/10 In the matter between: MARK WILLIAM LYNN NO FIRST APPELLANT TINTSWALO ANNAH NANA MAKHUBELE NO SECOND APPELLANT and COLIN HENRY COREEJES FIRST RESPONDENT LEON LOOCK SECOND RESPONDENT Neutral citation: Lynn NO v Coreejes (687/2010) [2011] ZASCA 159 (28 September 2011) Coram: LEWIS, SNYDERS, MALAN, MAJIEDT AND SERITI JJA Heard: 1 SEPTEMBER 2011 Delivered: 28 SEPTEMBER 2011 Summary: Civil proceedings ─ s 382(1) of Companies Act 61 of 1973 ─ institution of action by two of three liquidators not a nullity ─ s 382(1) not containing a prohibition ─ therefore not analogous with s 6(1) of Trust Property Control Act 57 of 1988. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (De Vos AJ sitting as court of first instance): 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the court below is set aside and substituted with the following order: ‘The application is dismissed with costs.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ MAJIEDT JA (LEWIS, SNYDERS, MALAN and SERITI JA concurring) [1] Section 382(1) of the Companies Act 61 of 1973,1 provides that: ‘When two or more liquidators have been appointed they shall act jointly in performing their functions as liquidators and shall be jointly and severally liable for every act performed by them jointly.’ The question for determination in this appeal is whether non-compliance with this provision renders the power of attorney given by two of three liquidators for the institution of an action a nullity and, if not, whether it is in law capable of ratification. In the high court De Vos AJ answered the first part of the question in the affirmative, holding that it was indeed a nullity incapable of subsequent ratification. He upheld this as a point in limine in the respondents’ favour and granted their application to strike the appellants’ claim in terms of Rule 30A. This appeal is with his leave. [2] The appellants and one Mr J M Oelofsen were appointed as joint liquidators of Wagmaar Investments CC (Wagmaar) which had been 1 The repeal of this Act by the Companies Act 71 of 2008 has no bearing on this appeal. voluntarily wound up in terms of a special resolution of March 2005. The winding-up was preceded by a judgment in October 2004 for payment of the sum of R3 409 907.33, interest and punitive costs against Wagmaar in favour of Total SA (Pty) Ltd (Total) after a lengthy trial before Maluleke J. [3] During July 2008 the joint liquidators, as plaintiffs, instituted action against the respondents, as defendants. Their cause of action appears to be the actio Pauliana. The details of the claim are not material to the issue for determination. It would suffice to state that the respondents were sued on the basis of allegations that they, as trustees of the Kiriake Trust, received Wagmaar’s transport and farming businesses (with the assets thereof) and certain of Wagmaar’s immovable and movable property for no consideration in return, as part of a fraudulent scheme designed by Wagmaar. The respondents were cited in their representative (qua trustees) and personal capacities. [4] A procedural challenge in terms of Uniform Rule 7 by the respondents to the authority of the attorneys representing the liquidators in the action developed into an objection by way of a point in limine before the high court, when it became apparent that Oelofsen had not joined the appellants in instructing their attorneys to institute the action. At the time of institution of the action Oelofsen was still a joint liquidator. He resigned thereafter, citing a potential conflict of interest. The Master accepted his resignation and appointed the appellants as joint liquidators of Wagmaar’s estate. [5] In the high court the appellants implicitly accepted that only two of the three liquidators had mandated the institution of the action and the matter was argued on that basis, as was also the case in this court. The appellants relied on an indemnity agreement signed by all three liquidators (including Oelofsen) with Total in respect of the action and other related proceedings and an ex post facto ratification by the appellants of the institution of the action to cure this defect. The respondents, on the other hand, persisted in their contention regarding the attorneys’ authority, arguing that all the liquidators did not authorise the institution of the action. They contended that s 382(1) of the Act requires that the liquidators had to act jointly in giving such authorisation and that the indemnity could not cure the defect. The institution of action could not be ratified ex post facto since it was a nullity. As stated, the respondents’ argument found favour with the court below. [6] In coming to the conclusion that the unauthorised action is a nullity and incapable of ratification, De Vos AJ relied on Powell & another v Leech & another; Leech & others v Powell & others2 in which two liquidators had been appointed by the Master in respect of a company in provisional liquidation. Only one of them sought and obtained a search warrant in terms of s 69 of the Insolvency Act 24 of 1936. In an application for the setting aside of the search warrant, Sutherland AJ held that the provisions in s 382(1) of the Act, which require liquidators to act jointly, were peremptory and that subsequent ratification of the decision to apply for the search warrant was legally untenable. He put it thus:3 ‘Ratification after the event is not open to a liquidator who did not participate in the original decision. Section 382 clearly contemplates a joint decision prior to action taking place. There is no room to make a joint decision after the act has been performed. Comparisons between the powers of liquidators and the powers of directors to ratify each other’s deeds are fundamentally inapt in this context.’ I am of the view, however, that Powell is distinguishable on the facts. Powell dealt with a situation where ratification was no longer possible, since the warrant had been applied for without the requisite consent and had been issued and executed. The present matter is different – here a procedural challenge was made in respect of the institution of an action by two of three liquidators, and the proceedings have not been finalised. 2 Powell & another v Leech & another; Leech & others v Powell & others [1997] 4 All SA 106 (W). 3 At 118g-h. [7] The respondents relied on Lupacchini NO & another v Minister of Safety and Security4 in supporting the judgment of the court below. That case concerned the question whether non-compliance with s 6(1) of the Trust Property Control Act 57 of 1988 rendered any acts by the trustees a nullity. Action had been instituted by trustees of a trust, but one of them was authorised by the Master to act as a trustee only after the action was instituted. Section 6(1) reads as follows: ‘Any person whose appointment as trustee in terms of a trust instrument, section 7 or a court order comes into force after the commencement of this Act, shall act in that capacity only if authorized thereto in writing by the Master’. It was not in issue that institution of the action in these circumstances was in contravention of s 6(1). In deciding that the proceedings instituted by a trustee without authorisation was a nullity, Nugent JA analysed a number of decisions and came to the conclusion that ‘. . . [there are] no indications that legal proceedings commenced by unauthorised trustees were intended to be valid. On the contrary, the indications seem . . . to point the other way’.5 An important consideration in reaching that conclusion, said Nugent JA, is the fact that there is no criminal sanction stipulated in respect of a trustee who acts without authorisation, leading to the inescapable inference that the legislature intended such acts to be a nullity, ‘because otherwise a contravention of the prohibition would have no consequences at all’.6 [8] I turn next to a consideration of the legal consequences of non- compliance with s 382(1). A useful point to start with, I believe, is to determine whether s 382(1) contains a general prohibition. In order to make such a determination and also to examine whether Lupacchini can be applied to this case, a brief consideration of the role of liquidators under the Act, as opposed to that of trustees under the Trust Property Control Act, is required. The law reports and the text books are replete with descriptions of what a liquidator is 4 Lupacchini NO & another v Minister of Safety and Security 2010 (6) SA 457 (SCA). 5 Para 22. 6 Paras 17 and 18, he then continued to cite Goldblatt J in Simplex (Pty) Ltd v Van der Merwe & others NNO 1996 (1) SA 111 (W) at 113C-D. and does. I adopt for present purposes the following description in M S Blackman et al Commentary on the Companies Act vol 3 at 14–288: ‘. . . a person who holds an office under the Companies Act, which office confers on him various powers to enable him to wind-up the company. One of these powers is the power to bind the company’s estate; another is the power to institute and defend proceedings in the company’s name.’ First and foremost and at the risk of stating the obvious, it is well to remind oneself that a liquidator is a creature of statute; he or she derives his or her powers from the Act and the Insolvency Act and may act within the bounds of those powers only. Although there are some analogies to be drawn between the office of a liquidator and that of a trustee (eg the fiduciary nature of both), a liquidator is not a trustee in the strict sense.7 The estate of the company in liquidation remains vested in the company itself (save of course in those exceptional circumstances where a court orders in terms of s 361(3) of the Act that all or part of the company’s property shall vest in the liquidator); the liquidator merely administers the estate as laid down by statute8 and does so under the control of the Master.9 In a trust on the other hand, the trust estate vests in the trustees who must administer it.10 [9] In the case of a trust the trust deed is its ‘constitutive charter’11 and ‘[w]hen fewer trustees than the number specified [in the trust deed] are in office, the trust suffers from an incapacity that precludes action on its behalf’.12 Even where trustees act jointly, they cannot in law bind the trust estate where they are not the requisite number stipulated in the trust deed, because ‘the trust’s incapacity during this period does not arise from the joint action requirement, but from the trust’s incapacity while a sub-minimum of trustees held office’.13 The difference between s 6(1) of the Trust Property 7 M S Blackman et al at 14–288; P M Meskin Henochsberg on the Companies Act 5 ed Vol 1 at 789. 8 Blackman et al, ibid. 9 Section 381 of the Act. 10 Land and Agricultural Bank of South Africa v Parker & others 2005 (2) SA 77 (SCA) para 10. 11 Ibid. 12 Para 11. 13 Para 13. Control Act and s 382(1) of the Companies Act is stark – appointment as a trustee by the Master is a sine qua non for a trustee to be clothed with the requisite authority to act on behalf of the trust, whereas s 382(1) does not contain such a requirement. A mere reading of the two sections reveals a marked difference; in this regard the use of the word ‘only’ in s 6(1) is significant, since this is indicative of invalidity in the case of non-compliance. [10] It will be recalled that in Lupacchini the absence of a criminal sanction in s 6(1) of the Trust Property Control Act led Nugent JA to the conclusion that non-compliance with that section renders all acts a nullity.14 Section 382(1) of the Act imposes no criminal sanction. The consequences of joint action, however, are set out in the second part of the subsection, that is joint and several liability for every act performed jointly. Nothing is said of the validity or otherwise of an act that is not performed jointly. For these reasons Lupacchini is not applicable in this instance. [11] The primary objective of s 382(1) is to ensure that joint liquidators act jointly. The second part of the section which relates to joint liability is in my view decisive in this regard. It imposes joint and several liability on liquidators who act jointly. Nothing more is said and it is not necessary to inquire into any implication that might flow from this provision. The subsection does not visit the acts of the liquidators who did not act jointly with nullity. [12] Section 386(4)(a) empowers a liquidator to, inter alia, bring or defend legal proceedings on behalf of the company. The section requires a liquidator to be duly authorised by a meeting of creditors or members (s 386(3)) or by the Master in case of urgent legal proceedings for the recovery of outstanding accounts (s 386(4)) before he or she can bring such proceedings on behalf of the company. Our courts have held that if a liquidator litigates without the 14 Para 7 above. prescribed authority, the court may refuse to allow him his costs out of the company’s assets and he may have to pay such costs himself.15 The litigation is not a nullity, it merely has potential adverse costs implications for the liquidator. And there is ample authority that a person against whom the unauthorised liquidator is litigating may not object to such lack of authorisation, for it is a matter between the liquidator and the creditors.16 Retrospective sanction of unauthorised litigation is available to the liquidator in appropriate instances, either from the creditors or members under s 386(3) or, if refused, from the Master under s 387(2) and, if the Master refuses, from the court under s 386(5) read with s 387(3).17 [13] Actions in terms of s 382(1) are prohibited only in the absence of consent of all the liquidators. In Neugarten & others v Standard Bank of South Africa Ltd18 the absence of consent by all the members of a company for security furnished by that company for an obligation of another company controlled by one or more of the directors of the first-mentioned company, in contravention of s 226(2)(a) of the Act, was considered and resolved as follows:19 ‘The transactions set out in ss (1) of s 226 are prohibited or illegal only in the absence of the consent of all the members. The question in any specific case is whether such consent has been given: if it has, the transaction is not prohibited or illegal. Consequently, to postulate that the transaction is prohibited and illegal is to beg the question. If the requisite consent is given to the transaction in initio, it is a valid transaction. If the transaction is subsequently ratified by the non-consenting members, the ratification relates back to the original transaction and the position is the same as if consent had originally been given.’ 15 Waisbrod v Potgieter & others 1953 (4) SA 502 (W) at 507H. 16 Dublin City Distillery (Great Brunswick Street, Dublin) Limited & another v Doherty [1914] AC 823; Waisbrod v Potgieter, supra, at 507G-H; Bowman NO v Sacks & others 1986 (4) SA 459 (W) at 461G; Griffin & others v The Master & another (Commins & another intervening) 2006 (1) SA 187 (SCA) para 7. 17 Henochsberg on the Companies Act supra at 822. 18 Neugarten & others v Standard Bank of South Africa Ltd 1989 (1) SA 797 (A). 19 At 803D-E. [14] Where an act is done by some and not all the liquidators it may not bind the company in liquidation.20 But it does not follow that the conduct of the liquidator may not be ratified. In Smith v KwaNonqubela Town Council21 the same approach as in Neugarten was followed, albeit in a different context:22 ‘The next attack upon the purported ratification was along these lines: Watson’s contentious act was an administrative one; it was not authorised by law; an unauthorised act is invalid; an invalid act cannot be ratified. The argument, I fear, already breaks down at the first proposition and it becomes unnecessary to consider the others. The launching of legal proceedings is not an administrative act but a procedural one open to any member of the public. Watson apparently believed on insubstantial grounds that he had the necessary authority to act on behalf of the town council. He was wrong. His expressed intention was to act on behalf of the town council and not on his own behalf. It is a general rule of the law of agency that such an act of an “unauthorised agent” can be ratified with retrospective effect. . .’. [15] Two of the three liquidators authorised the institution of the action. The non-consenting third liquidator then resigned and his resignation was accepted. The remaining two liquidators were then appointed by the Master as the only joint liquidators in the estate. They jointly pursued the litigation, as such ratifying their procedural act taken initially. As no time limit within which they had to take or ratify the institution of the action arises in the case, that is the end of the matter.23 [16] For these reasons the high court erred in upholding the objection in limine. It should have dismissed with costs the application to strike out the claim in terms of Rule 30A. The appeal must consequently be upheld and the following order is issued: 20 Cooper v The Master & others 1996 (1) SA 962 (N). 21 Smith v KwaNonqubela Town Council 1999 (4) SA 947 (SCA). 22 Para 10. 23 Smith para 12. 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the court below is set aside and substituted with the following order: ‘The application is dismissed with costs.’ ___________________ S A MAJIEDT JUDGE OF APPEAL APPEARANCES: Counsel for appellants : C E PUCKRIN SC M P VAN DER MERWE Instructed by : Alex May Inc. Lovius Block, Bloemfontein Counsel for respondents : A C FERREIRA SC D F BLIGNAUT Instructed by : Bekker Attorneys Symington & De Kok, 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 28 September 2011 STATUS: Immediate M W LYNN & ANOTHER v COREEJES (687/10) 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 (SCA) today upheld an appeal against a judgment and order of the North Gauteng High Court, Pretoria in the above matter. The high court had upheld an objection in limine and granted an application to strike the appellants’ claim in terms of Rule 30A. The high court held that, where two of three liquidators had authorised the institution of an action, it was a nullity incapable of ratification, since s 382(1) of the Companies Act 61 of 1973 required that liquidators act jointly. The SCA held that the high court had erred in this regard. Section 382(1) does not contain a general prohibition and is not analogous with s 6(1) of the Trust Property Control Act 57 of 1988. Actions in terms of s 382(1) are prohibited only in the absence of consent of all liquidators; such consent can be granted ex post facto through subsequent ratification. The high court should therefore have dismissed the application to strike out the appellants’ claim. -- ends --

112

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 793/2016 In the matter between: TUDOR HOTEL BRASSERIE & BAR (PTY) LTD APPELLANT and HENCETRADE 15 (PTY) LTD RESPONDENT Neutral citation: Tudor Hotel Brasserie & Bar (Pty) Ltd v Hencetrade 15 (Pty) Ltd (793/2016) [2017] ZASCA 111 (20 September 2017) Coram: Navsa ADP, Leach and Swain JJA and Molemela and Mbatha AJJA Heard: 4 September 2017 Delivered: 20 September 2017 Summary: Lease – agreement to pay rental in advance without deduction – exclusion of reciprocity – landlords failure to grant full beneficial occupation of entire leased premises – tenant obliged to pay rent. 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 dismissed with costs. JUDGMENT Swain JA (Navsa ADP, Leach JA, Molemela and Mbatha AJJA concurring): [1] The respondent, Hencetrade 15 (Pty) Ltd, successfully brought an application before the Western Cape Division, Cape Town (Binns-Ward J) for the eviction of the appellant, Tudor Hotel Brasserie & Bar (Pty) Ltd, from premises located at 153 Longmarket Street, Cape Town, used by the appellant to conduct the business of a hotel. [2] The right to occupation of the premises by the appellant was based upon a written lease agreement concluded between the parties on 29 June 2012. The eviction was granted on the basis that the respondent had validly cancelled the lease after the appellant had fallen into arrears with the rental payments. Despite the respondent having afforded the appellant the requisite notice to cure its default, it had failed to do so. [3] The appellant admitted that it had not paid the rental in terms of the lease agreement, but denied that any was due, on the basis that its obligation to make payment was suspended as a result of the failure by the respondent to afford to the appellant, ‘vacant occupation or beneficial use of the entire leased premises’. It was common cause that at the time that the appellant was given occupation of the premises, the respondent had retained a portion of the third floor to store property. [4] The legal basis for the argument of the appellant was the exceptio non adimpleti contractus. (the ‘exceptio’). The appellant submitted that this raised the legal question of whether the exceptio was available to a lessee who received only partial occupation of leased premises, but did not cancel the lease. [5] The court a quo pointed out that the appellant's approach to the issue of its liability to make payment of the rental ran counter to a line of authority commencing with Arnold v Viljoen 1954 (3) SA 322 (C) and stated (at para 9) that: ‘In terms of that line of authority, a lessee who takes occupation of premises which are deficient in any respect is obliged, while it remains in occupation, to pay the full rental stipulated in terms of the lease. Its remedy is to claim compensation by way of an abatement of rental and/or damages. A lessee who, having taken occupation, fails to pay the full rental is exposed to the cancellation of the lease for non-payment.’ [6] The court a quo then referred to the decision in Ethekwini Metropolitan Unicity Municipality (North Operational Entity) v Pilco Investments CC [2007] ZASCA 62; [2007] SCA 62 (RSA) para 22, where the following was stated: ‘It follows that, upon taking occupation of the property in late 1994, the plaintiff became obliged to pay rent to the defendant, as stipulated in clause 1 of the lease. Of course, because the plaintiff was, until early June 1997, deprived of the use of that portion of the property which was being used by the person making pre-cast fencing, the plaintiff would be entitled to a remission of rent over the period in question, proportional to its reduced use and enjoyment of the property. If the amount to be remitted was capable of prompt ascertainment, the plaintiff could have set this amount off against the defendant's claim for rent; if not, the plaintiff was obliged to pay the full rent agreed upon in the lease and could thereafter reclaim from the defendant the amount remitted.’ [7] The court a quo applied this principle and concluded in para 13 that: ‘ . . . unless the abatement in rent to which the respondent might have been entitled in respect of the part of the third floor of Huys Heeren XVII not made available by the applicant was capable of prompt ascertainment, the respondent was obliged to have paid the full rental during the first period.’ Finding that any remission in rental to which the appellant might have been entitled was not capable of prompt ascertainment, the court a quo decided that the appellant was in arrears in respect of the payment of rental, when the respondent validly exercised its right to cancel the agreement. An order evicting the appellant from the leased premises was accordingly granted. [8] The respondent by way of supplementary heads of argument, relied upon the unreported decision in Baynes Fashions (Pty) Ltd t/a Gerani v Hyprop Investments (Pty) Ltd [2005] JDR 1382 (SCA), for the submission that an interpretation of the provisions of clauses 10.1 and 21.1.3 of the lease agreement is dispositive of the appeal. The court a quo found it unnecessary to consider the effect of these clauses upon the right of the appellant to withhold payment of the rental. [9] In Baynes Fashions at para 4 the following relevant clauses in the lease agreement provided as follows: ‘6.2 All rentals payable by the TENANT in terms hereof shall be paid monthly in advance without any deduction or set-off . . . . . . 25.4 The TENANT shall have no claim against the LANDLORD for compensation, damages, or otherwise by reason of any interference with his tenancy or his beneficial occupation of the premises occasioned by any . . . repairs or building works as herein before contemplated. . .’ [10] With regard to the interpretation of these clauses, the following was stated at para 5: ‘[7] With respect to clause 6.2 it is contended on behalf of the appellants that the word "payable" confers a right on the lessor to claim payment only when it has performed in terms of the contract by granting beneficial occupation to the lessee. As the respondent has failed to grant beneficial occupation to the first appellant, thereby failing to perform in terms of the contract, so the argument proceeded, the rent was not "payable". [8] There is no warrant for this construction. The clause imposes an obligation on the lessee to make payment of rent "in advance". This means that the payment of rent by the lessee is not contingent upon prior performance by the lessor. In any event, the first appellant continues to trade and therefore does have beneficial occupation of the premises. The appellants’ real complaint is that the renovations effected by the respondent have interfered with the first appellant's right to occupy the premises beneficially in a manner that has led to the first appellant suffering a substantial loss to its monthly turnover. This loss, contends the appellants, entitles the first appellant to deduct the rent which is "payable" to the respondent. The simple answer to this complaint is that clause 25.4 in express terms, precludes the reduction of rent in these circumstances. [9] It can hardly be clearer that clauses 6.2 and 25.4 are intended to prevent any deduction of rent by the lessee where the renovations that are undertaken by the landlord in terms of clause 25.1 interferes with the lessee's right of beneficial occupation. The appellants signed the agreement that contained these clauses and cannot now seek to extricate themselves from its consequences.’ [11] The agreement that the rent was payable ‘monthly in advance’ had the effect of altering the usual position, that in the absence of contractual provisions, rent is payable in arrear at the end of each period in the case of a periodical lease, after the lessor has fulfilled his obligation. 1 The lease agreement therefore altered the reciprocal nature of the obligations of the lessor and the lessee. The obligation of the lessee to make payment of the rent was no longer reciprocal to the obligation of the lessor to grant beneficial occupation of the premises to the lessee. [12] The application of the principle of reciprocity to contracts is a matter of interpretation. It has to be determined whether the obligations are contractually so 1 A J Kerr The Law of Sale and Lease 4ed (2014) at 427; Ebrahim, N O v Hendricks 1975 (2) SA 78 (C) at 81E-F. closely linked that the principle applies. Put differently, in cases such as the present the question to be posed is whether reciprocity has been contractually excluded.2 [13] In Baynes Fashions, the interpretation the court placed upon the provision that the rent was payable ‘in advance’, namely that ‘payment of rent by the lessee is not contingent upon prior performance by the lessor’, necessarily involved a finding that the principle of reciprocity was excluded by the terms of the lease. [14] The conclusion in Baynes Fashions that the lessee was not entitled to a ‘reduction of rent’, caused by interference with the lessee's right of beneficial occupation, was based upon the provisions of clause 6.2 that the rent was payable ‘without any deduction or set-off’, and clause 25.4 that the tenant would not have any claim against the landlord ‘by reason of any interference with his tenancy or his beneficial occupation of the premises’, caused by repairs or building works. [15] The relevant clauses in the present lease agreement must be interpreted against the background set out above. Clause 10.1 provides that: ‘All payments in terms of this lease to be made by the tenant to the landlord shall be made on or before the first day of each month without demand, free of exchange, bank charges and without any deductions or set off whatsoever – ’ [16] Clause 21 of the lease agreement provides for the ‘Landlords Limitation of Liability’ in the following terms: ‘21.1 The tenant shall – 21.1.1 . . . 21.1.2 not have any claim of any nature whatsoever against the landlord whether for damages, remission of rent or otherwise, for any failure of or interruption in the amenities and services provided by the landlord, any local authority and/or other service provider to the leased premises, building and/or property unless such failure or interruption is caused by the 2 BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A) at 418B-D. negligent or wrongful act or omission by the Landlord or its agent or representative, notwithstanding the cause of such failure or interruption; 21.1.3 not be entitled to withhold or defer payment of any amounts due in terms of this lease for any reason whatsoever;’ [17] The provision that the rental was to be paid ‘on or before the first day of each month’ had the effect that it was to be paid in advance by the appellant. The obligation of the appellant to pay the rental was accordingly not reciprocal to the obligation of the respondent to provide beneficial occupation of the entire premises. Additionally clause 21.1.2 precluded the withholding of rental as a result of a ‘failure of or interruption in the amenities and services provided by the landlord.’ [18] The terms of the lease therefore precluded suspension of the payment of rental by the appellant, as a result of the failure by the respondent to afford the appellant beneficial use of the entire leased premises. As a result, the cancellation of the lease by the respondent was justified, the appellant being in arrears with the rental payments. [19] Counsel for the appellant, however, referred to the following dictum in Poynton v Cran 1910 AD 205 at 227-228, in support of his submission that the appellant was entitled to withhold payment of the rent, as a consequence of the failure of the respondent to grant beneficial occupation of the entire premises to the appellant: ‘It remains to consider whether the evidence discloses any circumstance which would deprive the tenant of the legal right which he exercised. I do not think that the clause in the lease providing for the payment of rent on a certain day "without any deduction whatever" has that result. That provision cannot relieve the landlady of her obligation to place the leased property in repair, or deprive the tenant of the remedy, which the law gives him in respect of her initial default. That default afforded pro tanto a defence to the claim for rent. And I entirely agree with the learned Judge when he says that "it is only the rent due which can be stipulated to be paid without deduction.’ (Emphasis added.) [20] In Poynton the plaintiff let a hotel to the defendant for a year and 11 months at a rental of £540 per annum ‘without any deduction whatever’, with certain rights of renewal. The plaintiff sued the defendant for £90 being two months arrears of rent. The defence was that the plaintiff had failed to put the hot water apparatus in proper repair and that after due notice to the plaintiff, the defendant had effected the repairs himself, the cost of which he set off against the rent due. The highlighted portion of the judgement that, ‘it is only the rent due which can be stipulated to be paid without deduction’, must be read in the context of the absence of any reference in the judgement to the monthly rental being payable by the defendant on the first of the month, ie in advance. The usual position accordingly prevailed and the rent was payable by the defendant, as the tenant, in arrear at the end of each month, after the plaintiff, as the landlady, had performed her obligations. On this basis the rent only became ‘due’ and therefore payable by the defendant, after the plaintiff had performed her reciprocal obligations. It was only at this stage that the defendant was obliged to make payment of the rent ‘without deduction’ to the plaintiff. The case is accordingly distinguishable on the facts from the present case where the rental was payable in advance. Moreover it does not appear that there was a clause such as clause 21.1.2. [21] The appeal against the order of the court a quo evicting the appellant from the premises must accordingly fail. This conclusion renders it unnecessary to deal with the statement by the court a quo, that any abatement in rent to which the appellant may have been entitled was not capable of prompt ascertainment, with the result that the appellant was obliged to make payment of the full rental. [22] The following order is granted: The appeal is dismissed with costs. K G B Swain Judge of Appeal Appearances: For the Appellant: S Rosenberg SC Instructed by: Jason Freel Attorneys, Cape Town McIntyre & Van der Post Attorneys, Bloemfontein For the Respondent: P White Instructed by: Herold Gie Attorneys, Cape Town 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 20 September 2017 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Tudor Hotel Brasserie & Bar (Pty) Ltd v Hencetrade 15 (Pty) Ltd (793/2016) [2017] ZASCA 111 (20 September 2017) Media Statement The SCA today dismissed an appeal by a lessee against an order of eviction granted by the High Court, after the lessee had fallen into arrears with the rental payments. The lessee admitted that it had not paid the rental in terms of the lease agreement, but denied that any was due on the basis that its obligation to make payment was suspended as a result of the failure by the lessor to afford to the lessee, vacant occupation of the entire leased premises. The lease agreement obliged the lessee to make payment of the rental ‘on or before the first day of each month’ and ‘without any deductions or set off whatsoever’. It was held that the rent had to be paid in advance by the lessee and was accordingly not reciprocal to the obligation of the lessor, to provide beneficial occupation of the entire premises. The terms of the lease therefore precluded suspension of the payment of rental by the lessee, as a result of the failure by the lessor to afford to the lessee beneficial use of the entire leased premises. As a result, the cancellation of the lease by the lessor was justified as the lessee was in arrears with the rental payments. --- Ends ---

3875

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 360/2021 In the matter between: MJ K FIRST APPELLANT MJ K NO SECOND APPELLANT JOHAN VAN ROOYEN NO THIRD APPELLANT MJ K NO FOURTH APPELLANT JOHAN VAN ROOYEN NO FIFTH APPELLANT MJ K NO SIXTH APPELLANT JOHAN VAN ROOYEN NO SEVENTH APPELLANT II K NO EIGHTH APPELLANT OLIVIA WILDPLAAS CC NINTH APPELLANT and II K RESPONDENT Neutral Citation: MJ K v II K (360/2021) [2022] ZASCA 116 (28 July 2022) Coram: ZONDI, SCHIPPERS and MABINDLA-BOQWANA JJA and MATOJANE and SMITH AJJA Heard: 19 May 2022 Delivered: 28 July 2022 Summary: Divorce – parties married out of community of property subject to the accrual system – determination of accrual – whether assets of trusts of which the husband is a trustee and the close corporation of which he is a sole member should be regarded as belonging to husband for purposes of determining the accrual of his estate – legal basis to pierce the veneer of trusts not established – appeal upheld. _____________________________________________________________________ ORDER _____________________________________________________________________ On appeal from: The Free State Division of the High Court, Bloemfontein (Mbhele J sitting as court of first instance): The appeal is upheld with costs including costs of two counsel; Paragraphs 2 and 6 of the High Court order are set aside and replaced with the following order: ‘The plaintiff’s claim for an order that the assets of the Koens Besigheids Trust, the Koens Familie Trust, the Bulhoek Trust and Olivia Wildplaas CC are to be used to calculate the accrual of the first defendant’s estate is dismissed with costs, including the costs of two counsel where so employed.’ _____________________________________________________________________ JUDGMENT _____________________________________________________________________ Zondi JA (Schippers and Mabindla-Boqwana JJA and Matojane and Smith AJJA concurring): [1] The issue in this appeal is whether the value of the assets of Koens Besigheids Trust, Koens Familie Trust, Bulhoek Trust (the trusts) and Olivia Wildplaas CC (the CC) is to be taken into account in determining the value of the accrual of the estate of the first appellant (the appellant) as at the date of dissolution of the marriage between him and the respondent. [2] The issue arose in the following circumstances: The respondent, II K as the plaintiff, sued the appellant, MJ K as the defendant, in the Free State Division of the High Court, Bloemfontein1 (the high court), for a decree of divorce. After joining the trusts and the CC as parties in the divorce proceedings, the respondent amended her particulars of 1 The divorce action was instituted in the North West Division of the High Court and was later transferred to the Free State Division of the High Court by agreement between the parties. claim so as to include a prayer for an order declaring that the assets of the trusts and the CC be taken into account in determining the value of the accrual in terms of ss 3 and 4 of the Matrimonial Property Act 88 of 1984 (the Act). The basis for her amended claim was that the trusts and the CC were the alter ego of the appellant. In support of her claim for the assets of the trusts and the CC to be regarded as assets of the appellant, the respondent alleged that during the marriage, the appellant established the trusts and the CC over which he assumed sole de facto control. [3] The respects in which the appellant was alleged to have the de facto control over the assets of the trusts and the CC are, in broad terms, pleaded by the respondent as follows. At all relevant times during the subsistence of the marriage, the appellant made no distinction between the income and expenses of the trusts and the CC and his income and expenditure. The control and management of the trusts and the CC lay solely with the appellant. In this regard, the respondent asserted that the appellant ensured that his personal friend, Mr Johan van Rooyen (Mr van Rooyen), was appointed as a trustee of all the trusts, who was a trustee in name only. All the trust deeds of the discretionary trusts are worded in such a manner as to give the appellant wide-ranging powers so that he manages the trusts and the CC without input from any third parties, including other trustees, and the appellant held no meetings of trustees or members. [4] The respondent further alleged that the antenuptial contract contains no stipulation that the assets of the trusts or the CC be excluded from the accrual and that the appellant acquired and funded the trusts and the CC with his personal funds. She went on to state that the appellant managed the trusts and close corporation assets as if they were his own, and there was no distinction between his assets and those of the trusts and/or the close corporation. She asserted that the appellant had sole signing powers on the bank accounts of the trusts and the CC, and that these entities exist in name only. She said that she performed duties for the trusts and CC as if they were part of the appellant’s farming business. The respondent received monthly payments from a trust for the purchase of groceries and household essentials. [5] The respondent claimed that the appellant established the trusts and the CC in order to prejudice her in the exercise of her right to claim a fair share of the accrued estate. Therefore, the assets of these entities must be regarded as part of the appellant’s estate and taken into account, together with any personal assets accrued by the appellant in his personal capacity in the calculation of accrual in terms of ss 3 and 4 of the Act. [6] The appellant denied the allegations underpinning the respondent’s claim. The trusts and the CC, making common cause with the appellant’s defences, contended that the averments as pleaded by the respondent did not support the relief she claimed. The basis for this contention was that there was no averment in the particulars of claim that the trusts and the CC acquired the assets with the fraudulent or dishonest purpose of avoiding the obligation to account for such assets or that the appellant had acted dishonestly or in an unconscionable manner in order to avoid his obligation to account for the accrual in his estate. [7] The evidence proffered by the respondent in support of the allegations in the pleadings is to the following effect. The parties were married to each other on 27 March 1993 out of community of property subject to the accrual system in terms of the Act. For purposes of accrual, the commencement value of the respondent’s assets at the time of marriage was R20 000, and that of the appellant was R175 000. The parties agreed that using the Consumer Price Index as at the date of divorce, these assets are now valued at R94 190.87 and R824 170.12, respectively. [8] The respondent testified that she had joined the trusts and the CC to the divorce proceedings because she felt that she had contributed more than her share during her marriage to the appellant and was entitled to a share in these entities. As regards the management of these entities, the respondent testified that the appellant did not consult her when decisions concerning their management were taken, and the resolutions that were taken were passed in her absence. These claims cannot be entirely true in relation to the conduct of the affairs of the Bulhoek Trust because, on not less than 11 occasions, she signed resolutions that were taken. [9] Mr van Rooyen, in his capacity as an independent trustee, explained how the trusts and the CC were formed. According to Mr van Rooyen, the Koens Besigheids Trust and Koens Familie Trust were formed in 1999, and the appellant was the sole trustee until 2009, when Mr van Rooyen was appointed as a second trustee in the two trusts. Bulhoek Trust was formed in 2011. It has three trustees, namely Mr van Rooyen, the appellant and the respondent. The appellant and the respondent together with their children, were nominated as capital beneficiaries of the trusts. [10] Prior to the creation of the trusts, since 1988, Mr van Rooyen had been providing accounting services to ll Civils CC (Civils), which the appellant had registered after his resignation from Eskom. He used it as a vehicle through which he conducted his business. Besides providing accounting services to Civils, Mr van Rooyen also advised the appellant and the respondent on estate planning related matters. It was on his advice that the trusts were set up for tax and estate planning purposes (to minimise tax liability) and to protect the appellant’s personal assets from his creditors. The appellant wanted to ensure that his family was sufficiently taken care of. Pursuant to Mr van Rooyen’s advice, the parties engaged the services of Mr Piet Swanepoel of FA Loch Logan, a firm specialising in estate planning, to advise them on forming a trust. This occurred in 1999, long before the appellant became aware of the respondent’s infidelity. With the assistance of Mr Swanepoel, the appellant formed the Koens Besigheids Trust and the Koens Familie Trust. [11] Mr van Rooyen testified that he had provided accounting services to the trusts since their formation. His relationship with the appellant and the respondent is purely professional. His responsibility as an independent trustee is to ensure that the assets of the trusts are used in the interests of their beneficiaries. Additionally, he is involved in the administration of the trusts, in particular when a decision has to be taken to buy or sell property on behalf of the trusts. But the appellant is involved in the day-to-day running of the trusts. When big financial decisions have to be taken, he would have a meeting with the appellant or discuss them with him over the phone. [12] As regards the formation of Olivia Wildplaas CC, Mr van Rooyen testified that the CC used to be a private company with limited liability before the appellant converted it into a close corporation. He bought the shares of Olivia Wildplaas Pty Ltd (Olivia Wildplaas) at an auction in 1999 and became its sole shareholder. [13] In about 2000, Olivia Wildplaas rented two farms in Vorstershoop. It later bought two farms, Putney and Pienaarskuil, in June 2000 and October 2000, respectively. Olivia Wildplaas obtained finance from ABSA Bank to pay the purchase price, and a mortgage bond in its favour was passed over the farms to secure payment. The present market value of these farms is R18,3 million. Olivia Wildplaas also acquired Goedehoop and Rensburgshoop farms which it later sold due to their unprofitability. The appellant, in 2007, converted Olivia Wildplaas into a close corporation to save costs on audit fees. The appellant, on the advice of the CC’s auditors, sold his whole membership in the CC to the Koens Familie Trust in about 2005. Koens Besigheids Trust purchased the farm Bowery in September 2009. The current market value of Bowery is R8 million. Bulhoek Family Trust bought the property at Hartenbos in 2011, and its current market value is approximately R2 million. [14] Against this background, the high court, after examining the terms of the trust deeds of the relevant trusts and the manner in which their affairs were conducted, found that the assets of the three trusts were controlled by the appellant. It reasoned that because the appellant controlled all the trusts, he took decisions alone to the exclusion of other trustees. The respondent, the high court found, as a trustee of Bulhoek Trust, was not consulted when decisions relating to its administration were taken and that the trust deeds effectively gave the appellant absolute power to deal as he wished with the assets of the trusts. In this regard, the high court stated that the Bulhoek Trust deed disqualifies the respondent as a trustee upon divorce. [15] The high court concluded that the appellant transferred the assets to the trusts with the dishonest and fraudulent purpose of frustrating the respondent’s claim to the accrual of the estate. It stated that the appellant, before he became aware of the respondent’s infidelity, conducted his businesses through his companies and close corporations, but after the discovery of the respondent’s infidelity, the appellant transferred all the assets to the trusts, in some instances, for no value. The high court went on to say that: ‘He dissipated his personal estate gradually after the plaintiff left common home with no trace of where their final destination was. He immediately sold his house in Bloemfontein and gave the money to the CC in which the trust holds 100% membership. His loan account to the trusts diminished by half with no clear explanation of how it happened.’ [16] On the basis of these factual findings, the high court concluded that the veneer of all the three trusts fell to be pierced to determine the accrual of the appellant’s estate as the appellant used the trusts as his alter ego. Notably, the high court made no determination regarding the piercing of the CC’s corporate veil and whether the value of its assets should be considered for the purposes of determining the value of the accrual of the appellant’s estate. [17] The appellant attacks the judgment of the high court on three main grounds. First, the high court impermissibly strayed beyond the defined issues. Secondly, there was no factual or legal basis for the court to pierce the veneer of the trusts in the manner that it did. Thirdly, the high court committed errors of fact. This point is related to the second one. In relation to this point, the argument was that some of the findings of the high court were made on incorrect facts. I will deal with each of them in turn. [18] In relation to the first point, it was submitted by the appellant that the high court impermissibly strayed beyond the issues as defined in the pleadings in finding that the appellant had transferred the assets to the trusts with the purpose of concealing them through fraud, dishonesty and to avoid his obligation to account to the respondent for the accrual of his estate. This was not the respondent’s case. The appellant contended that the legal basis for the respondent’s claim, as articulated in her particulars of claim, was that the trust and the CC were the alter ego of the appellant and that he managed these entities to prejudice the exercise of her rights to obtain her share of the accrued estate. [19] This calls for a careful analysis of the pleadings. The relief as sought by the respondent in para 8 of the particulars of claim, is the following: ‘That the assets of the Koens Business Trust, Koens Family Trust, Bulhoek Trust and Olivia Wildsplaas CC be taken together with the assets of the first respondent as assets belonging to the first respondent for the purposes of calculating the accrual in terms of sections 3 and 4 of the Matrimonial Property Act.’ [20] In order to succeed in her claim, the respondent had to plead and prove that the appellant transferred personal assets to the 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 her for the accrual of his estate and thereby evade payment of what was due to her in accordance with her accrual claim.2 The respondent’s claim was advanced on the basis that the appellant exercised full and exclusive control over the assets of the trusts and the CC and made no distinction between the income and expenses of the trusts and the CC and his own income and expenditure; that the trusts and the CC exist in name only; that the appellant established the trusts and the CC in order to prejudice the respondent in the exercise of her right to claim a fair share of the accrued estate; that the respondent performed duties for the trusts and the CC as if they were part of the appellant’s farming business; and that the trusts and the CC are the appellant’s alter ego. The trusts and the CC disputed the allegations underlying the respondent’s claim, and they all contended that her claim was unsustainable. [21] It was not open to the high court to adjudicate the case on the basis of issues which are not cognisable or derivable from the pleadings. In this regard, the Constitutional Court in Molusi and Others v Voges held that:3 ‘The purpose of pleadings is to define the issues for the other party and the Court. And it is for the Court to adjudicate upon the disputes and those disputes alone. Of course, there are instances where the court may, of its own accord (mero motu), raise a question of law that emerges fully from the evidence and is necessary for the decision of the case as long as its consideration on appeal involves no unfairness to the other party against whom it is directed. In Minister of Safety & Security v Slabbert, the Supreme Court of Appeal held:4 “A party has a duty to allege in the pleadings the material facts upon which it relies. It is impermissible for a plaintiff to plead a particular case and seek to establish a different case at the trial. It is equally not permissible for the trial court to have recourse to issues falling outside the pleadings when deciding a case”.’ [22] In Fischer and Another v Ramahlele and Others5, this Court held that it is for the parties, either in the pleadings or affidavits, to set out and define the nature of their dispute, and it is for the court to adjudicate upon that dispute and that dispute alone. 2 M v M [2017] ZASCA 5; [2017] 2 All SA 364 (SCA) para 20. 3 Molusi and Others v Voges N.O. and Others [2016] ZACC 6; 2016 (7) BCLR 839 (CC) para 28. 4 Minister of Safety & Security v Slabbert [2010] 2 All SA 474 (SCA) para 11. 5 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA) para 13. [23] This was not a case where the parties expanded on the defined issues by the way in which they conducted proceedings. On the contrary, the case advanced by the respondent was in harmony with her pleadings and that approach was also confirmed by her counsel’s opening address: ‘We have also joined the second to ninth defendants in this action being entities consisting of trust – three trusts and one close corporation being according to the plaintiff’s case, the alter ego of the defendant, the first defendant for purposes of determining how the accrual should be divided at the end of the day.’ [24] The evidence adduced by the respondent was consistent with her pleadings. It was not her case that the appellant transferred his assets to the trusts with the purpose of concealing them through fraud, dishonesty and improper purpose of avoiding his obligation to her for the accrual of his estate. In fact, counsel for the respondent conceded that no such case was established. [25] It was thus never put to Mr van Rooyen nor the appellant that there was a form of fraud or dishonesty involved in the creation of the trusts. The highwater mark of the cross- examination of Mr van Rooyen and the appellant was that the trusts and the close corporation were the appellant’s alter ego. The following proposition was put to Mr van Rooyen in cross-examination: ‘At the end of the day, I am putting it to you that the initial money where all these entities were created and put into place comes from [Mr K] and his wife earning a living as employees of Eskom initially and later in their own businesses. And these entities were only put in place for purposes of estate planning, as you have said and Receiver of Revenue.’ The following statement was put to the appellant in cross-examination: ‘I want to put it to you [Mr K that] all these entities and the close corporation, it is you. . ...That it was your, alter ego, in other words.’ [26] This evidence made it clear that there was nothing untoward in establishing the trusts so that assets could be held separately from the appellant’s personal estate. The appellant explained that the principal objective for protecting assets through the creation of the trusts was to ensure that the respondent and the appellant’s children, the capital beneficiaries, would be cared for. [27] As borne out by the evidence, the setting up of trusts was without any ulterior motive on the part of the appellant. According to him, he did not expect that the respondent would file for divorce. By all accounts, the respondent benefitted from the assets of Koens Familie Trust, which it had accumulated when the appellant managed it. That enabled both of them to live a comfortable life. The respondent had ‘‘n tjekboek gehad van Koen Familie Trust en [sy] het tekenreg daarop gehad.’6 It was her evidence that the appellant deposited R20 000 every month into its bank account, which she then used for household necessaries. She further testified that her decision to seek a divorce from the appellant caught him by complete surprise. The contemplation of a future divorce could, therefore not have been a reason for the appellant to create the trusts. Moreover, the respondent acted as a trustee of the Bulhoek Trust since its formation and was part of the decision by the trustees of that Trust to purchase the Hartenbos property. [28] In the affidavit in support of her application to join the trusts and the CC, the respondent averred that she joined these entities because she had also contributed to the growth of their assets. She alleged that as part of her contribution, she had managed Civils and ran the administration of the trusts and the CC. At the trial, she gave the following testimony regarding her decision to join the trusts and the CC as parties to the proceedings: ‘. . . ek voel dat ek in die tydperk wat ek met mnr. [K] getroud was dat ek meer as my deel in die huwelik gebring het . . . en ek voel dat ek in daardie tyd ja, geregtig is op ‘n deel van hierdie entiteite. Ek het self ook op die plaas wat betrokke is by die entiteit het ek gewerk.’7 [29] In the circumstances, the high court’s conclusion that the appellant transferred the assets to the trusts with the purpose of concealing them through fraud, dishonesty and improper purpose of avoiding his obligation to account to the respondent for the accrual of his estate is incorrect. This conclusion is not based on the case the respondent had advanced both in her pleadings and during her evidence and was not the case the appellant was called upon to meet. During argument, counsel for the respondent 6 Loosely translated: ‘She kept the cheque book of Koens Family Trust and had signing powers on the account.’ 7 Loosely translated: ‘I feel that during the time I was married to Mr [K] I contributed more than my fair share to the marriage…and I feel that at that time I was entitled to a share of these entities. I was also involved at the farm and worked at the entity.’ struggled to point to any specific evidence showing transfer of assets by the appellant from his account(s) to the trusts and the CC at the relevant periods, i.e. after the discovery of the infidelity, different to how he conducted his affairs from when these entities were established. [30] I turn to consider the appellant’s second contention that there was no factual or legal basis for the high court to pierce the veneer of the trusts. The high court ordered that the veneer of all the three trusts be pierced to ascertain the accrual of the appellant’s estate. Before considering the correctness of the high court’s conclusion, it is necessary to comment briefly regarding the proprietary consequences of a marriage out of community of property subject to an accrual system. Since community of property was excluded, each party maintained their respective separate estates. Under this regime, a claim (an accrual claim) arises at the dissolution of the marriage ‘for an amount equal to half of the difference between the accrual of the respective estates of the spouses.’8 [31] Trusts have for years been used and will continue to be used as a convenient tool for estate planning and are governed by the Trust Property Control Act 57 of 1988. Section 1 of the Trust Property Control Act defines ‘Trust’ as being: ‘. . . the arrangement through which the ownership in property of one person is by virtue of a trust instrument made over or bequeathed- (a) to another person, the trustee, in whole or in part, to be administered or disposed of according to the provisions of the trust instrument for the benefit of the person or class of persons designated in the trust instrument or for the achievement of the object stated in the trust instrument; or (b) to the beneficiaries designated in the trust instrument, which property is placed under the control of another person, the trustee, to be administered or disposed of according to the provisions of the trust instrument for the benefit of the person or class of persons designated in the trust instrument or for the achievement of the object stated in the trust instrument, but does not include the case where the property of another is to be administered by any person as executor, tutor or curator in terms of the provisions of the Administration of Estates Act, 1965 (Act No. 66 of 1965)’. 8 Section 3(1) of the Matrimonial Property Act 88 of 1984. [32] The statutory definition makes it clear that the trust founder must relinquish at least some of his or her control over the property to the trustee, which therefore requires that there must be a separation of ownership (or control) from the enjoyment of the trust benefits so derived.9 The separation of enjoyment and control is designed to ensure that the trustees in whom the assets of the trust vest are impartial and that they exercise diligence in protecting the interests of the trust beneficiaries. Section 12 provides for the separation of the trust assets from the personal assets of a trustee unless the trustee is also a beneficiary of the same trust. The mere fact that the assets vested in the trustees and did not form part of the appellant’s estate does not per se exclude it from consideration when determining what must be taken into account when calculating the accrual.10 [33] Where there is evidence of abuse of the trust by the trustee, the courts may look behind the trust form in order to prevent its abuse. In this regard, Cameron JA in Land and Agricultural Bank of South Africa v Parker and Others provided an example of abuse of the trust form which may justify the piercing of the trust veneer:11 ‘It may be necessary to go further and extend well-established principles to trusts by holding in a suitable case that the trustees’ conduct invites the inference that the trust form was a mere cover for the conduct of business ‘as before’, and that the assets allegedly vesting in trustees, in fact, belong to one or more of the trustees and so may be used in satisfaction of debts to the repayment of which the trustees purported to bind the trust. Where trustees of a family trust, including the founder, act in breach of the duties imposed by the trust deed and purport on their sole authority to enter into contracts binding the trust, that may provide evidence that the trust form is a veneer that in justice should be pierced in the interests of creditors.’ [34] The evidence that the trusts were created as an estate planning tool was not disputed. The appellant’s evidence was that the principal objective of creating the trusts was to protect their assets to ensure that the respondent and his children, especially their mentally challenged daughter, would be cared for. The respondent and the two children are also capital beneficiaries of the trusts. It is not clear from the evidence on which the 9 Land and Agricultural Bank of South Africa v Parker and Others [2004] ZASCA 56; 2005 (2) SA 77 (SCA) para 37.3. 10 Badenhorst v Badenhorst [2005] ZASCA 116; [2006] 2 All SA 363 (SCA) para 9. 11 Land and Agricultural Bank of South v Parker above para 37.3. high court based its findings that the appellant used the trusts and the CC as his alter ego. The high court’s conclusion that the assets of the trusts should be treated as the appellant’s assets for the purposes of determining accrual was based on a dictum of this Court in Badenhorst v Badenhorst (Badenhorst), where the following is stated:12 ‘To succeed in a claim that trust assets be included in the estate of one of the parties to a marriage there needs to be evidence that such party controlled the trust and but for the trust would have acquired and owned the assets in his own name. Control must be de facto and not necessarily de iure. A nominee of a sole shareholder may have de iure control of the affairs of the company but the de facto control rests with the shareholder. De iure control of a trust is in the hands of the trustees but very often the founder in business or family trusts appoints close relatives or friends who are either supine or do the bidding of their appointer. De facto the founder controls the trust. To determine whether a party has such control it is necessary to first have regard to the terms of the trust deed, and secondly to consider the evidence of how the affairs of the trust were conducted during the marriage. It may be that in terms of the trust deed some or all the assets are beyond the control of the founder, for instance where a vesting has taken place by a beneficiary, such as a charitable institution accepting the benefit. In such a case, provided the party had not made the bequest with the intention of frustrating the wife’s or husband’s claim for a redistribution, the asset or assets concerned cannot be taken into account.’ [35] In my view, the high court’s reliance on Badenhorst is misplaced. The issue in Badenhorst concerned a just and equitable distribution of assets in terms of s 7(3) of the Divorce Act 70 of 1979. The parties there were married out of community of property before the Matrimonial Property Act was enacted, and their marriage was therefore not subject to the accrual system. The redistribution order was made on the basis that Mr Badenhorst was found to have had full control of the trust and that he used the trust as a vehicle for his business activities. This Court did not find that the trust was a sham or had been abused or made an order that the assets of the trust were to be regarded as Mr Badenhorst’s property. It did not go behind the trust form. Going behind the trust form is a remedy that will generally be given when the trust form is used in a dishonest or unconscionable manner to avoid an obligation.13 12 Badenhorst v Badenhorst above para 9. 13 Van Zyl and Another NNO v Kaye NO and Others; [2014] ZAWCHC 52; 2014 (4) SA 452 (WCC) para 22. [36] The evidence accordingly does not support the respondent’s contention that these trusts were established with the fraudulent object of defeating any of the patrimonial claims of the respondent. [37] During the preparation of the judgment, this Court on 22 June 2022, delivered its judgment in P A F v S C F [2022] ZASCA 101 (P A F v S C F). That case concerned an application for special leave to appeal against the dismissal by a full court of the applicant’s application to introduce further evidence on appeal before the full court as well as an application to condone the late prosecution of the appeal. The issue was whether the high court was correct to hold that an amount donated by the applicant to a trust should be deemed to be part of the applicant’s estate for the purpose of calculating accrual. The applicant had founded the trust under the laws of the British Virgin Islands 20 days before the commencement of the divorce trial. On 30 January 2015, a day after the trust was established, he concluded a written deed of donation with the trust, in terms of which he donated the sum of £115 000 to the trust, which was paid in March 2015. During the same month, he transferred an amount of £125 000 into the bank account of his father, supposedly the repayment of a loan which his father had made to him some 25 years earlier. [38] The respondent amended her counterclaim to include a prayer that the calculation of the accrual should take into account the value of these transactions. The trial court concluded that the two transactions were made with the fraudulent intention of depriving the respondent of her rightful accrual claim. The evidence that the applicant sought to introduce on appeal before the full court was that he had obtained a written legal opinion regarding the lawfulness of establishing the trust and the opinion itself. The outcome of the application for special leave to appeal depended on the admission of this further evidence. [39] This Court dismissed the application for special leave to appeal on the basis that the application to introduce further evidence had no merit. It held that the full court had correctly refused condonation for the late prosecution of the appeal, as the applicant had not given a satisfactory explanation for his delay. [40] The facts in P A F v S C F are however clearly distinguishable. There it was alleged, and the trial was conducted on the basis that by creating the trust and making a donation to it, the applicant had abused the trust form in order to reduce the respondent’s accrual claim, which entitled the trial court to pierce the trust veneer,14 consistent with the principle stated in Badenhorst. That is not the case here. [41] In the result, the following order is made: The appeal is upheld with costs including costs of two counsel; Paragraphs 2 and 6 of the High Court order are set aside and are replaced with the following order: ‘The plaintiff’s claim for an order that the assets of the Koens Besigheids Trust, the Koens Familie Trust, the Bulhoek Trust and Olivia Wildplaas CC are to be used to calculate the accrual of the first defendant’s estate is dismissed with costs, including the costs of two counsel where so employed.’ ________________________ D H Zondi Judge of Appeal 14 P A F v S C F [2022] ZASCA 101 paras 29 – 30. Appearances For appellant: N Grobler SC (with W A van Aswagen) Instructed by: McIntyre Van der Post Inc., Bloemfontein For respondents: P Zietsman SC (with D Grewar) Instructed by: 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 July 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 MJ K v II K [2022] ZASCA 116 The Supreme Court of Appeal (SCA) today upheld an appeal against an order by the Free State Division of the High Court, Bloemfontein (high court), in terms of which it set aside paragraphs 2 and 6 of the high court order and replaced it with one dismissing the order that the assets in question are to be used to calculate the accrual of the first defendant’s estate. The issue in the appeal was whether the value of assets of the Koens Besigheids Trust, Koens Familie Trust, Bulhoek Trust (the trusts) and the Olivia Wildplaas CC (the CC) should have been taken into account to determine the value of accrual of the appellant’s estate at the date when the marriage was dissolved. The respondent sued the appellant for divorce in the high court. Once the trusts and the CC were joined as parties to the divorce proceedings the respondent amended her particulars of claim to include a prayer for an order declaring that the assets of the trusts and the CC be taken into account when determining the value of the accrual. The respondent alleged that the appellant had de facto control over the assets of the trust and the CC, as at all relevant times during the marriage, the appellant made no distinction between the trusts and the CC’s income and expenditure and his own, the antenuptial contract contained no stipulation that the aforementioned assets should have been excluded from the accrual and the trusts and CC were funded by the appellant’s personal funds. The high court examined the terms of the trust deeds and found that all three trusts were controlled by the appellant, and he was the sole member of the CC. The high court concluded that the appellant transferred assets to the trust with the fraudulent and dishonest purpose of frustrating the respondent’s claim to the accrual of the estate. The high court held that before the appellant had become aware of the respondent’s infidelity, he conducted his business through his companies and close corporations, but after he became aware of the infidelity, he immediately transferred all the assets to the trusts. The high court concluded that the veneer of the trusts fell to be pierced to determine the accrual of the estate, as the appellant had used the trusts as his alter ego. The appellant appealed, arguing that the high court had impermissibly strayed beyond the defined issues, and that there was no factual or legal basis for the high court to have pierced the veneer of the trusts in the manner that it did. Based on the facts before it, the SCA found that there was no improper motive for the formation of the trusts or that the first appellant transferred assets to the trusts with the intent of dishonestly or fraudulently avoiding obligations pertaining to the accrual of his estate. Secondly, the evidence did not support the respondent’s contention that the trusts were established with the fraudulent object of defeating the respondent’s patrimonial claims; the high court was, therefore, incorrect in piercing the veneer of the trusts. In the result, the SCA upheld the appeal and replaced paragraphs 2 and 6 of the order of the high court with one dismissing the order of the high court that the assets of the trusts and the CC are to be taken into account to determine the accrual of the appellant’s estate. --------oOo--------

4071

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 517/2022 In the matter between: THE MUNICIPAL MANAGER: THE CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY FIRST APPELLANT THE CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY SECOND APPELLANT JOHANNESBURG WATER (SOC) LIMITED THIRD APPELLANT and SAN RIDGE HEIGHTS RENTAL PROPERTY (PTY) LTD RESPONDENT Neutral citation: The Municipal Manager: The City of Johannesburg Metropolitan Municipality and Others v San Ridge Heights Rental Property (Pty) Ltd (517/2022) [2023] ZASCA 109 (11 July 2023) Coram: NICHOLLS, CARELSE, MABINDLA-BOQWANA, WEINER and MOLEFE JJA Heard: 11 May 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be at 11h00 on 11 July 2023. Summary: Administrative action – review of the decision to classify property in terms of s 74(1) of the Local Government: Municipal Systems Act 32 of 2000 as a multi dwelling for sewer and sanitation purposes under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) – no reasons provided for administrator’s decision in terms of s 5 of PAJA – remittal of decision for reconsideration. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Strydom J, sitting as a court of first instance): The appeal is upheld, to the limited extent indicated below. Paragraph 2 of the order of the court a quo is set aside and replaced with the following: ‘The matter is remitted to the second and/or third respondents to reconsider their classification of Erf 827 Erand Gardens, Ext 36 Township, held by Certificate of Consolidated Title T1100883/2016, in terms of the second respondent’s tariff policy under s 74(1) of Act 32 of 2000.’ Each party is to pay its own costs in the appeal. JUDGMENT Carelse JA (Nicholls, Mabindla-Boqwana, Weiner and Molefe JJA concurring): [1] This appeal is against the judgment and order of the Gauteng Division of the High Court, Johannesburg, per Strydom J (the high court), in terms of which the high court granted an order in the following terms: ‘1. The decision of the second and/or third respondent to classify Erf 827 Erard (sic) Gardens, Ext 36 Township, held by Certificate of Consolidated Title T1100883/2016, (“the property”) as a “multiple dwelling”, taken in terms of the second respondent’s tariff policy under section 74(1) of Act 32 of 2000 (“the Act”) and/or the second respondent’s tariff resolution under section 75(a)(ii) of the Act is reviewed, declared invalid and set aside. 2. The decision in paragraph 1 is substituted with a decision that the property is classified as “blocks of flats” in terms of the second respondent’s tariff policy and/or tariff resolution referred to above. 3. The respondents are ordered to pay the applicant’s costs, including the costs of two counsel where so employed.’ [2] The Municipal Manager of the City of Johannesburg Metropolitan Municipality is the first appellant (the municipal manager). The City of Johannesburg Metropolitan Municipality is the second appellant (the City). Johannesburg Water (SOC) Limited (Johannesburg Water), the third appellant, is the agency responsible for providing water and sanitation services to the residents of Johannesburg and collecting charges on behalf of the City). The respondent, San Ridge Heights Rental Property (Pty) Ltd (San Ridge) is the owner of immovable property described as Erf 827, Erand Gardens in Gauteng measuring 5,2929 hectares, known as San Ridge Heights. The property was purchased from Zotec Developments (Pty) Ltd (Zotec), a property development company. [3] The facts are largely common cause. San Ridge Heights consists of 42 buildings on a single erf (erf 827). Each of the 42 buildings is a multi-storey building with eight separate flats. In total, there are 470 flats on the erf. Each block has its own communal entrance, except the ground floor units which have direct access to the ground level. [4] The City and/or Johannesburg Water provide both sewerage and sanitation services to San Ridge Heights. The City and/or Johannesburg Water charge San Ridge for sewerage and sanitation services in terms of its tariff policy, which is adjusted annually. The tariff policy sets out the charges payable by property owners for sewerage and sanitation services for different categories of property. The tariff policy distinguishes between different categories/classification of property, namely, a dwelling unit,1 a multi dwelling,2 and a flat.3 The charges a property owner pays for sewerage and sanitation services is based on the category/classification that the property is assigned. [5] The City and/or Johannesburg Water classified San Ridge Heights under the category ‘multi dwelling’, which attracts a tariff of R416.47 per month, per unit effective 1 July 2019. Zotec, the previous owner of San Ridge Heights, lodged an internal appeal, in terms of s 62 of the Local Government: Municipal Systems Act 32 of 20004 (Municipal Systems Act) against the City and/or Johannesburg Water’s 1 Dwelling unit is defined in the tariff policy as ‘one or more rooms including a kitchen/s designed as a unit for occupancy for the purpose of cooking, living and sleeping which includes nearby outbuildings, sheds and granny flats within the curtilage of the property excluding multi dwellings and flats’. 2 Multi dwelling is defined as ‘any arrangement of premises that comprises more than one dwelling unit including semi-detached houses, simplex units, townhouses and any other arrangement of residential premises excluding a block of flats’. 3 Flat is defined as ‘a dwelling unit set aside in a single multi-storey building on a single erf with a communal entrance to the building, which building comprises more than one dwelling unit; and where the rates valuation does not exceed R700,000.00’. 4 Section 62 of the Municipal Systems Act provides: ‘(1) A person whose rights are affected by a decision taken by a political structure, political office bearer, councillor or staff member of a municipality in terms of a power or duty delegated or sub-delegated by a delegating authority to the political structure, political office bearer, councillor or staff member, may appeal against that decision by giving written notice of the appeal and reasons to the municipal manager within 21 days of the date of the notification of the decision. (2) The municipal manager must promptly submit the appeal to the appropriate appeal authority mentioned in subsection (4). (3) The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision. (4) When the appeal is against a decision taken by- (a) a staff member other than the municipal manager, the municipal manager is the appeal authority; (b) the municipal manager, the executive committee or executive mayor is the appeal authority, or, if the municipality does not have an executive committee or executive mayor, the council of the municipality is the appeal authority; or decision to classify San Ridge Heights as a ‘multi dwelling’. The notice of appeal and a subsequent follow-up letter to the City and/or Johannesburg Water was simply ignored. Dissatisfied with this classification, San Ridge contends that its property should fall under the category/classification of ‘blocks of flats’ and the tariff should be R250.00 per month, per unit.5 [6] In a letter dated 17 October 2019, Zotec informed the City and/or Johannesburg Water that if it did not receive a response to its notice of appeal it ‘will be forced to assume that [its] appeal has been unsuccessful’. As a result of the incorrect tariff, it has suffered a loss of R950 876.64 per year and its ability to provide low cost rental-housing has been adversely affected. To date, San Ridge has not received a response from the City and/or Johannesburg Water. [7] On 18 May 2020, San Ridge instituted review proceedings in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), alternatively on the grounds of legality. It submitted that the City and/or Johannesburg Water did not comply with s 5 of PAJA to the extent that it did not provide reasons for its decision to classify San Ridge Heights as a ‘multi dwelling’. San Ridge relied on the following grounds of review: ss 6(2)(c), 6(2)(e)(iii), 6(2)(e)(vi) and 6(2)(i) of PAJA.6 (c) a political structure or political office bearer, or a councillor- (i) the municipal council is the appeal authority where the council comprises less than 15 councillors; or (ii) a committee of councillors who were not involved in the decision and appointed by the municipal council for this purpose is the appeal authority where the council comprises more than 14 councillors. (5) An appeal authority must commence with an appeal within six weeks and decide the appeal within a reasonable period. (6) The provisions of this section do not detract from any appropriate appeal procedure provided for in any other applicable law.’ 5 See clause 2 (sewerage and sanitation charges) of the draft rates and tariffs issued by the Council of the City of Johannesburg Metropolitan Municipality (1 July 2019 – 30 June 2020). 6 Sections 6(2)(c), 6(2)(e)(iii), 6(2)(e)(vi) and 6(2)(i) of PAJA provide that ‘[a] court or tribunal has the power to judicially review an administrative action if . . . the action was procedurally unfair’; ‘the action was taken . . . because irrelevant considerations were taken into account or relevant considerations were not considered; . . . or arbitrarily or capriciously’; or ‘the action is otherwise unconstitutional or unlawful’. [8] On 22 June 2020, the Municipal Manager, the City and Johannesburg Water filed their notice of intention to oppose. They only filed the rule 53 record on 26 August 2020. On 18 May 2022, the high court found in favour of San Ridge in terms of the order mentioned above. Leave to appeal to this Court was granted by the high court. [9] The record consisted of documents of the mayoral committee dated 6 March 2019, the planning scheme, the Land Use Scheme, the property rates policy for the period 2018/2019, 2019/2020, the Local Government: Municipal Systems Act 32 of 2000 and Local Government: Municipal Property Rates Act 6 of 2004. The City and/or Johannesburg Water do not deny that the record filed does not relate to the decision and/or reasons to classify San Ridge Heights as a ‘multi dwelling’. [10] It is common cause that the decision by the City and/or Johannesburg Water amounts to administrative action and is subject to review under PAJA. The City and/or Johannesburg Water concede that San Ridge’s case is not an attack on the validity of the tariff policy, but on its decision to classify the property as a ‘multi dwelling’. In sum, San Ridge’s review challenge is premised on the implementation of the City’s tariff policy and not the tariff policy itself.7 [11] Section 7 of PAJA provides: 7 See Greys Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; [2005] 3 All SA 33 (SCA); 2005 (6) SA 313 (SCA) para 24, which reads: ‘Whether particular conduct constitutes administrative action depends primarily on the nature of the power that is being exercised rather than upon the identity of the person who does so. Features of administrative action (conduct of “an administrative nature”) that have emerged from the construction that has been placed on s 33 of the Constitution are that it does not extend to the exercise of legislative powers by deliberative elected legislative bodies, nor to the ordinary exercise of judicial powers, nor to the formulation of policy or the initiation of legislation by the executive, nor to the exercise of original powers conferred upon the President as head of state. Administrative action is rather, in general terms, the conduct of the bureaucracy (whoever the bureaucratic functionary might be) in carrying out the daily functions of the State which necessarily involves the application of policy, usually after its translation into law, with direct and immediate consequences for individuals or groups of individuals.’ ‘(1) Any proceedings for judicial review in terms of section 6(1) must be instituted without unreasonable delay and not later than 180 days after the date- (a) subject to subsection (2)(c), on which any proceedings instituted in terms of internal remedies as contemplated in subsection (2)(a) have been concluded; or (b) where no such remedies exist, on which the person concerned was informed of the administrative action, became aware of the action and the reasons for it or might reasonably have been expected to have become aware of the action and the reasons. (2)(a) Subject to paragraph (c), no court or tribunal shall review an administrative action in terms of this Act unless any internal remedy provided for in any other law has first been exhausted. (b) Subject to paragraph (c), a court or tribunal must, if it is not satisfied that any internal remedy referred to in paragraph (a) has been exhausted, direct that the person concerned must first exhaust such remedy before instituting proceedings in a court or tribunal for judicial review in terms of this Act. (c) A court or tribunal may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust any internal remedy if the court or tribunal deems it in the interest of justice. (3) The Rules Board for Courts of Law established by section 2 of the Rules Board for Courts of Law Act, 1985 (Act 107 of 1985), must, before 28 February 2009, subject to the approval of the Minister, make rules of procedure for judicial review. (4) Until the rules of procedure referred to in subsection (3) come into operation, all proceedings for judicial review under this Act must be instituted in a High Court or another court having jurisdiction. (5) Any rule made under subsection (3) must, before publication in the Gazette, be approved by Parliament.’ [12] The following facts are not disputed: Zotec and San Ridge exhausted all internal remedies before launching the review application (this allegation is met with a bald denial); and the review application was launched timeously. More importantly, after both Zotec and San Ridge had sent numerous letters to the City and/or Johannesburg Water, and even after the launch of an internal appeal, they did not provide any reasons for their decision to classify San Ridge Heights as a ‘multi dwelling.’ To put it bluntly, the City and /or Johannesburg Water have simply ignored all attempts by San Ridge to obtain reasons for their decision. [13] Section 33(2) of the Constitution8 imposes a duty on public administrators to give written reasons to those whose rights have been adversely affected by administrative action. This constitutional obligation is given effect in PAJA, which sets out that any person whose rights have been materially and adversely affected by administrative action and who has not been given reasons for the decision, is entitled to demand reasons for the administrator’s decision.9 8 Section 33(2) of the Constitution provides that ‘[e]veryone whose rights have been adversely affected by administrative action has the right to be given written reasons’. 9 Section 5 of PAJA provides: ‘(1) Any person whose rights have been materially and adversely affected by administrative action and who has not been given reasons for the action may, within 90 days after the date on which that person became aware of the action or might reasonably have been expected to have become aware of the action, request that the administrator concerned furnish written reasons for the action. (2) The administrator to whom the request is made must, within 90 days after receiving the request, give that person adequate reasons in writing for the administrative action. (3) If an administrator fails to furnish adequate reasons for an administrative action it must, subject to subsection (4) and in the absence of proof to the contrary, be presumed in any proceedings for judicial review that the administrative action was taken without good reason. (4)(a) An administrator may depart from the requirement to furnish adequate reasons if it is reasonable and justifiable in the circumstances, and must forthwith inform the person making the request of such departure. (b) In determining whether a departure as contemplated in paragraph (a) is reasonable and justifiable, an administrator must take into account all relevant factors, including- (i) the objects of the empowering provision; (ii) the nature, purpose and likely effect of the administrative action concerned; (iii) the nature and the extent of the departure; (iv) the relation between the departure and its purpose; (v) the importance of the purpose of the departure; and (vi) the need to promote an efficient administration and good governance. (5) Where an administrator is empowered by any empowering provision to follow a procedure which is fair but different from the provisions of subsection (2), the administrator may act in accordance with that different procedure. (6)(a) In order to promote an efficient administration, the Minister may, at the request of an administrator, by notice in the Gazette publish a list specifying any administrative action or a group or class of administrative actions in respect of which the administrator concerned will automatically furnish reasons to a person whose rights are adversely affected by such actions, without such person having to request reasons in terms of this section. (b) The Minister must, within 14 days after the receipt of a request referred to in paragraph (a) and at the cost of the relevant administrator, publish such list, as contemplated in that paragraph.’ [14] In this case, San Ridge was not provided with any reasons by the City and /or Johannesburg Water for their decision to classify San Ridge Heights as a ‘multi dwelling,’ which San Ridge submits has adversely and materially affected its rights. Section 5(3) of PAJA makes it clear that, and in the absence of proof to the contrary, the failure to provide reasons can lead to the presumption that the administrative action was taken without good reason or in bad faith. When a request for reasons is refused, the administrator must provide reasons for such refusal because it is likely that the administrator’s decision will have a material and adverse effect on the rights of the affected person, although, there may be exceptions (see s 5(4) of PAJA). [15] The City and/or Johannesburg Water have taken an ill-considered view that the classification of San Ridge Heights as a ‘multi dwelling,’ which is defined in the City and/or Johannesburg Water’s tariff policy, was self-explanatory and the reasons for the various classifications are embedded in the document itself. However, the tariff policy does no more than to define the different categories of residential property in Johannesburg. The City and /or Johannesburg Water do not explain what factors they took into account when they classified San Ridge Heights as a ‘multi dwelling.’ There may well be instances where what is contained in a document may be sufficient to formulate an objection.10 In any event, none of these submissions by the City and/or Johannesburg Water are set out in their answering affidavit. [16] The failure to give reasons by the City and /or Johannesburg Water in this case is fatal and dispositive of the matter. It is not necessary to deal with the other grounds 10 Commissioner for the South African Revenue Service v Sprigg Investment 117 CC t/a Global Investment [2010] ZASCA 172; 2011 (4) SA 551 (SCA); [2011] 3 All SA 18 (SCA) para 17. relied upon by San Ridge. This, however, is not the end of the matter. This Court must consider the appropriateness of the high court substituting its decision for that of the administrator. [17] Section 8 of PAJA gives the courts a wide discretion to make any ‘just and equitable’ order to remedy the violation of the right to just administrative action.11 This includes, in exceptional circumstances, the court substituting or varying the administrative action with a decision in terms of the court’s order (s 8(1)(c)(ii)(aa)). Substitution, however, is an extraordinary remedy.12 [18] The Constitutional Court in Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another13 clarified the test for exceptional circumstances where a substitution order is sought. It suffices to state 11 Section 8 of PAJA provides: ‘(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. (2) The court or tribunal, in proceedings for judicial review in terms of section 6(3), may grant any order that is just and equitable, including orders- (a) directing the taking of the decision; (b) declaring the rights of the parties in relation to the taking of the decision; (c) directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the refraining from the doing, of which the court or tribunal considers necessary to do justice between the parties; or (d) as to costs.’ 12 Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) para 42. 13 Ibid para 32. that remittal is almost always the prudent and proper course. Appropriate deference ought to be afforded to the administrator. Whether a court was in as good a position as the administrator to make the decision and whether the decision was a foregone conclusion are two factors that had to be considered cumulatively. Other relevant factors include delay, bias or incompetence on the part of the administrator.14 [19] The high court substituted its decision, that San Ridge Heights be classified as ‘blocks of flats’ in terms of the tariff policy for that of the City and/or Johannesburg Water’s decision to classify the property as a ‘multi dwelling’. In light of the abovementioned test, the high court erred in this regard for the following reasons. [20] It is common cause that there were no rates valuations15 of the individual flats attached to either San Ridge’s or to the City and/or Johannesburg Water’s affidavit. The high court required this information before making a determination as to whether or not San Ridge Heights is a ‘multi dwelling’ or not. As it did not have this information before it, it was not competent to substitute its decision for that of the administrator. Similarly, this Court does not have sufficient facts before it to substitute the administrator’s decision. As a result of the City and/or Johannesburg Water’s failure to provide reasons for their decision, the matter should be remitted to the decision-maker for reconsideration. In light of these findings, the appeal must succeed, although, only to the extent as provided for in the order below. Neither party has been fully successful and each should pay their own costs. [21] In the result, the following is made: 14 Ibid paras 43-54. 15 See fn 3. 1 The appeal is upheld, to the limited extent indicated below. 2 Paragraph 2 of the order of the court a quo is set aside and replaced with the following: ‘The matter is remitted to the second and/or third respondents to reconsider their classification of Erf 827 Erand Gardens, Ext 36 Township, held by Certificate of Consolidated Title T1100883/2016, in terms of the second respondent’s tariff policy under s 74(1) of Act 32 of 2000.’ 3 Each party is to pay its own costs in the appeal. _____________________ Z CARELSE JUDGE OF APPEAL Appearances For the appellants: S Ogunronbi Instructed by: Prince Mudau & Associates, Midrand Webbers Attorneys, Bloemfontein For the respondent: F J Erasmus SC (with H van Eetveldt) Instructed by: JDB Attorneys Incorporated, 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: 11 July 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal The Municipal Manager: The City of Johannesburg Metropolitan Municipality and Others v San Ridge Heights Rental Property (Pty) Ltd (517/2022) [2023] ZASCA 109 (11 July 2023) Today, the Supreme Court of Appeal (SCA) upheld an appeal, although to a limited extent, against the judgment of the Gauteng Division of the High Court, Johannesburg, per Strydom J (the high court), in terms of which the high court granted an order that, inter alia, declared invalid and set aside the decision of the second and/or third respondents to classify Erf 827 Erand Gardens, Ext 36 Township, in terms of the second respondent’s tariff policy. Each party was ordered to pay their own costs in the appeal. The Municipal Manager of the City of Johannesburg Metropolitan Municipality was the first appellant (the municipal manager). The City of Johannesburg Metropolitan Municipality was the second appellant (the City). Johannesburg Water (SOC) Limited (Johannesburg Water) was the third appellant. The respondent, San Ridge Heights Rental Property (Pty) Ltd (San Ridge) was the owner of immovable property described as Erf 827, Erand Gardens known as San Ridge Heights. The property was purchased from Zotec Developments (Pty) Ltd (Zotec), a property development company. The City and/or Johannesburg Water classified San Ridge Heights under the category ‘multi dwelling’, which attracted a tariff of R416.47 per month, per unit effective 1 July 2019. Zotec, the previous owner of San Ridge Heights, lodged an internal appeal, in terms of s 62 of the Local Government: Municipal Systems Act 32 of 2000 (Municipal Systems Act) against the City and Johannesburg Water’s decision to classify San Ridge Heights as a ‘multi dwelling’. The notice of appeal and a subsequent follow-up letter to the City and Johannesburg Water were simply ignored. Dissatisfied with this classification, San Ridge contended that its property should have fallen under the category/classification of ‘blocks of flats’ and the tariff should have been R250.00 per month, per unit. On 18 May 2020, San Ridge instituted review proceedings in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), alternatively on the grounds of legality. It submitted that the City did not comply with s 5 of PAJA to the extent that it did not provide reasons for its decision to classify San Ridge Heights as a ‘multi dwelling’. The SCA found that San Ridge was not provided with any reasons by the City and/or Johannesburg Water for their decision to classify San Ridge Heights as a ‘multi dwelling,’ which San Ridge submitted had adversely and materially affected its rights. The failure to give reasons by the City and/or Johannesburg Water, the SCA found, was fatal and dispositive of the matter. Notwithstanding, the SCA found further that it had to consider the appropriateness of the high court substituting its decision for that of the administrator. The high court had substituted its decision, that San Ridge Heights be classified as ‘blocks of flats’ in terms of the tariff policy, for that of the City and/or Johannesburg Water’s decision to classify the property as a ‘multi dwelling’. In this regard, the SCA found that the high court erred. This was because it was common cause that there were no rates valuations of the individual flats attached to either San Ridge’s or to the City and/or Johannesburg Water’s affidavits. The high court required this information before making a determination as to whether or not San Ridge Heights was a ‘multi dwelling’ or not. As the high court did not have this information before it, the SCA found that it was not competent to substitute its decision for that of the administrator. Similarly, the SCA found that it did not have sufficient facts before it to substitute the administrator’s decision. Accordingly, the SCA held that the matter be remitted to the decision-maker for reconsideration. ~~~~ends~~~~

3550

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 873/2019 In the matter between: JOHAN SEBASTIAAN EKSTEEN APPELLANT and ROAD ACCIDENT FUND RESPONDENT Neutral citation: Eksteen v Road Accident Fund (873/2019) [2021] ZASCA 48 (21 April 2021) Coram: PETSE AP and MAKGOKA and DLODLO JJA and LEDWABA and POYO-DLWATI AJJA Heard: Matter disposed of without a hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013 on 17 February 2021. Delivered: This judgment was handed down electronically by circulation to the parties' representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09:45 on 21 April 2021. Summary: Section 2(1)(e)(ii) of the Road Accident Fund (Transitional Provisions) Act 15 of 2012 – whether obligatory for a plaintiff affected by the section to first withdraw the action instituted in a magistrate’s court prior to issuing summons in the high court – whether prescription nevertheless commences to run even if action instituted in a magistrate’s court has not been withdrawn. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Free State Division of the High Court, Bloemfontein (Musi JP, Loubser J and Murray AJ concurring sitting as court of first instance): The appeal is upheld in part with costs. The action is referred back to the high court for trial in accordance with the principles set out in this judgment before a differently constituted court. The order of the high court is set aside and in its place is substituted the following: ‘3.1 The defendant’s special plea of lis alibi pendens is upheld. 3.2 The court declines to determine the special plea of prescription as the facts contained in the agreed statement of the parties are inadequately stated for a proper determination to be made. 3.3 The costs associated with the determination of the defendant’s special pleas shall be costs in the cause.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Poyo-Dlwati AJA (Ledwaba AJA concurring dissenting): [1] This appeal turns on the interpretation of s 2(1)(e)(ii) of the Road Accident Fund (Transitional Provisions) Act 15 of 2012 (the TPA). The preamble to the TPA reads: ‘To provide for transitional measures in respect of certain categories of third parties where claims were limited under the Road Accident Fund Act 1996 (Act No. 56 of 1996), prior to 1 August 2008; and to provide for matters connected herewith.’ Section (2)(1)(e)(ii) of the TPA provides: ‘Unless the third party expressly and unconditionally indicates to the Fund on the prescribed form, within one year of this Act taking effect, to have his or her claim remain subject to the old Act, the claim of such third party is subject to the new Act under the following transitional regime: (e) A third party who has prior to this Act coming into operation- (ii) instituted an action against the Fund in a Magistrate’s Court, may withdraw the action and, within 60 days of such withdrawal, institute an action in a High Court with appropriate jurisdiction over the matter: Provided that no special plea in respect of prescription may be raised during that period.’ [2] The TPA came into effect as a result of the Constitutional Court decision in Mvumvu,1 which declared ss 18(1)(a)(i), 18(1)(b) and 18(2) of the Road Accident Fund Act 56 of 1996 inconsistent with the Constitution and invalid. Those provisions capped to R25000 various claims of certain categories of claimants.2 1 Mvumvu and Others v Minister of Transport and Another [2011] ZACC 1; 2011 (2) SA 473 (CC); 2011 (5) BCLR 488 (CC). 2 Before its deletion Section 18 (1) read: The liability of the Fund or an agent to compensate a third party for any loss or damage contemplated in section 17 which is the result of any bodily injury to or death of any person who, at the time of the occurrence which caused that injury or death, was being conveyed in or on the motor vehicle concerned, shall, in connection with any one occurrence, be limited, excluding the cost of recovering the said compensation, and except where the person concerned was conveyed in or on a motor vehicle other than a motor vehicle owned by the South African National Defence Force during the period in which he or she rendered military service or underwent [3] On 17 January 2008, the appellant, Mr Johan Sebastiaan Eksteen, instituted an action against the respondent, the Road Accident Fund, in the Bloemfontein magistrate’s court. Without withdrawing that action, and on 19 October 2016, the appellant instituted another action against the respondent, in the Free State Division of the High Court (the high court) for damages he suffered as a result of a motor vehicle collision, which occurred on 18 June 2003. According to the appellant’s particulars of claim, he was a passenger in a motor vehicle driven by one Mr De Lange which collided with a vehicle driven by Mr Hyde at the intersection of Monument Road and Nico van der Merwe Avenue in Bloemfontein. It was alleged that the sole cause of the collision was the negligence of Mr Hyde. [4] The respondent defended the action and delivered two special pleas and the main plea disputing liability. The first special plea was one of lis alibi pendens. It was pleaded that the appellant had instituted an action in the Bloemfontein magistrate’s court based on the same cause of action which was still pending. The second special plea was that the appellant’s claim had prescribed, as the action was instituted five years after the collision, contrary to the provisions of the Road Accident Fund Act.3 military training in terms of the Defence Act, 1957 (Act No.44 of 1957), or another Act of Parliament governing the said Force, but subject to subsection (2)(a) to the sum of R25000 in respect of any bodily injury or death of any one such person who at the time of the occurrence which caused that injury or death was being conveyed in or on the motor vehicle concerned: (i) for reward; or (ii)in the course of the lawful business of the owner of that motor vehicle; or . . . (b) in the case of a person who was being conveyed in or on the motor vehicle concerned under circumstances other than those referred to in paragraph (a), to the sum of R25000 in respect of loss of income or of support and the costs of accommodation in a hospital or nursing home, treatment, the rendering of a service and the supplying of goods resulting from bodily injury to or the death of any one such person, excluding the payment of compensation in respect of any other loss or damage. 3 Section 23(3) of the Road Accident Fund Act 56 of 1996 as amended reads: Notwithstanding subsection (1), no claim which has been lodged in terms of section 24 shall prescribe before the expiry of a period of five years from the date on which the cause of action arose. [5] The matter served before Jordaan J for trial. The parties agreed and the court ordered, in terms of Rule 33(1), that the special pleas be adjudicated separately from the main plea. For this purpose, a statement of agreed facts was prepared by the parties. The relevant parts of that statement read: ‘1 . . . . . . . . . 4.1 . . . 4.2 The Plaintiff submitted a claim with the Defendant on or about 17 June 2004 in terms of the provisions of the Road Accident Fund Act, 56 of 1996, as amended (“the Act”). 4.3 The claim was submitted by the Plaintiff to the Defendant within the prescribed period of time. 4.4 The Plaintiff issued a summons from the Magistrate’s Court for the District of Bloemfontein, held at Bloemfontein, under case number 970/2008 on 16 January 2008 (“the Magistrate’s Court matter”). 4.5 The Magistrate’s Court summons was served on the Defendant on or about 18 February 2008. 4.6 The Plaintiff lodged the prescribed RAF 4 claim form with the Defendant on 13 March 2014. 4.7 The Plaintiff issued summons from the High Court of South Africa in Bloemfontein on 19 October 2016 under case 4972/2016 (“the High Court matter”). 4.8 The High Court summons was served on the Defendant on 20 October 2016. 4.9 The Defendant filed a plea in the High Court matter on 13 December 2016. 4.10 The Defendant filed special pleas of lis pendens and prescription during or about 26 May 2017 (“the special pleas”). 5.1 The Defendant contends that this matter is pending in another court, with which averment the Plaintiff agrees. 5.2 The Defendant further contends that the Plaintiff’s claim prescribed, due to the fact that the summons was issued on 19 October 2016, which is more than 5 years after the date on which the cause of action arose. 5.3 The Plaintiff contends that as the Plaintiff’s claim was duly lodged with the Defendant on 17 June 2004, whilst summons in the Magistrate’s Court action was duly served on the Defendant on 18 February 2008, prescription therefore does not play a role. 5.4 The Defendant further contends that the Plaintiff lodged the RAF 4 form with the Defendant on 13 March 2014 and accordingly the Plaintiff’s claim for non-pecuniary loss has prescribed. 5.5 The Plaintiff further contends that as the RAF 4 was duly lodged with the Defendant on 13 March 2014, the Plaintiff’s claim for non-pecuniary loss has not prescribed.’ [6] The parties further agreed that the high court was to determine the two special pleas and the effect of s 2(1)(e)(ii) of the TPA, in particular, whether the appellant was entitled to proceed with the high court action despite the pending action in the magistrate’s court. Jordaan J expressed a prima facie view that for a plaintiff who elects to prosecute and institute an action in the high court, to enjoy the protection of the section against prescription, he or she must first withdraw the magistrate’s court action and institute an action in the high court within 60 days. However, he did not decide the dispute before him, as his prima facie view differed with an earlier decision of that division on the same issue and with other divisions, but referred the matter to the full bench for a final decision. [7] The full bench (Musi JP, Loubser J and Murray AJ concurring) found in favour of the respondent and upheld the special pleas. After analysing various decisions relating to proper interpretation of s 2(1)(e)(ii) of the TPA, it found, ‘that the word “may” in the context of this section meant that a plaintiff had an election. The plaintiff may prosecute the claim in the magistrate’s court until it is finalized or he or she may decide to institute the action in the high court. The plaintiff may elect to continue with the claim in the magistrate’s court because with or without the cap it may fall within the monetary jurisdiction of that court. He or she may decide to amend the monetary value of the claim so that it is more than the cap but less than the maximum monetary jurisdiction of the magistrate’s court or he or she may abandon the amount which is more than the maximum monetary jurisdiction of that court. “May”, in this context, therefore means that the plaintiff has an election to litigate in one of [the] two fora’. [8] The full bench further observed that the word ‘such’ in the section had a grammatically intractable meaning and did not have an alternative meaning. It held that the words ‘within 60 days of such withdrawal’ meant within 60 days from the date of the withdrawal of the action in the magistrate’s court. It concluded that, ‘there must be an action in the magistrate’s court based on the cap. There must be an election to prosecute that action in the high court with jurisdiction over the matter. The plaintiff must first withdraw the action in the magistrate’s court and within 60 days after the withdrawal of the action in the magistrate’s court institute the action in the high court. If the steps are followed in this sequence the plaintiff would be protected against the special plea of prescription’. It, in the result, dismissed the appellant’s claim with costs. [9] Dissatisfied with this order, the appellant appeals with the leave of the full bench. The respondent does not oppose the appeal, and has filed a notice to abide the decision of this Court. [10] As I have stated, this appeal has its genesis in the interpretation of s 2 (1) (e) (ii) of the TPA favoured by the full bench. The question to be answered is whether in terms of the provisions of s 2 (1) (e) (ii) of the TPA a claimant is required to withdraw his claim in the magistrate’s court prior to instituting an action in the high court. There are various conflicting judgments in the various divisions of the high court on this issue. For instance, in Sekwere4, the court found that the section was not peremptory and thus did not oblige claimants to first withdraw the magistrate’s court summons and only thereafter issue same in the high court. It found that there was no obligation on the plaintiff to have followed a step-by-step process which was not provided for by the TPA. [11] In Klaas5, the court held, disagreeing with Sekwere: ‘I do not agree that the legislature did not provide a step-by-step procedure of how the summonses of court actions were to be dealt with. What is to be done is very clear from the provisions of s 2(1)(e)(ii) of the TPA. The legislature, quite logically, expected that claimants who had to go to the Magistrate’s Court due to the statutory limitations in the quantum of their claims had to be offered a transitional mechanism to launch new actions in the High Courts, should there be a need. In my view, the sequence is very clear in the provision. You withdraw the earlier instituted Magistrate’s Court action and within 60 days of such withdrawal institute an action in the High Court.’ [12] In Tshabalala,6 the court, agreeing with Klaas, held: ‘The plaintiff is required to first withdraw the action in the Magistrate’s Court. The fact that the plaintiff is allowed merely 60 days thereafter to institute the action in the High Court is indicative of this fact. The 60 day time limit is there for good reason. It would be untenable for a plaintiff to withdraw his/her action and, thereafter, not institute the High Court action for an indefinite period. Legal proceedings need to be certain, and need to end.’ And lastly in Buthelezi7 the court agreed with Klaas and Tshabalala and held: ‘The act makes provision for the action to be first withdrawn in the Magistrate’s Court and subsequent to that summons be issued in the High Court. It further held, upholding the special plea for prescription, that the section uses the word “may” which means that the third party is not 4 M. E Sekwere v Road Accident Fund [2015] ZAFSHC (FB). 5 Klaas v Road Accident Fund [2015] ZAGPPHC 778 (GP) para 25. 6 Tshabalala v Road Accident Fund [2015] ZAGPJHC 281 (GJ) para 27. 7 Buthelezi v Road Accident Fund [2018] ZAGPPHC 449 (GP). compelled to withdraw the action, but may only withdraw the action in the Magistrate’s Court if he/she has the intention of instituting the action in the High Court.’ [13] Before us, it was submitted on behalf of the appellant that it was not obligatory for the appellant to withdraw the magistrate’s court action prior to instituting the high court action. Such an interpretation, so went the contention, would be methodical and would deny claimants such as the appellant their right to equality whose claims were previously limited by the unconstitutional statutory provision. [14] It is apt to quote what this court had to say about interpreting the RAF legislation in Pithey v Road Accident Fund:8 ‘It has long been recognised in judgments of this and other courts that the Act and its predecessors represent social legislation aimed at the widest possible protection and compensation against loss and damages for the negligent driving of a motor vehicle. Accordingly, in interpreting the provisions of the Act, courts are enjoined to bear this factor uppermost in their minds and to give effect to the laudable objectives of the Act.’ [15] The principles applicable to statutory interpretation (or any written document for that matter) are trite. In Independent Institute of Education (Pty) Ltd v KwaZulu- Natal Law Society and Others,9 the Constitutional Court, reiterating the principles laid down in Endumeni,10 held that a contextual and purposive approach must be applied to statutory interpretation. Courts must have due regard to the context in which the words appear, even where the words to be construed are clear and unambiguous.11 In Department of Land Affairs v Goedgelegen Tropical Fruits (Pty) 8 Pithey v Road Accident Fund [2014] ZASCA 55; 2014 (4) SA 112 (SCA); [2014] 3 All SA 324 (SCA) para 18. 9 Independent Institute of Education (Pty) Limited v Kwazulu-Natal Law Society and Others [2019] ZACC 47; 2020 (2) SA 325 (CC); (2020 (4) BCLR 495 (CC) para 41. 10 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 11 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) para 90. Ltd,12 Moseneke DCJ held that a contextual approach requires that legislative provisions are interpreted in the light of the text of the legislation as a whole (internal context). [16] Bearing the above in mind and taking into account the purpose for which the TPA was enacted, properly construed, the provisions of s 2 (1) (e) (ii)of the TPA demonstrate that a claimant has an election to make; hence the word ‘may’. Ascribing meaning to the word ‘may’ would mean in this context that either the claimant may withdraw the action in the magistrate’s court, where, for example, the quantum of the claim sought to be pursued, exceeds the jurisdiction of a magistrate’s court. Alternatively, the claimant may decide to forego the amount in excess of the jurisdiction of a magistrate’s court and continue to prosecute its claim in such court. Once an election has been made to withdraw the action in the magistrate’s court, then the claimant has sixty days within which to institute an action in the high court and no plea of prescription can be raised during that period. If there is no election made, namely the claim remains in the magistrate’s court, then the 60 day period does not come into play. In my view, any contrary interpretation would be negating the context upon which this legislation was enacted. [17] Furthermore, the purpose for the insertion of the 60 day period to institute an action in the high court is to ensure that there is certainty for the period within which to institute such an action. It also protects those claimants from a plea of prescription. The vital role time limits play in bringing certainty and stability to social and legal affairs and maintaining the quality of adjudication has been repeatedly emphasised.13 The legislature could not have intended that the two actions would run parallel to 12 Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (10) BCLR 1027 (CC); 2007 (6) SA 199 (CC) para 53. 13 Road Accident Fund and Another v Mdeyide [2010] ZACC 18; 2011 (1) BCLR 1 (CC); 2011 (2) SA 26 (CC) para 8. each other, due to the risk of the plea of lis alibi pendens. The 60 day period is triggered only once an election has been made. This clearly demonstrates that if the 60 day period referred to in the text was not catered for, then there would be no time limit within which to institute an action in the high court and this would go against the principle of certainty in legal proceedings. [18] It is a reasonable and sensible interpretation that s 2(1)(e)(ii) contemplates that the magistrate’s court action be withdrawn first prior to the institution of the action in the high court. If one has regard to the TPA as a whole, it is clear that it was meant to provide transitional measures for actions that were already instituted in the magistrate’s court at the time that the TPA was enacted until they were finalized depending on the election made by the claimant. If one were to adopt the interpretation preferred by the appellant then there would be no end to the transitional period, thus undermining the apparent purpose of the TPA. [19] Furthermore, as it has happened in this case, the protection afforded by this section does not apply if the election has not been made. There is nothing preventing the respondent from raising the defence of lis alibi pendens if the magistrate’s court action has not been withdrawn prior to instituting another action in the high court. The same applies with prescription if the high court action has not been instituted within five years from the date of the collision. A claimant has to follow these steps in order to enjoy the full protection of the TPA. In any event, and in line with what was stated in Pithey14 above, the appellant will not be left empty handed as his claim in the magistrate’s court is still pending. 14 See fn 8. [20] Thus, the reasoning of the full bench cannot be faulted. Accordingly, the appeal must fail. There should be no costs order as the respondent did not participate in the appeal. [21] In the result, I would have made the following order: The appeal is dismissed. pp ________________________ T P POYO-DLWATI ACTING JUDGE OF APPEAL Petse AP (Makgoka and Dlodlo JJA concurring): [22] I have had the benefit of reading the judgment (first judgment) of my colleague, Poyo-Dlwati AJA. For reasons that follow, I, with respect, disagree with her conclusion in relation to the special plea of prescription. The facts of this case have been canvassed in the first judgment and will not be rehashed in this judgment. However, where necessary for purposes of this judgment, I shall also set out the relevant factual background. [23] The appellant instituted an action in the Free State Division of the High Court, Bloemfontein, for damages arising out of a collision that had occurred on 18 June 2003. This action was instituted pursuant to the provisions of s 2(1)(e)(ii) of the Road Accident Fund (Transitional Provisions) Act 15 of 2012 (the TPA). The first judgment sets out how it came about that the TPA was enacted.15 When the TPA came into effect, the appellant had already instituted an action in the Magistrate’s Court, Bloemfontein (first action), arising out of the same collision, which was still pending when the high court summons for substantially the same relief, barring the quantum of the claim, was issued. [24] It is common cause, as emerges from the record, that the first action had not been withdrawn before the high court action was instituted. The first action was therefore still pending when the matter served before the Full Bench. This appeal lies against the judgment of the Full Bench. Because the appellant elected to also litigate in the high court, relying on the same cause of action, whilst his first action was still pending in the magistrate’s court, the Road Accident Fund (the Fund) unsurprisingly raised a special plea of lis alibi pendens, which the high court rightly upheld. 15 See paragraph 1 of the first judgment. [25] The crux of the special plea of prescription was that the appellant issued summons in the high court on 19 October 2016, whereas his cause of action (ie the collision from which he sustained serious bodily injuries) had arisen on 18 June 2008. This summons was served on the Fund on 21 October 2016, ‘which [was] more than 5 years after the date on which the cause of action arose’. [26] As indicated in the first judgment, both special pleas came before the Full Bench, whose judgment was penned by Musi JP, in which Loubser J and Murray AJ concurred. In essence, the high court held that the prescription point was well- founded. In the result, it upheld the special plea of prescription and dismissed the action with costs. Hence the present appeal with its leave. [27] In reaching this conclusion, the high court, directing its focus on s 2(1)(e)(ii) of the TPA, reasoned thus: ‘The section should therefore be interpreted as follows. There must be an action in the Magistrate’s Court based on the cap. There must be an election to prosecute that action in the High Court with jurisdiction over the matter. The plaintiff must first withdraw the action in the Magistrate’s Court and within 60 days after the withdrawal of the action in the Magistrate’s Court institute the action in the High Court. If the steps are followed in this sequence the plaintiff would be protected against a special plea of prescription. The reason why there must first be a withdrawal is to ensure that the same action is not prosecuted in two different fora. Even if the new claim in the High Court shall have prescribed, the plaintiff is afforded a shield for 60 days against a special plea of prescription. If the claim is withdrawn in the Magistrate’s Court and it is not prosecuted in the High Court within 60 days, then the plaintiff would be without Legislative protection against a special plea of prescription. When the claim is instituted in the High Court within 60 days after the withdrawal of the Magistrate’s Court action, then only the High Court would be seized of the matter. The withdrawal of the action in the Magistrate’s Court and within 60 days thereafter instituting it in the High Court, are therefore conditions precedent to the protected institution of the claim in the High Court. The interpretation to the effect that the plaintiff may litigate against the same defendant in different fora at the same time based on the same causa renders the 60 days nugatory. The interpretation that the true meaning of the section is to have only one forum seized of the matter at any given time, means that the defence of lis alibi pendens will not arise. . . . The Legislature has granted the plaintiff the right to institute the action in the High Court without the possibility of a special plea of prescription being raised, during the window period. It has, however, also directed that certain formalities or conditions should precede to the exercise of that right. The formalities or conditions must therefore be rigorously observed. In Munro v Dranklisensieraad, Welkom the learned Judge quoted Maxwell with approval where the latter said the following: “. . . Where powers, rights or immunities are granted with a direction that certain regulations, formalities or conditions shall be complied with, it seems neither unjust nor inconvenient to exact a rigorous observance of them as essential to the acquisition of the right or authority conferred, and it is therefore probable that such was the intention of the Legislature . . .” Moreover, this section [ie proviso to s 2(1)(e)(ii)] takes away the defendant’s right to raise the defence of prescription whilst it gives the plaintiff the right to sue after the claim has prescribed. The defendant is therefore prejudiced, albeit for a noble reason. This is a further reason why there should be strict compliance with the formalities and conditions in the section.’ It bears mentioning that the high court’s reasoning has, in substance, been endorsed in the first judgment. [28] At the risk of stating the obvious, I emphasise that the enquiry here is directed at ascertaining the meaning of the provisions of s 2(1)(e)(ii) of the TPA, in the light of the language employed in this section, taking into account both the context and the purpose to which the TPA is directed. This exercise is essentially one of statutory interpretation. On this score, Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA); [2012] 2 All SA 262 (SCA) (Endumeni) reminds us that: ‘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.’16 [29] As noted in the first judgment, Endumeni was cited with approval in Independent Institute of Education (Pty) Limited v Kwazulu-Natal Law Society and Others [2019] ZACC 47; 2020 (2) SA 325 (CC); 2020 (4) BCLR 495 (CC). There, the Constitutional Court stated the following: ‘This canon is consistent with a contextual approach to statutory interpretation. It is now trite that courts must properly contextualise statutory provisions when ascribing meaning to the words used therein. While maintaining that words should generally be given their ordinary grammatical meaning, this Court has long recognised that a contextual and purposive approach must be applied to statutory interpretation. Courts must have due regard to the context in which the words appear, even where “the words to be construed are clear and unambiguous”.’17 [30] Thus, it is a well-established principle of statutory interpretation, reinforced by a plethora of decisions of our courts, to give effect to the object or purpose of the legislation being interpreted. As Schutz JA in Standard Bank Investment 16 Paragraph 18. 17 Paragraph 41. See also: Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (10) BCLR 1027 (CC); 2007 (6) SA 199 (CC) para 53. Corporation Ltd v Competition Commission and Others; Liberty Life Association of Africa Ltd v Competition Commission and Others [2000] ZASCA 20; [2000] 2 All SA 245 (A); 2000 (2) SA 797 (SCA), put it: ‘Our courts have, over many years, striven to give effect to the policy or object or purpose of legislation. This is reflected in a passage from the judgment of Innes CJ in Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 543.’18 [31] It is as well to remember that the legislation under consideration here is what has for a long time now been described as ‘social legislation’. Thus, we are enjoined to interpret such legislation in a manner that will afford the widest possible protection and compensation to third parties against loss and damages arising out of the negligent driving of motor vehicles to the extent that the language used in the provision can reasonably bear.19 [32] In endorsing the conclusion reached by the high court, the first judgment, in substance, says the following. First, that a third party who has instituted action in a magistrate’s court ‘has an election to make’ as to whether he or she wishes to rather pursue the claim in the high court.20 With this statement, I have no qualms. Second, that ‘[O]nce an election has been made to withdraw the action in the magistrate's court . . . the claimant has 60 days within which to institute an action in the high court’.21 Third, that ‘[I]f there is no election made, namely the claim remains in the magistrate’s court, then the 60 day period does not come into play’.22 18 Paragraph 16. See also, Inland Revenue v Sturrock Sugar Farms (Pty) Ltd 1965 (1) SA 897 (AD) at 903G-H in which it is stated that ‘. . . even where the language is unambiguous the purpose of the Act and other wider contextual considerations may be invoked in aid of a proper construction.’ 19 See, for example, in this regard: Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A) at 286 E-F; Multilateral Motor Vehicle Accidents Fund v Radebe 1996 (2) SA 145 (SCA) at 152 E-I; Road Accident Fund v Mtati [2005] ZASCA 65; [2005] 3 All SA 340 (SCA) para 12; Bezuidenhout v Road Accident Fund; [2003] 3 All sa 249 (SCA); 2003 (6) SA 61 (SCA) para 7 and the authorities therein cited. 20 Paragraph 16. 21 Ibid. 22 Ibid. [33] The first judgment then proceeds to say that the rationale for the insertion of the 60 day period, within which the high court action must be instituted, is to promote certainty and protect third parties from a plea of prescription.23 To my mind, the issue under consideration in this case should be approached from a broader perspective having regard to the language of the relevant section and its manifest purpose. [34] It is convenient at this juncture to quote s 2 of the TPA. It reads, in relevant parts, as follows: '2 Transitional arrangements for certain third parties (1) Unless the third party expressly and unconditionally indicates to the Fund on the prescribed form, within one year of this Act taking effect, to have his or her claim remain subject to the old Act, the claim of such third party is subject to the new Act under the following transitional regime: (a) Subject to the remaining provisions of this Act, the cause of action of the third party is deemed to have arisen on 1 August 2008 for purposes of section 12 of the Road Accident Fund Amendment Act, 2005 (Act 19 of 2005), and section 17 (4A)(b) of the new Act. (b) The right of the third party to claim compensation for non-pecuniary loss is limited to a maximum amount of R25 000, unless- (i) the third party submits a serious injury assessment report as contemplated in Regulation 3 of the Road Accident Fund Regulations, 2008, indicating a serious injury, within two years of this Act taking effect; and (ii) it is determined in accordance with Regulation 3 of the Road Accident Fund Regulations, 2008, that the third party suffered a serious injury. (c) . . . (d) . . . (e) A third party who has, prior to this Act coming into operation- (i) lodged a claim with the Fund on the prescribed claim form in terms of the old Act, shall not be required to lodge an RAF1 form in terms of the new Act; and (ii) instituted an action against the Fund in a Magistrate’s Court, may withdraw the action and, within 60 days of such withdrawal, institute an action in a High Court 23 Paragraph 17. with appropriate jurisdiction over the matter: Provided that no special plea in respect of prescription may be raised during that period.’ [35] The manifest purpose of the TPA, as its preamble clearly indicates, was to ‘provide for transitional measures in respect of certain categories of third parties whose claims were limited under the Road Accident Fund Act, 56 of 1996 (the RAF Act) prior to 1 August 2008 . . .’. Section 18 of the RAF Act – as it then stood – provided that the right of the third party to claim compensation for non-pecuniary loss was limited to a maximum amount of R25 000. Thus, it had the effect of putting a cap on the maximum amount that a third party could claim for non-pecuniary loss, regardless of the severity of the bodily injuries suffered by such third party. But, since the enactment of the TPA, this is no longer the case, provided certain requirements have been satisfied. And because the appellant’s claim for non- pecuniary loss was capped at R25 000, it fell within the jurisdiction of a magistrate’s court. [36] However, since the TPA took effect, a third party, who wishes to claim damages for non-pecuniary loss in excess of R25 000 – which is the amount to which the claim is as a general rule limited24 – may do so provided two prerequisites have been met. First, the third party must submit a serious injury assessment report as contemplated in regulation 3(1)(a) of the Road Accident Fund Regulations.25 Second, the Fund must determine in accordance with regulation 3(3)(c) and (d) that the third party suffered serious injury. Once these two prerequisites have been met, the provisions of s 2(1)(e)(ii) of the TPA would be triggered. Accordingly, a third party who had, prior to the TPA coming into effect,26 already instituted an action in a magistrate’s court, had an election, to withdraw such action and, within 60 days of 24 Section 2(1) of the TPA. 25 The Regulations were made by the Minister of Transport and published in GN R770, GG 31249, 21 July 2008. 26 The TPA came into effect on 13 February 2013. such withdrawal, institute an action in a division of the high court with appropriate jurisdiction over the matter. [37] Self-evidently, being desirous of taking advantage of the benefits brought about by the TPA, the appellant instituted an action in the high court in which he, amongst others, claimed a sum of R600 000 in respect of non-pecuniary loss. But where the appellant went wrong was to institute a fresh action in the high court without first withdrawing the one pending in the magistrate’s court, as contemplated by the clear provisions of s 2(1)(e)(ii) of the TPA. Hence my agreement with the first judgment that the special plea of lis alibi pendens raised against the appellant’s summons in the high court was rightly upheld. [38] Bearing in mind that the appellant instituted his high court action without having first withdrawn the action pending in the magistrate’s court, the pertinent question that now arises is whether the high court action had, in the light thereof, truly become prescribed. In considering this question, it is as well to pay heed to the warning of Wessels AJA in Stellenbosch Farmers' Winery Ltd v Distillers Corporation (SA) Ltd and Another 1962 (1) SA 458 (A) at 476 E-F that: '. . . it is the duty of the Court to read the section of the Act which requires interpretation sensibly, i.e. with due regard, on the one hand, to the meaning or meanings which permitted grammatical usage assigns to the words used in the section in question and, on the other hand, to the contextual scene, which involves consideration of the language of the rest of the statute as well as the “matter of the statute, its apparent scope and purpose, and, within limits, its background”. In the ultimate result, the Court strikes a proper balance between these various considerations and thereby ascertains the will of the Legislature and states its legal effect with reference to the facts of the particular case which is before it.’ It is to that exercise that I now turn. [39] It is noteworthy that unlike the other parts of s 2, subsec 1(e)(ii) does not stipulate any time frame within which a third party must withdraw an action pending in a magistrate’s court if the third party desires to claim more than R25 000 in respect of non-pecuniary loss. For example, s 2(1) explicitly provides that ‘unless the third party expressly and unconditionally indicates to the Fund on the prescribed form, within one year of the [TPA] taking effect, to have his or her claim remain subject to the old Act, the claim of such third party is subject to the new Act . . .’.27 Absent an unconditional indication to the Fund within the stipulated time, the third party’s claim is, by the operation of the law, made subject to the new Act in terms of the regime contained in the TPA. Subsection (1)(b) in turn provides that if the third party wishes to claim compensation for non-pecuniary loss in excess of R25 000, he or she must submit a serious injury assessment report indicating a serious injury. Again, this step must be taken within two years of the TPA taking effect. Then there is subsec (1)(e)(ii), which stipulates that once the action pending in a magistrate’s court is withdrawn –undoubtedly with a view to instituting another action in the high court – the high court action is required to be instituted within 60 days of such withdrawal. In that event, the third party is immunised from a special plea of prescription that the Fund would otherwise have been entitled to raise but for the proviso to s 2(1)(e)(ii). [40] Interestingly and most significantly, nowhere does the TPA expressly or by necessary implication provide that the third party, if he or she elects to withdraw the magistrate’s court action – in order to institute an action in the high court – must do so within a prescribed period of time from the TPA taking effect. All that subsec (1)(e)(ii) contemplates is, first, the withdrawal of the one action – pending in a magistrate’s court – and thereafter the institution of another in the high court, the latter to be instituted within 60 days of the withdrawal. Quite clearly therefore, it 27 Section 1 of the TPA defines the ‘new Act’ to mean ‘the Road Accident Fund Act, 1996 (Act 56 of 1996), as it stood from 1 August 2008 onwards’. seems to me that the decision as to whether or not to withdraw, and if so when, is at the absolute discretion of the third party. This is, however, not to suggest that the third party, as plaintiff, would be justified in taking an extraordinarily long period of time to make an election one way or other. In terms of the rules of the magistrate’s court, a plaintiff is obliged, at the risk of his or her claim becoming superannuated, to prosecute his or her claim to finality within a reasonable period of time. And what would be a reasonable period can only be determined with reference to the facts of each case. [41] It bears mentioning that in his action in the magistrate’s court, the appellant claimed a sum of R25 000 in respect of non-pecuniary loss. But in the high court action this claim was augmented exponentially to a sum of R600 000, some R575 000 more than what was claimed in the magistrate’s court. The effect of the high court’s judgment, therefore, is that the appellant will now have to forego the latter amount and be content with R25 000, which is the maximum amount recoverable in a magistrate’s court in terms of the old Act.28 Whilst cognisant of the fact that the extent of the appellant’s non-pecuniary loss would be a matter for a trial court to determine, sight should, however, not be lost of the fact that we are here dealing with social-security legislation, a fact also recognised by the Constitutional Court in Mvumvu and Others v Minister of Transport and Another [2011] ZACC 1; 2011 (2) SA 473 (CC); 2011 (5) BCLR 488 (CC) (Mvumvu).29 The high court did not advert to this important consideration in its judgment. [42] The first judgment says that ‘[O]nce an election has been made to withdraw the action in the magistrate’s court, then the claimant has 60 days within which to 28 The ‘old Act’ is defined in s 1 of the TPA to mean ‘the Road Accident Fund Act, 1996 (Act 56 of 1996) as it stood prior to 1 August 2008’. 29 Paragraph 20. institute an action in the high court’.30 It then goes on to say that ‘[T]he 60 day period is triggered . . . once an election has been made’.31 I do not agree. These statements do not, with respect, take into account the full purport of s 2(1)(e)(ii). In my view, not only must the third party make an election to withdraw the action, he or she must as a matter of fact do so. Only then would the 60 day prescription period commence to run. On the interpretation of s 2(1)(e)(ii) espoused in the first judgment, it matters not whether the action has actually been withdrawn, thus implying that a mere election to do so suffices. Such an interpretation is tenable only if one ignores the words ‘within 60 days of such withdrawal’ contained in this section, to which effect must be given. But to ignore these crucial words would plainly be impermissible. And yet this is precisely what the first judgment has done. [43] It is a well-entrenched rule of statutory interpretation that all the words used in a statute must be given effect to. Thus, superfluity of the words used in a statute is not lightly presumed. For, as Davis AJA observed in Wellworths Bazaars Ltd v Chandler’s Ltd 1947 (2) SA 37 (A); [1947] 2 All SA 233 (A) at 43 with reference to an old Privy Council decision in Ditcher v Denison (11 Moore PC 325 at 357): ‘It is a good general rule in jurisprudence that one who reads a legal document whether public or private, should not be prompt to ascribe – should not, without necessity or some sound reason, impute – to its language tautology or superfluity, and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use.’ [44] In S v Weinberg 1979 (3) SA 89 (A); [1979] 2 All SA 137 (A), Trollip JA, in the course of considering the argument advanced by counsel for the appellant as to the meaning of the word ‘gathering’ in s 9(1) of the Internal Security Act 44 of 1950, had the following to say (at 98D-E): 30 Paragraph 16. 31 Paragraph 17. ‘I think that the starting point in considering this argument is to emphasize the general well-known principle that, if possible, a statutory provision must be construed in such a way that effect is given to every word or phrase in it: or putting the same principle negatively, which is more appropriate here: “a statute ought to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void or insignificant . . .”.’ [45] Accordingly, when interpreting a statutory provision one must proceed from the fundamental premise that meaning must be given to every word where the context lends itself to such meaning. The rationale for this principle is that a statute is taken not to use words without meaning. In Attorney-General, Transvaal v Additional Magistrate for Johannesburg 1924 AD 421, Kotze JA pointedly remarked that to regard words occurring in a section as having been inserted per incuriam does not accord with the well-established canon of statutory interpretation for: ‘“A statute,” says Cockburn, R.J, “should be so construed that, if it can be prevented, no clause, sentence or word shall be superfluous, void or insignificant.” The Queen v Bishop of Oxford (4 Q.B.D at 261). To hold certain words occurring in a section of an Act of Parliament as insensible, and as having been inserted through inadvertence or error, is only permissible as a last resort. It is, in the language of Erle, C.J: “the ultima ratio, when an absurdity would follow from giving effect to the words as they stand.” Reg. v St. John (2 B and S. 706) in the Exchequer Chamber affirming the judgment of the Queen’s Bench.’32 [46] It cannot be suggested in this case that the Legislature used the words ‘within 60 days of such withdrawal’ through inadvertence or error. On the contrary, it is manifest that the wording of s 2(1)(e)(ii) was carefully chosen specifically to cater for instances where, as has happened in this case, a third party who wishes to claim compensation for non-pecuniary loss in excess of R25 000 in order to recover the full extent of his or her damages may do so without the risk of being met with a special plea of prescription that the Fund would, in the ordinary course, be entitled 32 At 436. to raise.33 This was designed to meet the declaration of constitutional invalidity of ss 18(1)(a), 18(1)(b) and 18(2) made by the Constitutional Court in Mvumvu, which had hitherto capped claims for non-pecuniary loss at R25 000 regardless of the severity of the third party’s bodily injuries or extent of the loss suffered. And, as the high court rightly noted, the third party must first withdraw the action pending in the magistrate’s court and thereafter institute a fresh action in the high court within 60 days of such withdrawal. When this is done, the Fund may not raise a special plea of prescription to an action instituted during the 60 day window period. [47] The interpretation favoured in this judgment does not occasion any violence to the plain and unambiguous language of the provision under consideration in this case. For, as Innes CJ remarked more than a century ago: 'A Judge has authority to interpret, but not to legislate, and he cannot do violence to the language of the lawgiver by placing upon it a meaning of which it is not reasonably capable, in order to give effect to what he [or she] may think to be the policy or object of the particular measure.’34 In truth, it does no more than ascribe a proper meaning to the words used in s 2(1)(e)(ii). [48] Thus, in the context of this case, two things must happen before the commencement of the 60 day prescriptive period is triggered. First, there must be an intention evinced by the third party to withdraw the action instituted in a magistrate’s court. Second, that intention must then translate into an overt act of carrying out the intention by actually withdrawing such action. Differently put, absent the withdrawal of the action first, there can be no question of the 60 day prescription period having commenced to run. 33 In this case the appellant claimed damages for non-pecuniary loss in the sum of R600 000 when the TPA came into operation. 34 Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 543. [49] Something needs to be said about the agreement of the parties in the high court, in terms of rule 33(1) of the Uniform Rules, that the two special pleas in issue should be determined separately from the other issues. To this end, the parties prepared a statement of agreed facts the relevant terms of which have been quoted in paragraph 5 of the first judgment. Paragraph 4.6 of the statement of agreed facts states that the appellant submitted the prescribed RAF4 claim form on 13 March 2014. Presumably, this must be a reference to the serious injury assessment report contemplated in regulation 335 of the Road Accident Fund Regulations. Paragraph 5.4 of the statement of agreed facts goes further to say that the [appellant’s] RAF4 form, having been lodged on 13 March 2014, the appellant’s claim for non-pecuniary loss has prescribed. This assertion by the Fund entirely overlooks the provisions of s 2(1)(b)(ii) which contemplates that a serious bodily injury assessment report, once it has been submitted by the third party to the Fund, must thereafter be ‘determined in accordance with regulation 3 of the Road Accident Fund Regulations, 2008, that 35 Regulation 3, to the extent relevant, reads: ‘3 Assessment of serious injury in terms of section 17(1A) (1)(a) A third party who wishes to claim compensation for non-pecuniary loss shall submit himself or herself to an assessment by a medical practitioner in accordance with these Regulations. (b) The medical practitioner shall assess whether the third party’s injury is serious in accordance with the following method: (i) The Minister may publish in the Gazette, after consultation with the Minister of Health, a list of injuries which are for purposes of section 17 of the Act not to be regarded as serious injuries and no injury shall be assessed as serious if that injury meets the description of an injury which appears on the list. (ii) If the injury resulted in 30 per cent or more Impairment of the Whole Person as provided in the AMA Guides, the injury shall be assessed as serious. (iii) An injury which does not result in 30 per cent or more Impairment of the Whole Person may only be assessed as serious if that injury: (aa) resulted in a serious long-term impairment or loss of a body function; (bb) constitutes permanent serious disfigurement; (cc) resulted in severe long-term mental or severe long-term behavioural disturbance or disorder; or (dd) resulted in loss of a foetus. . . . (3)(a) A third party whose injury has been assessed in terms of these Regulations shall obtain from the medical practitioner concerned a serious injury assessment report. . . . (c) The Fund or an agent shall only be obliged to compensate a third party for non-pecuniary loss as provided in the Act if a claim is supported by a serious injury assessment report submitted in terms of the Act and these Regulations and the Fund or an agent is satisfied that the injury has been correctly assessed as serious in terms of the method provided in these Regulations. the third party suffered a serious injury’. Accordingly, the question whether such a claim has prescribed can only be determined not with reference to the date on which the third party submitted a serious injury assessment report, but rather with reference to the date on which the Fund determined that the third party suffered a serious injury. For as this Court made plain in Road Accident Fund v Duma and three related cases (Health Professions Council of South Africa as Amicus Curiae) [2012] ZASCA 169; 2013 (6) SA 9 (SCA); [2013] 1 All SA 543 (SCA), that: ‘[u]nder regulations 3(3)(c) and (d), . . ., the Fund must not only determine the procedural validity of the RAF 4 form. It must also determine the substantive issue as to whether or not the report correctly assessed the claimant’s injuries as serious.’36 [50] Curiously, after the Fund had determined that the appellant had suffered a serious injury, nowhere did the statement of agreed facts, for example, state that the appellant’s high court action was instituted pursuant to s 2(1)(e)(ii) of the TPA. And, crucially, when such determination by the Fund was made. The impression created by the statement of agreed facts is that the high court action bears no connection to these historical facts. And yet, the fact that the appellant had: (a) instituted action in the magistrate’s court arising out of the same collision because his claim for non- pecuniary loss was limited to R25 000 by s 18 of Act 56 of 1996, as it stood before the enactment of the TPA; (b) section 18(1) of the Road Accident Fund Act of 1996 as it then stood was declared unconstitutional by the Constitutional Court; (c) the TPA was enacted pursuant to that declaration of invalidity; and (d) the latter enactment is what gave rise to the appellant’s high court action, without which it would never have seen the light of the day, were not canvassed at all in the statement of agreed facts. It was, therefore, not possible in my view, for the high court to determine whether the special plea of prescription was well-founded without these critical facts being placed before it. 36 Paragraph 22. [51] Moreover, paragraph 4.6 of the agreed statement of facts is not harmonious with paragraph 4.2, which records that the appellant submitted a claim with the Fund on 17 June 2004 in terms of the provisions of the Road Accident Fund Act 56 of 1996. The cumulative effect of these shortcomings in the parties’ agreed statement of facts ineluctably leads to one conclusion, namely that the facts of the agreed statements were either equivocal or discordant, and thus inadequate for the purpose for which they were intended. In Minister of Police v Mboweni and Another [2014] ZASCA 107; 2014 (6) SA 256 (SCA); [2014] 4 All SA 452 (SCA), Wallis JA made some pointed remarks in regard to the need to ensure that an agreed statement of facts in terms of rule 33 of the Uniform Rules of Court is adequate for its intended purpose and said the following: ‘It is clear therefore that a special case must set out agreed facts, not assumptions. The point was re-emphasised in Bane v D’Ambrosi, where it was said that deciding such a case on assumptions as to the facts defeats the purpose of the rule, which is to enable a case to be determined without the necessity of hearing all, or at least a major part, of the evidence. A judge faced with a request to determine a special case where the facts are inadequately stated should decline to accede to the request. The proceedings in Bane v D’Ambrosi were only saved because the parties agreed that in any event the evidence that was excluded by the judge’s ruling should be led, with the result that the record was complete and this court could then rectify the consequences of the error in deciding the special case.’37 In this instance, the agreed statement of facts is, as already indicated, singularly lacking in the requisite details necessary for a proper determination of the special plea of prescription raised by the Fund. Accordingly, it is not possible for this Court to salvage the situation on appeal. [52] Finally, it is necessary briefly to say something about the plea of lis alibi pendens. Whilst noting that this plea was ‘properly and meritoriously taken’, the 37 Paragraph 8. high court did not spell out what the consequences of this conclusion should be. As a general rule, a plea of lis alibi pendens is not an absolute bar to the proceedings in which such plea has been raised. When a court upholds a plea of lis alibi pendens it has a discretion to stay one or other of the two actions. A court is vested with such a discretion because it is prima facie vexatious to bring two actions in respect of the same subject matter. In this case, the appellant, by instituting the high court action, was self-evidently motivated by a desire to recover as much as possible of his non- pecuniary loss that was, until the TPA took effect, limited to R25 000. [53] The high court before which the second action was pending undoubtedly enjoyed a wide discretion to determine whether the interests of justice dictated that the second action should be allowed to proceed.38 The high court did not delve into this aspect in its judgment. Instead, it considered that the special plea of prescription was ‘dispositive of the matter’. Hence the dismissal of the action with costs. [54] For the aforegoing reasons, I find myself in respectful disagreement with the interpretation ascribed to s 2(1)(e)(ii) in the first judgment. In my view, a scrutiny of s 2 as a coherent whole in the light of its general tenor and the object of the TPA, as well as the circumstances attendant upon its enactment, all support the interpretation embraced this judgment. [55] In the result the following order is made: The appeal is upheld in part with costs. The action is referred back to the high court for trial in accordance with the principles set out in this judgment before a differently constituted court. 38 See in this regard: Cook and Others v Muller [1973] 2 All SA 34 (N); 1973 (2) SA 240 (N) at E-G; Sikatele and Others v Sikatele and Others [1996] 1 All SA 445 (Tk) at 448. The order of the high court is set aside and in its place is substituted the following: ‘3.1 The defendant’s special plea of lis alibi pendens is upheld. 3.2 The court declines to determine the special plea of prescription as the facts contained in the agreed statement of the parties are inadequately stated for a proper determination to be made. 3.3 The costs associated with the determination of the defendant’s special pleas shall be costs in the cause.’ X M PETSE ACTING PRESIDENT SUPREME COURT OF APPEAL APPEARANCES For appellant: N Snellenburg SC Instructed by: Honey Attorneys, Bloemfontein For respondent: No appearance

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED Eksteen v Road Accident Fund (873/2019) [2021] ZASCA 48 (21 April 2021) From: The Registrar, Supreme Court of Appeal Date: 21 April 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of the case and does not form part of the judgments of the Supreme Court of Appeal Today, the Supreme Court of Appeal (SCA) handed down judgment in terms of which it upheld the appellant’s appeal in part against the dismissal of his action by the full bench of the Free State Division of the High Court on the basis that his claim had prescribed and that the appellant had prior to instituting his high court action, instituted an action in the Bloemfontein Magistrate’s Court based on the same cause of action. The appellant, Mr Johan Sebastiaan Eksteen, instituted an action against the respondent, the Road Accident Fund, in the Bloemfontein Magistrate’s Court on 17 January 2008 for damages he suffered as a result of a motor vehicle collision which occurred on 18 June 2003. The appellant was a passenger in a vehicle driven by Mr Hyde who was alleged to be the sole cause of the collision. The appellant’s claim fell under the class of claims limited to R25 000 in terms of s 18(1) of the Road Accident Fund Act 56 of 1996 (the RAF Act). However, ss 18(1) and 18(2) of the RAF Act were declared inconsistent with the constitution by the Constitutional Court in 2011 and therefore invalid. Subsequent to that declaration, the Road Accident Fund (Transitional Provisions) Act 15 of 2012 (TPA) was enacted in order to provide for a transitional statutory regime in relation to claims instituted in a magistrate’s court in terms of ss 18(1) and 18(2) of the Act. Pursuant to the provisions of s 2(1)(e)( ii) of the TPA, the appellant, without first withdrawing the magistrate’s court action, instituted another action in the high court claiming the same relief save that the amount claimed in respect of non- pecuniary loss was increased from R25 000 to R600 000. The respondent defended the action instituted in the high court as it did with the action in the magistrate’s court and raised two special pleas and the main plea disputing liability. The first special plea was that the appellant’s action instituted in the magistrate’s court was still pending (lis alibi pendens) when the high court action was instituted. The second special plea was that in any event the appellant’s claim had prescribed. After the parties had agreed that the special pleas be adjudicated separately from the main plea, the high court, per Jordaan J, granted an order to that affect. As Jordaan J’s prima facie view on the matter was different from an earlier decision of a single judge in the same division and in other divisions of the high court in relation to the same issue, he referred the matter to the full bench for a final determination of the issue. The full bench (Musi JP, Loubser J and Murray AJ concurring) found in favour of the respondent. In upholding the special plea of lis alibi pendens, it held that in terms of s 2(1)(e)(ii) of the TPA the appellant was required to first withdraw the action pending in the magistrate’s court before instituting another action in the division of the high court having jurisdiction. With regard to the plea of prescription, it found that once the action had been withdrawn in the magistrate’s court the appellant had 60 days within which to institute an action in a division of the high court having jurisdiction. As the appellant had failed to institute his action within the 60 day period, his claim had prescribed. At the core of the appeal at the SCA was the interpretation of s 2(1)(e)(ii) of the TPA. The minority in the SCA held that the appellant had an election to make, whether to proceed with his action in the magistrate’s court or institute another in the high court. Once the election was made, he was required first to withdraw his action in the magistrate’s court and within 60 days institute another in the high court. This would afford the appellant the protection against a plea of prescription by the respondent. According to the minority, this interpretation would assist in bringing certainty and an end to legal proceedings whilst also interpreting the legislation in the context for which the TPA was enacted. The majority agreed that the lis alibi pendens plea was rightly and meritoriously taken by the respondent and correctly upheld by the full bench. It, however, held that the appellant must, as a matter of fact, withdraw the action and not merely elect to do so. It found that only then would the 60 day prescription window period commence to run. This interpretation means that, absent the withdrawal of the action first, there can be no question of the 60 day prescription period having commenced to run. This interpretation, in line with interpreting social legislation, would afford the widest possible protection and compensation to third parties against loss and damages arising out of the negligent driving of motor vehicles. Furthermore, the majority held that the facts in the agreed statement of the parties were inadequately stated for purposes of enabling the full bench to determine the fate of the special plea of prescription. For this reason, the full bench should have declined to determine the special plea of prescription. In the result the SCA, by majority, upheld the appeal in part with costs. It also referred the action back to the high court for trial in accordance with the principles set out in the majority judgment before a differently constituted court. ________________________________________

2995

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20345/2014 Reportable In the matter between: DAVID NAIDOO FIRST APPELLANT M & M HIRING CC SECOND APPELLANT M & M HIRING MARQUEE CC THIRD APPELLANT MNM MARQUEE & HIRING (PTY) LTD FOURTH APPELLANT and S J KALIANJEE NO FIRST RESPONDENT N ABRAM MATLALA NO SECOND RESPONDENT THE MAGISTRATE FOR THE DISTRICT OF JOHANNESBURG THIRD RESPONDENT DOWNINGS MARQUEE HIRING CC FOURTH RESPONDENT INGWE MARQUEE MANUFACTURING CC FIFTH RESPONDENT Neutral citation: Naidoo v Kalianjee NO (20345/2014) [2015] ZASCA 102 (29 June 2015) Coram: Mpati P, Leach, Petse and Willis JJA and Mayat AJA Heard: 12 May 2015 Delivered: 29 June 2015 Summary: Insolvency Act 24 of 1936 ─ validity of search and seizure warrant granted by magistrate in terms of s 69(3) of Insolvency Act 24 of 1936 – distinction between such a warrant and one issued under the Criminal Procedure Act 51 of 1977 – anomalies in warrant not rendering it invalid – warrant not too broad in scope. ORDER On appeal from North Gauteng High Court, Pretoria (Vorster AJ sitting as court of first instance): judgment reported sub nom Naidoo & others v Kalianjee NO & others 2013 (5) SA 591 (GNP). The appeal is dismissed with costs, including the costs of two counsel. ___________________________________________________________ JUDGMENT Leach JA and Mayat AJA (Mpati P, Petse and Willis JJA concurring) [1] The appeal in this matter relates to the validity of a search and seizure warrant issued by a magistrate under s 69(3) of the Insolvency Act 24 of 1936 (the Act). The appellants unsuccessfully applied to the court a quo for the warrant to be set aside. They appeal to this court with leave of the court a quo. [2] At all relevant times the first appellant, Mr David Naidoo, was the sole member of a close corporation named M&M Hiring SA CC (M&M). He was also the sole member of two similarly named close corporations, the second and third appellants, and the director of the fourth appellant, a private company. Not only were all these corporate entities similarly named but they shared the same business address at 11-13 Sprinz Avenue, Village Main, Johannesburg. [3] In 2010, the fourth and fifth respondents in this appeal (who we intend to refer to as „the petitioning creditors‟ for purposes of convenience) brought an application for the winding-up of M&M. As a result, on 14 September 2010 a provisional winding-up order was granted which was made final on 26 October 2010. In due course, the first and second respondents were appointed as joint liquidators of M&M (for convenience we shall refer to them as „the liquidators‟). [4] The course of M&M‟s winding-up was somewhat eventful, to say the least. However, the background history detailed in the papers is largely irrelevant to the issues to be decided in this appeal. Suffice it to say that on two occasions interdictory relief was granted against Mr Naidoo to restrain him from using, alienating or trading with assets of M&M and that, on 5 October 2010, pursuant to an order to that effect, the sheriff attached certain of M&M‟s assets. Moreover, in November 2010 the Master of the High Court issued a directive to the sheriff to attach certain movable assets, including those listed on the asset register of the close corporation. The sheriff was, however, unable to trace most of the assets listed in the directive. [5] On the strength of information forthcoming from Mr Naidoo‟s former business partner and at an insolvency inquiry, as well as reports from an employee of Naidoo and a private investigator appointed by the petitioning creditors, the liquidators suspected that the terms of the interdicts had been breached as assets of M&M were either being used by certain of Mr Naidoo‟s associated corporate entities or had been dissipated, alienated or subsumed into the asset registers of such other corporations. This was corroborated by goods reflected in invoices of purchases made by M&M not appearing in inventories of its post liquidation assets. Moreover, there was eye-witness evidence of Naidoo having changed the markings on an asset of M&M so as to reflect the name of another of his close corporations. [6] It is unnecessary to record the background history in any further detail as it can be accepted that the liquidators had a reasonable suspicion that assets of M&M had been concealed. On the strength of that suspicion, they approached a magistrate for a warrant under s 69 of the Act (which also applies to winding-up procedures). The provisions of the section relevant to this appeal are the following: „(2) If the trustee has reason to believe that any such property, book or document is concealed or otherwise unlawfully withheld from him, he may apply to the magistrate having jurisdiction for a search warrant mentioned in sub section (3). (3) If it appears to a magistrate to whom such application is made, from a statement made upon oath, that there are reasonable grounds for suspecting that any property, book or document belonging to an insolvent estate is concealed upon any person, or at any place or upon or in any vehicle or vessel or receptacle of whatever nature, or is otherwise unlawfully withheld from the trustee concerned, within the area of the magistrate‟s jurisdiction, he may issue a warrant to search for and take possession of that property, book or document. (4) Such a warrant shall be executed in a like manner as a warrant to search for stolen property, and the person executing the warrant shall deliver any article seized thereunder to the trustee.‟ [7] As there was clearly a reasonable suspicion as envisaged under s 69(3), the magistrate (the third respondent, who was cited as a party but has played no part in the proceedings either in the High Court or on appeal to this court) granted a warrant, the material terms of which are as follows: „2. That in accordance with the liquidation of M & M HIRING SA CC (in liquidation) (“the insolvent entity”) the members of the South African Police Services, the Sheriff of the above Honourable Court and the First and Second Applicants [the liquidators] are authorised and ordered in terms of Section 69(3) of the Insolvency Act (Act 24 of 1936) read together with Section 21 of the Criminal Procedure Act (Act 51 of 1977) to enter and search, at any time day or night, the properties situated at: 2.1 11-13 Sprinz Avenue, Village Main, Johannesburg, Gauteng. 2.2 At any other premises and/or address where assets of M & M HIRING SA CC (in liquidation) as set out in paragraph 3 hereunder may be found and/or utilized in the area of jurisdiction of the above Honourable Court. 3. That the members of the South African Police Services, the Sheriff of the above Honourable Court and First and Second [Applicants] are authorized and ordered in terms of Section 69(3) of the Insolvency Act (Act 24 of 1936) to 3.1 Take possession of all movable and/or other assets of whatever nature of the insolvent entity in the possession of any or all of the Respondents which are under judicial attachment. 3.2 Any and all documents, including financial, accounting and investment documents and records belonging to the insolvent entity. 3.3 The books and documents contained on the hard drive and similar device of the auditors, relating to the insolvent entity. 4. That the members of the South African Police Services and the Sheriff of the above honourable court be authorized and ordered in terms of Section 69(4) of the Insolvency Act (Act 24 of 1936) to deliver all the attached assets and documents referred to in paragraphs 3.1 to 3.3 above to the first and second applicants herein, in their capacities as the joint liquidators of the insolvent entity. 5. That the costs of this application be awarded to the applicants on a scale as between attorney and own client alternatively on such scale as the above honourable court deems fit, the one to pay the other to be absolved. 5(a) The return date is the 27 June 2013 at Court 1013 at 09h00. The respondents are entitled to anticipate the return date on 24 hour notice to the applicants in writing. 6. That this application be served simultaneously on the respondents at the time this Order is executed. 7. Further and alternative relief.‟ [8] The appellants subjected the validity of this warrant to a multi- faceted challenge, although not all of the points they raised were pressed in this court. Their principal contention, both initially and in this court, was that the warrant could not stand as the respondents had applied for it without giving them notice of their intention to do so. In this regard the appellants relied on the majority judgment of Smalberger JA (F H Grosskopf JA and Melunsky AJA concurring) in Cooper1 in which it was held that a warrant under s 69(3) should not be issued without notice to persons affected,2 save where the items to which the warrant relates have allegedly been „concealed‟ in the sense that they „had been hidden with a view to denying their existence or preventing their recovery‟. 3 In a minority judgment, Marais JA (Zulman JA concurring) concluded that s 69 impliedly excludes the giving of notice of intention to seek a warrant in all cases.4 [9] The correctness of these two views was not debated before this court, nor were we called upon to revisit the issue or decide whether the majority view should stand. Indeed, the entire issue became a storm in a teacup as counsel for the appellants was driven to concede that, on the 1 Cooper NO v First National Bank of SA Ltd 2001 (3) SA 705 (SCA). 2 Paras 23 to 25. 3 Para 26. 4 See in particular paras 8 to 16. undisputed facts alleged by the respondents, namely, that Mr Naidoo dissipated M&M‟s assets or moved them into the asset registers of his other corporate entities (allegations which were not pertinently denied by Mr Naidoo and which must therefore be accepted for purposes of these proceedings), there was a reasonable suspicion that those assets had been concealed. That being so, the appellants correctly conceded that the matter falls to be decided on the basis that the respondents had been entitled to apply for the warrant without notice. [10] A further major assertion raised at the outset was that the liquidators‟ application had constituted an abuse of the process of court. The argument in this regard appeared to be two-fold. First, that the warrant was unnecessary as clause 3.1 related to goods that were already under judicial attachment and, second, that the request for a warrant had been motivated by an improper purpose. [11] Both these arguments can be disposed of shortly. In regard to the first, the evidence placed before the magistrate was to the effect that the judicial processes until then had proved to be ineffective. Of course, as counsel for the appellants argued, a lengthy period had passed after the final winding-up order and the sheriff having effected an attachment in November 2010. But even if the liquidators or the sheriff had been somewhat slow or remiss in securing M&M‟s assets, about which it is unnecessary to decide or comment, the surreptitious concealment of assets long after the formality of their attachment does not preclude a magistrate from issuing a warrant to preserve them. [12] The second point is equally without merit. It was premised upon an allegation that the idea of obtaining a search and seizure warrant was not that of the liquidators but of a former business partner of Mr Naidoo, Mr S M Mashita, who had been cited by the liquidators as a respondent when applying for the warrant. The appellants contended that the issue of the warrant was the product of a mala fide process driven by Mr Mashita as part of a personal vendetta against them, particularly as he deposed to an affidavit exposing Mr Naidoo‟s actions in concealing assets. There is nothing to substantiate this gratuitous allegation with which counsel for the appellants wisely did not persist, despite it being raised in the heads of argument. [13] In reality, the simple answer to both legs of the appellants‟ allegation of an abuse of process is that there was a reasonable suspicion that assets of M&M had been concealed and, that being so, the liquidators were perfectly entitled to apply for a warrant. And when they did, the magistrate was fully entitled to issue it. [14] For completeness, it should be recorded that the appellants abandoned a further argument that the warrant had been irregularly issued due to the petitioning creditors having been parties to the application for its issue. Although the warrant indicated that possibly might be the case, a reading of the papers showed they were not. The appellants‟ concession in that regard was properly made and it is surprising that it was ever contended otherwise. [15] The appellants‟ next challenge to the warrant was based on an allegation by Mr Naidoo that certain of the assets which form the subject matter of the warrant were acquired by „the [appellants] independently and with money emanating from [their] own resources‟. Mr Naidoo also asserted that the warrant improperly gave the liquidators carte blanche to reap from the appellants‟ premises „everything they could have laid their hands upon‟. [16] There is no merit in this challenge. As is apparent from the terms of the warrant, it relates to assets of M&M and not to any assets that belong to any of the appellants. Moreover, as both Smalberger JA and Marais JA stated in their respective judgments in Cooper, the magistrate‟s decision to issue the warrant is not dispositive of any ownership rights. As Marais JA said: „The decision to issue a warrant is in no sense an adjudication of any substantive issue, existing or potential, between the trustee and any third party or between the insolvent and the third party. Success in obtaining a warrant and success in its execution brings the trustee no more than provisional physical possession of the relevant asset. The trustee‟s continued possession is open to challenge in the courts and the customary gamut of remedies (review proceedings, prohibitory interdicts, vindicatory actions, declarations of right, etc) is available to the third party. A successful challenge will bring an end to the trustee‟s possession.‟5 [17] It is accordingly always open to any affected owner to take legal measures relating to ownership of assets falling outside the ambit of the proceedings to which a warrant relates. In these circumstances, if assets seized in execution of the warrant are shown by the appellants not to have been the property of M&M when it was placed into liquidation, they are liable to be returned. But that is no reason to invalidate a warrant which relates to assets of M&M. The challenge on this basis must therefore also fail. [18] In the light of the above, the appellants were obliged to fall back on allegations in regard to what might be termed „technical imperfections‟ in the warrant. The first of these is based upon the provisions of clauses 5 and 5(a) of the warrant, namely, to an order for costs of the application and the setting of a „return date‟, albeit one that the appellants were entitled to anticipate on written notice. [19] The appellants‟ initial argument in respect of these provisions was that the process by which a magistrate issues a warrant for search and 5 Para 4 of the minority judgment. seizure under s 69 constitutes „administrative action‟ which cannot be issued provisionally and in respect of which a costs order could not be granted. In argument in this court, counsel for the appellants varied his stance somewhat. Relying on certain comments in Minister of Police v Auction Alliance 6 he stated that it was no longer the appellants‟ contention that the issue of a warrant constitutes administrative action but, rather, that it involves the exercise of a judicial discretion. But, that discretion, so he submitted, was not akin to civil proceedings so that it was neither proper to grant a costs order nor to issue a warrant provisionally. In these circumstances, the appellants contended that the warrant had been issued beyond the provisions of s 69 of the Act. [20] This cannot be accepted. One must accept that the terms of both clauses 5 and 5(a) of the warrant are anomalous. Awkwardly phrased the warrant may well be, but it was clearly not issued in the process of civil litigation. As is clear from the provisions of clauses 2, 3 and 4 where reference is made specifically to s 69 of the Act, it was no more than a warrant issued under that section. [21] Moreover, the award of „costs of this application‟ in clause 5 makes no mention of who should pay those costs. As there was no civil lis between the liquidators, who applied for the warrant, and any of the 6 Minister of Police & another v Auction Alliance (Pty) Ltd & others [2014] 2 ALL SA 432 (WCC) para 25. persons affected thereby, namely, those cited in the application as so- called „respondents‟, the latter could never be bound by the provisions of clause 5. That clause can therefore be regarded as irrelevant, unenforceable and pro non scripto. [22] Similarly, clause 5(a) is also anomalous but, again, it is an anomaly that is, in truth, without effect. The appellants‟ contention that this was a provisional warrant is without merit. It is clear from clause 6 that the warrant was to be executed on its issue. No person was called upon to show cause on the so-called return date why a provisional order should not be confirmed. Indeed the use of the phrase „return date‟, while unfortunate, conveys no more than that any person affected thereby (the appellants in this appeal) could approach the court on that date to challenge the issue of the warrant if so advised. [23] Relying upon the provisions of s 69(4) of the Act, the appellants then argued that as the section required the warrant to be „executed in a like manner as a warrant to search for stolen property‟, the warrant was in fact one issued under the provisions of the Criminal Procedure Act 51 of 1977 ─ and that had been envisaged by the magistrate who, in issuing the warrant, referred to s 69 „read together with s 21 of the Criminal Procedure Act‟ as authority for doing so. On the strength of this contention, the appellants further argued that the warrant did not match up to the strict requirements of a criminal warrant and should be set aside. [24] Whilst accepting that a warrant issued under s 69 has, at the very least, the potential to infringe the rights of others, there is nevertheless a fundamental distinction between it and a criminal warrant. There will be certain criminal matters in which the existence of a particular article connected with a suspected crime is known so that it can be described in specific terms in a warrant; while in others no particular article can be identified but it can be expected that, if the offence being investigated was committed, an article or articles should exist, and in those latter instances the purpose of the search will be to discover if they do.7 The overall purpose of a warrant issued in criminal proceedings is thus to find and seize evidence of a commission of a crime which may be preserved for use should a prosecution follow. This, as Mogoeng J stated in Minister of Safety and Security v Van der Merwe, 8 is an important weapon „designed to help the police to carry out efficiently their constitutional mandate of, amongst others, preventing, combating and investigating crime‟.9 7 See the remarks of Nugent JA in this court in Minister of Safety & Security v Van der Merwe & others 2011 (1) SACR 211 (SCA) para 11. 8 Minister of Safety & Security v Van der Merwe & others 2011 (2) SACR 301 (CC). 9 Para 35. [25] The underlying purpose of a seizure under s 69 of the Act is fundamentally different. As stated by Marais JA in Cooper: „It is to disable the insolvent and anyone else who may be physically in possession of such assets from alienating or encumbering them to the prejudice of creditors. That purpose is achieved by, inter alia, providing for the trustee to have physical possession of them in the case of movables or, in the case of movables under attachment or immovables, by having the relevant functionaries place caveats against the assets. Despite all that, but for s 69, there would remain a window of opportunity for a third party in possession of a movable asset, the ownership of which is vested in the trustee, to alienate it in such a way that it could not be vindicated by the trustee . . . The longer a third party can resist handing over the asset, the more extensive the opportunities of alienating the asset to another for value to the prejudice of creditors of the insolvent may be . . . Hence the need for a provision such as s 69.‟10 [26] In the light of these fundamental differences, a warrant under s 69 can neither be construed as being akin to a warrant issued under s 21 of the Criminal Procedure Act nor necessarily subject to the same limitations and restrictions attendant upon criminal warrants. In any event, a distinction must be drawn between the issue of a warrant, on the one hand, and its execution, on the other. As 69(4) only requires a warrant to be executed and not issued „in a like manner as a warrant to 10 Paras 11-12. search for stolen property,‟ the provisions relating to the issue of warrants in criminal proceedings are of no relevance to a s 69 warrant. [27] Section 21 of the Criminal Procedure Act requires a warrant issued under that section to „be executed by day, unless the person issuing the warrant in writing authorises the execution thereof by night‟11 and that the police official executing the warrant shall, upon the demand of an affected person, hand over a copy of the warrant. 12 Clearly, then, the reference to s 21 of the Criminal Procedure Act in the warrant issued by the magistrate meant no more than it was to be executed in such a manner, and not that it was a warrant issued under the provisions of the Criminal Procedure Act or fell to be regarded as such. [28] In the light of that conclusion, the appellants‟ argument that the warrant was to comply with the provisions of s 21 of the Criminal Procedure Act and that it was therefore necessary for a specific police officer to be identified in the warrant as the person who should effect the search and seizure, falls away. In any event, there can be no doubt that the order authorises the sheriff and the liquidators (the latter acting in their capacity as officials charged with the duty to protect assets upon which the hand of the law has been placed) to execute the warrant with the assistance of the police. 11 Section 21(3)(a) of the Criminal Procedure Act 51 of 1977. 12 Section 21(4). [29] Finally, the appellants fell back on an argument that the use of language such as „any or all documents‟ or „all movables and/or other assets under judicial attachment‟ in clause 3 of the warrant was so wide that it was impossible for any person to ascertain what should be seized and attached. Relying upon various well-known decisions they argued that a wide, general description of the documents to be sought was not competent. [30] This argument, too, cannot be upheld. The warrant clearly refers to assets of M&M, and no-one else. Indeed clause 3.1 of the warrant refers to those assets already attached, but which of course had not been secured but left at the business premises M&M shared with the other appellants. This alone militates against confusion. The terms of the warrant were therefore not so broad that it was impossible for a person executing it to ascertain what should be sought out and seized. This final challenge, too, cannot succeed. [31] For these reasons, despite its imperfections, the warrant was not invalid and the court a quo was correct both in concluding that to be so and in dismissing the appellants‟ application to have it set aside. The appeal must therefore fail. [32] The appeal is dismissed with costs, including the costs of two counsel. _______________________ L E Leach Judge of Appeal _______________________ H Mayat Acting Judge of Appeal Appearances For the Appellants: M P van der Merwe SC (with him C de Villiers) Instructed by: Gani Attorneys, Pretoria Honey Attorneys, Bloemfontein For the First, Second, Fourth and Fifth Respondents: G W Woodlend SC (with him L Zazaraj) Instructed by: Brits Matthee Attorneys, Pretoria McIntyre & Van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 June 2015 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Neutral citation: Naidoo v Kalianjee NO (20345/2014) [2015] ZASCA 102 (29 June 2015) At issue in this matter was the validity of the search and seizure warrant issued by a magistrate under s 69(3) of the Insolvency Act 24 of 1936 issued in an effort to find and secure assets of the company placed into liquidation that were reasonably suspected of having been concealed and hidden from the liquidators. The appellants who were persons affected by the warrant had unsuccessfully applied to the high court to have the warrant set aside. The judgement of that court is reported as Naidoo & others v Kalianjee NO & others 2013 (5) SA 591 (GNP). With leave of a high court the appellants appealed to the Supreme Court of Appeal repeating their assertion that the warrant had been invalid. The appellants’ challenge to the warrant was multi-faceted. Chief amongst their contentions was an argument that it ought not to have been issued without notice being given to them. However this, as well as several other challenges, were abandoned in the SCA. Nevertheless a variety of other contentions were raised by the appellants all of which were ultimately rejected by the SCA. Briefly the issues raised were as follows (a) The appellants argued that the application for a warrant had constituted an abuse of the process of court. This was rejected. (b) The appellants argued that certain assets that were subject to the warrant had been acquired by them independently. The SCA held on the strength of previous authority that the issue of the warrant did no more than give the liquidators provisional physical possession and that the assets concerned were liable to be returned to the appellants if it was shown that they had been the owners thereof at the date of liquidation. But this was no reason to set aside the warrant. (c) There were certain anomalies in the warrant – relating to what was referred to as a ‘return date’ and an order for costs. These it was argued rendered the warrant invalid. The SCA however held that the return date did not render the warrant provisional, as advanced by the appellants, and many conveyed that it could be challenged on that date. It further held that the costs order had been meaningless and ineffective. Neither of these anomalies thus rendered the warrant invalid. (d) The SCA also rejected the appellants argument that the warrant was one issued under the Criminal Procedure Act 51 of 1977 and should therefore have been issued to a policeman named therein. It held that there were fundamental differences between a warrant issued under s 69 of the Insolvency Act and a criminal warrant, and that there could be no doubt that the sheriff and the liquidators had been authorised thereunder to execute the warrant with the assistance of the police. (e) A further contention that the warrant was overboard was also dismissed. As the appellants therefore failed to establish that the warrant was invalid, the SCA concluded that there was no merit in the appeal which was dismissed with costs of two counsel. ---ends---

1478

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 831/2015 In the matter between: DALE LONSDALE HOHNE APPELLANT and SUPER STONE MINING (PTY) LTD RESPONDENT Neutral citation: Hohne v Super Stone Mining (Pty) Ltd (831/15) [2016] ZASCA 186 (30 November 2016) Coram: Shongwe, Leach, Petse and Willis JJA and Nicholls AJA Heard: 4 November 2016 Delivered: 30 November 2016 Summary: Delictual claim : theft of diamonds from employer : admissibility of confessions to the acts in question and admission of the quantum : threat of criminal prosecution and adverse publicity : not contra bonos mores : the creditor not exacting or extorting something to which it was not otherwise entitled : evidence admitted : claim enforceable : appeal dismissed with costs. ORDER On appeal from: The Northern Cape Division of the High Court, Kimberley (Lever AJ sitting as the court of first instance). The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT ___________________________________________________________________ Shongwe JA: (Nicholls AJA concurring) [1] I have had the benefit of reading the judgments prepared by Willis and Leach JJA. I agree with Leach JA that it is possible to reach a correct conclusion in this matter without reference to the issues raised by Willis JA in paragraphs 19 – 30 of his judgment. Willis JA took a view that the concept of legally recognized duress required greater attention. [2] The issue identified was primarily that of the admissibility of the video-taped interviews with the appellant and it would have been sufficient to only deal with the matter on this basis. However, having said that, I cannot fault Willis JA in his reasoning and interpretation of the law on duress and enforceability, both locally and in foreign jurisdictions. [3] They both arrive at the same conclusion, albeit following different routes. I therefore confirm the mutually agreed order that the appeal be dismissed with costs, including the costs of two counsel. _____________________ J B Z SHONGWE Judge of Appeal Willis JA: [4] The appellant, Mr Dale Hohne, was the defendant in the trial court. The respondent, Super Stone Mining (Pty) Ltd (Super Stone), succeeded as plaintiff in a delictual action for damages arising from the theft of high-value rough diamonds. The trial court awarded Super Stone R6,015 million plus interest and costs. The appellant appeals to this court with the leave of the trial court. [5] The case turns on two related issues: (a) the admissibility of evidence that was video-taped and transcribed during an interview between the appellant and representatives of his employer and (b) documentation signed by the appellant, after that interview. In both the recording of the interview and the documentation, it is clear that the appellant admitted having stolen diamonds from his employer as well as the value of what he had stolen. Although the appellant belatedly attempted faintly to argue that the quantum of Super Stone‟s damages was not proven, Mr Kemp, who appeared on his behalf, accepted that if the evidence in question was admitted, then not only was the appellant‟s liability established but also the quantum of Super Stone‟s damages, as awarded by the trial court. [6] Super Stone reprocesses mine dumps in Kimberley in order to find and then sell rough diamonds. The appellant had been employed by Super Stone as its „Final Recovery Manager‟. In this position he was a senior and trusted employee, solely responsible for the recovery and management of certain large diamonds that Super Stone‟s processes had yielded. Two of Super Stone‟s directors, Mr Jahn Hohne and Mr Peter Hohne, are relatives of the appellant. [7] During early January 2010 a security officer, watching CCTV footage featuring the appellant, became suspicious that he was stealing diamonds. The matter was reported to Mr Jahn Hohne. Further monitoring of CCTV footage confirmed the opinion of the security officer and Messrs Jahn and Peter Hohne that the appellant was indeed stealing diamonds having a high value from Super Stone. [8] On 15 January 2010 the appellant was requested by Mr Peter Hohne to accompany him to the house of Mr Jahn Hohne and there he was confronted with the allegation that he had been stealing diamonds. Also present at this meeting were Mr Noel Wewege, one of Super Stone‟s security consultants and Ms Catherine Lloyd, Super Stone‟s attorney. Later, a police officer, Inspector Van Zyl arrived at the meeting as well. The confrontation was videotaped, with the appellant‟s permission. This video and the transcript of the meeting formed part of the evidence before the court a quo. [9] Although at the commencement of the recorded interview the appellant initially denied any involvement in the theft, he later admitted that he had done so over a ten month period and that he had received payments of R5 million in respect thereof. This took place after the so-called „dirty dozen‟ exhortation to which I shall later refer. He disclosed that he still had R500 000 of the proceeds kept in a safe at his father-in-law‟s house, that there were still stolen diamonds hidden in a locked box at the same location and that he had R30 000 of the tainted money at his own house. He signed an acknowledgement of debt for R5 million. Attached to the acknowledgement of debt were annexures. [10] The appellant volunteered to hand over to Super Stone the stolen diamonds that were at his father-in-law‟s house. At this stage, a police officer, Inspector Van Zyl was called. The appellant, Mr Peter Hohne and Super Stone‟s security consultant, Mr Noel Wewege, then went to the house of the appellant‟s father-in-law. There, the appellant pointed out a large toolbox from which the stolen diamonds were subsequently uncovered at the diamond and gold branch of the South African Police Service, when the box was opened in the presence of one Inspector Gideon Van Zyl. A small plastic container holding 23 uncut diamonds was found in one of the locked drawers of the toolbox. The appellant was then dropped off at the police station where he was alone with a senior police officer, Lieutenant Colonel Vermeulen. Before this officer, and after his rights had been explained to him, the appellant gave a full and comprehensive statement in Afrikaans in which he admitted in detail to his theft of valuable diamonds from Super Stone, as well as their value. Later that evening, Mr Peter Hohne telephoned the appellant and asked him to deliver the money which the appellant had recouped from the safe of his father-in- law. On that same evening the appellant did so, making over a payment to Mr Peter Hohne of R500 000.00 for which Mr Hohne issued a receipt. [11] The next day, 16 January 2010 the appellant delivered a further R30 000.00 that he said had been at his own home. He was issued with a receipt signed by Mr Peter Hohne. The receipts issued on 15 and 16 January 2010 were also produced in evidence at the civil trial. After a week-end, on Monday 18 January 2010, Mr Peter Hohne requested the appellant to bring him a copy of his statement made to the police. Not only did the appellant agree to do so but also consented to an additional interview, which was also recorded. [12] Mr Kemp submitted that the cumulative effect of the following, indicated that the appellant‟s confession had not been freely made: (i) He had been asked to hand over his cellular telephone at the commencement of the interview on 15 January 2010; (ii) He had been transported to the house of Mr Jahn Hohne in the motor vehicle of Mr Peter Hohne on 15 January 2010; and (iii) During the interview on 15 January 2010, shortly after it had begun, Mr Jahn Hohne said the following to the appellant, after he had initially denied any wrong-doing: „All right here are the two options. OK, I have no choice but to offer you these two options: the one is you reconsider the question and you tell us everything and the other is I implement the dirty dozen. Here is the list of the dirty dozen and before we walk out of here I am going to make six phone calls and six groups of people are going to meet me there and afterwards I am going to make another six phone calls and I will continue with them and these are the phone calls I am going to make: I am going to phone the South African police the chief of police, I am going to phone the diamond and gold branch in fact other people are going to phone it for us there are people standing by the director of DPCT the director of priority crime investigation that‟s the new Hawks, De Beers security our private PI who has been contracted to do this investigation and criminal attorneys from Johannesburg who will come and assist with the total procedure after that we will be calling the following six people: SA Revenue services of tax and VAT investigations, the DFA and The Star, the polygraph guy again, the Kimberly club, the Diamond Board Mr Ernie Blom and ETV to assist us in spreading our findings around the world. Dale, if we go to that safe now and I find something in that lid from what I am going to do here you are going to be a very sorry man you probably going to sit in jail tonight – I am going to ask you the question again and I am going to give you two options – one you can go to denial and we use this system and the other is you be honest and you tell me everything. You lied to me once in this conversation already. It was my only question and you lied. Dale, what is in the lid of the solvent canister in the safe?‟ This became known, during the course of argument as „the dirty dozen‟ portion of the interview. For convenience, I shall adopt this epithet in the judgment. [13] Immediately after this, the appellant, to use a colloquial expression, „spilled the beans‟. For him, it was „downhill‟ all the way thereafter. Mr Kemp eventually conceded that the handing over of the cellular telephone and the appellant having been transported to the home of Mr Jahn Hohne by Mr Paul Hohne were „makeweights‟. The case turns on what one makes of „the dirty dozen‟ exhortation in the particular context in which it occurred. [14] Opinions may vary as to quite how „relaxed‟ the interview on 15 January 2010 had been. There is no doubt, as counsel for Super Stone concedes, emotions had run high. The sense of betrayal and disappointment by the other Hohne family members was palpable. It was the „family connection‟ that had been the main reason that the appellant had been given the position of trust in Super Stone. The directors admitted to having felt angry and betrayed. When Mr Jahn Hohne was cross- examined as to whether the representatives of Super Stone had been aggressive, he replied: „I don‟t like the term aggressive. I‟d prefer “firm and professional”.‟ The recording of the interview confirms the accuracy of Mr Jahn Hohne‟s description. The appellant‟s sense of guilt, shame and embarrassment was also obvious. As the trial judge emphasised in his judgment, at no stage during that confrontation had the appellant been threatened with physical violence or anything unlawful at common law. [15] The appellant was prosecuted in a criminal trial before Bertelsmann J on 5 and 6 December 2011. The charges included not only the theft of the diamonds but also money-laundering in terms of the Prevention of Organised Crime Act 121 of 1998 and the contravention of certain provisions of the Diamonds Act 56 of 1986. The State had sought to rely on the statement that the appellant had made to Lieutenant Colonel Vermeulen as well as the pointings-out of the diamonds and the cash. The appellant had challenged the admissibility thereof. A trial-within-a-trial concerning the admissibility of the statement and the pointings-out was then held. [16] In the light of the evidence of Inspector Van Zyl concerning the confrontation that had taken place at the home of Mr Jahn Hohne, Bertelsmann J decided that the statement had not been freely and voluntarily made in terms of the requirements of the Criminal Procedure Act 51 of 1977 (the CPA) and therefore could not be admissible. Relying on the „fruit of the poisoned tree‟ doctrine, Bertelsmann J found that the evidence of the pointings-out would also be inadmissible. The State and appellant then closed their respective cases, without leading any further evidence. No evidence as to the CCTV footage was lead. In the result, the appellant was acquitted in the criminal trial on 6 December 2011. The appellant may consider himself to have been fortunate. [17] The civil trial, with which this appeal is concerned, commenced on 13 August 2013. By agreement between the parties, the civil trial was divided into two parts: the first to deal with the question of admissibility and the second to deal with the merits. As the court a quo noted in its judgment concerning admissibility, this appears to have been the first time in South Africa where the question of the admissibility of evidence rejected as inadmissible in the preceding criminal trial was raised in a subsequent civil trial such that the court hearing the civil matter would have to consider the admissibility of substantially the same evidence. [18] On 28 February 2014 the court a quo issued a ruling in which it determined that the video recordings of the meeting with the appellant at the house of Mr Jahn Hohne on 15 January 2010, the statement to Lieutenant Colonel Vermeulen, the pointings-out and the acknowledgement of debt (together with annexures) were admissible. [19] The trial then proceeded on the merits. On 15 May 2015, the court a quo delivered its judgment that the appellant pay Super Stone the sum of R6,015 million plus interest and costs. The difference between the amount in the acknowledgement of debt (R5 million) and the amount in the order (R6,015 million) arises from the fact that the appellant‟s statement to the police and the transcript of the meeting on 15 January 2010 support the higher figure. [20] During the trial, detailed evidence of the CCTV footage, implicating the appellant in the theft of diamonds, was put before the judge. This evidence was supported by the real evidence of the so-called „click-clack‟ jars, which the appellant had handled. This evidence was not challenged by the appellant at all. The appellant elected not to testify either during the trial-within-a trial concerning the question of the admissibility of his acknowledgment of liability and the quantum thereof. The same applied in the trial concerning the merits. [21] In its judgment on the merits, the court a quo recognised that a distinction exists between the admissibility of an acknowledgement of debt and its enforceability.1 The two are not coextensive. I shall consider the question of admissibility of the acknowledgement of debt and, if admissible, its enforceability, in turn. Nevertheless, in view of the concession made by counsel for the appellant, Mr Kemp that the case turns on the question of admissibility, the significance of enforceability in this case may have been subsumed. This notwithstanding, enforceability raises policy considerations not far removed from those relating to admissibility. Accordingly, it may be useful to examine this issue, in order to ensure fairness to both parties. [22] In s 2 of the Civil Proceedings Evidence Act 25 of 1965 it is provided as follows: 1 See Arend & another v Astra Furnishers (Pty) Ltd 1974 (1) SA 298 (C) at 313A-B and Gruhn v M. Pupkewitz & Sons (Pty) Ltd 1973 (3) SA 49 (A) at 57B, although these two cases are not directly in point. „No evidence as to any fact, matter or thing which is irrelevant or immaterial and cannot conduce to prove or disprove any point or fact in issue shall be admissible.‟ Apart from cases dealing with hearsay evidence, there has been a dearth of authority, both in South Africa and England, dealing with the admissibility of evidence in civil cases. The rationale for excluding hearsay evidence has been its unreliability.2 The reason for this paucity of authority may lie in the fact that, historically in England, from which so much of our law of evidence derives, relevance was the overriding consideration on any question concerning the admissibility of evidence. In this regard, it is instructive to read a paper by Nigel Cooper QC, „The Fruit of the Poisoned Tree – The Admissibility of Evidence in Civil Cases‟.3 In that paper he summarises the position in England at present as follows: „1. Unlawfully obtained evidence is prima facie admissible in civil proceedings. 2. Such evidence may be excluded by the judge exercising the discretion conferred on him by CPR [Civil Procedure Rules] Part 32. However, in practice that discretion is generally exercised in favour of admitting this evidence. 3. In addition, evidence may be excluded by the court exercising its inherent discretion to prevent the court‟s process being abused or brought into disrepute. 4. Even if neither of those „discretions can be invoked, there may nevertheless be an alternative remedy available to a party can establish a breach of confidence, he should be entitled to an injunction restraining the use of the unlawfully obtained material.‟ [23] In Shell SA (Edms) Bpk & andere v Voorsitter, Dorperaad van die Oranje- Vrystaat en & andere, it was held that, in a civil case, a court has a discretion to refuse to admit evidence that had been improperly obtained („op „n onbehoorlike 2 See for example S v Molimi [2008] ZACC 2; 2008 (3) SA 608 (CC) and DT Zeffert and AP Paizes The South African Law of Evidence 2 ed (2009) at p385-388. 3 „The Fruit of the Poisoned Tree – The Admissibility of Evidence in Civil Cases‟ by Nigel Cooper QC www.bgja.org.uk/wp-content/uploads/2014/02/NigelCooper.pdf. (Accessed on 10 November 2016). wyse‟).4 This judgment was approved by the Constitutional Court in Ferreira v Levin NO & others; Vryenhoek & others v Powell & others.5 [24] The admissibility of evidence in a criminal trial stands on a different footing from a civil dispute and is adjudicated according to somewhat different criteria for reasons that are not hard to understand. In the first place, the Criminal Procedure Act 51 of 1977 (CPA) contains express provisions relating to the free and voluntary nature of written admissions and confessions before these may be admitted in evidence.6 There is no equivalent provision in our law of civil procedure. The Constitutional Court has recognised that, in certain important respects, civil and criminal proceedings have a different character.7 This relates, in particular, to the manner in which evidence is given and obtained.8 Most importantly, by way of background, a criminal matter is a contest in which the might of the State is pitted against an individual. In a contest of this kind, a bad result for an accused person may lead to a loss of freedom. Such a consequence is incomparably different from any outcome in a civil dispute. [25] Moreover, s 35(5) of the Constitution expressly addresses the question of evidence obtained in violation of the Bill of Rights and provides that evidence „must be excluded‟ from a criminal trial if it would render the trial unfair or would otherwise be detrimental to the administration of justice. Contrastingly, s 34, which extends to civil matters as well, contains no equivalent guarantees, providing merely that everyone has the right to have civil disputes decided „in a fair public hearing before a court‟. There is no provision regarding the exclusion of evidence. In civil litigation „fairness‟ is seldom, if ever, located in a „one-way street‟. 4 Shell SA (Edms) Bpk & andere v Voorsitter, Dorperaad van die Oranje-Vrystaat en & andere 1992 (1) SA 906 (O) at 916H-917G. 5 Ferreira v Levin NO & others; Vryenhoek & others v Powell NO & others 1996 (1) SA 984 (CC) para 148. See also the judgment of Brand J in Fedics Group (Pty) Ltd & another v Matus & others; Fedics Group (Pty) Ltd & another v Murphy & others 1998 (2) SA 617 (C) para 75. 6 Section 217 of the CPA provides that a confession relating to an offence may be admissible in criminal proceedings if it is „proved to have been freely and voluntarily made by such person in his sound and sober senses and without having been unduly influenced thereto.‟ Section 219A provides for the admissibility of extra-judicial admissions in relation to the commission of an offence that are proved to have been made „voluntarily‟. 7 See Bernstein v Bester NO & others 1996 (2) SA 751 (CC) paras 107-123. See also Fedics Group (Pty) Ltd & another v Matus & others; Fedics Group (Pty) Ltd & another v Murphy & others 1998 (2) SA 617 (C) para 90. 8 Ibid. [26] In the United States of America, in United States v Janis,9 the Supreme Court had to consider whether to extend this exclusionary rule to civil proceedings in circumstances where a state criminal law enforcement officer had obtained evidence in good faith but nevertheless unconstitutionally. The majority held that the „prime purpose‟ of the rule was to deter „unlawful police conduct‟ and that any „additional marginal deterrence provided by its extension in cases like this one does not outweigh the societal costs of excluding concededly relevant evidence.‟10 That case dealt with a tax dispute and not one between two private litigants. As far as I have been able to ascertain, the reasons relied upon by the appellant to exclude evidence of the kind in question, which relates to liability and the proof of quantum in a civil case, have succeeded nowhere in the world. [27] In Janit v Motor Industry Fund Administrators (Pty) Ltd11 this court carefully left open the question of whether a civil court had a discretion to exclude otherwise relevant evidence, which was unlawfully obtained. For reasons that follow, the evidence in this case was not unlawfully obtained and it is therefore not necessary for this court to decide the point left open in Janit. [28] As this court said in Medscheme Holdings & another v Bhamjee,12 „in general terms, an undertaking that is extracted by an unlawful or unconscionable threat of some considerable harm, is voidable‟.13 The evidence of the quantum of the theft may not have been freely and voluntarily obtained within the meaning of the CPA in order to prove his guilt but, insofar as proving the amount of his liability is concerned, it was not extracted unlawfully or „by the threat of some considerable harm.‟ Other than donations, civil liability is rarely „volunteered‟. Moreover, an employer is not only entitled to confront an employee about an allegation of wrongdoing, but is also 9 United States v Janis, 428 U.S. 433 (1976). 10 At 443. 11 Janit & another v Motor Industry Fund Administrators (Pty) Ltd 1995 (4) SA 293 (A) at 306H-307C. 12 Medscheme Holdings (Pty) & another v Bhamjee 2005 (5) SA 339 (SCA). 13 Para 6. obliged to do so, even before a formal disciplinary hearing is convened.14 It is part of the time-honoured „audi‟ principle.15 [29] It is a well-established principle of our law that if a party wishes to avoid liability on the basis that he assented to an agreement by reason of duress, the onus is upon him who makes that allegation.16 The same applies where a litigant claims that evidence was obtained in breach of his constitutional rights.17 The appellant alleged that he had signed the acknowledgement and the statement before the police under duress but did not testify. Although care must be taken not to confuse the relevant principles in claims founded in delict and those based on contract, it is not always impermissible to borrow principles from the one type of causa and apply them to another.18 We are dealing here with a written acknowledgment of both liability and the amount in question. The closeness of the facts in this case to those ordinarily featuring in contractual claims, in my opinion justifies a general examination of when legally recognised duress may be found to exist in situations other than delict. I turn now to consider the question of enforceability in our law. [30] In Machanick Steel & Fencing (Pty) Ltd v Wesrhodan (Pty) Ltd; Machanick Steel & Fencing (Pty) Ltd v Transvaal Cold Rolling (Pty) Ltd19 Nestadt J gave a comprehensive review of the law relating to threats of prosecution, including the well- known case of Arend & another v Astra Furnishers (Pty) Ltd,20 in which Corbett J delivered the judgment of the full court. Nestadt J dealt with whether the duress in question was induced by actual violence or reasonable fear of the threat of an imminent or imminent considerable evil and then concluded that two vital questions need to be asked: (i) was the threat contra bonos mores and (ii) did the creditor 14 See for example Old Mutual Assurance Co Ltd v Gumbi (2007) 28 ILJ 1499 (SCA) paras 5-10. 15 „Audi‟ is lawyers‟ shorthand for audi alteram partem, which means „hear the other side‟. See for example Old Mutual Assurance Co Ltd v Gumbi (supra) paras 5-10 and Boxer Superstores Mthatha & another v Mbenya (2007) 28 ILJ 2209 (SCA) paras 6-7. 16 Rothman v Curr Vivier Incorporated & another 1997 (4) SA 540 (C) at 551G-J; Paragon Business Forms (Pty) Ltd v Du Preez 1994 (1) SA 434 (SE) at 439E-G; Savvides v Savvides & others 1986 (2) SA 325 (T) at 330A-C and Machanick Steel & Fencing (Pty) Ltd v Wesrhodan (Pty) Ltd; Machanick Steel & Fencing (Pty) Ltd v Transvaal Cold Rolling (Pty) Ltd 1979 (1) SA 265 (W) at 275H. 17 See for example Protea Technology Ltd v Wainer & others 1997 (9) BCLR 1225 (W) at 1227. 18 See for example Fourway Haulage SAA (Pty) Ltd v South African National Roads Agency Ltd [2008] ZASCA 134; 2009 (2) SA 150 (SCA) in which Brand JA, delivering the unanimous judgment of this court, applied contractual principles relating to pure economic loss in a delictual claim. 19 Machanick Steel & Fencing ibid at 271B-273H. 20 Arend & another v Astra Furnishers (Pty) Ltd 1974 (1) SA 298 (C). thereby exact or extort something to which he was not otherwise entitled?21 Machanick Steel dealt with an acknowledgment of debt that was used in evidence in support of an application for the winding-up of a company. The acknowledgement had been obtained by threatening a prosecution of the directors. Nestadt J held that the onus was on the respondents to make out a case of operative duress. He found that they had failed to do so and a provisional order of liquidation in each instance was justified.22 [31] Arend v Astra Furnishers dealt with a contractual claim. Having come to the conclusion that „generally speaking a contract induced by the threat of criminal prosecution is unenforceable on the ground of duress‟, Corbett J went on to say, in that case: „It is not necessary to express a positive view on whether this rule obtains where the party threatened in fact owes a liquidated amount to the party making the threat and the agreement involves merely the payment of this amount.‟23 It is fundamentally important to bear in mind that in Arend v Astra Furnishers what the court was dealing with and set its face against was extortion or what is commonly known as „blackmail‟.24 One cannot threaten to lay a criminal charge against someone for an act irrelevant to that for which payment has been attempted to be secured.25 The same applies in respect of embarrassing but not criminal acts that have no bearing on the claim in question.26 As Corbett J noted, without actually using the colloquialism, is that under the influence of English law, „blackmail‟ has long been recognised as a crime in our law and, accordingly, it has correspondingly been our law since the nineteenth century that an agreement concluded as a result of such blackmail is void for its illegality.27 In deciding matters of the kind in question it seems that, ultimately, it is policy considerations that are determinative. A consideration of whether or not a threat was contra bonos mores is precisely one of policy.28 21 At 271B-D and 272C-D. 22 At 275C-277E. 23 At 311G-H. 24 See especially at 307B-308F. 25 See for example at 308E-F. 26 At 307F-308A. It was in Green v Fitzgerald & others 1914 AD 88 at 102 and 119-120 that this court decided that adultery, as a crime, was obsolete in our law. 27 At 308F-G. 28 See for example Gbenga-Olowatoye v Reckitt Benckiser South Africa (Pty) Ltd & another [2016] ZACC 33 (15 September 2016) para 9. [32] Here, we are dealing with a delict. In Machanick Steel the underlying causa for the acknowledgment was a misappropriation of money - in other words, what was also a delict. The facts and the issues in this case are so similar to those that were relevant in Machanick Steel that I conclude that the experience of the appellant and, more particularly, what was said to him immediately before he began to confess to his theft, was not contra bonos mores. Furthermore, it did not result in Super Stone exacting or extorting something to which it was not otherwise entitled. The contrary is true. Moreover, the conduct of Super Stone was not otherwise unlawful, never mind illegal. [33] The appellant has also sought to rely on the following passage from Ilanga Wholesalers v Ebrahim & others29 in which Milne J said as follows: „Where, however, the creditor does not know and probably cannot establish (and a fortiori where he knows he cannot establish), the amount of the debtor‟s indebtedness it seems to me an improper use of his rights to threaten to prosecute the debtor unless the debtor undertakes to pay an amount which the creditor more or less arbitrarily estimates to be due. No doubt even where the plaintiff does not know the exact amount stolen he is fully within his legal rights in threatening to prosecute the debtor but to use the threat of such proceedings to extort an undertaking to pay an amount which he knows he cannot prove to be due in a Court of law constitutes, in my view, an abuse of his legal rights.‟30 Ilanga Wholesalers seems to operate against the appellant, rather than in his favour. Super Stone did not use any threats in order to extort an undertaking to pay an amount which it knew it could not prove. Even in our law of criminal procedure an exhortation to tell the truth will not exclude a confession.31 Not even a threat of the probability of arrest constitutes undue influence.32 After all, the test is whether there is „any fair risk of a false confession.‟33 [34] Moreover, the uncontested evidence of the CCTV footage alone is sufficient circumstantial evidence to justify the conclusion that the appellant did, in fact, steal 29 Ilanga Wholesalers v Ebrahim & others 1974 (2) SA 292 (D) 30 At 297G-298B. 31 See for example R v Afrika 1949 (3) SA 627 (O) at 634-636, approved in S v Kearney 1964 (2) SA 495 (A) at 498H. 32 See for example R v Magoetie 1959 (2) SA 317 (A) at 325B. 33 See for example Kearney (supra) at 498H. the diamonds. The statement to the police, which contained the evidence of damages upon which the court a quo relied, was not „extorted‟ by Super Stone. It was made by the appellant when he was alone with Lieutenant Colonel Vermeulen. [35] The appellant failed to discharge the onus that rested upon him. The appellant did not give or show any evidence as to operative, or legally recognised, duress which could prevent the acknowledgement of debt from being enforced against him. The evidence is admissible because it is relevant and the uncontested evidence of Super Stone does not suggest a reason why it should be otherwise be excluded. Furthermore, there is no compelling policy consideration either why the evidence in question should be excluded or the admission of liability and quantum unenforced. On the contrary, in the absence of any legally recognised duress, policy considerations favour the admission of the evidence and the enforceability of the claim where a person has stolen millions of rands from another. [36] In summary, the appeal cannot succeed for the following reasons: both the theft and the evidence of the quantum of Super Stone‟s damages had been established in documents in which the appellant had acknowledged his wrongful acts, his liability and the amount in question. This evidence was both admissible and enforceable against the appellant because it had been obtained without there being any duress, recognised in law. [37] The following order is made: The appeal is dismissed with costs, including the costs of two counsel. ______________________ N P WILLIS Judge of Appeal Leach JA: (Petse JA concurring) [38] I agree with Willis JA that the appeal be dismissed. My reasons for doing so differ somewhat from his, and he deals with issues that I find unnecessary to comment upon. Hence this judgment. [39] The respondent is a diamond mining company which had employed the appellant in a senior position described as the „final recovery manager‟. The appellant, however, stole diamonds from the respondent. Of that there can be no doubt. Closed circuit television coverage proves that to be the case, albeit in regard to diamonds which were not the subject of the claim that lies at the heart of this appeal which related solely to diamonds allegedly stolen from mid-February 2009 until December that year. After a hearing in the Northern Cape Division of the High Court, Kimberley, the respondent obtained judgment in its favour against the appellant in the sum of R6,015 million being the value of diamonds the court found the appellant had stolen from the respondent during that period, as well as interest and costs. It is against that judgment that the appellant appeals to this court with leave of the court a quo. [40] As set out by my colleague Willis JA in paragraph 2 of his judgment, the appeal turns on the admissibility of certain evidence: first, the video-recording of interviews conducted with the appellant, and second, certain documents signed by the appellant – in particular a confession made to a police officer and a written acknowledgement of debt the appellant had signed in Kimberley on 15 January 2010 in which he admitted being liable for and held himself bound to the respondent in an amount of R5 million in order to secure loss it suffered as a result of his having stolen diamonds. Both the interview and these documents show clearly that the appellant admitted having stolen diamonds from his employer. Indeed counsel for the appellant, quite correctly, admitted in this court that the appeal had to fail, both in regard to the merits of the claim and the quantum of the respondent‟s damages, if his contention that this evidence was the product of duress was not accepted. Accordingly his argument was directed solely at that issue. [41] In paras 20-27 of his judgment, Willis JA deals, inter alia, with the discretion of a court to admit improperly or unlawfully obtained evidence, and in doing so deals with authorities both in this country and in foreign jurisdictions. However, as the respondent had limited the issue to duress and counsel for the respondent therefore essentially confined himself to that issue, interesting as my colleague‟s discourse in those paragraphs may be, it is in my view irrelevant to the issues at hand and needs not be dealt with by this court. [42] In arguing that the appellant‟s utterances were the result of duress, reliance was placed firstly upon the common law rules, including in particular those set out in Arend & another v Astra Furnishers (Pty) Ltd 1974 (1) SA 298 (C) at 305H-306C and 309B-F (relating to the distinction between a lawful threat of prosecution and the unlawful use of such a threat to extract a benefit from a suspected thief) and, secondly, on the contention that to allow evidence obtained by duress offended the right to a fair public hearing as envisaged by s 34 of the Constitution. But in doing so counsel conceded that the only factor upon which he could rely in support of any allegation of duress was the so called „dirty dozen‟ threat contained in the passage quoted by Willis JA in para 9 above. [43] It is of importance for that passage to be viewed in its context. At the outset, an attorney who was present, representing the interests of the respondent, asked the appellant whether he would consent to the taking of a video of the meeting and of „your statements made here‟, to which he agreed. A representative of the respondent then told the appellant that the respondent had entered into a substantial security investigation arising out of certain information received, and that they had learned from this both that the appellant had become „quite a high-rolling gambler‟ and that some drunk individuals had boasted as to how they had obtained „goods‟ (presumably diamonds) from the appellant. This had led to the respondent installing substantial new technology on the mine relating to security. The interviewer then concluded this introduction thus: „I have a question for you but before I ask you the question I need to remind you that we are of the same blood we are of the Hohne family and there has been an immense amount of trust laid on you by us and we expect today at this meeting that that trust continues that every question you will answer 100% honestly ─ you need to know that I know a lot and if at any point in time I believe you are lying to me you are going to be given two options which I will relate to you just now ─ but here‟s the question answer it honestly for once and please do not test my patience ─ if you and me had to go to you safe in the glove box now what will I find in the lid of the solvent canister?‟ [44] In response, the appellant stated that nothing would be found in the solvent canister. On being given the opportunity to think about the matter, he again replied that there was nothing there. This then led to the „dirty dozen‟ portion of the interview which concluded once more with the question „what is in the lid of the solvent canister in the safe?‟ It was after this that the appellant confessed there would be diamonds and that he had taken them out and put them back in the glove-box earlier that day. When asked why he had had diamonds in the lid of the canister, his reply was „I don‟t know‟. This ridiculous answer led to the following exchange: „Dale honestly I‟m telling you don‟t let me go to plan B ─ the ball is in your court now for plan A ─ plan A the following is also with plan A if you give us 100% honest questions on everything that I ask and we ask you today we will not prosecute you if you lie any further you will go thought the full prosecution ─ I know a lot more than you do Dale I know when you lie and trust met I need to be 99.999% sure that every answer you give me is true. You need to give me the whole bang shoot speel and we will give you an assurance of none prosecution. But I want everything otherwise I am sorry my boy it is the dirty dozen immediately and I will push it hard from every corner and you know how I deal with projects hey ─ so you did put diamonds into the lid? DH (nodding his head) JBL When did you take them out? DH Today JBL Where are those diamonds you put into the lid today? DH They in the glove-box JBL The glove-box or the safe? DH No in the glove-box ─ that canister on the coarse side JBL Be more specific please where are those diamonds exactly in the glove-box? DH The number 4 glove-box the concentrate pipe that bucket its in there JBL How many diamonds are in there? DH JBL How big are they approximately? DH Probably about 3 ─ 3 carats each JBL Just keep answering honestly hey don‟t let me down I don‟t want to do this but if I have to I have to I have a complete obligation for the company to resolve this thing 100% what were you going to do with those diamonds? DH We were going to try and sell them? JBL Try and sell them or have you got a buyer lined up? DH Try and sell them JBL Dale how many times have you done this before ─ careful of the answer here Dale be very careful of the answer you have to be honest with me how many times have you done this before?‟ (The initials DH in this transcript refer to the appellant.) It was after this that the appellant proceeded to make a clean breast of things and described in detail how he had stolen diamonds and what he had done with them. [45] Those present then agreed that they would all go to the home of Mr Dougie McLeod, described in the record both as being the appellant‟s brother-in-law and his father-in-law (quite what the relationship is between them is immaterial). This they did where, in a storeroom, the appellant pointed out a red toolbox. It was locked and its keys could not be found so it was loaded onto the back of a bakkie and taken to the South African Police Diamond and Gold branch offices where it was forced open. Inside was found a container in which there were 23 large rough diamonds. After these diamonds were photographed, the appellant was taken away whereafter he voluntarily gave a statement to a police officer. [46] At about 20.30 that evening the police telephoned the marketing director of the respondent, Mr Peter Hohne to say they were finished with the appellant. Mr Hohne went and fetched the appellant and took him to the mine where his motor vehicle was. An hour or so later he called the appellant on his cellphone and asked him to bring the sum of R500 000 that he had said was at the home of Mr Dougie McLeod. This the appellant promptly did, the money being delivered to him in a cardboard box. At this, Mr Hohne gave him a receipt for the money which contained the words „proceeds of illegal diamond sales‟ and which the appellant voluntarily signed. The following morning, after Mr Hohne had spoken to him on his cellphone, the appellant brought and handed over a further R30 000 in cash which he had been keeping in a safe at his home. He was again issued with a similar receipt. [47] It is in the light of these background facts that the question of duress has to be considered. In doing so it is important to bear in mind, as Kriegler J pointed out in S v Dlamini; S v Dladla and others; S v Joubert; S v Schietekat 1999 (4) SA 623 (CC) paras 93-97, that hard choices often have to be faced by people facing allegations of criminal conduct. And the mere fact that a suspected criminal is faced with an election whether or not to make any statement relating to allegations of criminality levelled against him or her does not render any statement he or she decides to make offensive to the right to a fair trial if it is thereafter introduced into evidence. As appears from what I have said, the respondent‟s representatives gave the appellant the option of co-operating with them by making a clean breast of things. He was told that in that event, although they could not grant him immunity from prosecution, they would request it. But their attitude in that regard was dependent upon his being truthful and answering their questions. If he failed, the full might of the law would be set in train. [48] I do not see this as having been either unlawful or contra bonos mores34 (or as it has been put an „unconscionable threat of some considerable harm‟35), being elements which would have to be established to avoid a contract on the grounds of duress. Nor in my view would evidence of anything he said or did as a result render his subsequent trial unfair. The appellant had a choice to make. He took what was in fact the soft option. He decided to confess and co-operate in the hope that he would obtain the benefit of possible immunity. By no stretch of the imagination can this be regarded as being the product of duress of an unlawful nature. [49] Moreover, there is no evidence that the appellant in fact acted under duress. Objectively viewed, in the light of what I have said above, there was no threat of any unlawful evil being done to him if he did not cooperate with the respondent. His counsel had stated in cross-examination of the respondent‟s witnesses that the appellant would deny that he had made the admissions freely and voluntarily, and would testify that during breaks in the recording he had been further threatened and told that his and his family‟s lives, including those of his parents who were employed by the respondent, would be destroyed, and that if he did not admit to provide the 34 Compare Arend v Astra Furnishers at 306A-C. 35 Medscheme Holdings & another v Bhamjee 2005 (5) SA 339 (SCA) para 6. information required he would be imprisoned for life. However, notwithstanding this and despite the unusual protection afforded by the trial-within-a-trial procedure that was adopted, the appellant failed to give evidence. That, too, was a decision he was entitled to take. But actions have consequences, and one of the consequences that flows from the respondent‟s failure to testify is the inference that his evidence was likely to damage his case.36 [50] The appellant bore the onus of establishing the necessary duress or coercion which either rendered the incriminating evidence against him inadmissible or breached his constitutional right to a fair trial if it was admitted. In my view, in the light of what I have said, including the appellant‟s failure to testify, he clearly failed in that task. On this limited basis alone the appeal must fail. [51] For these reasons I agree that the appeal be dismissed with costs, such costs to include those consequent upon the employment of two counsel. _____________________ L E LEACH Judge of Appeal 36 The authorities in this regard are well-known and do not require repetition. APPEARANCES: For Appellant: KJ Kemp SC (with him B Pretorius) Instructed by: Roelofse Meyer Inc, Port Elizabeth Kramer Wehmann & Joubert, Bloemfontein For Respondent: D Unterhalter SC (with him S Budlender) Instructed by: Haarhoffs Inc, Kimberley Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 30 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. Hohne v Super Stone Mining (Pty) Ltd (831/16) [2016] ZASCA 186 (30 November 2016) This morning, in two separate judgments, the Supreme Court of Appeal (SCA) unanimously dismissed an appeal by Mr Dale Hohne against a decision of the Northern Cape Division of the High Court, Kimberley (Lever AJ), sitting as the court of first instance. Mr Hohne’s employer, Super Stone Mining (Pty) Ltd had instituted a civil claim against him for the theft of diamonds. The case turned on the admissibility of the appellant’s confessions to the acts in question as well as the quantum of loss. The appellant had been threatened with a criminal prosecution and adverse publicity in respect of the theft. The SCA held that the high court had correctly found that there had been no unlawful duress and that the confessions were admissible. Accordingly, the appeal was dismissed with costs, including the costs of two counsel. ---ends---

3466

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 115/2020 In the matter between: KURT ROBERT KNOOP NO FIRST APPELLANT JOHAN LOUIS KLOPPER NO SECOND APPELLANT and CHETALI GUPTA RESPONDENT MAHOMED MAHIER TAYOB INTERVENING PARTY Neutral citation: Knoop and Another NNO v Gupta (No 1) (115/2020) [2020] ZASCA 149 (19 November 2020) Coram: WALLIS, MBHA and MOCUMIE JJA and EKSTEEN and MABINDLA-BOQWANA AJJA Heard: 6 November 2020 Delivered: The order in this case was delivered orally to the parties on 6 November 2020 and furnished to them electronically that day. This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 09h45 on 19 November 2020. Summary: Suspension of operation of order pending an appeal – section 18(1) of Superior Courts Act 10 of 2013 – leave to execute on order in terms of s 18(3) of Act – requirements – urgent appeal in terms of s 18(4) of Act – suspension of order granting leave to execute in terms of s 18(4)(iv) of Act – whether court empowered to order that suspension would not operate – such an order a nullity. ORDER On appeal from: Gauteng Division of High Court, Pretoria (Ledwaba DJP, Janse van Nieuwenhuizen J and Senyatsi AJ concurring, sitting as court of first instance): The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel. The order of the full court is set aside and replaced by the following order: 'The application is dismissed with costs, such costs to include those consequent upon the employment of two counsel.' It is declared that pending the finalisation of this appeal: (a) The operation and execution of the order of the full court granting leave to execute in terms of s 18(1), read with s 18(3), of the Superior Courts Act 10 of 2013 was suspended in terms of s 18(4)(iv) of the Superior Courts Act 10 of 2013. (b) The appellants were not validly removed from office as business rescue practitioners in respect of Islandsite Investments One Hundred and Eighty (Pty) Ltd (Islandsite) and Confident Concept (Pty) Ltd (Confident Concept). (c) The directors of Islandsite and Confident Concept were not entitled to act on the order for the removal of the appellants as business rescue practitioners in those two companies by nominating new business rescue practitioners and the appointments of Mr Tayob in respect of Islandsite and Mr Naidoo in respect of Confident Concept were invalid. (d) The notices of termination of business rescue given by Mr Tayob in respect of Islandsite and Mr Naidoo in respect of Confident Concept in terms of s 132(2)(b) of the Companies Act 71 of 2008 were invalid and of no force and effect. (e) Nothing in this order validates or invalidates any other action taken by Islandsite and Confident Concept since 7 February 2020 with the authority of Mr Tayob and Mr Naidoo as the case may be. It is further declared that pending the finalisation of the main appeal under Case No 116/2020 Islandsite and Confident Concept remain in business rescue under the supervision of the appellants in accordance with their original appointments as business rescue practitioners. JUDGMENT Wallis JA (Mbha and Mocumie JJA and Eksteen and Mabindla-Boqwana AJJA concurring) [1] The immediate execution of a court order, when an appeal is pending and the outcome of the case may change as a result of the appeal, has the potential to cause enormous harm to the party that is ultimately successful. That was well-illustrated by the facts in Philani-Ma-Afrika,1 where the judge granted leave to appeal against an eviction order and at the same time gave leave to execute. Only an urgent application to the Constitutional Court, made in the mistaken belief that the execution order was not appealable to this court, forestalled the inevitable and irreparable harm that would have resulted from giving effect to the execution order. In giving the judgment of this court, Farlam JA said:2 'The facts of this case provide a striking illustration of the need for orders of the nature of 1 Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA 115; 2010 (2) SA 573 (SCA); [2010] 1 All SA 459 (SCA). 2 Ibid para 20. the execution order to be regarded as appealable in the interests of justice.' There can be little doubt that what occurred in Philani-Ma-Afrika led to the statutory provisions that now govern the grant of leave to execute ('execution orders'). [2] At common law, unless the court in the exercise of a discretion ordered otherwise, an application for leave to appeal and an appeal pursuant to leave being granted suspended the operation of the order. It was not open to the successful party to execute on, or otherwise act pursuant to, that order.3 This common law rule and the power to grant an execution order is now expressly embodied in s 18(1), read with s 18(3), of the Superior Courts Act 10 of 2013 (the SC Act). The grant of leave to execute is constrained by the requirement that it may only be granted if there are exceptional circumstances; if the applicant will suffer irreparable harm if it is not granted; and if the grant will not cause the respondent to suffer irreparable harm. A further safeguard against the risk of harm being caused by an execution order is the automatic right to an urgent appeal given by s 18(4). Pending such an appeal the statute expressly provides in s 18(4)(iv) that the operation of the suspension order is itself suspended. This case illustrates what can go awry when a court attempts to override that statutory provision. But first, the background. Background [3] The shareholders in equal shares of two companies, Islandsite Investments One Hundred and Eighty (Pty) Ltd (Islandsite) and Confident Concept (Pty) Ltd (Confident Concept), are the respondent, 3 South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) 1977 (3) SA 534 (A) (South Cape Corporation) at 544H-545G. Mrs Gupta, her husband, Mr Atul Gupta, and Mr Gupta's two brothers, Arti and Rajesh Gupta (hereafter 'the Guptas'). Their business affairs have come to public attention through media reports, the 'State of Capture' report by the Public Protector, Ms Thuli Madonsela, and the activities and daily public hearings of the Commission of Inquiry into Allegations of State Capture, known eponymously as the Zondo Commission after the commissioner, Deputy Chief Justice Raymond Zondo. The Commission was appointed in fulfilment of the remedial action determined by the Public Protector in her report. [4] In consequence of allegations made about the Guptas a number of companies in the group through which the Guptas conducted their business activities became 'unbanked', because the major banks in South Africa were not prepared to afford them banking facilities. This precluded them from continuing with their business operations and very probably rendered them commercially insolvent.4 In the result Islandsite and Confident Concept were placed under supervision and went into voluntary business rescue on 16 February 2018. Six other companies in the group were placed under business rescue at the same time. These did not include Oakbay Investments (Pty) Ltd (Oakbay), the company that controlled the operations of all the other companies in business rescue. It is convenient to refer to these companies generally as the Oakbay Group. Forty percent of the shares in Oakbay are owned by Islandsite and the balance by Mr and Mrs Gupta. Its acting Chief Executive Officer (CEO) is Ms Ronica Ragavan. 4 Murray NO and Others v African Global Holdings (Pty) Ltd and Others [2019] ZASCA 152; 2020 (2) SA 93 (SCA); [2020] 1 All SA 64 (SCA). [5] The present appellants, Mr Knoop and Mr Klopper, were appointed as the business rescue practitioners (BRPs) in respect of Islandsite and Confident Concept5 and also held appointments as BRPs in respect of some of the other companies in the Oakbay Group. Although appointed at the instance of the directors (Ms Ragavan and Mr Ashu Chawla in the case of Islandsite, and Mr Chawla in the case of Confident Concept) on the recommendation of the attorneys advising the Guptas, within a short period disputes arose between the BRPs, Ms Ragavan and other employees in the Oakbay Group. These need not be described here, but they led to Mrs Gupta making an application on 28 November 2018, on the basis of an affidavit by Ms Ragavan, for the removal of the BRPs of these two companies in terms of s 139(2) of the Companies Act 71 of 2008 (the Act). That application came before a specially constituted full court of the Gauteng Division of the High Court, Pretoria (Ledwaba DJP, Janse van Niweuwenhuizen J and Senyatsi AJ) and succeeded. An order for the removal of the BRPs (the removal order) was granted. [6] Messrs Knoop and Klopper lodged an application for leave to appeal against the removal order and were met with an application for leave to execute, brought on behalf of Mrs Gupta on the strength of an affidavit deposed to by Ms Ragavan. On 7 February 2020 the application for leave to appeal to this court against the removal order succeeded. An execution order was also granted in terms of ss 18(1) and (3) of the SC Act. On 12 February 2020, as was their right and as was expected,6 Messrs Knoop and Klopper lodged notice of an extremely urgent appeal to this court. This is the appeal dealt with in this judgment. The following day they lodged their notice of appeal against the removal order. 5 They were jointly appointed in relation to Islandsite and Mr Knoop was the sole appointee in relation to Confident Concept. 6 According to counsel for Mrs Gupta. Subsequent events [7] After the execution order was granted arrangements were made – presumably by the boards of directors of the two companies – to have Mr M M Tayob appointed as the business rescue practitioner in respect of Islandsite and Mr S M Naidoo appointed as the business rescue practitioner in respect of Confident Concept. According to an affidavit filed by Mr Tayob his appointment was made on 10 February 2020 and I will assume that Mr Naidoo was appointed on about the same date. We do not know whether notice of that appointment was filed with the Companies and Intellectual Property Commission (the CIPC) as required by s 129(4)(a) of the Act, or whether and when notice was given to affected parties in terms of s 129(4)(b), but I will assume that there was proper and timeous compliance with these statutory requirements. What is relevant for present purposes is the steps taken, on the basis of these appointments, to bring these proceedings and the business rescue of the two companies, to an end. [8] On 13 March 2020, Mr Tayob delivered a notice purporting to withdraw the main appeal insofar as it related to Islandsite. On 17 March 2020, Mr Naidoo purported to do the same insofar as Confident Concept was concerned. This precipitated a paper war between the attorneys acting for Messrs Knoop and Klopper and those representing Mrs Gupta. On 9 April 2020, Mr Krause of BDK Attorneys wrote to the registrar asserting that Messrs Klopper and Knoop had been 'stripped of their capacity' as BRPs; had no locus standi and no right of appeal; and asking that the urgent appeal should not be enrolled, but should be disposed of by the President under Rule 11(1)(b) of the Supreme Court of Appeal Rules. It is difficult to conceive of a more misconceived request by a legal practitioner. The rule empowers the President to give such directions as she may consider just and expedient 'in matters of practice, procedure and the disposal of any appeal'. No sensible reading of the rule could lead anyone to think that it entitled the President of this court to dispose of an appeal without placing it before a bench properly constituted to consider the issues raised by the appeal, including the question of the entitlement of the appellants to pursue an appeal. [9] It is noteworthy that Mrs Gupta's attorneys did not ask for the appeal to be enrolled as a matter of extreme urgency as provided in s 18(4)(iii) of the SC Act. Indeed, they asked that it not be enrolled at all. This is both odd and unexplained. If their client thought that she would suffer irreparable harm by Messrs Knoop and Klopper remaining in office, one would have expected them to ask the court to expedite the urgent appeal to remove any obstacle to their removal. Had that been done immediately the notice of appeal was lodged on 12 February 2020, the appeal could have been set down for an urgent hearing in the February term that was about to commence and disposed of by the end, or shortly after the end, of that term. [10] The contention that Messrs Knoop and Klopper, who were cited in their capacity as business rescue practitioners nomine officio, no longer had any locus standi to pursue the main appeal, because they had not sought or obtained leave to appeal in their personal capacities was refuted by their attorneys. They asked for the urgent appeal to be enrolled. The outcome of this pointless spat was that the Deputy President quite properly refused to determine these legal issues on the correspondence and directed that the urgent appeal and the main appeal be set down for hearing together. They were both enrolled for hearing before us on 6 November 2020. On 5 October 2020 the attorneys delivered a notice that the parties wanted a web-based hearing. [11] Heads of argument were delivered in accordance with the rules. Counsel for Messrs Knoop and Klopper submitted that the urgent appeal had been rendered moot by the Deputy President's order, as the outcome of the main appeal would render it unnecessary to determine the urgent appeal. However, in making that submission they had counted on there being no further actions by Mr Tayob in relation to Islandsite and Mr Naidoo in respect of Confident Concept. In this they fell into error as the following paragraphs demonstrate. [12] On 12 October 2020, Mr Tayob lodged an application for leave to intervene in the main appeal for the sole purpose of placing further evidence before the court. While his notice of motion and affidavit did not express any view about the proper disposition of the main appeal – it will be recalled that he had purported to withdraw it – the terms of the affidavit were plainly directed at securing the dismissal of that appeal insofar as it related to Islandsite. On 22 October 2020, the court received a letter from the attorneys on behalf of the appellants saying that they would need time to respond to his affidavit and the four lever arch files of evidence to which it referred and that Mr Tayob might wish to reply to their answering affidavit. In the circumstances they said the appeals would need to be adjourned. [13] All this came only two weeks before the appeals were due to be heard, when the preparation by the members of the court was well advanced. Bearing in mind that the appeal against the execution order was required by the provisions of s 18(4)(iii) to be heard as a matter of extreme urgency and had already been delayed by nine months, we were not minded, without first hearing the parties, to agree either to Mr Tayob being allowed to intervene, or to the postponement of the appeals. [14] We had started preparing a directive to the parties governing the further conduct of the proceedings, when our attention was drawn to a news report that Mr Tayob had purported to terminate the business rescue and restore Islandsite to its directors. On Monday, 26 October 2020, the respondent's attorneys confirmed this by delivering a letter to the registrar attaching a copy of a document from the CIPC reflecting that the business rescue of Islandsite had been terminated by Mr Tayob and recorded by CIPC on 16 October 2020. The letter indicated that in the circumstances Mr Tayob would not be pursuing his application to intervene in the main appeal and it would not be necessary for the appeals to be adjourned as suggested by the appellants' attorneys. [15] The impression given by these actions on the part of Mr Tayob was that they might have been directed at stultifying the appellants' appeals both against the execution order and against the removal order. That was of concern, because our law is clear that if that is done with dolus it may amount to contempt of court. As long ago as 1906, Mason J in Li Kui Yu7 said: ' … where a person knows or has reason to believe or ought to know that an application is being made to the Court for a certain purpose --- where he has that knowledge, or that suspicion, then, if he takes any action before the Court can be approached, the Court will regard that as an interference with the administration of justice, and will exercise its powers to prevent itself being defeated by anything of that kind.’ 7 Li Kui Yu v Superintendent of Labour 1906 TS 181 at 190. Subsequent cases have stressed the need for there to be an intention to defeat the ends of justice amounting to dolus.8 In Yamamoto De Villiers JP gave, as examples of such conduct, procuring the disappearance of a witness knowing that they had been subpoenaed to appear or removing goods with the object of defeating a possible order of court. The question is whether it is 'manifest that there was an ulterior object – namely to obstruct the due course of justice.9 However, in oral argument counsel for the appellants said that a finding on this was not necessary for the determination of the appeal and we have not pursued the matter further. To do so would require further evidence. [16] The following directive was issued to the parties and Mr Tayob concerning the conduct of the appeals: 'The judges have considered the application for an adjournment of the main appeal under Case No 116/2020 and Mr Tayob’s application for leave to intervene in that appeal and to tender further evidence. Neither application is granted at this stage. They will be considered and disposed of together with the appeal in Case No 115/2020 in the scheduled appeal hearing on 6 November 2020. In addition, since receiving those applications the attention of the judges was drawn to a media report that Mr Tayob had purported to terminate the business rescue and restore the company to its directors. The respondent’s attorneys sent a letter to the Registrar of this court on 26 October 2020 recording the termination of business rescue in relation to that company. As these intervening events may affect the conduct of the proceedings, the court gives the following directive for the hearing on 6 November: Mr Tayob is to deliver an affidavit by no later than 30 October 2020 in which he is to inform the court: (a) when he terminated the business rescue and provide particulars, including copies of all documents showing the steps taken in terms of s 141(2)(a) or (b) as the case 8 Fein and Cohen v Colonial Government (1906) 23 SC 750; Yamamoto v Athersuch and Another 1919 WLD 105 at 106. 9 Fein and Cohen v Colonial Government at 758. may be of the Companies Act, 71 of 2008 in seeking the termination of the business rescue; (b) when he formed the intention to terminate the business rescue; (c) the basis upon which he gave notice to the Commission in terms of s 132 (2)(b), read with s 141 (2) of the Companies Act 71 of 2008. Mr Tayob is to file heads of argument not exceeding 15 pages in length by no later than 30 October 2020 dealing with the following matters: (a) As the operation of the execution order in terms of ss 18(1) and (3) of the Superior Courts Act 10 of 2013 (the Act) was automatically suspended in terms of s 18(4)(iv) of the Act, on what basis does he contend that he has a legal interest in the outcome of the appeal in Case No 116/2020 and, if he did so, on what basis was he entitled to terminate the business rescue? (b) Given the likelihood that the evidence he now seeks to tender will be disputed, on what basis is it admissible at the stage of an appeal? (c) The delay in bringing the application for leave to intervene. The parties and Mr Tayob are to be represented at the hearing on 6 November 2020. The hearing will commence at 9.45am by dealing with the urgent appeal under Case No 115/2020. The appellants will be allocated 35 minutes and the respondent 35 minutes, with 5 minutes for a reply. Counsel for Mr Tayob will be entitled to address the court on issue 1(a) above for no more than 15 minutes, subject to the directions of the court. Judgment in the urgent appeal under Case No 115/2020 will then be reserved and the court will adjourn to consider the further disposition of the appeal in Case 116/2020. When it resumes it will either grant an adjournment and hear argument on the wasted costs occasioned by the adjournment, or it will proceed to hear the appeal in accordance with directions to be given at that stage of the hearing. Pending the hearing on 6 November 2020 Mr Tayob is to take no further steps to give effect to any purported termination of the business rescue proceedings or in any way to transfer control, or facilitate the transfer of control, of the company under business rescue, Islandsite Investments 180 (Pty) Ltd, to its directors. The local attorneys for Mr Tayob, who are also the local attorneys for Mrs Gupta in these appeals, are directed forthwith to draw their client’s attention and that of the principal deponent to the affidavits on her behalf, Ms Ragavan, to the terms of these directives and in particular paragraph 5 thereof. 7 Any party affected by this directive is given leave to apply to the presiding judge on notice to the Registrar and the parties to the appeals for a variation of the terms of the directive.’ [17] Mr Tayob filed an affidavit and heads of argument, and was represented before us by counsel. In consequence of the directive, supplementary heads of argument were delivered on behalf of the appellants dealing with the suspension of the execution order and the urgent appeal. Mrs Gupta's attorneys wrote to the Registrar objecting to the supplementary heads of argument and sought a direction in that regard. We indicated that whether the supplementary heads would be accepted would be dealt with at the hearing. The attorneys were advised that if their counsel thought it appropriate to deliver supplementary heads of argument their reception would likewise be dealt with at the hearing. On the morning of the appeal they delivered two sets of supplementary heads of argument, one dealing with mootness and the other with the merits of the urgent appeal. Neither party suggested that we should disregard these supplementary heads and we are grateful to counsel on both sides for the assistance they have provided. [18] The final development came on 2 November 2020 when the Registrar received a letter from Mrs Gupta's attorneys informing the court that on 23 October 2020 Mr Naidoo had, like Mr Tayob, purported to terminate the business rescue in respect of Confident Concept. That completed the background against which we dealt with this urgent appeal. Had it been heard and disposed of as a matter of extreme urgency as provided in the SC Act the court would simply have had to determine whether the execution order should have been granted. Instead it was faced with a number of other issues arising from the basic question of whether the execution order was enforceable and could validly be acted upon pending the hearing of the urgent appeal. How that came about is set out in the next section of this judgment. Was the execution order enforceable? [19] Section 18(4) of the SC Act reads as follows: ' If a court orders otherwise, as contemplated in subsection (1) ─ (i) the court must immediately record its reasons for doing so; (ii) the aggrieved party has an automatic right of appeal to the next highest court; (iii) the court hearing such an appeal must deal with it as a matter of extreme urgency; and (iv) such order will be automatically suspended, pending the outcome of such appeal.’ (My emphasis) [20] The section provides a safeguard against irreparable prejudice being occasioned as a result of a court granting an execution order when it should not have done so. The court must record its reasons immediately and the aggrieved party has an automatic right of appeal, unlike the ordinary situation where it is necessary to obtain leave to appeal. An appeal against an execution order is one of right and the party that obtained the execution order cannot object to it. If they wish to sustain the execution order, they must oppose the appeal. If they wish to avoid being prejudiced by the execution order being suspended, their remedy is to approach the head of the court to which the appeal lies and take all steps within their power to secure a hearing of the extremely urgent appeal for which the section provides. As noted above, Mrs Gupta's attorneys did nothing of the sort, and at every stage have sought to rely on technicalities to avoid both appeals being heard on its merits. [21] As an example of what is envisaged by the section, when Fisher J granted an execution order on 18 April 2018 against Ms Ragavan and others at the instance of Messrs Knoop and Klopper, giving the BRPs access to the premises from which the companies under business rescue operated, Ms Ragavan's appeal was heard on 23 April and dismissed on 3 May 2018. Appeals under s 18(4) can be disposed of equally expeditiously by this court. In Ntlemeza10 the execution order was granted on 12 April 2017; the high court furnished its reasons on 10 May 2017; the appeal was heard on 2 June 2017; and judgment was delivered on 9 June 2017.11 Had the President been approached shortly after 12 February 2020 for a date for an urgent appeal it could easily have been accommodated in the first term of this year. [22] The provisions of s 18(4)(iv) are clear and emphatic. An execution order is suspended pending an urgent appeal by the aggrieved party.12 The suspension of the original order in terms of s 18(1) of the SC Act continues until the disposal of the urgent appeal. In those circumstances it may well be asked on what basis Messrs Tayob and Naidoo were appointed and on what basis they have acted as BRPs since their appointment; purported in that capacity to withdraw Messrs Knoop and Klopper's appeals; and now, as the appeal hearing was looming, purported to terminate the business rescue in relation to both companies? 10 Ntlemeza v Helen Suzman Foundation and Another [2017] ZASCA 93; 2017 (5) SA 402 (SCA); [2017] 3 All SA 589 (SCA) (Ntlemeza). 11 In University of the Free State v Afriforum and Another [2016] ZASCA 165; 2018 (3) SA 428 (SCA); [2017] 1 All SA 79 (SCA) (UFS v Afriforum) the execution order was granted on 21 July 2016 and affected the university's lecture arrangements for the ensuing academic year. The appeal was heard at the beginning of the November term on 3 November and judgment was delivered on 17 November. In Premier for the Province of Gauteng and Others v Democratic Alliance and Others [2020] ZASCA 136 the execution order was granted on 20 June 2020 and the appeal was heard on 17 August 2020. 12 Minister of Social Development and Others v Justice Alliance of South Africa and Another [2016] ZAWCHC 34 (Justice Alliance) para 2. [23] The answer to those questions lies in the following paragraphs of the judgment granting leave to execute. '[23] In terms of section 18(4)(ii) the respondents have an automatic right of appeal to the next highest court, being the Supreme Court of Appeal. [24] Section 18(4)(iv) provides that the order will automatically be suspended pending the outcome of the appeal. [25] The suspension would in the normal course require a further application for leave to execute. [26] The Supreme Court of Appel in Ntlemeza v Helen Suzman Foundation 2017 (5) SA 402 (SCA) was alive to the multiplicity of applications that would follow in view of the provisions of section 18(4)(iv) and held that a court seized with an application in terms of sections 18(1) and (3) may order that the order will operate and be executable despite the noting of any further appeals by any party. [27] The principle underlying the decision of the Supreme Court of Appeal in Ntlemeza supra is the inherent right of courts to control its own judgments to prevent a toing and froing of litigants [See Ntlemeza supra at paragraph [32]]. [28] In executing our inherent right in this regard an order that any present or future appeals, applications and petitions by any party relating to this judgment shall not suspend the operation of the order granted on the 13 December 2019 shall follow.' [24] In the result, apart from granting leave to execute the full court granted the following order: 'Any present or future appeals, applications and petitions by any party relating to this judgment shall not suspend the operation of the order granted on the 13 December 2019.' I will refer to this as the suspension order. [25] The suspension order was explicitly directed at overriding the provisions of s 18(4)(iv) and Islandsite and Confident Concept took advantage of it in the respects set out above. That might not have mattered practically so far as this appeal and the main appeal are concerned, had Messrs Tayob and Naidoo done nothing more than purport ineffectually to withdraw Messrs Knoop and Klopper's appeals. However, Mr Tayob's application to intervene in the main appeal necessitated, in the first instance, a consideration of his locus standi to do so. The subsequent conduct of both Mr Tayob and then Mr Naidoo aimed at terminating the business rescue of both companies, on which Mrs Gupta's attorneys relied in contending that the appeals were now moot, compelled us to consider whether the full court's order was properly granted. If it was not, the further question would arise of the validity of the steps taken in reliance upon it. [26] These issues arose because Mrs Gupta and her attorneys, who informed us in a letter on 2 November 2020 that they acted also for Islandsite, presumably on the instructions of the Guptas as a whole, sought to rely on the validity of the full court's order seeking to override s 18(4)(iv). They relied on the validity of the actions of the substitute BRPs in order to advance three contentions. Firstly, they contended that Messrs Knoop and Klopper had no locus standi to appeal because their removal and replacement meant that they lacked any official capacity and standing to pursue the appeal as BRPs. Secondly, they contended that the substitute BRPs had withdrawn the appeal insofar as they were appeals by the BRPs of Islandsite and Confident Concept. Thirdly, and most recently, they claimed that in consequence of the termination of business rescue in relation to both companies the main appeal had become moot. I turn then to address these questions commencing with the validity of the full court's order. Was the full court's order valid? [27] The short answer to that question is 'No'. There are four reasons why this is so. They are: (a) No such order was asked for in the application for leave to execute. We were informed that none of the parties were called upon to address the court on this specific issue and that the court made the order mero motu. In the result it was granted without affording Messrs Knoop and Klopper a hearing on the issue. (b) The order flew directly in the face of the statute, that explicitly says that pending an urgent appeal under s 18(4) the operation of an execution order is suspended. (c) Ntlemeza not only did not provide any authority in favour of the grant of such an order, but was authority against it. (d) The inherent power of a court to regulate its own procedure cannot be used to override the provisions of a statute directly governing the issue. [28] The first reason requires little explanation. Section 34 of the Constitution guarantees a 'fair public hearing' before a court. In De Beer,13 Yacoob J said: 'A fair hearing before a court as a prerequisite to an order being made against anyone is fundamental to a just and credible legal order.' Where an issue is not raised in the pleadings or affidavits in a case, and the order granted is one on which neither party has been heard, there is a breach of a fundamental constitutional right. Had the court raised the issue with counsel, the fact that it had no power to grant such an order would have been dealt with. Any misconception in regard to Ntlemeza and the scope of its inherent power to regulate its own procedure, could have been dispelled. On that ground alone the suspension order should not have been granted. 13 De Beer NO v North Central Local Council and South Central Local Council and Others (Umhlatuzana Civic Association Intervening) [2001] ZACC 9; 2002 (1) SA 429 (CC) para 11. [29] The language of s 18 (4)(iv) is explicit and allows for no misunderstanding. The operation of an execution order is suspended pending the outcome of an urgent appeal against that order. That is the statutory position and a court can no more grant an order contrary to a statute, than it can order a party to perform an illegal act.14 Mr Tsatsawane SC, who appeared for Mrs Gupta here, but not in the full court, quite properly accepted that the correct position is that the high court could not rely on its inherent jurisdiction to grant an order that was in direct conflict with the statute. Unless the statutory provision in question is subject to a constitutional challenge – and none was raised in this case – it must be applied. Mr Cassim SC, who appeared for Mr Tayob following the court's directive, conceded from the outset that the purported override of the statutory suspension of the execution order was a nullity. [30] Mr Snijders, junior counsel for Mrs Gupta, advanced an argument that the wording of s 18(4)(iv) reflected the wording of s 18(1) and therefore it was open to the court to revert to the latter section in order to suspend the suspension of the execution order. There is no merit in the argument. The fundamental difference between the two sections is that the suspension provision in s 18(1) is qualified by the words 'unless the court under exceptional circumstances orders otherwise' whereas there is no such qualification in s 18(4)(iv). To stress the point the suspension of the execution order under that section is said to be 'automatic'. [31] The reliance on Ntlemeza was misplaced. That was an urgent appeal where a preliminary argument was advanced that a pending 14 Hosain v Town Clerk Wynberg 1916 AD 236 at 240; Pottie v Kotze 1954 (3) SA 719 (A) at 726H- 727A. application for leave to appeal or a pending appeal was a jurisdictional requirement for the grant of an execution order. Leave to appeal had been refused and it was submitted that the court was precluded from granting an execution order because there was then no application for leave pending, although an application to this court for such leave was highly likely and duly materialised. The argument was rejected as inconsistent with the language of s 18(1), which does not make an application for an execution order dependent on a pending application for leave to appeal or an appeal at the time the application is made. The court pointed out that once an application for leave to appeal was lodged with this court, execution of the high court order would be stayed and it would be open to the respondents to make an application for an execution order. The court remarked that courts are guardians of their own process and should avoid 'a to-ing and fro-ing of litigants', but that related solely to the interpretation of s 18(1). It did not mean that a court could allow execution to take place in terms of an execution order when the statute said that order was automatically suspended pending the exercise of the right to an extremely urgent appeal. Other than the fact that the judgment set out s 18 as a whole, including s 18(4)(iv), it did not refer to the latter section and did not question that the effect of the section was to suspend the execution order pending an appeal against it. [32] Paragraphs 27 and 28 of the full court's judgment, quoted above in para 23, suggest that it thought that it could create a right to reverse the automatic suspension of its execution order on the basis of its inherent power to protect and regulate its own process. But that power is one to protect and regulate process in cases properly before it, not to assume powers that would override the explicit provisions of the statute. That there was no application before the full court for an order granting leave to execute on the execution order pending the appellants urgent appeal has already been dealt with. However, if there had been such an application, s 18(4)(iv) provided a complete answer to it. The Constitutional Court pointed out in Molaudzi15 that the inherent power of courts to regulate their process does not apply to substantive rights, but rather to procedural or adjectival rights. The position is clear that Messrs Knoop and Klopper had a right to an urgent appeal and a right not to have the execution order implemented against them – something that would have substantive law consequences – until that appeal had been disposed of. Protecting and regulating the court's process could not be invoked to deprive them of those rights.16 [33] It follows that the full court's suspension order, purporting to override the suspension of its execution order, was invalid. It had no power and no authority to make that order. It is inexplicable that it made the order without being asked to do so and without having heard argument. The order was void. In very similar circumstances that was the conclusion of this court in Motala.17 There a company was placed under judicial management in terms of the Companies Act 61 of 1973 (the 1973 Act) and the court made an order appointing two named individuals as joint judicial managers. It had no power to do that because s 429 of the 1973 Act vested the power of appointment exclusively in the Master.18 The Master was caught between Scylla and Charybdis, or in the modern iteration of that classical allusion, between a rock and a hard place. The 15 Molaudzi v The State [2015] ZACC 20; 2015 (2) SACR 341 (CC) para 33. 16 One cannot alter a statutorily prescribed procedural situation by resort to the court's inherent powers to regulate process, any more than the inherent power to develop the common law can be invoked to change the meaning of a statute. See The Minister of Safety and Security v Sekhoto and Another [2010] ZASCA 141; 2011 (5) SA 367 (SCA) [2011] 2 All SA 157 (SCA) para 22. 17 Master of the High Court Northern Gauteng High Court, Pretoria v Motala NO and Others [2011] ZASCA 238; 2012 (3) SA 325 (SCA). 18 Ex parte The Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP). unpalatable choices facing him were to act in terms of the court order by issuing certificates of appointment in disregard of the statute, or to act in terms of the statute and make appointments as he deemed appropriate, but disregard the court order. He chose the latter and declined to appoint the one person named in the court order on the grounds that he was unqualified for appointment and to do so was in conflict with the 1973 Act. The high court held him to be in contempt of court. That order was set aside on appeal to this court on the grounds that the court order was void from inception because it directly contradicted the statute. [34] I am aware that some of the reasoning in Motala has been subjected to criticism by the Constitutional Court.19 However, it remains authority for the proposition that if a court 'is able to conclude that what the court [that made the original decision] has ordered cannot be done under the enabling legislation, the order is a nullity and can be disregarded'.20 This principle can be invoked where the invalidity appears on the face of the order as in Motala and in this case.21 The suspension order granted by the full court was therefore a nullity. The consequences of nullity [35] The nullity of the suspension order meant that the execution order was suspended pending this appeal. No lawful steps could be taken to remove Messrs Knoop and Klopper as BRPs until the urgent appeal had been heard and dismissed. Substitute BRPs could not be appointed to take their place, because the order for their removal was not yet effective and 19 Department of Transport and Others v Tasima (Pty) Ltd [2016] ZACC 39; 2017 (2) SA 622 (SCA)(Tasima) paras 188-196. 20 Ibid para 197 relying on Provincial Government North West and Another v Tsoga Developers CC and Others [2016] ZACC 9; 2016 (5) BCLR 687 (CC) (Tsoga) para 50. 21 See to similar effect City of Johannesburg v Changing Tides 74 (Pty) Ltd and Others [2012] ZASCA 116; 2012 (6) SA 294 (SCA); [2013] 1 All SA 8 (SCA) para 8, referred to in support of this proposition in Tsoga para 48. they were still in place. The order directing the appointment of new BRPs was suspended and could not be acted on. [36] The consequences of that are perfectly clear. Messrs Tayob and Naidoo did not become BRPs of Islandsite and Confident Concept. Messrs Knoop and Klopper remained in office as BRPs of those two companies. The purported withdrawals of their appeals, by two individuals who were complete strangers to the dispute between the BRPs and Mrs Gupta, were invalid and of no effect. To be clear, that would have been so whether or not Messrs Tayob and Naidoo's appointments had been valid. The court had ordered that Messrs Knoop and Klopper be removed as BRPs. They were entitled to appeal against that decision. It was not for two people, who had no involvement in that dispute and no authority to represent Messrs Knoop and Klopper, to withdraw their appeals or in any other way to interfere with their constitutionally protected right to have their dispute with Mrs Gupta resolved by a court of law in accordance with the judicial hierarchy established by the Constitution. [37] For the same reason, the objection to the continued locus standi of Mr Knoop and Mr Klopper was without merit. The convoluted argument advanced on behalf of Mrs Gupta was that they were removed in their capacity as BRPs and given leave to appeal in that capacity, but not in their personal capacity. Therefore, when they were replaced as BRPs by Messrs Tayob and Naidoo, they no longer had locus standi because they did not have the right in their personal capacity to seek their reinstatement. This argument went beyond fantasy into the realms of the surreal. They had been joined in the removal application in their capacity as BRPs. It was in that capacity that they were removed and it was that decision that they challenged in the main appeal. Their only involvement in their personal capacity was the failed attempt to obtain an order for costs against them as individuals. There was nothing for them to appeal against in their personal capacity. The effect of the argument was that they had no right of appeal notwithstanding that the full court granted leave to appeal to this court. The argument smacks of a desperate endeavour to avoid the appeal being heard and the high court judgment ordering their removal being reconsidered. [38] It was also contended on behalf of Mrs Gupta that Messrs Knoop and Klopper had accepted the execution order and perempted their appeal by abiding by it and submitting in their heads of argument that it had become moot as a result of being set down for hearing simultaneously with the main appeal. That was clearly incorrect. The heads of argument merely reflected the sensible view that, once the merits of the main appeal had been disposed of, the question of leave to execute upon it would be moot, save in respect of costs, which s 16(2)(a)(ii) of the SC Act renders an irrelevant consideration. The correspondence made it clear that, apart from the coincidence of the two appeals being heard on the same day, Messrs Knoop and Klopper were persisting with the urgent appeal. The point was rightly not pressed in argument. [39] Potentially the most difficult issue relates to the purported termination of the business rescue of the two companies. Reliance was placed upon the principles in cases such as Tasima22 to contend that there needed to be an application to set aside the termination. But that was based upon the misconception that the termination was an official act by the CIPC. This is not correct. When one is dealing with a company that is 22 Op cit fn 18. placed in business rescue voluntarily by way of a resolution of the board of directors, the process of business rescue is conducted on the basis of the actions of the company; affected persons, that is, shareholders, any trade union representing employees and employees;23 the BRP; and the creditors. It is the company, acting through its directors that commences the process and appoints the BRP.24 The company then gives notice of the resolution to commence business rescue.25 During the course of the business rescue the directors of the company remain in office and must continue to perform their functions as directors26 and perform their management functions in accordance with the express instructions of the BRP to the extent that it is reasonable to do so.27 The BRP must investigate the affairs of the company and develop a business rescue plan to be considered by affected persons.28 If the plan is adopted the company is obliged to implement it under the direction of the BRP.29 [40] If it transpires at any stage of the process that the company cannot be rescued, the BRP is obliged to give notice of this and approach the court for a liquidation order.30 If the business rescue plan is substantially implemented, the BRP files a notice with the CIPC31 and the business rescue terminates when that notice is filed.32 If the business rescue plan is proposed and rejected and no affected person has acted to extend it in terms of s 153 (1) of the Act, the business rescue terminates. The BRP is obliged in that event to file a notice of termination of the 23 Definition of 'affected person' in s 128(1)(a) of the Act. 24 Sections 129(1) and (3)(b) of the Act. 25 Section 129 (4) of the Act. 26 Section 137(2)(a) of the Act. 27 Section 137(2)(b) of the Act. 28 Sections 141(1) and 140(1) of the Act. 29 Section 152(5) of the Act. 30 Section 141(2)(a) of the Act. 31 Section 152(8) of the Act. 32 Section 132(2)(c) of the Act. business rescue.33 If at the end of the BRPs investigation, they conclude that there are no longer grounds for thinking that the company is financially distressed, they must inform the court, the company and all affected persons of that fact and file a notice of termination of the business rescue.34 On filing that notice the business rescue proceedings end.35 [41] That summary of the process that ensues after a company enters voluntarily into business rescue demonstrates that the CIPC has no role to play in the process beyond receiving and maintaining in its records the information about the commencement and termination of business rescue. There is accordingly no public act by the CIPC that has legal efficacy and requires to be set aside in accordance with the principles in Tasima. Instead there is an entirely private process involving the company, the BRP and all affected persons. The role of the CIPC is simply to hold the public record of the company's status. [42] The correct position is therefore that the 'termination' of the business rescue of these two companies was effected by two people who were not the BRPs duly appointed and in office at the time. They had no right or power to terminate the business rescue, however much they may have believed that they did. The termination was accordingly invalid and void. As a result, both companies remain in business rescue. That conclusion means that we are back where we started, with an appeal against the execution order in this appeal and an appeal against the removal order in the main appeal. 33 Section 153(5) of the Act. 34 Section 141(2)(b) of the Act. 35 Section 132(2)(b) of the Act. [43] Before turning to deal with the urgent appeal it is necessary to make it clear that, save to the extent set out above, these conclusions do not either validate or invalidate actions by Mr Tayob and Mr Naidoo while they were acting as the BRPs of these companies. Those actions may have affected third parties or, for example in the case of their remuneration, Messrs Tayob and Naidoo themselves. The precise consequence of those actions in the light of the fact that they were not validly appointed as BRPs will, if need be, have to be explored in other litigation where the issues will be properly defined and those third parties are before the court. The order makes this clear. I can then move on to the urgent appeal. The merits of the urgent appeal [44] This is an appeal against the execution order. Section 18(1) of the SC Act provides that: ‘Subject to subsections (2) and (3), and unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision which is the subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal.’ Messrs Knoop and Klopper's removal as BRPs was therefore suspended by their application for leave to appeal and would have continued to be suspended after being granted leave to appeal, subject only to the provisions of s 18(3). That section provides that: ‘A court may only order otherwise as contemplated in subsection (1) . . . if the party who applied to the court to order otherwise, in addition proves on a balance of probabilities that he or she will suffer irreparable harm if the court does not so order and that the other party will not suffer irreparable harm if the court so orders.’ [45] These provisions have now been considered by this court in three judgments.36 The effect of these is that an applicant for an execution order must prove three things, namely, exceptional circumstances; that they will suffer irreparable harm if the order is not made; and that the party against whom the order is sought will not suffer irreparable harm if the order is made. [46] Courts have always eschewed any attempt to lay down a general rule as to what constitutes exceptional circumstances.37 The reason is that the enquiry is a factual one.38 There is a helpful summary in the MV Ais Mamas39 that has been endorsed both by this court and by the Constitutional Court.40 In the context of s 18(3) the exceptional circumstances must be something that is sufficiently out of the ordinary and of an unusual nature to warrant a departure from the ordinary rule that the effect of an application for leave to appeal or an appeal is to suspend the operation of the judgment appealed from. It is a deviation from the norm.41 The exceptional circumstances must arise from the facts and circumstances of the particular case. When dealing with someone’s removal from office, be it a BRP or a liquidator in relation to a company, or a trustee or an executor, or some other office bearer, the mere fact that the court has held that they should no longer fill that office does not, in and of itself, constitute exceptional circumstances. There must be something more in the circumstances of the particular case that makes the immediate implementation of the removal order necessary. 36 UFS v Afriforum op cit fn 10 paras 5-6; Ntlemeza op cit fn 9 paras 19-22; The Premier for the Province of Gauteng and Others v Democratic Alliance and Others [2020] ZASCA 136. 37 Norwich Union Life Insurance Society v Dobbs 1912 AD 395 at 399. 38 S v Dlamini; S v Dladla and Others; S v Joubert; S v Schietekat 1999 (4) SA 623 (CC) para 75-77. 39 MV Ais Mamas: Seatrans Maritime v Owners MV Ais Mamas and another 2002 (6) SA 150 (C) at 156E-157. 40 Liesching and Others v The State [2018] ZACC 25; 2019 (4) SA 219 (CC). 41 UFS v Afriforum op cit, fn 10 para 13. [47] The need to establish exceptional circumstances is likely to be closely linked to the applicant establishing that they will suffer irreparable harm if the removal order is not implemented immediately. One can readily imagine that an order for the removal of a dishonest BRP will provide grounds for the court to order that the removal order should have immediate operative effect. But unless there is a real and substantial risk of immediate and irreparable harm being suffered while waiting for the enrolment, hearing and outcome of the appeal, the foundation for an execution order will be absent. [48] Section 18(3) requires the applicant for an execution order to establish that the respondent will not suffer irreparable harm if the order is granted. The judgment in UFS v Afriforum42 indicates that the requirements of irreparable harm to the applicant and no irreparable harm to the respondent, unlike the common law position, do not involve a balancing exercise between the two, but must both be established on a balance of probabilities. If the applicant cannot show that the respondent will not suffer irreparable harm by the grant of the execution order that is fatal. It is unnecessary to decide whether in those circumstances the court would be empowered to grant other relief pending the hearing of the appeal in order to protect the applicant's position. [49] In Justice Alliance,43 it was held that the court has a wide discretion to grant or refuse an execution order once the statutory requirements are satisfied, and that prospects of success in the appeal have a role to play in considering the exercise of that discretion. There is 42 Op cit, fn 10, para 10. Incubeta Holdings and Another v Ellis and Another 2014 (3) SA 189 (GSJ)(Incubeta) para 24. 43 Op cit, fn 11, paras 26-29. a dictum in UFS v Afriforum44 that supports this approach, but in both that case and Ntlemeza the record in the main appeal was not before this court and the appeals had perforce to be decided without the full record or any consideration of the merits of the main appeals. [50] We had the full record in the main appeal before us and had read it in anticipation of dealing with the main appeal, but the argument on the urgent appeal did not include any debate over prospects of success in the main appeal. Our finding that the three requirements for making an execution order were not established means that we did not have to consider whether there is a discretion once they are present and, if so, whether the prospects of success should affect its exercise. There may be difficulties if the high court takes the prospects of success into account in granting an execution order, because it is not clear that the court hearing an urgent appeal under s 18(4) will always be in a position to assess the weight of this factor. As I have noted, in both UFS v Afriforum and Ntlemeza the court disposed of the appeal by disregarding the prospects of success on appeal. The urgency of the appeal almost inevitably dictates that in this court and possibly in a full court, the appeal court will not have the record before it and will be confined to assessing the prospects of success in the main appeal from the judgment alone. The usual principle that an appeal court decides the appeal on the record before the high court cannot apply in those circumstances. If the language of s 18(4) confers a discretion, is that a full discretion or a power, combined with a duty to exercise that power on proof of the requirements for its 44 Op cit, fn 10, para 15. It is contrary to the approach in Incubeta that the section codifies the law completely. exercise?45 These issues may warrant a reconsideration of the approach in Justice Alliance on an appropriate occasion. Exceptional circumstances [51] Ms Ragavan, who deposed to the founding affidavit in the application for leave to execute, said that Mrs Gupta's case was exceptional for the following reasons: (a) there had been inordinate delay in completing the business rescue, during which damage had been caused to certain properties of Islandsite and Confident Concept, the creditors' debts had not been settled and the BRPs had continued to generate fees for themselves; (b) the business rescue plans could have been implemented by the sale of a single asset, an aircraft owned by Islandsite that had been allowed to fall into a state of disrepair; (c) this was manifestly prejudicial to the companies and the creditors; (d) the BRPs could not be trusted to take decisions for the companies while the matter was delayed by an appeal 'which is in any event doomed to predictable failure'; (e) the BRPs had not adequately responded to certain demands made on Mrs Gupta's behalf by her attorneys in a letter written the day after the application for leave to appeal the removal order was served. In particular Ms Ragavan complained that a full accounting had not been furnished. [52] In his answering affidavit Mr Knoop dealt with each of these as follows: (a) the delays in completing the business rescue had been occasioned by the deliberate actions of Ms Ragavan and others in the employ of, or associated with, companies in the Oakbay Group to frustrate the BRPs in 45 Schwartz v Schwartz 1984 (4) SA 467 (A). performing their duties. The BRPs had been denied access to premises, records and information. Properties that should have been sold could not be sold because they were occupied by employees of the Oakbay Group and Ms Ragavan refused to instruct these employees to vacate and said she would oppose any attempt to evict them; (b) every endeavour to obtain information about the aircraft, which was owned by Islandsite and not available to be sold to satisfy Confident Concept's debts, had been blocked. It had been removed from South Africa and there were attempts to re-register it in the Isle of Man. The BRPs had reason to believe that it was being used by the Gupta family for private purposes. When its whereabouts in Dubai were discovered, the entity having responsibility for it, DC-Aviation, refused to provide the BRPs with any information concerning it. The potential 'sale' was in terms of an agreement where the identity of the purchaser was not disclosed and on terms in regard to the condition of the plane that were extremely onerous; (c) the general allegations of prejudice were unparticularised; (d) details of the fees that the BRPs had earned were given and it was pointed out that it had never been suggested in the removal application that they were excessive or a ground for their removal; (e) the attorneys' letter had been responded to, certain undertakings had been given and details of information about the progress of the business rescues had been furnished. Detailed reconciliations of sales were annexed to the affidavit. [53] The replying affidavit delivered by Ms Ragavan does little credit to her or to the legal practitioner or practitioners responsible for drafting it. Its contents consisted of a number of intemperate, but unsubstantiated attacks on Mr Knoop; repeated and unnecessary assertions of the lack of prospects of success in obtaining leave to appeal or in any appeal; and a joining of issue on many factual assertions thereby compounding the already apparent dispute of fact on the papers. All in all, there was nothing exceptional in the circumstances set out in Ms Ragavan's affidavit. Overwhelmingly they reiterated complaints advanced in the removal application, some being complaints that had not been dealt with by the full court in its judgment. All of them had been dealt with extensively in the answering affidavit and the supplementary affidavit delivered by Mr Knoop in the removal proceedings. There were disputes of fact on fundamental issues. [54] The full court needed to engage with the evidence and set out in clear terms the facts on which it based a finding that exceptional circumstances were present, as well as an explanation of why, in its view, those circumstances were exceptional within the context of s 18(1). This was required in terms of s 18(4)(i), a provision designed to ensure that, when a party against whom an execution order has been granted exercises their right to an extremely urgent appeal, the appeal court will know precisely why the order was granted. [55] Regrettably the full court merely stated in para 10 that the applicant submitted that the BRP's 'failure to meet the required standard expected of business rescue practitioners as dealt with in the judgment of this court constitutes exceptional circumstances'. Assuming this was intended as a summary of Ms Ragavan's complaints set out above in para 51 of this judgment, the complaints demonstrated that the circumstances were not exceptional. Were these to constitute exceptional circumstances, an execution order would have to issue in every case of the removal of a BRP under s 139(2) of the Act, and indeed in every removal of a liquidator, trustee, executor or similar office holder. However routine or mundane the grounds for removal they would always be treated as exceptional. [56] The full court said that business rescue was intended to be a speedy process requiring the BRPs to act in the best interests of all affected parties, conducting themselves as officers of the court with the duties of a director. No attempt was made to deal with the evidence of Mr Knoop in the answering affidavit, and in his affidavits in the main application, that the problems were caused entirely by the campaign waged by Ms Ragavan and others to hinder and prevent the BRPs from performing their duties. That evidence had to be accepted in accordance with the Plascon-Evans rule. [57] The findings in the main judgment were summarised in saying that the BRPs failed to discharge their duties in good faith, objectively and impartially; failed to report criminal unlawfulness of the prior board and shareholders to the authorities; had a conflict of interest by acting as BRPs in respect of different entities in the Oakbay Group; and failed properly and timeously to perform their duties. The judgment then returned to the theme that business rescue must be a speedy process and that the BRPs needed to adhere to the high standards set out in the Act, and concluded: 'In our view, the purpose of business rescue proceedings combined with the interests of all affected and the fact that the respondents failed dismally in their duties constituted exceptional circumstances.' [58] There were several errors in these reasons. The alleged failure to report criminal conduct to the relevant authorities had been introduced by the full court itself in its removal judgment, without having been raised as a ground of complaint or dealt with in the papers. The likelihood of it having been a ground of complaint by Mrs Gupta, speaking through Ms Ragavan, was nil, inasmuch as any such criminal conduct would have been by the Guptas and directors and employees of companies in the Oakbay Group, such as Ms Ragavan and Mr Chawla. Given that it was raised in the removal judgment, Mr Knoop set the record straight in his answering affidavit, explaining that the BRPs had reported their suspicions of potentially criminal conduct to the SAPS, the National Prosecuting Authority, the Special Investigations Unit, the Asset Forfeiture Unit, SARS and the Zondo Commission. The full court was wrong to use the error as a ground for a finding of exceptional circumstances. [59] The reliance on the finding of a conflict of interest was also unfounded and unjustified. In its judgment granting leave to appeal, delivered on the same day, it had accepted that there was a difference between its approach and that taken by a single judge in the same court in a similar application involving the same BRPs and Tegeta, another company in the Oakbay Group.46 The need to resolve this difference of view was one of the grounds upon which it granted leave to appeal. A ground on which there was room for a difference of view could not render the circumstances exceptional. [60] The full court's reasons consisted entirely of generalisations and there was no specific statement of the facts that made this case different from other similar cases and provided exceptional grounds for departing 46 Oakbay Investments (Pty) Ltd v Tegeta Exploration and Resources (Pty) Ltd (in business rescue) [2019] ZAGPHC 411. from the normal rule that the removal order would be suspended pending the outcome of the appeal. Making as much allowance as is possible for the fact that the judgment was delivered a week after argument was heard, it falls short of providing an explanation for finding that Mrs Gupta discharged the onus of establishing on a balance of probabilities that exceptional circumstances existed. Nor does a reading of the affidavits disclose such a basis. The heads of argument delivered in regard to the urgent appeal are long on rhetoric and assertions, but bereft of any analysis of the evidence, or the concept of exceptional circumstances, that would support the conclusion that such circumstances were present in this case. The existence of exceptional circumstances was not established. Irreparable harm [61] The application for leave to execute fell at the first hurdle and the appeal accordingly had to be upheld. However, it is desirable to point out that neither of the other two requirements were satisfied. As to Mrs Gupta's allegations of suffering irreparable harm, Ms Ragavan's affidavit went off on a tangent to the business rescue in respect of these two companies and alleged that the BRPs in their dealings with Optimum Coal Mine (OCM) and Koornfontein had turned OCM from being a profitable enterprise employing 2000 people to a ruin. She alleged that assets were being sold at a fraction of their value as part of a sale of the mine, which was the subject of litigation. She noted that an application had been brought for the liquidation of OCM. [62] The relevance of these allegations to Mrs Gupta suffering irreparable prejudice justifying the immediate implementation of the removal order in respect of Islandsite and Confident Concept was not apparent on the papers. In any event they were firmly refuted by Mr Knoop in his answering affidavit. He said that these companies and their assets had been virtually destroyed before the commencement of business rescue and alleged that Ms Ragavan had been a party to this. Ms Ragavan in reply denied the relevance of these allegations claiming that they had only been raised to show the poor management of the businesses by the BRPs. [63] Without referring to these allegations or the evidence the full court said: 'The conduct of the respondents thus far, however, establishes a pattern of their failure to properly conduct the business rescue proceedings. In our view the respondents lack of insight in their failure to adhere to the high standards expected of business rescue practitioners establishes at least on a balance or probabilities, that their continued involvement in the proceedings would cause irreparable harm, not only to the applicant but to all affected parties.' [64] It is not apparent to which conduct of the BRPs reference was being made. There was no mention of the grounds of prejudice relied on by Mrs Gupta as set out in Ms Ragavan's affidavit. The conclusion had no basis in the evidence. As to the position of 'all affected parties' the majority of the affected parties in the two companies, were the three Gupta brothers, who together own 75% of the shares in the two companies, and their silence was deafening. They did not, publicly at least, make common cause with Mrs Gupta in her endeavours to have the BRPs removed. Did they support her efforts? Were they cheering her on from the sidelines? Ms Ragavan only holds office as the acting CEO of Oakbay by virtue of their support. Was she in receipt of instructions from them? Nothing at all was said in this regard and nothing can or should be inferred. But in the absence of evidence from them, the full court could not reach generalised conclusions in regard to their interests. [65] No irreparable prejudice to Mrs Gupta was established. Nor was the onus discharged of showing that the BRPs would not suffer irreparable harm as a result of an execution order being granted. Ms Ragavan said that the only possible harm was a loss of fees. This theme had its origins in the judgment granting the removal order, which was taken up by Ms Ragavan in the execution application and appeared again in the execution judgment. The full court added, even though Ms Ragavan had not said this, that they could make up the shortfall by doing other work as BRPs. These allegations were denied. The issue of reputational risk as a result of being removed as BRPs in these high- profile cases of business rescue was not canvassed. Mr Knoop pointed to the prejudice creditors would suffer if they were removed and new BRPs appointed with the very real risk of the approved business rescue plans not being implemented. I am not sure that this was relevant to the question whether he and Mr Klopper would suffer irreparable harm as a result of the grant of such an order as that was potential harm to third parties not the BRPs. Be that as it may, on the tenuous evidence advanced I do not think that the onus under this head was discharged. Result [66] For those reasons the urgent appeal had to succeed and at the conclusion of the argument on this appeal we granted the order set out at the head of this judgment and below. The order was granted before we heard argument in the main appeal and was not affected by any consideration of the merits of the main appeal. [67] It remains to say something about the order. In view of the various issues that we have had to canvass and determine before reaching the main appeal, it was desirable that the order should reflect our conclusions on those issues. It therefore contains declaratory orders in relation to those issues. That is a proper approach given our power under s 19(d) of the SC Act to 'render any decision which the circumstances may require'. Insofar as any costs were occasioned to the appellants by Mr Tayob's abortive attempt to intervene, while his counsel addressed us during the argument on this appeal, the application to intervene was in the main appeal and the costs must be dealt with there. [68] In the result, after hearing argument in this urgent appeal and taking the opportunity to consult among ourselves during an adjournment of the proceedings, the following order was made: The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel. The order of the full court is set aside and replaced by the following order: 'The application is dismissed with costs, such costs to include those consequent upon the employment of two counsel.' It is declared that pending the finalisation of this appeal: (a) The operation and execution of the order of the full court granting leave to execute in terms of s 18(1), read with s 18(3), of the Superior Courts Act 10 of 2013 was suspended in terms of s 18(4)(iv) of the Superior Courts Act 10 of 2013. (b) The appellants were not validly removed from office as business rescue practitioners in respect of Islandsite Investments One Hundred and Eighty (Pty) Ltd (Islandsite) and Confident Concept (Pty) Ltd (Confident Concept). (c) The directors of Islandsite and Confident Concept were not entitled to act on the order for the removal of the appellants as business rescue practitioners in those two companies by nominating new business rescue practitioners and the appointments of Mr Tayob in respect of Islandsite and Mr Naidoo in respect of Confident Concept were invalid. (d) The notices of termination of business rescue given by Mr Tayob in respect of Islandsite and Mr Naidoo in respect of Confident Concept in terms of s 132(2)(b) of the Companies Act 71 of 2008 were invalid and of no force and effect. (e) Nothing in this order validates or invalidates any other action taken by Islandsite and Confident Concept since 7 February 2020 with the authority of Mr Tayob and Mr Naidoo as the case may be. It is further declared that pending the finalisation of the main appeal under Case No 116/2020 Islandsite and Confident Concept remain in business rescue under the supervision of the appellants in accordance with their original appointments as business rescue practitioners. _________________ M J D WALLIS JUDGE OF APPEAL Appearances For appellant: P Stais SC (with him GD Wilkins SC) Instructed by: Smit Sewgoolam Inc, Johannesburg; McIntyre Van der Post, Bloemfontein For respondent: NK Tsatsawane SC (with him J-P Snijders) Instructed by: BDK Attorneys, Johannesburg; Honey Attorneys Inc, Bloemfontein. For Mr M M Tayob: NA Cassim SC (Heads of Argument by MA Chohan and L Kutumela)

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 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. Knoop and Another NNO v Gupta (1) (115/2020) [2020] ZASCA 149 (19 November 2020) After the hearing on 6 November 2020, the court made an order upholding the urgent appeal by Mr Knoop and Mr Klopper against an order authorising their removal as business rescue practitioners (BRPs) in respect of two companies Islandsite Investments 180 (Pty) Ltd and Confident Concept (Pty) Ltd. The companies were owned by the Gupta family, consisting of Mrs Chetali Gupta, her husband, Mr Atul Gupta, and his brothers, Mr Arti and Mr Rajesh Gupta. Islandsite controls Oakbay Investments (Pty) Ltd and through it the companies constituting the Oakbay Group. They and six other companies in the Oakbay Group had become 'unbanked' as a result of the family being associated with allegations of 'State capture". Resolutions were passed to place all eight companies under supervision and business rescue. Mr Knoop and Mr Klopper were appointed as BRPs in respect of Islandsite and Mr Knoop as BRP in respect of Confident Concept. Disputes arose between the BRPs and representatives of the Gupta family and the Oakbay Group. This led to considerable litigation. In November 2018, Mrs Gupta applied to have Mr Knoop and Mr Klopper removed as BRPs in respect of the two companies. The full court of the Gauteng Division of the High Court, Pretoria upheld the application and granted leave to appeal to the SCA. At the same time, it granted an execution order permitting Mrs Gupta to act upon the removal order immediately. However, Mr Knoop and Mr Klopper had a statutory right to an extremely urgent appeal against that decision. It was that urgent appeal that the court heard first on 6 November 2020. Pending the hearing of the urgent appeal the statute provided that the execution order was suspended. The full court, however, granted an order that the urgent appeal would not suspend the operation of the execution order and new BRPs were appointed in respect of the two companies. In the first instance the new BRPs purported to withdraw Mr Knoop and Mr Klopper's appeals against the removal judgment. Mrs Gupta contended that this meant they had no legal standing to pursue the appeal. On 12 October, the new BRP of Islandsite, Mr Mahomed Tayob, applied for leave to intervene in the main appeal for the purpose of leading further evidence. Four days later he purported to terminate the business rescue. The new BRP in respect of Confident Concept, Mr Naidoo, did the same on 23 October 2020. As a result of these actions the court directed that the urgent appeal would be dealt with at the outset of the hearing on 6 November 2020. The SCA first dealt with the validity of the full court's order overriding the suspension of the execution order. It held that this was invalid as it flew in the face of the express provisions of the statute giving the right of appeal. Furthermore, it had been granted by the court of its own volition without notice to the parties and without affording them an opportunity to make submissions in regard to such an order. The invalidity of the order meant that pending the outcome of the urgent appeal Mr Knoop and Mr Klopper remained the duly appointed BRPs in respect of Islandsite and Confident Concept. The withdrawal of their appeals against their removal was invalid and ineffective. The appointments of Mr Tayob and Mr Naidoo were also invalid as were their endeavours to terminate the business rescue process. Declaratory orders to this effect formed part of the court's order. On the merits of the urgent appeal, the SCA pointed out that Mrs Gupta had been obliged to prove that the circumstances were exceptional, that she would suffer irreparable harm if the BRPs were not removed immediately and that the BRPs in turn would not suffer irreparable harm if they were removed immediately. It analysed the evidence in this regard and pointed out that there was nothing exceptional in the circumstances of the case that provided a reason for departing from the norm that pending an appeal the execution of the judgment appealed against is suspended. The SCA also held that neither irreparable harm to Mrs Gupta nor the absence of irreparable harm to the BRPs had been established. In the circumstances the appeal was upheld after argument for the reasons set out in the judgment delivered today.

2242

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 311/08 ERASMUS FERREIRA & ACKERMANN First Appellant CHRIS FERREIRA Second Appellant HENDRIK ACKERMANN Third Appellant and KERRY-LYNN FRANCIS Respondent Neutral citation: Erasmus Ferreira & Ackermann v Francis (311/08) [2009] ZASCA 54 (27 May 2009) Coram: STREICHER, FARLAM, NUGENT, CLOETE & CACHALIA JJA Heard: 17 MARCH 2009 Delivered: 27 MAY 2009 Summary: Section 1(1) of the Assessment of Damages Act 9 of 1969 which, in an action for damages arising from a person’s death, prohibits insurance money, pensions or benefits from being taken into account in calculating loss of support, does not apply to a dependant’s action against attorneys who negligently caused the loss of support claim to become prescribed. Where, however, a dependant received a collateral benefit from an insurance company in respect of the prescribed claim it was held that it was fair that the attorneys, who had caused the loss of support claim to become prescribed, should not be entitled to deduct that benefit from their overall liability to the dependant. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: High Court, Pretoria (Visser AJ sitting as court of first instance). The following orders are made: (i) The appeal is dismissed with costs. (ii) The order of the court below is amended to include the agreed provision for interest so that it reads: ‘Judgment is entered for the plaintiff against the defendants, jointly and severally, one paying the others to be absolved, in the amount of R850 000 (eight hundred and fifty thousand rand) with interest at the rate of 15.5% per annum calculated from the date 14 days after date of judgment with costs which costs are to include the costs attendant upon the employment of senior counsel.’ _____________________________________________________________________ JUDGMENT _____________________________________________________________________ CACHALIA JA (STREICHER, FARLAM, NUGENT, CLOETE JJA concurring) [1] This an appeal from the Pretoria High Court (Visser AJ) with its leave against a judgment ordering the appellants to pay the respondent an amount of R850 000 for damages arising from the professional negligence of the appellants. The high court decided the case on the basis of a stated case agreed to by the parties. It will be convenient to refer to the parties as they were referred to in the court below – the appellants were the defendants and the respondent was the plaintiff. [2] The plaintiff was married to one Bruce Francis (‘the deceased’) who was killed in a motor vehicle collision on 9 October 1998 giving rise to a third party claim by the plaintiff for damages for loss of support against the Road Accident Fund (‘the Fund’) under the Road Accident Fund Act 56 of 1956. The plaintiff instructed the defendants, who are attorneys, to pursue her claim against the Fund. They accepted the instruction and lodged the claim but failed to issue summons timeously. The claim thus became prescribed and the plaintiff sued the defendants for professional negligence. Her claim against the defendants was for R850 000 – the amount that the parties agreed she would have been entitled to recover from the Fund for her loss of support had the defendants not caused her claim to become prescribed. [3] The deceased was employed at Douglas Colliery Services Limited (‘Douglas Colliery’). In terms of his employment contract with Douglas Colliery he was (and on his death his dependants were) entitled to benefits under an insurance policy known as a Commuting Journey Policy (‘the CJP’) issued by Rand Mutual Assurance Company Limited (‘Rand Mutual’). It is common cause that, the plaintiff became entitled to payment of a pension of R695 525 from Rand Mutual in terms of the CJP arising from the death of the deceased, and that the pension is indeed being paid to her. (The figure comprises both the amounts which the plaintiff has received in the form of monthly pension payments, and the capitalised value of future payments.) Had the defendants pursued the plaintiff’s claim against the Fund, the Fund would not have been entitled to bring this amount into account as it was ‘for loss of support as a result of a person’s death (and constituted) insurance money, pension or benefit’ as envisaged in s 1(1) of the Assessment of Damages Act 9 of 1969 (‘the Assessment Act’), which the Fund, in terms of the section, would have been precluded from deducting from its overall liability. However, in terms of the CJP the plaintiff would have been obliged to pay Rand Mutual out of the amount received from the Fund to the extent of the benefit payable by Rand Mutual in terms of the CJP. [4] So, had the defendants pursued the claim against the Fund on the plaintiff’s behalf they would have recovered R850 000 in respect of the plaintiff’s loss of support from the Fund. She would have had to pay R695 525 to Rand Mutual, retaining a balance of R154 475 and would have continued to receive the CJP pension. She would thus, in effect, have received a total of R850 000 comprised of her monthly CJP pension to the value of R695 525 and the R154 475 that she would have retained out of her claim against the Fund. [5] The defendants contended that the plaintiff was not obliged to indemnify Rand Mutual to any extent out of damages recovered from them. This meant that she suffered damages in an amount of R154 475 and not R850 000 as a result of their negligence. Should they be ordered to pay R850 000 to the plaintiff she would, they submitted, be R695 525 better off than she would have been had they not allowed her claim to become prescribed. The plaintiff on the other hand contended that in terms of the CJP she is obliged to indemnify Rand Mutual out of damages recovered from any third party to the extent of the benefit payable by Rand Mutual. In the alternative she contended that her claim against the defendants is a claim for loss of support as a result of the death of her husband and that in terms of s 1 of the Assessment Act the insurance money payable to her may not be taken into account in assessing her damages claimed from the defendants. Consequently the stated case posed the following questions for determination by the high court: ‘The Court is asked to adjudicate upon the effect of the (p)laintiff’s receipt of benefits in terms of the CJP upon the (d)efendants’ liability to the (p)laintiff arising out of the prescription of her claim against the Fund. More in particular, the Court is asked to determine: (a) Whether the defendants were ‘third parties’ as defined in Condition 8 of the CJP. (b) If not, whether the plaintiff’s claim against the defendants fell to be reduced by the amount which the plaintiff would have had to repay to Rand Mutual, and which she was no longer obliged to.’ In answering the second question the high court was asked to determine whether the provisions of s 1 of the Assessment Act applied to the plaintiff’s claim against the defendants. [6] It appeared to the parties that if either question was answered affirmatively the plaintiff would be entitled to the full amount of R850 000 without having to deduct the R695 525. On the other hand, if the second question was resolved in favour of the defendants, in other words that the Assessment Act did not apply to the plaintiff’s claim, the parties were under the impression that the defendants’ liability of R850 00 would be reduced by R695 525 to R154 475. The high court decided the first question against the plaintiff but the second in her favour. This meant that the defendants could not deduct the value of the pension from the computation of the plaintiff’s damages and were thus liable to her for the full amount of R850 000. The defendants appealed against this finding. [7] I turn to consider the first question – whether the defendants are ‘third parties’ as envisaged in Condition 8 of the CJP. It reads thus: ‘Where the accident in respect of which a benefit is payable was caused under circumstances creating a legal liability in some person other than the Insured (hereinafter referred to as the Third Party) to pay damages to the Insured Person or to his dependants in respect thereof, the Insurer shall be entitled to be indemnified by the Insured Person or by his dependants, as the case may be, out of any damages recovered from the third party, to the extent of any benefit payable by the Insurer in terms of this policy . . .’ [8] The plaintiff contended in the high court, as she did before us, that the cause of the plaintiff’s claim was the accident. As such, so the contention went, the court should give effect to the true intention of the parties by interpreting the condition so as to include the defendants within the ambit of the meaning of ‘the Third Party’. The high court observed that the clear terms of the condition applied only to a claim that arose from an accident and because, the court reasoned, the legal liability of the defendants was caused not by the accident but by the prescription of the claim, the defendants were not third parties envisaged in the CJP. In my view the court’s reasoning on this aspect cannot be faulted. [9] I turn to the second issue namely whether the Assessment Act applied to the plaintiff’s claim. Section 1 of the Assessment Act provides as follows: ‘(1) When in any action, the cause of which arose after the commencement of this Act, damages are assessed for loss of support as a result of a person's death, no insurance money, pension or benefit which has been or will or may be paid as a result of the death, shall be taken into account. (2) For the purposes of subsection (1) – “benefit” means any payment by a friendly society or trade union for the relief or maintenance of a member's dependants; “insurance money” includes a refund of premiums and any payment of interest on such premiums; “pension” includes a refund of contributions and any payment of interest on such contributions, and also any payment of a gratuity or other lump sum by a pension or provident fund or by an employer in respect of a person's employment.’ [10] The defendants contended in the high court, as they do now, that the Assessment Act in its terms applies only to actions in which damages are assessed for loss of support, which the plaintiff’s action against the Fund is. And, so they contended, because the plaintiff’s action against the defendants is not one for loss of support, but for loss of her claim against the Fund, the Assessment Act did not apply to her claim against them. [11] The high court rejected this contention. In so doing, it reasoned that even though the plaintiff’s cause of action against the Fund differed from its action against the defendants, her claim, that is, her right of action against them was essentially the same – they both related to damages for loss of support as a result of the death of the deceased. I do not agree with the High Court’s reasoning on this aspect. [12] Claims for loss of support on the one hand and for professional negligence on the other differ. In the former case what is being compensated is the loss of support; in the case of the latter it is the lost opportunity for recovering that loss. The claims are conceptually different. Section 1(1) of the Assessment Act applies only to actions in which damages are to be assessed for loss of support as a result of a person’s death. In the present action damages are not to be assessed for loss of support. The damages that are to be assessed are the damages suffered by the plaintiff as a result of the negligence of the defendants in having allowed her claim for loss of support against the Fund to become prescribed. The fact that the quantum of damages suffered by the plaintiff may be the same as the amount of her loss of support and the fact that such damages have to be determined by reference to her loss of support do not make the present action an action in which ‘damages are assessed for loss of support’. [13] In light of the fact that the plaintiff is not in terms of the CJP obliged to indemnify Rand Mutual out of damages recovered from the defendants and the fact that the value of the benefit payable by Rand Mutual is not to be excluded from the computation of the damages suffered by the plaintiff as a result of the defendants’ negligence, the defendants submitted that the damages suffered by the plaintiff arising from their negligence amounted only to R154 475 and not R850 000 as claimed by her. [14] However, it does not follow that because s 1(1) of the Assessment Act does not apply the plaintiff’s claim against the defendants falls to be reduced by the amount which the plaintiff would have had to repay to Rand Mutual. The question arises whether, at common law, the benefit payable to the plaintiff in terms of the CJP should not be disregarded when determining the damages suffered by the plaintiff as a result of the defendants’ negligence. Because of the conclusion the high court had arrived at it was not necessary to pursue this inquiry and during their oral submissions before this court neither party dealt with this question satisfactorily. [15] So the parties were invited to make further written submissions. In particular they were requested to deal with whether the benefit payable by Rand Mutual was collateral to the plaintiff’s right of action according to the principle res inter alios acta, aliis neque nocet, neque prodest (‘a thing done, or a transaction entered into, between certain parties cannot advantage or injure those who are not parties to the act or transaction’) and had to be disregarded in computing the plaintiff’s damages. The parties were also asked to deal with the question whether Rand Mutual should have been joined in the proceedings before the high court. Since then Rand Mutual has indicated that it waived its right to be joined as a party and that it considers itself bound by this court’s decision. So the answer to this question fell away. It remains to deal with the question whether the pension benefit that Rand Mutual paid to the plaintiff was a collateral benefit which had to be disregarded in computing the damages suffered by her as a result of the defendants’ negligence. [16] As a general rule the patrimonial delictual damages suffered by a plaintiff is the difference between his patrimony before and after the commission of the delict. In determining a plaintiff’s patrimony after the commission of the delict advantageous consequences have to be taken into account. But it has been recognised that there are exceptions to this general rule. Various attempts to formulate a legal principle as to which benefits should be taken into account have been made. In Standard General Insurance Co Ltd v Dugmore NO 1997 (1) SA 33 at 41E-42E Olivier JA referred to these attempts and concluded: ‘Boberg (The Law of Delict vol 1 at 479) succinctly states: “The existence of the collateral source rule can therefore not be doubted; to what benefit it applies is determined casuistically; where the rule itself is without logical foundation, it cannot be expected of logic to circumscribe its ambit.” It now seems to be generally accepted that there is no single test to determine which benefits are collateral and which are deductible. Both in our country (Santam Versekeringsmaatskappy Bpk v Byleveldt (supra at 150F) and in England (Parry v Cleaver [1969] 1 All ER 555 (HL) (1970) AC 1) at 14 and 31 it is acknowledged that policy considerations of fairness ultimately play a determinative role.’ In a dissenting judgment Marais JA said that there can be little doubt that the exclusion of benefits flowing from the benevolence of third parties or from insurance policies which a plaintiff had himself taken out and paid for is a result intuitively sensed by virtually all to be ‘fair’. As to the reason why benefits in other classes of cases have not been excluded he suspected ‘that the intuitively sensed ‘fairness’ of ignoring benefits flowing from the benevolence of third parties or from insurance policies which a plaintiff himself had taken out and paid for, is either entirely absent in the other classes of case, or not so keenly sensed.’1 [17] In light of the aforegoing I agree with Neethling, Potgieter and Visser Law of Delict 5ed (2006) at p 215-216 that ‘[q]uestions regarding collateral benefits are normative in nature; they have to be approached and solved in terms of policy principles and equity’ and that in doing so ‘there should always be a weighing-up of the interests of the plaintiff, the defendant, the source of the benefit as well as the community in establishing how benefits resulting from a damage-causing event should be treated’. [18] The defendants submitted that it would be unfair to allow the plaintiff to receive double compensation and thereby to be enriched in the amount of R695 525, which will occur if the defendants are not able to deduct this amount from their overall liability of R850 000. On the other hand there would seem to be no reason why the defendants should be allowed to benefit from an insurance policy which had to be disregarded in respect of the loss of support claim which they allowed to become prescribed. Should the amount that the plaintiff receives from Rand Mutual be disregarded she may well consider herself morally obliged to indemnify Rand Mutual to the extent of the benefit payable by it in terms of the CJP as she would have been obliged to do had her claim against the Fund not become prescribed. I see no reason why she should be deprived of that moral choice by withholding the means for her to do so. An order that R850 000 be paid to her will therefore also be in the best interests of Rand Mutual, which according to Mr Mullins who appeared on behalf of the defendants, is ‘lurking behind (her) claim’. If it is, there is nothing opprobrious in its conduct. It is out of pocket in the amount of R695 525 and is entitled to try to recover this amount. [19] But even if the plaintiff does not repay Rand Mutual and thereby profits from the outcome of this litigation, I do not think it unfair that the defendants compensate her for the full extent of her loss of R850 000, for this is what she 1 At 48E-G. would have been entitled to receive from the Fund had the defendants not negligently caused her claim against the Fund to become prescribed. The defendants therefore cannot complain – they are no worse off than the Fund would have been had they fulfilled their mandate to diligently pursue her claim against the Fund. [20] For these reasons the appeal must fail. The parties agreed in the stated case that if the plaintiff’s claim succeeded she would be entitled to interest at the rate of 15.5% per annum calculated from a date 14 days after the date of judgment.2 The high court appears to have inadvertently omitted to reflect this agreement in its order. The following orders are made: (i) The appeal is dismissed with costs. (ii) The order of the court below is amended to include the agreed provision for interest so that it reads: ‘Judgment is entered for the plaintiff against the defendants, jointly and severally, the one paying the others to be absolved, in the amount of R850 000 (eight hundred and fifty thousand rand) with interest at the rate of 15.5% per annum calculated from the date 14 days after date of judgment with costs which costs are to include the costs attendant upon the employment of senior counsel.’ ________________ A CACHALIA JUDGE OF APPEAL 2 The reason for the 14 day delay is inexplicable. The pleader may have had in mind s 1(A) inserted into s 21 of the Compulsory Motor Vehicle Insurance Act 56 of 1972 by s 8 of Act 69 of 1978 but that provision has long since ceased to be applicable to motor accident claims and would in any event not have been applicable to the plaintiff’s claim here. She would have been entitled to interest at the prescribed rate, from the date on which the judgment debt became due and payable in terms of s 2(1) of the Prescribed Rate of Interest Act 55 of 1975 but he did not ask for it. APPEARANCES: For Appellant: J F Mullins SC Instructed by: Savage Jooste & Adams Inc; Pretoria Webbers; Bloemfontein For Respondent: J G Bergenthuin SC Instructed by: Van Zyl Le Roux & Hurter Inc; Pretoria Molefi Thoabala 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: 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. Erasmus Ferreira & Ackermann & others v Kerry-Lynn Francis The Supreme Court of Appeal (‘the SCA’) today held that s 1(1) of the Assessment of Damages Act 9 of 1969 (‘the Assessment Act’) which, in an action for damages arising from a person’s death, prohibits insurance money, pensions or benefits from being taken into account in calculating loss of support, does not apply to a dependant’s action against attorneys who negligently caused the loss of support claim to become prescribed. It held, however, that where a widow received a collateral benefit from an insurance company in respect of her claim for loss of support under the Assessment Act, it was fair that the attorneys, who negligently caused her claim to become prescribed and had thus themselves become liable to her, not be entitled to deduct the benefit from their overall liability to the widow. The facts of the case briefly, were these: The widow, Kerry-Lynn Francis’s husband, Bruce (‘the deceased’), was killed in a motor vehicle accident on 9 October 1998. The Road Accident Fund, as the third party, was liable for her claim for loss of support. She instructed the defendants, who are attorneys, to pursue the claim against the Fund. They accepted the instruction but failed to issue summons within the prescribed time limits. This meant that she was not able to enforce her claim against the Fund. She thus sued the defendants for professional negligence claiming from them R850 000 – the amount she would have been entitled to claim from the Fund. The deceased was employed at Douglas Colliery Services Limited (‘Douglas Colliery’). In terms of his employment contract with Douglas Colliery he was (and on his death his dependants were) entitled to cover under an insurance policy known as a Commuting Journey Policy (‘the CJP’) issued by Rand Mutual Assurance Company Limited (‘Rand Mutual’). Mrs Francis became entitled to payment of a pension of R695 525 from Rand Mutual in terms of the CJP arising from the death of her husband. The pension was paid to her. Had the defendants pursued Mrs Francis’s claim against the Fund, the Fund would not have been entitled to bring this amount into account as it was ‘for loss of support as a result of a person’s death (and constituted) insurance money, pension or benefit’ as envisaged in Assessment Act, which the Fund would have been precluded from deducting from its overall liability. However, in terms of the CJP Mrs Francis would have been obliged to pay Rand Mutual out of the amount received from the Fund to the extent of the benefit payable by Rand Mutual in terms of the CJP. So, had the defendants pursued the claim against the Fund on Mrs Francis’s behalf they would have recovered R850 000 in respect of the plaintiff’s loss of support from the Fund. She would have had to pay R695 525 to Rand Mutual, retaining a balance of R154 475 and would have continued to receive the CJP pension. She would thus, in effect, have received a total of R850 000 comprised of her monthly CJP pension to the value of R695 525 and the R154 475 that she would have retained out of her claim against the Fund. The defendants contended that the Assessment Act did not apply to Mrs Francis’s claim against them as it had applied to her claim against the Fund. This was, so they contended, because the Assessment Act applied only to claims for loss of support, not to claims against attorneys for professional negligence. Thus, they submitted, the defendants are liable to Mrs Francis only for R154 475, and not the full amount of R850 000, as Rand Mutual had paid her the pension of R695 525. On the other hand, they submitted, should Mrs Francis’s contention that the Assessment Act applied be upheld the consequence would be that she would be double compensated to the extent of R695 525 because she would now not be obliged to repay Rand Mutual as the claim against the Fund had become prescribed. Although the SCA agreed with the defendants’ contention that the Assessment Act did not apply to Mrs Francis’s claim against them as it did against the Fund, the court disagreed that this meant that the defendants could deduct the R695 525 from their overall liability to her, which the Fund was precluded from doing. This was because, so it reasoned, the common law recognized the amount as a collateral benefit, which would be unfair for the defendants to deduct when the Fund would have been debarred from doing so. Furthermore, said the SCA, the defendants had no cause to complain – had they not negligently failed to pursue the claim against the Fund the latter would have had been liable to Mrs Francis for the full amount of R850 000. The fact that she may profit from the litigation (if she does not repay Rand Mutual) does not detract from this fact. The defendants are therefore no worse off than the Fund would have been. The SCA accordingly dismissed the defendants’ appeal and ordered it to pay the costs.

3021

non-electoral

2015

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 20616/2014 Not Reportable In the matter between: JOHANNA ANDRIETTE GRUNDLING APPELLANT and THE STATE RESPONDENT Neutral citation: Grundling v The State (20616/14) [2015] ZASCA 129 (28 September 2015). Coram: Cachalia, Majiedt et Pillay JJA Heard: 02 September 2015 Delivered: 28 September 2015 Summary: Sentence - imposition of - factors to be taken into account- importance of pre- sentencing report - 30 counts of contravention of s 59(1)(a) of Value-Added Tax Act 89 of 1991 - eight years‟ imprisonment imposed by the court below set aside and replaced with a three year prison sentence in terms of s 276(1)(i) of Criminal Procedure Act 51 of 1977. ORDER On appeal from: Gauteng Division, Pretoria (Maumela J et Pillay AJ sitting as court of appeal) 1 The appeal is upheld and the order of the court below is set aside and replaced with the following: „1 The appeal is upheld. 2 The sentence of the regional court is set aside and replaced with the following: “The accused is sentenced to three years‟ imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act 51 of 1977 from which she may be placed under correctional supervision in the discretion of the Commissioner of Correctional Services or a parole board.”‟ JUDGMENT Pillay JA (Cachalia and Majiedt JJA concurring) [1] The appellant, Ms Johanna Andriette Grundling was charged in the Regional Magistrates Court, Pretoria, with 30 counts of fraud, alternatively 30 counts of theft of money and a second alternative of 30 counts of contravening s 59(1)(a) of the Value-Added Tax Act 89 of 1991 (VAT Act) involving an amount of R33 671375. She pleaded guilty to the second alternative and was sentenced to an effective period 10 years‟ imprisonment, the State having decided not to pursue the main counts of fraud and the first alternative counts of theft. She appealed to the Gauteng Division of the High Court, Pretoria against the sentence. The appeal was partially successful and the sentence was reduced to 8 years‟ imprisonment. With the leave of that court, she now comes on appeal to this court. [2] The appellant and her late husband, Mr Johannes Lodewikus Grundling, were the only members of ASERA Landbouprodukte CC and Africa South Earth Research Agricultural CC, which were registered Value Added Tax (VAT) vendors. In March 2010, they were arrested for submitting false VAT returns between April 2006 and July 2008. During the arrest, her husband shot and killed himself. [3] Section 59(1)(a) of the VAT Act reads as follows: „59. Offences and penalties in regard to tax evasion (1) Any person who with intent to evade the payment of tax levied under this Act or to obtain any refund of tax under this Act to which such person is not entitled or with intent to assist any other person to evade the payment of tax payable by such other person under this Act or to obtain any refund of tax under this Act to which such other person is not entitled – (a) makes or causes or allows to be made any false statement or entry in any return rendered in terms of this Act, or signs any statement or return so rendered without reasonable grounds for believing the same to be true; or . . . Shall be guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding 60 months.‟ [4] A brief synopsis of her written plea in terms of s 112 of the Criminal Procedure Act 51 of 1977 (CPA), which brought her conduct within the provisions of s 59(1)(a) of the Act is the following: During the period July 2006 to July 2008, the appellant and her husband were the only members of the two close corporations. He was responsible for all the operational activities while she helped with the administration of the business. During this period monthly VAT returns (VAT 201 forms) were completed by her late husband and he passed them on to her together with invoices and information for her to sign. She did so, even though she foresaw the possibility that the invoices and information were based on false figures, and had no reasonable grounds for believing such entries to be true. This rendered the VAT returns false as well. She nonetheless intentionally signed the returns after her husband had falsified the contents of the returns so that they would obtain refunds to which they were not entitled. [5] The State accepted the plea whereupon the appellant was duly convicted. No previous convictions were proved against her. After convicting the appellant, the magistrate granted an order for her assets, to the value of R8 287 863 to be attached by the Asset Forfeiture Unit. The trial was then postponed for the purpose of obtaining a pre-sentencing report, and the attachment order duly executed. [6] When the trial resumed, a pre-sentencing report by Dr Eon Frederik Sonnekus, a forensic criminologist, and a correctional supervision report in terms of s 276(1) of the CPA were handed in by the appellant‟s representative. The latter report was handed in without objection, but the report by Dr Sonnekus was not accepted by the State and this resulted in Dr Sonnekus testifying and being subjected to lengthy cross-examination. [7] The report and evidence of Dr Sonnekus throws considerable light on the appellant‟s personality as well as the circumstances under which the offences were committed. It transpired that: (a) The 65 year old former teacher was a first offender, and capable of rehabilitation; (b) She married at the age of 23 and over the next 35 years became a submissive and obedient wife of a dominating and aggressive husband: this was his explanation for why she carried out her husband‟s wishes in merely signing the false documents; (c) She had been a good person until the commission of these offences and had an untainted professional career; (d) She showed remorse by pleading guilty and genuinely appeared to have the intention of not wanting to be in this situation (of transgressing the law) again. [8] Dr Sonnekus concluded that she would benefit immensely from a program of rehabilitation. He recommended that the court consider a non-custodial sentence as punishment. [9] The correctional services report confirmed that the appellant was regarded as a suitable candidate for a sentence of correctional supervision in terms of s 276(1)(h) of the CPA. The correctional officer who did the assessment recommended that in imposing such a sentence on the appellant, she should be exempted from house arrest and community service. [10] That concluded the evidence that was led on behalf of the appellant. For its part, the State submitted, by consent, an affidavit deposed to Ms Mantwese Fay Smith who is a criminal investigator in the employ of SARS. She stated that she had investigated these offences. She found that these offences were committed over a period of two years. She explained that as a result of third party cross-referencing she discovered that the invoices relied upon by the late Mr Grundling and the appellant, in order to obtain refunds were fictitious and related to non-existent transactions. Furthermore, in certain respects the false information contained therein were in respect of items not offered by suppliers during that period. On a number of occasions, the only amounts paid into the bank accounts of the closed corporations were the VAT refunds. She further explained that of the R33 371 375 claimed as refunds, R27 068 197 was in fact paid to the appellant and her husband. However the claims for the balance amounting to R6 603 177,49 were withheld since by then, the scheme had been uncovered. [11] The magistrate, in exercising his discretion in respect of sentence, took into account that the appellant was 65 years old, pleaded guilty and that she was a first offender. However, he appears to have attached no weight to the pre-sentencing report of Dr Sonnekus. While he said he took into consideration what Dr Sonnekus had said in his evidence, he did not specifically discuss any aspect thereof. Nor did he consider the correctional services report and recommendations. He made no mention of it. [12] However, he had regard to a number of decisions in which sentences of direct imprisonment were imposed for theft of money and for fraud respectively. He also took all the counts together for purposes of sentence, and proceeded to impose a period of ten years‟ imprisonment, which in my view was shockingly inappropriate given the mitigating circumstances alluded to by Dr Sonnekus and the fact that the statutory prescribed maximum sentence is only 60 months for a contravention of s 59(1)(a) of the Act. These, in my view, constitute misdirections of sufficient weight to justify interference on appeal. [13] On appeal, the court below considered the effective period of ten years‟ imprisonment too harsh and sentenced the appellant to 48 months‟ imprisonment on each count before ordering counts 3 to 30 to run concurrently with the sentences imposed on counts 1 and 2, resulting in an effective 8 year term of imprisonment. The court below also seems to have disregarded the pre- sentencing report as well as the correctional services report. In my view, the effective sentence of 8 years‟ imprisonment was a mere minor adjustment of the punishment imposed by the magistrate. The court below did not accord sufficient weight to the appellant‟s mitigating circumstances and the sentence it imposed was shockingly out of kilter with the nature of the offences. [14] Before us, it was contended on behalf of the appellant, that a term of imprisonment for a person who is currently 68 years old and a first offender is too harsh. It was submitted that the magistrate and the court below did not place sufficient weight on the pre-sentencing report. It was further submitted that she was a productive member of society, being a former teacher until her late husband persuaded her to resign and join his business. It was thus argued that a non-custodial sentence would be appropriate in the circumstances, specifically a sentence in terms of s 276(1)(h) of the CPA. [15] Counsel for the State, supported the sentence imposed by the court below. She pointed out that much of the money that was lost through the scheme was not recovered by the fiscus and that the appellant had not disclosed what had happened to it or where the missing money was. She further argued that the appellant benefitted substantially from their scheme and this was borne out by paragraph 7 of her written plea which reads as follows: „Ek erken dus dat ek die BTW 201 A opgawes vir die tydperk soos vermeld in kolom 1 van Aanhangsel A en te Pretoria in die streekafdeling Gauteng, geteken het sonder dat ek redelike gronde gehad het om te glo dat die inhoud daarvan waar is, ten einde terugbelating van belasting ingevolge Wet 89 van 1991 te verkry, waarop ek en Johannes Lodewikus Grundling nie op geregtig was nie.‟ She contended that all this constituted aggravating circumstances which justified the sentence imposed by the court below. [16] Whilst it can be accepted that the appellant benefitted with her late husband from claiming VAT refunds to which they were not entitled, it does not necessarily follow that she benefitted equally. There is simply no evidence to indicate to what extent she benefitted personally nor does paragraph 7 of her plea clarify that aspect. In regard to the submission that the appellant has not disclosed what had happened to the unaccounted money, I accept that her failure to take the court into her confidence is an aggravating factor that must have a bearing on the sentence that must be imposed. [17] There is however no evidence that she had concealed assets that may have been acquired with the VAT funds. The assets of her estate, derived from the common estate, have been attached. She has been left with almost nothing and earns a living by selling pickles and jars of jam. The profits derived from these sales supplement her pension of R5 000 per month. She is therefore not likely to be in a position to commit these offences again and as she said, she has no intention to do so. [18] This does not mean that a wholly non-custodial sentence is appropriate. The imposition of an appropriate sentence, should be approached with a „humane and compassionate understanding for human frailties and the pressure‟ that contributed to the commission of the crimes.1 The offender‟s moral blameworthiness is a factor that must also be considered. In considering her actual role in the commission of the offences and the circumstances in which she did so, she should not be made to bear the brunt of the punishment in the absence of the primary perpetrator. There is certainly no justification to do so in this case. It 1 S v Rabie 1975 (4) SA 855 A at 866 B-C; [1975] 4 ALL SA 723 (A). is probable that she would not have committed these offences but for the pressures which was brought to bear on her to do so by her late husband. On the other hand she nonetheless played a crucial role in the commission of these crimes through which the fiscus suffered a huge loss. [19] The court in S v R2 alluded to the fact that by introducing the sentencing option of correctional supervision, the legislature clearly distinguished between two types of offenders, those who ought to be removed from society by means of imprisonment and those who should not, but should nonetheless be punished. (S v D3 and S v Ingram4; S v Samuels 5 and S v Grobler 6. This does not mean that even if an accused is regarded as a suitable candidate for correctional supervision, a non- custodial sentence must be imposed. As pointed out by Nienaber JA in S v Lister7 „to focus on the well-being of the accused at the expense of the other aims of sentencing and the interests of the community was to distort the process and to produce, in all likelihood, a warped sentence.‟8 [20] It is clear that the appellant does not fall into the category of offenders who are a danger to the community and she is not in a position to pose a threat to society. It also seems she is not in a position to pay a suitable fine. I do not think that this is an instance where a sentence of long term direct imprisonment is justified. At the same time though, the sentence should also reflect an appropriate measure of rebuke for her conduct. [21] In considering all the factors mentioned above, to impose a non-custodial sentence would in my view dilute the seriousness of the offences and indeed disregard the impact of the actual loss of R 18 780 334 to the fiscus.9 A sterner sentence other than a completely non-custodial sentence is called for and this 2 S v R 1993 (1) SA 476 (A) at 488G; [1993] 1 ALL SA 326 (A). 3 S v D 1995 (1) SACR 259 (A) at 266 c-d; [1995] 3 ALL SA 373 (C). 4 S v Ingram 1995 (1) SACR 1(A) at 9e; [1995] 3 ALL SA 121 (A). 5 S v Samuels 2011 (1) SACR 9 (SCA);(262/03) [2010] ZASCA 113. 6 S v Grobler 2015 (2) SACR 210 (SCA); (433/13) [2014] ZASCA 147 at para 6. 7 S v Lister 1993 (2) SACR 228 (A); [1993] 4 ALL SA 669 (A). 8 At 232 g-h. 9 The R33 671 375 less R6 603 177,49 in respect of unpaid claims and less a further less R8 287 863. would reflect the seriousness of the crimes committed. In the circumstances I would propose a sentence of 3 years‟ imprisonment in terms of s 276(1)(i) so that while the mitigating factors have been taken into account the other objectives of sentence are indeed also reflected. [22] In the result the following order is made: 1 The appeal is upheld and the order of the court below is set aside and replaced with the following: „1 The appeal is upheld. 2 The sentence of the regional court is set aside and replaced with the following: “The accused is sentenced to three years‟ imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act 51 of 1977 from which she may be placed under correctional supervision in the discretion of the Commissioner of Correctional Services or a parole board.”‟ R PILLAY JUDGE OF APPEAL Appearances: For Appellant: H F Klein Instructed by: Rianie Strijdom Attorneys, Pretoria Symington & De Kok Attorneys , Bloemfontein For Respondent: C Wolmarans Instructed by: The Director of Public Prosecutions, Pretoria The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 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. Johanna Andriette Grundling v The State The Supreme Court of Appeal (SCA) today upheld an appeal and set aside the sentence of 8 years’ imprisonment imposed by the Gauteng High Court, Pretoria. The 68 year old appellant, a first offender and former teacher, was convicted of 30 counts of contravening s 59(1)(a) of the Value-Added Tax Act 89 of 1991 after pleading guilty. She had married her husband some 35 years ago and became an obedient wife. They ran two businesses related to agricultural activities. Her husband completed falsified VAT returns and she signed off on them during the period 2006 to 2008. As a result an amount in excess of R33 million was claimed from the South African Revenue Services and an amount of more than R28 million was paid back to them as vat refunds. The claims were based on fictitious invoices and non-existent transactions. Her husband shot and killed himself during their arrest for these offences. Evidence disclosed that he was a dominating and aggressive person who controlled the appellant during their marriage and she would not have committed these offences but for the pressures brought to bear on her by her late husband. All her assets have been attached by the Asset Forfeiture Unit and she now sells pickles and jams to supplement her pension. In the circumstances a 3 year term of imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act 51 of 1977 was imposed.

557

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 19/2014 In the matter of: HENRY EMOMOTIMI OKAH APPELLANT and THE STATE FIRST RESPONDENT NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS SECOND RESPONDENT THE MINISTER OF POLICE THIRD RESPONDENT THE MINISTER OF INTERNATIONAL RELATIONS FOURTH RESPONDENT THE MINISTER OF JUSTICE AND CORRECTIONAL SERVICES FIFTH RESPONDENT Neutral Citation: Okah v S (19/2014) [2016] ZASCA 155 (3 October 2016) Coram: Navsa, Shongwe, Dambuza and van der Merwe JJA and Schoeman AJA Heard: 24 August 2016 Delivered: 3 October 2016 Summary: Interpretation and application of s 15 of the Protection of Constitutional Democracy Against Terrorist and Related Activities Act 33 of 2004 : extra-territorial jurisdiction : extent of. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: South Gauteng High Court, Johannesburg (Claassen J sitting as court of first instance) judgment reported sub nom S v Okah 2015 (2) SACR 561 (GJ): 1. The appeal is upheld to the extent reflected in the substituted order of the court below, set out hereafter. 2. In respect of conviction, the order of the court below is set aside and substituted as follows: „The appellant is convicted on counts 2, 4, 6, 8, 9, 10, 11 and 12.‟ 3. In respect of sentence, the order of the court below is set aside and substituted as follows: „Counts 2, 4, 6, 8, 10 and 12 are taken together for purposes of sentence and the accused is sentenced to 12 years‟ imprisonment. Counts 9 and 11 are taken together for purposes of sentence and the accused is sentenced to 8 years‟ imprisonment. The effective sentence is thus 20 years‟ imprisonment.‟ __________________________________________________________________ JUDGMENT ___________________________________________________________________ Navsa and Van der Merwe JJA (Shongwe & Dambuza JJA and Schoeman AJA concurring) [1] This appeal concerns the prosecution on criminal charges, in the South Gauteng High Court, Johannesburg, of the appellant, a Nigerian citizen who has permanent residence status in South Africa. The prosecution followed on two separate bombings in Nigeria, as a result of which 12 people were killed, 64 severely injured and property was damaged. It was alleged by the State that the appellant, Mr Henry Okah, had been involved in the planning and execution of these bombings. [2] During 2005, the appellant had made the Republic of South Africa his principal place of residence and was granted permanent residency status on 13 March 2007. He was arrested in South Africa on 2 October 2010 and was charged with 13 counts under the Protection of Constitutional Democracy Against Terrorist and Related Activities Act 33 of 2004 (the Act). The first 12 counts were related to bombings that occurred in Nigeria: at Government House Annex, Warri, on 15 March 2010 and Eagle Square, Abuja on 1 October 2010. Count 13 alleged that the appellant had threatened certain South African entities that were commercially active in Nigeria with destabilising terrorist activities. [3] The court below (Claassen J), in its judgment, at the outset, posed the following question: „One may well ask: Why is the accused being tried in a South African Court?‟ It answered the question by reference to a number of international conventions adopted by the United Nations General Assembly1 and the Organisation 1 The Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons including Diplomatic Agents, adopted by the General Assembly of the United Nations on 14 December 1973; the International Convention Against the Taking of Hostages, adopted by the General Assembly of the United Nations on 17 December 1979; the International Convention for the Suppression of Terrorist Bombings, adopted by the General Assembly of the United Nations on 15 December 1997; and the International Convention on the Suppression of the Financing of Terrorism, adopted by the General Assembly of the United Nations on 9 December 1999. of African Unity,2 in respect of which South Africa was a signatory, and a resolution by the United Nations Security Council,3 in response to international terrorism, and the resultant enactment by the legislature of the Act, which ostensibly enables extra- territorial prosecution of criminal offences comprising acts of terrorism and related activities. The counts in question, based on the provisions of the Act, range from engaging in terrorist activities to delivering, placing and or detonating explosives causing death and serious bodily injury, to attempts to cause harm to internationally protected persons and financing terrorist activities. The indictment contained a number of alternative counts. We shall, in due course, explore our law in relation to extra-territorial jurisdiction. We will also deal with the specific counts when we engage in determining whether the convictions set out below were well founded. [4] Claassen J undertook an examination of the Act, and specifically considered s 15, dealing with „jurisdiction‟, and was satisfied that the court was competent to try the appellant on all the counts in the indictment. [5] The court below had regard to certain admissions by the appellant and to the common cause facts. It was not disputed that the bombings had occurred in Warri and Abuja in Nigeria on 15 March 2010 and 1 October 2010 respectively, and were caused on each occasion by two explosive-laden vehicles being detonated remotely. It is common cause, as described earlier, that as a result of the Warri and Abuja bombings, several people died, many suffered bodily injury, and property was damaged. [6] It was uncontested that the appellant was a leader of the Movement for the Emancipation of the Niger Delta (MEND) during 2010 and that he had in the past supplied arms and ammunition to that organisation. It was accepted during the trial that MEND had claimed responsibility for the two bombings. 2 The OAU Convention on the Prevention and Combatting of Terrorism, adopted by the Organisation of African Unity at Algiers on 14 July 1999. 3 United Nations Security Council Resolution 1373, adopted under Chapter VII of the Charter of the United Nations on 28 September 2001. [7] MEND appears to have its origins in an uprising by people of the oil-rich region of the Niger Delta,4 against what appears to have been regarded as the Nigerian government‟s lack of concern about the severe degradation of the environment and the lack of benefit to the local population from oil revenue. Antagonisms also appear to have arisen from dispossession of land due to commercial activity linked to exploitation of oil deposits. A number of militant groups had attacked oil pipelines that served foreign oil companies. Executives of those companies were kidnapped and held for ransom. Ultimately, the militant groups united under MEND‟s umbrella and waged an armed struggle against the Nigerian government. [8] It is necessary to record that the former President of Nigeria, Mr Goodluck Jonathan (who was the president of Nigeria when the Abuja bombing occurred) himself came from the southern regions of Nigeria where MEND operated. His predecessor, President Umaru Musa Yar‟Adua,5 who was the President of Nigeria during the Warri bombing, had initiated an amnesty programme in 2009 which, inter alia, involved the voluntary surrender of arms and ammunition by armed MEND militants and other rebel factions associated with the conflict in the Niger Delta. One of the conditions in negotiating the amnesty with the militants was that the appellant as leader of MEND, who was in custody at that time on charges of treason and gun- running, should be released. [9] During July 2009 the appellant accepted an offer of amnesty extended to him by the Nigerian government. In so doing the appellant also offered to work with the Nigerian government towards the restoration of peace in the Niger Delta region. He was released as a result of the amnesty. It would appear that the appellant had subsequently become increasingly dissatisfied with post-amnesty conditions in the oil-rich regions of southern Nigeria. After his release, during August 2009, the appellant returned to South Africa. As stated earlier, the he was arrested in South Africa on 2 October 2010 on the counts he faced in the court below. 4 The Niger Delta is the delta of the Niger River, sitting directly on the Bight of Biafra side of the Gulf of Guinea on the Atlantic Ocean, in Nigeria. 5 President Yar‟Adua passed away on 5 May 2010. [10] We return to the trial in the court below where Claassen J took the view that the evidence led to the following ineluctable conclusions: (i) the appellant had acted as a spokesperson for MEND and used the pseudonym „Jomo Gbomo‟ in e-mails to and correspondence with the media; (ii) shortly before the Warri bombing he had entered Nigeria unlawfully from Benin, that is, not at an official point of entry; (iii) the two bombings were caused by motor vehicles laden with explosives, and the make of at least three of the four motor vehicles had been identified; (iv) MEND had accepted responsibility for the bombings which had caused death and destruction and which fell within the definition of „terrorist activities‟ and the offence of terrorism in the Act; (v) a number of people who had attended gatherings at Warri and Abuja fell within the definition of „internationally protected person‟ in the Act; and (vi) the buildings damaged during the bombing fell within the definition „state or government facility‟ in the Act. [11] Claassen J had regard to the evidence by key witnesses for the State in relation to the Warri bombing on 15 March 2010, from which it appeared that the appellant, who was in Nigeria at the time, had given instructions to a Nigerian national, Mr Obi Nwabueze, for the purchase of two vehicles to be used to detonate explosives. The appellant had arranged for hidden compartments to be constructed within those vehicles. The appellant had also provided money for the purchase of the explosives and detonators, and for the construction of the compartments. In addition, the appellant had supplied the timing devices for use in the explosives, being clocks and/or mobile phones. The appellant had also demonstrated how the detonators were to be attached to the explosives. [12] At the instance of the appellant, the location at Government House Annex, Warri, was chosen because it was where the Vanguard Newspaper had scheduled a post-amnesty dialogue meeting. That meeting intended to explore such issues as skills acquisition and training programs for the former militants; strategies to reconstruct the communities devastated by militant activities and oil pollution; rehabilitation programs for such militants; disarmament and amnesty; bunkering and economic sabotage; resource control; demilitarisation of the Niger Delta; and the security, economic development and peace in that area in general. The Minister of the Niger Delta, the Delta State Governor, the Imo State Governor, the Edo State Governor and other State officials were present. During the course of the morning, Jomo Gbomo, on behalf of MEND, sent a warning via the internet, that a bomb would be detonated in the vicinity of Government House Annex. The appellant had given instructions to operators to park the vehicles inside the venue, but due to there being a school directly adjacent to the venue and security being tight, they chose instead to park close to the entrance of the venue, and have the explosives detonated there. The appellant was, according to the evidence, still in Nigeria immediately after the explosion. [13] In relation to the Abuja bombing on 1 October 2010, the following evidence was adduced. The planning and the instructions for the bombing took place in South Africa. The appellant telephonically planned the bombing, and chose Abuja as the location because of the celebration of Nigeria‟s 50th National Independence Day. The appellant was the driving force behind the bombing, and sent money to his accomplices for the purchase of equipment for the bombing. He had also sent timing devices from South Africa. Former Nigerian President Goodluck Jonathan and foreign dignitaries and Nigerian state officials were in attendance to celebrate the Independence Day anniversary. [14] In respect of both the Warri and Abuja bombings, two sets of explosives had been utilised, and timing devices had been used to delay the detonation of the second explosion until some time after the first explosion. The intention was that a crowd would be attracted to the site of the first explosion, which would then be caught in the blast zone of the second explosion, resulting in maximum injury and death. [15] In relation to count 13, the State relied on a communiqué – an e-mail – on 27 January 2012, from one Mr Peter Timi (Timi), proclaiming himself to be the European representative of MEND, threatening the commercial interests of South African companies operating in Nigeria. The court below also had regard to a similar threat uttered by the appellant on 30 January 2012 to the investigating officer. [16] In the court below, the appellant‟s legal representative denied that he had been involved in the terrorist activities alleged by the State and suggested, when his legal representative cross-examined witnesses, that he had been the victim of a conspiracy between them and the Nigerian government to falsely implicate him. This was rejected by Claassen J who held that no basis had been laid for the alleged conspiracy and said the following (para 64): „On the contrary, many of the State witnesses were the accused‟s former accomplices who were intimately involved with the actions of the accused in planning and executing the bombings in Warri and Abuja.‟ The appellant chose not to testify. [17] In the end, the court held that the material evidence, which it dealt with in some detail, proved the appellant‟s guilt on counts 1 to 12. Claassen J said the following (paras 142 – 143): „The evidence of the two main accomplices is congruent and corroborates one another. There are no contradictions or discrepancies which may negatively affect their testimony. . . The evidence of these witnesses overwhelmingly established that the accused was the planner, funder, supplier, instructor, expert and leader in the execution of the bombings in Warri and Abuja. Although he was not present at the moment the car bombs exploded, it cannot be gainsaid that they exploded at his instance and direction. To my mind that makes him guilty beyond all reasonable doubt of the charges in counts 1 to 12 as the main perpetrator.‟ [18] It is necessary, in relation to count 13, first, to have regard to the e-mail by Timi containing the threat to South African interests in Nigeria, the relevant parts of which read as follows: „ 27 January 2012 . . . I am Mr Peter Timi the Europe representative of the Movement for the Emancipation of the Niger Delta (MEND). I have been mandated to communicate our displeasure over your country‟s involvement through the South African judiciary as it concerns our leader Mr Henry Okah. It was a shock when we learnt that the trial of Mr Henry Okah was once again postponed till the 1st of October 2012 which to us is totally unacceptable. We should remind you of the South African investments in Nigeria such as the few stated below and we will not hesitate to disrupt their business activities and take the South African nationals working for these companies hostage. - Ethnix Designs - Pepkoro Limited - Standard Bank - Nampak - KPMG - MTN - Phillips Consulting - Plessey - Legacy Hotels - Enterprise LG - Dimension Data - Johnnic Africa - Pace Property - Altech Namitech - Sun International - ABSA and Southern Sun The South African Government through her judiciary is hereby advised to within the next two weeks release our leader or else the South African citizens and companies will be at risk. Don‟t forget that no amount of Nigerian Government‟s security guarantee can stop us. We will carry out these „PROMISES‟ to the letter, enough is enough.‟ [19] In relation to this e-mail, the court below also had regard to the evidence of Mr Simon Kerry (Kerry), the group risk manager for Plessey (Pty) Ltd (Plessey), which installs and builds telecommunications infrastructure for the telecommunications industry in South Africa and other parts of the continent. Plessey employed four South African nationals in Lagos, Nigeria. After receiving the e-mail referred to above, a discussion ensued with company executives and it was accepted that there was cause for concern. There was communication with Dimension Data, another company whose interests were threatened in the e-mail. Whilst not evacuating their personnel, both companies put contingency plans in place for rapid evacuation should the need arise. There was no evidence that the threats materialised. As must by now be apparent, the appellant was in custody in South Africa at the time that the e-mail threat was made. [20] Finally, in relation to count 13, the court below took into account the evidence of Colonel Noel Zeeman (Zeeman), the investigating officer who had been called as a witness by the appellant. Zeeman testified about a conversation he had engaged in with the appellant, on 30 January 2012, in the reception area of the holding cells of the court below. According to Zeeman, the appellant had complained about his exorbitant legal fees and then went on to say the following: „South Africa is going to pay as South Africa should not be involved in the matter and that was not their problem. He went on further to say that there was nothing stopping him from attacking South African interests in Nigeria as he is a warrior and will continue fighting . . . .‟ Zeeman was subsequently made aware of the e-mail by Timi and saw a copy of it. [21] In respect of count 13, Claassen J concluded as follows (para 300): „I am satisfied that the State proved beyond a reasonable doubt that the accused is also guilty on count 13. The evidence of Kerry and Zeeman is uncontroverted and prove that the accused and/or one of his supporters, Timi, voiced threats of danger to South African companies and their employees operating in Nigeria.‟ [22] Being cautious, Claassen J considered, in the event of his conclusions in relation to the main charges being wrong, the alternative charges of conspiracy to commit those offences. The court below had regard to case law on conspiracy and held that the evidence clearly disclosed that the appellant had conspired with some or all of the individuals mentioned in the indictment in counts 1 to 12. [23] Having convicted the appellant, the court below proceeded to sentence the appellant as follows. In respect of the Warri bombing, the convictions on counts 1, 3, 5, 7, 9 and 11 were taken together for sentencing, and the appellant received a sentence of 12 years‟ imprisonment. In respect of the Abuja bombing, the convictions on counts 2, 4, 6, 8, 10 and 12 were taken together, and the appellant was sentenced to a further 12 years‟ imprisonment. In respect of the conviction on count 13, the court below imposed a sentence of 10 years‟ imprisonment. The latter sentence was ordered to run concurrently with the sentence imposed in respect of counts 2, 4, 6, 8, 10 and 12 referred to above. Thus, the effective sentence was 24 years‟ imprisonment. [24] The appellant applied for leave to appeal against his convictions on counts 1 to 12, principally on the basis that the court had no jurisdiction to adjudicate on those counts because they were acts of terrorism committed beyond the borders of South Africa, namely in Nigeria. A secondary ground on which leave to appeal was sought was that there had been a duplication of charges. In respect of count 13, leave to appeal was sought on the basis that no link could be established between the appellant and the e-mail threatening South African interests in Nigeria. Claassen J made the following order: „1. Leave is granted to the Supreme Court of Appeal against this court‟s finding that it had jurisdiction in terms of Act 33 of 2004 to hear and adjudicate counts 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12. 2. The application for leave to appeal the convictions on the merits of counts 3 to 8, based on an alleged duplication of charges, is dismissed. 3. Leave is granted to the Supreme Court of Appeal against the conviction only on count 13.‟ [25] The appeal was first enrolled in this court for hearing on 26 November 2014. There had been no attack in the court below on the constitutionality of the provisions of the Act. For the first time, in this court, counsel for the appellant sought to launch an attack on the constitutionality of the Act insofar as it purported to grant a South African court extra-territorial jurisdiction. After an exchange between this court and counsel on behalf of the State and the appellant, it was agreed that the matter be postponed to enable the responsible Minister, namely the Minister of Safety and Security, to be given notice of the constitutional challenge. Subsequently, an order was obtained by the appellant in the high court in terms of which the National Director of Public Prosecutions, the Minister of Police, the Minister of International Relations and Cooperation and the Minister of Justice and Correctional Services were joined as parties to the appeal in this court.6 6 For present purposes and for reasons provided in para 26 below, it will become apparent that it is not necessary to address the correctness of that procedure. [26] Subsequently, the appellant filed an application to extend his grounds of appeal, to include a constitutional challenge against certain provisions of the Act. Before us, however, when the present appeal was heard, the attack against the constitutionality of the Act was abandoned. Counsel on behalf of the appellant also accepted the factual findings of the court below in relation to counts 1 to 12. Therefore, the only issues on appeal were (a), whether the court below had jurisdiction to entertain any or all of counts 1 to12, and, (b), whether the evidence in the court below justified a conviction on count 13. It is to those issues that we now turn. [27] At the outset it is necessary to conduct a brief overview of our law relating to jurisdiction prior to the introduction of the Act. Jurisdiction is an important aspect of the sovereignty of the State. Sovereignty entitles a state to exercise its functions within a particular territory to the exclusion of other states. Jurisdiction encompasses the authority that a state has to exercise its functions by legislation, executive and enforcement action, and judicial decrees in relation to persons and property. In most circumstances the exercise of state power, as aforesaid, is limited to its own territory.7 It is a fundamental principle that a state can assert its jurisdiction over all criminal acts that occur within its territory and over all persons present in its territory, who are responsible for such acts, whatever their nationality. [28] In Kaunda & others v President of the Republic of South Africa & others 2005 (4) SA 235 (CC), para 38, Chaskalson CJ said the following: „It is a general rule of international law that the laws of a State ordinarily apply only within its own territory.‟ The European Court of Human Rights, in Bankovic & others v Belgium & others ECHR 2001-XII; [2001] ECHR 890 (para 59), said the following: „[F]rom the standpoint of public international law, the jurisdictional competence of a State is primarily territorial.‟ [29] In our law in relation to territorial jurisdiction, the principle that the State may assert its jurisdiction over all criminal acts that occur within its territory over all persons responsible for such criminal acts, whatever their nationality, when present 7 John Dugard International Law: A South African Perspective 4 ed (2011) at 146. in South Africa is well established.8 However, in more recent years there has been a broadening of the basis of jurisdiction. There is now recognition that the basic principle referred to above is losing ground. For a start, there is a trend indicating that, where the constituent elements of a crime occurred in different countries, the offence may be tried in any jurisdiction where any of those elements or their harmful effect occurred.9 [30] In S v Basson,10 the Constitutional Court in dealing with the presumption against extra-territorial jurisdiction and the exceptions to that rule said the following: „[223] We accept that as a general proposition our courts have declined to exercise jurisdiction over persons who commit crimes in other countries. This, as Dugard points out, is an aspect of sovereignty which has given rise to a presumption against the extraterritorial operation of criminal law. [224] There are, however, exceptions to the general rule. As Watermeyer CJ observed in R v Holm; R v Pienaar the basis of this rule is international comity: “'An independent state does not claim a wider jurisdiction because it does not wish to encroach upon the corresponding rights of other independent states.” Watermeyer CJ goes on to refer to Wheaton International Law as saying that the judicial power of the State extends: “'(1) To the punishment of all offences against municipal laws of the State, by whomsoever committed, within the territory. (2) To the punishment of all such offences, by whomsoever committed, on board its public and private vessels on the high seas and on board its public vessels in foreign ports. (3) To the punishment of all such offences by its subjects wheresoever committed. (4) To the punishment of piracy and other offences against the law of nations by whomsoever and wheresoever committed.” Watermeyer CJ points out that this proposition is not accepted by all sovereign states and that England makes the smallest claim to punish its own subjects or others for extraterritorial offences. Other countries go so far as to exercise jurisdiction over nationals who commit crimes in any country. [225] It seems generally to be recognised, even by those countries which limit their jurisdiction to crimes committed within their territories, that there are exceptions to the 8 See R v Holm; R v Pienaar 1948 (1) SA 925 (A) at 929-930; and S v Basson [2005] ZACC 10; 2007 (3) SA 582 (CC) paras 223-225. 9 Alfred V Lansdown and Jean Campbell, South African Criminal Law and Procedure, vol 5 (1982), at 3 and 9. 10 See S v Basson above. territorial rule. Treason is such an exception, for it is considered that the State that is threatened has a greater interest than any other state in punishing the offender. Exceptions are also made in respect of transnational crimes where more than one state may have an interest in holding the offender liable for the crime.‟ (Footnotes omitted.) [31] Further, with the increase in international terrorist activity, states have largely co-operated in order to combat that scourge. This has resulted in international instruments in that regard, which include the Conventions and the United Nations Resolutions mentioned above that are binding on signatories and/or member states. In order for the effective combatting of the terrorist activities, participating or member states are required to adopt the legislation that confers jurisdiction on domestic courts to adjudicate crimes committed extra-territorially. [32] The long title11 and the preamble12 of the Act set out the purposes it seeks to achieve, which include that set out at the end of the preceding paragraph. [33] We now turn to examine the relevant provisions of the Act. It must be understood that central to the Act is the creation of the offence of terrorism and related crimes. Section 2 of the Act provides as follows: „Any person who engages in a terrorist activity is guilty of the offence of terrorism.‟ The definition of „terrorist activity‟ in s 1 is extensive. For present purposes, it is not necessary to set out the definition in full, save to state that it is couched in wide terms and applies to acts committed both inside and outside the Republic. 11 The long title of the Act provides: „To provide for measures to prevent and combat terrorist and related activities; to provide for an offence of terrorism and other offences associated or connected with terrorist activities; to provide for Convention offences; to give effect to international instruments dealing with terrorist and related activities; to provide for a mechanism to comply with United Nations Security Council Resolutions, which are binding on member States, in respect of terrorist and related activities; to provide for measures to prevent and combat the financing of terrorist and related activities; to provide for investigative measures in respect of terrorist and related activities; and to provide for matter connected therewith.‟ 12 The preamble includes the following: „AND REALISING the importance to enact appropriate domestic legislation necessary to implement the provisions of relevant international instruments dealing with terrorist and related activities, to ensure that the jurisdiction of the courts of the Republic of South Africa enables them to bring to trial the perpetrators of terrorist and related activities; and to co-operate with and provide support and assistance to other States and relevant international and regional organisations to that end; . . . .‟ [34] The sections that follow on s 2 create offences that are subsidiary to or associated with the main offence of terrorism. So, for example, s 3 provides for „Offences associated or connected with terrorist activities‟, s 4 provides for „Offences associated or connected with financing of specified offences‟ and s 5 creates an offence in relation to the delivery, placing, discharging and/or detonation of explosives or other lethal devices. [35] The primary question in this case is to what extent extra-territorial jurisdiction is conferred by the Act in relation to offences created thereby. For that the starting point is s 15 of the Act, which is entitled „Jurisdiction in respect of offences‟. It is necessary to consider the provisions of subsecs 15(1) to (4), which read as follows: „(1) A court of the Republic has jurisdiction in respect of any specified offence as defined in paragraph (a) of the definition of “specified offence”, if – (a) the accused was arrested in the territory of the Republic, or in its territorial waters or on board a ship or aircraft registered or required to be registered in the Republic; or (b) the offence was committed – (i) in the territory of the Republic; (ii) on board a vessel, a ship, an off-shore installation, or a fixed platform, or an aircraft registered or required to be registered in the Republic at the time the offence was committed; (iii) by a citizen of the Republic or a person ordinarily resident in the Republic; (iv) against the Republic, a citizen of the Republic or a person ordinarily resident in the Republic; (v) on board an aircraft in respect of which the operator is licensed in terms of the Air Services Licensing Act, 1990 (Act 115 of 1990), or the International Air Services Act, 1993 (Act 60 of 1993); (vi) against a government facility of the Republic abroad, including an embassy or other diplomatic or consular premises, or any other property of the Republic; (vii) when during its commission, a national of the Republic is seized, threatened, injured or killed; (viii) in an attempt to compel the Republic to do or to abstain or to refrain from doing any act; or (c) the evidence reveals any other basis recognised by law. (2) Any act alleged to constitute an offence under this Act and which is committed outside the Republic by a person other than a person contemplated in subsection (1), shall, regardless of whether or not the act constitutes an offence or not at the place of its commission, be deemed to have been committed also in the Republic if that – (a) act affects or is intended to affect a public body, any person or business in the Republic; (b) person is found to be in the Republic; and (c) person is for one or other reason not extradited by the Republic or if there is no application to extradite that person. (3) Any offence committed in a country outside the Republic as contemplated in subsection (1) or (2), is, for the purpose of determining the jurisdiction of a court to try the offence, deemed to have been committed – (a) at the place where the accused is ordinarily resident; or (b) at the accused person‟s principal place of business. (4) Where a person is charged with conspiracy or incitement to commit an offence or as an accessory after that offence, the offence is deemed to have been committed not only at the place where the act was committed, but also at every place where the conspirator, inciter or accessory acted or, in case of an omission, should have acted.‟ (Our emphasis.) [36] As can be seen from the introductory wording of s 15(1), the definition of „specified offence‟ assumes importance. That expression is defined in s 1 as follows: „“specified offence”, with reference to section 4, 14 (in so far as it relates to section 4), and 23, means – (a) the offence of terrorism referred to in section 2, an offence associated or connected with terrorist activities referred to in section 3, a Convention offence, or an offence referred to in section 13 or 14 (in so far as it relates to the aforementioned sections); or (b) any activity outside the Republic which constitutes an offence under the law of another state and which would have constituted an offence referred to in paragraph (a), had that activity taken place in the Republic.‟ [37] Para (b) of the definition refers to an activity outside the Republic, whereas para (a) thereof makes no reference to territory. In supplementary heads of argument, counsel for the appellant submitted that para (a) of the definition requires that the offences in terms of the Act listed therein, must be committed in the Republic. We are unable to agree. The offences in para (a) consist of terrorist and related activities which, in terms of the definition of „terrorist activity‟ in the Act, may take place anywhere in the world. Para (a) of the definition of „specified offence‟ does not contain any limitation in respect of territory. It must be borne in mind that s 15 was inserted for the very purpose of empowering a domestic court to try offences in relation to terrorist activity committed elsewhere. There is no conceivable other reason for including such a provision relating to jurisdiction. [38] Both paras (a) and (b) of the definition of „specified offence‟ are qualified by the introductory reference to ss 4, 14 and 23. Section 4 deals with the financing of specified offences. Section 14, on the other hand, provides for criminal liability in relation to threats, attempts, conspiracies and assistance, inducements, etc to commit an offence. However, s 14, is in turn, qualified by the reference to s 4. Section 23 deals with prohibition and freezing orders in respect of property believed to be owned or controlled by an entity which has committed a specified offence and need not detain us further. It follows that the definition of „specified offence‟ provides for two categories of offences, namely, (i) the financing of an offence listed in para (a) of the definition, ie an offence in terms of the Act wherever committed and (ii) the financing of an activity outside the Republic described in para (b) of the definition ie, one which constitutes an offence under the law of another state that would have constituted an offence in terms of the Act had that activity taken place in the Republic. Section 15(1) caters only for extra-territorial jurisdiction in relation to (i) above. It does so when the accused person was arrested in South Africa or any of the requirements set out in s 15(1)(b)(i) to (viii) were met or the evidence reveals any other basis for jurisdiction recognised by law. It was not suggested by counsel for any of the parties that subparagraph (b) of the definition of „specified offence‟ found application in this case. It is thus not necessary to determine the circumstances under which it will find application. [39] Counsel on behalf of the State was constrained to concede that the Act was not a model of clarity and in parts badly drafted. He also accepted that, read literally, s 15(1) read with paragraph (a) of the definition of „specified offence‟, cannot have a meaning other than that set out above. However, it was contended by counsel on behalf of the State, that to interpret it in that manner would emasculate the Act and that one should assume that the intention of the legislature was to broaden the application of the legislation rather than to have it restricted. It was submitted further, that to follow the literal wording would lead to absurd results and could not have been what the legislature had intended. As we understood the argument, it was suggested that it would be absurd for the legislation to provide for extra-territorial jurisdiction in respect of the more circumscribed offence of financing of terrorist activities, rather than what is covered by the wide definition of „terrorist activity‟ ─ which the Act was intended to regulate. [40] The argument must be rejected. First, as we will show, extra-territorial jurisdiction in respect of offences in terms of the Act other than financing thereof, are provided for in s 15(2). Secondly, counsel on behalf of the State was constrained to accept that in order to reach the interpretation he contended for, it would be necessary not only to strain the language of the legislation, but also either to exclude certain words, or read in others, or both. Thirdly, it is the legislature‟s prerogative to decide to what degree it would extend the jurisdiction of domestic courts in respect of all terrorist and related activities. It chose to do so in the terms set out above. It chose, in its wisdom, to restrict the category to those of financing or assisting in the financing of terrorist activities and those mentioned in s 15(2). It is not within our province to question the legitimate policy choices made by the legislature.13 [41] We turn to deal with the wording of s 15(2), set out in para 35 above. Its introductory words are couched widely. It provides for extra-territorial jurisdiction in relation to a person other than one catered for in 15(1), if the conditions in s 15(2)(a), (b) and (c) are met. A person contemplated in s 15(1), as demonstrated above, is one who has committed an offence referred to therein and to whom the provisions of s 15(1)(a), (b) or (c) apply. Section 15(2), on the other hand, involves jurisdiction in relation to any person who has committed an offence in terms of the Act other than a person contemplated in s 15(1), provided sections 15(1)(a), (b) or (c) apply. Those subsections must be read conjunctively. This means that the act must affect or be intended to affect a public body, person or business in the Republic, the accused must be found to be in the Republic, and there is no application for the accused‟s 13 See Weare & another v Ndebele NO & others [2008] ZACC 20; 2009 (1) SA 600 (CC) para 58. extradition or the accused has, for one or other reason, not been extradited. As none of the offences in counts 1 to 12 affected South African interests, s 15(2) does not provide for extra-territorial jurisdiction in this case. [42] Section 15(3) requires only brief attention. It was inserted purely in order to determine which domestic court within the Republic will hear a matter once jurisdiction had been established in terms of s 15(1) or s 15(2). [43] It is now necessary to examine the facts and relate them to the counts in the indictment. Counts 1, 3, 5 and 7 are all related to the Warri bombing. It is clear that the appellant had departed from South Africa almost a month before it occurred. There was evidence that the appellant had travelled to Nigeria and crossed the border other than at an official crossing point. Every act committed by the appellant which constituted those offences as set out in the indictment, was committed by him outside of the Republic of South Africa. None of the counts set out at the beginning of this paragraph involve the financing of offences. As discussed above, our courts have extra-territorial jurisdiction in terms of s 15(1) of the Act only in relation to the crimes of the financing of the offences set out in para (a) of the definition of „specified offence‟. [44] The provisions of s 15(4), which deal with conspiracy and incitement, set out above, are not applicable to the counts dealt with in the preceding paragraph because none of the offences envisaged in that section occurred within South Africa. There is no compelling evidence of a conspiracy or incitement here to commit the offences in question.14 [45] Claassen J did not engage in the interpretative exercise as set out above. The court below thus erred in assuming jurisdiction in relation to counts 1, 3, 5 and 7. In respect of those convictions, the appeal is thus bound to succeed. 14 In para 96 of the judgment the court a quo referred to evidence of a witness who at the instruction of the appellant had conducted a reconnaissance of the venue where the post-amnesty dialogue would initially have taken place. This is far removed from the indictment and in any event it is unclear whether the appellant gave the instruction whilst in South Africa. [46] We now turn to deal with count 9, which does implicate the financing of terrorist activities. It concerns a contravention of s 4(1)(f) of the Act, read with the necessary associated sections. In the present case, the appellant was charged with providing more than 2 million Nigerian naira to three individuals for the purposes of acquiring and adapting vehicles and to purchase explosives for use in the Warri bombing. This constituted financing of offences within the meaning of para (a) of the definition of „specified offence‟. The appellant was arrested in the Republic of South Africa and the bombing was essentially perpetrated by him, being a person ordinarily resident within the Republic. It follows that in respect to count 9, the court a quo was clothed with extra-territorial jurisdiction in terms of s 15(1). That conviction can thus not be faulted on the basis of lack of jurisdiction. [47] In respect of count 11, it is necessary to have regard to the particulars set out in the indictment. The appellant was charged with contravening the provisions of s 3(1)(a) of the Act. That subsection reads as follows: „(1) Any person who – (a) does anything which will, or is likely to, enhance the ability of any entity to engage in a terrorist activity, including to provide or offering to provide a skill or an expertise; . . . for the benefit of, at the direction of, or in association with any entity engaging in a terrorist activity, and who knows or ought reasonably to have known or suspected, that such act was done for the purpose of enhancing the ability of such entity to engage in a terrorist activity, is guilty of the offence associated with a terrorist activity.‟ The factual averments in the indictment are that the appellant provided two clock timer devices that were fitted into the two vehicle-borne improvised explosive devices that were used in the Warri bombing. The court below found that the two timing devices used in the Warri bombing were acquired by the appellant in South Africa or were in his possession and that he had then transported them to Nigeria for the purposes of the bombing. The appellant thus contravened the provisions of s 3(1)(a) of the Act while still in South Africa, and the conviction on this count did not involve an assumption of extra-territorial jurisdiction. That conviction, too, cannot be faulted. [48] We now turn our attention to the counts related to the bombing in Abuja, namely, counts 2, 4, 6, 8, 10 and 12.15 The appellant conspired, planned and instructed people in relation to the execution of the bombing in Abuja whilst in South Africa. Simply put, there is no need in relation to these counts to examine the ambit of the extra-territorial application of the Act because he orchestrated the Abuja bombing from within the Republic of South Africa. It is as elementary as follows. The appellant was arrested here and charged locally for acts he committed within the country and a domestic court would therefore obviously have jurisdiction. In respect of these counts, the convictions by the court below must therefore also remain in stead. [49] It now remains for us to deal with count 13. It will be recalled that Claassen J relied in this regard on the evidence of Kerry and Zeeman.16 The essential problem for the State is that there was no acceptable evidence connecting the appellant with the e-mail referred to in para 18 above. The evidence of Kerry, that he had been made aware of the threat contained therein and that it was a cause for concern, is therefore of no assistance to the State. The expert evidence adduced by the State in relation to information technology did not cure the defect. What remains to be dealt with is the evidence of Zeeman. It is clear from the indictment that it is inextricably reliant on the Timi e-mail. The evidence of Zeeman would only be of assistance if it would link the email to the appellant, which it does not. For these reasons the court below erred in convicting the appellant on this count. [50] The result of the abovementioned convictions being set aside is that the sentences imposed have to be looked at afresh. Counsel for the parties were agreed 15 Count 2 is a contravention of s 2 of the Act, which involves engaging in terrorist activities and the alternative charges related thereto. Count 4 is a contravention of s 5(a) of the Act which involves the delivery, placing, discharge or detonation of an explosive device causing death and/or serious bodily injury and the alternatives relating thereto. Count 6 is a contravention of s 5(b) of the Act which involves the delivery, placing, discharge or detonation of an explosive device with the purpose of causing extensive damage to and/or destruction of inter alia a place of public use and/or public transport facility and/or government facilities, and the alternatives relating thereto. Count 8 is a contravention of s 8(a) read with s 14(b) of the Act, which deals with attempts to cause harm to internationally protected persons, and relates to the figures referred to earlier in the judgment who were in the vicinity of where the Abuja bombing occurred. Count 10 is a contravention of s 4(1)(f) of the Act involving financing of terrorist activities, and the alternatives relating thereto. Count 12 is a contravention of s 3(1)(a) of the Act involving enhancing the ability of an entity engage in a terrorist activity. 16 See para 20 above. that it would be in the interest of justice for this court to finalise that question without the need for it to be remitted for consideration afresh by the trial court. It will be recalled that the sentence in relation to count 13, which was that of 10 years‟ imprisonment, was ordered to run concurrently with the sentence in relation to the Abuja bombing. The effective sentence was one of 24 years‟ imprisonment. [51] In relation to the Warri bombing the only convictions that were not displaced were in relation to counts 9 and 11. In respect of an appropriate sentence, it is necessary to bear in mind that that these counts involved the appellant providing finance and equipment without which the bombing would not have been executed. It is also necessary to take into account that there was an amnesty in place, which appears to have been accepted by all the major actors involved in the past struggles in the Niger Delta, including the appellant and his cohorts. The subsequent bombings took place despite the acceptance of the amnesty and in contravention thereof. The Warri event at which the bombing occurred, appears to have been one arranged by a newspaper to air, discuss and address the grievances of persons living in the Niger Delta affected by the prior lack of concern on the part of the government of Nigeria. The bombing disrupted that event and prevented those discussions from taking their course. Furthermore, it is significant that a school was located within the immediate vicinity of the bombing and the appellant was aware of that fact. Fortunately, it was decided to close the school for the day because of the event. [52] It is also necessary to take into account that the two bombs were set up so that they did not explode simultaneously, with the second bomb only exploding ten minutes after the first. As explained above, the intention was that the first explosion would create chaos and confusion and draw a crowd to the scene of the disruption, ensuring that the second explosion would wreak even more havoc. It is also necessary to record that the appellant was upset that the bombs had not been placed closer to the buildings at which the event took place, despite being warned that this would result in more deaths, as he desired the bombings to have a greater devastating effect. [53] Having regard to what is set out above, limited interference with the sentence imposed in relation to the Warri bombings is called for. [54] In our view, the following sentences ought to be imposed: (i) In respect of the convictions on counts 9 and 11 (relating to the Warri bombing), taken together, 8 years‟ imprisonment is appropriate. (ii) The sentence in relation to the Abuja bombing, namely, 12 years‟ imprisonment, remains in place. (iii) The two sentences are not to run concurrently. (iv) The effective sentence is thus one of 20 years‟ imprisonment. [55] The following order is made: 1. The appeal is upheld to the extent reflected in the substituted order of the court below, set out hereafter. 2. In respect of conviction, the order of the court below is set aside and substituted as follows: „The appellant is convicted on counts 2, 4, 6, 8, 9, 10, 11 and 12.‟ 3. In respect of sentence, the order of the court below is set aside and substituted as follows: „Counts 2, 4, 6, 8, 10 and 12 are taken together for purposes of sentence and the accused is sentenced to 12 years‟ imprisonment. Counts 9 and 11 are taken together for purposes of sentence and the accused is sentenced to 8 years‟ imprisonment. The effective sentence is thus 20 years‟ imprisonment.‟ ______________________ M S Navsa Judge of Appeal ______________________ C H G van der Merwe Judge of Appeal Appearances: Counsel for Appellant: J P Marais (and P I Uriesi) (Supplementary heads of argument prepared by G C Muller SC) Instructed by: MVB Incorporated, Pretoria Botha & De Jager Attorneys, Bloemfontein Counsel for First Respondent: J P Pretorius SC (and J J du Toit) (Heads of argument prepared by S K Abrahams) Instructed by: Director of Public Prosecutions, Johannesburg Director of Public Prosecutions, Bloemfontein Counsel for Third and Fifth Respondent: M T K Moerane SC (and E B Ndebele) Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 3 October 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Okah v S (19/2014) [2016] ZASCA 155 (3 October 2016) MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) upheld only in part an appeal by Mr Henry Emomotimi Okah against his convictions on a number of charges under the Protection of Constitutional Democracy Against Terrorist and Related Activities Act 33 of 2004 (the Act), imposed by the South Gauteng High Court, Johannesburg. As a result, Mr Okah’s convictions on five of thirteen counts were set aside, and an effective sentence of 24 years’ imprisonment was reduced to an effective 20 years’ imprisonment. The two issues before the SCA were (i) whether the court below had jurisdiction to try Mr Okah on each of the various charges against him; and (ii) whether, in respect of count 13, the evidence adduced by the State was sufficient to prove his guilt beyond a reasonable doubt. Mr Okah was charged with 13 counts of terrorism-related offences under the Act, following on two separate bombings in Nigeria, as a result of which 12 people were killed, 64 severely injured and property was damaged. Mr Okah had allegedly been involved in the planning and execution of these bombings. Six counts related to the first bombing, in Warri, Nigeria, on 15 March 2010. Six counts related to the second bombing, in Abuja, Nigeria, on 1 October 2010. And count 13 related to an allegation that Mr Okah had threatened certain South African entities in Nigeria with destabilising terrorist activities. Before the SCA, Mr Okah accepted the correctness of the factual findings of the court below in respect of the convictions on counts 1 to 12, and also abandoned a constitutional challenge against the provisions of the Act. On appeal, Mr Okah’s argument in respect of the first 12 counts was solely that the court below had no jurisdiction to try him, because the bombings had taken place outside of South Africa. The SCA held that, on a proper interpretation of the Act, a South African court would have extra- territorial jurisdiction if the provisions of either s 15(1) or s 15(2) were applicable. On the facts, s 15(2) did not apply to any of the counts, and so extra-territorial jurisdiction would only apply if the requirements of s 15(1) were met. Essentially, this section grants extra-territorial jurisdiction in respect of financing offences, ie offences related to the financing of terrorist activities, and applies regardless of where the financing occurred. In addition, however, the SCA noted that a South African court could have jurisdiction where the ordinary requirements of territorial jurisdiction were met. In relation to the Warri bombings, the SCA held that the court below did not have jurisdiction in respect of four of the six counts, because these offences had taken place outside of South Africa and were not financing offences (and therefore s 15(1) did not apply). Accordingly, the convictions on these counts were set aside. However, in relation to the other two counts, the SCA held that the court below did have jurisdiction. One count was a financing offence, and the other count consisted of actions taken wholly within South Africa, and therefore the court could assert its conventional territorial jurisdiction. In relation to the Abuja bombings, the court held that Mr Okah had conspired, planned and instructed people in relation to the execution of the bombing in Abuja whilst in South Africa. Therefore, the court below had jurisdiction in respect of all six counts on the basis of its ordinary territorial jurisdiction. Finally, in relation to count 13, Mr Okah’s challenge was that the evidence adduced by the State did not prove beyond a reasonable doubt that he was responsible for the threats made against the South African entities in Nigeria, which took the form of an email sent in the name of another person while Mr Okah was in custody. The SCA upheld this challenge and set aside that conviction and sentence. Having set aside these convictions, it was necessary for the SCA to amend Mr Okah’s sentence accordingly. The court below had taken the counts in relation to each of the two bombings together for purposes of sentencing, and had sentenced Mr Okah to 12 years’ imprisonment in respect of the Warri bombing and 12 years’ imprisonment in respect of the Abuja bombing. On appeal, the SCA did not interfere with the sentence for the Abuja bombing, but reduced the 12 years’ in respect of the Warri bombing to 8 years’ imprisonment. This resulted in an effective 20 years’ imprisonment. --- ends ---

2206

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No:  241/2008 THE ROAD ACCIDENT FUND Appellant and THEMBEKA MONANI First Respondent THEMBEKA MONANI N O Second Respondent Neutral citation: Road Accident Fund v Monani (241/2008) [2009] ZASCA 18 (20 March 2009) Coram: Lewis, Maya JJA and Hurt AJA Heard: 19 February 2009 Delivered: 20 March 2009 Summary: Dependants’ claim for loss of support – court’s wide, equitable  discretion  to  arrive  at  a  fair  award  –  One dependant dying contemporaneously with breadwinner  –  Such  dependant’s  hypothetical  share of  maintenance  to  be  distributed  amongst  surviving dependants. _________________________________________________________________ ORDER On appeal from: Cape  Provincial  Division  (Erasmus  J  sitting  as  court  of first instance). The appeal is dismissed with costs. JUDGMENT HURT AJA (LEWIS and MAYA JJA concurring): [1] This  is  an  appeal  by  the  Road  Accident  Fund  against  an  award  of damages in a dependants' claim. It will be convenient to refer to the parties by their  respective  designations  in  the  trial  court,  viz  to  the  appellant  as  'the defendant'  and  to  the  respondents  as  'the  plaintiffs'.  The  issue  is  a  very narrow  one  and  was  defined  in  a  stated  case  in  terms  of  rule  33(4).  The stated case reads as follows: '1. Xolani Andrew Molani ("the Deceased") died in a road accident on 7 th December, 2001 ("the accident"). 2. At the time that he died he had a duty to support and supported:­ 2.1 First Plaintiff; 2.2 Second Plaintiff, Xolasisipho Monani ("Xolasisipho"); 2.3 Anela Aubrey Kwezi ("Anela"); 2.4 Thando Monani ("Thando"). 3. Thando died in the accident and as a result thereof. 4. The claim of Anela has not been prosecuted in these proceedings, 1 but the fact that Anela has a claim against the estate of the Deceased for loss of support has been taken into account in reducing the sum of damages due to the Plaintiffs as contemplated below. 5. The  parties  have  agreed  on  the  amount  of  the  Deceased's  past  and future earnings, contingencies to be applied to the Plaintiffs' claims and the 1 Anela was a child of the deceased by a relationship previous to that with the first plaintiff, the mother of Xolasisipho and Thando. It had been agreed by the parties that Anela would be paid one of two possible fixed amounts, pursuant to the ruling in this case. ratio in which the amount of money available to the Deceased's dependants should be distributed between such dependants. 6. The question for adjudication by this Honourable Court is whether the death of Thando in the accident constitutes a collateral benefit resulting from the accident, for which the Plaintiffs should not be compensated. 7. The parties are agreed that should this Honourable Court find that the death  of  Thando  is  not  a  collateral  benefit  resulting  from  the  accident, Plaintiffs will be entitled to receive damages in a further sum of R163 428,00, the parties being in agreement, at present, that the Plaintiffs are entitled to payment of the sum of R1 389 531,00.’ [2] The  dependant’s  claim  for  loss  of  support  was  introduced  into  our jurisprudence during the Roman­Dutch era. Cases such as Jameson's Minors v CSAR 2  and Hulley v Cox 3  trace its reception into and development in our common law. In Hulley, Innes CJ referred to the different approaches adopted by  the  early  writers  to  the  method  of  computation  of  the  quantum  of  such claims.  Of  these,  he  expressed  a  preference  for  the  equitable  approach recommended  by  Voet, 4  summarizing  that  writer's  views  in  the  following terms: 5 : 'Voet on the other hand favours a more general estimate. 6 Such damages, he thinks, should be awarded as the sense of equity of the judge may determine, account  being  taken  of  the  maintenance  which  the  deceased  would  have been  able  to afford  and  had  usually afforded  to  his  wife  and  children. That would seem to be the preferable view.' The further development of this approach is concisely summarized by Holmes JA in Legal Insurance Co Ltd v Botes. 7 The principles involved are well­known and need not be restated here. 2 1908 TS 575. 3 1923 AD 234. 4 Ad Pandectas 9.2.11. 5 At  243­ 244. 6 Sc Preferable to the 'annuity approach' opted for by a number of other writers. 7  1963 (1) SA 608 (A) at 614C­F. [3] The computation of the award in a claim by dependants is, in a sense, dichotomous. The first part of the exercise is to assess what the breadwinner would probably have earned had he not died when he did. The gross amount is appropriately adjusted and discounted to arrive at a 'present­day value'. In those cases where it is assumed that the whole of the breadwinner's income would have been devoted to the upkeep of his family (and this is one of them), the second exercise is to distribute the equivalent of the lost income between the  beneficiaries.  In  this  instance  it  is  agreed  that  the  income  would  have been allocated in the proportions of two parts to each adult and one to each child. The amount thus distributed must, according to the parties' agreement, 8 take account of the assumption that each child would become self­supporting at the age of 18. It is apparent from the actuarial calculations that the share previously  attributable  to  an  18­year­old  child  would  become  available  for distribution  amongst  the  mother  and  the  other  dependants  not  yet  self­ supporting. [4] As is apparent from the stated case both computation exercises have been  performed,  to  the  mutual  satisfaction  of  the  parties,  on  two  separate bases.  The  first  assumes  that  Thando's  share  would not  fall for distribution amongst the surviving members of her family and the second, that it would. The matter was thus argued before Erasmus J in the Cape High Court. He held that the additional amount of R163 428 was payable and gave judgment for the total amount of R1 552 959. He refused leave to appeal but leave was subsequently granted by this court . [5] Erasmus J approached the matter on the basis that what was available for distribution to the dependants was the 'present­day value' of the amount which  the  deceased  would  have  contributed  to  the  upkeep  of  his  family members  (with  the  customary  allowances  for  contingencies,  discounting  to current value etc). Referring to this metaphorically as a 'cake' or 'pot', he said: 'But the fact that the late Thando was there at the time, and may have been alive even at  a later stage,  would  not  have diminished  the  total  amount.  In 8  And  as  is  explicitly  stated  in  the  actuary's  explanation  of  his  method  of  assessment, attached to the stated case. engaging counsel I referred to the total cake or the pot. And the fact is that that  amount  is  agreed  (sic)  would  have  been  there  for  distribution  as  a manner of support for the family. . . . In my view, I do not even have to look at the legal argument presented here, because it's a matter of logic. It's a matter of, on these particular facts one cannot  diminish  the  total  pot  or  cake,  as  I  referred  to  it,  simply  because Thando is late.' [6] Before us, Mr Bridgman, for the appellant, based his contentions on the fundamental principle that an award in this type of claim is aimed at putting the  claimants,  as  nearly  as  is  possible,  into  the  position  they  would  have occupied if the delict had not caused the deceased to die when he did. If the accident had not occurred, he submitted, the deceased's dependants would have included Thando. Thus the support which each minor dependant would have received but for the accident would have amounted to one seventh of the  deceased's  income  and  the  first  plaintiff's  share  would  have  been  two sevenths. And this amount, so the argument ran, is what should be awarded to achieve the object of what I have referred to as 'the fundamental principle'. But,  if  the  one  seventh  share  for  Thando  is  awarded  proportionally  to  her mother and the surviving siblings, they would receive one third and one sixth each, respectively, and thus receive more than they could have expected had the  deceased  not  died.  Counsel  was  at  first  inclined  to  contend  (as  was indeed the contention in the stated case) that to award Thando's share to her mother and siblings in this manner would constitute a 'collateral benefit,' 9  but he  wisely  forsook  this  basis  in  argument  before  us.  Instead  he  pinned  his colours  to  the  mast  of  the  'fundamental  principle'  and  contended  that  the award  to  the  surviving  dependants  should  be  restricted  to  what  they  would have received had Thando not died. [7] Mr Bridgman readily conceded that if, hypothetically, Thando had died at any time before the deceased, then her 'share' of the family maintenance 9  As dealt with in Lambrakis v Santam Ltd 2002 (3) SA 710 (SCA) particularly paras 19 and 20 and the authorities there cited. would  have  fallen  away  and  become  available  for  distribution  among  her mother and siblings. He was by no means ready to concede, however, that if Thando had died after the deceased, the same situation would have applied, save for such maintenance as would have been appropriated for her between the  date  of  the  deceased's  death  and  the  date  on  which  she  died.  Mr Bridgman's  reluctance  to  make  such  a  concession  was  undoubtedly attributable to a fear that, if he made it, his carefully crafted contentions would founder on the rocks of logic. He submitted that, quite apart from what might be the position if Thando died after the deceased, there appeared to be no decided case in our law which dealt with the computation of compensation in a  dependant’s  claim  where  one  or  more  of  the  dependants  died simultaneously with the breadwinner. He therefore asked that the matter be considered as res nova. [8] The absence of reported authority for a particular proposition relating to the computation of damages in delict can, in this day and age, invariably be attributed to only one of two circumstances. The first is that it indeed is res nova and has thus never been considered by a court before. The second is that  its  answer  is  so  obvious  that  no  court  has  seen  fit  to  classify  it  as reportable.  I  rather  think  that  the  proposition  here  put  forward  by  the defendant falls into the latter category. [9] It is, after all, perfectly clear that the court takes into account events which occur after the death of the breadwinner in assessing the award to each dependant. The simple occurrence of one of the dependants becoming self­ supporting  is  one  such  event.  It  has  the  effect  of  making  available  to  the others  the  share  which  was  previously  allocated  to  the  now  self­supporting sibling. This is one of the very precepts by which the actuary in this case was called  upon,  by  agreement  between  the  parties,  to  make  his  assessments. Bekker J dealt with the question as a matter of general principle in the case of Wigham  v  British  Traders  Insurance  Co  Ltd 10  In  that  case  the  plaintiff's husband had died in a motor vehicle collision in January, 1960. At that time 10 1963 (3) 151 (W). the  plaintiff  was  81  years  old,  and  her  expectation  of  life  was  fixed  at  six years.  The  matter  came  to  trial in  1963,  when  the  plaintiff  was  84.  Her life expectancy at the date of trial was assessed at five years. The argument for the insurer was that her award should nevertheless be computed on the basis that  she  would  live  to  the  age  of  87  (the  assessment  at  the  date  of  the breadwinner's death) and not to the age of 89 (the assessment at the date of trial). Bekker J rejected this contention, saying: 11 'It is of course quite true that the general principle requires the amount of damages to be  assessed  at  the  date  of  the  wrong  but  the  court  is  entitled  in  the  case  of prospective damages to inform itself of subsequent facts which are known at the date of the trial and which if taken into account would enable the court to determine with a greater degree of certainty or accuracy the total loss of a plaintiff. By so doing the amount of speculation involved in such an assessment is reduced.' 12 Wigham plainly disposes of any logical ground for Mr Bridgman's reluctance to concede that if Thando had died between the date of the deceased's death and the date of trial, the support which would otherwise have been allocated to her would have gone to the surviving dependants. [10] The  defendant  has  thus  correctly  conceded  that  if  Thando  had  died before  the  date  of  the  delict,  the  plaintiffs  would  have  been  entitled  to  the extra amount of R163 428. And that would also be the position if she had died at  any  time  after  the  date  of  the delict  (save,  of  course,  for any  amount  of maintenance that would have accrued to her between that date and the date of  her  death).  Can  there  then  be  any  basis,  in  logic  or  otherwise,  for  a contention that since her death occurred simultaneously or contemporaneously with that of the deceased, the amount of R163 428 falls to be excised from the award? I think the question only has to be stated to be 11 at 156B­D. 12 Wigham has not been expressly approved by this Court, but in General Accident Insurance Co SA Ltd v Summers 1987 (3) SA 577, Rabie ACJ dealt exhaustively with the question of whether there was a fixed rule as to the date at which a plaintiff's loss of support should be assessed, and came to the conclusion (at 610J) that there was no authority to the effect that the loss of income (or, in dependants' claims, the loss of support) had to be assessed as at the  date  of  delict.  In  that  case,  the  judge  in  the  court  a  quo  had  expressly  based  his computation  on  the  quoted  dictum  by  Bekker  J,  and  Rabie  ACJ  did  not  question  the correctness  of  this  approach.  Wigham  has  been  referred  to  and  applied  in  a  number  of subsequent  decisions  and  should  now  be  taken  as  a  correct  statement  of the  law,  subject always to the consideration that the trial judge has a wide discretion in these matters. answered  in  the  negative.  It  seems  to  me  that  the  defendant's  contention stems from confusion between the exercise of determining the total loss (the 'pot' or 'cake' in the graphic language of the learned judge a quo) and that of distributing that amount amongst the dependants. The view of the court a quo that Thando's death could not have the effect of reducing the total loss cannot be faulted. [11] The appeal is dismissed with costs. ________________________ NV HURT ACTING JUDGE OF APPEAL Appearances: For Appellant: M J M Bridgman Instructed by: Hofmeyr, Herbstein & Gihwala Inc Cape Town E G Cooper Majiedt Inc Bloemfontein For Respondent: R D E Gordon Instructed by: A Batchelor & Associates Cape Town Van Wyk & Preller Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL 20 March 2009 STATUS: Immediate Road Accident Fund v Monani (241/2008) [2009] ZASCA 18 (20 March 2009) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal A breadwinner had been killed in a motor vehicle accident. One of his dependants had died in, or as a result of, the same accident. The other dependants (the breadwinner's wife and surviving children) claimed against the Road Accident Fund for loss of support. The Fund contended that the support which would otherwise have been allocated to the child who had died in the accident should not be included in the amount awarded to the surviving members of the family because they would then be placed in a better position than they would have occupied  if  the  breadwinner  had  not  died.  The  Supreme  Court  of  Appeal  rejected  this contention,  holding  that,  because  it  had  been  agreed  that  everything  which  the  deceased breadwinner  would  have earned would  have  been  used  for  the support of  himself  and  his family, the fact that one of the children would not share in the distribution of support could not have the effect of reducing the total amount of money which would have been available for the family but for the breadwinner's death.

3794

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No:1104/2020 In the matter between: ASTRAL OPERATIONS LTD t/a COUNTRY FAIR FOODS First Appellant PIONEER FOODS (PTY) LTD t/a TYDSTROOM POULTRY Second Appellant BOTTELFONTEIN ACTION GROUP Third Appellant and THE MINISTER FOR LOCAL GOVERNMENT, ENVIRONMENTAL AFFAIRS AND DEVELOPMENT PLANNING (WESTERN CAPE) First Respondent THE CITY OF CAPE TOWN Second Respondent THE MINISTER FOR ENVIRONMENTAL AFFAIRS, FORESTRY AND FISHERIES Third Respondent Neutral Citation: Astral Operations Ltd t/a Country Fair Foods and Others v The Minister for Local Government, Environmental Affairs and Development Planning (Western Cape) and Others (3509/2014) [2022] ZASCA 62 (29 April 2022) Coram: ZONDI, MOLEMELA, DLODLO and GORVEN JJA and MUSI AJA Heard: 21 February 2022 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 14h00 on 29 April 2022. Summary: Environmental law – application for environmental authorisation in terms of s 22 of the Environment Conservation Act 73 of 1989 (ECA) – Appeal against the decision of the competent authority – powers of the appeal authority under s 35 of the ECA – appeal authority has wide powers including the power to substitute or replace the decision of the competent authority appeal dismissed. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: The Western Cape Division of the High Court, Cape Town (Desai J sitting as court of first instance): The appeal is dismissed, with costs, including the costs of two counsel. ______________________________________________________________ JUDGMENT ______________________________________________________________ Zondi JA (Molemela, Dlodlo and Gorven JJA and Musi AJA concurring): [1] This is an appeal against a declaratory order granted by the Western Cape Division of the High Court, Cape Town (the high court) (per Desai J) in favour of the first respondent, the Member of the Executive Council for Environmental Affairs and Development Planning in the Western Cape Provincial Administration (the MEC) and the second respondent, the City of Cape Town (the City) (the respondents). The national Minister of Environmental Affairs was joined as a third respondent in the review, but took no part in the proceedings. The appeal concerns a question that was reserved for separate determination by agreement between the parties, when a set of separate decisions relating to environmental authorisation for a proposed new landfill site for the City was reviewed and set aside. [2] The question that was reserved for separate determination was the following: ‘Whether in dealing with the appeal against the decision of the Director: Integrated Environmental Management (Region B) in the Department Environmental Affairs and Development Planning of the Western Cape Province (per the record of the decision dated 16 July 2007, “the record of decision”), to grant authorisation under section 22 of the Environment Conservation Act, 73 of 1989, for activities related to the establishment and operation of a regional landfill at the location described in Part B of the record of decision known as Brakkefontein, the appeal authority will be entitled to authorise the activities at the Kalbaskraal location.’ [3] The high court answered the question in the affirmative and granted the appellants leave to appeal to this Court. The issue is whether the high court was correct in its determination. [4] The factual background is briefly the following: the first and second appellants are commercial enterprises with extensive broiler chicken farming interests close to the footprint of the proposed regional landfill for the City, near the Bottelfontein Farm in the Western Cape, for which environmental authorisation was granted by the MEC on 30 August 2013. [5] The third appellant is an association of farmers who carry on mixed farming activities, primarily the cultivation of cereal crops, on farms around Bottelfontein. The farms are located in an important wheat producing area of the Western Cape. [6] The first and second appellants’ main practical concerns relate to the impact of the landfill on the groundwater used at the broiler houses, and vectors (namely flies, rodents and birds) transporting pathogens from the landfill to the broiler houses. The third appellant’s main concerns are that the operation of the landfill will give rise to the contamination of the groundwater upon which the vast majority of its members depend for their farming activities. [7] In 2000, the City appointed consultants to identify and assess potential sites for a new landfill to service it. In June 2002, four sites were short-listed and then selected for a more detailed site ranking process. These sites were Kalbaskraal, Atlantis, Vissershoek and Eendekuil. [8] On 30 April 2007, the City applied to the Western Cape Department of Environmental Affairs and Development Planning (the department) for an environmental authorisation in terms of s 22(3) of the Environment Conservation Act 73 of 1989 (the ECA), for the establishment of the new regional landfill on one of two shortlisted sites, namely a site near Atlantis and a site near Kalbaskraal. The application form described the ‘Project’ as the ‘Identification of a new regional landfill site to service the CMA’ (ie the Cape Metropolitan Area) and gave the location and certain further particulars of the ‘Atlantis site’ and the ‘Kalbaskraal site.’ [9] The submission of the application form was preceded by the following: On 28 January 2004, the City’s environmental assessment practitioner, Crowther Campbell & Associates (CCA), submitted to the department a final scoping report (FSR) relating to four possible sites, namely the Atlantis site, the Kalbaskraal site and two further sites that were subsequently eliminated, being the Eendekuil site and the Vissershoek site. [10] One of the relevant factors in determining how many sites should be shortlisted was the requirement of the Environmental Impact Assessment (EIA) regulations and the National Environmental Management Act 107 of 1998 (NEMA) that alternatives be given due consideration. The sites were consequently investigated as alternatives. Although in terms of the Minimum Requirements for Waste Disposal by Landfill,1 the City was required to proceed with an EIA on only the top ranked site, namely Kalbaskraal, the City obtained legal advice to the effect that the EIA should include at least two sites to meet the requirement that alternatives be assessed. This accorded with the stance of the department, which required that ‘at least two site alternatives, preferably more, be considered as part of the EIA phase’. [11] On 10 May 2004, the department accepted the FSR, and when doing so advised that, having considered the four sites, the EIA phase of the project should ‘proceed for the two top ranking sites, namely Kalbaskraal and Atlantis’. [12] On 23 January 2007, CCA submitted to the department a Final Environmental Impact Assessment Report (the FEIR) relating to the Atlantis and Kalbaskraal sites respectively, which contained a comparative evaluation 1 (2nd ed., 1998. Department of Water Affairs and Forestry). One of three documents produced by the then Department of Water Affairs and Forestry in 1998 dealing with waste management is available at http://sawic.environment.gov.za/documents/266.PDF. Retrieved on 13 April 2022. of the environmental impacts of a regional landfill at each of the two potential sites. It also listed the advantages and disadvantages of each of the sites, but no recommendation as to which of the two should be authorised. The choice of either site would require mitigation measures to be put in place. It was left to the decision-maker to weigh the various considerations and reach a conclusion as to which of the two sites was preferable. [13] On 16 July 2007, the Director: Integrated Environmental Management in the Department Environmental Affairs and Development Planning of the Western Cape Province, Mr Barnes, (the Director) acting under authority delegated by the MEC, granted the City an environmental authorisation in terms of s 22(3) for the establishment of the new regional landfill at the Atlantis site. In reaching that decision, the Director: (a) concluded that the ‘No-Go Option’ (ie the option of not proceeding with the establishment of a regional landfill site) was unacceptable given the expected volume of waste to be generated during the next 30 years; and (b) considered the relative environmental impacts of a regional landfill on the Atlantis site and on the Kalbaskraal site, being ‘the two alternative sites to be comparatively assessed’. [14] Thereafter, 348 appeals were lodged in terms of s 35(3) of the ECA against the Director’s decision. On 23 July 2008 the erstwhile Mayor of the City wrote to the MEC stating that the City would like her, in dealing with the appeal, to review the decision that instructs the City to use only the Atlantis site, and to ‘leave open to the City the option of using the Kalbaskraal site’. [15] On 7 April 2009, the then MEC, Mr Uys, upheld the appeals and granted environmental authorisation for the establishment of the new regional landfill at the Kalbaskraal site (the first decision). In determining the appeals, the MEC considered the merits of both the Atlantis site and the Kalbaskraal site, as alternatives. [16] On 25 September 2009, the appellants applied for judicial review of the MEC’s decision. Their grounds of review included the allegation that the MEC had acted in a procedurally unfair manner because they were not given any prior notice of the possibility of his authorising the establishment of the landfill at the Kalbaskraal site. [17] On 16 October 2009, the City conceded the review on the ground that the MEC’s decision was procedurally unfair because the MEC ought to have informed all the registered interested and affected parties (the I&APs) that he was contemplating authorising the establishment of the regional landfill at the Kalbaskraal site instead of at the Atlantis site and outlined the reasons why he was doing so, so that the I&Aps, who would be adversely affected, could make representations to him regarding his intended decision and the reasons for it. [18] After the exchange of correspondence between the parties regarding the terms of the referral of the first decision to the MEC, on 5 January 2010, by agreement between the parties, a rule nisi was issued calling upon all interested parties to show cause on 20 April 2010 why the following order should not be made: ‘1.1 The decision taken on 7 April 2009 by the First Respondent [the MEC] in terms of sections 22(3) and 35(4) of the Environment Conservation Act 73 of 1989 (hereinafter “the ECA”): 1.1.1 upholding appeals in terms of section 35(3) of the ECA against the decision by the Director: Integrated Environmental Management (Region B) in the Western Cape Department of Environmental Affairs and Development Planning (hereinafter “the Director”) on 16 July 2007 to authorise the establishment of a new regional landfill site and associated infrastructure to service the City of Cape Town (hereinafter “the new regional landfill”) on Portion 1 of the Farm Brakkefontein, No. 32 (known as “Donkergat”), located approximately 40km north of Cape Town, approximately 3.6km north-east of Duynefontein, approximately 6.5km south of Atlantis, approximately 5.5km south of the Witsand informal settlement and approximately 7km west of the N7 national road, hereinafter “the Atlantis site”; and 1.1.2 replacing the Director’s decision with a decision in terms of section 22(3) of the ECA authorising the establishment of the new regional landfill on the alternative site, being Portions 2, 10 and 13 of the farm Munniks Dam and a portion of farm 1098 (together known as “Bottelfontein”) located approximately 50km north-east of Cape Town, approximately 20km south of Malmesbury, approximately 8km east of Philadelphia, approximately 7km south of Kalbaskraal, approximately 5km north of Klipheuwel and approximately 10km east of the N7 national road, hereinafter “the Kalbaskraal site”, is reviewed and set aside. 1.2 The said appeals are referred back to the First Respondent for reconsideration.’ [19] On 11 May 2010, the rule nisi was made final, thus setting aside the first decision, and remitting the appeals to the MEC for reconsideration. In due course a comprehensive supplementary EIA and public participation process was undertaken to ensure that updated specialist input from the various experts and further comment by I&APs in relation to the establishment of the regional landfill site on the Atlantis site or the Kalbaskraal site would be placed before the MEC with a view to his taking a fresh decision. [20] On 14 November 2012, CCA submitted and advertised for public comment a final supplementary environmental impact report (FSEIR), containing updated information about both sites including updated assessments of the environmental impacts of the regional landfill on each of them, and recommending that one or the other be approved as the site for the landfill. The FSEIR contained a section dealing with the advantages and disadvantages in relation to each site. As before, the FSEIR did not contain a recommendation as to which site was preferable. In the section headed ‘Reasoned Opinion on Authorisation’ it argued strongly against the alternative of not going ahead with the establishment of a new regional landfill site, ie in favour of authorising its establishment on either the Atlantis site or the Kalbaskraal site. [21] On 25 January 2013, the attorneys for the first appellant submitted comments to CCA regarding the FSEIR and specialist reports. On 31 August 2013, the MEC, acting in terms of s 35(3) and (4) of the ECA, again upheld the appeals against the Director’s decision and granted the City an environmental authorisation in terms of s 22 of the ECA for the establishment of the new regional landfill at the Kalbaskraal site (the second decision). Like the Director, the MEC considered and rejected the ‘No-Go Option’ and undertook a detailed comparative assessment of the two sites. [22] As appears from his record of decision, the main reasons the MEC preferred the Kalbaskraal site over the Atlantis site were outlined as follows: (a) the town of Atlantis was created by the Apartheid regime; (b) the Atlantis community has low social morale associated with its residents’ perception as the neglected stepchild of Cape Town where people have been ‘dumped’ over the years; (c) there was strong opposition to the proposed Atlantis site from the surrounding communities; (d) the establishment of a regional landfill in the vicinity of Atlantis is likely to contribute to the community’s social self-perception as a ‘dumped’ unvalued community; and (e) this negative social impact is not associated with the Kalbaskraal site. [23] Dissatisfied with the MEC’s decision the appellants, on 28 January 2014, instituted proceedings for judicial review in the high court in which they sought an order: (a) reviewing and setting aside the MEC’s decision to grant the City an environmental authorisation in terms of s 22 of the ECA for the establishment of the new regional landfill at the Kalbaskraal site, (b) reviewing and setting aside the MEC’s decision to uphold the appeals against the Director’s decision granting the City an environmental authorisation for the establishment of the new regional landfill at the Atlantis site and, (c) remitting the appeals to the MEC for reconsideration. [24] By agreement between the parties, on 29 April 2019, the high court reviewed and set aside the MEC’s decisions, referred the appeals back to the MEC for reconsideration and reserved for determination and decision by the high court the issue set out in paragraph 2 of this judgment. As already stated, the high court in a judgment delivered on 17 June 2020 determined the reserved question in favour of the MEC and the City and ordered the appellants to pay the costs jointly and severally, including costs of two counsel. [25] Before considering the appellants’ grounds of appeal it is necessary, briefly, to set out the applicable statutory provisions. The provisions that are relevant to the determination of this appeal are ss 21, 22, 33 and 35 of the ECA. Section 21(1) provides that the national Minister may, by notice in the Government Gazette, identify those activities which in his or her opinion may have a substantial detrimental effect on the environment, whether in general or in respect of certain areas. It is common cause that the establishment and operation of the City’s proposed regional landfill site will involve undertaking some of the identified activities in respect of which authorization will be required. [26] In broad terms, s 22(1) provides that no person shall undertake an activity identified in terms of s 21(1), or cause such an activity to be undertaken, except by virtue of a written authorisation issued by the national Minister or by a competent authority designated by the national Minister. It is common cause that the MEC is the competent authority in the Western Cape Province. Section 22(2) provides that an authorisation under s 22(1) shall only be issued after reports concerning the impact of the proposed activity and of alternative proposed activities on the environment have been complied with and submitted to the decision-maker. [27] Section 22(3) states that the Minister or competent authority may, in his or her discretion, refuse or grant the authorisation for the proposed activity or an alternative proposed activity on such conditions, if any, as he or she may deem necessary. Section 33(1), which deals with delegation of powers, provides that the MEC may delegate the powers conferred on him or her under the ECA to any officer or employee of the provincial administration. In the instant matter the MEC delegated his powers to the Director. [28] Section 35(3) provides that any person who feels aggrieved at a decision of an officer or employee of the provincial administration exercising any power delegated to them in terms of the ECA by the MEC, may appeal against such decision to the MEC. Section 35(4) provides that the MEC ‘…may, after considering such an appeal, confirm, set aside or vary the decision of the officer or employee or make such order as he may deem fit…’. [29] The appellants raised two main issues concerning the interpretation of these provisions. The first, is whether the same activity (establishment of a new regional landfill) proposed at different locations is an alternative proposed activity contemplated by ss 22(2) and (3) (the section 22 point). The second is whether, when determining an appeal in terms of s 35(3) and (4), the MEC may step into the shoes of the first-instance decision-maker (in this case the Director) and take any decision which the Director could have taken, or conversely, whether when the MEC upholds an appeal he or she must remit the matter to the Director for a fresh decision (the section 35 point). [30] In relation to the first point (the section 22 point), the appellants submitted that establishing a regional landfill at the Atlantis site and establishing a regional landfill at the Kalbaskraal site are not ‘alternative proposed activities’ as contemplated in s 22(2), and consequently the MEC was not entitled, on appeal, to authorise the Kalbaskraal site as an alternative proposed activity in terms of s 22(3). In support of their contention, the appellants referred to the City’s application for authorisation which they claimed makes it clear that an application was for authorisation at two different sites. [31] I disagree with the appellants. The MEC was entitled on appeal to authorise the landfill activity to be carried out at Kalbaskraal as an alternative proposed site. The words ‘alternative proposed activities’ appearing in s 22(2) and s 22(3) must be interpreted contextually and purposively. There is no good reason – textual, contextual or purposive2 – to interpret ‘alternative proposed activities’ as being limited to different types of activities at the same location, and not also as including the same activity at different locations. In the present case it is common cause that the Director, in undertaking a comparative assessment of the two sites, had regard to the fact that the study which had been undertaken by the City had considered the alternatives to waste disposal by landfill. The study found that the alternatives identified did not negate the need for a new regional landfill site. Again, the MEC, in his reasons for the decision, considered the availability of alternatives and concluded that no 2 Commissioner, South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16; 2020 (4) SA 428 (SCA) para 8. reasonable or feasible alternatives existed to the landfilling of waste. He regarded alternative waste management methods and technologies as complementary strategies to disposal by landfill. He also considered the option of not proceeding with the establishment of the landfill site (namely, the ‘No-Go Option’). He found the implications associated with the option of not proceeding with the establishment of a new landfill site to be unacceptable. [32] I agree with the respondents’ submission that, contextually, it is possible to read s 22(2) of the ECA as permitting the undertaking of comparative assessment of the proposed site and alternative proposed sites in circumstances where there are no available alternatives to the proposed activities by which the solid waste can be disposed of. In such circumstances it will permissible for the decision maker to consider reports concerning the impact on the environment of establishing the landfill on the proposed site and of doing so at one or more alternative proposed sites. This is exactly what the Director and the MEC did in this case. They each considered the impact on the environment of granting authorisation for a landfill in Atlantis or Kalbaskraal or of not granting authorisation at all. It is clear that the sites were presented as alternatives and were equally subjected to environmental scrutiny as required by s 22(2). [33] As counsel for the respondents correctly pointed out, in the Regulations made in terms of NEMA on 21 April 2006,3 ‘alternatives’, in relation to a proposed activity, is defined as meaning: ‘…different means of meeting the general purpose and requirements of the activity, which may include alternatives to – (a) the property on which or location where it is proposed to undertake the activity; (b) the type of activity to be undertaken; (c) the design or layout of the activity; (d) the technology to be used in the activity; and (e) the operational aspects of the activity;…’ 3 GN R385 in Government Gazette 28753 of 21 April 2006. [34] The 2010 EIA Regulations,4 which govern the present appeals, were formulated in a very similar way to the 2006 Regulations,5 and the definition of ‘alternatives’ in relation to a proposed activity expressly includes: ‘…alternatives to- (a) the property on which or location where it is proposed to undertake the activity;…’ The first point raised by the appellants must therefore fail. [35] As regards the second point, (the section 35 point) it was submitted by the appellants that the MEC’s powers on appeal were limited to a consideration of the application and the decision in respect of Atlantis site. Those powers, it was contended, did not include the power to grant environmental authorisation for the activities at a different site, namely Kalbaskraal. This was so, proceeded the argument, because the subject matter of the appeal to the MEC was the Director’s decision granting environmental authorisation for the listed activities at the Atlantis site, there having been no decision made and thus capable of appeal in respect of Kalbaskraal site. The appellants emphasised that s 35(3) confers an entitlement on a person who feels aggrieved at ‘a decision’ of the employee or officer exercising the delegated power to appeal against that decision and that the powers conferred upon the appellate decision-maker by s 35(4) must be exercised after considering ‘such an appeal.’ [36] The appellants submitted that, when determining an appeal in terms of ss 35(3) and (4), the appeal authority may not step into the shoes of the first- instance decision-maker and take any decision which the first-instance decision-maker could have taken. Building on this submission, the appellants argued that if the appeal authority decides to set aside the decision under appeal (as opposed to merely varying it), he or she may not replace it with an entirely different decision which the first-instance decision-maker could have taken. Thus, where the decision appealed against is the granting of authorisation for a proposed activity, the appeal authority may not set aside the 4 GN R543 in Government Gazette 33306 of 18 June 2010, as amended by GN 660 in Government Gazette 33411 of 30 July 2010. 5 Save that an additional subsection (e) was added to the definition of ‘alternatives’, namely ‘the option of not implementing the activity’. The EIA Report also had to contain a ‘description and comparative assessment of all alternatives identified during the [EIA] process’ (regulation 31(2)(i)). granting of that authorisation and replace it with the granting of an authorisation for an alternative proposed activity. Instead, the appellants contended, an appeal authority who sets aside a decision under appeal must remit the matter to the first-instance decision-maker for the taking of a fresh decision. This was so, it was argued, because the remedial powers conferred by s 35(4) to ‘confirm, set aside or vary the decision’ do not also include the power to substitute. [37] The correctness of the appellants’ submissions depends on the construction of the provisions of s 35(3) and s 35(4) of the ECA considered textually, contextually and purposively and the nature of the appeals they envisage. As already alluded to, where a decision has been made by someone acting under powers delegated by a competent authority, referred to in s 22, any person who feels aggrieved at the decision is entitled to appeal against it to the competent authority in terms of s 35(3) and s 35(4) of the ECA. [38] Sections 35(3) and (4) read as follows: ‘(3) Subject to the provisions of subsections (1) and (2) any person who feels aggrieved at a decision of an officer or employee exercising any power delegated to him in terms of this Act or conferred upon him by regulation, may appeal against such decision to the Minister . . . in the prescribed manner, within the prescribed period and upon payment of the prescribed fee. (4) The Minister, the Minister of Water Affairs or a competent authority, as the case may be, may, after considering such an appeal, confirm, set aside or vary the decision of the officer or employee or make such order as he may deem fit, including an order that the prescribed fee paid by the applicant or such part thereof as the Minister or Administrator concerned may determine be refunded to that person.’ [39] Appeals under ss 35(3) and (4) are appeals in the wide sense described in Tikly and Others v Johannes NO and Others,6 namely a complete re-hearing of, and fresh determination on the merits of the matter with or without additional evidence or information. In Hangklip/Kleinmond Federation of Ratepayers Associations v MEC for Environmental Planning and Economic Development: 6 Tikly and Others v Johannes NO and Others 1963 (2) SA 588 (T) at 590F-591A. Western Cape7 (Hangklip/Kleinmond), the high court held that an appeal to the MEC under s 35(3) of the ECA is an appeal in the wide sense. The court had this to say regarding the nature of the appeal under s 35(3) and s 35(4) of the ECA:8 ‘In considering and in the end upholding the appeal, the minister acted in terms of section 35(4) of ECA which provides that the minister “may, after considering such appeal, confirm, set aside or vary the decision of the officer or employee or make such order as he may deem fit. . .”. The appeal under section 35(4) is an appeal in the wide sense. It involves a complete rehearing and a fresh determination on the merits of the application with or without additional evidence or information. The minister came to the conclusion that authorisation should be granted. Mr Jamie SC, who appeared with Ms Bawa for the fourth respondent submitted that in giving her approval, the minister acted under section 35(4) and not, as was submitted by counsel for all the other parties, under section 22(3) of ECA. We do not agree with Mr Jamie’s submission. Having decided to uphold the appeal, the minister then decided to substitute the director’s decision with her own decision. In deciding which decision she should make she must act in terms of the provision under which the first decision- maker (the director) acted. That provision is section 22(3) of ECA. Section 22(3) confers a wide discretion on the competent authority who “may at his or its discretion refuse or grant the authorisation for the proposed activity or an alternative proposed activity on such conditions, if any, as he or it may deem necessary”. The minister is therefore empowered, in granting authorisation to impose such conditions as she deemed necessary, provided such condition is within the authority given to her under the provisions of ECA read with the relevant provisions of NEMA.’ [40] In Sea Front for All and Another v MEC: Environmental and Development Planning, Western Cape Provincial Government and Others9 (Sea Front for All), the high court, without citing Hangklip/Kleinmond, held that: ‘As emphasised by Baxter Administrative Law (1984) at 255, the precise form that an administrative appeal must take and the powers of the appellate body will always 7 Hangklip/Kleinmond Federation of Ratepayers Associations v MEC for Environmental Planning and Economic Development: Western Cape [2009] ZAWCHC 151. 8 Ibid paras 42-44. 9 Sea Front for All and Another v MEC: Environmental and Development Planning, Western Cape Provincial Government and Others [2010] ZAWCHC 69; 2011 (3) SA 55 (WCC). depend on the terms of the relevant statutory provisions. In regard to an inter- departmental appeal, such as the present appeal to the MEC, the learned author expresses the following view at 264-265: “If an appeal does lie to a Minister the power of decision is thereby kept fully within the departmental hierarchy and the appellate body (the Minister) is usually in a position to exercise the widest appellate jurisdiction. Such appeals therefore normally take the form of ‘wide’ appeals, or re-hearings de novo.”’ … In the instant matter the power of decision on appeal is also kept fully within the departmental hierarchy, which, as pointed out by Baxter supra, results in the appeal normally taking the form of a re-hearing de novo. Notably too, section 35(4) confers wider powers on the MEC than would be the case in a “normal” appeal, namely, to confirm, set aside or vary the decision of the second respondent, or to make such order as she may deem fit. … In these circumstances, I incline to the view that the MEC, in dealing with an appeal in terms of s 35(3) and (4) of the ECA, does not exercise appeal powers in the ordinary legal sense, but in the wider sense, which empowers her not only to substitute her own findings of fact and legal conclusions for those of the second respondent, but to conduct a re-hearing of the matter. Whilst I agree with Mr Newdigate that the 96 appeals which were lodged would be the MEC’s point of departure, she was, in considering the appeals, entitled to consider, and in the instant case did consider, On Track’s application afresh. That is why the review before this Court is a review of the decision of the MEC taken in terms of the 2007 ROD, and not a review of the original ROD.’10 [41] The specific context of an appeal under s 35(3) and (4), is a first-instance decision taken by an officer or employee exercising a power or authority delegated or assigned to them by the appellate decision-maker. As the first- instance decision-maker was exercising the power of the appellate decision- maker, it follows that in determining appeals under s 35(3) and (4) the appellate decision-maker should be able to exercise the decision-making powers to the full extent conferred upon him or her by the underlying empowering provision – which, in the present case is s 22(3) of the ECA. In this case, the Atlantis and 10 Ibid paras 23, 25 & 28. Kalbaskraal sites were presented as alternatives. The decision-maker could grant or refuse authorisation in respect of either of the two sites or both. The appeal authority could, on appeal, also grant or refuse authorisation in respect of either of the two sites or both sites. [42] This is confirmed by the remedial powers conferred upon the appellate decision-maker by the language of s 35(4). They are not limited to confirming, setting aside or varying the decision of the first-instance decision-maker. The appellate decision-maker may also ‘make such order as he may deem fit.’ [43] It is apparent from this analysis that an appeal under ss 35(3) and (4) against a decision of an officer or employee exercising delegated authority on an application for an environmental authorisation under s 22, involves a complete rehearing and a fresh determination of the merits of the application with or without additional evidence or information; and, further, that the appellate decision-maker is free to substitute his or her own decision for the decision under appeal. The high court was therefore correct in determining the separated question in favour of the respondents. [44] The appellants, however, submitted that Hangklip/Kleinmond and Sea Front for All, on which the high court relied for the proposition that the appeal authority has any power beyond an appeal against a decision to grant or refuse environmental authorisation, do not justify the finding that the appeal authority can, on appeal against a decision in respect of one site, grant authorisation of another in respect of which there had been no antecedent decision. They argued that these cases are distinguishable from the facts of the instant case in that those cases dealt with the unitary applications for environmental authorisation at single locations at first instance, whereas the MEC’s decision related to an application at the first instance for environmental authorisation of the same activities, but at two different locations that were geographically remote from one another. There were, in effect, two applications and the fact that they were contained in one set of documents is of no moment. The appellants contended that the high court should have applied the principles established in Groenewald NO and Others v M5 Developments (Cape) (Pty) Ltd11 (Groenewald); Potgieter v Howie NO and Others12 (Potgieter); Ocean Ecological Adventures (Pty) Ltd v Minister of Environmental Affairs13 (Ocean Ecological Adventures) and Meyer v Iscor Pension Fund14 (Meyer). [45] It is not correct that the City’s application for authorisation comprised two applications. In the application form, the City identified the project as ‘Identification of a new regional landfill site to service the CMA’ and the project location is identified as ‘Atlantis site’ and ‘Kalbaskraal site.’ The two sites were presented as alternatives and were comparatively assessed. This means that the application that was before the Director was the application for environmental authorisation at one or both of the two sites and the decision could have been granted either granting or refusing authorisation in one or both of the two sites. In terms of the principle established in Hangklip/Kleinmond and Sea Front for All, the appeal authority, when considering the appeal under s 35, was entitled to consider the application that was placed before the Director together with further information afresh. [46] The cases on which the appellants rely are distinguishable. The appeal provision at issue in Potgieter was s 26B(15) of the Financial Services Board Act 97 of 1990 which read: ‘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.’ [47] As is apparent, unlike s 35(4) of the ECA, s 26B(15) of that Act did not permit the appeal board to ‘make any order [it] may deem fit’, nor did it make any other provision for the appeal board to substitute an entirely different decision for that of the first-instance decision-maker. On the contrary, 11 Groenewald NO and Others v M5 Developments (Cape) (Pty) Ltd [2010] ZASCA 47; 2010 (5) SA 82 (SCA). 12 Potgieter v Howie NO and Others [2013) ZAGPPHC 313; 2014 (3) SA 336 (GP). 13 Ocean Ecological Adventure (Pty) Ltd v Minister of Environmental Affairs [2019] ZAWCHC 42; [2019] 3 All SA 259 (WCC). 14 Meyer v Iscor Pension Fund [2002] ZASCA 148; [2003] 1 All SA 40 (SCA). paragraph (a) only permitted the appeal board to vary the decision under appeal and paragraph (b) required the appeal board to remit the matter for reconsideration by the decision-maker concerned in accordance with such directions as it may determine. [48] The appellants further referred to the passages in paragraphs 25 and 26 in Groenewald in support of their contention that a power to vary does not entail the power to substitute or replace. Groenewald concerned an appeal in terms of s 62(3) of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) against a decision in a municipal procurement process involving multiple competing bidders. Section 62(3) confers on the appeal authority the following power: ‘The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.’ [49] In view of the considerable reliance placed by the appellants on the decision in Groenewald, it would be appropriate to analyse that decision in a little detail. In Groenewald, the appeal arose out of the award of tender of a municipal contract by the municipality to one of several entities who had tendered. M5 Development’s (M5) tender was initially accepted, but pursuant to an appeal Groenewald, who was at the time the acting manager, reversed that decision and awarded the contract to ASLA. On review the high court set aside the municipal manager’s decision to award the contract to ASLA and declared M5 to be entitled to enter into a contract with the municipality pursuant to the allocation of the tender. Aggrieved by the high court decision, Groenewald, the Municipality and ASLA appealed to this Court. [50] One of the issues before this Court was whether Groenewald, as appeal authority, was entitled to award the contract to an unsuccessful tenderer who had not appealed against the initial decision to award it to another. Arguing that Groenewald had been perfectly entitled to do so, counsel for the appellants, as a starting point, contended that an appeal in terms of s 62 is a wide appeal involving a re-hearing of the issues and that Groenewald was bound in his re- hearing of the matter to award the contract to the party to whom it should have been awarded in the first place, even if that party had not appealed. [51] In rejecting counsel’s argument, this Court stated the following:15 ‘The obvious fallacy in the appellants’ argument is found on an examination of the section under which the appeal authority is empowered to act. Section 62(1) allows a person to appeal by giving ‘written notice of the appeal and reasons’ to the municipal manager who, under s 62(2) has then to submit ‘the appeal’ – obviously the notice of appeal and the reasons lodged therewith under s 62(1) – to the appeal authority for it to consider ‘the appeal’ under s 62(3). Although in terms of this latter subsection the appeal authority is empowered to ‘confirm, vary or revoke the decision’ it exercises that power in the context of hearing ‘the appeal’ viz the appeal and the reasons lodged by the aggrieved person under s 62(1). That defines the ambit of the appeal, the sole issue being whether that aggrieved person should succeed for the reasons it has advanced. It is not for the appeal authority to reconsider all the tenders that had been submitted. If that had been the legislature’s intention, it would have said so. It did not, and for obvious reasons. There is a need in matters of this nature for decisions to be made without unreasonable delay. If each and every tender had to be revisited it could easily become an administrative nightmare with the appeal authority having to hear representations from all parties who tendered, some of whom might have no realistic prospect of success, in regard to a myriad of issues, many of which might in due course be proved to be wholly irrelevant. This could never have been the legislature’s intention. It is inconsistent with the requirement that a person aggrieved must file a notice of appeal with reasons within a fairly short period. Thus, while I accept that the appeal is a wide one in the sense of a rehearing, it is a re-hearing related to the limited issue of whether the party appealing should have been successful. In the context of a municipal tender, an appeal by a person whose tender was unsuccessful therefore does not entitle the appeal authority to reconsider all the tenders that were lodged and to decide whether the committee which adjudicated upon the tender ought to have awarded the contract to a person whose tender was not accepted, but who did not appeal against that decision (and who might no longer have any interest in being awarded the contract). In the present case, the appeal related solely to whether the contract should have been awarded to Blue Whale rather than 15 Groenewald paras 24-26. M5 and, having concluded that issue against Blue Whale and declining to consider ASLA’s appeal, the appeal should merely have been dismissed and the adjudication committee’s decision left undisturbed. Furthermore, while Groenewald may have had concerns about the legality of the award of the tender, it is important to bear in mind that those concerns were based on his perceptions flowing from his own investigations on issues identified by him and that his conclusions were challenged by M5.’ [52] The appeal authority has limited powers under s 62 of the Systems Act. It is for this reason that this Court found in Groenewald that ‘[i]n the context of a municipal tender, an appeal by a person whose tender was unsuccessful therefore does not entitle the appeal authority to reconsider all the tenders that were lodged…’.16 An appeal authority under s 35 of the ECA has wider powers including the additional power to ‘make such order as he may deem fit’. The challenges which faced the appeal authority in Groenewald are absent in this matter. The MEC in this matter, in considering the appeals, had to decide whether authorisation should be granted or refused in respect of Atlantis site or Kalbaskraal site or both sites. [53] Ocean Ecological Adventures does not assist the appellants. In that case the high court, following Groenewald, held, obiter,17 that where an applicant for a permit required by regulations made under the National Environmental Management: Biodiversity Act 10 of 2004 appealed in terms of s 43 of the National Environmental Management Act 107 of 1998 against the refusal of its application on the ground that it did not comply with one of three relevant compulsory requirements, the appellate decision-maker was not obliged to reconsider whether the permit applicant complied with the other two compulsory requirements.18 The court reasoned that there was nothing in the appeal to suggest that the appellate decision-maker had to look anew at the two other compulsory requirements. In the present case the MEC could not properly 16 Ibid para 25. 17 Ocean Ecological Adventures paras 40. 18 Ibid paras 42-43. determine the appeals against the Director’s decision without considering the City’s application afresh. He was bound to look at it when he considered the appeals. [54] Finally, the appellants referred to Meyer, which they contended was authority for the proposition that the powers of the appeal authority on appeal are limited to a consideration of a decision which is the subject matter of the appeal. Meyer concerned the powers of the high court when it entertains an appeal under s 30P of the Pension Fund Act 24 of 1956 against a determination by the Adjudicator. Section 30P deals with access to court. It provides: ‘(1) Any party who feels aggrieved by a determination of the Adjudicator may, within six weeks after the date of the determination, apply to the division of the High Court which has jurisdiction, for relief, and shall at the same time give written notice of his or her intention so to apply to the other parties to the complaint. (2) The division of the High Court contemplated in subsection (1) may consider the merits of the complaint made to the Adjudicator under section 30A (3) and on which the Adjudicator's determination was based, and may make any order it deems fit. (3) Subsection (2) shall not affect the court's power to decide that sufficient evidence has been adduced on which a decision can be arrived at, and to order that no further evidence shall be adduced.’ [55] This Court stated in Meyer that the appeal under s 30P is an appeal in the wide sense and that the high court is therefore not limited to a decision whether the Adjudicator’s determination was right or wrong, neither is it confined to the evidence or grounds upon which the Adjudicator’s determination was based. The court can consider the matter afresh and make any order it deems fit but that in doing so it is limited by s 30P to a consideration of ‘the merits of the complaint in question’ not to a consideration of the Adjudicator’s determination as the appellants contended. This Court made it clear in para 8 of the judgment that ‘the dispute submitted to the High Court for adjudication must still be a “complaint” as defined. Moreover, it must be substantially the same “complaint” as the one determined by the Adjudicator.’ This is what the MEC had to do in considering the appeal in this matter. He had to determine the appeal on the basis of the City’s application together with any further material that was placed before him. The ‘complaint’ under the Pension Fund Act is the equivalent of the application under s 22 of the ECA. It is therefore apparent that the Meyer case does not support the appellants’ contention. [56] I, therefore, hold that an appeal under ss 35(3) and (4) against a decision of an officer or employee exercising delegated authority on an application for an environmental authorisation under s 22, involves a complete rehearing and a fresh determination of the merits of the application with or without additional evidence or information; and further that the appeal authority is free to substitute his or her own decision for the decision under appeal. [57] In the result the appeal is dismissed, with costs, including the costs of two counsel. ________________________ D H Zondi Judge of Appeal Appearances For appellant: W Duminy SC (with him E Edmunds) Instructed by: Edward Nathan Sonnenbergs, Cape Town Lovius Block Inc., Bloemfontein For respondents: AM Breitenbach SC (with him M O’Sullivan) Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein Winstanley Inc., Cape Town Claud 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: 29 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 Astral Operations Ltd t/a Country Fair Foods and Others v The Minister for Local Government, Environmental Affairs and Development Planning (Western Cape) and Others (3509/2014) [2022] ZASCA 62 (29 April 2022) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs including the costs of two counsel, an appeal against the decision of the Western Cape Division of the High Court, Cape Town (the high court). The appeal concerned a question that was reserved for separate determination by agreement between the parties, when a set of separate decisions relating to environmental authorisation for a proposed new landfill site for the City was reviewed and set aside. The question that was separated was the following: whether in dealing with the appeal against the decision of the Director, the appeal authority was entitled to authorise the activities at the Kalbaskraal location? The high court answered the question in the affirmative and granted the appellants leave to appeal to this Court. The issue was whether the high court was correct in its determination. The facts of the matter were briefly the following: the first and second appellants were commercial enterprises with extensive broiler chicken farming interests close to the footprint of the proposed regional landfill for the City, near the Bottelfontein Farm in the Western Cape, for which environmental authorisation was granted by the MEC on 30 August 2013. The third appellant is an association of farmers who carried on mixed farming activities, primarily the cultivation of cereal crops, on farms around Bottelfontein. The first and second appellants’ main practical concerns related to the impact the landfill would have on the groundwater used at the broiler houses, and vectors (namely flies, rodents and birds) transporting pathogens from the landfill to the broiler houses. The third appellant’s main concerns were that the operation of the landfill would give rise to the contamination of the groundwater upon which the vast majority of its members depended on for their farming activities. In 2000, the City appointed consultants to identify and assess potential sites for a new landfill to service it. In June 2002, four sites were short-listed and then selected for a more detailed site ranking process. These sites were Kalbaskraal, Atlantis, Vissershoek and Eendekuil. The final two sites that were chosen, were Atlantis and Kalbaskraal. On 23 January 2007 a Final Environmental Impact Assessment Report (the FEIR) relating to the Atlantis site and the Kalbaskraal site was submitted to the department. Mr Barnes, (the Director) acting under authority delegated by the MEC, granted the City an environmental authorisation in terms of s 22(3) for the establishment of the new regional landfill at the Atlantis site. Thereafter, appeals were lodged in terms of s 35(3) of the Environment Conservation Act 73 of 1989 (ECA) against the Director’s decision. On 7 April 2009 the MEC upheld the appeals and granted environmental authorisation for the establishment of the new regional landfill at the Kalbaskraal site (the first decision). The first decision was taken on review by the appellants. It was reviewed and set aside pursuant to the court of 11 May 2010. The appeals were remitted to the MEC for reconsideration. On 31 August 2013, the MEC acting in terms of s 35(3) and (4) of the ECA, again upheld the appeals against the Director’s decision and granted the City an environmental authorisation in terms of s 22 of the ECA for the establishment of the new regional landfill at the Kalbaskraal site (the second decision). The MEC gave reasons why he preferred the Kalbaskraal site over the Atlantis site. However, the appellants were not satisfied with the MEC’s decision and thus instituted proceedings for judicial review in the high court. The second decision was reviewed and set aside in terms of the court order which was taken by agreement between the parties and the issue forming the subject matter of this appeal was reserved for separate determination by the high court. As already stated, the high court in a judgment delivered on 17 June 2020 determined the reserved question in favour of the MEC and the City and ordered the appellants to pay costs jointly and severally, including costs of two counsel. Hence the matter went on appeal to this Court. The appellants raised two main issues concerning the interpretation of section 22 and 35 of the ECA. The first was whether the establishment of a new regional landfill proposed at different locations was an alternative proposed activity contemplated by ss 22(2) and (3)? The second was whether, when determining an appeal in terms of s 35(3) and (4), the MEC could step into the shoes of the first-instance decision-maker (in this case the Director) and take any decision which the Director could have taken or conversely, whether when the MEC upholds an appeal he or she must remit the matter to the Director for a fresh decision? In relation to the first point (the section 22 point), the appellants submitted that establishing a regional landfill at the Atlantis site and establishing a regional landfill at the Kalbaskraal site were not alternative proposed activities as contemplated in s 22(2), and consequently the MEC was not entitled on appeal to authorise the Kalbaskraal site as an alternative proposed activity in terms of s 22(3). The SCA disagreed with the appellants’ submissions. The Court held that the MEC was entitled on appeal to authorise the landfill activity to be carried out at Kalbaskraal as an alternative proposed site. The words ‘alternative proposed activities’ appearing in s 22(2) and s 22(3) must be interpreted contextually and purposively. The SCA agreed with the respondents’ submission that, contextually, it was possible to read s 22(2) of the ECA as permitting the undertaking of comparative assessment of the proposed site and alternative proposed sites in circumstances where there were no available alternatives to the proposed activities by which the solid waste can be disposed of. In such circumstances it would have been permissible for the decision maker to consider reports concerning the impact on the environment of establishing the landfill on the proposed site and of doing so at one or more alternative proposed sites. This was exactly what the Director and the MEC did in this case. They each considered the impact on the environment of granting authorisation for landfill in Atlantis or Kalbaskraal or of not granting authorisation at all. It was clear that the sites were presented as alternatives and were equally subjected to environmental scrutiny as required by s 22(2). As regards the second point, (the section 35 point) it was submitted by the appellants that the MEC’s powers on appeal were limited to a consideration of the application and the decision in respect of Atlantis site. Those powers, it was contended, did not include the power to grant environmental authorisation for the activities at a different site, namely Kalbaskraal, because the subject matter of the appeal to the MEC was the Director’s decision granting environmental authorisation for the listed activities at the Atlantis site, there having been no decision made and thus capable of appeal in respect of Kalbaskraal site. The appellants emphasised that s 35(3) confers an entitlement to appeal on a person who felt aggrieved at the decision of the employee or officer exercising the delegated power and that the powers conferred upon the appellate decision-maker by s 35(4) must be exercised after considering such an appeal. The appellants contended that, when determining an appeal in terms of ss 35(3) and (4), the appeal authority could not step into the shoes of the first-instance decision-maker and take any decision which the first-instance decision-maker could have taken. Building on this submission, the appellants submitted that if the appeal authority decided to set aside the decision under appeal (as opposed to merely varying it), he or she could not replace it with an entirely different decision which the first-instance decision-maker could have taken. Thus, where the decision appealed against was the granting of authorisation for a proposed activity, the appeal authority could not set aside the granting of that authorisation and replace it with the granting of an authorisation for an alternative proposed activity. Instead, the appellants contended, an appeal authority who sets aside a decision under appeal must have remitted the matter to the first-instance decision-maker for the taking of a fresh decision. This was so, it was argued, because the remedial powers conferred by s 35(4) to confirm, set aside or vary the decision did not also include the power to substitute. The Court held in this case the Atlantis and Kalbaskraal sites were presented as alternatives. The decision-maker could have granted or refused authorisation in respect of either of the two sites or both. The appeal authority could, on appeal, also have granted or refused authorization in respect of either of the two sites or both sites. The Court further held that an appeal under ss 35(3) and (4) against a decision of an officer or employee exercising delegated authority on an application for an environmental authorisation under s 22, involved a complete rehearing and a fresh determination of the merits of the application with or without additional evidence or information; and further that the appeal authority was free to substitute his or her own decision for the decision under appeal. In consequence, the appeal was dismissed, with costs, including the costs of two counsel. ~~~~ends~~~~

3712

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 1163/2020 In the matter between: THE MINISTER OF POLICE APPELLANT and SHAWN BOSMAN FIRST RESPONDENT TANUSHKA DAWSON SECOND RESPONDENT SERANO DAWSON THIRD RESPONDENT BRENDA CLAASEN FOURTH RESPONDENT CHESLYN FOSTER FIFTH RESPONDENT GRANT MARKLEY SIXTH RESPONDENT DENVER LACKAY SEVENTH RESPONDENT CHINE JASS EIGHTH RESPONDENT MORNAY JASS NINTH RESPONDENT Neutral citation: Minister of Police v Shawn Bosman & Others (1163/2020) [2021] ZASCA 172 (9 December 2021) Coram: SALDULKER ADP and MATHOPO, MOLEMELA and NICHOLLS JJA and SMITH AJA Heard: 02 November 2021 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be at 10h00 on 09 December 2021. Summary: Criminal law and procedure – Criminal Procedure Act 51 of 1977 – sections 40(1)(b), (f) and (h) – unlawful arrest and detention – whether the respondents’ arrest and detention was lawful in terms of ss 40(1)(b),(f), and (h) of the Criminal Procedure Act 51 of 1977 – arrest and detention justified – award for damages set aside. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Grahamstown (Mapoma AJ and Revelas J, sitting as court of appeal): The appeal is upheld with costs. The respondents are to pay the costs of the appeal, such costs to include the costs of two counsel. The order of the full court is set aside and the following order is substituted: ‘1 The appeal is upheld with costs. The judgment of the Port Elizabeth Regional Court, under case number ECPERC 845/14, is set aside and replaced with the following order: “The plaintiffs’ claims are dismissed with costs.”.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Saldulker ADP (Mathopo, Molemela and Nicholls JJA and Smith AJA concurring): [1] This is an appeal by the appellant, the Minister of Police, against the judgment and order of the Eastern Cape Division of the High Court, Grahamstown (Mapoma AJ, with Revelas J concurring, sitting as a court of appeal) (the high court), in which the arrest and detention of the respondents, Shawn Bosman (first respondent), Tanushka Dawson (second respondent), Serano Dawson (third respondent), Brenda Claasen (fourth respondent), Cheslyn Foster (fifth respondent), Grant Markley (sixth respondent), Denver Lackay (seventh respondent), Chine Jass (eighth respondent) and Mornay Jass (ninth respondent), were confirmed to be unlawful and unjustified, and the award for damages payable by the appellant upheld.1 The high court dismissed the appellant’s appeal with costs on 28 July 2020. This appeal is with the leave of this Court. [2] This appeal raises the issues as to whether the arrests of the respondents and their subsequent detention were unlawful, including the issue of the awards made to them with regard to damages. It is necessary to look at what unfolded on the night of their arrest and detention. Background Facts [3] On or about 31 December 2013, and at around 20h00 - 21h00, the respondents were travelling together in a black Nissan bakkie, being driven by the first respondent, Shawn Bosman. On the same night, warrant officer Deon Goeda, employed with the South African Police Service (SAPS), and stationed at Gelvandale Police Station, was on duty, performing crime prevention duties, in the vicinity of Schauderville, Port Elizabeth. He was driving a marked police vehicle, G12, a Chevrolet Aveo, in the company of a reservist, Constable Schoenie, when he received information at around 20h00 from radio control that a shooting incident had occurred in Malabar, Extension 6, and that the suspects had fled in a black Nissan bakkie. The radio information was not directed at him personally, but it was a general radio control message to police officers. He could not remember whether any names were reported. He reacted immediately, activated the sirens, the blue lights and proceeded towards the shooting incident at Malabar. [4] En route to the scene of the shooting, they received another radio communication from a police vehicle, G8, that the latter was chasing the black bakkie down Fitchardt Street. When Goeda turned into Fitchardt Street, he saw the bakkie and the police vehicle that was pursuing it, drive past him at a high speed. Goeda gave chase, overtaking the police vehicle, and pursued the fleeing bakkie. The bakkie ignored the sirens and the blue lights and kept on driving at a high speed, ignoring a number of traffic lights. 1 The regional court, for the Regional Division of the Eastern Cape, held in Port Elizabeth (the trial court) ordered the appellant to pay each of the eight respondents (the third respondent abandoned his claim) R150 000, except the fourth respondent, who was awarded the sum of R200 000. [5] During the high speed chase, Schoenie informed Goeda that something had been thrown out of the window of the bakkie. Ultimately, when the bakkie came to a stop, Goeda took out his firearm, approached the bakkie, and ordered all the occupants to disembark. There were 13 people in the bakkie, three females, seven males and three children. The G8 and other police vehicles arrived. The passengers and the bakkie were searched and nothing was found. Some of the passengers smelt of alcohol. After the search, the respondents were made to lie face down on the ground. Goeda then ordered Schoenie and Sergeant van Rensburg to search the area where Schoenie had seen an object being thrown from the bakkie. After some time, Van Rensburg radioed Goeda to inform him that a firearm was found with live ammunition. Forensics and ballistic experts were called to the scene. Primer residue testing2 was conducted on the respondents, exhibits were sealed and forwarded for forensic analysis. [6] Goeda testified that he questioned the respondents at the scene of the arrest, but none of the respondents ‘owned up’ to possessing the firearm. He decided to arrest all the respondents for further investigation, because he had received information about the shooting incident at Malabar, and because of the fact that a firearm was found. He explained to the respondents that he was arresting them for the unlawful possession of a firearm, and that they could possibly be suspects in a shooting incident at Malabar. The children were taken away by family members. One of the respondents, Ms Claasen, a minor, was detained at Nerina One Stop Youth Justice Centre (Nerina House). [7] Sergeant Claasen, who was a detective in the South African Police Service, attended the shooting incident at Malabar. He was informed by witnesses at the shooting scene that the deceased, Ivan van Wyk, was shot twice by one Romano Foster, and that ‘Mano’, the first, third, sixth and ninth respondents had assaulted the deceased, and one Bradley Hartbees. He took the statements of two witnesses. The witnesses informed him that the murder suspect had fled in a black bakkie. This information was conveyed via radio to the other police officers who were doing 2 Primer residue is formed by the ignition of a chemical in the primer when a firearm is discharged. patrols. Whilst he was still at the shooting incident at Malabar he heard over the radio that the suspects had been arrested after a car chase. He then attended at the Gelvandale police station to verify the names of the persons arrested against the names of the suspects he had received at the shooting incident at Malabar. He interviewed the suspects, all of whom denied being at the shooting incident. Initially, the suspects were arrested for the illegal possession of a firearm, but later when the investigation was completed, some were charged with murder. He received the docket about three days after the incident with instructions to arrange for blood samples to be taken of the respondents. Later in the year some of those who had been arrested, namely Romano Foster, Shawn Bosman (the first respondent), Serano Dawson (the third respondent), Grant Markley (the sixth respondent) and Mornay Jass (the ninth respondent) were charged with the murder. However, these charges were also withdrawn, because one of the witnesses died and the other refused to testify. [8] The respondents’ version was that they were travelling at night from a beach at Summerstrand at which they had been partying. It was New Year’s Eve, they were celebrating and had consumed large quantities of alcohol. While travelling to another party, Shawn Bosman, who was the driver, noticed the police vehicle and fled because he was under the influence of alcohol. All the other respondents were asleep in the bakkie. When he finally came to a stop, police approached the bakkie with firearms, and all the occupants, including the children alighted from the vehicle. Primer residue tests were taken on their hands. The respondents denied any knowledge of the shooting incident, and the possession of the firearm. The respondents were arrested and detained. They were released from custody in the afternoon of 2 January 2014, after blood tests were taken from them at a hospital. [9] At the police station warning statements were taken and a docket was opened. The respondents were charged with the illegal possession of a firearm and ammunition. They were then detained at the Gelvandale police station, in Port Elizabeth. Aggrieved by their arrest and detention, the respondents instituted civil proceedings against the Minister of Police in the regional court, Port Elizabeth (the trial court) on the grounds that the arrest without a warrant and subsequent detention were wrongful and unlawful. [10] It is against this background that the question of the arrest without a warrant and the subsequent detention of the respondents must be decided. The appellant argued that the respondents’ arrest, without a warrant, was lawful in terms of ss 40(1)(b), 40(1)(f) and/or 40(1)(h) of the Criminal Procedure Act 51 of 1977 (CPA). The arresting officer acted in terms of s 205(3) of the Constitution. Furthermore, the subsequent detention of the respondents was lawful and justified in terms of ss 39(3) and 50(1) of the CPA. [11] Section 12(1)(a) of the Constitution enshrines the right to freedom and security of a person, which includes the right not to be deprived of freedom arbitrarily or without just cause.3 Accordingly, where it is alleged that one has been unlawfully detained, the State bears the burden to justify the deprivation of liberty.4 Law [12] Section 205(3) of the Constitution provides: ‘The objects of the police service are to prevent, combat and investigate crime, to maintain public order, to protect and secure the inhabitants of the Republic and their property, and to uphold and enforce the law.’ In terms of the relevant provisions of the Criminal Procedure Act 51 of 1977, s 40 states that: ‘(1) A peace officer may without warrant arrest any person— (a) . . . (b) whom he reasonably suspects of having committed an offence referred to in Schedule 1, other than the offence of escaping from lawful custody; (c) . . . (d) . . . (e) . . . (f) who is found at any place by night in circumstances which afford reasonable grounds for believing that such person has committed or is about to commit an offence; (g) . . . 3 Constitution, s 12(1)(a). 4 Zealand v Minister for Justice and Constitutional Development and Another [2008] ZACC 3; 2008 (6) BCLR 601 (CC); 2008 (2) SACR 1 (CC); 2008 (4) SA 458 (CC) para 24. (h) who is reasonably suspected of committing or of having committed an offence under any law governing the making, supply, possession or conveyance of intoxicating liquor or of dependence-producing drugs or the possession or disposal of arms or ammunition.’ [13] It is instructive to consider pertinent case law in regard to this matter. In Minister of Safety and Security v Sekhoto and another [2010] ZASCA 141; [2011] 2 All SA 157 (SCA); [2011] 2 All SA 157 (SCA), this Court succinctly said, at para 6, that: ‘As was held in Duncan v Minister of Law and Order, the jurisdictional facts for a section 40(1)(b) defence are that (i) the arrestor must be a peace officer; (ii) the arrestor must entertain a suspicion; (iii) the suspicion must be that the suspect (the arrestee) committed an offence referred to in Schedule 1; and (iv) the suspicion must rest on reasonable grounds.’ And at para 28: ‘Once the jurisdictional facts for an arrest, whether in terms of any paragraph of section 40(1) or in terms of section 43 are present, a discretion arises. The question whether there are any constraints on the exercise of discretionary powers is essentially a matter of construction of the empowering statute in a manner that is consistent with the Constitution. In other words, once the required jurisdictional facts are present, the discretion whether or not to arrest arises. The officer, it should be emphasised, is not obliged to effect an arrest. . . .’ Paragraphs 30 and 31: ‘He proceeded to say that an exercise of the discretion in question will be clearly unlawful if the arrestor knowingly invokes the power to arrest for a purpose not contemplated by the legislator. This brings me back to the fact that the decision to arrest must be based on the intention to bring the arrested person to justice. It is at this juncture that most of the problems in the past have arisen. Some instances were listed in the judgment of the court below, namely an arrest to frighten or harass the suspect, for example, to appear before mobile traffic courts with the intent to expedite the payment of fines (S v Van Heerden (supra) 416g- h); to prove to colleagues that the arrestor is not a racist (Le Roux (supra) paragraph 41); to punish the plaintiff by means of arrest (Louw (supra) at 184j); or to force the arrestee to abandon the right to silence (Ramphal (supra) paragraph 11). To this can be added the case where the arrestor knew that the state would not prosecute. The law in this regard has always been clear. Such an arrest is not bona fide but in fraudem legis because the arrestor has used a power for an ulterior purpose. But a distinction must be drawn between the object of the arrest and the arrestor's motive. This distinction was drawn by Schreiner JA in Tsose and explained by G G Hoexter J in a passage quoted with approval by this court in Kraatz (supra) at 507C-508F. Object is relevant while motive is not. It explains why the validity of an arrest is not affected by the fact that the arrestor, in addition to bringing the suspect before court, wishes to interrogate or subject him to an identification parade or blood tests in order to confirm, strengthen or dispel the suspicion. It would appear that at least some of the high court judgments under consideration have not kept this distinction in mind.’ Further, at para 39: ‘This would mean that peace officers are entitled to exercise their discretion as they see fit, provided that they stay within the bounds of rationality. The standard is not breached because an officer exercises the discretion in a manner other than that deemed optimal by the court. A number of choices may be open to him, all of which may fall within the range of rationality. The standard is not perfection, or even the optimum, judged from the vantage of hindsight and so long as the discretion is exercised within this range, the standard is not breached.’ Lastly, at para 42: ‘While it is clearly established that the power to arrest may be exercised only for the purpose of bringing the suspect to justice the arrest is only one step in that process. Once an arrest has been effected the peace officer must bring the arrestee before a court as soon as reasonably possible and at least within 48 hours (depending on court hours). Once that has been done, the authority to detain that is inherent in the power to arrest has been exhausted. The authority to detain the suspect further is then within the discretion of the court.’ In Naidoo v Minister of Police and others [2015] ZASCA 152; [2015] 4 All SA 609 (SCA), this Court stated at paras 40-41: ‘And, as was explained by Van Heerden JA in Duncan v Minister of Law and Order 1986 (2) SA 805 (A) at 818G–H, once the jurisdictional requirements of the section are satisfied, the peace officer may, in the exercise of his discretion, invoke the power to arrest permitted by the law. However, the discretion conferred by section 40(1) of the CPA must be properly exercised, that is, exercised in good faith, rationally and not arbitrarily. If not, reliance on section 40(1) will not avail the peace officer.’ It is now settled that the purpose of the arrest is to bring the arrestee before the court for the court to determine whether the arrestee ought to be detained further, for example, pending further investigations or trial. (See Minister of Safety and Security v Sekhoto and another [2010] ZASCA 141; 2011 (5) SA 367 (SCA) paras 30-3.) Thus it goes without saying that an arrest will be irrational and consequently unlawful if the arrestor exercised his discretion to arrest for a purpose not contemplated by law. . . .’ Further, in Raduvha v Minister of Safety and Security (Centre for Child Law as amicus curiae) [2016] ZACC 24; 2016 (10) BCLR 1326 (CC); 2016 (2) SACR 540 (CC) para 44, the Constitutional Court stated: ‘In other words the courts should enquire whether in effecting an arrest, the police officers exercised their discretion at all. And if they did, whether they exercised it properly as propounded in Duncan or as per Sekhoto where the court, cognisant of the importance which the Constitution attaches to the right to liberty and one’s own dignity in our constitutional democracy, held that the discretion conferred in section 40(1) must be exercised “in light of the Bill of Rights”.’ Lastly, the Appellate Division stated in Duncan v Minister of Law and Order [1986] 2 All SA 241 (A) at 243: ‘The question whether a peace officer "reasonably suspects" a person of having committed an offence within the ambit of s 40(1)(b) of the Act is objectively justiciable. And it seems clear that the test is not whether a policeman believes that he has reason to suspect, but whether, on an objective approach, he in fact has reasonable grounds for his suspicion.’ [14] To sum up, the jurisdictional facts for a s 40(1)(b) defence are that (i) the arrestor must be a peace officer; (ii) the arrestor must entertain a suspicion; (iii) the suspicion must be that the suspect (the arrestee) committed an offence referred to in Schedule 1; and (iv) the suspicion must rest on reasonable grounds. The test is objective. It requires reasonable suspicion, but not certainty. The suspicion must be based on factual grounds. Thus, the enquiry is not whether Goeda subjectively suspected that the occupants of the bakkie had been in possession of the firearm and were involved in the shooting incident, but whether a reasonable person in Goeda’s position, who had the same information at his disposal would have considered that there were reasonable grounds for suspecting that the occupants of the bakkie had been in possession of the firearm and were involved in the shooting incident at Malabar. [15] The respondents were questioned on the scene about the firearm, and they all denied any knowledge thereof. It was reasonable in the circumstances to suspect that any one of the respondents, including Ms Claasen, the fourth respondent who was 16 years old, a minor, and who was an occupant in the bakkie, was involved in the shooting incident and that they had possessed an illegal firearm and ammunition. [16] Goeda testified that once he had instructed the occupants to disembark from the bakkie, he stood outside the police vehicle. He could not say with certainty that he heard all of the information in respect of the shooting incident over the radio. It does not appear from Goeda’s testimony that there was mention of any names specifically communicated over the radio. Even if this Court were to accept that Goeda may have heard the names of the suspects involved in the shooting incident (and that not all of the respondents were suspects) over the radio, a firearm with live ammunition was found to have been thrown out of the fleeing bakkie in which all the respondents were occupants, which gave rise to a reasonable suspicion that they were involved in the shooting incident at Malabar and the possession of the firearm. In such circumstances it was reasonable for Goeda to arrest all the respondents, in order to conduct further investigation in this regard, as it could not be immediately determined which of the respondents may have potentially used the firearm in the shooting incident. This was not unreasonable in the circumstances. [17] Additionally, the fact that Goeda testified that he could not remember whether he had been given the names of the suspects does not impact on the reasonableness of the arrests. He could not release those of the respondents who were not named as suspects, as this information had not yet been verified. Significantly, it appears from Sergeant Claasen’s evidence that even though he had been given names of the suspects at Malabar, he had gone to the police station to verify the information he had received at the shooting incident. [18] Thus, objectively considered, taking into account the conspectus of information available to Goeda, the arresting officer, I am of the view that a reasonable suspicion existed in the mind of Goeda that the occupants of the black Nissan bakkie had committed an offence. This is because the information available to Goeda was the following: he had received information via radio that a shooting incident had occurred at Malabar; that the suspects had fled in a black Nissan bakkie; he saw the bakkie being chased by the marked police vehicle G8 from the direction of the shooting incident; he saw the bakkie driving in a reckless manner, skipping traffic lights and ignoring the sirens and trying to flee from the police over a distance between 15km to 20km; he was informed by Schoenie during the chase that something was thrown out of the bakkie; later a revolver was found in the area that Schoenie had observed an object being thrown from the bakkie. [19] In the circumstances the arrests of all the respondents were lawful, including that of the fourth respondent, Ms Claasen. In terms of the Child Justice Act 75 of 2008, an arrest of a child should be resorted to when the facts are such that there is no other, less invasive way of securing the attendance of such child before a court. Ms Claasen was in a bakkie fleeing from the police with occupants who were suspected of having been involved in the shooting incident at Malabar. During the pursuit, an object that was thrown from the bakkie, in which she was an occupant, turned out to be a firearm. Like the other occupants, she was equally suspected of being in possession of an illegal firearm and/or involved in the shooting incident. In the circumstances no criticism can be levelled against the police for also arresting the fourth respondent for further investigation. Goeda’s conduct in arresting all the respondents was eminently reasonable, lawful and justifiable in the circumstances. [20] In view of all the aforegoing, the jurisdictional facts for the arrest of the respondents in terms of the subparagraphs in s 40(1) of the CPA were present, and therefore a discretion arose. This discretion was, on a conspectus of all the evidence, in my view, properly exercised, in good faith, rationally and not arbitrarily.5 [21] I turn to consider whether the respondents’ detention was lawful. In terms of s 50 of the Criminal Procedure Act 51 of 1977: ‘(1)(a) Any person who is arrested with or without warrant for allegedly committing an offence, or for any other reason, shall as soon as possible be brought to a police station or, in the case of an arrest by warrant, to any other place which is expressly mentioned in the warrant. (b) A person who is in detention as contemplated in paragraph (a) shall, as soon as reasonably possible, be informed of his or her right to institute bail proceedings. (c) Subject to paragraph (d), if such an arrested person is not released by reason that— (i) no charge is to be brought against him or her; or (ii) bail is not granted to him or her in terms of section 59 or 59A, 5 Duncan v Minister of Law and Order 1986 (2) SA 805 (A) at 818G-H. he or she shall be brought before a lower court as soon as reasonably possible, but not later than 48 hours after the arrest.’ [22] Thus, s 50 of the CPA allows the police to lawfully detain an arrested person for a period not exceeding 48 hours before bringing him/her before a court or releasing him.6 In this case, the respondents were apprehended by the police after a high speed chase on the night of 31 December 2013. They were questioned and all the respondents denied being at the scene of the shooting incident at Malabar (even though eye witnesses placed some of them at the shooting scene). Further they denied any knowledge of the firearm that was thrown out of the bakkie. One or some of them must have had knowledge of the firearm. This, and their version that they had slept through the high speed chase was so improbable, that it clearly showed that the respondents were mendacious. Thus, as it could not be established at the time of the arrest which of the respondents had been in possession of the firearm, they were then arrested without a warrant, on a suspicion of being in possession of an illegal firearm and ammunition, and that they may possibly be involved in the shooting incident at Malabar. They were taken to the Gelvandale police station where they were detained. [23] The validity of their arrest is not affected by the fact that Goeda, in addition to arresting them, detained them for further investigation.7 He took them to the police station, as he intended to interrogate or subject them to blood tests in order to confirm, strengthen or dispel his suspicion.8 In the circumstances, there appears to be no reason why through further investigation, ie arrest, detention and questioning of the suspects/respondents, pertinent information could not be obtained about the shooting incident and the firearm. In fact, this is the proper purview and mandate of the SAPS. [24] At the police station, the respondents were charged with the unlawful possession of a firearm and ammunition under crime docket Gelvandale CAS 02/01/2014. In terms of the Notice of Rights the respondents were advised of their 6 Minister of Safety and Security v Sekhoto and another [2010] ZASCA 141; [2011] 2 All SA 157 (SCA); [2011] 2 All SA 157 (SCA) para 42. 7 Naidoo v Minister of Police and others [2015] ZASCA 152; [2015] 4 All SA 609 (SCA) para 41. 8 Sekhoto para 31. rights at around 01h30 - 02h30 on 1 January 2014. The official time of detention recorded by the police was at around 03h30 on 1 January 2014. [25] In addition, it also appears that another docket was opened in respect of a murder charge, in which the first, third, sixth and ninth respondents, together with Romano Foster (who was also in the bakkie, but not a respondent in this case), were implicated. These dockets were later combined, as the cases were ostensibly linked. This warranted further investigation, as the charges were serious, ie murder, and the firearm found by Schoenie and Van Rensburg was possibly the murder weapon. [26] Constable Jacques Grobler, who was on standby for the Gang Task Team of the South African Police Service, testified that he received the docket for further investigation on 2 January 2014. This was for both the murder and the unlawful possession of a firearm charges. The docket contained instructions from the senior public prosecutor to obtain warning statements from the respondents, arrange for the drawing of blood and processing of DNA samples, and to release them, except for Romano Foster. The evidence linked the murder suspect (Romano Foster) to the possession of the firearm. None of the respondents were linked. The warning statements were taken at about 14h00 and the blood drawn at the Dora Nginza Provincial Hospital at approximately 15h30 on the same day. The respondents were released on 2 January 2014. When the respondents’ counsel asked Grobler why those processes could not have been done on the 1st of January, he replied as follows: ‘Your Worship, I only received the docket myself on the 2nd and even if we received it on the 1st I still don’t think we would have been able to release them, because we had no district surgeon available on the 1st of January, due to the fact that it is a public holiday.’ [27] An arrest made under s 40(1)(b) of the CPA is not unlawful where the arrestor entertained the required reasonable suspicion but intends to make further investigation after the arrest before deciding whether to release the arrestee or whether to proceed with a prosecution as contemplated in s 50(1) of the CPA. From the point of view of the police, the possibility existed that the illegal possession of the firearm that the respondents were suspected of could very well have been part of the shooting incident at Malabar. Further investigation had to be carried out not at the scene of the arrest but at the police station where they were detained. This would include obtaining statements of the witnesses mentioned at the scene of the shooting, so as to verify the information at the police station. Thus, in view of the aforegoing, the subsequent detention of the respondents, including that of Ms Claasen, was justified and lawful in terms of s 39(3) of the CPA. [28] In this matter, the decision to arrest and detain the respondents could not, on the basis of the factual circumstances of this case be wrong or inequitable. There is no basis to suggest that Goeda or any of the other police officers involved in the arrest or further detention had an ulterior motive, acted irrationally and arbitrarily. There was no mala fides9 in detaining them for further investigation. [29] The respondents were released from custody when during the further investigation, it appeared that the arrested persons could not be linked to the commission of the crime. Thus, no criticism can be levelled against the SAPS for arresting and detaining all the respondents, including Ms Claasen, for further investigation. The docket was sent to the senior public prosecutor, so as to determine whether there was sufficient evidence to bring a charge against them. The prosecutor informed the SAPS on 2 January 2014 that the respondents should be released, only after blood samples for DNA testing were taken. This the SAPS duly did and the respondents were released on 2 January 2014 at around 16h00. The respondents were therefore in custody for less than 48 hours. [30] The conduct of the police was within the lawful parameters of detention, as provided for in the legislation (s 50 of the CPA). There can be little doubt that the police officers charged with the investigations acted with alacrity and the requisite sense of urgency after they received the docket on the morning of 2 January 2014. [31] In my view, Grobler’s explanation as to why it was not possible to undertake the required processes on the 1st of January 2014 was eminently reasonable. Notwithstanding, the challenging task of having to take warning statements from all the respondents, completing the necessary forms and transporting them to the 9 See Minister of Safety and Security v Sekhoto and another [2010] ZASCA 141; [2011] 2 All SA 157 (SCA); [2011] 2 All SA 157 (SCA) para 34. hospital for the drawing of blood, the police officers still managed to complete the investigations in time to release the respondents that same afternoon. It must be appreciated that the taking of blood tests for further investigation cannot, as a matter of course, be expected to be done on a public holiday. Therefore, it cannot be said that the appellant failed in its duty to secure the earlier release of the respondents, as 1 January 2014 was a public holiday. They were released as soon as it was established that ‘prima facie proof of the arrested person’s guilt [was] unlikely to be discovered by further investigation’.10 This was able to be done once the docket instruction was received on 2 January 2014. [32] Our constitutional dispensation has brought about a primacy on individual human rights, particularly the right not to be deprived of freedom arbitrarily or without just cause. However, to place unreasonable constraints on the SAPS would hamper their law enforcement functioning. Even though there may be circumstances where criticism may justifiably be levelled against the efficiency of the SAPS, the SAPS ought to be allowed the proper scope to arrest, detain and conduct necessary investigations, all within the lawful bounds as provided for by the legislature through, inter alia, s 50 of the CPA. The police are thus in terms of the law entitled to arrest and detain and release a person within 48 hours, as happened in this case. [33] Assessed objectively, in consideration of the totality of the information available at the time of the arrest, the arresting officer, Goeda, entertained a reasonable suspicion which led to the lawful arrest and detention of the respondents. In view of all the aforegoing, both the arrest and detention of the respondents by the SAPS were lawful, beyond reproach and justified.11 It follows that the order of the trial court must be set aside, including the award of damages to the respondents. The appeal must succeed. [34] In the result, the following order is made: The appeal is upheld with costs. 10 Duncan v Minister of Law and Order 1986 (2) SA 805 (A) at 821B–C. 11 See Minister of Police and Another v Du Plessis 2014 (1) SACR 217 (SCA) para 17. The respondents are to pay the costs of the appeal, such costs to include the costs of two counsel. The order of the full court is set aside and the following order is substituted: ‘1 The appeal is upheld with costs. The judgment of the Port Elizabeth Regional Court, under case number ECPERC 845/14, is set aside and replaced with the following order: “The plaintiffs’ claims are dismissed with costs.”.’ _________________________ H K SALDULKER ACTING DEPUTY PRESIDENT . APPEARANCES For appellant: F Petersen (with V Madokwe and L Hesselman) Instructed by: State Attorney, Port Elizabeth State Attorney, Bloemfontein For respondent: M du Toit Instructed by: Carol Geswint Attorneys, Port Elizabeth Lovius Block 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: 09 December 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Minister of Police v Shawn Bosman & Others (1163/2020) [2021] ZASCA 172 (09 December 2021) Today, the Supreme Court of Appeal (SCA) upheld with costs, including the costs of two counsel, an appeal brought by the appellant, the Minister of Police. The appeal was against the judgment and order of the Eastern Cape Division of the High Court, Grahamstown (Mapoma AJ, with Revelas J concurring, sitting as a court of appeal) (the high court), in which the arrest and detention of the respondents, Shawn Bosman (first respondent), Tanushka Dawson (second respondent), Serano Dawson (third respondent), Brenda Claasen (fourth respondent), Cheslyn Foster (fifth respondent), Grant Markley (sixth respondent), Denver Lackay (seventh respondent), Chine Jass (eighth respondent) and Mornay Jass (ninth respondent), were confirmed to be unlawful and unjustified, and the award for damages payable by the appellant upheld. The SCA thereby set aside the order of the high court, and dismissed the respondents’ claims with costs, including their claims for damages. The appeal raised the issues as to whether the arrests of the respondents and their subsequent detention were unlawful, including the issue of the awards made to them with regard to damages. The facts of the matter were briefly as follows. On or about 31 December 2013, and at around 20h00 - 21h00, the respondents were travelling together in a black Nissan bakkie, being driven by the first respondent, Shawn Bosman. On the same night, warrant officer Deon Goeda, employed with the South African Police Service (SAPS), was on duty, performing crime prevention duties, in Port Elizabeth. He received information at around 20h00 from radio control that a shooting incident had occurred in Malabar, Extension 6, and that the suspects had fled in a black Nissan bakkie. Goeda came upon and pursued the fleeing bakkie, which ignored the sirens and the blue lights and kept on driving at a high speed, ignoring a number of traffic lights. During the high speed chase, Constable Schoenie, who accompanied him, informed Goeda that something had been thrown out of the window of the bakkie. A firearm with live ammunition was later found pursuant to a search in the area where Schoenie had seen an object being thrown from the bakkie. Ultimately, the respondents were arrested and charged with the illegal possession of a firearm and ammunition. They were then detained at the Gelvandale police station, in Port Elizabeth. Aggrieved by their arrest and detention, the respondents instituted civil proceedings against the Minister of Police in the Port Elizabeth Regional Court (the trial court) on the grounds that the arrest without a warrant and subsequent detention were wrongful and unlawful. The SCA found that assessed objectively, in consideration of the totality of the information available at the time of the arrest, the arresting officer, Goeda, entertained a reasonable suspicion which led to the lawful arrest and detention of the respondents. In the circumstances the arrests of all the respondents were lawful, including that of the fourth respondent, Ms Claasen, who was a minor (16). The respondents, including Ms Claasen, were in a bakkie fleeing from the police with occupants who were suspected of having been involved in the shooting incident at Malabar. During the pursuit, an object that was thrown from the bakkie, in which she was also an occupant, turned out to be a firearm. Like the other occupants, she was equally suspected of being in possession of an illegal firearm and/or involved in the shooting incident. In the circumstances no criticism could be levelled against the police for also arresting the fourth respondent for further investigation. Goeda’s conduct in arresting all the respondents was eminently reasonable, lawful and justifiable in the circumstances. The SCA found that the jurisdictional facts for the arrest of the respondents in terms of the subparagraphs in s 40(1) of the Criminal Procedure Act 51 of 1977 (CPA) were present, and therefore a discretion arose. This discretion was, on a conspectus of all the evidence, properly exercised, in good faith, rationally and not arbitrarily. In this matter, the decision to arrest and detain the respondents could not, on the basis of the factual circumstances of this case be wrong or inequitable. There was no basis to suggest that Goeda or any of the other police officers involved in the arrest or further detention had had an ulterior motive, acted irrationally and arbitrarily. There was no mala fides in detaining them for further investigation. The respondents were released from custody when during the further investigation, it appeared that the arrested persons could not be linked to the commission of the crime. The respondents were in custody for less than 48 hours. The conduct of the police was within the lawful parameters of detention, as provided for in the legislation (s 50 of the CPA). Therefore, it could not be said that the appellant had failed in its duty to secure the earlier release of the respondents, as 1 January 2014 was a public holiday. The SCA thus held that both the arrest and detention of the respondents by the SAPS were lawful, beyond reproach and justified. It followed that the order of the trial court had to be set aside, including the award of damages to the respondents. ~~~~ends~~~~

172

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable In the matter between Case No: 1156/2016 WIERDA ROAD WEST PROPERTIES (PTY) LTD APPELLANT and SIZWENTSALUBAGOBODO INC RESPONDENT Neutral citation: Wierda Road West Property (Pty) Ltd v SizweNtsalubaGobodo Inc (1156/16) [2017] ZASCA 170 (1 December 2017) Coram: Cachalia and Majiedt JJA and Plasket, Meyer and Mbatha AJJA Heard: 22 November 2017 Delivered: 1 December 2017 Summary: Lease – National Building Regulations and Building Standards Act 103 of 1977 – lease agreement not rendered invalid and unenforceable by ss (4)(1) and 14(1), read with s 4(4) and s 14(4)(a) of the Act. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Gauteng Local Division, Johannesburg (Francis 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 substituted with the following: „Judgment is granted in favour of the plaintiff in the sum of R7 867 548.78 together with interest at 8% per annum from 1 December 2014 to date of payment and costs‟. 3. The cross-appeal is dismissed with costs. ______________________________________________________________ JUDGMENT ______________________________________________________________ Majiedt JA (Cachalia JA and Plasket, Meyer and Mbatha AJJA concurring): [1] The appellant, Wierda Road West Properties (Pty) Ltd, instituted action against the respondent, SizweNtsalubaGobodo Inc, for the amount of R7 867 548.78 in respect of rentals and municipal charges for the lease of its property at 41 West Street, Houghton, Johannesburg (the property). Francis J, sitting as a court of first instance in the Gauteng Local Division, Johannesburg (the high court), dismissed the action with costs. This appeal is with the leave of the high court, which also granted the respondent leave to cross-appeal against the finding that the lease agreement was not invalid, but merely unenforceable. [2] The action was based on a written lease agreement concluded between the parties on 3 August 2012. Although the duration of the agreement was for five years, the claim was for the period July 2014 to March 2016, as the appellant had sold and transferred the property, in March 2016. The quantum of the claim was not in issue. The respondent raised a number of defences and also instituted a counterclaim for an order declaring the lease agreement to be void ab initio, and for the repayment of the rentals paid during the period of its occupation of the property. During the trial the respondent withdrew its claim for repayment and persisted only with its claim for the declaratory order. [3] The respondent‟s defences were premised on its counterclaim, namely that the lease agreement was void ab initio and that the appellant was consequently precluded from enforcing its terms. The defence of the invalidity of the agreement was based on the following grounds, each one pleaded as an alternative to the other: (a) that the agreement contravened s 14 of the National Building Regulations and Building Standards Act 103 of 1977, (the Act) in that no occupancy certificate had been issued prior to the occupation thereof; (b) that the appellant had made a fraudulent misrepresentation by failing to inform the respondent of the fact that no occupancy certificate had been issued; and (c) that the property was not suitable for the purposes for which it was let, as it would have constituted an offence for the respondent to have remained in occupation in the absence of an occupancy certificate. [4] The high court partially upheld the first defence by finding that even though the agreement was not invalid, it was unenforceable. As stated, this finding prompted a cross-appeal by the respondent. The high court dismissed the second and third defences above. During argument in this court, the respondent abandoned the fraudulent misrepresentation defence. It became evident during the trial that there were no approved building plans for part of the property, as is required by s 4(1) of the Act. This non-compliance was advanced by the respondent as a further ground to invalidate the agreement. The fact of the non-compliance with sections 4(1) and 14(1) is common cause. The issues in this appeal are therefore: (a) Whether the agreement is void ab initio due to the contraventions of s 4(1), read with s 4(4) or s 14(1), read with s 14(4) of the Act; (b) Whether the failure to obtain an occupancy certificate rendered the property not suitable for the purposes for which it was let; and (c) In respect of the cross-appeal, whether the high court erred in its finding that the agreement was not invalid, but merely unenforceable. [5] A brief narration of the factual matrix is necessary for a proper understanding of the issues. Almost all the background facts were common cause or not seriously disputed. The respondent is a merged entity, comprising Gobodo Incorporated (Gobodo) and SizweNtsaluba VSP (Sizwe). The appellant is a property-owning company entirely owned by the shareholders of the erstwhile Gobodo. It purchased the property in 2009 on auction with a view to house Gobodo, whose premises at that time had become too small. The appellant undertook the refurbishing of the property at Godobo‟s instance to meet its requirements. On 1 August 2010 Gobodo moved in. In the course of the refurbishment it was discovered that there were no building plans in respect of the new wing added to the property by the previous owner. The original property consisted of a two storey residential dwelling. The new wing, also built by the original owner, comprised three floors, namely the ground, mezzanine and first floors. Despite concerted efforts, the appellant was unable to get building plans from the seller. Consequently, the appellant instructed its architects to draw plans for the new three storey wing and to submit them to the City Council of Johannesburg (City Council). [6] The appellant concluded a lease agreement with Gobodo for a period of 12 years, commencing 1 August 2010. On 1 June 2011 Gobodo merged with Sizwe to form the respondent, which concluded a new lease agreement in respect of the property with the appellant on 3 August 2012. The duration of the original lease was reduced from 12 years to 5 years. The appellant experienced serious problems getting the plans approved. There were as many as 12 separate approvals required. The building plans were finally approved during mid-2015, almost five years after their submission to the City Council. Without approved plans the appellant could not obtain an occupancy certificate. This is because s 14(1)(a) of the Act rendered the granting of an occupancy certificate subject, amongst others, to the requirement that the building concerned was erected in accordance with the provisions of the Act and with any conditions under which approval was granted.1 One of the relevant provisions for present purposes is s 4(1).2 [7] Pursuant to the conclusion of the lease, the respondent occupied the property from 1 August 2012 until June 2014, when it vacated the premises without notice to the appellant. During this period, the respondent paid the monthly rentals and municipal utility charges in accordance with the terms of the lease. [8] As the issues in dispute are largely a question of law, it is not necessary to refer in detail to the evidence of the witnesses at the trial. The high court, understandably, did not deem it necessary to make any credibility findings on the oral evidence. For present purposes the discussion can be restricted to a brief summary of the evidence on the central issues, namely the lack of building plans and an occupancy certificate. [9] Mr Dayalan Manikum Naicker was the main witness for the appellant. He was a shareholder and director of the appellant and, until his retirement in December 2010, a shareholder of Gobodo. All the shareholders in Gobodo were shareholders of the appellant and five of them, including Mr Naicker, were appointed as its directors. Mr Naicker conducted the negotiations regarding the lease agreement on behalf of the appellant. Mr Donavan Simpson, who was the chief financial officer of the respondent and previously 1 Section 14(1)(a) reads: „(1) A local authority shall within 14 days after the owner of a building of which the erection has been completed, or any person having an interest therein, has requested it in writing to issue a certificate of occupancy in respect of such building – (a) issue such certificate of occupancy if it is of the opinion that such building has been erected in accordance with the provisions of this Act and the conditions on which approval was granted in terms of section 7 . . .‟ 2 Section 4(1) reads as follows: „(1) No person shall without the prior approval in writing of the local authority in question, erect any building in respect of which plans and specifications are to be drawn and submitted in terms of this Act‟. a shareholder in Gobodo, acted for the respondent during the negotiations. The most important part of Mr Naicker‟s evidence, relevant to the central issue, was that Mr Simpson and all the other Gobodo shareholders were aware of the absence of an occupancy certificate. Mr Simpson was succeeded as chief financial officer by Mr Gerrit Prinsloo, who featured prominently in the events leading up to and after the respondent vacated the property. According to Mr Naicker, the City Council was fully aware that the property was being occupied without an occupancy certificate; its inspectors came to the property to make an assessment of the situation and there was no objection to occupation. [10] Surprisingly, neither Mr Simpson nor Mr Prinsloo testified for the respondent. Instead, it adduced the evidence only of Mr Victor Mazitha Sekese, the chief executive officer. Although he had signed the lease agreement on behalf of the respondent, he had not been involved in the prior negotiations at all. He had delegated all the negotiations regarding the lease to Mr Simpson. According to Mr Sekese he had no concerns about the agreement when it was brought to him for signature. He said that if he had known about the absence of the building plans and an occupancy certificate, he would not have signed the agreement. It bears emphasis that it was not the respondent‟s case that the property was not safe for occupation. What is more, Mr Naicker‟s evidence regarding the problems about the building plans and the occupancy certificate, was unchallenged. [11] The objective evidence, in the form of e-mail communications between the parties‟ representatives, prior to the respondent vacating the property in June 2014, is instructive. At no time during the parties‟ communications during March and April 2014 regarding a possible subtenancy was the absence of an occupancy certificate raised as an issue, except to the extent that the appellant had been alerted to the fact that it may prove problematic for the respondent to procure a subtenant. The respondent did not complain about the absence of an occupancy certificate. As stated, the respondent only became aware of the absence of approved plans during the course of the trial. [12] On 10 June 2014 Mr Naicker wrote to Mr Prinsloo asking him to confirm the rumours that the respondent would be moving out of the property. This was confirmed by Mr Prinsloo, who indicated that the respondent was to begin looking for a subtenant. On 25 September 2014, after the respondent had vacated the property, in a letter by the respondent‟s attorneys to the appellant, the absence of an occupancy certificate was for the first time pertinently raised as a reason for the respondent vacating the property. The attorneys also contended that, by reason of the lack of a certificate of occupancy, the lease agreement was invalid, and so the present litigation ensued. [13] The primary thrust of the attack against the lease agreement was, as stated, the non-compliance with ss 4 and 14 of the Act. It was contended that non-compliance rendered the agreement void ab initio and that this conclusion followed from the penal sanctions imposed in these sections.3 The high court‟s finding that the lease agreement was valid but not enforceable, was based exclusively on the Hubbard judgment of this court,4 which was confirmed on appeal to the Constitutional Court.5 [14] Hubbard is plainly distinguishable on the facts and on the law. That case concerned the provisions of s 10 of the Housing Consumers Protection Measures Act 95 of 1998 (Housing Act) which expressly prohibits an unregistered builder from receiving any consideration in terms of any agreement with a housing consumer in respect of the sale or construction of a home. Section 14 of the Act, which was the focus of the high court‟s 3 Section 4(4) reads: „Any person erecting any building in contravention of the provisions of subsection (1) shall be guilty of an offence and liable on conviction to a fine not exceeding R100 for each day on which he was engaged in so erecting such building.‟ Section 14(4)(a) reads: „The owner of any building, or any person having an interest therein, erected or being erected with the approval of a local authority, who occupies or uses such building or permits the occupation or use of such building – (i) Unless a certificate of occupancy has been issued in terms of subsection (1)(a) in respect of such building; (ii) . . . (iii) . . . (iv) . . . shall be guilty of an offence.‟ 4 Hubbard & another v Cool Ideas 1186 CC [2013] ZASCA 71; 2013 (5) SA 112 (SCA). 5 Cool Ideas 1186 CC v Hubbard & another [2014] ZACC 16; 2014 (4) SA 474 (CC). judgment, differs quite starkly from that provision, as it contains no such statutory prohibition. Section 10 of the Housing Act is plainly intended to protect housing consumers against unregistered builders – thus the Constitutional Court held that „the protection of housing consumers is a necessary and legitimate legislative objective‟.6 It is therefore not surprising that the respondent eschewed any reliance on this case. [15] This case was conducted and decided in the high court and argued before us on the basis of non-compliance with s 4(1) and s 14(1). We heard extensive argument on these provisions and in the course of the debate, particularly with the respondent‟s counsel, some difficulties emerged. As is immediately apparent from the sections (cited in footnote 1 above), it is questionable whether either applies in the present instance. First, s 4(1) applies to a person who erects a building. And the penalty provision in s 4(4) also refers to any person erecting any building. The appellant did not „erect‟ the building in question, within the definition of the word „erection‟ in s 1.7 This much was common cause. Second, s 14(1)(a) provides that an occupancy certificate may be issued if the local authority is „of the opinion that such building has been erected in accordance with the provisions of this Act . . .‟ Section 14(4)(a), which contains the penal sanction, refers to „[t]he owner of any building, or any person having an interest therein, erected or being erected with the approval of a local authority . . .‟ It was also common cause that, in the present instance, the building in question had been erected without the requisite plans, ie without the approval of the local authority. Section 14(4)(a) therefore deals with instances of occupancy without an occupancy certificate, but where there are approved plans in place. [16] But even if ss 4(1) and 14(1) were to apply here, and I do not find that they do, there are, in my view, compelling considerations why the lease agreement in the present matter is valid and enforceable. 6 Ibid para 42. 7 „Erection‟ is defined in s 1 as „in relation to a building, includes the alteration, conversion, extension, rebuilding, re-erection, subdivision of or addition to, or repair of any part of the structural system of, any building; and ‘erect’ shall have a corresponding meaning.‟ [17] The respondents placed much reliance on the trite principle that what the law prohibits it also renders void, and reference was made to the well- known dictum in Schierhout v Minister of Justice:8 „[i]t 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‟.9 And, as stated, the additional penal sanction in s 14(4)(a)10 was said to fortify a conclusion of invalidity in the case of non- compliance with s 14(1)(a). In this regard we were referred to Christie where it is explained that „when a contract is not expressly prohibited but it is penalized, that is the entering into it is made a criminal offence, then it is impliedly prohibited and so rendered void.‟11 But, as the author correctly points out, those are not inflexible rules. What must ultimately be determined is the purpose of the legislative provision. These principles are mere guidelines in ascertaining that purpose. Solomon JA put it as follows in Standard Bank v Estate Van Rhyn:12 „The contention on behalf of the respondent is that when the Legislature penalises an act it impliedly prohibits it, and that the effect of the prohibition is to render the [a]ct null and void, even if no declaration of nullity is attached to the law. That, as a general proposition, may be accepted, but it is not a hard and fast rule universally applicable. After all, what we have to get at is the intention of the Legislature, and, if we are satisfied in any case that the Legislature did not intend to render the [a]ct invalid, we should not be justified in holding that it was. As Voet (1.13.16) puts it – “but that which is done contrary to law is not ipso jure null and void, where the law is content with a penalty laid down against those who contravene it.” Then after giving some instances in illustration of this principle, he proceeds: “The reason for all this I take to be that in these and the like cases greater inconveniences and impropriety would result from the rescission of what was done, than would follow the act itself done contrary to the law.” These remarks are peculiarly applicable to the present case, and I find it difficult to conceive that the Legislature had any intention in enacting the directions referred to in sec 116(1) other than that of punishing the executor who did not comply with them.‟ 8 Schierhout v Minister of Justice 1926 AD 99 at 109. 9 At 109. 10 Para 12 above. 11 G B Bradfield Christie’s The Law of Contract in South Africa 7ed at 395 (footnotes omitted). 12 Standard Bank v Estate van Rhyn 1925 AD 266 at 274 - 275; see also: Metro Western Cape (Pty) Ltd v Ross 1986 (3) SA 181 (A) at 188F–189A. [18] In Swart v Smuts13 this Court considered this question in some detail. Referring to the flexibility of this principle, Corbett AJA observed that „[c]areful consideration of the wording of the statute and of its purpose and purview may lead to the conclusion that the Legislature did not intend invalidity‟ (own translation).14 In discussing the aids of interpretation in ascertaining the intention of the Legislature, the learned Judge referred to the question whether the attainment of the Legislature‟s purpose requires the nullification of the prohibited act or whether the sanction, penal or otherwise, would sufficiently meet that objective.15 In the present instance, this consideration is of particular importance since, as stated, the respondent relies on the penal sanctions in the relevant provisions as proof of the fact that the agreement is rendered invalid by non-compliance. The sentence to be imposed for criminal offences is almost invariably subject to the discretion of a court. There is thus a substantial measure of flexibility involved. [19] But that is not the case with the law of contract – the contract is either valid or it is not. If the law has been contravened, the contract may be treated as illegal and that is the end of the matter. As Boshoff JA correctly, with respect, cautioned in Metro Western Cape v Ross, „[t]he use of contract law to supplement the deficiencies of the criminal law has serious disadvantages which outweigh any utility it has in this respect‟.16 Regard must also be had to the probable unintended consequences („greater inconveniences and impropriety‟) which invalidity can cause when compared to the prohibited act.17 It is axiomatic that each case must be considered on its own facts, taking into account the language, scope and object of the statute in question as well as the consequences in relation to justice and the convenience of adopting one view rather than the other.18 13 Swart v Smuts 1971 (1) SA 819 (A). 14 At 829 F: „Deeglike oorweging van die bewoording van die statuut en van sy doel en strekking kan tot die gevolgtrekking lei dat die Wetgewer geen nietigheidsbedoeling gehad het nie‟. 15 Swart at 830 A-B. 16 Metro Western Cape v Ross above at 191H. 17 Swart v Smuts, footnote 12 above, at 830C. 18 Metro Western Cape footnote 15 above at 188G-H. [20] In my view, the penalty provision in s 14(4)(a) strongly suggests that the penalty itself was intended by the Legislature to be an adequate sanction, without the lease agreement in this instance also being void. As I see it, the primary purpose of the Act, as its short title suggests, is to provide for national building regulations and standards. The long title of the Act confirms this view: „[t]o provide for the promotion of uniformity in the law relating to the erection of buildings in the areas of jurisdiction of local authorities; for the prescribing of building standards; and for matters connected therewith‟. The Act is less concerned with private law relationships between, for example, lessors and lessees, but rather with public law relationships between local authorities and builders, users and occupants. Section 14 is thus concerned in the main with ensuring compliance with the provisions of the Act and with conditions of approval. It is difficult to understand why, over and above the penalty provisions in s 14(4)(a), compliance was intended to be achieved also by rendering void agreements which contravene the section. I am fortified in my conclusion in the following respects: (a) Section 14(1A) provides that permission may be granted by the local authority to an owner of a building or any person having an interest in the building, to use the building prior to the issue of an occupancy certificate.19 This exemption is strongly indicative of the fact that the Legislature did not intend agreements which contravene the section to be void. As I have said, neither the City Council nor the respondent, both of whom had full knowledge of the facts, had a problem with the absence of an occupancy certificate. The Act does not expressly place a prohibition on the occupation of a building without an occupancy certificate having been issued – it merely creates a statutory offence in respect of the occupation of a building without the requisite occupancy certificate. It was open to the appellant or the respondent to apply for s14(1A) permission if this had become necessary. 19 Section 14(1A) reads: „A local authority shall within 14 days after the owner of a building of which the erection has been completed, or any person having an interest therein, has requested it in writing to issue a certificate of occupancy in respect of such building – (a) issue such certificate of occupancy if it is of the opinion that such building has been erected in accordance with the provisions of this Act and the conditions on which approval was granted in terms of section 7 . . .‟ (b) Second, there are other remedies available to local authorities to enforce the provisions of the Act in order to achieve its primary purpose, set out above. These include: (i) ordering the alteration or demolition of a building which is dangerous or shows signs of becoming dangerous to life or property (s 12(1)); and (ii) applying to a magistrate‟s court for an interdict or the demolition of a building which contravenes the provisions of the Act (s 21). As stated, the primary focus of the statute is not on private contractual relationships, but on those between local authorities and builders, users and occupants. (c) Lastly, one of the factors to be considered in a determination of the Legislature‟s intention is that the additional sanction may have undesirable and unintended consequences.20 This case vividly demonstrates the unjust and undesirable consequences which may ensue. Through no fault of its own and utterly oblivious to the absence of any plans, having purchased the property at an auction, the appellant would find itself in the invidious position of having a lease agreement declared invalid where it has fully performed all its obligations and where the tenant was fully conversant with all the facts. In addition, the slow grind of the City Council‟s bureaucratic machinery stood in the way of the appellant‟s efforts to regularize the situation for five years. [21] Much of what has been stated in respect of s 14(1)(a) with regard to ascertaining the intention of the Legislature must of course also apply to s 4(1), read with s 4(4). For the reasons already outlined, I am of the view that the Legislature did not intend a further sanction of invalidating agreements which contravene the section over and above the penal sanction contained in s 4(4). This conclusion is even more compelling when one considers the nature of the penalty in s 4(4). Provision is made for a maximum fine of „R100 for each day on which [a person] was engaged in so erecting such building [without plans]‟ The longer the period of transgression, the harsher the penalty – something which, as already stated, cannot be achieved through invalidating a private contract. 20 Swart v Smuts, footnote 12 above. [22] In Friedshelf 113 (Pty) Ltd v Mysty Blue Trading 559 CC,21 an unreported judgment of the South Gauteng High Court, Johannesburg, a similar conclusion was reached. There the applicant had sought a declarator that the lease agreement between it and the respondent was validly cancelled. The basis for that relief was the contention that the respondent had fraudulently failed to disclose that there were no approved plans and occupancy certificate for the particular premises. The respondent also averred that it had an improvement lien over the premises due to the invalidity of the lease agreement by reason of the non-compliance with s 4 and s 14 of the Act. In a closely reasoned judgment, Van der Merwe AJ came to the conclusion that there are no „valid or compelling considerations which indicate that the private lease agreement in the present instance must be visited with the sanction of voidness and unenforceability by virtue of the fact that it relates to premises in respect of which the requirements of [the Act] have not been complied with.‟22 In reaching that conclusion the learned Judge reasoned that: (a) there were no allegations that the premises was unsafe for occupation and, on the unchallenged evidence, the applicant was attending to the outstanding requirements; (b) the authorities were aware of the situation and that the applicant was attending to it; (c) there are remedies available to the local authority to address the non- compliance, should it wish to do so; (d) there was „no pressing need . . . for the court to impose an additional sanction on the applicant regarding the private law relationship between the applicant and the respondent, which is not provided for in the relevant legislation‟; (e) the penal sanction was adequate and more appropriate in its flexibility to deal with non-compliance. 21 Friedshelf 113 (Pty) Ltd v Mysty Blue Trading 559 CC, Case no 2008/39429, delivered on 3 April 2009. 22 Ibid para 7. [23] I endorse these conclusions and the underlying reasoning of the learned Judge. This case is on all fours with the present one. For the reasons already set out, I therefore hold that the lease agreement in this instance is valid and enforceable. What remains is to consider the judgment of Rogers J in Berg River Municipality v Zelpy,23 a matter upon which the respondent placed heavy reliance for its contention that, due to the lack of approved building plans, the use and occupation of the property was impliedly prohibited by s 4(1). [24] In Berg River Municipality the municipality sought a final interdict preventing Zelpy, the respondent company, as property owner from occupying or using certain buildings on its property constructed without plans, until an occupancy certificate had been issued by the municipality. Zelpy opposed the application and in its counter-application sought an order directing the municipality to take a decision on Zelpy‟s request for permission to use the building in terms of s 14(1A). The municipality‟s refusal to issue a s 14(1A) certificate was based on its stance that an occupancy certificate could, in terms of s 14(1)(a), only be issued in respect of buildings constructed in accordance with approved building plans. Zelpy contended that the criminal sanction in s 14(4)(a) was adequate, rendering an interdict unnecessary. In the counter-application the central question was whether s 14(1A) permitted a local authority to grant permission for a building to be used where the building had been erected without its approval. [25] In deciding these issues, Rogers J reasoned that, since Zelpy had been occupying the buildings whithout approved plans, the erection of the buildings was unlawful in terms of s 4(1), but that „that section does not state, at least not expressly, that it is unlawful to use a building which has been unlawfully erected‟.24 The learned Judge reasoned further that the unlawfulness of Zelpy‟s use of the buildings is to be found by implication and that that implication is to be found, not in s 14(4), but rather in s 4(1). Rogers J 23 Berg River Municipality v Zelpy 2065 (Pty) Ltd [2013] ZAWCHC 53; 2013 (4) SA 154 (WCC). 24 Ibid para 23. opined that one of the Act‟s main purposes was to ensure that buildings will be safe and suitable for the intended use. He observed that: „[t]he erecting of a building is not an end in itself; a building is erected so that it may, upon completion, be occupied and put to use. The reason the Act forbids the erecting of buildings without approved plans and provides for their demolition if they are unlawfully erected is to prevent the existence of buildings which, because of the absence of approved plans, may be unsafe and unsuitable for use (even though no enquiry into safety and suitability is required in order for the act of erecting to be unlawful or in order to obtain an interdict or a demolition order). Even when a building has been erected in accordance with approved plans, s 4 does not permit it to be used or occupied without the local authority‟s further approval. This is a further mechanism to ensure that the building is safe and suitable for occupation, as is apparent inter alia from the requirement for the certificates specified in ss 14(2) and 14(2A).‟25 [26] The learned Judge furnished comprehensive reasons for his conclusion that s 4(1) contains an implied prohibition against the use or occupancy of a building in the absence of approved plans. He found support for his conclusion in the texts of ss 14(1) and 14(1A), the legislative history of s 14 and the absurdity of reading into the present wording of the introductory part of s 14(4)(1A) the words „or without‟ (ie that it would then read: „. . . erected or being erected with the approval of a local authority or without [such approval]‟. Rogers J found further support in the textual construction of the two penalty provisions in ss 4(4) and s 14(1)(a) respectively. He reasoned thus: „[t]here is a further reason for implying the prohibition in s 4(1) rather than s 14(4)(a). In the case of s 4, there is a prohibition in s 4(1) and an offence created in s 4(4). In the case of s 14, the prohibition and offence are not separately legislated – the sole source of unlawfulness is the offence created by s 14(4)(a). By implying into s 14(4)(a) words which would extend its operation to buildings erected without municipal approval one would be establishing a wider criminal offence than the one expressly created by the lawmaker. The scope of penal provisions must be conveyed with reasonable clarity . . . This is a further obstacle to implying words into s 14(4)(a), and it is only by some such implication that s 14(1A)‟s scope could sensibly be read as including buildings erected without municipal approval. The same difficulty 25 Ibid para 26. does not exist in s 4. Although the prohibition in s 4(1) necessarily implies, in the context of the Act as a whole, a prohibition against use, it is not necessary, and . . . probably not permissible, to make the same implication in s 4(4), which expressly criminalises the erecting (not the use) of a building in contravention of s 4(1)) and authorises a penalty expressed with reference to the number of days on which the person was engaged in erecting (not using) the building.‟26 [27] While the reasoning in Berg River Municipality appears, on the face of it, rather attractive, the conclusion that s 4(1) contains an implied prohibition against use or occupancy presents serious difficulties. First, the effect of such an implication may result in an offending party falling foul of a criminal sanction by attributing an implied meaning to a statutory provision. However, penal provisions must not only be stipulated with reasonable clarity,27 but must also be interpreted strictly where there may be ambiguity.28 The second difficulty is that there is no apparent reason why one must perforce read an implied prohibition against use or occupancy in s 4(1) when ss 14(1)(a) and 14(4)(a) expressly deal with unlawful use or occupancy where there are approved building plans. Where there are none, the local authority has other remedies available to it to enforce the provisions of the Act. It is well established that great caution must be exercised when seeking to read an implied meaning into a statute. That can only be done when implication is necessary to give effect to the statutory provision as it stands. In addition, the implication must be necessary so that the ostensible intent of the lawmaker is realised or to make the legislation workable. This approach was first laid down authoritatively by this court in Rennie NO v Gordon NO and another,29 and followed thereafter in a long line of cases in this court and in the Constitutional Court, most recently in Masetlha v President of the Republic of South Africa and others.30 I am unable to discern such a need as far as s 4(1) is concerned. And, importantly, the difficulties outlined above strongly militate against this implication. A strained interpretation which entails the implied 26 Ibid para 38. 27 University of Cape Town v Cape Bar Council & another 1986 (4) SA 903 (A). 28 Rex v Milne and Erleigh (7) 1951 (1) SA 791 (A ) at 823B-F. 29 Rennie NO v Gordon NO and another 1988 (1) SA 1 (A) at 22E-F. 30 Masetlha v President of the Republic of South Africa & another; 2008 (1) SA 566 (CC) para 192. meaning with its concomitant difficulties, propounded in Berg River Municipality, points inescapably to a need for legislative review and correction, if required. Confronted with these difficulties in the course of the debate, the respondent‟s counsel was driven to concede that the approach in Berg River Municipality on this aspect presents insurmountable obstacles. Counsel consequently reverted to what was termed, „the respondent‟s principal contention‟, namely the lack of an occupancy certificate and the effect of s 14(1)(a), read with s 14(4)(a), discussed above. [28] To sum up with regard to this first issue: non-compliance with ss 4(1) and 14(1) does not render the parties‟ lease agreement void and unenforceable. There is no basis to justify reading an implied meaning into s 4(1) that the use or occupancy of a building which has no approved plans is prohibited. I discuss next the respondent‟s alternative contention that the property was not fit for the purpose for which it had been let, since occupancy would have rendered the respondent liable to criminal prosecution under s 14(4)(a). [29] The respondent was at liberty to request the local authority to pursue the remedies available to it in terms of the Act, had the need arisen to do so. The conclusion is compelling that the respondent, with full knowledge of the lack of an occupancy certificate, had consented to use and occupation under the prevailing circumstances. The respondent received exactly what it had bargained for – office accommodation refurbished to its needs, in a building with an outstanding occupancy certificate which, to its knowledge, the owner (the appellant) was in the process of obtaining. The respondent never complained of this alleged unfitness for letting, and only did so after it had vacated the property and to avoid the consequences of being held to a contract it had freely entered into.31 [30] In the premises, the appeal must be upheld and the cross-appeal must fail. Although the appellant had in its summons initially sought payment from 31 Compare: Odendaal v Ferraris 2009 (4) SA 313 (SCA). 1 July 2014, in this court it altered that relief, seeking payment from 1 December 2014. The following order is issued: 1. The appeal is upheld with costs. 2. The order of the high court is set aside and substituted with the following: „Judgment is granted in favour of the plaintiff in the sum of R7 867 548.78 together with interest at 8% per annum from 1 December 2014 to date of payment and costs‟. 3. The cross-appeal is dismissed with costs. ________________________ S A MAJIEDT JUDGE OF APPEAL APPEARANCES For Appellant: D T v R du Plessis SC Instructed by: Mageza Raffee Mokoena Inc, Johannesburg Lovius Block Attorneys, Bloemfontein For Respondent: M P van der Merwe SC, with C de Instructed by: Villiers Delport van den Berg Attorneys, Pretoria Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 1 December 2017 STATUS: Immediate WIERDA ROAD WEST PROPERTIES (PTY) LTD v SIZWENTSALUBAGOBODO INC (1156/16) 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 unanimously upheld an appeal from the Gauteng Local Division of the High Court, Johannesburg with regard to the validity of a lease agreement which contravenes certain provisions of the National Building Regulations and Building Standards Act, 103 of 1997 (the Act). The high court had found the lease agreement to be valid but unenforceable, due to the contravention of s 4(1) of the Act (the lack of approved building plans in respect of the leased property) and s 14(1) of the Act (the lack of an occupancy certificate in respect of the leased property). The SCA held that the penal sanctions in these legislative provisions (ss 4(4) and 14(4)(a) respectively), were clearly regarded by the Legislative as adequate sanction in cases where these provisions are contravened. The SCA held further that the Legislature did not intend private contracts of, for example, lease, which contravene these sections, to be invalid as a further sanction. Lastly, the SCA held that there is no justifiable basis for reading an implied meaning into s 4(1) that the use or occupancy of a building which has no approved plans is prohibited. The SCA consequently upheld the appeal with costs and dismissed the cross-appeal with costs. -- end --

3136

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case no: 659/05 NOT REPORTABLE In the matter between: CLEARING AGENTS, RECEIVERS & SHIPPERS APPELLANT and THE MEMBER OF THE EXECUTIVE COUNCIL: TRANSPORT, KWAZULU-NATAL 1ST RESPONDENT THE MINISTER OF TRANSPORT 2ND RESPONDENT THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE 3RD RESPONDENT Before: Scott, Nugent, Lewis, Jafta et Cachalia JJA Heard: 13 March 2007 Delivered: 28 March 2007 Summary: All motor vehicles must be registered and licensed in accordance with the National Road Traffic Act 93 of 1996. Regulation 84, which is one of the regulations promulgated in terms of the Act, provides for unregistered and unlicensed vehicles to be operated on a public road temporarily under a temporary or special permit. It is intended as an interim measure, to permit unregistered and unlicensed motor vehicle users to operate their vehicles pending their registration and licensing in terms of the Act. It cannot be used to facilitate the transport of vehicles, using their own power, from a South African port to a neighbouring country. Neutral citation: This judgment may be referred to as Clearing Agents v MEC Transport [2007] SCA 35 (RSA) CACHALIA JA [1] The appellant is a universitas whose members describe themselves as clearing and forwarding agents and motor vehicle importers. The first and second respondents are the Member of the Executive Council: Transport, Kwazulu-Natal who is responsible for the administration of transport in that province and the Minister of Transport to whom the administration of the National Road Traffic Act 93 of 1996 (‘the Act’) has been entrusted. I refer to them together as ‘the respondents’. The third respondent has no interest in these proceedings. [2] There are three appeals before us. The main appeal arises in the following circumstances. There is a large market for imported second-hand motor vehicles in South Africa’s neighbouring countries apparently because they are more expensive when purchased in South Africa. The appellant’s members exploit this market by sourcing the vehicles from foreign countries, and then ship them to Durban from where they are driven to neighbouring countries. The vehicles thus sourced are not intended for use in this country. [3] The appellant’s members have been engaged in this business since at least October 2002 when the first and third respondents’ officials amended the relevant rules of the Customs and Excise Act 91 of 1964 to facilitate the removal in bond of the imported vehicles on South African roads to foreign destinations. They use the procedures provided for in reg 84 to achieve this result. Thus once the vehicles were physically offloaded from a ship, the appellant’s members applied for three-day ‘special permits’ to enable them to be driven to a roadworthy testing centre to obtain certificates of roadworthiness. Thereafter twenty-one day ‘temporary permits’ were issued to facilitate their being driven to foreign destinations on South African roads.1 1 See reg 84 below para 8. [4] In February 2005 the National Department of Transport, which reports to the second respondent, was advised that reg 84 does not permit the issue of temporary and special permits to facilitate the transportation of these vehicles from the port of entry to foreign countries. The Department’s Director- General accordingly issued a directive in May 2005 that the practice be discontinued. Following this directive the first respondent issued a circular, MLB Circular No 29/2005, instructing all registering authorities to discontinue issuing ‘special’ and ‘temporary permits’ for such vehicles with effect from 1 July 2005. In response the appellant sought a declaratory order in the court below that reg 84 authorises ‘the issue of temporary and special permits in respect of imported second hand motor vehicles intended to be driven in transit on South African roads, for the purposes of export’. The application was dismissed by Koen AJ in the Durban High Court. The appellant approaches this court with leave of the court below. The main question in this appeal is whether reg 84, properly construed, authorises the issue of temporary and special permits for the purpose of enabling vehicles to be driven on South African roads from the port of entry to our neighbouring countries. [5] There are two further subsidiary appeals. The first is against an order of Koen AJ that the appellant furnish security for costs. The second is against an order of Combrinck J interdicting the respondents from acting upon the directive pending the determination of the main appeal. It is convenient to dispose of these appeals immediately. Counsel for the parties agree that the determination of this dispute hinges on the outcome of the main appeal and that the two other appeals will have no practical effect or result. It is not suggested that there are any exceptional circumstances that warrant their consideration.2 Those appeals ought thus to be dismissed with costs. I turn to consider the main appeal. [6] A ‘regulation’ is defined in the Act to mean a regulation in terms of the Act. Regulation 1 provides that in the regulations, an expression defined in the Act has that meaning unless the context indicates otherwise. Regulations are subordinate legislation but the principles of statutory interpretation are equally applicable to them. The proper approach to be followed when interpreting any statutory provision or regulation was formulated by Wessels AJA in Stellenbosch Farmers’ Winery Ltd v Distillers Corporation (SA) Ltd3 as follows: ‘In my opinion it is the duty of the Court to read the section of the Act which requires interpretation sensibly, i.e. with due regard, on the one hand, to the meaning or meanings which permitted grammatical usage assigns to the words used in the section in question and, on the other hand, to the contextual scene, which involves consideration of the language of the rest of the statute as well as the “matter of the statute, its apparent scope and purpose, and, within limits, its background”. In the ultimate result the Court strikes a proper balance between these various considerations and thereby ascertains the will of the Legislature and states its legal effect with reference to the facts of the particular case which is before it.’ [7] The regulations must accordingly be considered in conjunction with and in the context of the Act. The Act’s object is ‘to provide for road traffic matters which shall apply uniformly throughout the Republic and for matters connected therewith’. Its underlying purpose is to regulate the use of motor 2 Section 21A of the Supreme Court Act 59 of 1959 Powers of court of appeal in certain civil proceedings (1) ‘When at the hearing of any civil appeal to the Appellate Division or any Provincial or Local Division of the Supreme Court the issues are of such a nature that the judgment or order sought will have no practical effect or result, the appeal may be dismissed on this ground alone. (2) . . . (3) Save under exceptional circumstances, the question whether the judgment or order would have no practical effect or result, is to be determined without reference to consideration of costs.’ 3 1962 (1) SA 458 (A) at 476E-G. vehicles in the Republic. Section 4 of the Act requires all motor vehicles to be registered and licensed unless exempt by regulation. Regulation 5 sets out the types of motor vehicles that fall within the exemption.4 Subject to these exemptions every motor vehicle in the Republic, whether or not operated on a public road, must be registered by a title holder thereof with the appropriate registering authority in accordance with the provisions of Part 1 under Chapter 111 of the Regulations. [8] Regulation 84, which we are concerned with for present purposes, provides for those circumstances where unregistered and unlicensed motor vehicles may be operated on a public road under a temporary or special permit. It reads thus: ‘(1) A person who desires to operate on a public road a motor vehicle which has not been registered and licensed or not licensed, and may not otherwise be so operated, may – (a) if he or she is the owner of such motor vehicle, obtain a temporary permit in respect of such motor vehicle in order to operate such motor vehicle on a public road as if it is registered and licensed, if such motor vehicle is to be – (i) delivered by or to such owner, who is a motor dealer; or (ii) registered and licensed in terms of this Chapter, but only during the period permitted for such registration and licensing; or (b) obtain a special permit in respect of such motor vehicle in order to operate such motor vehicle on a public road as if it is registered and licensed for purposes of – (i) testing such motor vehicle; (ii) proceeding to or returning from a place where repairs are to be or have been effected to such motor vehicle; (iii) reaching an examiner of vehicles or mass measuring apparatus; or (iv) repossessing such motor vehicle, as contemplated in regulation 69(2). (2) . . . 4 These include motor vehicles propelled by electrical power derived from overhead wires, have crawler tracks, belong to the Department of Defence or are self-propelled lawnmowers. (3) The owner of a motor vehicle which is licensed and who cannot comply forthwith with the provisions of regulation 35 or 36, may obtain a temporary permit in order to operate the motor vehicle on a public road. . . . [9] Regulation 84 allows for a temporary permit to be issued ‘if a motor vehicle is to be registered and licensed in terms of this Chapter’ (Chapter IV). The vehicles in the present case are not intended to be registered under the regulations, whether a regulation falling within this chapter or under any other regulation. Counsel for the appellants submitted that reg 875 (contained in this chapter) contemplates a register being kept of permits that are issued under reg 84 and that the recordal of permits in that register constitutes the registration of the vehicles concerned. Once permits were issued to members of the appellant, so it was submitted, and the permits were recorded in that register, that would constitute registration of the vehicles concerned under the provisions of this chapter. It follows, the submission continued, that the vehicles concerned were indeed ‘intended to be registered’ under this chapter. There is no merit in the submission. The recordal of permits under reg 87 does not constitute the registration of the vehicles concerned. [10] The clear purpose of reg 84 is to allow for vehicles to be driven on the roads pending their registration in accordance with the regulations (the reference in reg 84(1)(a)(ii) to ‘this chapter’ is probably erroneous). The 5 Regulation 87 Manner of issue of temporary or special permit ‘(1) On receipt of the application referred to in regulation 85(1) or (2), the registering authority may, and if the applicant so requires, shall issue an assessment showing the appropriate fees as determined by the MEC of the province concerned and if applicable, the penalties and arrear fees referred to in regulations 57 and 59. (2) On submission of the assessment and upon payment of the fees and penalties referred to in subregulation (1), the registering authority shall, subject to the provisions of regulation 59(2), and if satisfied that the application is in order – (a) record the particulars pertaining to – (i) the applicant; and (ii) if applicable, the date, number and place of issue of a certification of roadworthiness, referred to in regulation 85(3)(c); in the register of motor vehicles; . . .’ vehicles that are now under consideration are not intended to be registered under the regulations, whether under this chapter or at all, and on that ground alone the appellants are not entitled to permits. It is not necessary in the circumstances to consider the other grounds upon which they were said not to fall within the terms of the regulation. The following order is accordingly made: (i) The main appeal (against the order of Koen AJ) is dismissed with costs including those costs consequent upon the employment of two counsel; (ii) the second appeal (against the security of costs order of Koen AJ) is dismissed with costs; (iii) the third appeal (against the order of Combrinck J) is dismissed with costs. _______________ A CACHALIA JUDGE OF APPEAL CONCUR: SCOTT JA NUGENT JA LEWIS JA JAFTA JA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 March 2007 Status: Immediate Clearing Agents, Receivers & Shippers v MEC Transport, Kwazulu-Natal 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, with costs of two counsel, an appeal by Clearing Agents, Receivers & Shippers (the appellant) against a decision of the Durban High Court upholding a directive issued by the Director General of the Department of Transport that regulation 84 of The Road Traffic Regulations, (promulgated by the Minister of Transport in terms of the National Traffic Act 93 of 1996) does not authorise the issue of temporary permits in respect of imported second hand motor vehicles intended to be driven in transit on South African roads, for the purposes of export. The first and second respondents are the MEC for Transport, Kwazulu-Natal and The Minister of Transport to whom the administration of the National Road Traffic Act has been entrusted. The appellant had sought a declaratory order on behalf of its members that regulation 84 permitted the issue of special and temporary permits to facilitate imported vehicles to be driven on South African roads to foreign destinations. The appellant’s members have since October 2002 been able to facilitate the removal in bond of imported vehicles on South African roads to foreign destinations. They used the procedures provided for in regulation 84 to apply for special permits to enable the vehicles to be driven to a roadworthy testing centre and to obtain certificates of roadworthiness. Temporary permits were then issued to facilitate the driving of the vehicles to foreign destinations on South African roads. In May 2005 the Minister issued a directive that this practice was to be discontinued because the regulation did not permit the issue of temporary and special permits to facilitate the transportation of these vehicles from the port of entry to foreign countries. The SCA concluded that regulation 84 provides for unregistered and unlicensed vehicles to be operated on a public road temporarily under a temporary or special permit, and that it was intended to be an interim measure to permit unregistered and unlicensed motor vehicle users to operate their vehicles pending their registration and licensing in terms of the Act. The regulation can therefore not be used to facilitate the transport of vehicles, using its own power, from a South African port to a neighbouring country. The SCA also considered two subsidiary appeals. First, an order compelling the appellant to furnish security for costs and secondly, that the Minister be interdicted from acting upon the directive to discontinue the issue of temporary and special permits pending the determination of the appeal. The SCA found that these appeals had no practical effect and that no exceptional circumstances were shown to exist what warranted there consideration. In the case of the first appeal the appellant was ordered to pay the respondents’ costs and in the second appeal the respondents were ordered to pay the appellants’ costs.

1838

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 024/10 In the matter between: SIM ROAD INVESTMENTS CC Appellant and MORGAN AIR CARGO (PTY) LIMITED Respondent Neutral citation: Sim Road Investments CC v Morgan Air Cargo (Pty) Ltd (024/10) [2010] ZASCA 081 (27 May 2011) Coram: Harms DP, Lewis, Bosielo, Seriti JJA and Petse AJA Heard: 05 May 2011 Delivered: 27 May 2011 Summary: Sale of land – induced by fraudulent misrepresentation – effect thereof. ORDER On appeal from: North Gauteng High Court (Pretoria) (Murphy J sitting as a court of first instance). The appeal is dismissed with costs. __________________________________________________________________ JUDGMENT __________________________________________________________________ BOSIELO JA (Harms DP, Lewis, Seriti JJA and Petse AJA concurring): [1] The appellant, Sim Road Investments CC (Sim Road), was the owner of an agricultural holding known as plot (hoewe) 35 Pomona Estates, Pomona, Kempton Park. The respondent, Morgan Air Cargo (Pty) Ltd (Morgan Air), purchased the property at an auction on 17 May 2006 which was conducted by a firm of auctioneers (Venditor). Morgan Air paid at the fall of the hammer R200 000 as a deposit and R182 400 as the auctioneer’s commission. Morgan Air subsequently instituted action against Sim Road for cancellation (or for confirmation of a cancellation) of the agreement and for repayment of the amounts paid to Sim Road and to Venditor. Morgan Air based its claim on fraudulent misrepresentation and, in the alternative, on mistake. The court below (Murphy J) gave judgment in favour of Morgan Air for the amounts claimed against the defendants respectively. Aggrieved by the judgment, Sim Road appealed to this court with the leave of the court below. The auctioneer, however, did not appeal. [2] The facts of this matter have been set out in detail in the judgment of the court below. Consequently this judgment is confined to the evidence germane to this judgment. [3] Sim Road mandated Venditor to sell the property by auction. Pursuant to this Venditor published advertisements in both the Rapport and Beeld newspapers for the sale of the property. The relevant part of the advertisements reads as follows: ‘KOMMERSIëLE EIENDOM – POMONA (2.2 HEKTAAR) Ligging: Hoewe 35, Pomona, Kempton Park. Verbeterings: Rondawel/Kantoor met afkortings – onvoltooid. Omhein met beton pallisade met 10 m skuifhek. Hierdie puik 2,2-hektaar-eindom is geleë in ʼn baie gesogte gebied – bestem vir ligte industrie. Dienste beskikbaar. Voorwaardes: Deposito 10% + BTW. Koperskommissie 8% (plus BTW).’1 [4] It is important to note at this early stage that the advertisement was false in two material respects. The property was not a commercial property – it was agricultural and the title deed stated specifically that it could be used for agricultural, horticultural or for breeding or keeping domestic animals, poultry or bees. The property was also not earmarked for light industrial use. [5] Mr Morgan, who is one of the directors of Morgan Air, testified that Morgan Air carries on the business of chartering aircrafts for reward. In order to provide a better service to its customers it required property close to O R Tambo International Airport where it could build a warehouse. It already owned property near the airport. But as this property was zoned as agricultural land Morgan Air could not build any warehouse on it. When Morgan saw the advertisement in the 1 The same typing format is not reproduced. Rapport newspaper, he became interested in it because it was advertised as commercial property destined for light industry. As he knew the owner of Venditor, he telephoned him for confirmation of the auction sale. [6] On 17 May 2006, Morgan, together with one Van Vuuren, attended the auction. Before the auction took place Morgan spoke to the auctioneer, Mr Koop Steyger. He told him that he intended to buy the property so that he could build a warehouse for his customers. He explained to Steyger that he had another property nearby which was not commercial property. Steyger did not tell Morgan that the property to be auctioned was agricultural and not commercial nor that it was not earmarked for light industrial use. [7] Morgan Air, being the highest bidder, purchased the property for R2 million, signed a deed of sale and paid the deposit and auctioneer’s commission. Morgan subsequently learned that the property was zoned agricultural and not commercial. (He learned also that it was not possible to have the property rezoned, but that is of no consequence to the matter.) As he had not intended to buy a property zoned agricultural, he immediately took steps to have the agreement rescinded and demanded repayment. [8] Sim Road and the auctioneer did not accept the cancellation of the contract. They relied in this regard on the terms of the contract signed when the property was knocked down to Morgan Air. There was first a voetstoots clause in these terms:2 2 We do not use the same typing format as used in the actual contract but the words are verbatim. ‘Die eiendom word voetstoots verkoop, soos dit tans is en die afslaer nog die verkoper gee enige waarborge ten opsigte van groottes, sigbare of verborge gebreke, kwaliteit of wettigheid van verbeterings of aktiwiteite wat daarop befryf word nie. Die eiendom word verder verkoop onderhewig aan al die voorwaardes en serwitute teen die titelakte geregistreer.’ Then there was a clause in which the purchaser acknowledged that he had not been influenced by any representations contained in advertisements and the like: ‘Die afslaer of verkoper is nie verplig om enige grense of bakens uit te wys nie, en enige beskrywing of inligting, hetsy in advertensies, katalogusse, brosiures of mondelings verskaf, word in goedertrou gedoen en die koper erken dat hy nie deur enige uitdruklike of stilswyende voorstellings tot die sluiting van hierdie kontrak beweeg is nie.’ Lastly, there was clause 18: ‘Die bepaling van hierdie document behels die gehele ooreenkoms tussen die partye en geen voorlegging gemaak deur of namens die partye sal bindend wees as dit nie skriftelik tot hierdie document gevoeg en deur die partye onderteken is nie.’ [9] In the light of these provisions, Morgan Air could not base its claim for rescission on an innocent or negligent misrepresentation and instead relied in its particulars of claim on the two alternative causes of action mentioned. First, it said that it was not bound by these clauses because of a fraudulent misrepresentation. In the alternative it relied on a unilateral iustus error brought about by the content of the advertisement. The court below, unwilling to find fraud, upheld the argument that the agreement was void because of a unilateral mistake induced by the advertisement, and made the order for repayment. As will appear in due course, the order was correctly made but for the wrong reasons. This case is not about mistake but about fraud. But in order to come to that conclusion it is necessary to deal with the evidence in more detail. And I intend to deal in conclusion with the conceptual error committed by the court below when dealing with mistake. [10] Van Vuuren was Morgan Air’s general manager at the time of the auction. His evidence accorded with that of Morgan and does not require any elaboration. Mr Johan Moolman (Moolman Jnr) testified for Sim Road. His father was the only member of the close corporation. As his father is visually impaired he assisted him with the auction of this property. Essentially Moolman Jnr said that his father had instructed Venditor to attend to the sale of the property. The person who was instructed is Ms Lehmacher who worked for Venditor Auctioneers as an agent. Moolman Snr had furnished Lehmacher with the particulars and description of the property. Moolman Jnr confirmed that the property was zoned agricultural and not commercial and that they knew this at the time. [11] When confronted with the advertisements which were placed by Venditor and which described the property as commercial, Moolman Jnr disavowed any knowledge of such instructions. Importantly, he confirmed that he attended the auction where he saw many posters and flyers scattered around describing the property in the same terms. [12] However, notwithstanding this observation, Moolman Jnr did not instruct Steyger when he met him that morning at the auction to do something to correct this patent misrepresentation. He only shook his hand. Moolman Jnr testified that instead he instructed Lehmacher to correct this error and announce to the prospective bidders that the property was zoned agricultural and not commercial. However, according to Moolman Jnr, it was Steyger, the auctioneer, who announced to the prospective bidders at the auction that the property was agricultural and not commercial. Not surprisingly, Moolman Jnr could not explain why this crucial evidence was withheld and never put by his counsel to Morgan Air’s witnesses for their comments whilst they were still testifying. [13] Lehmacher, who was responsible for the advertisement, was called as a witness by Sim Road. Contrary to what Moolman Jnr stated, she testified that the information she used in the advertisements, in particular the word ‘commercial’, emanated from Moolman Snr. In support of this Lehmacher referred to a contemporaneous note of her telephone discussion with Moolman Snr on 17 April 2006 which reads: ‘Karel. Erf 35 Pomona. Sim Road Invest CC. ….very popular area. 1-8/2.2 omhein met sementmuur. Soneer landbou / Kommersieel. Geoogmerk ligte industry. Nie water nie – dienste beskikbaar….Water aansluit – Karel Jacobus Moolman volspoed’. Importantly she confirmed that the advertisements which appeared in the Rapport and Beeld newspapers were in accordance with these instructions from Moolman Snr. [14] Lehmacher testified that she had discovered soon after they had obtained the title deed that the property was zoned agricultural and not commercial. This was before the auction. She conceded that notwithstanding this crucial discovery, Venditor did not issue another advertisement to correct this patent error. She could not recall that Moolman Jnr told her at the auction to make a public announcement to advise prospective bidders that the property was agricultural and not commercial. [15] On the contrary, she testified that, during the course of the auction, she scribbled a note to Steyger with a request that he should make an announcement to the prospective bidders that the property was zoned agricultural and not commercial. Again, this evidence was never put to Morgan Air’s witnesses. Most importantly, Steyger did not testify. (The significance of this failure will become clear later in the judgment.) [16] It is clear from the evidence that Sim Road (through Moolman Snr, its sole member) knew that the representation was false and that both Moolman Jnr as well as Venditor knew it to have been false prior to the sale. The next issue was whether Morgan was informed before bidding that the land was not commercial. [17] Moolman Jnr testified, as already mentioned, that after he discovered that the property was wrongly described as commercial and not agricultural, he instructed Lehmacher at the auction to make an announcement to correct this error. This is contradicted by Lehmacher (who testified rather late in the trial) that, of her own accord she asked Steyger to make an announcement to correct the wrong description of the property. Whilst testifying in chief, Moolman Jnr stated that, in responding to a question by one of the bidders at the auction regarding the zoning of the property, he stated that the property was zoned agricultural. Evidently there is a serious contradiction on this crucial aspect between the two witnesses for Sim Road. [18] Notwithstanding this serious contradiction on a crucial aspect of the case, Steyger, who had been present in court during the trial, did not testify. This is despite the fact that it was put to Morgan during cross-examination by counsel for Venditor that Steyger would testify that before the auction started one of the bidders asked a question regarding the zoning of the property and Steyger replied that it was agricultural property. One would have expected him to testify to shed light on whether any public announcement was made at the auction to correct the misrepresentation and if so, by whom. No explanation was tendered for his failure to testify which in itself justifies the inference that Steyger would not have confirmed that such an announcement was made. On the evidence presented on behalf of Sim Road, no such announcement was made. Accordingly, the false misrepresentation was left to stand uncontradicted. [19] In any event, the probabilities are strongly in favour of Morgan Air that such announcement was not made within earshot of either Morgan or Van Vuuren. Morgan testified that if he knew that the property was agricultural and not commercial, he would not have purchased it. This is understandable as he could not build a warehouse on agricultural land. Furthermore, Morgan Air already owned nearby land which it could not use for commercial purposes. Why then would it buy another property zoned agricultural? The probabilities clearly indicate, and Morgan testified, that Morgan Air would not have bought the property had it known that it was zoned agricultural. It was thus induced by the misrepresentation to enter into the contract. [20] Murphy J concluded that he could not find that the appellant acted with fraudulent intent. However, he found that Morgan Air was induced to purchase the property by a misrepresentation made negligently by Sim Road. He found that such a mistake was about an essential attribute of the merx and that it induced the respondent to purchase something fundamentally different to what he intended to buy. He thus concluded that Morgan Air had reasonably made a material error allowing it to avoid the contract. [21] It is true that any misrepresentation is likely to result in a mistake made by the person induced by it to enter into a contract. But that mistake might not be iustus and therefore actionable. If, however, the mistake is both reasonable and material, the contract might well be void.3 But in this matter mistake was not the primary basis of Morgan Air’s claim that it was entitled to claim return of the moneys paid under it. Its claims were made on the basis of fraudulent misrepresentation. And the court below erred in finding that the contract was rendered void by the unilateral mistake of Morgan Air. [22] It has been settled law for many decades that a material representation renders a contract voidable at the instance of the misrepresentee.4 Absent the voetstoots and exclusion clauses cited above, Morgan Air would have been entitled to ask for rescission and restitution even if the misrepresentation had been innocent. [23] But liability for a misrepresentation made innocently and even negligently may be excluded by parties to a contract – hence the conjecture that Murphy J found that the misrepresentation had been made negligently and that it had resulted in iustus error that rendered the contract, including the exclusion clauses, void. As 3 Brink v Humphries & Jewell (Pty) Ltd 2005 (2) SA 419 (SCA) para 2. 4 See R H Christie The Law of Contract in South Africa 5 ed (2006) at 286ff. stated, however, a misrepresentation generally renders a contract voidable. The innocent party may elect to abide by it even where the other party has been fraudulent.5 The difference that fraud makes is that one cannot contract out of liability for fraudulent conduct.6 [24] And even where a misrepresentee has been foolish or negligent in relying on the fraudulent misrepresentation, that does not in any way affect the liability of the misrepresentor. In Standard Credit Corporation Ltd v Naicker7 Milne JP said it does not avail one guilty of fraud to say that the victim was negligent in believing the misrepresentation. He quoted from the judgment of Jessel MR in Redgrave v Hurd:8 ‘If a man is induced to enter into a contract by a false misrepresentation, it is not sufficient answer for him to say “if you had used due diligence you would have found out that the statement was untrue”.’ [25] The high court, referring to the Naicker case, considered that Morgan Air’s mistake had been made reasonably in the circumstances, and that it was material since it went to an essential attribute of the property. The contract, it held, was thus void. Murphy J stated that since Trollip v Jordaan9 ‘our law appears to have taken a different turn by allowing perhaps less than fraud to avoid an exemption clause’. But that case dealt with mistake. Hoexter JA (for the majority) held that when an error in corpore renders a contract void, the whole contract, including exemption clauses, is void. Error is not ‘something less’ than fraud. It is something different, 5 See, for example, Trotman v Edwick 1951 (1) SA 443 (A) and Ranger v Wykerd 1977 (2) SA 976 (A). 6 Wells v South African Alumenite Company 1927 AD 69. 7 Standard Credit Corporation Ltd v Naicker 1987 (2) SA 49 (N) at 51B-E. 8 Redgrave v Hurd (1882) 51 LJ Ch 113 at 117. 9 Trollip v Jordaan 1961 (1) SA 238 (A). because in the case of fraud the contract is voidable. Where there is a material and iustus error, on the other hand, the contract would be void. The other cases discussed by the high court, which dealt with mistake, have also not introduced any new approach. [26] There is no doubt that the fraudulent misrepresentation made by the Moolmans and Lehmacher was material and that it directly induced Morgan Air, which was looking for a commercial property, to purchase Sim Road’s property. The exclusion clauses in the contract signed by Morgan had no effect given the fraud. It follows that Morgan Air was entitled to rescind the agreement for the purchase of the property and to claim the moneys that it had paid as a deposit and as auctioneer’s commission. [27] The appeal is dismissed with costs. _______________ LO Bosielo Judge of Appeal APPEARANCES: For Appellant: A P Bruwer Instructed by: Ben Steyn Incorporated C/o Koekemoer Attorneys, Pretoria, Matsepes Incorporated, Bloemfontein; For Respondent: N Davids SC Instructed by: Snymans Attorneys, Pretoria, Horn & van Rensburg, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 27 May 2011 STATUS Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Sim Roads Investments CC v Morgan Air Cargo (Pty) Ltd (024/10) [2011] ZASCA 081 (27 May 2011) In a judgment delivered on 27 May 2011, the Supreme Court of Appeal (SCA) dismissed an appeal against a judgment of the North Gauteng High Court. The appellant, the owner of an immovable property had instructed Venditor Auctioneers to sell the property on its behalf by auction sale. According to the Title Deed the property was zoned agricultural. However acting on instructions received from one Morgan (the appellant’s sole director) Sabine, an employee of Venditor Auctioneers advertised the property as a commercial property. Relying on the advertisements, the respondent purchased the property as a commercial property for R2 million at an auction held on 17 May 2006. After the appellant had discovered that the property was zoned agricultural and not commercial, neither the appellant nor its agents took any steps to correct this patent misrepresentation regarding a material attribute of the merx. The SCA held that the appellant had a duty to correct the misrepresentation created by false advertisements. The SCA further held that by failing to correct the misrepresentation the appellant acted fraudulently. Furthermore, the SCA held that the respondent was induced by the fraudulent misrepresentation which was material to purchase the property. The SCA held that in the circumstances the respondent was legally entitled to rescind the agreement and to claim refund of the money he had paid as a deposit and auctioneer’s commission in respect of the agreement. The appeal was dismissed with costs.

212

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1361/2016 In the matter between: TEBOGO PATRICK LEDWABA PHETOE APPELLANT and THE STATE RESPONDENT Neutral citation: Phetoe v State (1361/2016) [2018] ZASCA 20 (16 March 2018) Coram: Leach, Mocumie JJA and Plasket AJA Heard: 16 February 2018 Delivered: 16 March 2018 Summary: Criminal law and Procedure – conviction of rape as an accomplice not correct – all elements of the crime including mens rea to be satisfied - association or mere presence at the scene of the commission of the crime, not necessarily proof of assistance or encouragement. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Local Division of the High Court, Johannesburg (Mokgoatleng and Kumalo JJ and Dama AJ sitting as court of appeal): (a) The appeal succeeds in respect of all counts except count 9. (b) The order of the court a quo is set aside and replaced with the following order. ‘(i) The appellant’s conviction and sentence in respect of count 9 are confirmed. (ii) The appellant’s convictions and sentences in respect of the remaining counts are set aside. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Mocumie JA (Leach JA and Plasket AJA concurring): [1] The appellant stood trial in the Gauteng High Court Division, Johannesburg (the trial court), with six co-accused on eight counts of housebreaking with intent to rob and robbery with aggravating circumstances, eight counts of common law rape perpetrated on numerous complainants, one count of attempted robbery, three counts of assault with intent to do grievous bodily harm, two counts of malicious damage to property and two counts of assault. In January 2000, he was convicted on all counts and sentenced to life imprisonment in respect of the rape convictions as well as sentences ranging from two to 20 years’ imprisonment in respect of the other convictions. [2] In May 2000, the appellant’s application for leave to appeal against his convictions and sentences was dismissed. In November 2012, this court granted the appellant leave to appeal to a full court of the Gauteng Division, Johannesburg. In June 2016, a majority of the full court upheld the appellant’s appeal against his convictions on the eight counts of common law rape and substituted them with convictions as an accomplice to those rapes. As the basis for these convictions had changed, the majority of the full court set aside the eight sentences of life imprisonment, reconsidered sentence and re-imposed eight sentences of life imprisonment. The appellant’s appeal against the remainder of his convictions and sentences were dismissed. In a minority judgment, Dama AJ would have set aside all of the convictions and sentences but for count 9, it being a count of robbery with aggravating circumstances for which the appellant had been sentenced to 15 years’ imprisonment. [3] The appellant has now appealed to this court against his convictions and sentences, with the exception of count 9. This appeal is with special leave of this court. Background Facts [4] It is common cause that late on a Sunday night and early on a Monday morning, in September 1998, a group of young men rampaged through the Umthambeka Section of Tembisa, in the district of Kempton Park. They forced entry into several shacks and once inside, they assaulted, robbed and raped the occupants. Ms Doris Mothobi (Ms Mothobi) and her two younger sisters, Ms Ncumisa (Ms Ncumisa) and Ms Malesedi Ncumisa occupied one of the several households invaded. Subsequently, seven people, including the appellant, were arrested. He was well known to Ms Mothobi as the two of them attended high school together. They were both in the same grade but in different classrooms. She knew the appellant as Pat. [5] In the trial court, Ms Mothobi testified that on the night in question, while she and her sisters were sleeping, the appellant and a group of young men who were unknown to her, forced entry into their shack. The intruders demanded money but they were told that there was none. Ms Mothobi and her younger sister, Ms Ncumisa, were ordered to cover their heads with blankets. A person, referred to in the trial as ‘the first intruder,’ demanded to have sexual intercourse with Ms Mothobi. She refused. A second person, referred to as the ‘second intruder’, assisted the first intruder to assault her and overcome her resistance. Her underwear was torn off. The first intruder then raped her. When he had finished he went outside. Ms Mothobi went to assist her younger sister, who was also being raped by another co-accused. [6] At some stage, Ms Mothobi saw the appellant lying next to her on the bed. She called him by his name and asked him ‘why are they doing such a thing’. Instead of saying anything in response, the appellant laughed. At some stage, and it is not clear from her evidence whether it was before or after she spoke to the appellant, another co-accused entered the shack and raped her. Two months later, an identification parade was held. Ms Mothobi identified the appellant positively and she did the same in the dock during the trial. Her identification of the appellant was corroborated by Mr Tholamile Eric Mdaka, an occupant of one of the shacks that was also invaded. He saw the appellant in the vicinity of his shack and Ms Mothobi’s shack. Ms Mothobi was unable to identify any of the appellant’s associates on the night of the incident. During cross examination, Ms Mothobi said that she could not identify who had raped her or Ms Ncumisa. In answer to a question asked by the trial judge, she said that she had not been raped by the appellant and she did not know who had raped her sister. The Trial Court [7] In the trial court, Willis J, despite no evidence to this effect having been led, found that the accused must have conspired together to commit the crimes that were committed during the rampage. He also concluded on the basis of inferences that he drew from circumstantial evidence that: first, the appellant was the second intruder who assisted the first intruder to assault and subdue Ms Mothobi in order for her to be raped; and secondly, he associated himself with the second rape of Ms Mothobi. He was convicted on this basis of the rapes of both Ms Mothobi and Ms Ncumisa. In addition, he was convicted on the basis of the finding as to a prior agreement of all the offences that were committed during the rampage. The Full Court [8] On appeal to the full court, the majority (Mokgoatlheng and Khumalo JJ) upheld the view of the trial court that Ms Mothobi was an excellent witness and it justifiably accepted her evidence as reliable in identifying the appellant on the night of the incident, immediately after she was raped by the first intruder. On that basis it concluded that the appellant was the second intruder that assisted the first intruder in assaulting and overpowering Ms Mothobi when she was first raped. The full court, like the trial court, concluded that the appellant associated himself with the second rape of Ms Mothobi. It however held him liable as an accomplice in respect of each of the eight common law rapes perpetrated on the eight complainants during the course of the rampage. It dismissed his appeal against the remainder of his convictions and sentences. [9] In his minority judgement, Dama AJ disagreed with the majority’s conclusion and held in respect of the rape of Ms Mothobi and her sister that: ‘[In this case] there is no minute evidence which was proved by the State that the appellant assisted others in any form during the commission of the rape, save that he was present at the scene and, therefore appellant must escape liability in this regard.’ He found that there was no evidence to link the appellant to the offences committed at places other than Ms Mothobi’s shack. He concluded that the evidence established the appellant’s guilt in respect of count 9 only – the robbery with aggravating circumstances committed in Ms Mothobi’s shack. He would have upheld the appeal in respect of all the convictions on all counts, other than count 9. In this Court [10] Before us, counsel for the appellant contended that Ms Mothobi’ s evidence as to when she saw the appellant in her shack was unclear. He submitted that during her testimony, Ms Mothobi replied ‘I do not remember any more as to whether it was before or after I had been raped’. He further submitted that the objective facts showed that there were more than three intruders, whereas Ms Ncumisa testified that there were five young men and Ms Mothobi could not remember. Ms Mothobi was also adamant that she and her younger sister were not raped by the same intruder. For that reason, counsel for the appellant contended that the full court misdirected itself for convicting the appellant as an accomplice to the rape of Ms Mothobi and her younger sister. He also argued that the appellant’s convictions in respect of all of the other counts, except for count 9, had not been proved beyond a reasonable doubt by the State. The law and the facts: accomplice to rape [12] In Minister of Justice and Constitutional Development & another v Masingili & others1 the Constitutional Court grappled with the meaning of the term ‘accomplice’. Having considered the facts before it, it stated the following: ‘An accomplice is someone whose actions do not satisfy all the requirements for criminal liability in the definition of an offence, but who nonetheless furthers the commission of a crime by someone else who does comply with all the requirements (the perpetrator).The intent required for accomplice liability is to further the specific crime committed by the perpetrator.’ [13] The learned author C R Snyman Criminal Law 6 ed (2014) at 266 describes the position as follows: ‘Accomplice liability may be defined as follows: 1. A person is guilty of a crime as an accomplice if, although he does not satisfy all the requirements for liability contained in the definition of the crime and although the conduct required for a conviction is not imputed to him by virtue of the principles relating to common purpose, he unlawfully and intentionally engages in conduct whereby he furthers the commission of a crime by somebody else. 2. The word “furthers” in rule 1 above includes any conduct whereby a person facilitates, assists or encourages the commission of a crime, gives advice concerning its commission, orders its commission or makes it possible for another to commit it.’ [14] Against this background, it is necessary to examine Ms Mothobi’s evidence. In my view, the clear identification of the appellant by Ms Mothobi could not be refuted as she knew him well prior to the incident. She also had sufficient opportunity within the confines of a single-room shack to positively identify him as he came into the shack with his co-accused and when he was lying on the bed after the first rape had occurred. 1 Minister of Justice and Constitutional Development & another v Masingili & others [2013] ZACC 41; 2014 (1) SACR 437 (CC) para 21; See also R v Jackelson 1920 AD 486 at 491. For interest, in the United Kingdom, the doctrine is more commonly known as ‘joint criminal enterprise’. In Jogee and Ruddock v The Queen (Jamaica) [2016] UKSC the Supreme Court stated: ‘(1) D2 must assist or encourage D1 in the commission of offence X; (2) D2 must know any necessary facts which gives D1’s conduct or intended conduct its criminal character; and (3) With that knowledge,D2 must intend to assist or encourage D1 to commit offence X, with the requisite mental fault element of that offence.’ [15] Reverting to the basis on which the full court confirmed the convictions, and applying same to these facts, I have to agree with Dama AJ on his reasons mentioned above in para [9]. To convict the appellant on the basis of his mere presence is to subvert the principles of participation and liability as an accomplice in our criminal law. For criminal liability as an accomplice to be established, there must have been some form of conduct on the part of the appellant that facilitated or assisted or encouraged the commission of the rape of Ms Mothobi during the two separate incidents in her shack. Ms Mothobi’s evidence does not disclose any assistance rendered by the appellants in the commission of the rapes; and the conduct does not amount to facilitation, assistance or encouragement. That, in my view, should have been the end of the matter. The fact that the appellant laughed after being asked why they were ‘doing such a thing’ may be conduct that showed his approval of what was happening, but that is not enough to establish his liability as an accomplice. In S v Nooroordien & andere,2 in which two persons had been present when a murder had been committed, the court stated: ‘Alles wat gebeur het mag, en het in alle waarskynlikheid hulle goedkeuring weggedra. Dit is egter nie genoeg nie…’3 [16] Before us, the State relied on S v Kock4 but also conceded that the facts of that case are distinguishable from the present appeal. In Kock the appellant was charged with rape together with his co-accused. During the rape of the complainant by the appellant’s co-accused, the appellant stood guard with a panga while accused 1 was raping the complainant. In the appeal before us, the least that can be said about the appellant’s conduct of laughing and doing nothing to prevent the rapes, is that it was morally reprehensible. That, and his mere presence at the scene, is not enough to justify a conviction as an accomplice to rape. [17] As no actus reus has been established by the evidence, the appellant’s convictions as an accomplice in respect of the rape of Ms Mothobi cannot succeed. For the reasons set out immediately below, the appellant’s conviction as an accomplice to the rape of Ms Ncumisa must also be set aside. 2 S v Nooroodien & andere 1998 (2) SACR 510 (NC); See Snyman above. 3 At 524f-g. Loosely translated to English it means ‘all that happened seems to have carried their approval. That is however not enough.’ 4 S v Kock en ‘n ander 1998 (1) SA 37 (A) Common purpose on the remaining offences where the appellant was not present. [18] In respect of the remaining charges of being an accomplice to rape, including the rape of Ms Ncumisa, housebreaking, with intent to rob and robbery with aggravating circumstances, common assault and assault with intent to do grievous bodily harm, housebreaking with intent to rob and attempted robbery with aggravating circumstances and malicious injury to property, which were committed at other households, the trial court found that a prior agreement must have been reached by all those identified at any of the sites at which crimes had been committed. It was on this basis that the appellant was convicted even though he was only identified at Ms Mothibi’s shack. It reached this conclusion by inferential reasoning: because so many offences were committed by so many people at so many places, those who were identified must have agreed beforehand to the rampage and everything that it entailed. This is not, however, the only reasonable inference to be drawn and certainly in respect of the appellant, it cannot be said that because he was seen at Ms Mothobi’s shack he was party to a prior agreement and was present at all of the other scenes. [19] In the absence of any prior agreement, the State had to prove the following requirements of the doctrine of common purpose as set out in S v Mgedezi5 in order for the appellant to be held criminally accountable. Firstly, the appellant was present at the scene of violence. Secondly, he was aware of the perpetration of such offences on the complainants in the other households. Thirdly, he had intended to make common cause with those who were actually perpetrating the offences. Fourthly, he manifested his sharing of a common purpose with the perpetrators of the offences by himself performing some act of association with the conduct of the others. Fifthly, he had the requisite mens rea i.e he intended to assault, break in and rob or must have foreseen the possibility of the commission of these offences and performed his own act of association with reckless disregard as to whether or not such eventuality ensued. 5 S v Mgedezi & others [1988] ZASCA 135; 1988 (1) SA 687 (A) at 7051I-706C. [20] In my view, there was no such evidence to prove that the appellant was present at the scenes of violence where the rapes, assaults, housebreakings, robberies and other offences were being committed other than at the household of Ms Mothobi and Ms Ncumisa . Nor was it proven that he had the requisite mens rea, was aware of the violence taking place in the other households and had manifested his sharing of a common purpose with the perpetrators of the rapes, assaults, housebreakings, robberies and other offences. The Constitutional Court in S v Molimi 6put it aptly as follows: ‘It is a cardinal principle of our criminal law that when the State tries a person for allegedly committing an offence, it is required, where the incidence of proof is not altered by statute .., to prove the guilt of the accused beyond reasonable doubt. That standard of proof, “universally required in civilised systems of criminal justice,” is a core component of the fundamental fair trial right that every person enjoys under s 35(3) of the Constitution. In S v Zuma and Others, this Court, per Kentridge AJ, held that it is always for the prosecution to prove the guilt of the accused person, and that the proof must be beyond reasonable doubt. The standard, borrowing the words used by Plasket J in S v T, “is not part of a charter for criminals and neither is it a mere technicality.” When the State fails to discharge the onus at the end of the case against the accused, the latter is entitled to an acquittal. ‘ Thus the appellant ought not to have been convicted of all the other charges except the charge in respect of count 9.The concession in respect of count 9 was made correctly so. In my view, therefore, the trial court and the full court erred in convicting the appellant of any of the charges with the exception of count 9. [21] The events of that night were aptly described by the full court as a ‘reign of terror, an orgy of violence and pillage which included a paralysis of fear, morbidity, hopelessness and a psychosis of defencelessness’ in the complainants.’ This court is sensitive and aware of these violent crimes perpetrated against women and children. But there is a more onerous duty on courts to ensure that there is an adherence to the rule of law to the extent envisaged by our Constitution where everyone is treated equally before the law. To use the words of Plasket J in S v T:7 ‘The State is required, when it tries a person for allegedly committing an offence, to prove the guilt of the accused beyond reasonable doubt. This high standard of proof – universally 6 S v Molimi [2008] ZACC 2; 2008 (2) SACR (CC) para 50. 7 S v T 2005 (2) SACR 318 (E) at para 37. required in civilised systems of criminal justice – is a core component of the fundamental right that every person enjoys under the Constitution, and under the common law prior to 1994, to a fair trial. It is not a part of a charter for criminals and neither is it a mere technicality. When a court finds that the guilt of an accused has not been proved beyond reasonable doubt, that accused is entitled to an acquittal even if there may suspicions that he or she was, indeed, the perpetrator of the crime in question. That is an inevitable consequence of living in a society in which freedom and the dignity of the individual are properly protected and are respected. The inverse – convictions based on suspicion or speculation – is the hallmark of tyrannical systems of law. South Africans have bitter experience of such a system and where it leads to’. [20] In the result the following order is granted: (a) The appeal succeeds in respect of all counts except count 9. (b) The order of the court a quo is set aside and replaced with the following order. ‘(i) The appellant’s conviction and sentence in respect of count 9 are confirmed. (ii) The appellant’s convictions and sentences in respect of the remaining counts are set aside. _________________ BC Mocumie Judge of Appeal APPEARANCES: For Appellant: EA Guarneri Instructed by: Justice Centre, Johannesburg Justice Centre, Bloemfontein For Respondent: KT Ngubane Instructed by: The Director of Public Prosecutions, Johannesburg The Director of Public Prosecutions, 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 2018 STATUS Immediate Phetoe v State (1361/2016) [2018] ZASCA 20 (16 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 SCA today upheld an appeal and set aside and substituted the decision of the Gauteng Local Division of the High Court, Johannesburg. The appellant stood trial with six co-accused on eight counts of housebreaking with intent to rob and robbery with aggravating circumstances, eight counts of common law rape, perpetrated on numerous complainants, one count of attempted robbery, three counts of assault with intent to do grievous bodily harm, two counts of malicious damages to property and two counts of assault. The appellant was convicted in January 2000 on all counts and sentenced to life imprisonment in respect of the rape convictions as well as sentences ranging from two to 20 years’ imprisonment in respect of the other convictions. In June 2016 the full court upheld the appellant’s appeal against convictions on the eight counts of common law rape and substituted them with convictions as an accomplice to those rapes and re-imposed eight sentences of life imprisonment. The appellant appealed to this court against his convictions and sentences with the exception of count 9. The SCA held on appeal that there was no evidence to prove that the appellant was present at the scenes of violence where the rapes, assaults, housebreakings, robberies and other offences were being committed other than at the household of Ms Mothobi and Ms Ncumisa. The State failed to prove the requirements of the doctrine of common purpose for the appellant to be held criminally accountable. In the event, the SCA confirmed the appellant’s conviction and sentence in respect of count 9 and found the convictions and sentences in respect of the remaining counts to be set aside.

3489

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 711/2019 In the matter between: ECONOMIC FREEDOM FIGHTERS FIRST APPLICANT MBUYISENI QUINTIN NDLOZI SECOND APPLICANT JULIUS SELLO MALEMA THIRD APPLICANT and TREVOR ANDREW MANUEL RESPONDENT MEDIA MONITORING AFRICA TRUST AMICUS CURIAE Neutral citation: EFF and Others v Manuel (711/2019) [2020] ZASCA 172 (17 December 2020) Coram: NAVSA, WALLIS, SALDULKER and MOLEMELA JJA and POYO-DLWATI AJA Heard: 2 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 09h45 on 17 December 2020. Summary: Defamation – defences – lack of animus iniuriandi – whether established - reasonable publication in relation to media defendants – requirements of – whether extending to individuals using social media – whether interdict appropriate – whether order for apology competent – whether damages claimable in proceedings by way of application ORDER On appeal from: Gauteng Division of High Court, Johannesburg (Matojane J, sitting as court of first instance), judgment reported sub nom Manuel v Economic Freedom Fighters and Others 2019 (5) SA 210 (GJ); [2019] 3 All SA 584 (GJ): 1. The application for leave to appeal in relation to paragraphs 1 to 3 and 5 of the order of the court below is dismissed with costs, including the costs of two counsel. 2. In relation to paragraphs 4 and 6 of the order of the court below the application for leave to appeal is granted. 3. The appeal in relation to paragraphs 4 and 6 of the order of the court below is upheld with costs, including the costs of two counsel. 4. Paragraphs 4 and 6 of the order of the high court are set aside and replaced with the following order: ‘1 The determination of the quantum of the damages suffered by the applicant is referred to oral evidence. 2 The high court will determine in conjunction with its determination of the quantum of damages whether an order for the publication of a retraction and apology should be made.’ JUDGMENT Navsa and Wallis JJA (Saldulker and Molemela JJA and Poyo-Dlwati AJA concurring) [1] On 27 March 2019, it was announced that a committee chaired by the respondent, Mr Trevor Manuel, formerly a member of parliament and South Africa's longest serving Minister of Finance, and at present the chair of a listed public company, had recommended to the President that Mr Edward Kieswetter be appointed as the new Commissioner of the South African Revenue Service (SARS) in terms of the South African Revenue Service Act 34 of 1997 (the SARS Act). That same day, the first applicant, the Economic Freedom Fighters (the EFF), the third largest political party represented in the National Assembly, issued a media statement, saying that it objected to 'the patently nepotistic and corrupt process of selecting 'Mr Kieswetter', which it characterised as 'secret', and adding: 'It has now emerged that the reason is that, one of the candidates who was interviewed, and favoured by the panel, is a dodgy character called Edward Kieswetter, who is not only a relative of Trevor Manuel, but a close business associate and companion.' [2] The statement was issued by the second applicant, Dr Mbuyiseni Ndlozi MP, in his capacity as the national spokesperson of the EFF and published on the party's Twitter account. It was also published on the Twitter account of the third applicant, Mr Julius Malema MP, the Commander in Chief of the EFF. We will refer to them and the EFF collectively as the applicants. To gauge the extent of its publication, the EFF has over 725 000 Twitter followers and the statement was retweeted 237 times from that account. Mr Malema has over 2 million Twitter followers, although one assumes that there would be considerable overlap between his and the EFF's followers. We do not know how often it was re- tweeted. The statement also attracted extensive coverage in conventional media and in online channels of media communication. [3] Mr Manuel regarded the statement as being defamatory of him and, demanded that it be withdrawn. After this demand was rejected, he instituted an application in the Gauteng Division of the High Court, Johannesburg, claiming a declaration that the allegations made about him in the statement were false and defamatory and that its publication was and remained unlawful. By way of consequential relief, he sought: (a) an order that it be removed from all EFF media platforms and in particular the Twitter accounts of the EFF and Mr Malema; (b) an order for the publication of a retraction and an apology; (c) an interdict against future and further publication; (d) damages in an amount of R500 000; and (e) costs on an attorney and client scale. In relation to the claim for damages Mr Manuel sought, in the alternative, that it be declared that the respondents were jointly and severally liable to pay him damages and that the quantification thereof be referred to oral evidence. [4] The application came before Matojane J who granted the relief claimed, subject to varying the terms of the interdict claimed by Mr Manuel. He refused leave to appeal. On application to this court, an order was granted referring the application for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. That is the matter before us. The parties were directed, if called upon to do so, to address the court on the merits. The Media Monitoring Africa Trust (the Media Trust) applied to be admitted as an amicus curiae. They were admitted as such on the basis that they could deliver written heads of argument and could, with the leave of the presiding judge, be permitted to present oral argument. Such leave was given at the hearing. We heard argument from the parties on both the application for leave to appeal and the merits. The amicus presented argument in relation to the dangers of the publication of falsehoods on social media platforms and on extending media protection to individuals. The facts [5] The statement by the EFF bore the heading: ‘THE EFF REJECTS SARS COMMISSIONER INTERVIEW PROCESS’ The full text read: ‘The Economic Freedom Fighters objects to the patently nepotistic, and corrupt process of selecting the South African Revenue Services’ Commissioner. In February 2019, the EFF sent a letter, and Parliamentary questions to the outgoing President Mr Cyril Ramaphosa and Mr Tito Mboweni, to specifically ask why they are conducting the SARS selection process in secret. It is confirmed that a panel chaired by former Minister, Trevor Manuel, conducted secret interviews to select the SARS Commissioner, and this goes against the spirit of transparency and openness. It has now emerged that the reason is that, one of the candidates who was interviewed, and favoured by the panel, is a dodgy character called Edward Kieswetter, who is not just a relative of Trevor Manuel, but a close business associate and companion. Kieswetter used to be a Deputy SARS Commissioner, unlawfully appointed to that position by Trevor Manuel, when Pravin Gordhan was SARS Commissioner. Kieswetter was in SARS during the time of the illegal intelligence unit established by Pravin Gordhan, to hound off political opponents and commit corruption. After SARS, Kieswetter joined Alexander Forbes, and was subsequently removed from the company due to alleged corruption and unethical conduct. After Alexander Forbes, Kieswetter became a vice-chancellor of an institution whose academic credentials are questionable. This is now a candidate whom Trevor Manuel and Tito Mboweni want to impose into SARS. The EFF is profusely (sic) opposed to the imposition of a secretly assessed candidate by conflicted individuals, and we will do everything in our power to stop and reverse the appointment of Kieswetter as SARS Commissioner. We will immediately write a legal letter to Mr Ramaphosa and Mr Mboweni, to demand disclosure of all processes that were followed in the process of selecting a SARS Commissioner. Furthermore, the EFF will explore legal options to invalidate the unlawful appointment of SARS Commissioner. The EFF is particularly concerned about SARS, because our Elections Manifesto states that, part of our immediate plan when we take over Government will be capacitation of SARS so that it can maximally collect revenue. The EFF particularly advocates for a SARS that will decisively fight against illicit financial flows, base erosion and profit shifting. A secretly chosen SARS Commissioner with clear connection to the white capitalist establishment will not maximally collect taxes. The EFF therefore demands that the process to select SARS Commissioner should be restarted and be opened to public scrutiny. This should be so because, a Commissioner of the ultimate Revenue Collector in South Africa should be beyond reproach and must stand public scrutiny. SARS has over the years been involved in a lot of illegal and unlawful activities, and taxpayers deserve to know who will be responsible for the institution. We also caution Mr Ramaphosa and Mr Mboweni to not engage in activities that led to the downfall of Mr Zuma. If they become arrogant, and ignore the EFF’s logical demands, they must know that they too will fall very hard on their own sword.’ [6] Mr Manuel took the view that the sting of the statement was that, as chair of a panel selecting the next SARS Commissioner, he conducted a corrupt, unlawful and clandestine process, which led to the unlawful appointment of Mr Edward Kieswetter, who was said to be a relative and a close associate of his. He complained that the statement accused him, when he was Minister of Finance, of unlawfully appointing Mr Kieswetter as Deputy Commissioner of SARS and charged him with acting contrary to the best interests of SARS with corrupt intent. Finally, he said that the statement accused him of acting contrary to the best interest of SARS by virtue of his connection to a 'white capitalist establishment'. All this, he said, cast aspersions on his character and integrity. He was adamant that the offensive allegations were devoid of truth. He insisted that they could not be justified. [7] Mr Manuel said that Mr Kieswetter was neither a relative nor a business associate. He denied that secret interviews were conducted and denied any kind of nepotism or corruption. He pointed out that the selection panel, which he chaired, could only make a recommendation about who should be appointed as Commissioner of the South African Revenue Service and that the power to appoint the SARS Commissioner, in terms of the applicable legislation, was solely vested in President Ramaphosa.1 [8] Attorneys acting for Mr Manuel wrote to the EFF and Dr Ndlozi demanding that the applicants remove the statement from their social media platforms and apologise unconditionally in terms set out in the letter. They refused to do so. Mr Manuel then approached the high court on motion seeking certain relief. His stated purpose was: '[I] seek various orders aimed at vindicating my good name, putting an end to the ongoing and anticipated unlawful publication of the allegations in the statement, and compensating me for the harm suffered.’ He was not seeking to convey that he had suffered pecuniary loss for which he was seeking compensation, because he indicated that, if awarded damages, he would donate the entire amount to a worthy cause. [9] Mr Manuel provided details of his lengthy political career, stretching from the beginning of his involvement in the ANC, to the long period of time he served as National Minister of Finance. He described the positions he had held in a number of well-known international organizations and set out his involvement in business and his association with academic institutions. He also provided details of a number of international and local awards he had received in recognition of 'my contribution to the country and to principles of democratic governance'. It was this commitment to country and democracy, so he asserted, that led to his participation in the selection panel. 1 Section 6 of the South African Revenue Service Act 34 of 1997 under the heading ’Appointment’ reads as follows: ‘(1) The President must appoint a person as the Commissioner for the South African Revenue Service. (2) The person appointed as the Commissioner holds office for an agreed term not exceeding five years but which is renewable.’ [10] The selection panel that Mr Manuel chaired, the legitimacy of which was not attacked by the applicants in the statement set out above, had its genesis in the removal from office of the former SARS Commissioner, Mr Tom Moyane, pursuant to the recommendations of the Nugent Commission of Inquiry into Tax Administration and Governance at SARS. On 9 November 2018 the Nugent Commission, in its Second Interim Report, recommended a specific process for the appointment of the next Commissioner of SARS. It recommended, inter alia, that the candidate or candidates chosen or nominated by the President should be subjected to interview by an apolitical panel, comprising persons of high standing who would inspire confidence across the tax paying-spectrum. It also provided baseline criteria against which potential candidates should be evaluated. Although saying that the process 'for the purposes of providing input to the President, or the Minister, as to the suitability for office of the candidates' should be 'open and transparent', the Nugent Commission recommended that the candidates should submit to a private interview by a panel of four or more members selected by the President and that the function of the panel was to evaluate candidates against the prescribed criteria. [11] It was undisputed that President Ramaphosa, whilst recognising that it was ultimately his prerogative to appoint the Commissioner, accepted the Nugent Commission’s recommendation. He appointed the present Minister of Finance, Mr Tito Mboweni, to oversee the recommended process, including the appointment of the panel, which it was envisaged would shortlist interviewees and submit a list, recommending suitable and competent persons for consideration. On 7 February 2009 Mr Mboweni announced the appointment of the interviewing panel. The panel comprised seven members, including Mr Manuel as chairperson. The other six members were well-known individuals, who no-one suggested did not meet the criteria set by the Nugent Commission. It is for present purposes unnecessary to set out their personal and professional particulars. [12] Applications for the position of Commissioner were called for and a shortlisting process ensued. The panel ultimately selected seven candidates to be interviewed, but one withdrew. Five candidates were interviewed on 9 February 2019 and the last candidate, who had been travelling overseas, was interviewed on 21 February 2019. Before Mr Kieswetter was interviewed, Mr Manuel disclosed that he had, in the past, worked with him, although they had not interacted, other than, at arms-length and professionally. This took place when Mr Manuel was Minister of Finance and Mr Kieswetter, Deputy Commissioner of SARS. During that time the Ministry met with senior management of SARS once a fortnight to discuss matters of mutual interest. [13] The other panel members considered this disclosure, but did not think there was a conflict of interests, requiring him to recuse himself. Nonetheless, according to Mr Manuel, out of an abundance of caution he merely observed Mr Kieswetter being interviewed, but did not participate in the questioning. Following the interview process three candidates were recommended to proceed to competency testing. Standard reference and security checks were performed. Intense competency checks were conducted, and psychometric assessments were undertaken by an outside consulting company. After all the information had been gathered the panel deliberated and Mr Kieswetter was unanimously recommended for appointment as SARS Commissioner. [14] The applicants’ response was to set out what they considered to be the proper context within which the statement complained of was published. They explained that the EFF had serious concerns regarding the removal of the previous Commissioner and was concerned about the abuse of state institutions. They pointed out that the EFF was the third largest political party in South Africa and it was thus 'materially interested' in the appointment of the new Commissioner. According to them, the EFF was intent on ensuring that the individual to be appointed as Commissioner and the process leading up to the appointment, be beyond reproach. The EFF, so it was said, wanted to see to it that the process employed would withstand ‘robust scrutiny’. In this regard it referred to past corruption in the Public Service. [15] The applicants emphasized that they were acting, not for personal or private gain, but in the public interest at the time of a national general election. The EFF was adamant that President Ramaphosa be held to account and that there be no blind acceptance of decisions made by him. They asserted forcefully that they were committed to the Rule of Law and the Constitution. They were adamant that the court should be concerned about political free speech and that defences open to media defendants should be available to them. The following is a material part of their answering affidavit: 'The respondents disclose to this Court that its statement was motivated by certain disclosures made to it by a source whose identity and details the respondents are not at liberty to disclose. Suffice it to say, this source had intimate knowledge of the intended appointment process, including the appointment of the Panel, and informed the EFF that this was to occur largely out of the public gaze.' The information provided by the source featured large in an assertion that it was reasonable for the EFF to publish the statement and we will consider it in greater detail later in this judgment. [16] While accepting that s 6 of the SARS Act was not prescriptive of how the President should go about appointing the SARS Commissioner, the applicants were concerned by the exclusion of parliament from that process. It was the lack of public scrutiny in relation to the selection process that the applicants contended motivated the statement complained of. They put it thus: 'So, when the EFF received the confidential tip-off, both in respect of the process occurring in secret, and the possibility that the interviews would be run under the applicant and that he was related to one of the applicants, the EFF was galvanized into action as it should as a major political party.' They described the statement as being in the 'typical robust rhetorical style' of the EFF’. [17] The applicants submitted that the statement by them that Mr Manuel was related to Mr Kieswetter was substantially true, on the strength of what was imparted to the EFF by its confidential source. They contended that in any event they genuinely believed the statement was true. They did not challenge Mr Manuel's assertion that he and Mr Kieswetter were not relatives in the common familial sense of being related by blood or marriage. However, they said that it was ‘common cause’ that Mr Manuel and Mr Kieswetter were related, due to the past relationship that Mr Manuel disclosed to the committee and which led to him partially recusing himself during Mr Kieswetter's interview. It was submitted that the nepotism they referred to in the statement, should be widely construed to include this past relationship. Similarly, the corruption alleged in the statement should also be seen in this light. [18] In seeking to justify the statement, the applicants contended that the publication of the statement in question was reasonable in the circumstances and should be considered akin to statements by whistle- blowers. Additionally, they adopted the position that the statement complained of was fair comment. Lastly, the applicants warned that censoring and prohibiting statements like the one in question would have a chilling effect on political speech. The high court's judgment [19] The high court was called upon to adjudicate the disputes crystallised from the preceding paragraphs. Initially it dealt with and rejected certain ‘preliminary objections’. It noted that, there was no attempt to show that the sting of the article was not as contended by Mr Manuel and held, after applying the two-stage test laid down by the Constitutional Court in Le Roux v Dey,2 that the statement was defamatory of Mr Manuel. Accordingly, the court said that its publication was presumed to be wrongful and intentional and that the applicants bore the onus of rebutting either wrongfulness or intention. [20] The judge dealt with all of the defences raised by the applicants under the general heading of defences to rebut unlawfulness. Whether that was a correct classification is an issue to which we will need to return. He dealt with them under four headings, namely, truth and public interest; reasonable publication; fair comment; and public interest. As regards the last of these, he said that it was not a defence in itself, but an element of other defences. [21] Each defence was examined and all of them were rejected on the basis that the applicants had not established the factual basis for any of 2 Le Roux and Others v Dey (Freedom of Expression Institute and Restorative Justice Centre as amici curiae) [2011] ZACC 4; 2011 (3) SA 274 (CC) (Le Roux v Dey) para 89. them. As far as truth and public interest was concerned, the judge held that the sting of the charge had to be shown to be substantially true. The fact that interviews of candidates would take place privately was part of the Nugent Commission's recommendations and known before the interviews were held, so the process was open and transparent, even though the interviews were not public. He held that Mr Kieswetter was neither a relative of, nor a close business associate of and companion to, Mr Manuel. The latter's recusal from active participation in Mr Kieswetter's interview did not in substance establish the truth of these allegations. [22] The high court based its approach to the defence of reasonable publication on the judgment of this court in Bogoshi3 as approved by the Constitutional Court in Khumalo.4 Those cases dealt with publication in the media – both involved newspaper articles – and the rejection of the decision in Pakendorf v De Flamingh,5 which held the media strictly liable for defamatory publications. The high court applied the defence to publication by private individuals, saying simply that there was no justification for the press enjoying a privilege of freedom of expression greater than that enjoyed by a private individual. In doing so it did not consider whether it was extending the possible range of defences open to private individuals, or imposing upon them the constraints that apply to the broadcast and press media. Be that as it may, the judge held that the applicants had failed to show that it was reasonable for them to publish the statements made about Mr Manuel. 3 National Media Ltd and others v Bogoshi 1998 (4) SA 1196 (SCA)(Bogoshi). 4 Khumalo and others v Holomisa [2002] ZACC 12; 2002 (5) SA 401 (CC) paras 18 and 19. 5 Pakendorf en Andere v De Flamingh 1982 (3) SA 146 (A). [23] The high court relied on the approach by the Constitutional Court in McBride,6 that the defence of fair comment required that the comment not be made maliciously and be based on facts that were fairly stated and substantially true. The judge held that anything constituting comment in the statement was not based on facts fairly stated. Furthermore, he held that the applicants were actuated by malice because they published the statement with reckless indifference to whether it was true or false. [24] That took the high court to the question of remedy. It dealt first with the issue of damages and awarded a sum of R500 000. Without any great discussion it held that Mr Manuel was entitled to the interdictory relief he sought, as well as a declaratory order and a retraction and apology. Its reasons will be considered later in this judgment. [25] In the result Matojane J made the following order: '1 The allegations made about the applicant, Trevor Andrew Manuel, in the statement titled 'The EFF Rejects SARS Commissioner Interview Process' dated 27 March 2019 are defamatory and false. It is declared that the respondents' unlawful publication of the statement was, and continues to be, unlawful. The respondents are ordered to remove the statement, within 24 hours, from all their media platforms, including the first and third respondent's Twitter accounts; The respondents are ordered, within 24 hours, to publish a notice on all their media platforms, on which the statement has been published, in which they unconditionally retract and apologise for the allegations made about the applicant in the statement. The respondents are interdicted from publishing any statement that says or implies that the applicant is engaged in corruption and nepotism in the selection of the Commissioner of the South African Revenue Service. 6 The Citizen 1978 (Pty) Ltd and Others v McBride [2011] ZACC 11; 2011 (4) SA 191 (CC) (McBride) para 83. The respondents are ordered jointly and severally to pay damages of R500 000 to the applicant. The respondents are ordered jointly and severally to pay the applicant's costs on an attorney and client scale.' The issues [26] A number of issues fall to be considered in this case. The first is whether leave to appeal should be granted. Although that is a threshold issue it requires consideration to some extent of the merits of Mr Manuel's case and the merits of the defences advanced by the applicants. For that reason, we will only deal with leave to appeal at the end of the judgment. The defence of reasonable publication was considered for the first time in the context of publication by a private individual and a political party, rather than the media. The court recognised it as a defence, so it will be necessary to consider to some extent, if not necessarily definitively, whether that development of the law is appropriate. All the defences were dismissed on the basis of the judge's factual findings. There is thus the question of how we view those conclusions. [27] If the publication was defamatory of Mr Manuel and the proffered defences were correctly rejected by the high court, there remain issues regarding the relief granted by the court. Before us there was a general attack on the quantum of the award of damages, but there is an anterior question whether it was permissible for the court to make that award without hearing oral evidence. This is an issue of principle in regard to a change of procedure having a substantive effect, because, so far as we are aware, this and one case that followed it,7 were the first occasions on which 7 Gqubuke-Mbeki and Another v Economic Freedom Fighters and Another [2020] ZAGPHC 2 (Gqubuke-Mbeki). As appears from para 4 of that judgment the relief claimed was essentially the same courts made awards of damages for defamation, or any similar injuria, in application proceedings. Whether that is a permissible approach requires consideration for the guidance of litigants and the profession generally. [28] Lastly, there is the question of whether the declaratory and interdictory relief and the order to publish an apology were appropriate or should be amended. The applicants contended that they should not have been ordered to remove the statement in its entirety but only those portions that adversely reflected on Mr Manuel's reputation. [29] In considering all of these issues we will throughout be conscious that we must do so against the background of the right to freedom of expression, guaranteed in s 16 of the Constitution, the political rights in s19 of the Constitution and the right to dignity in s 10 of the Constitution. We say this at the outset to avoid oft repetition of what is fundamental to the proper adjudication of this type of case. The defamation [30] Determining whether a statement was defamatory involves a twofold enquiry.8 First, one establishes the meaning of the words used. Second, one asks whether that meaning was defamatory in that it was likely to injure the good esteem in which the plaintiff was held by the reasonable or average person to whom the statement was published. Where the injured party selects certain meanings in order to point the sting of the statement, as in the present case and the applicants were represented by the same attorneys. In awarding damages the judge followed the approach in this case. 8 Le Roux v Dey, op cit, fn 2, para 89. they are bound by the selected meanings.9 The meaning of the statement is determined objectively by the legal construct of the reasonable reader and is not a matter on which evidence may be led.10 [31] We received some interesting submissions from the Media Trust concerning the approach to the legal construct of the reasonable reader in the context of social media platforms, such as Facebook, Twitter and Instagram, in the light of two cases from England.11 Useful though those may prove on some future occasion, the publication on Twitter in this case was a publication of the whole statement that had been circulated as a media release to the established media. It was not confined to a limited number of characters or written in a form of shorthand. Even a cursory read by social media users would have conveyed to them the essence of the charges made by the EFF against Mr Manuel. In those circumstances, the fact that the statement was published on Twitter does not require us to evolve a new approach to the reasonable reader. [32] Mr Manuel identified nine respects in which he said the statement was defamatory of him. They were that he was corrupt; nepotistic; conducted himself unlawfully; conducted 'secret interviews' and participated in a secretive process to select the new SARS Commissioner; that the secretive process was a deliberate attempt to disguise his familial relationship and business association with Mr Kieswetter; that he conducted an unlawful appointment process; and that he had previously made unlawful appointments to positions at SARS when he was Minister 9 Ibid, para 88. 10 Ibid para 90; Sutter v Brown 1926 AD 155 at 163. The position is different if a secondary meaning, or innuendo properly so called, is pleaded, but that was not the case here. 11 Monroe v Hopkins [2017] EWHC 433 (QB) para 35; Stocker v Stocker [2019] UKSC 17; [2020] AC 5903; 2019 (3 All ER 647 (SC) para 41. of Finance. More generally, he contended that the statement meant that he had acted contrary to SARS' interests with corrupt intent, and was connected to a 'white capitalist establishment' that acted contrary to the best interests of SARS. [33] An analysis of the statement almost completely justified Mr Manuel's contention. In the opening paragraph the process of selecting the new Commissioner was described as patently nepotistic and corrupt. In the following paragraph the panel chaired by Mr Manuel was said to have conducted 'secret' interviews. That this was intended to convey that there was something clandestine and untoward about the interviews becomes clear when one reads the third paragraph, which said that: 'It has now emerged that the reason is that, one of the candidates who was interviewed, and favoured by the panel, is a dodgy character called Edward Kieswetter, who is not just a relative of Trevor Manuel, but a close business associate and companion.' The point of this being patently nepotistic and corrupt was then hammered home in the following paragraph, where it was said that Mr Manuel, when Minister of Finance, unlawfully appointed Mr Kieswetter as a Deputy SARS Commissioner. [34] The statement went on to say that Mr Manuel and Mr Mboweni were trying to impose on SARS someone with a dubious background involving corruption and unethical conduct. The individuals who assessed him for this post, of which Mr Manuel and Mr Mboweni were the only ones specified by name, were described as 'conflicted' and the appointment was described as 'unlawful'. The only complaint by Mr Manuel that was possibly not justified was that he was tied to a 'white capitalist establishment' that acted contrary to the best interests of SARS. That statement was made about Mr Kieswetter and could at most possibly have had only an indirect impact upon Mr Manuel. We will disregard it. [35] There can be no doubt that the effect of these statements would in the eyes of the reasonable reader diminish the esteem in which any person about whom they were made was held by others in the community. That is defamatory, and apart from a short-lived, and patently unfounded, endeavour to suggest that 'relative' did not mean a familial relative, counsel accepted that it was defamatory. Wrongfulness and intention [36] Once the publication of defamatory matter has been proved, it is presumed that the publication was wrongful and intentional, that is, published with the intention to injure (the animus iniuriandi).12 A defendant wishing to avoid liability must raise a defence that excludes either wrongfulness or intention. The publisher of the defamation bears the onus of rebutting either wrongfulness or intention. They must adduce the evidence necessary to achieve that purpose.13 In this case the onus rested on the applicants to establish either that the publication was not wrongful, or that it was not published with the requisite intent. Truth and public interest [37] Truth and public interest and fair comment are two defences that have long been recognised as rebutting the presumption of wrongfulness. A defendant relying on truth and public interest must plead and prove that the statement is substantially true and was published in the public interest.14 12 Khumalo v Holomisa, op cit, fn 4, para 18. 13 Le Roux v Dey, op cit, fn 2, para 85. 14 Lawsa, Vol 14(2), 3 ed (2017), by Justice FDJ Brand, para 124. This defence can be disposed of in short order. The applicants made no attempt to establish that the defamatory statements about Mr Manuel were true. The furthest they went was to claim that they believed to be true what they had been told in a WhatsApp message by a whistle-blower, whose identity they kept secret. There was no attempt to refute Mr Manuel's statements that he was not related to Mr Kieswetter and that they were neither business associates or companions. As those factual propositions were the foundation for the entire statement and its attack on Mr Manuel the failure to establish that they were substantially true was fatal to the defence. It was correctly rejected by the high court and not surprisingly it was not pursued in argument. Fair comment [38] Turning to fair comment, it has four elements. The defamatory statement (a) must be a comment and not a statement of fact; (b) it must be fair, by which is meant only that it must be an honestly- held opinion, not that it is balanced or temperate; (c) the facts on which it is based must be true and must be clearly stated or clearly indicated, or matters of public knowledge; and (d) the comment must relate to a matter of public interest.15 If the comment is made maliciously, that is, with an improper motive, as opposed to being no more than the expression of an honestly-held opinion on a matter of public interest, it is wrongful and the defence is not available.16 Where malice is alleged the evidence led to establish it may 15 Crawford v Albu 1917 AD 102 at 115-117; Marais v Richard en ń Ander 1981 (1) SA 1157 (A) at 1167E-G; McBride, op cit, fn 6, para 80. 16 Crawford v Albu ibid at 114. also be directed at rebutting the claims that the opinion was bona fide and that the matter was one of public interest. [39] Not all of the defamatory matter in the statement can be regarded as a comment. At best for the applicants the description of the process in the opening paragraph as 'patently nepotistic and corrupt' may be regarded as comment. But that comment, if it be such, was expressly based on what was stated in the third paragraph, that Mr Kieswetter was Mr Manuel's relative, business associate and companion. That was all untrue. That sufficed to dispose of the defence of fair comment. It was correctly rejected by the high court and, like the defence of truth and public interest, was not pursued in argument. Reasonable publication [40] The third defence going to wrongfulness advanced by the applicants was that of reasonable publication. Before us the argument on the merits revolved around this and accordingly it requires more detailed treatment than the other defences. The applicants advanced it on the following basis. Since the judgment of this court in Bogoshi,17 the media have been entitled to establish that the publication of a defamatory statement was not wrongful by proving that they reasonably believed in its truth and that it was in the public interest that it be published. The applicants contended that this defence was available to them, albeit that they are not part of the media. The high court recognised the defence, but held that the publication was not reasonable. Animus iniuriandi 17 Op cit, fn 3. [41] In order to evaluate the contentions in this regard it is necessary to undertake a brief excursion into our jurisprudence in relation to the requirement of animus iniuriandi in the context of defamation and the developments that followed upon the comprehensive review of the law on this topic by De Villiers AJ in Maisel v Van Naeren.18 The claim of defamation arose from aspersions cast on Mr van Naeren's conduct as a tenant in a block of flats contained in a letter addressed by Mr Maisel to the Chairman of the Rent Board, Cape Town. A defence that the letter was published on a privileged occasion failed because the block of flats was not subject to rent control. However, the claim was dismissed on the basis that Mr Maisel's bona fide but erroneous belief that the letter was written on a privileged occasion rebutted the presumption that it had been published animo iniuriandi. De Villiers AJ said; '… I can see no reason why an erroneous belief in the existence of a so-called "privileged occasion" could not in fit circumstances protect a defendant …' [42] In Jordaan v Van Biljon19 Rumpff JA said that in order to avoid misunderstanding and unnecessary confusion the expression 'malice' that had been used in earlier cases should not be used. Once it was accepted that it was open to a defendant to rebut animus iniuriandi in any manner, in the light of the facts set out in the plea, confusion in regard to defences with special names would be avoided.20 The requirement of animus 18 Maisel v Van Naeren 1960 (4) SA 836 (C) at 840E-G. 19 Jordaan v Van Biljon 1962 (1) SA 286 (A) at 296D-F. 20 The entire passage of which this is the substance, was in Afrikaans and reads as follows: 'As die aanbeveling van Appèlregter SCHREINER gevolg word om nie die woorde 'malice' of 'malicious' te gebruik by die omskrywing van laster nie, sal inderdaad misverstand en onnodige verwarring vermy word en indien verder besef word dat dit 'n verweerder vrystaan om op enige wyse afwesigheid van animus iniuriandi te bewys, na uiteensetting in sy verweerskrif van die relevante feite waarop sy ontkenning van animus iniuriandi gebaseer is, sal verwarring in verband met woordgebruik by verwere met spesiale name, ook mettertyd verminder. Solank egter die in ons regspraak erkende begrip 'bevoorregte geleentheid' as sodanig en met name gepleit word sal die benadering daarvan plaasvind op die wyse wat in ons regspraak vasgelê is.' iniuriandi was reaffirmed in Craig v Voortrekkerpers Bpk,21 although on the facts it was held that the defendant had not discharged the onus of showing that the occasion was privileged in accordance with its plea. [43] Nydoo v Vengtas, was the last of this trilogy of judgments, all authored by Rumpff JA. The legal position in regard to a defence based on the absence of animus iniuriandi was set out in the following terms:22 'Evidence that a defendant honestly thought that his defamatory words were published with a lawful purpose, although in accordance with an objective standard the purpose was not lawful, would justify an inference that he did not have the intention to injure.' (Our translation) [44] In O'Malley23 this court considered a plea by the country's national broadcaster that it had published a news report on the basis of information from reliable sources and without the intention to injure the plaintiff. While reasserting the need for an intention to injure and consciousness of the wrongfulness of the publication as essential elements of defamation, Rumpff CJ raised the possibility, without deciding, that, in the case of the media, absence of animus iniuriandi might not be a defence and instead that strict liability might apply to owners, publishers, editors and printers, but not to distributors.24 That possibility became the law with his judgment in Pakendorf v De Flamingh.25 21 Craig v Voortrekkerpers Bpk 1963 (1) SA 149 (A) at 156H-157A. 22 Nydoo en Andere v Vengtas 1965 (1) SA 1 (A) at 15 A-B reading as follows in the original Afrikaans text: 'Getuienis dat 'n verweerder eerlik gedink het dat sy lasterlike woorde met 'n geoorloofde doel gebesig word, hoewel volgens objektiewe maatstaf die doel nie geoorloof is nie, sou 'n afleiding regverdig dat hy nie die opset gehad het om te beledig nie.' 23 Suid-Afrikaanse Uitsaaikorporasie v O'Malley 1977 (3) SA 394 (A). 24 Ibid at 403D-407H. 25 Op cit, fn 5. [45] To sum up, the legal position at this stage appeared to be that when confronted with a claim for defamation, a defence could be raised that the defamation had been published without animus iniuriandi. Defendants were not constrained by specific categories of defence, such as that the publication took place on a privileged occasion, but could rely upon their own bona fide error in believing that the defamation had been published lawfully, although in the above-cited cases such a defence had been upheld only in Maisel v Van Naeren.26 This defence was not open to the media, both print and broadcast. Their liability, outside of the limits of a defence of publication on a privileged occasion, was strict. However, in what might be viewed as a retreat from the pure principle articulated in the earlier trilogy of judgments, Pakendorf v De Flamingh reserved for later decision the question whether a defendant could acknowledge that the publication was defamatory, but contend that due to mistake there was an absence of knowledge of unlawfulness. It said that it was unclear whether this issue and its resolution belonged with the requirement of fault or intention.27 That set the stage for Bogoshi. [46] Bogoshi overruled Pakendorf v De Flamingh insofar as it imposed strict liability on the media. It held that there had been an over-emphasis on the issue of intention and insufficient regard had been paid to the question of lawfulness. A new defence was recognised that publication of defamatory matter by the media would not be unlawful if the publication was reasonable. Hefer JA formulated the defence in the following language:28 26 It was later upheld in Suttonmere (Pty) Ltd and Another v Hills 1982 (2) SA 74 (N) and Minister van Veiligheid en Sekuriteit en ń Ander v Kyriacou 2000 (4) SA 337 (O). 27 Ibid, 154H-155A. 28 Bogoshi op cit, fn 3, at 1212G-H. 'the publication in the press of false defamatory allegations of fact will not be regarded as unlawful if, upon a consideration of all the circumstances of the case, it is found to have been reasonable to publish the particular facts in the particular way and at the particular time.' [47] Bogoshi recognised that the new defence of lawful publication by the media raised the question, left open in Pakendorf v De Flamingh, whether absence of knowledge of wrongfulness could be relied upon as a defence of absence of animus iniuriandi, if the lack of knowledge of wrongfulness was due to the defendant's negligence. 29 Because the new defence was explicitly based on the lawfulness of the publication, and negligence might be determinative of its lawfulness,30 Hefer JA said that if media defendants could raise the same negligence as a basis for claiming absence of animus iniuriandi 'it would obviously make nonsense of the approach … to the lawfulness of defamatory untruths'.31 He explained that absence of animus iniuriandi was concerned with ignorance or mistake regarding one or other of the elements of defamation. The Bogoshi defence is based on the reasonableness of the publication. In short, unreasonable publication of defamatory matter by the media is unlawful, and the corollary is that a defence of absence of animus iniuriandi, based on negligent absence of knowledge of wrongfulness, is not available to the media. The result is that in principle the media and non-media defendants stand on a different footing as appears from this concluding passage:32 '… there are compelling reasons for holding that the media should not be treated on the same footing as ordinary members of the public by permitting them to rely on the 29 Ibid at 1214B-C. 30 Ibid at 1215I where he said: 'Proof of reasonableness will usually (f not inevitably) be proof of lack of negligence.' 31 Ibid at 1214C-D. 32 Ibid at 1214F-G. absence of animus injuriandi, and that it would be appropriate to hold media defendants liable unless they were not negligent in the circumstances of the case.' [48] Whether defendants other than the media can rely on a defence of absence of knowledge of unlawfulness due to their own negligence, and hence an absence of animus iniuriandi, was again left open in Bogoshi, but there was an indication that they might be entitled to do so, because, after explaining that media defendants could not rely on that as a defence, Hefer JA said: 'The resultant position of media defendants may not in this respect be so different from that of other defendants because Pakendorf left open the question whether any defendant can rely on a defence of absence of knowledge of unlawfulness due to negligence. However, we have not been called upon to decide the question in relation to other members of the public.' The endorsement of Bogoshi by the Constitutional Court in Khumalo33 did not take this any further and it has not been addressed in subsequent cases. Other jurisdictions [49] In formulating the defence of reasonable publication, Hefer JA had regard to developments in Australia and the United Kingdom as well as a statement of the law in the Netherlands. Internationally the law has moved on since then. For example, he referred to the decision of the Court of Appeal in the UK in Reynolds.34 The appeal from that judgment was heard after the judgment in Bogoshi and referred to it in a comprehensive survey of the approach taken in the United States, Canada, India, Australia, South Africa and New Zealand to issues of the media's liability for defamation in regard to public figures, political expression and the requirement of 33 Op cit, fn 4. 34 Reynolds TD v Times Newspapers Ltd [1998] EWCA Civ 1172; [1998] 3 All ER 961 (CA). The judgment had been delivered less than three months before argument in Bogoshi and had not yet been reported. reasonable care in publishing defamatory matter in respect of such public figures. Given that these judgments were based on widely differing constitutional provisions, local statutes and developments of the common law from widely differing bases, it is no surprise that in the leading speech for the majority Lord Nicholls of Birkenhead concluded that the solutions were not uniform and each was not without its critics in its home country.35 In regard to the Court of Appeal's decision on which Hefer JA had placed some reliance it was said that its 'formulation of three questions gives rise to conceptual and practical difficulties and is better avoided'. [50] The end result was that the House of Lords in Reynolds declined, by a narrow majority, to create a new category of occasions when privilege derives from political information alone. It held that the existing defence of qualified privilege was sufficiently flexible to accommodate the problems encountered by the media in reporting on matters of public concern, whilst giving appropriate protection to reputation. Lord Nicholls said that in determining whether the occasion on which publication occurred was privileged, a range of matters ought to be taken into account, of which ten were mentioned as illustrative only, namely:36 '1. The seriousness of the allegation. The more serious the charge, the more the public is misinformed and the individual harmed, if the allegation is not true. 2. The nature of the information, and the extent to which the subject-matter is a matter of public concern. 3. The source of the information. Some informants have no direct knowledge of the events. Some have their own axes to grind, or are being paid for their stories. 4. The steps taken to verify the information. 35 Reynolds v Times Newspapers Ltd and Others [1999] UKHL 45; [2001] 2 AC 127; [1999} 4 All ER 609 (HL). 36 Ibid at 205 (Appeal Cases) and 626 (All ER). 5. The status of the information. The allegation may have already been the subject of an investigation which commands respect. 6. The urgency of the matter. News is often a perishable commodity. 7. Whether comment was sought from the plaintiff. He may have information others do not possess or have not disclosed. An approach to the plaintiff will not always be necessary. 8. Whether the article contained the gist of the plaintiff's side of the story. 9. The tone of the article. A newspaper can raise queries or call for an investigation. It need not adopt allegations as statements of fact. 10. The circumstances of the publication, including the timing. This list is not exhaustive. The weight to be given to these and any other relevant factors will vary from case to case. Any disputes of primary fact will be a matter for the jury, if there is one. The decision on whether, having regard to the admitted or proved facts, the publication was subject to qualified privilege is a matter for the judge. This is the established practice and seems sound. A balancing operation is better carried out by a judge in a reasoned judgment than by a jury. Over time, a valuable corpus of case law will be built up.' [51] Although this was expressed as outlining the scope of the existing defence of qualified privilege in English law, it created greater flexibility in regard to reporting matters of public interest and the possibility of reasonable error in such reporting. It was 'concerned to provide a proper degree of protection for responsible journalism'.37 Because the English law of defamation does not draw the same distinctions as our law in regard to wrongfulness and animus iniuriandi, it was not expressed in terms easily transferable to this country. 37 Per Lord Nicholls in Bonnick v Morris [2002] UKPC 31; [2003] 1 AC 300 para 23. [52] In Jameel,38 the leading speech on behalf of a narrow majority in the House of Lords was delivered by Lord Hoffmann. He pointed out that the Reynolds defence, as it had come to be known, was not the same as the existing defence of privilege,39 because it was the material that was privileged, not the occasion on which it was published. The issue of 'malice', which in South African legal parlance is largely equivalent to the intention to injure,40 did not arise as a separate issue because it was dealt with in the requirements for reasonable publication. The final curial development of the Reynolds defence came in Flood, altering the defence from privilege to one of public interest based on whether there was some real public interest in having the information in question in the public domain.41 It was also said that the defence was not reserved for the media, although it was the media that was most likely to invoke it.42 [53] The most recent development in England has been the passage of s 4 of the Defamation Act 2013 (c24), which enacts a defence of 'Publication on matter of public interest' in the following terms: 'Publication on matter of public interest (1) It is a defence to an action for defamation for the defendant to show that— (a) the statement complained of was, or formed part of, a statement on a matter of public interest; and (b) the defendant reasonably believed that publishing the statement complained of was in the public interest. 38 Jameel and Others v Wall Street Journal Europe Sprl [2006] UKHL 44; [2007] 1 AC 359. 39 In agreement with the Court of Appeal in Loutchansky v Times Newspapers [2002] QB 783 (CA) at 806. 40 Basner v Trigger 1946 AD 83 at 94; Jordaan v Van Biljon op cit, fn 19 at 295E-296F. 41 Flood v Times Newspapers Ltd [2012] UKSC 11; [2012] 2 AC 273 para 42, per Lord Phillips of Worth Matravers P. 42 Ibid para 44. (2) Subject to subsections (3) and (4), in determining whether the defendant has shown the matters mentioned in subsection (1), the court must have regard to all the circumstances of the case. (3) If the statement complained of was, or formed part of, an accurate and impartial account of a dispute to which the claimant was a party, the court must in determining whether it was reasonable for the defendant to believe that publishing the statement was in the public interest disregard any omission of the defendant to take steps to verify the truth of the imputation conveyed by it. (4) In determining whether it was reasonable for the defendant to believe that publishing the statement complained of was in the public interest, the court must make such allowance for editorial judgement as it considers appropriate. (5) For the avoidance of doubt, the defence under this section may be relied upon irrespective of whether the statement complained of is a statement of fact or a statement of opinion. (6) The common law defence known as the Reynolds defence is abolished.' This defence has been the subject of recent analysis by the Supreme Court in Serafin v Malkiewicz.43 [54] The new defence in Bogoshi went further than the original Reynolds defence as articulated by Lord Nicholls in the House of Lords, in treating it as a separate defence, unconfined by the traditional defence of qualified privilege. However, it did not create a general defence of public interest publication available to persons other than the media. Nor did it diminish the ability of persons outside the media from pleading and proving that in certain circumstances publication of defamatory matter in consequence of error could support a defence of publication without animus iniuriandi. [55] We have traced these developments in English law because they illustrate the need to develop the law within the framework of a country's own jurisprudence. The fact that there is now a general defence of publication on matters of public interest in England may be of assistance 43 Serafin v Malkiewicz and Others [2020] UKSC 23 paras 67-78. in a proper case in developing our common law, but it cannot be assumed that our law should parallel theirs. For the same reason it is helpful to refer to the Australian solution to the problem of publication of untrue defamatory matter on matters of public interest, provided we bear in mind that its rule is based on a constitutional principle that 'each member of the Australian community has an interest in disseminating and receiving information, opinions and arguments concerning government and political matters that affect the people of Australia' and the media has a concomitant interest in disseminating it.44 The requirement of reasonableness in publishing is a statutory one, that the court held did not infringe the constitutional right. [56] As a final illustration of the diversity of approaches to this issue and the fluidity of the law in that regard, we refer to the position in New Zealand. There the defence of qualified privilege was expanded in Lange v Atkinson45 to include publications concerning Members of Parliament, or those seeking election to Parliament, if the allegations concerned their fitness for office, but not importing the Australian requirement of reasonable publication. In a subsequent decision the court declined to follow the House of Lords by adopting the Reynolds defence.46 This comparatively cautious approach has recently changed with the adoption by the same court of a new defence of public interest communication that extends to all matters of significant public concern, but subject to a 44 Lange v Australian Broadcasting Corporation ("Political Free Speech case") [1997] HCA 25; (1997) 145 ALR 96 at 115. See also McCloy and Others v State of New South Wales and Others [2015] HCA 34 para 2. 45 Lange v Atkinson [1998] 3 NZLR 424 (CA). 46 Lange v Atkinson [2000] 3 NZLR 385 (CA). responsibility requirement. In regard to the need for the latter, the court said:47 'The emergence of social media and the “citizen journalist” which has radically changed the nature of public discourse. Bloggers and those who comment on blogs, tweeters, and users of Facebook and other social media are modern phenomena largely unknown to the Court in Lange. While the mainstream New Zealand media may still be as responsible as the Court in Lange considered it was, the proliferation of unregulated bloggers and other commentators who can be reckless means that the imposition of a responsibility requirement is highly desirable and a necessary safeguard for reputation and privacy rights. It would also provide much needed clarity and certainty in an unregulated world. The other alternative would be to deny the defence altogether to anyone other than the mainstream media but we do not consider that drawing such a distinction would be justified either as a matter of logic, policy or principle. Non-media commentators have an important role to play. [57] This brief review of developments in other jurisdictions reflects a convergence of judicial thinking about the important role of the media in modern democracies, the proper boundaries of freedom of expression, the public interest and the recognition of the right to dignity in respect of reputation. Our own jurisprudence in cases such as Bogoshi and Khumalo is part of that convergence. The rise of social media will continue to focus attention on this area of the law. Significant in this judicial convergence is that all societies are facing similar issues, but each has found it necessary to address it in its own way in accordance with its own legal principles. Some have addressed the problem by developing common law principles, some have resorted to statute and others have found the answers by a blend of constitutional principle and common law development. Any development of our common law will likewise have to be undertaken in 47 Durie v Gardiner [2018] NZCA 278; [2018] 3 NZLR 131 para 56(c). The court was influenced by the adoption in Canada in Grant v Torstar Corp 2009 SCC 61; [2009] 3 SCR 640 of a new defence of responsible communication on a matter of public interest, separate from that of qualified privilege. accordance with the legal principles of the actio injuriarum and in the light of our constitutional values. Development of the common law [58] Section 173 of the Constitution mandates the development of the common law by the high court, this court and the Constitutional Court, taking account of the interests of justice. In doing so we are enjoined by s 39(2) to promote the spirit, purport and objects of the Bill of Rights. This is a structured process. In Mighty Solutions48 the Constitutional Court said: 'Before a court proceeds to develop the common law, it must (a) determine exactly what the common law position is; (b) then consider the underlying reasons for it; and (c) enquire whether the rule offends the spirit, purport and object of the Bill of Rights and thus requires development. Furthermore, it must (d) consider precisely how the common law could be amended; and (e) take into account the wider consequences of the proposed change on that area of law.' A few years thereafter, in MEC for Health and Social Development, Gauteng v DZ OBO WZ,49 the Constitutional Court again dealt with how an enquiry into the development of the common law should proceed:50 ‘To start the enquiry one must be clear on (1) what development of the common law means; (2) what the general approach to such development is; (3) what material must be available to a court to enable the development; and (4) the limits of curial, rather than legislative, development of the common law.’ [59] The Constitutional Court explained that the common law developed incrementally, through rules of precedent, which ensured that like cases are treated alike. Development occurs not only when a common law rule is 48 Mighty Solutions CC t/a Orlando Service Station v Engen Petroleum Ltd and Another [2015] ZACC 34; 2016 (1) SA 621 (CC) (Mighty Solutions) para 38. 49 MEC for Health and Social Development, Gauteng v DZ obo WZ [2017] ZACC 37; 2018 (1) SA 335 (CC) (DZ obo MZ). 50 Ibid para 27. changed altogether, or when a new rule is introduced, but also when a court needs to determine whether a new set of facts falls within or beyond the scope of an existing rule. The development of the common law cannot take place in a factual vacuum.51 Finally, in DZ obo WZ the Constitutional Court, as it had in Mighty Solutions, set out the proper approach: ‘The general approach to development of the common law under s 39(2) is that a court must: (1) determine what the existing common law position is; (2) consider its underlying rationale; (3) enquire whether the rule offends section 39(2) of the Constitution; (4) if it does so offend, consider how development in accordance with section 39(2) ought to take place; and (5) consider the wider consequences of the proposed changes on the relevant area of the law.’52 [60] Where it is suggested that there is a deficiency in the common law that is not at odds with the Bill of Rights, then that deficiency might be addressed by the court relying on its inherent power in terms of s 173 of the Constitution.53 Again, the deficiency must be specifically identified and a viable solution proposed. [61] The need to follow this process imposes duties on litigants when they seek to persuade a court that a development of the common law is required. They have a responsibility to present to the court their understanding of the current state of the law and the reasons for it by reference to the relevant authorities. The current rule must be assessed in the light of the spirit, purport and objects of the Bill of Rights. The parameters of the proposed development must be clearly expressed and the 51 Ibid para 28, the previous points being made with reference to K v Minister of Safety and Security [2005] ZACC 8; 2005 (6) SA 419 (CC) para 16. 52 Ibid para 31; Mighty Solutions op cit, fn 46, para 38. 53 DZ obo WZ op cit, fn 47, para 32. Section 173 of the Constitution states that: ‘The Constitutional Court, the Supreme Court of Appeal and the High Court of South Africa each has the inherent power to regulate their own process, and to develop the common law, taking into account the interests of justice.’ See eg Mokone v Tassos Properties CC [2017] ZACC 25; 2017 (5) SA 456 (CC) para 41. consequences of amending the law in that way examined. Very often this will require evidence to enable the court to determine what the likely consequences will be. [62] This process was not followed by the parties and they did not provide the necessary input to enable the court to determine whether a development of the common law was required and, if so, what it should be. The answering affidavit of Mr Malema, characterised the defence as 'reasonableness' on the basis that the EFF's conduct was reasonable because their actions were akin to those of a whistle-blower. It said that they had been given information by a confidential source in circumstances where the secrecy of the appointment process and the failure to obtain satisfactory answers to questions posed to the President and the Minister of Finance meant that they were not in possession of all the facts. It was submitted that the correct test for determining whether the statement was unlawful54 was whether there was a bona fide belief by the EFF in the truth of the statement and whether its conduct was reasonable. In the heads of argument there was no analysis of the legal position and the only authorities referred to were Bogoshi and a case on the importance of political speech.55 [63] The respondent's approach in the heads of argument was to say that the defence in Bogoshi was a defence afforded to the media. It noted that the high court had developed the law in the applicants' favour by extending that defence to non-media defendants, but pointed out that it had not been followed in Gqubule-Mbeki.56 It was submitted that if we upheld the high court's finding that a defence of reasonable publication was not established 54 The affidavit said 'defamatory' in para 58 but that was plainly incorrect. 55 Mthembi-Manyele v Mail and Guardian Ltd and Another [2004] ZASCA 67; 2004 (6) SA 329 9SCA) para 47. 56 Gqubule-Mbeki op cit, fn 7, paras 71-75. it would be unnecessary for this court to decide whether the extension was warranted. No submissions were made against the eventuality of this court not upholding the approach of the high court. Nor did we receive any submissions addressing the curious concept of a defence being dismissed on the facts, even though its existence and ambit had not been determined. [64] The high court did not engage in any detailed analysis of the background to Bogoshi, or the manner in which it was situated in the context of wrongfulness and intention in the law of defamation. No doubt this was because the issue was not explored in argument. It was not referred to the line of authority flowing from Maisel v Van Naeren that indicated that a bona fide belief that publication of defamatory material was lawful was capable of rebutting the animus iniuriandi. It noted that, because of social media platforms, ordinary members of the public now have publishing capacities that are capable of reaching an audience beyond those of the print and broadcast media. It held that there was no difference between an ordinary person communicating matters of public interest or concern to the general public on social media and a journalist doing the same in a newspaper. That led to the conclusion that: 'There is no justification as to why the press should enjoy the privilege of freedom of expression greater than that enjoyed by a private individual. The liberty of the press is no greater than the liberty of any individual. There is, therefore, no justification for limiting the defence of reasonableness as it pertains to both wrongfulness and fault to the media alone. In my view this limitation cannot be justified under section 36 of the Constitution.' [65] With respect, this conclusion proceeded from the basis that Bogoshi had afforded media defendants a defence to claims for defamation that was not available to non-media defendants and thus disadvantaged non-media defendants. As we have shown, that was not a correct reading of Bogoshi, which left untouched the defence of absence of animus iniuriandi for non- media defendants and did not extend that defence to the media. The principle of strict liability was rejected. If untrue defamatory material was published in circumstances where it was reasonable to publish those particular facts in that particular way at that particular time the media were afforded a new defence of reasonable publication. This rebutted the prima facie unlawfulness of the publication. Whether publication was reasonable would involve an assessment of a number of factors, including the reliability of the source and the steps taken to verify the information. It goes without saying that it would have to be shown that they were satisfied that the information was true. The new defence was accordingly hedged around with qualifications that were particularly pertinent to publications by the media, but not necessarily to non-media defendants. By extending Bogoshi to non-media defendants the high court may inadvertently have restricted the defences available to such defendants, which was clearly not its intention. [66] We were not presented with a satisfactory basis upon which to be asked to develop the common law. Bogoshi dealt with wrongfulness and the lawfulness of publications of untrue defamatory material by the media. It carefully distinguished that from the defence of absence of animus iniuriandi available to non-media defendants, while recognising that the latter defence might afford non-media defendants a defence in circumstances similar to media defendants. It also recognised that it would make a nonsense of the defence based on lawfulness to make a defence of absence of animus iniuriandi available at the same time to the same defendant. Making Bogoshi applicable to non-media defendants would have the effect of depriving non-media defendants of the defence that defamatory material was not published animo iniuriandi. [67] None of these issues were explored in the high court or in the arguments before us. This is not a case in which to engage in the task of developing the common law, because we do not have the benefit of a properly structured approach to the suggested development. Development of the common law would notionally involve an assessment of whether the present bifurcated system properly protects the constitutional right to freedom of expression of both media and non-media defendants in the light of the public interest in receiving information about matters of public concern, especially in the political arena. It would involve a consideration of the EFF's contention in oral argument that one cannot apply the same level of reasonableness to a political party as to the media. We were not provided with any submissions as to how and where the lines would be drawn. A development must assess whether it is desirable to place media and non-media defendants on the same footing and the potential impact of depriving non-media defendants of the defence of the absence of animus iniuriandi. The situation of a single member of the public, like Mr Maisel, as well as prominent players on the political stage, such as the EFF and Mr Malema, requires consideration. Whether publications on social media platforms are in some respects at least to be equated with publications by the formal media, must be weighed. We have had none of the evidence and none of the submissions that would enable us to make a proper determination of these questions. [68] Fortunately, the facts of this case are such that it makes no difference to the outcome whether we approach the defence of reasonable publication on the basis that it is a defence that seeks to rebut animus iniuriandi, or that it is a defence on the lines set out in Bogoshi. On either basis, the circumstances of the publication of this statement were not such as to sustain the defence. We turn then to examine the facts. Was the publication reasonable [69] We have dealt above with the defamatory content of the statement issued by the EFF. At its heart lay the factual statements that Mr Manuel and Mr Kieswetter were relatives, close business associates and companions. All of this was factually untrue, but it was the foundation for the description of the process as nepotistic and corrupt. It also underpinned the suggestion that to prevent these facts from being disclosed, the interviews were not conducted in public. [70] The foundation for these allegations was a 'tip-off' in a WhatsApp message sent to Mr Floyd Shivambu, the deputy leader of the EFF, which read: ‘Cde DP, the SARS Commissioner interview process is full of intrigue. One of the shortlisted candidates is one Prof Edward Kieswetter, a relative and close friend of the Chair of the interviewing panel Trevor Manuel. Kieswetter is former SARS deputy commissioner under Parvin (sic) Gordhan when Manuel was the Finance Minister. He left to run Alexander Forbes and then was forced off by the board and he went to be one CEO of the Da Vinci Institute. Maria Ramos, Trevor, Kieswetter and Martin Kingston fly often first class to London, not only as friends but also as business associates …we wonder whether this apparent conflict of interest has been declared to Tito Mboweni.’ [71] Neither the source of this message, nor the date when it was sent, were disclosed in the redacted version annexed to an affidavit by Mr Shivambu. The source was described as a colleague of Mr Kieswetter and a 'senior person who has been employed in the executive structures of a State Owned Company'. Keeping his name confidential was justified by a perceived threat to 'his current and future prospects' were his identity to be revealed. It was submitted that the non-disclosure of his identity should 'do nothing to affect the reliability and credibility' of the source. [72] Although the date on which the message was sent was not revealed its terms indicate that it was sent prior to the interviews of the shortlisted candidates. The names of several of those to be interviewed, including Mr Kieswetter, were published on the BusinessLive website on 8 February 2019 and all bar one of the interviews took place on 9 February 2019, so it can safely be accepted that it was sent about that date. On 13 February 2019 Mr Shivambu had written to the Minister of Finance, Mr Mboweni, asking about the recruitment process; the names of the applicants; the criteria for short-listing; the names of those short-listed and whether interviews had been conducted. He said that the EFF was concerned about the secrecy surrounding the process and added: 'We are also concerned about the attempt to impose an incompetent and unqualified person'. In the absence of any suggestion that this referred to one of the other applicants, the inference is that it was a reference to Mr Kieswetter and flowed from the WhatsApp message. [73] Mr Shivambu was advised by the Minister to address his questions via parliamentary channels and question posed to the Minister by another member of the EFF asked the basis upon which the members of the panel had been selected and whether potential conflicts of interest had been taken into account before the selection. The Minister's response, given on 5 March 2019, referred to the recommendations of the Nugent Commission as the basis for the appointment of the panel. It explained that the panel was advisory in nature and was required to make non-prescriptive recommendations to the President. It was not making the decision on who to appoint as Commissioner. As regards conflicts of interest, it was stated that all members were requested to disclose any possible conflicts of interest when being appointed to the panel and again when interviewing candidates. Given the terms of the WhatsApp message in Mr Shivambu's possession it seems clear that the questions about conflicts of interest were particularly directed at Mr Manuel and the alleged relationship between him and Mr Kieswetter. [74] Counsel for the applicants characterised these answers as a denial of relevant information that ought to have been made public. They submitted that the applicants were not themselves vouching for the accuracy of the statements and described the untruths that appeared in the statement as the product of 'loose language' and were 'peripheral'. In addition they stressed that the EFF's criticism of the process was legitimate. They submitted that it was unreasonable to expect the EFF to seek information from its political opponents in order to ascertain the correctness of the allegations against Mr Manuel in the WhatsApp message. [75] The immediate problem confronting the applicants is that the source was not reliable and the information given to Mr Shivambu and incorporated in the public statement on 27 March 2019 was false. The EFF relied on the untested word of its source without taking any steps to verify the correctness of the statements they made. Contrary to its counsel's submissions, there were many simple things that could have been done in this regard. It should have asked its source where he obtained this information. That would have enabled it to check its reliability. Had the answer been along the lines of 'it's common knowledge' or 'I've been told' that would have opened up other lines of enquiry. An active political party would be able to approach members of the community who knew the two men to look for information. In a world driven by technology the internet is usually a fruitful source of information and one could have ascertained whether they had attended the same school or tertiary institution, belonged to the same church, served in public bodies or were linked in any other way. Given Mr Manuel's political profile it should not be difficult for a political party such as the EFF to ascertain whether there were long- standing political links between the two men. Business links could be investigated by reference to the records of CIPC and well-known business directories. [76] Counsel stressed that the EFF is a political party with significant representation in Parliament and a role to play in uncovering corruption and maladministration in government entities. The Commissioner's role is an important one. There should be no suspicion attaching to the person appointed to this role. All this we accept. But it emphasised the necessity for the EFF to take steps to confirm the correctness of the allegations made by the source. If true there was a real risk that the appointment of Mr Kieswetter might be seen in the public's eyes as tainted. That was the very charge levelled in the EFF statement. [77] Had steps been taken to check the accuracy of the source's information and no basis for them discovered, that would have dictated the need to take far greater care before publishing. Other routes of enquiry could have been explored. The obvious one would have been to address Mr Manuel or Mr Kieswetter directly and ask whether the allegations were true. Counsel pooh-poohed that suggestion, saying that it was impolitic to ask an opponent – by which it meant Mr Manuel – for such information. We fail to see why. If he refused to respond that might have justified their going public with the allegations. If he admitted them in whole or in part there could have been a demand that Mr Manuel withdraw from the panel. An admission not followed by a withdrawal, would have provided political ammunition for them to employ in order to discredit the process in the eyes of the electorate and make political capital for the upcoming election. [78] The problem for the EFF in approaching Mr Manuel directly was that, if the answer was that the allegations were untrue, it would remove a potential political weapon from their arsenal. No question of urgency arose. There was ample time between 8 February and 27 March to make enquiries. The tenor of the questions posed to Mr Mboweni reflected an intention to exploit the source's 'facts' for political advantage. Making an enquiry and being told the correct facts risked turning a possible bombshell into a damp squib. [79] The issue was squarely raised in Mr Manuel's replying affidavit where he said that the EFF was evasive as to the nature and content of the disclosures by its source and as to the steps it took to satisfy itself as to the reliability of the source and the truth of the allegations. That prompted the filing of another affidavit by Mr Malema and one by Mr Shivambu. Mr Malema explained that these were tendered because Mr Manuel had raised a dispute about the EFF's version of reliance on a source and disputed the credibility of the information supplied to the EFF by the source. The affidavits were tendered to demonstrate that the EFF had a reasonable basis upon which to make the statements and to demonstrate that its conduct was not unreasonable in the circumstances. He acknowledged that he had not had direct contact with the informant and the latter's 'suspicions', as he described them, were conveyed to him by Mr Shivambu. [80] There is nothing in Mr Shivambu's affidavit about steps taken to confirm the accuracy of the source's information. He said that the 'high office which the informant held, coupled with the intimate knowledge he reasonably knows (sic) about Mr Kieswetter given their proximity, is a valid basis upon which the EFF could make its statements'. Mr Shivambu's contention about the source's information being incorrect, was: 'That he turned out to be incorrect in the strictest sense in how he suspected the applicant and Mr Kieswetter to be related to each other is not sufficient to discard the information communicated to the EFF [and] is no basis to sanction it.' (Our insertion) [81] Viewing these facts from the perspective of a contention that the statement was published without the animus iniuriandi they fell woefully short of discharging the onus on that issue. It is clear that the EFF published the statement accusing Mr Manuel of nepotism and corruption on the basis of statements made by its source that it made no attempt to check. Even if it were given the same benefit that the conventional media are given in regard to non-disclosure of their sources, that would not assist its case. The allegations it made were clearly defamatory and concerned a public figure given the responsibility of interviewing people and advising the President on the appointment of the Commissioner of SARS. That is a most serious allegation. To do so on the basis of a message of this type without any endeavour to confirm the truth of the allegations is inconsistent with the absence of an intention to injure. It demonstrates a willingness to wound irrespective of the truth of the allegations. [82] The position was made worse in regard to the continuing publication of the statement after 27 March 2019 when Mr Manuel had said that the facts were false and demanded a retraction and its removal. He issued a statement demanding the production of evidence for three claims, namely, that there were 'blood ties' between him and Mr Kieswetter; that there were business relationships between them; and that he had previously appointed Mr Kieswetter as Deputy Commissioner of SARS. (The latter allegation was made in the statement but did not appear in the WhatsApp message.) Mr Malema's response on Twitter when a journalist drew this statement to his attention was: 'He can go to hell, we are not scared of him.' This attracted 396 retweets and 1460 likes. [83] The response to the letter of demand addressed by Mr Manuel's attorneys to the EFF and Dr Ndlozi was equally defiant. It said that they stood by the statement and refused to publish an apology. Any proceedings would be vigorously defended. Then, on the basis of a media report concerning Mr Manuel recusing himself from active participation in Mr Kieswetter's interview, it proceeded to demand answers to no less than 46 questions, only two of which bore, and then only indirectly, upon the assertions concerning his relationship with Mr Kieswetter. The EFF knew that Mr Manuel insisted that the material parts of their statement were false. Yet it did nothing to verify their accuracy either then or before delivering their answering affidavit in the litigation. Instead, it claimed that there was a personal relationship between him and Mr Kieswetter and that its criticism of the process was justified. It asked that the application be dismissed with an order for attorney and client costs. [84] It is impossible to reconcile this attitude, persisted in to the bitter end in the high court, with an absence of animus iniuriandi. The EFF knew that the statement they published was defamatory of Mr Manuel. The claim that they were genuinely mistaken about the accuracy of the information on the basis of which they assailed Mr Manuel's reputation is inconsistent with an attitude that they would persist in those allegations – the statement was not removed from either Twitter account – irrespective of whether or not it was accurate. [85] The alternative argument based upon Bogoshi falls at substantially the same hurdle. Seriously defamatory statements were made based upon a single rather cryptic WhatsApp message, without any endeavour to check the correctness of the facts in that message. No reason of urgency or pressing public importance justified the failure to investigate further to confirm the truth of the facts they were relying on. The attempt to justify it on the basis of political free speech amounts to little more than adopting the old adage 'All's fair in love and war'. [86] For those reasons, whether the defence of reasonable publication is approached as a denial of publication animus iniuriandi, or as a development of the common law along the lines indicated in Bogoshi, it could not succeed and there is no reasonable prospect of the judge's conclusion to that effect being overturned. That is also the fate of the other defences advanced by the applicants. On the merits therefore there is no basis upon which to grant leave to appeal. We turn then to deal with the contentions in regard to the relief granted by the high court. The relief granted by the court below Declaratory and interdictory relief [87] The first question to be addressed in relation to the relief afforded Mr Manuel, consequent upon the court’s conclusion that the statement by the EFF was defamatory and unlawful, is whether the declaratory and interdictory relief granted by the court below was appropriate. The difficulty with interdictory relief is that it may prevent speech that will be published in the future. In Midi Television (Pty) Ltd t/a E-TV v Director of Public Prosecutions (Western Cape)57 this court dealt with the danger attendant upon orders for the prior restraint of publication. It had regard to the decision of this court in Hix Networking Technologies v System Publishers (Pty) Ltd and Another58 where a temporary interdict was sought. At para 20 of Midi the following appears: ‘Where it is alleged, for example, that a publication is defamatory, but it has yet to be established that the defamation is unlawful, an award of damages is usually capable of vindicating the right to reputation if it is later found to have been infringed, and an anticipatory ban on publication will seldom be necessary for that purpose. Where there is a risk to rights that are not capable of subsequent vindication a narrow ban might be all that is required, if any ban is called for at all. It should not be assumed, in other words, that once an infringement of rights is threatened, a ban should immediately ensue, least of all a ban that goes beyond the minimum that is required to protect the threatened right.’ (Citations omitted.) This was dealing with a restraint on anticipated publication, while the issue here is repetition of publication that has already taken place. [88] In the present case, the statement complained of was first published more than two months prior to the matter being heard by the court below. Despite protestations by Mr Manuel, the applicants remained defiant and drew even more attention to the original publication that had been retweeted, by their emphatic, if somewhat designedly crass, public response. By the time of the hearing in the court below, the defamatory statement had still not been removed and Mr Manuel, understandably, sought interdictory relief in relation to the continued future publication. The court below was not approached for an interim interdict. Mr Manuel sought declaratory and interdictory relief in final terms. The court below 57 Midi Television (Pty) Ltd t/a E-TV v Director of Public Prosecutions (Western Cape) [2007] ZASCA 56; 2007 (5) SA 540 (SCA). 58 Hix Networking Technologies v System Publishers (Pty) Ltd and Another 1997 (1) SA 391 (A) at 401D-G). held that the statement was defamatory and thus unlawful. We have shown that, on that score, the conclusions of the court below were well founded. The defences advanced by the EFF, whether based on the lawfulness of the publication, or an absence of animus iniuriandi, were all properly rejected on the papers. Where defamation is established and the defences to a claim for an interdict are shown on the papers to be without substance, the grant of a final interdict is permissible.59 Conversely, where the opposition to an interdict is based on a colourable defence based on facts advanced in the answering affidavit that cannot be rejected on the papers and require oral evidence, a final interdict may not be given.60 Whether any interim relief can be granted will depend on the application of the well-established rules in relation to interim interdicts. [89] In circumstances where the applicants were obdurate, and where the integrity of an institution of state was being undermined on the basis of Mr Manuel’s alleged corrupt and nepotistic conduct, an award of damages, in due course, could hardly be said to be a viable and compelling alternative to an interdict prohibiting further publication. Mr Manuel satisfied the requirements for the final relief he had sought, which was granted by the court below. The applicants’ reliance on this court’s decision in Tau v Mashaba and Others61 is misplaced. That case concerned an application for interim relief, pending an ‘action for defamation and damages’. The court below, in that case, before allowing for possible defences to be addressed, granted a declaratory order and an interdict in final terms. This court, predictably, set those orders aside. That case is far from the facts of the present application. In the present case, Mr Manuel satisfied the 59 Heilbron v Blignault 1931 WLD 167 at 169; Buthelezi v Poorter 1974 (4) SA 831 (W) at 838A-B. 60 Herbal Zone (Pty) Ltd v Infitech Technologies (Pty) Ltd and Others [2017] ZASCA 8; [2017] 2 All SA 347 (SCA) para 37. 61 Tau v Mashaba and Others [2020] ZASCA 26; 2020 (5) SA 135 (SCA). requirements for the declaratory and interdictory relief sought. Consequently, those orders are not liable to be set aside. [90] Insofar as it was suggested that those parts of the statement that were unobjectionable could be clinically excised from the defamatory portions, our response is as follows: It is not for this court to recast the statement so that it might be unobjectionable and coherent. We decline the invitation to do so. The damages award Purpose and proper procedure and developing the law [91] We now turn to deal with the propriety of the award of damages by the court below. We begin, first, by looking at the purpose of such an award. An award of damages for defamation is compensation for an injury to dignity and reputation, under the rubric of the actio iniuriarum.62 Put differently, an award of damages is to compensate a plaintiff for wounded feelings and loss of reputation.63 Where, in addition, patrimonial loss is sustained, the Aquilian action is available.64 [92] Second, as presaged above, it is necessary to consider the proper process for prosecuting such claims. An unliquidated claim for damages must be pursued by institution of an action.65 No less so, when an aggrieved victim of a defamatory statement seeks compensation. That has always 62 Le Roux v Dey (above fn 2) para 199. 63 Ibid para 151. 64 Caxton Ltd and Others v Reeva Forman (Pty) Ltd and Another 1990 (3) SA 547 (A) at 567G-576B. 65 As to the nature of an unliquidated claim for damages see Kleynhans v Van der Westhuizen NO 1970 (2) SA 742 (A) at 750G-751A. It is one where the quantum of the damages is not determined or determinable. been the position66 and it is reflected in the Uniform Rules of Court.67 Uniform Rule 17(2) compels a person claiming unliquidated damages to use a long form summons and file particulars of claim, and Uniform Rule 18(10) obliges ‘a plaintiff suing for damages [to] set them out in such manner as will enable the defendant reasonably to assess the quantum thereof’ and plead thereto.68 In respect of damages claims for personal injury the rule requires even greater specificity. Summary judgment proceedings, regulated by Uniform Rule 32, are limited to claims based on a liquid document, a liquidated amount in money, the delivery of specified movable property, and ejectment. It is not a remedy available in respect of claims for unliquidated damages. [93] This is not mere technicality. Claims for unliquidated damages by their very nature involve a determination by the court of an amount that is just and reasonable in the light of a number of imponderable and incommensurable factors. That exercise cannot be undertaken in proceedings by way of application. As Harms DP said in Cadac:69 ' … motion proceedings are not geared to deal with factual disputes – they are principally for the resolution of legal issues – and illiquid claims by their very nature involve the resolution of factual issues.'(Emphasis added.) 66 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1161, where Murray AJP said: 'There are on the other hand certain classes of case (the instances given by DOWLING, J., are matrimonial causes and illiquid claims for damages) in which motion proceedings are not permissible at all.' See also Cadac (Pty) Ltd v Weber-Stephen Products Company and Others [2010] ZASCA 105; 2011 (3) SA 570 (SCA) (Cadac). 67 Rules regulating the conduct of the proceedings of the several provincial and local divisions of the High Court of South Africa, originally published under GN R48 in GG 999 of 12-01-1965 (the Uniform Rules). 68 Rule 18(4), which applies to pleadings generally, provides that: ‘Every pleading shall contain a clear and concise statement of the material facts upon which the pleader relies for his claim, defence or answer to any pleading, as the case may be, with sufficient particularity to enable the opposite to reply thereto.’ 69 Cadac op cit para 10; National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 26. [94] In Grindrod (Pty) Ltd v Delport and Others70 the court, in dealing with Uniform Rule 18(10), said that it ‘enjoins any party claiming damages to provide sufficient information to enable the opposing party to know why the particular amount being claimed as damages is in fact being claimed’.71 Failure by a plaintiff to meet the requirement of this rule might well compel a defendant to resort to the provisions of Uniform Rule 18(12), in terms of which the pleadings, because of the deficiency, are deemed to be an irregular step. [95] A defendant could, in the light of proper pleading, be motivated to make a tender or settle a claim. It is true that claims for damages based on defamation, as the many reported cases attest, are frequently opposed, both on the merits and in relation to the quantum of damages allegedly sustained. However, some are settled and those that are contested often take place against the background of a secret tender. [96] In contested cases, following on the close of pleadings, evidence is led in an attempt to justify the amount claimed. A defendant is entitled to challenge that evidence and present countervailing evidence. How else would a court be able to determine an appropriate award? Relevant evidence has to be presented and fully explored. The factors to be considered by a trial court in determining an appropriate award include: the character and status of the plaintiff; the extent of the defamatory publication; its envisaged and actual impact on the plaintiff; and the subsequent conduct of the person who made the defamatory statement, 70 Grindrod (Pty) Ltd v Delport and Others 1997 (1) SA 342 (W). 71 Ibid at 346I-347A. including his or her efforts, if any, to make amends after the publication.72 This list is not exhaustive. [97] In Gelb v Hawkins73 the victim of a defamatory statement claimed damages for contumelia and loss of reputation. After oral evidence was adduced by both plaintiff and defendant, the trial court and this court considered whether the plaintiff had proved his entitlement on either, or both grounds.74 This included a consideration of whether the plaintiff, who was an attorney, had been adversely affected in his practice due to his loss of reputation. Unlike Caxton, there was no claim for patrimonial damages in Gelb. As can be seen, there has to be purposeful, specificity of pleading, followed by sufficient oral evidence, in order to enable the trial court to determine an appropriate award. [98] In De Flamingh v Pakendorf75 the plaintiff testified about the effect upon him of a defamatory statement. The court heard from him about the hurt he had experienced. He testified about how, within social circles, he had been questioned concerning what had been said about him and the impact on his professional life. He testified that the defamatory statement had caused his colleagues to approach him with a measure of suspicion. These aspects all featured in the determination of the amount of damages awarded by the trial court.76 72 SA Associated Newspapers Ltd en ’n Ander v Samuels 1980 (1) SA 24 (A) at 45D-G; Muller v SA Associated Newspapers Ltd and Others 1972 (2) SA 589 (C) at 595A-B. 73 Gelb v Hawkins 1960 (3) SA 687 (A). 74 Ibid at 692C-F and at 693G-H. 75 De Flamingh v Pakendorf en ’n Ander; De Flamingh v Lake en ’n Ander 1979 (3) SA 676 (T). 76 Ibid at 685H-686F. [99] Even in undefended cases, in which unliquidated damages are claimed, the position dictated by the applicable rules of court, has always been that oral evidence is required before an award can be made. Uniform Rule 31(2)(a), dealing with default judgments, reads as follows: ‘Whenever in an action the claim or, if there is more than one claim, any of the claims is not for a debt or liquidated demand and a defendant is in default of delivery of notice of intention to defend or of a plea, the plaintiff may set the action down as provided in subrule (4) for default judgment and the court may, after hearing evidence, grant judgment against the defendant or make such other order as it deems fit.’ (Emphasis added.) [100] Thus, in undefended actions in which unliquidated damages are claimed, our courts, have insisted on hearing viva voce evidence in order to make a proper assessment and issue an appropriate award. In Venter v Nel77 the court, in dealing with a claim by a plaintiff for damages she sustained as a consequence of being infected with HIV during a sexual encounter, noted that it was dealing with an undefended action, and said the following: ‘The practice in this Division is to hear some evidence on claims for damages, but inevitably the enquiry is not as detailed or controversial as it would be were the matter defended, were the defendant represented by counsel and were the evidence of the witnesses who testified for the plaintiff tested by way of cross-examination and by the defendant leading countervailing evidence.’78 [101] In Dorfling v Coetzee,79 faced with a claim for damages flowing from a motor vehicle collision, in the form of an application for default judgment, the court said the following in relation thereto: 80 77 Venter v Nel 1997 (4) SA1014 (D) at 1016. 78 Ibid at 1016A-B. 79 Dorfling v Coetzee 1979 (2) SA 632 (NC). 80 Ibid at 635B-D. The original text read: ‘Damages may be recovered on the basis of numerous causes of action, and one can envisage cases, especially in cases of breach of contract, where the court can determine damages without any reference to evidence in relation to the cause of action. On the other hand, where the cause of action is delictual, damages can in most cases only be determined after evidence has been led also in relation to the cause of action, for instance in respect of assault, defamation, etc.’ In essence, the court held that in cases where damages are claimed in delict one would, in the normal course, require evidence in relation to the damages allegedly sustained. In motor collision cases, of course, questions arise concerning negligence, contributory negligence and, where applicable, the apportionment of damages, in relation to all of which oral evidence is required. [102] In New Zealand Insurance Co Ltd v Du Toit,81 dealing with an application for default judgment, the court, in special circumstances, permitted proof of damages by affidavit. The plaintiff was the insurer under the Motor Vehicle Insurance Act 29 of 1942, of a motor vehicle owned by Du Toit. The latter was involved in a motor vehicle collision, which resulted in one Fourie being severely injured. Fourie consequently instituted action against the plaintiff, which was settled by payment of R5000 damages. In consequence of his non-compliance with certain provisions of the statute Du Toit was liable to pay the plaintiff the amount to which Fourie was entitled. It sued him alleging that Fourie's damages were 'not less than R5000' and the action was undefended. The plaintiff needed to prove that Fourie had been entitled to damages of at least R5000. Skadevergoeding kan uit hoofde van verskeie skuldoorsake geëis word en mens kan jou gevalle voorstel veral by kontrakbreuk waar die hof die skadevergoeding kan bepaal sonder enige verwysing na getuienis oor die skuldoorsaak. Aan die ander kant waar die skuldoorsaak op delik gebasser word, kan die skadevergoeding in die meeste gevalle slegs bepaal word nadat getuienis oor die skuldoorsaak ook gelei is, bv aanraanding, laster, ens.’’ 81 New Zealand Insurance Co Ltd v Du Toit 1965 (4) SA 136 (T). [103] In exceptionally permitting the evidence on affidavit of a doctor in relation to the nature of Fourie’s injuries, his pain and suffering and the disability sustained by him, the court in New Zealand said the following: ‘At the hearing of this matter counsel sought leave to prove the amount of damages by tendering an affidavit of Dr Wolfowitz which sets out the nature of the injuries, the pain and suffering and the disabilities which Fourie sustained. Although I think it would be dangerous to allow this type of practice I have nevertheless come to the conclusion on the affidavit of Dr Wolfowitz that I would be erring if I did not grant the order as prayed. The affidavit places it beyond question that the amount of damages suffered by Fourie was, to say the least, R5000 and if I insist on verbal evidence I think I would merely be causing unnecessary costs for which defendant is liable. On the facts of this case, and bearing in mind that the defendant was served with the summons and combined declaration in which his attention is drawn to the fact that R5000 was claimed and that he has not seen fit to make representations to this court, I will accordingly grant judgment as prayed.’82 [104] It must be emphasised that in that case the court cautioned against not requiring verbal evidence in undefended cases and was careful to set out its reasons for the exception in that case. New Zealand does not dislodge the rationale for insisting on oral evidence, as set out earlier, so as to enable a proper determination of damages in undefended cases and especially in opposed matters. On the contrary, New Zealand reiterated that oral evidence is the rule. [105] Motion proceedings are particularly unsuited to the prosecution of claims for unliquidated damages, whether in relation to defamation or otherwise. We enquired of counsel representing Mr Manuel whether they could refer us to any case law, in terms of which damages for defamation were claimed and determined in motion proceedings. They cited Gqubele- 82 Ibid at 137B-D. Mbeki.83 But, in that case, the court, relied on the judgment of the court below in this case, to hold that there is no hard and fast rule against using motion proceedings in a damages suit. Furthermore, so the court there said, the rule only applied if disputes of fact arise and that in the case before it what the claimants said was ‘largely undisputed’ and that if the matter went to trial the deponents would merely repeat them. Neither judgment dealt with the established procedure or the necessity for oral evidence. In the present case the novelty of the procedure was not dealt with in the judgment and it can hardly serve as authority for the approach in Gqubele-Mbeki. Neither case can be seen as authority for departing from established procedure and permitting damages claims based on defamation to be pursued in motion proceedings without the need for oral evidence. [106] That brings us to an issue that arose during oral argument before us. Counsel representing Mr Manuel, faced with the difficulty of having employed motion proceedings to claim damages, informed us that, in the court below, they had submitted that since the defamation complained of implicated Mr Manuel’s right to dignity and since, in terms of s 38 of the 83 Gqubele-Mbeki op cit fn 7. A similar procedure was followed in Hanekom v Zuma [2019] ZAKZDHC 16, but the judge did not determine the damages and referred that issue for oral evidence, although without specifying the procedure to be followed in that regard. This part of the order was not the subject of the application for leave to appeal dismissed by both this court and the Constitutional Court. When the boot was on the other foot and Mr Malema alleged that he had been defamed he adopted precisely the same strategy, but it received a frosty reception from the judge who said: 'As far as I have been able to ascertain, bringing a defamation claim by way of application for a final interdict and damages is a new phenomenon in our law (as opposed to an interim interdict pending an action for damages). In my view, it is inappropriate and undesirable. The reason I say this is the following: the person making the defamatory statement may have a very good reason for doing so, but may not have the hard evidence to hand, which evidence may be in the possession of the person who claims to have been defamed and/or third parties; in an action a defendant will have the benefit of the pleadings in which the issues are narrowly defined, of the discovery process, of requesting particulars for trial, of a pre-trial conference and the subpoenaing of witnesses and documents duces tecum; he/she will be entitled to cross-examine the plaintiff and the witnesses called on behalf of the plaintiff in order to test their version and to give evidence and call his/her own witnesses; evidence of an expert nature might be necessary. An application deprives a respondent of all these extremely valuable and necessary litigation tools.' The case is Malema v Rawula [2019] ZAECPEHC 83 para 33 and it is set down for hearing in this court in the next term. Constitution he was entitled to appropriate relief, they had urged the court to develop the common law in terms of s 8(3) read with s 39(2) of the Constitution, to provide effective and expeditious relief, in the form of permitting them to claim damages on motion, notwithstanding established practice and precedent. We were informed that this was part of a sustained effort on the part of Mr Manuel’s attorney, to achieve that object for the benefit of existing and prospective litigants. The court below, perhaps because of the manner in which it approached the question of damages, did not deal with that aspect at all. [107] In relation to suggested developments of the common law and the need to follow a structured approach, we referred in para 58 to the judgments of the Constitutional Court in Mighty Solutions84 and DZ obo WZ,85 where the Constitutional Court set out how an enquiry into the development of the common law should be undertaken. Given that what is being suggested is a novel approach to the procedure to be used in pursuing claims for damages for defamation, it might be thought that we are not being asked to develop the common law, but to exercise our inherent power to protect and regulate our own process. But there is a reason why developing the common law and protecting and regulating the process of courts are both dealt with in s 173 of the Constitution. It is that they are frequently opposite sides of the same coin, in that the development of the one affects the development of the other. It is appropriate therefore, when a change to the long-established procedure for resolving claims for unliquidated damages is advanced, that a similar process is followed to a proposed development of the common law. 84 Mighty Solutions op cit fn 46. 85 DZ obo WZ op cit, fn 47. [108] We enquired of counsel representing Mr Manuel whether, when the court below was urged to develop the common law in relation to the award of unliquidated damages in application proceedings, the steps mandated by the Constitutional Court were followed. More specifically, whether an analysis of the existing position had been undertaken on behalf of Mr Manuel, the rationale addressed, and a suggested development proposed, taking into account the wider consequences in this area of the law, including impinging on the applicable rules of court. Equally, if the suggestion was that there was a deficiency, whether it was identified, and a solution proposed. Counsel replied that this had not been done. [109] These aspects were not foreshadowed, even tangentially, in Mr Manuel’s affidavit in support of his case. In these circumstances it would have been unfair to have required the court below to have addressed the question merely by way of generalised submissions from the bar. It would have been equally unfair on the applicants.86 [110] The amicus, in generalised terms, supported the approach of the high court in all of its facets, including the award of damages. Its submissions were premised on its concern about the dangers of misinformation and disinformation being spread on social media platforms, which caused harm to individuals or groups or to the public in general. It contended that when a person, aggrieved by defamatory statements published on social media platforms, sought legal redress on the basis of the infringement of a constitutionally entrenched right, such as the right to dignity, a court was obliged to provide effective and expeditious relief. It supported the 86 MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute [2014] ZACC 6; 2014 (3) SA 481 (CC). submissions on behalf of Mr Manuel, that victims of defamation of the kind complained of by him should be able to approach a court on motion to seek relief, including the recovery of damages. [111] There is, of course, no problem with persons seeking an interdict, interim or final, against the publication of defamatory statements proceeding by way of motion proceedings, on an urgent basis, if necessary. If they satisfy the threshold requirements for that kind of order, they would obtain instant, though not necessarily complete, relief. There is precedent for this in the well-known case of Buthelezi v Poorter,87 where an interdict was granted urgently in relation to an egregious piece of character assassination. Notably, however, the question of damages was dealt with separately.88 In appropriate circumstances persons following this route might, as pointed out earlier, be required to overcome the barriers to prior restraints and have to deal with the availability of alternative measures, as a potential bar, to achieving redress. However, seeking damages, instantly, on application, is problematic for the reasons provided above. Counsel for the amicus, like counsel for Mr Manuel, did not provide a proper basis for departing from the established position of requiring evidence and did not propose how damages might otherwise, especially in opposed matters, be determined. In argument he indicated that if we held that a claim for damages could not be pursued on paper, we should nevertheless reiterate that an interdict, retraction and apology could be ordered. [112] We accept that the spread of misinformation and disinformation on social media platforms is, notoriously, a worldwide concern. This is 87 Buthelezi v Poorter 1975 (4) SA 831 (W). 88 Buthelezi v Poorter 1975 (4) SA 608 (W). especially so in the European Union and the United States of America, where legislative intervention and state regulation is being touted. We were informed that the amicus was opposed to such intervention and regulation. The spread of falsehoods that threaten or infringe the rights of individuals and the public at large is a legitimate concern. If there are curial means of addressing those concerns, distinct from legislative intervention, those should be presented by litigants in a constitutionally acceptable fashion and a court can then address them. In the present case that was not done. [113] It appears that the simplistic view was taken that if one were to provide victims of social media defamation with a quick and easy way of seeking and obtaining sizeable damages awards on motion, that would bring to a quick halt these kinds of transgressions. We do not agree that the problem can be resolved that easily. The search for a solution to the evils of the abuse of social media platforms should be carefully considered, without compromising constitutional rights, fundamental legal principles and due process. Careful thought should be given to the possible dangers of the envisaged simplistic solution. It might well incentivise the abuse of motion proceedings by undeserving, but well-resourced, plaintiffs and be used in terrorem. It has the potential for stifling freedom of expression. [114] We now deal with the alternative relief sought by Mr Manuel in his notice of motion, namely, the referral of the issue of quantum to oral evidence. It is true that a court, in motion proceedings, in terms of Uniform Rule 6(5)(g), has a discretion to direct that oral evidence be heard on specified issues with a view to resolving a dispute of fact or, in appropriate circumstances, to order the matter to trial. Generally, however, a court will dismiss an application when, at the time that the application is launched, an applicant should have realised that a serious dispute of fact was bound to develop.89 We would add that bringing application proceedings claiming relief that is not appropriate to be sought in such proceedings, will ordinarily be an a fortiori case. [115] Mr Manuel’s legal representatives, without regard to the Uniform Rules and established practice, in relation to the necessity of proceeding by way of an action to claim unliquidated damages, were clearly not unmindful of what is set in the preceding paragraph. Indeed, it must have been that awareness that caused them to seek, in the alternative, a declaration that the applicants are jointly and severally liable to pay damages and to refer ‘the quantification of the damages to oral evidence’. [116] At this point it is necessary to consider the limited nature of what appeared in the litigants’ respective affidavits and the brief reasoning of the court below in relation to the award of damages. Mr Manuel, in his affidavit in support of his case, did not complain of hurt feelings and was thus not claiming compensation as solatium in relation thereto. The sum total of his assertions in relation to his claim for damages is as follows: ‘Lastly, I claim damages for the injury to my reputation. I am advised and respectfully submit that the quantum of my damages is readily capable of determination on the papers. If this court should, however, not be inclined to determine the quantum of the damages on paper, I ask that the determination of such quantum be referred to oral evidence. Should I be awarded damages I will donate the entire amount to a worthy organization.’ [117] It is true that, preceding what is set out immediately above, Mr Manuel complained that his reputation had been affected and his dignity 89 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1153 (T) at 1162 and Adbro Investment Co Ltd v Minister of the Interior 1956 (3) SA 345 (A) at 350A-B. undermined. However, this passage indicates that he was primarily concerned, in his claim for damages, with the harm done to his reputation. The applicants’ response to this was to state that Mr Manuel’s complaints about the ‘prejudice’ he suffered was ‘unproven, generic and unspecified’. They went on to say the following: ‘The applicant is a man of great stature and given his experience at the forefront of politics for well over 20 years, it is unlikely that he suffered any harm as alleged. His bringing this application was done for political purposes …’ [118] The high court dealt cursorily with the question of damages. The following is what it said in relation to damages before it awarded the amount of R 500 000: ‘Mr Manuel has indicated that should he be awarded damages he will donate the entire amount to a charitable organisation. Having regard to the foregoing and the general trend in recent times, I believe that an award of R500 000 in general damages is merited.’ [119] The reasoning on which the award was based, as can be seen, was sparse, with little attention paid to how best to determine the extent of reputational loss. We accept that in considering the reasoning of a trial court in relation to quantum, one should have regard to what was said in the judgment as a whole.90 However, in the present case Mr Manuel was primarily concerned with reputational harm, but provided no details in relation to the reputational harm he suffered. This, as referred to above, was seized upon by the applicants in their denial that Mr Manuel suffered reputational harm. No details of what the court took into account in relation to the extent of reputational damage, other than Mr Manuel’s limited say- so is provided in the judgment. The court below did not deal at all with the 90 Dikoko v Mokhatla [2006] ZACC 10; 2006 (6) SA 235 (CC) para 97. applicants’ challenge to Mr Manuel’s claim of reputational loss. It did not pause to consider whether it should dismiss the application on the basis that this dispute ought to have been foreseen, or on the basis that that issue ought to have been dealt with by way of action. It did not deem it necessary to consider referring the issue of quantum to oral evidence as sought, in the alternative by Mr Manuel. [120] Before us, counsel representing Mr Manuel lost their enthusiasm for the alternative relief sought in the notice of motion. In line with what the court said in Gqubele-Mbeki, they submitted that oral evidence would serve no purpose as the facts before us would not change. Counsel asked, presumably rhetorically, how a referral to oral evidence could assist in the determination of damages? That, as we will demonstrate, with reference to the facts of this case and generally, misconceives the role of oral evidence in the determination of damages. [121] It is clear that the dispute about the extent of Mr Manuel’s asserted reputational loss could be fully explored and resolved by way of oral evidence. Mr Manuel could, notionally, present evidence that those within and beyond his circle of associates and friends, were taken in by what was said by the applicants and consequently thought less of him, and that some people did, in fact, shun him. A cross-examiner might enquire of Mr Manuel whether his friends abandoned him, or whether he was dropped from any of the boards of companies on which he sits. He could be asked whether the reaction to the defamatory statement by those within his circle was that he should ignore whatever the applicants said because the statements complained of was typical of them. The applicants could adduce countervailing evidence. The list of what might be explored and what might emerge is long. For present purposes what is set out above will suffice. It applies not just to this case but generally. If hurt feelings were to be explored the court would get to hear first-hand from the victim of defamatory statements about its impact and about the degree of personal distress it caused.91 That is why courts have insisted on evidence before determining damages. [122] There is the added problem that, at least superficially, the amount awarded appears extraordinarily high and not, as stated by the court below, in line with the recent general trend. In its judgment on the application for leave to appeal, the court below dealt with the submission on behalf of the applicants that, comparatively, the award of damages to Mr Manuel was unjustifiably high. The court below, impermissibly, attempted to supplement its prior reasoning, by referring to cases where courts warned that each case had to be decided on its own facts and that mathematical calculations were impermissible. It also referred to a dictum of this court in which it was said that an award of damages is ‘little more than an enlightened guess’.92 [123] As recognised by the court below in the judgment refusing leave to appeal, there is, no empirical measure to determine compensation for damages for harm of this nature.93 The court, in determining an appropriate award, must have regard to all the facts of a particular case. In Van der Berg v Coopers and Lybrand Trust (Pty) Ltd this court said that a court, must, as best it can, make a realistic assessment of what it considers just and fair in all the circumstances.94 It is true that the court went on to say 91 See ibid para 88. That is what the plaintiff did in De Flamingh v Pakendorf op cit, fn 5. 92 Van der Berg v Coopers and Lybrand Trust (Pty) Ltd 2001 (2) SA 242 (SCA) para 48. 93 Tsedu and Others v Lekota and Another [2009] ZASCA 11; 2009 (4) SA 372 (SCA) at para 25. 94 Van der Berg v Coopers and Lybrand Trust op cit, fn 90. that the result represents ‘little more than an enlightened guess’. However, for it to arrive at the ‘enlightened guess’, with the emphasis on ‘enlightened’, the relevant facts and circumstances must be placed before it. The established practice and the Uniform Rules dictate that this is achieved by way of oral evidence, pursuant to the institution of an action for damages. That course enables the resolution of disputes and provides the evidentiary material on which the courts can consider the factors set out in para 96 above. ‘Enlightened guess’, was perhaps an unfortunate description of the culmination of the process of determining damages. [124] In regard to quantum, this court has repeatedly stated that each case turns on its own facts and that comparisons with prior awards serve a limited purpose.95 Awards in other cases might provide a measure of guidance but only in a generalised form.96A cursory scrutiny of awards from 2017 onwards will reveal that recent awards in serious defamation cases, with defamatory statements having been widely published, were in amounts that were a fraction of what was awarded in this case.97 [125] Counsel for Mr Manuel’s reliance on Bytes Technology Group v Michael98 as support for the award of the court below demonstrates the dangers of reliance on prior awards, warned against by our courts. It was misplaced because there is a chasm of differences between that case and the present. It related to defamatory statements by a disgruntled former employee. A number of different defamatory statements over an extended period of time were made within the context of the commercial world. The 95 Van der Berg op cit, fn 99, para 48. 96 Tsedu op cit, fn 98, para 18 97 Media 24 Ltd t/a Daily Sun and Another v Du Plessis [2017] ZASCA 33; Manyi v Dhlamini [2018] ZAGPPHC 563; Mthimunye v RCP Media and Another [2007] ZAGPPHC 372; 2012 (1) SA 199 (TPD). 98 Bytes Technology Group v Michael [2014] ZAGPPHC 926. plaintiffs were an Information Technology entity and its two senior officials. They managed information technology for major retailers and banks. The defendant, the disgruntled employee, repeatedly made defamatory statements to the aforesaid clients and others, claiming to be a whistle-blower in relation to fraud. He resorted to extortion and set criminal proceedings in motion. Clients of the business reacted to this by directing questions to the plaintiffs. To address the harm caused by the defamatory statements money and effort had to be expended by the first plaintiff. The defendant continued his vendetta by continuing to make defamatory statements. Critically, all the necessary evidence upon which the award was based was adduced over an extended period and the evidence led by the plaintiff was subjected to extensive cross-examination. Even then, the award which was considerable, given the multiplicity of statements and actions and the attendant commercial consequences, was less than in the present case. There is no sustainable comparison with the present case. [126] Reliance was also placed on Branko v Moffat and Another.99 In that case two interviews were granted to two newspapers which had wide circulation. In those interviews, the defendant, made defamatory statements concerning the plaintiff, who was an internationally renowned boxing promoter. The interviews were given by the head of a boxing control body after the relationship between the plaintiff and the body had soured. The plaintiff, based on the oral evidence that was led and fully explored, quite clearly suffered professional reputational harm and the statements potentially destroyed his career. Significantly, in its judgment the court referred to the extensive evidence that had been adduced that 99 Branko v Moffat and Another [2014] ZAGPJHC 304. covered every aspect of every issue raised in that case. Half of what was awarded in the present case was awarded in respect of each of those interviews. Again, the dangers of comparing cases have to be guarded against. But most importantly, the plaintiff there claimed damages by instituting an action and extensive relevant evidence was adduced and tested. [127] It must be borne in mind that awards are to compensate, not to punish. In McBride the Constitutional Court remarked that substantial damages awards may unnecessarily stifle freedom of expression.100 That too is something to be borne in mind in the determination of damages. In this regard context is important. These aspects were not addressed by the court below. For all the reasons set out above oral evidence was required before making an award of damages. The applicants were forewarned that this relief was going to be sought. They did not raise procedural objections and the issue appears to be a narrow one, namely the extent of reputational damages sustained by Mr Manuel. In these circumstances, exceptionally, the matter would lend itself to such a referral. It should not, however, be seen as endorsing as a general practice in defamation cases an application for some immediate relief together with an application for the issue of the quantum of damages to be referred to oral evidence. For the reasons we have given the ordinary procedure in claims for unliquidated damages should be by way of action. The apology [128] That leads us to the question whether the apology ordered by the court below was appropriate. While there might be reservations concerning 100 McBride op cit fn 6, para 131. the sincerity of a court-ordered apology, the Constitutional Court in Le Roux v Dey considered remedies provided for in Roman-Dutch law that had fallen into disuse. These allowed for the retraction of a defamatory statement and an apology. The court also had regard to customary law and tradition and concluded that respect for the dignity of others lies at the heart of the Constitution, and that reconciliation between opposing parties at different levels consists of recantation of past wrongs and apology for them. It considered that the plaintiff in that case was entitled to an apology.101 It must also be borne in mind that the apology in that case was ordered in conjunction with an award of damages, not separately from it. [129] In McBride the Constitutional Court referred to its earlier decision in Le Roux v Dey102 and reiterated the importance of an apology in securing redress and ‘in salving feelings’.103 It went on to have regard to the plaintiff’s contention on appeal, that an apology in that case was inappropriate and took into account that a media defendant was involved and that there were law reform initiatives afoot in other countries. Consequently, it was thought that ordering an apology in those circumstances was not warranted.104 [130] Neither of these two judgments suggested that an order for publication of a retraction and apology on its own and not in conjunction with an award of damages would be an adequate remedy. The high court's order for publication of a retraction and apology in this case was made in conjunction with its order for damages. We have held that the latter should 101 Le Roux v Dey op cit, fn 2 paras 199, 202 and 203. 102 Le Roux v Dey op cit fn 2, para 197. 103 McBride op cit fn 6, para 134. 104 Ibid. not have been made without hearing evidence. The applicants had suggested in their challenge to the quantum of damages, that an apology would be sufficient redress, but that suggestion can only be considered in conjunction with the consideration of whether an award of damages should be made and the quantum of that award. An apology has always weighed heavily in determining the quantum of damages in defamation cases as occurred in Le Roux v Dey.105 In our view, whether an order for an apology should be made is inextricably bound up with the question of damages. As the latter award falls to be set aside and referred to oral evidence, so too must the order to publish a retraction and apology be set aside and referred to the high court for determination after the hearing of oral evidence on damages. Costs in the court below [131] The court below clearly took a dim view of the obdurate stance of the applicants after the protestations by Mr Manuel. It gave consideration to what it concluded was reprehensible behaviour of the applicants in continuing to publish in the light of the disclosure of all the facts. It considered that the punitive costs order sought by Mr Manuel was justified. We can find no fault with that conclusion and we bear in mind that courts of appeal are generally slow to interfere with the exercise of a discretion by a court of first instance in relation to costs unless the order was capricious or based on wrong principle.106 That is not the case here. Conclusions [132] As stated earlier, there are no reasonable prospects of success in an appeal in relation to the conclusions reached by the court below, that the 105 Le Roux v Dey op cit fn 2, para 196. 106 Fripp v Gibbon & Co 1913 AD 354. statement was defamatory and unlawful. The same applies to the consequential relief, other than the order to publish a retraction and apology and the award of damages. The application for leave to appeal in respect of those two aspects should therefore succeed and the application for leave to appeal in respect of all other issues should be dismissed. This means that part of the application for leave to appeal succeeds and the appeal in relation thereto should, consequentially, be upheld. The determination of the quantum of damages and whether a retraction and apology must be published must take place after oral evidence has been led. Order [133] The following order is made: 1. The application for leave to appeal in relation to paragraphs 1 to 3 and 5 of the order of the court below is dismissed with costs, including the costs of two counsel. 2. In relation to paragraphs 4 and 6 of the order of the court below the application for leave to appeal is granted. 3. The appeal in relation to paragraphs 4 and 6 of the order of the court below is upheld with costs, including the costs of two counsel. 4. Paragraphs 4 and 6 of the order of the high court are set aside and replaced with the following order: ‘1 The determination of the quantum of the damages suffered by the applicant is referred to oral evidence. 2 The high court will determine in conjunction with its determination of the quantum of damages whether an order for the publication of a retraction and apology should be made.’ ____________________ M S NAVSA JUDGE OF APPEAL _________________ M J D WALLIS JUDGE OF APPEAL APPEARANCES: For Applicants: Tembeka Ngcukaitobi SC (with him Kameel Premhid) Instructed by: Ian Levitt Attorneys, Sandton; Lovius Block Inc, Bloemfontein For Respondent: Carol Steinberg SC (with her Michael Mbikiwa) Instructed by: Webber Wentzel, Johannesburg; Symington & De Kok, Bloemfontein. For Amicus Curiae: Steven Budlender SC Instructed by: Power Singh Inc, Johannesburg; Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 17 December 2020 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. EFF and others v Manuel (711/2020) [2020] ZASCA 172 (17 December 2020) The SCA today gave judgment in an application by the EFF, its national spokesperson, Dr Mbuyiseni Ndlozi, and its leader, Mr Julius Malema, for leave to appeal against a judgment of the Gauteng Division of the High Court, Johannesburg in which a statement issued by the EFF and published on the Twitter accounts of the party and Mr Malema, was held to be defamatory of Mr Trevor Manuel, the former Minister of Finance. The case arose from Mr Manuel's role as the chair of a committee appointed to advise President Ramaphosa on the appointment of a new Commissioner for the South African Revenue Service. After the committee's recommendation of Mr Edward Kieswetter for the post was published, the EFF issued a statement condemning the recommendation. It said that it was corrupt and nepotistic and had been conducted in secret as a result of an alleged relationship between Mr Manuel and Mr Kieswetter. The basis for these allegations was a WhatsApp message addressed to the Deputy Leader of the EFF, Mr Floyd Shivambu. A demand by Mr Manuel for a retraction was rebuffed in strong terms, leading to him bringing an application against the EFF, Dr Ndlozi, who was responsible for the statement and Mr Malema, who had posted it on his Twitter account. The High Court held that the statement was defamatory and rejected the defences advanced by the applicants. It ordered that the statement be removed from both the EFF's and Mr Malema's Twitter accounts and that a retraction and apology be published. It also awarded Mr Manuel damages of R500 000. The SCA held that the statement was clearly defamatory and that it was neither true and in the public interest, nor fair comment. The reason was simply that the allegation of a relationship between Mr Manuel and Mr Kieswetter was denied by Mr Manule and the EFF made no attempt to prove that such a relationship existed. Instead it advanced a defence of reasonable publication or absence of intention to injure Mr Manuel. In doing so it relied upon the WhatsApp message. The defence failed because the EFF had made no attempt to establish whether the information given to it by its informant was true. It was not reasonable in the circumstances for it to have relied on it in order to make defamatory statements and this unreasonable conduct showed that it was intended to defame Mr Manuel. In the result the application for leave to appeal on the merits was dismissed. The SCA then considered the relief granted. It held that the High Court was justified in making a declaratory order and issuing an interdict. However, it said that claiming damages in application proceedings without hearing oral evidence was impermissible. Such claims may only be pursued through a trial action. The basis of Mr Manuel's claim to have suffered damages to his reputation was disputed and could only be resolved by hearing evidence. Additionally, the amount of the award far exceeded the awards in comparable cases. The SCA accordingly granted leave to appeal in regard to the award of damages and upheld the appeal against that award. In the special circumstances of the case it referred that issue for determination after hearing oral evidence. It also held that an order for the publication of a retraction and apology could only be considered in the light of any damages award. Leave to appeal was also granted in relation to that order and it was referred back to the High Court for consideration after the hearing of evidence and the determination of any damages award.

2223

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 139/08 In the matter between: ISMAIL EBRAHIM JEEBHAI FIRST APPELLANT YASMIN NAIDOO SECOND APPELLANT ZEHIR OMAR THIRD APPELLANT v MINISTER OF HOME AFFAIRS FIRST RESPONDENT MICHAEL SIRELA SECOND RESPONDENT Neutral citation: Jeebhai v Minister of Home Affairs (139/2008) [2009] ZASCA 35 (31 March 2009). Coram: Mpati P, Streicher, Ponnan, Cachalia JJA et Hurt AJA Heard: 16 February 2009 Delivered: 31 March 2009 Summary: Immigration Act 13 of 2002 read with Immigration Regulations - lawfulness of arrest, detention and deportation of illegal foreigner. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Pretoria High Court (Ngoepe JP, Pretorius J, Snijman AJ). The following order is made: The appeal is upheld with costs; The convictions and sentences of the appellants for contempt of court are set aside; The respondents are to pay the costs occasioned by their opposition to the application for the admission of the amicus curiae; The order of the court below is set aside and in its place the following is substituted: ‘a the detention of Khalid Mahmood Rashid at Cullinan Police Station and his subsequent removal and deportation are declared to have been unlawful; b The respondents are to pay the costs of the application; c The counter-application is dismissed with costs.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ CACHALIA JA ( Mpati P concurring) [1] This is an appeal from the Full Court, Pretoria (Ngoepe JP, Pretorius J and Snijman AJ sitting as a court of first instance) in which it dismissed with costs an application to declare unlawful the arrest, detention and subsequent removal from the country of one Khalid Mahmood Rashid (including certain ancillary relief) and granted a counter-application by the respondents declaring the appellants to have been in contempt of court.1 The full court refused the appellants leave to appeal against its judgment but this court granted the necessary leave to them. [2] The first appellant is Mr Ismail Ebrahim Jeebhai who is a businessman from Lenasia. Rashid was arrested in Estcourt at the home of Jeebhai’s brother, Mr Mohamed Ali, in circumstances that are described in greater detail below. As Rashid was unable to instruct attorneys or depose to an affidavit, Jeebhai, the first appellant, instituted proceedings on his behalf. Mr Zehir Omar, who is the attorney of record in these proceedings and his professional assistant Ms Yasmin Naidoo were found guilty of having been in contempt of court by the full court, along with Jeebhai. Jeebhai was cautioned and discharged but Omar and Naidoo were each sentenced to a fine of R2 000 or six months’ imprisonment suspended for a period of three years on condition that they are not convicted of contempt of court committed during the period of suspension – hence their interest in the present proceedings (as the third and second appellants respectively). The first respondent is the Minister of Home Affairs and the second respondent a senior immigration officer in the Department of Home Affairs. They are cited in their official capacities. [3] The events surrounding this appeal span more than three years. I set them out in some detail so that the issues that arose from them are understood in their proper context. [4] On the evening of 31 October 2005, at about 22h00, a senior immigration officer, Mr Anthony de Freitas, and several members of the South African Police Service descended on Mohamed Ali Jeebhai’s home in Fordeville, Estcourt in the Province of KwaZulu Natal. The police were armed and clad in protective bullet-proof vests. The police first gained entry to the house and, having established that it was safe to enter, De Freitas also entered. They found Mohamed Ali and Rashid, a Pakistani national, on the 1 The judgment of the full court is reported as Jeebhai v Minister of Home Affairs & another 2007 (4) SA 294 (T). premises. De Freitas asked them for their identification papers. Rashid was not able to produce any permit authorizing his stay in the country. De Freitas arrested both as illegal foreigners and accompanied them with the police to the Cullinan Police Station in Pretoria where they were detained. De Freitas played no further role in the events that unfolded. [5] On 2 November 2005, Mr Joseph Swartland, a Chief Immigration Officer, interviewed Rashid. Rashid, Swartland says, admitted to being an illegal foreigner and also that he had fraudulently obtained documents purporting to authorize his presence in the country. Swartland handed him a ‘Notice of Deportation’ as contemplated in regulation 28(2) of the Immigration Regulations.2 The notice states that as the person is an illegal foreigner he is notified that he is to be deported to his country of origin – in this case Pakistan. The cryptic reason given for the deportation was that he is ‘illegal’. The notice then states: ‘In terms of section 34(1)(a) and (b) of the Act, you have the right to – (a) appeal the decision to the Director-General in terms of section 8(4) of the Act within 10 working days from the date of receipt of this notice; and (b) at any time request any officer attending to you to have your detention for the purpose of deportation confirmed by a warrant of the court. NB: Should you choose not to exercise the rights mentioned above, you shall be detained pending your deportation. Should you however choose to exercise the rights mentioned above, you shall remain in custody and may not be deported pending the outcome of the appeal or the confirmation of the warrant of detention by the court. . . . ACKNOWLEDGMENT OF RECEIPT OF NOTIFICATION OF DEPORTATION I hereby acknowledge receipt of the original notification of deportation in which my rights in terms of section 34(1)(a) and (b) of the Act were explained to me. 2 ‘Immigration Regulations, GN R616, GG 27725, 27 June 2005.’ The notice complies with Form 29. After due consideration, I have decided to – Await my deportation at the first reasonable opportunity, whilst Remaining in custody. Yes No Appeal the decision to deport me. Yes No Have my detention confirmed by a warrant of the court. Yes No ……………………………………………………..…………………. Signature of Detainee Date . . .’ Swartland states that after handing this form to Rashid he informed him of his right to appeal against the decision to deport him and to have his detention confirmed by a warrant of the court. Rashid, he says, read the form and placed a tick in the ‘yes’ column, indicating his wish to be deported at the first reasonable opportunity, whilst remaining in custody. He also signified that he did not wish to appeal the decision or have his detention confirmed by a warrant of the court by placing a cross in the relevant ‘no’ column. Swartland avers that Rashid signed the document in the space provided for the detainee’s signature and said that he consented to being sent back to Pakistan immediately so that he could receive treatment for a skin problem. [6] On 6 November 2005 Rashid was handed over to five Pakistani law enforcement officials at Waterkloof Military Air Base in Pretoria from where he was flown to Islamabad Airport in Pakistan and held in custody.3 His removal from the country was apparently effected secretly – without his relatives or friends having been apprised of what had happened to him. In the meantime Mohamed Ali was transferred to Lindela Repatriation Centre – a facility that 3 See judgment of the full court below cited above at n1 para 11. the Department of Home Affairs uses to detain illegal immigrants pending their deportation. It appears that he contacted his family from Lindela. The first appellant then instructed his attorneys to commence legal proceedings in the Pretoria High Court both for his and Rashid’s release. (They were at this stage unaware of Rashid’s removal.) The application was set down for hearing on 15 November 2005. [7] On that day the application was postponed after the respondents consented to an order for Mohamed Ali’s immediate release and to disclose where Rashid was ‘upon such information being available’ by 6 December 2005. Mohamed Ali was released but the respondents failed to provide any information concerning Rashid. On 25 January 2006 the respondents delivered a notice to the first appellant’s attorneys that reads as follows: ‘Mr Mahmood Rashid Khalid was deported to Pakistan, in terms of s 34 of the Immigration Act, no 13 of 2002, on 6 November 2005. As Mr Khalid is outside the Republic, the first and (second) respondents are unable to say what his present whereabouts are.’ [8] On 14 February 2006 the matter again came before Legodi J. The appellants contested whether Rashid had indeed been deported because his family in Pakistan had not heard of his arrival in that country. They also persisted in their claim that the respondents were in contempt of court for not having disclosed his ‘whereabouts’. The judge postponed the application indefinitely to allow the respondents to file a further affidavit within 10 days dealing with both issues. [9] The further affidavit filed by Swartland provided no additional information about Rashid’s location. It did, however, provide confirmation from the Pakistani Ministry of the Interior that he had indeed arrived in that country. So, on 15 March 2006 the appellants filed papers to amend the original notice of motion directing the respondents to disclose details of the Pakistani officials who dealt with Rashid during his deportation both in South Africa and in Pakistan, the flight information of the aeroplane that transported him to Pakistan and the airport where he was deported from. The amended notice also included a prayer that all South African officials who had dealt with Rashid appear in person to answer questions from the court concerning his disappearance. [10] The matter was enrolled for hearing before Poswa J on the urgent roll on 10 May 2006. On 15 May 2006, having heard argument on the amended application, Poswa J granted an order in the following terms: ‘The respondents must within 10 days of this order: 1. Identify the persons/people with whom arrangements were made at the Pakistani Embassy to have Mr Rashid deported; 2. Identify the person in Pakistan who received Mr Rashid, by making appropriate enquiries; 3. Name the airport where the aeroplane, in which Mr Rashid was transported, landed in this country; 4. Furnish the flight number of the aeroplane in which Mr Rashid was transported at the time of his being flown from this country. . . .’ [11] On 6 June 2006 the respondents furnished the following information: ‘No arrangements were made with the Pakistani High Commission in South Africa. Mr Khalid was handed to a Pakistani official by the name of Habib Ullah, by Joseph Swartland, an official of the Department of Home Affairs, at Waterkloof Air Base. Mr Ullah was accompanied by four Pakistani officials whose names appear on Annexure A2. Mr Ullah signed as receiver as is apparent from Annexure A1.The aircraft departed from Waterkloof Air Base on 6 November 2006. The Respondent has no knowledge of the airport at which the aircraft landed in Pakistan. The Respondent is not in possession of the flight number. However, the registration number of the aircraft appears on Annexure A2. The respondent has no knowledge of the time of landing.’ [12] By 12 June 2006, more that seven months after his arrest, the first appellant had still not been able to establish what had happened to Rashid. So he launched another urgent application in which he sought, among other orders, a declaration that the arrest, detention and ‘removal’ of Rashid from South Africa were unlawful, inconsistent with the Constitution and constituted an ‘enforced disappearance’ as envisaged in article 7(2)(i) of the Rome Statute of the International Criminal Court. In their answering affidavit filed in response to the application the respondents applied for the appellants to be committed for contempt of court. (I deal more fully with this issue later at paras 46-49.) On 19 June 2006 Legodi J struck the matter from the roll for want of urgency and ordered that the matter be heard by a full court. (This is the application with which we are concerned in this appeal – the 12 June 2006 application.) [13] A few days afterwards, on 22 June, yet another application was launched – this time in the name of the ‘Society for the Protection of Our Constitution’. The notice of motion sought relief similar to that claimed in the application that Legodi J struck from the roll. The matter came before Southwood J who also struck the matter from the roll. [14] The matter was duly enrolled before the full court, which directed that the various applications be consolidated so as to be heard together. The appellants filed a consolidated record compromising 12 volumes in compliance with the court’s directions. The court heard argument on 25 August 2006 and delivered its judgment on 16 February 2007. [15] It is apparent that in considering the relief sought by the first appellant, the court below had regard only to the evidence that appeared from the papers in the 12 June 2006 application – not any other evidence that was contained in the various applications that were part of the consolidated record. In this court the appellant filed a consolidated record of all the applications that were consolidated before the full court. On 4 November 2008 the matter was struck from the roll mainly for the reason that the appellants had failed to comply with the rules of this court relating to the record on appeal. During the hearing it emerged that only three of the twelve volumes were relevant for the adjudication of the appeal.4 [16] The matter was re-enrolled for hearing in this court on 16 February 2009. The application for the appeal to be reinstated, this time with a shortened record, was granted. However, as part of the reinstatement application the first appellant applied for leave to place further documentary evidence, which had been part of the consolidated record but not of the 12 June 2006 application, before this court. (It was contained in the application brought by the Society for the Protection of Our Constitution). The evidence was required to support the contention that Rashid had been removed from the country because he was being sought for his alleged connection with international terrorism. There were two pieces of evidence that they sought to have admitted for this purpose: first, the statement of the Pakistan High Commission issued on 14 June 2006 which reads: ‘Mr Khalid Mahmood, a Pakistani national was arrested by South African Authorities on 31 October 2005. Mr Khalid Mahmood was wanted in Pakistan for his suspected links with terrorism and other anti state elements. The suspect was handed over to Government of Pakistan officials on 6 November 2005. Presently he is in custody of (the) Government of Pakistan.’ The second item of evidence was a letter apparently written by an Advocate Malik of the Pakistan High Court. (The letter is addressed to Dr Mary Rayner outlining their efforts to secure Rashid’s release in the Lahore High Court Rawalpindi). [17] The difficulty for the first appellant was that his attorneys did not bring a proper application, supported by a reasonably sufficient explanation for not having included the evidence in its founding affidavit, or outline any special reason for the court to grant this relief.5 In the circumstances the evidence 4 Jeebhai v Minister of Home Affairs (139/08) [2008] ZASCA 160 (27 November 2008). 5 Section 22 of the Supreme Court Act 59 of 1959; P B J Farlam & D E Van Loggenberg Erasmus-Superior Court Practice 30 ed A1-55-56. could not be admitted and will be disregarded for the purposes of deciding this appeal. [18] The full court was asked to decide whether:  the respondents ought first to have invoked the procedure provided for in s 8 of the Act before arresting Rashid;  the respondents’ failure to obtain a warrant for Rashid’s deportation rendered the deportation unlawful;  the respondents purportedly used a deportation procedure to achieve an ulterior and unlawful purpose – the extradition of Rashid as an ‘international terrorist’ under the guise that they were deporting an illegal foreigner. (In other words the court was asked to decide whether the deportation constituted a ‘disguised extradition’);  Rashid’s disappearance after his arrest constituted an ‘enforced disappearance of persons’ as contemplated in Article 7(1)(i) of the Rome Statute of the International Criminal Court – and thus a ‘crime against humanity’;  by annexing a document to the first appellant’s founding affidavit, apparently in violation of a court order, the appellants were in contempt of court. [19] The court decided these issues against the appellants, but did not deal with the argument advanced by the amicus concerning the respondents’ alleged failure to obtain a deportation warrant. [20] Before I deal with each issue I outline what the law requires when disputes regarding deportations arise. Deportation is a unilateral act of the deporting state to remove a foreigner, who has no right or entitlement to be in its territory. Its purpose is achieved when the foreigner leaves the deporting state’s territory. The authority of and constraints on the state to deport people is to be found in the Immigration Act 13 of 20026 and the Immigration 6 As amended by the Immigration Amendment Act 19 of 2004. Regulations made by the Minister under s 7 of the Act.7 For a deportation to be carried out lawfully, the ‘action or procedure’ used to facilitate an illegal foreigner’s removal from the country must be done in ‘terms of the Act’.8 [21] A decision to deport someone often carries far-reaching consequences – it concerns that person’s livelihood, security, freedom and, sometimes, his or her very survival. This is why immigration laws, often harsh and severe in their operation, contain safeguards to ensure that people who are alleged to fall within their reach are dealt with properly and in a manner that protects their human rights. Our courts have thus stressed ‘. . . the duty which lies on officials entrusted with the administration of the immigration laws . . . of observing strictly and punctiliously the safeguards created by the Act.’9 [22] An act of deportation does not necessarily involve the loss of a deportee’s liberty, but it usually does – as in this case, where it is preceded by arrest and detention. And because every deprivation of liberty is presumptively unlawful the respondents bear the onus to adduce sufficient facts to justify their actions.10 This is so also in motion proceedings – as an exception to the general requirement that the applicant must disclose its entire case in the founding affidavit.11 There is good reason for this approach, especially in the present case where a person on whose behalf the application was launched is alleged to have disappeared and is himself unable to depose to an affidavit. Moreover, the respondents alone know the true facts concerning the detention and deportation. The appellants have, in their founding affidavit, squarely placed the lawfulness of Rashid’s arrest, detention 7 ‘Immigration Regulations, GN R616, GG 27725 of 27 June 2005.’ 8 Section 1 defines ‘deport or deportation’ to mean ‘the action or procedure aimed at causing an illegal foreigner to leave the Republic in terms of the Act’. 9 See Blackwell J in Kazee v Principal Immigration Officer 1954 (3) SA 759 (W) p 763A. 10 Minister of Law and Order v Hurley 1986 (3) SA 568 (A) p 589E-F; Zealand v Minister of Justice and Constitutional Development & another 2008 (2) SACR 1 (CC); [2008] ZACC 3 para [25]. 11 Minister Van Wet en Orde v Matshoba 1990 (1) SA 280 (A) p 294B-D. and deportation in issue – the respondents must therefore prove that they acted lawfully.12 [23] It is convenient, at this stage, to outline the scheme of the relevant provisions of the Act (and regulations) that bear on this appeal. The provisions of the Act are ss 1, 8, 32, 34 and 41 and they are interrelated. Section 1 defines an ‘illegal foreigner’ as: ‘A foreigner who is in the Republic in contravention of this Act.’ Unless an illegal foreigner has the written authorization of the Director- General to be in the country pending his application for a status he must be deported. (Section 32) [24] Section 41(1) is concerned with the verification of the identity and status of persons suspected of being illegal foreigners.13 To this end an immigration officer or police officer who reasonably suspects a person to be an illegal foreigner may interview that person about his identity and status and hold him in custody briefly for this purpose. If necessary, the person may be detained in terms of s 34(2) for a period not exceeding 48 hours during the verification exercise.14 In performing this function the officer must gain access to relevant documents; or contact persons who may be of assistance; and access departmental records.15 The detention contemplated in s 34(2) must 12 See Matshoba above at p 296B-D. 13 Section 41(1) provides: ‘Identification – When so requested by an immigration officer or a police officer, any person shall identify himself or herself as a citizen, permanent resident or foreigner, and if on reasonable grounds such immigration officer or police officer is not satisfied that such person is entitled to be in the Republic, such person may be interviewed by an immigration officer or a police officer about his or her identity or status, and such immigration officer or police officer may take such person into custody without a warrant, and shall take reasonable steps, as may be prescribed, to assist the person in verifying his or her identity or status, and thereafter, if necessary detain him or her in terms of section 34.’ 14 Section 34(2) provides: ‘The detention of a person in terms of this Act elsewhere than on a ship and for purposes other than his or her deportation shall not exceed 48 hours from his or her arrest or the time at which such person was taken into custody for examination or other purposes, provided that if such period expires on a non-court day it shall be extended to four p.m. of the first following court day.’ 15 Regulation 32. be by warrant addressed to the station commissioner or head of a detention facility.16 Thereafter the suspected illegal foreigner may either be released or, if he is in fact an illegal foreigner, detained further under s 34(1) for the purpose of facilitating the person’s deportation. 17 [25] However, the s 41 process may only be used in cases involving persons who are suspected of being illegal foreigners. Where an immigration officer has decided, as a fact, that the person concerned is an illegal foreigner the officer must consider what to do next. He may either arrest the illegal foreigner without a warrant and then detain him in terms of s 34(1) for deportation or, in terms of s 8(1), inform the foreigner concerned in the prescribed manner that he is entitled to make representations to the Minister within three days to review his determination as an illegal foreigner.18 The illegal foreigner may not be deported before the Minister’s decision is made.19 It must be emphasised that s 34(1) confers on an officer a discretion whether or not to effect an arrest or detention of an illegal foreigner. There is no obligation to do so. If the officer exercises his discretion to arrest and detain a foreigner and it then transpires that the foreigner concerned is in fact not illegally in the country, the arrest and detention would have been unlawful – as it would have been if the officer had failed to exercise his discretion properly or at all.20 16 Regulation 28(7) read with a form substantially complying with Form 33. 17 Section 34(1) provides: ‘Without the need for a warrant, an immigration officer may arrest an illegal foreigner or cause him or her to be arrested, and shall, irrespective of whether such foreigner is arrested, deport him or her or cause him or her to be deported and may, pending his or her deportation, detain him or her or cause him or her to be detained in a manner and at a place determined by the Director-General, provided that the foreigner concerned – (a) shall be notified in writing of the decision to deport him or her and of his or her right to appeal such decision in terms of this Act; (b) may at any time request any officer attending to him or her that his or her detention for the purpose of deportation be confirmed by warrant of a Court, which, if not issued within 48 hours of such request, shall cause the immediate release of such foreigner; (c) shall be informed upon arrest or immediately thereafter of the rights set out in the preceding two paragraphs, when possible, practicable and available in a language that her or she understands; . . .’ 18 Section 8(1)(b) read with reg 5(1). The request is submitted on a form substantially corresponding to Form 1. 19 Section 8(2)(b). 20 Lawyers for Human Rights v Minister of Home Affairs 2003 (8) BCLR 891 (T) p 896. [26] Once an illegal foreigner is arrested and detained in terms of s 34(1) the Act and regulations contain safeguards to protect that person’s rights. He must upon arrest or immediately thereafter be notified in writing of the decision to deport him; of his right to appeal the decision and also of his right to request that his detention be confirmed by warrant issued by a court within 48 hours. If the warrant is not issued he must be released immediately.21 In addition, and although not mentioned in the Act or regulations, detained illegal foreigners are beneficiaries of rights under s 12(1) and s 35(2) of the Constitution.22 The arrested person’s detention must be by means of a warrant issued by an immigration officer authorizing the station commissioner or head of the detention facility to detain him.23 Where the authorities intend to detain an illegal foreigner for longer than 30 days, they must obtain, from a court, a warrant which may on good and reasonable grounds be extended for a period not exceeding 90 days.24 The person must be held in compliance with minimum standards protecting his dignity and human rights.25 Once detained an illegal foreigner’s release may be effected only by written authority of an immigration officer as contemplated in s 34(7) of the Act or if a court so orders.26 [27] Section 8 of the Act provides for review and appeal procedures and deals with people who are refused entry into the country and those who are found to be illegal foreigners.27 In this appeal we are concerned only with the 21 Section 34(1)(a), (b) and (c). In terms of reg 28(2) the notification of the deportation of an illegal foreigner contemplated in s 34(1)(a) shall be in a form substantially corresponding to Form 29. The form does not make provision for the detainee to be informed of his constitutional rights under s 35(2) of the Constitution. 22 Lawyers for Human Rights & another v Minister of Home Affairs 2004 (4) SA 125 (CC) para 27. 23 Regulation 28(1) read with Form 28. 24 Section 34(1)(d). 25 Section 34(1((e). 26 Section 34(7) provides: ‘On the basis of a warrant for the removal or release of a detained illegal foreigner, the person in charge of the prison concerned shall deliver such foreigner to that immigration officer or police officer bearing such warrant, and if such foreigner is not released he or she shall be deemed to be in lawful custody while in the custody of the immigration officer or police officer bearing such warrant.’ 27 Section 8 provides: ‘Review and appeal procedures (1) An immigration officer who refuses entry to any person or finds any person to be an illegal foreigner shall inform that person on the prescribed form that he or she may in writing request the Minister to review that decision and- latter category. I have mentioned earlier that the effect of s 8(1) is that once an immigration officer finds that a person is an illegal foreigner, he must inform the foreigner concerned of his right to make representations to the Minister. In terms of s 8(3) any decision other than one contemplated in s 8(1) (a finding by an immigration officer that a person is an illegal foreigner), which adversely and materially affects the rights of any person, must be communicated in writing to the person concerned. In my view, a decision to deport a person falls within the purview of this sub-section. A decision of this nature, and the reasons for it, must be communicated in writing to the affected person promptly. The notification must also inform the person that he may, within 10 working days, make representations to the Director-General for a review or appeal of the decision.28 An aggrieved applicant who has made written representations to the Director-General in terms of s 8(4), may, if still unhappy with the outcome, make further representations to the Minister.29 (a) if he or she arrived by means of a conveyance which is on the point of departing and is not to call at any other port of entry in the Republic, that request shall without delay be submitted to the Minister; or (b) in any other case than the one provided for in paragraph (a) , that request shall be submitted to the Minister within three days after that decision. (2) A person who was refused entry or was found to be an illegal foreigner and who has requested a review of such a decision- (a) in a case contemplated in subsection (1) (a) , and who has not received an answer to his or her request by the time the relevant conveyance departs, shall depart on that conveyance and shall await the outcome of the review outside the Republic; or (b) in a case contemplated in subsection (1) (b) , shall not be removed from the Republic before the Minister has confirmed the relevant decision. (3) Any decision in terms of this Act, other than a decision contemplated in subsection (1), that materially and adversely affects the rights of any person, shall be communicated to that person in the prescribed manner and shall be accompanied by the reasons for that decision. (4) An applicant aggrieved by a decision contemplated in subsection (3) may, within 10 working days from receipt of the notification contemplated in subsection (3), make an application in the prescribed manner to the Director-General for the review or appeal of that decision. (5) The Director-General shall consider the application contemplated in subsection (4), whereafter he or she shall either confirm, reverse or modify that decision. (6) An applicant aggrieved by a decision of the Director-General contemplated in subsection (5) may, within 10 working days of receipt of that decision, make an application in the prescribed manner to the Minister for the review or appeal of that decision. (7) The Minister shall consider the application contemplated in subsection (6), whereafter he or she shall either confirm, reverse or modify that decision.’ 28 Read with reg 5(2) and Form 2. Form 2 makes reference only to a review and has erroneously omitted the reference to an appeal. 29 Section 8(6). [28] It is apparent that s 8 is concerned only with appeals and reviews and s 34(1) with the arrest, detention and deportation of illegal foreigners. The review procedure contemplated in s 8(1) applies only when an illegal foreigner has not been arrested for deportation purposes. A right of review or appeal of any other decision contemplated in s 8(3), including the decision to deport an illegal foreigner, which adversely affects the rights of any person are clearly applicable to all people, whether or not they are in custody. [29] I revert to the first issue. The appellants and amicus curiae submitted that the provisions of s 8 of the Act ought to have been invoked before Rashid was arrested. [30] The source of the contention that s 8 procedures providing for appeal and review must be applied before an arrest is effected under s 34(1) is a trilogy of decisions of the Pretoria High Court. The first was Arisukwu & others v Minister of Home Affairs30 where De Villiers J held that the s 9 of the Aliens Control Act 96 of 1991, must be complied with before an illegal alien may be detained in terms of s 44(1)(a) of that Act. (These provisions are the predecessors of s 8 and s 34 in the current Act.) This was followed by judgments of Southwood J in Muhammed v Minister of Home Affairs & others31 and Bertelsman J in Khan v Minister of Home Affairs.32 In the latter case the learned judge held that: ‘(O)nce an official ha(s) decided that a foreigner was illegally in the country and the foreigner ha(s) been informed of that fact, the foreigner must be informed of his rights in terms of the relevant section. The foreigner is entitled, as a matter of law, not to be detained immediately after his having been informed of the decision to deport him, but to exercise his rights either to appeal to the Minister or to apply to the Director- General to review or appeal the decision to deport him either in terms of s 8(1) and s 8(2) or s 8(4) without and before being incarcerated.’ 30 2003 (6) SA 599 (T). 31 [2007] JOL 18935 (T). 32 [2007] JOL 18958 (T) at p 18. [31] A contrary view was adopted by Mabuse AJ in Abid Ali & others v Minister of Home Affairs & others33 who held that an illegal foreigner has no right not to be detained in terms of s 34(1) while he is being dealt with under s 8. The full court approved of Mabuse AJ’s approach and disagreed with the judgments that preceded it. In Ulde v Minister of Home Affairs34 Sutherland AJ, considered himself bound by the full court. His view captures the essence of the difference between the approach in these cases and that of the earlier trilogy: ‘Section 8 does not address an arrest. Section 34 does. It is a decision that a person is an illegal immigrant and in turn the decision to deport that triggers s 8. The notion that a s 8 notice must be given for an arrest to be valid is not warranted.’35 [32] The first appellant’s contention that a person may not be arrested or detained in terms of s 34(1) until he has been permitted to exhaust his right of appeal and review is, in my view, not only contrary to the scheme of the Act but would, if upheld, effectively render s 34(1) nugatory. This may be illustrated by a simple example, which regrettably, is common place in this country. A person enters the country illegally and fraudulently obtains documents which appear to authorize his presence here. An immigration officer examines the documents, realises that they are forgeries, and having failed to obtain a satisfactory explanation for them decides that the person is an illegal foreigner who is liable for deportation. The officer proceeds to arrest and detain him. The submission that s 8 must be invoked before such a person may be arrested and detained for the purposes of deportation, effectively means that the fraudster is entitled not to be arrested and detained until he has exhausted his right of appeal and review in terms of s 8. If on the other hand a person has been found to be an illegal foreigner and an officer decides not to arrest him, it would rarely be necessary to arrest him after the appeal or review process is finalised. In the event that his appeal or review 33 TPD case No. 36405/06 (Unreported). It appears that the cases mentioned earlier dealing with this point were not brought to the learned judge’s attention, as he made no mention of them in his judgment. This is troubling because he would have been bound to follow those judgments unless satisfied that they were clearly wrong. 34 2008 (6) SA 483 (W) paras 33-34. 35See Ulde quoted above at para 29. fails, the foreigner concerned is likely to depart voluntarily, without the need for an arrest and detention. [33] But there is a more telling reason why this submission is unsustainable. Section 41(1), as I have mentioned, read with s 34(2), permits the detention of a suspected illegal foreigner for a period not exceeding 48 hours while his status is being verified. And s 34(1) permits the arrest and detention of an illegal foreigner for deportation purposes. The consequence of the submission is that a suspected illegal foreigner can be taken into custody – but not a person who is found in fact to be an illegal foreigner because, as it is submitted, he may not to be arrested until he has exhausted his right of appeal or review under s 8. This is an absurdity that the legislature could not have contemplated. [34] To recapitulate, a decision that a person is an illegal foreigner triggers his right to appeal or review that decision. It may also cause an arrest and detention for the purposes of deportation, but need not.36 The decision to arrest and detain an illegal foreigner for the purposes of deportation is a discretionary one. It does not detract from any of the alleged foreigner’s rights under s 8 and is not contingent upon his decision whether or not to exercise them. I conclude that the judgment of the full court on this aspect is, with respect, correct and the trilogy of cases which are relied upon in support of the contrary view not. [35] I turn to the next issue. The first appellant and amicus curiae contended that Rashid’s arrest, detention and deportation were unlawful because of the failure of the respondents to comply with the peremptory requirements of the Act. Concerning the arrest, detention and deportation the respondents were, at the very minimum, required to prove that: (i) the arresting officer arrested a person who is an illegal foreigner as defined in s 1; 36 Lawyers for Human Rights & another v Minister of Home Affairs 2003 (8) BCLR 891 (T) p 896. (ii) the detention was, as reg 28(1) prescribes, by means of a warrant corresponding to Form 28; (iii) the detainee was informed promptly, in writing at the time or soon thereafter in terms of s 34(1) read with reg 28(2), and on a form corresponding to Form 29, what the reason(s) for his intended deportation were; that he may in terms of s 34(1)(a) appeal against the decision to deport him and also, in terms of s 34(1)(b) to request his detention to be confirmed by a warrant of a court. (If the warrant is not issued within 48 hours of such request, he must be released); and (iv) the detained illegal foreigner’s removal from custody for deportation was effected in terms of s 34(7) read with reg 28(9) through the issue of a warrant, corresponding to Form 35, by an immigration officer addressed to the person in charge of the detention facility. (As proof that the person removed from detention and deported through a port of entry is in fact the person whose name appears in the warrant, the Form makes provision for a left and right thumb print of the deportee to be taken and also the identification of the port of entry from which the deportation will be carried out. This is to ensure that there is a proper record of the identity of the illegal foreigner and the place from where he was deported. Its purpose is also to protect the Department from unwarranted allegations.)37 [36] De Freitas arrested Rashid on 31 October 2005 to, in his words, ‘facilitate his deportation under s 34 (and) it was decided to detain him at the Cullinan Police cells, pending further investigation and compliance with the formalities prescribed in the Act’. [37] At the time of his arrest Rashid was an illegal foreigner and on that basis, absent any attack on the exercise of the arresting officer’s discretion, his arrest was authorised by the section. In respect of the other formalities 37 Section 34(7) provides: ‘On the basis of a warrant for the removal or release of a detained illegal foreigner, the person in charge of the prison concerned shall deliver such foreigner to that immigration officer or police officer bearing such warrant, and if such foreigner is not released he or she shall be deemed to be in lawful custody while in the custody of the immigration officer or police officer bearing such warrant.’ prescribed by the Act the facts show a lamentable disregard for them. On the respondents’ own showing:  Rashid was detained without a warrant;  Form 29 was given to him almost two days after his arrest – not promptly as s 34(1)I requires; and the respondents provide no explanation for the delay. (It was suggested in argument by counsel for the respondents that there was in fact no delay as Rashid was being dealt with under s 41(1). De Freitas’s affidavit, however, makes clear that Rashid was arrested immediately in terms of s 34(1). He makes no reference to s41(1)).  No warrant was obtained for his removal from the Cullinan Police Station for the purposes of his deportation; and  He was not deported from a port of entry that the Minister had designated for this purpose in terms of s 1 of the Act. I should point out that the full court accepted the respondents’ denial that Waterkloof Air Base was not a designated port of entry. But it erred in this regard. The respondents were required to prove that the Airbase was a designated port of entry as contemplated in s 1 of the Act. They failed to do so.38 [38] In the view I take it is not necessary to deal with what legal consequences, if any, flow from the failure of the respondents to warn Rashid of his rights under s 34(1)(a) and s 34(1)(b) promptly after his arrest or their failure to prove that he was deported through a designated port of entry. For present purposes, the fact that Rashid was detained at the Cullinan Police Station without a warrant and then removed from this facility, also without a warrant, means that both his detention there and his deportation were unlawful. [39] It is true, as counsel for the respondents contended, that the failure of the respondents to comply with the regulations, at least in respect of Rashid’s deportation, was not raised pertinently on the papers. But, it does not follow, 38 The Government’s website, http://www.home-affairs.gov.za/airports.asp lists 11 airports as ports of entry. Waterkloof Air Base is not one of them. as counsel for the respondents sought to contend, that this failure precludes the point being raised before this court as a point of law. As I have mentioned, the respondents bore the onus to prove that the detention and deportation were lawful. And once the first appellant had placed the lawfulness of the detention and deportation in issue, the respondents were required, at the very minimum, to adduce sufficient facts to prove that every procedural requirement, including the issue of the necessary warrants, was complied with. [40] The first appellant and amicus raised another important challenge to Rashid’s deportation. They contended that his deportation to Pakistan was the result of a request to the South African Government from the Government of Pakistan or some other state, because of his alleged links with international terrorism. His deportation, so it is contended, therefore constituted an unlawful disguised extradition.39 A variation of this argument is that the deportation was constitutionally offensive because the South African Government failed to secure an assurance from Pakistan that Rashid would not be tortured or sentenced to death if put on trial. The challenge failed before the full court on the ground that the respondents were not shown, on the admissible evidence, to have been aware that Rashid was being sought because of his alleged connection with international terrorism at the time of his deportation.40 [41] Although the circumstances of Rashid’s deportation from the country are troubling, the first appellant did not make out a case for a disguised extradition in his founding papers. His case is that Rashid is not an illegal foreigner (I have already found that he was) and that: ‘The real reason for the unlawful arrest, detention and deportation of Mr Rashid, which was never frankly disclosed . . . was the request by the British Authority /Intelligence following upon their suspicion that Mr Rashid was suspected of having links to International Terrorist Networks.’ 39 See generally J Dugard. International Law – A South African Perspective 3 ed (2005) p 229-231. 40 See judgment of the full court above at n1 para 37. [42] Be that as it may, the only evidence to support this allegation directly is the first page of a document emanating from a file of the respondents. The document became a hotly contested issue after the appellants had annexed it to the founding papers before the full court, apparently in violation of a court order of Poswa J issued on 14 May 2006. The circumstances under which the file containing the document was placed before Poswa J are not explained in the papers before us. The document linked Rashid to international terrorism and appears to be part of a report on Rashid’s arrest which, according to the respondents, formed ‘a part of the notes by an employee of the first respondent for the purposes of briefing counsel’. [43] In summary the document reveals that a member of the South African Police Service Crime Intelligence Unit, Captain Moses, contacted De Freitas to assist in arresting a suspected illegal foreigner. De Freitas referred him to his supervisor, Mr Chembayan. Moses then contacted Chembayan and told him that he required De Freitas’s help to track down the Pakistani national ‘who was suspected of having links with International Terrorist Networks abroad’. He also told Chembayan that due to the ‘sensitive nature of the case’ it was being ‘handled at Ministerial level’. Chembayan authorized De Freitas’s participation in the operation. The following day, on 31 October, Moses collected De Freitas at the Durban Central Police Station from where they proceeded to Estcourt in search of the suspected illegal foreigner. On route Moses indicated that the suspect was ‘wanted by the British Authorities for having links with international terrorist Networks’, but made no mention of the suspect’s nationality. [44] The full court struck out the contents of the founding affidavit upon which this report was based on the grounds that the appellants had published it in violation of Poswa J’s court order of 14 May 2006. [45] The document is incomplete, unsigned and its author unknown. Ex facie the statement the information it contains constitutes inadmissible hearsay evidence. Moreover, it does not suggest that Rashid was wanted for questioning in Pakistan. In those circumstances there was no basis for the suggestion, in argument, that the deportation was actually a disguised extradition. In my view, the contents of the document are not only unreliable but do not advance the first appellant’s case that he now seeks to make. [46] I turn to deal with the next issue – whether the appellants were properly convicted of contempt of court arising from their use of the controversial document in support of their application. On 15 May 2006, Poswa J prohibited publication of the file’s contents (mentioned earlier in connection with the disguised extradition argument) and ordered its return to the Department. The order read: ‘1. That there shall be no publication of the contents of the affidavit for the intended application for intervention as amicus curiae and annexures whatsoever. 2. That there shall be no publication of the contents of the file of the Department of Home Affairs. 3. That the file shall be restored to the representative of the respondent.’ [47] The order, which was issued by the registrar, is clear in its terms. Nevertheless, in the present proceedings the appellants annexed the document to the founding affidavit to support the allegation that Rashid was deported because of his alleged involvement with international terrorism. The respondents, in addition to filing an answering affidavit on the merits in the 12 June 2006 application, lodged a counter-application for the appellants to be committed for contempt of court because of their use of the document in apparent disregard of the court order. However, in their answering affidavit filed in response to the respondents’ counter-application, Mr Omar avers that Poswa J stated in court that the prohibition on publication did not prevent him from using the contents of the file in any other proceedings. The respondents do not deny this averment and for present purposes it must be accepted. [48] Mr Omar, however, took a further precaution by instituting proceedings before Poswa J, before the full court heard the matter, for his order to be corrected so as to confirm the appellants’ understanding of it. Having heard the party’s submissions the judge upheld the appellants’ contentions and amended the order on 8 August 2006. The relevant amendment was contained in paragraph 4 of the amended order. It reads as follows: ‘4. Orders 1 and 2 above shall not prohibit use of the file of the Department of Home Affairs in the advancement of any other court proceedings. The orders in 1 and 2 above shall endure until judgment by this court in these proceedings.’ [49] The full court took the view that the amended order had no bearing on the original prohibition against the usage of the contents of the file before any other court.41 But it seems that this is precisely what Poswa J intended. The appellants’ use of the document before the full court, therefore, did not violate his order. It follows that the appellants were incorrectly convicted of contempt of court. [50] The last issue to be decided is whether the manner of Rashid’s removal from South Africa constituted a ‘crime against humanity’ under Article 7(1)(i) of Part 2 of the Rome Statute of the International Criminal Court because it was an ‘enforced disappearance’. The Rome Statute sets a threshold for a crime to be elevated to the level of a ‘crime against humanity’. The criminal act must be committed with specific intent and be ‘part of a widespread or systematic attack directed at a civilian population’.42 Article (2)(i) defines ‘enforced disappearance of persons’ as ‘the arrest, detention, abduction, of persons by, or with the authorization, support, or acquiescence of, a State or political organization, followed by a refusal to acknowledge that deprivation of freedom or to give information on the fate or whereabouts of those persons, with the intention of removing them from the protection of the law for a prolonged period of time’. For present purposes, even if I were to 41 See the judgment of the full court above at n1 para 45. 42 Dugard International Law - A South African Perspective 3 ed (2005) p 182-185. accept that the circumstances of Rashid’s removal from South Africa does fall within this definition (which I do not because the definition refers to ‘persons’, not a person), there can be no suggestion that removing a single person from a country meets the threshold level for a ‘crime against humanity’. This contention must fail. [51] I turn to the question of costs. In the reinstatement application, Mr Omar contended that the order of this court on 27 November 2008 that he pay the wasted costs de bonis propiis relating to the record on appeal which had been struck from the roll, be reconsidered because it was interlocutory in nature. The submission is without merit. An order striking a matter from the roll with costs is final in effect and cannot be reconsidered. [52] The amicus contended that the respondents ought to pay their costs for having unreasonably opposed their application to be admitted as amicus curiae in this court. In this matter the submissions of the amicus were of considerable assistance to the court. There were no proper grounds for opposing its application and I agree that it is appropriate that the respondents pay such costs. [53] To conclude, Rashid’s arrest was lawful but his detention and deportation were not because they were carried out without compliance with the peremptory procedures prescribed by the Act. We were informed from the bar that Rashid was released from the custody of the Pakistani authorities in December 2007. The appellants have accordingly abandoned the relief sought for an order declaring that the government conduct an investigation while Rashid’s fate was not clarified. The appellants have, in the main, been successful in this appeal and it follows that they are entitled to their costs. [54] I must express our gratitude to the amicus curiae for its assistance to us. [55] The following order is made: 1. The appeal is upheld with costs; 2. The convictions and sentences of the appellants for contempt of court are set aside; 3. The respondents are to pay the costs occasioned by their opposition to the application for the admission of the amicus curiae; 4. The order of the court below is set aside and in its place the following is substituted: ‘a. the detention of Khalid Mahmood Rashid at Cullinan Police Station and his subsequent removal and deportation are declared to have been unlawful; b. The respondents are to pay the costs of the application; c. The counter-application is dismissed with costs.’ _________________ A CACHALIA JUDGE OF APPEAL PONNAN JA (Streicher JA et Hurt AJA concurring) [56] I have read the judgment of my colleague Cachalia. I take a far narrower approach to the matter. Although there had been a proliferation of applications and counter-applications involving essentially the same issues, the matter ultimately came to be decided, at the direction of the learned Judge President, by a specially constituted court consisting of three judges (Ngoepe JP, Pretorius J and Snijmann AJ), on the basis of just one of the many applications that served before them. It is noteworthy that the founding and answering affidavits in the matter comprise a single volume of less than 120 pages. That matter serves before us on appeal on the basis of leave having been granted by this court. We are thus constrained by that record, which I may add, does not contain a replying affidavit. [57] A useful starting point is the allegations made in the affidavits filed of record in the matter. To my mind, the crux of the first appellant’s case is to be found in paragraph 24 of the founding affidavit, which reads: 'NOTEWORTHY is that Mr. De Freitas, who at all material times worked in the course and scope of his employment with the First Respondent immediately arrested, detained and later deported Mr. Rashid following upon the said Mr. De Freitas having declared Mr. Rashid an "illegal foreigner". Mr. Rashid was not afforded the rights contemplated in Section 8(1) and (2) of Act 13 of 2002, more specifically to appeal/ make representations challenging the decision to declare him (Mr. Rashid) an 'illegal foreigner". The adverse consequence of being declared "an illegal foreigner" is that an "illegal foreigner" may be arrested, detained and deported. I respectfully say that the "legislature" intended that the procedure in Section 8(1) and (2) of Act 13 of 2002 must be followed before arrest and detention in terms of Section 34 of Act 13 of 2002. The arrest and detention of Mr. Rashid on the 31st October 2005 is / was therefore unlawful. . . . . The response it elicited was: ‘In the light of the facts before court, the affidavits of De Freitas and Swartland I do not understand on what basis the deponent makes the allegations in this paragraph. He has no personal knowledge of what happened to Khalid after his arrest. The rest of the contents of this paragraph are argumentative, speculative and incapable of traverse. Questions of interpretation of the Act will be dealt with at the hearing of this matter.’ [58] Earlier in the answering affidavit filed on behalf of the respondents, the following appears: ‘Khalid's arrest and detention were effected pursuant to information that the Department had received that he was an illegal foreigner, residing in Estcourt. On 31 October 2005, Anthony de Freitas, who is employed by the Department as a Senior Immigration Officer at its offices in Durban, arrested Khalid in the following circumstances. He went to Khalid's place of residence, namely, 12 Canna Avenue, Fordville, Estcourt. As is often the practice when Department officials effect arrests under their statutory powers, De Freitas was accompanied by a number [of] policemen. On this occasion, the policemen were under the command of Inspector Arumugan Munsamy. They were armed and clad in bullet proof vests, which is the practice employed in such operations. After they had pronounced the premises safe to enter, De Freitas went in. There he found Khalid and Mohamed Ali Ebrahim Moosa Jeebhai ("Jeebhai"), the deponent to the founding affidavit. . . . When De Freitas entered the premises in which Jeebhai and Khalid were to be found, he asked for their identification and travel documents. Khalid said he did not have any identification papers. He said his passport was in Johannesburg. But he produced a copy of the passport. However, no permit of any nature appeared on the page where his personal particulars were reflected. It was clear to De Freitas that Khalid was an illegal foreigner, as contemplated in the Act. As such, he was subject to arrest and deportation. De Freitas informed Khalid that he was being placed under arrest. The purpose of his arrest was to facilitate his deportation under s34 of the Act. In order to facilitate his deportation, it was decided to detain him at the Cullinan Police cells, pending further investigations and compliance with the formalities prescribed in the Act. Khalid was then transported to the Cullinan Police cells. De Freitas accompanied the police who were responsible for such transportation. After Khalid was placed in the police cells at Cullinan, De Freitas returned to Durban. While at the Cullinan police cells, Khalid was in the custody of the police members there. I annex hereto as "JS1" a confirmatory affidavit of De Freitas. Swartland, an employee of first respondent, conducted an investigation into the residence status in South Africa of Khalid. In his capacity as the Department's Tshwane Chief Immigration Officer, he has access to all [the] Department's records on foreign nationals in South Africa. He interviewed Khalid at the Cullinan Police Station on 2 November 2005. Khalid admitted to Swartland that he had entered the country illegally. He then advised him that, because he was in the country illegally, he was liable to be deported. As he is required to do under the Act, he gave Khalid written notification of his decision to deport him to his country of origin, namely Pakistan. He further informed Khalid of his right to appeal against that decision and to have his detention confirmed by a warrant of the Court. These averments are confirmed by the written notification that he then handed to Khalid, on 2 November 2005. A copy of that notification is annexed hereto marked "JS2". . . . I may mention that Khalid's decision in respect of the three matters43 are entirely consistent with the following. In response to Swartland's enquiries as to how he had entered the Republic and secured a "work permit", Khalid told Swartland the following: That he had entered the country without a visa, and had paid an agent $600 "to get me through the immigration". He had thereafter paid R7 000.00 to the agent for "a fake work permit". Khalid later confirmed the aforegoing in an affidavit. A copy of the affidavit is annexed hereto, marked "JS3".' [59] Significantly, those allegations are not disputed by or on behalf of the appellants. Nor, given the nature of the allegations, could they be. Absent a referral to oral evidence and there was none here, it follows that the matter falls to be determined on the version of the respondent. On that version they were dealing with a self-confessed illegal foreigner in Mr Khalid Rashid, who had by virtue of that fact rendered himself liable to arrest in terms of s 34(1) of the Act for the purposes of deportation. I pause to record that, in my view as well, the cases, in which it was held that the procedure outlined in s 8(1) and (2) must be followed before a person may be arrested in terms of s 34, were wrongly decided. If a person is an illegal foreigner he may be arrested in terms of s 34. An illegal foreigner is, in terms of s 1, by definition a foreigner who is in the Republic in contravention of the Act and not a person who is confirmed to be an illegal foreigner by the Minister upon review in terms of s 8(2). Mr Khalid Rashid, by his own admission, fell within this definition of ‘illegal foreigner’. Moreover, also on his own version, he had perpetrated a fraud in order to facilitate his entry into and sojourn in the Republic. In those circumstances, like Cachalia JA, I too am of the view that his arrest was authorised by the Act. [60] The same does not hold true for Mr Rashid’s detention at the Cullinan Police Station and his subsequent deportation. The receipt and subsequent retention of an individual in custody is an exercise of public power. Any such 43 In terms of JS2, Khalid chose: (i) To await his deportation at the first reasonable opportunity, whilst remaining in custody; (ii) Not to appeal the decision to deport him; and (iii) Not to have his detention confirmed by a warrant of court. exercise is constrained by the principle of legality.44 It may thus only occur in terms of lawful authority. [61] Regulation 28 (1) of the Immigration Regulations45 provides: ‘The detention and deportation of an illegal foreigner contemplated in section 34(1) of the Act shall be by means of a warrant issued by an immigration officer, which warrant shall substantially correspond to Form 28 contained in Annexure A.’ Form 28 is headed ‘WARRANT OF DETENTION OF ILLEGAL FOREIGNER’, and must be addressed to the relevant ‘Station Commissioner/Head of Prison or Detention facility’. It reads: ‘As ………….. (first name(s) and surname of illegal foreigner) has made *himself/herself liable to *deportation/removal from the Republic and for detention pending such *deportation/removal in terms of section *34(1)/34(5)/34(8) of the Act, you are hereby ordered to detain him or her until such time as *he/she is *deported/removed from the Republic.’ There then follows designated spaces on the Form for the ‘Signature of [the relevant] immigration officer, ‘Date’ and ‘Official stamp’. [62] Regulation 28(9)(a) provides that the warrants contemplated in s 34(7) of the Act shall ‘in respect of the removal of an illegal foreigner, be in a form substantially corresponding to Form 35’. Form 35 reads: DEPARTMENT OF HOME AFFAIRS REPUBLIC OF SOUTH AFRICA WARRANT FOR REMOVAL OF DETAINED ILLEGAL FOREIGNER [Section 7(1)(g) read with section 34(7); Regulation 28(9)(a)] TO: Person in charge of prison or detention facility 44 Minister of Justice and Constitutional Development and Another v Zealand 2007 (2) SA 401 (SCA); [2007] ZASCA 92; Zealand v Minister for Justice and Constitutional Development and Another 2008 (4) SA 458 (CC); [2008] ZACC 3. 45 See footnote 7. As ............................................................................................................(first name(s) and surname), whose fingerprints appear on the reverse side of this Form, has made *himself/herself liable to removal from the Republic, you are hereby requested to deliver *him/her into my custody. Removal from the Republic shall be affected via ........................................... (port of entry) and the responsible immigration officer or police officer at that port of entry shall, before the removal of the detainee, impress the left and right thumb prints of the detainee in the space provided hereunder and certify that the prints were taken by him or her. ....................................................... .............................................. Signature of immigration officer Date Appointment no.: ................................................... Place: ...................................................................... Reference no.: ....................................................... CERTIFICATE BY IMMIGRATION OFFICER I hereby confirm that the abovementioned person was removed from the republic on ....................................(date) to .................................... (country) via ......................................................(port of entry). I also confirm that *his/her left and right thumb prints were taken by me. LEFT THUMB PRINT RIGHT THUMB PRINT Immigration officer: ........................................................................................ Appointment number: .................................................................................... Date: .............................................................................................................. Port of entry: .................................................................................................. Departure Stamp [63] Given that the deprivation of Mr Rashid’s liberty was prima facie unlawful, it was for the respondents to justify such deprivation.46 In this instance, one would have thought that, as a bare minimum, the respondents would have sought to show compliance with Regulation 28. It would to my mind have been a relatively simple matter to have adduced duly completed Forms 28 and 35 as proof of compliance with Regulation 28. That the respondents failed to do. After all, it seems to me that the Regulation 28 safeguards exist, not just for the benefit of the illegal foreigner, but also to protect the respondents against unjustified and unwarranted claims flowing from detention or deportation or both. Accordingly, on the view that I take of the matter, from the time that Mr Rashid was handed over by De Freitas to the officials at the Cullinan Police cells until he came to leave the Republic, the conduct of the state officials in whose charge he found himself, was unlawful. It follows that Mr Rashid’s detention and subsequent deportation was unlawful. [64] That, ordinarily at any rate, ought to be the end of the matter certainly insofar as the main issue is concerned. There remains the contention ─ which was not pressed with any vigour before us ─ that Mr Rashid’s deportation constituted a disguised extradition. Although I am by no means persuaded 46 Zealand (CC) para 24. that this is still a live issue in the current appeal, it may nonetheless be prudent for me to deal with it, albeit briefly. Once again the starting point has to be the founding affidavit. In this regard, the closest that the founding affidavit comes to advancing that rather speculative hypothesis is as follows: ‘The real reason for the unlawful arrest, detention and deportation of Mr. Rashid, which was never frankly disclosed to this Honourable Court was the request by the British Authority / Intelligence following upon their suspicion that Mr. Rashid was suspected of having links to International Terrorist Networks. Ironically, the former British Prime Minister Margaret Thatcher labelled our former president Madiba (Nelson Mandela) a terrorist. Madiba, was conferred the status of "Icon" approximately three years ago. British Authority and particularly the British Prime Minister were clearly wrong in labelling Madiba a terrorist, particularly because not too long ago the same Madiba was awarded an International Nobel Peace Prize. Mr. Rashid was not linked to any International Terrorist Network nor was Mr. Rashid suspected of having committed a crime anywhere in the world including South Africa.' The response, unsurprisingly was: I deny that the real reason for the arrest of Khalid was not disclosed. Khalid was an illegal foreigner who had entered the country through illegal means including fraud and corruption in that he paid money to buy both a visa and a permit. The Act referred to above empowers first respondent to arrest, detain and deport an illegal foreigner. That is the basis on which Khalid was deported from South Africa. The rest of the contents of this paragraph are polemic, vague, irrelevant and incapable of traverse.' [65] Without more and given the nature of the factual dispute, had those juxtaposed paragraphs stood in isolation, the issue of the alleged disguised extradition would have been resolved against the first appellant. But, in the paragraph of the founding affidavit immediately preceding that under consideration, the following appears: ‘"MV9"47 hereto is the first page of a report supplied to the First respondent about the "arrest" of Mr. Rashid by the SAPS Crime Intelligence Unit Durban. Noteworthy is the concluding paragraph on "MV9" more specifically:- 47 Summarised in para 43 of Cachalia JA’s judgment. " ... That the suspected illegal foreigner to be arrested in Estcourt (referring to Mr. Rashid) was wanted by the British Authority for having links to International Terrorist Networks abroad ..." ‘. The response it elicited was: ‘The report referred to in this paragraph is also part of the notes by an employee of first respondent drawn for the purposes of briefing counsel. The notes are privileged and inadmissible and should have never have been used or annexed to this application. The use of all these documents in contempt of a court order shows how desperate deponent is to buy publicity.’ It is thus necessary to subject MV9 to greater scrutiny to ascertain whether it materially advances the first appellant’s case in this regard. [66] For the reasons that follow, I am of the view that no evidential weight can be attached to MV9. First, on the first appellant’s own showing, it is only the first page of a report. Second, the statement is unsworn and unsigned and there is, moreover, no evidence as to the identity of its author. Third, ex facie the statement, the information it contains constitutes inadmissible hearsay evidence. Fourth, even if it be shown to have been made by an official in another arm of state, MV9 could hardly be binding on the first respondent, absent an admission by her of the truth of its contents. Fifth, if agents of the South African state were acting at the behest of British Authorities in securing Mr Rashid’s arrest ─ as the document asserts – it is incomprehensible and indeed would appear to be inconceivable, that they would have simply handed him over to the Pakistani authorities. I thus remain unpersuaded that such evidence as there is (namely the reliance on MV9) – which to my mind is neither reliable nor credible and stands to be disregarded in its entirety - supports the inference sought to be advanced by the first appellant. [67] I agree with Cachalia JA that the contempt of court conviction cannot stand and that the respondents’ counter-application in that regard should accordingly have been dismissed with costs by the court below. I likewise agree with his approach to costs. In the result, I agree with the order proposed by my learned Colleague. _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES: COUNSEL FOR APPELLANT: Z Omar (Attorney) Amicus Curiae: A Katz; M du Plessis INSTRUCTED BY: Zehir Omar Attorneys; Springs Amicus Curiae: WITS Law Clinic, Johannesburg CORRESPONDENT: Goodrick & Franklin; Bloemfontein Amicus Curiae: Matsepes Inc., Bloemfontein COUNSEL FOR RESPONDENT: P M Mtshaulana SC; G Bofilatos INSTRUCTED BY: The State Attorneys; Pretoria CORRESPONDENT: The State Attorneys; Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 March 2009 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Ismail Ebrahim Jeebhai & others v Minister of Home Affairs & another The Supreme Court of Appeal (SCA) today upheld an appeal brought on behalf of Pakistani national Mr Khalid Mahmood Rashid that his detention at the Cullinan Police Station from 1 November 2005 and his subsequent deportation to Pakistan on 6 November were unlawful. It however held that his arrest on 31 October 2005 at a home at Estcourt in KwaZulu Natal where he was staying was lawful because the evidence disclosed that he was an illegal foreigner. The Pretoria High Court had held in February 2007 that his arrest, detention and deportation had been carried out lawfully. Mr Ismail Ebrahim Jeebhai who unsuccessfully brought the application against the Minister of Home Affairs in the high court, then appealed to the SCA. The facts that were placed before the court revealed that Rashid had entered the country a few months earlier and had obtained documents authorizing his stay in the country fraudulently. As an illegal foreigner he was therefore liable to arrest. On 31 October 2005 an immigration official supported by armed police arrested him at Estcourt. He was then driven to the Cullinan Police Station where he was detained. On 6 November he was removed from detention and deported to Pakistan. The SCA held that the Immigration Act 13 of 2002 and the Regulations promulgated thereunder required a warrant to be issued by an immigration officer for the detention of an illegal foreigner as also for his removal from that place of detention. As neither Rashid’s detention nor his removal from detention for deportation was effected pursuant to a warrant both his detention and deportation were held to be unlawful. The SCA also set aside the convictions and sentences by the high court of Jeebhai and his attorneys Mr Zehir Omar and Ms Yasmin Naidoo for contempt of court. In the high court Jeebhai was cautioned and discharged but Omar and Naidoo were each sentenced to a fine of R2 000 or six months’ imprisonment which was suspended for a period of three years on condition that they are not convicted of contempt of court committed during the period of suspension. The high court had found that Jeebhai and his attorneys had used a document in violation of an earlier court order that had issued by Judge Poswa on 14 May 2005. The SCA, however, held that that Judge Poswa’s order had not prohibited the use of the document in the proceedings before the high court – accordingly the convictions and sentences could not stand. The SCA rejected two further arguments by Jeebhai’s legal representatives. The first was that Rashid’s deportation was a disguised extradition; and the second that Rashid’s deportation was a ‘crime against humanity’ because it amounted to an ‘enforced disappearance’ under the Rome Statute of the International Criminal Court. In both instances the SCA found that the evidence that was placed before the court did not support those contentions. Nevertheless because Rashid’s detention and deportation were held to have been unlawful, the Minister of Home Affairs was ordered to pay the costs incurred by Jeebhai and his attorneys of the legal proceedings both in the high court and in the SCA. ------------

4066

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no:1124/2022 In the matter between: THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY APPELLANT and VRESTHENA (PTY) LTD (REGISTRATION NO. 2001/015148/07) FIRST RESPONDENT THE BODY CORPORATE OF ZAMBEZI RETAIL PARK SECOND RESPONDENT ZAMBEZI RETAIL PARK INVESTMENTS (PTY) LTD THIRD RESPONDENT THUMOS PROPERTIES (PTY) LTD FOURTH RESPONDENT ZRJ PROPERTIES (PTY) LTD FIFTH RESPONDENT Neutral citation: City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd & Others (Case no 1124/2022) [2023] ZASCA 104 (22 June 2023) Coram: SALDULKER, MOTHLE, MATOJANE and MOLEFE JJA and DAFFUE AJA Heard: 4 May 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 22 June 2023. Summary: Civil Procedure – Section 18(4) of the Superior Courts Act 10 of 2013 (the Act) – interpretation of the ‘next highest court’ – whether the appellant has a second right to an automatic appeal to approach the next highest court in terms of s 18(4) of the Act where a full court has already heard an appeal in terms of s 18(4) of the Act – whether the notice of appeal is irregular and the appeal void. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Tolmay, Nyati and Koovertjie JJ concurring, sitting as the full court on appeal): 1. The matter is struck from the roll with costs, including the costs of two counsel where so employed. JUDGMENT Matojane JA (Saldulker, Mothle, Molefe JJA and Daffue AJA concurring): [1] The issue before us is whether s 18(4)(ii) of the Superior Court Act 10 of 2013 (‘the Act’) allows for a second automatic right to appeal to the ‘next highest court’ under s 18(4), against an order granted under s 18(3) of the Act, with further appeals being possible. Background [2] The first respondent Vresthena (Pty) Ltd (Vresthena), is the owner of six units in the Sectional Title Scheme known as Zambesi Retail Park, which is a shopping centre. Vresthena leases its properties to different businesses in the scheme. These properties share a single electricity supply point. The City of Tshwane Metropolitan Municipality (the Municipality) provides electricity to these properties through the Body Corporate of Zambesi Retail Park. The Body Corporate has been dysfunctional from its inception. On 28 March 2022, the Municipality issued disconnection notices to the tenants and occupiers of the scheme. These notices were given because the tenants and occupiers had failed to pay for electricity and other services. As a result, the electricity and water services were disconnected on 13 April 2022. [3] Vresthena filed an urgent application requesting the court to compel the Municipality to accept and review its application for a separate electricity connection for the tenants. Additionally, Vresthena sought an order to restore its electricity and water supply. [4] On 16 June 2022, the Gauteng Division of the High Court, Pretoria (the high court) per Madam Justice Ndlokovane AJ granted an interim order on an urgent basis, ordering the Municipality to restore electricity and water supply to the property within 14 (fourteen) days of the order. The high court further authorised Vresthena to instruct an electrician to reconnect the electricity should the Municipality fail to comply with the order. [5] On 6 July 2022, the Municipality delivered an application for leave to appeal. Then, on 23 August 2022, Vresthena filed an application under s 18(3) of the Act. Vresthena sought a declaratory order stating that the order issued by the high court on 16 June 2022 should not be suspended while the Municipality’s application for leave to appeal is being considered. [6] On 28 September 2022, the high court granted the Municipality leave to appeal the judgment granted on 16 June 2022. The high court also ordered that the order given on 16 June 2022 should be put into effect and carried out while the appeal decision is pending. The Municipality exercised its automatic right of appeal under s 18(4) by filing an appeal to the full court of the Gauteng Division of the High Court, Pretoria (the full court), against the execution order. On 10 November 2022, the full court rejected the s 18(4) appeal and issued an order allowing the main order to be implemented while the appeal decision was pending. [7] On 22 November 2022, the Municipality filed a ‘notice of appeal’ in this Court, asserting that the phrase ‘next highest court’ in s 18(4) of the Act should be interpreted to include more than one court of appeal. Vresthena, on the other hand, contends that s 18(4) allows for only one appeal to the court immediately above the lower court. Therefore, the Municipality’s notice of appeal is irregular and, as a result, void. Statutory provisions [8] Section 16 of the Act regulates appeals generally and provides in s 16(1)(b) that an appeal against any decision of a high court on appeal or of a full bench sitting as a court of first instance lies with this Court. Leave to lodge such appeal may be granted by the full bench or upon special leave having been granted by this Court. [9] Section 17(1) of the Act provides that leave to appeal can only be granted if the judge or judges concerned are of the opinion that there is a compelling reason why the appeal should be heard. This may include factors such as conflicting judgments on the subject matter, the practical implications of the order, or whether the appeal would result in a fair and timely resolution of the actual disputes between the parties. [10] Section 17(3) of the Act provides that an application for special leave to appeal brought under s 16(1)(b) of the Act may be granted by this Court on an application filed with the registrar of the court within one month after the decision sought to be appealed against, or such longer period as may on good cause be allowed, and the provisions of subsecs 2(c) to (f) shall apply with the necessary changes required by the context. [11] Sections 16 and 17 of the Act establish a requirement for obtaining leave to appeal as a precondition for prosecuting a civil appeal. Should a litigant wish to appeal a judgment from a provincial or local division, they must first obtain leave to appeal from that division. Should that division not grant leave, the person may then seek leave from this Court. This provision serves as a screening mechanism to prevent the abuse of the appeal process and to ensure that only cases with merit proceed to appeal. By requiring leave to appeal, the law aims to filter out cases that do not have a reasonable chance of success, allowing the appellate courts to focus on cases that raise significant legal issues or have a genuine chance of being overturned. [12] Section 18 of the Act contains a sui generis provision for an automatic right of appeal to the next ‘highest court’ against an order made under s 18(3) of the Act. I now turn to deal with the provision of s 18 which reads as follows: ‘(1) Subject to subsections (2) and (3), and unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision which is the subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal. (2) Subject to subsection (3), unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision that is an interlocutory order not having the effect of a final judgment, which is the subject of an application for leave to appeal or of an appeal, is not suspended pending the decision of the application or appeal. (3) A court may only order otherwise as contemplated in subsection (1) or (2) if the party who applied to the court to order otherwise, in addition, proves on a balance of probabilities that he or she will suffer irreparable harm if the court does not so order and that the other party will not suffer irreparable harm if the court so orders. (4) If a court order otherwise, as contemplated in subsection (1) – (i) the court must immediately record its reasons for doing so; (ii) the aggrieved party has an automatic right of appeal to the next highest court; (iii) the court hearing such an appeal must deal with it as a matter of extreme urgency; and (iv) such order will be automatically suspended, pending the outcome of such appeal. (5) For the purposes of subsections (1) and (2), a decision becomes the subject of an application for leave to appeal or of an appeal as soon as an application for leave to appeal or a notice of appeal is lodged with the registrar in terms of the rules.’ [13] Section 18(1) of the Act regulates the suspension of a decision pending appeal. It provides that when an application for leave to appeal or an appeal is being considered, the implementation and execution of the decision in question is suspended until a decision is reached regarding the application or appeal. [14] An order issued in terms of s 18(3) is an extraordinary remedy reserved for exceptional circumstances. It empowers a high court to deviate from the general principle that pending an appeal, a judgment and attendant orders are suspended if the party requesting the court to do so can prove, on a balance of probabilities, two things. Firstly, they must demonstrate that they will suffer irreparable harm if the court does not issue the requested order. Secondly, they must show that the other party involved will not suffer irreparable harm if the court grants the requested order. This provision allows the court to consider the potential harm to both parties and make a decision that aims to prevent irreparable harm to the party seeking the order because of the extreme nature of the remedy. [15] Considering the context of s 18(4), it is evident that it specifies that an appeal should be made from a single judge to a full court within the same division, as mandated by s 17(6)(a), which designates the next highest court. Consequently, if an order under s 18(1) is granted by a court composed of a single judge, an automatic right of appeal lies with the full court, as it is the ‘next highest court’ in the hierarchy, which was the case in the present matter. [16] Section 18(4)(ii) introduces a provision that grants an automatic right to appeal to the ‘next highest court’ against an order issued under s 18(3) of the Act. This provision is unique because it changes the general appeal processes in that such orders, being interlocutory in nature, are generally not appealable and that leave to appeal must first be obtained before an appeal can be lodged. Section 18(4) establishes a mechanism for a single appeal that will be concluded in an expedited process, as evidenced by the absence of provisions for appealing the decision of the ‘next highest court’. In essence, the decision made by the ‘next highest court’ in the appeal process is final and cannot be appealed any further. [17] The current matter exemplifies the mischief that the legislature intended to address through the introduction of s 18(4). Despite a reconnection order being issued on 16 June 2022, an order under s 18(3) in September 2022 and an order of the full court in November 2022, the Municipality has still not reconnected the electricity to Vresthena, thus thwarting the purpose of the extraordinary appeal process introduced by s 18(4). [18] Section 18(4) of the Act serves as a protective measure to prevent irreversible harm caused by a court granting an execution order inappropriately. The court is required to immediately document its reasons for such a decision. The party affected by the order has an automatic right to appeal, unlike the usual situation where leave to appeal is required. The appeal against the execution order is an inherent right, and the party who obtained the order cannot object to it. If they want to uphold the execution order, they must contest the appeal. In an instance where they want to avoid the suspension of the execution order and potential harm, their recourse is to approach the head of the court overseeing the appeal and take all necessary steps to expedite an urgent hearing, as provided by this section. [19] The Municipality argues that the automatic right of appeal should be interpreted in a less restrictive manner. They contend that limiting litigants to only one right of appeal would result in an interpretation that goes against the Constitution and constitutional rights. They contend that such a restriction would lead to injustices. Essentially, the Municipality is suggesting that allowing multiple appeals is necessary to ensure fairness and protect the constitutional rights of aggrieved litigants. [20] A general principle of statutory interpretation is that the words used in a statute should be understood in their normal grammatical sense unless this would lead to an absurd result. In Cool Ideas 1186 CC v Hubbard and Another,1 (Cool Ideas), the Constitutional Court added three additional principles to this general rule. Firstly, statutes should be interpreted purposively. Secondly, the relevant statutory provision must be properly contextualized, and lastly, all statutes must be construed consistently with the Constitution. These three principles serve to guide the interpretation of statutes and ensure that the law is applied in a manner that aligns with the intended purpose and constitutional principles. [21] Section 18(4) of the Act establishes a distinct provision that establishes a unique category of appeals, specifically designed to be utilized solely for orders made under s 18(3) of the Act. This provision carves out a specific and extraordinary avenue for appeals in exceptional circumstances, especially when it can be proved that irreparable harm would follow if the operation and execution of a decision is suspended. The provision enhances access to court on appeal by 1 Cool Ideas 118 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28. guaranteeing one automatic appeal, bypassing the typical screening process outlined in the general provisions of ss 16 and 17 of the Act. The purpose is to streamline and facilitate access to courts for these specific appeals, providing a more efficient and expedited avenue for seeking redress without infringing the s 34 Constitutional right of access to courts. [22] We endorse Navsa JA’s obiter viewpoint in Ntlemeza v Helen Suzman Foundation,2 that s 18(4) of the Act specifically allows for a single automatic right appeal indicating that multiple appeals are not permitted under the section. He expressed it as follows: ‘Understandably, because it is such a dramatic change, only one appeal to the “next highest court” is permissible. No further appeal beyond this court appears competent - for present purposes it is not necessary to decide this point.’ [23] The language of s 18(4)(ii) is explicit and straightforward. As held in Natal Joint Municipal Pension Fund v Endumeni Municipality,3 ‘the inevitable point of departure is the language of the provision itself’. The provision in plain language states that a party who is aggrieved has an automatic right of appeal to the ‘next highest court’ (Own emphasis.) The use of the words ‘an’ and ‘court’ implies a singular meaning, indicating a restriction on further appeals. Considering the language, context, and purpose of the provision, the clear wording does not support a broader interpretation to support the appellant's interpretation. [24] The Constitutional Court in National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others,4 held that when 2 Ntlemeza v Helen Suzman Foundation [2017] ZASCA 93; [2017] 3 All SA 589 (SCA); 2017 (5) SA 402 (SCA) para 24. 3 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 4 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000 (2) SA 1; 2000 (1) BCLR 39 para 65-66. determining whether words should be severed from a provision or added to it, the court takes into consideration two important factors. First, it focuses on ensuring that the resulting provision, after the severance or addition of words, aligns with the Constitution and its fundamental values. Second, the court aims to minimize any interference with the laws established by the legislature. This means that the court strives to maintain consistency with the Constitution while also respecting the legislative intent as much as possible. [25] The Municipality contends that the fundamental right to access to courts in s 34 of the Constitution entails an automatic right of access to all appeal courts. In National Union of Metal Workers of SA and Others v Fry’s Metal,5 this Court held that s 34 of the Constitution does not explicitly provide for a right of appeal. Unlike s 35(3)(o) of the Constitution, which specifically includes a right of appeal or review for accused persons in their right to a fair trial, the court explained that s 34 does not inherently imply the same right. The Court stated that even if it did, any such right could be subject to reasonable limitations and justifiable restrictions. Moreover, the principle of legality applies to all court decisions, allowing them to be constitutionally reviewed. Therefore, it cannot be said that the court’s general appellate jurisdiction automatically extends to the appealability of all justiciable rights. [26] In Besserglik v Minister of Trade, Industry and Tourism and Others,6 the Constitutional Court considered the contention by the applicant in that case that s 22 of the Interim Constitution (predecessor to s 34 of the Constitution) aimed to ensure that individuals have the right to have their disputes resolved fairly by a court of law, including the right of appeal. The Court dismissed this argument 5 National Union of Metal Workers of SA and Others v Fry’s Metal (Pty) Ltd 2005] ZASCA 39; [2005] 3 All SA 318 (SCA) at para 29. 6 Besserglik v Minister of Trade, Industry and Tourism and Others 1996 (6) BCLR 745; 1996 (4) SA 331 (CC) para 10. and held that the scope of s 22 does not necessarily imply a right of appeal. The Constitutional Court further stated that a screening procedure, which excludes appeals lacking merit, does not amount to a denial of access to a court. As long as the screening process enables the highest court to assess the likelihood of success for an appeal, it does not violate s 22 of the Interim Constitution. [27] In view of all of the aforegoing, the notice of appeal dated 22 November 2022 delivered by the Municipality is irregular and void and no proper appeal served before us. [28] In the result, the following order is made: 1. The matter is struck from the roll with costs, including the costs of two counsel where so employed. __________________________ K E MATOJANE JUDGE OF APPEAL APPEARANCES For appellant: M Dewrance SC with N Erasmus Instructed by: Diale Mogashoa Attorneys, Pretoria Honey Attorneys, Bloemfontein For first respondent: P Cilliers SC with M Louw Instructed by: Wiese & Wiese Inc, Pretoria Hendre Conradie Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 22 June 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd & Others (Case no 1124/2022) [2023] ZASCA 104 (22 June 2023) Today the Supreme Court of Appeal (SCA) struck a matter from the roll with costs including costs of two counsel. The matter emanated from the full court of the Gauteng Division of the High Court, Pretoria (the full court) with the issue before the SCA being whether s 18(4)(ii) of the Superior Court Act 10 of 2013 (the Act) allows for a second automatic right to appeal to the ‘next highest court’ under s 18(4) of the Act, against an order granted under s 18(3) of the Act, with further appeals being possible. The first respondent Vresthena (Pty) Ltd (Vresthena), is the owner of six units in the Sectional Title Scheme known as Zambesi Retail Park, which is a shopping centre. Vresthena leased its properties to different businesses in the scheme. These properties shared a single electricity supply point. The appellant, the City of Tshwane Metropolitan Municipality (the Municipality), provides electricity to these properties through the Body Corporate of Zambesi Retail Park. The Body Corporate has been dysfunctional from its inception. On 28 March 2022, the Municipality issued disconnection notices to the tenants and occupiers of the scheme. These notices were given because the tenants and occupiers had failed to pay for electricity and other services. As a result, the electricity and water services were disconnected on 13 April 2022. Vresthena filed an urgent application requesting the Gauteng Division of the High Court, Pretoria (the high court) to compel the Municipality to accept and review its application for a separate electricity connection for the tenants. Additionally, Vresthena sought an order to restore its electricity and water supply. On 16 June 2022, the high court granted an interim order on an urgent basis, ordering the Municipality to restore electricity and water supply to the property within 14 (fourteen) days of the order. The high court further authorised Vresthena to instruct an electrician to reconnect the electricity, should the Municipality fail to comply with the order. On 6 July 2022, the Municipality delivered an application for leave to appeal, subsequently on 23 August 2022, Vresthena filed an application under s 18(3) of the Act. Vresthena sought a declaratory order stating that the order issued by the high court on 16 June 2022 should not be suspended while the Municipality’s application for leave to appeal is being considered. On 28 September 2022, the high court granted the Municipality leave to appeal the judgment granted on 16 June 2022. The high court also ordered that the order given on 16 June 2022, should be put into effect and carried out while the appeal decision is pending. The Municipality exercised its automatic right of appeal under s 18(4) by filing an appeal to the full court against the execution order. On 10 November 2022, the full court rejected the s 18(4) appeal and issued an order allowing the main order to be implemented while the appeal decision is pending. On 22 November 2022, the Municipality filed a notice of appeal in the SCA, asserting that the phrase ‘next highest court’ in s 18(4) of the Act should be interpreted more boadly to include more than one court of appeal. Vresthena, on the other hand, contended that s 18(4) of the Act allows for only one appeal to the court immediately above the lower court, and therefore, the Municipality’s notice of appeal is irregular and as a result void. In addressing the issue on appeal, the SCA held that s 18(4) of the Act establishes an extraordinary provision that establishes a unique category of appeals, specifically designed to be utilised solely for orders made under s 18(3) of the Act. It further held that this provision carves out a specific and extraordinary avenue for appeals in exceptional circumstances, especially when it can be proved that irreparable harm would follow if the operation and execution of a decision is suspended. The SCA further reasoned that the language of s 18(4)(ii) of the Act is explicit and straightforward in that it states that a party who is aggrieved has an automatic right of appeal to the ‘next highest court’ and that the use of the word ‘an’ and ‘court’ in s 18(4)(ii) of the Act indicates a meaning in the singular rather than allowing for multiple appeals. The clear wording of the provision does not warrant a wider interpretation and does not conflict with constitutional principles. Consequently, the SCA reasoned that the remedy of reading down the section cannot be employed to endorse the Municipality’s interpretation and that it cannot be said that a court’s general appellate jurisdiction automatically extends to the appealability of all justiciable rights. In the result, the SCA concluded that the notice of appeal dated 22 November 2022 delivered by the Municipality is irregular and void and no proper appeal served before the SCA. Consequently, the matter was struck from the roll with costs, including the costs of two counsel where so employed. --------oOo--------

3043

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 20431/2014 In the matter between: CHARMAINE NAIDOO APPELLANT and MINISTER OF POLICE FIRST RESPONDENT T S MOLEFE SECOND RESPONDENT ISIAH TUANYANE MAMPEILE THIRD RESPONDENT IVAN PERUMAL FOURTH RESPONDENT LINDY KHAZI FIFTH RESPONDENT WOMEN’S LEGAL CENTRE TRUST INTERVENING AMICUS CURIAE Neutral citation: Naidoo v Minister of Police (20431/2014) [2015] ZASCA 152 (2 October 2015) Coram: Maya ADP, Lewis, Petse, Mbha and Mathopo JJA Heard: 31 August 2015 Delivered: 2 October 2015 Summary: Negligence ─ Duty of care ─ police conduct in breaching rights under the Domestic Violence Act 116 of 1998 actionable. Arrest ─ legality of ─ arrest without a warrant ─ person arrested whilst seeking assistance from the police under the Domestic Violence Act ─ arrest by police without warrant under s 40(1)(b) or (q) of the Criminal Procedure Act 51 of 1977 not absolving police from liability if requirements of the section not met. Damages ─ assault ─ appellant a victim of domestic violence assaulted by police while seeking assistance from them ─ appellant suffering secondary victimisation ─ that factor aggravating the contumelia element of the assault. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Local Division of the High Court, Johannesburg (Mbongwe AJ sitting as court of first instance): 1 The appeal is upheld. 2 The order of the court below is set aside and there is substituted therefor the following: „1 The first defendant is ordered to pay the following sums to the plaintiff; (a) the amount of R200 000 in respect of claim one; (b) the amount of R70 000 in respect of claim two; (c) the amount of R10 000 in respect of claim three. (2) The first defendant shall pay interest on the aforesaid amounts at the rate of 15,5 per cent per annum from the date of service of the summons to the date of payment. (3) No order as to costs is made.‟ _____________________________________________________________________ JUDGMENT ______________________________________________________________________ Petse JA (Maya ADP, Lewis, Mbha and Mathopo JJA concurring): Introduction [1] In the early evening of 12 April 2010 the appellant (Ms Charmaine Naidoo) was assaulted and injured by her former husband, Mr Charlton Naidoo, at their common home in Lenasia South, Johannesburg. She was rendered unconscious. The plaintiff‟s daughter, Ms Cindy Naidoo, solicited the assistance of the police and paramedics who responded at different times. The appellant was conveyed by ambulance to and admitted at Chris Hani Baragwanath Hospital where she received medical treatment overnight. The next day she was discharged from hospital. This incident was a manifestation of a long-standing marital conflict between the parties. [2] On Wednesday 14 April 2010 the appellant and her sister, Ms Roelene Vandeyar, went to the Lenasia South Police Station to lay a charge of assault against Naidoo under the Domestic Violence Act 116 of 1998. A police officer who attended to the appellant told her that she required a protection order from the magistrates‟ court before the police could assist her. In consequence, the appellant went to the magistrates‟ court. There she was advised that a protection order was not a pre- requisite for a charge being laid. She then returned to the police station for assistance but alas none was rendered. What followed thereafter was a dreadful series of traumatic, humiliating, dehumanising and flagrant violations of the appellant‟s right to dignity, freedom, security of her person and bodily integrity. Instead of being assisted, she was arrested, ostensibly pursuant to a charge of assault laid against her by Naidoo at the instigation of an Inspector Molefe, and detained overnight. The next day, when she was being taken to the Vereeniging Magistrates‟ Court, she was assaulted by a police officer who threw her into the rear of a police van. She suffered physical injury comprising soft tissue injuries in the right arm and right leg with severe swelling. In court, the charges against her were withdrawn by the prosecutor. [3] The appellant instituted a delictual action in the Gauteng Local Division of the High Court, Johannesburg against the Minister of Police (the Minister) and certain members of the South African Police Service (SAPS) for damages. She claimed that members of the SAPS had wrongfully and negligently failed to comply with the legal duties they owed to her in terms of the Domestic Violence Act 116 of 1998 (the Act), the Regulations and National Instructions issued in terms of the Act; that they were guilty of unlawful arrest and detention and assault; that they had breached the constitutional duty owed to her by them; and that they breached a statutory duty in consequence of which she again allegedly became a victim of domestic violence on 2 September 2010. [4] It was common cause on the pleadings that at all times material to the appellant‟s claims the members of the SAPS, in their dealings with the appellant, were acting in the course and within the scope of their employment as servants of the Minister and that the Minister was vicariously liable for their wrongful actions. The trial came before Mbongwe AJ who, at its conclusion, dismissed the appellant‟s action with costs. [5] In dismissing the appellant‟s claims under the various heads the court below held, inter alia, that: (a) the Minister could not be held liable because the members of the SAPS who were said to have breached the legal duty allegedly owed to the appellant under the Act were not cited as defendants and in consequence „the court [could] not entertain a claim unless all the parties who stand to be affected by an order the court may give have been brought before court‟; (b) as the third [respondent] had died before trial, it was incumbent upon the appellant to substitute his estate or its representative as a party in the action; and (c) the arrest and detention of the appellant was lawful for there had been a complaint of domestic violence laid against the appellant by her former husband. Mbongwe AJ subsequently dismissed the appellant‟s application for leave to appeal which was granted by this court on petition to it. The facts [6] It is necessary to set out the facts as they appear from the evidence led at the trial in some detail. During the evening of 12 April 2010 the appellant was severely assaulted by Naidoo, from whom she is now divorced. As a result of the scuffle that had ensued, he pushed the appellant causing her to fall to the kitchen floor, hitting her head against the door. She suffered a concussion and when she regained her consciousness she was surrounded by paramedics who stabilised her and thereafter conveyed her to hospital for treatment. She was admitted to hospital, treated overnight and discharged the next day. [7] On 14 April 2010 she went to the Lenasia South Police Station accompanied by Vandeyar, to report the assault and lay a criminal charge of domestic violence against Naidoo. There, as explained above, she was attended to by an unidentified member of the SAPS who informed her that before she could lay a charge of domestic violence it was necessary for her to first apply for and obtain a protection order under the Act which she could do at the Lenasia Magistrates‟ Court. She then went to the magistrates‟ court as advised, to apply for a protection order. She was attended by a certain Ms Buthelezi who informed her that a protection order was not a prerequisite for her to lay a criminal charge under the Act. She was also told that she could, if so inclined, apply for a protection order once she had laid a charge. [8] The appellant returned to the charge office and reported to the same officer who had attended to her in the first instance as to what Buthelezi had advised her. That officer then approached Inspector Molefe, the second respondent, and requested him to assist the appellant. Molefe asked her for Naidoo‟s telephone numbers which she furnished. Molefe then telephoned Naidoo and requested him to report to the charge office, and then advised the appellant to wait until he arrived. When Naidoo ultimately arrived Molefe first spoke to him on the side, after which he told Naidoo and the appellant to discuss the matter between themselves to see if they could resolve their dispute amicably. This failed. [9] The appellant reported to Molefe that their negotiations had come to nought and that she was consequently intent on pursuing the charge against Naidoo. Molefe advised her that Naidoo would similarly lay a charge against her and if this were to happen she would also be liable to be arrested. Molefe then asked both the appellant and Naidoo to write their respective statements. Once they had done so, they were both arrested, charged and detained in separate police cells at the police station. [10] The following morning (15 April 2010) the third respondent, Mr Isiah Mampeile, then a member of the SAPS, since deceased, informed the appellant in her police cell that he had come to take her to court. As she was being escorted to a police van she asked Mampeile to allow her a moment in order to speak to the fourth respondent, Colonel Ivan Perumal. But Mampeile would have none of that and sternly ordered her to board the police van. Mampeile then forcibly flung her into the rear of the police van. As a result of this she was traumatised and suffered pain and swelling in the right side of her body. She then just lay tearfully in the rear of the police van. At this stage Perumal appeared and inquired as to what had happened. She made a report to Perumal who directed that she alight from the rear of the van and sit in the cab. The police van drove to the Vereeniging Magistrate‟s Court where the charge against her was withdrawn. She was then released from custody. [11] Upon her release, the appellant obtained a medical examination report form (referred to in the evidence as J88) from the Lenasia Charge Office and consulted a Dr Munchi in relation to her assault by Mampeile. The doctor recorded in his medical report that the appellant had suffered soft tissue injuries in her right arm and right leg with severe swelling. On 16 April 2010 the appellant consulted Ms Lisa Vetten, working for a non-governmental organisation called Tshwaranang Legal Advocacy Centre that rendered free counselling to abused women and children. She had three sessions with a social worker. The social worker subsequently referred the appellant to a counselling psychologist, Mr Charl Louw, who was in private practice in Johannesburg at the time but also did consulting work for a number of governmental and non-governmental organisations. Louw had emigrated to New Zealand by the time the matter came to trial. For this reason an application was made during the trial to allow Louw to testify via video link which the court below granted. [12] Louw prepared a psychological impact report which was admitted into evidence at the trial by agreement between the parties. In essence this report deals with the following: (a) the psychological assessment of the appellant; (b) clinical impressions formed by Louw; (c) the impact of the trauma on the appellant; and (d) his conclusion and recommendations. Like the social worker, Louw had three separate sessions of one hour each with the appellant. Moreover, in his report, which was confirmed in his evidence at the trial and which was not seriously challenged by the respondents, Louw expressed the opinion that because of her experience with the police both on 14 and 15 April 2010 the appellant had difficulty in overcoming her ordeal and was in fact suffering from chronic Post Traumatic Stress Disorder. The appellant told the counselling psychologist that whenever she recalled the incidents she would experience flashbacks that emotionally overwhelmed her. She was still emotionally distressed and this left her irritable and at times depressed. And Louw opined that the appellant‟s traumatic experiences, whilst not entirely discounting the impact of the initial assault by Naidoo, were causally linked to the experiences she had been subjected to at the hands of the police. Louw attributed this to the fact that the appellant‟s anguish was intensified because the police had, by their conduct, exacerbated her sense of vulnerability. [13] The second and fifth respondents also testified at the trial. But for present purposes only the evidence of Molefe is material. He testified that on 14 April 2010 he was on duty at the Lenasia Charge Office and attended to the appellant and Naidoo when they laid charges of domestic violence against each other. After Molefe had explained to them (wrongly, as I shall show) that he was required to arrest them both, he arrested and detained them in separate cells. On 15 April 2010 they were both taken to the Vereeniging Magistrates‟ Court but the charges were withdrawn by the public prosecutor, Mr Ludick, apparently for further investigation. However, nothing came of the further investigation for the appellant‟s daughter, Cindy, declined to make a statement to him. Later, both the appellant and Naidoo withdrew the charges that they had laid against each other and signed withdrawal statements confirming that they had no desire to pursue their respective cases against each other. When asked how many cases of domestic violence he had dealt with in his police career, Molefe said it was „quite a lot‟ although he could not give an estimation of the number. He also stated that he was „not quite sure‟ if he knew about the National Instructions 7 of 1999 issued by the National Police Commissioner. I shall elaborate on these national instructions later. And yet he confirmed that if the appellant was told that she could not lay a charge without a protection order, as she had testified, that advice was wrong. When pressed to explain why he thought it necessary to arrest the appellant if the charge laid against her was common assault, Molefe could offer no plausible answer, about which more will be said later. [14] On 26 January 2015 this court granted the Women‟s Legal Centre Trust (the Trust) leave to intervene as an amicus curiae and to make written submissions. At the hearing of the appeal the Trust was permitted to address the court. [15] It bears mentioning at the outset that at the hearing of the appeal counsel for the appellant informed us that the appellant was no longer persisting in claims 4, 5 and 6 on appeal. Consequently only claims 1, 2 and 3 are the subject of this appeal. [16] I now turn to consider the legal requirements for delictual claims of the nature in issue in this appeal. As I have already stated, the appellant instituted a delictual claim in which she sought to hold the Minister vicariously liable for the alleged wrongful acts of the members of the SAPS in their dealings with her on 14 and 15 April 2010. [17] It is trite that acts causing physical and emotional harm to a plaintiff are wrongful. The claims made by the appellants were based on a series of acts and breaches of statutory duty. [18] The Constitutional Court had occasion to state in S v Baloyi (Minister of Justice & another Intervening) [1999] ZACC 195; 2000 (2) SA 425 (CC) para 13 that freedom from violence is fundamental to the equal enjoyment of human rights and freedom. It went on to state ─ an observation that is pertinent in the present context ─ that the sting of domestic violence lies in its „hidden, repetitive character and its immeasurable ripple effect on society and in particular family life‟. The Constitutional Court also stressed that domestic violence reinforces patriarchal domination given its „systemic, pervasive and overwhelmingly gender-specific‟ nature (para 12). And that its harrowing effects are made all the more devastating because of „the ineffectiveness of the criminal justice system in addressing family violence‟ which in turn „intensifies the subordination and helplessness of the victims‟ (para 12). [19] Mr Wesley, who appeared with Ms Kazee for the appellant, contended that the court below erred in rejecting the evidence of the appellant and that had it considered it against the relevant constitutional and statutory backdrop it would have been driven to a different conclusion. Mr Wesley submitted that the court below gave a cursory summation of the evidence which manifests a fundamental misconception on its part. [20] At this juncture it is necessary to remind oneself that the appellant approached the police to seek assistance under the Act, its Regulations and the police standing orders as encapsulated in the National Instruction 7 of 19991 issued by the National Commissioner of Police pursuant to s 18(3) of the Act. In Minister of Safety and Security v Venter & others [2011] ZASCA 42; 2011 (2) SACR 67 (SCA) this court, recognising the extensive nature of the rights and remedies accorded victims of domestic violence under the Act, emphasised (para 19) the manifest object of the Act spelt out in the preamble which is to „afford the victims of domestic violence the maximum protection from domestic abuse that the law can provide.‟ [21] Section 2 of the Act provides that: „2 Duty to assist and inform complainant of rights Any member of the South African Police Service must, at the scene of an incident of domestic violence or as soon thereafter as is reasonably possible, or when the incident of domestic violence is reported─ (a) render such assistance to the complainant as may be required in the circumstances, including assisting or making arrangements for the complainant to find a suitable shelter and to obtain medical treatment; (b) if it is reasonably possible to do so, hand a notice containing information as prescribed to the complainant in the official language of the complainant's choice; and (c) if it is reasonably possible to do so, explain to the complainant the content of such notice in the prescribed manner, including the remedies at his or her disposal in terms of this Act and the right to lodge a criminal complaint, if applicable.‟ [22] Equally important are the provisions of paragraph 7(1) of the National Instruction that impose a duty on members of the SAPS to render assistance to victims of domestic 1 Promulgated in GN207, 28581, 3 March 2006. In essence National Instruction 7 of 1999 contains a host of comprehensive guidelines having force of law which prescribes to members of the SAPS how they must deal with domestic violence complaints and what they may or may not do. violence by receiving and investigating the complaint and which further decrees that they may not shirk this responsibility by directing the complainant to seek other means2 as Molefe had sought to do. Some of the acts complained of by the appellant were plainly deliberate. Others, such as the giving of incorrect advice and failing to comply with duties imposed on members of the SAPS, were not. Thus the question arises as to whether they were negligent and in determining that one must ask whether a reasonable person in the position of the members of the SAPS would have taken precautions to guard against the harm suffered by the appellant. The answer must be in the affirmative regard being had to: (a) the nature of the appellant‟s complaint; (b) the wide ranging remedies accorded a victim of domestic violence by the Act; (c) the comprehensive and explicit directives given to members of the SAPS both in the Regulations promulgated under s 18(3) of the Act and the National Instructions 7 issued by the National Commissioner of Police all of which proclaim a single-minded objective which is to afford victims of domestic violence the maximum protection from domestic abuse that the law can provide.3 Negligence [23] In Kruger v Coetzee 1966 (2) SA 428 (A) at 430 E-H this court stated the test for negligence as follows: „For the purposes of liability culpa arises if ─ (a) a diligens paterfamilias in the position of the defendant ─ (i) would forsee the reasonable possibility of his conduct injuring another in his person or property and causing him patrimonial loss; and (ii) would take reasonable steps to guard against such occurrence; and (b) the defendant has failed to take such steps. 2 Paragraph 7 (1) reads thus: „In terms of the Domestic Violence Act a complainant may approach the Service for assistance at any time, irrespective of when or where the incident took place. Where a criminal charge is laid by the complainant, it is the responsibility of the member receiving the complaint to open a docket and have it registered for investigation and the member may not avoid doing so by directing the complaint to counselling or conciliation services.‟ 3 See in this regard the Preamble to the Act which recognises that domestic violence is a serious social evil, prevalent in the country, affecting the most vulnerable member of society and that current remedies available having proved ineffective to deal with this scourge. And its expressed purpose is to, inter alia, provide measures to ensure that the relevant organs of state give full effect to the provisions of the Act. . . . Whether a diligens paterfamilias in the position of the person concerned would take any guarding steps at all and, if so, what steps would be reasonable, must always depend upon the particular circumstances of each case. No hard and fast basis can be laid down.‟ [24] In determining the question of negligence one must of course pay heed to the warning of Nicholas AJA in S v Bochris Investments (Pty) Ltd & another [1987] ZASCA 140; 1988 (1) SA 861 (A) at 866I-867C that: „In considering this question [reasonable forseability], one must guard against what Williamson JA called “insidious subconscious influence of ex post facto knowledge” (in S v Mini 1963 (3) SA 188 (A) at E-F). Negligence is not established by showing merely that the occurrence happened (unless the case is one where res ipsa loquitur), or by showing after it happened how it could have been prevented. The diligens paterfamilias does not have “prophetic foresight”. (S v Burger [1975 (4) SA 877 (A)] at 879D). In Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound) 1961 AC 388 (PC) ([1961] All ER 104) Viscount Simonds said at 424 (AC) and at 414G-H (in All ER): “After the event, even a fool is wise. But it is not the hindsight of a fool; it is the foresight of the reasonable man which alone can determine liability.”‟ See also in this regard: Sea Harvest Corporation (Pty) Ltd & another v Duncan Dock Cold Storage (Pty) Ltd & another [1999] ZASCA 87; 2000 (1) SA 827 (SCA) para 27. [25] It is trite that the question whether the precautions taken to guard against foreseeable harm were reasonable or not is a factual one. This was explained by Scott JA in Cape Metropolitan Council v Graham 2001 (1) SA 1197 (SCA) as follows (para 7): „Turning to the question of negligence, it is now well established that whether in any particular case the precautions taken to guard against foreseeable harm can be regarded as reasonable or not depends on a consideration of all the relevant circumstances and involves a value judgment which is to be made by balancing various competing considerations. These would ordinarily be: “(a) the degree or extent of the risk created by the actor's conduct; (b) the gravity of the possible consequences if the risk of harm materialises; (c) the utility of the actor's conduct; and (d) the burden of eliminating the risk of harm'. . . . If a reasonable person in the position of the defendant would have done no more than was actually done, there is, of course, no negligence.”‟ (Citations omitted) On the facts of this case the question to be answered is whether a reasonable person in the position of the members of the SAPS would have taken precautions to guard against the harm suffered by the appellant. Put differently, the question is whether in the light of the peculiar facts of this case the conduct of the police fell short of the conduct of the notional reasonable person. (See in this regard Sea Harvest Corporation para 21.) Undoubtedly, the answer must be in the affirmative. Factual and legal causation [26] In Minister of Safety and Security & another v Carmichele [2003] ZASCA 117 2004 (3) SA 305 (SCA) this court reaffirmed a well-established principle that causation has two elements. In International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (AD) at 700E-I Corbett CJ explained these elements as follows: „The enquiry as to factual causation is generally conducted by applying the so-called “but-for” test, which is designed to determine whether a postulated cause can be identified as a causa sine qua non of the loss in question. In order to apply this test one must make a hypothetical enquiry as to what probably would have happened but for the wrongful conduct of the defendant. This enquiry may involve the mental elimination of the wrongful conduct and the substitution of a hypothetical course of lawful conduct and the posing of the question as to whether upon such an hypothesis plaintiff‟s loss would have ensued or not. If it would in any event have ensued, then the wrongful conduct was not a cause of the plaintiff‟s loss; aliter, if it would not so have ensued. If the wrongful act is shown in this way not to be a causa sine qua non of the loss suffered, then no legal liability can arise. On the other hand, demonstration that the wrongful act was a causa sine qua non of the loss does not necessarily result in legal liability. The second enquiry then arises, viz whether the wrongful act is linked sufficiently closely or directly to the loss for legal liability to ensue or whether, as it is said, the loss is too remote. This is basically a juridical problem in the solution of which considerations of policy may play a part. This is sometimes called “legal causation”.‟ (Citations omitted.) Claim one [27] Counsel for the amicus referred us to a number of international and regional instruments whose purpose is to eradicate all forms of gender-based discrimination that have the effect of impairing the enjoyment by women of fundamental rights and freedom. It is internationally accepted that states that subscribed to those instruments must take all measures necessary to provide effective protection to women against all forms of violence. The Convention on the Elimination of All Forms of Discrimination Against Women4 and the Protocol to the African Charter on Human Peoples‟ Rights on the Rights of Women in Africa,5 amongst others, have as their particular focus the protection of the right to human dignity and the protection of women against all forms of violence that member states are obliged to enforce by legislative measures. Both the Constitutional Court and this court have reaffirmed the principle that the State is obliged under international law to protect women against violent crime and gender discrimination inherent in violence against women.6 [28] Taking cognisance of the international and regional initiatives relating to the protection of women against all gender-based discrimination, South Africa enacted the Act. One of the objects of the Act in the preamble declares that: „AND HAVING REGARD to the Constitution of South Africa, and in particular, the right to equality and to freedom and security of the person; and the international commitments and obligations of the State towards ending violence against women and children, including obligations under the United Nations Conventions on the Elimination of all Forms of Discrimination Against Women and the Rights of the Child; . . .‟ [29] Counsel for the appellant argued that the respondents violated the appellant‟s right to freedom and security of her person and treated her in a cruel and degrading way. Consequently, concluded the argument, the appellant was subjected to secondary victimisation which intensified and prolonged her trauma. And such conduct was in breach of their statutory obligations both under the Act, the Regulations and paragraph 7(1) of the National Instruction7 which, amongst others, impose a duty on members of the SAPS to render assistance to victims of domestic violence. 4 Ratified by South Africa on 15 December 1995. 5 Ratified by South Africa on 17 December 2004. 6See, eg, Baloyi (para 13); Carmichele (para 62) and Van Eeden (para 15). 7 Footnote 1. [30] Counsel for the appellant readily accepted that although the conduct of Molefe constituted a breach of his constitutional and statutory duties owed to the appellant in a most fundamental way, that conduct was not pertinently relied upon as underpinning this part of the appellant‟s action. It was, however, contended that the evidence led at the trial to which the respondents acquiesced, relating to the conduct of Molefe, meant that the court below was not precluded from considering such evidence. Of course, it is trite that litigants are obliged to allege in their pleadings all the material facts on which they rely for their cause of action. Ordinarily it is impermissible for a party to plead a particular cause and at trial seek to establish a different case. Nor is it permissible for a trial court to base its decision on something outside the parameters of the pleadings.8 [31] But that practice, hallowed though it is, is not cast in stone. Where the issue has been fully canvassed in evidence and will not occasion prejudice to the opponent a party may be allowed to rely on an issue not covered in the pleadings. In South British Insurance Co Ltd v Unicorn Shipping Lines (Pty) Ltd 1976 (1) SA 708 (A) this court put it thus (at 714G): „However, the absence of such an averment in the pleadings would not necessarily be fatal if the point was fully canvassed in evidence. This means fully canvassed by both sides in the sense that the court was expected to pronounce upon it as an issue.‟9 [32] On his own version, Molefe did not assist the appellant immediately when she sought assistance upon returning from the magistrates‟ court. He caused her to wait because he had asked Naidoo to come to the police station first. When Naidoo eventually arrived he suggested to the parties that they should rather endeavour to reconcile. When the appellant informed him that she was still determined to pursue her charge against Naidoo, Molefe suggested that he lay a counter-charge against the appellant pointing out to the latter that she also faced arrest. 8 Imprefed (Pty) Ltd v National Transport Commission [1993] ZASCA 36; 1993 (3) SA 94 (A) at 107A-E. 9 See also Minister of Safety and Security v Slabbert [2009] ZASCA 163; [2010] 2 All SA 474 (SCA) paras 11-12. [33] Counsel for the respondents argued first that the appellant was assisted by the police to lay her charge, albeit belatedly, after Naidoo had arrived at the police station and had himself also laid a counter-charge against the appellant. Second, it was submitted that if the appellant had established that the members of the SAPS had breached their legal duty as alleged, she was not without a remedy and that her recourse was to require that the police invoke s 18(4)(a) of the Act. Section 18(4)(a) provides, inter alia, that failure by a member of the SAPS to comply with an obligation imposed in terms of the Act or the national instructions issued by the Commissioner under subsection (3) constitutes misconduct. These submissions are without merit. The first submission is belied by the evidence led at the trial which has already been set out above. The second submission based on s 18(4)(a) of the Act is similarly misplaced. That section, as already explained above, does not purport to provide for delictual liability flowing from a breach of a legal duty imposed on members of the SAPS to take reasonable positive steps to prevent harm to persons in the position of the appellant. Accordingly, I am satisfied that what the appellant experienced on 14 April 2010 at the hands of members of SAPS constituted a breach of the legal duty that those members owed to her. Thus the emotional harm, humiliation and trauma that the appellant was subjected to is the antithesis of what the Act, the Regulations and the National Instruction ─ with their extensive remedies ─ seek to accomplish. Did appellant suffer psychological harm? [34] In support of this part of her claim the appellant called Louw, a counselling psychologist, as an expert witness. As I have stated before, the expert report of Louw was admitted by consent and its contents and his evidence at the trial were not seriously challenged by the respondents. After interviewing the appellant on three different occasions Louw set out to ascertain whether the appellant exhibited any symptoms of Post-Traumatic Stress Disorder. For this purpose he employed two psychometric methods. First, he used the Impact of Event Scale-Revised (IES-R) which is designed to assess current subjective distress for any specific life event. Second, he used the DSM-IV Criteria for Post-Traumatic Stress Disorder. According to Louw the results of the IES-R assessment revealed that the appellant, inter alia: (a) re- experienced the traumatic event „at a clinically significant level‟; (b) attempted to avoid being reminded about the traumatic event to a clinically significant level; and (c) is „. . . exposed to feelings of psychological and physical hyperarousal and that she feels irritable, struggles to concentrate, has an exaggerated startle response and feels restless as a result of the trauma‟. [35] The diagnostic results of the DSM-IV are set out in Louw‟s report from which he concluded that the incidents that befell the appellant „continue[d] to have a significant impact‟ on her and that „she is affected on various social, interpersonal, emotional and psychological areas of functioning‟ which is indicative of the severity of the incident. And that the information elicited from the appellant „is consistent with a person suffering from chronic Post Traumatic Stress Disorder‟, directly attributable to the incidents. [36] It was contended on behalf of the respondents that because the appellant was already traumatised as a result of the domestic violence perpetrated by Naidoo before she went to the police it could not be asserted with reasonable certainty that her psychological condition was caused by the incidents that she experienced at the police station. In my view, this aspect was adequately dealt with by Louw in his evidence at the trial in response to what was put to him. It was put to Louw under cross-examination as to whether he had investigated the trauma suffered by the appellant following the physical abuse perpetrated by Naidoo. In response, Louw said that he had asked the appellant specifically about this and that he had focussed, in his assessment, on that very aspect „to gain an insight into how she understands that trauma‟. And his assessment was that her traumatic experiences „link[ed] specifically to experiences she had at the police station‟. This was likewise taken up by the trial court which sought elucidation from Louw as to „how he would draw the line in [his] assessment and say these effects are as a result of the abuse by [Naidoo] and these . . . are as a result of the conduct of the police…‟ Again Louw explained that given his training and expertise as a clinician he was able, from the sessions he had with the appellant and whilst acknowledging that the impact of the domestic violence could not be entirely discounted, to conclude that the appellant could clearly relate to her experiences at the police station as harrowing. Moreover there has been no suggestion from the evidence that the appellant was malingering. [37] In light of the aforegoing I am satisfied that the appellant has succeeded in establishing her first claim against the respondents. Claim two [38] The appellant‟s second cause of action, as will be recalled, was that her arrest and detention were unlawful. The Minister resisted this claim and invoked s 40(1)(b) and (q) of the Criminal Procedure Act 51 of 1977 to justify the arrest. Section 40 (1)(b) and (q) of the CPA provide that a peace officer (such as Molefe) may without warrant arrest any person ─ „(b) whom he reasonably suspects of having committed an offence referred to in Schedule 1 . . .; . . . (q) who is reasonably suspected of having committed an act of domestic violence as contemplated in section 1 of the Domestic Violence Act, 1998, which constitutes an offence of which violence is an element.‟ (My emphasis.) [39] The Bill of Rights in the Constitution guarantees the right of security and freedom of the person, including the right, in the words of s 12(1)(a) of the Constitution, „not to be deprived of freedom arbitrarily or without just cause‟. In Zealand v Minister of Justice and Constitutional Development & another [2008] ZACC 3; 2008 (4) SA 458 (CC) para 25, the Constitutional Court said the following: „This is not something new in our law. It has long been firmly established in our common law that every interference with physical liberty is prima facie unlawful. Thus, once the claimant establishes that an interference has occurred, the burden falls upon the person causing that interference to establish a ground for justification. In Minister van Wet en Orde v Matshoba [1989] ZASCA 129 (A); 1990 (1) SA 280, the Supreme Court of Appeal again affirmed that principle, and then went on to consider exactly what must be averred by an applicant complaining of unlawful detention. In the absence of any significant South African authority, Grosskopf JA found the law concerning the rei vindicatio a useful analogy. The simple averment of the plaintiff‟s ownership and the fact that his or her property is held by the defendant was sufficient in such a case. This led that court to conclude that, since the common-law right to personal freedom was far more fundamental than ownership, it must be sufficient for a plaintiff who is in detention simply to plead that he or she is being held by the defendant. The onus of justifying the detention then rests on the defendant. There can be no doubt that this reasoning applies with equal, if not greater, force under the Constitution.‟10 [40] And, as was explained by Van Heerden JA in Duncan v Minister of Law and Order 1986 (2) SA 805 (A) at 818G-H, once the jurisdictional requirements of the section are satisfied, the peace officer may, in the exercise of his discretion, invoke the power to arrest permitted by the law. However, the discretion conferred by s 40(1) of the CPA must be properly exercised, that is, exercised in good faith, rationally and not arbitrarily. If not, reliance on s 40(1) will not avail the peace officer. [41] It is now settled that the purpose of the arrest is to bring the arrestee before the court for the court to determine whether the arrestee ought to be detained further, for example, pending further investigations or trial. (See Minister of Safety and Security v Sekhotho & another [2010] ZASCA 141; 2011 (5) SA 367 paras 30-31.) Thus it goes without saying that an arrest will be irrational and consequently unlawful if the arrestor exercised his discretion to arrest for a purpose not contemplated by law. This brings me to the next inquiry, that is, whether the respondents established at the trial that Molefe exercised the discretion to arrest the appellant in a proper manner.11 On this aspect the evidence of Molefe is critical. Under cross-examination he said: „It is domestic violence. I cannot allow the two people to go back under the same roof again. I do not know what is going to happen there. So it is better if we separate them until then, they will go to court and court decide. . . . Because sometimes court say one must leave the house and go stay, look for a place somewhere. But that should be decided by court, not me.‟ 10 See also: Minister of Law and Order & others v Hurley & another [1986] ZASCA 53; 1986 (3) SA 568 (A) at 589E-F which held that: „An arrest constitutes an interference with the liberty of the individual concerned, and it therefore seems fair and just to require that the person who arrested or caused the arrest of another person should bear the onus of proving that his action was justified in law.‟ 11 Footnote 11 at 818H-J. [42] In my view this piece of evidence ineluctably leads to the conclusion that Molefe either exercised his discretion to arrest arbitrarily or for an improper purpose, that is, to separate the appellant from Naidoo until she was brought to court the following day. This is all the more so if regard is had to the fact that it was: (a) only at his instance that Naidoo laid a counter-charge of domestic violence against the appellant; and (b) he had, contrary to the prescripts of the Act, the Regulations and the National Instructions, insidiously advised the appellant to settle the matter with Naidoo under threat of arrest in the event that the matter was not settled. Accordingly, in the light of the foregoing it cannot be said that Molefe, in exercising his discretion to arrest as he saw fit, „stayed within the bounds of rationality‟. Moreover, on his own account, Molefe considered himself obliged to arrest the appellant because a docket of domestic violence had been opened against her and that she was therefore liable to be arrested as a matter of course. The court below agreed and held that „it was standard practice‟ that an arrest had to follow as a matter of course. No consideration was given to the crucial question whether the charge of common assault laid by Naidoo against the appellant was an offence referred to in Schedule I so as to satisfy one of the jurisdictional facts required for the proper exercise of the power under s 40(1)(b) of the CPA. And in any event the ostensible charge laid against the appellant by Naidoo was, on the evidence, instigated by Molefe himself as a ruse to cajole her to withdraw the charge that she had laid against him. [43] As to s 40(1)(q) of the CPA the amicus argued that it too does not avail the respondents even had it been relied upon by them. The gravamen of the amicus’ submission was that there was no evidence led at the trial to establish that Molefe had entertained a reasonable suspicion that the appellant had committed an act of domestic violence constituting an offence of which violence is an element. Consequently, concluded the argument, it could not be asserted that Molefe had exercised any discretion he might have had in good faith, rationally and not arbitrarily. In my view, it is not open to the respondents to invoke s 40(1)(q) of the CPA for the same reasons set out above in relation to s 40(1)(b). And there was no serious suggestion, still less evidence, that the appellant had committed an act of domestic violence which constitutes an offence of which violence is an element. Claim three [44] The appellant‟s third cause of action was the allegation in her particulars of claim that on 15 April 2010 she was assaulted by a member of the SAPS. But, as I have already stated, the member concerned had died by the time the matter came to trial. The court below held that this claim could not be entertained and, in consequence, it was similarly dismissed. In so doing the court below reasoned thus: „The aforementioned principle and consequence of a failure to bring an interested party before the court applies equally to the plaintiff‟s claim 3. The plaintiff was advised during a pre trial conference that the 3rd defendant had since passed on. Since the plaintiff‟s claim is for monetary compensation, it was necessary for the plaintiff to reign in the estate of the deceased or the representative thereof as a party to the proceedings in the stead of the deceased for, any order that may be granted in favour of the plaintiff will impact on the deceased‟s estate. The plaintiff failed to reign in the estate and, in the result this claim must fail.‟ [45] The court below elaborated upon this reasoning in its judgment refusing leave to appeal and stated that the withdrawal statement signed by the appellant (which was common cause) exonerated the [respondents]. In this court the reasoning of the court below was criticised by the appellant‟s counsel. As to the so-called failure by the appellant to substitute the estate of the deceased police officer, it was contended that the fact that the respondents had admitted in their plea that the Minister‟s servant who assaulted the appellant was acting in the course and scope of his employment was tantamount to an admission that the Minister was vicariously liable for the wrongful conduct of the member concerned. As to the withdrawal statement, it was argued that on its terms it amounted to no more than a withdrawal of the charge that the appellant had laid against Naidoo under the Act. It was not and did not purport to be a waiver by the appellant of her rights to hold the Minister delictually liable for the wrongful conduct of the Minister‟s servants. [46] Counsel for the Minister accepted in this court that the Minister is vicariously liable for the wrongful acts of his servants. But he persisted in his support of the reasoning of the court below in relation to the withdrawal statement. I am satisfied, however, that the appellant‟s contention must prevail and that the respondents‟ counter is without merit and must be rejected for the following reasons. First, when the appellant signed the statement she had had no discussion with Molefe that she was contemplating instituting action for delictual damages against the respondents. Second, when the charge against the appellant was withdrawn by the prosecutor on 15 April 2010 this was to allow Molefe, as investigating officer, time to conduct further investigations. Hence Molefe sought a statement from the appellant‟s daughter who declined to furnish one. Third, once Molefe accepted that there was no prospect of obtaining a statement from the appellant‟s daughter, he turned to the appellant who told him that she and Naidoo had decided to withdraw their respective charges against each other. Fourth, is the text of the statement itself. What was withdrawn was „the case against the accused‟. It cannot reasonably be suggested that the respondents are the accused referred to therein for the appellant had laid no charge against them. Nor was Molefe investigating any charge against the respondents. How it was then thought by the court below that the withdrawal statement was a waiver of the appellant‟s rights to claim delictual damages against the respondents is difficult to fathom. Quantum [47] This brings me to the issue of quantum. The appellant claimed R200 000 for the breach of the legal duty owed to her by the members of the SAPS, R70 000 for her unlawful arrest and detention and R10 000 for assault. It was argued on behalf of the appellant that these amounts are both fair and reasonable when viewed against past awards in comparable cases. On the other hand counsel for the respondents submitted that these amounts are excessive and call for moderation. Counsel submitted that this court should apply apportionment so as to ameliorate the respondents‟ situation. But the difficulty confronting the respondents on this score is that apportionment was neither pleaded nor canvassed at the trial. It was also not even foreshadowed in the respondents‟ heads of argument.12 In any event I fail to see how it could conceivably be said that the appellant was contributorily negligent in relation to the damages suffered by her on the facts of this case. [48] It should, however, be emphasised that the facts of this case need to be considered in their entirety. Whilst it is permissible to have regard to past awards in comparable cases the court must take cognisance of the fact that few cases are directly comparable. And, as Nugent JA observed in Minister of Safety and Security v Seymour 2006 (6) SA 320 (SCA), „money can never be more than a crude solatium for the deprivation‟ of liberty. [49] An examination of the earlier cases awarding damages of the nature in issue in this case reveals that our courts have consistently placed a high premium on personal liberty, the infringement of rights to dignity and the right to freedom and security of the person. And where these rights have been gratuitously undermined, as has happened in this case, an award of aggravated damages (as opposed to punitive damages that are not allowed) may be justifiable.13 References have already been made to the appellant‟s traumatic experiences as a consequence of the egregious conduct of the members of the SAPS and these need not be repeated. Suffice it to say that, in my view, the description of the appellant‟s experiences by Louw is apt. He said that by not assisting the appellant the police „exacerbated her sense of vulnerability‟. Consequently, and taking into account all the circumstances, the amounts claimed under the three heads in issue in this appeal are, in my view, appropriate. Conduct of the trial [50] Before concluding, it is unfortunately necessary to comment on what I consider to be the unacceptable manner in which the learned judge conducted the trial. There are several instances that demonstrably show the frequency with which the appellant‟s legal 12 See, eg, Thompson v South Africa Broadcasting Corporation [2001] ZASCA 7; 2001 (3) SA 746 (SCA) para 7 where it was held that the function of oral argument, especially in a court of appeal is supplementary to the written argument. 13 Fose v Minister of Safety and Security 1997 (3) SA 786 (CC) paras 62 and 83. representative was hampered in her presentation of the appellant‟s case in the court below. On occasions too numerous to detail in this judgment, the legal representative was unduly denied the opportunity to deal with critical issues pertinent to the appellant‟s case. The legal representative was, inter alia, precluded from eliciting evidence from the appellant concerning: (a) what her daughter and sister had told her even though the court below had been informed that they would be called as witnesses, as indeed they were; and (b) the things that the appellant had discussed with Perumal concerning her experiences with the police. The learned trial judge disallowed these and other related questions because he wrongly perceived that the evidence that the appellant sought to give would be hearsay and thus inadmissible. [51] The disallowance of such evidence was a manifestation of the fundamental misconception on the part of the learned judge as to what constitutes hearsay evidence. He was seemingly oblivious to the existence of the Law of Evidence Amendment Act 45 of 1988 and even most significantly and troubling the import of s 3(1)(b) and s 3(3) thereof both of which provide for the provisional admission of hearsay evidence if the person upon whose credibility the probative value of such evidence depends, will testify at such proceedings.14 Thus the appellant ought to have been permitted to proffer such evidence and it was wrong of the learned judge to impose a blanket embargo, as he had done, on such evidence. [52] Even more disconcerting were the numerous unwarranted interruptions by the learned judge when he wrongly prevented or restricted, at critical stages of the trial, the appellant‟s legal representative when she led or cross-examined witnesses. To 14 Section 3, in material parts, provides as follows: „Hearsay evidence (1) Subject to the provisions of any other law, hearsay evidence shall not be admitted as evidence at criminal or civil proceedings, unless ─ . . . (b) the person upon whose credibility the probative value of such evidence depends, himself testifies at such proceedings; or . . . (3) Hearsay evidence may be provisionally admitted in terms of subsection 1(6) if the court is informed that the person upon whose credibility the probative value of such evidence depends, will himself testify in such proceedings: Provided that if such person does not later testify in such proceedings, the hearsay evidence shall be left out of account. . .‟ compound matters, some of the interventions bordered on discourtesy and cynicism towards the witnesses, and counsel were not spared either. In Distillers Korporasie (SA) Bpk v Kotze 1956 (1) SA 357 (A) at 361A-H this court considered the question whether disallowing legitimate questions sought to be put to a witness by cross-examining counsel is an irregularity. This court answered that question thus: „The first question to be considered was whether there had been an irregularity. The answer could not be in doubt. The disallowance of proper questions sought to be put to a witness by cross-examining counsel is an irregularity which entitles the party represented by the cross- examiner to relief from a Higher Court, unless that Court is satisfied that the irregularity did not prejudice him.‟ (Citations omitted.) Although these remarks were made in relation to cross-examination, by parity of reasoning, they apply with equal force to examination-in-chief. [53] The impartial adjudication of disputes which come before the courts is the cornerstone of our legal and judicial system. This requires judicial officers to conduct trials in an open-minded and fair manner.15 It is equally vitally important that judicial officers be sensitive and compassionate to the plight of those who appear before them for the rule of law can only flourish if the citizenry‟s confidence in the administration of justice is entrenched. [54] The remarks of the Constitutional Court, although made in a different albeit related context, are apposite. The Constitutional Court said the following: „. . . Civility and courtesy should always prevail in our courts. Litigants should leave our courts with a sense that they were given a fair opportunity to present their case. This is crucial if public confidence in the judicial system is to be maintained. . . ‟16 Regrettably, the learned judge in the court below was seemingly oblivious to these judicial injunctions. Accordingly, it was perfectly understandable when counsel for the amicus submitted that the appellant, who had suffered primary victimisation by her former husband and secondary victimisation by the police yet again bore the brunt of tertiary victimisation during the trial. 15 S v Roberts 1999 (4) SA 915 (SCA) para 25. 16 Bernert v Absa Bank Ltd [2011] ZACC 28; 2011 (3) SA 92 (CC) para 98. [55] It remains to express our gratitude to counsel for the amicus, Ms O‟Sullivan and Ms Williams, for their helpful submissions in this court and for making available to us copies of international and regional articles and instruments dealing with obligations of member states to combat all gender-based discrimination and violence against women that have the effect of impairing the quality and enjoyment of their fundamental rights and freedoms. Conclusion [56] It follows from what has been said above that the appeal must succeed. This conclusion renders it unnecessary to consider the appeal against the costs order made by the court below. This result would ordinarily have meant that the appellant is entitled to her costs both in this court and the court below. However, we were informed by counsel for the appellant that her legal representation both in this court and the court below is on a pro bono basis. That being the case no order as to costs is sought in both courts and consequently none will be made. [57] There are two final issues to consider. The first is the rate at which mora interest is to be computed. The Prescribed Rate of Interest Act 55 of 1975 empowers the Minister of Justice to prescribe a rate of interest for purposes of the Act from time to time. By virtue of that power the Minister prescribed a new rate of interest, effective from 1 August 2014, reducing the prescribed rate of interest from 15, 5 per cent per annum to 9 per cent per annum.17 However, as the appellant‟s action was instituted before the effective date the reduced rate of 9 per cent per annum does not apply in this case.18 Allied to the first issue is the secondary issue that this court is empowered, in the exercise of its discretion, to award interest in respect of unliquidated debts from the date 17 See GNR 554, GG 37831 dated 18 July 2014. 18 See in this regard Davehill (Pty) Ltd v Community Development Board 1988 (1) SA 290 (A) at 300G- 302A. of demand. Taking into account the facts of this case this will be a proper case for this court to invoke that power.19 [58] Accordingly, the following order is made: 1 The appeal is upheld. 2 The order of the court below is set aside and there is substituted therefor the following: „1 The first defendant is ordered to pay the following sums to the plaintiff; (a) the amount of R200 000 in respect of claim one; (b) the amount of R70 000 in respect of claim two; (c) the amount of R10 000 in respect of claim three. (2) The first defendant shall pay interest on the aforesaid amounts at the rate of 15,5 per cent per annum from the date of service of the summons to the date of payment. (3) No order as to costs is made.‟ _________________ X M Petse Judge of Appeal 19 See s 2A(5) of the Prescribed Rate of Interest Act 55 of 1975 which empowers a court in the exercise of its discretion to award interest in respect of unliquidated debts from the date of demand. APPEARANCES: For Appellant: M A Wesley (with him S Kazee) Instructed by: Webber Wentzel, Johannesburg Webbers, Bloemfontein For the Amicus Curiae: M O‟Sullivan (with her J Williams) Instructed by: Women‟s Legal Centre Trust, Cape Town Webbers, Bloemfontein For Respondents: M W Dlamini Instructed by: The State Attorney, Johannesburg The State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 2 October 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Naidoo v Minister of Police (20431/2014) [2015] ZASCA152 (2 October 2015) MEDIA STATEMENT Today the Supreme Court of Appeal (SCA) upheld the appeal by Ms Charmaine Naidoo (the appellant) and set aside the order of the Gauteng Local Division, Johannesburg. In the result, the Minister of Police (the respondent) was held vicariously liable for the wrongful acts of certain members of the South African Police Service (SAPS) and ordered to pay an amount of R280 000 to the appellant. The issues before the SCA were whether the respondent should be held vicariously liable for the actions of his employees (members of the SAPS) and ordered to pay compensation to the appellant on three bases: (a) that they had wrongfully and negligently failed to comply with a legal duty owed to her in terms of the Domestic Violence Act 116 of 1998 (the Act) and the Regulations and National Instructions issued in terms of the Act, which comprehensively detail the manner in which victims of domestic violence must be treated and assisted; (b) unlawful arrest and detention; and (c) assault by a police officer. The facts of the matter were as follows. In April 2010, the appellant was assaulted by her (then) husband at their common home, and rendered unconscious. Their daughter arranged for paramedics to transport her to a hospital, where she received medical treatment and was discharged the next day. She then went to the Lenasia South Police Station to lay a charge of assault against her husband. The police officer who attended to her furnished her with incorrect advice, and sent her to a magistrate’s court to obtain a protection order prior to laying a charge. After visiting the magistrate’s court and learning that this was not a prerequisite, the appellant returned to the Police Station, to again try to lay a charge. This time, the police refused to help her until her husband had been consulted, and telephoned him to come in to the station. Upon his arrival, they attempted to convince the appellant to resolve the matter amicably and not to lay a charge. When this failed, the police informed her that should she insist on laying a charge, her husband would do the same, and both would be arrested. This is what then occurred, and they were both held overnight. The next morning, they were escorted to a police van, to be transported to court. However, instead of being helped into the back of the van, a SAPS member violently hurled the appellant into it, causing her to suffer shock, pain and swelling in the right side of her body. At the hearing, the prosecutor then proceeded to withdraw both sets of charges. The appellant accordingly instituted a delictual action on the bases explained above (as well as three others, but these were abandoned). The SCA held that in respect of claim (a), the police were under a statutory duty in terms of the Act, the Regulations promulgated under the Act, and the National Instructions to render assistance to victims of domestic violence. Here, instead of helping the appellant, the police hindered her attempts to lay a charge, instigated her husband to lay a counter-charge, and then arrested the appellant. The court held that this was in clear breach of their statutory duty, and found that the appellant had suffered psychological harm, and accordingly upheld claim (a). In respect of claim (b), the SCA held that on the facts the decision to arrest the appellant was clearly unjustifiable, and so this claim was also upheld. In respect of claim (c), the court a quo had held that the appellant was not entitled to succeed with this claim as the member of the SAPS responsible for the assault had passed away by the time that the matter had come to trial, and she had failed to join his estate, and that she had signed a statement withdrawing the charges against her husband which amounted to a waiver of her claim against the respondent. The SCA rejected these arguments and upheld this claim as well. Accordingly, the appeal was upheld in respect of all three claims. --- ends ---

3530

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 140/2020 In the matter between: THE NATIONAL CREDIT REGULATOR APPELLANT and GETBUCKS (PTY) LTD FIRST RESPONDENT MINISTER OF TRADE AND INDUSTRY SECOND RESPONDENT Neutral citation: National Credit Regulator v Getbucks (Pty) Ltd and Another (Case no 140/2020) [2021] ZASCA 28 (26 March 2021) Coram: PETSE AP, ZONDI and MBATHA JJA and GORVEN and WEINER AJJA Heard: 2 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 09h45 on 26 March 2021. Summary: Validity – Regulation 44 under the National Credit Act 34 of 2005 – invocation of defensive challenge to deregistration proceedings – period allowed for comment on proposed regulation inadequate – promulgation of regulation non-compliant with National Credit Act – appellant not entitled to rely on regulation in proceedings brought to deregister first respondent. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Davis J sitting as court of first instance): The appeal is dismissed with costs. JUDGMENT Gorven AJA (Petse AP, Zondi and Mbatha JJA and Weiner AJA concurring) [1] Regulation 44 (the regulation) promulgated under the National Credit Act1 (the Act) prescribes maximum monthly service fees.2 These are fees which a credit provider may charge a consumer. The appellant, the National Credit Regulator, (the NCR) claimed that the first respondent, Getbucks (Pty) Ltd, (Getbucks) overcharged fees and was thus non-compliant with the regulation. It accordingly approached the National Credit Tribunal to cancel the registration of Getbucks under the Act. This prompted Getbucks to approach the Gauteng Division of the High Court, Pretoria on application for, primarily, the following relief: ‘1. That it be declared that Regulation 44 of the Regulations GMR489, published in the Government Gazette of 31 May 2006 . . . in terms of the National Credit Act, 34 of 2005 is ultra vires and/or void. 1 National Credit Act 34 of 2005. 2 The regulation is one of a number promulgated on 31 May 2006 under GN R489/2006 in Government Gazette No. 28864. I shall refer to it as the regulation unless it is necessary to refer to the others promulgated simultaneously. The papers and order of the court of first instance incorrectly refer to ‘Regulations GMR 489’, but nothing turns on this. 2. Declaring that the [NCR] cannot prosecute [Getbucks] in the Tribunal for an alleged contravention of Regulation 44.’ The NCR and the second respondent, the Minister of Trade and Industry, (the Minister) opposed the application. [2] After hearing argument, the court of first instance, per Davis J, granted the following order: ‘1. It is declared that the First Respondent is barred from prosecuting the Applicant or seeking any relief against it before the National Consumer Tribunal in respect of any alleged contravention of Regulation 44 of the National Regulations GMR 489 published in the Government Gazette of 31 May 2006, prior to its subsequent review and amendment. 2. The Respondents are ordered to pay the Applicant’s costs, including costs of two counsel.’ It is against this order that the NCR appeals, with leave of the court of first instance. The Minister took no part in the appeal. [3] As appears from the order, the regulation was reviewed and amended prior to the date of judgment. As such, any defects which might have existed at the time no longer attend on the regulation. Since the unamended regulation was operative when the application was brought, it remains relevant as to whether Getbucks is or is not subject to deregistration for non-compliance. [4] The relevant part of the regulation reads: ‘The maximum monthly service fee, prescribed in terms of section 105(1) of the Act, is R50.’ And that of s 105(1) of the Act, in terms of which the regulation was promulgated, reads: ‘(1) The Minister, after consulting the National Credit Regulator, may prescribe a method for calculating- . . . (b) the maximum fees contemplated in this Part, applicable to each subsector of the consumer credit market, as determined by the Minister.’ [5] The first issue is whether the regulation was promulgated pursuant to s 171 of the Act or under s 11 of Schedule 3 to the Act.3 The significance of this will become apparent below. The NCR contended that it was promulgated under s 171, while Getbucks contended that it was promulgated under s 11. If the court of first instance correctly held that it was promulgated under s 11, the NCR submitted that the period of 30 days required under that section was afforded or, if not, that the shorter period should have been condoned by the court. [6] Section 171 of the Act provides: ‘(1) The Minister- (a) may make any regulations expressly authorised or contemplated elsewhere in this Act, in accordance with subsection (2); (b) in consultation with the National Credit Regulator, may make regulations for matters relating to the functions of the National Credit Regulator, including- (i) forms; (ii) time periods; (iii) information required; (iv) additional definitions applicable to those regulations; (v) filing fees; (vi) access to confidential information; and (vii) manner and form of participation in National Credit Regulator procedures; 3 Schedule 3 to the Act deals with transitional arrangements. (c) in consultation with the Chairperson of the Tribunal, and by notice in the Gazette, may make regulations for matters relating to the functions of the Tribunal and rules for the conduct of matters before the Tribunal; and (d) may make regulations regarding- (i) any forms required to be used for the purposes of this Act; and (ii) in general, any ancillary or incidental matter that is necessary to prescribe for the proper implementation or administration of this Act. (2) Before making any regulations in terms of subsection (1)(a), the Minister- (a) must publish the proposed regulations for public comment; and (b) may consult the National Credit Regulator and provincial regulatory authorities. (3) A regulation in terms of this Act must be made by notice in the Gazette.’ And s 11 of Schedule 3 to the Act reads: ‘On the effective date, and for a period of 60 business days after the effective date, the Minister may make any regulation contemplated in the Act without meeting the procedural requirements set out in section 171 or elsewhere in this Act, provided the Minister has published such proposed regulations in the Gazette, allowing a period of at least 30 business days for comment.’ [7] The draft regulation was published along with the other proposed regulations in General Notice 307 in Government Gazette No. 28531 on 20 February 2006. The notice indicated that these were ‘Draft National Credit Regulations to be published in terms of the National Credit Act’ and were published for ‘General Public Comment’. The Notice gave as the ‘[c]losing date for submissions 25 March 2006’. [8] The following is the timeline of relevant events. The proposed regulations were published on 20 February 2006. The Act was assented to on 10 March 2006. The advertised closing date for submissions on the draft regulations was 25 March 2006. The regulations were published on 31 May 2006. The sections of the Act relevant to this appeal came into effect on 1 June 2006. This means that, for purposes of this litigation, the effective date of the Act was 1 June 2006. Getbucks was initially registered as a credit provider under the Act on 22 February 2012. The NCR referred Getbucks to the Tribunal for deregistration on 26 November 2014. [9] It is common cause that the advertised closing date for submissions was 27 business days after publication. This is short of the minimum period of 30 business days specified in s 11. Regulations made under s 171(1)(a) must comply with s 171(2). This requires that they must be published for public comment. Unlike s 11, s 171(2) does not specify a minimum period which must be allowed for the submission of comments. This means that, if the advertised closing date for submissions is the date which governs the minimum 30 day period required for comment under s 11, the regulation could not have been validly promulgated under that item. It could only be valid if it had been promulgated under s 171. On the other hand, if the advertised date for submissions was not the date which governed the 30 day period, the regulation could have been validly promulgated under s 11. [10] Section 14 of the Interpretation Act 33 of 1957 provides: ‘Where a law confers a power- (a) to make any appointment; or (b) to make, grant or issue any instrument, order, warrant, scheme, letters patent, rules, regulations or by-laws; or (c) to give notices; or (d) to prescribe forms; or (e) to do any other act or thing for the purpose of the law, that power may, unless the contrary intention appears, be exercised at any time after the passing of the law so far as may be necessary for the purpose of bringing the law into operation at the commencement thereof: Provided that any instrument, order, warrant, scheme, letters patent, rules, regulations or by-laws made, granted or issued under such power shall not, unless the contrary intention appears in the law or the contrary is necessary for bringing the law into operation, come into operation until the law comes into operation.’ It is the Act itself which grants the Minister the power to promulgate regulations. She did so the day before the Act came into effect on 1 June 2006. This means that she did so when she had not yet been empowered by the Act to do so. Without the provisions of s 14 of the Interpretation Act, the Minister could not have been empowered to make the regulation because the Act had not yet come into effect. Her power to do so, which derives from the Act, had not yet arisen. However, due to the provisions of s 14 of the Interpretation Act, it was competent for the Minister to promulgate the regulation on 31 May 2006. This is so regardless of whether it was made under s 171 or under s 11. [11] During argument, both parties accepted this. The reason for this provision is obvious. Machinery required to administer the Act had to be in place on the date the Act came into effect. The Act repealed prior legislation and the bodies which had administered it were no longer empowered to do so. But for the provisions of s 14 of the Interpretation Act, there would have been a vacuum with the repealed legislation no longer operative and the Act lacking regulations to administer it. Section 14 accordingly allows for a smooth transition where this is necessary. [12] As indicated, the regulation came into effect on 1 June 2006, on the same day as the Act. Section 12 of the Act begins ‘[t]here is hereby established a body to be known as the National Credit Regulator’. It was accepted during argument that this clearly means that, prior to 1 June 2006, the NCR did not exist. In other words, the NCR came into being at the same time as the regulation came into effect. [13] It is clear that the regulation dealt with matters regulated by s 105(1) of the Act. This much was conceded by the NCR during argument. The regulation itself makes this plain when it states that ‘[t]he maximum monthly service fee, prescribed in terms of section 105(1) of the Act, is R50’. And the subject matter falls foursquare under s 105(1) which prescribes ‘a method for calculating . . . (b) the maximum fees contemplated in this Part’. [14] Section 105(1) requires that the regulation in question be made ‘after consultation with the National Credit Regulator’. This is a procedural requirement. In order for the procedural requirement to have been met, the Minister could only make the regulation ‘after consultation with’ the NCR. It has been held that ‘after consultation with’ means that the functionary must have regard to the views of the other functionary but is not bound by them,4 or must give serious consideration to their views.5 The obligation to consult does not require exhaustive consultation. In Minister of Home Affairs and Others v Scalabrini Centre and Others,6 Nugent JA said: 4 Premier, Western Cape v President of the Republic of South Africa [1999] ZACC 2; 1999 (3) SA 657; 1999 (4) BCLR 383 (CC) para 85. 5 President of the Republic of South Africa and Others v South African Rugby Football Union and Others [1999] ZACC 9; 1999 (4) SA 147; 1999 (7) BCLR 725 (CC) para 63. 6 Minister of Home Affairs and Others v Scalabrini Centre and Others [2013] ZASCA 134; 2013 (6) SA 421; [2013] 4 All SA 571 (SCA) para 43. ‘[A]n obligation to consult demands only that the person who is entitled to be consulted be afforded an adequate opportunity to exercise that right. Only if that right is denied is the obligation to consult breached.’ [15] This all means that, if the NCR was not consulted, the obligation to consult in s 105(1) was breached. In such a case, the only way the regulation could be valid was if s 11 was invoked. This allows regulations to be made ‘without meeting the procedural requirements set out . . . elsewhere in this Act, provided the Minister has published such proposed regulations in the Gazette, allowing a period of at least 30 business days for comment’. Section 171 does not contain a similar provision doing away with the need to meet procedural requirements in the Act. [16] When confronted during argument with this proposition, the NCR stood by its contention that the regulation was promulgated under s 171. It said that there was indeed prior consultation. As evidence, it pointed to an affidavit of the Minister of Trade and Industry and one delivered on behalf of the NCR in an interlocutory application. That of the Minister explained that a Policy Framework was set up to chart the process leading to the promulgation of the legislation surrounding the Act. The affidavit explains this as follows: ‘Chapter 7 of the Policy Framework highlights that prior to the National Credit Regulator being formed in terms of section 12 of the Act, a cluster known as the Micro Finance Regulatory Council (“MFRC”) was established by the Department of Trade and Industry, and subsequently became the institution now known as the National Credit Regulator.’ In support of this assertion, the NCR quoted from the Policy Framework: ‘In recognition of the unique experience and expertise gathered by the Micro Finance Regulatory Council (MFRC) over the five years of its operation, it is proposed that the National Credit Regulator will absorb the MFRC, but also the national Usury Act inspection function within the DTI. The National Credit Regulator will be jointly funded from credit provider registration fees and levies, and an annual transfer from national government.’ In the affidavit delivered in the interlocutory matter it was asserted: ‘The MFRC, as is explained by the Minister, was the entity that became the NCR, as provided for in Section 8, Schedule 3 of the NCA.’ [17] It was submitted that consultation with the MFRC was, therefore, consultation with the NCR. This is because it became the NCR on 1 June 2006. There are a number of difficulties with this submission, however. First, as mentioned, s 12 of the Act creates the NCR. Prior to 1 June 2006, it did not exist and could therefore not have been consulted. Secondly, the assertions contained in these affidavits are contradicted by the Policy. The Policy did not say that the MFRC became the NCR. It said that the NCR would ‘absorb the MFRC’. The absorption of one body by another does not mean a metamorphosis of the existing body into the new entity. Thirdly, s 8 of Schedule 3 provides: ‘As of the effective date— (a) the assets, liabilities and employees of a regulatory institution designated by the Minister in terms of section 15A of the Usury Act, 1968 (Act No. 73 of 1968), are transferred to and are assets, liabilities and employees, respectively, of the National Credit Regulator; and (b) any person appointed as an inspector or in any other capacity in terms of the Usury Act, 1968 (Act No. 73 of 1968), may be transferred to the National Credit Regulator.’ A transfer presupposes two different entities. One cannot transfer assets, liabilities or people to oneself. There is thus simply no way around the legal position that, prior to 1 June 2006, the Minister could not have consulted the NCR in order to satisfy the requirements of s 105(1). [18] Factually, therefore, the regulation could not have been made by the Minister ‘after consulting the National Credit Regulator’. The procedural requirement of prior consultation in s 105(1) was thus breached. Section 171(1)(a) read with s 172 did not allow the Minister to make regulations without meeting procedural requirements contained in the Act. It could therefore not have been the basis on which the regulation was promulgated. One is driven to the ineluctable conclusion that, in order to do away with the procedural requirement of prior consultation in s 105(1), the regulation could only have been promulgated under s 11. [19] The next question is whether s 11 was complied with. Section 11 carries with it the requirement of ‘allowing a period of at least 30 business days for comment’. The advertised closing date for submissions in the Gazette did not allow 30 business days but only 27. The NCR contended that, because the regulation was promulgated 71 business days after publication of the Notice, the requirement of a minimum of 30 business days was to all intents and purposes satisfied. Uncontradicted evidence was given that submissions received after the advertised closing date would have been, and in fact were, taken into account. [20] This aspect turns at least partly on the interpretation of s 11. It allows procedural requirements in the Act to be overlooked: ‘[P]rovided the Minister has published such proposed regulations in the Gazette, allowing a period of at least 30 business days for comment.’ The issue resolves itself into whether this proviso requires the Gazette to indicate that at least 30 business days is allowed for comment, or the Minister may allow 30 days despite the Gazette giving only 25 business days. [21] The approach to interpretation is objective: ‘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.’7 The language of the provision talks of ‘allowing’ that period. On balance, on a grammatical construction, it seems that it is the publication which must allow the period. The context of the provision is that regulations bearing on the operation of the NCA are intended to be made. The provision is aimed at persons interested and affected by those regulations who may wish to comment. It can scarcely be contended that all such persons are aware of the 30 business day period specified in s 11. The clear purpose of the provision is to inform them of the date by which they should submit comments if they are to be taken into consideration. That purpose is not met if, despite the Gazette advertising a closing date for submissions, the Minister, unbeknown to anyone but herself, decides to allow longer. The language, context and purpose of the proviso support the interpretation that the Gazette must allow a minimum of 30 days for the submission of comments. [22] As a result, this contention of the NCR simply cannot succeed. The clear requirement is that interested and affected persons should be informed by when their comments should be received. The fact that the NCR would have considered all comments, whether or not made within the advertised period, is of no moment. All of this means that the Minister did not comply with the proviso to s 11. 7 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18 (references omitted). [23] The final submission by the NCR is that, because the 27 days allowed was a reasonable period, and was just three days short of the minimum 30 days specified, the court of first instance should have condoned this non- compliance. But this is to misconstrue the proviso to s 11. Section 11 empowers the Minister to promulgate regulations without the need to comply with procedural requirements set out in the Act, ‘provided the Minister has published such proposed regulations in the Gazette, allowing a period of at least 30 business days for comment’. If the Minister does not do so, she is not empowered by s 11 to promulgate regulations without meeting the procedural requirements of the Act. This power arises only if the Gazette allows a minimum of 30 business days for comment. [24] To summarise. The regulation could only have been promulgated under s 11. The requirement was that the Gazette allow a period of at least 30 business days for the submission of comments. This requirement was not complied with. The power of the Minister to make the regulation thus did not arise under s 11. The nett effect of all of this is that the promulgation of the regulation was ultra vires the power of the Minister.8 The regulation was accordingly not validly promulgated. [25] What, then, is the effect of this on the present matter? In its heads, the NCR said that the application launched by Getbucks was one to review and 8Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others [1998] ZACC 17; 1999 (1) SA 374; 1998 (12) BCLR 1458 (CC) para 59, where it is made clear that these principles remain operative under the Constitution: ‘There is of course no doubt that the common-law principles of ultra vires remain under the new constitutional order. However, they are underpinned (and supplemented where necessary) by a constitutional principle of legality. In relation to “administrative action” the principle of legality is enshrined in section 24(a). In relation to legislation and to executive acts that do not constitute “administrative action”, the principle of legality is necessarily implicit in the Constitution.’ set aside the regulation. The NCR submitted that, because it was not brought within the requisite period allowed under PAJA, it should have been dismissed on this ground alone. But this is a classic collateral, reactive, or defensive challenge to the regulation. It is available when an attempt is made to coerce an entity by utilising the regulation. The challenge may use as a defence the fact that the regulation was not validly promulgated. The classic exposition of this is found in Merafong City v Anglogold Ashanti Ltd,9 where the Constitutional Court held: ‘A subject at risk of criminal conviction or other coercive action by the state may indeed raise a reactive or defensive challenge to the lawfulness of the administrative act on which the prosecution or coercion is based.’10 [26] It is clear that the application in question sought to raise a reactive challenge. It was therefore not a review application, whether under PAJA or the common law. The NCR correctly did not press this line of argument during the hearing. As such, it is not necessary to determine whether the promulgation of the regulations in question was administrative or legislative in character. The issue is one of legality. If the regulation does not pass muster, the reactive challenge need not be to administrative action but to any invalid act:11 ‘These provisions imply that a local government may only act within the powers lawfully conferred upon it. There is nothing startling in this proposition – it is a fundamental principle of the rule of law, recognised widely, that the exercise of public power is only legitimate where lawful. The rule of law – to the extent at least that it expresses this principle of legality – is generally understood to be a fundamental principle of constitutional law.’ 9 Merafong City v Anglogold Ashanti Ltd [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC). 10 Merafong City para 30. 11 Fedsure para 56. References omitted. [27] It seems to me to be in the nature of this kind of collateral, or reactive, challenge that it cannot be time-barred as with an attempt to review administrative action. This is because the person raising the reactive challenge might only be subjected to the coercive action by an organ of the state based on the impugned provisions a considerable period of time after they came into effect. That is precisely the situation in the present matter. It cannot be said, accordingly, that the application should have been dismissed due to the time which had passed since the regulation was made. [28] The court of first instance thus correctly found for Getbucks. It also correctly recognised the challenge raised by Getbucks as being a reactive, defensive, or collateral one. The order granted addressed that coercive action and declared that the regulation could not be used against Getbucks. [29] In the result, the appeal is dismissed with costs. ________________________ T R GORVEN ACTING JUDGE OF APPEAL APPEARANCES For appellant: P L Carstensen SC Instructed by: Lebethe Attorneys & Associates Incorporated, Alberton c/o Matsepes Incorporated, Bloemfontein For first respondent: R Michau SC Instructed by: Louw Le Roux Incorporated, Pretoria c/o 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: 26 March 2021 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. THE NATIONAL CREDIT REGULATOR v GETBUCKS (PTY) LTD AND ANOTHER (Case no 140/2020) [2021] ZASCA 28 Today the Supreme Court of Appeal dismissed an appeal from the Gauteng Division of the High Court, Pretoria (per Davis J). The National Credit Regulator (the NCR) sought to invoke Regulation 44 (the regulation) promulgated under the National Credit Act 34 of 2005 (the Act) against Getbucks (Pty) Ltd (Getbucks). The regulation prescribes maximum monthly service fees which the NCR claimed had been exceeded by Getbucks. The NCR accordingly approached the National Credit Tribunal (the Tribunal) for the deregistration of Getbucks as a credit provider under the Act. Getbucks applied to the court of first instance to bar the NCR from doing so on the basis that the regulation had not been validly promulgated. The regulation was one of a comprehensive set of regulations designed to give effect to the provisions of the Act. Without the regulations, there would have been a lacunae in the administration of matters concerning credit. The primary issue was whether the regulation had been promulgated under s 171 of the Act or under s 11 of Schedule 3 to the Act, dealing with interim arrangements. If under the former, the proposed regulation had to be published and comment from interested and affected parties called for, but without specifying any period for the submission of comments. If under s 11 of Schedule 3 to the Act, a period of 30 business days had to be allowed for comments to be submitted. The advertisement specified that comments should be submitted by a particular date which was only 27 business days from the date of publication of the draft regulations. The Supreme Court of Appeal held that the regulation could not have been promulgated under s 171. The NCR only came into existence on the date on which the Act and regulation came into effect. Section 105(1) of the Act required the Minister to consult with the NCR prior to promulgation of regulations dealing with matters concerning minimum monthly service fees. Since there could have been no prior consultation with a non-existent body, the provisions of s 105(1) were not complied with. Only s 11 of Schedule 3 allowed for non-compliance with procedural aspects of the Act. It was thus the only basis on which the Minister could have promulgated the regulation. Because s 11 required a 30 day period for comment and this had not been allowed, the Minister had not been empowered to promulgate the regulation and the NCR was barred from invoking it against Getbucks. The short period could not be condoned because the power to promulgate only arose under s 11 once the 30 business day period had elapsed. For these reasons, the appeal was dismissed with costs.

4015

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 221/2022 In the matter between: PRENASHAN GOVENDER APPELLANT and THE STATE RESPONDENT Neutral Citation: Govender v The State (221/2022) [2023] ZASCA 60 (3 May 2023) Coram: SCHIPPERS and CARELSE JJA, and NHLANGULELA and SIWENDU and UNTERHALTER AJJA Heard: 24 February 2023 Delivered: 3 May 2023 Summary: Criminal Law – murder – common purpose – conviction on direct and circumstantial evidence – presence at scene, active association and intent proved – failure to testify – conviction upheld. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mokgoathleng J, Makhoba J and Van der Westhuizen AJ sitting as court of appeal): The appeal is dismissed. ________________________________________________________________ JUDGMENT ________________________________________________________________ Siwendu AJA (Schippers and Carelse JJA and Nhlangulela and Unterhalter AJJA concurring): [1] The appellant was charged in the Gauteng Division of the High Court, Johannesburg (the high court) with two counts of murder and various contraventions of the Firearms Control Act 60 of 2000 (the Act).1 He was convicted on the murder charges and sentenced to life imprisonment on each count. An appeal against conviction and sentence to a full court of the high court (the full court) was dismissed. He was granted special leave to appeal to this Court. [2] The conviction follows the fatal shooting of two persons on 12 August 2018 at a restaurant and club in Kyalami, Johannesburg (the club), at which the appellant, his wife and a group of friends, had attended a function. The appellant and his co-accused, Mr Lloyd Lester Latchman (Accused 1), were convicted mainly on the evidence of Mr Mboni Maswanganye, Ms Kerisha Nair 1 For present purposes, the appellant’s conviction of contravening section 120(10)(a) of the Firearms Control Act – giving possession of a firearm to a person who is not allowed to possess it – is relevant. The appellant was sentenced to six months’ imprisonment for this offence. and Mr Tambo Dickson. The appellant was Accused 2 in the proceedings in the trial court. [3] Mr Maswanganye is an Uber driver who was called to the club by the appellant to take his wife home to Randburg. His evidence, in summary, is as follows. On arrival at the club, he found the appellant and his wife waiting outside. He parked his vehicle close to the building, next to the stairway leading up to the club. It was after midnight and the place where Mr Maswanganye had parked was well lit. The appellant’s wife asked him to wait for two other passengers. Mr Maswanganye noticed that the appellant was carrying a firearm underneath his jacket, just below his waist. [4] While waiting for the two passengers, a man, later identified as ‘Bilal’, came out of the club with a bloody nose, followed by a man wearing a red bandana. They were part of the appellant’s group. The appellant and his wife were outraged at what happened to Bilal. The appellant removed his loaded firearm from its holster and held it in his hand. A scuffle ensued when the man with the red bandana attempted to restrain the appellant from going into the club and told him to go home; whatever had happened was over. [5] During this scuffle, Accused 1 appeared. The appellant, who still had the firearm in his hand, walked with Accused 1 up the stairs, in the direction of the club. When they were halfway up the stairs, Accused 1 took the firearm from the appellant. Accused 1 did not grab or forcefully take it. Five to seven seconds later, Mr Maswanganye heard gunshots. Shortly after the shots were fired, a man (later identified as the deceased, Mr Theolan Nair) came running from the club. He held his arm on his chest and shouted that he had been shot. He was followed by Accused 1 who, Mr Maswanganye testified, was armed with a silver firearm. Mr Maswanganye was seated in his vehicle. Accused 1 opened the rear door of Mr Maswanganye’s vehicle, shouting, ‘Where is he? Where is he?’, referring to Mr Nair. The appellant’s wife was seated in the back of the vehicle. Accused 1 then left the vehicle and went in the direction that Mr Nair had gone. Mr Maswanganye saw Accused 1 leaving in a white BMW without number plates. The last time he saw the appellant was on the stairs, where Accused 1 had taken the firearm. [6] Mr Maswanganye, who himself was carrying a firearm, wanted to leave immediately when Accused 1 came to his vehicle, but the appellant’s wife restrained him from doing so. She wanted to be assured of the appellant’s whereabouts. When she saw the white BMW leaving, she indicated to Mr Maswanganye that he should leave. The appellant did not travel with his wife to his home in Randburg, in Mr Maswanganye’s vehicle. [7] Ms Nair worked at the club and was married to the late Mr Theolan Nair. She testified that there was an argument inside the club between Accused 1 and Mr Nair. Her husband’s friend, Mr Yashlin Pillay, was also involved in the argument. A crowd gathered around them and a fight broke out. When Ms Nair decided to approach the crowd, the bouncers had already removed persons involved in the fight from the club, including Accused 1 and Mr Nair. About five to ten minutes later, Accused 1 returned to the club with a gun in his hand and fired a shot at the ceiling. Thereafter he shot Mr Pillay in his chest at point blank range. The patrons ran for cover. Mr Pillay died at the scene. At that point, Mr Nair was hiding behind a pillar in the club, but Accused 1 had seen him. Mr Nair fled and Accused 1 followed him down the stairs. While she was running behind them, Ms Nair heard a shot. She saw Accused 1 jumping into a white BMW which sped off. It had no number plates. Subsequently, Ms Nair found her husband, who had been shot in the shoulder area. Attempts by paramedics to resuscitate him were unsuccessful. The autopsy report states that Mr Nair died of a penetrating gunshot wound of the thorax. [8] Mr Dickson was one of the bouncers. He testified that a fight broke out in the club between patrons. Accused 1 and the appellant were part of a group involved in the fight. Mr Dickson said that he spoke to the people involved and had calmed down the situation. He took Accused 1 outside the club and spoke to him, while his fellow bouncers dealt with the other persons who were involved in the fight. However, Accused 1 subsequently returned, after which Mr Dickson heard gunshots coming from inside the club. The patrons, who took cover when the shots were fired, only ran out of the club after Accused 1 and the appellant had left. When Mr Dickson went back into the club, he discovered that someone had been shot. [9] Accused 1 testified in his own defence. He said that he had met the appellant at the club and that they were together almost the entire night. At some stage the appellant informed him that he was leaving because his wife was ill. The appellant left the club. Shortly afterwards Accused 1 also left, greeted the appellant and his wife at the Uber vehicle and left the club in his own car. Accused 1 testified that he had not seen a firearm on the appellant, and said that the appellant had not been involved in a scuffle with anybody. Accused 1 denied that he had taken a firearm from the appellant, or that he shot anybody at the club. [10] The appellant chose not to give evidence in his defence, despite the fact that he had instructed his counsel to put the following version to Mr Maswanganye. A group of people had come down the stairs, ‘when the scuffle was taking place between accused 2 and the man in the bandana’. Somebody had dispossessed the appellant of his firearm at the stairs. The appellant ‘ran upstairs to try and retrieve and find [the person] who took his firearm’. [11] The main issue on appeal is whether the appellant acted in common purpose with Accused 1 in the murder of the deceased. Counsel for the appellant submitted that the trial court’s findings on the facts were based on ‘conjecture and speculation’, and that it had made ‘huge quantum leaps in respect of the evidence before it’. As to the decision of the full court, there was no evidence, so it was submitted, ‘to suggest that the appellant’s actions were in any way linked to that of Accused 1.’ He had not ‘formed a common purpose with Accused 1’; and the requisites for a conviction based on common purpose had not been met. [12] There was no evidence of a prior agreement between Accused 1 and the appellant to murder the deceased. However, a finding that a person acted together with another in a common purpose is not dependent upon proof of a prior conspiracy. Such a finding may be inferred from the conduct of the participants.2 The State was therefore required to prove that the appellant had actively associated himself with the execution of the common purpose. The concept of active association is wider than that of agreement, since it is seldom possible to prove a prior agreement. Consequently, it is easier to draw an inference that a participant associated himself with the perpetrator.3 [13] This court in Mgedezi,4 outlined the following requirements for active association in common purpose. The accused must have: (a) been present at the scene where the violence was committed; (b) been aware of the assault on the victim by somebody else; (c) intended to make common purpose with the person perpetrating the assault; (d) manifested his sharing of a common purpose by himself performing an act of association with the conduct of the perpetrator; and 2 C R Snyman Criminal Law (5 ed 2012) at 265. 3 Snyman fn 2 at 267. 4 S v Mgedezi and Others 1989 (1) SA 705 (A) at 705 I. (e) have the requisite mens rea. Dolus eventualis is sufficient: the accused must have foreseen the possibility that the acts of the perpetrator may result in the death of the victim, and reconciled himself with that eventuality.5 [14] The State proved all these requirements in the present case. The appellant removed his firearm from its holster and held it in his hand, with the intention of going into the club to avenge the assault on Bilal. That is why he had to be restrained, why a scuffle ensued and why he did not leave the club. His friend with the red bandana had implored him to leave the scene and the Uber was right there. The appearance of Accused 1 did not deter the appellant from going towards the club to settle a score: he retained the firearm in his hand and proceeded towards the club. Only when he was halfway up the stairs did Accused 1 take the firearm from the appellant. His counsel rightly conceded that he had voluntarily relinquished possession of the firearm to Accused 1. [15] The reason why the appellant did not proffer any resistance to the taking of his firearm and why, even then, he did not dissociate himself from the common purpose by leaving the club, is clear: he knew that Accused 1 was going to use the firearm to do precisely what he (the appellant) had intended to do from the outset – to avenge the assault on Bilal. The appellant thus knew, or foresaw the possibility, that Accused 1 was going to use the firearm in the club which could result in the death of a person, but nonetheless reconciled himself with that possibility.6 The State thus proved the requisite intent on the part of the appellant. [16] The natural reaction of an unsuspecting person who accompanies another armed with a deadly weapon, is to completely distance himself from the events 5 Snyman fn 2 at 268. 6 S v Ngubane 1985 (3) SA 677 (A) at 685 F about to unfold.7 Instead, the appellant accompanied Accused 1, who was armed with the appellant’s firearm. He must have foreseen that Accused 1 would use the firearm, which he did. This was not a case where the common purpose arose spontaneously or on the spur of the moment.8 Five to seven seconds after he had taken the firearm from the appellant, Accused 1 fired a number of shots, fatally wounding the two deceased. Thus, both direct and circumstantial evidence point to the presence of the appellant at the scene when these shots were fired. Where else could he have gone with Accused 1? [17] On these facts, the submissions by the appellant’s counsel are unsustainable. There is direct evidence placing the appellant on the scene of the murders: Mr Dickson testified that after the shots had been fired, Accused 1 and the appellant ran out of the club. Of course, Mr Dickson could never have known that they were together in the club on the night in question, unless he had seen them. Mr Dickson described the clothes that both Accused 1 and the appellant were wearing, and said that Accused 1 had a tattoo on his arm. All of this evidence, crucially, went unchallenged. It merely underscores the appellant’s acts of association with the conduct of Accused 1. And Mr Dickson was adamant that the patrons came running out of the club, screaming, only after Accused 1 and the appellant had left the scene. That evidence, unsurprisingly, was not contradicted – nobody else had fired gunshots in the club. They were the ones who caused mayhem which resulted in the death of two persons. [18] What is more, Mr Dickson’s evidence is corroborated by the evidence of both Mr Maswanganye and Ms Nair. After the shooting, Mr Maswanganye was restrained from leaving the club because the appellant’s wife wanted to ascertain his whereabouts. But when she saw the white BMW leaving the scene, she 7 S v Kramer en Andere 1972 (3) SA 331 (A) at 334F. 8 Snyman fn 2 at 266; S v Mambo 2006 (2) SACR 563 (SCA) para 17. instructed Mr Maswanganye to leave. The appellant did not travel home to Randburg in the Uber. So how did he leave the scene, if not with Accused 1 in the BMW? [19] Ms Nair testified that Accused 1 jumped into a BMW which sped off. Who else, other than the appellant, could have driven the BMW? And both witnesses could not have been mistaken – it was a white BMW with no number plates. So, nothing turns on the fact that Mr Maswanganye initially stated that he saw the appellant getting into the BMW, but later said that the last time he had seen the appellant was on the stairs when Accused 1 had taken firearm from him. The only reasonable inference to be drawn from the proved facts, is that the appellant fled the scene together with Accused 1, in the BMW. [20] Then there is the appellant’s failure to report the loss of his firearm to the police. This was rightly considered by the full court as but another fact pointing to the appellant’s guilt. The evidence makes it clear that his allegation that somebody had dispossessed him of his firearm and that he ran up the stairs in order to retrieve it, can safely be rejected as false. The inference is ineluctable that both Accused 1 and the appellant knew that the firearm had been instrumental in the killing of the deceased; and that they were intent on suppressing that evidence. [21] On the totality of the evidence, which comprised mainly direct evidence but also circumstantial evidence, the case against the appellant was damning and called for an answer. Despite this, he chose to remain silent. In this regard, the dictum by Holmes JA in Mthethwa9 bears repetition: ‘Where . . . there is direct prima facie evidence implicating the accused in the commission of the offence, his failure to give evidence, whatever his reason may be for such failure, in 9 S v Mthethwa 1972 (3) SA at 769D, emphasis in the original. general ipso facto tends to strengthen the State case, because there is nothing to gainsay it, and therefore less reason for doubting its credibility or reliability.’ [22] If he was innocent, the appellant could have met the State’s case with ease, particularly in the light of the allegation that he had been dispossessed of his firearm (and therefore it could not have been used by Accused 1 to shoot the deceased). Further, his counsel put it to Mr Maswanganye that a witness would be called if the need arose to testify that the appellant had left the venue for his own safety as soon as the gunshots were fired; and that he did not see the shooting. The witness was never called. The full court was perfectly entitled to conclude that the evidence against the appellant was sufficient to sustain a conviction.10 [23] The appellant was thus rightly convicted on two counts of murder. As this Court stated in Chabalala.11 ‘The appellant was faced with direct and apparently credible evidence which made him the prime mover in the offence . . . To have remained silent in the face of the evidence was damning. He thereby left the prima facie case to speak for itself. One is bound to conclude that the totality of the evidence taken in conjunction with his silence excluded any reasonable doubt about his guilt.’ [24] The appeal against sentence can be dealt with briefly. The appellant was convicted of murder committed in furtherance of a common purpose, which carries a mandatory life sentence.12 The prescribed minimum sentence is the sentence that should ordinarily be imposed in the absence of weighty justification. A court may not depart from the prescribed sentence lightly and for flimsy reasons.13 10 S v Boesak 2001 (1) SACR 1 (CC) para 24. 11 S v Chabalala 2003 (1) SACR 142 (SCA) para 21. 12 Section 51(1) of the Criminal Law Amendment Act 105 of 1997, read with Part 1, item (d) of Schedule 2 thereto. 13 S v Malgas 2001 (1) SACR 469 (SCA) paras 9 and 25. [25] As the full court observed, murder is a heinous crime. In this case the killing of the deceased was brazen. Mr Pillay was shot at point-blank range. Immediately thereafter, Mr Nair was followed and shot in circumstances where his wife, who had just witnessed the murder of Mr Pillay, unsuccessfully tried to warn him that Accused 1 was armed. The patrons in the club were terrified and ran for cover. The full court’s finding that there were no substantial and compelling circumstances which justified a deviation from the prescribed minimum sentence, cannot be faulted. [26] In the result, the appeal is dismissed. _________________________ N T Y SIWENDU ACTING JUDGE OF APPEAL Appearances For the appellant: JJCS Meiring Instructed by: BDK Attorneys, Johannesburg Symington & De Kok Attorneys, Bloemfontein For the respondent: E K Moseki Instructed by: The Director of Public Prosecutions, Johannesburg 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: 3 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 Govender v The State (221/2022) [2023] ZASCA 60 (3 May 2023) Today the SCA dismissed the appeal against the conviction and sentence by the full court Gauteng Division of the High Court, Johannesburg. On the 12th August 2018 the appellant and his co-accused (Accused 1) were part of a group attending a function at a restaurant and club in Kyalami, Johannesburg. Accused 1 shot and killed two people at the club. The appellant was charged and convicted on two counts of murder based on common purpose. The appellant challenged his conviction on the grounds that it was based on circumstantial evidence. He denied that he was present at the scene. He contended that common purpose was not established and the state did not prove his guilt beyond a reasonable doubt. The main issue on appeal was whether the appellant acted in common purpose with Accused 1 in the murder of the two deceased and was correctly convicted of the crimes. The conviction was mainly based on the evidence of Mr. Maswanganye (an Uber driver called by the appellant to the club to pick the appellant’s wife and take her home Randburg), Mrs Nair, (an employee at the club, married to one of the deceased, Mr Nair), and Mr Dickson (a bouncer employed by the club). After midnight on arrival at the club, Mr. Maswanganye (the driver), found the appellant and his wife waiting outside. The area was well lit. He parked his vehicle close to the building, next to the stairway leading up to the club. The appellant’s wife asked him to wait for two other passengers. He noticed that as the appellant moved about, he had a firearm underneath his jacket below waist.. One of the two passengers, Bilal, came out of the club with a bloody nose, followed by a man wearing a red bandana. Outraged by what happened to Bilal, the appellant wanted to go back to the club and the man in the red bandana attempted to restrain him. The appellant removed his firearm, described as a “silver firearm” from the holster and held it in his hand. A scuffle ensued between the appellant and the man with a bandana who tried to persuade the appellant to go home. The scuffle migrated to the stairway leading to the club. Accused 1 appeared and joined the scuffle. The driver saw Accused 1 take the firearm from the appellant. The appellant gave no resistance to the taking of his firearm. Shortly afterwards, the driver heard sounds gunshots being fired. A man, later identified as Mr. Nair, came running from the club, shouting that he had been shot. Accused 1 had followed Mr. Nair, with the firearm in his hand. He opened the back passenger door of the Uber vehicle looking for Mr. Nair. Mr. Maswanganye wanted to leave immediately but the appellant’s wife restrained him for leaving. She wanted to be assured of the appellant’s whereabouts. Soon thereafter, the driver saw Accused 1 leaving in an unmarked white BMW. Seeing the departure of the BMW, the appellant’s wife instructed the driver to leave. The appellant did not travel with his wife in the Uber vehicle. The driver confirmed during cross examination that he last saw the appellant during the scuffle on the stairs leading to the club where Accused 1 took the firearm from him. It was a common cause during the trial that the appellant was a licensed owner of two firearms, one of which was a silver Taurus. He did not report the firearm missing. The firearm was never found after the incident. According to Mrs Nair who was inside the club, an argument ensued between Accused 1, Mr. Nair and Mr. Pillay. A crowd had gathered around them. Club bouncers were called to remove those involved. Peace restored inside, but was short lived because Accused 1 returned using a different entrance. Accused 1 then fired a bullet up at the ceiling and another at Mr. Pillay whom he shot at point blank range. Mrs Nair tried to warn Mr. Nair that Accused 1 had a firearm. Mr Nair took cover behind a pillar but Accused 1 saw and followed him down stairs. Soon thereafter, Mrs. Nair heard the sound of a gunshot and later found that Mr. Nair had been shot in the shoulder area. Despite attempts by paramedics to resuscitate him, he died at the scene from a penetrating gunshot wound of the thorax. One of the bouncers, Mr. Dickson, confirmed that a fight broke out in the club. Accused 1 and the appellant were part of the same group of patrons. He described the clothes the appellant and Accused 1 wore. In trying to calm down the fight, he took Accused 1 outside the club. Accused 1 returned to the club and fired gunshots inside the club. The patrons, who took cover when the shots were fired, only ran out of the club after Accused 1 and the appellant left. His evidence was that Accused 1 and the appellant left the club together. This evidence was not challenged. Accused 1 testified in his own defence. He disputed involvement in the scuffle, denied taking a firearm from the appellant and denied shooting the deceased inside the club. The appellant on the other hand, chose not to give evidence in his defence. The version the appellant put to the driver was that someone dispossessed him of his firearm during the scuffle and he ran upstairs to retrieve it. The SCA considered common purpose based on the requirements in S v Mgedezi and Others [1989 (1) SA 705 (A) at 705 I] to establish whether the appellant actively associated himself with the actions of Accused 1 and had the requisite intent to find a conviction. It observed that there was no proof of a prior conspiracy, but however that, an act of active association is wider than a prior agreement. It can be inferred from the conduct of the participants. In this case, the appellant removed his firearm from the holster with the intention to go to the club to avenge the assault on Bilal. He resisted efforts to restrain him and engaged in a scuffle. The appearance of Accused 1 did not deter him from proceeding toward the club to settle the score. It was only halfway the stairway that the forearm was taken from him. His counsel rightly conceded that the appellant relinquished his firearm to Accused 1. The SCA found that the appellant did not disassociate himself because Accused 1 was going to use the firearm to do that which the appellant intended to do. He knew and foresaw the possibility that Accused 1 would use the firearm which could result in the death of a person and reconciled himself with the consequence. The natural reaction of a person accompanying another with a deadly weapon is to completely distance himself from the events about to unfold. Instead the appellant accompanied Accused 1. The SCA held that both direct and circumstantial evidence pointed to the presence of the appellant at the scene when the shots were fired. Where else could he have gone with Accused 1? The evidence of the driver, Mr. Maswanganye and Mr Nair corroborated each other that after the shots were fired, Accused 1 sped off in an unmarked white BMW. The only reasonable inference from the proved facts was that the appellant fled the scene with Accused 1. Who else could have driven the white BMW but the appellant? He did not travel home with his wife in the Uber vehicle. The SCA also considered the appellant’s failure to report the loss of his firearm to the police, rightly taken into account by the full court as another factor pointing to his guilt. It found that an inference was ineluctable that both the appellant and Accused 1 knew that the firearm had been instrumental in the killing of the deceased and were intent on suppressing that evidence. The evidence made it clear that the allegation that the appellant went upstairs to retrieve the firearm could be rejected. The SCA held that the totality of the evidence on which the appellant’s conviction was based comprised of direct and circumstantial evidence. Applying the principle in S v Mthethwa 1972930 SA at 769AD, it found there was a damning case against the appellant which called for an answer. The appellant chose not to give evidence in own his defence. He could have met the State’s case with ease, particularly in the light of the allegation that he was disposed of his firearm. His counsel had put to the driver that a witness would be called to say the appellant left the venue for his safety and did not see the shooting. The appellant never called the witness. The full court was entitled to conclude that the evidence against the appellant was sufficient to sustain a conviction. There were no substantial and compelling circumstances which justified a deviation from the prescribed minimum sentence. Therefore, the appeal was dismissed. ----- ends -----

3443

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 886/2019 In the matter between: THE PUBLIC SERVANTS ASSOCIATION OF SOUTH AFRICA FIRST APPELLANT JAMES KILGOUR VAN WYK SECOND APPELLANT BENSON BOY ISHMAEL OLIFANT THIRD APPELLANT and GOVERNMENT EMPLOYEES PENSION FUND FIRST RESPONDENT MINISTER OF FINANCE SECOND RESPONDENT MINISTER OF PUBLIC SERVICE AND ADMINISTRATION THIRD RESPONDENT SEVENTEEN TRADE UNIONS FOURTH – TWENTIETH RESPONDENT PUBLIC SERVICE BARGAINING COUNCIL TWENTY FIRST RESPONDENT Neutral citation: Public Servants Association of South Africa and Others v Government Employees Pension Fund and Others (Case no 886/2019) [2020] ZASCA 126 (9 October 2020) Coram: NAVSA, SALDULKER, SCHIPPERS and DLODLO JJA and GOOSEN AJA Heard: 7 September 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 10h00 on 9 October 2020. Summary: Pension Fund – Government Employees Pension Fund Rules require consultation with employee organisations before a decision is made regarding actuarial interest – discussion of what is meant by consultation – Rule must be complied with – principle of legality – cannot be remedied by consultation with non-designated functionary after implementation of decision – decision liable to be set aside. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Van der Westhuizen J, sitting as court of first instance): judgment reported sub nom Public Servants Association of South Africa and Others v Government Employees Pension Fund and Others [2019] ZAGPPHC 199 The appeal is upheld with costs, including the costs of two counsel. The order of the court below is set aside and substituted as follows: ‘(a) The delay in bringing the application for review is excused; (b) The decision of the first respondent to amend, with effect from 1 April 2015, the F(Z) and A(X) factors utilised in the calculation of actuarial interest under Rule 14.4.2 of the Rules of the Government Employees Pension Fund is reviewed and set aside; (c) The first respondent is ordered to consult with the first applicant, the second respondent, the fourth to nineteenth respondents and all other employee organisations as defined in the Rules of the Government Employees Pension Fund concerning the calculation of the actuarial interest referred to in (b) above, in respect of those affected thereby; (d) The first respondent is to pay the costs of the application, including the costs of two counsel where so employed.’ _____________________________________________________________________ JUDGMENT ______________________________________________________________________ Navsa JA (Saldulker, Schippers and Dlodlo JJA and Goosen AJA concurring): [1] This appeal concerns, principally, the propriety of a decision of the first respondent, the Government Employees Pension Fund (the GEPF), taken on 3 December 2014, in relation to the calculation of the actuarial interest of members whose membership terminated after 1 April 2015. As the name suggests, the GEPF was established to administer and manage pension fund matters and schemes relating to government employees. The first appellant, the Public Servants Association (the PSA), a trade union registered in terms of the Labour Relations Act 66 of 1995 (the LRA), and the second and third appellants, Mr James Van Wyk and Mr Benson Boy Olifant (both former members of the PSA), respectively, had sought, in the Gauteng Division of the High Court, Pretoria (Van der Westhuizen J), to have the aforesaid decision by the GEPF reviewed and set aside. The high court dismissed the application with costs, including the costs of two counsel. It is against that order that the present appeal, with the leave of the court below, is directed. The detailed background is set out hereafter. [2] The PSA represents over 237 000 members employed in the public service, in both the national and provincial spheres of government. The GEPF is a pension fund contemplated in section 2 of the Government Employee Pension Law, 1996 (the GEP law).1 It operates under the GEP law and the rules of the GEPF.2 The applicant and the fourth to twentieth respondents are all trade unions and parties to the twenty first respondent, the Public Service Co-ordinating Bargaining Council (the PSCBC), established and registered in terms of s 36(1), read with Schedule 1, of the LRA. The aforesaid respondents are also ‘employee organisations’ contemplated in the GEPF rules. [3] The application launched in the high court by the appellants was served on current members of the GEPF and on members who, as at 1 April 2015, were members but whose membership had been terminated subsequently, in terms of the GEPF’s rules. The application was also served on beneficiaries of former members who had become entitled to benefits after 1 April 2015 as well as on former spouses of members, for whom a divorce debt was recorded. 1 The GEP law is a legislative instrument published under Proc 21 in GG 17135 of 19-04-1996 and came into effect on 12 May 1996. The GEP law was authorised by section 237 of the interim Constitution of South Africa, Act 200 of 1993, that provided for the rationalisation of public administration. It brought into the fold of the GEPF former members of the liberation struggle and public service pension funds in former Transkei, Bophuthatswana, Venda and Ciskei (the so-called ‘TBVC states’) 2 The Rules of the GEPF are published in Schedule 1 of the GEP law. [4] Actuarial interest lies at the heart of this appeal. It is thus necessary to deal with that concept at the outset. Actuarial interest is, simply, a member’s accrued benefit payable to the member by the GEPF, as determined by the rules. More precisely, it is described in the definitions section of the rules as follows: ‘[A]n amount representing the value of a member’s benefits in the Fund based on his or her pensionable service, calculated in terms of rule 14.4.2...’ [5] Rule 14.4.2, in turn, reads as follows: ‘The actuarial interest of a member who has— (a) not attained the age of 55 years, shall be calculated in accordance with the following formula: Provided that the actuarial interest shall not be less than the amount of the benefit described in rule 14.4.1(a): N(adj) x FS x F(Z) x [1 + (0.04 x (60 – Z))] Where— N(adj) is the member’s period of pensionable service, taking into account all adjustments thereto in terms of the rules, as at the date of termination of service; FS is the member’s final salary; F(Z) is a factor determined by the Board acting on the advice of the actuary, and after consultation with the Minister [of Finance] and the employee organisations; Z is the age of at which the member attains his or her pension-retirement date; (b) attained the age of 55 years, shall be calculated in accordance with the following formula: Provided that the actuarial interest shall not be less than the amount of the benefit described in rule 14.4.1 (a): G + [A x A(X)] Where— G is the amount of the gratuity the member would have received in terms of the rules had he retired on that date. For this purpose, a member with less than 10 years pensionable service, will be deemed to qualify for the same benefit as a member with 10 years or more service; A is the amount of the annuity the member would have received in terms of the rules. For this purpose, a member with less than 10 years pensionable service, will be deemed to qualify for the same benefit as a member with 10 years or more service; A(X) is a factor determined by the Board acting on the advice of the actuary, and after consultation with the Minister and the employee organisations.’ (Emphasis added) [6] The appellants contended, in the court below and before us, that the GEPF had unlawfully taken its decision on 3 December 2014 to amend, with effect from 1 April 2015, the F(Z) and A(X) factors in the formula contained in the rule set out in the preceding paragraph, relying only on an actuarial valuation report, that is, without prior consultation with the PSA or any of the employee organisations prescribed by the rules. In short, the appellants contended that the GEPF, in acting as it did, offended against the principle of legality. [7] In seeking relief in the court below the appellants stressed the importance of consultation. They emphasised the fiduciary duty of the GEPF’s Board of Trustees to act in the best interests of GEPF members and beneficiaries. They pointed to the fact that the GEPF is funded by contributions from government and persons employed in the public service. Insofar as the board’s power to amend the actuarial factors is concerned, the appellants took the view that the GEPF was fulfilling a ‘legislative’ duty to make rules but that this role made it necessary, in terms of the rules and the contextual setting, to engage in processes that acknowledge collective bargaining. [8] The appellants also placed reliance on s 29 of the GEP law, the relevant parts of which provide as follows: ‘(2) The rules referred to in subsection (1), may— … (b) from time to time prescribe the conditions subject to which and the rate at which members shall contribute to the [GEPF] and the times at which and the manner in which such contributions or any amounts which are payable to the Fund in terms of this Law, shall be deducted from the pensionable emoluments of members and paid over to the Fund; … (g) from time to time prescribe the benefits or other amounts payable from the [GEPF] to members, their former spouses or their beneficiaries determined in the rules in cases or classes or categories of cases specified by the rules, and the manner in which such benefits or other amounts shall be calculated and the times at which and the manner in which such benefits or other amounts shall be paid; [and] … (k) that any change to the rules shall satisfy the condition that the real value of the accrued benefits of every member of the [GEPF], as represented by the [GEPF’s] actuarial liability towards the member and his or her beneficiaries, shall be maintained in such change, and provide for the manner in which such value is to be determined.’ [9] According to the appellants, both the GEP Law and the rules place a premium on the relationship between the State, as employer, and its employees as members of the GEPF. Both the GEP law and the rules make various references to instances where negotiations or consultations are required, with the responsible Minister and the labour representative in the PSCBC or employee organisations. This is an aspect dealt with in some detail later in this judgment. The appellants were adamant that the need for consultation, negotiation and consensus, central to the employment relationship founded in the LRA, is a constant theme in the GEP law and the rules. [10] The rules set out the circumstances in which benefits become payable to members who leave the service of the State. A range of benefits, such as lump sum payments, gratuities and annuities, are payable under certain circumstances, including discharge from service, retirement or end of contract. Benefits will differ, depending on a member’s length of service, or whether they have reached pensionable age. [11] Rule 14.4 determines the benefits payable. The appellants submitted that the amendment of the actuarial interest factors in the formula in that sub-rule, giving rise to the application brought in the court below, is vital to the benefits to be paid to a member who resigns, dies, divorces, or is discharged either for misconduct, or on account of ill-health, or for a reason not specifically mentioned in the rules and who is not entitled to benefits provided elsewhere in the rules. The pensionable amounts of members in these categories depend directly on the application of the F(Z) and A(X) factors. Any amendment to the F(Z) or A(X) factors directly impacts upon the ultimate pension received by members. It was submitted on behalf of the appellants that this was the rationale behind the rules requiring consultation prior to an amendment of those factors. A decision to amend could only be determined by the GEPF Board, so the argument was made, by acting on the advice of an actuary after consultation with the Minister and employee organisations. [12] ‘Employee organisation’, according to the rules of the GEPF, includes: ‘1.6.1 an admitted employee organisation referred to in s 1 of the Public Service Labour Relations Act, 1994; 1.6.2 an admitted employee organisation referred to in s 1 of the Education Labour Relations Act 146 of 1993; 1.6.3 an employee organisation or other employee structure formed by personnel appointed in terms of the Intelligence Services Act 38 of 1994, the Defence Act 44 of 1957 and the South African Police Service Act 68 of 1995 (Act 68 of 1995) and which has for negotiation purposes been accepted by the employer.’ [13] In the envisaged consultation process, according to the appellants, the relevant parties will be provided with all the relevant information to enable meaningful engagement. The GEPF was accused of not having done any of this prior to the impugned decision being taken. [14] The appellants insisted that there had been no prior consultation, as contemplated in the rule, with either the PSA or any of the other employee organisations. The GEPF decision took effect on 1 April 2015. The first time that the PSA or the other two appellants became aware of the decision was during July 2015. The PSA became aware of the decision when it started receiving queries from its branches who, in turn, had been receiving enquiries from members. [15] After an article concerning the amendment was published in a Sunday newspaper with national circulation, some PSA members, including the second appellant, approached the PSA and complained about the absence of any response to their enquiries from the GEPF concerning the amendment. The second appellant, with reference to his latest pension benefit statement, wanted to know why the benefit initially indicated by the GEPF had been substantially reduced. This is how the statements and reduced benefit, on which the query was based, was described by the PSA: ‘This statement [as at 31 March 2015] reflects a resignation benefit of R2 547 716.00. In contrast, Mr van Wyk’s 31 May 2015 benefit statement … reflects a resignation benefit of R2 399 206.00. This is a reduction of R148 510.00 or 5.8%.’ [16] On 4 June 2015 Mr Abel Sithole, the then Acting Principal Executive Officer of the GEPF, wrote a letter to Mr Frikkie de Bruyn, General Secretary to the PSCBC, proposing that pension-related matters, including consultation on the actuarial interest factors and queries surrounding reduced actuarial interest, be placed on the agenda of the PSCBS’s next meeting. The following parts of the letter are instructive. First, Mr de Bruyn referred to sections of the GEP law and a number of rules, including rule 14.4.2, which require consultation and interaction by the Board with, amongst others, employee organisations and the Minister. The introductory sentence to the paragraph containing the references is revealing. It reads as follows: ‘The GEP Law and the GEPF Rules make various references to instances where negotiations or consultation is required with the Minister of Finance and/or labour representatives in the PSCBC or employee organisations, representing the Public Service, prior to any changes being made to, amongst others, the benefit structures of the Fund…’ (Emphasis added). [17] As revealing, is another part of that letter, which reads as follows: ‘[I]t seems appropriate for the Fund to establish a direct and ongoing relationship with the PSCBC…’ A stated motivation, amongst others, was ‘[t]o facilitate consultation or negotiations on the instances mentioned above (particularly around benefit improvements) as contemplated in the GEP Law and/or the GEPF Rules’. A little later in the letter, the Board made the following statement: ‘Due to a lack of such a direct ongoing relationship, the GEPF has had some difficulty in complying with the Rules around the consultation process with the PSCBC. This is in regard to the F(Z) and A(X) factors (also referred to as actuarial interest factors)... The consultation process regarding these factors has been a subject of material debate by the Board of Trustees of the GEPF in recent times…’ Towards the end of the letter the following appears: ‘In keeping with the main purpose of this letter, the GEPF would like to strengthen its relationship with the PSCBC so as to, amongst others, deal with this and any other matters and to facilitate the consultation process contemplated in the GEP Law and the Rules … We propose that pension-related matters be made a standing item in the PSCBC agenda wherein the GEPF will present any matters at the next PSCBC meeting’. This letter came to the PSA’s attention by virtue of its membership of the PSCBC. [18] When it became clear to the PSA that the GEPF wanted to consult, after the decision to amend had been made, the former wrote to the latter, requesting that the decision be withdrawn pending a proper consultation process. This met with no success. There was also no response from the Minister. [19] What followed was some form of post hoc consultation by the GEPF, not directly with employee organisations but rather through the medium of the PSCBC. A special PSCBC Council meeting was scheduled and held on 23 September 2015. The union representatives, after discussions about benefits in terms of the rules, stated that there was no endorsement of the presentation by the GEPF and requested that the amendments be put on hold so as to allow meaningful input from employees. [20] On 1 October 2015 Mr Sithole, now as Principal Executive Officer of the GEPF, received a letter from the GEPF’s actuary indicating that, due to administrative factors, the actuarial interest factors come into effect on 1 April in the year following the statutory valuation. In relation to the present case, that would mean it was put into effect on 1 April 2015. In short, this occurred before the envisaged consultation process. [21] On 7 October 2015, the PSA’s attorneys wrote to the GEPF calling upon it to reverse the decision to amend the actuarial factors and to re-instate the previously applicable factors. The GEPF’s attorneys responded by stating that the decision of the Board of Trustees stood, and that changes in the actuarial interest did not translate into a change in the benefit structure. [22] The PSCBC met again on 29 October 2015. By this time it had become clear that the GEPF had already implemented the amendments. Employee representatives asked that it be put on hold. A further meeting of the PSCBC took place on 11 December 2015. After the amendment of the actuarial interest factors had been discussed, unfortunately from the perspective of the PSA, the labour representative said the following: ‘[I]f they can then document that for us so that we are able to explain these issues well to the affected members, then on that note chair we do accept the proposals or the amendments as proposed by the GEPF.’ [23] The PSA insisted that the PSCBC process was not the proper one and that, in any event, what is recorded in the previous paragraph did not absolve the GEPF from having to comply with the rules and consult, not through the PSCBC but through the channel prescribed by the rules, namely, with employee organisations. The labour representative on the PSCBC could not bind the PSA. Not all of the employee organisations required to be consulted, so the PSA contended, are represented on the PSCBC. [24] On 5 January 2016, the GEPF’s attorneys wrote to the PSA stating that the GEPF’s position on the amendment to the actuarial factors remained unchanged. [25] The GEPF appears to have consulted with the Minister over an extended period, commencing in January 2013, which makes it all the more peculiar that the same emphasis was not placed on prior consultation with employee organisations, the PSA contended. [26] On 25 April 2016 the PSA demanded that the GEPF withdraw the amendment. The GEPF’s stance was that the PSCBC process amounted to a form of condonation of the amendment in question. Mr Sithole based this on the resolution passed at the PSCBC. The PSA was adamant that there is no mention of consultation with the PSCBC in the rules and that the PSCBC process was irrelevant. It also insisted that the PSA’s representative at the meeting was not present at the material time. The aforesaid were the bases for the review application in the court below. [27] In opposing the application, the GEPF pointed out that as at 31 March 2014 the GEPF had approximately 1 280 000 active members and approximately 367 000 pensioners. GEPF members are members of various trade unions, ‘most’ of which, according to the GEPF, are recognised and admitted members of the PSCBC. [28] The GEPF considered the role of the actuary in terms of the rules to be of cardinal importance. Rule 4.8 obliges the Board to appoint an actuary to be the valuator of the GEPF. In terms of rule 4.9 the valuation must be done at least every three years and the actuary must provide a report to the board. In the present case the Board considered it prudent to have a valuation done every two years. The GEPF noted the objectives of the valuation as follows: ‘The objectives of the statutory valuation of the GEPF are therefore, among other things, to: (a) investigate and report on the financial position of the GEPF on an ongoing basis by assessing whether the GEPF’s funding level meets the minimum funding requirement and the requirements of the GEPF’s funding policy; (b) analyse the financial progress of the GEPF since the previous statutory valuation; (c) analyse the sources of any surpluses or strains that have arisen in the inter-valuation period; (d) determine the assumptions to be used in the current valuation; (e) advise on the required changes, if any, to the actuarial factors; and (f) determine the required employer contribution rate for the period to the next valuation in respect of future service accrual and the expected strain or release to the GEPF if the employers contribute at a different rate.’ (My emphasis.) [29] According to the GEPF, the result of the actuary’s valuation is presented to the Board’s Benefits and Administration Sub-Committee, which then considers and interrogates it in detail. The subcommittee then makes a recommendation to the Board on whether it should be accepted and approved. The valuation of the GEPF in question in this appeal was at 31 March 2014. The suggestion appears to be that the actuary’s valuation trumps consultation with the employee organisations. [30] The GEPF denied that the decision taken to amend the actuarial factors constituted a decision reviewable under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The GEPF contended that the valuation conducted by the actuary showed that the actuarial interest factors decreased, on average, as a result of a change in the valuation basis which, in turn, came as a result of changes in demographic assumptions. The F(Z) factors decreased by 7.5% when compared to the previous F(Z) factors. The A(X) factors decreased on average by 3.5% when compared with the previous A(X) factors. The decrease in the actuarial factors reduces the value of the benefits payable to members to whom actuarial interest is due upon exit. All of this being taken into account, it was submitted on behalf of the GEPF that it is not surprising that one does not find any mention by the appellants that the actuarial factors recommended by the actuary were not reasonable and not based on actuarially sound principles. Furthermore, so it was submitted, the appellants have not shown that the recommended actuarial factors are not in the best interests of the GEPF. It has been shown, so it was said, that the PSA, even if they had been consulted before the decision to amend, would have asked the Board not to approve the factors. [31] I pause to set out the PSA’s response, in its replying affidavit, to those assertions by the GEPF. In short, first, notwithstanding the Board’s scepticism about whether employee organisations could make a meaningful contribution in relation to the actuarial report, rule 14.4.2 required it to consult with them. Second, the employee organisations could certainly question assumptions made by the actuaries and could question other aspects of the report. Third, employee organisations might want to consult and take advice from actuaries of their own. Fourth, employee organisations might have something to say about the timing and manner of the implementation of the amendments. Fifth, employee organisations, one would have to accept, would want to maximise benefits for their members. Last, employee organisations might make suggestions about increased contributions by government and engage in dialogue about it. [32] Minutes of the Board meeting reflected that the Board resolved on 3 December 2014 that rule 14.4.2 should be amended to require it to notify the Minister and employer organisations, rather than consult them. In terms of s 29 of the GEP Law, a rule which reduces the benefit payable from the GEPF may not have retrospective effect. The rule change and its validity, or subsequent implementation or otherwise, was not an issue in this case. In respect of the decision to alter the actuarial interest factors, the Minister notified the Board that he approved the decision. The GEPF dealt with the issue of prior consultation with employee organisations as is set out hereafter. [33] The GEPF referred, in the first instance, to the definition of ‘employee organisation’ in the rules of the GEPF. The GEPF contended that this meant the rules, properly construed, contemplated consultation with employee organisations at a forum where labour issues are ordinarily negotiated, namely the PSCBC. To require otherwise would be to fragment the consultation process. Moreover, so it was asserted on behalf of the GEPF, half of the Board members of the GEPF are appointed by members. Six of those are nominated by employee organisations. In light of the above, it was submitted that there can hardly be a complaint of a failure to consult employee organisations. [34] The Board, after the implementation of the amendment, sought to engage the PSCBC on the basis that it was prudent to do so. The GEPF noted that there had been no objection to the PSCBC process by the PSA. Furthermore, a PSA representative was present at the meeting on 11 December 2015, referred to earlier in this judgment. Consequently, he was part of the decision taken. On 14 April 2016 the PSCBC wrote to the GEPF, recording that there had been a full discussion of the amendment to the actuarial factors and that agreement had been reached on the implementation of the amendment. [35] It was submitted on behalf of the GEPF that the expression ‘after consultation’ did not mean that there had to be agreement between the person or entity being consulted and the decision maker. It was also submitted that the law permits consultation after the event, such as occurred in the present case. [36] The GEPF denied that the decision in question was an ‘administrative action’ in terms of the PAJA. It was contended that in making the decision the GEPF was not exercising a public power or performing a public function. It was asserted on behalf of the GEPF that the Board was doing no more than complying with its fiduciary duty to act in the best interests of the GEPF, its members and beneficiaries, on the advice of the actuary and within the requirements of the GEPF’s minimum funding levels. The GEPF took the view that, in the event it was held that the decision constituted an administrative action, there was in any event an unreasonable delay in bringing the application, which should not be condoned, especially since there have been subsequent valuations of the Fund. [37] The GEPF noted that there was no countervailing valuation put up by the PSA to contest the actuary’s valuation. It was submitted that there was case law in terms of which it was held that a decision by a Board of Trustees was not administrative action, as defined in case law. It was contended that to have the matter referred back for consultation would be a waste of time as consultation had already occurred. That, then, was the stance adopted by the GEPF. I now turn to the adjudication of the dispute by the court below. [38] In interpreting and applying the rule, the court below said the following: ‘On a purposive reading of the afore quoted passage, there appears to be two requirements that are to be considered when determining the respective factors, F(Z) and A(X). Those requirements are: advice from the actuary and consultations with the Minister and employee organisations. The first requirement is that of the advice of the actuary. The informed advice of the actuary is paramount in determining the respective factors. That advice is provided on the strength of inter alia important fiscal and other financial considerations that impact upon the determination of the respective factors, to which the Board of GEPF [does] not have access to, [nor] the required expertise to consider, analyse or make informed decisions thereon. The actuary referred to is that of the Board of the GEPF.’3 [39] The court went on to say the following concerning consultation: ‘The second requirement is that of consultation. The Board is obliged to consult with the Minister and the relevant employee organisations. This requirement appears from the language used in rule 14, the syntax thereof and the grammatical rules to be applied. The requirement follows on the use of a specific punctuation tool, ie a comma, which is immediately followed by the word “and”. The so-called Oxford comma. The purpose of the Oxford comma is to introduce a second category, in the present instance that of consultation. In the context of the GEP Law, the Board of the GEPF has fiduciary duties in respect of its members as well as towards the fiscus. The one is not more important than the other. Both are of equal importance. A balance is to be struck. It is submitted on behalf of the applicants that the requirement of consultation is to be complied with prior to a determination of the relevant factors. It is further submitted on their behalf, that the purpose of the prior consultation is to permit the consultees to obtain their own actuary to advise on what the appropriate factors should be. That submission would entail that the Minister would likewise be entitled to appoint his or her own actuary to advise on the appropriate factor. In my view, the context of the GEP Law and the rules promulgated thereunder, do not lean to such interpretation. As recorded above there is only one actuary involved, that of the GEPF. 3 Public Servants Association of South Africa and Others v Government Employers Pension Fund and Others [2019] ZAGPPHC 199 paras 10-11. (Citations omitted.) The purpose of the consultation required in the context of rule 14.4 is to inform the Minister and the employee organisations of the advice of the actuary and of the effect of the proposed factors and to discuss those issues, as those have financial implications not only for the employees, but also for the fiscus. It is of fundamental importance to note that the rule only requires consultation, and not the reaching of an agreement. The phrase used is “after consultation”. That phrase has been considered by the courts on numerous occasions. It means nothing more than discussion and not to arrive at an agreement. The importance of this difference is manifest. In my view, it does not matter whether the consultation took place prior to or after the taking of the decision. The requirement only requires consultation and in terms of the dictum in Premier, Western Cape v President of the Republic of South Africa4 … the Board of GEPF is not obliged to accept any input from the employee organisations. Compliance with the first requirement is common cause. The dispute is in respect of the second requirement. In this regard, there is ample proof that the Minister was consulted on the issue as required. The Minister in fact acquiesced in that regard in the form of a letter dated 28 January 2015.’5 [40] In relation to the time and manner of the consultation that took place, the court below stated: ‘It is common cause that the members have direct representation on the Board of GEPF. That much is clear from the composition of the Board of GEPF as recorded above. It is also common cause that the first applicant is represented on the Board of GEPF. It is further apparent from the answering affidavit of the GEPF, that a letter was addressed to the PSCBC during June 2015 from which it is clear that the GEPF was alive to the consultation 4 Premier, Western Cape v President of the Republic of South Africa 1999 (3) SA 657 (CC). 5 Public Servants Association (above fn 3) paras 12-19. (Citations omitted.) process and that the issue of the relevant factors advised on by the actuary would be discussed at the next PSCBC meeting. That meeting was held on 11 December 2015. The GEPF submitted that at the meeting of 11 December 2015, the PSCBC agreed to the implementation of the relevant factors provided by the actuary. It is further submitted by the GEPF that the first applicant had a representative on the PSCBC and, according to the attendance register, was present at the meeting. The minutes of that meeting do not reflect that the first applicant’s representative was late. Further in that regard, no proof was provided by the first [applicant], who bears the onus in that respect, of any late coming on the part of that representative. It follows that the first applicant was in fact “consulted” on the issue of the relevant factors to be used, both as a member of the Board of GEPF, as well as part of the PSCBC. At neither time was any objection raised. In my view, determining the relevant factor primarily depends upon the actuary’s advice. That much flows from the dicta in Premier, Western Cape v President of the Republic of South Africa…6 The GEPF is not obliged to accept the input of the employee organisations. Furthermore, in the present instance, both parties acquiesced in the determination of the relevant factors.’7 [41] Having reached the conclusions set out above the court below, as stated earlier, dismissed the application with costs. The court below, because of the manner in which it decided the dispute between the parties, did not consider it necessary to deal with the issue of whether condonation ought to have been granted and whether the decision to alter the actuarial interest factors constituted administrative action, as defined in the PAJA, and further, whether a conclusion in regard thereto would be decisive. We are required at the outset to deal with both of those questions. 6 Premier, Western Cape (above fn 4). 7 Public Servants Association (above fn 3) paras 20-24. (Citations omitted.) [42] There is presently no judicial consensus on whether decisions of pension funds, either generally, or in limited circumstances, constitute administrative action as contemplated in the PAJA.8 It must, in my view, depend on the nature of the power being exercised by the fund, having regard to the related statutory provision or rule under which it is exercised.9 However, in the present case, counsel were ultimately agreed that the classification of the decision to amend the interest factors is not decisive and that it is not strictly necessary for that analysis to be undertaken. The challenge to the decision in this case is based on a failure to comply with the rules of the GEPF, which are mandated by the PFA. It is, in essence, a legality challenge. It was accepted by the parties, condonation aside, that if we were to conclude that rule 14.4.2 dictates that consultation should precede a decision to alter the actuarial interest factors and that consultation has to take the form of consultation with employee organisations, rather than through the PSCBC, and that the majoritarian principle relied on by the GEPF before us was without merit, then the appeal should succeed. Conversely, if we were to incline on the side of the stance adopted by the GEPF, namely, that consultation could occur after the decision had been taken to alter the actuarial interest factors, that the PSCBC was an appropriate forum within which the consultation could take place and that the consultation process was of minor importance because it was superseded by the important role of the Board’s actuaries, the appeal falls to be dismissed. 8 See Gerson v Mondi Pension Fund and Others [2013] ZAGPPHC 160; 2013 (6) SA 162 (GJ) para 45 and the discussion preceding it. See also Moshoesoe v Sentinel Retirement Fund and Others GJ 13-09- 2019 case no 2506/19; 2019 JDR 1972 (GJ) para 11 et seq; Themba and Another v Retail Provident Fund (Shoprite) and Others WCC 06-05-2014 case no 9647/13 para 21; and the minority judgment in Government Employees Pension Fund and Another v Buitendag and Others [2006] ZASCA 166; 2007 (4) SA 2 (SCA) paras 24-30. 9 See Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; 2005 (6) SA 313 (SCA) para 24. [43] The enquiry into the delay in launching the review application is the anterior question, which will determine whether the other questions require to be addressed. Delay, and whether it should in the circumstances of a particular case be condoned, must feature in a PAJA or legality review. In terms of the PAJA the outer limit is 180 days from being informed, or from the time the person might reasonably have been expected to know, of the administrative action, within which an application for the review thereof must be brought.10 Section 9(2) of the PAJA enables a court, on application by a litigant, to grant an extension of the 180-day period ‘where the interests of justice so require’. In respect of a legality review, it is a long-standing rule that it must be initiated without undue delay and that courts have the discretion to refuse a review application in the face of an undue delay or to overlook the delay.11 In exercising that discretion a court must be informed by the values of the Constitution.12 [44] In considering whether the delay should be overlooked, a court will have regard to the delay and the attendant circumstances. The chronology of events has to be revisited. As stated at the beginning of this judgment, the Board resolution concerning the alteration of the actuarial interest factors was taken on 3 December 2014, contemplating implementation from 1 April 2015. In its founding affidavit, the PSA stated that it first obtained knowledge of the GEPF decision during July 2015. Shortly thereafter it received queries from members concerning the benefits they had received subsequent to the 10 See s 7(1) read with s 6(1) of the PAJA. 11 Altech Radio Holdings (Pty) Ltd and Others v City of Tshwane Metropolitan Municipality [2020] ZASCA 122 para 18. 12 Khumalo and Another v MEC for Education, Kwazulu-Natal [2013] ZACC 49; 2014 (5) SA 579 (CC) para 44. decision. The GEPF in its answering affidavit contended only that it was improbable that the PSA became aware of the impugned decision as late as July 2015 because its members served on the GEPF Board of Trustees, suggesting knowledge of the decision at an earlier stage and consequently an earlier court challenge. This stance by the GEPF discounts the continuing engagement between the parties after the decision was taken, albeit with entrenched attitudes on both sides. The GEPF does not, however, take issue with the assertion by the second appellant that he only became aware of the alteration and the effect it would have on his withdrawal benefits on 12 July 2016 when he was contacted by the PSA’s attorney. Nor does it take issue with the statement that the second appellant first approached the PSA with queries after an article on the amendment to the actuarial interest factors had appeared in a Sunday national newspaper during August 2015. The GEPF, in an attempt to sanitise its failure to engage employee organisations before the decision was taken engaged the PSCBC, by way of the letter referred to in para 17 above, proposing that pension related matters be discussed there and that issues such as consultation on actuarial interest be placed on the agenda for the next meeting of the PSCBC. [45] On 18 August 2015, the PSA wrote to the GEPF requesting that the decision be withdrawn, pending consultation as envisaged in rule 14.4.2. The GEPF, however, was determined to press on with the idea that the matter should be dealt with at the PSCBC. A special PSCBC Council meeting was held on 23 September 2015. Labour’s reaction was to call on the GEPF to put the amendments on hold. They requested time to make ‘meaningful inputs’. This, against the fact that the decision had already been taken. As to whether the PSCBC was the appropriate forum the Employer, in this case Government, asked whether it was there only as observer. It clearly did not understand its role. It was agreed by the meeting that labour would consult and revert. [46] On 7 October 2015 the PSA’s erstwhile attorneys wrote to the GEPF calling upon it to reverse the decision to alter the actuarial interest factors. It was pointed out that the decision was taken in contravention of the rules. The GEPF’s response, in a letter dated 28 October 2015, through its attorneys, is revealing. The following is the contents of that letter: ‘We wish to state the following:- 1) That the [Board of Trustees] is scheduled to meet on 4 December 2015 to amongst others deliberate on the matter and unless a resolution is passed by [it] setting aside its previous resolution relating to the “benefit structure”, the status quo shall remain. 2) That we wish not to deal at length with intricacies of this matter and failing of such should not be construed as an admission of any issues and our Client’s rights are fully reserved herein’ [47] A further meeting of the PSCBC was convened on 29 October 2015. Labour again called for the amendments to be put on hold. On 11 December 2015 the next meeting of the PSCBC was held. It was there where the labour representative responded as described in para 23 above. [48] On 5 January 2016 the GEPF’s attorneys wrote as follows: ‘1) That the [Board of Trustees] indeed has deliberated on this matter on 4 December 2015. 2) That’s its position as previously advised stands which has been extensively articulated on in principle that “changes in actuarial interests are not changes to the benefit structure, albeit such changes can result in an increase or a decrease in the amount of benefit paid to members on a particular mode of exit”.’ (Emphasis added). [49] On 29 January 2016 there was a further communication from the GEPF in which it was stated that agreement had been reached at the PSCBC in respect of issues related to the alteration of the actuarial interest factors. In April 2015 the PSA’s new attorneys wrote to the GEPF calling upon it to reverse its decision, failing which there would be an approach to court. On 28 April 2016 the GEPF wrote in response, stating that the last PSCBC meeting had 'condoned’ the application of the altered actuarial interest factors and expressing surprise that legal action was being threatened. [50] The PSA in its founding affidavit stated that as early as January 2016 it had instructed its erstwhile attorneys to prepare an application to court to compel the GEPF to consult with employee organisations as prescribed in the rules. When no progress was made it terminated the attorneys’ mandate. In April 2016 it engaged its present attorneys, who then sent the letter threatening litigation, referred to above. Subsequently the trade union, Solidarity, served court papers on the GEPF and on the PSA as an interested party. The PSA considered it prudent to obtain the advice of counsel on whether it should embark on its own litigation. That caused a further delay until the application that is the subject of this appeal was launched in July 2016. [51] It is true that the application could have been launched a few months earlier. It is equally true that the GEPF was intent on ratification, rather than consultation, and from the correspondence referred to above it is clear that it placed little value on the consultative process. This is an aspect to which I shall return when I deal with the merits and the submissions in relation thereto on behalf of the GEPF. It must also be borne in mind that the GEPF was dead set on pursuing the PSCBC route and insisted that ex post facto consultation of the kind it envisaged would suffice. [52] The PSA was emphatic that the setting aside of the GEPF decision would cause the GEPF no prejudice as it was aware, from the time that the PSA first challenged its decision that the decision would not be accepted, but it pushed ahead nonetheless and this has to be seen against the many members who were potentially prejudiced by its failure to consult. The allegations by the GEPF regarding prejudice are sparse. It did not give any indication of the precise number of affected members who left the GEPF since 1 April 2015, nor of the costs, it said ‘would be a huge burden on the administration of the GEPF’. It was, however, in the invidious position, that it had created for itself, of not knowing what a proper consultation process, involving a proper interrogation of actuarial assumptions and valuation, would yield. It could also not know whether a present valuation could meet a readjustment of actuarial interest factors for a limited category of persons, who left the fund after 1 April 2015. The actuarial factors were altered in favour of members once again in 2016. The category of persons affected is limited and the duration as well. The GEPF could not know whether there should be an approach to government to meet a shortfall, if that eventuated, or what government’s response would be. [53] I pause to point out that during oral argument before us it was accepted on behalf of the PSA that the wide nature of the relief sought in the notice of motion could not be sustained and that the court could not order that the prior actuarial factors be applied pending consultation. In the event that we inclined in the PSA’s favour it accepted that all that could be ordered was that the consultation that did not occur should take place. [54] In my view, on a conspectus of all the circumstances, including potential prejudice and having regard to the prospects of success on the merits, which I will deal with in due course, this is a case in which the delay should, whether in terms of the PAJA or on the basis of a legality review, be overlooked or excused. [55] I now turn to a consideration of the merits. It is clear that there is a distinction between situations in which a decision, by way of statutory prescripts or binding rules, has to be taken ‘in consultation’, and where a decision has to be taken ‘after consultation’. The former requires agreement and the latter requires that the decision be taken in good faith, after consulting and giving serious consideration to the view of the party that has to be consulted.13 [56] In Government of the Republic of South Africa v Government of KwaZulu and Another 1983 (1) SA 164 (A) this court said the following at 199G-200A: ‘The State President’s power to amend an area which has been declared by him to be a self-governing territory is not unlimited, for, since such an area is an area for which a legislative assembly has been established in terms of the provisions of s 1(1) [of the National States Constitution Act 21 of 1971], an amendment thereof may be made only after consultation by the Minister with the Cabinet of the territory concerned… It is clear from the aforegoing that the State 13 Unlawful Occupiers, School Site v City of Johannesburg [2005] ZASCA 7; 2005 (4) SA 199 (SCA) para 13. President’s powers ... are subject to the limitation that they may be exercised only after there has been consultation by the Minister with the Cabinet…’ (Emphasis added). [57] The sequence in rule 14.4.2 is clear. Consultation should occur before the decision is made and the party to be consulted should be afforded the opportunity to present a point of view that then must be seriously considered. It does not have to be accepted but it must be considered. Put differently, consultation was a precondition for a valid decision. The court below erred in not recognising this. [58] Furthermore, rule 14.4.2 specifies the functionaries that must be consulted, namely, employee organisations. In the past the identification of and consultation with the specified entities did not seem to pose a problem. ‘Employee organisations’, it will be recalled, are defined as set out in para 12 above. Some of the legislation referred to in that definition has been superseded by the LRA. During argument before us counsel for the parties were each requested to submit a note on the legislative changes that might have a bearing on the case. The changes and the belated submissions on behalf of the GEPF in that regard are dealt with hereafter. [59] As set out in para 12 above, the rules recognised as an ‘employee organisation’: an admitted employee organisation referred to in s 1 of the Public Service Labour Relations Act, 1994 (the PSLRA), an admitted employee organisation referred to in s 1 of the Education Labour Relations Act 146 of 1993 (ELRA), and an employee organisation or other ‘employee structure’ appointed in terms of the Intelligence Services Act 38 of 1994, the Defence Act 44 of 1957 and the South African Police Services Act 68 of 1995 and which has for negotiating purposes been accepted by the employer. The PSLRA defined an ‘admitted employee organisation’ as ‘any employee organisation referred to in s 26(5) and (6)’. Those subsections provide, inter alia, for the continued recognition of an organisation which had previously been a member of the chamber of the Public Services Bargaining Council at central level and for the recognition subsequent to the commencement of that Act to prove to the ‘relevant’ chamber by way of verified membership that they are ‘sufficiently’ representative of employees as determined by the constitution of the central chamber. Section 10 of the PSLRA deals with the admission of an employee organisation to the chambers of Council in order to participate in the proceedings thereof. Council was defined in the PSLRA as the Public Services Bargaining Council. [60] The ELRA defined ‘admitted employer organisation or employee organisation’ as follows: ‘such an organisation admitted to the Council in terms of the provisions of section 10’. That section provided that the Education Labour Relations Council was the entity to decide on the admission as an employee organisation. Similarly to the position in respect of the PSLRA, at least one of the criteria was whether the organisation sought to be admitted was sufficiently representative. [61] The PSLRA and the ELRA were repealed by the LRA. However, the provisions in the repealed statutes that relate to employee organisations were retained by the LRA. Section 212 of the LRA, read with Schedule 7, appears to have preserved the position of previously recognised employee organisations as provided for in the ELRA and the PSLRA. As stated earlier, identifying and consulting those organisations did not appear to have been a problem in the past. Consultation in terms of rule 14.4.2 must therefore mean consultation before a decision is reached with all previously recognised employee organisations. We know that in the present matter consultation beforehand was not conducted at all. There is no justification for the submission on behalf of the GEPF, namely, that the only employee organisations that have to be consulted in terms of rule 14.4.2 are those that meet the PSCBC membership threshold. It was never raised as an issue in the answering affidavit, nor was it raised in its interactions with the PSA and there appears no basis for it on a reading of any of the provisions of the related legislation or the rules of the GEPF. In any event, the PSA, a representative union, was not consulted and it was uncontested that NAPTOSA, a representative trade union, was not present at the last meeting of the PSCBC on which the GEPF relied. [62] The GEPF was dismissive of whatever potentially useful input might be received from employee organisations. It persisted in argument before us to elevate above any form of reproach the views of its actuaries. It sought to minimise the utility of the consultative process and maximise the weight of an actuarial report. Actuaries are statisticians who make assumptions in relation to risks in the field of pensions and in the insurance industry. They provide assistance in the valuation of pension funds. However, they, like other professionals, are not impeccable. Their assumptions and valuations are subject to interrogation and challenge. They might be proved right, or not. Consultation provides an opportunity for their views to be put to the test. [63] It must be borne in mind that the GEP law and the rules place primary responsibility for the administration and management of a fund on the Board.14 It is true that a Board must appoint an actuary to be a ‘valuator’ of a fund and is required to provide such a valuation periodically and to report thereon to the Board.15 The report makes recommendations in relation to any deficit or surplus in the fund. The actuary’s appointment is valid until terminated by the Board. The actuarial report must comply with s 16 of the Pension Funds Act 24 of 1956. It is the Board that ultimately takes decisions after recommendations are made. It is the Board that is required to consult the employee organisations as defined in the rules. Rule 14.4.2(b) makes it clear that it is the Board which determines the A(X) factor acting on the ‘advice’ of the actuary. There is no room for elevating the actuary above its station in the scheme of the GEP law and the rules. Section 29(5) makes the rules of the GEPF binding on the government, the GEPF, its members, pensioners, beneficiaries or any other person who has a claim against the GEPF. [64] This court is not called upon to decide the merits or demerits of the actuarial report on which the GEPF based its decision. The consultation process is where engagement on those issues will occur. Ultimately, when that process is completed the GEPF will be called upon to make a decision about appropriate actuarial interest factors. It makes sense that employee organisations should be consulted as their membership’s pension benefits are impacted. It does not behove the GEPF to downplay the consultative process. 14 Sections 6 and 7 of the GEP law and rule 4 of the rules of the GEPF. 15 Rules 4.8 and 4.9 of the GEPF rules. [65] Can the failure by the GEPF to consult beforehand be sanitised by the GEPF’s belated attempts to invoke the PSCBC as a forum through which, it was contended on behalf of the GEPF, the same result could be achieved? The short answer is no. The rule is clear about the sequence of events: first consultation, followed by a decision. Inverting the order in these circumstances makes a nonsense of consultation. The case law referred to above makes it clear that there must be a good faith consideration of what the consultation yields. In the present case the invocation of the PSCBC by the GEPF was an ill-advised attempt, not so much as to cure the incurable defect but rather to enforce the GEPF’s will. It was resorted to because the consultation with the various employee organisations proved tedious and burdensome. That much is clear from the GEPF’s own documents referred to above. [66] The powers and functions of a bargaining council are set out in s 28 of the LRA. They do not include dealing with a consultation process by a Board of Trustees, as determined by the rules of any pension fund. For present purposes I accept that pension matters could conceivably be part of a dispute between labour and employers, where for example it impacts on conditions of service and involves, say, a position adopted by an employer that employees feel aggrieved about. I also accept that employers, employees and pension funds could agree that the PSCBC be employed to reach agreement on matters of mutual concern.16 That was not the case here. The GEPF insisted on using 16 Section 31 of the GEP law provides for changes to benefit structures brought about by agreement reached in the bargaining structures for the Public Service. This, as opposed to rule 14.4.2, which provides for a specified consultation process when there is a specific intended alteration of actuarial factors. that forum to ‘consult’ after a decision was reached. As was pointed out earlier it was not a consultation process but was aimed at imposing its decision that had already been made. Section 51 of the LRA, which deals with the dispute resolution functions of a council concerning matters of mutual interest, envisage labour and employers in one or other guise on either side of a dispute. In this case there was no substantive dispute with the employer, nor indeed with the GEPF, except in relation to the process of consultation. In any event, at the first meeting of the PSCBC, referred to earlier in this judgment, the employer did not even know what its role was. It sought clarification on whether it was there as an observer. As was evident from the correspondence between the GEPF and the PSCBC, the former sought to use the latter to overcome what it considered to be a fragmented and burdensome process and wanted to impose its will. [67] The court below erred in taking into account in favour of the GEPF that labour representatives served on the Board of the GEPF and that this somehow excused the GEPF from consulting the employee organisations specified in rule 14.4.2. The rule requires consultation by the Board, qua Board, with employee organisations, not with the PSCBC, when there is a specific alteration of the actuarial interest factors. The Board has no power to act outside of the GEP law and the rules. It is obliged in terms of the rules to consult with employee organisations before settling on actuarial interest factors. It did not do so. The ‘majoritarianism’ principle on which counsel for the GEPF relied for the proposition that parties should be held to PSCBC decisions, where those that meet its threshold requirements, hold sway, is fallacious. The rules prescribed a specific consultative process before arriving at a decision. It had to be followed. It was not followed and consequently its decision is flawed and liable to be set aside. [68] In light of the conclusions reached the following order is made: The appeal is upheld with costs, including the costs of two counsel. The order of the court below is set aside and substituted as follows: ‘(a) The delay in bringing the application for review is excused; (b) The decision of the first respondent to amend, with effect from 1 April 2015, the F(Z) and A(X) factors utilised in the calculation of actuarial interest under Rule 14.4.2 of the Rules of the Government Employees Pension Fund is reviewed and set aside; (c) The first respondent is ordered to consult with the first applicant, the second respondent, the fourth to nineteenth respondents and all other employee organisations as defined in the Rules of the Government Employees Pension Fund concerning the calculation of the actuarial interest referred to in (b) above, in respect of those affected thereby; (d) The first respondent is to pay the costs of the application, including the costs of two counsel where so employed.’ _____________________ M S Navsa Judge of Appeal APPEARANCES For appellants: C E Watt-Pringle SC (with him M Sibanda) Instructed by: Faskin Inc Webbers, Bloemfontein For respondents: V Ngalwana SC (with him S Khumalo and F Karachi) Instructed by: Mohalutsi Attorneys Inc, Pretoria Bezuidenhouts Inc, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL The Public Servants Association of South Africa and others v Government Employees Pension Fund (Case no 886/2019) [2020] ZASCA 126 From: The Registrar Date: 9 October 2020 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgment of nor is it binding on the Supreme Court of Appeal Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against a decision of Van der Westhuizen J, sitting in the Gauteng Division of the High Court, Pretoria (the high court). The appeal was upheld with costs, including the costs of two counsel. The matter involved the interpretation and application of the rules of the First Respondent, the Government Employees pension Fund (the GEPF). In terms of the rules the GEPF was required to consult ‘employee organisations’ before making a decision concerning the alteration of actuarial interest factors employed in the calculation of benefits. The GEPF had made a decision without consulting the employee organisations. When the appellant, the Public Servants Association (the PSA) protested, the GEPF sought to use the Public Service Co-ordinating Bargaining Council (the PSCBC) as a means of ex post facto consultation. The high court held that the GEPF was justified in doing so. It took into account that the GEPF itself had employee representation on the Board as did the PSCBC and that the role of actuaries was the significant factor. It held the consultation requirement meant only that discussion and not agreement should ensue. It dismissed the application by the PSA to have the decision by the GEPF altering the actuarial interest factors set aside with costs, including the costs of two counsel. The SCA held that the envisaged consultation had to precede the decision and had to take the form prescribed by the rules, namely, with employee organisations. It rejected the argument that the views of the majority should prevail through the medium of the PSCBC. It held that consultation meant that the views of the entity or person that had to be consulted must be considered by the decision maker. It held further that the views of actuaries were subject to interrogation. In the result the appeal was upheld with costs including the costs of two counsel. The decision of the GEPF was set aside and it was ordered to consult with the employee organisations concerned.

3187

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT REPORTABLE Case no: 208/06 In the matter between MICHAEL CONSTANTARAS APPELLANT and BCE FOODSERVICE EQUIPMENT (PTY) LTD RESPONDENT Coram: FARLAM, BRAND, HEHER, JAFTA JJA and HANCKE AJA Heard: 23 MAY 2007 Delivered: 1 JUNE 2007 Summary: Close Corporations Act 69 of 1984 s 23 – purpose of – cheque signed on behalf of corporation not containing prescribed information – personal liability of signatory on non-payment by corporation – defence of rectification not available to meet claim under the Act. Practice – exception – striking out of plea – defendant entitled to opportunity to amend before granting of judgment. Neutral citation: This case may be cited as Constantaras v BCE Foodservice Equipment [2007] SCA 86 (RSA). ____________________________________________________________________ HEHER JA HEHER JA: [1] This judgment concerns the personal liability of the representative of a close corporation who signed and issued a cheque on its behalf at a time when the correct particulars of the corporation did not appear on the cheque. Such liability arises by reason of the provisions of s 23(2)1 of the Close Corporations Act 69 of 1984 (‘the Act’). [2] The plaintiff sued the defendant for payment of two amounts of R65 229,25 being the face value of two cheques dated 3 October 2004 and 3 November 2004 respectively drawn in its favour and dishonoured by non-payment. Each cheque reflected the printed description of the drawer as ‘Cater-Mart (Pty) Ltd 2000/001852/07’ and was signed by the defendant without an indication that he did so in a representative capacity. [3] The plaintiff alleged that the defendant was personally liable because he failed to indicate that he was signing for and on behalf of the corporation. In the alternative, and in the event that court should find that he did act in a representative capacity on behalf of the corporation, the plaintiff averred that he was nevertheless personally 1 S 23 provides as follows: ‘ (1) Every corporation- (a) shall display its registered full name (or a registered literal translation thereof into any one other official language of the Republic) and registration number in a conspicuous position and in characters easily legible on the outside of its registered office and every office or place in which its business is carried on; (b) shall have that name (or such translation thereof) and registration number mentioned in legible characters in all notices and other official publications of the corporation, including notices or other official publications in electronic format, and in all bills of exchange, promissory notes, endorsements, cheques and orders for money, goods or services purporting to be signed by or on behalf of the corporation, and all letters, delivery notes, invoices, receipts and letters of credit of the corporation; and (c) shall use a registered shortened form of that name only in conjunction with that name or such literal translation thereof. (2) If any member of, or any other person on behalf of, a corporation- (a) issues or authorizes the issue of any such notice or official publication of the corporation, or signs or authorizes to be signed on behalf of the corporation any such bill of exchange, promissory note, endorsement, cheque or order for money, goods or services; or (b) issues or authorises the issue of any such letter, delivery note, invoice, receipt or letter of credit of the corporation, without the name of the corporation, or such registered literal translation thereof, and its registration number being mentioned therein in accordance with subsection (1) (b), he shall be guilty of an offence, and shall further be liable to the holder of the bill of exchange, promissory note, cheque or order for money, goods or services for the amount thereof, unless the amount is duly paid by the corporation. (3) Any corporation which fails to comply with any provision of subsection (1) shall be guilty of an offence.’ liable in terms of s 23(2) for the amount of the cheque because in signing the cheque the defendant did so without ensuring that the registered full name and registration number of Cater-Mart appeared on the face of the cheque. [4] The defendant pleaded that he signed the cheque in his capacity as the authorized signatory of Cater-Mart CC registration number 2002/020821/23 and therefore did not incur personal liability on the cheque. Alternatively the defendant pleaded rectification in the following terms: ‘[I]t was the common continuing intention of the parties to the cheque, that, by signing the cheque as the duly authorized signatory of the corporation, the defendant was merely completing the signature of the corporation and was not binding himself to be personally liable thereon, and that, accordingly, should it be held by reason of his signature of the cheque that the defendant thereby incurred personal liability, this was a mistake common to the parties which justifies rectification of the cheque: 8.3.1 to reflect the words “for and on behalf of” before the words Cater-Mart” and/or 8.3.2 to substitute the words “CC 2002/020821/23” for the words “(Pty) Ltd 2000/001852/07”. [5] The defendant also pleaded an estoppel which plea was set aside on exception and with which it is unnecessary to deal further. [6] The plaintiff excepted to the defendant’s plea on the grounds that s 23(2) is peremptory in its terms and that rectification would circumvent the statutory provision and defeat the legislative intention and was therefore not a remedy upon which the defendant was entitled to rely. The court a quo (Tshiqi J) agreed. Following Epstein v Bell and Another2 the learned judge held the defendant’s liability arose from the 2 1997 (1) SA 483 (D) punitive provisions of the statute and was not contractual in origin and that rectification could therefore not assist the defendant. She accordingly upheld the exception and granted judgment in favour of the plaintiff. With her leave the defendant appealed to this Court. [7] Counsel for the defendant submitted in support of the appeal that once rectified to reflect a signature in a representative capacity, the close corporation would stand alone as the drawer. Rectification, he contended, would not defeat the purpose of s 23(2). Therefore it furnished a permissible remedy. Epstein v Bell was, he submitted, wrongly decided in so far as Magid J had followed distinguishable English authority. [8] Alternatively, so counsel argued, the description of the drawer on the cheque was merely out-dated. The company bearing that name and number had been converted to a close corporation. That was an alteration in legal status without the creation of a new or separate corporate identity and was, in his submission, irrelevant to s 23(2) of the Act (or to 50(3) of the Companies Act 61 of 1973 which contains equivalent provisions in relation to officers and agents of companies). Counsel referred to the terms of s 27(5)3 of the Act to emphasise his submission that s 23(2) was complied with in substance if not strictly in form. He maintained that ‘a simple search’ in the office of the Registrar of Companies would have revealed (if the respondent did not already know of the fact) that the company had converted to a close corporation. [9] The plaintiff’s claim arose ex lege as a remedy created by s 23(2) of the Act. The defendant relied on the defence of rectification to provide himself with an answer 3 ‘(5) (a) On the registration of a corporation converted from a company, the assets, rights, liabilities and obligations of the company shall vest in the corporation. (b) Any legal proceedings instituted by or against the company before the registration may be continued by or against the corporation, and any other thing done by or in respect of the company shall be deemed to have been done by or in respect of the corporation. (c) The conversion of a company into a corporation shall in particular not affect- (i) any liability of a director or officer of the company to the company on the ground of breach of trust or negligence, or to any other person pursuant to any provision of the Companies Act; or (ii) any liability of the company, or of any other person, as surety. (d) The juristic person which prior to the conversion of a company into a corporation existed as a company, shall to the statute: the cheque duly rectified would ex tunc be regarded as complying with its terms. If the statute does not permit of reliance on such a defence rectification will serve no purpose. The question is accordingly one of interpretation. [10] The whole of s 23 of the Act is relevant. According to its plain wording the principal purpose of ss (1) is to ensure that in its contact and dealings with the public a close corporation discloses in unmistakable terms (i) its corporate status; (ii) the fact of its registration as a close corporation; (iii) the full name under which it is registered; (iv) the number allotted to it on registration. The purpose is achieved, in the first instance, by requiring such disclosure by the corporation (a) on the outside of its registered office and every office in which the business of the corporation is carried on; and (b) on all notices and official publications of the corporation and in all bills of exchange, promissory notes, endorsements, cheques and orders for money, goods or services purporting to be signed by or on behalf of the corporation, and on all letters, delivery notes, invoices, receipts and letters of credit of the corporation. [11] The language is peremptory. A failure to comply constitutes an offence. It is clear that the offence is committed irrespective of whether any member of the public has actually seen a relevant document or whether such a person has been misled by any such document or been aware of the absence of the required particulars or their inaccuracy. The section protects the public by ensuring that it is not exposed to the risk of being misinformed or misled by requiring objective compliance in the documents themselves. It follows that where a member of the public is involved it is irrelevant that he does or does not know the true facts relating to the company. notwithstanding the conversion continue to exist as a juristic person but in the form of a corporation.’ [12] Section 23(2) reinforces ss (1) by imposing criminal and civil sanctions on members of the corporation and its representatives who issue or authorise the issue of the said documents and who sign on its behalf the bills, notes, endorsements, cheques and orders specified therein. The purpose is achieved by requiring compliance before or at the time the document in question is issued or signed. Here also it is apparent that the criminal offence which ss (2) creates is committed by the objective failure to comply without the need for communication to a third party. [13] The personal liability to holders which ss (2) imposes on members and representatives of the corporation who contravene its terms depends upon the same default as does the offence. The only additional factum probandum is that the corporation has not duly paid the amount of the bill, note, cheque or order. The state of mind of the holder, his knowledge or intention, does not suddenly become relevant; the mere fact of authorising or issuing a defective document in a specified category creates the liability4. In these circumstances, according to its terms the section creates a statutory civil penalty for non-compliance which arises independently of any contractual relationship which may exist between the holder of any document in the specified categories, the authoriser or signatory and the company. [14] Counsel for the appellant conceded that s 23(2) does not expressly render the state of mind of the holder of the instruments to which it relates relevant to the imposition of personal liability on the person who issues, authorises or signs the document. But, he submitted, there must be read into the section the qualification that in order for personal liability to arise the holder must be unaware of the true facts 4 It is not necessary to consider the possibility of raising an estoppel against the holder. relating to the status, registration, name and number of the corporation at the time of receiving the defective instrument. (He did not explain why rectification should be necessary to establish such awareness.) He submitted that the consequences of an interpretation which excluded such a qualification would be arbitrary, bear no relation to the degree of fault on the part of the holder and may result in an obligation to pay very great amounts of money. He did not, however, contend that the result would be absurd. [15] The structure of s 23 suggests that the legislature had in mind that the relatively light criminal sanctions of themselves would not be sufficient to procure compliance with the obligations of a corporation. It therefore added the weight of personal liability as a penalty likely to increase the effectiveness of the protection afforded to the public. There is an obvious correlation between the amount of the instrument, the degree of responsibility of the person authorising, signing, or issuing it and the loss suffered by the holder who must rely in the first instance on the corporation to pay the amount. Moreover the responsible member or representative can be expected to have an insight into the ability of the corporation to meet its debt which the holder will usually not possess. Thus, although the section may bear hard and even at times unfairly upon the responsible persons I do not agree that an implication of awareness on the part of the holder is necessary in order to give proper effect to the legislative purpose. [16] It follows that rectification of a document, which is an equitable remedy which requires proof of the common intention of all parties to a contractual instrument in order to place them in the relationship to each other that they intended, cannot and does not provide a defence against the claim of a holder who relies on the liability created by s 23(2). [17] That really is an end of the matter. But reference to the decided cases dealing with companies bears out the interpretation. [18] In Cotona Oil & Cake Ltd v Gangut and Another5 Hefer J said of s 50(3)(b) of the Companies Act, in his usual incisive manner, ‘The Legislature has seen fit to impose personal liability upon directors of companies who sign cheques in the form in which the present one was signed, and, in my view, the fact that the receiver of such a cheque is aware of the fact that it was intended to be signed on behalf of a company is irrelevant. The defendant’s defence is accordingly completely untenable.’ [19] In Abro v Softex Mattress (Pty) Ltd6 a promissory note and written orders were signed by the excipient in which the name of his principal was furnished as ‘Henwoods’. In fact Henwoods was a trading name of a company Libertas (Andries Street) (Pty) Ltd which name was not disclosed in the order. When the company failed to pay the respondent sued the recipient personally relying on s 58 of the Companies Act 46 of 1926 (a predecessor of s 50 of the 1973 Act). An exception on the ground that the note and orders did not purport to be signed by or on behalf of the company was dismissed. Henning J construed the statute. He recognised that its terms were imperative and found the language neither obscure nor ambiguous. He concluded that any misdescription of a company’s name or any omission therefrom was intended to render the section operative. [20] In Sadler v Nebraska (Pty) Ltd and Another7 the name of the drawer printed on the cheque was that of the respondent in the citation whereas the registered name of the company was Nebraska Manufacturing Co (Pty) Ltd. Goldstone AJ following Abro v Softex Mattress accepted the law to be that the section is to be strictly and literally interpreted and that any misdescription of the name of a company would render the signatory guilty of a criminal offence and personally liable to pay the holder in the event of non-payment by the company (at 722 F-H). [21] In Epstein v Bell8 two directors of South African Unlisted Securities Market Exchange (Pty) Ltd signed five cheques drawn on that company’s account. Each 5 1977 (1) PH A26 (N) 6 1973 (2) SA 346 (D) 7 1980 (4) SA 718 (W) 8 1997 (1) SA 483 (D) reflected the drawer as ‘SA Unlisted Sec Market Exchange (Pty) Ltd T/A USM Investments’. It was common cause that the directors were not responsible for the printed description and were unaware of the legal effects of signing a cheque bearing an abbreviated name of the drawer company. The company was identified by its registered number on the cheque. In an application for summary judgment against them, the directors relied on a right to rectification. Magid J granted judgment. He held that they were not sued as drawers of the cheques and their liability was not contractual but statutory. Accordingly rectification was not open to them. The learned judge did not rely on Blum v OCP Repartition SA9 (as submitted by counsel for the appellant) but found that the conclusion arrived at in that case coincided with his view10. He referred to the dictum of Hefer J in Cotona quoted above. In relation to a defence that mens rea was an element of the offence Magid J found that (i) the language of the prohibition was peremptory; (ii) the intention of the section was both strict and penal in its effect (referring in this regard11 to Scottish and Newcastle Breweries Ltd v Blair and Others12); the low penalty provided for the offence was an indication that mens rea was excluded; absence of mens rea would provide too easy and obvious an escape route and frustrate the statutory objective; even if mens rea were an element of the criminal offence, it did not follow that lack of the necessary mental element would entitle a director to escape civil liability, a consequence which the learned judge found to be at odds with the legislative intention. In my view all these findings are borne out by an analysis of s 23. Although Magid J did not say so, his conclusion regarding the exclusion of mens rea as an element in the offence must of itself have rendered rectification (which depends on proof of the subjective 9 1988 Palmer’s Company Cases 416 ([1988] BCLC 170 CA) 10 at 487C 11 at 489F 12 1967 SLT 72 at 73 intention of the parties) inapplicable. [22] In Van Lochen v Associated Office Contracts (Pty) Ltd and Another13 Malan J noted the cases which had required strict compliance with the section (or its equivalent in other legislation). He cited Atkins & Co v Wardle14 in which it was said that the provisions were enacted ‘with the intention of ensuring the strictest accuracy in this respect for the protection of the public’. The learned judge also referred to the history of the provision as set out by J T Pretorius ‘Die Aanspreeklikheid van Maatskappye in die Wisselreg’ in (1983) 100 SALJ 240 at 256-7. [23] Of the considerable number of English cases dealing with equivalent legislative provisions I propose to refer only to three. Counsel submitted that Blum v OCP Repartition SA15 was distinguishable. It seems to me, however, that, far from being so on grounds of differences between South African and English principles of rectification, the judgment serves to identify the essence of the weaknesses in the appellant’s argument. [24] In Blum the signatory to the cheque was a director of a company, Bomore Medical Supplies Ltd. The word ‘Limited’ was omitted from the drawer’s name on the instrument. The Court of Appeal (May and Balcombe LJJ) accepted that the intention of all concerned (the plaintiff payee, the defendant director, the bank joined as a third party by the defendants and the company itself) was that the cheques should be limited company cheques, paid by the company to the plaintiff on the company’s account with the bank in part settlement of the company’s liability to the defendant. May LJ pointed out that the claim based on the personal liability of the defendant was a claim on the statute and not a claim arising on the cheque16. (The defendant was not sued as a party to the cheque or the contract for which it was given.) The consequence was twofold: the liability of the defendant had to be determined in accordance with 13 2004 (3) SA 247 (W) 14 (1889) 58 LJQB 377 at 381 15 supra, fn 8 16 at 175e-g the statutory provisions; rectification was inapposite because the parties to the cheque, the company and the plaintiff had no need of rectification to give effect to their common intention17 and the only purpose of applying for rectification was the (forlorn) attempt to relieve the director of his statutory liability18. [25] The reasoning in Blum seems to me to be unexceptionable even in the context of South African law. Counsel submitted that it conflicted with established principles enunciated in, inter alia, Dickinson v SA General Electric Co (Pty) Ltd19 which afford the signatory of a cheque the right to apply for its rectification to reflect his representative capacity. But there is no conflict. Such a signatory is sued on the cheque because ex facie the cheque he is the drawer and the equitable defence of rectification permits him the opportunity to show that according to the common continuing intention of the parties he signed in a representative capacity. If however the signatory is sued on the statute the underlying assumption is that he indeed acted in a representative capacity but is not entitled by reason of non-compliance with its terms to rely on that capacity. So rectification cannot assist him. And because, as I have pointed out earlier, the knowledge and intention of the holder is likewise irrelevant, both props necessary to maintain a rectification defence have no significance in the determination of his liability. [26] In Penrose v Martyr20 (a judgment delivered two years after the enactment of the Joint Stock Companies Act 1856 (19 & 20 Vic c 47) which, in s 31, first imposed personal liability on company signatories) Crompton J said, ‘I think that intention of the enactment plainly was to prevent persons from being deceived into the belief that they had a security with the unlimited liability of common law, when they had but the security of Company limited; and that, if they were so deceived, they should have the personal security of the officer.’ (My emphasis.) 17 at 173g-i 18 at 174a; see also Rafsanjan Pistachio Producers Co-operative v Reiss [1990] BCLC 352 (QBD) at 361a-363e particularly at 363c. 19 1973 (2) SA 620 (A) at 629H-630A 20 (1858) EB & E 499 The first part of this passage has often been quoted with approval. The portion I have italicized does not, for the reasons I have given earlier seem correctly to reflect the anticipatory purpose inherent in s 23(2) which penalizes the authorisation, issue or signing of the specified documents without regard to the actual effect of those acts on any person. [27] In the Scottish and Newcastle Breweries case21, supra, Lord Hunter reached substantially the same conclusion. He said, ‘It was submitted by counsel for the compearing defenders that it was necessary to the operation of the statutory provisions in the present case that the pursuers should have been deceived or misled by the failure to mention the correct name of the Company in the said bill, and that, in the absence of any averment to that effect, the pursuers’ case was irrelevant. I can find nothing in the language of the statutory provisions which lends any support to such an argument, and the only shadow of support for it to be found in the authorities cited to me is one sentence in the judgment of Crompton, J., in Penrose v. Martyr (supra) at p. 503. I am far from clear that the sentence to which I have referred necessarily supports counsel’s submission, and in any event no trace of such a view is to be found in either of the other judgments in that case. The ration of the decision in Penrose v. Martyr appears to me to be that the defendant signed a bill on behalf of the Company without their name being mentioned on it. (See per L. Campbell, C.J., at p. 503.) I notice that the author of Gower on the Principles of Modern Company Law, 2nd edition, at p. 187, expresses the following opinion:-“It seems clear that it makes no difference that the third party concerned has not been misled by the misdescription”. With that opinion, having regard to the terms of the statutory provisions and to the authorities cited to me, I agree.’22 21 supra, fn 12, at 74 22 cf Gower’s Principles of Modern Company Law, 6ed (1997) by Paul L Davies, at 158: ‘It might be a useful reform to amend the subsection [s 349 (4) of the United Kingdom Companies Act 1985] by affording the signatory a defence if he could establish that the holder had not been misled by the misdirection; the recent decisions display a marked disinclination to apply the provision when that is so.’ (citing Lindholst & Co A/S v Fowler [1998] BCLC 166 (CA) and Rafsanjan, supra, fn 18) [28] I also do not accept the argument that there has, in the circumstances of this case, been compliance with the terms of the section. In the first place the terms of s 23(1) and (2) are peremptory in so far as they lay down the information which the company, its officers and agents are to furnish for the benefit of the public. The deviations from the requirements of the section were of such a nature as to deprive the public entirely of the prescribed details of the status and registration of the corporation. It is no answer to say that the defendant’s obligation would have been met if the plaintiff had made reasonable enquiries. [29] In the result it seems to me that the court a quo was correct in concluding that the defendant’s plea of rectification raised no sustainable defence to the plaintiff’s claim. [30] I have treated the argument relating to the sufficiency of compliance as one bearing on the question of the plaintiff’s knowledge of the true facts behind the corporation. In argument it was accepted by counsel that compliance with the statute in the absence of rectification was neither pleaded nor properly formed a component of the answer to the exception. Counsel then relied on in a different context. At the hearing the learned judge was asked, in the event that she upheld the exception and struck out the defence, to grant the defendant leave to amend his plea. She refused to do so remarking that no real basis had been made for the indulgence. The defendant appealed against her refusal. In argument counsel submitted that the rule is that a party whose pleading is struck down on exception is afforded such an opportunity as a matter of course. [31] That is certainly true of a successful exception to a summons: Group Five Building Ltd v Government of the Republic of South Africa (Minister of Public Works and Land Affairs 1993 (2) SA 593 (A) at 602I-603J. Such a rule is both understandable and necessary. Such an exception can never put an end to the dispute if a plaintiff has a viable alternative basis for its claim; even though the original claim is struck down without leave to amend, the plaintiff can always issue a new summons in which the alternative is pleaded. So refusing an amendment is merely a waste of costs. But the plaintiff may be blocked by prescription. In such a case said Corbett CJ in Group Five Building supra at 603A ‘it would be contrary to the general policy of the law to attach such drastic consequences to a finding that the plaintiff’s pleading discloses no cause of action’. Neither of these considerations is relevant to the striking down of a plea in its entirety. Prima facie the defendant no longer has an answer to the claim and the plaintiff is entitled to judgment. Whether that consequence is the correct one is considered in what follows. [32] In an obiter dictum in Princeps (Edms) Bpk en ‘n Ander v Van Heerden NO en Andere 1991 (3) SA 842 (T) at 845 Harms J said that in the Supreme Court an unsuccessful pleader is given the opportunity to amend his so-called plea, even when that plea has been set aside because it does not disclose a defence. The rationale seems to be that although the defence contained in the pleading may be bad the pleading as such continues to exist. In the Group Five Building case (at 603F-H) Corbett CJ quoted with approval from Johannesburg Municipality v Kerr 1915 WLD 35 at 37 in which Bristowe J said that although the quashing of an entire declaration on exception means that it is an absolute bar to any relief being obtained on it, that ‘does not take the declaration off the file or place the case in the same position as though no declaration had been delivered’. Despite the distinctions between the effects of the striking down of a particulars of claim and a plea to which I have earlier referred, it seems to me that, in principle, fundamentally defective pleadings emanating from a plaintiff and defendant should be dealt with on an equal footing. Since the rule referred to above is firmly established in relation to the defective pleading of claims we should therefore apply it mutatis mutandis to the flawed pleading of defences. That being so, Tshiqi J was wrong to treat the defendant’s application for time to consider an amendment of his plea as the seeking of a indulgence. In the absence of reason to believe the request was merely a ploy to delay the inevitable, such an opportunity should have been included in her order upholding the exception as a matter of course (even if no application had been made). Para 2 of the order made by the learned judge in which she granted judgment in favour of the appellant requires amendment in consequence of this conclusion. The respondent has, however, achieved substantial success and is entitled to the costs of the appeal including the costs of the application for leave to appeal (which were reserved). [33] The following order is made: 1. The appeal against paragraph 1 of the order of the court a quo is dismissed save as hereinafter set out. 2. Paragraph 2 of the order of the court a quo is set aside and replaced with the following: ‘2. The defendant is given leave, if so advised, to file an amended plea. 3. The costs of the proceedings on exception are to be paid by the defendant.’ 3. The filing of the amended plea for which provision is made in paragraph 2 is to take place within one month of the making of this order failing which the plaintiff may set the matter down for judgment. 4. The costs of appeal are to be paid by the appellant. ___________________ J A HEHER JUDGE OF APPEAL FARLAM JA )Concur BRAND JA ) JAFTA JA ) HANCKE 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: Friday 1 June 2007 Status: Immediate The Supreme Court of Appeal delivered judgment on 1 June 2007 in the matter of M Constantaras v BCE Foodservice Equipment (Pty) Ltd (208/06). The appeal involved s 23 of the Close Corporations Act which requires a corporation to include on its cheques (and certain other categories of documents) details of its correct name, description and registration number. It imposes personal liability on the signatory of a cheque on behalf of a corporation which does not contain such details, if the corporation does not pay the amount of the cheque to the holder. The appellant signed such a cheque. The respondent sued him relying on the statutorily-created liability. The appellant pleaded that he and the respondent were both aware that he was signing on behalf of the corporation and that both intended that the cheque should reflect the name of the corporation and the prescribed details but had mistakenly overlooked their absence at the time of signing and receiving the cheque. The appellant claimed rectification of the cheque to reflect the correct details. The respondent successfully excepted to the plea as disclosing no defence to the claim. On appeal the SCA held that the claim was brought under the statute the terms of s 23 are peremptory and require strict compliance by the corporation and its signatories; such liability arises independently of the knowledge of the holder of the cheque and is unaffected by such knowledge. Rectification is relevant to an action on the cheque or in contract but does not provides a defence to a claim under the statute. The appeal was accordingly dismissed. --ends--

1208

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT REPORTABLE Case number : 621/06 In the matter between : HENRY FRASER FIRST APPELLANT MAGDALENA GERTRUIDA FRASER SECOND APPELLANT and JOHANNA JACOMINA VILJOEN RESPONDENT CORAM : SCOTT, CAMERON, MTHIYANE, COMBRINCK, CACHALIA JJA DATE : 7 MARCH 2008 DELIVERED : 27 MARCH 2008 Summary: Sale of immovable property – authorising other party to insert material terms after delivery of uncompleted document – non-compliance with s 2(1) of Alienation of Land Act 68 of 1981 Neutral citation: Fraser v Viljoen (621/2006) [2008] ZASCA 24 (27 March 2008) COMBRINCK JA/ COMBRINCK JA: [1] This appeal concerns yet another of the seemingly unending number of cases where it is in issue whether a contract for the sale of immovable property complies with the provisions of the Alienation of Land Act, 68 of 1981 (‘the Act’). The appellants seek to enforce an agreement in terms of which they purchased a flat situated at Blythedale Beach KwaZulu-Natal. The respondent claims the agreement is null and void due to non-compliance with s 2(1) of the Act1. [2] The question for decision is one of law and is to be determined against the following factual background. The appellants occupy a flat described as 29 Wild Waves, Blythedale Beach, as lessees in terms of a monthly lease. The respondent is the lessor and owner. In April 2003 pursuant to a telephone call in which Mr Viljoen (respondent’s husband) confirmed a willingness to sell, the appellants sent an offer in the form of an uncompleted printed form relating to the purchase and sale of property held under sectional title to respondent. The names of the parties were left blank as was a description of the property. The purchase price of R180 000 was typed in in the appropriate clause as was the name and address of the appellants’ conveyancer. The offer was unsigned. It was forwarded under cover of a letter in which the following was said: ‘Dear Mr Viljoen Re: Purchase and sale Agreement. Kindly sign the enclosed agreement and post it back to me. You will notice that paragraphs 2.3. (a) is not completed as I do not have the description. Please let me have a copy of the title deed to enable us to draw the transfer papers properly. As soon as I receive the documents from you we will go ahead with the registration and transfer. Thanking you in anticipation Henry Fraser.’ On receipt of the document Mr Viljoen telephoned the appellants and advised that he was prepared to accept a price of R185 000. The first appellant then agreed to pay this price and requested the respondent to alter the figure and 1 ‘No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by both parties thereto or by their agents acting on their written authority.’ return the document. When the document was returned to the appellants, it now contained the following in manuscript: (i) The name of the seller (respondent); (ii) Alteration of the price to R185 000; (iii) The signature of respondent as seller together with the date and place of signature; (iv) The signature of two witnesses; (v) The initialling of all alterations and each page by respondent and her two witnesses. The document was inchoate containing neither the name of the purchasers, nor their signature, nor a description of the property. The appellants then obtained the full description of the property, inserted it in the document and they both signed it omitting, however, to record the date of signature. The document was then given to the appellants’ conveyancer to effect transfer. Thereafter for more than a year the conveyancers attempted in vain to get respondent to sign the documents necessary to effect transfer. She did, however, during February 2004 send a copy of her identity document when called upon to do so. Eventually by a letter dated 18 May 2004 the respondent indicated that she was no longer interested in disposing of her property. In a subsequent affidavit she said that they were no longer interested in selling as they intended moving into the flat and spending their retirement there. [3] The appellants on notice of motion sought a declaratory order to the effect that the contract of purchase and sale was valid and binding and that an order should issue compelling respondent to sign the necessary documents to effect transfer. The application was opposed on several grounds. The matter came before Pillay J in the Durban High Court. He dismissed the application on two grounds, first he held that the date of conclusion of the agreement was material as it impacted on other terms and the omission was fatal to the validity of the agreement. Second, he followed Sayers v Khan 2002 (5) SA 988 (C) and found that the omission in the agreement to reflect the provisions of s 2(2A) of the Act (the so-called ‘cooling off’ period) rendered the agreement null and void. (The judgment was handed down before this court held that Sayers v Khan was wrongly decided – see Gowar Investments (Pty) Ltd v Section 3 Dolphin Coast Medical Centre CC 2007 (3) SA 100 (SCA).) Leave to appeal was granted by the court a quo because of the conflicting judgments in the provincial divisions in the Sayers and Gowar Investments cases (the latter reported in 2006 (2) SA 15 (D).) From the judgment of Pillay J it does not appear that the issue raised before us was argued and the learned judge obviously did not deal with it. [4] The issue debated before us was whether in the light of the decisions of this court in Fourlamel (Pty) Ltd v Maddison 1977 (1) SA 333 (A) and Jurgens v Volkskas Bank Ltd 1993 (1) SA 214 (A), the agreement complied with s 2(1) of the Act. Fourlamel dealt with a deed of suretyship which was incomplete when signed by the surety. At that stage the name of the co-surety did not appear on the document nor had he signed it. Neither the name of the creditor nor that of the principal debtor had been filled in. These details were inserted at a later stage after signature. It was held that in order to comply with the section all the material terms had to be contained in the document at the time of signature. In Jurgens (also a case dealing with a deed of suretyship) greater leeway was given. In that case when the sureties signed the deeds they were incomplete and inchoate. The blank spaces were, however, filled in by secretaries after signature and then delivered to the bank for its signature. It was held that it is immaterial when the document was signed by the first party, whether before or after the missing terms had been filled in or alterations made, as long as all the material terms were in the document when it was delivered to the other party. The time of delivery to the other party for signature is therefore crucial and not the time of signature by the first party. It was common cause that the reasoning in these cases is equally applicable to incomplete deeds of sale of immovable property. (See Just Names Properties 11 CC v Fourie 2008 (1) SA 343 (SCA).) [5] Counsel for the appellants conceded that on the authority of Jurgens there had been non-compliance with s 2(1), it being common cause that the document in question did not contain a description of the property nor the names of the purchasers when delivered to the appellants by the respondent. He argued however, that the respondent had appointed the appellants as her agent for the purpose of completing the document by inserting a description of the property and their names as purchasers. On carrying out their mandate the agreement became valid and binding. Respondent’s counsel disputed the contention that on the papers it could be found that the appellants had been given the authority contended for by them. Even if they were so authorised, so it was submitted, to allow such evidence would open the door to the very mischief the Act was intended to address. [6] I shall accept without deciding that the respondent did authorise the appellants to fill in a description of the property. The question is, were the provisions of s 2(1) satisfied when appellants, duly authorised, completed the document when respondent had already signed it? The question was considered in Fourlamel where Miller JA at 344A-D had the following to say: ‘What is important to note in that connection, however, is that the question left open by the Court [in the matter of Levin v Drieprok Properties (Pty) Ltd 1975 (2) SA 397 (A)] related to an alteration made by the offeror's agent, not by any other person. Here, the additions to the deed of suretyship were not made by the respondent or his agent. The suggestion made by appellant's counsel that by signing the deed in blank the respondent tacitly authorized the appellant to fill in the blanks on his behalf, is untenable. Apart from the circumstance that the appellant, in a transaction of the kind that requires the terms of the agreement to be in writing, would be acting in the dual capacity of one of the contracting parties and the agent of the other contracting party (as to which, see Restatement of the Law, 2nd ed., vol. 1, para. 24, comment b), there is nothing in the papers to warrant an inference that such authority was given to the appellant or any other person.’ Although obiter, the reasoning is persuasive. The comment in the Restatement of the Law referred to by the learned judge reads: ‘(b) A party to a transaction within the Statute of Frauds cannot orally confer power upon the other party to the transaction to sign effectively a memorandum required to satisfy the provisions of the Statute.’ The same attitude seems to have been adopted in English Law. See Wilson & Sons v Pike [1949] 1 KB 176 at 180 where the decision in Farebrother v Simmons (1822) 5 B and A – 333 was quoted with approval but distinguished on the facts. The following was quoted in Wilson from the head note of the latter case: ‘The agent contemplated by s 17 of the Statute of Frauds, who is to bind a defendant by his signature, must be a third person, and not the other contracting party; and therefore, where an auctioneer wrote down the defendant’s name by his authority opposite the lot purchased: Held, that in an action brought in the name of the auctioneer, the entry in such book was not sufficient to take the case out of the Statute.’ The reason for adopting this approach is not difficult to find. It is sought to obviate disputes about the terms of agreements, exclude the possibility of fraud and perjury and avoid unnecessary litigation – the very mischief these types of statutes are aimed at. See in this regard Johnston v Leal 1980 (3) SA 927 (A) at 946H per Corbett JA: ‘The other possible obstacle to the admission of extrinsic evidence in this case is s 1 (1) itself and the policy underlying it, viz as already indicated, the prevention of uncertainty and disputes concerning the contents of contracts for the sale of land and of possible malpractices in regard thereto. The main effect of the section is to confine the parties to the written contract and to preclude reliance on an oral consensus not reflected therein.’ See further Fourlamel (supra) at page 343A and Philmatt (Pty) Ltd v Mosselbank Developments CC 1996 (2) SA 15 (A) at 25C-D. Were the one party to an agreement of sale of immovable property to appoint the other to be its agent for the aforementioned limited purpose of filling in a description of the property sold and the name of the purchaser the object of the legislation would be nullified. It would open the door to uncertainty as to precisely what the parties orally agreed upon and what the other party was authorised to do. The object of certainty would disappear. Had the Frasers returned the document to Viljoen for signature after the description of the property and the names of the purchasers had been inserted, there would have been a valid and binding agreement. Unfortunately this was not done. It follows that, in my view, the agreement is void for non- compliance with the Act. This conclusion makes it unnecessary to consider the question whether the date of conclusion of the agreement in this particular case was material. [7] It follows that the appeal must fail. The following order is made: The appeal is dismissed with costs. ……………………… P C COMBRINCK JUDGE OF APPEAL Concur: SCOTT JA CAMERON JA MTHIYANE JA CACHALIA JA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Case number: 621/06 In the matter between HENRY FRASER FIRST APPELLANT MAGDALENA GERTRUIDA FRASER SECOND APPELLANT and JOHANNA JACOMINA VILJOEN RESPONDENT From: The Registrar, Supreme Court of Appeal Date: 2008-03 Status: Immediate A couple living in Blythedale Beach, KZN, attempted to enforce a contract of sale of a flat to them. They were unsuccessful in the Durban High Court. In a judgment of the SCA, they, having taken the matter on appeal, were again unsuccessful though for different reasons. What had happened was, the purchaser had sent an incomplete pro forma agreement of sale for the sellers to complete and sign. The price had been agreed upon at R185 000. The agreement was returned signed, but without a description of the property sold and the names of the purchasers. These were filled in later by them but without sending the agreement back for further signature. The court held that the one party could not orally appoint the other to fill in material terms of the contract and accordingly that it did not comply with the Alienation of Land Act which requires all the terms of a sale to be in writing and signed by the parties. The contract was found to be null and void.

2387

non-electoral

2013

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 173/12 Reportable In the matter between: Robert Cheng-Li Tsung First Appellant Robert Hsu-Nan Tsung Second Appellant and Industrial Development Corporation of South Africa Limited First Respondent Findevco (Proprietary) Limited Second Respondent Neutral citation: Tsung v IDC (173/2012) [2013] ZASCA 26 (25 March 2013) Coram: Lewis, Cachalia, Theron JJA and Schoeman and Van der Merwe AJJA Heard: 20 February 2013 Delivered: 25 March 2013 Summary: Directors of a company held liable under s 424(1) of the Companies Act 61 of 1973 for conducting the business of the company at a time when it was insolvent, and knowing that the company would not be able to pay its creditors, by concluding transactions for their own gain. ORDER On appeal from: Western Cape High Court, Cape Town (Davis J sitting as court of first instance) The appeal is dismissed with costs including those of two counsel. JUDGMENT LEWIS JA (CACHALIA AND THERON JJA AND SCHOEMAN AND VAN DER MERWE AJJA concurring) [1] The appellants, father and son, Robert Cheng-Li Tsung and Robert Hsu-Nan Tsung, were the directors of Dynasty Textiles (Pty) Ltd (Textiles) which ran a textile factory in Atlantis, Cape Town. The respondents, the Industrial Development Corporation of South Africa Ltd (the IDC) and its financial arm, a wholly owned subsidiary, Findevco (Pty) Ltd (Findevco), instituted action against both appellants in the Western Cape High Court, claiming some R35 million (rounded off) in terms of s 424 of the Companies Act 61 of 1973, on the basis that the business of Textiles had been carried on by them recklessly or with the intention to defraud creditors of Textiles, in particular the IDC and Findevco. The action succeeded, Davis J declaring that the Tsungs’ conduct fell within the ambit of s 424(1) and that they were personally liable for an amount agreed (during the course of the trial) to be the quantum of their liability, R32 340 346. Leave to appeal against that decision was given by this court. [2] Section 424(1) reads: ‘When it appears, whether it be in a winding-up, judicial management or otherwise, that any business of the company was or is being carried on recklessly or with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the Court may, on the application of the Master, the liquidator, the judicial manager, any creditor or member or contributory of the company, declare that any person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct.’ (My emphasis.) (The other subsections of s 424 deal with the kinds of order that a court may make when a person is found to be liable for the reckless or fraudulent conduct of the business of a company, and with criminal liability. When I refer to s 424 alone it should generally be read to mean s 424(1).) Davis J found that the Tsungs had, on the probabilities, concluded three transactions that brought their conduct within the ambit of s 424. He declared them jointly and severally liable to Findevco for the sum agreed – R32 340 346. I shall deal with each of the three transactions in turn. But first the factual background must be explained: the context within which the Tsungs conducted the business of Textiles is all-important. [3] Tsung senior (to whom I shall refer as Robert) established a textile factory in the former ‘homeland’ Ciskei in the early eighties. He wished to take advantage of the tax incentives offered to businesses which were set up in the area. For this purpose he formed a company, Dynasty Garments (Pty) Ltd (Garments), which manufactured woven shirts and exported them, mainly to America. The business flourished and by 1985 employed some 850 people. But sanctions against South Africa, instituted in 1986, had a seriously adverse effect on the business and Garments changed its market and began to manufacture knitwear for the domestic market, selling to the South African clothing retailers. [4] The factory was located in an area that was in economic and political turmoil, and so the Tsungs decided to reduce their reliance on the local labour force and to produce cotton yarn instead. Garments ceased effectively to be operational by 1990 and Textiles was established to produce the yarn. The sole shareholder in Textiles was Lio Ho International Co Ltd (Lio Ho), a company incorporated in Hong Kong. The Tsungs were both directors of Textiles. (I shall refer to Dynasty Textiles as Textiles so as to distinguish it from Dynasty Garments. In passages quoted later in this judgment reference is made simply to Dynasty. It is the same entity as Textiles.) The shareholders in Lio Ho were the Tsungs and Robert’s wife, Lucy Tsung. [5] The production of yarn required major capital expenditure for plant and equipment, and the Tsungs (Tsung junior, to whom I shall refer as Bobby, having joined his father Robert in the Ciskei) decided to purchase the building in which the factory was operated. In order to fund this Textiles borrowed funds (about R5 million) from the IDC, and repaid it by 1998. [6] In that year too a bill – the African Growth and Opportunity Bill – was passed in the United States Senate to promote exports to America by African countries. The Tsungs wished to take advantage of the proposed benefits that the legislation (which did not ever materialize) would have. Textiles needed easy access to a large international port for that purpose and the Tsungs decided to relocate the factory to Atlantis in Cape Town. [7] In order to set up the factory in Atlantis, Lio Ho lent some R80 million to Textiles. Textiles approached the IDC for further funding, this time for R40 million. It was IDC’s requirement that the ratio between what Lio Ho invested in the company, and what it would invest, would be 2:1. Findevco then purchased plant and equipment from Lio Ho and sold it on to Textiles. The agreement was dated April 1997. It was labelled a ‘suspensive sale agreement’, although I fail to see what was suspensive about it. It was a sale with a reservation of ownership until the full purchase price and interest had been paid by Textiles to Findevco. The invoice from Lio Ho to Findevco in respect of the plant and machinery purchased was for US$7.84 million. The invoice was dated 30 November 1996. Lio Ho apparently left this sum in South Africa, on loan account, as working capital for Textiles. Findevco advanced R25.9 million to Textiles in respect of the machinery reflected on the invoice. [8] The Tsungs arranged for Tung Hung International Trading Company Ltd (Tung Hung) to transport the machinery from Hong Kong and to commission it in Atlantis. Tung Hung was not only a broker in this type of machinery but also a mover and installer of such plant and machinery. Its director, Mr Stephen Yang, himself visited the factory in Atlantis in 2000 and provided a valuation of it then of $10 million. (A great deal of the evidence led at the trial related to this valuation. I shall not deal with it for reasons that I shall explain.) The invoice in respect of the plant and machinery, as I have said, was some $7.84 million. [9] In November 1997 more equipment was purchased by Findevco and sold in turn to Textiles under a second ‘suspensive sale agreement’. The purchase price was R5.9 million. And as security for Textiles’ indebtedness to Findevco, Textiles registered a collateral mortgage bond over immovable property owned by it in Dimbaza in the Eastern Cape in favour of Findevco, and a notarial covering bond over its movable property – the machinery. [10] Textiles did well financially in 1998 and 1999. But in 2000 it started to struggle financially and did not meet all its payment obligations to Findevco. It was affected by the downturn in the global economic markets and by the crisis in the Asian economies in particular. Accordingly, when payments were not made to Findevco timeously, or at all, Textiles’ account was handed over to Mr Christo Fourie who headed the restructuring department of the IDC. Bobby testified that as early as 2000 he and Fourie had discussed the possibility of a debt-equity swap, but that Fourie had not been interested in it at that stage. However, in an effort to resolve the issue of non-payment, the IDC and Findevco concluded a debenture deed with Lio Ho in late 2000. What Bobby had had in mind instead was that Lio Ho would swap its equity in Textiles in reduction of its debt to Findevco, as the IDC had done with a competitor of Textiles, Prilla 2000 (Pty) Ltd (Prilla), to which the IDC had also lent money. [11] Bobby testified that although Textiles had still been profitable in 2000, the payments of interest to Findevco made it unable to meet its repayment of capital. Thus throughout 2001, 2002 and most of 2003 he had continued to negotiate with Fourie about a debt-equity swap. His view was that Prilla was able to compete against Textiles because the IDC had acquired, first, 70 per cent of Prilla’s equity, and subsequently all the shares in the company. Prilla’s interest obligations were thus reduced and then disappeared which meant that it could undercut Textiles’ prices. [12] Eventually, in August 2003, Fourie agreed that Findevco would swap Textiles’ debt to it for 80 per cent of the equity in Textiles, Lio Ho retaining the balance of 20 per cent. A draft agreement reflecting this was prepared in October or November of 2003, and a copy sent to Bobby for his comment. The proposed agreement was never concluded. But in anticipation of it Bobby agreed that the IDC, acting for Findevco, could perfect its notarial bond over the plant and machinery (by taking possession of it) which it did in November 2003. Bobby considered that the agreement was in effect concluded. And that appeared to be the view also of the Executive Policy Committee of the IDC which met on 6 November 2003. The minutes of the meeting record the following: ‘IDC is already effectively acting as a shareholder of Dynasty [Textiles] as it has not taken any legal action against Dynasty in spite of its non-payment, as Dynasty always kept IDC up to date with the status of the business and IDC’s recovery in a forced sale situation would be very low. However, IDC is not currently receiving any benefit for acting as a shareholder and it does not have any control over Dynasty’s operations. Converting IDC’s debt to equity will provide IDC with control over the business and the ability to determine decision-making and the future direction of the company. The existing shareholder [Lio Ho] is willing to give IDC management control of Dynasty, if required.’ [13] In the same report the IDC referred to the various factors that had led to Textiles’ inability to meet its commitments to Findevco – the collapse of the Asian economy, illegal importation of cheap textiles and clothing from East Asia, high local interest rates and the appreciation of the Rand in early 2003. It referred also to the retrenchment of half the workforce of Textiles in that year, and a scaling down of production. The report stated also that should Textiles not survive, the IDC would lose approximately R30 million. To avoid this, it would explore the possibility of a merger between Prilla and Textiles. [14] Once the IDC had perfected its notarial bond over the machinery of Textiles, it sold it to Prilla for R19 075 million. It is noteworthy that the machinery had been valued for substantially more than that by Yang in 2001, at R79 494 287, and that was reflected in the financial statements of Textiles. [15] In fact Bobby left South Africa with his family in December 2003. He advised Fourie at a meeting shortly before he left that he was going to live in Australia and that Robert would attend to the formalities for the debt-equity swap to be concluded. The events leading to their departure will be discussed later as the IDC argued that the Tsungs had an ‘exit strategy’, intending to strip Textiles of its funds, divert them to repay the Lio Ho loans, and then leave the country and the shell of the company behind. [16] Mr Jorge Maia, an economist employed by the IDC, was seconded to Textiles in January 2004 to facilitate the handover of the management of the company to the IDC and to prepare for the proposed merger between Textiles and Prilla. The former financial officer of Textiles, Mr Donald Campbell, left the company and went to work for Prilla in January 2004. [17] On 2 February 2004 Maia and Ms Angela Mhlanga, the financial manager of Textiles seconded by the IDC, wrote an ‘interim status report’ on the operations of Textiles and its financial status. For the sake of convenience I shall refer only to Maia when dealing with the report. Maia made some damning comments about the quality of the yarn produced, and the financial position of Textiles. He said, apropos shareholders’ loans: ‘These comprised ordinary shareholders loans and a loan from the Bank of Taiwan to Mr RCL Tsung and secured by family members, on behalf of Dynasty. Quoting from a statement made by Mr Donald Campbell on 23 January 200[4]: “from around March to May last year, Bobby Tsung realised that the business was going nowhere and decided to cash in.” What followed reflected a deliberate attempt by the shareholders assisted by the former management to repay shareholders’ loans and reduce their exposure to company risk by various means. Shareholders’ loans were repaid to the tune of R7,6 million over the ten-month period ending 31 December 2003. These repayments were effected through:  cash payments made to Mr Tsung or Lio Ho . . . including an amount of R1.6 million in May 2003 (pushing the FNB and Bank of Taiwan overdraft facilities towards significantly higher negative balances) as well as a total of R908 000, mostly in cash, paid during the last quarter of calendar 2003 . . .  recurring monthly payments, either through debit orders or direct settlement of personal liabilities; and  the outstanding balance on Mr RCL Tsung’s loan facility with the Bank of Taiwan (on behalf of Dynasty), but secured by personal unlimited guarantees and stand-by letters of credit opened by the Tsung family), was reduced by R3 million to R1 million during the course of December 2003. The overdraft facility had been stable throughout the previous nine months at a level of R4 million. This payment was made possible by significant receipts from debtors during the month of December.’ Maia continued: ‘In the opinion of the new management . . . no further repayments of shareholders loans should be effected until the company is in a position to do so.’ [18] Most damning of all is the following narration in the report: after being requested by Campbell on behalf of Robert to transfer some R200 000 overseas through Textiles’ bank account, and being told that such transactions had been done in the past, Maia investigated such previous transactions. He stated: ‘It became evident that one such transaction was effected through Dynasty’s FNB banking account towards end-December 2003 for the purpose of transferring USD 1 500 000 (R10 373 500) to the account of Lio Ho . . . at the Hong Kong and Shanghai Banking Corporation in Hong Kong.’ Maia noted that the following movements were recorded in the bank account: Two deposits on 23 December 2003 of R4 million each; a deposit on 24 December of R2.5 million; a withdrawal on 29 December 2003 of R3 412 500 and another the following day of R6 969 000. The sum withdrawn was paid to Lio Ho in Hong Kong. [19] This was the most controversial of the acts complained of by the IDC and I shall return to the evidence of Maia, Bobby and Campbell in this regard when considering whether the payment out of Textiles’ account constituted conduct falling within the ambit of s 424. For now, it is sufficient to note how Maia understood the transaction based on what Campbell had told him. He noted that the deposits emanated from the proceeds of the sale of properties by the Tsung family. The funds were channelled through the Textiles bank account, and the document presented to the bank (FNB) to support the transfer of what amounted to $1.5 million was an invoice from Lio Ho reflecting the sale of second-hand spinning mill machinery and equipment to Textiles in December 1996. The invoice had been stamped for exchange control approval of payment in 1997. The payment to Lio Ho, said Maia, resulted in a reduction in the shareholders’ loans by R10 372 500, and a corresponding credit to Garments for R10 500 000 (the amount of the deposit). The foreign liability was thus converted to a domestic liability. The inference that Maia drew in this regard was from entries in Textiles’ books of account which reflected that the deposits were made by Garments, and the credit was reflected against a Garments shareholder’s loan account. [20] Maia referred also to the overvaluation of the machinery by Yang which resulted in an inflation of the value of Dynasty’s assets. He concluded that the conduct of the Tsungs (to whom he referred as shareholders) reflected a ‘clear exit strategy’. This was evidenced by the following conduct (I do not refer to all the acts complained of): they had deliberately wound down the company’s operations; accelerated repayment of their shareholders’ loans; and used the company’s bank account for sending money overseas under false pretexts. Both Tsungs had left the country, Robert going to Hong Kong and Bobby to Australia. [21] The report referred further to a legal opinion that had been written at Maia’s request by the IDC’s attorney on the legality of the payment of R10.3 million to Lio Ho as well as to a pending forensic audit. He recommended that the signing of the debt-equity swap agreement be delayed and possibly reconsidered. Acting on his advice the IDC did not sign the debt- equity swap agreement and eventually instituted action under s 424 of the Act against the Tsungs. [22] I do not propose to traverse the evidence of the expert accountants who testified for both parties about the financial health of Textiles in the years leading to 2003 and in that year in particular. It is not disputed, at this stage, that Textiles was both factually and commercially insolvent by the end of 2003: its liabilities exceeded its assets by some R5.9 million at the beginning of the year, and it was unable to pay its creditors, principally Findevco, for most of that year. Many of Textiles’ employees had been retrenched during the course of the year, and by the end of it only a small part of the factory was operative. About ten workers were still employed. It had ceased trading in the ordinary course; it was in fact insolvent and it could not pay its creditors. On 17 December 2003, Fourie wrote to Campbell instructing that no payments should be made to Lio Ho or to the directors – the Tsungs. The payment of R10.3 million to Lio Ho was thus directly contrary to Fourie’s instruction. The reach of s 424(1) [23] The purpose of the section is to prevent the business of a company from being carried on in a reckless or fraudulent manner. The complaint of the IDC and Findevco (I shall refer mainly to the IDC, but such references, where appropriate, include Findevco as well) was, in essence, that the Tsungs had deliberately and fraudulently embarked on a strategy to ensure that they were able to take as much money as possible from Textiles when they left the country. They did this at a time when the company was unable to meet its financial commitments and did not advise the IDC of the transactions complained of, which were contrary not only to the instruction from Fourie on 17 December 2003, but also in breach of the suspensive sale agreements. The Tsungs denied any deliberate or reckless wrongdoing, but also argued that there was no causal link between the acts in issue and the inability of the company to pay its debts. Causation [24] Until recently it was clear from a series of decisions in this court that a plaintiff need not prove that the defendant’s conduct was the cause of the company’s inability to pay its creditors. This was affirmed in Howard v Herrigel and another NNO1 and Philotex (Pty) Ltd v Snyman.2 But in L & P Plant Hire BK v Bosch,3 Brand AJA pointed out that if a company was able to pay its debts, even if there was reckless conduct on the part of a person conducting the company’s business, the intention of the section (in fact the equivalent section dealing with close corporations)4 was not to create a joint and several liability with the company. [25] That statement was interpreted to mean, in Saincic v Industro-Clean (Pty) Ltd,5 that causation was a requirement to found liability under s 424. That would have been a deviation 1 Howard v Herrigel and another NNO 1991 (2) SA 660 (A) at 672C-E. 2 Philotex (Pty) Ltd v Snyman 1998 (2) SA 138 (SCA) at142G-I. 3 L & P Plant Hire BK v Bosch 2002 (2) SA 662 (SCA). 4 Section 64 of the Close Corporations Act 69 of 1984. 5 Saincic v Industro-Clean (Pty) Ltd 2009 (1) SA 528 (SCA). from Howard and from Philotex. However, Brand JA has recently explained what he intended in L & P Plant Hire. In Fourie v Firstrand Bank Ltd6 Brand JA said that he had not suggested that a causal requirement be introduced to found liability under the section: he had said, in the context of the L & P Plant Hire case, where the close corporation was able to pay its debts, that the reckless actors were not jointly and severally liable. If the company or close corporation were able to pay then no prejudice would be suffered by creditors. [26] In a case where a company was ‘hopelessly insolvent’, as was the case in Fourie, a causal link between the fraudulent or reckless conduct, and the company’s inability to pay its debt, does not have to be established. Counsel for the Tsungs argued that this court in Fourie nonetheless approved the judgments in Saincic to the effect that although causation as it is understood as a requirement for delictual liability is not required for liability under s 424, a causal link is somehow required as in the example given by Harms JA in that case in his separate concurring judgment. Harms JA suggested that where the reckless or fraudulent conduct occurs at a time when company A owes a debt to B, which does not affect A’s solvency at the time, but subsequently A incurs a debt to C when the affairs of A are being properly conducted, and A, for some reason, cannot then pay its debt, C would not be able to rely on s 424. The example, he said, illustrated that there must be some causation in order to found liability under s 424. [27] However, the passage does not suggest that there must be a causal link between the improper conduct and the inability of the company to pay its debt. It seems to me to hold no more than that there must be some link or connection in time between the conduct complained of and the company’s inability to pay. Brand JA went on to say, in Fourie,7 that Saincic recognized ‘an exception to this general principle where the converse had been positively established, namely that there was plainly no causal connection between the relevant conduct and the debt’, as in the example given by Harms JA. But, he said, even if the company’s 6 Fourie v Firstrand Bank Ltd 2013 (1) SA 204 (SCA) paras 27, 28 and 29. 7 Para 31. financial downfall resulted from the behaviour of other parties, if that was facilitated by the reckless or fraudulent conduct of the defendant, the latter would be liable under s 424, as Fourie was held to be. [28] Moreover, this court was careful to point out in Fourie that L & P Plant Hire had not changed the law. After citing the passage from Harms JA’s judgment8 Brand JA said9 that L & P Plant Hire was not authority for the proposition that where a company is insolvent ‘the plaintiff-creditor is required to establish a causal link between the fraudulent or reckless conduct relied upon and the company’s inability to pay its debt. On the contrary, L & P Plant Hire was never intended to deviate from those decisions of this court . . . [such as Howard and Philotex] which expressly laid down the general principle that s 424 does not require proof of a causal link between the relevant conduct and the company’s inability to pay the debt.’ Disregard of the corporate identity [29] Another important consideration in determining whether conduct falls within the ambit of s 424 is the separate legal identity of a corporate entity. In dealing with a close corporation, Cameron JA said this in Ebrahim v Airport Cold Storage (Pty) Ltd:10 ‘It need hardly be added that the function of the statutory provision also shapes its application. Although juristic persons are recognised by the Bill of Rights – they may be bound by its provisions, and may even receive its benefits – it is an apposite truism that close corporations and companies are imbued with identity only by virtue of statute. In this sense their separate existence remains a figment of law, liable to be curtailed or withdrawn when the objects of their creation are abused or thwarted. The section retracts the fundamental attribute of corporate personality, namely separate legal existence, with its corollary of autonomous and independent liability for debts, when the level of mismanagement of the corporation’s affairs exceeds the merely inept or incompetent and becomes heedlessly gross or 8 Para 29 in Saincic quoted in para 27 of Fourie. 9 Para 30. 10 Ebrahim v Airport Cold Storage (Pty) Ltd 2008 (6) SA 585 (SCA) para 15, dealing with s 64(1) of the Close Corporations Act 69 of 1984. Footnotes are omitted. dishonest. The provision in effect exacts a quid pro quo: for the benefit of immunity from liability for its debts, those running the corporation may not use its formal identity to incur obligations recklessly, grossly negligently or fraudulently. If they do, they risk being made personally liable.’ [30] In that case, a shelf close corporation was used in order to provide the delinquent member’s (A) creditor (B) with a VAT number. B had for some time supplied A with ‘comestibles’ (poultry, fish and the like) through a different entity, C. A transferred the entire debt owed by C to B to the new close corporation. It received no consideration for taking over the debt. A regarded the transfer as a formality. Cameron JA found that A had ‘no conception of, nor respect for, the fact that the CC was a distinct legal entity with a separate legal existence; that to sustain its separateness the law exacts compliances and formalities; and that it could not be used at will as the receptacle of another entity’s accumulated debts’.11 The section (64(1)) ‘targets just such heedlessness of corporate autonomy and form’, where the transfer of the debt showed reckless disregard for the solvency of the CC.12 This court upheld the finding of Griesel J in the Western Cape High Court that the Ebrahims had used the corporate entities concerned to pursue their own interests, having ‘scant regard’ for the separate identities of the various corporate entities and thus acting recklessly. Various acts, Griesel J found, formed ‘part of one composite complaint of abuse of the separate juristic personality’ of the close corporation.13 [31] It is clear, then, that if the IDC can show (and of course it bears the burden of proof) on the probabilities that the Tsungs acted recklessly or fraudulently in conducting the business of Textiles, and that Textiles was unable to pay its debts, they would be liable to it under s 424. Henochsberg on the Companies Act14 states that the carrying on of the business of a company recklessly means ‘carrying it on by conduct which evinces a lack of any genuine concern for its prosperity’. A fortiori if one deliberately depletes the company’s assets, or misuses its 11 Para 17. 12 See also Fourie v Newton [2011] 2 All SA 265 SCA. 13 Para 4 of the SCA judgment. 14 Edited by J A Kunst et al, service issue 33, 916(1), approved in Ebrahim para 18. corporate form for one’s own purposes, then that conduct will fall within the ambit of s 424. Henochsberg states also:15 ‘Ordinarily, if a company while carrying on its business incurs debts at a time when to the knowledge of its directors there is no reasonable prospect of the creditors’ ever receiving payment, there is a carrying on of its business with intent to defraud those creditors.’ Textiles’ inability to pay its debts [32] I turn then to the question whether the Tsungs knew that Textiles could not pay its debts and knowingly concluded transactions that exacerbated its inability to meet its obligations. I have already said that by the end of 2003 Textiles had retrenched all but ten of its staff and was operating only a very small part of its former business. Indeed, Bobby said, in his affidavit in support of an application for the liquidation of Textiles, deposed to in July 2006, that Textiles in 2003 was unable to pay its debts, was dormant and not trading. When testifying he insisted that he did not know what ‘dormant’ meant: that the company had indeed been carrying on business. But the fact is that the reason for the attempts to conclude the debt-equity swap agreement was precisely because Textiles could not pay the IDC what it owed. And Campbell confirmed that by November 2003 only a handful of staff were still employed and there was limited production. The expert witnesses for the Tsungs and the IDC considered that the company was factually and commercially insolvent. The fraudulent conduct of the Tsungs [33] As indicated earlier the IDC and Findevco relied upon several transactions in which they alleged that the Tsungs had acted recklessly or fraudulently. I shall deal only with those in respect of which Davis J in the high court made findings. 15 At 916(2) -916(3). Payment of R10.372 million to Lio Ho [34] I shall first discuss the payment into the Textiles bank account, and then the almost immediate transfer out to Lio Ho. I have already referred to the payment into the account of Textiles and the way in which it was reflected in the books. The assumption made by Maia, on which the IDC relied when it instituted action under s 424, was that the source of the payment to Textiles was Garments: that there had been a sale of property by a Tsung company, and that by paying into the account of Textiles the loan account of Garments to Textiles was extinguished (so it ceased to be a debtor and instead Textiles became Garments’ debtor). But Bobby testified that the payment was made not by Garments to Textiles but by another entity. In fact, Robert’s bank records reflect that he made the payment to Textiles from his personal account.The source of the funds, Bobby testified, was compensation for the expropriation of a golf course in the Eastern Cape. Since the owner of the golf course, Alexander Properties (Pty) Ltd (usually referred to as Xander Properties), had no bank account, and neither did Garments, it was channelled to Lio Ho through the Textiles account. On the Tsungs’ argument that account was used as a ‘conduit’. [35] The fact of Xander Properties’ ownership was not put to Maia when he was cross- examined. And his testimony that Campbell told him that he was instructed by the Tsungs to enter the transaction as a credit to Garments’ account was not challenged. But there is no evidence of any particular loan by Textiles to Garments and the entries in the books of account of Textiles are not supported by any documentation. Bobby’s evidence was of no help. He agreed that the payment was credited to Garments’ loan account. [36] The IDC argued that correspondence between Fourie and Bobby reflected that Bobby saw the transaction as one where Garments was repaying a loan to Textiles. In a memorandum to Bobby dated 12 February 2004, Fourie asked Bobby to respond to a number of queries, but in particular, for present purposes, to the comment that Textiles bank account was being used ‘for the transfer of funds of “affiliated” companies overseas, with such companies having no relation to Dynasty Textiles. The funds were channelled overseas utilising import documentation of Dynasty Textiles for exchange control purposes’. Bobby’s response, written on 15 February 2004, was that: ‘The affiliated companies repay the loan from Dynasty Textiles or lend to Dynasty Textiles to repay LIO HO. The net shareholder’s loan has not changed. This has been common practice throughout the years between 1990 and 2003. The IDC is aware of all these types of transactions in the past and had not found them to be improper.’ [37] This showed, argued the IDC, that the payment into Textiles was regarded as repayment of a loan to Textiles, but because it was in excess of what was apparently owed to Textiles, Garments became a creditor and Textiles a debtor, thus reducing its ability to pay its debt to the IDC. It is, however, hard to see how this construction is supported by the evidence, given that there is nothing to tell us what Garments in fact owed Textiles, if anything, and given also that we do not know on what basis the funds had become those of Garments. [38] The high court concluded that because of the payment of the funds into Textiles’ account, the ‘funds became the property of Dynasty Textiles’, converting Garments to a creditor. Textiles’ property was thus used to repay a shareholder’s loan ‘at the time when Dynasty Textiles was factually and commercially insolvent and in flagrant breach of contractual obligations, which defendants owed to plaintiffs in respect of payments for example, to Lio Ho’. [39] I do not accept the finding that the R10.3 million became the property of Textiles (although technically the money was owned by the bank, which had a contractual obligation to pay Textiles if required to do so).16 The indiciae are that the compensation for expropriation 16 See in this regard First National Bank of Southern Africa Ltd v Perry NO 2001 (3) SA 960 (SCA), confirming what has long been trite. was paid to Robert, who used the Textiles bank account as a conduit to send money to Lio Ho in Hong Kong. But that is not the end of the matter. [40] The next question is whether the Tsungs fraudulently (or recklessly) used the document issued to Textiles in 1997, reflecting the sale of equipment by Lio Ho to Textiles, and in respect of which exchange control approval for payment was granted. Clearly the payment was made contrary to the instruction of Fourie to which I have referred. [41] Much was made in argument before us of the misuse of the invoice from Lio Ho issued in 1996 for equipment that had been sold to Findevco. The invoice was issued by Lio Ho to Textiles on 30 November 1996. It was in respect of machinery, the price being $7 844 million. Treasury approval for payment was given in May 1997. When Campbell, acting for Textiles and on the instructions of the Tsungs, remitted R10.3 million to Lio Ho in Hong Kong in December 2003, this elderly invoice with its foreign exchange approval was used to facilitate that payment. The invoice was stamped by ‘FNB Forex’ on 2 January 2004. [42] When Maia discovered this he consulted the IDC’s attorney, Mr David Anderson, about potential liability for exchange control contravention. Maia informed Anderson that the payment into Textiles’ bank account was repayment of a loan by Garments. The advice sought was whether IDC had an obligation to disclose to the Reserve Bank that the payment to Lio Ho was ‘ostensibly’ made in relation to exchange control approval granted for imports in 1997. Anderson advised that the regulations did not require a creditor to advise the Reserve Bank of a contravention by a debtor. He said in an email following a consultation that: ‘Textiles obtained exchange control approval for the repayment of the debt owing by Textiles to Lio Ho in relation to the Imports. Any payment made by Textiles in December 2003 to Lio as repayment of the Imports is legitimate and not contrary to the Regulations. The fact that the funds were raised by means of a loan from Garments . . . is generally not problematic . . . .’ [43] Reliance on this advice by the Tsungs, in arguing that the IDC’s attorney had considered the transaction as one that was not in contravention of exchange control regulations, is misplaced. The opinion was based on the information that Garments had repaid a loan to Textiles, which the Tsungs now argue was not the case. If the Tsungs’ argument that the Textiles bank account was used as a conduit is correct, then clearly there was a misuse of authority given to Textiles some years previously. Indeed, Bobby stated that when the IDC advanced funding to Textiles it was advised that there would be ‘channelling through Dynasty Textiles and its invoices through the approved exchange controlled invoices back into Lio Ho International over to overseas’. [44] The gravamen of Bobby’s evidence in this regard was that IDC was not deceived. Fourie knew that money was channelled ‘in and out, sometimes not for the purpose of Dynasty Textiles’. When cross-examined he said that ‘I knew the money that did not belong to Dynasty Textiles was being put into Dynasty Textiles and will eventually exit via Dynasty Textiles. I was aware of that, yes.’ He conceded also that the payment to Lio Ho in December 2003 in reliance on the 1996 invoice and 1997 Treasury approval actually had nothing to do with Textiles itself. He testified that the process, and previous use of the account as a channel, had been approved by the company auditors. But he could not name the auditor who had given such approval and it is improbable that any auditor would have sanctioned the misuse of exchange control approvals in this way. [45] In my view the Textiles account was indeed used as a conduit: but in making use of the account in that way the Tsungs were, at the least, recklessly carrying on the business of the company by using its bank account as a channel for payments and making false entries in the books of account. More significantly they were dishonestly using foreign exchange approval given to Textiles in remitting funds, unrelated in any way to Textiles, to Lio Ho. They were deliberately using documents of Textiles for a purpose that was not intended. While Textiles may not have suffered any actual loss as a result of this transaction (no causal connection is required), it in fact could not pay its debts in December 2003 and the Tsungs knew this full well. [46] The payment to Lio Ho did not cause the company to fail. But at a time when it had failed they falsely used an invoice provided to Textiles, and Treasury approval given to Textiles, to remit what was, on their version, Robert’s money to Lio Ho. They put Textiles at risk of prosecution. In my view, their conduct showed not just a reckless, but a deliberate, disregard for the prosperity of Textiles. The Tsungs treated Textiles’ bank account as their own, ignoring the corporate entity and making themselves vulnerable to having the benefit of immunity from its liabilities removed. The statements from Cameron JA’s judgment in Ebrahim cited above are particularly apposite here. [47] I consider that the Tsungs used a Textiles document and bank account for a fraudulent purpose and brought themselves within the ambit of s 424. The inference is inescapable that they were using the Textiles account as a conduit – part of their strategy to get money (in this case, on their version, compensation for the expropriation of a golf course) out of the country falsely using Textiles’ invoice for plant and equipment bought from Lio Ho. I shall return to this conclusion after examining the other transactions for they all show a pattern of conduct. The Bank of Taiwan repayments [48] One of the matters on which Maia reported in February 2004 was the payment by Textiles to the Bank of Taiwan of some R3 million over the period from 3 to 17 December 2003. At the time Textiles’ account with FNB was overdrawn. The payments were made into Bobby’s account with the Bank of Taiwan, and had the effect of reducing the overdraft in that account from R4 million to R1 million, that is, by R3 million. The reason advanced by Bobby for the payment was so that combing machines in the Atlantis factory could be released from the security held by the Bank of Taiwan over the machines in order to facilitate the debt-equity swap. However, when Textiles purchased the combing machines they had been specifically excluded from the embrace of the general notarial bond in favour of Findevco or the Bank of Taiwan would not have agreed to advance funds to Textiles. [49] Fourie of the IDC did not know of the payments made in December 2003, and had in fact prohibited payments to the shareholders and directors of Textiles on 17 December 2003, as has been discussed. Indeed a year before then, on 13 November 2002, Fourie had written to Bobby saying that during ‘a period that a company is facing financial difficulty and especially when a company is not able to honour its commitments to its lenders one would expect the company’s shareholders to inject additional funding and to restrict their withdrawals and therefore not to repay shareholders’ loans before honouring commitments to its lenders’. [50] Indeed it was a term of the suspensive sale agreement that Textiles would not repay any shareholders’ loans or make payments to its directors without the written consent of Findevco. However, the prohibitions were subject to thresholds and it was not proved that those threshholds were reached. So it is not entirely clear that these payments were made in breach of contract. [51] However, the effect of these payments was to reduce Bobby’s liability to the Bank of Taiwan and to reduce the assets of Textiles. The payments were made when the Tsungs knew that Textiles was insolvent and when both were planning to leave South Africa. The Tsungs also knew that the payments were made contrary to Fourie’s instruction. While Bobby testified that Fourie had known about these payments, this is contrary to the written comment of Fourie and to his instruction, and it was never put to him that he had known of, let alone authorized, these payments. Again, the inference is inescapable that the Tsungs deliberately diminished Textiles’ ability to repay its debts, thus bringing their conduct within the ambit of s 424. It is no defence to say, as counsel for the Tsungs did, that the payments were made to a legitimate creditor of Textiles and that they were thus neutral. The payments had the effect of reducing the Tsungs’ personal liability, and aggravating Textiles’ inability to pay its creditors. [52] While I accept that the preference of one creditor over another does not in itself amount to reckless or fraudulent carrying on of a business, I consider that this conduct, examined in context, and coloured by the exit strategy, was a deliberate means of reducing the Tsungs’ personal liability at the expense of Textiles’ creditors. Payment of the Tsungs’ personal expenses [53] Garments did not have a bank account. But it did have a Diners Club credit card. Textiles paid the credit card account. The Tsungs paid for their very lavish lifestyle on the Diners Card. The statements from the bank reflect vast sums spent on clothing, golf courses and restaurants, among other things. None of this is disputed. Nor is it disputed that in 2003, the year of Bobby’s departure from South Africa, he bought a new vehicle in Australia, paid emigration consultants and a furniture removal company and bought air tickets for himself and his family to leave for Australia, all on the Diners Club card. [54] The Tsungs contended that since the inception of Textiles their expenses had been paid in this way: it was in lieu of payment as directors, had been sanctioned by their auditor, and was in the normal course set off against their shareholders’ loans at the end of every financial year. Campbell said that this was the procedure followed, and that the IDC conducted internal audits. He testified that there was a clause in the IDC agreements that limited what the Tsungs ‘could draw out’ each year. [55] It would have been apparent from a glance at the Diners Club statements that the card was used for personal purposes, given the nature of the expenditure. Thus the IDC must have sanctioned payment by Textiles of the account, it was argued. Moreover, the contention went, the amounts were nominal. However, the total expenditure on what were clearly lifestyle expenses in 2003 exceeded R1 million. In addition, school fees for one of Bobby’s children had been paid out of the Textiles account. [56] Moreover, Lio Ho had ceded (in February 1997) to the IDC, as security for the performance of its obligations under the suspensive sale agreement, its right to all amounts standing to the credit of its loan account in Textiles. And Bobby could not say which auditor had sanctioned such book entries. Although the practice may have been to debit the shareholder’s loan account at the end of each financial year to offset these personal expenses, in fact for the 2003 year no such transaction was effected. Textiles’ insolvency was exacerbated. [57] As argued by the IDC, payment by a company of a director’s personal costs is a breach of a fiduciary duty, and is unlawful. In S v De Jager17 this court held that De Jager was guilty of theft because he had paid personal expenses from a company’s account. The defence that his conduct was justified because his loan account was in credit was rejected on the facts. In that case too the director charged with theft argued that his conduct was not unlawful because the company’s shareholders (of whom he was one) had agreed that the company’s funds be used to pay his debts. Holmes JA held that this contention could not succeed: it entailed the consequence that a shareholder could agree to the company being ‘despoiled’ by a director, and offended also against the basic principle of limited liability. 17 S v De Jager 1965 (2) SA 616 (A) at 624H-625A. [58] Counsel for the Tsungs argued that De Jager is distinguishable because there the accused’s loan account was not in credit. I see no distinction. And even if the Tsungs’ conduct in this regard did not amount to theft (on which I make no finding) it certainly amounted to the dishonest use of Textiles’ funds at a time when Textiles was unable to pay its debts – not only to the IDC but to other creditors as well. This conduct too falls within the ambit of s 424. The exit strategy [59] I have found that each of the three transactions or courses of conduct which the high court considered gave rise to s 424 liability was in itself sufficient to warrant that the Tsungs be held liable under the section. It is important, however, additionally to place their conduct in context to show that they did not intend to rescue Textiles by concluding the debt-equity swap: they knew that the equity would be substantially diminished when they left the country. They deceived the IDC. [60] I have already referred to Maia’s description of their conduct as an ‘exit strategy’. He said in evidence that while the Tsungs had appeared to be working with the IDC to conclude the debt-equity swap agreement, such that the IDC (Findevco) would acquire 80 per cent of Textiles, they had at the same time planned their emigration, and to take with them as much money from Textiles as they could. The IDC had negotiated in good faith, assuming that the Tsungs also wished to save Textiles, when in fact they were ‘doing exactly the opposite’. [61] In his affidavit in support of an application to attach the Tsungs’ property in 2004, Maia referred to Bobby’s admission to him early in December 2003 that he was emigrating to Australia. Robert told him in January 2004 that he too was leaving, going to Hong Kong. During the course of 2003 Bobby had (with the Garments Diners Club credit card) paid for flights to and from Australia, paid school fees in Australia, bought a car, paid emigration consultants, and the furniture removal company. Indeed it is probable that he had planned the move in the previous year: the Diners Club statements for 2002 reflected payments for flights and expenses in Australia. And in evidence Bobby acknowledged that he had bought a house in Australia in 2002. [62] In the face of all this, Bobby maintained when testifying that he made the decision to emigrate only in December 2003. He waited, he said, until the debt-equity swap was finalized and only then did he decide to leave. His evidence was rightly disbelieved by Davis J. [63] The Tsungs did not advise the IDC of their intention to leave South Africa while they negotiated the transfer of their equity to it. Despite meetings with IDC staff and Fourie in the course of the year they made no mention of their plan. Only in December 2003, when transactions that fell foul of s 424 had already been concluded, did Bobby advise the IDC that he was going. And after he went Robert paid the R10.3 million into Textiles and Campbell was instructed to pay that sum to Lio Ho, using an old invoice and old Treasury approval to remit the funds. [64] If one has regard to these facts it is plain that the payments made to Lio Ho, to the Bank of Taiwan and in respect of the Tsungs’ personal expenses, were for their personal gain and not for the benefit of Textiles or its creditors. They deliberately eviscerated the company. They used the corporate shell not for its prosperity but to recover their personal investment. [65] As I have said, when instituting action and running the trial the IDC relied on several additional acts to show that the Tsungs should be held personally liable for Textiles’ debt. I have dealt with only three, as did Davis J in the high court. In view of the conclusion to which I have come, I consider that there is no need to consider the other conduct. Costs of postponement [66] At the end of the trial the Tsungs asked for the costs of a postponement requested by the IDC and Findevco. The parties had agreed that the question of those costs would stand over for determination when judgment was given. But the high court made no mention of these costs ‘seemingly per incuriam’, according to counsel for the Tsungs. The reason for the postponement was that the IDC and Findevco made discovery of an additional 600 pages of documents shortly before the trial was due to commence. They had also filed an expert report out of time. The Tsungs required time to consider the documents and report. They argued that the wasted costs occasioned by the postponement should be borne by the IDC and Findevco. [67] The response of the IDC and Findevco is that the documents and the report related to the extent of the liability, and had become irrelevant once the parties had agreed on quantum. The report was itself a response to the Tsungs’ expert’s report, and the late filing had caused no prejudice. I consider that the claim for wasted costs is accordingly not founded. Order [68] In the result, the appeal is dismissed with costs including those of two counsel. -------------------------- C H Lewis Judge of Appeal APPEARANCES: For appellant: J Muller SC (with him J Miller) Instructed by: Spencer-Pitman Inc Rondebosch Lovius Block Bloemfontein For Appellant: M Fitzgerald SC (with him C Buikman) Instructed by: Bowman Gilfillan Cape Town Matsepes Inc Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 25 March 2013 STATUS Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Tsung v IDC (173/12) [2013] ZASCA 26 (25 March 2013) The Supreme Court of Appeal today upheld the decision of the Western Cape High Court (Davis J) that the appellants, a father and son, had conducted the business of a company for fraudulent purposes, and were liable for the payment of some R32 million to the Independent Development Corporation in terms of s 424(1) of the Companies Act 61 of 1973. The section imposes personal liability for the debts of the company on persons who have recklessly or for fraudulent purposes conducted the business of a company. The appellants were the directors of a company that ran a textile manufacturing business in Atlantis in the Western Cape. The company borrowed substantial sums of money from the IDC to set up the business. The appellants had also invested in the company through a company, Lio Ho, incorporated in Hong Kong. The business foundered when the global economy, and the downturn in the South African textile industry, adversely affected it. The company was unable to pay its debts, and in particular could not pay what it owed the IDC. By the end of 2003 it was both factually and commercially insolvent. Despite this, the appellants concluded several transactions which had the effect of recovering their investment (through Lio Ho) in the company at the expense of the IDC. They knowingly made payments to reduce their liabilities, ignoring the separate corporate identity of the company. Moreover, they paid their personal expenses from the company’s bank account. The SCA accordingly concluded that they should be held liable for what the company owed the IDC. --------------

88

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 1288/2016 1309/2016 Reportable In the matter between: THE NATIONAL ENERGY REGULATOR OF SOUTH AFRICA FIRST APPELLANT ESKOM HOLDINGS SOC LIMITED SECOND APPELLANT and BORBET SA (PTY) LTD FIRST RESPONDENT PG GROUP (PTY) LTD t/a SHATTERPRUFE SECOND RESPONDENT CROWN CHICKENS (PTY) LTD THIRD RESPONDENT AGNI STEELS SA (PTY) LTD FOURTH RESPONDENT AUTOCAST SOUTH AFRICA (PTY) LTD t/a AUTOCAST PORT ELIZABETH FIFTH RESPONDENT NELSON MANDELA BAY BUSINESS CHAMBER SIXTH RESPONDENT MINISTER OF ENERGY SEVENTH RESPONDENT NELSON MANDELA BAY MUNICIPALITY EIGHTH RESPONDENT SOUTH AFRICAN LOCAL GOVERNMENT ASSOCIATION NINTH RESPONDENT and In the matter between: ESKOM HOLDINGS SOC LIMITED FIRST APPELLANT THE NATIONAL ENERGY REGULATOR OF SOUTH AFRICA SECOND APPELLANT And BORBET SA (PTY) LTD FIRST RESPONDENT PG GROUP (PTY) LTD t/a SHATTERPRUFE SECOND RESPONDENT CROWN CHICKENS (PTY) LTD THIRD RESPONDENT AGNI STEELS SA (PTY) LTD FOURTH RESPONDENT AUTOCAST SOUTH AFRICA (PTY) LTD t/a AUTOCAST PORT ELIZABETH FIFTH RESPONDENT NELSON MANDELA BAY BUSINESS CHAMBER SIXTH RESPONDENT Neutral citation: NERSA v Borbet SA (Pty) Ltd [2017] ZASCA 87 (1288/2016 & 1309/2016) (6 June 2017) Coram: Navsa, Ponnan, Wallis and Dambuza JJA and Mbatha AJA Heard: 4 May 2017 Delivered: 6 June 2017 Summary: Adjudication by the National Energy Regulator of South Africa (NERSA), a statutory regulator, of tariff adjustment application by Eskom, a licensee with a license, inter alia, to distribute as principal supplier electricity in South Africa : nature of adjudication process and decision: administrative action: subject to review in terms of the Promotion of Access to Justice Act 3 of 2000: not, as suggested by NERSA and Eskom, immune from judicial scrutiny because it involved application of policy. Price adjustment methodology discussed, interpreted and applied: whether decision by NERSA rational and whether adjudication process and decision unfair. Discussion of deference to specialised administrative body. __________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division, Pretoria of the High Court (Pretorius J sitting as court of first instance): The following order is made: 1 The appeal is upheld with costs including the costs of two counsel. 2 The order of the court below is set aside and replaced with the following: „The application is dismissed with costs including the costs of two counsel.‟ _________________________________________________________________ JUDGMENT _________________________________________________________________ Navsa JA (Ponnan, Wallis and Dambuza JJA and Mbatha AJA concurring): Introduction [1] On 1 March 2016 the first appellant, the National Energy Regulator of South Africa (NERSA), approved an additional 1,4 per cent increase in the electricity tariff, over and above an earlier, properly approved eight per cent increase, that the second appellant, Eskom Holdings SOC Limited (Eskom),1 could impose on its customers in relation to the 2013/2014 financial year. The decision was announced on 2 March 2016. It is common cause that the increase came into effect on 1 April 2016 and endured until 31 March 2017. It is uncontested that the increase was passed on to municipalities by Eskom and that consumers were charged that increased rate.2 At the end of March 2016, the first to sixth respondents successfully challenged NERSA‟s approval of the additional 1,4 per cent increase in the Gauteng Division, Pretoria of the High Court. The first to fifth respondents are private companies which operate businesses within the Nelson Mandela Bay Metropolitan Municipality. They are consumers and users of electricity distributed by that municipality and were all affected by the tariff increase. The sixth respondent is the 1 Eskom is a public company licensed to generate, transmit and distribute electricity under licences issued by NERSA. 2 This was ascertained for the first time by counsel for the second appellant during argument before us after enquiry by the court. It should be borne in mind that municipalities are able to load the tariff with their own margin. Nelson Mandela Bay Business Chamber (the Chamber), which represents a broad spectrum of businesses in the Nelson Mandela Bay with a membership of close to one thousand. I shall, for the sake of convenience, refer to the respondents collectively as Borbet.3 Eskom is undoubtedly the major bulk supplier of electricity in South Africa. The State is its sole shareholder. In the ordinary course it provides electricity to municipalities for onward transmission to consumers within their area of jurisdiction. Eskom‟s continued viability is of vital national importance. In this regard, NERSA is charged with oversight. [2] The Gauteng Division, Pretoria of the High Court (Pretorius J) reviewed and set aside the decision taken by NERSA, on the basis that it had failed to follow its own statutorily based Multi-Year Pricing Determination Methodology (MYPDM), more specifically, the provisions dealing with adjustments to already approved tariffs. The details of the prevailing methodology will be dealt with in due course. It is against that order that the present appeal, by NERSA and Eskom, with the leave of that court, is directed. It is, I venture, not unfair to say that because of historical inefficiencies leading to what South Africans have come to know as load shedding – a euphemism for electrical power cuts – and because of extensive public debates concerning its competency, Eskom has attained a level of unpopularity in the public eye. In the present case, however, the question is whether NERSA duly discharged its statutory obligations. If it did then Eskom was entitled to charge the tariffs it authorized. [3] Electricity tariff increases affect all South Africans. They impact the business world as well as domestic households. Thus, there is a statutory framework to ensure fairness so that tariff increases have the result that electricity infrastructure remains sustainable while at the same time ensuring that undue hardships are not imposed on consumers. For a proper appreciation of the matter it is necessary at the outset to have regard in some detail to the regulatory framework. 3 Borbet SA (Pty) Ltd is the first respondent. The regulatory framework [4] NERSA was established in terms of the National Energy Regulator Act 40 of 2004 (NERA),4 which, inter alia, regulates the generation, transmission and distribution of electricity. Section 4 of NERA sets out NERSA‟s functions and provides, amongst others, that NERSA is to undertake the functions set out in s 4 of the Electricity Regulation Act 4 of 2006 (ERA).5 In that section of ERA the powers and duties of the regulator are set out as follows: „The Regulator – (a) must – (i) consider applications for licenses and may issue licences for – (aa) the operation of generation, transmission or distribution facilities; (bb) the import and export of electricity; (cc) trading; (ii) regulate prices and tariffs; (iii) register persons who are required to register with the Regulator where they are not required to hold a licence; (iv) issue rules designed to implement the national government‟s electricity policy framework, the integrated resource plan and this Act; (v) establish and manage monitoring and information systems and a national information system, and co-ordinate the integration thereof with other relevant information systems; (vi) enforce performance and compliance, and take appropriate steps in the case of non-performance; (b) may – (i) mediate disputes between generators, transmitters, distributors, customers or end users; (ii) undertake investigations and inquiries into the activities of licensees; (iii) perform any other act incidental to its functions.‟ (My emphasis.) [5] The objects of ERA are as follows:6 „(a) [to] achieve the efficient, effective, sustainable and orderly development and operation of electricity supply infrastructure in South Africa; 4 Section 3 of the Act provides: „The National Energy Regulator is hereby established as a juristic person.‟ 5 NERSA is also a gas and petroleum regulator. See sections 4(1)(a) and (b). 6 Section 2 of ERA. (b) ensure that the interests and needs of present and future electricity customers and end users are safeguarded and met, having regard to the governance, efficiency, effectiveness and long-term sustainability of the electricity supply industry within the broader context of economic energy regulation in the Republic; (c) facilitate investment in the electricity supply industry; (d) facilitate universal access to electricity; (e) promote the use of diverse energy sources and energy efficiency; (f) promote competitiveness and customer and end user choice; and (g) facilitate a fair balance between the interests of customers and end users, licensees, investors in the electricity supply industry and the public.‟ [6] Section 14(1) of ERA under the title „Conditions of licence‟ provides, inter alia: „(1) The Regulator may make any licence subject to conditions relating to – . . . (d) the setting and approval of prices, charges, rates and tariffs charged by licensees; (e) the methodology to be used in the determination of rates and tariffs which must be imposed by licensees; . . .‟ (My emphasis.) [7] Section 15 of ERA sets out „Tariff principles‟: „(1) A licence condition determined under section 14 relating to the setting or approval of prices, charges and tariffs and the regulation of revenues – (a) must enable an efficient licensee to recover the full cost of its licensed activities, including a reasonable margin or return; (b) must provide for or prescribe incentives for continued improvement of the technical and economic efficiency with which services are to be provided; (c) must give end users proper information regarding the costs that their consumption imposes on the licensee‟s business; (d) must avoid undue discrimination between customer categories; and (e) may permit the cross-subsidy of tariffs to certain classes of customers. (2) A licensee may not charge a customer any other tariff and make use of provisions in agreements other than that determined or approved by the Regulator as part of its licensing conditions. (3) Notwithstanding subsection (2), the Regulator may, in prescribed circumstances, approve a deviation from set or approved tariffs.‟ [8] Section 21(2) of ERA provides: „A licensee may not discriminate between customers or classes of customers regarding access, tariffs, prices and conditions of service, except for objectively justifiable and identifiable differences approved by the Regulator.‟ [9] Municipalities are charged with the obligation to ensure electricity reticulation services within their areas of jurisdiction. Section 27 of ERA states that each municipality must exercise its executive authority and perform its duty by: „(a) complying with all the technical and operational requirements for electricity networks determined by the Regulator; (b) integrating its reticulation services with its integrated development plans; (c) preparing, implementing and requiring relevant plans and budgets; (d) progressively ensuring access to at least basic reticulation services through appropriate investments in its electricity infrastructure; (e) providing basic reticulation services free of charge or at a minimum cost to certain classes of end users within its available resources; (f) ensuring sustainable reticulation services through effective and efficient management and adherence to the national norms and standards contemplated in section 35; (g) regularly reporting and providing information to the Department of Provincial and Local Government, the National Treasury, the Regulator and customers; (h) executing its reticulation function in accordance with relevant national energy policies; and (i) keeping separate financial statements, including a balance sheet of the reticulation business.‟ [10] In the present case, in relation to the time period concerned, Borbet and others in that municipal area were billed by the Nelson Mandela Bay Metropolitan Municipality. It is necessary to record that municipalities are themselves, as licensees for reticulation to customers and/or end-users, in terms of s 15(1)(a) of ERA, entitled to the same recovery of costs of licenced activities, as is Eskom, including a reasonable margin or return. [11] Section 35(1) reads as follows: „(1) The Regulator may, after consultation with – (a) licensees; (b) municipalities that reticulate electricity; and (c) such other interested persons as may be necessary, make guidelines and publish codes of conduct and practice, or make rules by notice in the Gazette.‟ [12] The provisions set out above create a situation where licensees are the ones empowered to charge a tariff for electricity consumption within parameters set by the Regulator. Licences, as can be seen from the provisions of ss 14(1)(d) and (e) of ERA, may contain conditions relating to the setting and approval of prices, charges, rates and tariffs to be charged by licensees. Licences may be made subject to conditions relating to the methodology to be used in the determination of rates and tariffs which must be imposed by licensees (s 14(1)(e)). NERSA is therefore responsible for determining whether a licence should be granted; the terms of the licence; the methodology by which tariffs and charges are to be determined and the imposition of that methodology on the licensee by way of a licence condition; and the tariffs and charges that the licensee may recover from its customer. All of these are embodied directly or indirectly in the licence and the obligation to adhere to them flows from the licence. Notionally, licence conditions could vary from licensee to licensee. [13] During the hearing of this appeal, we called for a copy of the Eskom licence. It sets out Eskom‟s duties, largely in line with the provisions of ERA. Under „Specific Conditions‟, Eskom is required to maintain financial records in relation to the distribution of electricity. Clause 4.6 of the licence provides that „the licensee‟ shall comply with „the price and tariff methodology‟ provided by NERSA in determining its prices and tariffs and it is restricted to charging the consumer and/or end-user tariffs and prices approved by NERSA. Under „General Conditions‟, Eskom is required to comply with the applicable provisions of ERA. It is also required to take reasonably practical steps to protect the environment and to ensure safety in the course of operations associated with the licence, including, but not only those specified, in health and safety and environmental legislation. [14] In terms of s 17 of ERA, NERSA may revoke a licence on the application of a licensee if the licenced facility or activity is no longer required and the licenced facility or activity is not economically viable. That provision is mirrored in clause 7 of Eskom‟s licence. Section 18 of ERA deals with contraventions of a licence and allows for the Regulator to sit as a tribunal to deal with allegations of a failure to comply with a licence condition, or with any provision of ERA. Section 18(5) of ERA allows for financial penalties to be imposed on licensees, depending on the degree of non-compliance. Section 19 of ERA empowers the Regulator to apply to the high court for an order suspending or revoking a licence, if there are grounds for doing so. Many of the sections of ERA referred to and the licence conditions predominantly set and define the parameters of the relationship between NERSA and licensees. I pause to reflect that it is significant that any failure to comply with licence conditions, which includes the failure to maintain financial records, and non-compliance with the pricing tariff methodology, clearly does not, in terms of the provisions set out above, operate as a guillotine against the licensee, resulting in an immediate cancellation of the licence and the cessation of licenced activities. This is an aspect to which I shall revert. The Multi-year Price Determination Methodology (the MYPDM) [15] It is common cause that tariffs to be charged by licensees are determined by NERSA at intervals in accordance with the MYPDM, ostensibly in terms of s 14(1)(e) of ERA. 7 [16] Each price determination interval covers a period of three to five years, hence the description „multi-year price determination methodology‟. The MYPDM is apparently updated in relation to each interval. The determination in dispute falls within the third price determination interval, which covers five tariff years between 1 April 2013 and 31 March 2018. The methodology employed in relation thereto will henceforth be referred to as the MYPDM3. It is the interpretation and application of the MYPDM3 that lies at the heart of this appeal. [17] Under the MYPDM3 the tariffs set by NERSA that Eskom would charge and recover from its customers was envisaged to increase by eight per cent year-on-year for each of the five years in question. The additional 1,4 per cent, an adjustment in 7 This is envisaged in the Electricity Pricing Policy, GN 1398, GG 31741,19 December 2008. relation to the 2013/2014 financial year, approved by NERSA, referred to in para 1 above, would mean that in the financial year 1 April 2016 till 31 March 2017 Eskom would have been entitled to a total increase of 9,4 per cent, which, as stated earlier, was passed on to end-consumers. [18] In keeping with the principle of transparent and accountable governance and administration, the MYPDM3 is contained in a comprehensive document and was the product of extensive consultation by NERSA with interested and affected parties. The introduction to the document is significant and I consider it necessary to set it out in full: „The Multi-Year Price Determination (MYPD) Methodology is developed for the regulation of Eskom‟s required revenues. It forms the basis on which the National Energy Regulator of South Africa (NERSA or “the Energy Regulator”) will evaluate the price adjustment applications received from Eskom. The MYPD was first introduced in 2006 for implementation from 01 April 2006 to 31 March 2009. It is a cost-of-service-based methodology with incentives for cost savings and efficient and prudent procurement by the licensee (Eskom). The Methodology also provides for Services Quality Incentives (SQI) for Eskom. On an annual basis, the MYPD runs concurrently with Eskom‟s financial year(s). A second MYPD period started from 01 April 2010 to 31 March 2013, with the next one scheduled to run from 01 April 2013 to 31 March 2018. In developing the MYPD Methodology, the following objectives were adopted: 1. to ensure Eskom‟s sustainability as a business and limit the risk of excess or inadequate returns; while providing incentives for new investment; 2. to ensure reasonable tariff stability and smoothed changes over time consistent with socio-economic objectives of the Government; 3. to appropriately allocate commercial risk between Eskom and its customers; 4. to provide efficiency incentives without leading to unintended consequences of regulation on performance; 5. to provide a systematic basis for revenue/tariff setting; and 6. to ensure consistency between price control periods. The development of the Methodology does not preclude the Energy Regulator from applying reasonable judgment on Eskom‟s revenue after due consideration of what may be in the best interest of the overall South African economy and the public.‟ The qualification in the last part of the introduction is significant. It allows NERSA latitude to exercise „reasonable judgment‟ after due consideration of what may be in the public interest. [19] The MYPDM3 reflects, in large part, government‟s electricity pricing policy, issued by the Department of Minerals and Energy.8 The MYPDM3 and the pricing policy are in line with the tariff principles set out in s 15 of ERA. It provides for the recovery of the full costs of licensed activities, including a reasonable margin or return and provides for prescribed incentives for continued improvement of technical and economic efficiency. Section 3 of the MYPDM3 sets out a formula to determine the allowable revenue for Eskom within the interval, which includes taking into account, inter alia, its asset base, weighted average cost of capital, expenses and other factors which for present purposes are not material. [20] Before Eskom applied for the additional 1,4 per cent increase in terms of MYPDM3 it had, during April/May 2015, applied for what is termed a „selective reopener of the MYPD[M]3‟, based on a shortfall on electricity sales of approximately R22 billion in respect of expected revenue of approximately R143 billion, recorded as part of the earlier MYPDM3 tariff approvals. Eskom applied for a „selective reopener‟ because, so it alleged, its operating costs had increased due to unexpected events such as a boiler explosion at one of its units, the collapse of a power station silo, challenges related to the quality of coal, and delays in the commissioning of new power stations. [21] After receipt of Eskom‟s application, NERSA published it on its website and called for public comment. NERSA went further and held public hearings on 23 and 24 June 2015. A total of 225 written comments were received. On 29 June 2015 NERSA decided to decline the application on the basis that the MYPDM3 did not provide for a „selective reopening‟, but stated that Eskom could resort to the risk management control and pass-through mechanism which is described in the MYPDM3 as „The Regulatory Clearing Account‟ (RCA). 8 See fn 7 above. The Regulatory Clearing Account – s 14 of the MYPDM3 – Eskom’s application [22] In response, Eskom, on 10 November 2015, submitted an RCA application to NERSA, seeking an adjustment in respect of the tariff for the 2013/2014 tariff year of approximately R22 billion, purportedly in terms of s 14 of the MYPDM3. In para 3 of Eskom‟s RCA submission to NERSA, the following appears: „Eskom‟s 2013/14 RCA Submission is driven substantially by revenue under-recovery and higher primary energy costs to meet demand, whilst operating in a constrained electricity system. The determined RCA balance is motivated with evidence for prudent scrutiny by NERSA. Variances can be linked to two key sources:  Increases in costs due to a changing environment and assumptions after the MYPD3 decision;  Assumptions made for purposes of the MYPD3 revenue decision which did not materialise.‟ [23] Under para 3.1 of its RCA submission Eskom stated the following: „The revenue variance of R11 723m was primarily as a result of lower electricity sales volumes attributable to standard tariff customers.‟ Paragraph 3.2 reads as follows: „Due to the constrained electricity system and level of Generating plant performance, Eskom was required to operate a more expensive mix of generating plant compared to the assumptions in the MYPD3 decision in order to avoid/minimize load shedding. This included a combination of higher levels of supply from local and regional [Independent Power Producers] (IPPs), more [Open Chamber Gas Turbines] (OCGT) usage and a change in the mix of the coal fleet which was required in trying to meet demand and more importantly to protect the stability of the overall electricity system. This resulted in R8 024m higher OCGTs fuel spend, extra net coal burn of R2 000m, more from local IPPs of R580m, regional IPP supply of R1 136m and additional other primary energy of R2 491m compared to the assumptions in the MYPD3 decision. The other primary energy variance was substantially linked to costs for startup gas and oil and nuclear fuel costs. The coal burn variance of R2 000m is a result of a combination of the positive volume variance of R1 378m in favour of the consumer and the negative coal price variance of R3 378 in favour of Eskom. The coal volume variance is attributable to lower coal production volumes because of lower sales volumes and reduction in Generation coal plant performance levels compared to that assumed in the MYPD3 decision.‟ In its RCA submission, Eskom also alluded to under-expenditure in relation to the environmental levy of R312 million, which would inure to the benefit of consumers. There were also other items in relation to over – and under-expenditure that, for present purposes, are not material. [24] Because of its importance in the determination of this appeal it is necessary to quote s 14 of the MYPDM3 in full: „14.1 Risk Management Device The risk of excess or inadequate returns is managed in terms of the RCA. The RCA is an account in which all potential adjustments to Eskom‟s allowed revenue which has been approved by the Energy Regulator is accumulated and is managed as follows: 14.1.1 The nominal estimates of the regulated entity will be managed by adjusting for changes in the inflation rate. 14.1.2 Allowing the pass-through of prudently incurred primary energy costs as per Section 8 of the Methodology. 14.1.3 Adjusting capital expenditure forecasts for cost and timing variances as per Section 6 of the Methodology. 14.1.4 Adjusting for prudently incurred under-expenditure on controllable operating costs as may be determined by the Energy Regulator. 14.1.5 Adjusting for other costs and revenue variances where the variance of total actual revenue differs from the total allowed revenue. In addition, a last resort mechanism is put in place to trigger a re-opener of the price determination when there are significant variances in the assumptions made in the price determination.‟ [25] Section 14.2 bears the heading, „The Regulatory Clearing Account‟, and provides: „The RCA is used to debit/credit all the aforementioned potential adjustments to Eskom‟s allowed revenue and must be used as follows: 14.2.1 The RCA will be created at the beginning of the financial year and continuously monitored. The evaluation of the account (for the purpose of determining the pass-through and/or claw-back) will be done with actuals for the full financial year. 14.2.2 This account must be updated quarterly so as to use it for regular alerts to customers of any possible adjustment in the coming year. Eskom must therefore submit actual financial data on a quarterly basis. 14.2.3 The RCA balance will be measured as a percentage of total allowed revenue and will act as a trigger for re-opener as follows: 14.2.3.1 If the RCA balance is less than or equal to 2 % of the allowable revenue, then there will be no immediate pass-through adjustment, but the RCA balance will be carried over to the next financial year. 14.2.3.2 If the RCA balance is between 2 % and 10 %, the amount is allowed as a pass- through in the next financial year without the need for a full stakeholder consultation process. 14.2.3.3 If the balance is greater than 10 % of the allowable revenue, there will be a full stakeholder consultation process before any pass-through is allowed. 14.2.4 The adjustments to be included in the RCA and balance of the RCA will be approved by the Energy Regulator in terms of the MYPD Methodology. The Energy Regulator will only have to determine the timing of when it should be passed through or clawed-back. 14.2.5 Eskom will, on a quarterly basis, present the Energy Regulator with possible adjustments based on the Methodology, the costs to date and the projections to year-end. 14.2.6 The Energy Regulator will then review Eskom‟s submission and make a preliminary assessment of any adjustments required in the subsequent financial year‟s tariff adjustment. 14.2.7 The review will be performed on receipt of audited statements from Eskom.‟ [26] As can be seen, the RCA exists to facilitate ex post facto adjustments to the approved revenues under the MYPDM3 determination. Variations between projected and actual revenues and expenses can only be finally determined after the end of a financial year. Variances may arise because expected revenues do not materialise or expenses increase beyond those contemplated. They might also occur due to revenues being beyond expectation and expenses less than those envisaged. This very rarely might ultimately redound in favour of the consumer. In theory, the RCA allows Eskom to obtain adjusted revenues for prior years by after-the-fact adjustments to the electricity price. If NERSA approves it, subject to the requirements of s 14 of the MYPDM3, the adjustment is effected through price increases in subsequent years. Unlikely though it might seem the same would apply in the event that consumers were entitled to the benefit of over recovery and the claw-back provisions applied. [27] Because the adjustment sought, namely R22 billion, as against expected revenue of R143 billion, fell within the provisions of s 14.2.3.3 of MYPDM3 – ten per cent greater than the allowable revenue – the matter had to be dealt with by way of „a full stakeholder consultation process before any pass-through [was] allowed‟. The public participation process [28] Thus, on 13 November 2015, NERSA published Eskom‟s RCA application for public comment and held public hearings. The Chamber, made written representations. In its covering letter to the submissions made by it, the Chamber stated that it was strongly opposed to the application. The following part of the letter bears repeating: „The current submission by the [Chamber] is a plea to Nersa to play its crucial role in ensuring Eskom gets back on track. Eskom has to get out of its vicious circle of spiraling costs and lack of delivery: it is imperative that Eskom turns a situation where it is doing ever less with ever more, into a situation where it will be doing more with significantly less.‟ [29] The Chamber provided a summary of its written submissions, part of which is reproduced hereunder: „Having reviewed the RCA submissions by Nersa, the submissions by the [Chamber] may be summarized as follows:  Eskom is unable to sustain itself in a competitive environment. As a result of this Eskom cannot support an industry which needs to be globally competitive;  If the RCA submission by Eskom were accurate, the complete and substantial inability by the MYPD3 process and decision to forecast a stable energy price, with any measure of reliability, strongly suggests that the entire MYPD3 process was tainted by unlawfulness;  The tariffs are serving as an investment disincentive to South Africa;  Eskom has failed to make a full disclosure and in so doing has deprived Nersa of the opportunity of making an informed decision;  And Eskom is seeking to recover the cost of its inefficiency. The ERA only allows for the recovery of efficient costs.‟ [30] It made the following recommendations:  „With regards to the revenue variance, Eskom should not get compensated for the lost revenue as claimed in the RCA submission, and that the request to reclaim R11.9723 billion be rejected;  No further cost increases beyond the scope of the original MYPD3 decision must be allowed;  The 2016/17 tariff decision be based on the tariff per the original MYPD3 decision;  All inefficient costs incurred by Eskom be absorbed or funded by its shareholders, the Government;  And Eskom must be encouraged to operate more efficiently, reduce costs and then pass these on to South African consumers.‟ [31] In its oral submissions during the public hearings arranged by NERSA, the following that appears from a transcript, seems to have been the primary thrust of the Chamber‟s contention that Eskom was not following the RCA methodology: „Eskom is not following Nersa’s RCA Methodology  Eskom refers to a 2011 consultation document as the basis for its application  Eskom‟s application does not comply with Nersa‟s MYPD Methodology (Nov 2012) - Timing and frequency:  The RCA has to be created during the year the deviations are incurred.  Eskom must present possible adjustments to Nersa on a quarterly basis  The review is done prior to financial year end adjusted upon receipt of FS [financial statements] - The current application comes 1,5 years after the end of FY [financial year] (un-procedural) - No evaluation of the RCA in the Annual Financial Statements 2013/14 Eskom‟s RCA did not follow the MYPD methodology in relation to IPP‟s and OCGT‟s and it ignoring RCA methodology. The RCA is to be rejected on this basis alone.‟ This complaint was repeated as a primary contention on behalf of Borbet in the court proceedings that followed. [32] The public participation process to deal with Eskom‟s RCA application was undoubtedly extensive. More than 18 stakeholder comments were received and included comments from individuals, small users, energy-intensive users, environmental activists and government. Public hearings were conducted at various locations nationwide. Forty-two oral representations were made. It is necessary to record that during the public participation process small users noted that Eskom had failed to follow the MYPDM3 RCA methodology, in that it did not provide quarterly financial updates during the 2013/2014 year. Eskom had instead submitted bi-annual reports. NERSA’s electricity sub-committee and its deliberations and report [33] Following on the public hearings, notice was given to the public on NERSA‟s website, of a special meeting of its electricity subcommittee (ELS) to be held during February 2016.9 Section 8(9)(a) of NERA dictates that any meeting of NERSA must be open to the public, „unless the quorate meeting passes a resolution to the effect that, for the part of the meeting concerned, the information to be discussed during that part of the meeting would create a record that would in turn oblige the Energy Regulator to refuse access to that information…‟. [34] The purpose of the meeting was to consider and make a decision surrounding Eskom‟s RCA application. It is clear from the record of proceedings that the ELS took into account written stakeholder comments. The report of the ELS chairperson to NERSA that followed the meeting contained summaries of stakeholder comments, which included comments from small and intensive users and government departments. [35] Small users noted that the MYPDM3 provided a clear price path and predictability and that Eskom had deviated from it by not producing quarterly updates during 2013/2014. NERSA was urged to „either reject the application due to procedural failure or penalise Eskom for not following the process prescribed in the MYPD methodology‟. In addition, NERSA was urged to disregard Eskom‟s claims for all customers to compensate it for under-collections due to low prices charged to some, in terms of negotiated price agreements. Small users complained that the over-utilisation of Open Chamber Gas Turbines (OCGTs) was a result of Eskom being an inefficient operator and that the RCA did not allow for recovery of losses as a result of inefficiency. Small users contended that Eskom‟s failure to implement new capacity generation projects was related to inefficient project management. 9 The ELS was established in terms of s 8(10)(a) of NERA, which provides: „The Energy Regulator may establish subcommittees of its members to perform such functions of the Energy Regulator as it may determine, including conducting hearings and enquiries and sitting as a tribunal.‟ [36] Like small users, intensive users also complained about all customers being penalised for agreements with certain customers who had been charged at lower rates, resulting in lower revenue. Intensive users did not consider it fair to allow a tariff adjustment for variances in costs resulting from the use of more expensive coal and because of the delays in new power producing plants being implemented. They also objected to oil and gas costs being passed on to consumers. They were adamant that the cost occasioned by OCGT usage should not be imposed on consumers. Government departments were concerned about the additional cost caused by the use of OCGTs. [37] The ELS agreed that quarterly reports had not been submitted. It noted that the evaluation of the RCA for determining pass-through or claw-backs is only finally done with actual audited annual financial accounts for the full year. It noted that quarterly reports are used for monitoring purposes. It took the view that actual audited financial accounts had been submitted in line with MYPDM3. The ELS recorded that costs considered not to be prudent would not be allowed. The following is recorded in the report that followed: „It is a fair comment to say that the factors resulting in the need for the over-utilisation of OCGT were all within Eskom‟s control. Eskom‟s plant performance deteriorated from 80 % to 75 %. Although the system as a whole had a reserve margin of 31,7 %, this was made futile by the low availability of the coal fleet. The new generation capacity that was due to come on line in the form of Medupi and Ingula would have made a significant difference in the capacity shortfall and would have resulted in less OCGT usage.‟ [38] The report of the ELS deals fairly extensively with the economic impact of a tariff adjustment. Its negative impact on inflation, the GDP and employment were all considered. The ELS indicated that there was an endeavor to strike a balance between Eskom‟s financial sustainability and the impact on the South African economy. [39] The report of the ELS also stated that in terms of the provisions of MYPDM3, coal burn costs and coal handling costs were subject to automatic pass-through. The following also appears: „The [MYPDM3] methodology prescribes that OCGT price variance is automatic pass- through however limited to the allowed volumes. Since Eskom has applied for the total OCGT variance, the price variance is factored in already.‟ [40] On 22 February 2016 the ELS, as appears from the minutes of that meeting, noted that the implementation of the RCA balance as determined is the prerogative of NERSA, after consideration of the interests of both the licensee and its customers. It resolved, inter alia, as follows: „The Subcommittee approved: Based on the available information and the analysis of Regulatory Clearing Account (RCA) Application – third Multi Year Price Determination (MYPD3) Year 1 (2013/14) the Subcommittee, at its meeting held on 25 February 2016 recommended the following to the Energy Regulator: (a) The RCA balance of R11 243m be recoverable from the standard tariff customers, local SPAs and international customers. The recovery of the RCA balance is proportional to the respective customers groups‟ forecasted sales volumes for the year of implementation (2016/17). (b) The RCA balance of R11 243m be implemented for the 2016/17 financial year only. (c) The amount of R10 259m be recoverable from standard tariff customers for the 2016/17 financial year only. (d) The disallowed amount for other primary energy of R1 589m will in future be made available to Eskom provided that Eskom demonstrates improvement in the plant performance and coal handling costs. This may only be available after the 2016/17 financial year. (e) The average tariff for standard tariff customers be increased [to] 9.4% for 2016/17 financial year only. (f) The amount of R984m be recoverable proportionally from Eskom‟s local SPA customers and international customers for 2016/17 financial year only. (g) Eskom must submit a new MYPD application based on revised assumptions and forecasts that reflect the changed circumstances.‟ [41] On 24 February 2016, the chairperson of the ELS signed the written report referred to above and submitted it to NERSA, which was requested to approve the resolution and the underlying reasons. The report contained the synopses of written stakeholder comments referred to above. NERSA’s decision [42] After receipt of the ELS report, notice was given on NERSA‟s website of a meeting it intended to convene on 1 March 2016. The meeting took place as scheduled. It considered the ELS report and required 18 changes to be made to the draft decision and reasons. [43] On 1 March 2016 NERSA announced its decision to approve Eskom‟s RCA application, in terms of which the latter would be able to obtain an additional price increase in relation to the 2013/2014 tariff year of R11,2 billion to take effect on 1 April 2016. The decision by NERSA had the consequence that Eskom was allowed an additional tariff increase of 1,4 per cent over and above the eight per cent already approved in terms of the MYPDM3. The reasons for the decision were not immediately made available. Borbet had to request reasons. [44] On 29 March 2016 NERSA published the reasons for its decision. It is a 54 page document that sets out in detail the history leading up to the RCA application. In dealing with revenue variance, NERSA had regard to MYPDM3. It noted the under-recovery in revenue from the estimated amount which had led to the prior eight per cent approval. NERSA considered the energy availability performance targets it had set for Eskom for the 2013/14 financial year and recorded that it fell short by 6,4 per cent. It required Eskom to revise its maintenance strategy and implementation. In respect of OCGTs it allowed a pass-through of variances up to the MYPDM3 allowance. It decided as follows: „Eskom is therefore allowed a total of R1 252m for OCGTs made up of R647m for OCGT generation compensation and R578m for fuel price variance against the R8 024m that is applied for by Eskom.‟ [45] In respect of higher coal costs, NERSA said the following: „45. The MYPD methodology allows coal to be treated as a single cost centre without differentiating between the various coal sources (contract types). 46. The methodology did not anticipate scenarios where the coal variances will result in higher average coal costs due to purchasing of coal from different suppliers. 47. In light of the above, the methodology must be reviewed. 48. The R2 000m coal burn cost is allowed in favour of Eskom.‟ [46] It dealt with Independent Power Producer costs as follows: „49. The Independent Power Producer (IPP) costs were based on approved Power Purchase Agreement (PPA) contracts submitted by Eskom. 50. Therefore Eskom is allowed the variance of R580m with regard to IPP costs in its favour.‟ [47] In respect of costs in relation to a regional independent power producer, NERSA said the following: „51. The purchase of power from the regional IPP was approved by the Energy Regulator when generation performance deteriorated as a cheaper option. 52. Therefore Eskom is allowed the variance of R1 136m with regard to regional IPP costs in its favour.‟ [48] In relation to reduced water costs, it had regard to the variance of R295m in favour of the consumer. [49] NERSA had regard to the startup gas and oil variances and dealt with it as follows: „55. Eskom‟s start-up oil and gas variance (R1 549m in its favour) is adjusted by R1 184m to R365m as shown in Table 9 above. The adjustment is because the costs were inefficiently incurred as they relate to issues that were within management control (e.g. maintenance related). 56. Eskom is allowed R365m due to the unfavourable fluctuation in the Rand/Dollar exchange rate and issues that were outside management control (e.g. torrential rainfall).‟ [50] It reasoned as follows on coal handling costs: „57. The additional costs resulted from the misaligned performance of the generation fleet compared to what was anticipated in the MYPD3 (EAF of 75.1 % as opposed to the approved 81.5 % in Table 8). 58. As a result, Eskom‟s application for the variance of R377m for coal handling is disallowed.‟ [51] It dealt with water treatment costs as follows: „59. The Eskom application for R55m water treatment variance is with respect to poor water quality and an increase in the volume of water processed. Part of the variance (R27m) was with respect to poor water quality and the rest (R28m) was because of an increase in the volume of water processed. 60. The additional water treatment cost of R27m is allowed because of water quality issues, which are outside Eskom‟s direct control. 61. However, the increase in the volume of water processed and the associated costs of R28m is considered to be within management control as it deals with issues such as boiler tube leaks due to poor maintenance and is therefore disallowed.‟ [52] NERSA went on to consider other variances, such as in relation to the environmental levy.10 [53] The economic impact of the increased tariff was considered by NERSA. The following appears in the written decision: „124. The electricity industry plays a significant role in enabling economic activity and growth within the South African economy. It is evident that an increase in electricity tariffs will have a negative economic impact. The Energy Regulator conducted a macroeconomic impact assessment of a 9,4 % electricity price increase on the economy. 125. The main focus of this assessment was on Consumer Price Increase (CPI), Producer Price Index (PPI), Gross Domestic Product (GDP), export and the impact on low-income households.‟ They concluded as follows: „132. After due consideration, [NERSA] has endeavoured to strike a balance between Eskom‟s financial sustainability and the impact on the South African economy. 133. [NERSA] is of the view that the approved RCA balance puts Eskom in a favourable financial position. The impact the increase will have on key macroeconomic indicators and low-income households is noted given the current state of the economy.‟ [54] As can be seen from the above, the public participation process leading up to the decision was extensive and interactive. Even from the brief synopsis in the preceding paragraphs one can see that the decision making by NERSA was well motivated and detailed. 10 This was a R312 million variance in favour of the consumer. The respondents’ engagement with NERSA and Eskom [55] Aggrieved at NERSA‟S decision, the first, second, third and sixth respondents, urgently engaged with NERSA. It is necessary to record that even before launching the urgent application culminating in the present appeal, more particularly during the public participation process, Borbet sought information from NERSA and Eskom in terms of the Promotion of Access to Information Act 2 of 2000 (PAIA). Subsequent to NERSA‟s decision referred to in para 1 above, which is the subject of the present appeal, the second to fifth respondents sought reasons for the decision both from Eskom and NERSA. NERSA and Eskom required time to consult each other. NERSA expressed concerns about Eskom‟s confidential commercial information being made available to the public, an aspect to which I shall return later in this judgment. [56] Frustrated at being thwarted in its quest to obtain the information sought, Borbet launched an urgent application in the North Gauteng Division of the High Court, Pretoria, in which it sought relief in two parts. First, it sought an order directing NERSA and Eskom to supply NERSA‟s reasons for its decision to approve Eskom‟s RCA application for the year 2013/14. In addition, it sought an interdict restraining NERSA and Eskom from giving effect to the decision. [57] The urgent application was scheduled to be heard on 31 March 2016. The day before the first scheduled hearing, reasons for the approval in question were supplied. The parties then reached agreement in relation to further affidavits to be filed and an expedited date for the hearing of the application was arranged with the Judge President of that division, obviating the need for the interdictory relief. The application in the high court [58] At the outset, the primary thrust of Borbet‟s attack on the decision was that the MYPDM3 had not been followed because the RCA process should have been initiated during the 2013/2014 tariff year and completed that year. [59] According to Borbet this was a peremptory provision of the MYPDM3. The respondents contended that the interdictory relief had been sought because, once the approval of the increased tariffs was implemented, millions of consumers would be forced to pay unlawful increases and recovering those amounts later would be difficult. Their fears seem to have been allayed by the undertaking by Eskom that it would credit particular customers in the event of an order in that regard by the court. This does not explain how the credit system would work in relation to municipalities and consumer accounts sent out by them. [60] In their challenge, Borbet contended that it was clear that NERSA‟s decision was administrative action and subject to review in accordance with the Promotion of Administrative Action Act 3 of 2000 (PAJA). In this regard, they had ss 9 and 10 of NERA in mind. [61] Section 9 reads as follows: „Members of the Energy Regulator must – (a) act in a justifiable and transparent manner whenever the exercise of their discretion is required; (b) at all times act in the interests of the Energy Regulator and not in their own sectoral interests; (c) act independently of any undue influence or instruction; (d) recuse themselves from and refrain from voting on or discussing any matter, pending before the Energy Regulator in which they have a direct or indirect pecuniary interest; (e) act in a manner that is required and expected from the holder of a public office; and (f) act in the public interest.‟ [62] Section 10 provides: „(1) Every decision of the Energy Regulator must be in writing and be – (a) consistent with the Constitution and all applicable laws; (b) in the public interest; (c) within the powers of the Energy Regulator, as set out in this Act, the Electricity Act, the Gas Act and the Petroleum Pipelines Act; (d) taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present relevant facts and evidence to the Energy Regulator; (e) based on reasons, facts and evidence that must be summarised and recorded; and (f) explained clearly as to its factual and legal basis and the reasons therefor. (2) Any decision of the Energy Regulator and the reasons therefor must be available to the public except information that is protected in terms of the Promotion of Access to Information Act [Act 2 of 2000]. (3) Any person may institute proceedings in the High Court for the judicial review of an administrative action by the Energy Regulator in accordance with the Promotion of Administrative Action Act [Act 3 of 2000]. (4)(a) Any person affected by a decision of the Energy Regulator sitting as tribunal may appeal to the High Court against such decision. (b) The procedure applicable to an appeal from a decision of a magistrate‟s court in a civil matter applies, with the changes required by the context, to an appeal contemplated in paragraph (a).‟ [63] With reference to s 15(1)(a) of ERA, referred to in para 7 above, the respondents argued that only an „efficient licensee‟ is entitled to recover the full costs of its licence activities, including a reasonable margin of return. Thus, they submitted, Eskom was in deficit because of its own inefficiency and was therefore precluded from seeking an RCA adjustment. [64] In its answering affidavit, directed principally at resisting the interdictory relief, Eskom contended that the respondents‟ case was baseless. It stated that the challenge to NERSA‟s decision offended against the doctrine of the separation of powers, as the approval of electricity tariffs was classically polycentric in nature and fell outside the sphere of administrative law. It was argued that these were policy decisions and could only be challenged on very narrow bases which were not present in this instance. [65] In a further founding affidavit, the case for Borbet mutated somewhat. Although they continued to insist that Eskom ought to have applied for an adjustment during the 2013/14 tariff year, they did concede that an adjustment could only be brought into effect in the following financial year (2014/2015). [66] They continued to be adamant that the quarterly updates by Eskom, required in terms of MYPDM3, were integral to the RCA process. It was submitted on behalf of Borbet that the early warning system was to enable consumers to plan ahead rather than be overtaken by events and attendant increased costs. It was also contended on behalf of Borbet that quarterly reports might provide an early basis for corrective action leading to possible production schedules being amended by Eskom. In this regard, Borbet relied on the affidavit of Professor Nattrass, a professor of sociology and economics, particularly in relation to businesses being informed timeously and the negative impact on their future planning. [67] Borbet contended that paras 14.2.1 to 14.2.7 of the MYPDM3, which deals with the RCA, had to be satisfied in all respects before a price adjustment could be approved by NERSA. Borbet pointed out that the first time Eskom submitted the required information remotely to NERSA was during November 2015, some 27 months after they were required to commence with quarterly submissions. In accepting bi-annual reports, so it was contended, NERSA simply adopted the attitude that it could deviate arbitrarily from the MYPDM3. [68] Furthermore, Borbet adopted the attitude that „efficiency‟ is a persistent theme in the MYPDM3 and that expenses are therefore to be prudently and efficiently incurred and thus Eskom should not be allowed to recover expenditure brought about by its own inefficiency. [69] In relation to purchase agreements with independent power producers (IPPs), it was contended on behalf of Borbet that NERSA was required to review the efficiency and prudence of these agreements before and after they were concluded. [70] In relation to the over-utilisation of OCGTs Borbet took the view that this was all within Eskom‟s control. In respect of under-recovery in relation to lower electricity sales, Borbet adopted the position that this was due once again to Eskom‟s own inefficiency. [71] In NERSA‟s answering affidavit to the further founding affidavit, it was emphatic that there should be „judicial deference‟ to the Regulator‟s decision. It was contended on behalf of NERSA that the principle of the separation of powers required that interference with the Regulator‟s functions should only be done if the Constitution so mandated. [72] In dealing with Borbet‟s contention that the quarterly reports served an important signaling function, NERSA pointed out that the MYPDM3 provided that an RCA application could only be finally decided after the audited financial statements of Eskom became available, which meant that the earliest that the tariff increase or decrease could be assessed, was in the financial year following the year in which the revenue was generated and/or the expenditures were incurred and could at best only be affected in a subsequent financial year. It was submitted that to the extent that there was non-compliance with the MYPDM3, it was not a material failure which defeated the purpose of the RCA. [73] In dealing briefly with Borbet‟s contention of an inadequate consultation and public participation process, NERSA referred to the processes described in considerable detail earlier in this judgment. It was submitted that a fatal flaw in Borbet‟s approach was that, should a tariff increase be set aside, there would be no tariff applicable at all. The previous tariff, it was submitted, could never be the default or fall-back position to the existing tariff, were it to be set aside. It was contended that the previous tariff, did not take into account „actual revenue generated‟ and „expenditure incurred‟ during the financial year. [74] In relation to the RCA account, NERSA was adamant that it was created at the beginning of each financial year and continuously monitored. According to NERSA the MYPDM3 contained clear indicators that the Regulator had to balance the interests of the consumer and Eskom and that it served as a guide to that end. It was repeated on behalf of NERSA that the MYPDM3 involved the implementation of policy that had been translated into legislative form, which was protected from judicial interference by the doctrine of the separation of powers. It may not, so it was contended, be translated into an immutable role. Eskom echoed NERSA‟s contentions in relation to the doctrine of the separation of powers. [75] In respect of the temporal requirements of MYPDM3, the following parts of Eskom‟s answering affidavit are of importance: „17.3 An entity such as Eskom has an obligation to report its financial statements to the public, and it must have its financials audited. The audited financial statements are the ones used in the RCA application. The financial year ordinarily ends at 31 March. Although the financial year ends during 31 March, for Eskom‟s books to be closed takes a month or more. Then the auditors have to audit the financial results. This is done by external auditors including the Auditor General‟s office. It takes Eskom over two months to finalise this process. Eskom traditionally makes its financial statements in July of every year. It is on this basis that Eskom was ready to launch the MYPD3 RCA 2013/14 application during January 2015. 17.4 There are variables that create a delay in the production of annual financial statements. This has occurred and consequently occasioned delays in Eskom launching its RCA application during the 2013/14 tariff year. On this basis, Eskom couldn‟t submit its financial statements during July 2014. This is so as it was also finalising the MYPD2 RCA which was finalised during November 2014. Eskom could only apply itself to the RCA application from November 2014 once MYPD2 RCA process (the first ever RCA process) was concluded.‟ [76] The following further paragraphs of Eskom‟s answering affidavit are also significant: „22.3 Furthermore, the 2013/14 RCA cannot be recovered in the 2014/15 year because the audited financial results are finalised and released by end-July 2014. By that time the 2014/2015 year has already commenced and the tariffs for that year have already been finalised. It must be borne in mind that Eskom cannot charge any tariff that has not been approved by NERSA, and that that process must be completed by March preceding the next financial year in which the decision is to be implemented. It is therefore not possible to have the decision of the RCA implemented in the year immediately after the end of the financial year implicated. 22.4 Eskom gives NERSA, six monthly reports. These regulatory reports are a reflection of Eskom‟s actual results for 6 months. This is in line with the Regulatory Financial standard. Clearly Eskom provides sufficient information to NERSA in this regard amounting to substantial compliance.‟ [77] In respect of the MYPDM3 process, Eskom too pointed to the extensive public participation process and reminded Borbet that it had not received all that it had sought in its application for a tariff adjustment. [78] According to Eskom, it is notable that there is no prescribed time within which an application for an RCA approval is to be made. [79] Insofar as variances in relation to OCGTs were concerned, Eskom pointed out that NERSA did not allow for any variance above the allowed variance for OCGTs. What was allowed was the price variance due to fluctuations in the diesel price and the coal equivalent costs for the OCGT costs above the allowed levels. [80] According to Eskom, NERSA expected the energy from OCGTs to have been provided by coal fired power stations. On that basis NERSA only provided the coal equivalent costs for that energy category. The determination meant that Eskom was restricted in running its OCGTs to what was allowed in MYPDM3. Eskom pointed out that NERSA did not allow any compensation for decreased revenues as a result of low sales. [81] In relation to IPP‟s, locally and internationally, NERSA approved power purchase agreements, including their related costs and all other agreements as part of its licencing process. This allowed Eskom to recover its costs in terms of the rules for power purchase cost recovery. [82] Those then were the opposing positions adopted by the parties. The high court judgment [83] Pretorius J prepared and finalised a comprehensive 63 page judgment. After considering the regulatory framework, she dealt with the submissions on behalf of NERSA and Eskom, namely, that Borbet was precluded by the doctrine of the separation of powers from challenging the approval of the additional 1,4 per cent. She also had regard to the contentions on behalf of Eskom and NERSA concerning deference to specialised administrative bodies. She dealt with the submission concerning NERSA‟s non-compliance with the MYPDM3 and the contention that the decision was rationally and procedurally unfair. [84] Pretorius J agreed with Borbet that NERSA had not complied with the temporal and procedural requirements of MYPDM3. She held it against NERSA that it was contending simultaneously that it had complied with MYPDM3 and that it was empowered to depart from it. She held that NERSA had departed from the MYPDM3 and that its reliance on the introduction did not absolve it from justifying a decision to deviate and to publish the reasons for such a deviation. [85] The court a quo thought it significant that the requirement that quarterly updates be submitted was couched in „peremptory language‟. The court took into account that financial statements for the 2013/14 year had been available at the latest in July 2014. It went on to say that: „[T]he tariff increase could and should have been assessed in the 2014 tariff year.‟ It considered 14.2.6 of MYPDM3 important in relation to time limits. „The Energy Regulator will then review Eskom‟s submission and make a preliminary assessment of any adjustments required in the subsequent financial year‟s tariff adjustment.‟ [86] Pretorius J went on to hold that the concession by both Eskom and NERSA that quarterly reports had not been submitted and the further concession by Eskom as to the purpose of the quarterly reports, compelled a finding that in that regard non-compliance with the MYPDM3 was irrational, unfair and therefore unlawful. [87] In respect of efficiency, the court below agreed that one could not have a fixed rule, but went on to state that it was nonetheless a factor to be considered and held that NERSA did not pay sufficient heed to the efficiency test in relation to contracts with IPP‟s. According to the court below the efficiency and prudency of the IPP contracts should be checked before and after contracts were concluded. [88] Pretorius J held it against Eskom that it encouraged customers to use less electricity and then sought to recover the resultant variance. She felt that NERSA‟s failure to take this into account was irrational. [89] It appears that the court below, wary of the submissions on behalf of NERSA and Eskom, namely, that courts should be slow to interfere with policy decisions and careful not to offend against the doctrine of the separation of powers, based its findings primarily on the basis that NERSA had acted irrationally in the manner referred to above. [90] The court below then went on to make the following order: „1. The decision published by the first respondent on 1 March 2016 in relation to the Regulatory Clearing Account (“RCA”) application by the second respondent – third Multi Year Price Determination (MYPD3) Year 1 (2013/2014) (the “Decision”) is reviewed, set aside and remitted to the first respondent. 2. It is directed that all future RCA applications by the second respondent in relation to the MYPD3 must be submitted and evaluated in accordance with paragraph 14 of the MYPD3 Methodology, or any future amendment thereof. 3. The first and second respondents are to pay the costs of this application jointly and severally, as well as the costs occasioned by the interim application of 31 March 2016, including the costs of three counsel.‟ [91] It is against those orders and the conclusions referred to above that the present appeal is directed. Conclusions [92] I propose to deal first with the legal nature of NERSA‟s decision-making in relation to Eskom‟s RCA application, which implicates the question whether courts will be offending against the doctrine of the separation of powers in reviewing such a decision. It also dictates the scope of such a review. [93] The introduction to the MYPDM3 set out in para 18 above, makes it clear that it was developed for the „regulation of Eskom‟s required revenues‟. That introduction states that the MYPDM3 would form the basis on which NERSA would evaluate price adjustment applications received from Eskom. NERSA performs a regulatory function. When it makes decisions concerning adjustment applications, it is acting in an administrative capacity even though it is applying policy. The MYPDM3 states that it is applying NERA and ERA, which, as discussed above, reflects in substantial parts, government policy. [94] As stated in Grey’s Marine Hout Bay (Pty) Ltd & others v Minister of Public Works & others 2005 (6) SA 313 (SCA) para 24, „[a]dministrative action is rather, in general terms, the conduct of the bureaucracy (whoever the bureaucratic functionary might be) in carrying out the daily functions of the State, which necessarily involves the application of policy, usually after its translation into law, with direct and immediate consequences for individuals or groups of individuals‟. In this regard, the decision of the Constitutional Court in President of the Republic of South Africa & others v South African Rugby Football Union & others 2000 (1) SA 1 (CC), at para 136, was relied upon. That paragraph reads as follows: „136. The principal function of s 33 is to regulate conduct of the public administration and, in particular, to ensure that where action taken by the administration affects or threatens individuals, the procedures followed comply with the constitutional standards of administrative justice. These standards will, of course, be informed by the common-law principles developed over decades. The question that arises in this case is what is included within the concept of “administrative action” as it is employed in s 33.‟ [95] The legislature, conscious of what is set out in the preceding paragraph, enacted s 10(3) of NERA referred to above, which entitles any person to institute proceedings in the high court in terms of PAJA for the judicial review of an administrative action by NERSA. [96] Of course, proceedings for judicial review of an administrative action, can be instituted on any of the grounds set out in s 6(2) of PAJA, including on the basis that it was not rationally connected to: the purpose for which it was taken, the purpose of the empowering provision, the information before the administrator or the reasons given by the administrator.11 A review is also justified on the basis of action that was procedurally unfair.12 [97] To sum up, NERSA‟s decision-making in relation to an RCA application is an administrative action reviewable in terms of PAJA. The scope of review is therefore wider than contemplated by the appellants and the court below. [98] Considering the correctness of the approach and the conclusions of the high court in relation to the legality of the 1,4 per cent adjustment approved by NERSA, there should, at the outset be careful scrutiny of MYPDM3 weighed against the statutory framework. 11 Sections 6(2)(f)(ii)(aa)-(dd). 12 Section 6(2)(c). [99] As explained in para 12 above, licences issued by NERSA may be made subject to conditions relating to the MYPDM3 to be used in the determination of rates and tariffs. As pointed out in para 13, clause 4.6 of the Eskom licence obliges it, as licensee, to comply with the price and tariff methodology. [100] In para 14 above, sections 17, 18 and 19 of ERA were discussed. It appears clearly from those provisions that they were intended primarily to regulate the relationship between NERSA and a licensee and that non-compliance by a licensee was not necessarily fatal to its continued operations. So, for example, a licensee might not be scrupulous or punctual in the keeping of its financial statements. Such failure might mean that financial penalties could be imposed by NERSA as sanction for non-compliance and as a disincentive to continued maladministration. As was indicated in para 14 above, non-compliance with the MYPDM3 or any other condition of the licence does not act as a guillotine resulting in an immediate cancellation of the licence and or the cessation of licenced activities. That is not to say, if the licenced activity was no longer viable, that NERSA could not resort to s 17 and revoke a licence. However, s 17(3) dictates that the Minister must prescribe the form and procedure to be followed in revoking a licence. In short, there has to be some form of due process. [101] It is clear that the MYPDM3 and the statutory framework provides for best and worst-case scenarios, in the collection of revenues and concomitant expenditure, and indicates how either or a combination ought to be dealt with. The introduction to the MYPDM3, as appears in para 18 above, specifically states that the development of the MYPDM3 does not „preclude the Energy Regulator from applying reasonable judgment on Eskom‟s revenue after due consideration of what may be in the best interest of the overall South African economy and the public‟. That is an overall power, the propriety of the application which can be tested by whether the ultimate decision is indeed in the interest of South Africa. As discussed earlier, Eskom is the major bulk supplier of electricity in South Africa and the State is its only shareholder. Its continued operation is a matter of national importance. It is against that background that NERSA‟s role and the application of the MYPDM3 has to be seen. [102] It is clear from what appears above that the statutory framework and the MYPDM3 imposes certain obligations on licensees, but they also recognise that these obligations may not always be met and that corrective or remedial measures on the part of NERSA might ensue. What they are to be is entirely within NERSA‟s compass. [103] The RCA account was established to deal with the possibility of plans and estimates going awry. In Eskom‟s case, for the reasons articulated above, the variance between estimates and actual revenue and expenditure was wide. That variance led to the RCA application by Eskom. [104] It is true that 14.2.2 of MYPDM3 requires the RCA account to be updated quarterly „so as to use it for regular alerts to customers of any possible adjustment in the coming year‟. Section 14.2.2 goes on to state that in order for the RCA account to be updated quarterly as part of a regular alert system, Eskom „must . . . submit actual financial data on a quarterly basis‟. As pointed out earlier, in the ordinary course, failure by a licensee to comply with the methodology or a licence condition, might result in sanctions being imposed by NERSA. NERSA could also apply to court to compel Eskom to comply. It chose not to do so, electing rather to abide by bi-annual reports. However, it does not follow ineluctably that Eskom‟s failure to supply the quarterly report precludes NERSA from entertaining an RCA application. The MYPDM3 nowhere says so and holding otherwise would be to defeat the purpose of the RCA and negate NERSA‟s role as regulator. It would mean that an RCA application which, if approved would strike the proper balance between the liability of Eskom and continued electricity supply and the public interest, would be thwarted because of a failure to supply quarterly reports. This might have the consequence that Eskom was rendered financially non-viable and threaten the supply of electricity regionally or nationwide. That is not to say that laxity by licence holders such as Eskom should be encouraged. In these circumstances, to preclude an RCA application because of a historical failure to submit quarterly reports would not only be destructive of the regulatory framework and purpose of the RCA but would also threaten Eskom‟s viability and expose NERSA to legal challenge. [105] A careful reading of the affidavit filed in support of Borbet‟s case reveals that it vacillated and was confused in respect of the core of its case concerning Eskom‟s failure to supply the quarterly reports. It was never unequivocally suggested that the failure to submit the quarterly reports operated as an absolute bar to the bringing of an RCA application. Rather, the complaint in essence appeared to have been that the RCA application should not have been approved because of the failure to submit the quarterly reports. [106] Sections 14.2.5 and 14.2.6 of the MYPDM3, set out to in para 25 above, have to be viewed in context. The following is envisaged: (a) On a quarterly basis Eskom has to present NERSA with „possible adjustments‟ based on MYPDM3, the costs to date and projections to year end. (b) NERSA then has to review Eskom‟s submission and make a preliminary assessment of any adjustments required in the subsequent year‟s tariff adjustment. This caters for a situation where the quarterly reports form a basis for possible future tariff adjustments. The quarterly reports, in these circumstances, are to be accompanied by submissions requiring a preliminary assessment with an eye towards future tariff adjustments. We now know that Eskom did not make such submissions and much later thought that the correct path to follow was the ill-fated application for a „selective re-opener‟. [107] I am mindful of submissions on behalf of Borbet‟s counsel that one must guard against being too readily dismissive of the value of the early customer alerts catered for by s 14.2.2 of the MYPDM3. It was contended that they served an important purpose and enabled customers to plan for the future. I accept that had quarterly reports been filed customers might have been alerted earlier to future adjustments. I do not intend to minimise or negate the need for the alerts by way of the quarterly reports. In the present case the first bi-annual report would no doubt, particularly having regard to the extent of Eskom‟s financial woes, already have signalled trouble. As stated above, the failure to present the quarterly reports can be met by corrective and/or penal action by NERSA. It would be salutary practice for NERSA to insist on this. However, it is entirely within NERSA‟s province to determine how to deal with shortcomings by licensees. [108] As far as the timing of the RCA is concerned, it should be borne in mind, as pointed out above, that final reviews can only realistically be conducted, in the year subsequent to the one in which the audited financial reports are made available. In this regard, it is necessary to bear in mind what is stated by Eskom in paras 75 and 76 above concerning the timing of the closure of its books of account after 31 March each year and that the audit involves external auditors, including the Auditor- General‟s office. Eskom pointed out that there are variables that create delays in the production of annual financial statements that caused delays in lodging its RCA application. It is against that factual background and the realities of commercial accounting that the timing of the RCA application has to be adjudicated. [109] The delay was compounded by Eskom misconstruing its remedy to seek tariff adjustments by way of a „selective re-opener‟. Eskom only brought the RCA application, after it was informed by NERSA that its remedy to deal with the variances lay down that path. [110] Faced with the RCA application, NERSA was obliged to deal with it in the manner contemplated in s 14.2.3.3 of the MYPDM3, namely, because the variance was more than ten per cent, a full stakeholder participation process had to be conducted. If it failed to follow that process, NERSA would, as Regulator, have been remiss in not dealing with the very real problem of a variance of billions of rands threatening the lifeblood of a key national asset. Its task, as stated above, is to maintain a balance between Eskom‟s sustainability as a business and reasonable tariff stability as well as to appropriately allocate commercial risk between Eskom and its customers. That is not to say that NERSA is obliged to approve variances due to maladministration on Eskom‟s part. The RCA application has to be dealt with on its merits and in terms of the MYPDM3. [111] As pointed out earlier, the imposition of sanctions for non-compliance by a licensee with its licence obligations or the condonation thereof, are entirely within NERSA‟s remit. In justifiable circumstances NERSA is empowered to apply to the high court for an order suspending or revoking a licence. The contention by Borbet that the failure by Eskom to supply quarterly reports vitiates the entire RCA process is inconsistent with the regulatory and licencing structure catered for by the legislative framework. Casting it in the manner suggested by Borbet would lead to absurd results and would render nugatory the entire statutory scheme. [112] The question of Eskom‟s failure to submit quarterly reports was pertinently raised during the RCA process. All stakeholders made their submissions in this regard. The public participation process concerning the RCA application was conducted nationwide and was extensive and interactive. The lack of quarterly reports was specifically, carefully and extensively dealt with by the ELS and NERSA, as referred to earlier in this judgment. The RCA process can hardly, in light thereof, be described as unfair. [113] As to the timing of the implementation of the tariff increase, as pointed out above, in terms of s 14.2.4 of the MYPDM3, it is wholly within NERSA‟s power. Realistically, given the financial years of both Eskom and municipalities, the decision that it be imposed from the beginning of the year following the one during which the decision was made, appears to be realistic and rational. [114] Borbet‟s contention in relation to IPPs referred to above is, in my view, without any foundation. Once contracts are approved and concluded one might rightly ask how one could review them midstream without incurring contractual liability, thereby incurring further potential costs for Eskom. It is necessary to note that the legality of those contracts have in the present case not been challenged. As correctly pointed out by NERSA, a review of those contracts is not part of the MYPDM3 process. That is not to say that Eskom and NERSA can act beyond Treasury requirements or outside of the parameters of any legislative provisions which serve to ensure transparency and accountability. [115] The MYPDM3 pre-approved, on estimates, an eight per cent year-on-year increase. This appears to have been based on some degree of differentiated pricing, hence the complaint by stakeholders concerning such differentiation. The RCA process was concerned not with a review of the underlying basis for the MYPDM3 projected year-on-year tariff increases but rather with the question of the variance and what ought rightfully to be allowed in terms of the RCA. [116] The high court also held it against Eskom that it urged less electricity usage and then complained about under recovery of revenue. As accepted in the Chamber‟s submissions, consumers heeded a call to reduce electricity usage in order to prevent power outages. In this regard Eskom appears to have been caught between a rock and a hard place. The variance was due to failure by Eskom to take steps to ensure that its capacity was not overtaken by consumer demand. This was due to the reality of historical primary inefficiencies and lack of foresight (a period long before the financial year in question). [117] I do not intend to deal with each individual pass-through that was allowed by NERSA, referred to in greater detail in paras 44 to 53, save to note that this was not a case of a rogue Regulator but one that was cautious and motivated in each of the constituent parts of its overall decision. The economic impact of the adjustment was considered by NERSA and the amounts allowed were within the bounds set by the MYPDM3. As far as efficiency is concerned, NERSA was astute to ensure Eskom did not obtain a benefit from its own inefficiency. One has to bear in mind the balance to be achieved between Eskom‟s sustainability and the impact on the consumer and the South African economy. This is a case in which there has to be a degree of judicial deference to a specialised administrative body engaged in an administrative action. In this regard the words of the Constitutional Court in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & others 2004 (4) SA 490 (CC), are apposite: „[48] In treating the decisions of administrative agencies with the appropriate respect, a Court is recognising the proper role of the Executive within the Constitution. In doing so a Court should be careful not to attribute to itself superior wisdom in relation to matter entrusted to other branches of government. A Court should thus give due weight to findings of fact and policy decisions made by those with special expertise and experience in the field. The extent to which a Court should give weight to these considerations will depend upon the character of the decision itself, as well as on the identity of the decision-maker. A decision that requires an equilibrium to be struck between a range of competing interests or considerations and which is to be taken by a person or institution with specific expertise in that area must be shown respect by the Courts. Often a power will identify a goal to be achieved, but will not dictate which route should be followed to achieve that goal. In such circumstances a Court should pay due respect to the route selected by the decision-maker. This does not mean, however, that where the decision is one which will not reasonably result in the achievement of the goal, or which is not reasonably supported on the facts or not reasonable in the light of the reasons given for it, a Court may not review that decision reasonably. A Court should not rubber-stamp an unreasonable decision simply because of the complexity of the decision or the identity of the decision-maker.‟ The following part of an article by Professor Hoexter, cited with approval by the court in Bato Star, bears repeating: „[A] judicial willingness to appreciate the legitimate and constitutionally-ordained province of administrative agencies; to admit the expertise of those agencies in policy-laden or polycentric issues; to accord their interpretations of fact and law due respect, and to be sensitive in general to the interests legitimately pursued by administrative bodies and the practical and financial constraints under which they operate. This type of deference is perfectly consistent with a concern for individual rights and a refusal to tolerate corruption and maladministration. It ought to be shaped not by an unwillingness to scrutinize administrative action, but by a careful weighing up of the need for – and the consequences of – judicial intervention. Above all, it ought to be shaped by a conscious determination not to usurp the functions of administrative agencies; not to cross over from review to appeal.‟13 [118] In my view, Borbet and the court below misconceived the manner in which the MYPDM3 operates and how it is to be applied. They both erred in considering that Eskom‟s failure to submit quarterly reports, without more, precluded the approval of an RCA application. Furthermore, they misconstrued the role of NERSA as Regulator. [119] I appreciate that the South African taxpayer and electricity consumer are exhausted by the constant historical failures by Eskom. Whether Eskom is penalised by NERSA through the imposition of a fine or whether a request for a tariff adjustment is granted or denied, the taxpayer and the consumer ultimately appear to be the ones who bear the financial burden. Eskom is a strategic national asset. What is required from it is optimum efficiency and accountability. NERSA and its sole shareholder, the government, are tasked to ensure that result. This case was concerned with the question of the proper adjudication of an RCA application. What was disallowed by NERSA took into account the failures on the part of Eskom. 13 C Hoexter „The Future of Judicial Review in South African Administrative Law‟ (2000) 117 SALJ 484 at 501-502. Those are matters that have to be addressed prospectively by NERSA and with government oversight. They are matters beyond the adjudication in this case. [120] One further aspect requires brief consideration. State owned enterprises have to resist the impulse to immediately resist constitutionally permissible judicial scrutiny. This includes resistance to making information available that rightly belongs in the public domain. After all, they are, through the State, owned by the nation. I appreciate that there might well be commercial confidentiality that attaches to certain commercial contracts but the default position should be to make information available subject to justifiable redaction. It is a pity that Eskom and NERSA did not, in the early stages when it was evident that litigation would follow, adopt that attitude. [121] For all the reasons set out above, the following order is made: 1 The appeal is upheld with costs including the costs of two counsel. 2 The order of the court below is set aside and replaced with the following: „The application is dismissed with costs including the costs of two counsel.‟ _____________________ M S Navsa Judge of Appeal APPEARANCES: For the First Appellant D Fine SC (with him A Pantazis and M Chauke) Instructed by: Hogan Lovells (SA) Inc. c/o Macintosh Cross & Farquharson, Pretoria McIntyre & van der Post, Bloemfontein For the Second Appellant: J Gauntlett SC (with him K Hofmeyr) Instructed by: Ledwaba Mazwai, Pretoria Symington & De Kok, Bloemfontein For the First to Sixth Respondents D Unterhalter SC (with him M du Plessis, S Pudifin-Jones and J Thobela-Mlambisi) Instructed by: Joubert Galpin Searle Attorneys c/o Couzyn Hertzog & Horak, Pretoria Spangenberg Zietsman & Bloem, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 6 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. NERSA v Borbet SA (Pty) Ltd [2017] ZASCA 87 (1288/2016 & 1309/2016) (6 June 2017) MEDIA STATEMENT The Supreme Court of Appeal (SCA) today upheld an appeal by the National Energy Regulator of South Africa (NERSA) and Eskom Holdings SOC Limited (Eskom) against a judgment of the Gauteng Division, Pretoria of the High Court (Pretorius J). That court had reviewed and set aside a decision of NERSA approving a tariff increase by Eskom to be passed on to consumers. The review application was brought by Bobert SA (Pty) and other private businesses. The review application concerned NERSA’s approval of an additional 1,4 per cent increase in the electricity tariff, over and above an earlier, properly approved eight per cent increase for the 2013/2014 financial year. The decision by NERSA was announced on 2 March 2016. The increase came into effect on 1 April 2016 and endured until 31 March 2017, and was passed on to municipalities by Eskom. Briefly, the manner in which electricity tariffs are regulated is set out in the Electricity Regulation Act 4 of 2000. NERSA, which is established in terms of s 3 of the National Energy Regulator Act 40 of 2004 (NERA), in turn regulates the generation, transmission and distribution of electricity. It considers and is empowered to grants applications for the distribution of electricity, and regulates electricity prices and tariffs. As between NERSA and Eskom, the electricity tariff methodology is set out in the ‘multi-year price determination methodology’ (the MYPDM). The MYPDM is updated in intervals. The determination which was the subject of the review application fell within the third price determination interval, and covers the five tariff years between 1 April 2013 and 31 March 2018. This methodology, named MYPDM3, and the interpretation and application thereof, lay at the heart of the appeal. Under the MYPDM3, the tariff set by NERSA that Eskom could charge and recover from its customers was envisaged to increase by eight per cent year-on-year for each of the five years (2013 to 2018). The additional 1,4 percent, in relation to the 2013/2014 financial year, approved by NERSA, effectively meant that in the financial year 1 April 2016 till 31 March 2017, Eskom would have been entitled to a total increase of 9,4 per cent – which was passed on to consumers. Eskom applied through the Regulatory Clearing Account, in terms of s 14 of the MYPMD3, for an adjustment of approximately R22 billion. The RCA is used to debit or credit all potential adjustments to Eskom’s allowed revenue. NERSA allowed Eskom an adjustment of R11,2 billion which equates to the 1,4 percent increase, despite Eskom’s failure to provide quarterly reports as envisaged in the MYPDM3, and despite objections from Borbet and government departments. The SCA stated that ‘NERSA’s decision-making in relation to an RCA application is an administrative action reviewable in terms of the Promotion of Access to Justice Act 3 of 2000 (PAJA).’ Thus, the court continued, the scope of review was wider than envisaged by Eskom and NERSA, and the court below. The SCA noted that the correctness or otherwise of the high court’s approach and conclusions in relation to the 1,4 per cent adjustment approved by NERSA had to be determined against the backdrop and upon a scrutiny of the MYPDM3, weighed against the statutory framework (namely, ERA and NERA). It noted that licenses issued by NERSA may be made subject to conditions relating to the MYPDM3. And in relation to the regulatory scheme, in particular sections 17, 18 and 19 of ERA, it was clear that non-compliance by a licensee was not fatal to its continued operations – these provisions were intended primarily to regulate the relationship between NERSA and the licensee. The court stated that the statutory framework and the MYPDM3 imposed certain obligations on licensees, but that the framework also recognises that these obligations may not always be met and that corrective or remedial measures on the part of NERSA might ensue. It was the court’s view that those measures are entirely within NERSA’s remit. Moreover, the SCA noted, section 14.2.2 of the MYPDM3 states that in order for the RCA account to be updated quarterly as part of a regular alert system, Eskom ‘must . . . submit actual financial data on a quarterly basis. . . in the ordinary course, failure by a licensee to comply with the methodology or a licence condition, might result in sanctions being imposed by NERSA. NERSA could also apply to court to compel Eskom to comply. It chose not to do so, electing rather to abide by bi-annual reports.’ However, the court said, it did not follow ineluctably that Eskom’s failure to supply the quarterly report precludes NERSA from entertaining an RCA application. The MYPDM3 nowhere says so and holding otherwise would be to defeat the purpose of the RCA and negate NERSA’s role as regulator. It would mean that an RCA application, which if approved would strike a proper balance between the liability of Eskom and continued electricity supply and the public interest, would nevertheless be thwarted because of a failure to supply quarterly reports. This might have the consequence that Eskom was rendered financially non-viable and threaten the supply of electricity regionally or nationwide. That is not to say, the court continued, that laxity by licence holders such as Eskom should be encouraged. In these circumstances, to preclude an RCA application because of a historical failure to submit quarterly reports would not only be destructive of the regulatory framework and purpose of the RCA but would also threaten Eskom’s viability and expose NERSA to legal challenge.’ The court recognized, however, the importance of the quarterly reports in order to alert customers of possible adjustments. The SCA also noted that NERSA had an overall power which was permitted by the MYPDM3 which in its introduction states that the development of the MYPDM3 does not ‘preclude the Energy Regulator from applying reasonable judgment on Eskom’s revenue after due consideration of what may be in the best interest of the overall South African economy and the public’. And concluded that it was apparent that the statutory framework and the MYPDM3 imposed certain obligations on licensees but that these instruments also recognized that these obligations ‘may not always be met and that corrective or remedial measures on the part of NERSA might ensue.’ With regards to the timing of the implementation of the tariff increase, the court held that this was entirely within NERSA’s remit, and noted that given Eskom and the municipalities’ financial year ends, the decision that it be imposed from the beginning of the year following the one during which the decision was made, appeared to be realistic and rational. And the court was at pains to point out that as regards the claim of inefficiency; Eskom did not obtain a benefit from its own inefficiency. The SCA pointed out that the present was a case in which there had to be a degree of deference to a specialized administrative body such as NERSA. What NERSA intended to do, and was so entitled, the court held, was to strike a balance between Eskom’s sustainability and the impact on the consumer of the South African economy. In the event, the court found that the high court and Borbet not only misconceived the manner in which the MYPDM3 operated, but also NERSA’s role as the regulator. Accordingly, the SCA dismissed the court below’s order that NERSA’s decision to allow Eskom an additional electricity tariff adjustment be reviewed. The court held that: ‘[119] [It] appreciate[d] that the South African taxpayer and electricity consumer are exhausted by the constant historical failures by Eskom. Whether Eskom is penalised by NERSA through the imposition of a fine or whether a request for a tariff adjustment is granted or denied, the taxpayer and the consumer ultimately appear to be the ones who bear the financial burden. Eskom is a strategic national asset. What is required from it is optimum efficiency and accountability. NERSA and its sole shareholder, the government, are tasked to ensure that result. This case was concerned with the question of the proper adjudication of an RCA application. What was disallowed by NERSA took into account the failures on the part of Eskom. Those are matters that have to be addressed prospectively by NERSA and with government oversight. They are matters beyond the adjudication in this case.’ Earlier in the judgment the court said the following (para 2): ‘It is, I venture, not unfair to say that because of historical inefficiencies leading to what South Africans have come to know as load shedding – a euphemism for electrical power cuts – and because of extensive public debates concerning its competency, Eskom has attained a level of unpopularity in the public eye. In the present case, however, the question is whether NERSA duly discharged its statutory obligations. If it did then Eskom was entitled to charge the tariffs it authorized.’ In the end, it said, the present was a case which concerned the proper adjudication of the RCA application. --- ends ---

3437

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 1085/ 2019 In the matter between: MARTRADE SHIPPING AND TRANSPORT GmbH APPELLANT and UNITED ENTERPRISES CORPORATION FIRST RESPONDENT MV 'UNITY' SECOND RESPONDENT Neutral Citation: Martrade Shipping and Transport GmbH v United Enterprises Corporation and MV 'Unity' (1341/18) [2020] ZASCA 120 (2 October 2020) Coram: NAVSA, MAKGOKA and SCHIPPERS JJA and EKSTEEN and GOOSEN AJJA Heard: 31 August 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand- down is deemed to be 09h45 on 2 October 2020 Summary: Interpretation of court order – manifest purpose of the order – consideration of language used in light of ordinary rules of grammar – whole of the order to be read – where ambiguous a sensible, practical interpretation to be adopted which fosters purpose for which order granted. ORDER On appeal from: The KwaZulu-Natal High Court, Pietermaritzburg (per Bezuidenhout, Gyanda and Chili JJ) sitting as court of appeal: 1. The appeal is upheld with costs. 2. The order of the court below is set aside and substituted as follows: ‘(a) The appeal is upheld with costs, including the costs related to the withdrawn cross-appeal; (b) The order of the court below is set aside and substituted as follows; “The application is dismissed with costs”.’ JUDGMENT Goosen AJA (Navsa, Makgoka and Schippers JJA and Eksteen AJA concurring) [1] This appeal concerns the proper interpretation of a court order granted in relation to a claim for security in a maritime dispute. The central question is whether the order obliged the furnishing of security with a period of 15 days of the date of granting the order. [2] The principles which apply to the interpretation of court orders are well- established. Trollip JA observed in Firestone South Africa (Pty) Ltd v Gentiruco AG1 that the same principles apply as apply to construing documents. Thus, ‘..(T)he court’s intention is to be ascertained from the language of the judgment or order as construed according to the usual, well-known rules… Thus, as in the case of a document, the judgment or order and the court’s reasons for giving it must be read as a whole to ascertain its intention.’ [3] The starting point, it was held in Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Limited and others2, is to determine the manifest purpose of the order. This was endorsed by the Constitutional Court in Eke v Parsons3. This court, in Natal Joint Municipal Pension Fund v Endumeni Municipality4, described the process of interpretation as involving a unitary exercise of considering language, context and purpose. It is an objective exercise where, in the face of ambiguity, a sensible is to be preferred to one which undermines the purpose of the document or order. The facts 1 Firestone South Africa (Pty) Ltd v Gentiruco AG 1977 (4) SA 298 (A) at 304; [1977] 4 All SA (A) at 604. 2 Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Limited and others 2013 (2) SA .204 (SCA) para [13] [2012] ZASCA 49. 3 2015 (11) BCLR 1319 (CC) para [29]. 4 2012 (4) SA 593 (SCA) para [18]. [4] The appellant, Martrade Shipping and Transport GmbH (Martrade Shipping) caused the second respondent (the MV Unity) to be arrested in the Durban port on 21 February 2014. The arrest was in terms of s 5 (3) of the Admiralty Jurisdiction Regulation Act 5 (the Admiralty Act) to provide security for Martrade Shipping’s claims against the first respondent , United Enterprises Corporation, (United Enterprises) in ongoing arbitration proceedings in London (the arbitration proceedings). United Enterprises thereafter gave a letter of undertaking as security for the claims and obtained the release of the MV Unity from arrest. The MV Unity however, was deemed to be under arrest in terms of s 3 (10) of the Admiralty Act. [5] In April 2014 United Enterprises brought an application in the KwaZulu-Natal Division of the High Court (the high court) to set aside the arrest of the MV Unity. In the event that the arrest was not set aside, United Enterprises sought counter-security for its claims against Martrade Shipping in the arbitration proceedings. The application was dismissed. However, it granted the application for counter security. It is this order which is the subject of the interpretation dispute. [6] The relevant part of the order read as follows: ‘2.1 The respondent [Martrade Shipping] is directed to give security in a form acceptable to the applicants, alternatively to the Registrar of the above Honourable Court in the event of the parties not reaching agreement, in the amount of US$ 978 868.69 within 5 105 of 1983. fifteen (15) days of the gran.t of this Order in respect of the first applicant’s [United Enterprises] claim in the London arbitration proceedings;6 … 2.2 Failing compliance with paragraph 2.1 above within thirty (30) days of the date of granting this order, the respondent [Martrade Shipping] is directed to return to the applicants [United Enterprises] the letter of undertaking given by the applicants pursuant to the arrest order of 21 February 2014, and the arrest of the second applicant [MV Unity], shall lapse.’ [7] It was common cause that the 15-day period in paragraph 2.1 of the order expired on 18 January 2017, and that the 30-day period in paragraph 2.2 expired on 5 February 2017. Martrade Shipping’s insurer tendered a letter of undertaking as security on 17 January 2017. United Enterprises refused to accept the tendered undertaking. Accordingly, on 18 January Martrade Shipping referred the determination of the form of security to the registrar for a decision. The registrar approved the tendered security on 1 February 2017 and it was provided to United Enterprises on that date. [8] On 22 March 2017 the respondents commenced an application to set aside the directive issued by the registrar on 1 February. They also sought orders declaring that the arrest of the MV Unity had lapsed, and directing the return of the letter of undertaking provided by United Enterprises. That application was heard by Maharaj AJ who, on 15 March 2018, granted the relief sought. The order also provided for the reduction of the amount of security provided by Martrade Shipping to an amount of US$500 000. 6 The other part of the order sets out, in a number of sub-paragraphs, specified claim amounts and specified interest claims. These are not reproduced here since they are not relevant in determining the purpose and meaning of the order. [9] Martrade Shipping appealed against the order of Maharaj AJ declaring the provision of security out of time and that the arrest had lapsed. United Enterprises prosecuted a cross-appeal against the order reducing the security to be provided to US$500 000. The appeal was heard on 7 June 2019. By then the cross-appeal issue had become moot and it was withdrawn subject to the costs being costs in the appeal. On 28 June 2019 the full court dismissed the appeal. The appeal is with the special leave of this court. The purpose of the order of 23 December 2016 [10] The description of the background to the present appeal points to an essential underlying purpose of the order to be interpreted. What was before Henriques J was a common conundrum faced in maritime claims: the balancing of the interests of contending parties to security for their claims where the dispute is being adjudicated in a foreign jurisdiction and where the effectiveness of a future judgment must be ensured. [11] In MV NYK Isabel; Northern Endeavour Shipping Pte Ltd v Owners of the MV NYK Isabel and Another 7 this court set out the approach to the resolution of such conundrums in the exercise of a court’s admiralty jurisdiction. ‘The [Admiralty] Act is a special statute dealing with maritime matters and it is directed at meeting the needs of the shipping industry in enforcing maritime claims. It provides the Court with very extensive powers to deal with maritime cases. In regard to the breadth of these powers I draw attention to section 5(1), which empowers the Court, to join a person as a party "notwithstanding the fact that he is not otherwise amenable to the jurisdiction of 7 MV NYK Isabel; Northern Endeavour Shipping Pte Ltd v Owners of the MV NYK Isabel and Another 2017 (1) SA 25 (SCA) para [44] – [45] (Northern Endeavour). the Court", and to section 5(2) (a), which provides that a Court may decide any matter arising in connection with a maritime claim "notwithstanding that any such matter may not be one which would give rise to a maritime claim". These powers take account of the reality that maritime defendants are mobile and transitory in their presence in any particular jurisdiction. Perforce they compel maritime claimants to become "wandering litigants of the world", in the colourful expression of Didcott J recorded in The Paz, but without the pejorative overtones with which he used it. In order to address this problem the Act provides wide-ranging powers of arrest, both for the purpose of instituting actions in South Africa and to enable claimants to obtain security for proceedings in other jurisdictions. It follows in my view that the provisions of the Act should be given a generous interpretation consistent with its manifest purpose of assisting maritime claimants to enforce maritime claims. That construction is also consistent with the right of access to Courts afforded to everyone in terms of section 34 of the Constitution. There is, however, a need for balance when the Courts exercise the expansive powers of arrest and attachment of vessels embodied in the Act. Section 5(2) (b) and (c) give Courts the means to balance the interests of claimant and defendant by ordering counter-security in appropriate cases and attaching conditions to orders of arrest or attachment. Thus, it is commonplace for an arrest to be subject to the provision of security for the costs of an application to set the arrest aside, or for any loss suffered in consequence of that arrest if it is subsequently set aside.’ (Footnotes omitted) [12] The court went on to state that where the requirements for security and counter-security are established and the merits of the claims are evenly balanced ‘considerations of fairness suggest that either both parties should have security or neither’.8 [13] It is in the light of these general principles that the order of Henriques J must be understood. She stated in her judgment that the requirements of s 5 8 Northern Endeavour par [58]. (3) of the Admiralty Act were met. She was therefore satisfied that an order be made in terms of s 5 (2) (c) of that Act. The section provides that a court may, in the exercise of its admiralty jurisdiction, ‘(c) order that any arrest or attachment made or to be made or that anything done or to be done in terms of this Act or any order of the court be subject to such conditions as to the court appears just, whether as to the furnishing of security or the liability for costs, expenses, loss or damage caused or likely to be caused, or otherwise;’ It is apparent therefore that Henriques J considered that counter-security for United Enterprises’ claims should be provided. The meaning and effect of the order [14] The appellant’s argument was that the 15-day period provided in paragraph 2.1 of the order was not to be read as the period within which the security was to be furnished. Paragraph 2.2 qualifies paragraph 2.1 by providing for compliance within 30 days of the date of the order. [15] Counsel for the respondents however, argued that paragraph 2.1 of the order must be read to mean that Martrade Shipping was obliged to deliver security for the amount stipulated within 15 days of the date of the order. The 15-day time period was one that applied to both circumstances envisaged by the order, irrespective of whether the form of security was agreed between the parties or it was determined by the registrar. [16] Clause 2.2 of the order, if seen in this light, relates not to the provision of security but to the re-delivery of the letter of security which had been provided to secure the release of the MV Unity from arrest. Thus the 30-day period stated in the order is not to be construed as a period within which security could be furnished, nor as upon expiry of which the arrest lapsed. The 30-day period was therefore to enable the administrative process of surrendering the letter of undertaking to occur. [17] There are, as I shall demonstrate, several difficulties with this construction. There is nothing in the record or indeed in the prevailing circumstances to suggest that re-delivery of the letter of undertaking required any elaborate administrative process. Nor was it a matter which the court was called upon to consider and to which it applied its mind. Counsel conceded that in this instance no such ‘administrative’ considerations arise. It was also conceded that the terms of the letter of undertaking are such that upon the lapsing of or release from the arrest, the causa upon which the letter could be perfected falls away. The re-delivery or return of the letter of undertaking carried no consequence. [18] Moreover, there are textual difficulties with the construction advanced on behalf of the respondents. Paragraph 2.1 employed the word ‘alternatively’. In doing so it posited two options or possibilities which governed the furnishing of security. The first option was the provision of security in a form acceptable to United Enterprises, ie in a form agreed between the parties. The second option arose in the event that agreement was not reached. In that event the registrar was to determine the form of security. These options accord with the practice that governs the provision of security. The textual difficulty arises with the phrase ‘within fifteen days of the grant of the order’. It either qualified the giving of security in a form which was agreed or gave rise to a textual conflict with paragraph 2.2 of the order. [19] Paragraph 2.1 of the order dealt with two distinct issues, namely the obligation to furnish security, and the determination of the form in which security was to be provided. Paragraph 2.2 on the other hand, dealt with the consequences of non-compliance with the obligation to furnish security. It also dealt with two distinct issues, namely the lapsing of the arrest of the MV Unity and the return of the letter of undertaking. [20] Counsel for the respondents suggested the 30-day period concerned only the delivery of the letter of undertaking. That is not how the order reads. The phrase ‘within 30 days of the date of this order’ qualifies ‘the failure to comply’ with paragraph 2.1 of the order. It does so in a grammatical structure that describes the consequences of non-compliance, namely the directive to return the letter of undertaking and the lapsing of the arrest of the MV Unity, as flowing from that failure to comply. [21] Thus, when paragraph 2.2 is read as it was written, the different time periods in 2.1 and 2.2, sensibly interpreted, must mean that the court intended that a period of 15 days be available to the parties to reach agreement as to the form of security and a further 15 days within which to provide security in a form acceptable to the registrar. A court is enjoined, where ambiguity presents itself, to interpret a document or order so as to avoid impractical, unbusiness- like or oppressive consequences which would undermine the purpose of the order. 9 9 Endumeni para [26]. [22] Henriques J afforded the parties an opportunity to agree to the form of security to be provided. This, in my view, is what paragraph 2.1 was intended to allow. When the order is read as a whole and is considered in context, the construction applied by the full court cannot be sustained. That interpretation was based upon a misreading of paragraph 2.2 of the order. At para 13 of its judgment the full court held that: ‘Paragraph 2.2 of the order provides that if security was not provided within the 15 day period the letter of undertaking must be returned and grants a further period of 15 days to do so.’ [23] That is not what paragraph 2.2 states. For the reasons set out above, such interpretation does not accord with the grammatical structure of the language used in both paragraphs of the order. It follows that the appeal must succeed. The order [24] As indicated at the outset, the cross-appeal was abandoned before the full court. It was agreed that the costs be costs in the appeal. Paragraph 4 of the order granted by Maharaj AJ accordingly need not be addressed. [25] In the result: 1. The appeal is upheld with costs. 2. The order of the court below is set aside and substituted as follows: ‘(a) The appeal is upheld with costs, including the costs related to the withdrawn cross-appeal; (b) The order of the court below is set aside and substituted as follows; “The application is dismissed with costs”.’ ________________________ G GOOSEN ACTING JUDGE OF APPEAL Appearances For appellant: L M Mills Instructed by: Bowmans, Durban Matsepes Inc, Bloemfontein For respondent: P J Wallis Instructed by: Shepstone & Wylie Webbers Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM: The Registrar, Supreme Court of Appeal DATE: 2 October 2020 STATUS: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Martrade Shipping and Transport GmbH v United Enterprises Corporation and MV Unity (Case no 1085/2019) [2020] ZASCA 120 (2 October 2020) Today the Supreme Court of Appeal (the SCA) handed down judgment in an appeal by Martrade Shipping and Transport GmbH (Martrade Shipping) against an order of the KwaZulu Natal Division of the High Court, Pietermaritzburg. The matter concerned the interpretation of a court order regarding security and the release of the MV ‘Unity’ from arrest. On 23 December 2016 the KwaZulu-Natal Division of the High Court, Durban (Henriques J) directed Martrade Shipping to provide counter-security for certain maritime claims made by Union Enterprises in ongoing arbitration proceedings in London (the high court order). The high court stipulated a 15-day time period in relation to the provision of security in the first paragraph of its order. It provided that in the event of non-compliance with the first paragraph of the order within 30 days, the arrest of the MV Unity would lapse. Security in a form determined by the registrar was provided outside of the 15-day time period provided in the first paragraph of the order. Union Enterprises brought an application in the high court to set aside the registrar’s determination and to declare that the arrest of the MV Unity had lapsed. The high court (Maharaj AJ) granted the orders. Martrade Shipping appealed against the order of Maharaj AJ declaring the provision of security out of time and that the arrest had lapsed. The appeal was heard by a full court (Bezuidenhout, Gyanda and Chili JJ) of the KwaZulu-Natal Division, Pietermaritzburg. On 28 June 2019, the full court dismissed the appeal. On further appeal to the SCA, the central question to be determined was the proper interpretation of the high court order. The SCA found that the order was ambiguous. In these circumstances it held that a sensible interpretation of the order was to be preferred to one that would lead to impractical, un-businesslike or oppressive consequences, or that would undermine the purpose of the order. The purpose of the order, it held, was to balance the interests of the parties in the ongoing arbitration proceedings and to ensure the effectiveness of any orders made in those proceedings. It held that the 15-day period provided in the first paragraph of the order was to enable the parties to agree upon the form of security to be provided. The 30-day period in the second paragraph of the order was the period within which the security was to be furnished. Therefore, since the security was provided within this latter period, Martrade Shipping had complied with the order. In the result, the appeal by Martrade Shipping was upheld and the SCA substituted the high court’s subsequent order with one dismissing the application brought by Union Enterprises with costs. It also ordered the latter to pay the costs of the appeal.

1905

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 798/2010 In the matter between: TRANSNET LIMITED Appellant and ERF 152927 CAPE TOWN (PTY) LTD First Respondent JOHAN LOMBARD Second Respondent CROSS COUNTRY CONTAINERS (PTY) LTD Third Respondent VINTAGE AFRICA INVESTMENTS 706 (PTY) (LTD) Fourth Respondent VONPROP ONE (PTY) LTD Fifth Respondent SMOKEY MOUNTAIN TRADING 151 (PTY) LTD Sixth Respondent SOUTHERN CARGO (PTY) LTD Seventh Respondent ROMAN EMPEROR INVESTMENTS 7 (PTY) LTD Eighth Respondent PEARL ISLE TRADING (PTY) LTD Ninth Respondent NICOLHEATH PROPERTIES (PTY) LTD Tenth Respondent LORCOM SIX (PTY) LTD Eleventh Respondent MALKEN CC Twelth Respondent CMC GRINROD (PTY) LTD Thirteenth Respondent (SUCH OTHER PERSONS AS MAY BE FOUND TO BE IN OCCUPATION OF THE PROPERTY) Fourteenth Respondent SOUTH CAPE CONTAINERS (PTY) LTD Fifteenth Respondent ____________________________________________________________ Neutral Citation: Transnet Limited v Erf 152927 Cape Town (Pty) Ltd & others (798/2010) [2011] ZASCA 148 (26 September 2011) Coram: NAVSA, VAN HEERDEN, MHLANTLA, THERON & WALLIS JJA Heard: 1 September 2011 Delivered: 26 September 2011 Summary: Eviction sought by way of motion proceedings – foreseeable bona fide dispute of fact raised – high court correctly refusing to refer to oral evidence and dismissing application. ORDER On appeal from: Western Cape High Court, Cape Town (Koen AJ sitting as a court of first instance): The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT VAN HEERDEN JA (NAVSA, MHLANTLA, THERON AND WALLIS JJA concurring): [1] If a valuation report which forms part of the record is to be believed, Transnet Limited (Transnet) is the owner of most of the vacant or undeveloped properties within a five kilometre radius of the harbour in Cape Town. As a result of industrial expansion in the Cape Peninsula, there is a strong demand for such properties, inter alia for the purpose of storing containers. Transnet currently have in place a moratorium on the disposal of properties owned by it. This greatly affects the demand and supply situation in the area. [2] One such property (the property), situated only 3.6 kilometres from the harbour entrance and served by railway sidings, forms the subject of the present appeal. In February 2007, Transnet applied for the eviction of the respondents from the property. It asserted simply that it was the owner of the property and that the respondents were in occupation. After the institution of the application, Transnet concluded that a number of the respondents were not in occupation of the property. It therefore confined the relief sought by it to the first, third, fifth, tenth, eleventh, thirteenth, fourteenth and fifteenth respondents. [3] The eleventh respondent, Lorcom Six (Pty) Ltd (Lorcom), in its affidavit filed in opposition to the eviction application, contended that it was entitled to occupy the property in terms of an oral lease agreement concluded between itself and Transnet. It stated that, while Lorcom occupied a small portion of the property, it had sublet the remainder to the first respondent, Erf 152927 Cape Town (Pty) Ltd, which had in turn sublet portions of the remainder to the other respondents against whom Transnet sought an eviction order. In its replying affidavit, Transnet denied the existence of a lease with Lorcom. [4] It is common cause that the first respondent purchased the property from Transnet on 18 February 1998, pursuant to the exercise of the option dealt with below. Lorcom claims that it is in occupation of the property by virtue of the oral lease referred to in the preceding paragraph, pending the transfer of the property to the first respondent. The transfer has been beset by technical difficulties which, it is alleged, are currently being addressed. It appears that at least part of the delay in the transfer has been caused by obstructiveness on the part of Transnet flowing from the abovementioned moratorium and consequent attempts by Transnet not to comply with its legal obligations. The second respondent, Mr Lombard (Lombard), is a director of both Lorcom and the first respondent and is also Lorcom’s representative. [5] Transnet’s application was dismissed with costs by Koen AJ in the court below. The learned acting judge did so on the basis that there had been a foreseeable bona fide dispute of fact on the question of the existence of an oral lease and that the defence based on the lease could not be rejected on the affidavits alone. Koen AJ also rejected Transnet’s submission that, if a dispute of fact was found to exist with regard to the conclusion of an oral lease, the court should refer the matter for the hearing of oral evidence. The consequent appeal by Transnet serves before us with the leave of the court below. [6] There are only two issues to be decided in this appeal. First, whether the court below was correct in concluding that the defence contended for by Lorcom, namely the oral lease, created a bona fide dispute of fact and was not so far-fetched or clearly untenable that the court was justified in rejecting it merely on the papers. 1 Second, whether the court below was correct in exercising its discretion to dismiss Transnet’s application, instead of referring the matter to trial or for oral evidence, on the basis that Transnet ought reasonably to have foreseen a dispute of fact in regard to the conclusion of an oral lease with Lorcom. [7] Because of the nature of the proceedings and the dispute which has arisen, it is necessary to set out the contents of the affidavits in some detail. 1 Fakie NO v CCII Systems (Pty) Ltd 2006 (4) SA 326 (SCA) para 55. [8] For many years, Transnet and its predecessor, the South African Transport Services (SATS), had leased the property to a range of occupiers. The relevant agreements which form the background to the alleged oral lease agreement relied on by the respondents are: a) a written lease agreement for a period of thirty years concluded between SATS and Coalcor Cape (Pty) Ltd (Coalcor) on 11 December 1987; and b) a written option agreement, also for a period of thirty years, and also concluded on 11 December 1987, whereby Coalcor, as tenant, was given the option to purchase the property from SATS (the option). [9] As the property was then (and remains) an unregistered erf, Clause 5 of the option provided that ‘in anticipation of the exercise of this Option, it shall be incumbent on TRANSPORT SERVICES to procure the subdivision, including the survey, preparation and approval of Subdivisional Diagrams as may be necessary in order to enable this transaction to be implemented forthwith upon exercise thereof’. [10] The rights of the lessee and option holder were over the years ceded and assigned to various entities. However, by February 1998, Macphail (Pty) Ltd (Macphail) was both the lessee and the option holder. On 18 February 1998, Macphail exercised the option to purchase the property. As it was entitled to do, Macphail nominated the first respondent as the purchaser of the property in respect of the sale agreement resulting from the exercise of the option. [11] Despite an attempt by Transnet to repudiate its obligations under the option agreement, the first respondent obtained an order in the Johannesburg High Court on 29 October 1998, confirming that the first respondent was entitled to enforce the agreement of sale resulting from the exercise of the option and directing Transnet to take all such steps as may be required and necessary to transfer the property to the first respondent. The judge (Schabort J) recorded that the property was at that time an unregistered consolidated erf. It remains such. [12] That order notwithstanding, the first respondent has still not received transfer of the property, largely due to delays in obtaining the necessary regulatory approvals required to register the property as a consolidated erf. Moreover, since early 2007, and despite the court order, Transnet has once again adopted the stance that, on various grounds (including prescription), it is not obliged to transfer the property. [13] Counsel for the respondents contended that Transnet’s executory obligation to transfer the property formed the basis of the conclusion of the oral lease agreement upon which the respondents rely. It is certainly so that the parties approached the matter, at the time the oral lease agreement is said to have been concluded, on the basis that transfer of ownership of the property to the first respondent was expected to occur in the near future. [14] It is apparent that by late 2000, Transnet and Lorcom knew that Maphail was going to terminate its lease of the property. On 22 August 2000, Lombard sent an email to Mr Bhoola (the acting senior property manager for Transnet’s Spoornet division) (Bhoola), requesting Transnet to consent to Macphail subletting the property to Lorcom for the period 1 September 2000 to 28 February 2001. Bhoola responded by email on 28 August 2000, indicating that Transnet was awaiting Macphail’s six months’ notice to terminate the lease, but that, assuming such notice was received, Transnet would in principle be prepared to allow Macphail to sublet the property to Lorcom for the six month period. [15] On 31 August 2000, Macphail gave six months’ notice of the termination of its lease. Lorcom then occupied the property. It asserted that it had the right to do so with effect from 31 August as Macphail’s subtenant, with Transnet’s consent. On 1 September 2000, a meeting was held between Bhoola and Mr Vilakazi (Transnet’s executive: property and asset management) (Vilakazi), on the one hand, and Lombard, Mr Cohen (the respondents’ attorney) and the latter’s clerk, on the other. According to Lombard, the purpose of the meeting was to discuss whether, on the termination of Macphail’s tenancy and assuming that transfer of the property had not yet taken place, Transnet would be willing to permit Lorcom to enter into a lease agreement for the period between the termination of the Macphail lease and the transfer of property to the first respondent. Bhoola followed up this meeting with an email on that same day, advising that Transnet consented to Lorcom subletting from Macphail for a three month period, effective from 31 August 2000. However, it is important to note that it was clear from this email that Transnet was hoping to conclude a new lease agreement with Lorcom during this three month period. [16] After the three months had expired at the end of November 2000, Lorcom remained in occupation of the property for the remainder of the Macphail lease agreement without any objection from Transnet. On 26 February 2001, just two days before the termination of the Macphail lease, Lombard commenced negotiations with Transnet’s representatives, Bhoola and Vilakazi, in regard to the conclusion of an interim lease agreement, which agreement would authorise Lorcom’s occupancy of the property pending what all parties then perceived to be the imminent transfer of the property to the first respondent. [17] From 1 March 2001, Lorcom remained in occupation of the property without any objection from Transnet. Between this date and March/April 2002, there were ongoing written and oral negotiations between Lombard, Bhoola and Vilakazi concerning the period of the abovementioned lease agreement and the rental payable. These negotiations are set out in some detail in the judgment of the court a quo and I do not consider it necessary to repeat this exercise. Suffice it to say that, according to Lombard, by March 2002 an oral lease agreement was in place which would endure until transfer of the property to the first respondent. The rental was R50 000 per month, subject to an agreed annual escalation of between eight and ten per cent. [18] For nearly two years after this, nothing happened, and Lorcom and the respondents who occupied the property through it remained in occupation. On 27 September 2004, Bhoola sent an email to Lombard requesting a meeting to finalise ‘the matter of the sale/lease of the premises’ which was ‘long outstanding’. This email evoked no response from Lombard and another two years went by. Then, in August 2006, an attorney engaged by Transnet attended at the property in order to ascertain who was occupying it. Pursuant to his enquiries and on 25 August 2006, letters were addressed by Transnet’s attorneys to the entities which appeared to be in occupation of the property, including the first respondent and Lorcom. Relying solely on Transnet’s ownership of the property, these occupiers were given ten days ‘to vacate the premises failing which an action will be instituted against you for your eviction’. This was the very first indication that Transnet objected to Lorcom’s occupancy of almost six years. [19] In response to the letters, the first respondent’s attorney stated that its client was entitled to remain on the property, as were the other entities to which eviction letters had been addressed. In a further letter dated 13 September 2006, the first respondent’s attorney reiterated that its client and the other entities on the property were in lawful occupation and that Transnet was not entitled to an eviction order. On 21 September 2006, two of the other entities wrote to Transnet’s attorneys, advising them that each occupied the property in terms of a lease with the first respondent. In terms of these written lease agreements, the leases were due to terminate on 31 December 2007. [20] Lombard acknowledged that Lorcom had not paid rental under the lease agreement, but asserted that he had repeatedly requested both VAT invoices and a schedule of arrear rentals from Transnet, which had failed to furnish them. According to Lombard, he had indicated to Bhoola and Vilakazi on several occasions that Lorcom would pay the rent on the provision of these documents and that they had agreed to provide them, but did not do so. [21] It was submitted on behalf of Transnet that, on a close scrutiny of Lombard’s own version, no case had been made out for an oral lease of indefinite duration pending transfer of the property to the first respondent. However, it was unable to procure affidavits from either Bhoola or Vilakazi and thus could not adduce admissible evidence to controvert what Lombard had said about the conclusion of the oral lease. This notwithstanding, Transnet contended in its replying affidavit that Lombard’s version was so far-fetched as to warrant rejection on the papers alone.2 [22] Counsel for Transnet analysed Lombard’s evidence in considerable detail and highlighted several features of this evidence which, it was argued, showed that no oral lease as contended for by Lombard was ever concluded. Thus, it was submitted that Vilakazi’s agreement to accept less rental than had previously been agreed upon (R50 000 per month as opposed to R65 000 per month) was not explained by Lombard and was ‘baseless and inexplicable’; that in a letter dated 5 April 2002, Lombard requests Bhoola to agree to a minimum lease period of 12 months and there is no allegation that Transnet ever agreed to this request; that Lombard’s request to Bhoola in this letter to draft a agreement indicated that none had yet been concluded; that Lombard’s excuse for not having paid rent, namely that no VAT invoices and no schedule of arrear rentals had been supplied to him, was incredible; that in an email dated September 2004, Bhoola had requested a meeting to finalise ‘the matter of the sale/lease of the premises’ which was ‘long outstanding’, and that Lombard’s explanation that he understood the reference in this email to refer to a formal written lease agreement was contrary to his own version and unbelievable. Counsel for Transnet also made much of the fact that an oral lease agreement had not been mentioned in the attorneys’ letters written during August 2006 in response to the eviction notice, indicating that Lombard’s version was a recent fabrication. 2 See Plascon-Evans Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634I-635C. [23] As the court a quo pointed out, what made things difficult for Transnet was that what Lombard had said about the oral lease was not controverted, and the truthfulness of his evidence could only be measured against inherent contradictions therein and against the established facts. I agree with counsel for the respondents that, by poring over the minutiae of the evidence, Transnet impermissibly attempted to evaluate the respondent’s version by reference to the probabilities. This is not the function of motion proceedings – ‘Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts. Unless the circumstances are special they cannot be used to resolve factual disputes because they are not designed to determine probabilities.’3 [24] In essence, Lombard’s version is summed up in the following paragraph in his answering affidavit – ‘31.27. Both Vilakazi and Bhoola accepted that the lease would endure until transfer of the Property was effected. While the above email refers to a twelve month period (this period had been suggested by me for planning purposes only (ie all anticipated that the transfer of the Property should occur within this period), it was at all material times the intention of both Lorcom and the applicant [Transnet] that the whole purpose of the interim lease was to enable Lorcom to remain in occupation of the Property pending transfer to the first respondent of the Property and that the head lease would endure pending the transfer of the Property to the first respondent. As stated above as the term of the head lease was indefinite in the sense that it would endure until the Property had been transferred to the 3 National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) para 26. first respondent, annual percentages in rental were requested by Bhoola and agreed to by me.’ [25] However robust a court may be, in order to reject Lombard’s version, it must be held to be ‘so far-fetched or clearly untenable that it can confidently be said, on the papers alone, that it is demonstrably and clearly unworthy of credence’.4 I agree with the court below that there are no inherent contradictions in Lombard’s version and that his evidence does not conflict to any material degree with the common cause facts. There is nothing about Lombard’s version which strikes one as being palpably implausible, far- fetched or clearly untenable. In fact, in the absence of affidavits by Bhoola and Vilakazi, there is simply nothing to gainsay Lombard’s version as summarised above. [26] There is another aspect which was not referred to by counsel, but was raised by this court. As indicated above, Macphail exercised the option to purchase the property on 18 February 1998 and nominated the first respondent as the purchaser of the property in respect of the sale agreement resulting from the exercise of the option. Clause 7 of the option agreement, headed ‘Payment of Purchase Price’, contains the following words: ‘For the avoidance of doubt, it is confirmed that the rental due in terms of the Lease shall remain payable up to the date upon which transfer is actually registered as aforesaid.’ 4 Fakie NO v CCII Systems (Pty) Ltd para 56. [27] This clause anticipates that there would be continued occupation of the property pending registration of transfer and that rental would remain payable throughout this period. Of course, in terms of this clause, it would be the first respondent who would remain in occupation of the property and pay rent. As stated above, the respondents’ case was that there was a head lease for the property between Transnet and Lorcom, that Lorcom occupied a small portion of the property and had sublet the remainder to the first respondent, which had in turn sublet portions of the remainder to some of the other respondents. This notwithstanding, clause 7 lends weight to the contention that Transnet contemplated continued occupation of the property in terms of a lease agreement pending registration of transfer. [28] If anything is not credible, then it is Transnet’s assertion that the relevant respondents have been in occupation of the property for nearly six years without the existence of any kind of agreement to occupy and that Transnet tolerated this state of affairs. In my view, this is a weighty factor to be taken into account in considering whether there was a genuine dispute of fact concerning the existence of an oral lease. As is evident from paragraph 31 below, this was not lost on the court a quo. [29] As indicated above, the court below exercised its discretion in terms of Uniform rule 6(5)(g) by dismissing Transnet’s application, instead of referring the matter to oral evidence as had been contended for by Transnet, on the basis that Transnet ought reasonably to have foreseen a dispute of fact in regard to the conclusion of an oral lease with Lorcom. Are there any grounds for interfering with this exercise of the court’s discretion? [30] As was stated in Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd 1982 (1) SA 398 (A):5 ‘A litigant is entitled to seek relief by way of notice of motion. If he has reason to believe that facts essential to the success of his claim will probably be disputed he chooses that procedural form at his peril, for the Court in the exercise of its discretion might decide neither to refer the matter for trial nor to direct that oral evidence on the disputed facts be placed before it, but to dismiss the application.’6 [31] In this regard, Koen AJ pointed out that Lorcom had been in occupation of the property since August 2000. It came into possession of the property lawfully, with Transnet’s consent, and remained in undisturbed possession with Transnet’s consent until the oral lease about which Lombard testified on affidavit was allegedly concluded. Thereafter, Transnet knew that Lorcom and at least some of the respondents continued to occupy the property, but took no action to evict Lorcom or anyone else. The first respondent was, in terms of the order of Schabort J, entitled to take transfer of the property. Transnet recognised this for years and even if it now holds a different view about the enforceability of the order, it ought reasonably to have foreseen that there would be a dispute about Lorcom’s right to occupy. From the correspondence directed by the respondents’ attorneys to Transnet following the demand to vacate the property, Transnet had been unequivocally told that Lorcom was in lawful occupation of the property and that any eviction proceedings instituted by Transnet would be resisted. The 5 At 430G-H. 6 See also Gounder v Top Spec Investments (Pty) Ltd 2008 (5) SA 151 (SCA) para 10. tone of the correspondence exchanged between the parties after the demand to vacate had been made during 2006 was confrontational, reinforcing the conclusion that disputes were bound to arise. In September 2006, Transnet’s attorneys received letters from two of the respondents, stating that they had rights of occupation in terms of lease agreements which they had concluded with the first respondent. Transnet thus knew that the first respondent held itself out to be entitled to occupy the property. According to the learned acting judge, Transnet or its attorneys must have known that Lorcom asserted, or would assert, that a lease existed, because Lorcom’s failure to pay rental was a topic broached in a discussion between Transnet’s attorney and the respondents’ attorney recorded in a letter dated 13 September 2006, more than five months before the eviction application was launched.7 [32] The court a quo did not discount the fact that Lorcom’s attorneys were vague about the basis of Lorcom’s right to occupy the premises in their letter written in response to the demand to vacate the property. This notwithstanding, the court held that, had any reasonable level of enquiry been made before the application proceedings were instituted, Transnet would have concluded that a serious dispute of fact was likely to arise. This was particularly so, given the long history of the matter and the extent of the correspondence exchanged between Lombard, on the one hand, and Vilakazi and Bhoola, on the other. Transnet’s contention that the respondents, despite several opportunities to do so, had not specifically alleged a lease before the 7 In any event, Transnet is not precluded from proceeding by way of action to recover such arrear rental as, by Lorcom’s own admission, is owing. application was launched, does not really hold water. A party anticipating litigation is under no obligation to disclose in advance the basis of its defence. [33] In Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T),8 the court said: ‘It is certainly not proper that an applicant should commence proceedings by motion with knowledge of the probability of a protracted enquiry into disputed facts not capable of easy ascertainment, but in the hope of inducing the Court to apply Rule 9 to what is essentially the subject of an ordinary trial action.’ Koen AJ concluded that this was precisely what had happened in this case. In the circumstances, he dismissed the application. [34] I am in agreement with the approach of the court below as set out in paragraphs 31 and 32 above. It cannot in my view be faulted for having refused the application by Transnet for a referral to oral evidence. [35] For all the reasons stated above, the following order is made: The appeal is dismissed with costs, including the costs of two counsel. ______________________ B J VAN HEERDEN JUDGE OF APPEAL 8 At 1162. APPEARANCES: APPELLANT: F H ODENDAAL SC (with him V P NGUTSHANE) Instructed by Cliffe Dekker Hofmeyr Inc, Johannesburg Matsepes, Bloemfontein RESPONDENTS: J MULLER SC (with him G ROME) Instructed by Eversheds, Johannesburg Lovius Block, 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 26 September 2011 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Transnet Limited v Erf 152927 Cape Town (Pty) Ltd (798/10) [2011] ZASCA 148 (26 September 2011) Media Statement The Supreme Court of Appeal (SCA) today dismissed an appeal against a judgment of the Western Cape High Court, Cape Town, in terms of which Transnet’s application to evict the respondents from a certain property was dismissed. Transnet is the owner of the property. In February 2007, it applied for the eviction of the respondents from the property, relying solely on its ownership and the fact that the respondents were in occupation of the property. The eleventh respondent, Lorcom Six (Pty) Ltd, contended that it was entitled to occupy the property in terms of an oral lease agreement concluded between itself and Transnet. It stated that, while Lorcom occupied a small portion of the property, it had sublet the remainder to the first respondent, Erf 152927 Cape Town (Pty) Ltd, which had in turn sublet portions of the remainder to the other respondents against whom Transnet sought an eviction order. It was common cause that the first respondent had purchased the property from Transnet on 18 February 1998, pursuant to the exercise of an option. Lorcom claimed that it was in occupation of the property by virtue of the oral lease referred to above, pending the transfer of the property to the first respondent. Despite a court order in 1998 directing Transnet to take all such steps as may be required and necessary to transfer the property to the first respondent, transfer has still not taken place, partly due to technical difficulties but, at least in part, because of obstructiveness on the part of Transnet. Transnet’s application was dismissed by Koen AJ in the court below on the basis that there had been a foreseeable bona fide dispute of fact on the question of the existence of an oral lease and that the defence based on the lease could not be rejected on the affidavits alone. Koen AJ also rejected Transnet’s submission that, if a dispute of fact was found to exist with regard to the conclusion of an oral lease, the court should refer the matter for oral evidence. The SCA examined the contents of the affidavits in some detail and concluded that the court below was correct in holding that the defence contended for by Lorcom, namely the oral lease, created a bona fide dispute of fact and was not so far-fetched or clearly untenable that the court was justified in rejecting it merely on the papers. The SCA also agreed with the court below that Transnet ought reasonably to have foreseen a dispute of fact in regard to the conclusion of an oral lease with Lorcom. Lorcom came into possession of the property lawfully, with Transnet’s consent, and remained in undisturbed possession with Transnet’s consent until the oral lease referred to above was allegedly concluded. Thereafter, Transnet knew that Lorcom and at least some of the respondents continued to occupy the property, but took no action to evict Lorcom or anyone else. Following Transnet’s demand to vacate the property, it had been unequivocally told that Lorcom was in lawful occupation of the property and that any eviction proceedings instituted by Transnet would be resisted. As was found by the court below, had any reasonable level of enquiry been made before the application proceedings were instituted, Transnet would have concluded that a serious dispute of fact in regard to the existence of an oral lease was indeed likely to arise. This being so, the SCA held that the court below was correct in exercising its discretion by dismissing Transnet’s application, instead of referring the matter to oral evidence. --- ends ---

564

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 600/2015 In the matter between: GALEFELE HILDA NDABA APPELLANT and JAMES NDABA RESPONDENT Neutral citation: Ndaba v Ndaba (600/2015) [2016] ZASCA 162 (4 November 2016) Coram: Mpati AP, Seriti, Petse and Swain JJA and Makgoka AJA Heard: 23 August 2016 Delivered: 4 November 2016 Summary: Marriage ─ Divorce ─ parties married in community of property ─ pension interest ─ entitlement of non-member spouse under ss 7(7)(a) and 7(8)(a) of Divorce Act 70 of 1979 ─ pension interest of member spouse as at date of divorce is by operation of law part of the joint estate for the purpose of determining the parties‟ patrimonial benefits ─ no order required in terms of s 7(7)(a). ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Kgomo 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 in its place the following order is substituted: „1 Mr Phillip Jordaan of Divorce Settlement Services, Pretoria is appointed as Liquidator of the joint estate of the applicant and the respondent with the powers and obligations set out in annexure A to this judgment. 2 It is declared that the applicant is entitled to an amount equal to 50 per cent of the respondent‟s nett pension interest in the Government Employees Pension Fund Scheme calculated as at 25 May 2012. 3 It is declared that the respondent is entitled to an amount equal to 50 per cent of the applicant‟s nett pension interest in the Government Employees Pension Fund Scheme calculated as at 25 May 2012. 4 The respondent shall pay the costs of the application.‟ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Petse JA (Mpati AP and Swain JA concurring): [1] The primary issue in this appeal concerns the proper interpretation of s 7(7) and (8) of the Divorce Act 70 of 1979 (the Act). The subsidiary issue concerns the legal effect of the terms of a clause relating to the division of the joint estate contained in the settlement agreement concluded by the parties and incorporated in the divorce order granted in the Regional Court for the North West Regional Division, Temba (the trial court) on 25 May 2012. These issues arise against the following backdrop. [2] The appellant, Ms Galefele Hilda Ndaba, and the respondent, Mr James Ndaba, were formerly married in community of property. On 25 May 2012 their marriage was dissolved by the trial court at the suit of the appellant. The divorce order granted by the trial court incorporated a provision that „. . . the deed of the settlement between the parties . . . [annexed thereto] is made an order of the court.‟ The parties‟ deed of settlement in turn provided, inter alia, that their joint estate would be divided equally between them. The appellant asserted that they incorporated this clause into their settlement agreement because at that stage they could not agree on the method of the division of the joint estate. [3] On 15 April 2013 the appellant‟s attorneys wrote a letter to the respondent inviting him to make proposals in relation to the division of the joint estate. They indicated that if no proposals were forthcoming the appellant would institute legal proceedings in which a determination of that dispute would be sought. In the event, no response was received from the respondent. Consequently, on 26 June 2013 the appellant, as applicant, instituted legal proceedings on notice of motion against the respondent in the Gauteng Division of the High Court, Pretoria in which, in essence, she sought an order for, inter alia, the appointment of a liquidator. She also sought a declarator that she and the respondent were entitled to an amount equal to 50 per cent of each other‟s pension interest. In addition, she sought an order directing each pension fund to make an endorsement in its records that a portion of the pension interest of the member spouse, as at the date of divorce, shall be payable to the non-member spouse when the pension benefits accrued. [4] Whilst the respondent did not oppose the appointment of the liquidator, he, however, resisted the remainder of the relief sought. In his answering affidavit, the respondent, inter alia, said the following: „I deny that either my or the applicant‟s pension interest form part of the assets to be divided between the parties. Our respective pension interests did not form part of the applicant‟s claim when she instituted divorce proceedings, it did not form part of the settlement agreement, and no order was granted in terms of which it was deemed to be part of the assets in the joint estate in accordance with section 7(7) and 7(8) of the Divorce Act 70 of 1979. . . . These policies include my retirement annuity fund, which also falls within the definition of “pension interest” and is similarly excluded from the joint estate, because of the fact that our respective pension interests did not form part of the applicant‟s claim when she instituted divorce proceedings, it did not form part of the settlement agreement, and no order was granted in terms of which it was deemed to be part of the assets in the joint estate in accordance with section 7(7) and 7(8) of the Divorce Act 70 of 1979.‟ [5] Thus, the respondent‟s answer to the appellant‟s claim was, in substance, threefold. First, he asserted that the appellant had unequivocally renounced her claim in relation to the pension interest in her prayers in the divorce action. Second, that the pension interest nowhere featured in their settlement agreement. Third, that the divorce court which granted the decree of divorce had not made an order deeming the pension interest as part of the joint estate, as contemplated in s 7(7)(a) and (8) of the Act. However, it was not contested that the joint estate had still not been divided between them. [6] The application came before Kgomo J who, after considering the provisions of the Act and reviewing certain judgments dealing with the interpretation of s 7(7)(a) and (8) of the Act, dismissed it with costs. The dismissal of the application in relation to the appointment of a liquidator appears to have occurred per incuriam as the court a quo had itself noted that that aspect was uncontentious. In essence, the court a quo approached the matter on the following basis:  It first asked itself two questions; namely: (i) whether it could grant an order declaring the parties‟ respective pension interests to be part of the joint estate long after the dissolution of the marriage when no such order was made by the court granting the decree of divorce; and (ii) whether it was open to it to vary the divorce order by supplementing the blanket order relating to the division of the joint estate by inclusion of the parties‟ respective pension interest.  After reviewing several cases1 of various Divisions of the High Court, it held that the Act contemplates that any order in terms of s 7(7)(a) and (8) can be granted only by the court granting the decree of divorce. Thus, s 7(7)(a) and (8) do not avail a party who seeks to invoke them after the dissolution of the marriage.  It concluded that absent a court order by the divorce court declaring the pension interest of the member spouse as part of the joint estate, such pension interest did not form part of the joint estate. 1 Sempapelele v Sempapelele & another 2001 (2) SA 306 (O); YG v Executor, Estate Late CGM 2013 (4) SA 387 (WCC); Maharaj v Maharaj & others 2002 (2) SA 648 (D); Fritz v Fundsatwork Umbrella Pension Fund & others 2013 (4) SA 492 (ECP).  That, in any event, the parties‟ settlement agreement in the divorce court was silent in relation to their respective pension interests. [7] Aggrieved by the dismissal of her application, the appellant now appeals to this court with the leave of the court a quo. [8] Section 7(7) and (8) in their material parts read: „(7)(a) In the determination of the patrimonial benefits to which the parties to any divorce action may be entitled, the pension interest of a party shall, subject to paragraphs (b) and (c), be deemed to be part of his assets. (b) The amount so deemed to be part of a party's assets, shall be reduced by any amount of his pension interest which, by virtue of paragraph (a), in a previous divorce ─ (i) was paid over or awarded to another party; or (ii) for the purposes of an agreement contemplated in subsection (1), was accounted in favour of another party. (c) . . . (8) Notwithstanding the provisions of any other law or of the rules of any pension fund ─ (a) the court granting a decree of divorce in respect of a member of such a fund, may make an order that ─ (i) any part of the pension interest of that member which, by virtue of subsection (7), is due or assigned to the other party to the divorce action concerned, shall be paid by that fund to that other party when any pension benefits accrue in respect of that member; (ii) the registrar of the court in question forthwith notify the fund concerned that an endorsement be made in the records of that fund that that part of the pension interest concerned is so payable to that other party and that the administrator of the pension fund furnish proof of such endorsement to the registrar, in writing, within one month of receipt of such notification; (b) . . . .‟ [9] The concept of „pension interest‟ which is central to s 7(7) and (8) is, in turn, defined in s 1(1) of the Act as follows: „Pension interest‟, in relation to a party to a divorce action who- (a) is a member of a pension fund (excluding a retirement annuity fund), means the benefits to which that party as such a member would have been entitled in terms of the rules of that fund if his membership of the fund would have been terminated on the date of the divorce on account of his resignation from his office; (b) . . . .‟ [10] As to the nature of the pension interest, this court in Old Mutual Life Assurance Co (SA) Ltd & another v Swemmer 2004 (5) SA 373 (SCA) said the following (para 18): „[A]s indicated above, s 7(7)(a) of the Divorce Act 'deems' a member spouse's “pension interest” to be an asset in his or her estate for purposes of the determination of the patrimonial benefits to which the parties to a divorce action may be entitled. “Pension interest” is narrowly defined and simply establishes a method of ascertaining the value of the “interest” of the member of the pension or retirement annuity fund concerned as accumulated up to the date of the divorce. In the words of the South African Law Commission: “A pension interest is not a real asset that is open to division. It is the value that, on the date of divorce, is placed on the interest that a party to those proceedings has in the pension benefits that will accrue to him or her as a member of a pension fund or retirement annuity fund at a certain future date or event in accordance with the rules of the particular fund. The value of the interest is calculated according to a fixed formula and the amount determined in this manner is deemed to be an asset of the party concerned. What we are dealing with here is a notional asset that is added to all the other assets of the party concerned in order to determine the extent of the other party's claim to a part of the first-mentioned party's assets.”‟ (Footnotes omitted.) [11] As indicated, the real issue on appeal is therefore whether a non-member spouse in a marriage in community of property, is entitled to the pension interest of a member spouse in circumstances where the court granting the decree of divorce did not make an order declaring such pension interest to be part of the joint estate. As to a pension fund‟s statutory competence to make deductions from a member‟s pension benefits, this court in Eskom Pension and Provident Fund v Krugel & another (689/2010) [2011] ZASCA 96 [2011] 4 All SA 1 (SCA) said the following (para 8): „A pension fund‟s right to make deductions from a pension benefit is highly circumscribed and may be exercised only as expressly provided by sections 37D and 37A of the Pension Fund Act. Relevant for present purposes is section 37D which, in subsection (1)(d)(i), allows a fund to: “deduct from a member‟s benefit or minimum individual reserve, as the case may be . . . any amount assigned from such benefit or individual reserve to a non-member spouse in terms of a decree granted under section 7(8)(a) of the Divorce Act, 1979”. According to the provisions of subsection (4)(a): “the portion of the pension interest assigned to the non-member spouse in terms of a decree of divorce or decree for the dissolution of a customary marriage is deemed to accrue to the member on the date on which the decree of divorce or decree for the dissolution of a customary marriage is granted.”‟ (Footnotes omitted.) [12] In the context of a divorce action, it is s 37D(1)(d)(i) of the Pension Funds Act 24 of 1956 which is of relevance. It authorises a registered pension fund to: „(d) deduct from a member's or deferred pensioner's benefit, member's interest or minimum individual reserve, or the capital value of a pensioner's pension after retirement, as the case may be─ (i) any amount assigned from such benefit or individual reserve to a non-member spouse in terms of a decree granted under section 7 (8) (a) of the Divorce Act, 1979 (Act 70 of 1979) or in terms of any order made by a court in respect of the division of assets of a marriage under Islamic law pursuant to its dissolution; and . . .‟ [13] Section 21(1) of the Government Employees Pension Law 1996 which came into operation on 1 May 1996 is to the same effect. The section reads: „Subject to section 24A, no benefit or right in respect of a benefit payable under this Act shall be capable of being assigned or transferred or otherwise ceded or of being pledged or hypothecated or, save as is provided in . . . section 7(8) of the Divorce Act, 1979 (Act 70 of 1979), be liable to be attached or subjected to any form of execution under a judgment or order of a court of law.‟ [14] There are several judgments2 of the various Divisions of the High Court in which the import of the provisions of s7(7)(a) and (8) of the Act has been considered. The interpretation placed on these provisions in those judgments has been discordant. However, I do not propose to analyse and discuss each of those decisions so as not to overburden this judgment. [15] In Sempapalele, the court dealt with a claim by a former spouse for the payment of a portion of the pension interest of the member spouse following the dissolution of their marriage by divorce years earlier. The parties had concluded a settlement agreement ─ made an order of court ─ in terms of which their joint estate was to be 2 Sempapelele v Sempapelele & another 2001 (2) SA 306 (O); YG v Executor, Estate Late CGM 2013 (4) SA 387 (WCC); Maharaj v Maharaj & others 2002 (2) SA 648 (D); Fritz v Fundsatwork Umbrella Pension Fund & others 2013 (4) SA 492 (ECP); Elesang v PPC Lime Ltd & others 2007 (6) SA 328 (NC); Kotze v Kotze & another [2013] JOL 30037 (WCC); Macallister v Macallister [2013] JOL 30404 (KZD); Motsetse v Motsetse [2015] 2 All SA 475 (FB); M v M (LPD) unreported case no 18/15 of June 2016. divided between them. The former wife asserted that she was entitled to a 50 per cent share of the former husband‟s pension benefits paid out to him, more than a year after their divorce and to that end she instituted an action claiming, inter alia, a share of the former husband‟s pension benefit. Although Musi J ultimately dismissed the action on the simple basis that the plaintiff had failed to prove the value of her former husband‟s pension interest as at the date of divorce, the learned judge observed that (at 312G-H): „. . . the applicant failed (for whatever reason) to obtain at the hearing of the divorce matter a Court order awarding her a share in the respondent‟s pension interest in terms of s 7 of the Divorce Act. She cannot now get such an order.‟ [16] In YG v Executor, Estate Late CGM (which pertained to a claim for redistribution of assets in terms of s 7(3) of the Act), Gangen AJ found the reasoning in Sempapalele instructive. He expressed the view that there was a common thread running through s 7 of the Act, to the effect that any relief in terms thereof can only be granted by the court granting the decree of divorce. The learned judge said (para 15): „It is also clear from a reading of the subsections of s 7 that they are interrelated and cannot be treated in isolation of one another.‟ Later he continued (para 17): „It is accordingly evident that only a court granting a divorce order may grant the ancillary relief.‟ [17] In Maharaj the court was faced with a situation similar to that in Sempapalele but reached a contrary conclusion. In the course of his consideration of s 7(7)(a), Magid J said the following (at 651C-E): „That section was presumably inserted in the Act in order to rectify what may have been regarded as an injustice to the spouse who did not have the pension interest. It states quite unequivocally that a pension interest is deemed to be part of the assets of a party “in the determination of the patrimonial benefits to which the parties to a divorce action may be entitled”. The phrase “patrimonial benefits” is not qualified by reference to the other subsections of s 7 of the Act. It applies in my judgment, with equal force to a marriage in community of property. . . . In my judgment, therefore, when the joint estate of spouses married in community of property is to be divided it is proper to take into account, as an asset in the joint estate, the value of a pension interest held by one of them as at the date of divorce.‟ Later he continued (652B): „It therefore seems to be common cause that the joint estate as it existed at the date of the divorce has never actually been divided . . .‟ [18] In Fritz v Fundsatwork Umbrella Pension Fund, a case where similarly no order had been made pursuant to s 7(7) of the Act when the decree of divorce was granted, Goosen J expressed a preference for Maharaj as opposed to Sempapalele. After examining certain judgments in relation to court orders for division of a joint estate, the learned judge said (para 23): „This, in my view, brings the process of giving effect to an order of division of the joint estate, by way of a subsequent appointment of a receiver or by way of the resolution of a dispute in relation to the division by the court, squarely within the ambit of s 7(7) of the Divorce Act, which speaks of determining the patrimonial benefits in a divorce action. The definition of “divorce action” which refers to an action by which a decree of divorce or other relief in connection therewith is applied for, is broad enough to cover proceedings whereby the court exercises its supervisory jurisdiction in relation to the division of a joint estate in the absence of agreement between the parties.‟ [19] But, as the joint estate had already been divided pursuant to the decree of divorce, the court in Fritz concluded that „an order the effect of which is to “deem” a pension interest to be part of the joint estate‟ would not be appropriate. [20] The import of s 7(7) and (8) of the Act also arose pertinently in Kotze, a judgment of the Full Court of the Western Cape High Court. It bears mentioning that Kotze (like Fritz) differs from the present case in one material respect, namely that the division of the parties‟ joint estate pursuant to the order granted by the court granting the divorce had already occurred. There, the former wife had sought an order declaring that she was entitled to 50 per cent of the pension benefit paid to the former husband several years after the divorce. Her claim in the court of first instance failed on the ground that there was an irresoluble dispute of fact on the papers, which she ought to have foreseen. [21] On appeal, the Full Court considered the issue to be one that fell foursquare within the purview of s 7(7) and (8) of the Act. Saldanha J, writing for the Full Court, said the following (paras 30-31): „[30] As indicated, Mr Studti was strongly of the view that if the divorce order is found as not having excluded the pension benefit (and all the other movables) it should be regarded as ambiguous and in such event the principles of interpretation applied thereto. Mr Burger however submitted that there was nothing ambiguous about the court order as it was clear and inasmuch as the issue of the pension interest arose by virtue of section 7(7)(a) it did not impact on a interpretation of the divorce order. Moreover, the first respondent himself in his opposing papers in the court a quo claimed that the meaning of the court order was clear and so too did Louw J in fact find that the order was clear and unambiguous. I share that view and it is therefore not necessary to apply the rules of construction or interpretation with regard to the divorce order inasmuch as its meaning is clear and deals very specifically only with the assets in the joint estate referred to therein. [31] It is apparent from the judgment of the court a quo that Louw J did not consider the relief that the appellant sought in paragraph 2 but rather dealt substantively with whether the appellant had made out a case for the variation of the court order. Moreover, it does not appear that it was argued before the court a quo that the appellant was entitled to the relief under Prayer 2 which, in my view, she was entitled to, without the need for a variation of the divorce order.‟ And the learned judge concluded (para 32): „[32] I am of the view that where parties who were married to each other in community of property in subsequent divorce proceedings do not deal with a pension or provident fund interest which either or both of them may have had in separate pension or provident funds either by way of a settlement agreement or by an order of forfeiture, each of them nonetheless remain entitled to a share in the pension or provident fund to which the other spouse belonged to and such share is to be determined as at the date of divorce by virtue of the provisions of section 7(7)(a) of the Divorce Act 70 of 1979.‟ [22] It would appear that the only assets of real value comprising the joint estate in Kotze were two immovable properties. The parties had agreed that the wife would retain the one property whilst the husband would retain the other. The divorce court made an order incorporating the parties‟ settlement agreement. As indicated, when the wife discovered that the husband had received a substantial amount from his pension fund, that had accrued to him long after the division of the joint estate (pursuant to the parties‟ agreement) had occurred, she applied to the court of first instance, for an order in terms of s 7(7) and (8). As already mentioned, the court of first instance dismissed the application on the grounds that there was an irresoluble dispute of fact on the papers, which should have been foreseen. The Full Court, as pointed out above, found that notwithstanding the fact that the division of the joint estate had already been completed, the wife was entitled to a share of the pension benefit which had accrued to the husband. This share fell to be determined as at the date of divorce, in terms of s 7(7)(a) of the Act. To the extent that the Full Court in Kotze concluded that it was competent to grant an order in terms of s 7(7)(a) of the Act after the parties‟ joint estate had already been divided in accordance with the order granting the divorce, it erred. [23] The judgment of the Full Court in Kotze has been criticised by Mr Johan Davey in an article titled „K v K and Another ─ a critique‟ published in De Rebus of September 2013 (at 26-28). The writer opines that even though a pension interest is deemed to be part of the joint estate for the purposes of determining the patrimonial benefits of a marriage to which parties to a marriage in community of property are entitled, a non- member spouse becomes entitled to such share only if the court granting the decree of divorce makes such a declaration in terms of s 7(8)(a). [24] Relying on the authority of Eskom Pension and Provident Fund which is to the effect that a non-member spouse‟s entitlement to receive benefits from a pension fund of the member spouse in terms of s 37D(1)(d)(i) of the Pension Funds Act, 24 of 1956, derives from the provisions of s 7(7) and s 7(8) of the Act, Mr Johan Davey then contends that even though a member spouse‟s pension interest is deemed to form part of the joint estate for the purposes of s 7(7)(a), a non-member spouse becomes entitled to a share thereof only when „it is assigned to him or her in terms of s 7(8)‟. [25] Accordingly, the writer notes that, absent a court order in terms of s 7(8), the non-member spouse effectively forfeits his or her entitlement to a share in the pension interest of the member spouse. I do not agree with these sentiments for the following reasons. First, s 7(7)(a) is self-contained and not made subject to s 7(8). It deems a pension interest to be part of the joint estate for the limited purpose of determining the patrimonial benefits to which the parties are entitled as at the date of their divorce. The entitlement of the non-member spouse to a share of the member spouse‟s pension interest as defined in the Act is not dependant on s 7(8). To my mind, it would be inimical to the scheme and purpose of s 7(7)(a) if it only applies if the court granting a divorce makes a declaration that in the determination of the patrimonial benefits to which the parties to a divorce action may be entitled, the pension interest of a party shall be deemed to be part of his or her assets. The grant of such a declaration would amount to no more than simply echoing what s 7(7)(a) decrees. For the same reasons it was not necessary for the parties in this case, to mention in their settlement agreement what was obvious, namely that their respective pension interests were part of the joint assets which they had agreed, would be shared equally between them. [26] In my judgment, by inserting s 7(7)(a) in the Act the legislature intended to enhance the patrimonial benefits of the non-member spouse over that which, prior to its insertion, had been available under the common law. The language of s 7(7)(a) is clear and unequivocal. It vests in the joint estate the pension interest of the member spouse for the purposes of determining the patrimonial benefits, to which the parties are entitled as at the date of their divorce.3 Most significantly, the legislature‟s choice of the word „shall‟ coupled with the word „deemed‟ in s 7(7)(a) is indicative of the peremptory nature of this provision. The section creates a fiction that a pension interest of a party becomes an integral part of the joint estate upon divorce which is to be shared between the parties. Van Niekerk puts it thus:4 „[W]here the parties are married in community of property, the value of the pension interest is added to the value of the other assets that fall in the joint estate for purposes of the division of the estate.‟ [27] Section 7(8), on the other hand, creates a mechanism in terms of which the Pension Fund of the member spouse is statutorily bound to effect payment of the portion of the pension interest (as at the date of divorce) directly to the non-member spouse as provided for in s 37D(1)(d)(i) of the Pension Funds Act 24 of 1956 and s 21(1) of the Government Pension Law, 1996. This is as far as s 7(8) goes and no further.5 The non-member spouse is thereby relieved of the duty to look to the member spouse for the payment of his or her share of the pension interest with all its attendant risks.6 The remarks by this court in relation to s 7(8)(a), in Old Mutual Life Assurance Co (SA) Ltd & another v Swemmer 2004 (5) SA 373 (SCA) are instructive. It said the following (para 20): 3 See further in this regard: Jacqueline Heaton ed (2014), The Law of Divorce and Dissolution of Life Partnerships in South Africa at 74. 4 P A van Niekerk, A Practical Guide to Patrimonial Litigation in Divorce Actions, issue 17 September 2015 at 7.2.4.1. 5 See further the discussion by P A van Niekerk op cit para 7.2.4.1. 6 Jacqueline Heaton op cit at 77. „Once a part of the pension interest of the member spouse becomes “due” or “is assigned” to the non-member spouse in the course of the divorce proceedings, the Court may order that such part of the pension interest must be paid by the pension fund concerned to the non- member spouse “when any pension benefits accrue in respect of” the member spouse. . . .‟ [28] The cases that espouse the proposition that for the pension interest of a member‟s spouse to form part of the joint estate upon divorce, it is necessary that it be claimed by the non-member spouse in his or her summons or counter-claim, have been criticised.7 For the reasons articulated above, those criticisms, in my view, are justified. [29] In the respondent‟s written heads of argument, it was contended that only the court granting the divorce order may grant relief under s 7(7)(a). And that in the absence of such an order the non-member spouse could not at a later stage seek an order under s 7(7)(a) or s 7(8). For this submission respondent‟s counsel placed much store in the decision of this court in Schutte v Schutte 1986 (1) SA 872 (A) at 882C-E. In relation to maintenance in terms of s 7(1) of the Act, this court said it was only the court granting a divorce that could make an order with regard to the payment of maintenance by the one party to the other. That decision, however, is distinguishable and did not deal with the clear wording of s 7(7)(a). [30] Appreciating the weakness inherent in the respondent‟s contention, before us counsel for the respondent adopted a different approach accepting that the pension interest of either party in this case formed part of their joint estate. It was nevertheless contended that a party seeking an order for the division of the pension interest of the other party ─ which is what the appellant sought in the court a quo ─ must still obtain an order in terms of s 7(8) of the Act from the court granting the divorce. For the reasons set out above this submission is without foundation. A further submission was made however, that the appellant‟s belated application in the court a quo was doomed to fail as no such order can be granted post the grant of the divorce order, even at the instance of a liquidator. It is, in my view, not necessary to decide this point as counsel for the appellant accepted that it would not be competent for this court to decide this 7 See, for example, Merike Pienaar Does a non-member spouse have a claim on pension interest (December 2015) De Rebus at 38-39; M C Marumoagae A non-member spouse‟s entitlement to the member‟s pension interest (2014) 17(6) Potchefstroom Electronics Law Journal 2488 at 2509. issue for the first time on appeal when no application had been made in the court that granted the decree of divorce for such relief.8 [31] In the result those decisions which held that if there is no reference in the divorce order of parties married in community of property to a member spouse‟s pension interest, the non-member spouse is precluded in perpetuity from benefitting from such pension interest as part of his or her share of the joint estate, were wrongly decided. It follows that the liquidator will be justified in regarding the pension interest of either party as part of the assets of their joint estate which has yet to be divided between them. [32] It remains to say that I have had the benefit of reading the judgment of my colleague, Makgoka AJA. I have no quarrel with the additional facts set out in my colleague‟s judgment. My colleague and I agree on the basic premise that the fate of this appeal in relation to the parties‟ pension interests hinges on the interpretation of their settlement agreement. But we differ fundamentally on the direction to which the interpretation process should lead us. I regret that I cannot subscribe to the process of reasoning and the conclusion reached by my colleague. I have difficulty with the interpretation placed on the parties‟ settlement agreement in relation to the division of their joint estate. My colleague says that because the relevant clause is headed „Immovables and Movables‟ this means that the body of the clause which reads: „The joint estate shall equally be divided between the parties‟ must be taken to mean that only immovables and movables are encompassed thereby and nothing else. And that the concept of „immovables and movables‟ does not include the pension interest of a member spouse. In my view, there is a glaring difficulty with this approach. [33] First, as already indicated (para 10), this court in Old Mutual Life Assurance approved of the description of a pension interest in the South African Law Commission‟s Reports dealing with the division of pension benefits on divorce in Project 41 (March 1995) and the sharing of pension benefits in Project 112 (June 1999), namely, that a „pension interest‟ is a notional asset which „simply establishes 8 See in this regard s 168(3)(b)(i) and (ii) of the Constitution which provides that the Supreme Court of Appeal may decide only appeals or issues connected with appeals. The wording of s 7(8)(a) would, however, seem to restrict the grant of such an order to the „court granting a decree of divorce‟. But for the present purposes it is unnecessary to express a definite conclusion on this question. a method of ascertaining the value of the “interest” of the member of the pension or retirement annuity fund as accumulated up to the date of the divorce‟. This notional asset „is added to all the other assets of the party concerned in order to determine the extent of the other party‟s claim to a part of the first-mentioned party‟s assets‟. Second, whilst it is correct that the heading and the provisions of a contract should be read together where the heading does not conflict with the body of the contract, it is trite that where there is conflict between the heading and the body of the contract the latter prevails. But here, as my colleague points out, there is no conflict between the heading and the body of the relevant clause. However, sight must not be lost of the fact that the parties in this case were married in community of property. Consequently, one of the invariable consequences of such a marriage is that, subject to a few exceptions not here relevant, the spouses became co-owners in undivided and indivisible half-shares of all the assets acquired during the subsistence of their marriage. And, absent a forfeiture of benefits under s 9(1) of the Act or an express agreement between the parties to the contrary, each spouse is entitled to a half-share of the joint estate ─ whatever it entails. [34] The joint estate in this case must necessarily include the pension interest of either party as contemplated in s 7(7)(a) of the Act. Hence the heading to the clause, such as it is, cannot be taken to mean that the pension interest of each spouse is excluded from the assets which make up the joint estate. It is manifest from the language of the clause, which must be „the inevitable point of departure, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document‟9, that the clause relating to the equal division of the joint estate constituted the so-called blanket division. Indeed both the heading and the language of the body of the clause concerned, read together, do not support the construction and hence the limitation placed on it by my colleague. And the settlement agreement is not susceptible to an interpretation that the parties‟ pension interests were excluded from its reach. Quite the contrary. As to the background to the preparation and production of the settlement agreement, great store is placed in the assumption that the settlement agreement was drafted by the respondent‟s attorneys without any input from the appellant. From this, it is 9 Natal Joint Municipality Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 SCA para 18. concluded that because the respondent‟s attorneys knew that the appellant had renounced her entitlement to the pension interest in her combined summons, the respondent could not have been so benevolent as to allow the appellant to share in his pension interest. In my view, there is no warrant for this conclusion. First, it is belied by the averment in the respondent‟s answering affidavit that the parties‟ pension interest „did not form part of the settlement negotiations‟ which implies that the conclusion of the settlement agreement was preceded by negotiations. Second, it is based on conjecture as there is no evidence on record as to what the parties‟ settlement negotiations entailed prior to the grant of the divorce order. [35] In any event, there is a more fundamental reason why the pension interests of the parties must, on the facts of this case, be an integral part of their joint estate. Central to the reasoning in my colleague‟s judgment is, in my view, the notion that a pension interest is neither immovable nor movable. And that because the clause under consideration provides that only immovables and movables shall be divided equally between the parties, anything else not expressly mentioned is excluded. To my mind such a notion is unsound in law. By its very nature, movable property comprises both corporeal and incorporeal things. According to the learned authors of Wille’s Principles of South African Law10 typical examples of incorporeal movables, inter alia, include real rights such as a pledge, notarial bond, mortgage bond, or any rights in personam that are connected with the transfer of movable property from one person to another or which can be satisfied by a money payment.11 It therefore goes without saying that the parties‟ entitlement to each other‟s pension interests, which can be satisfied by a money payment, falls squarely within the rubric of movables. Seen in this light, the maxim expressio unius est exclusio alterius is therefore unavailing. My conclusion above, in relation to s 7(7) of the Act, renders it unnecessary to address the jurisdiction question. It suffices to say that this point was neither raised on the papers nor addressed in written or oral argument. It is trite that it is impermissible for judicial officers to rely for their decisions on matters not put before them by litigants either in evidence or in oral or written submissions. (See in this regard: Kauesa v Minister of Home Affairs & others 1996 (4) SA 965 (NmS) at 10 Francois du Bois et al Wille’s Principles of South African Law 9 ed (2007) at 421-424. 11 Ibid at 424. In footnote 167 the learned authors cite Voet 1.8.21 and MV Snow Delta: Serva Ship Ltd v Discount Tonnage Ltd 2000 (4) 746 (SCA) paras 9-10 in support of what they say. 973J-974A; Welkom Municipality v Masureik & Herman t/a Lotus Corporation & another 1997 (3) SA 363 (SCA) at 371G-H.) [36] This leaves the question of costs. The relief to which the appellant is entitled has a bearing not only on the costs of the appeal, but also those in the court a quo. Counsel for the appellant argued that what was in contention between the parties was whether the appellant was entitled to a share of the respondent‟s pension interest. As the appellant has established such entitlement in this court, she has achieved substantial success entitling her to the costs of the appeal and those in the court a quo. Counsel for the respondent did not contend otherwise. The appellant is accordingly entitled to a costs order in her favour in both courts. [37] In the result the following order is made: 1 The appeal is upheld with costs. 2 The order of the court below is set aside and in its place the following order is substituted: „1 Mr Phillip Jordaan of Divorce Settlement Services, Pretoria is appointed as Liquidator of the joint estate of the applicant and the respondent with the powers and obligations set out in annexure A to this judgment. 2 It is declared that the applicant is entitled to an amount equal to 50 per cent of the respondent‟s nett pension interest in the Government Employees Pension Fund Scheme calculated as at 25 May 2012. 3 It is declared that the respondent is entitled to an amount equal to 50 per cent of the applicant‟s nett pension interest in the Government Employees Pension Fund Scheme calculated as at 25 May 2012. 4 The respondent shall pay the costs of the application.‟ _________________ X M PETSE JUDGE OF APPEAL Makgoka AJA (Seriti JA concurring) [38] I have read the erudite judgment of my colleague, Petse JA. I agree that the appeal in respect of the appointment of a liquidator, with related powers, should succeed. With regard to the appeal in respect of the pension interests of the parties, I agree, in principle, with my colleague‟s scholarly exposition of the law. I differ, however, with him on the application of the law to the facts of this case. [39] My interpretation of the settlement agreement signed by the parties, and the circumstances in which it came into existence, lead me to a different conclusion, namely, that the parties had, on a proper construction of the settlement agreement, agreed to exclude their respective pension interests from the division of their joint estate. With that conclusion, it is unnecessary for this court to consider the effect of s 7(7) of the Divorce Act. For that reason, I disagree with the declaratory orders made by my colleague in respect of the parties‟ pension interests in terms of s 7(7) of the Divorce Act. I therefore write separately to set out the reasons for my disagreement. [40] The basic facts, which are simple and largely common cause, have been set out in my colleague‟s judgment. However, I think that he has not given sufficient attention to the circumstances which gave rise to the settlement agreement. Also, I do not agree with his interpretation of the settlement agreement. I will therefore give focused attention to those aspects. [41] The parties were married to each other in community of property on 14 January 2005. The appellant is employed as a supply chain officer in the Department of International Relations and Cooperation in Pretoria. The respondent is a major in the employ of the South African National Defence Force, Air Force Headquarters, in Pretoria. By virtue of their employment, they are both members of, and contribute to, the Government Employees Pension Fund (the GEPF). [42] During 2011, the appellant instituted divorce action against the respondent in the North West Regional Court of Moretele (the regional court), in which she also sought ancillary relief, namely, custody of the parties‟ minor children, and their maintenance, spousal maintenance and division of the joint estate. With regard to the pension interests, the appellant sought a prayer that „each party [was] to retain his/her pension fund interest.‟ [43] The divorce action was eventually settled. The terms of the settlement were recorded in a settlement agreement signed by the parties on 25 May 2012. The settlement agreement comprises slightly under 1½ pages. It has headings, making provision for the following aspects: action for divorce; custody of the minor children; maintenance of the minor children; immovables and movables; and future expenses. The headings are all in upper case, and emboldened. The specific clause which deals with the division of the joint estate reads: ‘IMMOVABLES AND MOVABLES. The joint estate shall equally be divided between the parties.‟ [44] A decree of divorce was granted on 25 May 2012, and the settlement agreement concluded by the parties was made an order of court by the regional court. On 15 April 2013, the appellant‟s attorneys (who were not her attorneys during the divorce action), wrote a letter to the respondent and requested him to furnish them with his proposals regarding the division of the joint estate. [45] When no response was forthcoming from the respondent, the appellant launched motion proceedings in the Gauteng Division of the High Court, Pretoria (the high court) seeking the appointment of a liquidator for the purposes of dividing the joint estate. In prayers 2 and 3 of the notice of motion, the appellant sought orders that the parties were entitled to payment of 50 per cent of each other‟s pension interest as at the date of the divorce. It was common cause between the parties that a liquidator should be appointed. The only dispute was on the appellant‟s prayers in respect of the pension interests. Clearly due to inadvertence, the high court dismissed the entire application with costs. The high court erred in that regard. It should have granted the order for the appointment of a liquidator, as this had been agreed upon by the parties. [46] In her founding affidavit, the appellant asserted that the assets which comprised the joint estate included the parties‟ respective pension interests. In his answering affidavit, the respondent denied that assertion. The respondent stated that the pension interests „did not form part of the [appellant‟s] claim when she instituted divorce proceedings, [and] did not form part of the settlement agreement‟ and that no order was made in respect thereof in terms of s 7(8) of the Divorce Act. [47] Confronted with the respondent‟s version, the appellant sought, in her replying affidavit, to explain the reason why the prayers in her combined summons expressly excluded the pension interests. She explained that she was assisted by one Mr Sentsho, whom she believed to be an attorney (who later turned out not to be). According to the appellant, she had indicated to Mr Sentsho that she wished to share in the respondent‟s pension interest. Mr Sentsho informed to her that if she included a prayer for sharing in the respondent‟s pension interest, it would bring about a lot of administrative difficulties. She also sought to explain the background to the signature of the settlement agreement, in respect of which she states that on the day of the hearing she was presented with the settlement agreement, which she signed. [48] These, briefly are the facts. I should mention, right at the outset, that s 7(7) is peremptory in its provisions. In other words, the pension interests of spouses married in community of property are, by default, deemed to be part of the joint estate. In para 33 above, my colleague emphasises this point, and correctly states one of the invariable consequences of a marriage in community of property: at the dissolution of the marriage, each party is entitled to a half-share of the joint estate, including the pension interests, where applicable, except where there is an order of forfeiture in terms of s 9(1) of the Act or an express agreement between the parties to the contrary. As already stated, I take a view that the parties have adopted the latter option in the settlement agreement. [49] To my mind, the starting point, before considering the effect of s 7(7) of the Divorce Act, should be whether the settlement agreement as framed, is to be interpreted so as to include the parties‟ pension interests. Only if that question is answered positively, would it be necessary to consider the issue of principle in terms of s 7(7). The question, in my view, should be answered in the negative, for two reasons. First, the clear language of the settlement agreement militates against that. Second, the circumstances in which the settlement agreement came into being do not lend themselves to that interpretation. [50] With regard to the language of the settlement agreement, I have in para 43 above, referred to the clause of the settlement agreement which makes provision for the division of the joint estate. I understand that clause to mean: „The joint estate, as identified above, being the immovables and the moveables, shall be divided equally.‟ Therefore, anything which does not fall within the identified category is not included in the division of the joint estate. [51] Pension interests are neither immovable nor moveable property. In the context of a divorce action and s 7(7) and (8) of the Divorce Act, any suggestion that „immovable and moveable property‟ includes pension interests is untenable. That is so because, traditionally, the pension interests did not form part of the assets of the parties. Only by special legislative enactment in the form of s 7(7)(a), were they deemed so. It is for that reason that a specific order in terms of s 7(8), distinct from the order of division of the joint estate, should be made by the court to give effect to the deeming provisions of s 7(7)(a). This point is fully discussed in paras 66-70 below. In the present case, the pension interests are excluded by the maxim expressio unius est exclusio alterius,12 as applied with the necessary caution. (See for example, Administrator, Transvaal, & others v Zenzile & others 1991 (1) SA 21 (A) at 37G-H.) In my view, the language used in the settlement agreement concluded by the parties is plain and unambiguous. [52] The situation would have been entirely different had there been no heading. In that event, the clause providing for the equal division of the joint estate would have constituted a so-called blanket division. That would have brought the pension interests within the purview and reach of the deeming provisions of s 7(7) of the 12 A maxim of interpretation meaning that the express mention of one thing is the exclusion of the other. Divorce Act. To read the clause providing for equal division of the joint estate as if the heading does not exist is, with respect, untenable. The heading clearly delineates the assets of the joint estate to be divided. By specifically mentioning the category of the assets of the joint estate to be divided, the parties clearly had the intention to exclude any other category not mentioned. Effect should therefore be given to the clear and unambiguous provisions of the settlement agreement. [53] In Sentinel Mining Industry Retirement Fund and Another v Waz Props (Pty) and Another [2012] ZASCA 124; 2013 (3) SA 132 (SCA) para 10, it was observed that when interpreting a contract, headings can be taken into account. Where a heading conflicts with the body of contract, it must be the body of the contract which prevails because the parties‟ intention is more likely to appear from the provisions the parties have spelt out than from an abbreviation they have chosen to identify the effect of those provisions. [54] My colleague and I are agreed that there is no conflict between the heading and the body of the relevant clause in the present case. What then was intended by the inclusion of the heading with the particular words „IMMOVABLES AND MOVABLES‟ in relation to the division of the joint estate? Those words should be given meaning. One cannot treat those words as if they do not exist. It is impermissible to do so, as it militates against a longstanding precept of interpretation that every word must be given a meaning, and that no word should be ignored, or treated as tautologous or superfluous. See African Product (Pty) Ltd v AIG South African Ltd 2009 (3) SA 473 (SCA) para 13; National Credit Regulator v Opperman & others 2013 (2) SA 1 (CC) para 99; Kilburn v Tuning Fork (Pty) Ltd [2015] ZASCA 53; 2015 (6) SA 244 para 15. [55] When read together, the heading and the clause make perfect sense, given the circumstances which gave rise to the settlement agreement. The settlement agreement, by its silence on pension interests, is consistent with, and mirrors, the appellant‟s express exclusion of pension interests in her combined summons. [56] I turn now to consider the circumstances under which the settlement agreement came into existence. This court, in Natal Joint Municipality Fund v Emdumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262; 2012 (4) SA 593 (SCA) para 18, recognised that the circumstances in which a document came into being, is one of the factors to be considered when interpreting a document. Wallis JA said: „[W]hatever 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.‟ (Footnotes omitted.) See also Cloete Murray N.O. & another v Firstrand Bank Ltd [2015] ZASCA 39; 2015 (3) SA 438 (SCA) para 30. [57] My conclusion that the settlement agreement was not preceded by negotiations, and that the appellant did not have any input in its production, is not speculative, nor is it based on conjecture. What are the facts? The answer lies, first, in what the appellant does not say. She does not say that the settlement agreement was preceded by any negotiations in which she made input with regard to its terms. If she did, it should not be difficult to say so. Part of the difficulty in this regard, is the paucity of information in both the appellant‟s founding and replying affidavits. It seems that she consciously set out to be as sparse as possible. As the applicant, she was expected to place before the court, as much relevant information as possible. If she elected to place less, she should not expect the court to speculate in her favour. If there is adverse speculation against her, it is only because the appellant‟s papers are woefully lacking on detail. [58] But what she says with regard to the production of the settlement agreement, is also instructive. It is set out in paragraph 10.10 of her replying affidavit: She says: „At the hearing of the divorce the respondent and his legal representative presented me with the settlement agreement which was later that specific day incorporated in the order of the court. No mention was made of the pension fund and at the time of the signing of the settlement agreement I never understood the pension fund interest not to form part of the joint estate. I at all relevant times the specific day understood the pension fund to be included in the joint estate, especially in the light of the fact that it was not specifically excluded in the settlement agreement drafted by the respondent and his legal team. I was never advised differently prior to date I have approached my current legal team who explained to me the legal position.‟ [59] From the above, it is clear that the respondent‟s attorneys were the drafters of the settlement agreement. If the appellant had negotiated with them for the inclusion of the pension interests in the settlement agreement, she would surely have enquired about its non-inclusion, on being presented with the settlement agreement. What material was known to the respondent‟s attorneys when the settlement agreement was produced? They knew that the appellant had expressly excluded the pension interests in her combined summons. It is therefore difficult to see how, under those circumstances, they would include the pension interests in the agreement, such never having been part of the lis between the parties on the pleadings, because the appellant had expressly excluded them. The drafters of the settlement agreement were therefore entitled to draft the settlement agreement on the basis of the pleadings, unless the appellant had conveyed to them a contrary attitude with regard to the pension interests. [60] Human experience has shown that contracting parties seldom contract to their disadvantage. I therefore do not see how the respondent‟s attorneys would have been so benevolent as to make the respondent‟s pension interest part of the settlement agreement, where the appellant had expressly disavowed her entitlement thereto. It must be borne in mind that had the respondent not defended the divorce action, the regional court would in all likelihood, have granted an order that each party was to retain their own pension interest, as requested by the appellant in her combined summons. [61] It is therefore quite ironic that by defending the matter and concluding a settlement agreement in the manner it was worded, the respondent would suddenly be deemed to have bestowed a right on the appellant, which she expressly had disavowed in her combined summons. Under the circumstances, the appellant could only be entitled to share in the respondent‟s pension interest if the settlement agreement was a product of negotiations, during which she insisted that the pension interests be included as part of the settlement agreement. From the facts available to us, this was not the case. It seems the settlement agreement was presented to the appellant by the respondent‟s attorneys as a fait accompli on the day of the hearing of the divorce action. [62] This brings me to the appellant‟s statement (in paragraph 10.10 of her replying affidavit) that at the time of signature of the settlement agreement, she „never understood the pension fund interest not to form part of the joint estate.‟ This can simply not be correct. Having expressly excluded the pension interests in her combined summons, she could possibly not have had such an understanding. That could only be, if she had a change of heart on that aspect, and conveyed that to the respondent‟s attorneys before the settlement agreement was drafted. As stated already, this does not appear to have happened. At least she does not say so, and there is nothing in the record to suggest otherwise. [63] But if there is any residual doubt about whether the appellant considered the settlement agreement to incorporate the pension interests, paragraph 10.12 of her replying affidavit offers a complete answer. There, the appellant essentially acknowledges that the settlement agreement falls short of including the pension interests as part of the assets to be divided. She says: „If the legal position was explained to me I would never have instituted the action in the manner I did, and in addition hereto I never would have signed the settlement [agreement] in the manner it was presented to me.‟ [64] In my view, there can be no clearer indication of the appellant‟s mind-set (as to whether the pension interests formed part of the settlement agreement). It is plain that the appellant recognizes that terms of the settlement agreement are insufficient to be read as to include the pension interests. For, if her case is that the settlement agreement as drafted also incorporates the pension interests, why would she „never have signed‟ it in its present wording? The above statement seems to contradict the essence of the appellant‟s case, which, as already stated, is that the terms of the settlement agreement do incorporate the parties‟ pension interests. [65] One has sympathy for the appellant because clearly she was assisted by an unqualified person in drafting her papers in the regional court. She was apparently unrepresented when she signed the settlement agreement, which she appears not to have had any role in negotiating its terms. One option open to her would have been to approach the court for the rectification of the settlement agreement on the basis that it did not correctly reflect the intention of the parties. But she, on advice I suppose, elected to seek an order in terms of s 7(7) and 7(8)(a) of the Divorce Act on the basis of a settlement agreement which, in my view, patently does not permit of such an order. I would, very reluctantly, non-suit her on this portion of the appeal, for all of the reasons stated above. [66] Lastly, and for the sake of completeness, there is also the issue of jurisdiction. This issue, as to which court is competent to grant an order in terms of s 7(8) of the Divorce Act, was pertinently debated during the hearing with the appellant‟s counsel, during which counsel conceded, correctly so, that this court does not have jurisdiction to grant an order in terms of s 7(8)(a) as had been requested by the appellant in the high court. My colleague discusses this issue in para 30, and states that „[I]t is ….not necessary to decide this point as counsel for the appellant accepted that it would not be competent for this court to decide this issue for the first time on appeal…‟ My colleague then concludes that it is not necessary to decide the point, but accepts, correctly so, in my respectful view, that „the wording of s 7(8) …seem to restrict the grant of such an order to the “court granting the decree of divorce”‟ [67] In my view, it is necessary to determine the issue. I do so. Section 7(8)(a) of the Divorce Act reads: „Notwithstanding the provisions of any other law or of the rules of any pension fund ─ (a) the court granting a decree of divorce in respect of a member of such a fund, may make an order that – (i) any part of the pension interest of that member which, by virtue of subsection (7), is due or assigned to the other party to the divorce action concerned, shall be paid by that fund to that other party when any pension benefits accrue in respect of that member; (ii) an endorsement be made in the records of that fund that that part of the pension interest concerned is so payable to that other party.‟ [68] The above sub-section makes plain that the court which may grant an order directing a pension fund to pay a pension interest to a non-member spouse, is the court granting the decree of divorce. The court with the requisite jurisdiction is the regional court. This is the court to which the appellant should have directed her application. The upshot of this is that the high court lacked jurisdiction to determine prayers 2 and 3 of the appellant‟s notice of motion. It should have declined to hear that portion of the appellant‟s application. It is trite that a decision taken absent proper jurisdiction is void. As explained by this court in Tὃdt v Ipser 1993 (3) SA 577 (A); [1993] 2 All SA 303 (A) at 589B-C: „According to our common-law authorities judgments are void in only three types of cases – where there has been no proper service, where there is no proper mandate or where the court lacks jurisdiction. See Minister of Agricultural Economics and Marketing v Virginia Cheese and Food Co (1941) Pty Ltd 1961 (4) SA 415 (T) at 422E-424H; S v Absalom 1989 (3) SA 154 (A) at 163C and 164E-G; and the earlier authorities cited in these cases…‟ [69] By parity of reasoning, this court is similarly placed. It is for that reason that this court is not making an order in terms s 7(8)(a), and is restricting itself to a declaratory order in terms of s 7(7). This does not help the appellant much, because, absent an order in terms of s 7(8)(a), the declaratory order in terms of s 7(7) remains enforceable only between the parties. The pension fund to which they both belong, the GEPF, is empowered by law to give effect only to an order made in terms of s 7(8)(a). [70] Such an order must direct the pension fund to make payment of a member‟s pension interest to a non-member spouse, and endorse its records accordingly. A declaratory order such as the one made by my colleague, is not sufficient. The upshot of this is that, unless and until one of the parties approaches the regional court for an order in terms of s 7(8)(a) of the Divorce Act, the appellant‟s victory in this court would remain hollow and a brutum fulmen, as far as the GEPF is concerned. [71] In conclusion, it is appropriate to refer to the observations made by this court in Old Mutual Life Assurance Co (SA) Ltd & another v Swemmer 2004 (5) 373 (SCA) para 26, in which the importance of carefully formulating settlement agreements and divorce orders relating to pension interests, was emphasised. This is to ensure that they fall within the ambit of s 7(7) and (8) of the Divorce Act. The dispute in the present case would have been avoided had this been heeded. [72] Like my colleague, I would uphold the appeal to the extent that the high court failed to grant a prayer for the appointment of a liquidator, despite it being common cause between the parties that such a prayer should be granted. I would make no order in respect of the appeal relating to the pension interests. For the reason that the appellant had sought an order in respect of pension interests in a wrong forum, I would accordingly order that each party should pay its own costs, both in the high court and in this court. __________________ T M Makgoka Acting Judge of Appeal APPEARANCES: For the Appellant: M Haskins SC (with R M Molea) Instructed by: Shapiro & Haasbroek Inc, Pretoria Lovius Block, Bloemfontein For the Respondent: J L Basson Instructed by: Makokga Sebei Inc, Kempton Park Phatshoane Heney Inc, Bloemfontein Annexure A _________________________________________________________________________ APPOINTMENT OF LIQUIDATOR AND/OR RECEIVER OF THE JOINT ESTATE OF PLAINTIFF AND DEFENDANT _________________________________________________________________________ 1. PHILLIP JORDAAN is hereby appointed as Liquidator in the joint estate of the above PLAINTIFF and DEFENDANT to realise the whole of the joint estate assets, movable and immovable, and for that purpose to sell them or any part of them, by public auction or by private agreement as may seem most beneficial with leave to both parties to bid, to collect debts due to the joint estate unless the same be disposed of by sale, to pay the liabilities of the joint estate, to prepare a final account between PLAINTIFF and DEFENDANT, and to divide the assets of the joint estate after payment of its liabilities in accordance with the account. 2. THE LIQUIDATOR SHALL HAVE THE FOLLOWING POWERS: 2.1 The right to make all investigations necessary and in particular to obtain from the parties all information with regard to the assets comprising the joint estate; 2.2 the right to obtain information regarding their financial affairs from bank managers, building societies, managers or any other financial institutions where monies may have been invested. 2.3 the right to obtain information from auditors of private companies or business and personal accountants with regard to personal affairs and tax matters and any other person who may have knowledge of the affairs 2.4 the right to obtain and call for balance sheets in respect of all companies or businesses in which the parties have interest; 2.5 the right to inspect books of account in respect of any company or business where the parties may have an interest and also the right to inspect personal bank statements, paid cheques, deposit books and personal statements of affairs and liabilities which may have been drawn for tax and other purposes; 2.6 the right to make physical inspection of assets and take inventories; 2.7 the right to question the parties and obtain all explanations deemed necessary by them for the purpose of making the division; 2.8 without limitation to the aforegoing, the rights which are conferred on a Trustee in terms of the provisions of the Insolvency Act Number 24 of 1936 and in particular the rights to call meetings of creditors to perform interrogatories to take charge of the property of the joint estate, to open bank accounts and to deal with investments as provided for in terms of sections 64, 65, 66, 68, 70 and 72 of Act 24 of 1936; 2.9 in particular the Liquidator is empowered to distribute and allocate the movable assets of the joint estate between PLAINTIFF and DEFENDANT and will not be obliged to realise/sell all the assets of the joint estate; 2.10 the Liquidator is empowered to locate assets for the joint estate out of the Republic of South Africa, to proceed overseas to take evidence in location of such assets on commission de bene esse if needs be for the purpose of taking in possession assets of the joint estate; 2.11 the Liquidator is authorised, with the concurrence of the affected pension funds, to effect the necessary endorsement against any pension interest of the parties in terms of section 7[8] of the Divorce Act No 70 of 1979 and the same shall apply to the insurance policies of the parties. 3. DUTIES OF THE LIQUIDATOR The Liquidator is obliged to collect all assets, discharge all liabilities and pay to the parties after deduction of his fees and the legal costs of the parties in the divorce action and interlocutory applications in that action and any other amounts due, the residue of the joint estate to each party in equal shares. Included in the aforegoing will be the right to realise all assets on such terms as the Liquidator may deem fit, including by public auction, private treaty or otherwise. 4. SECURITY The Liquidator is not required to find security for his administration. 5. RELEASE OF THE LIQUIDATOR: The Liquidator shall be relieved of his duties as follows: 5.1 Upon completion of his account, the Liquidator will forward a copy of such account to the parties‟ respective attorneys. 5.2 The liquidator will send his account by prepaid registered mail or hand-delivery to the addresses as reflected above. 5.3 Both PLAINTIFF and DEFENDANT shall be entitled to raise objections to the said account within 14 [FOURTEEN] DAYS from date that such accounts had been sent. Should the Liquidator not receive any objections from either PLAINTIFF or DEFENDANT within the fourteen day period, the said account shall be deemed to have been confirmed by PLAINTIFF and DEFENDANT and the Liquidator shall proceed to finalise the estate in accordance with the said account.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 4 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. Ndaba v Ndaba (600/2015) [2016] ZASCA 162 (4 November 2016) MEDIA STATEMENT The Supreme Court of Appeal today upheld an appeal against a judgment of the Gauteng Division of the High Court, Pretoria, concerning the entitlement of a non-member spouse in a marriage in community of property under subsections 7(7)(a) and 7(8)(a) of the Divorce Act 70 of 1979 in respect of pension interests. The question was whether a non-member spouse in a marriage in community of property is entitled to the pension interest of a member spouse in circumstances where the court granting the decree of divorce had not made an order declaring such pension interest to be part of the joint estate. The Supreme Court of Appeal held that on a proper construction of the s 7(7)(a) of the Divorce Act, which is clear and unequivocal, it vests in the joint estate the pension interest of the member spouse for the purposes of determining the patrimonial benefits to which the parties are entitled as at the date of their divorce – provided that their joint estate has yet to be divided between them ─ and that no order is required in terms of s 7(7(a) as the court below had held. As the parties’ joint estate has not been divided between them, the SCA held that the court a quo erred in dismissing the application. --- ends ---

3244

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case Number : 434 / 06 In the matter between LUFUNO MPHAPHULI & ASSOCIATES (PTY) LTD APPELLANT and NIGEL A ANDREWS FIRST RESPONDENT BOPANANG CONSTRUCTION CC SECOND RESPONDENT Coram : HARMS ADP, MTHIYANE, LEWIS, PONNAN JJA et MALAN AJA Date of hearing : 5 NOVEMBER 2007 Date of delivery : 22 NOVEMBER 2007 SUMMARY Arbitration – review of award – grounds for setting aside – condonation – refusal of Neutral citation: This judgment may be referred to as : Lufuno Mphaphuli & Associates v Andrews [2007] SCA 143 (RSA) ___________________________________________________________________ PONNAN JA [1] The appellant, Lufuno Mphaphuli and Associates (Pty) Ltd ('Lufuno'), was one of Eskom's principal contractors on the Tjatane, Malegale and Sebitse Electrification Project in the Limpopo Province. It in turn concluded, pursuant to a tender process, a written agreement incorporating the engineering and construction short contract with the second respondent, Bopanang Construction CC ('Bopanang'), on 16 May 2002, in terms of which the latter had to execute certain electrical and construction work. [2] Certain disputes having arisen between Lufuno and Bopanang relating to the execution of the work and payment, the latter issued summons out of the Pretoria High Court for payment of what it alleged were moneys due to it in terms of the agreement. It furthermore launched an urgent application on 11 April 2003 to interdict Eskom from effecting payment of the sum of R656 934.45 (being the amount claimed by it) to Lufuno in terms of the principal electrification agreement. The parties agreed that the dispute between them would be resolved by arbitration and in consequence of that agreement the action was abandoned. The first respondent, Nigel Andrews ('Andrews'), was duly appointed arbitrator. [3] On 16 October 2003 and after certain preliminary meetings, the parties concluded an arbitration agreement which defined the purpose of the arbitration as follows: 'To determine whether payment is due in terms of the contract …' and, if so - 'The extent of such payment due, having regard to the scope of the agreement, any agreed amendments or instructions for amendments thereto by the defendant or Eskom; the value of the work that has been done by Bopanang; the effect of any defects, if any, and the rectification thereof; any and all payments made to Bopanang. Therefore a final assessment of monies reasonably due by one of the parties to the other needs to be made by the arbitrator.' The further material terms of the arbitration agreement, to the extent here relevant, were that: '2 The final award made by the arbitrator . . . shall be final and binding on the parties. Any payment to be made by any of the parties in terms of the award . . . shall be due and payable to the other party within 21 calendar days of the date of the written award . . . . The arbitrator shall be entitled to liaise with Eskom's duly authorised representatives, and to request any documentation with regard to this project from Eskom, who is hereby authorised by both parties to make such documentation available. The arbitrator shall commence with the inspection and measurement of the work done on site on or about 27 October 2003. Each party shall provide their reasonable co-operation with the aim of completing the process as speedily as possible, and appoint representatives to attend the physical inspection and measurement. This agreement constitutes the full and complete agreement reached between the parties and no variation, amendment, alteration, addition or omission shall be valid and binding on the parties unless reduced to writing and signed by all parties or their duly authorised representatives.' [4] The parties filed their claim and counter-claim respectively and the arbitration was duly conducted before Andrews. On 23 August 2004, Andrews despatched his award (‘the award’) as well as his reasons therefor to the parties per facsimile. He held that Lufuno was liable to Bopanang in the sum of R339 998.83 with interest at the rate of 0.5 per cent per week, computed from 6 October 2002. Insofar as the costs were concerned, he ordered each party to pay half of his costs and their own legal costs. [5] After having sought and obtained legible copies of an appendix to the award, Lufuno's then attorney sent a letter to Andrews on 25 August 2004. That letter asserted that Lufuno had already identified certain items which required further clarification and undertook to revert to Andrews with specific queries once the appendix had been thoroughly considered. The letter further suggested a round table discussion with Andrews, in order that 'matters be clarified as soon as possible', which according to the writer would be in the best interests of everybody. That letter elicited the following reply from the Andrews on 27 August 2004: 'In terms of Clause 2 of the signed arbitration agreement between the parties the final award made by the arbitrator is final and binding on the parties. There is no provision in the arbitration agreement for you to respond to the arbitrator on his decision or for the arbitrator to enter into any further discussion on such. I therefore cannot enter into any further discussions upon this issue and it becomes a matter between the parties. I trust this clarifies the situation.' [6] On 16 September 2004, Lufuno's then attorney wrote to Bopanang’s attorney that they held instructions to take the matter on review to the High Court. When nothing further was heard from him and after the expiry of the 21 calendar days envisaged in Clause 3 of the arbitration agreement, Bopanang applied during October 2004, in terms of s 31(1) of the Arbitration Act 42 of 1965, for the award to be made an order of court, and for judgment in its favour in the sum of R339 998.82, with interest. That application was opposed by Lufuno. It filed its answering affidavit on 13 December 2004 and simultaneously launched an application to review and set aside the award, as also for an order that the matter be remitted to the arbitrator for him to review his award. [7] The principal thrust of Lufuno’s application was that Andrews '… had awarded numerous costs in favour of Bopanang for work never done nor even claimed …' by it. And, as Andrews had refused to discuss the matter any further, Lufuno, so it was further contended, would suffer final and irreparable loss. It thus, so the contention proceeded, had no alternative but to approach the High Court for a review of the arbitrator's decision and award. [8] On 7 March 2005, Andrews filed his reasons as well as a record of the arbitration proceedings with the registrar of the High Court in accordance with Rule 53. On 11 April 2005, Lufuno's then attorney informed Bopanang and Andrews that it did not wish to amend, add to or vary the terms of its notice of motion or supporting affidavit and that they could therefore proceed to file their answering affidavits in the review application. Bopanang and Andrews duly did so, by filing what came to be termed their first answering affidavits on 12 and 16 May 2005 respectively. [9] In its affidavit Bopanang asserted that Lufuno had failed to comply with s 32(2) of the Act, inasmuch as the review application had not been launched within six weeks after publication of the award. Nor, for that matter, had Lufuno sought an extension of time in terms of s 38 of the Act. Accordingly, as the review application was out of time and as good cause had not been shown, nor relief sought in terms of s 38, the application fell, on that basis alone, to be dismissed with costs. [10] During June 2005 Lufuno's then attorney withdrew and was replaced with its current attorney of record. There then followed an exchange of correspondence between Lufuno's new attorney and Bopanang’s attorney of record. On 21 July 2005, Lufuno's attorney sent a letter of demand to Bopanang's attorney claiming payment of an amount of R136 000 in respect of what it alleged were penalties arising from Bopanang’s repudiation of the contract. In the meanwhile, no replying affidavit having been filed by Lufuno in the review application, Bopanang applied for a court date and the matter was set down for hearing on the opposed roll on 7 October 2005. [11] On 4 August 2005, Lufuno delivered an amended notice of motion and a supplementary founding affidavit. It now sought in addition to the relief envisaged in its original notice of motion, a declaratory order that Bopanang was liable to it in the sums of R136 000, R115 859.76 and R85 200, with interest on each of those amounts. It accordingly sought an order that the award be substituted with an order that Bopanang pay to it the sum of R623 035.20 together with interest. It furthermore sought an order condoning '… to the extent necessary, the late filing of this application and the amended notice of motion and supplementary founding affidavit.' [12] Bopanang and Andrews then filed a second set of answering affidavits to Lufuno's supplementary founding affidavit on 16 and 29 September 2005 respectively. On 3 and 4 October 2005 Lufuno delivered replying affidavits respectively to those answering affidavits. On 20 December 2005, Lufuno delivered a second notice of intention to amend its notice of motion. It now sought, in addition, an order in terms of s 38 of the Act, to the effect that the periods stipulated in s 33(2) be extended to provide for the admission of its original founding affidavit as amended by its supplementary founding affidavit. It also sought as an alternative to the matter being remitted to Andrews, that the dispute be referred to trial alternatively for the hearing of oral evidence on certain specified issues. [13] Both Lufuno’s review application and Bopanang’s application for the award to be made an order of court were heard by Van der Merwe J in the Pretoria High Court on 24 and 25 January 2006. In each instance Bopanang succeeded with costs on the punitive scale as between attorney and client. Various applications for condonation by Lufuno confronted Van der Merwe J. The learned judge held that Lufuno had '. . . made out no case on the merits of the application. No case was made out in the founding affidavit. The attempts to make out a case in the various supplementary affidavits did not succeed. The applications for condonation are therefore refused on the basis that there was no proper explanation for the delay as well as on the basis that no case was made out for the relief sought.' Having expressed himself quite firmly on the merits and having demonstrated his displeasure at what he described as vexatious conduct on the part of Lufuno with a punitive costs order, the learned judge thereafter and without furnishing any reasons, somewhat surprisingly, granted leave to appeal to this court. [14] The legal principles applicable to an enquiry of this kind were recently set out by Harms JA on behalf of this court.1 Applying those principles to the facts of this case, which I have set out in some detail in this judgment, illustrates, to my mind, that Lufuno fundamentally misconceived the nature of its relief. Moreover, Lufuno’s founding papers assumed, erroneously so - as was subsequently conceded by it - that the private arbitration process was an administrative one, which had to be lawful, reasonable and procedurally fair.2 That fundamental misapprehension permeated its founding application, which as I shall presently show, it subsequently sought in its supplementary papers, to remedy. The parties clearly intended Andrews to have exclusive authority to decide whatever questions were submitted to him and that each was precluded by virtue of the provisions of Clause 2 of the arbitration agreement from appealing against his decision. The parties had accordingly waived the right to have the merits of their dispute re-litigated or reconsidered.3 Interference by a court was therefore limited to the ground of procedural irregularities as set out in s 33(1) of the Act.4 Lufuno could thus challenge the award only by invoking the statutory review provisions of s 33(1) of the Act, as any further ground of review, either at common law or otherwise, had by necessary implication been waived by it.5 [15] The grounds for any review, as well as the facts and circumstances upon which a litigant wishes to rely, have to be set out in its founding affidavit amplified insofar as may be necessary by a supplementary affidavit after the receipt of the 1 Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA). 2 Total Support Management (Pty) Ltd v Diversified Health Systems (SA)(Pty) Ltd 2002 (4) SA 661 (SCA) para 25. 3 Telcordia para 50. 4 Telcordia para 51. 5 Telcordia para 51. record from the presiding officer, obviously based on the new information that has since become available.6 The original founding affidavit filed by Lufuno comprised ten pages excluding annexures. Lufuno abused its right to amplify in this case by filing a supplementary affidavit of 80 pages in which it raised all manner of new allegations. [16] The only new information that emerged from the record of the arbitration proceedings filed by Andrews in terms of Rule 53(1)(b) was what Lufuno described as evidence of three ‘secret meetings’ between Andrews and Bopanang’s representative. That new information could hardly justify the lengthy supplementary affidavit that had been filed, ostensibly in terms of Rule 53(4). Leaving aside for the moment the secret meetings to which I will return, Lufuno sought in effect to make out a completely new case in its supplementary affidavit. That plainly was not authorised by Rule 53 or by any other principle of our law. In those circumstances, it seems to me, the court below can hardly be faulted for having exercised its judicial discretion against Lufuno under s 38 of the Act. It has not been suggested that the discretion was exercised capriciously or upon a wrong principle or upon any other ground justifying interference by a court of appeal.7 That, one would have thought, would have been the end of the matter. But, says Lufuno, relying primarily on the ‘secret meetings’ to which I have already alluded, Andrews exhibited conscious bias in favour of Bopanang and against it. Bopanang, on the other hand, urged upon us that in this case an arbitration stricto sensu was not intended and that the Act does not apply. Foundational to that argument is the contention that Andrews was acting as an expert or valuer and not as an arbitrator whose position was governed by the Act. Each of these contentions will be considered in turn. [17] In its founding affidavit Lufuno stated : ‘It should be noted that the task of the arbitrator was primarily to work through the documentation provided and to conduct a physical inspection and measurement of the work factually done by [Bopanang]. The agreement does not provide for pleadings or oral evidence by the parties or their witnesses.’ 6 Telcordia para 32. 7 Ex parte Neethling 1951 (4) SA 331 (A) at 335. In that context, Andrews had invited comment from the parties on technical issues pertaining to the measurements that he had made. As Lufuno itself stated, the agreement had not provided for pleadings or oral evidence by the parties or their witnesses. It followed that Andrews’ inspection, re-measurement and estimation had to form the basis upon which he would arrive at a determination which by agreement between the parties was to be conclusive. That, plainly, had to have been within the contemplation of the parties when they concluded their agreement. Lufuno fully participated in that process. Furthermore, no legal argument or submissions were to be made by the parties prior to Andrews’ finalisation of his award. [18] Were an arbitrator to discuss the merits of the matter with one of the parties to the exclusion of the other that, ordinarily at any rate, would constitute a serious irregularity, which may without more warrant the award being set aside.8 But, against the backdrop of the arbitration agreement and the context of the arbitrator’s mandate, those meetings were quite innocuous and had no effect whatsoever on Andrews. To describe them as ‘secret meetings’, as Lufuno does, is to give to them a sinister connotation that is wholly unwarranted. The purpose of those meetings was simply to verify certain figures and to clarify the use of certain items. That fell within the parameters of Andrews’ mandate. That being so, even if he had been wrong those would have been errors of the kind committed within the scope of his mandate.9 [19] Proof that Andrews misconducted himself in relation to his duties or committed a gross irregularity in the conduct of the arbitration is a prerequisite for the setting aside of the award. An error of fact or law, or both, even a gross error, would not per se justify the setting aside the award.10 It followed that Lufuno had to go further than that. For, as Smalberger ADP put it: 'A gross or manifest mistake is not per se misconduct. At best it provides evidence of misconduct … which, taken alone or in conjunction with other considerations, will ultimately have to be sufficiently compelling to justify an inference (as the most likely inference) of what has variously been described 8 S v Roberts 1999 (4) SA 915 (SCA) para 23. 9 Telcordia para 86. 10Total Support para 35. as "wrongful and improper conduct" …, "dishonesty" and "mala fides or partiality" … "moral turpitude".’11 [20] Lufuno asserted bias. It was for it to establish a reasonable apprehension of bias.12 The threshold for a finding of real or perceived bias is high.13 The bias complained of was, according to Lufuno, grounded in the relationship between Andrews and Bopanang. Why Andrews would have shown an inclination to favour the one party to the dispute does not emerge on the papers. The three ‘secret meetings’, as I have just illustrated, were not only innocuous but also occurred within the scope of Andrews’ mandate. The proceedings, on any yardstick, were thus not infected by them. No other overt act is relied upon in support of the proposition that the proceedings were contaminated and that the award is therefore susceptible to attack. Simply put, there are no reasonable grounds to think that Andrews might have been biased. It must follow that the award, on this score, is immune from interference. [21] I turn to Bopanang’s argument that Andrews was not in truth an arbitrator but rather a valuer. The distinction urged upon us in this case is illustrated by Ogilvie - Thompson JA, who observed:14 ‘This argument assumes something in the nature of an appeal to the arbitrator against the decision of the auditor. That is, however, not the position. In making his valuation, the auditor hears neither party. His is not a quasi-judicial function. He reaches his decision independently on his knowledge of the company’s affairs. His function is essentially that of a valuer (arbitrator, aestimator), as distinct from that of an arbitrator (arbiter), properly so called, who acts in a quasi-judicial capacity. The distinction between arbitri and arbitratores was well known to our writers .... The arbitrator or aestimator need not necessarily be an entirely impartial person. In discharging his function he is of course required to exercise an honest judgment, the arbtirium boni viri; but a measure of personal interest in not necessarily incompatible with the exercise of such a judgment.’ [22] It seems to me that the parties intended the Arbitration Act to apply to their dispute, within the limits of their agreement. A finding that Andrews was a valuer would not assist Lufuno and does not require a decision. Unlike an arbitrator, a 11 Total Support para 21. 12 S v Basson 2007 (3) SA 582 (CC) para 29. 13 South African Commercial Catering and Allied Workers Union v Irvin & Johnson Ltd (Seafoods Division Fish Processing) 2000 (3) SA 705 (CC) para 15. 14 Estate Milne v Donohoe Investments (Pty) Ltd 1967 (2) SA 359 (A) at 373H – 374C. valuer does not perform a quasi-judicial function but reaches his decision based on his own knowledge, independently or supplemented if he thinks fit by material (which need not conform to the rules of evidence) placed before him by either party. Whenever two parties agree to refer a matter to a third for decision, and further agree that his decision is to be final and binding on them, then, so long as he arrives at his decision honestly and in good faith, the two parties are bound by it.15 It has not been suggested that Andrew’s decision was not arrived at honestly and in good faith. Nor was such a case made out on the papers. Here as well therefore, Lufuno must fail. [23] It follows that the conclusion reached by Van der Merwe J cannot be faulted. In the result the appeal is dismissed with costs. V M PONNAN JUDGE OFAPPEAL CONCUR: HARMS ADP MTHIYANE JA LEWIS JA MALAN AJA 15 Per Lord Denning MR Arenson v Arenson [1973] 2 All ER 235 at 240 e-f; SA Breweries v Shoprite Holdings [2007] SCA 103 (RSA) paras 6, 22 and 41.

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 November 2007 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. LUFUNO MPHAPHULI & ASSOCIATES (PTY) LTD v NIGEL A ANDREWS & BOPANANG CONTSTRUCTION CC (Case No 434 / 06) Media Statement Today the Supreme Court of Appeal (‘SCA’) dismissed an appeal by Lufuno Mphaphuli & Associates (‘Lufuno’) against a judgment of the Pretoria High Court in favour of Nigel A. Andrews (Andrews) and Bopanang Construction CC (Bopanang). Lufuno was appointed by Eskom as its principal contractor on an electrification project in the Limpopo Province. It in turn, during 2002, concluded a written agreement with the second respondent, Bopanang. When certain disputes arose between Lufuno and Bopanang relating to the performance of the contract and payment, those disputes were referred by the parties to arbitration. The first respondent, Andrews, was duly appointed arbitrator. Andrews found in favour of Bopanang, awarding to it the sum of R339 998.83 together with interest. Aggrieved by Andrew’s award, Lufuno approached the Pretoria High Court with an application to review and set aside the award. The High Court held that Lufuno had failed to comply with the time limits prescribed by the Arbitration Act. It accordingly refused to grant the condonation sought resulting in Lufuno’s application being dismissed with costs on a punitive scale. The High Court nonetheless granted Lufuno leave to appeal to the SCA. Neither the rules nor any principle of our law, according to the SCA, permitted an applicant to make out its case in its supplementary affidavit. It followed that the High Court could not be faulted for refusing to grant the condonation sought. That, ought to have been the end of the matter. Before the SCA, however, Lufuno contended that Andrews had held three secret meetings with Bopanang. Bopanang on the other hand argued that Andrews, strictly speaking, had not performed the function of an arbitrator but rather that of an expert or valuer. According to the SCA, were an arbitrator to have discussed the merits of the matter with one of the parties to the exclusion of the other that ordinarily may warrant the setting aside of the award, but in this instance, the meetings were innocuous and occurred within the scope of Andrews’ mandate. The SCA held further that even if Andrews had performed the function of a valuer that would not have assisted Lufuno as it could not be said that Andrews’ decision was not arrived at honestly and in good faith. It accordingly dismissed the appeal with costs. --- ends ---

3972

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 672/2021 In the ex parte application: GAONE JACK SIAMISANG MONTSHIWA APPLICANT Neutral Citation: Gaone Jack Siamisang Montshiwa (Ex Parte Application) (Case no 672/2021) [2023] ZASCA 19 (3 March 2023) Coram: DAMBUZA ADP, VAN DER MERWE and NICHOLLS JJA and CHETTY and SIWENDU AJJA Heard: 18 November 2022 Delivered: 3 March 2023 Summary: Application for leave to appeal ─ section 17(2)(d) of the Superior Courts Act 10 of 2013 ─ leave to appeal against a decision of two judges sitting as court of first instance ─ referred for oral argument ─ order refusing leave to appeal by single judge ─ Court invoking inherent powers to consider the application ─ application dismissed with costs. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: North West Division of the High Court, Mahikeng (Olivier J and Mbhele J, sitting as court of first instance): The application is dismissed with costs. ________________________________________________________________ JUDGMENT ________________________________________________________________ Siwendu AJA (Van der Merwe JA concurring): [1] The applicant, Mr Montshiwa sought to be admitted by the North West Division of the High Court, Mahikeng (the high court) as a legal practitioner in terms of s 24 of the Legal Practice Act No 28 of 2014 (LPA).1 A practice has developed in certain Divisions of the high court that matters concerning the admission of legal practitioners are heard by two judges. Over a sustained period, Mr Montshiwa had made disparaging allegations against the majority of the judges of the high court. As a result, the Judge President of the high court specially constituted a full bench comprising of judges from outside the division to hear his application for admission.2 [2] The facts are briefly that on 1 September 2014, Mr Montshiwa entered into a contract of articles for five (5) years with Mr Lavelle Winston Vere of Vere 1 Section 24(1) provides: ‘A person may only practise as a legal practitioner if he or she is admitted and enrolled to practise as such in terms of this Act.’ 2 Section 14(1)(a) of the Superior Courts Act 10 of 2013 provides; ‘Save as provided for in this Act or any other law, a court of a Division must be constituted before a single judge when sitting as a court of first instance for the hearing of any civil matter, but the Judge President or, in the absence of both the Judge President and the Deputy Judge President, the senior available judge, may at any time direct that any matter be heard by a court consisting of not more than three judges, as he or she may determine.’ Attorneys as his principal3 while studying towards his LLB (the first contract). He resigned from the firm after a period of a year and 11 months. The departure was not on good terms. He entered into a contract of articles with Moetsi Maredi Attorneys Inc, and Mr KA Moetsi was his new principal (the second contract). [3] The first contract was registered in terms of s 5(1) of the Attorneys, Notaries and Conveyancers Act 29 of 1984 with the then Law Society of Bophuthatswana under contract No. 24/2014 (Bophuthatswana)4. The second contract, regulated by the Attorneys Act 53 of 1979 (AA) as amended, was registered with the Law Society of Northern Provinces on 17 May 2017 under contract number 1531/2017, approximately 9 months after its conclusion. [4] It bears mentioning that under the AA, unlike under the LPA, where articles were not registered within two months of the commencement of service as required by s 5(3) of the AA, a court had a discretion under s 13(2) to condone an irregular service performed prior to registration, provided the service was rendered under a valid contract of articles as defined in s 1 of the AA5. To ensure continuity and a recognition of the unregistered period of service, an applicant had to register the contract together with the cession of articles within two months of commencement in terms of s 11(1) of the AA. Furthermore, a principal had an obligation to inform the Law Society in writing of the cancellation, abandonment or cession of the contract. [5] Mr Montshiwa left the employ of Moetsi Maredi Attorneys Inc. in March 2018. At the time of his application for admission, the LPA had come into effect, 3 Mr Montshiwa matriculated from Mascom Training College in 2010 and thereafter enrolled for a Bachelor of Laws (LLB) at the University of South Africa (Unisa). He also applied for a certificate of full exemption in terms of section 7(1)(e) of Act 61 of 1995, which was issued with effect from 1 January 2011. 4 That Act has since been repealed by section 100 of the Compensation for Occupational Injuries and Diseases Act 130 of 1993. 5 Ex Parte Gird (Prokureursorde, Transvaal, Toetredend) SA 1985 (3) SA 514 (T); Ex Parte Singer: Law Society, Transvaal, Intervening 1984 (2) SA 757 (A ) the upshot being that s 246 read with s 26 applied to the requirements for his admission. These provisions prescribe the requirements for admission and enrolment of legal practitioners in the Republic. They include South African citizenship, minimum academic qualifications, fitness for admission as a legal practitioner, and the necessary practical vocational training as a candidate legal practitioner. It is the last three requirements that became contentious in relation to Mr Montshiwa. [6] In his application for admission as a legal practitioner Mr Montshiwa sought the following order in the high court: ‘1. Joinder of the two contracts of articles registered with Law Society of Bophuthatswana under article number 24/14 and the Law Society of the Northern Provinces under the registration number 1531/2017; Condonation for the three (3) years and seven (7) months service of period for articles.’ This order was sought on the basis that the two contracts of articles of clerkship covered the period prescribed to qualify for admission as a legal practitioner. According to Mr Montshiwa the contract that he concluded with Mr Vere was registered with the Law Society on 2 September 2014 and was interrupted when he resigned from Mr Vere’s employment on 5 August 2016. The second contract was concluded with Mr Moetsi on 6 August 2016 and was registered with the Law Society ‘within two months’ of the date of conclusion thereof. According to Mr Montshiwa Mr Vere refused to sign the cession of the first contract to Mr Moetsi, hence there was no evidence in relation to the relevant period as to whether he was a fit and proper person for admission as a legal practitioner. 6 Section 24(2) 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.’ [7] The high court found that Mr Montshiwa had failed to explain certain discrepancies regarding the dates on which his contracts of articles of clerkship were concluded. It also was not satisfied that Mr Montshiwa had met the requirement for a structured work course during the period of serving articles or 12 months thereafter. The high court found that on the evidence Mr Montshiwa was not a fit and proper person to be admitted as a legal practitioner. [8] For these reasons on 3 September 2020, in a judgment by Olivier J (Mbhele J concurring), the high court dismissed Mr Montshiwa’s application for admission. Dissatisfied with the outcome, he approached the high court for leave to appeal, which was similarly dismissed. The record shows that on 29 March 2021, Mbhele J, solely considered the application for leave to appeal and refused it in a judgment delivered on 31 May 2021. The dismissal of the application for leave to appeal led to a petition to this Court. [9] On 26 August 2021, the application was referred for oral argument in terms of s 17(2)(d)7 of the Superior Courts Act 10 of 2013 (the Superior Courts Act). Mr Montshiwa was directed to address the Court on the merits of the appeal. In addition, at the request of the Judges who considered the petition, the Registrar despatched a directive to the Legal Practice Council (the LPC) to make representations on the merits of the application. At the hearing of the application, counsel representing the LPC referred to the fact that the court that dismissed the admission application was not constituted in the same manner as the court that heard and dismissed the application for leave to appeal. He argued that the application was not properly before this Court. 7 Section 17(2)(d) provides that: ‘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.’ [10] Thus, the controversy is about whether there is ‘a valid decision’ refusing leave by the high court within the contemplation of the Superior Courts Act, and whether the application is properly before this court. Put differently, it is whether the denial of the leave to appeal by Mbhele J, sitting as a single judge, rendered her decision and order a nullity, and whether, as a consequence, this Court lacks the jurisdiction to consider the application. This, in turn, casts a shadow of doubt on the validity of the directive issued on 26 August 2021 inviting Mr Montshiwa to address it in terms of s 17(2)(d). [11] The right to appeal to this Court is not automatic, and is regulated by ss 16 and 17 of the Superior Courts Act. Audience before this Court on appeal is predicated ‘upon leave having been granted’ by the court first seized with the matter or by this Court.8 Principally, s 16(1)(a)(ii) states that an appeal against the judgment of any Division as a court of first instance lies with this Court if the court consisted of more than one judge. The provisions in s 17 apply to evaluating whether leave to appeal should be granted. [12] Section 17(1) of the Superior Courts Act informs the challenge before us and states that ‘the judge or judges’ who heard the case at first instance may only grant leave to appeal if they are of the opinion that the appeal would have reasonable prospects of success, or that there is some other compelling reason why the appeal should be heard. The constitution of the high court that presided over the application for leave is determined by s 17(2)(a), which reads: ‘Leave to appeal may be granted by the judge or judges against whose decision an appeal is to be made or, if not readily available, by any other judge or judges of the same court or Division.’ (Emphasis added.) 8 Section 16(1). [13] Section 17(2)(d) prescribes the constitution of the court which may validly consider an application for leave to appeal. The section bestows competence on ‘a judge or judges.’ The conclusion that the application for leave to appeal heard in terms of s 17(2)(a) is to be heard by the same number of judges that heard the main application is fortified by analogy of s 14(5) of the Superior Courts Act that applies to matters heard by a full court by virtue of s 14(6). Section 14(5) reads: ‘(5) If, at any stage during the hearing of any matter by a full court, any judge of such court is absent or unable to perform his or her functions, or if a vacancy among the members of the court arises, that hearing must – (a) if the remaining judges constitute a majority of the judges before whom it was commenced, proceed before such remaining judges; or (b) if the remaining judges do not constitute such a majority, or if only one judge remains, be commenced de novo, unless all the parties to the proceedings agree unconditionally in writing to accept the decision of the majority of the remaining judges or of the one remaining judge as the decision of the court.’ [14] The provision provides support for the conclusion that where a matter is heard by a full bench (two judges), leave to appeal must be determined a court that is constituted in the same manner. Importantly, in S v Gqeba,9 this Court held that if a court is not properly constituted, the proceedings before that court constitute a nullity.10 Most recently, in Matamela v Mulaudzi11 the high court granted leave to appeal to this Court when special leave should have been sought by way of application to this Court. Answering an invitation to exercise its inherent jurisdiction, the court, referred to another decision by this Court in 9 S v Gqeba & Others [1989] ZASCA 60; 1989 (3) SA 712 (A). After one of the assessors was relieved from duty and the appeal, the court set aside a conviction and sentence on account of the fact that the judgement handed out was not properly authorised by the section. 10 See also S v Malindi & Others [1989] ZASCA 114; 1990 (1) SA 962 (AD); [1990] 4 All SA 433 (AD). 11 Matamela v Mulaudzi [2022] ZASCA 71. Tadvet Industrial (Pty) Ltd v Anthea Hanekom & Others,12 and held that the decision of the high court was a nullity. It refused to entertain the appeal. [15] There can be no doubt that an improperly brought appeal will have repercussions for an applicant who wants to have his case finally determined. He may need to re-approach the high court for proper leave to appeal and apply for condonation. Given the unfortunate history alluded to above, it is not permissible for this Court to deal with the matter in terms of s 17(2)(e)13 of the Superior Courts Act. This provision does not stand alone and cannot be relied upon to leapfrog the requirement for a valid judgment or order, a precondition for a leave to appeal. Doing so would be antithetical not only to the Superior Courts Act but to the jurisprudence of this Court. [16] The point of departure is whether despite the nullity of the decision by the high court, this Court has an inherent power under s 17314 of the Constitution to deal with the application for leave to appeal. The judgment by my colleague Dambuza ADP stresses that the Constitution gives this Court the power to regulate its processes and we should do so to prevent prejudice to Mr Montshiwa, as the matter would be ultimately referred back to it. It moves from the premise that an application for leave to appeal engages the ‘procedures and processes’ of this Court. 12 Tadvet Industrial (Pty) Ltd v Anthea Hanekom & Others [2019] ZASCA 19 para 8. 13 Section 17(2)(e) provides: ‘Where an application has been referred to the court in terms of paragraph (d), the court may thereupon grant or refuse it.’ 14 Section 173 of the Constitution of the Republic of South Africa ,1996, (Constitution) provides: ‘The Constitutional Court, Supreme Court of Appeal and High Courts each has the inherent power to protect and regulate their own process, and to develop the common law, taking into account the interests of justice.’ [17] The first hurdle is the subsidiarity principle in My Vote Counts NPC v Speaker of the National Assembly15 which prohibits the direct reliance on the Constitutional provision where national legislation has been enacted to give effect to a right. This Court functions in terms of the Superior Courts Act, the national legislation envisaged by s 17116 of the Constitution which prescribes (a) the jurisdictional requirements; (b) the process and (c) the threshold for granting an application for leave to appeal to this Court. Secondly, in New Clicks v Minister of Health17 (New Clicks) this Court, affirmed that although ‘like the Constitutional Court and High Courts, [it] has the inherent power to protect and regulate its own process, that “does not extend to the assumption of jurisdiction not conferred upon it by statute.”’18 The circumstances in New Clicks which involved ‘a constructive refusal’ to render a judgment by a lower court are not comparable. The pathway through which the provisions of the Superior Courts Act can be overlooked to confer this Court’s jurisdiction absent a valid judgment by the high court is not defined. [18] Significantly, several decisions by this Court consistently affirm that absent leave being granted, it lacks the jurisdiction to entertain an appeal.19 The decision in Absa Bank Ltd v Snyman20 (Absa Bank) illustrates this point. There, the court confirmed another decision by this Court in Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd21 (Newlands) where under the rubric 15 My Vote Counts NPC v Speaker of the National Assembly [2015] ZACC 31; 2016 (1) SA 132 (CC) para 54: ‘. . . where legislation has been enacted to give effect to a right, a litigant should rely on that legislation in order to give effect to the right or alternatively challenge the legislation as being inconsistent with the Constitution.’ 16 Section 171 of the Constitution provides: ‘All courts function in terms of national legislation, and their rules and procedures must be provided for in terms of national legislation.’ 17 Pharmaceutical Society of South Africa and Others v Minister of Health and Another; New Clicks South Africa (Pty) Limited v Tshabalala-Msimang and Another [2004] ZASCA 122; 2005 3 SA 238 SCA. 18 Ibid para 19. 19 Section 16(1) of the Superior Courts Act; see also, Absa Bank Ltd v Snyman [2015] ZASCA 67; [2015] 3 All SA 1 (SCA); 2015 (4) SA 329 (SCA) (Absa Bank) at para 10. 20 Ibid Absa Bank. 21 Newlands Surgical Clinic (Pty) Ltd v Pennisula Eye Clinic (Pty) Ltd [2015] ZASCA 25; 2015 (4) SA 34 (SCA) (Newlands) paras 12-14. The Court in Newlands quoted Hefer JA in Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A). of an ‘inherent reservoir of power to regulate its procedures in the interest of proper administration of justice’ the court deliberated on whether it may entertain a matter not the subject of the order granting leave to appeal. Confirming the often-cited decision of this Court in Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service22 (Moch), it held that such a power does not extend to an assumption of jurisdiction not conferred upon it by statute. The upshot of these decisions, which have not been set aside, is that this Court’s inherent power to regulate its affairs, condone an irregularity or address prejudice predominantly applies to matters regulated by its rules and not to matters not expressly provided by the governing statute. Even there, the power will be exercised sparingly. In this instance, the prejudice Mr Montshiwa will suffer is partly self-created as it should have been evident to him at the hearing of the application for leave to appeal that the court was not properly constituted. [19] In sum: this Court could only have jurisdiction in terms of s 17(2)(b) of the Superior Courts Act. The jurisdictional requirement is that leave was refused by a properly constituted court, in fact or constructively. As there is no dispute that there was no constructive refusal of leave and that the order purporting to refuse leave is a nullity, the necessary jurisdictional requirement is absent. The improper composition of the court dealing with the leave to appeal renders the judgment a nullity, which cannot be sanctioned. The same applies to the order referring the application for leave to appeal for oral argument. [20] In the result I would have struck the application from the roll with costs. 22 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service [1996] ZASCA 2; 1996 (3) SA 1 (SCA). _________________________ N T Y SIWENDU ACTING JUDGE OF APPEAL Dambuza ADP (Nicholls JA and Chetty AJA concurring) [21] I have read the judgment prepared by my colleague Siwendu AJA. Although I agree that the proceedings in the application for leave to appeal were irregular and the consequent order of the high court is a nullity, I do not agree that Mr Montshiwa should be sent back to the high court for a fresh application for leave to appeal. In my view this is a case in which this court should exercise its inherent powers under s 173 of the Constitution to regulate its process by considering the merits of the application for leave to appeal and, if it deems appropriate, the appeal, and make a decision thereon. [22] Section 17 of the Superior Courts Act regulates the process of approaching this court to appeal against a judgment of a Division of a high court. The section builds upon the provisions of s 16(1)(a)(ii) of the same Act which confers appeal jurisdiction on this court and regulates the process of exercising the right of appeal as follows: ‘(a) an appeal against any decision of a Division as a court of first instance lies; upon leave having been granted – (i) . . . (ii) . . . if the court consisted of more than one judge, to the Supreme Court of Appeal. [23] Section 17(1) prescribes the threshold that must be met for an appeal to be heard by this court. Section 17(2)(b), in terms of which Mr Montshiwa approached this court, provides opportunity to an applicant whose application for leave to appeal under s 17(1) has been refused, to approach this court for the same purpose. [24] The purpose for the threshold and procedure laid out in s 17 is to regulate the appeal process in this court for the court’s benefit, by ensuring that this court’s resources are not wasted on meritless appeals or cases that are not sufficiently important to occupy the attention of this court. Hence the following remarks by Chaskalson CJ in Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others (New Clicks South Africa):23 ‘The granting of leave to appeal by an appeal court in such circumstances [where there had been unreasonable delay in rendering a judgment on an application for leave to appeal] does not cause any prejudice. If the application for leave had been dismissed by the lower court the litigant would have been entitled as of right to apply to the appeal court for leave. The only prejudice caused is to the appeal court which will have been burdened with an unnecessary application in cases where the lower court would have given leave in any event’.24 [25] The underlying principle is that courts are bestowed with inherent powers to administer justice, including avoidance of multiple fruitless court proceedings between the same parties. Under the first judgment Mr Montshiwa must return to the high court for that court to comply with the relevant statutory prescriptions. Whatever judgment the reconstituted high court will render, the matter will, in all probability, return to this court, either for a further application for leave to appeal or for an appeal. All this in circumstances where Mr Montshiwa did comply with the requirements under the Superior Courts Act in relation to the application for leave to appeal process. It seems to me that grave injustice will result from such a judgment, and the waste of both his and the courts’ resources will be completely unjustified. 23 Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others [2005] ZACC 14; 2006 (2) SA 311 (CC). 24 Ibid para 70. [26] Recently this court has exercised its authority to override irregularities occasioned in the application for leave to appeal process. Apart from New Clicks South Africa, in National Credit Regulator v Lewis Stores (Pty) Ltd25 it did so in circumstances where leave had incorrectly not been sought from the court of first instance. Instead, leave had been sought and granted by this Court on the basis that the applicant had to prove special circumstances justifying the grant of leave to appeal. The correct standard was that of reasonable prospects of success.26 This court held that to strike the appeal from the roll, only for the appellants to retrace their steps to the high court for leave to appeal and, if refused leave, back to this Court for a repeat hearing of an issue that had been fully argued would be a gross technicality and waste of resources. [27] Indeed, as illustrated in the following judgments of this court, the courts’ reservoir of power to regulate its process and procedure in the interests of proper administration may not be used by the court to appropriate to itself jurisdiction that is not conferred to it by statute or where a statute grants exclusive jurisdiction to another court.27 In Moch this Court refused to hear an appeal against a provisional sequestration order because no leave had been sought from the court which granted that order. In addition, s 150 of the Insolvency Act 24 of 1936 precluded an appeal against a provisional sequestration order. In this case however, leave to appeal was sought by Mr Montshiwa in the court of first instance, and the appeal jurisdiction of this Court is not excluded in respect of the subject of the dispute between the parties. [28] This application is also distinguishable from Matamela v Mulaudzi28 in a number of respects. In that case the full court had removed the appeal from its 25 The National Credit Regulator v Lewis Stores (Pty) Ltd [2019] ZASCA 190; 2020 (2) SA 390 (SCA) 26 Ibid para 58. 27 Snyders v De Jager [2015] ZASCA 137; 2016 (5) SA 218 SCA. 28 See footnotes 11 and 23 of the first judgment. court roll, leaving in place only the order of eviction granted by the magistrates court. The appeal was only against the ruling removing the appeal from the full court roll. The magistrates court order could not be appealed in this Court. Further, in that case this court did not have before it an application for leave to appeal. In addition, the appellant was at fault in having brought an application for leave to appeal in the incorrect court. [29] In Newlands29 the high court had granted leave to appeal on only one of two issues in respect of which leave had been sought. On appeal the appellant urged this court to consider its submissions on the second issue as well. This Court refused to do so on the basis that its jurisdiction on appeal was limited to the grounds on which leave to appeal has been granted. Importantly, no application for leave to appeal had been brought in the court of first instance on the second issue. [30] In Social Justice Coalition and Others v Minister of Police and Others30 there had been a delay in the granting of a relief by the Equality Court, although the court had already given a judgment and a declarator that a system employed by the SAPS to allocate human resources in the Western Cape unfairly discriminated against black and poor people. The applicants had also sought orders that the Provincial Commissioner of Police had the power to determine the distribution of police resources between stations within the province. The Equality Court refused to grant the full extent of the order sought on the basis that it did not have sufficient evidence on that aspect. It then postponed the hearing on the remedy to a date that was to be arranged between the parties. In the intervening appeal the Constitutional Court distinguished the court order granted 29 See footnote 21 above. 30 Social Justice Coalition and Others v Minister of Police and Others [2022] ZACC 27; 2022 (10) BCLR 1267 (CC) This judgment was recently handed down on 19 July 2022 by the Equality Court from New Clicks and held that the court’s power to regulate its own processes did not extend to making decisions in respect of matters pending in other courts. 31 [31] A distinction must also be drawn between this case and S v Malindi32 wherein this court set aside the decision of a criminal trial court because of the dismissal of an assessor during the course of the trial. This Court found that the change in the constitution of the court to have been grossly irregular. Unlike in this case, the court in Malindi was not concerned with a process that was intended for the courts’ benefit. The prescribed court constitution was intended for the benefit of the accused. As discussed earlier, no prejudice will be suffered by Mr Montshiwa in this case if this court considers this application for leave to appeal. On the other hand, the prejudice resulting from re-starting the leave to appeal process is manifest. [32] The submission on behalf of the LPC that consideration and adjudication of this application would amount to stultification of the clear vision of the s 17 and would lead to the opening of doors to litigants to approach this court directly without a prior application to the court of first instance is not persuasive. The peculiar circumstances of this case have been discussed, including the irregularity attributable to the court, and the absurdity that would result if Mr Montshiwa would be denied audience by this Court. Indeed, the courts have cautioned that the power provided for under s 173 of the Constitution must be exercised sparingly and carefully in instances where, otherwise grave injustice would result.33 I am satisfied that this is a proper case where such power should be exercised. 31 Ibid para 87. 32 S v Malindi and Others [1989] ZASCA 175; [1990] 4 All SA 433 (AD). 33 Enyati Colliery Ltd & Another v Alleson 1922 AD 24 at 32. [33] Has Mr Montshiwa then made out a proper case for an order granting leave to appeal? I am not persuaded that another court would reach a different decision from that of the high court. The requirements specified in the LPA for admission as a legal practitioner are set out in the first judgment. The courts in this country and elsewhere have identified certain qualities for a fit and proper person as envisaged in the LPA. These include integrity, hard work, dignity, honesty, fairness and respect for legal order.34 [34] The expression ‘fit and proper’ is not defined in the LPA. There is also no single test for determination of what constitutes a fit and proper person for purposes of admission into the legal profession. Section 5 of the LPA, however, sets out one of the objectives of the Act as to ‘determine, enhance and maintain appropriate standards of professional practice and ethical conduct of all legal practitioners and all candidate legal practitioners’. In terms of s 24(2)(c) of the LPA only fit and proper persons may be admitted by courts as legal practitioners. [35] In Australian Broadcasting Tribunal v Bond35 the court described the expression fit and proper as follows: ‘The expression “fit and proper person”, standing alone, carries no precise meaning. It takes its meaning from context, from the activities the person is or will be engaged in and the ends to be served by those activities. The concept of ‘fit and proper’ cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of those activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it indicates that, in certain contexts, character (because it provides indication of likely future 34 General Council of the Bar of South Africa v Jiba and Another [2019] ZACC 23; 2019 (8) BCLR 919 (CC). 35 Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321. conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.’36 [36] As a legal practitioner and an officer of the court Mr Montshiwa would be expected to conduct himself with the highest degree of integrity, to ensure that the dignity and decorum of the court is maintained and to have the highest respect for legal order. Insulting, vulgar and disparaging language by a legal practitioner cannot be tolerated. ‘The effective functioning of our courts and the proper administration of justice are highly dependent on how legal practitioners go about discharging [their duty to the court].’37 [37] As it appears from the record, apart from the discrepancies relating to his vocational training, Mr Montshiwa’s conduct, as demonstrated throughout his application for admission as a legal practitioner, and prior thereto, falls far short of the degree of integrity, dignity, honesty and respect expected of an officer of the court. The LPC referred to numerous instances of conduct that has no place in the application for admission as a legal practitioner. It is apparent from these that Mr Montshiwa’s appreciation of the processes, procedures, and decorum of our courts is woefully deficient. When Mr Jerry Sithole, an attorney practicing in Mmabatho, filed a notice to oppose his application for admission, Mr Montshiwa responded with an ‘Opposing affidavit to the Notice to Oppose’ in which he contended that Mr Sithole’s opposition was premature, resulted from ‘bitterness and stupidity’, and was an ‘idiotic move . . . motivated by stupidity’. [38] In addition, when Mr J Nkomo, another attorney from Mmabatho, filed an application to intervene in the proceedings before the high court, in order to place 36 Ibid para 36. 37 R Seegobin ‘Restoring dignity to our courts: the duties of legal practitioners’ 14 September 2022 Groundup. Available at https://www.groundup.org.za/article/restoring-dignity-to-our-courts-the-duties-legal- practitioners/. Accessed on 16 February 2023. on record certain conduct by Mr Montshiwa in the maintenance court, the latter referred to Mr Nkomo’s application as ‘idiotic’, ‘barbaric’ and exhibiting the level of substance expected from ‘a passionate first year law student’. Mr Montshiwa also addressed a letter to the Minister of Justice and Correctional Services requesting him to establish a Commission of Enquiry to investigate the relationship ‘between Mr Nkomo and the North West High Court Bench.’ [39] The Judge President of the North West Division of the High Court at the time, Madame Leeuw JP was not spared from Mr Montshiwa’s tirade. Mr Montshiwa berated the JP for constituting a Full Bench of judges from outside her Division. He complained that the JP’s leadership was ‘a mockery’ and undertook to ensure that ‘Mashangu Leeuw JP, my enemy will never get away with any unlawful conduct that she may try.’ [40] The papers filed by Mr Nkomo and Mr Sithole revealed Mr Montshiwa’s personal attacks on the Judge President and a criminal complaint that he laid against her. The removal of his application for admission from high the court roll on 20 March 2022 by Pietersen AJ led to a complaint by Mr Montshiwa against the judge to the Minister of Justice and the Judicial Services Commission. Mr Montshiwa also directed insults at the judges who heard his application for admission and accused them of bias and collusion with the Judge President against him. [41] His vitriolic attacks did not only dominate the proceedings in the high court. In this Court, Mr Montshiwa demanded an explanation from the two judges who directed that the LPC participate in this application for leave to appeal. He castigated Ms Dineo Motaung for the contents of the affidavit filed on behalf of the LPC. All this conduct demonstrates his lack of appreciation of the ethos and principles that govern the legal profession and the courts of this country. [42] Mr Montshiwa does not dispute the conduct and utterances attributed to him. He only maintains that his conduct is not inappropriate. That cannot be so. His conduct demonstrates a predisposition to bouts of extreme anger and disrespect. Against this background no other court would find differently from the decision of the high court. [43] Consequently, The application for leave to appeal is dismissed with costs. ___________________________ N DAMBUZA ACTING DEPUTY PRESIDENT Appearances For Applicant: In person For LPC: T Tshavhungwa Instructed by: Damons Magardie Richardson Attorneys, Pretoria Phatshoane Henney Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 03 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 Gaone Jack Siamisang Montshiwa (Ex Parte Application) [2023] ZASCA 19 (3 March 2023) Today, the Supreme Court of Appeal (SCA) dismissed an application for leave to appeal from the North West Division of the High Court, Mahikeng (high court). The applicant was a candidate attorney who sought to be admitted as an attorney. However, the high court found that the applicant had failed to explain certain discrepancies regarding the dates on which his contract of articles of clerkship were concluded. The court was also not satisfied that the applicant had met the requirements related to a structured work course during the time in question. Ultimately, the court found that the applicant was not a fit and proper person to be admitted as a legal practitioner and dismissed the applicant’s application for admission. The applicant approached the high court for leave to appeal, which was similarly dismissed after a single judge considered the application. Lastly, the applicant petitioned this Court. This Court directed the Legal Practice Counsel (LPC) to make representations on the merits of the application. However, the LPC indicated that, considering the circumstances, the application was improperly brought before this Court as the court that considered the appeal only consisted of one judge, thereby rendering the dismissal of the appeal a nullity. The argument followed that this court, accordingly, had no jurisdiction to entertain the appeal. However, the SCA found that it was warranted to exercise its inherent powers under s 173 of the Constitution of the Republic by considering the merits of the application for leave to appeal and, if appropriate, determine the appeal. The Court was of the view that if the matter was remitted to the high court, it would, in all probability, end up before this Court again. This would have amounted to an absurdity and would serve to only waste the Court and the applicant’s resources. Furthermore, upon consideration of the merits, the SCA determined that the applicant failed to make out a proper case for an order granting leave to appeal. Despite the vitriolic attacks against numerous members of the judiciary throughout the country, the applicant maintained that his conduct was not inappropriate. It was found that the applicant was not a fit and proper candidate for the legal profession; his conduct exhibited throughout the application procedure was found to have fallen short of the integrity, dignity, honesty and respect expected from an officer of the court. In the result, the SCA confirmed the order of the high court and dismissed the application for leave to appeal. In a separate dissent, the minority held that the proceedings in the application for leave to appeal was irregular and the consequent order a nullity. As such, the matter ought to have been struck from the role. ~~~~ends~~~~

1917

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 666/10 In the matter between: WAKEFIELDS REAL ESTATE (PTY) LTD Appellant and GAVIN WAYNE ATTREE First Respondent TRACEY ATTREE Second Respondent FIONA ISOBEL HOWARD Third Respondent Neutral citation: Wakefields Real Estate v Attree (666/10) [2011] ZASCA 160 (28 September 2011) Coram: Navsa, Lewis, Ponnan, Mhlantla and Wallis JJA Heard: 12 September 2011 Delivered 28 September 2011 Summary: Whether estate agent who introduces a purchaser to a property, where sale is concluded through another agent, is effective cause of the sale and entitled to commission. _____________________________________________________________ ORDER ______________________________________________________________ On appeal from: KwaZulu-Natal High Court, Durban Nicholson J sitting as court of first instance): The appeal is upheld with costs and the cross appeal is dismissed with costs. Paragraphs (a) and (b) of the order of the high court are set aside and replaced with: ‘The defendants are ordered to pay the plaintiff the sum of R232 560 plus interest at the rate of 15.5 per cent per annum from 11 October 2005 to date of payment, and costs of suit.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ LEWIS JA (NAVSA, PONNAN, MHLANTLA and WALLIS JJA concurring ) [1] The appellant in this matter, Wakefields Real Estate (Pty) Ltd (Wakefields), is an estate agency. The first two respondents, Mr and Mrs Attree, sold their house at 37 Monteith Place (I shall refer to the house as Monteith Place), Durban North, KwaZulu-Natal, to the third party, Mrs F Howard, who was joined at the instance of the Attrees. The dispute between them is whether Wakefields was the effective cause of the sale and thus entitled to commission. The Attrees in fact paid commission to another estate agency, Pam Golding Properties, which in turn shared it with a third agency, Remax Estate Agents. Remax had the sole mandate to sell the house at the time the sale was concluded. [2] The high court (Nicholson J) held that Wakefields had not been given a mandate by the Attrees and also that they had not been the effective cause of the sale. It dismissed Wakefields’ claim. The high court did not, in the circumstances, need to deal with Howard’s position, but it nonetheless ordered that the Attrees pay her costs incurred prior to a rule 37 conference held on 6 November 2009, and that she pay her costs after that date. She cross appeals against the latter costs order. Leave to appeal was granted by this court. [3] It will be immediately apparent that at least three estate agents attempted to find a willing purchaser for the house. In fact there were more. I shall turn to a brief summary of the facts before dealing with the legal principles applicable and the evidence of the parties and the estate agents. [4] In 2001 the Attrees bought Monteith Place through Wakefields, represented by Mr M Craig. Some two years later they acquired a vacant piece of land in Mount Edgcombe, and started building another house there in 2004. A number of estate agents, including Craig, heard that the Attrees were building at Mount Edgcombe and offered to find a purchaser for Monteith Place. At that stage, the Attrees were not sure that they would move to the new house, but did tell agents that they could bring potential purchasers to view Monteith Place. Craig ‘listed’ the house on Wakefields’ books and advertised it at a price of R3 775 000, although Mr Attree had said that he wanted R3 995 000. [5] Craig, when giving evidence, maintained that Wakefields had sent a standard letter to the Attrees confirming that it had a mandate to sell the house. Mr Attree denied ever receiving such a letter and Craig could not produce a copy since Wakefields’ computer systems had ‘crashed’. He did, however, produce a standard letter to this effect, and insisted that he would have sent one to the Attrees. Nothing actually turns on this, for Wakefields pleaded that there was an oral mandate, the express (or implied) terms of which included one that the Attrees pay estate agent’s commission equivalent to the tariff amount plus VAT. The amount payable if that term were proved was agreed by all concerned to be six per cent of the purchase price (less in fact than the tariff amount would have been). [6] From time to time in 2005 Mrs Phoulla Walker, an estate agent employed by Wakefields, took prospective purchasers to view Monteith Place. She did not encounter either of the Attrees on these visits but was let in by a domestic worker and always left a card to show that she had been there. [7] Howard and her husband lived in Morningside, Durban. In January 2005 she attended a show day in a complex, where she encountered Walker, the estate agent showing the property. Howard told Walker that she was not really interested in the type of property on show, but wished to buy something older. Walker made a note of houses to show Howard, and took her to view a number of houses in different areas. Although Howard was keen to remain in Morningside she nonetheless went to see Monteith Place in Durban North in March 2005. In her own words she ‘loved’ the house. However, she told Walker that the price was beyond her reach. Despite that she visited again with her husband and they spent some time there. [8] When Walker phoned Howard after the second visit, on 6 March 2005, Howard told her that she and her husband had decided not to buy a new house. They were under financial pressure and needed to invest money in their garage business. Walker accordingly stopped phoning Howard and showing her houses on the property market. [9] Shortly afterwards, Howard went to the Gateway shopping centre with a friend. Fortuitously they encountered the friend’s aunt, Mrs D de Marigny, an agent employed by Pam Golding Properties. When Howard learned that De Marigny was an estate agent working in the Durban North area, Howard told her that she had seen Monteith Place and had really liked it – the look and the layout – but that it was far too expensive, and she had stopped looking for a while. She asked whether De Marigny knew of any other properties that were similar. De Marigny said that, offhand, she did not. In any event Howard said that she still wished to live in Morningside and De Marigny said that she would put Howard in contact with the Pam Golding agents who worked there. [10] Early in April 2005 the Attrees were advised by Mrs D Hamilton of Remax that they should lower their asking price to R3 495 000. (This was termed ‘price counselling’.) They agreed to do so and gave Remax the sole mandate to find a purchaser, arranging for Monteith Place to be put on show on Sunday 10 April. The sole mandate was effective from 7 April, but the Attrees mistakenly thought that it would commence only the following Monday. Remax advertised the house for sale on Friday 8 April at the lower price. [11] Despite having given a sole mandate to Remax, Attree phoned two other agents, one of whom was De Marigny, on 8 April, and told them that he had agreed to lower the price. De Marigny recalled that Howard had said she really liked Monteith Place and on Saturday 9 April phoned her to tell her that the price had been reduced. Howard agreed to go back to the house with her husband and made arrangements to do so that day. De Marigny prepared an offer to purchase for R3 400 000 and agreed to a reduced commission. She took it to the Attrees who accepted the offer that evening. As indicated, the commission of R150 000 was shared by Remax, which had the sole mandate, and Pam Golding which claimed that it was the effective cause of the sale. [12] The high court found that there was no oral mandate given to Wakefields to find a purchaser for a commission of six per cent. On appeal the Attrees did not persist in the argument that Wakefields had no mandate, accepting that Monteith Place had been listed for sale by them and that they had had dealings with the Attrees and brought potential purchasers to view it. They accepted also that in the absence of agreement as to the quantum of commission the rate would have been six per cent. [13] But the high court found also that De Marigny was the effective cause of the sale – hence the dismissal of Wakefields’ claim. It reached this finding on several bases: that at the time when Walker took the Howards to Monteith Place they could not afford the asking price; that De Marigny did more than Walker to secure the sale; that the Attrees had been persuaded to reduce the price; and that the Howards were no longer under financial pressure in respect of their business. The cumulative effect of these factors, said the judge, outweighed the effect of the initial introduction by Walker. [14] It is notoriously difficult, when there are competing estate agents, to determine who is the effective cause of the sale that eventuates. It may be that more than one agent is entitled to commission. This was put trenchantly by Van den Heever JA in Webranchek v L K Jacobs & Co Ltd 1948 (4) SA 671 (A) at 678 where he said: ‘Situations are conceivable in which it is impossible to distinguish between the efforts of one agent and another in terms of causality or degrees of causation. In such a situation it may well be (it is not necessary to decide the point) that the principal may owe commission to both agents and that he has only himself to blame for his predicament; for he should protect himself against that risk.’ Van den Heever JA continued (at 679): ‘[A] judge who has to try the issue must needs decide the matter by applying the common sense standards and not according to the notions in regard to the operation of causation which “might satisfy the metaphysician” . . . . The distinction between the concepts causa sine qua non and causa causans is not as crisp and clear as the frequent use of these phrases would suggest; they are relative concepts. . . . It stands to reason, therefore, that the cumulative importance of a number of causes attributable to one agent may be such that, although each in itself might have been described as a causa sine qua non, the sum of efforts of that agent may be said to have been the effective cause of the sale.’ [15] Was Walker’s introduction of Howard to Monteith Place in itself the effective cause when the sale was concluded? The high court held not, for the reasons already described. And it found that Walker, De Marigny, Howard, Mr Howard and Mr Attree, all of whom testified, were telling the truth to the best of their ability. In my view, nothing actually turns on the respective witnesses’ credibility. For the facts that are not in dispute are sufficient to determine whether Wakefields were entitled to commission. I should note, however, that the evidence of De Marigny was far from satisfactory and that the Howards, who allegedly indemnified the Attrees against paying commission to any agent other than Pam Golding (an issue that does not arise in this appeal), were not disinterested witnesses. [16] The high court concluded that the Howards dealt with De Marigny ‘because she was the most instrumental in securing the sale’ and the judge ‘was not convinced a sale would have eventuated without the efforts of Mrs de Marigny’. However, the court recognised that she ‘was fortunate in meeting the Howards (sic) by accident’. She came ‘on the scene when the obstacles were capable of removal’. This, and the fact that she took them to see Monteith Place again, tended ‘to offset the notion that the original introduction and visiting of the house was conclusive and dominating’. The judge considered that while Walker’s introduction of Howard to the house was a sine qua non, it was not the causa causans of the sale. [17] The high court relied on Basil Elk Estates (Pty) Ltd v Curzon 1990 (2) SA 1 (T) in concluding that the first introduction by the estate agent had been outweighed by intervening factors. Various personal factors had stopped the prospective purchaser in that case from concluding a sale. But nine months later circumstances had changed and the purchaser bought the property through another estate agent. The court held that the intervening factors were such as to make the initial introduction relatively unimportant. [18] In my view Aida Real Estate Ltd v Lipschitz 1971 (3) SA 871 (W) is more instructive. Although Nicholson J quoted from it extensively, he did not apply the principles cited. In that case an estate agent had introduced a purchaser who ultimately negotiated directly with the seller in concluding a sale. The agent was nonetheless held to be the effective cause of the sale and entitled to commission. Marais J said (at 875E-H) that protracted negotiations about finances are often attendant on transactions brought about by an estate agent. In that case it was the purchaser who had concluded the deal, but it was the estate agent’s ‘wisdom and business acumen’ that brought together the eager seller and the purchaser who was able to overcome financial obstacles. Marais J said that ‘[i]n such a case the agent would be entitled to remuneration, no matter whether he selected the potential purchaser by chance or by foresight. A commission agent is paid by results and not by good intentions or even hard work.’ [19] This matter is little different from Aida. But for Walker’s introduction of the house to Howard, the latter would not have been aware of the existence of the property. It was Walker’s ‘wisdom and business acumen’ that made her take Howard to Monteith Place in Durban North. Howard was not looking in that area at the time, and preferred to buy a house in the area where she and her family then lived. She claimed to have been frustrated that Walker took her to see houses in Durban North that were out of their price range, but she nevertheless did view them. And when Walker took Howard to Monteith Place Howard ‘loved’ the house, and returned with her husband the following day, accompanied by Walker. Howard conceded that she and her husband were very interested in the house but said that, given financial constraints (that later fell away), they could not afford it. Walker gave up trying to negotiate a sale with Howard only when told that she had stopped looking for a house to buy and that she and her husband were going to renovate their existing home. [20] If Howard had herself approached the Attrees, and persuaded them to sell Monteith Place to her at a lower price (that is, assuming there was no intervention at all by De Marigny) Wakefields would undoubtedly have been entitled to commission, as was the agent in Aida. So too, had the Attrees approached Howard directly and offered to sell to her at a lower price, Wakefields would likewise have been entitled to commission: Walker was the effective cause of the sale. [21] De Marigny, on the other hand, learned that Howard was interested in Monteith Place quite fortuitously. She did nothing about it until phoned by Mr Attree who advised that he was asking for less. At that stage it was only five weeks since Howard had seen the house with Walker. The effort that De Marigny put in amounted to no more than making a phone call to Howard, arranging for the Howards to see the house again, drawing up the offer to purchase, persuading the Attrees to lower their price even further and accepting a reduced commission. That may be regarded by some as a hard day’s work: and she was undoubtedly instrumental in concluding the sale. Indeed she was reluctant to admit that Walker’s introduction, and the work of the Remax agent who had persuaded the Attrees to reduce the asking price, had any effect on the sale of Monteith Place. [22] Had Walker not shown the Howards the house first – the initial introduction – Monteith Place would not have been sold to Howard through the agency of Pam Golding. Howard had ‘absolutely loved the house’ and had persuaded her husband to view it with her. He too liked it but was concerned about finances. But for that introduction De Marigny would not have known that the Howards were interested in the property (and that, as I have said, she discovered quite fortuitously). She would not have found a willing and able purchaser before Remax’s show day. She reaped where she had not sown. Despite De Marigny’s later intervention, in my view Walker’s introduction was the effective cause of the sale. [23] Accordingly, Wakefields were entitled to commission at the rate agreed by them to be applicable – six per cent. That the Attrees find themselves liable to pay more than one agent is of their own making. This is the kind of situation described by Van den Heever JA in Webranchek where he said that a seller has ‘only himself to blame for his predicament; for he should protect himself against that risk’ (quoted above). [24] As far as the cross appeal against the costs order is concerned, Howard’s lack of success on the merits means that it must fail. There was no appeal against the order that the Attrees pay her costs before the pre-trial conference on 6 November 2009. And in this regard there was some logic in the reasoning of the high court, which in any event was exercising a discretion. The cross appeal must thus be dismissed and paras (c) and (d) of the high court’s order (that the Attrees pay Howard’s costs incurred prior to 6 November, and that she pay her own costs incurred after that date) must stand. [25] The appeal is upheld with costs and the cross appeal is dismissed with costs. Paragraphs (a) and (b) of the order of the high court are set aside and replaced with: ‘The defendants are ordered to pay the plaintiff the sum of R232 560 plus interest at the rate of 15.5 per cent per annum from 11 October 2005 to date of payment, and costs of suit.’ _____________ C H Lewis Judge of Appeal APPEARANCES: FOR APPELLANT: B L Skinner SC Instructed by Neumann White, Durban Alberts Attorneys, Bloemfontein RESPONDENT: A J Troskie SC Instructed by Larson Falconer Inc, Durban Symington & De Kok, Bloemfontein THIRD PARTY: K C McIntosh Instructed by Berkowitz Cohen Wartski, Durban Matsepes Inc, Bloemfontein.

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY 28 September 2011 STATUS: Immediate Wakefields Real Estate v Attree (666/10) [2011] ZASCA 160 (28 September 2011) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Today the Supreme Court of Appeal upheld an appeal against a decision of the KwaZulu-Natal High Court (Nicholson J) which held that an estate agent, W, who had introduced a purchaser, H, to a house in Durban North, which had subsequently been sold to H, was not entitled to agent’s commission. A different estate agent, D, who fortuitously knew that H was interested in the house, had contacted H when she heard that the seller was willing to reduce the price. D prepared an offer to purchase and persuaded the seller to reduce the price further. The seller accepted H’s offer. The high court held that W had no mandate to sell the house for a commission of six per cent of the price, and that D was the effective cause of the sale and entitled to commission on an agreed basis. On appeal it was not disputed that W did in fact have a mandate to find a purchaser. The SCA set aside the order of the high court, finding that it was actually W who had taken H, and subsequently H’s husband as well, to the house which H had liked, but which she and her husband thought was beyond their means. But for that introduction H would not have known that the house was for sale. W was the effective cause of the sale, and entitled to commission. --------------

3008

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 483/2013 Reportable In the matter between: THE MEC: DEPARTMENT OF POLICE, ROADS AND TRANSPORT, APPELLANT FREE STATE PROVINCIAL GOVERNMENT and TERRA GRAPHICS (PTY) LTD t/a TERRA WORKS FIRST RESPONDENT SSI/TSHEPEGA JOINT VENTURE SECOND RESPONDENT Neutral Citation: MEC v Terra Graphics (483/2013) [2015] ZASCA 116 (10 September 2015). Coram: Navsa, Ponnan, Leach, Saldulker and Zondi JJA Heard: 20 August 2015 Delivered: 10 September 2015 Summary: Sub-contract to provide environmental consultancy services in relation to the Free State Province‟s Road Rehabilitation Programme – work done and services rendered both by principal contractor and by the first respondent, a subcontractor – benefit of work accepted and retained – after effecting partial payment, Province refusing to pay the main contractor the balance – basis for refusing to pay the balance was that the Road Rehabilitation Programme was allegedly not budgeted for and that effecting payment in those circumstances would be in contravention of various statutory provisions – defence held to be fallacious – further defence of lack of privity of contract rejected as diversionary – always contemplated that for the subcontractor to be paid, main contractor had to be paid – first respondent claiming in the alternative that the amount owing to the main contractor be paid and that it in turn be ordered to pay sub-consultant – no resistance to this by main contractor – in circumstances it would be artificial and strained to not order direct payment. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Free State Division of the High Court, Bloemfontein (Matlapeng AJ sitting as court of first instance). The following order is made: 1. Save to the extent set out in paragraph 2 hereof, the appeal is dismissed with costs. 2. The order of the court below is altered by substituting the amount of R1 540 123.54 in paragraph 1 with the amount of R1 436 880.21. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Navsa JA (Ponnan, Leach, Saldulker and Zondi JJA concurring): [1] This case is about a provincial government behaving unconscionably. As will become apparent, in its dealings culminating in the present appeal, the Free State Provincial Government conducted itself without any integrity and failed to be transparent and accountable as enjoined by our Constitution. In short, after the Province had awarded a tender in relation to a road infrastructure programme and concluded a written agreement with the main contractor, the second respondent, to supply engineering services for a total remuneration package of R69 million and sanctioned the appointment of the first respondent as the subcontractor to provide environmental protection services for payment in an amount of R1 593 997.95 and after they had both completed the work and received some payment, the Province refused to pay the balance owing, on the spurious basis that the work had not been budgeted for. Notwithstanding that the Province had received the benefits of the labour of the two contractors, it contended that the failure to budget for the contemplated road works in the year in which the written agreement with the main contractor was concluded and in several budgetary periods thereafter amounted to contraventions of applicable regulatory statutory provisions and it was therefore entitled to refuse to be held to its obligations in terms of the concluded agreements. Ironically, it relied on the principle of legality to avoid honouring agreements that it had authorised. It hardly requires any imagination to consider what members of the public would make of such behaviour. The detailed background and the reasons for the conclusions reached in the first two sentences of this paragraph are set out hereafter. [2] During 2009/2010 the Free State Provincial Government, represented in the present litigation by the appellant, the Member of the Executive Council: Free State Provincial Government: Department of Police, Roads and Transport (the MEC), embarked on a road infrastructure programme, the purpose of which was to promote accessibility, mobility and a safe road infrastructure network in the Province that would be environmentally sensitive and would stimulate socio-economic growth. The programme encompassed 23 roads located throughout the Province. In accordance with its own procurement policy and the applicable regulatory statutory provisions, the Free State Department of Police, Roads and Transport (the Department) called for tenders to be submitted to it for the provision of, amongst others, engineering related services. The second respondent, SSI/Tshepega Joint Venture (SSI), submitted a tender and subsequently, on 19 April 2010, the Department concluded a written agreement in terms of which SSI was to render services as follows: „Assist the Department of Police, Roads and Transport, to manage the implementation of the road repairs and rehabilitation programme for the Free State road network. Your appointment is limited to Road 12 to Road 23 as per the Department‟s priority list. Your appointment will be with immediate effect and for the duration of the contracts.‟ [3] In effect, SSI was the engineering firm that was appointed the project manager for the road repair and rehabilitation programme set out in the agreement referred to above. The total contract value was approximately R69 million.1 Clause 5.1.3 of the agreement reads as follows: „Where the client has required the Consultant to appoint selected consultants as the Consultant‟s sub-consultants, fees owed to those sub-consultants shall be due to the Consultant in addition to the Consultant‟s own fees.‟ I shall refer to that agreement as the main agreement. In this judgment the terms sub- consultant and subcontractor are used interchangeably. [4] The main agreement contemplates the appointment, with the approval of the Province, of sub-consultants. Environmental services are specifically mentioned in the main agreement. When the services of an environmental sub-consultant were required the approval of the Province was obtained and tenders to that end were invited. Terra 1 This appears to be a small part of a much larger initiative that was described by the Minister of Finance in correspondence that formed part of the record as a multi-year R4,2 billion project. Graphics (Pty) Ltd, a company that trades as Terra Works (TW), submitted a bid and subsequently a written agreement with the approval of the Province was concluded between TW and SSI. I shall refer to that agreement as the sub-consultancy agreement. [5] The sub-consultancy agreement was concluded on 22 October 2010. The contract value was R1 593 997.75, excluding VAT and disbursements. Monthly payment terms were stipulated. It is common cause that both SSI and TW performed their obligations in terms of the aforesaid written agreements. TW received two payments from SSI in the amounts of R80 925.94 and R76 191.60 on 30 September 2011 and 12 December 2011, respectively. A total of approximately R13,7 million was paid by the Department to SSI, with the last payment being made on 6 October 2010. [6] After the Province had failed to pay SSI the balance still owing, the latter instituted action in the Free State Division of the High Court, claiming payment of an amount of R44,7 million. That litigation has not yet run to a conclusion. I pause to record that in that litigation the Province‟s defences are substantially the same as in this case. It also unsuccessfully raised an exception to an alternative claim by SSI that was based on unjust enrichment. [7] Since SSI had not been paid, it could not pay TW the balance due to the latter for the work done and services rendered in terms of the sub-consultancy agreement. Consequently, TW applied in the Free State Division of the High Court for an order that the MEC pay an amount of R1 540 123.54 for work done and services rendered. Alternatively, TW sought an order that the MEC be ordered to effect payment of the amount mentioned to SSI, and that it, in turn, be ordered to immediately and by no later than 7 days after receipt thereof, effect payment to TW. In addition, TW sought interest on the amount claimed and costs of suit. [8] In resisting TW‟s application, the MEC admitted that the Province had invited tenders that resulted in the conclusion of the agreements referred to above. The MEC did not dispute that the work had been done and that services had been rendered by SSI and TW in terms of the main and sub-consultancy agreements. In resisting TW‟s application in the court below, the first point taken by the Province was that the application was premature, because the sub-consultancy agreement provided for arbitration in the event of a dispute which TW was bound by and which it had not resorted to. The second point was that the application was ill-fated since TW had failed to comply with the notice provisions of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002. These defences were clearly entirely without substance and were rightly abandoned by the MEC during the hearing in the court below. [9] In relation to the merits of TW‟s claim, first, it was contended on behalf of the MEC that the claim for payment for services rendered lay against SSI and not against the Province. It was submitted that this was so because in terms of both the main and sub-consultancy agreements SSI undertook to pay TW. There was thus no contractual obligation on the part of the Province to make such or any payment to TW. Essentially, the MEC contended that there was no contractual privity between the Province and TW and that TW‟s claim was therefore fatally flawed. Secondly, and astonishingly, TW‟s claim was resisted on the basis that the Province had made no budgetary allocation for the road rehabilitation programme in respect of which the written agreements were concluded. As a consequence, so the Province asserted, it was unable to withdraw the requisite funds from the Provincial Treasury to meet the financial obligations it had undertaken in terms of the agreement with SSI. In this regard reliance was placed by the Province on sections 21(1)(b)(i) and 24(1)(a)(i) of the Public Finance Management Act 1 of 1999 (the PFMA). The following parts of the answering affidavit on behalf of the MEC bear repeating: „As at October 2010, alternatively, as at any date material to the applicant‟s claim, no budgetary allocation had been made by the Free State provincial government in respect of the main agreement or any other agreement related thereto. Likewise, no allocation of any significance was made in respect of the two subsequent financial years. This is conveniently summarized in page 374 of the estimates of provincial expenditure that were tabled in the Free State Provincial Legislature with the Appropriation Bill for 2010/2011, a copy of which is attached hereto and marked “AA2”. Accordingly, the requisite funds to meet the financial commitments contemplated in the main agreement could not lawfully be withdrawn from the Provincial Revenue Fund, as contemplated in section 21(1)(b)(i), read with section 24(1)(a)(i) of the Public Finance Management Act 1, 1999 (“PFMA”).‟ I shall, in due course, examine the veracity of that statement, more particularly in relation to the annexure marked „AA2‟, and I intend to explore the paucity of information supplied on behalf of the MEC in relation to the background leading up to the conclusion of the main and sub-consultancy agreements and events thereafter. I shall, in addition, in due course, record the concessions rightly made before us by counsel representing the Province. [10] Lastly, in what appears to be a repeat of the second substantive defence set out in the preceding paragraph, the MEC resisted TW‟s application on the basis that since the main agreement was tainted by illegality because the statutory prescripts referred to above were not complied with, no legal consequences could flow from it and TW was thus precluded from suing on it. [11] The court below (Matlapeng AJ) considered whether there was any merit to the defence that there was no contractual privity between TW and the Province. He took into account provisions of the main agreement in terms of which SSI was the Province‟s project manager in relation to the road rehabilitation programme, including being responsible for the financial management of the project. The court below noted that payment due to the applicant for sub-consultancy services had to be made by the Province to SSI. Matlapeng AJ considered that it followed that „[TW] had proved that there was privity between itself and the [Free State Provincial Government].‟ [12] Regrettably, the court below was extremely brief in its treatment of the substantive defences recorded in paragraphs 9 and 10 above, namely that because the sub-consultancy agreement was tainted by illegality, TW was precluded from suing on it. The defences were dealt with as follows: „The first respondent attack[ed] the validity of the main agreement on the grounds that because of its failure to comply with the peremptory provisions of section 66 of 68 of Public Finance Management Act, no 1 of 1999 and further that no budgetary allocation had been made by the Free State Provisional Government in respect of the main agreement that such an agreement was void ab initio and could not satisfy a cause of action. This issue is the subject matter of a pending case in this court under case number 393/2012. As a result I find it improper to pre- empt the decision of another court.‟ [13] The court below then, nevertheless, went on to make the following order: „1. The first respondent is ordered to pay an amount of R1 540 123.54 to the applicant representing payment for work done and services rendered by the applicant to the first respondent. 2. Alternatively the first respondent is ordered to effect payment of the amount mentioned in 1 above to the second respondent and that the second respondent is ordered to immediately and by no later than seven days after receipt of the said amount to effect payment to the plaintiff of the said amount. 3. The first respondent is ordered to pay interest on the amount mentioned in 1 above at the rate of 15,5% per annum a tempore morae calculated from the date of issuing this application until the date of first payment. 4. The first respondent is ordered to pay the costs of this application.‟ In truth the court below did not address the defence referred to in paras 9 and 10 above at all. [14] It is against the order and the conclusions referred to in paras 11, 12 and 13 above that the present appeal, with the leave of the court below, is directed. [15] At the outset it is necessary to note that the answering affidavit on behalf of the MEC was deliberately vague and evasive. No attempt was made to explain how the Provincial Government could have concluded the written agreement with SSI without having budgeted for the roads programme. Indeed, not even a cursory attempt was made to explain how the road rehabilitation programme came into being and what steps the Provincial Government had taken to fund it. Much more disturbingly, annexure „AA2‟, referred to above, was employed by the Provincial Government in a manner that was disingenuous. Annexure „AA2‟ does not support the statement made in the answering affidavit that no budgetary allocation had been made by the Free State Provincial Government in respect of the roads that form the subject matter of the agreement with SSI. Indeed, it demonstrates the opposite. Careful scrutiny of annexure „AA2‟, which on the Province‟s own version of events was an annexure to an Appropriation Bill for the 2010/2011 financial year, reveals that specific amounts for three consecutive financial periods, commencing in 2010, were appropriated by the Province for all the roads that form the subject matter of the written agreement with SSI. The roads in question comprising a total length of 370.8km, are set out in Appendix 4 of the agreement with SSI, and are as follows: Rouxville – Zastron; Zastron –Wepener; Deneysville – Oranjeville; Oranjeville – Frankfort; Vredefort – Parys; Bultfontein – Wesselsbron; Bothaville – Leeudoringstad; Hobhouse – Ladybrand; Ladybrand – Clocolan; Kroonstad – Vredefort; and Harrismith – Oliviershoek. Each of these roads appears in Annexure „AA2‟. This fact was studiously and glaringly omitted by the Province. Moreover, the Province did not, in its answering affidavit, reveal the following very important information, namely, that the Free State Provincial Government subsequently passed an Appropriation Act 3 of 2010. Item 6 of the Schedule to the Appropriation Act in respect of Police, Roads and Transport reflects that a globular amount of approximately R1,078 billion was appropriated in respect of road infrastructure in the Province. When presented with the Appropriation Act, counsel on behalf of the Province rightly conceded that he could not persist in the Province‟s defence of a failure to appropriate monies in respect of the expenditure contemplated in the main written agreement or sub-consultancy agreement. This concession was compelled not only because counsel was faced with the Appropriation Act but also because of what is set out in the following five paragraphs. [16] In its founding affidavit, TW referred to minutes of a meeting held on 13 October 2010 which was attended by officials of the MEC‟s Department as well as representatives of SSI and TW. These minutes are important. Under the heading „Project Management Contractual Issues‟, the following, inter alia, is recorded: „3.1. Contract documents The signing of the contract documents remains an issue to be resolved (Thirteen of the 23 contracts have been concluded – signed by Dept. PR&T HOD).2 . . . 3.1.6 Taking note of the DG‟s undertaking that the contractual and budgetary matters will be resolved by the end of Oct. „10, Mr Redman expressed his concern that would be impractical to respond and implement any feedback received from the DG/PR&T before then.‟ Under the heading „Compliance Issues‟, the minutes reflect the following: „5.1. Environmental and Health & Safety Auditors 5.1.1. Mr Redman reported that, on instruction of the Dept. PR&T, tenders were obtained from a number of consultants for the above two auditing functions. The tender processes were in-line with PFMA regulations, in that: Invitations to tender were issued publicly. The tenders were evaluated fairly and the process contained in comprehensive evaluation reports. Formal letters of appointment were issued. It was confirmed that the auditors do not operate in regions where they may be doing relevant work for the contractors.‟ 3 Under the sub-heading „Resolutions‟, the following appears: „5.3.1. Mr Redman is to submit a summary of the appointment values of the auditing teams to Ms Mentz, as well as a motivation to extend the appointment scope of SSI/Tshepega.‟ 2 By this time the written agreement between SSI and the Province had already been concluded. 3 This relates to the tender that was ultimately awarded to TW in respect of which an agreement was concluded with SSI. [17] It is clear from what is set out in the preceding paragraph that, at the very least, both written agreements that are at the centre of this litigation were approved by the Department. The minutes show that budgetary concerns were being addressed by officials of the Province. That fact and the other facts dealt with in the immediately preceding paragraphs, lend a lie to the highly improbable and clearly contrived explanation by the Province that the work had not been budgeted for. [18] At this stage it is necessary to deal with yet a further disturbing aspect of the Province‟s case. It will be recalled that in resisting TW‟s claim the MEC relied on the Province‟s failure to comply with the provisions of s 21(1)(b)(i), read with s 24(1)(a)(i) of the PFMA. Section 21(1)(b)(i) of the PFMA provides: „(1) The provincial treasury of a province is in charge of that province‟s Provincial Revenue Fund and must enforce compliance with the provisions of section 226 of the Constitution, namely that – . . . (b) no money may be withdrawn from the Fund except – (i) in terms of an appropriation by a provincial Act; or (ii) as a direct charge against the Fund when it is provided for in the Constitution or a provincial Act.‟ The relevant part of s 226 of the Constitution read as follows: „(1) There is a Provincial Revenue Fund for each province into which all money received by the provincial government must be paid, except money reasonably excluded by an Act of Parliament. (2) Money may be withdrawn from a Provincial Revenue Fund only – (a) in terms of an appropriation by a provincial Act; or (b) as a direct charge against the Provincial Revenue Fund, when it is provided for in the Constitution or a provincial Act.‟ Section 24(1)(a)(i) of the PFMA provides: „(1) Only a provincial treasury may withdraw money from a Provincial Revenue Fund, and may do so only – (a) to provide funds that have been authorised – in terms of an appropriation by a provincial Act; or . . .‟ The disturbing aspect flows from the following, stated by the principal deponent on the MEC‟s behalf: „The financial commitments purported to have been made in the appointment of the contractors of the 23 projects and the second respondent thus fell within the purview of the definition of “irregular expenditure” in section 1 of the PFMA.‟ „Irregular expenditure‟ is defined in s 1 of the PFMA, as follows: „“irregular expenditure” means expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including – (a) this Act; or (b) the State Tender Board Act, 1968 (Act 86 of 1968), or any regulations made in terms of that Act; or (c) any provincial legislation providing for procurement procedures in that provincial government.‟ Section 81 of the PFMA renders an accounting officer for a department liable to disciplinary proceedings for wilfully or negligently making or permitting irregular expenditure. Section 86, which deals with offences and penalties in relation to the PFMA, makes an accounting officer guilty of an offence, liable to a fine or imprisonment for a period not exceeding 5 years, if that accounting officer willfully or in a grossly negligent way fails to comply with the provision of sections 38, 39 and 40. Section 38 sets out, in general terms, the duties of an accounting officer for a department which include ensuring that there is an effective, efficient and transparent system for financial and risk management and internal control. Section 39 obliges an accounting officer for a department to ensure that expenditure is in accordance with the vote of the department and to take appropriate and effective steps to prevent unauthorised expenditure. [19] On the MEC‟s asserted version of events, namely, that such payments as had been made to SSI (which amount to approximately R14 million) were irregular payments, one would have expected that the persons responsible for those payments would have been subject to disciplinary action and that criminal charges would have been brought. That does not appear to have been done. In any event, as demonstrated above, the main and sub-consultancy agreements were approved and the Province‟s own documentation prove that it had in fact appropriated funds for the repair and rehabilitation of the relevant roads. In its replying affidavit, TW attached a letter dated 5 October 2012 from the then Minister of Finance, Minister Gordhan, to a Member of Parliament which addresses concerns about the validity of agreements concluded by the Province with construction companies in relation to the Oliviershoek-Harrismith road project. The existence and contents of the letter were never contested. That letter, dealing with the failure of the department to comply with the PFMA, the Borrowing Powers of Provincial Governments Act 48 of 1996, as well as with the Preferential Procurement Policy Framework Act 5 of 2000, explained that the Provincial Government in consultation with National Treasury would continue engaging with the Department and the subcontracted companies involved to find a mutually agreeable compromise on fair value amounts in relation to work done by those construction entities. We are not called upon to deal with the validity of agreements in relation to construction companies or with all the provisions of the statutes referred to. However, it does appear that the Free State Provincial Government behaved irresponsibly in certain instances, including the transactions in question, without due regard to the rights and hardships faced by those with whom it had concluded written agreements on behalf of its citizens and that in the face of National Treasury‟s asserted willingness to assist the Province to meet its obligations towards the subcontracted companies and others with whom written agreements had been concluded. It appears that in relation to SSI and TW the urgings of the then National Minister of Finance were ignored. [20] If in fact, the funds appropriated in terms of the Appropriation Act, referred to above, were insufficient to meet the totality of the Province‟s obligations in relation to its Roads Infrastructure Programme and it was therefore unable to pay SSI, it does not mean that it would be free to simply avoid its contractual obligations. The outstanding commitment would then fall to be treated as unauthorised expenditure in terms of the PFMA and not irregular expenditure as initially contended for on behalf of the Province. In s 1 „unauthorised expenditure‟ is defined, inter alia, as overspending of a vote or a main division within a vote.4 Section 34, which deals with unauthorised expenditure, provides: „(1) Unauthorised expenditure does not become a charge against a Revenue Fund except when – (a) the expenditure is an overspending of a vote and Parliament or a provincial legislature, as may be appropriate, approves, as a direct charge against the relevant Revenue Fund, an additional amount for that vote which covers the overspending ; or (b) the expenditure is unauthorised for another reason and Parliament or a provincial legislature, as may be appropriate, authorises the expenditure as a direct charge against the relevant Revenue Fund. (2) If Parliament or a provincial legislature does not approve in terms of subsection 1(a) an additional amount for the amount of any overspending, that amount becomes a charge against the funds allocated for the next or future financial years under the relevant vote.‟ Section 34(2) has the effect that the Provincial Treasury would, ex lege, become liable to meet the Province‟s contractual obligation in terms of the main agreement. That obligation would be met as a first charge upon the Treasury in the subsequent financial cycle. Simply put, there is no statutory impediment preventing payment to SSI and, in turn, TW. On the contrary, there is a legal obligation to pay, even if it meant a delay that extended into the next financial cycle. In the present case a number of financial cycles have passed. It is important to bear in mind that inability to pay was never the MEC‟s case, nor was it contended that there had been over-expenditure. [21] It is important that governmental institutions respect the rights of those with whom it transacts. Government should be a scrupulous role model. In this regard the following part of a dictum of the Constitutional Court in Mohamed & another v President of the Republic of South Africa & others (Society for the Abolition of the Death Penalty in South Africa & another intervening) [2001] ZACC 18; 2001 (3) SA 893 (CC) is apposite (para 68): 4 Section 1 (b) of the PFMA. „South Africa is a young democracy still finding its way to full compliance with the values and ideals enshrined in the Constitution. It is therefore important that the State lead by example. This principle cannot be put better than in the celebrated words of Justice Brandeis in Olmstead et al v United States: “In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously . . . . Government is the potent, omnipresent teacher. For good or for ill, it teaches the whole people by its example . . . . If the government becomes a lawbreaker, it breeds contempt for the law; it invites every man to become a law unto himself; it invites anarchy.” The warning was given in a distant era but remains as cogent as ever. Indeed, for us in this country, it has a particular relevance: we saw in the past what happens when the State bends the law to its own ends . . . . The legitimacy of the constitutional order is undermined rather than reinforced when the State acts unlawfully.‟(footnotes omitted) In the present case, the stance adopted by the Province was that it had acted contrary to statutory prescripts, more particularly, that it had failed to appropriate funds. As demonstrated above and as accepted by the Province that was not the case. The Province failed to take any subsequent remedial steps and it completely ignored the hardships it had caused for those with whom it had contracted. Worse still, it accepted and retained the advantages it gained through the work done and services rendered by those contractors and steadfastly refused to take any steps to ensure that they received the compensation that was their due. This position was adopted notwithstanding the exhortation by the then National Minister of Finance to resolve the impasse. [22] Having made the concession referred to in para 15, counsel on behalf of the MEC maintained that he remained entitled to rely on the lack of contractual privity between TW and the Province. In my view, that defence is diversionary and unhelpful. It is necessary to have regard to the relevant parts of the main and sub-consultancy agreements in the present case. The following are the relevant clauses in the sub- consultancy agreement: „2. The following documents shall be deemed to form and be read and construed as part of this Sub-Consultancy Agreement: 1. The Conditions 2. The Appended Clauses of the Main Agreement 3. Schedules 1 to 4. 3. In consideration of the payments to be made by the Consultant to the Sub-Consultant; as hereinafter mentioned, the Sub-Consultant agrees to perform the Sub-Consultant‟s Services in conformity with the provisions of the Sub-Consultancy Agreement. 4. The Consultant hereby agrees to pay the Sub-Consultant, in consideration of the performance of the Sub-Consultant‟s Services, such amounts as become payable under the provisions of the Sub-Consultancy Agreement, within seven days after received money from the Department, at the times and in the manner prescribed by the Sub-Consultancy Agreement. 5. The Sub-Consultant is appointed on instruction of the client, The Department of Police, Roads and Transport. (hereinafter called “the Client”). 6. The same payment conditions between the Client and the Consultant apply between the Client and the Sub Consultant.‟ In the present instance, TW performed work for the benefit of the Department, for which it invoiced SSI, which, in turn, invoiced the Department for the same amount, in respect of the same work. It is perhaps necessary to reiterate, that the Province knew that environmental services could only be provided by a sub-consultant. It approved the appointment of that particular sub-consultant. In terms of clause 5.1.3 of the main agreement, the Province had undertaken to SSI to pay the subconsultant‟s fees in addition to its (SSI‟s) own fees. It received the benefit of the services of TW. It is also not without significance that the MEC represents a government department, which in terms of constitutional prescripts, is required to be accountable. SSI has been joined in these proceedings, which it has chosen not to oppose. All interested parties were therefore before this court. The MEC has failed to raise any justification for its failure to pay TW through the conduit of SSI. The court below ordered the MEC to effect payment of the sum of R 1 540 123.54 to TW (paragraph 1 of its order). And, in paragraph 2 (albeit wrongly couched as an alternative to paragraph 1) it ordered that such payment be effected via SSI. There is therefore no reason in principle to interfere with those orders of the high court. [23] It is necessary to deal briefly with the manner in which the litigation leading up to and including this appeal was conducted. The present appeal was postponed on a prior occasion to enable the parties to arrive at a settlement which, I must repeat, was the outcome recommended by the National Minister of Finance nearly three years ago (see para 19 above). No such settlement was reached. In addition, as stated earlier, the answering affidavits were vague and evasive. And, right up until the hearing, the MEC was firm in his stance that the financial commitments under the sub-consultancy agreement firstly, constituted „irregular expenditure‟ in terms of the PFMA (as noted at para 18 above), and secondly, were in contravention of s 66(2) of the PFMA, in that certain prescribed formalities regulating „future financial commitments‟ had not been complied with. However, at the hearing, upon being pressed to justify these conclusions based on the facts before the court, and to explain how this state of affairs had arisen and what steps the Province was taking to hold those responsible to account, counsel for the MEC accepted the court‟s offer to take further instructions from his client, and following this abandoned both arguments. Having finally arrived at the end of this protracted process, it is likely that the cost of the litigation in the court below and before us probably approximates the total amount claimed by TW. The litigation was a waste of public money. It should never have occurred. [24] Finally, there is one brief aspect that requires to be addressed. As stated earlier, in the founding affidavit, it appears that the total remuneration for the sub-consultancy services, was R1 593 997.75. It also appears that TW received two payments, namely, R80 925.94 and R76 191.60. If the latter two amounts are deducted from the amount of R1 593 997.75, a total amount of R1 436 880.21 is due. This is less than the amount claimed in the court below and provided for in that court‟s order. Counsel on behalf of TW accepted that, if we were inclined to dismiss the appeal the order of the high court should be amended to allow for the payments hitherto received by his client, but not considered by the court below. I stress that this point was raised by this court mero motu. The order of the court below will therefore be altered accordingly. [25] Following on the conclusions set out above, the following order is made: 1. Save to the extent set out in paragraph 2 hereof, the appeal is dismissed with costs. 2. The order of the court below is altered by substituting the amount of R1 540 123.54 in paragraph 1 with the amount of R1 436 880.21. _____________________ M S Navsa Judge of Appeal APPEARANCES: FOR APPELLANT: L T Sibeko SC (with him V September) Instructed by: State Attorney, Bloemfontein. FOR FIRST RESPONDENT: S Grobler Instructed by: Peyper Sesele Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 10 September 2015 STATUS Immediate MEC v Terra Graphics (483/2013) [2015] ZASCA 116 (10 September 2015). Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Today the Supreme Court of Appeal (SCA) delivered a judgment dismissing the appeal by the MEC: Department of Police, Roads and Transport, Free State Provincial Government against an order by the Free State Division of the High Court, Bloemfontein, in terms of which it was ordered to pay an amount of R1 540 123.54 to the first respondent, Terra Graphics (Pty) Ltd t/a Terra Works, employed as an environmental subcontractor by a main contractor, the second respondent, SSI/Tshepega Joint Venture in furtherance of the Road Rehabilitation Programme of the Free State Provincial Government. In short, after the Province had awarded a tender in relation to a road infrastructure programme and concluded a written agreement with the main contractor, the second respondent, to supply engineering services for a total remuneration package of R69 million and sanctioned the appointment of the first respondent as the subcontractor to provide environmental protection services for payment in an amount of R1 593 997.95 and after they had both completed the work and received some payment, the Province refused to pay the balance owing, on the spurious basis that the work had not been budgeted for. Notwithstanding that the Province had received the benefits of the labour of the two contractors, it contended that the failure to budget for the contemplated road works in the year in which the written agreement with the main contractor was concluded and in several budgetary periods thereafter amounted to contraventions of applicable regulatory statutory provisions and it was therefore entitled to refuse to be held to its obligations in terms of the concluded agreements. Ironically, it relied on the principle of legality to avoid honouring agreements that it had approved and benefitted from. The court held that the documentation provided by the Province demonstrated that the Road Infrastructure Programme had indeed been budgeted for and that an Appropriation Act had in fact been passed by the Provincial Government and an amount of approximately R1,078 billion had been appropriated in respect of road infrastructure in the Province. Minutes of meeting also showed that budgetary concerns were being addressed by provincial officials. The court said the following about the aforesaid documents and the Appropriation Act: ‘[They] lend a lie to the highly improbable and clearly contrived explanation by the Province that the work had not been budgeted for.’ The court found it disturbing that on the version of the MEC the amounts already paid to the main contractor and the subcontractor would have constituted irregular expenditure in respect of which disciplinary steps ought to have been taken. There was no indication that that had occurred. At best for the Province, in the event that the budgeted amount was insufficient to pay the remainder of the amounts contractually due to the main contractor, the outstanding commitment would constitute unauthorised expenditure in terms of the Public Finance Management Act 1 of 1999 and would ex lege have constituted a first charge on the Provincial Treasury in the next financial cycle. The court rejected the Province’s contention that it was not obliged to pay the first respondent because there was no contractual privity between them. It was submitted by the Province that the first respondent should look to the main contractor (the second respondent) for payment, notwithstanding that the Province had failed to pay the main contractor. The court had regard to contractual provisions from which it was evident that the Province knew that environmental services could only be provided by a subcontractor, of which it had approved. Furthermore, the Province had undertaken to pay the main contractor whatever was due to the subcontractor. The court held that all the affected parties had been joined, and the MEC had failed to raise any justification for its failure to pay the first respondent through the second respondent. The Province had also failed to heed the call by the then Minister of Finance to ensure that contractors it had employed were compensated. In dismissing the appeal with costs the court stated that in relation to the transactions in question the provincial government had behaved unconscionably, without any integrity and had failed to be transparent and accountable as enjoined by our Constitution. The court emphasised that government should be a scrupulous role model. In the judgment the court stated that it hardly required any imagination to consider what members of the public would make of the manner in which it treated the two respondents. The also criticised the MEC for persisting in the appeal. It described the ongoing litigation as a waste of public money.

1442

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No 510/10 In the matter between: THOKOZANE PHILANE SINDANE APPELLANT and THE STATE RESPONDENT Neutral citation: Sindane v The State (510/10) [2010] ZASCA 157 (1 December 2010) Coram: PONNAN, MHLANTLA et TSHIQI JJA Heard: 22 November 2010 Delivered: 1 December 2010 Summary: Rape ─ appeal against conviction ─ assessment of evidence totality of evidence to be considered ─ whether all elements of offence proved. ___________________________________________________________ ORDER _____________________________________________________________________ On appeal from: KwaZulu-Natal High Court (Pietermaritzburg) (K Pillay and Van Zyl JJ sitting as court of appeal): The appeal against conviction is dismissed. JUDGMENT _____________________________________________________________________ MHLANTLA JA (PONNAN JA and TSHIQI JA concurring): [1] Does ‘rape’ mean rape is evidently what we are called upon to decide in this case? The suggestion on behalf of the appellant being that when the complainant repeatedly used that word during the course of her evidence she had no real appreciation of its meaning or import. That question arises against the following backdrop. [2] The appellant, Thokazane Sindane, an educator, was charged in the Regional Court, Pietermaritzburg with rape involving his 19 year old domestic worker. The charge against him was based upon an occurrence at his home on Sunday, 24 July 2005. On 17 April 2007, the appellant was convicted of rape and sentenced to ten years' imprisonment. An appeal against his conviction was dismissed by the KwaZulu-Natal High Court (Pietermaritzburg), (K Pillay J, Van Zyl J concurring). His appeal is before us with the leave of that court. [3] The complainant testified that on the day in question, she had gone to church and on her return, found no-one at home. The appellant arrived and let her in. She prepared food for him and thereafter carried on with her other household duties. She was busy ironing when the appellant approached her. He reminded her that in the past he had told her that he loved her and reiterated those feelings for her. She ignored him and carried on with her work. [4] She testified that the appellant then started fondling her but she pushed his hands away. He grabbed her from behind and threw her onto the bed. He lifted her skirt, pulled her panty aside and raped her. She cried and protested but no one heard her because the television set had been switched on and the volume was high. [5] After the incident, the complainant left the house. She attempted to call her mother in order to report the incident but could not get through to her. She waited for the appellant's wife and on her return made a report to her about having been raped by the appellant. The appellant was confronted by his wife about the allegation. Mrs Sindane berated him. She was upset and broke down crying, which attracted the attention of their neighbours. [6] The complainant testified that she had never had sex before and that she was a virgin when the appellant raped her. She was taken to a doctor for treatment by Mrs Sindane, who by that stage was hysterical, and two of her neighbours. She was advised by them to lie to the doctor about the true identity of her rapists. The advice having been that if she had told the doctor that the perpetrators were unknown she would qualify for anti-retroviral treatment. According to the complainant, Mrs Sindane thereafter convened a meeting with her (Mrs Sindane’s) relatives to discuss what course to follow. She and certain other relatives later accompanied the complainant to her mother where they reported the incident. [7] During cross-examination she admitted that the appellant had stated that he wanted sex and was adamant that the appellant had raped her. She denied that she had falsely implicated him to secure financial assistance for herself in the event that she fell pregnant. [8] The complainant was thereafter examined by a district surgeon, Dr Abdul Akoo, two days later. Dr Akoo testified that the gynaecological examination of the complainant was quite difficult because she was very anxious. She would not allow him to insert his fingers into her vagina because it was very sore and tender. He recorded in the J88 form that her vagina was very tender, there was a slight vaginal discharge and her hymen had a bruise. Dr Akoo concluded that he could not exclude forced penetration, albeit that he was not 100 per cent certain. During cross- examination he stated that if any forced vaginal penetration had occurred, then the injuries sustained by the complainant would be consistent with those sustained by a virgin 48 hours prior to his examination of her. According to him, the tissue in her vaginal area, which has a good supply of blood, heals quite fast. That, so he testified, may explain the absence of tears 48 hours later. [9] The appellant denied any involvement in the commission of the offence. He testified that he had found the complainant outside the house crying. She did not tell him what was troubling her despite his repeated enquiries. He informed his wife, when she returned from church, about the complainant's distraught state. The former went to speak to the complainant and thereafter told him that the complainant had reported to her that she had been raped by unknown boys. His wife subsequently took the complainant to the doctor. When they returned, his wife confronted him with the allegation that he had raped the complainant. He denied the allegation contending that the complainant had falsely implicated him as she knew that he would be able to cover her medical expenses if she became pregnant. He testified that he then decided to ‘stay away from this matter and to involve [himself] not in this matter’. [10] The trial court cautioned itself that the complainant was a single witness and was mindful of the approach to be adopted when evaluating her evidence. The court accepted the complainant's testimony and concluded that she had no reason to falsely implicate the appellant. It rejected the appellant's version because it was 'so unlikely that it just cannot be true'. The trial court accordingly convicted the appellant as charged. [11] The appellant appealed to the high court. In that court, various arguments were advanced on his behalf, on appeal, but the question of whether the complainant understood the full import of the word 'rape' when she used it in her evidence was never raised. The court below held that the magistrate had properly evaluated the evidence and that there was no basis for interfering with its finding. It thus dismissed the appeal. [12] This issue was raised for the first time in the high court during the application for leave to appeal to this court. The high court appeared to have been persuaded that it had some merit and accordingly granted leave to appeal to this court. [13] The common law crime of rape is defined as the unlawful and intentional sexual intercourse by a male person with a female without her consent.1 The slightest penetration is sufficient. Before us, the thrust of the argument on behalf of the appellant was that the complainant did not quite comprehend what the word 'rape' meant especially since she had never had sexual intercourse before the incident. Counsel contended that it was incumbent upon the State to have adduced evidence to prove that she fully comprehended what the word meant. Absent such elaboration, so the contention went, an essential element of the offence, namely penetration, had not been proved. [14] That submission cannot prevail. It is necessary to refer to the evidence in this regard. The record discloses the following twelve references to the word 'rape' during the complainant's testimony: 'Prosecutor: How do you know him? Complainant: I know him because he is the one who raped me. I was employed by him. . . . Q: Yes? A: The accused grabbed me from behind because I was facing the bed and he pushed me onto the bed. He then raped me. . . . Q: With your clothes on? A: As a matter of fact I was dressed in a skirt and panties, a long skirt which eventually got torn during the struggle between myself and him. He then pulled the panty to the side, he then raped me. . . . Two of the neighbours came and they enquired what had happened and the accused's wife then explained that her husband, one Thokozane, had raped me. 1 C R Snyman Criminal Law 4 ed (2002) p 445. . . . Q: What did you tell the doctor then? A: I said to the doctor that I had been raped coming from church by unknown males. . . . Q: You were a virgin when the accused raped you? A: Yes.' [15] During cross-examination, the appellant’s counsel used the word ‘rape’ repeatedly. The complainant under cross examination was adamant that the appellant had raped her. She replied as follows to questions put to her: 'Q: But on the day in question he reminded you that he wants sex, is it? A: Yes, that is what he said. . . . Q: Before you arrived at accused home, after the church, had you been raped by any boys? A: No . . . Q: Why did you agree to say that you had been raped by unknown persons? A: I agreed because I did not want any serious infection. . . . Q: Then how did he rape you with his pants on. A: I do not know when he took off his pants but when he grabbed me he had his pants on. . . . Q: Accused denies that he ever raped you. A: He did rape me. . . . Q: Accused also puts it to you that you mentioned him as the person who raped you for convenience so that you can be treated in case you have contracted a disease? A: I was raped by him. . . . Q: Accused says what you told the doctor about the person who raped you was correct. A: I was raped by him and he was intoxicated on the day in question.' [16] A perusal of the record clearly shows that the complainant, who was 21 years old when she testified, repeatedly stated that she was raped. There is nothing on the record to suggest that she did not understand what the word ‘rape’ meant. The issue of penetration or what she understood by the word rape was never canvassed during her evidence. There is not a shred of evidence that suggests that the complainant did not appreciate or understand the import of the word when she used it. In my view, on the totality of the evidence, there can be no doubt that she fully comprehended what rape entailed. By the end of her evidence it became common cause that she had been raped. The only issue before the trial court was the identity of the perpetrator. The appellant’s defence in the trial court, consistent with what the doctor had been informed on the evening of the incident, was that some unknown males were the perpetrators. [17] Moreover, as an educator the appellant was not an unsophisticated person. If indeed the contact between him and the appellant had fallen short of penetration one would have expected him to have raised that in his defence. I accept that there is no onus on him, however one would have expected a person of his standing to take issue with the allegation and dispute that penetration had taken place. He instead chose initially to become aloof and at a very late stage, after he had already had two bites at the cherry this technical defence was opportunistically raised on his behalf. [18] To all of that must be added the conduct of the appellant's wife. She became very upset when she heard the allegations. She scolded the appellant. She cried and broke down. She made a noise which attracted the attention of her two neighbours. She ensured that the complainant was taken to a doctor. She even reported the matter to her relatives. It is clear that the appellant’s wife was left in no doubt that something untoward had happened in the house. [19] Counsel for the appellant contended that the medical evidence was neutral. There is no merit in that submission. It is prudent to consider the J88 form in greater detail. Dr Akoo noted that the hymen was bruised and that the vagina was very tender and sore and there was a vaginal discharge. It is common cause that the complainant had not been sexually active prior to the incident. Those observations are all consistent with some kind of trauma to the complainant’s vaginal area. It follows that the medical evidence, far from being neutral, in fact corroborated the complainant's evidence that a sexual assault had occurred. There is nothing to gainsay her evidence that the trauma was caused by the rape. [20] In those circumstances, I am satisfied that the State proved all of the elements of the offence and established the guilt of the appellant beyond reasonable doubt. The appellant's version was correctly rejected as not being reasonably possibly true. There is therefore no basis to disturb the trial court's finding of guilt. [21] For these reasons the appeal against conviction is dismissed. _______________ N Z MHLANTLA JUDGE OF APPEAL APPEARANCES: APPELLANT: L Barnard Instructed by Ngubane Wills Inc Pietermaritzburg; Naude Attorneys, Bloemfontein RESPONDENT: R Blumrick The Director of Public Prosecutions, Pietermaritzburg; The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 December 2010 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Sindane v The State (510/10) [2010] ZASCA (1 December 2010) Media Statement Today the Supreme Court of Appeal (SCA) dismissed an appeal by Mr T P Sindane (the appellant) an educator, against his conviction by the KwaZulu-Natal High Court (Pietermaritzburg) on a charge of rape, involving his 19 year old domestic worker. In argument before this court, it was contended on behalf of the appellant, that the complainant did not comprehend the meaning or import of the word 'rape' when she used it in her evidence especially since she had never had sexual intercourse before the incident. The SCA rejected this argument. First, the issue of penetration or what the complainant understood by the word rape was never canvassed during her evidence. Second, after a close inspection of the record and on the totality of the evidence, this court could find no indication to suggest that she did not fully understand what the term 'rape' encompassed. This court held that the complainant fully comprehended what rape entailed. Third, accepting the fact that the appellant did not bear an onus, one would have expected him to put in dispute that penetration had taken place. Furthermore, the medical evidence corroborated the complainant’s evidence that a sexual assault had occurred. The SCA held that the State had proved all the elements of the offence and accordingly dismissed the appeal. --- ends ---

25

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 493/2016 In the matter between: NIEKARA HARRIELALL APPELLANT and UNIVERSITY OF KWAZULU-NATAL RESPONDENT Neutral citation: Harrielall v University of KwaZulu-Natal (493/2016) [2017] ZASCA 25 (27 March 2017) Coram: Cachalia and Swain JJA, and Molemela, Gorven and Mbatha AJJA Heard: 16 February 2017 Delivered: 27 March 2017 Summary: Promotion of Administrative Justice Act 3 of 2000 : refusal of application for admission to course of study leading to MBChB degree : application for review of decision : new challenge on appeal : not raised in founding affidavit : appeal dismissed. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Moodley J sitting as court of first instance): The appeal is dismissed with costs. ______________________________________________________________ JUDGMENT ______________________________________________________________ Swain JA and Mbatha AJA (Cachalia JA and Gorven AJA concurring) [1] The appellant, Ms Niekara Harrielall, aspires to be a medical doctor and in pursuit of this objective unsuccessfully applied to the respondent, the University of KwaZulu-Natal for admission to study for an MBChB degree in 2015. Undaunted by this rejection the appellant registered and pursued a course of study for the degree of Bachelor of Medical Science (Anatomy), with the respondent during 2015. She did so in order to enhance her prospects for admission to the MBChB degree in 2016, within the category described as „Mature Students‟ forming part of the respondent‟s admissions policy. [2] Regrettably the appellant's application as a „mature student‟ for the 2016 academic year was also unsuccessful. Aggrieved at the outcome the appellant launched an application before the KwaZulu-Natal Division of the High Court, Pietermaritzburg (Moodley J) seeking orders reviewing and setting aside the decision of the respondent on the grounds that it had failed to consider, alternatively apply, its own admissions policy in refusing the appellant's application. In further alternative relief, the appellant sought an order reviewing and setting aside the refusal of her application to be admitted to the first-year of study for the MBChB degree for the 2016 academic year. [3] The court a quo dismissed the application with costs, concluding that the appellant had failed to discharge the onus of proving that the respondent had not considered her application properly, alternatively had acted capriciously and arbitrarily in deviating from its admissions policy in refusing to admit the appellant to the 2016 academic year, for the MBChB degree. [4] Section 37(3) of the Higher Education Act 101 of 1997 provides that: „The admission policy of a public higher education institution must provide appropriate measures for the redress of past inequalities . . .‟ This requirement is reflected in the admissions policy of the respondent contained in a document described as „Undergraduate Selection Process‟. The „mature student‟ category is described as follows: „3. MATURE STUDENTS Mature students will comprise 20% (40 students) of the class. Mature students are categorized as follows: a. Candidates who have completed the Matriculation/Grade 12 examination and exceeding the minimum standards for entry into the MBChB programme as defined above; and have done a year or more of a degree course at a recognised university in South Africa; and achieved outstanding results (Open). Twenty five percent (10 students) will be from this open competitive category. b. BSc and BMedSc access programmes (reflecting Quintile 1 and 2 students) - racial groups do not apply for the selection of Quintile 1 and 2 students (BSc/BMedSc Access). Fifty percent of the mature students (20 students) will be from the BSc and BMedSc access programmes (reflecting Quintile 1 and 2 students). c. Twenty-five percent (10 students) will be from BSc/BMedSc graduates from Health Science related degrees, (Health Sciences Open).‟ [5] The complaint raised by the appellant in her founding affidavit was that the respondent in awarding places within the „mature student‟ category, had only considered for selection students who had completed their degrees. As a result it was alleged that the appellant‟s application had not been considered by the respondent. It was on this basis that the appellant alleged that the respondent's failure to consider her application, alternatively apply its own admissions policy, contravened the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). [6] In the appellant's heads of argument before this Court the challenge to the respondent‟s decision was however no longer based upon a failure of the respondent to consider her application at all, but rather a failure of the respondent to properly differentiate between the three categories which comprise „mature students‟. The argument advanced was that the appellant should only have competed against applicants that fell within category 3a, which the appellant described as „degree incomplete students‟ and not against „degree complete students‟. It was alleged that „the respondent on its own version ignored these categories and pitted “degree incomplete students” against those with degrees and ranked all mature applicants according to completed degrees (Masters, Honours, undergraduate) and then year of study in postgraduate degree‟. It was alleged that this was a new criterion which referenced a ranking system in respect of „mature students‟, which was entirely absent from the respondent's admissions policy and had been disclosed by the respondent for the first time in its answering affidavit. [7] On appeal the challenge of the appellant was again altered. Appellant‟s counsel expressly disavowed any reliance upon this argument and conceded that so-called „degree complete students‟ could compete within category 3a, with „degree incomplete students‟. The argument now advanced was that the respondent had failed to explain its preferential admissions policy in respect of the various degrees that could be considered in terms of category 3a. It was submitted that the respondent should have set out in its admissions policy the points that would be allocated for each type of degree within the category, as well as the points to be allocated to each of the subjects making up the degree under consideration. [8] When counsel for the appellant was asked to identify the passages in the founding affidavit where this new challenge was raised, he requested an opportunity to examine the founding affidavit. When court resumed he referred to certain paragraphs in the founding affidavit in support of the argument. However an examination of these paragraphs does not support his contention that the argument was properly raised. The only reference by the appellant to the ranking system of the respondent was in reply where the following was stated: „However the respondent has made it clear that it has, independently of its own policy, applied a ranking system to these applications,‟ because it chose completed degree applicants ahead of the appellant's application. In addition it was alleged that „There is no such ranking provision provided for in the policy and therefore whomever applied this criteria was not consistent with the policy.‟ The appellant did not however persist with this argument that the ranking system applied by the respondent, did not form part of its admissions policy. A complaint that the respondent had failed to disclose in advance how it applied this ranking policy was never raised. Counsel conceded that if this new challenge was not raised in the appellant‟s founding affidavit the appeal could not succeed. This concession was correctly made. It was incumbent upon the appellant to make out her case in the founding affidavit.1 [9] We turn to the costs of the appeal. In argument, the decision in Biowatch Trust v Registrar, Genetic Resources, & Others [2009] ZACC 14; 2009 (6) SA 232 (CC), was referred to, but is not applicable on the facts of this case. No constitutional issues were implicated. This case is simply a review under PAJA of an administrative decision by the respondent, not to admit the appellant to the course of study leading to the MBChB degree. Of importance in a consideration of this issue is that the appellant altered the basis for her challenge to the respondent's decision several times during the litigation. In addition, the final challenge advanced on appeal was not contained in the appellant's founding affidavit. These shortcomings could have been avoided if the appellant had utilised the provisions of rule 53 of the Uniform rules of court at the outset, to obtain the respondent's reasons for 1 Swissborough Diamond Mines (Pty) Ltd & others v Government of the Republic of South Africa & others 1999 (2) SA 279 (T) at 323 F-J and 324A. rejecting her application, as well as any documentation forming part of the record of the admissions process. Because of the urgency of the matter, the court hearing the application could have been asked to direct that the respondent furnish its reasons and any relevant documentation sooner than the period of 15 days specified in rule 53(1)(b). Interim relief restraining the respondent from finalising the list of successful applicants pending the outcome of the review proceedings, could have been sought. In this manner the appellant would have been informed in advance of the respondent‟s reasons for the decision and enabled to properly formulate her challenge to the rejection of her application. The need for changes to be made to the appellant's challenge to the respondent's decision during the course of the litigation, could have been avoided. [10] For these reasons the appellant should be ordered to pay the respondent's costs. The issues raised were not complex and did not justify the employment of two counsel. [11] In the result the following order is made: The appeal is dismissed with costs. _________________________ K G B Swain Judge of Appeal _________________________ Y T Mbatha Acting Judge of Appeal Molemela AJA [12] I have had the benefit of reading the majority judgment of my colleagues Swain JA and Mbatha, AJA. I agree that the appeal must fail. I also agree, on the same reasoning adopted by the majority judgment, that the Biowatch principle is not applicable in this matter. I, however, disagree with the majority judgment‟s reasoning and order relating to the costs of the appeal. It is appropriate to preface my reasoning with the reiteration of the applicable legal principles to cost awards. [13] It is well established that a court has a discretion in relation to the award of costs. In Ferreira v Levin NO & others,2 Ackerman J said: „The Supreme Court has, over the years, developed a flexible approach to costs which proceeds from two basic principles, the first being that the award of costs, unless expressly otherwise enacted is in the discretion of the presiding judicial officer, and the second that the successful party should, as a general rule , have his or her costs. Even this second principle is subject to the first. The second principle is subject to a large number of exceptions where the successful party is deprived of his or her costs. Without attempting either comprehensiveness or complete analytical accuracy, depriving successful parties of their costs can depend on circumstances such as for example, the conduct of parties, the conduct of their legal representatives, whether a party achieves technical success only, the nature of the litigants and the nature of the proceedings . . . If the need arises the rules may have to be substantially adapted; this should however be done on a case by case basis.‟ (My emphasis.) Indeed, even a court of Appeal has a wide discretion on the question whether a successful appellant should be awarded costs.3 [14] As I will demonstrate hereunder, this case is a perfect illustration of how the facts of a particular case, cumulatively considered, may justify a deviation from the general rule that costs must follow the result. 2 Ferreira v Levin NO & others; Vryenhoek & others v Powell NO & others 1996 (2) SA 621 (CC) para 3. 3 Unimark Distributors (Pty) Ltd v Erf 94 Silvertondale (Pty) Ltd 2003 (1) SA 204 (T) at 215- 216. [15] It is necessary to give a brief background about the respondent‟s admission policy. It is common cause that „Annexure D‟ constitutes the respondent‟s published policy. It is evident from Annexure D that clause 3 thereof outlines three categories of „mature students‟ who qualify for admission under categories 3a, 3b and 3c. It is common cause that the category applicable to the appellant is Clause 3a of Annexure D. This clause describes mature students as follows: „Candidates who have completed the Matriculation/Grade 12 examination and exceeding the minimum standards for entry into the MBChB programme as defined above; and have done a year or more of a degree course at a recognised university in South Africa; and achieved outstanding results (Open). Twenty five percent (10 students) will be from this open competitive category‟. (My emphasis.) [16] In its answering affidavit, the respondent averred that the selection policy and criteria it applied to the appellant‟s application were, as specified in clause 3 of Annexure SC3. That clause reads as follows: „Mature students are candidates who have completed the Matriculation/Grade 12 examination and exceeding the minimum standards for entry into the MBChB programme as defined above; and have done a year or more of a degree course, at a recognised university in South Africa; and achieved outstanding results; Mature students will comprise 20% (40 students) of the class; 50% of the mature students (20 students) will be from the BSc and BMedSc access programmes (reflecting Quintile 1 and 2 students) and selected in the different racial groups. Twenty five per cent (10 students) will be from BSc/BMedSc graduates and 25 per cent (10 students) will be from Health Science related degrees, open competitive category.‟ [17] The respondent contended that there is no discrepancy between Annexures D and SC3. The High Court found that the discrepancies between the policy in Annexure D and the one in Annexure SC3 pertained only to the „layout‟ of the policy. It also found that despite any variations in the wording of Annexure D and Annexure SC3, the qualification for the open category is the same. For the reasons discussed below, I disagree. [18] A very brief discussion of the trite principles applicable to interpretation of documents is apposite. It is well-established that when interpreting a document, it is necessary to consider the language of the provision in the light of the ordinary rules of grammar and syntax. The words used must be read in the context of the document as a whole and in light of all relevant circumstances. Where the words in the documents are capable of more than one meaning, a sensible meaning should be preferred over one that undermines the apparent purpose of the document.4 [19] Having read the respondent‟s policy, it is rather self-evident that category 3a includes graduates and under-graduates of any degree, which means that students who are pursuing non-health-related degrees are also entitled to be considered. Importantly, category 3a stipulates that 25 per cent (10 students) of the students „will be‟ selected from this „open competitive category‟ and thus guarantees consideration of students from this category. Clauses 3b and 3c specifically mention the degrees from which prospective students will be selected, namely BSc and BMedSc access programmes (clause 3b); and BSc/BMedSc graduates from Health Science degrees (clause 3c). A purposive interpretation of clause 3 of Annexure D, which sets out three distinct categories, leads me to conclude that the provisions of that policy are intended to grant access to prospective medical students from a diverse educational background.5 [20] In my view, category 3a of „mature students‟ embraces this diversity by accommodating students whose matric results exceeded the minimum standards for entry into the MBChB programme but are not registered for the degrees mentioned in clause 3b or 3c of Annexure D, for example, students who are registered for non-health-related degrees such as Engineering, Veterinary Science, Actuarial Science, and Commerce. 4 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para (18). 5 Section 37(3) of the Higher Education Act 55 of 1999 states: „The admission policy of a public higher education institution must provide appropriate measures for the redress of past inequalities and may not unfairly discriminate in any way.‟ [21] Ironically, a sensible interpretation of clause 3 of Annexure D is eloquently articulated in the Respondent‟s heads of argument. I can do no better than to quote this interpretation verbatim: „20. The category 3a includes all candidates that “have done a year or more of a degree course”. That “includes” degree complete students not falling under categories 3b and 3c‟. [The footnote to this paragraph reads: this is most easily understood when one considers a hypothetical commerce or engineering graduate who would undoubtedly not qualify under section 3c.] 21. The interpretation for which the appellant contends would necessarily exclude from access to the medical school under any circumstances, degree complete students not falling in categories 3(b) and 3(c). 22. That is not a sensible interpretation and should be rejected.‟ [22] Although the respondent did not persist with nor disavow this argument during the hearing of the appeal, I am of the view that the interpretation postulated above is indeed the most sensible one in respect of clause 3 of Annexure D as it embraces students from a diverse educational background. Regrettably, this laudable inclusiveness is conspicuously absent from clause 3 of Annexure SC3 because the latter does not cater for undergraduates or graduates from non- health- related degrees. Furthermore, it also does not extend the same guarantees granted by Annexure D. In my view, clause 3 of Annexure SC3 is more exclusionary and cannot be a sensible interpretation of the respondent‟s published policy.6 [23] I am of the view that the interpretation attached by the respondent to its policy, as reflected in clause 3 of Annexure SC3, „undermines the purpose‟7 of the inclusionary stipulations of clause 3a of Annexure D. The discrepancies between these two policies bear testimony to the ambiguity in the respondent‟s undergraduate selection criteria. Given these circumstances, the appellant‟s contention that the „subtle alteration of the words‟ in clause 3 of Annexure SC3 has resulted in the policy leading to different consequences than clause 3a of Annexure D, is not misplaced. Similarly, her contention that 6 See s 37(3) of the Higher Education Act above. 7 See Natal Joint Municipal Pension Fund above para (18). an ambiguity in the policy may be prejudicial to other students is not unfounded. [24] Another important consideration in this matter is that in the exchange of correspondence that preceded the commencement of litigation, the respondent advised the appellant that the selection criteria it had applied to the appellant were in accordance with clause 3 of Annexure D. As correctly pointed out in the majority judgment, s 37(2) of the Higher Education Act enjoins the council of a university to publish its admission policy and to make it available on request. The appellant‟s founding affidavit was prepared on the acceptance that clause 3 of Annexure D was the applicable policy. It was only in its answering affidavit that the respondent unveiled Annexure SC3 to the appellant. It is therefore not difficult to understand why the appellant took issue with clause 3 of Annexure SC3 for the first time in her replying affidavit. It is for this reason that I hold the view that the majority judgment‟s criticism of the appellant for making new allegations concerning clause 3 of Annexure SC3 in the replying affidavit is, with respect, unjustified.8 [25] I have already alluded to the material discrepancies between Annexure D and Annexure SC3. Under such circumstances, it is not inconceivable that the appellant could have pleaded her case differently if Annexure SC3 had been disclosed to her before the commencement of the litigation. I am also of the view that the finding of the majority judgment that the appellant could have invoked the procedures laid down in Rule 53 of the Uniform Rules to obtain certain documents is, with respect, overly technical. For example, it would have been pointless for the appellant to invoke Rule 53 merely to obtain a policy that the respondent had already furnished to her by way of correspondence. [26] Furthermore, the nature of the right the appellant was seeking to protect is another important consideration. Her litigation was not in pursuit of a 8 Lagoon Beach Hotel (Pty) Ltd v Lehane NO & others 2016 (3) SA 143 (SCA) para 15-16; Pretoria Portland Cements Co Ltd v Competition Commission & others 2003 (2) SA 385 (SCA) para 63. commercial interest; rather it was in a bona fide pursuit of admission to her preferred field of study. In the broader scheme of things, her litigation was about access to education. Moreover, it was not based on spurious grounds, as the respondent had previously admitted under-graduates on the strength of the provisions of clause 3a of Annexure D. [27] Despite the fact that the outcome sought by the appellant in her application would have been for her sole benefit, her application served to highlight the flaws attendant on the interpretation of Annexure SC3, which have already been canvassed earlier in this judgment. The appellant‟s litigation exposed the potential prejudice that some prospective medical students who fall within the category of „mature students‟ may suffer as a result of the ambiguity of the respondent‟s admission policy. This litigation therefore raised an important matter of broad concern. [28] Furthermore, the appellant decided to litigate as a last resort, having personally engaged the respondent‟s officials before seeking the intervention of the Students Representative Council (SRC). Several consultations were held between the SRC delegation and the respondent‟s officials: correspondence was exchanged. Sight must not be lost of the fact that the appellant is a 19 year old fulltime student. She stated that her litigation was funded by her parents. She also disclosed that the reason she prefers to study at a medical school in Durban is because her parents are not wealthy and would thus not afford to pay for her accommodation if she were to study elsewhere. The fact that the appellant is evidently a person of modest financial means is not an irrelevant consideration, given all the circumstances of this case.9 [29] Having considered all the facts of this case, I am of the view that mulcting the appellant with costs may discourage those who may legitimately wish to challenge the respondent‟s policy on other grounds. This may have an 9 Tlale & Others v The University of the Witwatersrand & Another (JHC) unreported case no 38337/2016 of 3 November 2016 para 53. unintended chilling effect on access to justice. Such an order would militate against the „just and equitable‟ remedy envisaged in Section 8(1)(f) of the Promotion of Administration Justice Act 3 of 2000, which dictates that costs be determined in a manner that is fair to both parties. For all the reasons alluded to above, I am of the view that there are special circumstances that justify a departure from the general rule that costs must follow the event. I would therefore make no order as to the costs of the appeal. _________________________ M B Molemela Acting Judge of Appeal Swain JA [30] I have had the benefit of reading the dissenting judgement of Molemela AJA on the issue of the award of costs in the appeal to the respondent. Central to the reasoning in the dissent is that because of the alleged ambiguity between annexures D and annexure SC3, in which the admissions policy of the respondent was set out, the appellant's application „served to highlight the flaws attendant on the interpretation of annexure SC3 . . .‟ and „exposed the potential prejudice that some prospective medical students who fall within the category of "mature students" may suffer as a result of the ambiguity of the respondent's admission policy.‟ [31] As I understand the argument, it is that the alleged ambiguity in the respondent's admission policy was partially to blame for the institution by the appellant of these proceedings, was the cause of the appellant only taking issue with the provisions of annexure SC3 in her replying affidavit and if annexure SC3 had been disclosed to the appellant before the commencement of the litigation „it is not inconceivable that the appellant could have pleaded her case differently‟. For these and other reasons, it is concluded that the appellant should not be ordered to pay the costs of the appeal. [32] On appeal both parties accepted that there was no material difference between annexure D and annexure EC3. This was made clear well in advance of the hearing. The appellant in her heads of argument submitted that, „As aforesaid, we contend that annexure D applied and that, in any event, there is no material difference between annexure D and annexure SC3.‟ The same view was advanced in the respondent's heads of argument where the following submission was made, „In the circumstances of this matter, "SC3" appears to be a minor redrafting of annexure "D" with no material discrepancy between the two and only a slight reordering of language.‟ In argument before this court, any alleged ambiguity between these annexures was not referred to, nor relied upon, by either counsel. It is therefore plain that the alleged ambiguity was not relied upon by the appellant as a ground of appeal and did not serve as a reason for challenging the decision on appeal. Although the alleged ambiguity may have served as an argument for altering the costs order made by the court a quo, it can have no bearing upon the costs of the appeal, which the dissent has as its objective. [33] In addition the only argument advanced by the appellant as to why she should not be ordered to pay the costs of the appeal, was that the Biowatch principle was applicable. Molemela AJA agrees with the view of the majority that this is not so. None of the other grounds relied upon by Molemela AJA, to justify no order being granted as to the costs of appeal were relied upon by the appellant. The respondent was accordingly never afforded an opportunity to deal with any of these grounds. [34] I disagree with the contention of Molemela AJA that „it would have been pointless for the appellant to invoke rule 53 merely to obtain a policy that the respondent had already furnished to her by way of correspondence.‟ As pointed out in the judgement, rule 53 could have been used to obtain the respondent's reasons for rejecting her application, as well as any documentation forming part of the record of the admissions process. The object of such a procedure would never have been the pointless exercise of using rule 53 to obtain a copy of the policy, which the appellant already had. In this manner the appellant would have been enabled to properly formulate her challenge to the rejection of her application. [35] I also take issue with the conclusion of Molemela AJA that, „It is for this reason that I hold the view that the majority judgement‟s criticism of the appellant for making new allegations concerning clause 3 of annexure SC3 in the replying affidavit is, with respect, unjustified.‟ The only reference to the replying affidavit of the appellant in the judgment was in the context of an allegation by the appellant, that the application of a ranking system by the respondent did not form part of the respondent's admissions policy. This was referred to in the judgement in order to highlight the distinction between this argument (which was abandoned) and the argument advanced on appeal by the appellant, namely that the respondent had failed to disclose in advance how it applied this ranking policy. As pointed out in the judgement, the latter argument was never raised in the application papers. No criticism was directed at the appellant in this context, for raising this argument in reply. [36] The fact that the litigation was not in pursuit of a commercial interest but rather a bona fide pursuit of admission by the appellant to her preferred field of study, and was therefore about access to education, cannot on all of the evidence be regarded as a determining factor. Although it is true that the appellant is 19 years old and dependent upon her parents, (who she describes as „not wealthy‟) to fund the litigation, what must also be considered is that the respondent is reliant upon and administers public funds to attain its objectives. [37] I disagree with the conclusion that „mulcting the appellant with costs may discourage those who may legitimately wish to challenge the respondent's policy on other grounds. This may have an unintended chilling effect on access to justice‟. No other grounds were raised by the appellant as a basis for challenging the respondent's policy. The concern raised is not based on any evidence and amounts to unjustified speculation. [38] For these reasons I disagree with the conclusion of Molemela AJA that no order should be made as to the costs of the appeal. _________________________ K G B Swain Judge of Appeal Appearances For the Appellant: G Marcus SC with A J Boulle Instructed by: Pather & Pather, Durban Claude Reid Inc., Bloemfontein For the Respondent: A J Dickson SC with P J Wallis Instructed by: Shepstone and Wylie, Durban Webbers, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 27 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. Harrielall v University of KwaZulu-Natal (493/2016) [2017] ZASCA 25 (27 March 2017) Media Statement The SCA dismissed an appeal against an order by the High Court dismissing an application brought by the appellant, in which an order was sought directing the respondent to admit the appellant into the first year of study for the MBChB degree, for the academic year of 2016. On appeal the appellant abandoned the previous grounds relied upon by her for challenging the decision of the respondent, refusing her application for admission to the medical faculty of the respondent. A new ground was advanced for the first time on appeal which was not contained in the appellant's founding affidavit. For this reason the appeal was dismissed with costs. --- Ends ---

554

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 140/2016 In the matter between: VUSUMUZI NKOSINATHI MHLONGO APPELLANT and THE STATE RESPONDENT Neutral citation: Mhlongo v The State (140/16) [2016] ZASCA 152 (3 October 2016) Coram: Bosielo, Swain, Zondi and Mocumie JJA and Dlodlo AJA Heard: 24 August 2016 Delivered: 3 October 2016 Summary: Criminal Law and Procedure ─ conviction on one count of rape ─ the charge sheet erroneously referred to Part 2 of Schedule 2 and not Part 1 of Schedule 2 to s 51(1) of the Criminal Law Amendment Act 105 of 1997 ─ sentence of life imprisonment imposed ─ whether this irregularity vitiated the sentence proceedings ─ application in terms of s 276B of the Criminal Procedure Act 51 of 1977 ─ importance and permanent infusion of the Victim Impact Statement at the sentencing stage ─ duty of the prosecution to place all information before the court ─ Comprehensive guidelines, protocol and model VIS instruments must be drafted by the National Director of Public Prosecutions ─ matter remitted to court a quo. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Van Zyl J and Vahed J sitting as court of appeal): 1. The appeal is upheld. 2. The order of the court a quo in terms of s 276B of the Criminal Procedure Act 51 of 1977 is set aside. 3. The matter is remitted to the court a quo for the parties to make representations on the desirability of granting an order in terms of s 276B of the Criminal Procedure Act 51 of 1977. _____________________________________________________________________ JUDGMENT ______________________________________________________________________ Mocumie JA (Bosielo, Swain and Zondi JJA and Dlodlo AJA concurring): [1] On 10 March 2009 the appellant was charged with and convicted by the Regional Court, Empangeni, on one count of rape. On 12 March 2009 he was sentenced to life imprisonment. Subsequently, on 8 September 2011, he applied for and was granted leave to appeal against his conviction and sentence to the full court of the KwaZulu- Natal Division, Pietermaritzburg. The full court dismissed the appeal against the conviction but upheld the appeal against the sentence of life imprisonment and substituted it with a sentence of 18 years‟ imprisonment. In addition, it fixed a non- parole period of 12 years in terms of s 276B of the Criminal Procedure Act 51 of 1977 (the Act). The appellant appeals against the sentence imposed and the fixing of the non-parole period with special leave of this court. [2] In relation to the non-parole period, the appellant launched a three pronged attack. First, he contends that there was no application made by the State to fix the non- parole period either before the regional court or before the full court. Secondly, that he was not given a notice that s 276B will be invoked. Thirdly, that the parties were not given an opportunity to present argument or evidence for or against the fixing of a non- parole period. The appellant contends further that there was no basis or finding that his character could only be rehabilitated after a period of 12 years. The full court gave no reasons for fixing the non-parole period. As to the invocation of s 51(1) of Part I of Schedule 2 of the Criminal Law Amendment Act 105 of 1997 (the Criminal Law Amendment Act) by the regional court, the appellant contends that since s 51(1) was not specified in the charge sheet, it committed a material misdirection by imposing the sentence of life imprisonment. [3] A non-parole order is a determination that has serious consequences for an accused. „. . . [I]t is an order that a person does not deserve being released on parole in future.1‟ Its effect is to ultimately restrict the liberty of a person who is sentenced to a term of imprisonment, since such a person cannot be released on parole, or correctional supervision, until the expiry of the non-parole period.2 The fixing of a non-parole period entails the exercise of a discretion vested in a court which like all discretionary powers must be judicially exercised. Especially in criminal matters where the liberty of a person is at stake, it must be exercised judiciously and in accordance with principles of fairness and justice. [4] In S v Pakane & others3 this Court said that the intention of the legislature in enacting s 276B of the CPA is to invest sentencing courts with discretionary power to „control the minimum or actual period to be served by the convicted person‟.4 Furthermore, this section provides the courts with the „overall latitude‟ and flexibility in determining whether to fix or refrain from fixing non-parole periods, but not as a matter of routine.5 Hence, in interpreting s 267B of the Act, this Court in Mthimkhulu in recognising a progression from subsection 1 to subsection 2, said that: 1 Strydom v S [2015] ZASCA 29 para 16; S v Bull & another [2001] ZASCA 105 at 692D-I, 693D-G and 697A. 2 S v Williams; S v Papier [2006] ZAWCHC 5; 2006 (2) SACR 101 (C). 3 S v Pakane & Others [2007] ZASCA 134; 2008 (1) SACR 518 (SCA). 4 Ibid paras 46–47. 5 Mthimkhulu v S [2013] ZASCA 53; 2013 (2) SACR 89 (SCA) para 14. „What s 276B(2) in fact does is to enjoin a sentencing court, once it has exercised its discretion under s 276B(1)(a) against the convicted person, to then fix the non-parole period in respect of the effective period of imprisonment taking cognisance of the provisions of s 276B(1)(b)‟.6 [5] The principles that determine the exercise of this exceptional order of non-parole are well-stated; first, as to why a court should exercise the discretionary power; second, as to what facts are germane to its exercise, and third, as to the procedure to be followed. In Mthimkhulu,7 this court held: „An order in terms of s 276B should therefore only be made in exceptional circumstances, when there are facts before the sentencing court that would continue, after sentence, to result in a negative outcome for any future decision about parole‟.8 The judiciary, within the matrix of South Africa‟s constitutional democracy, stands as a bulwark against any arbitrary exercise of power and owes every citizen a duty of ensuring that every exercise of power conforms to the Bill of Rights. The principle of fair hearing enshrined in the South African Bill of Rights is a key aspect of the rule of law.‟9 [6] This Court has consistently held in several reported judgments that the provisions of s 276B must be invoked for substantial reasons. Three of these decisions warrant special mention. They are Strydom v S,10 S v Stander11 and Mthimkulu v S12. In Strydom, the appellant was convicted of 36 charges of fraud involving a benefit of R375 816.92. She was consequently sentenced to serve a term of five years‟ imprisonment with the provision that in terms of s 276B of the Act the appellant serve three years of imprisonment before being placed on, or being considered eligible for parole. On appeal this court stated the following: „[A] court should not resort to s 276B of the CPA lightly and rather, as this court has often indicated, allow the officials of the Department of Correctional Services, who are guided by the 6 Ibid para 16. 7 See also S v Stander [2011] ZASCA 211; 2012 (1) SACR 537 (SCA) para 16. 8 Above fn 6 para 19. 9 Section 34 of the Constitution of the Republic of South Africa 108, 1996 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‟. 10 Strydom v S [2015] ZASCA 29. 11 S v Stander 2012 (1) SACR 537 (SCA). 12Mthimkhulu v S 2013 (2) SACR 89 (SCA); See also S v Mhlakaza & another [1997] ZASCA 7; 1997 (1) SACR 515 (SCA). [Correctional Services Act 111 of 1998] (CSA) and the attendant regulations, to make such assessments and decisions as well as the parole board.‟13. [7] In Stander, the appellant was sentenced to eight years‟ imprisonment for fraud, two years of which were conditionally suspended for five years. The trial court also ordered, in terms of s 276B of the CPA that the appellant serve at least 36 months of her sentence before she could be considered for parole (the non-parole order).14 On appeal the court held that the failure of the magistrate to give reasons for the sentence made it impossible to assess what prompted the order in the first instance. On appeal, this Court found that a court can only invoke s 276B when there are circumstances specifically relevant to parole in addition to any aggravating factors pertaining to the commission of the crime, and where a proper, evidential basis had been laid for a finding that such circumstances exist so as to justify the imposition of such an order.15 [8] In Mthimkulu, the appellant was convicted in the high court on one count of murder, possession of a fully automatic firearm (an AK47 assault rifle) without a licence to possess such firearm and possession of five rounds of live ammunition (7.62 mm) without the required licence. The appellant was sentenced to 20 years‟ imprisonment on the murder count and five years for both unlawful possession of a prohibited firearm and ammunition. The trial court directed that the term of five years‟ imprisonment in respect of the latter two counts, run concurrently with the 20 years‟ imprisonment imposed in respect of the murder count and fixed a non-parole period of 13 years. There was no invitation by the trial court to counsel to address it prior to the fixing of the non-parole order. This Court held that the failure to afford the parties the opportunity to address the sentencing court might, depending on the facts of each case, constitute an infringement of fair-trial rights.16 13 Strydom para 15. 14 Stander para 1. 15 Ibid para 20. 16 Mthimkhulu para 21. The procedure for fixing a non-parole period and the accused’s entitlement to be heard [9] A trial court has a duty to impose an appropriate sentence according to long standing principles of punishment and judicial discretion. A convicted person, generally speaking, has a reasonable expectation of being paroled after serving a portion of the term of imprisonment. Parole can therefore be regarded as an essential element in the punishment of an offender. The right of an accused to a fair trial extends throughout the entire proceedings, including the sentencing stage.17 The fixing of a non-parole period is part of a criminal trial and it must thus accord with the dictates of a „fair trial‟ that an accused person be given notice of the court‟s intention to invoke s 276B of the Act and to be heard before a non-parole period is fixed. Failure to do so amounts to a misdirection by the sentencing court.18 [10] In Stander this Court stated categorically, „[a]t least two questions arise when such an order [non-parole order] is considered: first, whether to impose such an order and second, what period to attach to the order. In respect of both considerations the parties are entitled to address the sentencing court. Failure to afford them the opportunity to do so constitutes misdirection.’19 (My emphasis) [11] At the heart of the right to a fair criminal trial and what infuses its purpose, is for justice to be done and also be seen to be done. Dignity, freedom and equality are the foundational values of the Constitution. In relation to sentencing, what the right to a fair trial requires, amongst other things, is a procedure which does not prevent any factor which is relevant to the sentencing process and which could have a mitigating effect on the punishment to be imposed, from being considered by the sentencing court. The Constitutional Court emphasised „[i]n the present circumstances a fair trial would also have to ensure that, in the process of the sentencing court being put in possession of 17 S v Dodo [2001] ZACC 16; 2001 (1) SACR 594 (CC) at para 38; Prinsloo v Van der Linde & another [1997] ZACC 5; 1997 (3) SA 1012 (CC) para 31. S v Stander para 22. 18 Strydom para 17; See generally: Mthimkulu and Stander. 19 Stander para 22. the factors relevant to sentencing, the accused is not compelled to suffer the infringement of any other element of the fair trial right.‟20 [12] The principle to be derived from Strydom, Stander and Mthimkhulu is that the discretion to fix a non-parole period must not be exercised lightly, but only in exceptional circumstances which can only be established by an investigation and a consideration of salient facts, and further evidence upon which such a decision rests.21 Giving reasons for decisions is a long-standing and salutary practice that serves the interests of justice. Furthermore, it helps to show the rationale for the decision.22 Without reasons for a judgment on sentence as is the case in this matter, in respect of the invocation of s 276B, such lack of reasons is highly prejudicial to the accused person. Thus the court a quo‟s failure to state the rationale for its judgment is a vitiating factor. [13] It is clear, as the State conceded, that the court a quo erred materially. This Court is therefore bound to set aside the order in terms of s 276B and remit the matter to the court a quo to afford the parties an opportunity to address it. [14] The appellant also assailed the sentence imposed by the regional court on the basis that the trial court misdirected itself by sentencing him in terms of the provisions of s 51(1) Part I of Schedule 2 of the Criminal Law Amendment Act whereas Part 2 of Schedule 2 was specified in the charge sheet. In other words, it was not specified that life imprisonment was the prescribed minimum sentence. Further, no clear and unambiguous explanation was given to the appellant at the commencement of the trial, as to the applicability of a mandatory sentence of life imprisonment in the event of a conviction. [15] Section 35(3) of the Constitution guarantees the right to a fair trial for everyone charged with a criminal offence,23 while s 84(1) of the CPA stipulates that a charge must 20 S v Dzukuda & others; S v Tshilo [2000] ZACC 16; 2000 (2) SACR 443 (CC) paras 11-12. 21 Strydom para 16. 22 See Stander fn 8 with reference to S v Immelman 1978 (3) SA 726 (A) at 726A. 23 Section 35 of the Constitution provides: „(3) Every accused person has a right to a fair trial, which includes the right─ (a) to be informed of the charge with sufficient detail to answer it; contain the essential particulars of an offence.24 Considering the constitutional right of an accused to be sufficiently informed of the charge, and other underlying values of the Constitution, it is very important that a charge sheet makes reference to provisions relevant to the sentence for a particular offence; otherwise the Constitution would become a dead letter.25 This Court has said on numerous occasions that it is always desirable that a charge sheet refers to those provisions of the law of relevance to the sentence to be imposed for the offence charged.26 Although there is no fixed rule, a failure to state the relevant section in the Act, unless it occasions substantial prejudice to the accused, does not necessarily vitiate the whole trial.27 In Ndlovu, this Court held that the State‟s failure to give the accused sufficient prior notice of the applicability of the statute was fatal to the sentence imposed, more so when the accused was unrepresented.28 In Legoa this Court did not prescribe any general rule on the issue, but emphasised the importance of a clearly drafted charge sheet and the reflection of the fundamental principle of a fair hearing in the entire trial process. It also stressed that an accused person should be given sufficient notice of the State‟s intention to rely on the minimum mandatory sentencing regime in every instance.29 [16] I now turn to consider the question of whether the relevant provisions of the Criminal Law Amendment Act were brought to the attention of the appellant. The appellant contends that the legislation was referred to for the first time by the prosecutor (b) to have adequate time and facilities to prepare a defence. . .‟ 24 Section 84 of the CPA dealing with „essentials of charge‟ provides as follows: „(1) Subject to the provisions of this Act and of any other law relating to any particular offence, a charge shall set forth the relevant offence in such manner and with such particulars as to the time and place at which the offence is alleged to have been committed and the person, if any, against whom and the property, if any, in respect of which the offence is alleged to have been committed, as may be reasonably sufficient to inform the accused of the nature of the charge. (2) Where any of the particulars referred to in subsection (1) are unknown to the prosecutor it shall be sufficient to state that fact in the charge. (3) In criminal proceedings the description of any statutory offence in the words of the law creating the offence, or in similar words, shall be sufficient.‟ 25 S v Ndlovu [2002] ZASCA 144; 2003 (1) SACR 331 (SCA) para 11; R v Zonele & others 1959 (3) SA 319 (A) at 323A-H; S v Moloi 1969 (4) SA 421 (A) at 424 A-C; S v Legoa [2002] ZASCA 122; 2003 (1) SACR 13 (SCA) para 20. 26 Ibid. 27 Legoa paras 20-21. 28 Ndlovu para 12. See also Seleke & andere 1976 (1) SA 675 (T) at 682H. 29 Legoa para 21. in his address in aggravation of sentence, when he said: „Your worship, the State would submit that there are no substantial and compelling circumstances which the defence has brought to the court's attention.‟ However, if one reads the record as a whole and despite the incorrect reference to Part 2 of Schedule 2 to section 51of the Criminal Law Amendment Act, there is no doubt that the appellant was apprised of his rights and was well aware of same throughout the proceedings. That the appellant was apprised of his rights in relation to the minimum sentencing regime is borne out by the record. First, the charge, to which the appellant pleaded, is worded unambiguously as follows: „The accused is guilty of the crime of rape . . . In that upon or about and or between 16 March 2006 at or near Ngwelezane B section in the Regional Division of Natal, the said accused did wrongfully and unlawfully have sexual intercourse with Ntuli Bongangithini without her consent, and or against her will in circumstances where she was raped more than once by the accused.‟ (My emphasis) Secondly, not only was the appellant made aware of his rights within the purview of the Criminal Law Amendment Act at the beginning of the trial, but he was conscious of the seriousness of the charge because he even sought the regional court‟s indulgence for a postponement to discuss this very aspect with his parents; which indulgence the regional court granted from 2 February 2006 to 14 February 2006. Thirdly, and crucially, the appellant was at all times legally represented. [17] From these three aspects, it is undoubtedly clear, as counsel for the appellant was constrained to concede, that the fact that the charge sheet had a defect which was never rectified in terms of s 86(1) of the CPA, did not of its own vitiate the sentencing proceedings.30 The facts of this case are for that matter, distinguishable from those of Ndlovu and subsequent cases in which this court considered the irregularity on the part of the State which it found to be so material misdirection, that it vitiated the whole proceedings. As this Court has repeatedly emphasised, each case must be treated and judged on its own facts, before any decision to set aside the proceedings can be taken. 30 S v Kolea [2012] ZASCA 199; 2013 (1) SACR 409 (SCA) para 18. In S v Ndlovu; Sibisi31, which was cited with approval by this Court in S v Mabuza & others,32 it was said that: „It will not be essential to inform [the accused person] that he is facing the possibility of a substantial prison sentence or a sentence which may be “materially prejudicial” if he can reasonably be expected to be aware of this.‟33 [18] Turning to the sentence imposed by the regional court, which was then set aside by the court a quo, the salient facts relevant to the sentence are as follows. The complainant, a 27 year old young woman, testified that she was lured by the appellant and his uncle to get a lift home on the fateful afternoon of 16 March 2006 as it was raining and there were no buses from Empangeni to her home, due to a strike. After dropping off an older man whom she believed to be the uncle of the appellant, the appellant drove in the opposite direction to her home until he reached his own home. Once inside the house, he demanded to have sexual intercourse with her. When she refused, he assaulted her and threatened to kill her. Ultimately he overpowered and raped her repeatedly throughout the night until he released her the next day. She went directly to a clinic where she made a report to a nurse. She testified that she was still a virgin and further that she was subsequently diagnosed with HIV. When the trial ended, the State placed on record without any demur from the defence that she succumbed to Aids thereafter. Regrettably, the State did not tender evidence to link her Aids status to the appellant. [19] In imposing sentence, the regional court found that no substantial and compelling circumstances existed which justified a departure from the minimum sentence of life imprisonment, specified in Part 1 of Schedule 2 of the Criminal Law Amendment Act, where the complainant was raped more than once by the same person. The regional court then imposed the ordained life imprisonment. Disgruntled with the sentence, the appellant appealed to the court a quo. 31 S v Ndlovu; S v Sibisi 2005 (2) SACR 645 (W). 32 S v Mabuza & others [2007] ZASCA110; 2009 (2) SACR 435 (SCA) para 15. 33 At 654F-G. [20] In upholding the appeal against the sentence the court a quo found that: „[I]n the present [case] there is a significant degree of callousness in the manner in which the complainant was enticed into the vehicle, effectively abducted, and subjected to a night of terror and repeated rapes. The crimes, of which the appellant had been convicted, fall into a serious category which requires direct imprisonment for a lengthy period. The appellant acted with callous disregard to the rights, feelings, welfare or the impact of his actions, upon the life and wellbeing of the complainant. At no stage did he indicate any genuine remorse for his actions. Nevertheless, this is not the worst kind of rape one can imagine. Although that is not necessarily the criteria for avoiding a sentence of life imprisonment, in all the circumstances of this case, I take the view that a sentence of imprisonment of life, is disproportionate to the nature of the crime and that an injustice would result if that sentence were permitted to stand. I would uphold the appeal against sentence and propose that the sentence, imposed by the magistrate be set aside and replaced by a sentence of eighteen (18) years‟ imprisonment.‟ (My emphasis.) [21] This court harboured considerable disquiet concerning the sentence imposed by the court a quo, which was canvassed with counsel. There was no justification for the court a quo to interfere with the sentence imposed by the regional court. The facts of this case are very similar to those in S v Nkomo.34 The court a quo stated, in its reasons for sentence that „it is clear from the evidence of the complainant in this case, that the rapes had a profound effect upon her psychologically.‟ The court a quo also found that „there was significant callousness in the manner in which the complainant was enticed into the vehicle, effectively abducted and subjected to a night of terror and repeated rapes. Yet, the court unconvincingly came to the conclusion that „nevertheless this is not the worst kind of rape one can imagine . . .‟ To use the words of Theron JA in her minority judgment in Nkomo35 contrary to the sentiments echoed in S v Abrahams36 and S v Mahomotsa:37 „If life imprisonment is not appropriate in a rape as brutal as this, then when would it be appropriate? I am of the view that this is precisely the kind of matter the Legislature had in mind for the imposition of the minimum sentence of life imprisonment. Courts must not shrink from 34 S v Nkomo [2006] ZASCA 139; 2007 (2) SACR 198 (SCA). 35 Ibid paras 27–28. 36 S v Abrahams 2002 (1) SACR 116 (SCA) para 29. 37 S v Mahomotsa [2002] ZASCA 61: 2002 (2) SACR 435 (SCA) paras 17-19. their duty to impose, in appropriate cases, the prescribed minimum sentences ordained by the Legislature. Society‟s legitimate expectation is “that an offender will not escape life imprisonment ─ which has been prescribed for a very specific reason ─ simply because [substantial and compelling] circumstances are, unwarrantedly, held to be present”. In our constitutional order women are entitled to expect and insist upon the full protection of the law.‟ Even stronger sentiments have been echoed by this court in S v Matyityi38 and subsequent cases. But, in the light of there being no cross appeal by the State against sentence; this court can, unfortunately, do no more39. [22] There are two further areas of concern in this case. First, the failure on the part of the State to obtain a Victim Impact Statement (VIS) for purposes of sentence. Secondly, the failure by the State to cross appeal the sentence imposed by the court a quo, which is too lenient in the circumstances. The State acknowledged that it did not compile a VIS during the trial. In Matyityi40 this Court with reference to the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW),41 UN Declaration of the Basic Principles of Justice for Victims of Crime and Abuse of Power42 and the Service Charter for Victims of Crime in South Africa,43 sent a powerful message on the importance of a VIS which seems to be disregarded wantonly and without fear of any repercussions, by the State. A VIS forms an integral part of the last phase of the trial. It is essential for the court in arriving at a decision that is fair to the offender, victim and the public at large. It serves a greater purpose than contributing only to the quantum of punishment.44 It generally gives the sentencing court a balanced view of all aspects in order to impose an appropriate sentence. It accommodates the victim more effectively, thus giving her or him a voice and the only opportunity to participate in the last phase of the trial. Moreover, the VIS, gives the victim the opportunity to say in her or his own 38 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA). 39 Kellerman v S [1997] 1 All SA 127 (A). 40Matyityi paras16-17. 41 International treaty adopted in 1979 by the United Nations General Assembly. 42 Resolution 40/34 adopted by the General Assembly on 29 November 1985. 43 Approved by Cabinet on 2 December 2004. 44 K Muller & A van der Merwe „Recognising the victim in the sentencing phase: The use of Victim Impact Statements in Court‟ (2006) 22 SAJHR at 647–663. voice how the crime has affected him or her. This is particularly so where no expert evidence is led by the State to indicate the impact of the crime on the victim. [23] After several judgments of this Court have pointed out the substantial importance of the VIS and that it must form part of the sentencing process, the South African criminal justice system requires the permanent infusion of a VIS into the justice process. Comprehensive guidelines, protocols and model VIS instruments must be drafted by the National Director of Public Prosecutions in order to achieve that. This will address the lackadaisical manner in which the State treats victims of violent crimes and in particular, rape. If this is not dealt with decisively, there will soon come a time when the State will be held accountable for this failure of its duty,45 by victims of violent, particularly sexual crimes such as rape. [24] The failure by the State to cross appeal the sentence imposed by the court a quo merits mention. In addressing this court, the State was initially in agreement with the appellant that a sentence of 18 years imposed by the court a quo was sufficient. However, after this Court had pointed out several seriously aggravating aspects of the evidence of the complainant and the devastating effect the rapes had on her, counsel for the State accepted the sentence was too lenient. It is a travesty of justice that the State failed to lead expert evidence on the impact of the rapes on the complainant and in particular the possible link between her death and being infected with HIV by the appellant. [25] Rape is undoubtedly a serious crime which violates the dignity, security, freedom and wellbeing of the victim. The wave of rape cases is increasing at an alarming rate and it is a crime which calls for long term imprisonment.46 According to the Law Reform Commission statistics it is estimated there are 1,7 million rapes a year. On average only 45 In terms of s 174 of the Criminal Procedure Act 51 of 1977 read with s 179 of the Constitution of South Africa together with s 22 (6)(a) of the National Prosecuting Authority Act 32 of 1998 (Code of Conduct) and the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW) it is the duty of the prosecution to place all the information before the court which assists the court in arriving at a fair and just sentence. 46 Matyityi para 22. 54 000 rape survivors lay charges.47 Only 344 out of every 1000 sexual assaults are reported to the police, which means approximately two out of three sexual assaults remain unreported.48 The rape rate refers to the number of reported rapes which occur per 100,000 people.49 Despite these distressing statistics the State chose not to cross appeal against the sentence imposed by the court a quo. [26] Lastly, one aspect requires comment i.e. the number of appeals against s 276B non-parole orders emanating from various Divisions of the high court. From my observation on reported cases of this Court50, it is clear that appeals on s 276B are multiplying in numbers every year. This is inappropriate and results in cases of greater complexity and truly deserving of the attention of this Court having to compete for a place on the court roll. 51 [27] In the result, the following order is made: 1. The appeal is upheld. 2. The order of the court a quo in terms of s 276B of the Criminal Procedure Act 51 of 1977 is set aside. 3. The matter is remitted to the court a quo for the parties to make representations on the desirability of granting an order in terms of s 276B of the Criminal Procedure Act 51 of 1977. _________________ BC Mocumie Judge of Appeal 47 L du Toit A Philosophical Investigation of Rape: The Making and Unmaking of the Feminine Self 6ed (2009) at 186. 48 Department of Justice, Office of Justice Programs, Bureau of Justice Statistics, National Crime Victimization Survey, 2010–2014 (2015). 49 South African Police Service analysis of the 2014/15 national crime statistics and the Statistics of South Africa‟s mid-year population estimates for annual rape rates from 2008/09 to 2014/15. 50 Between 2006 and 2016, this Court had to deal with eleven appeals on s 276B of the Criminal Procedure Act 51 of 1977 from various Divisions of the High court. 51 S v Monyane & others 2008 (1) SACR 543 (SCA) para 28. Appearances For Appellant: S B Mngadi Instructed by: Durban Justice Centre, Durban Bloemfontein Justice Centre, Bloemfontein For Respondent: F van Heerden Instructed by: The Director of Public Prosecutions, Pietermaritzburg

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 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Mhlongo v The State (140/16) ZASCA 152 [2016] MEDIA STATEMENT Today the Supreme Court of Appeal (SCA) upheld the appeal by the appellant against the order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg in terms of which the court a quo had fixed a non-parole period of 12 years in respect of the effective period of 18 years’ imprisonment imposed on the appellant. The order was set aside and the matter was remitted to the court a quo for the parties to make representations on the desirability of granting an order in terms of s 276B of the Criminal Procedure Act 51 of 1977. The issues before the SCA were (i) whether the incorrect reference to Part 2 of Schedule 2 and not Part 1 of Schedule 2 to s 51(1) of the Criminal Law Amendment Act 105 of 1997 vitiated the sentence proceedings and (ii) the application of s276B of the Criminal Procedure Act 51 of 1977. The appellant was charged and convicted on one count of rape by the regional court and sentenced to life imprisonment. On appeal the conviction was upheld and the sentence of life imprisonment was substituted with a sentence of 18 years’ imprisonment and a fixed non-parole period of 12 years in terms of s 276B of the Criminal Procedure Act 51 of 1977. The appellant contended that the State made no application to fix the non-parole period, that the appellant was not given notice and the opportunity to present argument or evidence for or against the fixing of a non-parole period. On appeal, the SCA held that the fact that the charge sheet had a defect which was never rectified in terms of s 86(1) of the Criminal Procedure Act did not of its own vitiate the sentencing proceedings. That each case must be treated and judged on its own facts, before any decision to set aside the proceedings can be taken. The SCA held further that on a proper interpretation of s 276B and having regard to several reported judgments of this court, s 276B must be invoked for substantial reasons and that the discretion to fix a non-parole period must not be exercised lightly, but only in exceptional circumstances which can only be established by an investigation and a consideration of salient facts and further evidence. It therefore followed that there was no justification for the court a quo to have interfered with the sentence imposed by the regional court. The SCA also remarked that the failure on the part of the State to obtain a Victim Impact Statement (VIS) for purposes of sentence and the failure to cross appeal the sentence imposed by the court a quo was a travesty of justice. The SCA held further that legal representatives should realise their duty and roles in criminal cases, especially at the sentencing stage and the importance of the VIS in order to place all information before the court. The SCA set aside the order of the court a quo and remitted the matter back to the court a quo for the parties to make representations in terms of s 276B of the Criminal Procedure Act 51 of 1977. --- ends ---

1927

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 661/2010 In the matter between: SOUTH AFRICAN RAIL COMMUTER CORPORATION LIMITED Appellant and ALMMAH PHILISIWE THWALA Respondent Neutral citation: South African Rail Commuter Corporation Ltd v Thwala (661/2010) [2011] ZASCA 170 (29 SEPTEMBER 2011) Coram: MTHIYANE, HEHER, MAYA, MAJIEDT AND WALLIS JJA Heard: 16 August 2011 Delivered: 29 September 2011 Summary: Damages – appellant falling on train station platform and sustaining bodily injuries when jostled by fellow commuters alighting from a stationary train – claim based on negligent omission – negligence not proved. ___________________________________________________________________ ORDER On appeal from: South Gauteng High Court, Johannesburg (Lamont 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 is substituted: ‘Absolution from the instance is granted, with costs.’ _____________________________________________________________________________ JUDGMENT __________________________________________________________________ MAYA JA (MTHIYANE, HEHER, MAJIEDT, WALLIS JJA concurring): [1] The respondent, a 54 year-old woman, sued the appellant in the South Gauteng High Court (per Lamont J) for damages arising out of an incident in which the respondent was injured at the Village Main Station, Johannesburg on 1 June 2007. The trial proceeded only on the issue of liability (which the appellant denied), the parties having obtained a consent order separating the issues of liability and quantum in terms of rule 33(4) of the Uniform Rules. At the conclusion of the trial, the court below found that the appellant’s negligence caused the respondent’s injury and that it was consequently liable for her damages. The appeal is with its leave. [2] The background facts are simple and largely undisputed. On her way to work on the fateful morning, the respondent, a regular commuter on the appellant’s train service since she took employment in the Village in 1990, boarded her usual train, 9705, at Orlando West, Soweto between 05h00 and 06h00. The train was more crowded than usual because of a civil service strike which brought more passengers. Her regular coach was full to capacity with seated and standing passengers and she was compelled to take the adjacent one, also crowded, in which she stood for the duration of her ride. As the train approached her station, disembarking passengers pushed their way to the doors sweeping her along with the tide. She was pushed in that throng and fell on the station platform. She was trampled whilst lying there in a daze. She sustained soft tissue injuries on the neck and right arm and a further head injury which caused the momentary loss of consciousness. No one came to her aid in the rush and when she could compose herself, she rose and sought a station official to assist her. She found a ticket examiner, Ms Rennet Tshidzumba, to whom she reported the incident and showed her injuries. Ms Tshidzumba took her to Mr Johannes Maleka, a Metrorail1 leading protection official and manager who had visited the station to investigate a case of theft. The latter simultaneously interviewed and took sworn statements concerning the incident from both the respondent and Ms Tshidzumba. Thereafter, the respondent was conveyed to hospital to receive medical care. [3] The only dispute which arose related to whether the train was in motion or stationary when the respondent was pushed and fell. In opening addresses at the beginning of the trial, the parties’ legal representatives informed the court below that it was not disputed that ‘the [respondent] was pushed from [in]side the train onto the platform and basically the only issue ... is whether the train was stationary or in motion’. According to the respondent’s counsel, ‘[the] only other evidence on behalf of the [respondent would] be that the train was overcrowded and that the doors of the train remained open from the previous station up to the station where the incident occurred’. 1 Metrorail is one of the divisions or business units of services Transnet Ltd, a public company with share capital owned by the State, which include South African Airways, port services and freight rail. It was established in terms of the Legal Succession to the South African Transport Services Act 9 of 1989 to render commuter rail services. [4] The respondent’s testimony was that she noticed that the train doors were open only when it pulled in at Village Main Station (contrary to her counsel’s summation of her case above that the train doors were open from the previous station) and jostling passengers, who pushed her causing her fall, started disembarking before the train came to a complete standstill. She claimed to have told both Ms Tshidzumba and Mr Maleka that she was pushed from the train whilst it was still moving, albeit slowly. However these officials, who testified for the appellant, were adamant that she reported that the train had already stopped when she was pushed to the platform and fell. [5] In his evidence, Mr Maleka referred to two documents which he said recorded the respondent’s report to him. In the statement she gave to Mr Maleka mentioned above – which he took in her language, Zulu, translated into and wrote in English and then read back to her for confirmation – the respondent said: ‘On its arrival at Village Main the train stopped and as I was about to disembark the train I was pushed by commuters who were also disembarking. I then fell out of the train to the ground with my right shoulder. The train was overcrowded. I then went to the ticket offices ... and looked for ticket examiners as they were not yet at the station. At about 7h10 I saw one of the ticket examiners arriving and I reported the incident to her.’ [6] In the appellant’s Railway Occurrence Reporting (Liability) Report completed by Mr Maleka contemporaneously with the execution of the respondent’s affidavit during her interview, one of the pro forma questions was whether the train was in motion when the accident occurred. Mr Maleka had checked the answer ‘No’. He emphasized the importance of this aspect in his evidence stating that ‘it very important … it is one of the major question[s] put on the liability form … and the information which I must write into that form, I must be very certain that it is correctly related to me, what I am writing down’. [7] Ms Tshidzumba’s account was similar and, despite lengthy cross-examination on this point, she steadfastly maintained that the respondent’s report was that the accident took place after the train had stopped. This testimony tallies with her affidavit recorded by Mr Maleka, in the respondent’s presence, which reads: ‘[The respondent] accessed the train at about 05h40. She was inside the train ... at Village Main and was about to disembark ... She alleges that immediately after the train stopped commuters from her back pushed her out of the coach ... and she fell to the ground on her right shoulder. Train according to her was overcrowded.’ [8] The driver of train 9705, Mr Johannes Fourie, testified. He explained that he cannot see the 12-coach train from his driving post in the front as he faces forward and relies on train guards who man the coaches to operate the doors. It is these guards who open and close the train doors (which are inspected daily for mechanical faults and functioned properly at the material time) by pressing certain buttons to release or engage the door locking mechanism when it is safe for passengers to board or disembark. He said he is able to hear, from his driving seat, the whooshing sound from air pressure being released when the doors open after he stops the train. When the train departs the guards sound a bell to alert him that it is safe to drive. From his account, there appears to have no deviation from this procedure on the relevant morning. His train ran smoothly and no mishap was brought to his attention. He sought to dispute that the train was overcrowded but conceded in cross-examination that he could not deny such evidence as he did not and could not see what happened in the coaches behind him. [9] The court below rejected the respondent’s evidence that the train was moving when the accident occurred. It found it improbable that ‘the general throng of passengers of whom she was one would’ exit a moving train and concluded that the train was stationary when the respondent, pushed along by other passengers, disembarked and fell. The court however accepted the respondent’s version that the train was overcrowded. On that basis it found that the harm suffered by the respondent – that a frail commuter such as the respondent, travelling on a crowded train during peak hours, might be pushed, fall and suffer injury – was foreseeable and that the appellant ‘was under an obligation to take steps to prevent’ it. The court consequently held that by allowing the train to be overcrowded, the appellant negligently failed to take reasonable steps to prevent harm which was foreseeable and that such negligent omission was the direct cause of the respondent’s injuries giving rise to liability for her damages. [10] In her particulars of claim the respondent based her cause of action on the appellant’s alleged breach of its ‘legal duty, alternatively a duty of care ... to ensure the safety of the public ... making use of such services as passengers or otherwise’. It was alleged that the respondent ‘was pushed, by persons unknown to her, from the moving train, through open coach doors and fell on the platform’. The grounds of negligence were then pleaded as follows: ‘6.1 The Defendant failed to ensure the safety of members of the public in general and the Plaintiff in particular on the coach of the train in which the Plaintiff travelled; 6.2 The Defendant failed to take any or adequate steps to avoid the incident in which the Plaintiff was injured, when by the exercise of reasonable care it could and should have done so; 6.3 The Defendant failed to take any or adequate precautions to prevent the Plaintiff from being injured by moving train; 6.4 The Defendant failed to employ employees, alternatively, failed to employ an adequate number of employees to guarantee the safety of passengers in general and the Plaintiff in particular on the coach in which the Plaintiff intended to travel; 6.5 The Defendant failed to employ employees, alternatively, failed to employ an adequate number of employees to prevent passengers in general and the Plaintiff in particular from being injured in the manner in which she was; 6.6 The Defendant allowed the coach of the train in which the Plaintiff was travelling to be overcrowded; 6.7 The Defendant allowed the train to be set in motion without ensuring that the doors of the train and coach in which the Plaintiff was travelling were closed before the train was set in motion; 6.8 The Defendant took no steps to prevent the coach in which the Plaintiff was travelling from becoming overcrowded; 6.9 The Defendant allowed the train to move with open doors and failed to take any, alternatively, adequate steps to prevent the train from moving with open doors; 6.10 The Defendant failed to keep the coach safe for use by the public in general and the Plaintiff particular; 6.11 The Defendant neglected to employ security staff on the platform and/or the coach in which the Plaintiff was travelling to ensure the safety of the public in general and the Plaintiff.’ [11] The test by which to determine delictual liability is trite. It involves, depending upon the particular circumstances of each case, the questions whether (a) a reasonable person in the defendant’s position would foresee the reasonable possibility of his or her conduct causing harm resulting in patrimonial loss to another; (b) would take reasonable steps to avert the risk of such harm; and (c) the defendant failed to take such steps.2 But not every act or omission which causes harm is actionable. For liability for patrimonial loss to arise, the negligent act or omission must have been wrongful.3 And it is the reasonableness or otherwise of imposing liability for such a negligent act or omission that determines whether it is to be regarded as wrongful.4 The onus to prove negligence rests on the plaintiff and it requires more than merely proving that harm to others was reasonably foreseeable and that a reasonable person would probably have taken measures to avert the risk of such harm. The plaintiff must adduce evidence as to the reasonable measures which could have been taken to 2 Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-F; Mkhatshwa v Minister of Defence 2000 (1) SA 1104 (SCA) paras 19-22; Sea Harvest Corporation (Pty) Ltd v Duncan Dock Cold Storage (Pty) Ltd 2000 (1) SA 827 (SCA) para 22. 3 See, for example, Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority 2006 (1) SA 461 (SCA) para 12; Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) para 10; Charter Hi (Pty) Ltd v Minister of Transport [2011] ZASCA 89. 4 Trustees,Two Oceans above para 11; Shabalala v Metrorail 2008 (3) SA 142 (SCA) para 7. prevent or minimise the risk of harm.5 [12] It is settled that the appellant (a corporation whose main object and business in terms of the Legal Succession to the South African Transport Services Act 9 of 1989 under which it was established, is to provide rail commuter services in the public interest and generate income from the exploitation of rail commuter assets on behalf of the State)6 carries a positive obligation to implement reasonable measures to ensure the safety of rail commuters who travel on its trains.7 Such obligation must give rise to delictual liability where, as was pleaded here, the risk of harm to commuters resulting from falling out of crowded trains running with open doors is eminently foreseeable. [13] Reverting to the facts of the present matter, I respectfully agree with the court below that the train must have stopped before the respondent was unceremoniously ejected from her coach. Any other conclusion would necessitate a finding that Mr Maleka and Ms Tshidzumba who interviewed the respondent directly after the accident, for an unknown reason and no obvious gain to them, somehow concocted a grand scheme to cover for the appellant and, to achieve that goal, falsified documentation by deliberately recording a report contrary to what the respondent told them and were prepared to perjure themselves in court. Notably, it was not put to either of them in their thorough cross-examination that they were lying in this regard to afford them an opportunity to deal with such a charge. There is, in my view, simply no basis to draw the far-fetched conclusion of a conspiracy on the acceptable evidence. [14] I may just add that I accept that it is common human behaviour for railway 5 Shabalala para 11. 6 See ss 15(1), 22 and 23(1) of the Legal Succession to the South African Transport Services Act 9 of 1989. 7 Rail Commuters Action Group v Transnet Ltd t/a Metrorail 2005 (2) SA 359 (CC) paras 82-88. commuters, particularly during morning peak periods when most are in a hurry to get to work, to rush to the doors of a coach, when it nears their destination, so as to disembark quickly. This, in fact, is supported by the respondent’s evidence that ‘if the train is about to stop or to arrive at the station, people push each other ... because they want to get off the train’. I find it most unlikely, as did the court below, that the majority of the passengers, no matter how much in a rush they are, would engage in such a dangerous exercise as to exit a moving train as the respondent would have it. What seems more probable is that when the doors of the stationary train opened, the respondent was trapped in the surge of dismounting passengers, shoved in the rush and lost her balance. [15] But I have a difficulty with the factual finding made by the court below that the train and, in particular, the respondent’s coach, was ‘overcrowded’, from which the inference of negligence was drawn. The sum of the respondent’s evidence on this aspect was merely that the train was ‘very full … even up to the door’. She neither pleaded nor established in evidence that the appellant had a duty to regulate the numbers of its rail passengers nor what reasonable measures it ought to have implemented in that regard to ensure passenger safety that it omitted to take. She led no evidence, for example, on the passenger capacity of the coach; if that number was exceeded, how many passengers remained in the coach when the train reached her station etc. One cannot assume simply from the fact that there were standing passengers that the coach carried an impermissible number as the appellant’s policy and applicable safety standards might well legitimately have allowed that practice. [16] I say this aware that the appellant’s policies and legal obligations in the conduct of its rail service are, of course, peculiarly within its knowledge. So too is the nature and extent of the relevant precautionary measures it must take to ensure rail commuter safety. However, the fact remains that it did not have to prove that it could not reasonably have prevented the respondent’s fall. The record shows no indication that the respondent attempted to ascertain this kind of evidence by, for example, employing the mechanisms provided by the rules of court such as seeking discovery, requesting particulars for trial etc. The nature of the respondent’s onus was such as to oblige her to adduce evidence that gave rise to an inference of negligence. Only then would the appellant have had to rebut that inference by adducing evidence relating to the measures it took to avert harm. But the onus of proving that such measures were inadequate and unreasonable in the circumstances would nevertheless remain on the respondent. [17] The question which remains for determination is whether on the evidence that the respondent fell and sustained injury as a result of being pushed from a stationary train by impatient fellow commuters – a happenstance over which the appellant was not shown to have control – she discharged the onus resting upon her, of proving on a balance of probabilities that the appellant was negligent: bearing in mind that whether or not conduct constitutes negligence ultimately depends upon a realistic and sensible judicial approach to all the relevant facts and circumstances.8 [18] As indicated above, the premise of the respondent’s case was that she fell and sustained injury as a result of being pushed by an excessive crowd ‘from inside’ a moving train. Quite apart from the finding that the evidence does not establish that she was pushed and fell because the coach was overcrowded and her failure to establish the reasonable precautionary measures that the appellant could have taken to prevent passengers knocking one another down when disembarking from stationary trains, the respondent’s single, insurmountable hurdle is her failure to establish that the train was in motion when she was ejected from it. It seems to me that once the court accepted that the train was stationary when the respondent disembarked and the 8 Mkhatshwa para 23. accident occurred, that should have been the end of the respondent’s case. This, clearly, was the result contemplated by the parties themselves when they defined the issue; that only a finding that the train was in motion when the respondent was pushed and fell would give rise to liability. The court below thus erred in this regard and the appeal must succeed. [19] In the result the following order is made: 1 The appeal is upheld with costs. 2 The order of the court below is set aside and the following is substituted: ‘Absolution from the instance is granted, with costs.’ ____________________ MML Maya Judge of Appeal APPEARANCES FOR THE APPELLANT: M Smith Instructed by Cliffe Dekker Hofmeyer Inc, Johannesburg McIntyre & Van der Post, Bloemfontein FOR THE RESPONDENT: JC Pieterse Instructed by Edeling Van Niekerk Inc, Johannesburg Lovius-Block, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 September 2011 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal SOUTH AFRICAN RAIL COMMUTER CORPORATION LIMITED v ALMMAH PHILISIWE THWALA (661/2010) [2011] ZASCA 170 (29 SEPTEMBER 2011) The Supreme Court of Appeal today upheld an appeal brought by the South African Rail Commuter Corporation (the appellant) against the decision of the South Gauteng High Court, Johannesburg. The High Court had found the appellant liable for damages suffered by Mrs Almmah Philisiwe Thwala arising from injuries she sustained when she was pushed by fellow commuters and fell from a train onto the platform at Village Main Station in Johannesburg. The SCA held that Mrs Thwala failed to prove that the accident occurred because the train was overcrowded and in motion when she was pushed and that the appellant had been negligent in any way. ---ends---

3195

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case Number : 588 / 06 In the matter between J BLIGNAUT APPELLANT and THE STATE RESPONDENT Coram : MTHIYANE, HEHER and PONNAN JJA Date of hearing : 16 AUGUST 2007 Date of delivery : 30 AUGUST 2007 SUMMARY Sentencing – minimum sentence – substantial and compelling circumstances – misdirection by trial court Neutral citation: This judgment may be referred to as : Blignaut v The State [2007] SCA 94 (RSA) PONNAN JA [1] The appellant, a first offender, was convicted, pursuant to his guilty plea, by the Port Elizabeth Regional Court on charges of robbery with aggravating circumstances and kidnapping. In terms of s 51(2)(a) of the Criminal Law Amendment Act 105 of 1997 (the Act), a regional court is obliged to sentence a first offender on a conviction of the former offence to a term of imprisonment of not less than 15 years. A lesser sentence may only be imposed if substantial and compelling circumstances within the meaning of that expression are found to exist justifying the imposition of such lesser sentence (s 51(3)(a)). The regional magistrate, being of the view that no such circumstances existed, thus imposed a sentence of 15 years’ imprisonment on the robbery count. On the kidnapping, the appellant was sentenced to a term of imprisonment for a period of 5 years which was ordered to run concurrently with the 15 years imposed on the robbery. An appeal to the Grahamstown High Court (Erasmus J, Maqubela AJ) against the finding that no such circumstances existed proved unsuccessful and the further appeal to this Court is with its leave. [2] The facts and circumstances relating to the conviction can be gleaned from the appellant’s written statement adduced in amplification of his plea, which reads: ‘My family had been going through a financial crisis for quite some time. I had a lot of debt at the time. In April 2001 I had lost my job after I had an argument with my supervisor. About a month later my wife got retrenched from her job. Both of us were unemployed at that stage. I used the money which I had received from my provident fund to pay most of our debts. However I still owed Credit Indemnity (a cash loans company) R3 000. By January 2002 all of our monies were finished. My wife started complaining about money that we didn’t have. My parents in law by whom we were living, complained to my wife that we were not paying rent. She in turn complained to me. I was getting tired of all the moaning and groaning about money and food that was not there. There was no income in the household. I then started drinking alcohol regularly. Previously I drank occasionally on weekends. I started drinking a lot with my friends. This continued for a long time. About a week before the incident, I decided to break away from the pressure and decided to go and stay with my wife’s cousin in extension 29 in Bethelsdorp. I left the Thursday and went back home on the Saturday. When I got home, it was the same story about money and food shortages in the house. It continued for the Sunday and Monday. I got to the stage where I could not cope anymore. On that Monday I decided to go for a walk. I walked from our house in Extension 21 toward Arcadia. At the Shopping Complex in Arcadia, I picked up a shoe box, which I intended to use to hold all of my radio cassettes. I then walked further through West End toward Cleary Park. I walked through the park near Machu Primary School where I picked up a motor with the wires attached to it, that belongs to a washing machine. Our washing machine had recently broken. I then put this part into the box and continued to walk towards Cleary Park. When I got to Cleary Park Shopping Centre I sat outside the complex for a long while. I then picked up paper and plastic packets and stuffed it in the box. I picked up 2 plastic packets and put the box in these packets. I then went into the complex and sat inside First National Bank. I then fetched a deposit slip and wrote on it. I wrote the following words, “I HAVE A BOM GIVE ME SOME MOYNE OR I WILL BLOW YOU UP”. I then went to the counter and gave the slip to the teller. The lady teller took the note and then went to the teller next to her. She showed her the note and I remained waiting at the counter. I indicated that I have a bomb in the box and that I have a detonator in my hand. Shortly after that I saw all the people going out of the bank. I asked what is happening and the teller told me that they want to get all the customers out of the bank. I told them that I am looking for money. I was told to wait. The lady then went to the back of the bank and I remained standing at the counter. I then heard a knock at the door. The lady told me that it was the bank manager. Thereafter the lady gave me a sum of R5 000.00. I told the man and the lady that both of them must come with me to get out of the bank. I told them that I was going to use the lady as my hostage. We then proceeded out of the building. The man who pretended to be the bank manager then convinced me to let the lady go and I agreed to that. When we got outside, the so-called bank manager then took a bakkie from a gentleman in the parking lot and the two of us drove off in the direction of Bethelsdorp. While we were driving in Bethelsdorp the man convinced me to throw away the detonator. I then threw it away out of the window. He then stopped the bakkie and I got out of the bakkie. He also got out and then arrested me. He took the box, which contained the so-called bomb and took the money from me. I later learn that the man was a police officer.’ [3] The approach of a sentencing tribunal to the imposition of the minimum sentences prescribed by the Act is to be found in the detailed judgment of Marais JA in S v Malgas 2001 (1) SACR 469 (SCA). The main principles appearing in that judgment which are of particular application to the present appeal are: First, the court has a duty to consider all the circumstances of the case, including the many factors traditionally taken into account by courts when sentencing offenders. Secondly, for circumstances to qualify as substantial and compelling, they do not have to be exceptional in the sense of seldom encountered or rare. Thirdly, although the prescribed sentences required a severe, standardised and consistent response from the courts unless there were, and could be seen to be, truly convincing reasons for a different response, the statutory framework nonetheless left the courts free to continue to exercise a substantial measure of judicial discretion in imposing sentence. (See also S v Fatyi 2001 (1) SACR 485 (SCA) para 5; S v Abrahams 2002 (1) SACR 116 (SCA) para 13.) [4] The circumstances entitling a court of appeal to interfere in a sentence imposed by a trial court were recapitulated in Malgas (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”.’ [5] The question therefore is whether there was a material misdirection by the trial court in the manner in which it weighed the factors relevant to the determination of sentence or, if not, whether the sentence imposed was in any event so shockingly inappropriate as to give rise to the inference that there had been a failure to properly exercise the sentencing discretion (Abrahams para 15). [6] In my view the test for intervention on the first leg is satisfied and it is thus unnecessary to consider the second. The record reflects that the regional magistrate erred in several respects in his approach to sentence. He thus materially misdirected himself in imposing a sentence of fifteen years. First, he stated without elaboration or greater specificity that there were aggravating circumstances present. Plainly, there were none. Secondly, he wrongly characterised the appellant’s conduct as an attempt to perpetrate, as he put it, a popular crime. Thirdly, the magistrate emphasised the community interest and general deterrence in arriving at what he considered to be a just sentence, whilst the other traditional aims of sentencing such as personal deterrence, rehabilitation and reformation did not merit a mention in his judgment. Fourthly, the many mitigating factors that were present were not afforded appropriate recognition by the magistrate, nor were they balanced against what he perceived to be the aggravating features in the commission of the offences. It follows that the sentence imposed by the magistrate falls to be set aside and this Court is accordingly free to impose the sentence it considers appropriate subject of course to the provisions of the Act. [7] Against that backdrop I turn to the mitigating factors present in this case. It is in the appellant’s favour that his first criminal transgression had occurred at the relatively mature age of 34 and that he had maintained an unblemished record until then. He had, until the loss of his job, been in gainful employment and had supported his wife and two children. The loss of his employment had resulted in deteriorating financial security for his family and acute embarrassment for himself – resulting; it would seem, in him being driven to despair. To cope, he drew greater solace from alcohol. Despite all of this though, according to the probation officer, he continued to have a warm and meaningful relationship with his wife and children. The offence itself was ill- conceived and executed in a rather inept and amateurish manner. It occurred without any real preplanning or forethought. Although the personnel at the bank responded to his bomb threat with genuine apprehension and anxiety, the appellant was in truth not possessed of a bomb or armed in any other manner; he thus posed no real danger to anyone. Although not proffered as an excuse for his conduct, his desperate situation no doubt drove him to commit the offences for which, by pleading guilty he has demonstrated remorse. He must undoubtedly have learnt from his first brush with the law and he is thus unlikely to resort to crime again. Personal deterrence accordingly ought not to weigh too heavily in the sentencing process. That all of the money was recovered and that the appellant was arrested with relative ease is perhaps indicative of his lack of sophistication and guile. In short, his conduct on the day in question was childlike and naïve and, if the truth be told, woeful and pathetic. [8] In my view the cumulative effect of the aforegoing factors, all of which the sentencing court failed to take into account, constitute substantial and compelling circumstances within the meaning of that expression. I am thus persuaded that a departure from the prescribed minimum is justified on the basis that such a sentence would be disproportionate to the crime, the criminal and the legitimate interests of society (S v Mahomotsa 2002 (2) SACR 435 (SCA) para 20). It follows that the fifteen years’ imprisonment imposed on the appellant by the regional magistrate is not a just sentence. Plainly, for an offence of the kind encountered here, a custodial sentence is clearly warranted. Reconsidering the matter, I consider a sentence of 5 years’ imprisonment to be appropriate in respect of count 1 – the robbery with aggravating circumstances. [9] In the result: (a) The appeal against sentence succeeds. (b) The sentence of 15 years’ imprisonment imposed by the regional court pursuant to the appellant’s conviction on count 1 - the robbery with aggravating circumstances is set aside and replaced with the following: ‘The accused is sentenced to imprisonment for a term of 5 years’. V M PONNAN JUDGE OF APPEAL CONCUR:

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 August 2007 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. J BLIGNAUT v THE STATE (Case No 588 / 06) Media Statement Today the SCA upheld an appeal by Joseph Blignaut against a sentence of 15 years’ imprisonment imposed by the Port Elizabeth Regional Court in consequence of his conviction on charges of robbery and kidnapping. The appellant had pleaded guilty to the charges and in his plea explanation he stated that he had lost his employment and had fallen on hard times. On the day in question, whilst out walking he had come upon an empty shoe box, a discarded motor with wires attached to it, some paper and two plastic packets. He placed the latter three items into the shoe box. When he got to the First National Bank in Cleary Park in Port Elizabeth he wrote the words: ‘I have a bom give me some moyne or I will blow you up’ onto a deposit slip and handed it to a teller. He observed the bank being evacuated and whilst that was happening a person entered the bank who was introduced to him as the ‘bank manager’. He was given R5 000 by the teller and thereafter left the bank together with the bank manager and teller. He was persuaded by the bank manager to release the teller, who he proposed taking hostage. Once outside the bank he boarded a bakkie together with the bank manager. En route to Bethelsdorp the bank manager convinced him to throw away the motor. He then arrested the appellant. The appellant later learnt that the ‘bank manager’ was in fact a police officer. The regional court held that there were no substantial and compelling circumstances present warranting a departure from the statutorily prescribed minimum sentence. It accordingly imposed a sentence of 15 years’ imprisonment in respect of the robbery. On the charge of kidnapping the appellant was sentenced to imprisonment for a term of 5 years which was ordered to run concurrently with the 15 years. An appeal to the Grahamstown High Court was unsuccessful. That court however granted the appellant leave to appeal to the SCA. According to the SCA, the regional court had misdirected itself in several respects. It held that the offences had been perpetrated without any preplanning in a rather inept and amateurish manner and that the various mitigating factors such as: the appellant was a first offender, he had, by pleading guilty, demonstrated remorse for his conduct, he did not in fact pose a threat to anyone, and all of the money had been recovered; had not been afforded due weight by the regional court. It accordingly found that the cumulative effect of all of those factors constituted substantial and compelling circumstances and thus set aside the sentence of 15 years and replaced it with a term of imprisonment for a period of 5 years. --- ends ---

3436

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 779/2019 In the matter between: MINISTER OF PUBLIC WORKS APPELLANT and ROUX PROPERTY FUND (PTY) LTD RESPONDENT Neutral citation: Minister of Public Works v Roux Property Fund (Pty) Ltd (779/2019) [2020] ZASCA 119 (1 October 2020) Coram: WALLIS, MOCUMIE, MOLEMELA and NICHOLLS JJA and MATOJANE JJA Heard: 7 September 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand- down is deemed to be 9.45 am on 1 October 2020. Summary: Civil procedure – non–compliance with s 3(1) the Institution of Legal Proceedings against Certain Organs of State Act 40 of 2002 – application for condonation in terms of s 3(4) – whether s 3(4) permits condonation for non– compliance with the provisions of ss 3(1) and 3(2)(b) – whether the respondent's non–compliance with s 3(1) ought to be condoned in terms of s 3(4) – whether the court a quo misdirected itself in relation to requirements of s 3(4)(b) – whether condonation should have been granted. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from Gauteng Local Division, Pretoria (Neukircher 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 high court is set aside and the following order substituted for it: '1 The application is dismissed with costs including the costs of two counsel. The plaintiff’s claim is dismissed with costs, including the costs of two counsel where two counsel were employed.' __________________________________________________________________ JUDGMENT ___________________________________________________________________ Matojane AJA (Wallis, Mocumie, Molemela and Nicholls JJA) Introduction [1] The issue in this appeal is whether the failure by the respondent to have timeously given notice to the appellant in terms of s 3(2) of the Legal Proceedings Against Certain Organs of State Act 40 of 2002 ("the Act") ought to have been condoned by the court a quo in terms of s 3(4) of the Act. [2] The notice was given in respect of an action instituted by the respondent against the Minister in which respondent claimed damages in the amount of R340 million arising from the alleged breach by the National Department of Public Works ("DPW") of a written lease agreement concluded between the respondent and the DPW. [3] The Minister of Public Works (the Minister) acts in his capacity as a member of the Executive of the Government of the Republic of South Africa, and the Minister responsible for the National Department of Public Works. Mr Ngwane Roux Shabangu, the deponent to the founding affidavit, is the sole director of the respondent. [4] The notice under the Act was dated 28 August 2014, the same day as that on which the action was instituted. In October 2014 the Minister filed a special plea asking for the claim to be dismissed on the grounds that notice had not been given timeously and there had been no application for condonation. The respondent did nothing about this until it launched the present application on 24 April 2017. Condonation was granted by Neukircher J. This appeal is with her leave. [5] The appellant contended that the power of condonation in terms of s 3(4) of the Act is only available in respect of non-compliance with the provisions of s 3(2)(a) and does not extend to non-compliance with s 3(1). The appellant argued further that the application for condonation did not satisfy the requirements of s 3(4)(b) and that the court in the exercise of its discretion ought to have refused condonation due to the delay by the respondent in bringing the application. Background facts [6] On 20 July 2010, the respondent as lessor entered into a written lease agreement with the DPW, as lessee. In terms of the lease agreement, the DPW agreed to lease premises from the respondent for the use of the South African Police Service for 9 years 11 months commencing on 1 November 2010 and terminating on 30 September 2020. Two addenda to the lease agreement were subsequently entered into in December 2010 and January 2011 respectively. The first addendum on 1 December 2010 increased the area and rent payable and the second one on 5 January 2011 altered the period of the lease from 1 April 2011 to 28 February 2021. [7] The DPW did not take occupation of the leased premises on the commencement date of 1 April 2011, or at any time thereafter, nor did it ever pay any rent for them. It denied the validity of the lease on the grounds of the lack of authority of the DPW officials who concluded the lease. It also contended that various statutory requirements pertaining to procurement of goods and services for an organ of state were not complied with. [8] On 11 April 2011, the respondent defaulted on its mortgage bond repayment to Nedbank, the bondholder and on 21 April 2011 Nedbank instituted action against respondent for the accelerated outstanding balance of the mortgage bond. [9] On 13 September 2011, the appellant instituted motion proceedings against the respondent in the Gauteng High Court to declare the lease agreement void ab initio. The respondent regarded this Act as a repudiation of the lease agreement. [10] On 7 November 2011, Nedbank obtained a judgment against the respondent in the foreclosure action for payment of the sum of R248, 589, 308.49 plus interest. Leave to execute was also granted. On 14 August 2013, the property was sold by the sheriff at a sale in execution and was bought by Nedbank. [11] On 28 August 2014, the respondent issued and served a summons on the appellant claiming damages arising from the breach and repudiation. The damages claimed represented an amount in respect of the value of the lost ownership of the property and the future benefit of the respondent being the owner of the property at the end of the lease without the property being encumbered by a mortgage bond or any liability. Condonation [12] The legal requirements for giving notice of the intention to institute proceedings before issuing summons against an organ of state to recover a debt, are fully set out in s 3 of the Act which specifies that: ‘(1) No legal proceedings for the recovery of a debt may be instituted against an organ of state unless- 1. (a) the creditor has given the organ of state in question notice in writing of his or her or its intention to institute the legal proceedings in question; or 2. (b) the organ of state in question has consented in writing to the institution of that legal proceeding(s)- (i) without such notice; or (ii) upon receipt of a notice which does not comply with all the requirements set out in subs (2). (2) A notice must- 1. (a) within six months from the date on which the debt became due, be served on the organ of state in accordance with s 4 (1); and 2. (b) briefly set out- (i) the facts giving rise to the debt; and (ii) such particulars of such debt as are within the knowledge of the creditor’. [13] In terms of s 3(4)(a) of the Act, if an organ of state relies on a creditor’s failure to serve a notice in terms of subsec (2)(a), the creditor may apply to a court having jurisdiction for condonation of such failure. Section 3(4)(b) determines that a court may grant an application for condonation if it is satisfied that: "(i) the debt has not been extinguished by prescription; (ii) good cause exists for the failure by the creditor; and (iii) the organ of state was not unreasonably prejudiced by the failure." These three requirements are conjunctive, and the court must be satisfied that the requirements have been met before it can exercise its discretion and condone non- compliance with the Act.1 1 Minister of Safety and Security v De Witt [2008] ZASCA 103; 2009 (1) SA 457 (SCA) para 13. Minister of Agriculture and Land Affairs v C J Rance (Pty) Ltd [2010] ZASCA 27; 2010 (4) SA 109 (SCA) para 11. [14] Counsel for the applicant submitted that the power of condonation in terms of s 3(4) is limited to failure to give timeous notice and that a court cannot condone the failure by the creditor to give notice. This court in Minister of Safety and Security v De Witt2 considered and rejected this interpretation of s 3(4) and held: ‘In Legal Aid Board Theron J concluded that because s 3(1) is couched in peremptory terms, a court has no power to condone a failure to serve a notice prior to the creditor's institution of action. Her finding that ‘The court does not have the power to condone the institution of legal proceedings in circumstances where the provisions of s 3(1) have not been complied with" is in my view incorrect. It fails to take into account the purpose of condonation which is to forgive non-compliance or faulty compliance provided that the criteria in s 3(4)(b) are met, and does not accord with an earlier statement in the judgment that s 3(4)(a) 'confers upon the creditor the right to apply for condonation of the failure to comply with the provisions of s 3(1).’ [15] Counsel submitted that this was obiter as that case's facts did not require a consideration of the power to condone non-compliance with s 3(1). Whether that is correct – and it might well be said that this was an integral part of the reasoning and therefore part of the ratio decidendi – it is a fully considered view of this court not lightly departed from. None of the grounds for departing from an earlier decision of the court were advanced or are present. Counsel's point must be rejected. [16] The respondent's non-compliance with s 3 in having failed to serve notice within the six month period provided for in s 3(2)(a) and only having served the notice on 1 September 2014 after service of the summons on 28 at this 2014, may accordingly, subject to the requirements of s 3(4)(b) being satisfied, be condoned by a court. [17] This court in Madinda v Minister of Safety and Security3 has held that the test for the court being satisfied that the requirements mentioned in s 3(4) are present involves, not proof on a balance of probabilities but, 'the overall impression made on a court which brings a fair mind to the facts set up by the parties. According to the judgment the first of these requires 'an extant cause of action'. Prescription is a mixed 2 Minister of Safety and Security v De Witt para 17. 3 Madinda v Minister of Safety and Security [2008] ZASCA 34; 2008 (4) SA 312 (SCA) para 8. question of fact and law. It is not a matter of impression, unlike the questions of good cause and prejudice in the other sub-sections. The court must therefore be satisfied that the claim has not prescribed in order to grant condonation. [18] The second requirement of 'good cause' involves an examination of 'all those factors which bear on the fairness of granting the relief as between the parties and as affecting the proper administration of justice', and may include, depending on the circumstances, 'prospects of success in the proposed action, the reasons for the delay, the sufficiency of the explanation offered, the bona fides of the applicant, and any contribution by other persons or parties to the delay and the applicant's responsibility therefor.' [19] The court held that good cause for the delay is not 'simply a mechanical matter of cause and effect' but involves the court in deciding 'whether the applicant has produced acceptable reasons for nullifying, in whole, or at least substantially, any culpability on his or her part which attaches to the delay in serving the notice timeously'; and in this process, strong merits may mitigate fault; no merits may render mitigation pointless.4 [20] As regards the third requirement it is not all and any prejudice that precludes the grant of condonation. It is only unreasonable prejudice. The availability of witnesses and records will be of particular importance under this head, but other features may also be relevant. Prescription [21] The respondent's cause of action is founded on the alleged repudiation of the lease agreement by DPW on 13 September 2011 when it instituted motion proceedings seeking an order declaring the lease agreement void ab initio. [22] In terms of s 12(1) of Act 68 of 1969 prescription commences running 'as soon as the debt is due'. The term ‘debt’ in the section is wide enough to include any liability arising from or owing under a contract. A debt only becomes due when the 4 Madinda para 12. creditor acquires a complete cause of action and prescription commences to run as soon as the debt is due5. The respondent had knowledge of its damages claim long before the applicant brought the application to have the lease declared void ab initio. In paragraph 10.4 of its particulars of claim respondent pleaded that: "Had the defendant not remained in breach of the lease agreement, had the defendant not repudiated its obligations arising from the lease agreement, and had the defendant made payment of the rental which it was obliged to pay in terms of the lease agreement, the plaintiff would have been in a position to avoid judgment being taken against it by Nedbank". [23] According to the respondent, the damages claimed represents an amount in respect of the value of the lost ownership of the property and the future benefit of its being owner of the property at the end of the lease without the property being encumbered by a mortgage bond or any liability. [24] When Nedbank instituted action on 21 April 2011 claiming the full outstanding balance of the loan and seeking a judgment against the respondent and an order declaring the property specially executable, it was inevitable that the respondent would lose the ownership of the property and the future benefit of being an owner at the end of the lease period. This followed from the fact that the respondent had no defence to the claim. [25] Therefore, the respondent acquired a complete cause of action on 21 April 2011. On the limited facts that the respondent chose to put up in support of its application it must have been apparent by 21 April 2011 that the appellant was not going to occupy the premises or pay the rent, with the consequence that it was going to lose the property. This was a clear repudiation of its obligations under the lease. It was therefore apparent by then that the respondent was going to suffer the damages that are claimed in this action. [26] The respondent knew the identity of the appellant and the facts upon which its cause of action was based. Summons in the action was served on 28 August 2014 being after the expiry of the relevant three year prescription period which ended on 5 See Haskins & Sells Consulting (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd 1991 (1) SA 525 (A) at 532G approved in Road Accident Fund v Mdeyide 2011 (2) SA 26 (CC) para 13, note 16. 20 April 2014. The respondent did not satisfy the court that the claim has not prescribed. Good cause [27] It is trite that as a party seeking condonation is seeking a court's indulgence, a full explanation for non-compliance must be given, and the explanation must be reasonable enough to excuse the default.6 The respondent's explanation for the delay in serving the notice was that it only became aware of the claim after retaining the services of new attorneys in August 2014. Its erstwhile attorneys did not advise of its damages claim and of the need to give notice in terms of s 3(1). The respondent does not explain the delay from October 2014 to May 2018 after it engaged the services of new attorneys. [28] This explanation is wholly inadequate. Its erstwhile attorneys defended the Minister's application to declare the Lease Agreement invalid ab initio. The only reason for doing so was in order to establish the lease's validity in order to pursue a claim for damages against the DPW. No other reason for defending the case occurs to us and counsel was unable to suggest any other reason for doing so. The respondent alleged that substantial fees were paid to its erstwhile attorneys in this regard but did not explain what the fees were for and what advice it received from its previous attorneys and the extent to which the respondent itself contributed to the delay. [29] By 10 October 2014 when the special plea was filed the respondent was aware that the appellant relied upon non-compliance with the provisions of s 3 of the Act. One would have expected it to bring an application for condonation immediately. Instead it delayed for over three years. The respondent does not explain why over three years elapsed before it could bring the condonation application and what efforts it took to expedite the claim. [30] There is no explanation of any basis for saying that the officials who concluded the lease agreement were authorised to do so and that the lease agreement was valid in law and binding on the Minister. The application to set aside the lease set out in detail the grounds upon which the respondent said that the officials lacked 6 See Grootboom v National Prosecuting Authority and Another 2014 (2) SA 68 (CC) para 23. authority but the founding affidavit did not say on what basis this could be rebutted. The same affidavit gave details of the non-compliance with mandatory procurement requirements, but the respondent has failed to explain why the lease agreement was not concluded in compliance with the requirement of s 217 of the Constitution, the Preferential Procurement Policy Framework Act 5 of 2000, s 38(1)(a) (iii), 44(1)(a), s 66 of the Treasury Regulations and the appellant's supply chain management policy as the lessee was an organ of state, and the procurement involved a considerable amount of public monies. No lawful excuse for non-compliance was proffered. [31] The respondent has failed to meet the criteria established for condonation in terms of s 3(4) as its explanation is not full enough to enable the court to understand how the default came about and to assess its conduct and motives.7 Nor does it set out facts that demonstrate that it has a strong case. All that was said in the founding affidavit was that 'if [the allegations in the particulars of claim] are found to be correct, the plaintiff's clam will be successful'. No facts were advanced to suggest that those allegations could be substantiated. Good cause was not established. Prejudice [32] The third requirement for condonation is for the respondent to prove that the appellant did not suffer unreasonable prejudice due to the delay. Heher JA in Madinda explained that:8 'There are two main elements at play in s 4(b), viz the subject's right to have the merits of his case tried by a court of law and the right of an organ of state not to be unduly prejudiced by delay beyond the statutorily prescribed limit for the giving of notice. Subparagraph (iii) calls for the court to be satisfied as to the latter. Logically, subparagraph (ii) is directed, at least in part, to whether the subject should be denied a trial on the merits. If it were not so, consideration of prospects of success could be entirely excluded from the equation on the ground that failure to satisfy the court of the existence of good cause precluded the court from exercising its discretion to condone. That would require an unbalanced approach to the two elements and could hardly favour the interests of justice. Moreover, what can be 7 See Silber v Ozen Wholesalers (Pty) Ltd 1954 (2) SA 345 (AD) at 352G,353H. 8 Madinda para 10. achieved by putting the court to the task of exercising discretion to condone if there is no prospect of success? In addition, that the merits are shown to be strong or weak may colour an applicant's explanation for conduct which bears on the delay: an applicant with an overwhelming case is hardly likely to be careless in pursuing his or her interest, while one with little hope of success can easily be understood to drag his or her heels. As I interpret the requirement of good cause for the delay, the prospects of success are a relevant consideration.' [33] The applicant has pointed out that key personnel who were involved in the negotiation and conclusion of the lease agreement are no longer in the employ of the applicant, and the trial will require oral evidence by everyone who was involved. It mentions that the former acting Director-General who deposed to the founding affidavit supporting the appellant's application for an order declaring the lease invalid has, after disciplinary charges were brought against him, deposed to an unsolicited affidavit in the same matter changing his version. [34] The applicant avers that if the application is granted, it will be prejudiced in conducting the trial without its key witnesses who have since been dismissed from its employ. Undeniably, an inordinate delay of more than three and a half years between the time the respondent was aware that it was required to bring the condonation application and the time that it brought the application is prejudicial to the applicant. Long delays in litigation are not in the interest of justice as memories of witnesses may fade, documents may get lost and changes in administration may result in a high turnover of senior staff. [35] Accordingly, the respondent has failed to satisfy the court that the applicant has not been unreasonably prejudiced by the failure to serve the notice timeously. Conclusion [36] Because the respondent did not meet the three requirements for condonation in terms of s 3(4)(b) no question of the court exercising a discretion to grant condonation arose. The parties agreed that in that event there was no purpose in the matter returning to the high court and that the order we grant should dismiss the action. [37] The following order is granted 1. The appeal is upheld with costs including those attendant on the employment of two counsel. 2. The order of the high court is set aside and the following order substituted for it: '1 The application is dismissed with costs including the costs of two counsel. The plaintiff’s claim is dismissed with costs, including the costs of two counsel where two counsel were employed.' ______________________ K MATOJANE ACTING JUDGE OF APPEAL APPEARANCES For appellant J Peter SC (with him M Mokotedi) Instructed by: State Attorney, Pretoria and Bloemfontein For respondent: P T Rood SC Instructed by: Etienne Naude Attorneys, Pretoria Symington & De Kok Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 October 2020 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Minister of Public Works v Roux Property Fund (Pty) Ltd (779/2019) [2020] ZASCA 119 (1 October 2020) The SCA today upheld an appeal against a judgment of the Gauteng Division of the High Court, Pretoria, granting condonation to the respondent for its failure to give timeous notion of its intention to bring proceedings against the Minister of Public Works claiming damages of nearly R250 million. The action was based on the alleged repudiation by the Department of Public Works of the lease of a centre city building in Pretoria to serve the SAPS. The lease was concluded in 2010 with two addenda being concluded thereafter extending the commencement of the lease and increasing the rental. When the Department of Public Works refused to take occupation of the premises on 1 April 2011 and refused to pay the rent, the respondent, the Roux Property Fund (Pty) Ltd, it defaulted on its obligation to Nedbank, which held a mortgage over the property. Nedbank foreclosed on the mortgage and sued the respondent for the outstanding amount. As a result the building was sold. Roux Property Fund commenced an action for damages against the Minister on 28 August 2014 without having given prior notice as required by s 3(1) of the Legal Proceedings against Certain Organs of State Act 40 of 2002. It sought condonation for this failure in an application commenced in May 2017. The high court granted condonation but gave leave to appeal to the SCA. The SCA held that the evidence on behalf of the respondent by Mr Roux Shabangu failed to satisfy the court that the claim had not prescribed at the time the action was commenced; that there was good cause for the failure to give notice timeously as required by the Act and that the Department had not been prejudiced by the failure. In the result the appeal was upheld with costs and the action was dismissed.

190

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 56/2017 Reportable In the matter between: THE ROAD ACCIDENT APPEAL TRIBUNAL FIRST APPELLANT THE HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA SECOND APPELLANT PROF G J VLOK NO THIRD APPELLANT DR C F KIECK NO FOURTH APPELLANT DR C LIEBETRAU NO FIFTH APPELLANT DR R K MARKS NO SIXTH APPELLANT and LARTZ GOUWS FIRST RESPONDENT ROAD ACCIDENT FUND SECOND RESPONDENT Neutral citation: RAF & others v Gouws & another (056/2017) [2017] ZASCA 188 (13 December 2017) Coram: Navsa, Saldulker & Mocumie JJA and Tsoka & Makgoka AJJA Heard: 14 November 2017 Delivered: 13 December 2017 Summary: Interpretation and application of Road Accident Fund Act 56 of 1996 and Regulations thereunder – primary purpose of Appeal Tribunal is to determine a dispute concerning seriousness of injury – Appeal Tribunal does not have final say on question of link between the driving of a motor vehicle and the injuries allegedly sustained – causation to be determined by court. __________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Tuchten J sitting as court of first instance): The appeal is dismissed with costs including the costs of two counsel. _________________________________________________________________ JUDGMENT _________________________________________________________________ Navsa ADP (Saldulker & Mocumie JJA and Tsoka & Makgoka AJJA concurring.) [1] This appeal, with leave of the court below (Tuchten J), concerns the ambit of the powers of the first appellant, the Road Accident Appeal Tribunal (the Tribunal). The question for determination is whether it is within the Tribunal’s statutory remit to finally determine the nexus between the injuries allegedly sustained, on which a claim for compensation is premised, and the driving of a motor vehicle. The appellants, which include The Road Accident Appeal Tribunal, The Health Professions Council of South Africa1 (HPCSA) and the four members who, at its instance, served on the Tribunal, contend that it is indeed within the Tribunal’s statutory power to make such a determination. The first respondent, Mr Lartz Gouws, who is a claimant for purposes of s 17 of the Road Accident Fund Act 56 of 1996 (the Act), contends otherwise. The court below, the Gauteng Division of the High Court, Pretoria found in favour of Mr Gouws. It is that decision against which the present appeal is directed. The appeal turns on the interpretation and application of the relevant statutory provisions. The background is set out hereafter. 1 Established in terms of s 2 of the Health Professions Act 56 of 1974. [2] Mr Gouws allegedly sustained injuries as a result of being struck by a motor vehicle whilst walking in a parking area and being flung over two vehicles in the vicinity. The collision was said to have occurred on 24 July 2010. On 16 August 2012 Mr Gouws lodged a claim for compensation with The Road Accident Fund (the Fund), a statutory insurer, under s 17 of the Act. At this juncture, it is convenient to consider the circumstances under which the Fund, established under s 2 of the Act, is liable to compensate a claimant. [3] In terms of s 17(1), the Fund, inter alia, is ‘obliged to compensate any person (the third party) for any loss or damage which the third party has suffered as a result of any bodily injury . . . caused by or arising from the driving of a motor vehicle by any person at any place within the Republic, if the injury . . . is due to the negligence or other wrongful act of the driver or of the owner of the motor vehicle or of his or her employee in the performance of the employee’s duties as employee’. (My emphasis.) The proviso in s 17(1), following immediately on the aforesaid quoted part, reads as follows: ‘Provided that the obligation of the Fund to compensate a third party for non-pecuniary loss shall be limited to compensation for a serious injury as contemplated in subsection (1A) and shall be paid by way of a lump sum.’ (My emphasis.) Section 17(1A) reads as follows: ‘(a) Assessment of a serious injury shall be based on a prescribed method adopted after consultation with medical service providers and shall be reasonable in ensuring that injuries are assessed in relation to the circumstances of the third party. (b) The assessment shall be carried out by a medical practitioner registered as such under the Health Professions Act 1974 (Act 56 of 1074).’ (My emphasis.) [4] Consonant with s 17(1A), s 26 of the Act enables the Minister to ‘make regulations regarding any matter that may be prescribed in terms of [the] Act, or which it is necessary or expedient to prescribe in order to achieve or promote the object of [the] Act’. The object of the Fund, set out in s 3 of the Act, is ‘the payment of compensation in accordance with [the] Act for loss or damage wrongfully caused by the driving of motor vehicles’. Sections 26(1) and 26(1A) provide: ‘(1) The Minister may make regulations regarding any matter that shall or may be prescribed in terms of this Act or which it is necessary or expedient to prescribe in order to achieve or promote the object of this Act. (1A) Without derogating from the generality of subsection (1), the Minister may make regulations regarding – (a) the method of assessment to determine whether, for purposes of section 17, a serious injury has been incurred; (b) injuries which are, for the purposes of section 17, not regarded as serious injuries; (c) the resolution of disputes arising from any matter provided for in this Act.’ (My emphasis.) [5] The prescribed method referred to in ss 17(1A), 26(1) and 26(1A) is to be found in the Regulations promulgated under the Act (the Regulations).2 Regulation 3(1)(b) dictates how an assessment of an injury in terms of s 17(1A)(a) of the Act is to be conducted by the medical practitioner concerned. It provides as follows: ‘(b) The medical practitioners shall assess whether the third party’s injury is serious in accordance with the following method: i) The Minister may publish in the Gazette, after consultation with the Minister of Health, a list of injuries which are for purposes of Section 17 of the Act not to be regarded as serious injuries and no injury shall be assessed as serious if that injury meets the description of an injury which appears on the list. ii) If the injury resulted in 30 % or more impairment of the whole person as provided in the AMA Guides,3 the injury shall be assessed as serious. iii) An injury which does not result in 30 % or more impairment of the whole person may only be assessed as serious if that injury: (aa) Resulted in serious long term impairment or loss of body function; (bb) Constitutes permanent serious disfigurement; (cc) Resulted in severe long term mental or severe long term behavioural disturbance or disorder; or (dd) Resulted in loss of a foetus.’ (My emphasis.) I pause to note that both s 17(1) of the Act and Regulation 3(1)(b), in terms, limit the assessment by the medical practitioner to one concerning the seriousness of the injury. [6] Prior to the submission of his claim, Mr Gouws’ injuries were assessed by Dr M de Graad, an orthopaedic surgeon, who, on his behalf, completed the prescribed RAF4 form. At this stage it is necessary to have regard to the relevant 2 Road Accident Fund Regulations, GN R770, GG 31249, 21 July 2008. 3 American Medical Association’s Guides to the Evaluation of Permanent Impairment, Sixth Edition. part of Dr de Graad’s report submitted to the Fund in which she stated the following in relation to his injuries: ‘5. SERIOUS INJURY: THE NARRATIVE TEST 5.1 Serious long term impairment or loss of body function. Shoulder replacement on the left Artrodesis of the right thumb. Both upper limbs involved that is restricting him from doing his normal work.’ The description set out above is one, ostensibly, within the ambit of Regulation 3(b)(iii)(aa). [7] On 18 October 2012 Mr Gouws’ claim for compensation in relation to general damages was rejected by the Fund. The material part of the letter written to him on behalf of the Fund informing him of that fact reads as follows: ‘Be informed that the Fund rejects your client’s claim for general damages on the basis that: Dr M de Graad assessed your client in accordance with the prescribed assessment method and concluded that the injury is not serious, as evidenced by the Serious Injury Assessment Report (RAF 4), we await your medico legal reports and photographs of injuries.’ As is clear from what is set out earlier, Dr de Graad, contrary to what is set out in the aforesaid letter, did assess Mr Gouws’ injuries as being serious. Counsel on behalf of the Tribunal rightly did not seek to justify the stated basis for the decision rejecting Mr Gouws’ claim. Simply put, the basis for the Fund’s decision was fallacious. Mr Gouws understandably was aggrieved by the fund’s rejection of his claim on the basis set out above. [8] I interpose to state that in terms of Regulation 3(3)(d) the Fund, if not satisfied that the injury has been correctly assessed: ‘[M]ust: (i) reject the serious injury assessment report and furnish the third party with reasons for the rejection; or (ii) direct that the third party submit himself or herself, at the cost of the Fund or an agent, to a further assessment to ascertain whether the injury is serious, in terms of the method set out in these Regulations, by a medical practitioner or an agent.’ Those are the options open to the Fund. In the event of a further assessment, Regulation 3(3)(e) provides as follows: ‘The Fund or an agent must either accept the further assessment or dispute the further assessment in the manner provided in these Regulations.’ There was no further assessment but there was a rejection of the report. A dispute arose. In the event of a dispute both the claimant and the Fund have a right to refer a dispute to an appeal tribunal. In relation to these options and the dispute resolution provided for by way of an appeal process, see the decision of this court in RAF v Faria 2014 (6) SA 19 (SCA), paras 30-32. [9] The Regulations, in some detail, provide for an appeal process. This is foreshadowed by s 26(1A)(c) of the Act, set out in para 4 above. Regulation 3(4) provides as follows: ‘If a third party wishes to dispute the rejection of the serious injury assessment report, or in the event of either the third party or the fund or the agent disputing the assessment performed by a medical practitioner in terms of the regulations, the disputant shall: a) within 90 days of being informed of the rejection or the assessment, notify the Registrar that the rejection or the assessment is disputed by lodging a dispute resolution form with the Registrar; b) in such notification set out the grounds upon which the rejection or the assessment is disputed and include such submissions; medical reports and opinions as the disputant wishes to rely on; and c) if the disputant is the Fund or agent, provide all available contact details pertaining to the third party.’ [10] The procedure set out in the preceding paragraph and further procedures for the finalisation of an appeal process provided for in Regulation 3 were followed by Mr Gouws. On 22 February 2013, after an exchange of correspondence with the Registrar of the HPCSA4 in relation to a prospective consideration by an appeal tribunal of the dispute referred to it by Mr Gouws, his attorneys submitted a further 4 The Registrar of the HPCSA has the responsibility to appoint members of the Tribunal and provide administrative support to the Tribunal. See definition of ‘Registrar’ in Regulation 1 and Regulation 3(8), which reads as follows: ‘(a) After receiving the notification from the other party or the expiry of the 60 day period, referred to in subregulation (6), the Registrar shall refer the dispute for consideration by an appeal tribunal paid for by the Fund. (b) The appeal tribunal consists of three independent medical practitioners with expertise in the appropriate areas of medicine, appointed by the Registrar, who shall designate one of them as the presiding officer of the appeal tribunal. (c) The Registrar may appoint an additional independent health practitioner with expertise in any appropriate health profession to assist the appeal tribunal in an advisory capacity.’ ‘Registrar’ is defined in the Regulations as the ‘Registrar of the Health Professions Council of South Africa established in terms of section 2 of the Health Professions Act, 1974 (Act No. 56 of 1974)’. ‘medico-legal’ report by Dr de Graad dated 19 February 2013, past hospital records, a radiological report, consultation notes of a neurosurgeon, a letter from Dr Jonker, an orthopaedic surgeon, clinical evaluation notes by Dr Julyan, another orthopaedic surgeon, theatre notes by Dr Julyan and further consultation notes by a radiologist. The documents submitted were all directed at showing that the injuries sustained were serious within the meaning of that expression provided for in Regulation 3(1)(b). The tests set out in Regulation 3(1)(b)(iii) are popularly referred to as the narrative test. [11] On 21 July 2014, Mr Gouws was informed that the third, fourth, fifth and sixth appellants had been appointed to determine the appeal. On 26 August 2014, Mr Gouws was informed of the outcome of his appeal. The letter informing him of this, by the HPCSA, on behalf of the Tribunal, bears repeating in its entirety: ‘We refer to the above matter and hereby inform you that Road Accident Fund Appeal Tribunal resolved at its recent meeting held on 01 August 2014 as follows – i. He is currently 50 years old of age. On 24 July 2010 he was in an accident where he sustained soft tissue injury to his left forearm, tenderness in his chest. ii. There is no indication that he had acute injury to his left shoulder or his right thumb as well as the carpal tunnels. iii. The committee took notice that he had various surgery procedures which include a bicep tendon repair. Posterior bank card repair and later on an athetosis of first metal Carpal Phalangeal Joint of the right thumb. iv. He also had a posterior bank card repair as well as a coronary bypass. v. With all the information available the committee cannot find a link between his left shoulder and his right thumb as well as the carpal tunnels. vi. The committee must take notice that he was a karate instructor and with the information available the committee cannot bring the accident to his present condition as well as his surgeries he had. vii. With all the information available the committees is of the opinion that his injuries are not serious under the Narrative test. We trust you find the above in order.’ [12] The powers of the Tribunal set out in Regulation 3(11) are clearly directed at a determination of whether the injuries sustained are serious within the narrative test. For example, Regulations 3(11)(a) and (b) which are part of the overall powers of the Tribunal, provide: ‘(11) The appeal tribunal shall have the following powers: (a) Direct that the third party submit himself or herself, at the cost of the Fund or an agent, to a further assessment to ascertain whether the injury is serious, in terms of the method set out in these Regulations, by a medical practitioner designated by the appeal tribunal. (b) Direct, on no less than five days written notice, that the third party present himself or herself in person to the appeal tribunal at a place and time indicated in the said notice and examine the third party’s injury and assess whether the injury is serious in terms of the method set out in these Regulations.’ In term of regulation 3(11)(g) an appeal tribunal has the power to: ‘(g) Determine whether in its majority view the injury concerned is serious in terms of the method set out in these Regulations.’ In terms of regulations 3(11)(h) and (i) the Tribunal has the power to: ‘(h) Confirm the assessment of the medical practitioner or substitute its own assessment for the disputed assessment performed by the medical practitioner, if the majority of the members of the appeal tribunal consider it appropriate to substitute. (i) Confirm the rejection of the serious injury assessment report by the Fund or an agent or accept the report, if the majority of the members of the appeal tribunal consider it is appropriate to accept the serious injury assessment report.’ [13] As is apparent, the Tribunal took the view that Mr Gouws’ injuries were not causally connected to the collision referred to above. At this stage it is necessary to record that in terms of Regulation 3(13) the findings of a Tribunal ‘shall be final and binding’. I consider it necessary at this stage to repeat what is set out in para 11 above, namely, that in terms of ss 3(11)(a) and (b), what is in contestation before an appeal tribunal is the correctness of the medical practitioner’s assessment of the seriousness of the injuries allegedly sustained and consequently the correctness or otherwise of the Fund’s rejection of the report. [14] Subsequent to the decision of the Tribunal being communicated to Mr Gouws, his attorneys submitted further extensive documentation to the Tribunal in support of his contention that the injuries he sustained were directly attributable to the collision described above. The Tribunal did not have regard to the further information supplied as it had already made its decision. For present purposes it is not necessary to deal with the dispute concerning the nature and consequences of the clinical observations made by medical personnel who attended to Mr Gouws soon after the collision and why invasive shoulder surgery was only performed a few days later. We are also not required to deal with the persuasiveness or otherwise of all the documentation in favour of, or against the view that the injuries were not sustained as a result of or connected to the collision. Furthermore, in deciding this case the relevance of Mr Gouws being a karate instructor need not be determined. [15] For completeness I record that in her medico-legal report, Dr de Graad said the following concerning the carpal tunnel syndrome that Mr Gouws complained of: ‘Mild carpal tunnel syndrome: The carpal tunnel syndrome is not necessarily related to the injuries. It is uncommon for men to develop carpal tunnel syndrome. One must thus give the patient the benefit of the doubt and conclude that there is a nexus between a carpal tunnel syndrome and the injuries sustained. Provision must be made for carpal tunnel release of both hands.’ That conclusion does not appear to detract from the seriousness of the shoulder injury which Dr de Graad had regard to in assessing the seriousness of Mr Gouws’ injuries. [16] Aggrieved by the Tribunal’s decision, Mr Gouws applied to the court below for, inter alia, the following relief: ‘1. That the First Respondent’s decision of 1 August 2014 under reference number RAFA/001125/2013 be reviewed and set-aside. 2. That the matter is referred back to the Road Accident Fund Appeal Tribunal (First Respondent) for reconsideration by a different panel to be constituted by the Registrar of the Third Respondent. 3. That the Road Accident Fund Appeal Tribunal as appointed in paragraph 2 above, be directed to inter alia take into account all relevant and available hospital records, radiological reports, consultation notes, letters, clinical evaluations, theater reports and medical legal reports as appear from this application of the Applicant and all such further documents that may become available before the hearing of the appeal.’ [17] Mr Gouws complained that the Tribunal had disregarded the documentary expert evidence supplied by him, which accepted that his shoulder injury was related to the accident and that it resulted in serious long term impairment. Furthermore, in his founding affidavit, he stated that if the Tribunal had been concerned about the nexus between his injuries and the collision referred to earlier, it had the power, in terms of Regulations 3(11)(a) to (e) to obtain further information. Mr Gouws stated that he had no idea why the fact that he was a karate instructor had been taken into account. In a supplementary affidavit, he stated that from the record supplied in terms of Rule 53 of the Uniform Rules, there appears to have been no basis upon which the undisputed information supplied by experts on his behalf was rejected. In his replying affidavit Mr Gouws complained that he had not been apprised that causality was in issue and had therefore not been given an opportunity to deal with it. He also denied that the Tribunal has the power to consider questions regarding the nexus between the injuries and the collision. [18] Tuchten J, in adjudicating Mr Gouws’ application, had regard to the methods to determine the seriousness of an injury identified in Regulation 3. The court below took into account the history of the assessment by Dr de Graad of Mr Gouws’ injuries and his appeal to the Tribunal. The following appears at para 9 of the judgment of the court below: ‘The tribunal thus found that the injuries which the applicant had suffered had not been caused by the accident on 24 July 2010. The applicant took the decision of the tribunal on review. The applicant asks that the decision of the tribunal be set aside and the matter remitted for consideration afresh. Whether the review should succeed is before me for adjudication. It was common cause between counsel that it was implicit in the decision of the tribunal that the tribunal had found that its jurisdiction extended to the issue of causation.’ [19] The court below considered the submission on behalf of the appellants that it was implicit in terms of the Act and the Regulations that a determination with regard to causation was within the Tribunal’s statutory remit. The following are the material parts of the judgment of the court below: ‘Counsel conceded that legal causation remained indeed for the court to decide in due course but submitted that the question whether medical causation was established in a particular case had been entrusted in first instance to the Fund and then to the tribunal. Medical causation, counsel said, was to be found in the interrelationship between the injury and the pathology which gives rise to it. But counsel had difficulty in identifying the separate scopes, if any of medical and legal causation in relation to the present dispute. I do not see any myself. Furthermore, I think division of the duty to decide causation between the Fund and the Tribunal on the one hand and the court on the other would potentially give rise to intolerable confusion as to the boundaries of jurisdiction. To compound the confusion, this suggested role of the Fund and the tribunal would only arise when the issue of a serious injury was raised. In all other cases, on the analysis of counsel for the opposing respondents, the court would retain complete (ie not merely partial) jurisdiction to determine causation. It seems to me improbable and unwieldy for certain aspects of causation arising in certain categories cases to be withdrawn from the jurisdiction of the court while other aspects of other categories remain. If counsel’s submission is correct, then if a tribunal finds an injury or set of injuries to be serious, on whatever ground, then the Fund would be disabled from arguing at the trial that the plaintiff had not established causation. This could have far reaching and even absurd consequences. The courts have for decades determined causation. Difficult questions arise in this regard from time to time. In my view the courts, duly informed by expert evidence and argument, are better suited to make this adjudication than the administrative decision makers in question.’ [20] The court below concluded that there was nothing in the language of the legislation concerned which empowered the Tribunal to determine whether the injuries assessed by it were caused by or arose from the driving of a motor vehicle. It made an order in the terms set out in para 15 above and ordered the second appellant to pay Mr Gouws’ costs, including the costs of two counsel. [21] It is against the order referred to in the preceding paragraph that the present appeal is directed. Before us counsel on behalf of the Tribunal accepted that there was no express provision in the Act or the Regulations that conferred on it the power to determine finally whether the injuries submitted to it for assessment were caused by or arose out of the driving of a motor vehicle. Counsel on behalf of the Tribunal persisted with the position adopted in the court below, namely that it was implicit in the legislation that the Tribunal had that power. In this regard, reliance was placed on the decision of this court in Johannesburg Municipality v Davies & another 1925 AD 395. It was submitted on behalf of the Tribunal that the scheme of the Act and the Regulations was to ensure that deserving and qualifying claims are met. This, so it was argued, could only be achieved if the cause and the extent of the injury or injuries involved were determined. Section 17 of the Act, so it was contended, makes it clear that the injury for which a claimant is to be compensated must be caused by or arise from the driving of a motor vehicle. [22] Furthermore, so it was asserted, Regulation 3(11)(d), which clothes the Tribunal with the power to examine pre- and post-accident medical reports when it assesses the seriousness of the injury, supports the argument that it is implicit in the Regulations that the Tribunal has the power to determine the connection between the injuries and the event allegedly giving rise to them. [23] A further argument on behalf of the Tribunal is that it is rightly within the professional terrain of medical experts to determine cause and effect in relation to injuries. Support for this latter contention was sought to be found in an article by M Slabbert and H J Edeling entitled ‘The Road Accident Fund and Serious Injuries: The Narrative Test’.5 The following are the quotes upon which reliance were placed. First, where the authors take issue with the ‘loose’ use of the word injury: ‘Problems arise in relation to the loose use of the word “injury” where the context appears to relate to complications, impairment or disability. This can easily lead to confusion. In essence “injury” refers to the physical damage that occurs at the moment of the accident, “complication” to the subsequent pathological developments, “impairment” to the long-term symptoms and losses resulting from the injuries, and “disability” to the effects of the impairment on the various elements of the individual’s life taking into account the circumstances.’ Second, where the authors question the adequacy of the prescribed RAF 4 report form: ‘Point 4 refers to the AMA Guides rating which should be completed if the injury sustained does not appear on the non-serious list of injuries. In point 4.1 the doctor is required to describe the nature of the motor vehicle accident, despite the fact that he or she often has no knowledge or limited knowledge of what happened and he or she must therefore speculate. It would be more relevant to ask the doctor whether he or she is satisfied that the 5 M Slabbert and H J Edeling ‘The Road Accident Fund and Serious Injuries: The Narrative Test’ (2012) 268 PELJ 15 2. injured was indeed injured in a motor vehicle accident, and whether the injuries claimed for were in fact caused by the motor vehicle accident in question.’ [24] The submissions on behalf of the Tribunal are superficially attractive. After all, the proposition that the Act and Regulations were designed to ensure that deserving and qualifying injuries are compensated is unassailable. So, it seems to follow, and one would expect that the Tribunal ought to be able to decide finally whether the injuries calling for assessment did indeed arise out of or were caused by the driving of a motor vehicle. However, one has to weigh these submissions in light of the provisions of the Act and the Regulations and view them against first principles and policy considerations. [25] In Fedsure Life Assurance Ltd & others v Greater Johannesburg Transitional Metropolitan Council & others [1998] ZACC 17; 1999 (1) SA 374 (CC) and Pharmaceutical Manufacturers Association of South Africa & another: In re ex parte President of the Republic of South Africa & others [2000] ZACC 1; 2000 (2) SA 674 (CC), the Constitutional Court made it clear that it is a fundamental principle of our law that public power can only be exercised within the bounds of the law. Repositories of power can only exercise such power as has been conferred upon them by law.6 This is a description of the principle of legality. [26] It will be recalled that even though counsel on behalf of the Tribunal conceded that there was no express provision conferring upon it the power of finally deciding the question of causation, he nevertheless submitted that such power, having regard to the object of the Act, could be implied in terms of Davies. The following is the relevant dictum relied on: ‘Here it may be as well to remark that the rule that a power is to be implied to do that which is reasonably incidental to what has been expressly authorised is no new rule of construction of statutes, it is merely an example of a proper implication to draw.’7 [27] As stated above, the general rule is that express powers are needed for the actions and decisions of administrators.8 As pointed out by Professor Hoexter, 6 Paras 56-58 of Fedsure and paras 17-20 of the Pharmaceutical case. 7 At 402. implied powers may, however, be ancillary to the express powers or exist either as a necessary or reasonable consequence of the express powers.9 Furthermore, the author goes on to state that ‘a court will be more inclined to find an implied power where the express power is of a broad, discretionary nature – and less inclined where it is a narrow, closely circumscribed power’.10 Where the administrative action or decision is likely to have far reaching effects, it is less likely that a court will in the absence of express provisions find implied authorisation for it.11 [28] The Road Accident Fund Amendment Act 19 of 2005 (Amendment Act), which came into effect on 1 August 2008 brought about significant changes to the Act. It limited the Fund’s liability for compensation in respect of claims for non- pecuniary loss (general damages) to situations where a serious injury as defined in the Act has ensued. That has been dealt with above, in brief, under the discussions of sections 17 and 26 of the Act and the Regulations. The Amendment Act also, by way of the introduction of s 21, abolished certain common law claims which for present purposes we need discuss no further. The Amendment Act also limited the amount of compensation the Fund is obliged to pay in relation to claims for loss of income or for a dependent’s loss of support, arising from the bodily injury or death of a victim of a motor accident. These are far-reaching changes expressly catered for in the legislation. [29] The amendments in express terms referred to in the preceding paragraph militate against importing the far-reaching suggested powers of the Tribunal that will see it have the final word on the question of causation. The power of the Minister to make regulations in terms of s 26(1A)(c), namely, for the resolution of disputes arising from any matter provided for in this Act, is the genesis for the power of the Tribunal. Regulation 3 bears the title ‘Assessment of serious injury in terms of section 17(1A)’. That subsection, as discussed above, directs that the assessment of an injury shall be based on ‘a prescribed method’. This, of course, relates first to an assessment by a medical practitioner and thereafter has relevance in the appeal 8 See also Cora Hoexter Administrative Law in South Africa 2 ed (2012) at 43. 9 Ibid at 44 and the authorities cited there, namely, Lekhari v Johannesburg City Council 1956 (1) SA 552 (A) at 567A and Chonco v Minister of Justice and Constitutional Development 2010 (4) SA 82 (CC). 10 Page 45. 11 Page 45. process, which is directed at determining whether the assessment by the medical practitioner was rightly made. In this regard, both the Fund and the claimant may be disputants.12 [30] In the present case, the Tribunal, an appellate body, purported to have the power to decide finally upon the question of causation. In this regard the second to sixth appellants, in their answering affidavit relied expressly on the powers conferred upon the Tribunal by Regulation 3(13). The Fund was cited as a respondent in the court below but did not participate in the proceedings in the court below or in this court. It appears that the Fund considered itself bound by the Tribunal’s decision. Thus, it did not contend that it ultimately had the prerogative to concede or challenge causation. [31] In paras 10 and 11 of its judgment, set out in para 19 above, the court below reflected that the Tribunal adopted the position that it had the power to decide on whether there was a nexus between the injuries allegedly sustained and the driving of a motor vehicle. In para 10, Tuchten J noted that whilst counsel on behalf of the Tribunal had conceded that ‘legal causation’ was ultimately for the courts to decide, it was nevertheless submitted that ‘medical causation’ was the preserve of the Fund and the Tribunal. The court below went on to state that counsel on behalf of the Tribunal had difficulty in distinguishing between ‘medical’ and ‘legal’ causation. As stated above, in para 11, Tuchten J recorded that the division of the ‘duty’ to decide causation between the court on the one hand, and the Tribunal on the other, would give rise to ‘intolerable confusion as to the boundaries of jurisdiction’. [32] In heads of argument filed in this court on behalf of the Tribunal, it latterly appears to be suggested that the Tribunal is entitled to ‘express an opinion’ on the nexus between the driving of a motor vehicle and the alleged injuries. This attempt to dilute its earlier position is negated by the provisions of Regulation 3(13) on which, inter alia, it had relied and by the passive attitude of the Fund. That Regulation makes ‘findings’ of the Tribunal final and binding. In para 49 of its heads of argument the Tribunal stated: 12 See Regulations 3(4) and (5). ‘The facts of this matter, considered against the authorities referred to above, indicate that the Tribunal was authorised and enjoined to consider and pronounce upon the link between the injury and the accident relied upon.’ This demonstrates confused thinking on the part of the Tribunal. When the Tribunal ‘pronounces’ on causation it must be considered to arrive at a finding which would then, in terms of Regulation 3(13) be final and binding. As set out in para 30 above, the Fund appears to have considered itself bound by the Tribunal’s finding in relation to causation. [33] The medical practitioner who conducts the initial assessment of the seriousness of the injury is not, in making that assessment, precluded from expressing a view on whether the injury was caused by or arose from the driving of a motor vehicle. In the event of the medical practitioner casting doubt on whether there was a link between the alleged injury and the driving of a motor vehicle, the Fund can decide whether to contest causation or to concede it. In adopting a position on whether to contest causation, the Fund is not limited to the views expressed by the medical practitioner, but may have or acquire other information to inform its decision. In the ordinary course causation is an issue that is ultimately decided by the courts. A dispute between the Fund and a claimant in relation to causation has to be referred to a court for adjudication. When that issue is decided by a court, it does not follow that medical practitioners are necessarily the only experts upon whom reliance may be placed. Courts are not bound by the view of any expert. They make the ultimate decision on issues on which experts provide an opinion. [34] If, after the initial assessment by the medical practitioner, the Fund exercises the option of a rejection of the report, a dispute arises in relation to the correctness of the assessment of the seriousness of the injury by the medical practitioner and where, as far as the Fund is concerned, causation is not in issue, that dispute is left to be dealt with by the Tribunal, which will have the last say on the matter, subject of course to whether that decision is susceptible to judicial review. In the present case, as described in para 7 above, the Fund disputed the assessment of the injury on fallacious grounds. The Fund did not inform Mr Gouws that causation was in issue nor did it independently adopt a position in relation thereto. It wrongly abdicated that position to the Tribunal. As pointed out above, the contestation before the Tribunal could only be in relation to the assessment by the medical practitioner of the seriousness of the injury and the finality of its decision is in relation to that aspect. [35] The effect of what is suggested on behalf of the Tribunal is that the jurisdiction of the court is ousted. The only challenge to a decision by the Tribunal in relation to causation on the suggested basis will therefore be in the form of a review which, contrary to the suggestion on behalf of the Tribunal, will not be time or cost efficient. One might rightly ask where the funding for such an exercise will come from and how it might impact on indigent persons. [36] Having regard to the authorities and principles set out in para 25 above, it is necessary to bear in mind that the power given to the Tribunal in terms of the legislation is narrowly circumscribed. It is not of a broad discretionary nature, which would allow for further powers to be implied. The Tribunal cannot have the final say in relation to causation. That power is not provided for. [37] Moreover, the power contended for is not a necessary or reasonable consequence of the express powers of the Tribunal or of the Fund. On the contrary, if the contentions on behalf of the Tribunal are upheld, it will be oppressive in relation to claimants and, as stated above, will deny them access to courts on an issue traditionally reserved for adjudication by them. A finding against the suggested power does not enervate the provisions of the Act. The Fund maintains the right to challenge or concede causation. The Fund’s view could be informed by information it has acquired or has at its disposal at any time before or during litigation and in this regard is not restricted to only the medical evidence at its disposal. As hinted at in para 12 of the judgment of the court below, if the submissions on behalf of the Tribunal were to be upheld the result might well be that the Fund itself will be stripped of its power to decide the issue of causation in the event of an appeal tribunal deciding causation against it. [38] The article by Slabbert and Edeling, referred to in para 23 above, on which reliance was placed by counsel on behalf of the Tribunal, takes the matter no further. The authors’ criticism of para 4.1 of the injury assessment report form (RAF 4) detracts from the submission that the Tribunal has the final say on causation. The authors state that the medical practitioner is required to describe the nature of the motor vehicle accident ‘despite the fact that he or she often has no knowledge or limited knowledge of what happened and he or she must therefore speculate’. One might rightly ask how, in the absence of complete knowledge or information, the medical practitioners and, indeed, the Tribunal, can have the final say on causation. [39] As stated above, Mr Gouws was given no notice that causation was an issue that was going to be addressed by the Tribunal and was not afforded an opportunity to make representations, either on whether a conclusion of the kind finally arrived at was justified or on whether a final decision on that issue was within the Tribunal’s statutory remit. [40] It is up to the Legislature to decide whether to intervene and detract further from the right of claimants, perhaps on the basis of affordability and ultimately in the interest of the public, by way of further legislative amendments. In that event there will no doubt be careful scrutiny by affected parties of the constitutionality of such provisions. Following on this judgment the legislature, or the Minister, may consider whether, for the purposes of greater clarity regarding prospective disputes, including those with greater complexity than the present one,13 legislative change is called for. That is an aspect beyond our remit. Returning to the present case, in my view, principle and policy compel a conclusion against the Tribunal. The essential findings of the court below cannot be faulted. [41] In light of the above, the following order is made: The appeal is dismissed with costs including the costs of two counsel. ___________________ M S Navsa Acting Deputy President 13 In the present case the dispute, as it finally appears to have crystallised, after a finding by the Tribunal, even though the initial basis for the rejection by a medical practitioner was erroneous, was whether the shoulder injury assessed as serious by the medical practitioner, was caused by or arose from the driving of a motor vehicle. The seriousness of the shoulder injury, per se, does not appear to have been in dispute. Prospectively, questions might arise about whether a differentiated assessment by a medical practitioner is competent in the event of a concern about whether some of a number of injuries are related to or arose from the driving of a motor vehicle. The Act and the Regulations appear to have been crafted on the basis of causation not being in issue. Appearances: For the Appellant: L Kutumela Instructed by: Gildenhuys Malatji Inc., Petoria Honey Attorneys, Bloemfontein For the Respondent: F A Ras SC (with him M Tromp) Instructed by: Johan van de Vyver Attorneys, Pretoria Symington & De Kok Attorneys, Bloemfontein

SUPREME COURT OF APPEAL SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 13 December 2017 STATUS Immediate RAF & others v Gouws & another (056/2017) [2017] ZASCA 188 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 an appeal brought by the appellants, the Road Accident Appeal Tribunal (the Tribunal) and others against a judgment of the Gauteng Division of the High Court, Pretoria (the court a quo), in favour of the respondent, Mr Lartz Gouws (Mr Gouws). The issue at the nub of this appeal concerned the question as to whether it is within the Tribunal’s statutory remit to finally determine the nexus between the injuries allegedly sustained, on which a claim for compensation is premised, and the driving of a motor vehicle. The dispute between the parties which gave rise to this appeal emanates from the following factual background. Mr Gouws allegedly sustained injuries as a result of being struck by a motor vehicle on 24 July 2010, whilst walking in a parking area and being flung over two vehicles in the vicinity. On 16 August 2012 Mr Gouws lodged a claim for compensation with The Road Accident Fund (the Fund), a statutory insurer, under s 17 of the Road Accident Fund Act 56 of 1996 (the Act). In terms of s 17(1) of the Act, the Fund’s liability is limited to compensating a third party for general damages – or non- pecuniary loss, as it is called in the section – to instances where he or she suffered ‘serious injuries’ within the meaning of s 17(1A) of the Act. At present, there are three methods of determining what constitutes a serious injury for purposes of the Act. They are identified in Regulation 3 of the Road Accident Fund Regulations (the Regulations). Firstly, the Minister of Transport may publish, after consultation with the Minister of Health, a list of injuries which are for purposes of section 17 of the Act not to be regarded as serious injuries. No injury shall be assessed as serious if that injury meets the description of an injury which appears on the list. Secondly, if the injury resulted in 30 percent or more Impairment of the ‘Whole Person as provided in the AMA Guides’, the injury shall be assessed as serious. Thirdly, an injury which does not result in 30 percent or more Impairment of the Whole Person may only be assessed as serious if that injury resulted in a serious long-term impairment or loss of a body function, constituted permanent serious disfigurement, resulted in severe long-term mental or severe long-term behavioural disturbance or disorder or resulted in loss of a foetus. Prior to the submission of his claim for compensation, Mr Gouws submitted himself to an assessment by a medical practitioner as required by the Regulations. In her assessment, Dr de Graad concluded that Mr Gouws required a shoulder replacement on the left and an arthrodesis of the left thumb. At the time of his accident Mr Gouws was a shift boss at a mine. Dr de Graad believed that the injuries restricted him from doing his normal work. She considered Mr Gouws to have suffered serious long term impairment or loss of a body function. On 18 October 2012 Mr Gouws’ claim for compensation in relation to general damages was rejected by the Fund on the erroneous basis that Dr de Graad had not assessed the injury as being serious. Mr Gouws was aggrieved and resorted to an appeal. In the event of a dispute arising concerning the assessment by a medical practitioner, the Regulations provide for an appeal process to the Tribunal consisting of three independent medical practitioners appointed by the Registrar of the second appellant, the Health Professions Council of South Africa (HPCSA). Mr Gouws’ appeal was adjudicated at a formal level in accordance with the Regulations. On 26 August 2014, Mr Gouws was informed of the outcome of his appeal. The Tribunal upheld the Fund's rejection of the serious assessment injury report. It did so on the basis that it could not find a link between Mr Gouws’ serious injury and the driving of a motor vehicle. It noted that Mr Gouws was a karate instructor. In the court a quo, it was held that there was nothing in the language of the legislation concerned which empowered the Tribunal to determine whether the injuries assessed by it were caused by or arose from the driving of a motor vehicle. It therefore reviewed and set aside the decision of the Tribunal and it remitted the matter to the Tribunal for reconsideration by a different panel to be constituted by the Registrar of the HPCSA. Before the SCA the Tribunal accepted that there was no express provision in the Act or the Regulations that conferred on it the power to determine finally whether the injuries submitted to it for assessment were caused by or arose out of the driving of a motor vehicle. Counsel on behalf of the Tribunal persisted with the position adopted in the court a quo, namely that it was implicit in the legislation that the Tribunal had that power. It was submitted on behalf of the Tribunal that the scheme of the Act and the Regulations was to ensure that deserving and qualifying claims are met. This, so it was argued, could only be achieved if the cause and the extent of the injury or injuries involved were determined. Section 17 of the Act, so it was contended, makes it clear that the injury for which a claimant is to be compensated must be caused by or arise from the driving of a motor vehicle The SCA rejected the submissions on behalf of the Tribunal. The power contended for was far reaching. It was oppressive to claimants and denied them access to courts on an issue traditionally reserved for adjudication by them. Such dramatic change had to be expressly catered for. Furthermore, the power given to the Tribunal was to decide the question of the seriousness of the injury and was not of a broad discretionary kind, allowing for the power contended for to be implied. A finding against the suggested power does not enervate the provisions of the Act. The Fund maintains the right to challenge or concede causation. The Tribunal does not have the power to decide finally the question of causation. The appeal was dismissed with costs.

3577

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1110/2019 In the matter between: INGQUZA HILL LOCAL MUNICIPALITY FIRST APPELLANT BAMBEZAKHE GOYA SECOND APPELLANT and JONGINTABA MDINGI RESPONDENT Neutral citation: Ingquza Hill Local Municipality & Another v Jongintaba Mdingi (Case no 1110/2019) [2021] ZASCA 75 (10 June 2021) Coram: PETSE DP and ZONDI and DLODLO JJA and LEDWABA and MABINDLA-BOQWANA AJJA Heard: 11 May 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 10 June 2021. Summary: Local Government: Municipal Structures Act 117 of 1998 – removal of a member of the executive committee as a mayor – prescripts of s 53(1) not complied with. ORDER On appeal from: Eastern Cape Division of the High Court, Mthatha (Brooks J, sitting as the court of first instance): The appeal is dismissed with costs, including costs occasioned by the employment of two counsel. JUDGMENT Mabindla-Boqwana AJA (Petse DP and Zondi and Dlodlo JJA and Ledwaba AJA concurring): [1] This appeal concerns the removal of the respondent, Mr Jongintaba Mdingi (Mr Mdingi), who was a member of the executive committee of the first appellant, Ingquza Hill Local Municipality (the Municipality), as its mayor pursuant to a resolution adopted by the Municipal Council (the Council) ostensibly acting in terms of s 53(1) of the Local Government: Municipal Structures Act 117 of 1998 (the Act) on 23 January 2019. [2] The procedures relating to the functioning and operations of municipal councils derive from s 160 of the Constitution,1 which states, among others, 1 Constitution of the Republic of South Africa, 1996. that ‘[a] Municipal Council makes decisions concerning the exercise of all the powers and the performance of all the functions of the municipality’.2 Further, in terms of s 160(8): ‘Members of a Municipal Council are entitled to participate in its proceedings and those of its committees in a manner that – (a) allows parties and interests reflected within the Council to be fairly represented; (b) is consistent with democracy; and (c) may be regulated by national legislation.’ [3] The Local Government: Municipal Structures Act 117 of 1998 (the Act) is the national legislation contemplated in s 160(8)(c) of the Constitution that regulates the functioning of municipal councils. In terms of s 18 of the Act, each municipality must have a municipal council, which must meet at least quarterly (ss 18(1) and (2)). Only those municipalities which qualify in terms of s 42 can establish executive committees. Members of an executive committee are elected from among members of a municipal council at a meeting that must be held within 14 days after the council’s election (s 45(a)). [4] A member of the executive committee vacates office in terms of s 47 of the Act, which states: ‘(1) A member of the executive committee vacates office during a term if that member – (a) resigns as a member of the executive committee; (b) is removed from office as a member of the executive committee in terms of section 53; or (c) ceases to be a councillor. (2) The filling of a vacancy in an executive committee is subject to section 43.’ (My emphasis.) 2 Section 160(1). [5] Section 53, referred to in s 47(1)(b), provides thus: ‘(1) A municipal council may, by resolution remove from office one or more or all the members of its executive committee. Prior notice of an intention to move a motion for the removal of members must be given.’ (My emphasis.) [6] The election of mayors is governed by s 48 of the Act. That section stipulates: ‘(1) The municipal council must elect a member of its executive committee as the mayor and, if the MEC for local government in the province so approves, another member of the executive committee as the deputy mayor, of the municipality. (2) The election of a mayor and deputy mayor takes place when the executive committee is elected or when it is necessary to fill a vacancy. (3) The procedure set out in Schedule 3 applies to the election of a mayor and deputy mayor. (4) A mayor and deputy mayor is elected for the duration of that person’s term as a member of the executive committee, but vacates office during a term if that person – (a) resigns as mayor or deputy mayor; (b) is removed from office as a member of the executive committee in terms of section 53; or (c) ceases to be a member of the executive committee.’ (My emphasis.) [7] Of fundamental importance from this section is that the mayor is elected from members of the executive committee (s 48(1)) and vacates office when he or she resigns; is removed from office as a member of the executive committee in terms of s 53; or ceases to be a member of the executive committee (s 48(4)). [8] This must be contrasted, importantly, with the situation that pertains to the election and removal of executive mayors. Certain types of municipalities may elect executive mayors, and if a qualifying municipality chooses to have an executive mayor, Part 2 of Chapter 4 applies (s 54). An executive mayor may be removed from office in accordance with s 58, which states that ‘[a] municipal council, by resolution may remove its executive mayor or deputy executive mayor from office. Prior notice of an intention to move a motion for the removal of the executive mayor or deputy executive mayor must be given’. No similar provision exists in as far as ordinary mayors are concerned. [9] An interesting observation though, is that the wording of s 58 as regards the removal of an executive mayor is similar to that in s 53(1) pertaining to the removal of an executive committee member. While the Act is silent as to the removal of a mayor other than an executive mayor, it does explicitly state in s 48(4) that the mayor must vacate his or her office upon being removed as a member of the executive committee in terms of s 53(1), or upon ceasing to be a member of the executive committee. [10] Section 53(1) makes it obligatory that prior notice of the intention to move a motion for the removal of a member of the executive committee be given. The section does not confine the giving of prior notice to a member or those members of the executive committee who are the subject of the proposed removal. In my view, a proper reading of the section should entail giving notice to all members of the municipal council. [11] The importance of giving notice to members of the council was underscored in Democratic Alliance v Matika and Others,3 a matter that dealt with a removal of the executive mayor. The court there held: ‘As far as national legislation is concerned, we are of the view that the provisions of section 58 of the MSA are indeed intended to facilitate and achieve the objects in the Constitution, for the simple reason that the democratic right to participate, as intended in the Constitution, cannot be exercised by a member or councillor if he/she is unaware of the fact that the meeting is going to take place. . . . . . . In the present case, however, the complete failure to give notice to Mr Matika and any of the other councillors had in our view frustrated the object that decisions must be taken in circumstances where all members of a council had been given the opportunity to participate and to debate before voting takes place and a decision is reached.’ [12] The court further referred to Makume and Another v Northern Free State District Municipality and Others,4 in which it was stated: ‘[I]n the absence of a proper notice of the intended motion there could have been no valid council resolution to carry the . . . motion. No council resolution can be taken in a vacuum. A municipal council is an assembly of divergent political parties. These various political parties had their say when the executive mayor was enthroned by popular vote. Those various political parties ought to have their say when the executive mayor is dethroned. Logically those various political parties in the local assembly cannot democratically have their say in a meaningful way unless they are timeously notified prior to the relative council meeting by way of a written notice of the intended motion . . . Any councillor or any political party intending to impeach the executive mayor was legally obliged to timeously inform, not only the mayor, but also each and every member of the municipal council of his or her intention to do so. . . . Certainly it is not enough to say the executive mayor knew beforehand that he was going to be removed. The fact of the matter 3 Democratic Alliance v Matika and Others [2018] ZANCHC 55; 2019 (1) SA 214 (NCK) paras 43 and 45. 4 Makume and Another v Northern Free State District Municipality and Others [2003] ZAFSHC 36; [2003] ZAFSHC 15 (FB). is that all the councillors irrespective of their political affiliations were also entitled to know. . . . Respect for law is as important as clean public administration itself. None of the two should be sacrificed on the altar of the other.’5 [13] Finally, the court in Matika referred to the decision of the Constitutional Court in Democratic Alliance and Another v Masondo NO and Another,6 which held that ‘inclusive deliberation prior to decision-making’ is required to give effect to s 160(8) of the Constitution. It then concluded that ‘[i]n our view it is clear that even if a single councillor was deprived of the right to debate and to participate, because of the absence of notice, the objects of the Constitution and of the MSA would have been frustrated’.7 [14] Therefore, notice is necessary to afford the affected member(s) an opportunity to be aware and to consider the motion before it is tabled for discussion. Additionally, it is to provide council members similarly with an opportunity to engage meaningfully in the ensuing debate before a resolution is taken. [15] I now turn to the facts of this case. Mr Mdingi was elected as the mayor on 3 August 2016. He was removed from his position following a resolution taken by the Council on 23 January 2019. The events leading to his removal started on 14 December 2018 when the Municipality convened an emergency council meeting to deal with various issues. One of the issues discussed was an investigation report dated 29 October 2018, prepared by the Department of 5 Makume paras 17 and 18. 6 Democratic Alliance and Another v Masondo NO and Another [2002] ZACC 28; 2003 (2) BCLR 128; 2003 (2) SA 413 (CC) para 78. 7 Matika para 46. Cooperative Governance and Traditional Affairs (COGTA), relating to alleged acts of misconduct involving maladministration by the municipal manager, in which COGTA recommended his precautionary suspension. [16] In his founding affidavit, Mr Mdingi alleged that after making a presentation in relation to matters that were on the agenda he and other councillors left the meeting. He was informed by those who remained behind that as the speaker was about to declare the meeting closed, one of the councillors, Mr Simthembile Mtshazo, intervened on a point of exigency stating that he wanted to introduce the issue of Mr Mdingi’s removal as the mayor. It was agreed that the meeting be closed and the matter be dealt with in the next council meeting of 2019. [17] The Municipality denied that Mr Mdingi had left the meeting when the motion was raised. It was alleged on its behalf that after the presentation of the COGTA investigation report by Mr Mdingi, the meeting was adjourned for an hour to allow him an opportunity to obtain further documents for consideration by the councillors. It was at this time that a motion for his removal was fashioned by Mr Mtshazo, who presented it to some councillors for support. The motion was prompted by the fact that Mr Mdingi had failed to implement a council resolution adopted on 14 June 2018 directing him to write a letter to the municipal manager concerning the Municipality’s intention to suspend him. According to the Municipality, COGTA’s recommendation was exactly the same as its earlier resolution which Mr Mdingi had failed to implement. [18] It was alleged that Mr Mdingi's failure to implement the council's resolutions led to a breakdown of trust between Mr Mdingi and the Municipality. According to the Municipality, the meeting resumed after it had adjourned momentarily and the notice to move a motion of no confidence in Mr Mdingi was introduced as an exigency motion right at the tail end. The fact that Mr Mdingi was present when the motion was raised, was confirmed by the Speaker and the Chief Whip. In this regard, the version of the Municipality, as the respondent in the review application, cannot, on the Plascon-Evans rule,8 be rejected on the papers. The Municipality contends that this motion was in terms of the Standing Rule 25.1 and in compliance with s 53 of the Act. We have not been favoured with a copy of the Standing Rule, in any event, the rule as alleged could never trump statutory provisions. [19] The motion drafted by Mr Mtshazo on 14 December 2018 read as follows: ‘COUNCIL MEETING SCHEDULED FOR FRIDAY THE 14TH DECEMBER 2018. EXIGENT MOTION 4.2 Honourable Councillor SIMTHEMBILE HOPEWELL MTSHAZO moved an exigent motion for the removal of the Mayor Mr Mdingi from office in terms of 25.1 of the Council Standing Orders. IN SUPPORT OF THE MOTION 1. There has been allegations of misconduct and/or maladministration in the Municipality by the Municipal Manager as we all know them which resulted into Court Judgment against the Municipality for rebuilding houses at Lusikisiki and the costs orders following that to cite the few; 8 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634-635. 2. Following those allegations the Mayor had been given strict instructions by the Council on 14 June 2018 to implement. Notwithstanding the clear instruction from the Council the Mayor has failed to comply and to carry [out] the Council’s mandate. Madam Speaker these are very serious allegations which needed drastic intervention by our Council. In order for the Council Madam Speaker to take steps to address these gross serious allegations of gross maladministration and/or misconduct the Council needs to have a Mayor that they would trust and would obey the Council’s resolutions. The only way Madam Speaker for Council to have such a person or Mayor is to remove the incumbent Mayor Mr Mdingi. The Council Madam Speaker I propose that the Council should today. (a) Take a resolution that it intends to remove the Mayor subject to following due and relevant provisions of the law [ie MSA 117 of 1998 SECTION 53(1)]9 governing the removal of the Mayor ie that the Mayor today be given notice that the Council intends to move a motion for his removal from office on a date this Council would agree on or fix. That is the exigent motion Madam Speaker. [Mr Mtshazo’s signature appears here] MR SIMTHEMBILE HOPEWELL MTSHAZO Honourable Councilor THANDEKA NDZUMO Madam Speaker I second the motion and request that it be adopted. [Mr Ndzumo’s signature appears here] THANDEKA NDZUMO’ (Original bold face and underlining.) (My emphasis in italics.) [20] On 23 January 2019, the Municipality convened another emergency meeting where Mr Mtshazo’s motion of exigency was discussed. A resolution 9 The inscription ‘i.e. MSA 117 of 1998 SECTION 53(1)’ was inserted in manuscript, while the entire document is otherwise typed. A typed version of the insertion is indicated at the bottom of the document with an asterisk (*). to remove the respondent from the position of Mayor was taken by a majority vote. The second appellant, Mr Bambezakhe Goya, who is now deceased, was elected to be the Mayor in place of Mr Mdingi in terms of s 48(2) of the Act. [21] It appears from the draft minutes of the meeting of 23 January 2019, attached as an annexure to the founding affidavit, that a motion to refer the matter to an ad hoc committee for investigation was raised. Twenty councillors voted in favour of the establishment of the committee, while 39 voted that the Mayor be removed. The Municipality attached a different set of minutes to its answering affidavit, which was signed on 6 February 2019. Conspicuously missing from these minutes is the part about the establishment of an ad hoc committee. The minutes record: ‘39 voted that the Mayor Councillor Mdingi to be removed as a member of the Executive Committee and a Mayor of Ingquza Hill Local Municipality. 20 Councillors voted against. Honourable Councillors Mabasa, Ndziba and Gwegwe abstained. The Council resolved to: - Remove Honourable Councillor Mdingi as a member of the Executive Committee and Mayor of Ingquza Hill Local Municipality in terms of section 53 of the Municipal Structures Act of No. 117 of 1998.’ [22] There is no indication whether these minutes were adopted at a subsequent council meeting. This notwithstanding, it is odd that the minutes that were signed on a date after the institution of the review proceedings differ markedly from those attached to the founding affidavit on an important aspect which was the subject of the review application. I take it no higher than to state that this appears strange. [23] Aggrieved by what transpired at the meeting of 23 January 2019, Mr Mdingi took the Municipality’s decision on review to the Eastern Cape Division of the High Court, Mthatha (the high court) by way of an urgent application for the setting aside of the decision to remove him and the subsequent decision to elect the deceased as his replacement. His grounds for review were that no investigation was undertaken by the Municipality of the allegations of misconduct against him, no charges were put to him, and he was neither informed of his rights nor given an opportunity to make a presentation of his case, let alone an adequate opportunity to do so. The Municipality submitted that it relied on s 53(1) of the Act as well as Rule 25.1 of its Standing Orders and Rules. As already indicated, the reference to s 53(1) was inserted in the typed motion in handwriting. In reaction to the Municipality’s reliance on s 53(1), Mr Mdingi alleged that he had not been served with any notice to remove him as a member of the executive committee, nor was any sent to the councillors. He further stated that evidence showed that he in fact had implemented the decision of the Council that he was accused of having defied. [24] The review application served before Brooks J, who set aside the aforesaid decisions of the Municipality, holding that ‘no motion was ever placed before the [Municipality] in which [Mr Mdingi]’s removal as the Member of the Executive Committee was sought, nor can the present notice ever be transformed into such a notice by simple reference to the relevant provisions of Section 53(1) of the Act’. Secondly, the learned judge found that ‘the need for there to be prior notice appears to have been completely overlooked as the motion itself morphed into a dismissal process at the meeting on the 23 January 2019’. Finally, referring to the audi alteram partem principle, the learned judge stated that ‘where a decision may be made which is adverse to a person, such a person should be given an opportunity to participate fully in the process’. Subsequently, the learned judge granted leave to appeal his decision to this Court. The issue whether the high court erred in its decision to review and set aside the Municipality’s decisions takes centre stage in this appeal. [25] Section 53(1) does not detail what the notice should entail other than to state that it should be given. Seemingly, this should depend on the nature of the motion sought to be moved. Mr Mtshazo’s motion was detailed. Counsel for the respondent argued that because Mr Mdingi was removed for detailed non-compliance with a decision of the Council, the notice would have to, as of necessity, contain such information or make reference to the supporting information contained in the motion. [26] When the motion for Mr Mdingi’s removal – for his alleged failure to implement the resolution of the Municipality, relating to the conduct of the municipal manager – was introduced on 14 December 2018, it was suggested by the mover of the proposed motion, Mr Mtshazo, that Mr Mdingi be given notice for the intended motion on the same day (14 December 2018) and be informed of the motion that would be moved on a date still to be arranged. [27] It is common cause that no actual notice was given to Mr Mdingi and the councillors after the meeting of 14 December 2018. What followed was the council meeting of 23 January 2019. We have not been provided with the agenda of that meeting. But what appears on the draft minutes is that the issue of the motion regarding Mr Mdingi’s intended removal was not on the agenda. It appears from the minutes of that meeting that one of the councillors, Councillor Jiba (seconded by Councillor Nkungu) requested the addition of two items on the agenda to be recorded as ‘5.1.3 Removal of the Mayor; 5.1.4 Election of the Mayor’. [28] Thus, even if it were to be argued that the agenda would have served as ‘prior notice’, the item pertaining to Mr Mdingi’s intended removal was not on the agenda as reflected by the minutes. To illustrate further that councillors were not served with the requisite notice, it is recorded that another councillor, Councillor Mngqinelwa ‘wanted to know the reasons for the removal of the Mayor’. [29] Actions of the Council must be consistent with the Constitution and the law. It is for that reason that s 53(1) requires prior notice, not just to the member who is the subject of an intended motion, but to all the councillors. This is to enable them to take an informed decision. Counsel for the Municipality submitted that the written motion of 14 December 2018 by Mr Mtshazo served as adequate notice, because Mr Mdingi admitted that he had sight of it. Firstly, it is not clear whether Mr Mtshazo’s intended motion was made a resolution on 14 December 2018, as we were not favoured with a copy of the minutes of that meeting. Secondly, the Municipality has admitted that Mr Mdingi was not given a notice in compliance with Mr Mtshazo’s suggestion. Thirdly, it is clear that the notice setting out the date, time, place and reasons for the motion was not afforded to all the councillors. Fourthly, if the submission by the Municipality was to be accepted that the actual notice is inconsequential as long as a member is aware of the intended motion to remove him or her, this would frustrate the objects and purpose of s 53(1) of the Act read with s 160(8) of the Constitution, as all the councillors must be given an opportunity to participate in council meetings. Furthermore, it may be possible that those members who were absent at the meeting of 23 January 2019 would not have known that a motion to remove Mr Mdingi was to be moved, as it was raised by way of an additional item at the meeting itself. Even those councillors who voted in favour of the motion against the respondent did not have the benefit of prior notice. [30] One further issue that bears mentioning is that the motion was said to have been moved in terms of s 53(1). It was however couched not as a notice to remove Mr Mdingi as a member of the executive committee, but as the mayor. Section 53(1) relates to the removal of executive committee members. While it is so that a mayor would have to vacate office once removed as a member of the executive council, as stated in s 48(4), if reliance is placed on s 53(1), however, then the motion must be unequivocal that it is for the removal of an incumbent as a member of the executive committee. I take note that the resolution appearing on the version of the minutes produced by the Municipality, signed on a date after the review application, refers to the removal of Mr Mdingi as both a member of the executive committee and as the mayor. This does not change the fact that Mr Mtshazo’s proposed motion, coupled with the added item on the agenda, did not refer to the suggested removal of Mr Mdingi as a member of the executive committee. It also does not change the fact that no notice was given to Mr Mdingi and other councillors prior to this resolution being taken. Reference to removal as a mayor, as opposed to as a member of the executive committee, cannot be taken as inconsequential. This is for the reason that the nature of the motion and the reasons thereof may differ, in which event, councillors ought to know what they are dealing with. [31] Accordingly, the high court was correct in reaching the conclusion that it did. When all is said and done the order that it granted is unassailable. The fact that one of the reasons it gave was that there should have been a fully- fledged inquiry against the respondent does not, in the context of the facts of this case, avail the Municipality. It is further not necessary to enter into a debate as to whether or not the grounds for removal were established, or whether a court can interfere with a municipal council’s decision on the basis of irrationality. [32] It remains to express the Court’s gratitude to Mr N Snellenburg SC, who together with Mr P T Masihleho appeared as amici curiae, for their valuable submissions in this matter which were of considerable help to the Court. The amici were appointed because heads of argument had not been filed on behalf of Mr Mdingi and the matter was ripe for hearing. The President of this Court took it upon herself to approach the Bloemfontein Society of Advocates to appoint one of their members to assist the Court. Heads of argument for Mr Mdingi were filed only a few days before the hearing of the matter with an application for condonation, which the Court granted. [33] 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 APPEARANCES For the appellants: T Masuku SC (with him L Matoti and V Kunju) (heads of argument drafted by T Masuku SC with L Matoti and L R Brauns) Instructed by: Jolwana Mgidlana Inc., Mthatha Maduba Attorneys Inc., Bloemfontein For the respondent: V Notshe SC (with him A Bodlani) Instructed by: M T Mlola Attorneys, Mthatha Makubalo Attorneys, Bloemfontein Amici curiae: N Snellenburg SC (with him P T Masihleho)

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 10 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 Ingquza Hill Local Municipality & Another v Jongintaba Mdingi (1110/2019) [2021] ZASCA 75 (10 June 2021) The Supreme Court of Appeal (SCA) today dismissed an appeal brought by the Ingquza Hill Local Municipality and another appellant against the decision of the Eastern Cape Division of the High Court, Mthatha (the high court) with costs, including costs occasioned by the employment of two counsel. The appeal concerned the removal of the respondent, Mr Jongintaba Mdingi (Mr Mdingi), who was a member of the executive committee of the first appellant, Ingquza Hill Local Municipality (the Municipality), as its mayor pursuant to a resolution adopted by the Municipal Council ostensibly acting in terms of s 53(1) of the Local Government: Municipal Structures Act 117 of 1998 (the Act) on 23 January 2019. The second appellant, Mr Bambezakhe Goya (Mr Goya), who is now deceased, was elected to be the mayor in place of Mr Mdingi in terms of s 48(2) of the Act. The issue before the SCA was whether the high court erred in its decision to review and set aside the Municipality’s decisions to remove Mr Mdingi and the subsequent decision to elect Mr Goya as his replacement. The facts of the matter were briefly as follows. Mr Mdingi was elected as the mayor on 3 August 2016. On 14 December 2018, the Municipality convened an emergency council meeting to deal with various issues, wherein Mr Simthembile Mtshazo (Mr Mtshazo) intervened on a point of exigency stating that he wanted to introduce the issue of Mr Mdingi’s removal as the mayor, for the reason of his alleged failure to implement the resolution of the Municipality, relating to the conduct of the municipal manager. Thereafter, Mr Mdingi was removed from his position following a resolution taken by the Council on 23 January 2019. Aggrieved by what transpired at the meeting of 23 January 2019, Mr Mdingi took the Municipality’s decision on review to the high court by way of an urgent application. His grounds for review were that no investigation was undertaken by the Municipality of the allegations of misconduct against him, no charges were put to him, and he was neither informed of his rights nor given an opportunity to make a presentation of his case, let alone an adequate opportunity to do so. The Municipality submitted that it relied on s 53(1) of the Act as well as Rule 25.1 of its Standing Orders and Rules. The SCA noted that the reference to s 53(1) was inserted in the typed motion in handwriting. In reaction to the Municipality’s reliance on s 53(1), Mr Mdingi alleged that he had not been served with any notice to remove him as a member of the executive committee, nor was any sent to the councillors. He further stated that evidence showed that he in fact had implemented the decision of the Council that he was accused of having defied. The SCA held that the high court was correct and that the order that it had granted was unassailable. It found that requisite prior notice was not given to Mr Mdingi and the other councillors, prior to the resolution being taken. It further found that the Municipality had admitted that Mr Mdingi was not given notice in compliance with Mr Mtshazo’s proposed motion; accepting the Municipality’s submission that the actual notice was inconsequential as long as a member was aware of the intended motion to remove him or her, would frustrate the objects and purpose of s 53(1) of the Act read with s 160(8) of the Constitution, as all the councillors must be given an opportunity to participate in council meetings. The SCA further found that the appellants erred in another respect, namely that the motion was said to have been moved in terms of s 53(1) when it was not couched as a motion to remove Mr Mdingi as a member of the executive committee, but as the mayor. Lastly, the SCA found that it was not necessary to enter into a debate as to whether or not the grounds for removal were established, or whether a court could interfere with a municipal council’s decision on the basis of irrationality.

1926

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 771/2010 In the matter between: DAVID WALLACE ZIETSMAN APPELLANT and ELECTRONIC MEDIA NETWORK LIMITED FIRST RESPONDENT MULTICHOICE AFRICA (PTY) LIMITED SECOND RESPONDENT Neutral citation: Zietsman v Electronic Media Network (771/2010) [2011] ZASCA 169 (29 September 2011) Coram: Mthiyane, Van Heerden, Bosielo and Leach JJA and Meer AJA Heard: 13 September 2011 Delivered: 29 September 2011 Summary: Application for security for costs ─ s 17(2) of Patents Act 57 of 1978 ─ Earlier application dismissed on appeal to the SCA ─ Whether second application precluded by the operation of doctrine of res judicata or issue estoppel. _____________________________________________________________________ ORDER On appeal from: Court of the Commissioner of Patents (Pretoria) (Sapire AJ sitting as court of first instance): The appeal is dismissed with costs. ___________________________________________________________ JUDGMENT MTHIYANE JA (VAN HEERDEN, BOSIELO, LEACH JJA and MEER AJA CONCURRING): [1] This appeal is against the judgment of Sapire AJ sitting as a Commissioner of Patents in the Court of the Commissioner of Patents of the Republic of South Africa, in which the appellant was ordered to furnish security for the costs of the first and second respondents jointly in the amount of R100 000. [2] The application that gave rise to this appeal is the second application for security for costs. The appellant was previously ordered to furnish security for the costs of the respondents in the amount of R250 000 each. The appellant noted an appeal against that ruling and succeeded. The judgment in that case is reported as Zietsman v Electronic Media Network Ltd & others 2008 (4) SA 1 (SCA), (the SCA judgment). The appellant’s answer to the respondents’ request for security for costs was that, in light of the SCA’s judgment, the respondents were precluded from seeking further security from the appellant as the matter was res judicata. The history of the matter [3] It is necessary to describe briefly the background to the present application. In December 2004 the appellant instituted action against the first and second respondents and three other entities for the alleged infringement of his South African patent number 92/9925. This action (the main action) is pending in the court below. [4] On 15 February 2005 the respondents requested security for costs in terms of Uniform rule 47(1). [5] The respondents thereafter brought the first application for security for costs in the court of the Commissioner of Patents and the appellant was ordered to furnish security. This order formed the subject of the appeal in the SCA judgment. [6] On 7 March 2008 the appellant’s appeal against the order on the first application for security for costs was upheld and the order of the Commissioner of Patents was altered to one dismissing the respondents’ application with costs. [7] Although this court made findings adverse to the appellant’s ability to satisfy an order for costs that may be given against him, it refused the respondents’ application on the basis that they had not disclosed a defence and because evidence relating to their defence and their prospects of success in the main action had not been tendered. [8] On 10 June 2008, the respondents again requested security for costs in terms of Uniform rule 47(1). This time the notice under Uniform rule 47(1) contained, inter alia, statements indicating that the respondents had good prospects of success in their defence of the main action. [9] The appellant refused to offer security for costs in response to the respondents’ aforesaid (second) request and the respondents then launched their second application for security for costs before the court a quo on 28 August 2008. The issue on appeal [10] The issue for decision in this appeal is whether the second application for security for costs should have been refused by the court a quo because of the operation of res judicata or issue estoppel. The underlying ratio of the doctrine of res judicata is that where a cause of action has been litigated to finality between the same parties on a previous occasion, a subsequent attempt by one party to proceed against the other party on the same cause of action should not be permitted. The constituent elements of this defence are: (a) an earlier judicial decision, (b) which is final and definitive of the merits of the matter; (c) involving the same parties; (d) where the cause of action in both cases is the same; and (e) the same relief is sought.1 [11] Where a defendant raises the defence that the same parties are bound by a previous judgment on the same issue, it has become commonplace to refer to this defence as one of ‘issue estoppel’. The essential requirements of issue estoppel are: (a) an earlier judicial 1 See Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning & Local Government, Gauteng 2009 (3) SA 577 (SCA) para 21. decision; (b) which is final and definitive of the merits of the matter; (c) involving the same parties; and (d) which involves an issue of fact or law which was an essential element of the judgment on which reliance is placed.2 [12] The appellant’s primary submission is that this court has in the SCA judgment ruled on the appellant’s liability to furnish security and that the respondents are precluded from again approaching this court on the matter in circumstances where the respondents have not introduced any new evidence that was not available when the matter was first before this court. [13] The respondents submit that the appellant has failed to discharge the onus of proving the sustainability of the defence of res judicata or issue estoppel. They accept that the SCA judgment has the following elements in relation to the judgment of the court a quo: (a) an earlier judicial decision; (b) which involves the same parties; and (c) where the same relief was sought. The respondents however, dispute that the SCA judgment is a final and definitive judgment on the merits of the first application for security for costs and aver further that the causes of action in both applications for security for costs are not the same. [14] In order for the defence of res judicata to be sustained it must be shown that the earlier judicial decision on which reliance is placed was a decision on the merits. It has been said that, ‘it is not the form of the order granted but the substantive question (did it decide on the merits or merely grant absolution?) that is decisive in our law and that what is required for 2 Yellow Star Properties para 22. the defence to succeed is a decision on the merits.’3 The respondents submit that the SCA judgment was one of absolution from the instance. As indicated above they submit further that the causes of action in both applications for security for costs are not the same. [15] On an analysis of the SCA judgment (especially paras 19 and 20), it is clear that the ratio for the decision was that insufficient evidence had been placed before the court and the respondents had not disclosed a defence.4 Neither the respondents’ defence, nor their prospects of success in the main action were dealt with in the first application. This caused this court to hold that it would place an unjust impediment on the appellant’s constitutional right in terms of s 36 of the Constitution were the court to direct the appellant to furnish security for costs. The respondents’ application for security for costs was thus dismissed. [16] In my view the effect of the SCA judgment is that it only granted absolution from the instance. It clearly did not deal with the merits. It is simply not so as contended by the appellant that the merits were considered in detail. Accordingly, the doctrine of res judicata cannot be relied on by the appellant to prevent adjudication of the respondents’ second application for security for costs. [17] As already indicated above, one of the elements underlying the defence of res judicata is that the earlier judicial decision relied on must be in respect of the same cause of action. In the respondents’ second application for security for costs the respondents have not only relied on essentially the same facts on which the SCA judgment is based, but have 3 See MV Wisdom C: United Enterprises Corporation v STX Pan Ocean Co Ltd 2008 (3) SA 585 SCA para 9. 4 Zietsman supra para 19 at 9J-10J. in addition tendered new evidence. This new evidence deals with the respondents’ prospects of success in the main action and cures the deficiency that resulted in the respondents being non-suited in the first application. The evidence now shows that the respondents have good prospects of success in the main action and that there is therefore a good prospect of an adverse costs order being made against the appellant at the termination of the main action. [18] The evidence now tendered relates to the respondents’ application in terms of s 51(10) of the Patents Act 57 of 1978 which identifies 15 grounds for the setting aside of the amendment which was made by the appellant to his patent. If this application succeeds, the appellant’s patent may become wholly or partially invalid. It is important to note that this application was made only after the first application for security of costs had been instituted. So too, the affidavit deposed to by the respondents’ expert, Mr Hanrahan, had only become available during the course of the previous proceedings for security for costs. [19] The further evidence tendered by the respondents shows, at least prima facie, that the respondents could not have infringed the appellant’s patent. This evidence was not before the court in the first application. Clearly, the second application is premised on a cause of action which is different from the cause of action in the first application. [20] On this basis the doctrine of res judicata (as such or in the form of issue estoppel) is inapplicable. There was therefore no reason for the Commissioner of Patents, Sapire AJ, not to entertain the respondents’ application. His approach finds support in the dictum of Hefer JA in Shepstone & Wylie & others v Geyser NO 1998 (3) SA 1036 (SCA) at 1042H where the court said in relation to refusal of an application for security for costs: ‘It may be that the Court, having once refused an application, retains the power to entertain a subsequent one. But any subsequent application will obviously require new evidence.’ [21] During argument the question arose as to whether it was open to the respondents to rely on evidence which they did not raise in the first application, when they had the opportunity to do so. The appellant submitted that they were not entitled to do so. The respondents offered two reasons why the evidence was not tendered in the first application. First, the evidence in question only came into their possession after the first application had been lodged. Second, the respondents did not consider themselves under any obligation, at that stage, to incur the additional expense of tendering evidence on their prospects of success. The appellant’s allegations of patent infringement were considered to be without any merit and the respondents did not consider it necessary to investigate (in the appellant’s words) ‘all aspects regarding the patent, possible infringement and possible invalidity, of the claims’ before applying for security for costs at the earliest possible opportunity. At that stage, given their view of the strength of the respondent’s case, this would have been unduly expensive and time-consuming. In terms of s 17(2)(b) of the Patents Act, the Commissioner of Patents is not obliged to have regard to the prospects of success of any party in considering whether security should be furnished. The section reads as follows: ‘The Commissioner may have regard to the prospects of success or the bona fides of any such party in considering whether such security should be furnished.’ (Emphasis added.) [22] In my view the respondents have provided a satisfactory explanation as to why evidence regarding their defence and their prospects of success was not tendered in the first application. The appellant argued that the respondents’ failure to disclose their defence in the first application amounts to an abuse of the process of court. I do not agree that any abuse has been established and the submission to that effect falls to be rejected. [23] In sum the plea of res judicata cannot be upheld and was correctly rejected by the Commissioner of Patents. [24] As to costs I do not think that the matter justified the employment of two counsel. The appeal did not raise complex or novel issues. In essence, this court simply had to consider whether the order for security for costs given by the court a quo was liable to be set aside on the basis of res judicata. Order [25] In the result the following order is made: The appeal is dismissed with costs. ______________________ K K MTHIYANE JUDGE OF APPEAL APPEARANCES For Appellant: AGS Galgut Instructed by: Galgut & Galgut, Johannesburg McIntyre & Van der Post, Bloemfontein For Respondent: P Ginsburg SC (with him F Southwood) Instructed by: Adams & Adams, Pretoria Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 29 September 2011 STATUS: Immediate ZIETSMAN V ELECTRONIC MEDIA NETWORK (771/2010) [2011] ZASCA 169 (29 SEPTEMBER 2011) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (the SCA) today dismissed an appeal with costs from the Court of the Commissioner of Patents, Pretoria. The appellant, Zietsman, was previously ordered to furnish security for costs of the respondents, Electronic Media Network and Multichoice Africa in an action the appellant instituted against the respondents for alleged infringement of his South African patent number. The appellant’s appeal against the order was upheld by the SCA in an earlier judgment on the basis that the respondents had not disclosed a defence and evidence relating to their prospects of success in the main action had not been tendered. The respondents again requested security for costs with statements indicating that the respondents had good prospects of success in their defence of the main action but the appellant refused to offer such security. The issue on appeal was whether the second application for costs should have been refused because of the operation of res judicata or issue estoppel. The doctrine of res judicata provides that where a cause of action has been litigated to finality between the same parties before, another attempt by one party to proceed against the other party on the same cause of action should not be permitted. The SCA stated that for the defence of res judicata to succeed, it must be shown that the earlier judicial decision on which reliance is placed was a decision on the merits. The SCA held that the earlier SCA judgment was based on the lack of insufficient evidence placed before the court and for that reason, the earlier judgment granted absolution from the instance and did not deal with the merits. The SCA in dealing with whether the earlier judgment and the current appeal were the same cause of action for the plea of res judicata to succeed stated that the respondents relied on the same facts but tendered new evidence dealing with the respondents’ prospects of success in the main action. Accordingly, the SCA held that the cause of action in the second application is different from the first application. On the facts of the case, the SCA held that the respondents could rely on evidence they did not raise in their first application and on this basis, the doctrine of res judicata or issue estoppel was not applicable.

2779

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 474/2011 Reportable In the matter between: MPHEPHU MARIA NGWENYAMA Appellant and MODJADJI FLORAH MAYELANE First Respondent MINISTER OF HOME AFFAIRS Second Respondent Neutral citation: Ngwenyama v Mayelane & another (474/11) [2012] ZASCA 94 (1 June 2012) Coram: MTHIYANE DP, PONNAN JA et NDITA AJA Heard: 14 May 2012 Delivered: 1 June 2012 Summary: Customary marriages – polygamy- Interpretation- s 7(6) of the Recognition of Customary Marriages Act 120 of 1998- whether failure by the husband to enter into a contract regulating matrimonial property renders subsequent customary marriage invalid – provisions of s 7(6) not intended to invalidate subsequent customary marriage. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Bertelsmann J sitting as court of first instance): The appeal succeeds partially to the extent that the order of the court below is set aside and replaced with the following: '(a) Prayer (a) of the notice of motion (declaring a customary marriage between Hlengani Dyson Moyana (the deceased) and the First Respondent null and void ab initio ) is dismissed. (b) Prayer (b) (directing the Second Respondent to register the marriage between the applicant and the deceased Hlengani Dyson Moyana nin: 5701085803086) is granted. (c) Each party is ordered to pay its own costs.' 2. There is no order as to costs. ______________________________________________________________ JUDGMENT ______________________________________________________________ NDITA AJA (MTHIYANE DP, PONNAN JA concurring) Introduction [1] This appeal concerns the interpretation of s 7(6) of the Recognition of Customary Marriages Act1 (the Act). The section regulates the proprietary consequences of a customary marriage in circumstances where the husband 1 Recognition of Customary Marriages Act 120 of 1998. wishes to enter into a second customary marriage. The appeal comes before us with the leave of the court a quo. [2] The first respondent, Ms Mdjadji Florah Mayelane, as applicant, instituted motion proceedings against the appellant, Ms Mphephu Maria Ngwenyama, in the North Gauteng High Court in which she sought an order (a) declaring the customary marriage contracted between the appellant and Hlengani Dyson Moyana (the deceased) null and void ab initio; (b) directing the second respondent to register the customary marriage between the first respondent and the deceased and (c) costs. Bertelsmann J granted the application. The second respondent, Minister of Home Affairs, filed a notice to abide the decision of the and consequently does not feature any further in this appeal. Any reference to the respondent should be understood to refer to the first respondent. The judgment in the court a quo is reported as MM v MN & another 2010 (4) SA 286 (GNP). The Facts [3] The facts and circumstances relating to this appeal are as follows: The respondent was married to the deceased, according to customary law and tradition at Nkovani Village, Limpopo, on 1 January 1984. Three children, all now majors, were born out of the union. The marriage was not registered. The deceased died on 28 February 2009 and the marriage was still subsisting. When the respondent sought to register the customary union at the Department of Home Affairs after the death of the deceased, she was advised that the appellant had also sought to register a customary marriage allegedly contracted between her and the deceased on 26 January 2008. The respondent asserts that the purported marriage between the deceased and the appellant was null and void ab initio as she had not been consulted before it was concluded and the deceased had failed to comply with s 7(6) the Act of which provides that a husband in a customary marriage who wishes to enter into a further customary marriage with another woman must apply to the court to approve a written contract governing the proprietary consequences of the marriages. [4] The deceased‘s elder brother, Mr Mzamani Temson Moyana, deposed to an affidavit confirming the respondent‘s marriage to the deceased. In addition, he stated that in terms of their custom and tradition, the first wife must be consulted before a second customary marriage is concluded, and such a marriage should be witnessed by the husband‘s blood relatives. Section 7(6) [5] Section 7(6) provides as follows: A husband in a customary marriage who wishes to enter into a further customary marriage with another woman after the commencement of this Act must make an application to the court to approve a written contract which will regulate the future matrimonial property system of his marriages.‘ [6] It is common cause that the marriage contracted between the appellant and the deceased was not preceded by an application for an order approving a contract regulating the future matrimonial system of both marriages. In the high court [7] Bertelsmann J, considered the equal status and capacity afforded to spouses in a customary marriage and came to the conclusion that s 7(6) is aimed at protecting the proprietary interests of both the existing and prospective spouse. He emphasised the prejudice likely to be suffered by the existing spouse where the second marriage has not been disclosed, dealt with by the contract and sanctioned by the court and held thus: ‗The failure to comply with the mandatory provisions of this subsection cannot but lead to the invalidity of a subsequent customary marriage, even though the Act does not contain an express provision to that effect. Cronje and Heaton argue in South African Family Law 2ed at 204, that the court‘s intervention would be rendered superfluous - which the legislature could not have intended - if invalidity did not result from a failure to observe ss (6).‘ However, he found that the failure of the husband to comply with the provisions of s 7(6) rendered the second customary marriage null and void ab initio as the provisions of the section are peremptory. The learned judge continued at para 25: ‗A further argument, that failure to comply with the subsection leads to invalidity of the subsequent further customary marriage, arises from the peremptory language of the provision: the word ‗must‘, read with the provisions of subsection (7)(b)(iii), empowering the court to refuse to register a proposed contract, indicates that the legislature intended non-compliance to lead to voidness of a marriage in conflict with the provision.‘ The issues [8] The core issue in this appeal turns on whether the failure by the husband to make an application to court to approve a written contract regulating the matrimonial property system of both the first and second marriages, as envisaged in s 7(6) of the Act, invalidates the subsequent customary marriages from inception, in the absence of an express provision in the Act to that effect. In this court [9] At the hearing of this appeal, counsel for the appellant submitted that the conclusion arrived at by the court below as to the consequences of non- compliance with s 7(6) is incorrect because the section is not peremptory. Moreover, it could not have been the intention of the legislature, said counsel to effect so fundamental a change to the customary law of polygamy by subjecting the validity of a second marriage to prior consent by a court, which could withhold it. Relying on two decisions of the Constitutional Court in Hassam v Jacobs NO 2 and Gumede v President of the Republic of South Africa 3 counsel for the appellant further argued that the interpretation 2 Hassam v Jacobs NO & others 2009 (5) SA 572 (CC). 3 Gumede v President of the Republic of South Africa & others 2009 (3) SA 152 (CC). accorded to the section by the court a quo is in conflict with s 39(2) of the Constitution.4 [10] The Women‘s Legal Trust was admitted as amicus curiae. Counsel for the amicus aligned herself with the appellant‘s submissions and added, basing her argument on Brink v Kitshoff NO, 5 that the court a quo, in interpreting the provisions of s 7(6) was enjoined to consider historical inequalities based on race, gender, marital status and class, as well the realities of women married under customary law generally and women in polygamous marriages, in particular. She further contended that an interpretation that renders the second customary marriage invalid undermines the subsequent wife‘s right to dignity and equality. The amicus outlined the harsh impact of invalidating an otherwise valid customary marriage in three stages: viz divorce, death and succession as well as social standing of the second wife and her children. According to the amicus, the interpretation accorded to s 7(6) by the court a quo gives priority to the rights of the first wife and in so doing defeats the purpose of the Act to protect all wives in polygamous marriages by creating a mechanism for a certain and equitable matrimonial property regime. Such an interpretation is, so went the argument, at odds with the Constitution and the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) ratified without reservation by the Republic of South Africa in 1996. [11] The respondent‘s counsel in his turn argued that the appellant, on the facts presented failed to establish that her customary marriage to the deceased was valid. Although this issue was debated in court, I must at the outset state that this court need not decide it as there is no cross-appeal challenging the finding of the court a quo on its acceptance of the validity of the second customary marriage. It was further submitted on behalf of the respondent that s 7 (6) was aimed at protecting the interests of the existing 4The Constitution of the Republic of South Africa, 1996. 5 Brink v Kitshoff NO 1996 (4) SA 197 (CC) para 44. wife, it is for that reason that she must be joined in the proceedings determining the proposed contract regulating the matrimonial property. I deal with this issue in my conclusion. Discussion [12] The stated purpose of the Act is: ‗To make provisions for the recognition of customary marriages; to specify the requirements for a valid customary marriage; to regulate the registration of customary marriages; to provide for the equal status and capacity of spouses in customary marriages; to regulate the proprietary consequences of customary marriages and the capacity of spouses of such marriages.‘ In short, the Act marks a significant break from the past when customary, and more particularly polygamous marriages were considered repugnant to public policy. In so doing it seeks to protect and advance the rights of women married in accordance with customary law and tradition. To this end, the Constitutional Court in Gumede v President of the Republic of South Africa6 restated the purpose of the Act as follows: ‗The Recognition Act is inspired by the dignity and equality rights that the Constitution entrenches and the normative value systems it establishes. It is also necessitated by our country‘s international treaty obligations, which require member states to do away with all laws and practices that discriminate against women …‘ What is clear is that s 7(6) is intended to protect matrimonial property rights of the spouses by ensuring a fair distribution of the matrimonial property in circumstances where a husband is desirous of entering into a further customary marriage. [13] I have indicated earlier in this judgment that the court below based its finding that the second marriage was null and void on the peremptory language of s 7(6). The section states in plain language that a husband 6 Gumede v President of the Republic of South Africa fn 3 supra para 21. ‗must‘ prior to contracting the further marriage enter into a contract regulating the future marital property system of his marriages which must be approved by the court. There is however no sanction for the failure to comply with s 7(6) because none was intended. [14] The court a quo concluded that the use of the word ‗must‘ indicates that the legislature intended non-compliance with s 7(6) to invalidate a subsequent customary marriage. It is trite that the primary rule in the construction of a statutory provision is to ascertain the intention of the legislature by giving words of the provision under consideration the ordinary grammatical meaning which their context dictates, unless to do so would lead to an absurdity the legislature could not have contemplated. The language used is but one of the ways of determining the intention of the legislature, so is the aim and purpose of that particular provision. Whilst words must be given their ordinary meaning a contextual and purposive reading of the statute is also important. This is more so in the circumstances of the instant matter, where it is alleged that the interpretation accorded by the court below offends some of the rights enshrined in the Constitution. Ngcobo J in Bato Star7 explains the importance of context in statutory interpretation as follows: ‗Certainly no less important than the oft-repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context. But it may be useful to stress two points in relation to the application of this principle. The first is that ―the context‖ as here used, is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limit, its background.‘ 7 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & others 2004 (4) SA 490 (CC), para 89 citing Jaga v Dönges 1950 (4) SA 653 (A). [15] Counsel for the appellant emphasised that when regard is had to the purpose and object of the Act, the court a quo ought to have considered the provisions of s 39(2) of the Constitution which state that: ‗When interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.‘ The Constitutional Court in Investigating Directorate: Serious Economic Offences & others v Hyundai Motor Distributors (Pty) Ltd8 with reference to s 39(2) said: ‗The Constitution requires that judicial officers read legislation, where possible, in ways which give effect to its fundamental values. Consistently with this, when the constitutionality of legislation is in issue, they are under a duty to examine the objects and purport of an Act and to read the provisions of the legislation, so far as possible, in conformity with the Constitution.‘ This court has also repeatedly stressed the necessity to interpret legislation and statutory provisions purposively.9 The objective set out in the preamble of the Act can be best achieved by giving effect to s 39(2) of the Constitution. The purpose of s 7(6) [16] There are divergent views regarding the purpose and interpretation of s 7(6) and its impact on customary marriages. As earlier alluded to, the court a quo reasoned that the fact that s 7(7)(b)(iii)10 empowers the court to refuse to register a proposed contract indicates that the legislature intended non- compliance to be visited with nullity. Citing Cronje and Heaton, South African Family Law 2 ed at 204, the court further held that if a customary marriage 8 Investigating Directorate: Serious Economic Offences & others v Hyundai Motor Distributors (Pty) Ltd & others; In re Hyundai Motor Distributors (Pty) Ltd & others v Smit NO & others 2001 (1) SA 545 (CC) para 22 9 Standard Bank Investment Corporation Ltd v Competition Commission & others; Liberty Life Association of Africa Ltd v Competition Commssion & others 2000 (2) SA 797 (SCA) paras 16-22. 10 Section 7(b) (iii) provides that when considering the application in terms in terms of subsection 6 the court must refuse the application if in its opinion the interests of any of the parties involved would not be sufficiently safeguarded by means of the proposed contract. were to remain valid in the face of non-compliance, the court‘s intervention would be rendered superfluous and that could not have been the intention of the legislature. According to the learned authors referred to by the court a quo, the husband‘s capacity to enter into a further customary marriage depends upon the approval of the contract by the court. A different view is, however, espoused by I P Maithufi and G M B Moloi 11 and the authors conclude as follows: ‗It is further submitted that non-compliance with this requirement in these circumstances will not lead to the nullity of the marriage and that such marriages will be regarded as out of community of profit and loss. The main purpose of the requirement is to avoid unnecessary litigation concerning property brought into the marriage and property that may be acquired during the subsistence of the marriage.‘ Similarly, Pieter Bakker12 argues that: ‗The second marriage should therefore be valid even when the requirements of section 7(6) have been disregarded. Non-compliance with section 7(6) will not affect the first wife negatively where she was married out of community of property with the exclusion of the accrual system. Where the first wife was married out of community of property, the property system will continue after her spouse marries his second wife. The only contract that can be drafted is an agreement to continue with the marriage out of community of property. Therefore non-compliance will have no effect on the first wife if the first marriage is out of community of property.‘ [17] Judicial decisions are also disharmonious with regard to the effect of non-compliance with s 7(6) on a customary marriage. In MG v BM13 Moshidi J had occasion to consider whether there was a valid customary marriage between the deceased and the applicant. The learned judge concluded that the marriage remained valid despite failure to comply with s 7(6) the deceased husband, and declined to follow the decision of the court a quo, in the instant matter. Moshidi J correctly stated that once there is a valid 11 The current legal status of customary marriages in South Africa, 2002 TSAR at 599 12 The New Unofficial Customary Marriage: Application of Section 7(6) of the Recognition of Customary Marriages Act 120 of 1998 2007 (70) THRHR 482. 13 MG v BM & others 2012 (2) SA 253 (GSJ) subsequent customary marriage, the second wife also acquires certain rights. He further questioned why the second wife should be penalised or prejudiced on account of the failure of the husband to comply with the requirements of s 7(6), more so when the Act does not contain an express provision invalidating customary marriages contracted without compliance with the section. He held that the section could not be interpreted as invalidating an otherwise valid customary marriage. [18] The respondent relied on the judgment of Dlodlo J in Mrapukana v Master of the High Court14 wherein the court stated, albeit obiter, that a man who seeks to enter into a further customary marriage must first enter into a written agreement that will set out the manner in which the material possession and wealth of the family will be managed. Stated differently, the contract is a prerequisite for the validity of the further customary marriage. This statement is no more than a restatement of the section as Dlodlo J understood it. Dlodlo J did not consider the impact of s 7(6) as it was not an issue before him. Any reliance on this judgment is therefore misplaced. Conclusion [19] The purpose of the section must be determined in the light of the legislative scheme which guided its promulgation. At the heart of the Act, is the intention to advance the rights of women married according customary law in order that they acquire rights to matrimonial property they did not have before the enactment of the Act. Effectively, the Act seeks to realise the right to equality envisaged in the Bill of Rights. With this in mind, it becomes difficult to reason that s 7 (6) could be intended solely for the protection of the wife in an existing marriage. The court a quo correctly considered and acknowledged the equal status and capacity afforded to spouses in a customary marriage and came to the conclusion that s 7(6) is aimed at protecting the proprietary interests of both the existing and prospective spouses, but failed to afford a purposive interpretation to the section so that 14 Mrapukana v Master of the High Court & another [2008] JOL 22875 (C). second wife is equally protected. Properly construed s 7(6) is for the benefit women in both monogamous and polygamous customary marriages. This much is obvious from the wording of s 2(3) which provides: ‗If a person is a spouse in more than one customary marriage, all valid customary marriages entered into before the commencements of this Act are for all purposes recognised as marriages.‘ It follows that whatever protection is afforded to women married according to customary law equally applies to women in polygamous marriages. I am fortified in this view by the dictum in Hassam v Jacobs NO15 where Nkabinde J said: ‗By discriminating against women in polygynous Muslim marriages on the grounds of religion, gender and marital status, the Act clearly reinforces a pattern of stereotyping and patriarchal practices that relegates women in these marriages to being unworthy of protection. Needless to say, by so discriminating against those women, the provisions in the Act conflict with the principle of gender equality which the Constitution strives to achieve. That cannot, and ought not, be countenanced in a society based on democratic values, social justice and fundamental human rights. The purpose of the Act would clearly be frustrated rather than furthered if widows to polygynous Muslim marriages were excluded from the benefits of the Act simply because their marriages were contracted by virtue of Muslim rites. The constitutional goal of achieving substantive equality will not be fulfilled by that exclusion. These women, as was the case with the applicant, often do not have any power over the decisions by their husbands whether to marry a second or a third wife. It follows therefore that the exclusion of widows in polygynous Muslim marriages from the protection of the Act is constitutionally unacceptable because it excludes them simply on the prohibited grounds. In any event, it would be unjust to grant a widow in a monogamous Muslim marriage the protection offered by the Act and to deny the same protection to a widow or widows of a polygynous Muslim marriage.‘ 15 Fn 2 supra paras 37-39. [20] Although the above was stated in the context of polygynous Muslim marriages, by parity of reasoning, it equally applies to polygynous marriages concluded in accordance with customary law. It will be recalled that the Act was promulgated in response to constitutional values and human rights, more specifically the right to equality and non-discrimination. If this court were to uphold the interpretation of s 7(6) adopted by the court a quo, it would be seriously undermining the very equality that the Act seeks to uphold. [21] The discriminatory interpretation of s 7(6) excluding women in polygamous marriages, validly married according to customary law, and recognised as such in their communities is deeply injurious to women in such marriages as it affects them negatively. Such women would be adversely affected in the areas of, inter alia, succession, death and social standing. It constitutes a gross and fundamental infringement of their right to dignity, right to equal status in marriage as well as the rights to physical and emotional integrity. The effect extends to children born of such a marriage, who would, by virtue of the interpretation accorded to s 7(6) by the court a quo, be instantly rendered illegitimate. The harsh consequences of such a declaration on the children are unthinkable. Furthermore, such an interpretation would be in stark contrast with the manner in which the people affected live their lives. For example, if all the requirements of a customary marriage have been complied with and the wife is for all intents and purposes socially recognised as a wife, and non-compliance with the section renders her unmarried, that would be out of step with the living customary law. The very purpose for which the Act was intended, equality of recognition and spouses of customary marriages, would be defeated. An interpretation that renders a polygamous customary marriage recognised in customary law invalid, is clearly untenable and could not have been intended by the legislature. In line with the purposive approach outlined in Hyundai, that courts must prefer an interpretation of legislation that falls within the constitutional bounds over that which does not, if such an interpretation can be reasonably ascribed to the section, it follows that the decision of the court a quo cannot be confirmed. [22] The section of the Act dealing with validity of a customary marriage (s 3) is not by any means related or linked to s 7(6). In striking a balance between the text and context of the Act, the preamble states the purpose the Act seeks to achieve and specifically refers to the validity of customary marriages. The requirements for validity of a customary marriage in s 3(1) are simply that: (i) the spouses must be above the age of 18 years; and (ii) both must consent to be married to each other under customary law; and (iii) the marriage must be negotiated and entered into or celebrated in accordance with customary law. [23] The Act does not specify the requirements for the celebration of a customary marriage. In this way, the legislature purposefully defers to the living customary law. Put differently, this requirement is fulfilled when the customary law celebrations are generally in accordance with the customs applicable in those particular circumstances. But once the three requirements have been fulfilled, a customary marriage, whether monogamous or polygamous, comes into existence. Notwithstanding the absence of a sanction for non-compliance with s 7(6) the scheme of the Act and the broader context of the statute compels a conclusion that the section could never have been intended to have any impact on the validity of the second marriage. This scheme of the Act amply demonstrates that the main purpose of the s 7(6) is to determine and regulate proprietary consequences and does not seek to invalidate an otherwise valid polygamous customary marriage, which complies with s 3. The underlying theme of the whole of s 7 is fairness and equity in dealing with the matrimonial property and not the validity of a customary marriage. To this end s 7(7) provides that: ‗When considering the application in terms of subsection 6– (a) the court must– (i) in the case of a marriage in community of property or which is subject to the accrual system– (aa) terminate the matrimonial property system which is applicable to the marriage; and (bb) effect a division of the matrimonial property; and (ii) ensure an equitable distribution of the property; and (iii) take into account all the relevant circumstances of the family groups which would be affected if the application is granted; (b) the court may– (i) allow further amendments to the terms of the contract; (ii) grant the order subject to any condition it may deem just; or (iii) refuse the application if in its opinion the interests of any of the parties involved would be not be sufficiently safeguarded by means of the proposed contract.‘ Section 7(8) on the other hand entitles all persons having sufficient interest in the matter, and in particular the applicant‘s existing spouse or spouses and his prospective spouse, to be joined in the proceedings instituted in terms of subsection (6). The joinder of spouses and prospective spouses shows that the legislature intended to protect the rights of both wives. The duty to act in compliance with s 7(6) is placed on the husband. It would be unjust to invalidate an otherwise valid marriage on the basis of the husband‘s failure when no duty was placed on the wife. [24] On the interpretation advanced on behalf of the respondent, the requirements of s 7(6) must precede the conclusion of a further customary marriage; otherwise, the marriage is invalid. This submission must be considered in the historical context of customary marriages as articulated by Masoneke DCJ in Gumede16as follows: ‗Before I confront the equality claim, it may be helpful to discuss up-front the operative statutory arrangements. The Recognition Act was assented to and took effect well within our new constitutional dispensation. It represents a belated but welcome and ambitious legislative effort to remedy the historical humiliation and exclusion meted out to spouses in marriages which were entered into in accordance with the law and culture of the indigenous African people of this country. Past courts and legislation accorded marriages under indigenous law no more than a scant recognition under the lowly rubric of customary ―unions‖.‘ The learned judge continues at paragraph 24: ‗I revert to consider the main and other purposes of the Recognition Act. Without a doubt, the chief purpose of the legislation is to reform customary law in several important ways. The facial extent of the reform is apparent from the extended title of the Recognition Act. The legislation makes provision for recognition of customary marriages. Most importantly, it seeks to jettison gendered inequality within marriage and the marital power of the husband by providing for the equal status and capacity of spouses. It specifies essential requirements for a valid customary marriage and the registration of marriages. In this way, it introduces certainty and uniformity to the legal validity of customary marriages throughout the country.‘ The proper context of the Act is elucidated above. Clearly the determination of s 7(6) must be in a manner that is consistent with the Constitution. An interpretation which holds that s 7(6) affects the validity of a subsequent marriage relegates customary marriages, once again, to the very status the Act sought to elevate it from as, based on it, there would be no second customary marriage without the approval of the court. Concerns about proprietary interests are sufficiently addressed in the Act as courts have been given a wide discretion to determine what is just and equitable in a given case. I have in this judgment already stated that a purposive interpretation of this section compels a conclusion that the legislature did not intend non- compliance to invalidate a valid customary marriage. 16 Supra fn 6 para 16 [25] The amicus curiae drew the attention of the court to human rights instruments pointing to the vulnerability of women generally, and women in polygamous marriages in particular. Article 16 of CEDAW obliges the country to take all appropriate measures to eliminate discrimination against women in all matters relating to marriage and family relations. Similarly, Article 6(b) of the Protocol to the African Charter on Human and People‘s Rights in Africa to which the country is a signatory obliges state parties to enact appropriate national legislative measures to guarantee that the rights of women in marriage and family, including polygamous marital relationships are promoted and protected. The above human rights instruments support the purpose of the Act. In my view, by addressing the relevant clauses of the Act, the issue of equality and polygamous marriage has been adequately addressed. Costs [26`] It is trite that generally, costs follow the result. However in Biowatch17 the court considered the impact of an award of costs on litigants wishing to vindicate their rights under the Bill of Rights where the litigation is not frivolous or vexatious. The rule is that the losing party is not mulcted in costs. The rights the unsuccessful respondent sought to vindicate are neither frivolous nor vexatious. In the circumstances the appropriate approach is to make no order as to costs. [27] It remains to mention that I have had the privilege to read the concurring judgment of Ponnan JA and I find nothing different from what I have already said. It is substantially a repetition of what I have said except for what is contained in paragraph 5 and 10. For that reason, I concur in it. 17 Biowatch Trust v Registrar, Genetic Resources & others 2009 (6) SA 232 (CC) at 245C-249E. [28] In the result the following order is made: Order 1. The appeal succeeds partially to the extent that the order of the court below is set aside and replaced with the following: '(a) Prayer (a) of the notice of motion (declaring a customary marriage between Hlengani Dyson Moyana (the deceased) and the First Respondent null and void ab initio ) is dismissed. (b) Prayer (b) (directing the Second Respondent to register the marriage between the applicant and the deceased Hlengani Dyson Moyana nin: 5701085803086) is granted. (c) Each party is ordered to pay its own costs.' 2. There is no order as to costs. ________________________ T NDITA ACTING JUDGE OF APPEAL PONNAN JA [29] Is a further customary marriage entered into without compliance with the provisions of s 7(6) of the Recognition of Customary Marriages Act 120 of 1998 (the Recognition Act) null and void ab initio? That is the crisp yet rather vexing question that confronts us. The high court (per Bertelsmann J) held that it was. It is the correctness of that conclusion that forms the subject of this appeal. Ndita AJA has reached a contrary conclusion to that of the high court – a conclusion with which I am in respectful agreement. Given the complexity of the matter, however, as also its importance to a particularly vulnerable class of persons who, more often than not, are victims of deep patterns of disadvantage, I prefer to articulate separately the considerations that impelled me to that conclusion. [30] The Recognition Act is inspired by the dignity and equality rights that the Constitution entrenches and the normative value system it establishes (Gumede v President of Republic of South Africa & others 2009 (3) SA 152 (CC) para 21). According to Moseneke DCJ (Gumede para 16): 'It represents a belated but welcome and ambitious legislative effort to remedy the historical humiliation and exclusion meted out to spouses in marriages which were entered into in accordance with the law and culture of the indigenous African people of this country. Past courts and legislation accorded marriages under indigenous law no more than a scant recognition under the lowly rubric of customary "unions".' [31] The chief purpose of the Recognition Act is to reform customary law in several important ways. As Moseneke DCJ (Gumede para 24) put it: 'The facial extent of the reform is apparent from the extended title of the Recognition Act. The legislation makes provision for recognition of customary marriages. Most importantly, it seeks to jettison gendered inequality within marriage and the marital power of the husband by providing for the equal status and capacity of spouses. It specifies the essential requirements for a valid customary marriage and regulates the registration of marriages. In this way, it introduces certainty and uniformity to the legal validity of customary marriages throughout the country. The Recognition Act regulates proprietary consequences and the capacity of spouses and governs the dissolution of the marriages, which now must occur under judicial supervision. An additional and significant benefit of this legislative reform is that it seeks to salvage the indigenous law of marriage from the stagnation of official codes and the inscrutable jurisprudence of colonial "native" divorce and appeal courts.' [32] Section 7(6) must be interpreted in the context of the scheme of the Recognition Act as a whole. The Recognition Act defines a customary marriage as 'a marriage concluded in accordance with customary law'. And customary law 'means the customs and usages traditionally observed among the indigenous African peoples of South Africa and which forms part of the culture of those people'. Section 2(2) provides that: 'A customary marriage entered into after the commencement of this Act, which complies with the requirements of this Act, is for all purposes recognised as a marriage.' And s 2(4) reads: 'If a person is a spouse in more than one customary marriage, all such marriages entered into after the commencement of this Act, which comply with the provisions of this Act, are for all purposes recognised as marriages.' Section 3 headed 'Requirements for validity of customary marriages', provides: '(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.' [33] In terms of s 3(5) of the Act, s 24A of the Marriage Act 25 of 1961 is rendered applicable to the marriage of a minor entered into without the necessary consent. According to the latter provision a marriage between persons of whom one or both are minors shall not be void merely because the person whose consent is by law required for the entering into of a marriage did not consent to the marriage, but may be dissolved by a competent court on the ground of want of consent if application is made to it. Even then a court shall not grant the application unless it is satisfied that the dissolution of the marriage is in the interests of the minor or minors. A valid customary marriage must be registered in terms of s 4 of the Act. Section 4(9) makes it clear though that failure to register a customary marriage does not per se affect the validity of that marriage. [34] Section 6, which appears to 'usher in a remedial regime of equal worth and capacity of spouses in customary marriages‘ (Gumede para 25), provides: 'A wife in a customary marriage has, on the basis of equality with her husband and subject to the matrimonial property system governing the marriage, full status and capacity, including the capacity to acquire assets and to dispose of them, to enter into contracts and to litigate, in addition to any rights and powers that she might have at customary law.' And finally, s 7(6), which applies to marriages concluded after the Act came into force and which is located in that part of the Act headed: 'Proprietary consequences of customary marriages and contractual capacity of spouses', provides: 'A husband in a customary marriage who wishes to enter into a further customary marriage with another woman after the commencement of this Act must make an application to the court to approve a written contract which will regulate the future matrimonial property system of his marriages.' [35] The Recognition Act has to be interpreted in a manner that promotes the spirit, purport and objects of our Bill of Rights. This duty is one in respect of which 'no court has a discretion' (Phumelela Gaming and Leisure Ltd v Grünlingh and others 2007 (6) SA 350 (CC) para 26 and 27). In Brink v Kitshoff NO 1996 (4) SA 197 (CC) para 44, O‘Regan J had this to say: 'Although in our society discrimination on grounds of sex has not been as visible, nor as widely condemned, as discrimination on grounds of race, it has nevertheless resulted in deep patterns of disadvantage. These patterns of disadvantage are particularly acute in the case of black women, as race and gender discrimination overlap. That all such discrimination needs to be eradicated from our society is a key message of the Constitution. The preamble states the need to create a new order in "which there is equality between men and women" as well as equality between "people of all races".' [36] Viewing the scheme of the Recognition Act as a whole therefore, it is plain that s 7(6) of the Act does not purport to regulate the validity of polygnous customary marriages. That is sought to be achieved by s 3. Section 7(6) appears on the face of it to regulate the proprietary consequences of such a marriage. The Act itself does not contain an express provision to the effect that non-compliance with s 7(6) results, without more, in invalidity of the second customary marriage. The court below, however, appeared to reason that the use of the word 'must' in the subsection means that the section is peremptory and that invalidity must follow as a natural consequence of non-compliance. There are strong indications and reasons why non-compliance with s 7(6) ought not to result in the second customary marriage being a nullity. [37] First, when determining an application in terms of s 7(6), a court is required by s 7(7) to terminate the existing matrimonial property system if the earlier marriage was in community of property or subject to the accrual system and to effect a division of the matrimonial property. The consequence of a failure to comply with the provisions of the section therefore is that the matrimonial property system existing before the conclusion of the second customary marriage continues in existence and is not terminated by the conclusion of the second marriage. This ought to adequately protect the rights of the first spouse whilst leaving in place and valid the subsequent customary marriage, with all of the attendant consequences and advantages of marriage. Second, a nullity means that a court is not entitled at all, irrespective of the particular circumstances of a case, to condone non-compliance with the provisions of s 7(6) of the Act. The effect of non-compliance will thus be that all subsequent marriages, irrespective of the circumstances, would be null and void ab initio. Such a harsh and indiscriminate result could hardly have been intended by the legislature. Nor, it seems to me, can it be countenanced by our Constitution. Third, although no obligation is imposed on either the first or subsequent wife by the legislature (the obligation to apply to court being placed solely upon the husband), the potential hardship is visited on the wife of the subsequent marriage. The potential hardships include the potential for the alteration of the status of: a woman, who may since the inception of her marriage have conducted herself as a married woman, to that of a concubine; and her children from that of legitimate to illegitimate. In either event the consequential social stigma and legal disability may cause irreparable harm to the woman and her children. Fourth, the considerations as to illiteracy that persuaded the court below to interpret the requirements of s 7(6) to protect the first wife's fundamental rights, apply equally to the second wife. Fifth, it could not have been the intention of the legislature to effect a fundamental change to the customary law incident of polygyny by subjecting the validity of a second marriage effectively to prior consent by a court which could be withheld by it. Sixth, s 7(6) does not appear in that part of the Recognition Act which prescribes the requirements for the validity of customary marriages. Those requirements are to be found in s 3. And as I have already shown, non- compliance with those requirements that the legislature has itself designated as requirements for the validity of a customary marriage does not automatically result in nullity. Why then, it must be asked, would non- compliance with s 7(6). Seventh, an interpretation that visits nullity on a marriage concluded in breach of s 7(6) will perpetuate inequalities and patterns of disadvantage between men and women. It both fails to afford parties married in accordance with African custom, equal protection and benefit of the law and it constitutes discrimination against women in second or subsequent polygynous marriages. Women in polygynous marriages, like the rest of this country‘s citizenry, enjoy a right to dignity. They are entitled to equal respect and protection by our society. It would fundamentally violate the right to dignity of a woman in a second or subsequent marriage to nullify her marriage otherwise valid under customary law, because her husband failed either through ignorance or design to obtain a court order under s 7(6) of the Act. It would also violate her right to equality. An interpretation that visits nullity on marriages concluded in breach of s 7(6) differentiates between women in second or subsequent polygynous marriages and those in first marriages. The purpose of the differentiation would, according to the court below, be to protect a first wife. However, the Recognition Act, as I have sought to show is designed to protect all spouses in polygynous marriages not only the first spouse by creating a certain and equitable matrimonial property regime in the polygynous context. Given the purpose of s 7(6), the differentiation drawn by nullifying marriages concluded in its breach is irrational. It is irrational because it defeats its very purpose. It is also illegitimate because the Constitution requires that both spouses be protected. Important as the interests of the first wife are, it is unfair to protect only her interests given the vulnerability of all female spouses in polygynous marriages and the importance of protecting their rights and interests as well. It is particularly unfair given that the reason for nullity will often flow merely from ignorance of the law (either by the husband or also his spouse) or lack of resources or in some cases, may flow from a husband's deliberate breach of the law. A rule that will punish a second or subsequent wife in good faith cannot be fair. Indeed it is an extraordinarily harsh consequence when one considers that the class of woman affected is least likely to have access to the knowledge and resources required to ensure observance with s 7(6). Finally, failure to recognise a marriage that would at customary law be valid appears to me to be the very antithesis of what the legislature sought to achieve. In my view the purpose of the Recognition Act, as the name suggests, is to afford recognition to customary marriages and thus extend the greatest protection possible to a particularly vulnerable class of persons, namely, female spouses in polygynous marriages. [38] I accordingly cannot endorse the conclusion of the court below that non-compliance with the requirements of s 7(6) results without more in the second customary marriage being void ab initio. I hold instead that the consequence of such non-compliance is that the subsequent marriage would be valid but that it would be one out of community of property. It plainly cannot be a marriage in community of property as that would imply the existence of two joint estates, which it is clear cannot co-exist. That conclusion, it seems to me, would afford sufficient protection to the wife of the first customary marriage. It, moreover, would accord with the injunction of the Constitutional Court that all legislation be interpreted in accordance with the spirit and purport of the Constitution. _____________________ V PONNAN JUDGE OF APPEAL MTHIYANE DP [39] I have had the privilege of reading the judgments of my colleagues Ndita AJA and Ponnan JA. I concur in both, save for paragraph 27 of the main judgment. _____________________ K K MTHIYANE DEPUTY PRESIDENT APPEARANCES: For Appellant: N H Maenetje SC T Ntsankota Instructed by: Legal Aid South Africa Pretoria Bloemfontein Justice Centre Bloemfontein For 1st Respondent: C A Da Silva SC T R Masevhe Instructed by: H D Rammutla Pretoria Phatshoane Henny Inc Bloemfontein For 1st Respondent: Instructed by: The State Attorney Pretoria The State Attorney Bloemfontein Amicus Curiae S Cowen N Mji

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 June 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. * * * M M NGWENYAMA V F M MAYELANE &ANOTHER Today, the Supreme Court of Appeal (SCA) handed down a judgment, in the case of Mphephu Maria Ngwenyama v Modjadji Florah Mayelane, upholding an appeal against the an order of the North Gauteng High Court declaring null and void ab initio a polygynous marriage between the appellant and her deceased husband contracted in terms of customary law, because it was not preceded by the conclusion of a contract regulating the future marital property system of both marriages, as envisaged in s 7(6) of the Recognition of Customary Marriages Act 120 of 1998. The Women’s Legal Trust was admitted as amicus curiae in the proceedings before this court. The deceased was married to both the appellant and the respondent according customary law. On his death both spouses who were not aware of each other’s respective marriages, sought to register their customary marriages with the Department of Home Affairs where they learned about each other for the first time. The respondent approached the North Gauteng High Court seeking an order declaring that the appellant’s marriage was null and void ab initio because the deceased husband had failed to approach the court for approval of the contract in terms of s 7(6) referred to above. The high court concluded that the marriage null and void because of non-compliance with s 7 (6), consequent. On appeal, this court held that even though the wording of s 7(6) is couched in a peremptory language, courts were, when interpreting a statutory provision enjoined to prefer an interpretation that falls within the constitutional bounds over that which does not. Such an approach would result in untold hardship to women married customary law and would adverse effects on the children born to such marriages as they would be rendered instantly illegitimate. Properly construed, the legislature could never have intended failure to comply with s 7 (6) does not render an otherwise valid customary marriage invalid.